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2006 Strategic HR Management

Survey ReportA Study by the Society for Human Resource Management

Research

2006 Strategic HR Management Survey Report

Shawn FegleySurvey Research Specialist

ResearchSHRMOctober 2006

This report is published by the Society for Human Resource Management (SHRM). All content is for informational purpos-es only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability result-ing from the use or misuse of any such information.

© 2006 Society for Human Resource Management. All rights reserved. Printed in the United States of America.

This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form of by any means, electronic, mechanical, photocopying, record-ing or otherwise, without the prior written permission of the Society for Human Resource management, 1800 Duke Street, Alexandria, VA 22314, USA.

For more information, please contact:

SHRM Research Department1800 Duke Street, Alexandria, VA 22314, USAPhone: (703) 548-3440 Fax: (703) 535-6432Web: www.shrm.org/research

06-0499

2006 Strategic HR Management

v About This Report

v About SHRM

v About SHRM Research

v About the Author

v Acknowledgments

1 Introduction

2 Methodology

4 Key Findings

5 Survey Results

22 An HR Prospective

24 A Look Ahead: Strategic HR Management

25 Demographics

29 SHRM Survey Reports

Contents

Survey Report

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vSHRM 2006 Strategic HR Management Survey Report

rently has more than 550 affiliated chapters within the United States and members in more than 100 countries. Visit SHRM Online at www.shrm.org

About SHRM Research

SHRM Research, as part of the Knowledge Development Division supporting SHRM, produces high-quality, leading-edge research and provides expertise on human resource and business issues. It acts as an advisor to SHRM for the purpose of advancing the HR profession and generates and pub-lishes cutting-edge research used by human resource professionals to develop their knowledge and to provide strategic direction to their organizations. As leading experts in the field of HR, SHRM Research works closely with leading academics, policy makers and business leaders.

About the Author

Shawn Fegley is a survey research specialist for SHRM. His responsibilities include designing, con-ducting and analyzing surveys on HR-related topics. He has worked in survey research for the past seven years.

Acknowledgments

This report is the culmination of a team effort. Steve Williams, Ph.D., SPHR, director of Research, provided valuable expertise adding to the content of the sur-vey report. Deb Cohen, Ph.D., SPHR, chief knowledge officer; Steve Miranda, SPHR, GPHR, chief human

About This Report

In June 2006, the Society for Human Resource Management (SHRM) conducted the Strategic HR Management Survey, which asked HR profession-als to what extent their HR department strategically contributed to the organization and used metrics and analytics to measure specific organizational func-tions. The survey also looked at potential barriers that limit the ability of HR to more effectively contrib-ute to the organization’s bottom line and what orga-nizations can do to develop the strategic HR skills of their HR staff. This report discusses the results of the survey by exploring the differences between HR departments with and without a formal strategic plan in place. Interpretations about current applications and future trends are presented at the end of the report in the sections titled “An HR Prospective” and “A Look Ahead.”

About SHRM

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 210,000 individual members, the Society’s mission is to serve the needs of HR professionals by providing the most essential and comprehensive resources available. As an influential voice, the Society’s mission is also to advance the human resource profession to ensure that HR is recognized as an essential partner in developing and executing organizational strategy. Founded in 1948, SHRM cur-

vi SHRM 2006 Strategic HR Management Survey Report

resources and strategic planning officer; and Jessica Collison, director of strategic planning, provided valuable expertise adding to the content of the sur-vey instrument. Jennifer Schramm, manager of the Workplace Trends and Forecasting Program, contrib-uted by providing insight on future trends, and Nancy Lockwood, SPHR, GPHR, manager of HR Content Program, contributed by providing insight on practical application.

Strategic HR Management Survey was developed by the SHRM Survey Program. The SHRM Organizational

Development Special Expertise Panel (specifically Maggie Aldrich, SPHR, Charlotte H. Anderson, SPHR, Fernán R. Cepero, Patricia A. Miller, SPHR, GPHR, and David Rock), SHRM HR Consulting/Outsourcing Special Expertise Panel (specifically Tom Kelley, David Kippen, Jim Nys, PHR, Don Packham, SPHR, and Mary-Jane Sinclair, SPHR) and SHRM Workforce Staffing and Deployment Special Expertise Panel (specifically Tom Darrow, Becky Strickland, SPHR, and Dorothy J. Stubblebine, SPHR) provided valu-able insight and recommendations for the survey instrument.

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1SHRM 2006 Strategic HR Management Survey Report

Introduction

In recent years, the field of human resources has experienced a significant transformation and redefinition. In the past, HR was heavily inundated

and responsible for personnel and transactional activities. In many organizations, HR has moved from merely an administrative role to that of a strategic partner and facilitator. Today, organizations are real-izing HR’s potential to positively affect a wide range of activities such as budgeting, talent management, succession planning, analysis of trends and forecast-ing, executive-level compensation, and corporate social responsibility programs.

For an organization to be successful in today’s highly competitive and changing international business environment, it needs targeted strategic initiatives that are integrated throughout the entire organiza-tion. Many successful organizations are realizing that their HR department is a resource that provides a competitive advantage. These organizations have recognized the value of addressing human resource and business functions from a strategic perspective that can ultimately be linked with overall business strategy. Currently, HR helps already successful orga-nizations further distinguish themselves from their competitors.

Strategic human resource management is a term that is being used to describe an assortment of strategic initiatives HR professionals use to effect bottom-line objectives. The HR function in many organizations has been segmented into two areas: one that focuses more time on operational functions and the other—on strategic activities. Even though HR has advanced extensively over the last 20 years, the profession still faces considerable barriers, such as the legacy of being an administrative contributor and still having the responsibility for dealing with many operational functions, that prevent many HR professionals from focusing on strategic initiatives. This report explores to what extent HR strategically contributes to specific functions within organizations, examines how often HR uses metrics and analytics to measure specific organizational functions, looks at potential barriers that limit the ability of HR to more effectively contribute to the organization’s bottom line and discusses what organizations can do to develop the strategic HR skills of their HR staff. The report also examines the differences between HR depart-ments with and without a formal strategic plan in place.

2 SHRM 2006 Strategic HR Management Survey Report

Methodology

A sample of HR professionals was randomly selected from SHRM’s membership data-base, which included approximately 210,000

individual members at the time the survey was con-ducted. Only members who had not participated in an SHRM survey or poll in the previous six months were included in the sampling frame. Members who were students, consultants, academics, located inter-nationally or had no e-mail address on file were also excluded from the sampling frame.

In June 2006, an e-mail that included a link to the Strategic HR Management Survey1 was sent to 3,000 randomly selected SHRM members whose titles were HR manager and higher. Of these, 2,530 e-mails were successfully delivered, and 427 HR professionals responded, yielding a response rate of 17%. The survey was fielded for a period of two weeks, and four e-mail reminders were sent to sam-ple members in an effort to increase the response rate.

Notes and Caveats

Analysis: Throughout this report, analyses by respon-dents’ organization staff size, HR department size and the existence of a formal strategic plan are presented and discussed, when applicable. For the purposes of this study, strategic HR is defined as the process of taking a long-term approach to human resource management through the development and

implementation of HR programs that address and solve business problems and directly contribute to major long-term business objectives. Operational HR is defined as focusing on the day-to-day approach to human resource management through policies, practices and processes. Throughout this report, the terms “HR function” and “HR department” both refer to the HR department within an organization.

Differences: Conventional statistical methods were used to determine if observed differences were sta-tistically significant (i.e., there is a small likelihood that the differences occurred by chance). Therefore, in most cases, only results that were significant are included, unless otherwise noted.

Generalization of results: As with any research, readers should exercise caution when generalizing results and take individual circumstances and expe-riences into consideration when making decisions based on these data. While SHRM is confident in its research, it is prudent to understand that the results presented in this survey report are only truly representative of the sample of HR professionals responding to the survey.

Number of respondents: The number of respondents (indicated by “n” in figures and tables) varies from table to table and figure to figure because some respondents did not answer all of the questions. Individuals may not have responded to a question on

1This survey instrument is available upon request by contacting the SHRM Survey Program at [email protected] or by phone at 703-535-6301.

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49% of HR professionals reported that their organiza-tion had in place an established method to measure the effectiveness of HR strategy through metrics and analytics. With a 5% margin of error, the reader can be 95% certain that between 44% and 54% of SHRM members would report that their organization presently measures the effectiveness of HR strategy through metrics and analytics. It is important to know that as the sample size decreases, the margin of error increases, and therefore the margin of error for each individual question will vary depending on the number of responses to that particular question.

the survey because the question or some of its parts were not applicable or because the requested data were unavailable. This also accounts for the varying number of responses within each table or figure.

Confidence level and margin of error: A confidence level and margin of error give readers some measure of how much they can rely on survey responses to represent all of SHRM members. Given the level of response to the survey, SHRM is 95% confident that responses given by all responding HR profession-als can be generalized to all SHRM members with a margin of error of approximately 5%. For example,


Key Findings

Three-quarters of HR professionals indicated that their organization had a strategic busi-ness plan in place. Among these respondents,

more than two-thirds indicated that the plan had been articulated and communicated throughout the organization.

More than one-half of HR professionals indicated their HR department had a strategic plan in place. Among respondents that reported that both their HR department and their organization had strategic busi-ness plans in place, the vast majority indicated that HR’s strategic plan was aligned with the delivery of the organization’s strategic plan.

Almost one-half of HR professionals reported their organization had in place an established method to measure the effectiveness of HR strategy through metrics and analytics. The functions HR depart-

ments used most frequently with metrics or analytics were recruitment and selection processes, perfor-mance management, compensation management/reward programs, benefits management and employ-ee relations.

HR departments with a strategic plan in place were more likely than those without a strategic plan to have established methods of measurements in place and were more likely to indicate that their HR depart-ment was involved with various aspects and func-tions within their organization.

The most frequently cited barriers that limited the ability of the respondents’ HR department to more effectively contribute to the organization’s bottom line were their department’s strong focus on administra-tion and the inability to directly measure HR’s impact on the bottom line.

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Survey Results

In this very competitive global marketplace, it is difficult for an organization to reach its full poten-tial without a well-conceived strategic business

plan that focuses on the organization’s short- and long-term visions, goals and objectives. An organiza-tion is at a competitive disadvantage if it is weighed down by short-term matters, because without a long-term focus as the source for a vision, an organiza-tion will likely be inundated with immediate concerns and not sufficiently prepared to anticipate opportu-nities. Overall, 75% of HR professionals indicated that their organization had a strategic business plan in place. These data are depicted in Figure 1. As shown in Tables 1 and 2, large organizations (500 or more employees) and HR departments with 10 or more employees were more likely to have a strategic business plan. This may be due to the complexity of these organizations, which brings about the need to have a strategic business plan.

Figure 1Organizational Strategic Business Plan in Place

Source: SHRM 2006 Strategic HR Management Survey Report

(n = 426)Not sure

7%

Yes 75%

No18%

Table 1 Organizational Strategic Business Plan in Place (by Organization Staff Size)

Overall(n = 412)

Small(1-99 Employees)

Medium(100-499 Employees)

Large(500 or More Employees)

Differences Based on Organization Size

75% 66% 74% 84% Large > small

Note: Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided.



Table 2 Organizational Strategic Business Plan in Place (by HR Department Size)

Overall(n = 416)

1-4 Employees 5-9 Employees 10 or More Employees Differences Based on HR Department Size

75% 69% 80% 92% 10 or more employees > 1-4 employees

Note: Sample size is based on the actual number of respondents by HR department staff size who answered this question using the response options provided.


To ensure success, an effective strategic business plan should clearly communicate and articulate what the organization wants to achieve. This plan should be presented to every individual who will be affected in the organization. Such communication makes the entire organization aware of the plan’s rationale and applications and, as a result, helps provide the best opportunity for a business plan to succeed. Among respondents from organizations that had a strategic business plan in place, 68% indicated that the plan had been articulated and communicated throughout the organization. These data are depicted in Figure 2.

Every business unit or department within an organi-zation should have a plan that is supported by and associated with the overall strategy of its organiza-tion. As illustrated in Figure 3, overall 56% of HR professionals indicated their HR department had a strategic plan in place. Once again, large organiza-tions (500 or more employees) and HR departments with 10 or more employees were more likely to have a strategic plan. These data are depicted in Tables 3 and 4.

Figure 2 Strategic Business Plan Articulated and Communicated Throughout the Organization

Note: Only employees who indicated that their organizations had a strategic business plan in place were asked this question.


(n = 319)Not sure

8%

Yes 68%

No24%

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Table 3 HR Department With a Strategic Plan in Place (by Organization Staff Size)

Overall(n = 412)





56% 43% 59% 64% Large > small



Table 4 HR Department With a Strategic Plan in Place (by HR Department Size)

Overall(n = 416)


75% 51% 54% 76% 10 or more employees > 9 or fewer employees




The most effective way for HR to deliver strategic initiatives is through the alignment with the overall strategic business plan of an organization. Among respondents who reported that their HR department had a strategic plan and their organization had a strategic business plan in place, the vast majority (96%) indicated that HR’s strategic plan was aligned with the delivery of the organization’s strategic plan (see Figure 4). HR should be an active participant in the development and implementation of business strategy; if HR is not aligned with business initia-tives, then it is almost impossible for HR to stra-tegically contribute and enhance business-related initiatives.

In many organizations HR is required to perform a variety of roles that could vary from operational to strategic in nature. Even though the HR function has evolved in the last 20 years from providing adminis-trative support to acting as a dynamic strategic pro-vider, in some organizations HR is still fighting to gain recognition from its colleagues. Tables 5 and 6 exam-ine the gap between how HR professionals view their roles and the role of their departments compared with how they feel employees perceive these roles. Overall, the majority of HR professionals indicated that they considered their own role (73%) and the role of their HR department (75%) as a combination of strategic and operational functions. However, while

Figure 4 HR Strategic Plan Aligned With the Organization’s Strategic Plan

Note: Only employees who indicated that their HR department had a strategic plan and their organization had a strategic business plan were asked this question.


(n = 212) Not sure2%

Yes 96%

No2%

Figure 3 HR Departments With a Strategic Plan in Place


(n = 421) Not sure4%

Yes 56%

No40%

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the majority of HR respondents (60%) perceived that employees viewed the role of HR professionals as a combination of strategic and operational functions, 59% felt that employees perceived their HR depart-ment as mainly having an operational role.

HR professionals were provided with 21 organiza-tional functions and were asked to indicate to what extent they thought HR departments could contribute to each function in general. As illustrated in Figure 5, 89% of HR respondents indicated that HR could con-tribute to a large extent through employee relations

Table 6 Role of the HR Department

PrimarilyStrategic

PrimarilyOperational

Combinationof Both

Respondents’ perception of how employees view their organization’s HR department (n = 413)

2% 59% 39%

Respondents’ view of their HR department’s role in the organization (n = 423)

9% 16% 75%

Table 5 Role of the HR Professional

PrimarilyStrategic

PrimarilyOperational

Combinationof Both

Respondents’ perception of how employees view the role of HR professionals in the organization (n = 426)

4% 37% 60%

Respondents’ view of their own role in the organization (n = 422)

12% 15% 73%

Note: Excludes respondents who indicated “not sure.” Percentages are row percentages and may not total 100% due to rounding.


Note: Excludes respondents who indicated “not sure.” Percentages are row percentages and may not total 100% due to rounding.


and recruitment and selection processes. This was followed by benefits management (86%), compensa-tion management/reward programs (85%), diversity practices (83%), employee communication programs (80%), performance management (80%) and reten-tion programs (76%). These findings are not surpris-ing since functions very commonly believed to be associated with or driven by HR were the most fre-quently noted, while functions not perceived as being closely related to HR, such as analysis of trends and forecasting (57%) and budgeting (37%), were less frequently cited.


Figure 5 To What Extent HR Departments Can Strategically Contribute to Specific Organizational Functions

Note: Percentages may not total 100% due to rounding. This figure is sorted in descending order by the percentage of respondents who answered “to a large extent” and excludes respondents who indicated "not sure."

Source: SHRM 2006 Strategic HR Management Survey Report 0 20 40 60 80 100 120

To some extent To no extentTo a large extent

Employee relations (n = 424)

Recruitment and selection processes (n = 425)

Benefits management (n = 421)

Diversity practices (n = 421)

Employee communication programs (n = 419)

Performance management (n = 423)

Compensation management/reward programs (n = 423)

Retention programs (n = 420)

Leadership development (n = 423)

Employee engagement initiatives (n = 417)

Human capital measurements (n = 408)

Work/life programs (n = 414)

Talent management initiatives (n = 417)

Succession planning (n = 417)

Skills development initiatives (n = 422)

Health, safety and security programs (n = 426)

Employment brand strategy/employment branding (n = 408)

Retirement planning (n = 421)

Corporate social responsibility programs (n = 416)

Analysis of trends and forecasting (n = 415)

Budgeting (n = 419)

89% 11% 0%

89% 11% 1%

86% 13% 1%

85% 15% 0%

83% 16% 1%

80% 20% 1%

80% 19% 1%

76% 22% 2%

74% 24% 2%

72% 27% 1%

72% 25% 3%

70% 26% 4%

69% 28% 3%

69% 25% 6%

68% 30% 2%

65% 34% 2%

64% 33% 3%

63% 33% 5%

60% 37% 3%

57% 40% 3%

37% 61% 2%

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Tables 7a, 7b and 7c examine the 21 organizational functions that were rated in Figure 5, but from the perspective of strategic contribution to each function by the HR department at the respondents’ organiza-tion. Overall, 70% of HR professionals indicated their HR department strategically contributed to a large ex-tent through employee relations. This was followed by

recruitment and selection processes (68%), benefits management (65%), performance management (54%) and compensation management/reward programs (48%). These data are depicted in Table 7a. There were virtually no differences between the rankings of how HR professionals believed HR in general could contribute to these functions and the extent to which

Table 7a To Which Extent the Respondents’ HR Department Could Strategically Contribute to Specific Organizational Functions (Overall)

To a Large Extent To Some Extent

To No Extent

(but this is an area in which my organization can contribute

more strategically)

To No Extent

(unlikely an area in which my organization can con-tribute more strategically)

Employee relations 70% 25% 5% 0%

Recruitment and selection processes 68% 27% 5% 1%

Benefits management 65% 27% 5% 3%

Performance management 54% 38% 7% 2%

Compensation management/reward programs 48% 40% 11% 1%

Employee communication programs 45% 43% 11% 1%

Health, safety and security programs 45% 41% 12% 3%

Diversity practices 45% 34% 18% 3%

Employee engagement initiatives 38% 41% 19% 2%

Retention programs 38% 40% 20% 2%

Leadership development 37% 47% 14% 2%

Work/life programs 32% 38% 28% 3%

Retirement planning 30% 44% 21% 6%

Skills development initiatives 29% 49% 19% 3%

Talent management initiatives 29% 40% 28% 4%

Human capital measurements 29% 39% 27% 4%

Employment brand strategy/employment branding

29% 39% 24% 8%

Succession planning 29% 34% 31% 7%

Corporate social responsibility programs 27% 39% 25% 9%

Budgeting 17% 55% 23% 6%

Analysis of trends and forecasting 15% 49% 29% 7%

Note: Sample size is based on the actual number of respondents who answered this question using the response options provided. This table is sorted by percentage of respondents who responded “to a large extent” for each statement and excludes respondents who indicated “not sure” or “not applicable.” Percentages within each category may not total 100% due to rounding.


(n = 406)


Table 7b To What Extent the Respondents’ HR Department Could Strategically Contribute to Specific Organizational Functions (by HR Department With a Strategic Plan)


To No Extent


more strategically)

To No Extent

(unlikely an area in which my organization can contribute

more strategically)










Employee engagement initiatives 47% 41% 105 1%









36% 40% 20% 4%



Budgeting 19% 58% 19% 4%



their individual HR department strategically contrib-uted to these functions.

Tables 7b and 7c examine the differences between respondents from departments with a strategic plan in place and those without such plan. HR profes-

sionals from departments with the existing strategic plan were significantly more likely than those without a strategic plan to report that their HR department strategically contributed to a large extent within these functions. HR departments with a strategic plan in place were very likely to have these plans aligned with

(n = 236)

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Table 7c To What Extent the Respondents’ HR Department Could Strategically Contribute to Specific Organizational Functions (by HR Department Without a Strategic Plan)


To No Extent


more strategically)

To No Extent

(unlikely an area in which my organization can contribute

more strategically)










Employee engagement initiatives 26% 41% 31% 3%







18% 37% 30% 15%




Budgeting 13% 51% 29% 7%




(n = 170)

the overall strategic business plans and were usually larger-sized organizations.

There are many ways that an HR department can contribute to its organization. HR professionals were provided with a series of statements and were asked

to rate the extent to which their HR department was involved with various aspects and functions in their organization. As illustrated in Table 8b, HR profession-als from departments with a strategic plan in place were more likely than those without a strategic plan to rate their function as being involved to a larger ex-


tent on all 12 subjects that were addressed. The as-pects that were rated the highest by HR professionals from departments with and without a strategic plan in place included the following: 1) HR works closely with senior management in implementing organizational strategies (68% for HR departments with a strategic plan in place and 38% for HR departments without a strategic plan in place); 2) HR works closely with se-nior management in creating organizational strategies

Table 8a Extent of HR’s Involvement in the Organization (Overall)

To a Large Extent To Some Extent To No Extent

HR works closely with senior management in implementing organizational strategies 56% 39% 6%

HR works closely with senior management in creating organizational strategies 44% 45% 11%

HR has achieved a level of respect that is comparable with other departments in the organization

40% 51% 10%

Senior management realizes that investments in HR make financial sense 39% 50% 12%

HR implements strategies and processes to drive business results 35% 52% 13%

HR is involved in the communication of the business goals 33% 48% 19%

HR is involved in the alignment of the business goals 32% 49% 19%

The role of HR is increasingly more focused on strategic interests 31% 50% 19%

HR involvement is essential in all major business activities and decisions 28% 56% 16%

HR creates strategies and processes to drive business results 25% 56% 19%

HR is involved in the development of the business goals 24% 52% 24%

HR is involved in monitoring the achievement of business goals 21% 49% 30%

Note: Sample size is based on the actual number of respondents who answered this question using the response options provided. This table is sorted by percentage of respondents who responded “to a large extent” for each statement and excludes respondents who indicated “not sure.” Percentages within each category may not total 100% due to rounding.


(n = 406)

(56% and 27%); 3) HR has achieved a level of respect that is comparable with other departments in the organization (49% and 26%); 4) senior management realizes that investments in HR make financial sense (47% and 27%); and 5) HR implements strategies and processes to drive business results (46% and 19%). These findings reveal that having an HR department with a strategic plan in place is important to the level of contribution that HR can offer.

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Table 8b Extent of HR’s Involvement in the Organization (by HR Departments With a Strategic Plan)





49% 45% 6%












(n = 236)

Table 8c Extent of HR’s Involvement in the Organization (by HR Departments Without a Strategic Plan)






26% 58% 15%











(n = 170)


Metrics and AnalyticsOrganizations should closely examine a vast array of information before making any recommendation or decision. Metrics and analytics are critical measure-ment tools that help uncover opportunities, identify problems, measure progress and help recognize differences between performance and expectation. These measures should be linked closely to the organization’s strategic business plans and goals. As illustrated in Figure 6, 49% of HR professionals reported their organization had in place an estab-lished method to measure the effectiveness of HR strategy through metrics and analytics.

As shown in Tables 9 through 11, large organizations (500 or more employees), HR departments with 10 or more employees and organizations with an exist-ing strategic plan within the HR department were more likely to have an established method of mea-surement in place.

Many organizations have a wealth of internal data available that could be used to measure and evalu-

Figure 6An Established Method to Measure theEffectiveness of HR Strategy Through Metrics and Analytics


(n = 423)Not sure

3%

Yes 49%

No48%

Table 9 An Established Method to Measure the Effectiveness of HR Strategy Through Metrics and Analytics (by Organization Staff Size)

Overall(n = 412)





49% 31% 48% 66% Large > small



Table 10 An Established Method to Measure the Effectiveness of HR Strategy Through Metrics and Analytics(by HR Department Size)

Overall(n = 416)


49% 39% 57% 78% 10 or more employees >4 or fewer employees



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Table 11 An Established Method to Measure the Effectiveness of HR Strategy Through Metrics and Analytics(by HR Departments With and Without a Strategic Plan in Place)

Overall (n = 406)

HR Department With a Strategic Plan HR Department Without a Strategic Plan Comparison by HR Departments With and Without a Strategic Plan in Place

49% 66% 29% With > without

Note: Sample size is based on the actual number of respondents who answered this question using the response options provided.


ate a wide range of traditional and nontraditional activities. HR professionals should look into ways to use these data to strategically contribute and show value. HR professionals from organizations with established methods in place were asked how frequently their HR department used metrics or ana-lytics in conjunction with specific HR activities. As seen in Table 12, the majority (59%) indicated that their HR department frequently used metrics or ana-lytics in association with recruitment and selection processes. This was followed by performance man-agement (52%), compensation management/reward programs (51%), benefits management (51%) and employee relations (49%). Less traditional functions such as corporate social responsibility programs (17%) and employment brand strategy/employment branding (21%) were less often linked with these measurement systems.

BarriersAlthough the field of HR has evolved in recent years to become a more strategic entity in organizations, HR still encounters significant barriers that limit its ability to more effectively contribute business results that are related to the bottom line. In this section, HR professionals were asked to rate to what extent various factors may limit their HR department’s abil-ity to more effectively contribute to the organization’s bottom line. As illustrated in Figure 7, 86% of the respondents felt that their department’s focus on administrative duties rather than on strategy limited their ability to contribute either to a large or to some extent. Additionally, 78% of HR professionals report-ed that their department was not able to directly

measure HR’s impact on the bottom line and lacked an established method for measuring the effective-ness of HR strategy through metrics and analytics.

It is not surprising that focus on administrative duties and lack of measurement processes were the most commonly cited barriers. HR professionals could over-come administrative burdens by outsourcing some of these functions or hiring staff dedicated specifically to strategic initiatives, thus providing their HR depart-ment a better opportunity to focus on strategy. It is very difficult for HR to add value without the ability to measure the direct impact of HR initiatives; however, at the same time, HR does not have consistent mea-surement systems to assist in this process. These measurement systems are continuously becoming more sophisticated, and great advancements are be-ing made in this area every year. In due time, refined measurements will be available that will provide HR professionals with the data they need to help their organizations run more effectively and will aid HR in measuring its direct impact on the bottom line. In the meantime, HR professionals should strive to perfect their HR-related metrics and attempt to utilize any available data that could be used in conjunction with organizational and human capital measurement issues.

Another factor that could hinder the strategic progres-sion and development of an HR department is related to its proximity to the organization’s chief executive officer (CEO)/president. HR professionals were asked to whom the person overseeing the HR department directly reported. The closer HR is associated with


Table 12 How Often Metrics or Analytics Are Used With Specific Organizational Functions

Frequently Sometimes Rarely

Recruitment and selection processes (n = 197) 59% 31% 10%

Performance management (n = 196) 52% 41% 8%

Compensation management/reward programs (n = 199) 51% 34% 15%

Benefits management (n = 192) 51% 34% 15%

Employee relations (n = 194) 49% 31% 20%

Health, safety and security programs (n = 193) 43% 39% 18%

Budgeting (n = 189) 40% 38% 23%

Retention programs (n = 191) 35% 40% 25%

Employee communication programs (n = 185) 34% 44% 23%

Diversity practices (n = 188) 32% 42% 26%

Employee engagement initiatives (n = 180) 31% 43% 27%

Analysis of trends and forecasting (n = 180) 29% 45% 26%

Leadership development (n = 187) 28% 51% 21%

Human capital measurements (n = 175) 28% 37% 35%

Retirement planning (n = 169) 27% 38% 36%

Talent management initiatives (n = 176) 26% 39% 35%

Skills development initiatives (n = 192) 21% 53% 27%

Work/life programs (n = 171) 23% 44% 33%

Succession planning (n = 174) 22% 41% 37%

Employment brand strategy/employment branding (n = 161) 21% 40% 39%

Corporate social responsibility programs (n = 156) 17% 38% 45%

Note: Percentages are row percentages and may not total 100% due to rounding. This table is sorted by percentage of respondents who responded “frequently” for each function and excludes respondents who indicated “not sure” or “not applicable."


the C-suite, the more the organization will expect from it. As illustrated in Figure 8, the majority (63%) of HR professionals indicated that the individual over-seeing HR directly reported to the CEO/president. This was followed by the vice president (11%) and the chief operating officer (COO) (8%) positions.

As illustrated in Table 13, HR departments from

smaller-sized organizations (1-99 employees) were significantly more likely than those from larger organi-zations to have their head of HR report directly to the organization’s CEO/president.

It is important that all levels of HR professionals rein-force and improve their business acumen, strategic HR knowledge and competencies. Further develop-

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Figure 7 Factors That Limit HR From Contributing to the Organization’s Bottom Line

Note: Percentages may not total 100% due to rounding. This figure is sorted in descending order by the percentage of respondents who answered “to a large extent” and excludes respondents who indicated "not sure."


0 20 40 60 80 100 120

To some extent To no extentTo a large extent

HR department is reluctant to adopt new technology (n = 408)

HR department is not aligned with the organization’s business strategy (n = 390)

HR department is not willing to take chances (n = 404)

HR department does not outsource enough administrative functions (n = 396)

HR department lacks HR professionals trained in HR strategy (n = 413)

HR department does not receive respect from senior management (n = 404)

HR department has limited involvement with the board of directors (n = 399)

HR department lacks HR professionals trained in business strategy (n = 411)

HR department is too focused on people management issues (n = 405)

HR department is not able to set and focus on a small amount of central

priorities (n = 400)

HR department spends an insufficient amount of time on business management

matters (n = 399)

HR department is not able to directly measure HR’s impact on the bottom line

(n = 405)

HR department lacks an established method for measuring the effectiveness of HR strategy

through metrics and analytics (n = 406)

HR department focuses more on administra-tive duties rather than strategy (n = 411)

35% 43% 22%

31% 55% 14%

27% 36% 38%

24% 54% 22%

19% 48% 32%

16% 47% 37%

16% 55% 29%

14% 52% 34%

13% 36% 50%

13% 41% 46%

11% 40% 49%

7% 31% 62%

6% 37% 57%

5% 22% 73%


Figure 8 To Whom the Person Overseeing the HR Department Directly Reports

0

10

20

30

40

50

60

70

80


(n = 410)

11%

63%

8% 7%4%

2% 2% 3%

Vice p

reside

ntCO

OCF

O

CEO/p

reside

nt

Directo

r

Genera

l

manag

erBo

ard of

direc

tors Othe

r

Table 13 To Whom the Person Overseeing the HR Department Directly Reports (by Organization Staff Size)

Overall

(n = 410)

Small

(1-99 Employees)

Medium

(100-499 Employees)

Large

(500 or More Employees)

Differences Based on Organization

Size

CEO/president 63% 75% 60% 59% Small > medium, large

Vice president 11% 7% 8% 16%

COO 8% 5% 12% 7%

Chief financial officer 7% 7% 8% 6%

Director 4% 4% 4% 6%

General manager 2% 0% 4% 3%

Board of directors 2% 3% 1% 2%

Other 3% 1% 4% 3%

Note: Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Blank cells in the comparison column indicate that no statistically significant differences were found.


80%

70%

60%

50%

40%

30%

20%

10%

0%

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ment within these areas enables HR professionals to increase and improve their skills. Ultimately, this could lead to the advancement of the strategic HR function within various elements in the organization.

As illustrated in Figure 9, 92% of HR professionals indicated their organization provided development opportunities for its HR staff. Among these respon-dents, almost two-thirds (63%) offered professional development opportunities. This was followed by memberships in business professional associations (53%) and individual informal mentoring (44%). These data are depicted in Table 14.

Figure 9Strategic Developmental Opportunities for HR Staff


(n = 427)

Yes 92%

No8%

Table 14 Ways Organizations Develop the Strategic HR Skills of Their HR Staff

Yes No

Professional development opportunities 63% 37%

Memberships in business professional associations 53% 47%

Individual informal mentoring 44% 56%

Attending a strategy conference 32% 69%

Participating in teams focused on HR strategy and/or business 31% 69%

Assisting a senior HR leader in strategy initiatives 30% 70%

Participating in strategy meetings for exposure 27% 73%

Shadowing a senior HR professional who works on HR strategic initiatives 7% 93%

Participating in a formal mentoring 9% 91%

(n = 394)

Note: Percentages may not total 100% due to rounding.



In today’s competitive envi-ronment, effective commu-nication strategies are at

the heart of strategic planning. According to this survey report, 80% of HR professionals see employee communication pro-grams as an area to which HR can strategically contribute (see Figure 5). The best place to begin is to establish a commu-nications strategy for all internal and external stakeholders. For example, employee communica-tion programs in organizations serve important strategic func-tions, such as 1) supporting organizational success and sus-tainability; 2) retaining talent/employee engagement; 3) rolling out new HR and/or organization-al initiatives; 4) gathering feed-back; and 5) sharing information.

Without question, energizing the organization through improved communication is an HR stra-tegic contribution. New organi-zational initiatives present an excellent opportunity for HR to strategically contribute to the company’s goals through employ-ee communication programs. To maintain a competitive edge, many companies today are taking a closer look at the perception of their products and services as well as the company reputation overall. Utilizing their interper-sonal communication skills, HR

professionals can help set orga-nizational strategy and effectively communicate change manage-ment initiatives, thus providing important value-add around key initiatives—such as branding, talent management, corporate social responsibility and diversi-ty—to keep employees engaged and focused, promote productiv-ity, strengthen employee commit-ment and encourage a respectful employer-employee relationship.

In addition, HR professionals are uniquely placed to support man-agement and employees alike through employee communica-tion programs. In general, top-down and bottom-up employee communication programs allow for more effective communica-tion and promote well-informed decisions. HR can facilitate opportunities to ensure good communication between manage-ment and employees by estab-lishing a variety of employee communication programs to keep staff informed, thus cast-ing a wide net for all parties to inform and become informed on issues of importance to both the organization and the work-force. Thoughtfully selecting the best medium for the message is an important strategy to effec-tively get the message across. Employee attitude surveys, focus groups, management report

An HR Perspective

cards, employee suggestion programs and employee commu-nication boxes are examples of bottom-up communication pro-grams. In addition, the HR func-tion can provide strategic sup-port to the organization through employee communication programs with face-to-face pre-sentations that convey a mes-sage of partnership between management and employees as well as emphasize company val-ues. Face-to-face meetings are important because they offer the opportunity for employees to ask questions. Broader com-munication programs—such as monthly company-wide meet-ings, staff briefings, round-table luncheons with cross-depart-mental groups, lunch with the CEO, HR and all-staff e-mails, and a company intranet—are top-down employee communica-tion programs that reach out to many employees and pro-vide a sense of inclusiveness that helps generate good will, respect and trust.

Finally, in addition to the recom-mendations above, HR can also strategically contribute to the organization by 1) assessing, evaluating and measuring the effectiveness of current employ-ee communication programs; 2) thoroughly understanding the goals of initiatives in advance

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By Nancy R. Lockwood, SPHR, GPHR, M.A., Manager, HR Content

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of sending out communications to staff; 3) carefully crafting com-munications with clear language; and 4) finding innovative ways to communicate. Ultimately, employer communication programs can strategically promote a workplace environment of trust and respect, keeping the communication chan-nels open.■


By Jennifer Schramm, M.Phil., Manager, Workplace Trends and Forecasting

When SHRM invited a group of HR leaders in 2005 to discuss the future of strategic HR, there was general agreement that progress in achieving the vision of strategic HR will, to a great extent, involve changing perceptions among senior business leaders on the HR’s con-tribution to the development and implementation of business strat-egy. Doing so requires elevating the field in a number of different ways, including developing a common set of definitions that help HR speak the language of strategy, creat-ing common and effective tools, metrics, analytics and consistent methodologies that demonstrate the effectiveness of HR strate-gies, working to align expectations between the C-suite and HR, and creating and maintaining higher standards for entry into the profes-sion.

There does seem to be a grow-ing awareness among business leaders—increasingly supported by research findings—that HR’s involvement is an important part of the strategic planning process. This survey report indicates that cur-rently HR is focused more on imple-mentation than on the creation of strategic business plans, but future developments could further height-en the importance of HR not only in implementing strategy but also in creating strategic business plans.

When it comes to implementing strategy, two important forces are emphasizing the need for HR’s involvement. The first is simply the recognition that as businesses come to rely on the knowledge, innovation and creativity of their workforce to create value and remain com-petitive, the implementation of strategic business plans must inevitably involve HR processes. Secondly, as HR metrics improve, the ability to see the impact of specific human resource practices on the performance of individual employees, teams and the organization as a whole will underscore the necessity of effective HR in meeting strategic business objectives. It will also mean that implementing strategy will involve creating a broader awareness among employees of what this strategy is, requiring HR to build effective channels of communication between busi-ness leaders and employees. Finally, HR will also be responsi-ble for implementing the policies and processes in the workplace that give employees the ability to use this information to consider long-term implications while also effectively responding to today’s challenges.

In addition to the implementation of business strategy, HR’s role

in the strategic planning process is also evolving. The growing complexity of both the workforce and the business world create a challenging environment in which to plan and implement strategy. This complexity may mean that in order to better envision potential future issues that could influence the intellectual and productive capacity of their organizations’ workforce, HR professionals will need to gather much more information about the current workforce and the business en-vironment, as well as the trends that could influence both, and may be increasingly expected to act as leaders in their organiza-tions’ internal discussions about the future of the organizational human capital.■

Strategic HR ManagementA Look Ahead:

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Demographics

HR Role

Oversee the HR function/department 59%

Work in the HR department at the organization 41%


(n = 427)

Approximate Amount of Time Devoted to Strategic Business/Tactical Issues

1%-25% 59%

26%-50% 25%

51%-75% 10%

76%-100% 2%

None 5%


(n = 421)

Approximate Amount of Time Devoted to Administrative/Operational HR Issues

1%-25% 10%

26%-50% 22%

51%-75% 26%

76%-100% 42%

None 1%


(n = 419)

Years in the HR Profession

1-4 10%

5-9 21%

10-14 27%

15-19 16%

20 or more 26%


(n = 420)

Job Title

Manager 51%

Director 28%

Vice president/chief 12%

Senior director 2%

Other 6%


(n = 420) HR Professional Certification(s) Held

Professional in Human Resources (PHR) 47%

Senior Professional in Human Resources (SPHR) 24%

Global Professional in Human Resources (GPHR) 1%

Other 5%

None 47%

Note: Percentages do not total 100% because multiple responses were allowed.

(n = 427)


Highest Level of Education Completed

No college degree 15%

Associate degree 15%

B.A. 6%

B.A. with a concentration in HR 15%

B.S. 7%

B.S. with a concentration in HR 3%

B.B.A. 2%

B.B.A. with a concentration in HR 6%

MBA 3%

MBA with a concentration in HR 9%

Masters in non-HR-related field 15%

Masters in HR-related field 1%

Law degree 1%

Ph.D. in HR-related field 1%

Other 1%


(n = 420)

Individual the Respondents Directly Report To

CEO/president 37%

Head of HR 20%

Another HR staff person(who is not the head of HR)

11%

CFO 9%

COO 7%

Vice president 6%

Director 4%

General manager 1%

Other 5%


(n = 421)

Organization Staff Size

Small organization(1-99 employees)

28%

Medium organization(100-499 employees)

43%

Large organization(500 or more employees)

30%


(n = 412)

Organization Sector

Privately owned for-profit organization 47%

Publicly owned for-profit organization 24%

Nonprofit organization 22%

Government 5%

Other 2%


(n = 421)

Census Region


(n = 409)

Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin)

34%

South (Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia)

28%

West (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Nevada, New Mexico, Montana, Oregon, Utah, Washington, Wyoming)

23%

Northeast (Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

23%

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Organization Industry

Health 15%

Services (profit) 15%

Manufacturing (durable goods) 11%

Services (nonprofit) 9%

Wholesale/retail trade 8%

Finance 6%

Manufacturing (nondurable goods) 6%

High-tech 5%

Construction and mining/oil and gas 4%

Insurance 4%

Educational services 3%

Government 3%

Telecommunications 3%

Transportation 3%

Newspaper publishing/broadcasting 2%

Utilities 1%

Other 1%


(n = 421)

1-4 65%

5-9 16%

10-24 12%

25-49 3%

50-99 3%

100 or more 2%

(n = 416)


HR Department Staff Size

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SHRM Survey Reports

Available to members and the public 1. SHRM/CareerJournal.com 2006 Workplace

Romance Poll Findings (17 pages, January 2006) 2. SHRM/CareerJournal.com 2005 U.S. Job

Recovery and Retention Survey Report (40 pages, November 2005)

3. Organizational Communication Poll Findings (24 pages, June 2005)

4. Workplace Productivity Poll Findings (17 pages, January 2005)

5. SHRM/CareerJournal.com Workplace Privacy Poll Findings (47 pages, January 2005)

6. SHRM/CareerJournal.com 2004 U.S. Job Recovery and Retention Poll Findings (33 pages, November 2004)

7. Employee Trust and Loyalty Poll Findings (21 pages, July 2004)

8. Job Negotiation Survey Findings (41 pages, April 2004)

9. Job Opportunities Survey (39 pages, September 2003)

10. Job Recovery Survey (28 pages, August 2003) 11. Job Opportunities Poll (39 pages, April 2003) 12. Job Satisfaction Poll (74 pages, December 2002)13. HR Implications of the Attack on America (23

pages, September 2002)14. Corporate Credibility and Employee

Communications Survey (14 pages, August 2002)15. Job Opportunities Poll (30 pages, August 2002)16. Workplace Romance Survey (24 pages, February

2002)17. School-to-Work Programs Survey (16 pages,

January 2002)18. HR Implications of the Attack on America:

Executive Summary of Results of a Survey of HR Professionals (13 pages, October 2002)

19. Negotiating Rewards Poll (14 pages, October 2001)

20. Search Tactics Poll (8 pages, April 2001)

Available to members only 1. Manufacturing Industry Findings on Human

Resource Topics (47 pages, July 2006) 2. 2006 Benefits Survey Report (80 pages, June

2006) 3. 2006 Job Satisfaction Survey Report (57 pages,

June 2006) 4. 2006 Succession Planning Survey Report (33

pages, June 2006) 5. 2006 Executive Compensation Survey Report (33

pages, May 2006) 6. 2006 Access to Human Capital and Employment

Verification Survey Report (34 pages, March 2006)

7. 2006 Talent Management Survey Report (30 pages, January 2006)

8. 2005 Disaster Preparedness Survey Report (48 pages, October 2005)

9. 2005 Workplace Diversity Practices Survey Report (40 pages, October 2005)

10. 2005 Offshoring Survey Report (51 pages, October 2005)

11. 2005 Fair Labor Standards Act Survey Report (22 pages, August 2005)

12. 2005 Benefits Survey Report (72 pages, June 2005)

13. 2005 Future of the U.S. Labor Pool Survey Report (58 pages, June 2005)

14. 2005 Job Satisfaction Survey Report (52 pages, June 2005)

15. SHRM/Catalyst Employee Development Survey Report (36 pages, April 2005)

16. 2005 HR Technology Report (37 pages, March 2005)

17. 2005 Rewards Programs and Incentive Compensation Survey Report (38 pages, March 2005)

18. The Maturing Profession of HR: Worldwide and Regional View Survey Report (33 pages, February 2005)


19. Reference and Background Checking Survey Report (41 pages, January 2005)

20. Job Satisfaction Series Survey Report (193 pages, August 2004)

21. Generational Differences Survey Report (41 pages, August 2004)

22. Employer-Sponsored Investment Advice Survey Report (60 pages, July 2004)

23. Human Resources Outsourcing Survey Report (40 pages, July 2004)

24. 2004 Benefits Survey Report (76 pages, June 2004)

25. Health Care Survey Report (40 pages, June 2004)

26. SHRM/CNNfn Job Satisfaction Series: Job Satisfaction Survey Report (52 pages, April 2004)

27. SHRM/CNNfn Job Satisfaction Series: Job Compensation/Pay Survey Report (36 pages, February 2004)

28. The Maturing Profession of Human Resources in the United States Survey Report (48 pages, January 2004)

29. Workplace Violence Survey (52 pages, January 2004)

30. SHRM Eldercare Survey (40 pages, December 2003)

31. SHRM/CNNfn Job Satisfaction Series: Job Benefits Survey (57 pages, December 2003)

32. Undergraduate HR Curriculum Study (45 pages, October 2003)

33. SHRM Equal Employment Opportunity Commission Survey (10 pages, October 2003)

34. Fair Labor Standards Act (FLSA) Survey (20 pages, August 2003)

35. SHRM/SHRM Foundation 2003 Benefits Survey (81 pages, June 2003)

36. SHRM Job Satisfaction Series: Job Security Survey (41 pages, June 2003)

37. SHRM/NOWCC/CED Older Workers Survey (53 pages, June 2003)

38. March 2003 Current Events Survey (28 pages, May 2003)

39. 2003 FMLA Poll (20 pages, April 2003)40. 2003 Business Ethics Survey (48 pages, April

2003)41. Employer Incentives for Hiring Individuals With

Disabilities (66 pages, April 2003) 42. Fun Work Environment Survey (56 pages,

November 2002) 43. Aligning HR With Organizational Strategy (53

pages, November 2002) 44. Recruiter Cost/Budget Survey (30 pages,

October 2002) 45. 2002 SHRM/Fortune Survey on the Changing

Face of Diversity (16 pages, October 2002) 46. Workplace Demographic Trends Survey (37

pages, June 2002) 47. Global Leadership Survey (36 pages, June

2002) 48. SHRM 2002 Benefits Survey Results (57

pages, April 2002) 49. A Study of Effective Workforce Management (36

pages, February 2002) 50. Resource Strategies, Stages of Development

and Organization Size Survey (46 pages, January 2002)

51. Job Security and Layoffs Survey (76 pages, December 2001)

52. World Events Survey-Impact on Global Mobility (4 pages, November 2001)

53. Religion in the Workplace (58 pages, June 2001)

54. Employee Referral Programs (40 pages, June 2001)

55. Impact of Diversity Initiatives on the Bottom Line (41 pages, June 2001)

56. 2001 Benefits Survey (59 pages, April 2001) 57. 2000 FMLA Survey (51 pages, January 2001) 58. Workplace Privacy Survey (51 pages, December

2000) 59. Performance Management Survey (43 pages,

December 2000) 60. Impact of Diversity Initiatives Poll (5 pages,

October 2000) 61. 2000 Retention Survey (40 pages, June 2000)

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62. RM Cover Letters and Resume Survey (39 pages, May 2000)

63. 2000 Benefits Survey (52 pages, April 2000)

www.shrm.org/surveys

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ISBN 1-58644-089-690000>

SHRM® 2006 Strategic HR Management

Survey Report

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