The function of the human resources (HR) department in a company is transforming globally from providing service support to becoming a strategic partner, while recognition of the need for a change in approach is growing in China.

According to a recent survey by Mercer Human Resources Consulting, 69 percent of 129 Chinese corporate respondents said that HR transformation was underway or planned in their enterprises.

But the percentage of companies that have no plan for HR transformation was 31 percent, showing the need has been identified by most respondents, yet one-third have not recognized it. 

HR transformation is the process of recreating the function of HR to enhance its contribution to a business.

Business' human resources departments were long seen mostly as a cost, yet more and more global corporations now realize that HR is a source of value. From Mercer's survey, about 53 percent of Chinese company leaders surveyed view HR as a mix of cost and value.

Only 28 percent regarded HR as a source of value, "which may indicates that HR functions in Chinese enterprises should keep improving effectiveness by providing real value-added services according to their organizations' needs," said Cindy Yi, a senior consultant of Mercer HR Consulting China.

When were asked whether HR is a strategic partner in China, a total of 63 percent respondents answered "yes", while about 25 percent thought HR has decision-making power.

The results also revealed that over 50 percent thought HR should spend less time on administrative tasks and more on strategic activities.

Attracting top talent and succession planning appear to be key functions in which HR has a strategic impact.

Skill improvement of HR talent, redesign of work processes and evaluation and implementation of new technology will promote the transformation in China.

The report showed that 69 percent of HR leaders of participating companies said that business executives and board members are addressing right issues about employees and are planning to implement talent development strategies in the next 12 months.

"HR transformation has become a trend and the opportunities are turning up in every direction," Yi said. "However, there are also barriers that make it less easy to realize strategic HR in China."

According to the study, the three biggest barriers were found to be HR functional leadership, business perception of HR value and skills and competency of HR staff.

From the perspective of human resources departments themselves, whether HR is seen as a strategic department critical to HR effectiveness, and whether it focuses on administrative work or on strategic discussions is very important to its effectiveness.

"If we want to make an effective HR department, we should make it a strategic partner and if we have a strategic HR, it is easier to be effective," Yi added.

(China Daily July 6, 2007)