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Survey report September 2007

The changing HR function

Contents

Summary of key findings 2

Introduction 4

Restructuring the HR function 5

Benefits and challenges of HR structures 10

Roles and responsibilities of HR 15

HR skills and careers 24

Conclusions 26

Background 27

Acknowledgements 28

References 28

The changing HR function �

Summary of key findings

• Fifty-three per cent of organisations have restructured of centres of expertise were identified, the most

their HR function in the last year and 81% have done

so in the last five years. By far the most common

common being deeper professional knowledge.

Other commonly perceived benefits are in the

reason for restructuring was to enable the HR consistency of HR advice, the quality of advice

•

function to become a more strategic contributor.

Three out of ten respondents whose HR function

given to HR partners and making the function a

more strategic contributor.

has been restructured say that it now reflects the • In general, the most common difficulties

three-legged ‘Ulrich model’ and a further 28% say

that this is partially true. However, only 18% of HR

encountered in restructuring the HR function are

in defining new roles (42%), having insufficient

functions actually had in place all three elements resources (40%), dealing with skills gaps (38%),

of this model (shared services, business partners

and centres of expertise). Among HR functions

having ineffective technology (35%) and resistance

to change within HR (23%). Respondents also

that were said not to reflect the ‘Ulrich model’, report on specific challenges in implementing each

by far the most common structure is a single HR

team incorporating generalists, specialists and •

element of the so-called ‘Ulrich model’.

When asked about the main objectives of the HR

administration. function, recruitment and retention was given

• Centralised provision of HR administrative services

exist in 28% of organisations responding to the

as the highest priority, followed by developing

competencies and maximising employee

survey. Over two-thirds of these organisations involvement and engagement. Meeting business

currently deliver their shared services wholly in

house and a quarter partially outsource. A range of

strategy or goals is the most important driver of

future people management policies and practices.

benefits are identified in having shared services, the • The HR function has over the last three years

most common of which are repositioning the HR

function, making it a more strategic contributor,

doubled the proportion of time it spends on

strategic inputs, at the expense of administrative

helping focus HR work on more value-added activities. Further movement in the same direction

•

services and improving HR service quality.

HR business partners are present in 38% of

is expected over the next three years. However,

though developing HR strategy and policy and

organisations. A number of benefits were observed contributing to business strategy are the most

in having business partners, the most common

of which is that HR is becoming a more strategic

important tasks for respondents, providing support

to line managers and HR administration are their

contributor. Other common benefits are that HR is most time-consuming tasks.

more business-focused, people management issues

are given more importance and the HR function

• Areas of devolution of people management

activities are largely unchanged from the

has improved its credibility. CIPD’s 2003 survey. HR still takes the lead on

• Centres of expertise are found in 29% of

respondent organisations. The most common

remuneration and implementing redundancies; the

line has prime responsibility for work organisation;

expertise areas are training and development while for a third group (recruitment, employee

(79%), recruitment (67%), reward (60%) and

employee relations (55%). A range of benefits

relations, and training and development) matters

are more shared.

� The changing HR function

• Three-quarters of survey respondents would like to

go further in the transfer of people management

responsibilities to the line. It seems obstacles to

progress appear to be line manager priorities,

their skills, the time available to them for people

management tasks and poor manager self-service.

• Virtually all the survey organisations measure HR’s

efficiency and over half examine HR effectiveness

through people management practice and its effect

on outcomes such as absence.

• With respect to the competencies of HR staff, the

biggest challenges that lie ahead are considered

to be in developing influencing skills and strategic

thinking. Business knowledge, leadership skills,

willingness to innovate and, to a lesser extent,

being able to deliver against targets are also

commonly noted to be a challenge.

• The overall impression from the survey is that

structural change has had little impact on

development upwards or sideways, or in joining

the function. Two-thirds of our survey respondents

say that the changes give more opportunity to staff

compared with only 17% who think that it‘s harder

to develop people into new roles.

• To deal with skills gaps the emphasis is on more

formal types of learning. Nearly three-quarters of

respondents choose external courses, followed by

CIPD study (57%) and half select internal events

and external conferences as the main means to

close skills gaps.


Introduction

This report presents the findings of a survey

commissioned by the CIPD as the third phase of its

major two-year research study, ‘The Changing HR

Function’. The survey builds on the work of the first

two stages, a review of existing knowledge and

research and a series of qualitative case studies.

The aim of the survey is to examine how HR functions

across the spectrum of size and sector are meeting the

challenges of structure, role, skills and relationships.

Particular attention is given to the extent to which HR

functions have adopted the so-called ‘three-legged’

model developed from Ulrich’s work, which

incorporates centres of expertise, shared services and

business partners.

This is a companion to the main Research into Practice

report, The changing HR function: transforming HR?

(CIPD 2007), and follows the Phase One report, The

changing HR function: the key questions (CIPD 2006).


Restructuring the HR function

The great majority of respondents (81% of the 787)

report that their HR function has changed its structure

in the last five years, with just over half of these (53%)

having done so in the last year. This section focuses on

the structures that have been adopted, in particular in

relation to the three-legged ‘Ulrich model’. We also

discuss the main drivers for restructuring the HR

function, the size of the HR function and what benefits

and challenges respondents identified in the various

elements of the ‘Ulrich model’. The section finishes

with some key lessons that respondents feel they have

learned from the restructuring process.

The roles and responsibilities of the HR function,

including the extent to which HR-related activities were

devolved to line management, and the impact

restructuring the function has had on careers in HR are

discussed separately (see pages 15 and 24).

Drivers for change in structure

Respondents cite a range of drivers for changing the

structure of HR. Among these, by far the most

common reason given is to enable HR to become a

more strategic contributor, this being indicated by 54%

of respondents whose organisations have changed

their structures in the last five years.

Somewhat less prevalent, but nonetheless common,

drivers are a need to improve services (34%), increased

business focus (30%) and cost reduction (29%).

Closely following these reasons are a need to fit the

wider organisational model and repositioning the HR

function (24%) and a need for a more responsive

customer service (23%).

The 41 individual responses citing ‘other’ reasons for

restructuring the HR function include mergers, business

growth, reductions and increases in workforces and a

change of HR director or other senior personnel.

Size of the HR function

The average (median) size of the HR function is 10

staff, with a third (32%) comprising 1 to 5 staff, and

half (51%) between 6 and 50. Eight per cent have over

100 staff in their HR functions and the highest number

recorded is 3,000 (see Figure 1).

0

0

1–5 6–10 11–20 21–50 51–100 101+

35

25

30

10

5

32

18 16

17

8 8

0

15

20

Number of staff in HR

Perc

enta

ge o

f re

spon

dent

s

Figure 1: Number of people employed in your HR function


Respondents were asked how the number of staff in

their HR function has changed in the last three years (see

Table 1). Overall, the most common increase is in the

number of mid-level managers, professionals or technical

specialists (45% of organisations). The most common

numerical decrease is in administrators and junior staff,

which has occurred in a third (31%) of organisations. In

just over half of organisations (55%), the number of

senior HR managers has stayed the same.

These figures are similar for public and private sector

organisations, although there are the following notable

differences: more private sector organisations have

increased the number of senior HR managers than

public sector organisations (35% versus 29%);

reduction of mid-level managers is slightly more

common in the private sector than public (17% versus

13%); and in the private sector there is more growth,

and in the public sector more reductions, in the number

of administrative and junior staff in organisations.

Adoption of the ‘Ulrich model’

Adoption of the three elements

Respondents were asked whether their HR function

has introduced the three commonly recognised aspects

of the ‘Ulrich model’ (or three ‘legs of the stool’),

namely centralised provision of shared administrative

services (shared services), business partners and centres

of expertise.

A total of 219 respondents report that their

organisations have introduced centralised provision of

shared administrative HR services. This represents 28%

of all organisations and 35% of those organisations

with new HR structures. At the time, over two-thirds

(69%) of organisations that have shared services

deliver them wholly in-house; just over a quarter

(28%) partially outsource their shared services; and

4% wholly outsource them (see Figure 3). However, a

general shift towards greater outsourcing of shared

services in HR is anticipated. Eleven per cent of

%

Reduced Base

Senior managers 32 55 13 745

Mid-level managers 45 41 15 730

32 37 31 733

Table 1: Changes in the size of the HR function over the previous three years (row percentages)

Grown Stayed the

same

Administrative/junior staff

Business partners

35

40

25

30

10

5

28

38

28

0

15

20

Shared services Centres of expertise

Perc

enta

ge o

f re

spon

dent

s

Figure 2: Percentage of all organisations that have implemented the three legs of the ‘Ulrich model’

Implemented element of ‘Ulrich’ Base: 776


Base: 214

Base: 214

69%

4%

28%

Wholly in-house

Wholly outsourced

Partially outsourced

Wholly in-house

Shared services now

Shared services in 3 years

Wholly outsourced

Partially outsourced

42%

11%

47%

Figure 3: How are shared services delivered now?

respondents expect that these will be wholly

outsourced in three years’ time, 47% expect them to

be partially outsourced and 42% expect them to be

wholly in-house.

Twenty-nine per cent of all organisations (36% of

those with new HR structures) have implemented

centres of expertise. These exist for a range of areas

that vary by organisation (see Figure 4). However, the

0 20

60

67

43

55

36

32

26

79

30

8

40

Management information

60 80 100

Percentage of respondents Base: 229

Communications

Health/welfare

Talent management

Employee relations

Organisational development

Recruitment

Reward

Social responsibility

Training/development

Figure 4: Subject with their own centres of expertise as a percentage of organisations with centres of expertise


great majority of organisations with centres of

expertise have them for training and development

(79%). Other common areas include recruitment (67%

of organisations with centres of expertise), reward

(60%) and employee relations (55%).

Thirty-eight per cent of organisations (46% of those

with new HR structures) report that their organisations

have introduced HR business partners.

There are moderate correlations between the

implementation of these three aspects of the model,

suggesting that these changes are often implemented

more or less in conjunction, as a general shift towards

the ‘Ulrich model’.

Perceptions of the ‘Ulrich model’

As well as being asked which elements of the ‘Ulrich

model’ have been introduced, respondents whose

organisations have restructured their HR functions

were more generally asked whether these reflected

‘the so-called Ulrich model’. Almost 3 in 10 (29%) say

that this is the case; 28% that it is partially so; and

two-fifths (41%) of respondents report that this is not

the case.

However, although 29% claim that their HR function

has been restructured to reflect the ‘Ulrich model’,

cross-tabulating the results to the individual questions

on shared services, business partners and centres of

expertise shows that, in fact, only 18% of

respondents’ organisations had all three ‘legs of the

stool’ (see Table 2). This is interesting, not least

because the phrase the ‘Ulrich model’ carries a great

deal of currency in HR circles. One can speculate as to

the reasons why respondents report that their

organisations have implemented the three-legged

‘Ulrich model’ when in fact they don’t have all three

components; nonetheless, this finding certainly

reinforces the impression that the pure model is not as

common as the publicity that surrounds it suggests.

Adoption of other models of the HR function

Among organisations that have a new HR structure

but have not adopted the ‘Ulrich model’, two-thirds

(66%) have single HR teams with generalists,

specialists and administration together. A further 15%

have corporate HR strategy teams with operational

teams aligned to business units; 12% have corporate

strategy teams with operational teams aligned by

location; and 5% have a set of centrally provided

specialist services supporting business unit HR teams

(see Figure 5).

Business partners %

3 3 3 18

3 3 7 7

3 7 3 4

3 7 7 6

7 3 3 7

7 3 7 15

7 7 3 8

7 7 7 36

Table 2: Implementation of the three legs of the ‘Ulrich model’

Shared services Centres of expertise

Total �00

Base: 625


Corporate HR strategy team aligned by location

Corporate HR team aligned to business units

Single HR team

5%

5%

Other

Set of HR specialist services

67% 15%

12%

Figure 5: Structures of the HR function other than the ‘Ulrich model’


Benefits and challenges of HR structures

This section describes the benefits and challenges that

respondents associate with introducing different HR

structures, in particular shared services, business

partners and centres of expertise.

Although a number of respondents feel that the HR

functions are too early in the process of change to see

any benefits, many are able to identify both benefits of

introducing the three elements of the ‘Ulrich model’

and problems associated with doing so.

General challenges in implementing changes

Respondents were asked about general challenges

they have experienced in implementing changes to

the structure of the HR function. The most common

problems cited were defining new roles (42% of

those who noted challenges), having insufficient

resources (40%), dealing with skills gaps (38%) and

having ineffective technology (35%). Resistance to

change in HR is also relatively common, being cited

by a quarter of the respondents who noted

challenges (see Figure 6).

Shared services

Benefits

Respondents whose organisations have shared services

were asked whether its introduction has resulted in ‘no

change’, ‘some change’ or ‘major change’ in a range of

relevant areas (see Table 3). It was most commonly

noted that ‘some change’ has been achieved, with

between 45% and 60% of respondents selecting this

option for each question. Overall, there is some degree,

but not a great deal, of variance between the responses,

average (mean) scores ranging from 0.8 to 1.2 (where

0=no change, 1=some change and 2=major change).

Nonetheless, some benefits are seen to be greater than

others. In particular, a third of respondents (34%) note

major change in repositioning the HR function, with

only 18% noting no change. The extent to which HR

0 10

42

23

35

40

3

38

16

17

13

6

20

Dealing with skills gaps

Inadequate consultancy

Resistance to change in technology

Other

30 40 50

Percentage of respondents with restructured HR function Base: 614

Objections from line manager customers

Insufficient resources

Ineffective technology

Defining roles

Recruitment difficulties

Ineffective process change

Figure 6: Challenges faced in implementing changes

�0 The changing HR function

%

Benefits No change Major change Base

27 60 13 195

14 57 29 192

21 49 30 192

24 52 25 191

25 45 31 191

Repositioning HR 18 48 34 191

19 50 31 193

38 45 17 192

HR time shifted to value-added services 16 59 25 190

Table 3: Observed benefits of shared services

Some change

Cost reduction

Improvement in service quality

More responsive customer service

More commercial approach to HR

Improving credibility of function

HR more strategic

More satisfied HR staff

has become a more strategic contributor, which as

noted above is the most common driver for change,

is also fairly marked – half of respondents noting some

change and 31% noting major change.

There are also some benefits that are generally seen to

be less marked than others. Especially muted is the

increase in satisfaction among HR staff, in which two-

fifths (38%) of respondents note no change and only 1

in 6 (17%) note major change. It is likely that this

finding partially reflects a time lag from the

implementation of changes to effects on staff

satisfaction. In another long-term factor, namely

improvement in the credibility of the HR function,

there is greater variance of opinion. Here, a third of

respondents (34%) note major change and a quarter

note no change.

The benefits to cost reduction are also relatively small,

only 13% noting major change and over a quarter

(27%) noting no change.

Challenges

By far the most common problem encountered in

introducing shared services is boundary disputes (Figure

7) between parts of HR, as recognised by 56% of

0 10

35

34

19

56

41

14

30

36

26

13

20

Boundary disputes

Customer complaints

Expected savings not achieved

30 40 50 60


Blocks to development of HR career

Ineffective escalation procedures

Gaps in service provision

Poor learning within shared services

HR staff objections to structure

None

HR communication difficulties

Figure 7: Percentage of respondents with shared services encountering problems

The changing HR function ��

respondents. This is followed by the related issue of

gaps appearing in service provision, which is recognised

by two-fifths of respondents (41%). Other common

difficulties are communication problems within HR

(36% of respondents), customer complaints over the

service (35%) and existing HR staff objecting to a

service centre structure (34%).

Business partners

Benefits

Overall, the introduction of HR business partners is seen

to have a number of benefits for the organisation. The

most common benefit is that HR is becoming a more

strategic contributor, which was observed by three-

quarters (76%) of respondents whose organisations

have introduced HR business partners (Figure 8).

This is an important finding, as this factor was identified

as the most common key driver for change (see page

5). Further, it is supported by the fact that the majority

of respondents recognise that the introduction of

business partners has led to an increased business focus

(69% of respondents), put people management issues

higher up the agenda (60%) and improved the

credibility of the function (58%). About half of

respondents (53%) agree that HR business partners

have helped reposition the function.

Benefits are also seen in staff engagement and

performance outcomes. Three-fifths (61%) of

respondents whose organisations have introduced HR

business partners observe that it has led to greater line

engagement, two-fifths (40%) that it has led to

improvements in service quality and half (51%) that it

has led to increased customer satisfaction.

Challenges

The most common challenges experienced in

implementing business partners generally relate to

developing the role appropriately. Half (49%) of

respondents whose organisations have introduced HR

business partners agree that they have been drawn into

activities that are not relevant to the role (‘going native’);

just under half (46%) recognise that there has been

tension between responding to corporate and business

unit needs; and two-fifths (40%) cite the failure to be

strategic as a problem. A quarter think that the business

partner role is or has been unclearly defined (Figure 9).

Centres of expertise

Benefits

As one would hope, a clear majority (69%, or seven

out of ten) of respondents whose organisations have

implemented centres of expertise think that the depth

of professional experience has been increased as a

0 20

76

51

61

53

40

58

69

60

7

1

40

Base: 291

Repositioning of HR function

None

People management issue higher up agenda

60 80 100

Percentage of respondents

Increased business focus

Improving credibility of function


Greater line engagement

Increased customer satisfaction

HR becoming more strategic contributor

Cost reduction

Figure 8: Percentage of respondents with business partners experiencing benefits

�� The changing HR function

result. More specifically, nearly half (47%) think that Marked improvements are also evidenced in the

there is better awareness of external good HR practice dissemination of this expertise through advisory services.

(Figure 10). In particular, over half (54%) of respondents cite

0 10 20

Higher quality of advice to line managers

Repositioning HR function

Higher quality of advice to executive committee

Higher quality of advice to HR partners

None

Other

30 40 70

69

54

42

51

56

38

30

47

47

3

11

44

36

4

6050

0 10

25

40

46

13

32

12

49

21

41

18

20

Inadequate knowledge

Behavioural skill deficiencies

Failing to act as a service lead

Coping with employee demands

30 40 50


Credibility of function improved

Cost reduction

Improved handling of call centre referrals

Better awareness of good practice

More responsive customer service

HR becomes more strategic contributor

Greater consistency of advice

Deeper professional expertise


Figure 10: Percentage of respondents with centres of expertise experiencing benefits


Getting drawn into wrong activities

Tensions between corporate and business levels

Failure to be strategic

Unclear role

Difficulties in finding right staff

Customer resistance

Figure 9: Percentage of respondents with business partners encountering problems


benefits in the quality of advice given to HR partners

and half (51%) note that, overall, there is greater

consistency of advice. Substantial proportions of

respondents also note higher-quality advice to line

managers (47%) and executive committees (42%).

Interestingly, however, a more commonly noted benefit

of introducing centres of expertise is that they help HR

become a more strategic contributor (noted by 56% of

respondents). Their role may thus be particularly

important in supporting HR business partners.

Challenges

The problems most commonly associated with

introducing centres of expertise are difficulties in

separating out transactional work (cited by 46% of

respondents whose organisations have shared services)

and communication with the rest of the function (34%).

Other common problems include recruiting appropriately

skilled staff (30% of respondents) and staff having a

poor grasp of business issues (28%) and deficiencies in

their professional skills (21%) (Figure 11).

0 10

12

16

17

13

21

28

4

18

30

34

46

9

7

20

Base: 215

Poor grasp of business issues

Over elaborating services

None

Other

30 40 50


Communication with rest of function

Recruitment of high quality staff

Difficulty in developing specialist careers

Gives inappropriate advice to line managers

Professional skills deficiencies

Not aware of external good practice

Too much time spent on problems

Insufficiently tailored advice

Difficulty in separating out transactional work

Figure 11: Percentage of respondents with centres of expertise encountering problems


Roles and responsibilities of HR

Purpose and objectives

Respondents were asked to identify the five main

objectives of their HR functions. The objective most

commonly cited is to recruit and retain key staff,

identified by 7 out of 10 respondents. Following this are

the objectives of developing employee competencies

(62% of respondents), improving the management of

people performance (61%) and maximising employee

involvement and engagement (59%) (Figure 12).

Helping employees focus on key business goals,

changing line management behaviour and securing

compliance with employment relations regulations are

also common main objectives (respectively cited by 47%,

46% and 39% of respondents).

A similar question was asked in 2003. Comparison

needs to be done with care, as the options offered

were somewhat different. Nevertheless, there are some

striking differences. In particular, where 16% of the

sample this year identify cutting costs as one of their

priorities, 55% did so last time. It is possible that this is

a reflection of a change in the business climate. There

are also striking reductions in developing employee

competencies/capabilities and focusing employees on

business goals and customer needs. Recruitment and

retention of staff is consistently a key goal, and

employee engagement and legal compliance remain

important to roughly three-fifths and a two-fifths of

the survey respondents.

0 20

47

62

16

70

18

39

59

19

35

61

33

46

3

40

Manage major structural change

Maximise employee involvement/engagement

Focus employees on customer needs

Develop employee competencies

Change line management behaviour

Manage major cultural change

60 80


Improve the way in which people performance is managed

Create a more diverse workforce

Secure compliance with employment regulations

Recruit and retain key staff

Cut/control costs

Improve employees’ focus on key business goals

Other

Figure 12: Main objectives of the HR function (top five priorities)


%

Not important I i Base

Business strategy 1 11 88 783

Employee needs 5 66 29 778

24 52 24 760

5 48 46 776

Benchmarking against good HR practice 15 62 22 771

Cultural values of organisations 2 39 59 774

1 44 55 776

Line managers 6 63 31 768

10 61 29 772

21 64 15 761

HR strategy 5 45 51 770

30 43 27 759

Table 4: Expected importance of potential drivers of HR change over the coming three years

mportant Very mportant

Changes in product/services

Cost pressures

Views of senior management

Employment regulation

Internal customer pressure

Globalisation/competitive pressure

Future drivers of change

Respondents were asked to rate the importance of a

range of factors as drivers of change in their people

management policies and practices over the coming

three years. Each of the 12 factors listed is thought to

be ‘important’ or ‘very important’ by the majority of

respondents (between 70% and 99%); but some

factors are nonetheless generally considered more

important than others (Table 4).

In line with the CIPD’s 2003 survey, by far the most

important drivers are business strategy and goals –

almost 9 out of 10 respondents (88%) identify them as

very important drivers for the coming years and only 1%

identify them as unimportant. Also extremely important,

and again unchanged from 2003, are the culture and

values of the organisation and the views of senior

management, with over half of respondents predicting

that they would be very important drivers and only 1%

or 2% considering them unimportant. HR’s own strategy

and cost pressures are also considered very important by

many respondents (51% and 46% respectively). Cost

pressure is lower in importance as a driver of future

change compared with 2003, just as it is less important

as a current priority. Less than a third of respondents

think that employment regulation would be very

important as a change driver. In 2003 the figure was

57%. Employee needs as a very important contributor to

HR change also fell from 47% in 2003 to 29% in 2007.

Using five scales indicating different continuums,

respondents were also asked to describe their vision of

where they believe the HR function needs to be in the

future compared with its current position. Figure 13

overleaf shows the mean scores of these results.

Overall, significant shifts are thought necessary for the

function in all five continuums, towards becoming more

strategic, proactive, tailored, business-driven and

specialist. However, the greatest changes thought to

be needed are for the HR function to become more

proactive and for it to shift from being generally

operational to being generally strategic.


1 2

2.7

3.4

1.9

2.6

2.1

2.5

1.7

3.1

2.0

3.2

3 4 5

strategic

business-driven

operational

employee-driven

generalist

Now

1 2

3.7

3.2

2.5

3.4

2.7

2.4

3.1

1.5

3.2

1.9

3 4 5

strategic

business-driven

operational

employee-driven

generalist

Now

proactive

tailored practice

specialist

reactive

off-the-shelf

Mean score Future

Figure 13: Where the HR function is now and where it needs to be in the future (mean scores) 2007

proactive

tailored practice

specialist

reactive

off-the-shelf

Mean score Future


When comparing these results with 2003, as seen in

Figure 14, they are similar. But two differences can be

picked out. First, is the function becoming more

generalist than in the past, and is this a reflection of the

growth in business partner roles? Second, the function

seems to be even more business-driven in its approach,

and less employee-driven, than in 2003.

Activities

Respondents were asked to indicate what proportion

of their time they spend or would spend doing

administrative, operational and strategic activities three

years ago, at the current time and in three years’ time.

The average scores for these results are presented in

Figure 15 overleaf.


69%


Three years ago

12%

Administrative activities 50%

39% Operational HR

Strategic input

Base: 611

Now

23%

36% Administrative activities

Operational HR

41% Strategic input

Base: 626

In three years’ time

35% 24%

Administrative activities

Operational HR

41% Strategic input

Base: 607


On average, it is estimated that three years ago

administrative duties took up half (50%) of

respondents’ time. Since then, there has been a marked

drop in this figure to just over a third (36%) and a

corresponding rise in the proportion of time spent on

strategic tasks (from 12% to 23%). The proportion of

time spent on operational tasks is generally thought to

be similar now to three years previously (up from 39%

to 41%).

Over the coming three years, based on these responses,

it can be anticipated that the trends in administrative

tasks and strategic input will continue steadily, with

respondents estimating that the proportion of their time

spent on administrative activities will go from just over a

third to a quarter (36% to 24%), and vice versa for the

time spent on strategic input (23% to 35%). Overall,

the proportion of time spent on operational tasks is

expected to remain at two-fifths (41%).

In short, there is a clear upward trend in strategic input

and a corresponding downward trend in administrative

activities, pointing to a concerted effort to increase the

added value of the HR function.

The shift is also reflected in the importance respondents

attach to their respective activities (Figure 16). Over half

of respondents (58%) identify business strategy

activities and nearly two-thirds (64%) identify

developing HR strategy and policy as among the three

most important types of task that they undertake. By

contrast, only 5% of respondents list administrative

activities as among the three most important types of

tasks they undertake.

Within operational activities, the one most commonly

recognised to be among the most time-consuming is

providing support to line managers (71% of

respondents); by contrast, only a quarter (26%) of

respondents report that supporting employees is among

the most time-consuming of their activities. This

difference is reflected in the importance respondents

attach to these activities, with only 1 in 10 (9%) listing

employee support and over a third (37%) listing line

manager support as among the most important of their

activities.

Other operational tasks considered to be among the

most time-consuming are implementing HR policies

(38% of respondents) and change management (36%).

However, while the latter is frequently considered

among the most important of respondents’ activities (by

49% of respondents), the former is considered thus by

only one-sixth (16%) of respondents.

The results from the 2003 survey are very similar.

0 20 40

Base: 775

HR administration

Updating own HR knowledge

Helping employees

Developing HR strategy and input

Implementing HR policies

Most important

Most time-consuming

60 80 100

58 14

16 38

37

36

71

64 28

49

49

52

30

9

5 5

9

26

10 30 50 70 90


Change management

Providing support to line managers

Providing specialist HR output

Business strategy

Figure 16: Percentage of respondents listing activity areas as among three most important/most time-consuming


Responsibility for HR-related activities

The remits of HR vary to some extent, with substantial

proportions of the respondents reporting that their HR

functions have part or main responsibility for various

activities other than those typical for HR (see Table 5).

The most common among these is organisational design,

9 out of 10 respondents (89%) indicating that their HR

functions have part or main responsibility for this.

A similar proportion (87%) report that their HR functions

are involved in managing internal communications.

The HR functions of a third of respondents (35%) take

the lead responsibility for health and safety, with a

further 42% holding joint responsibility.

The extent to which the allocation of HR-related tasks is

divided between the HR function and line management

varies substantially between respondents. Nonetheless,

there are some general trends, which can be seen in

Table 6. The responsibility for pay and benefits,

employee relations, training and development, and

implementing redundancies is typically shared or lays

primarily with HR. There are particularly low levels of

devolvement to line management in pay and benefits

and the implementation of redundancies, which are

managed mainly or entirely by HR in nearly two-thirds

of organisations (65% and 62% respectively).

On the other hand, the responsibilities for work

organisation and for recruitment and selection lie

mainly with line managers. In over half of organisations

(55%) line managers are mainly or entirely responsible

for work organisation. Recruitment and selection are

primarily the responsibility of line managers in a fifth

(21%) of organisations and shared between line

managers and HR in a further 55% of cases.

Table 6 also allows comparison to be made with the

2003 survey. As can be seen, there is very little change

in the allocation of responsibilities between HR and the

line. This is despite HR’s ambition to devolve more.

Lead /joi None Base

Organisational design 22 67 11 771

Facilities management 12 22 66 753

24 63 13 770

Health and safety 35 42 22 771

14 57 29 761

Corporate branding 4 43 53 759

2003 2007

Li / inly li

inly /

Li / inly li

inly /

Recruitment/selection 31 52 17 29 55 16

Pay and benefits 8 29 62 7 28 65

8 40 52 6 40 54

12 44 43 10 49 42

6 34 59 4 34 62

– – – 54 37 9

Table 5: Percentages of HR functions taking responsibility for atypical HR activities

HR responsibility %

Part nt

Internal communications

Corporate social responsibility

Table 6: The allocation of responsibility and line management in how decisions are taken

Work area nema ne Shared

MaHR HR

nema ne Shared

MaHR HR

Employee relations

Training and development

Implementing redundancies

Work organisation *

* not included in 2003 survey questionnaire

�0 The changing HR function

0

1.40

1.11

1.11

1.35

1.31

0.55

0.70

0.80

0.48

1.19

1.15

1

0 = not at all 1 = a fair amount 2 = a g

Poor employee self-service capability

Reluctance to let go

l

Skills

Disposition

Priorities

2

HR issues

Mean scores

reat deal

Poor manager self-service capability

Technology issues

Lack of management encouragement to devo ve

Lack of role clarity

Restrictive HR processes

Time

Training

Line manager issues

Figure 17: What has restricted progress in the HR function? (mean scores)

Indeed, the great majority (72%) of respondents report

that their line managers currently take less responsibility

for people management than had been intended. The

reasons for this are thought to lie particularly with the

attitudes and abilities of line managers and to a lesser

degree with technology. Overall, the HR functions

themselves are seen as far less problematic.

It is likely that the general thrust of these answers reflects

the fact that respondents are themselves HR managers,

and very different responses may be obtained from line

managers themselves. Nonetheless, the results do give an

indication of the key obstacles to greater devolvement in

people management from the perspective of senior HR

managers. This can be seen in Figure 17.

Within line management, particular challenges are

thought to lie with the work priorities and time

pressures of line managers, which are cited as restricting

progress ‘a great deal’ by 47% and 43% of

respondents respectively. The skill-sets of line managers

are also thought to be a significant challenge, with over

half (55%) reporting that they restrict progress ‘a fair

amount’ and a further two-fifths (38%) ‘a great deal’.

Technological limitations are typically acknowledged in

the self-service capability for both line managers and

employees, in each case nearly 8 out of 10 respondents

(78% and 79% respectively) recognising that it restricts

progress ‘a fair amount’ or ‘a great deal’.

Performance measurement

Respondents were asked to indicate the ways in which

they measure five key aspects of HR performance.

The results are shown in Figure 18 overleaf. The most

measured aspects are the efficiency and effectiveness

of the HR function, with relatively fewer measurements

taken of the quality of the HR service, people

management practice and the impact of the HR

function on organisational performance.

Particularly common measurements of the HR function’s

efficiency are costs, business performance measures,

outcomes and ratios, each of which is used by half of

respondents. Outcomes and business performance

measures are also common measurements of the

effectiveness of the HR function, used respectively in

56% and 50% of cases.


Figure 18: Ways in which HR performance is assessed


The most common measurement of the quality of HR

services is line manager surveys (used in 53% of cases)

and hard outcomes, such as absence rates (46%).

People management practice is most often measured

through outcomes (56% of cases) and employee

surveys (47%). The impact of HR on organisational

performance is most often monitored through the use

of business performance measures (60% of cases) and

outcomes (55%).

Respondents were asked to rate how they think their

chief executives would score the performance of the HR

function in a number of different dimensions. The

results don’t show a great deal of variance, with the

majority of cases being rated ‘positive’ or ‘strongly

positive’. In fact, in almost all dimensions, half or more

of respondents think that their CEO would rate them

positively, and between a fifth and a third (21% to

34%) think their CEO would be strongly positive. The

exception to this is the quality of HR processes, which is

generally rated slightly lower. The mean scores of these

results can be seen in Figure 19.

Compared with 2003, the results have improved in three

areas – contribution to business performance, influence

on board decisions and closeness to the business.

–2.0 0 1.0

1.1

1.0

1.0

0.9

1.1

0.6

1.2

2.0

Relationship with the line

Contribution to business performance

Closeness to business

–1 = Negative 0 = Neither positive or negative 1 = Positive

–1.0

Ability to offer independent perspective

Quality of HR processes

Influence on board decisions

Calibre of people in function

Mean score

–2 = Strongly negative 2 = Strongly positive

Figure 19: How do you think your CEO would score the performance of the HR function? (mean score)


HR skills and careers

Respondents were presented with a list of competencies

and capabilities and asked to identify which they see as

the three most important for establishing the credibility

and effectiveness of the HR function. They were then

asked to identify the competencies or capabilities that

they think are the most challenging to acquire or

develop. Table 7 shows the percentages of respondents

who indicated the various items given. It also compares

this 2007 survey with the 2003 one where the same

questions were asked.

The most important competencies are viewed as

strategic thinking (identified by 54% of respondents)

and influencing skills (51%). Business knowledge

(45%) and the ability to deliver against targets (40%)

are also commonly rated as among the most

important. In general, the competencies identified as

the most important are also identified as the biggest

challenges to develop.

There are differences in the results between the two

surveys, but similarities too. Given that these are not

matched samples, interpretation should be cautious.

The key changes are that business knowledge is

recognised as more important this year than in the 2003

survey, and, as to the most challenging, there have been

reversals in the ability to deliver against targets (less

challenging) and willingness to innovate (more so).

A range of methods are used to address skills gaps

among HR staff, including various modes of study and

training, work placements and recruitment (see Figure

20 overleaf). However, the most commonly used method

is sending staff on external training courses, reported by

more than 7 out of 10 respondents (72%). Other

common practices are CIPD study (57% of respondents),

and conferences and internal courses (both 52%).

‘Other’ training and development interventions used

include coaching and mentoring, job shadowing and job

swaps, networking groups and secondments.

2003 2007

Most important

Bill

( l iills)

Most important

Biggest challenge

these skills)

Influencing/political skills 61 64 51 58

Understanding of HR practices 26 10 27 8

Empathy/communication/listening skills 24 15 16 8

Leadership ability 35 26 34 34

Strategic thinking 46 48 54 53

Ability to deliver against targets 39 40 40 29

Business knowledge 32 34 49 38

Negotiating skills 11 19 8 11

Integrity 25 5 23 4

13 17 17 34

Table 7: Assessment of HR function’s competencies/capabilities (percentage scores)

Work area (to HR’s

effectiveness)

ggest cha enge

to deve op ng these sk

(to HR’s effectiveness)

(to developing

Willingness to innovate


0 20

57

52

72

36

12

13

52

13

24

10

40

36

CIPD study

Short-term assignments

60 80 100


External conferences

External degree level study

Recruitment

Project working in other areas

Temporary cover

External courses

Internal courses

Other

Temporary cover

Figure 20: How are you closing skills gaps in HR?

Finally, respondents were asked how the changes they’ve

witnessed in the structure of the HR function have

affected careers within HR (see Figure 21). By far the

most often recognised effect is that it has created more

opportunity (cited by 65% of respondents) and a

substantial proportion of respondents also think that it

has become easier to move between HR roles (31%).

Various negative effects were also noted by some

respondents, including that it has become more difficult

to enter the function and for the function to develop

people, and that HR careers have become more siloed.

0 20 40 60 80

17

65

31

19

17

21

22

4


Made it more difficult to enter the function

Made it more difficult to develop people into new roles

Made it easier to move between HR roles

Created more opportunity

Made it more difficult to develop people

Made HR careers more siloed

Other

Made mid-career moves easier

Figure 21: How changes in HR structure have affected HR careers


Conclusions

This report presents the findings of a survey

commissioned by the CIPD as the third phase of its

major two-year research study, ‘The Changing HR

Function’. The findings from this survey report feed into

the final Research into Practice report, The Changing HR

Function: Transforming HR (CIPD 2007). This final report

also includes findings from detailed interviews with

various case-study organisations. As such, the final

report aims to provide practical guidance to

organisations on how best to structure and staff the

function to achieve future success. The Changing HR

Function: Transforming HR? (CIPD 2007) will be available

to purchase from the CIPD bookstore in October 2007

(see www.cipd.co.uk/bookstore for more details).


Background

Methodology

The questions used in this survey drew upon the

questionnaire used for the 2003 CIPD survey of the HR

function (CIPD 2003), the report for the first phase of

this project (CIPD 2006) and the case-study findings

of the second phase. The survey questionnaire was

devised in two formats, paper and online, for

respondents’ convenience.

A list of contacts for potential respondents was drawn

up with the aim of recruiting the most senior HR

personnel from UK organisations. Two-thirds (64%)

of responses were done on paper and a third (36%)

through the online questionnaire. Data was input

automatically from the online questionnaires and

manually from the paper questionnaires.

Respondents

The CIPD sent out 12,000 invitations to complete the

survey: 2,000 by email and 10,000 by post. A total of

787 people responded to the questionnaire. Of these,

57% class themselves as heads of HR functions and a

further 26% say they were board members (Figure 22).

The majority of the remainder describe themselves as

HR managers (8%), HR experts (3%) or business

partners (2%). The context of responses varied slightly

less, with 73% of respondents answering in relation

to whole businesses, 17% in relation to individual

business units and 10% in relation to corporate centres

or head offices.

The variety in the positions held by respondents partly

reflects the sizes of the organisations that they

represent. The median size of the units or

organisations represented is 824, although behind

this figure lies substantial variance: the inter-quartile

range is 2,650, with responses ranging from 1 to over

400,000 employees.

Respondents represent both public (43%) and private

(57%) organisations. Just over a third (36%) work

for multinational organisations.

The great majority (84%) of respondents are

CIPD members.

HR expert

Business partner

Head of HR function

2%

8%

3% 4%

Other

HR manager

Board member

57%

Base: 784

26%

Figure 22: Job description of respondents


Acknowledgements

The CIPD is very grateful to all those organisations We would also like to thank Jonny Gifford from the

and individuals who gave their time to take part in Institute of Employment Studies (IES), who was the

this survey. author of this survey report for the CIPD.

References

CIPD. (2003) HR survey: where we are, where we are REILLy, P. (forthcoming) The changing HR function:

heading. Survey report. London: Chartered Institute of transforming HR. London: Chartered Institute of

Personnel and Development. Personnel and Development.

CIPD. (2006) The changing HR function: the key

questions. Change Agenda. London: Chartered Institute

of Personnel and Development.


We explore leading-edge people management and development issues through our research.

Our aim is to share knowledge, increase learning and understanding, and help our members

make informed decisions about improving practice in their organisations.

We produce many resources on HR issues including guides, books, practical tools, surveys and

research reports. We also organise a number of conferences, events and training courses. Please

visit www.cipd.co.uk to find out more.

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