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In Trying Times, HR Vital to Strategic Planning



(December 30, 2008)
With the United States entering year two of a recession and companies facing massive layoffs nationwide, businesses are looking within their HR departments for all kinds of assistance—and not just the administrative kind.

According to China Miner Gorman, Chief Operating Officer of the Society for Human Resource Management (SHRM), "The expectation for HR to step up to the plate with strategic business solutions is increasing, and HR is looked to more and more for bottom-line strategies." Gorman was speaking as moderator of the Dec. 16, 2008, "HR as Strategic Business Partner" panel discussion sponsored by Lee Hecht Harrison, a global provider of integrated human capital solutions. The program held in Vienna, Va., featured as panelists senior HR executives from SAIC, AOL and Sodexo.


Gorman introduced a 2008 study by SHRM in which 137 executive-level HR leaders were asked to identify the HR challenges facing their companies today and those they expected in 2012. Talent management was identified as their most critical HR challenge over the next five years, including finding and keeping high performers. Succession planning, leadership development and skills shortages attributable to shifting demographics were also key issues.

To address those concerns, experts agree, HR professionals must continue to evolve from a primarily administrative focus and play a more strategic role as a business partner in their organizations. During the discussion, Gorman asked the three panelists to explain how that strategic role has played out within their HR departments.

In spite of the major differences among the three companies, their HR departments are following a common vision and implementing business-focused strategies to address the transformation that all three companies are experiencing.

Transforming SAIC
"The story of SAIC, a leading provider of scientific, engineering, systems integration and technical services and solutions, really parallels the story of our HR function," said SAIC Executive Vice President for Human Resources Brian F. Keenan. The 40-year-old science, engineering and technology company employs 45,000 worldwide.

It has grown through an entrepreneurial culture with more than 50 operating businesses into a leading Fortune 500 firm, which provides integrated solutions to the U.S. government and other major clients. Keenan said each operating business operated autonomously, but they've transitioned into a more unified corporate structure—"One SAIC"—bringing the best of SAIC to solving their customers' most difficult problems.

According to Keenan, "That has required us to organize and manage our people processes differently across the enterprise." He added, "Our journey is not done. We are now at the beginning of a multiyear effort of transforming all the functions to include HR, our systems, our tools, and to make this work consistently across the enterprise."

Constant Change at AOL
Meanwhile, at AOL, HR has struggled with revamping its strategic role while undergoing a complete transformation after the company merged with Time Warner in 2000. "We have strategic changes constantly," said AOL's Senior Vice President of Human Resources Michaela Oliver. Two years ago, AOL changed its business model from a subscription business employing 20,000 to a web-services business that now employs 8,000. And in 2007, the company became a global digital media ad-supported business.

"Three years ago, as an HR leadership team, we made the decision that we didn't want to just continue to cut costs, we wanted to change our model," Oliver said. "We were doing a lot of administration, programs, and had a generalist coverage model," she said. After consulting with AOL leadership, the HR department discovered that the company wanted more focus on strategic consulting, talent acquisition and leadership development.

So the HR department launched a new operating model for human resources to improve overall performance and capability and manage costs. During this time, Time Warner changed virtually the entire AOL leadership team. But the HR department forged ahead with its plans for change, garnering support from the new CEO, who was "very familiar with the importance of HR being a business partner," Oliver stated.

In 2007, the company launched its "PeoplePlace" portal that allows employees and managers to get HR self service and permits their HR department to focus more on supporting the company's business strategy. AOL's HR department also has created a workforce analytics group that compiles people metrics and data so that it can provide real information to the business on their talent.

What's more, every week at the CEO's staff meeting the head of HR provides human capital information with 30 minutes of that time spent talking about people. "They look at attrition, talent, comparisons to other companies, engagement data, productivity data and where money is spent," Oliver said.

Sodexo Focuses on Talent
Sodexo, on the other hand, employs 355,000 people and operates in 80 countries. It began in 1966 as a small French food service company in Marseilles. "We've expanded tremendously," said Gerri Mason Hall, Sodexo USA's senior vice president of HR for the Corporate Services Division. The company is now a full-service global company providing integrated food and facilities management services.

Diversification has forced the Sodexo HR department to eliminate a lot of transactional and administrative processes. Applicant tracking, benefits, compensation, and 401(k) are all now outsourced. This allows HR at Sodexo to focus on things like talent acquisition and development, total rewards and diversity. "We've made quantum leaps," Hall said. "For example, we were one of the first companies to recruit and interview in Second Life."

Strategy for Trying Times
How are the three companies weathering the current economic downturn? SAIC's bottom line remains strong, and their HR department will continue its current strategy in 2009. AOL presents a very different story. "This year it was communicated very openly by our parent company that they wanted to sell AOL," Oliver said. She added that the company has been challenged most of 2008 trying to retain its critical talent while the company is on the sales block and its stock loses value.

Globally, Sodexo's business is strong, but in the United States certain lines of business are facing challenges as many clients are major corporations that have downsized, have merged or have been acquired. Hall said the key for Sodexo is to focus on development, growth and innovation. For Sodexo HR, "the focus on talent is even more critical now."

In summation, Gorman noted that HR's role in the current economic crisis may be considerably different than it has been in past recessions. She said: "As organizations face difficult economic times, traditionally the fastest and easiest way to cut costs is to cut people. It appears this time that layoffs won't be just a knee-jerk response to alleviating the bottom line, but rather, part of a broader strategic approach to an economic downturn." (SHRM Online staff)
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