Chartered Institute

of Personnel and
HR survey
Development Where we are, where we’re heading

Survey report
October 2003
What you said about the changing
HR function

Respondents were asked ‘If you had to say what was
the most significant change likely to affect the way in
which the HR function develops in the next five years,
what would it be?’ Some of the responses are quoted
below and throughout the report.
‘HR needs to see itself as central to delivering business
objectives; CEOs need to see HR in the same way.’
‘Change in culture, resulting in line managers taking a
more effective and active role in managing their staff
and tackling HR issues.’
‘Greater involvement by HR in organisational
development as a whole.‘
‘It needs to be more strategic but also will have to
demonstrate its contribution to the business both in
terms of cost and value added.‘
‘In my experience the HR function is more of a
legalistic department and, given changes in
employment law, is more likely to develop in this
direction over the next five years.‘
‘HR has to understand and influence business needs
and work with operational staff to achieve required
strategic outcomes. Don’t say no – find an appropriate
route to say yes.‘
‘The strength of the economy will depend on whether
HR is a “selling” or “buying” function, which has a
major impact upon the direction in which it develops.‘
‘The need for HR to fully understand both the
business and HR practices in order to deliver effective
solutions to maximise business performance.‘

‘The most significant change will be in HR’s specialism

to provide consultancy to line management and an
increasing input to board-level decisions/business
strategy.‘
 HR survey 1

Contents

Summary of key findings Page 2

Background Page 3

Where is HR now? Page 5

Where are we going? Page 9

HR roles and work Page 11

HR organisation: the size and shape of the function Page 16

HR competencies Page 20

How are we doing? Page 22

Conclusions Page 24
2 HR survey
Summary of key findings
● Seventy-two per cent of respondents say they
have more influence in relation to senior
colleagues compared with three years ago.
● More than two in five say the HR function in their
organisation employs more people in total than it
did three years ago; one in four says it now
employs fewer.
● Seven in ten respondents say their CEO believes
HR has a key role to play in achieving business
outcomes. A similar proportion report that the
executive board frequently discusses HR issues and
that HR managers are comfortable discussing
business issues.
● One in three respondents sees their current role as
that of a strategic business partner; more than one
in four see themselves as change agents. More
than half would like to become strategic partners
in the future.
● Eighty-eight per cent of respondents say that
business strategy and goals will be a very
important driver of change in people management
policies and practices in their organisation in the
next three years. This compares with 63% who
see cost pressures as a very important driver.
● Key priorities for the HR function are improving
employees’ focus on achieving key business goals
and developing employee capabilities.
● HR has led responsibility for a range of activities
outside those typically seen as an integral part of
the HR function. These include organisational
design (29%), internal communications (36%),
health and safety (44%) and corporate social
responsibility (19%).
● Most respondents do not agree that the traditional
HR function will cease to exist, but 72% agree
that it will be increasingly difficult to define the
boundaries of the HR function.
● Thirty-five per cent of respondents believe the HR
function in their organisation is currently too
focused on operational issues, compared with
27% who describe it as heavily strategic. Almost
half currently see the HR function as being more
reactive than proactive.
● More than half of respondents believe that line
managers receive appropriate training and support.
However, three in five believe line managers have
not accepted full responsibility for making decisions
and taking action with respect to their staff.
● Delivery of HR practices by the line is seen as an area
requiring substantial improvement, together with
employee understanding of HR policies and practices.
● Most organisations have not significantly increased
or reduced their use of external providers of HR
services in the last three years. But almost half are
making increased use of outsourcing for their
training and development activities, while one in
three are outsourcing more recruitment.
● The direction of change where this has occurred is
towards greater use of outside providers. There
has been a more modest increase in the use of
internal shared services.
● The use of HR information systems (e-HR) has had
relatively limited effects – 38% of respondents
report that costs have not been cut at all, while
50% say that employees have no more choice
than before.
 HR survey 3

Background

‘HR has come to the proverbial fork in the road. One leads to a highly automated employee services operation ...
the other leads straight to the CEO’s office.’ Thomas A. Stewart

‘The HR function will have to change because it’s heading towards a precipice.’ Ed Lawler

‘HR people no longer can make choices about whether they will be "generalists" or "specialists" in organisations.
They have to be both.’ Gautam Ghosh

Why do we need the survey?
Commentators here and in the United States reflect
profound uncertainties about the future of the HR
function. They point to the increasing complexity of
the function and the pressures on it coming from
many directions. They suggest that line managers are
taking on the frontline people management tasks that
HR used to do, and much of the rest of the role is
being automated and/or outsourced. Senior
management is pushing for cost savings and
expecting HR to deal with the negative consequences
for the workforce. Employees are more demanding
about what they want from their work. Investors are
increasingly focusing on issues about ’human capital’
and looking for reassurance that it will sustain
organisational performance.
It seems as though new, tougher demands are being
placed on HR, and that many of the traditional
personnel skills may be losing their relevance. It’s hard
to escape the conclusion that HR is facing the
prospect of major transformation that will involve
getting out of its functional silo and taking on a more
strategic role in support of the business. In which
case, how is HR doing in crossing the divide and
seeking to enter this brave new world? Do HR
practitioners buy into this vision of the future, and
how confident are they of their ability to cope? How
effective do they think they are being in supporting
senior management? Is the shape of the function
changing, and will it be recognisable in a few years’
time? These are some of the issues addressed by this
report. The conclusions are not necessarily what you
might expect.
’The HR function runs the risk of moving away
from grass roots involvement into the ivory tower.’
Methodology
This report is based on a postal survey of senior HR
practitioners carried out in July and August 2003.
Questionnaires were sent to 4,000 CIPD members and
1,000 non-members; an email version of the survey was
also sent to a number of CIPD forum and SOCPO
members. Some 1,188 completed forms were returned,
a response rate of 23%, confirming the Institute’s belief
that it is timely to produce an authoritative map of the
current state of the HR function and the direction in
which it needs to be heading. The data inputting and
analysis were undertaken by the Department of Business
and Management at the University of Glasgow, and the
survey report was written by CIPD Adviser Mike Emmott.
Who are the respondents?
Twenty-one per cent of respondents say they are
board members and a further 53% heads of the HR
function. Some hold positions in general management
(for example, chairman, chief executive, general
manager); others have specialist roles in, for example,
training, organisational development and reward. The
great majority have ’HR’ in their job title; some
describe themselves as being responsible for
’personnel’ or ’employee relations’. But the diversity of
job titles and the range of specialisms covered
4 HR survey
(including knowledge management, leadership,
resources, quality, and systems) underline the wide
variety of organisational contexts in which the HR
function operates and hint at the difficulty in defining
the boundaries of the function.
Some 25% of respondents are from the public sector
and 6% from voluntary organisations; the rest (69%)
are from the private sector. In terms of size, more than
half are in organisations employing between 250 and
5,000 people and nearly 10% are in organisations
employing more than 25,000.

Where is HR now?
HR priorities: the business
Looking at the priorities of the HR function within the
organisation, senior practitioners are unashamedly
focused on supporting the achievement of business
goals (83%). More traditional goals, including
employee resourcing, development and involvement
are also key priorities. They also place strong emphasis
on improving employees’ focus on customer needs.
’Becoming more business- and customer-focused
and demonstrating that it can add value to the
organisation.’
HR and the business strategy
Seventy-one per cent of respondents say that their
chief executive believes the HR function has a key role
to play in achieving business outcomes; the same
percentage say that the executive board frequently
discusses HR issues. A similar proportion agrees that
HR managers are comfortable discussing business
issues. Over half believe that HR issues are fully taken
into account in the business planning process, though
a significant minority of respondents clearly believe
HR survey 5
In other words, HR appears to be focusing on its
fundamental job of building human capital and
ensuring that employee efforts are aligned with
business objectives. Fifty-six per cent say that
controlling costs is one of the top five HR priorities,
while diversity, compliance with employment
regulation and change management all come in the
same category in nearly a third of organisations.
that more weight needs to be given to them. Seventy
per cent have a defined HR strategy linking into the
business direction.
’Businesses will really involve HR at all stages,
particularly in shaping strategy. I think in some
organisations strategy and HR strategy are aligned
but strategy comes first. This will shift and result in
sorting out the “men from the boys” in the HR
function.’
6 HR survey

Table 1: HR in the organisation (% respondents)

Strongly Disagree Neither Agree Strongly
disagree agree nor agree
disagree
The executive board frequently discusses HR issues 6 9 10 25 46
CEO believes HR has a key role to play in 7 10 10 22 49
achieving business outcomes
HR issues are fully taken into account in the 7 19 17 32 22
business planning process
HR managers are comfortable discussing 4 11 14 32 38
business issues

Taken as a whole, these responses represent an
assertion of confidence by senior HR executives in the
relationship between the HR function and the wider
business, and in senior management’s support for its
role. Cynics might say that HR professionals are bound
to assert their own success. Yet in 89% of
respondents’ organisations the performance of the HR
function is regularly assessed, based on business
outcomes (59%) and generally incorporating line
managers’ views. Historical allegations of lack of
measurable impact appear to be being addressed.
Respondents say that HR is significantly involved in
planning business strategy and that its influence at
this stage is also significant. However, both
involvement and influence decline at later stages in
the process of implementation, so that only one in
twenty feel they are either heavily involved or highly
influential by this stage. On their own analysis, senior
HR practitioners have more impact in the planning
and development of business strategy than in its
execution. And a variety of recent CIPD studies
suggest that the Achilles’ heel of contemporary HR
strategy is in its implementation.
’HR must continue to be proactive at senior
management level and be innovative in its design
of jobs and flexible working arrangements.’

Table 2: Influence of HR function in developing and implementing business strategy (% respondents)

Low Medium High
Outset/planning stage 29 45 24
Development stage 36 47 15
Discussion/agreement stage 42 46 10
Implementation stage 52 40 6

Broader responsibilities: more communications
and OD, less canteen and toilets
Although the survey specifically targeted the HR
function, we also asked what broader responsibilities
the function has. The most common, wider
responsibilities are health and safety (43.5%), internal
communications (36%) and organisational design
(29%). Corporate social responsibility also makes a
respectable showing (19%), in line with other survey
evidence. Only 16% of respondents say that facilities

management, a traditional ‘add-on’ to the personnel
function, is an HR responsibility.
In addition, HR shares responsibility for many of these
activities with other departments in a significant
proportion of organisations. For example, 45% of
respondents say that the HR function has a shared
responsibility for organisational development, 41% for
internal communications and 39% for corporate social
responsibility. These are strategic issues that are close to
the heart of business operations and the responses
Broader responsibilities and influence are also reflected
in the career paths of modern HR professionals.
Indeed, one in three respondents agree that more
chief executives will in the future have a background in
HR. A majority (52%) of respondents believe that HR
people need to have spent time in jobs outside HR,
and a reasonably high proportion have done so – with
15%, for example, having prior experience in sales and
marketing and 11% in finance.
The survey also finds that 17% of the most senior HR
posts are filled with people from non-HR backgrounds.
In a surprisingly high 66% of cases, the most senior
HR survey 7
suggest that HR is becoming increasingly integrated
with, and influential in, the rest of the organisation.
’Working more closely with senior managers on
strategy to move the business forward – less fire-
fighting, more planning and implementing.’
’Give me one month and I’ll make a good
businessperson into a good HR person; too often
you’d need an eternity to reverse the trick.’
HR person was recruited from outside the
organisation, reflecting the diversity of experience now
required in these increasingly varied, demanding and
results-focused roles. These findings all suggest an
increasing degree of fluidity in organisational practice
and thinking about the role of HR and the skills and
experience required to deliver business value.
’The HR professional who has experience in other
areas of the business besides HR will be crucial in
ensuring HR becomes and remains a key business
partner in the future.’
8 HR survey

Table 3: How may the HR function change in future? (% respondents)

Strongly Disagree Neither Agree Strongly
disagree agree nor agree
disagree
HR needs to develop new skills and frameworks to 2 5 13 30 49
meet the needs of tomorrow's organisation
People need to have spent time in jobs outside HR 6 17 25 26 26
if they are to be fully effective as HR people and
business partners
More chief executives will have a background in 9 21 34 22 12
the HR function
It will be increasingly difficult to define the boundaries 3 10 12 39 33
of the HR function
HR will become a source of in-house consultancy 4 8 9 31 47
and support on all aspects of people management
and development
The traditional HR function will cease to exist 21 33 21 13 9
HR administration will be computerised and/or 5 13 14 34 31
outsourced
There will be a need for fewer HR jobs in the future 16 24 20 20 16

Where are we going?
Dimensions of change in the HR function:
specialism and strategy
’... a need for the function to become more
strategic or disappear.’
The survey explored how respondents would describe
the HR function on a number of key dimensions, and
how far they believe it needs to change in the future
(see Figure 4). Focusing on their current organisation,
respondents are inclined to see the HR function as
more generalist and operational in nature, rather than
highly specialist or strategic. Similar proportions see
the function as predominantly reactive rather than as
proactive. By more substantial margins, practitioners
see HR as having already moved to providing tailored
practices, rather than supplying off-the-shelf schemes,
and driven by the demands of the business rather
than employees.
HR survey 9
However, respondents believe that HR needs to be
significantly more business-focused and strategic in the
future, also offering more specialist advice. This is in
line with the finding that two in five organisations are
making more use of specialists in areas such as
employment law and remuneration than they were
three years ago. Early theorists of HR strategy who
described it as the opposite of the traditional ’technical’
personnel management function are, according to the
survey respondents, wrong. The contemporary HR
function is having to move in both directions, adding
strategic business value and providing the more
specialist technical advice that is required. And so the
vast majority disagree that the HR function will
ultimately disappear into general management.
’The emphasis on raising and improving individual
performance levels will increase as pressure on
delivery of profit and value added intensifies.’
10 HR survey

Drivers of change
There is overwhelming agreement among respondents
that business strategy and goals will be key drivers of
change in people management policies and practices
in the future. Cost pressures, the views of senior
management and organisational culture are also seen
as very important drivers by more than three in five
respondents. Neither benchmarking nor changes in
products and services are seen as particularly
important, so the days of ’follow the fad’ in HR seem
to be well and truly over. But 57% of respondents see
employment regulation as an important driver of
change in people management practices, reflecting
the increasing volume of legislation under this
Government and emanating from Brussels.
’... implementation of EU and UK legislation will
take up far too much of the HR manager’s time:
more law, less love.’

Table 4: How important is each of the following likely to be as a driver of change? (% respondents)
Very important Somewhat important Not important
Business strategy goals 88 12
Views of senior management 64 35 1
Cost pressures 63 33 3
Culture/values of the organisation 62 35 3
Employment regulations/government policies 57 40 2
Employee needs 47 50 3
Changes in products or services 40 44 14
Line managers 31 62 6
Benchmarking 28 59 12

HR roles and work
The focus: partnering, not administering
’The future role for HR is as a change agent – with
broader, more business-focused skills.’
In line with the identification of five distinct roles for
the HR function by US academic Dave Ulrich, one-
third of HR practitioners currently see their primary
Although 23% of respondents see their current role
as being a business ’player’, acting as coach, architect
and facilitator, only 15% see this as their preferred
role, possibly because they feel this would take them
too far from their HR moorings. Relatively few senior
HR people see themselves primarily as an ’employee
champion’ and fewer still would wish to do so. This
HR survey 11
role as being strategic business partners. Rather more
than one in four see themselves as change agents and
slightly fewer (24%) as administrative experts. In
terms of their preferred roles, that is, the one they
would like to focus on in the future, nearly three in
five aspire to be business partners, while the
proportion who see their role as being administrative
experts in the longer term falls to just 4%.
may be partly because the language sounds unfamiliar
to UK ears; or because employee relations issues are
dealt with at a lower level within the organisation; or
because of the predominance in this country of US-
style, business-driven strategic HRM, as opposed to
the more consensual, Continental personnel model.
12 HR survey
How do HR people spend their time?
Still too operational, not enough strategy
Respondents were asked what their three most time-
consuming activities were, and which of these they
saw as most important in terms of their contribution
to the organisation. The single most time-consuming
activity, taking nearly half as much time again as any
other single activity, is providing support for line
managers. After that comes a group of activities
It should perhaps be no surprise that, despite
respondents’ aspiration to be more strategic, they
spend nearly three times as much time on
administration as on business strategy, since ‘urgent’
matters notoriously drive out those that are only
‘important’. The high percentage of time spent on
implementing HR policies and supporting the line is
interesting, given the widespread emphasis on line
which have a similar amount of time spent on them,
including implementing HR policies (49%), providing
specialist HR input to wider business issues (47%), HR
administration (46%) and developing HR strategy and
policy (45%). Notable by the relative lack of time they
currently attract are business strategy (17%), HR
programme design (14%) and updating managers’
own HR knowledge (9%).
managers taking responsibility for delivery of HR
policies. It points to the difficulties in implementation
mentioned earlier.
’... transformation to a small strategic function with
most administrative activity outsourced or
decentralised.’

When we look at the activities that respondents
believe are most important, there are some dramatic
shifts in the rankings. Developing HR strategy and
policy should, they say, be in the number-one slot
(71%), followed by business strategy (64%) and
providing specialist HR input to wider business issues
(60%). Support for line managers shrinks visibly
(44%), as do implementing HR policies (20%) and
administration (4%). It would be unrealistic to
suppose that managers could entirely succeed in
allocating their time precisely in accordance with
business priorities. Nevertheless, it is clear that
respondents feel uncomfortable with the mismatch
between their current, reactively determined workload
and those strategic activities which would add most
value to the business and their influence.
HR and the line: shared responsibilities
The survey asked where the primary responsibility
between the HR function and line management lies
for decisions in a number of areas. Predictably the
great majority of respondents say that responsibility
HR survey 13
on most issues is shared; apart from recruitment and
selection, the line is seen to have sole responsibility for
any of the HR activities listed in fewer than 2% of
instances. HR has prime responsibility for
implementing redundancies (26%), for pay and
benefits (16%) and for employee relations (14%).
Ownership of training and development is rather less
clear, 8% of respondents saying it belongs with HR
and only 1% with the line. Where responsibilities are
shared, HR is seen as having the lead role by a
substantial margin in respect of each of the activities
listed, other than in recruitment and selection, where
lead responsibility has clearly passed largely to line
managers in many organisations.
‘... demand from the line for a different “brand”
of HR.’
’... helping to improve line management skills to
tap into the discretionary behaviours of staff and
hence to add real value.’
14 HR survey
 HR survey 15

Table 5: HR and the line

Mean*
Line managers receive appropriate training and support for handling people issues 3.3
HR people are trained to diagnose business problems and offer hands-on help to line 3.3
managers dealing with them
The nature of the HR function is shifting from implementing HR policies to being 3.8
an internal advisory team
Line managers have accepted full responsibility for making decisions and taking action 2.5
with respect to their subordinates
Outsourcing HR processes will not significantly reduce the requirement for in-house 3.9
HR advice and support
*On a 5-point scale, where 1 = 'strongly disagree', 3 = mid-point ('agree'), 5 = 'strongly agree'.
16 HR survey
HR organisation: the size and shape of
the function
Numbers and focus: more at the centre
The total number of people in the HR function has
gone up in the last three years in 43% of
organisations, compared with 31% in which it has
gone down. This suggests that the HR profession is
still expanding, despite the prophecies of doom over
the last decade. As already mentioned, the numbers
of staff with experience outside the HR function have
generally increased.
Within the total, the number of specialists has gone
up in 37% in organisations, compared with 23% in
which the number has gone down. Increasing
numbers therefore appear to be being driven by the
need for staff in areas such as employment law and
compensation and benefits to address the increasing
complexities and demands in these areas.
In parallel with the increasing use of specialists, 37%
of organisations are now operating in a more
centralised way, compared with 28% adopting less
centralised approaches, possibly reflecting a
refocusing of business activity in the last three years
and increasing use of technology. Contrary to some
claims, fewer organisations are making use of external
consultants compared with three years ago, possibly
as a result of the business downturn and developing
more specialist expertise in-house.
’... centralisation reducing HR generalist function in
smaller business units.’
 HR survey 17

Figure 8: Changes in the HR function now compared with 3 years ago (% repondents)
18 HR survey
Use of external providers and shared
services: a slow take-off
There have been many stories in recent years about
the way in which outsourcing is likely to affect the HR
function. The survey shows that most organisations
have neither significantly increased nor reduced their
use of external providers of HR services in the last two
years, and hence most respondents do not believe
that outsourcing will significantly reduce the
requirement for in-house HR staff and support.
’More companies will outsource HR as employment
law becomes more complicated and unworkable,
or will have to retain an expensive consultant to
manage this complex area.’
Table 6: Use of external providers in the last three years (% respondents)
Recruitment
Training and development
Payroll
Pension
Employee benefits
Employee counselling
Outplacement
Dispute resolution
Organisational development
There has also been some increase in the use of
internal shared services, though not to the same
extent as outsourcing. Again the main areas affected
are recruitment, and training and development.
E-HR: the administrative solution?
’... computerisation of administration and more
senior HR staff with an internal consultancy role.’
Almost one half are outsourcing more of their training
and development activities and a third are outsourcing
more recruitment and employee counselling, but these
are areas where the use of outside providers has been
evident for many years. Where change is taking place,
the trend is towards increased use of outside providers,
with more than one in five organisations reporting
more reliance on the outsourcing of employee benefits,
outplacement and organisational development. But it
does not appear to be occurring at the pace that some
headlines or IT companies would have us believe.
’HR administration will become increasingly efficient
and stand-alone (or outsourced). This will focus the
debate on what else HR is/should be about.’
Increased Decreased Neither
34 17 46
49 20 29
14 9 71
25 4 67
24 4 67
33 3 59
22 5 63
11 6 78
24 8 63
Two-thirds of respondents believe that more HR
administration will be computerised and/or outsourced in
the future. Presumably this is a key means by which the
executives see themselves addressing the
importance/time-spent gap, with administrative
efficiencies giving them more time for strategic input.
However, the survey shows that e-HR has so far had only
modest effects. In 38% of cases, costs were not cut at all
(in only 3% were they cut to a great extent). And 50%
of respondents report that employees do not have more
choice as a result of introducing e-HR technology.
 HR survey 19

The main benefits of the technology are seen as faster Table 7: To what extent have the application of web
administration and better communication. Half of and e-HR technology allowed the organisation to
respondents reported systems/technical problems with (% respondents):
HR information systems, while one in three say they
have had problems in delivering the desired levels of Delegate HR responsibilities 3.8
service, and one in four report excessive costs. Give employees a more central/self-service role 3.9
Offer employees more choice 4.1
Cut costs 3.9
Speed up administration 3.2
Improve communication 3.1
Monitor HR processes 3.4
Figures are mean on a 5-point scale: 3 is mid-point, 5 means ‘not at all’.
20 HR survey
HR competencies
Capabilities and challenges
Four in five respondents agree that HR needs to
develop new skills and frameworks to meet the needs
of tomorrow’s organisations; almost half agree strongly
with this statement. But what skills will be required?
’The demand for higher-calibre HR people by
businesses and business leaders – especially those
with a good understanding of business,
global/cultural skills, business transformation and
change management skills ...’
It is often suggested that HR will win more respect for
its contribution to the business only if it delivers
consistent and reliable HR services and demonstrable
business impact. It’s therefore no surprise that delivery
against targets is also rated as one of the most
important capabilities for HR, ahead of leadership and
business knowledge. Other capabilities, including
understanding of HR practices, along with
communication skills and integrity, are seen as less
The survey asked about the most important factors for
establishing the personal effectiveness and credibility
of HR practitioners, and which of these represent the
biggest challenge. Influencing and political skills
emerge head and shoulders above the rest as the
most important qualities that senior HR people believe
they need. Respondents also score strategic thinking
skills highly; matching their belief that HR should
increase its strategic contribution.
important, while negotiating skills and willingness to
innovate come at the bottom of the list. It is perhaps
surprising that communication and negotiating skills
do not rank higher.
’HR professionals need to understand business
realities and create practical and pragmatic solutions
to advise on best practice, meet legal requirements
and be seen as an integral part of the business.’

The ranking of capabilities in terms of the scale of
challenge they represent is largely in line with
perceptions of their importance. The one exception is
leadership, which fewer respondents recognise as a
major challenge. This may mean that practitioners are
HR survey 21
comfortable with their ability to meet the demands on
them in this respect – or maybe all that leadership
development activity they are providing in their
organisations is having a positive personal impact!
22 HR survey

How are we doing?

Measurement of HR performance
There is much talk at the moment in HR circles about
’human capital’ and the need to measure and
demonstrate better the impact of people on business
performance. Respondents were asked how the
performance of the HR function is assessed within their
organisation. The most common method is consulting
the views of line managers. Other widely used methods
are reviewing against business outcomes, conducting
surveys, undertaking specific reviews and carrying out
cost–benefit analyses. In only one in ten cases is the
performance of the HR function not generally assessed.
None had in fact retitled their function ’human capital’.
Table 8: How is the performance of the HR function
assessed? (% respondents)
Business outcomes 59
Cost–benefit analysis 26
Employee surveys 51
Line managers' views 70
Specific reviews 41
Other 7 but their views are still on the positive side of the scale.
Not assessed 11
It is reassuring that organisations appear to be placing
considerable weight on business outcomes and on the
views of the function’s customers in the line. Half of all
respondents say they also rely on surveys of employee
attitudes. Although this survey did not specifically ask
about the focus of the assessment, the results imply that
more weight is given to assessing the effectiveness of
the HR function than its efficiency. With the trend
towards outsourcing and shared services, simple
efficiency measures such as the ratio of HR staff to total
numbers of employees may in any case be less
meaningful, and worries about the misinterpretation of
data are frequently voiced in discussions about improved
human capital accounting.
How others see us
Respondents were also asked how they thought their
CEO would score the performance of the HR function
on a number of dimensions. In general, the assessment
is seen as fairly positive. Chief executives are reported
to score HR highly on its relationship with the line, and
its ability to offer an independent perspective. Chief
executives are felt also to hold positive views about the
calibre of people in the HR function. They are seen as
somewhat more sceptical about HR’s involvement in the
business, and its contribution to business performance,
Small but not insignificant minorities say their CEO has
negative views about the influence of HR on board
decisions and the quality of HR processes.
’The HR director needs to be a smarter strategic
global thinker and focused on business success
through organisational capability.’
 HR survey 23

Table 9: Perceptions of chief executive's evaluation of HR (% respondents)

Strongly Positive Neutral Negative Strongly

positive negative
Contribution to business performance 13 49 30 6 1
Closeness to business 14 50 25 7 1
Calibre of people in the function 24 50 21 3 1
Influence on board decisions 13 42 32 9 2
Relationship with the line 28 54 15 2 0
Quality of HR processes 15 47 27 8 1
Ability to offer an independent perspective 31 50 16 2 0

The survey cannot tell us directly what CEOs
themselves think. For this, we need to turn to other
recent CIPD research and specifically our research
report, Voices from the Boardroom. This study, carried
out in 2001, suggested that many senior executives,
including CEOs, HR and other directors, had doubts
about the level of involvement of the HR function in
the business, and its contribution to business
performance. Few positive comments were recorded
from that survey about the calibre of people in the HR
function: many of its critics were themselves HR
directors. The findings from the current survey are
generally more positive.
HR strengths and weaknesses
Our survey asked what respondents themselves saw as
areas of major strength within the HR function and
what they saw as areas requiring significant
improvement in their organisation. Again, respondents
feel that a significant strength is the level of senior
management buy-in, and that HR activities are
integrated with each other and the wider business
strategy. They are also broadly content with the
efficiency of HR administration. But HR communications
with, and buy-in from, line colleagues and employees
are generally seen as less impressive, highlighting
further this implementation and delivery concern.

Table 10: Areas of major strength or requiring improvement (lower figure: major strength, 3 is neutral)

Mean
Integration of HR activities with each other 2.7
Integration of HR activities with business strategy 2.8
Efficiency of HR administration 2.8
Delivery of HR practices by the line 3.5
Employee understanding of HR policies and practices 3.3
Board/senior management buy-in 2.6
24 HR survey
Conclusions
Is HR on the decline?
Not on the evidence of this survey. A substantial
majority of respondents believe that HR’s influence with
senior colleagues has increased, while the numbers
employed in the HR function are also increasing. The
shape of the HR function and the nature of its activities
are changing, with more emphasis on specialist advice
and strategic input. HR has a clear collective view of the
direction in which the profession should be heading: a
third of all senior practitioners already see themselves
as being the kind of business partner that most of the
rest aspire to become.
’... a change agent that is the catalyst for improved
organisation capability and cultural change.’
How strategic is HR?
On the one hand, the survey confirms that
practitioners are still inclined to see the function as
more operational than strategic. On the other hand,
they feel they have made progress and are looking to
shift their focus further into strategic areas, including
change management. Clearly, the HR community has
internalised the message that it needs to spend less
time on administration and operational issues and
more on business strategy and adding value. It accepts
there is some way to go in this direction, but the
movement is well under way.
The findings indicate that HR activities are heavily
business-driven and already strongly aligned with
business needs. Business strategy and the views of
senior management are seen as key drivers of change
in HR. The shift in aspiration from a function
concerned with reactive HR (fire-fighting) to one
focused on adding business value has already taken
place. This is reflected in respondents’ views on the
key factors in establishing their personal credibility. Top
of the list by a long way are influencing and political
skills, followed by the ability to think strategically.
Although two-thirds of respondents say that business
strategy is one of the three most important activities in
which they personally engage, it accounts for a
relatively small proportion of their time. The second
most important activity, making a specialist HR input to
wider business issues, also, they believe, merits more
time than it gets. The single activity on which HR
practitioners currently spend most of their time is
reacting to line management needs.
The findings suggest that we may need to clarify what is
meant by HR moving to become more strategic. Clearly
it implies moving closer to the business, but to which
part of the business? When asked about future changes
for the HR function, three in four see it as becoming a
source of in-house consultancy and advice to line
management. On the other hand, respondents say they
want to spend substantially less of their time providing
support for the line. The answer to this apparent
discrepancy may lie in the role which HR heads of
function see for themselves – an upstream role, working
with other functions on developing business strategy –
as well as a desire to provide a more proactive, advisory
and coaching role to support line managers, rather than
reactively responding to the same sets of issues and
problems. But there may be a risk in moving closer to
strategy – developing senior executives at the expense
of line and operational needs.
’... anyone can read a book or policy document –
which gives the answer to “how” to do something
or “how” to resolve an issue. HR needs to think
more of the “why” and then be able to lead in
managing change.’
The two main areas of weakness identified are
employee understanding of HR practices, and delivery
of HR practices by the line. This underlines the
yawning gap, as identified in recent CIPD research

studies, that can exist between HR policies and their
practice. It also raises the question whether HR
professionals accurately understand what Dave Ulrich
means when he talks about HR being a strategic
business partner. His concept of such a partner is
’working with senior and line managers in strategy
execution, helping to move planning from the
conference room to the market place’.
‘As business becomes more flexible and fast
moving, the demand for HR to really add value
means that a small number of good HR
contributors will be valued as internal organisation
consultants ...’
How is HR seen by senior management?
The picture of the HR function and its relationship
with senior management that emerged from the CIPD’s
Voices from the Boardroom was a mixed one. Although
HR directors were widely perceived to provide a
valuable supportive role to boardroom colleagues,
they were often not expected to play a proactive and
strategic role. Major concerns were also evident, not
least from HR directors, about the quality of personnel
staff. How far is this picture supported by this survey?
Certainly respondents feel confident about the way in
which HR is regarded by chief executives. Almost two-
thirds of respondents say that their chief executives
believe the function is close to the business and makes a
positive contribution to its performance. Some doubts
creep in about the quality of HR processes and the
degree of influence on board decisions, but these are at
the margin. Respondents feel that the calibre of people
in the HR function is seen by chief executives as high.
In the end, a survey of this kind has to rest on its own
evidence. If we want to know how different
stakeholders feel about the HR function, the best
HR survey 25
answer is to ask them directly. But, whatever the
potential criticisms of self-interest, at least our HR
heads responding to this survey are self-confident and
positive about how their senior colleagues regard
them, an attribute not always evident in the function.
A confident profession that believes it is influential and
is seeking to contribute business value is likely to have
more impact than a hesitant profession clinging to its
historical territory and with limited ambitions.
What about outsourcing?
The survey confirms that the shape of the HR function
is shifting, at least at the margin, as some organisations
make more use of external providers. This is in line with
the trend in recent years across the economy as a
whole for organisations to focus on their core business.
However, the dynamics of outsourcing HR activities
probably differ in important ways from those of
outsourcing services such as IT, and the changes in HR
are by no means all one-way, with some HR activities
being brought back in-house, and more being pulled
back into the centre.
There is a continuing shift towards the computerisation
of HR administration, although there are doubts as to
whether this will lead to a reduction in the number of
HR jobs in the future, given the growth in requirements
in other areas of HR’s activities. The application of
technology to date has had little impact on costs and
numbers. Similarly, the more gradual but still significant
increase in the use of shared HR services is seen as
being likely to have a greater impact on the distribution
of HR resources and the way in which they are used
than on overall numbers. Whether this can deliver the
significant time-saving that HR executives seek in order
to focus more heavily on business value-adding
strategic issues, however, must be open to doubt, given
the problems that are reported. This is an area where
more CIPD research is being carried out.
26 HR survey
The major shifts anticipated in the HR function are not
in terms of numbers or location but in the nature of
the job to be done. The scale of the change, which
respondents believe continues to be needed as HR has
moved and continues to progress from a primarily
operational and tactical to a more strategic role, is
dramatic, as is that from a somewhat reactive stance
to a much more proactive one. More HR people will
need to specialise in order to deliver real business
value in our increasingly complex business
environment. The traditional HR function will not
disappear, but in many organisations it will be
increasingly difficult to recognise. HR already has
substantial responsibilities outside its traditional area
for activities, including organisational design, internal
communications and corporate social responsibility,
and the significance of these activities in the future
can only increase.
‘... “people-ism” will take on new levels of
importance as people realise “shareholder value” is
an empty goal and is not what gets people out of
bed in the morning.’
HR and the line
A key issue flagged up by the survey is the relationship
between HR and the line. Day-to-day responsibility for
managing and developing people is now seen to sit to a
greater or lesser extent with line managers. The HR
function sees its responsibilities as shifting from the
implementation of HR policies and practices to
supporting and providing advice to line managers on a
consultancy basis. But line managers have yet to accept
full responsibility in this area and have the skills to deliver
it. And there are some doubts as to whether HR people
are fully equipped to diagnose business problems.
Continuing effort will be needed to see that both HR
and line managers are clear about their respective roles
and have the information and are adequately trained to
perform them. The CIPD’s recent research study
Unlocking the Black Box highlighted the central
importance of line managers as the filter through which
HR strategies are delivered, and the key point at which
grand HR strategies can break down in practice.
’... shifting responsibility for the management of
staff from being seen as “an HR function” to a
point where managers accept responsibility for
their actions.’
This message has not been lost on the HR community.
There is general agreement that HR needs to develop
new skills and frameworks to meet the needs of
tomorrow’s organisations; this is one of the clearest
messages to emerge from the survey. Almost half of all
respondents agree strongly with this statement. The
ability to think strategically is seen as a major
challenge by almost half of respondents, while many
recognise the need to improve their business
knowledge, negotiating skills and willingness to
innovate. These findings should not be seen as a
recognition of weakness but as an honest reflection of
the scale of the job required of HR practitioners. There
is a strong sense that HR has been more successful in
selling its message to senior management than to line
managers and employees, and more attention will
need to be devoted to the latter.
So how does HR add value to the organisation?
Research by John Purcell, David Guest and others for
the CIPD has amply demonstrated the way in which
effective HR policies and practices can deliver bottom-
line performance. This survey confirms that HR
practitioners feel they are gaining, but still need to do
more to develop, a more strategic role in the
organisation. This comes out clearly in the degree of
involvement and influence of the HR function in the
business planning process, particularly at the earliest
stages of that process. There is less evidence, however,
from this survey that HR sees its mission as (in Dave
Ulrich’s words) ’helping to move planning from the
conference room to the market place’.

’… the focus on board integrity will drive a
requirement for a neutral/facilitation role on boards,
which has some independence from the product
and commercial functions.’
The survey suggests that chief executives value the
independent perspective that HR is able to offer. On
the other hand, most HR practitioners resist the idea
that they should see themselves as ’employee
champions’. The HR perspective is, rather, based on a
non-partisan understanding and experience of how
people management and development processes
contribute to business performance, as well as on the
support which many senior HR people offer board
members in personal advice and mentoring, just as
their functional colleagues do to line managers
throughout the business. In an increasingly complex
political and legislative environment, the specific
expertise of HR staff in people management is
increasingly demanded and recognised.
What’s the bottom line?
The overriding message from this survey is that HR
practitioners have positive views about their role. They
are confident that their influence is increasing and
clear about the direction in which the function needs
to change. Often-repeated messages about the need
for HR to become more strategic have been
internalised. Outsourcing and downsizing seem to be
making little impression on numbers within the HR
function, which are on the contrary going up in many
organisations. HR accepts that its skills need to be
sharpened and broadened in a number of respects.
Senior HR people believe they are getting their message
across to senior management and make a significant
input to the business planning process. But they are less
positive about the extent to which HR issues are fully
taken on board within that process. Their aspiration to
be more closely involved in business strategy also needs
HR survey 27
to be unpacked: is strategy about influencing boardroom
discussion and senior management decisions, or is it
about effective delivery, or – as this survey suggests –
both? More focus on the implementation, but not at the
expense of planning, would seem to be required,
according to the results of this study.
’The ability to keep ahead of the game, be involved
at strategic level and turn that into day-to-day help.’
More negative messages do emerge regarding the
delivery of HR policies and practices and the
effectiveness of links between HR and line managers.
Respondents claim to be making major efforts to
support the line but admit to having doubts as to how
far line managers have accepted their people
management responsibilities. Should HR be doing more
to influence, help and support line managers? That said,
much greater effort is going into measuring and
demonstrating the impact of the HR function and HR
practices, short of renaming the function ’human
capital’, which none of our respondents have done.
In terms of wider responsibilities, HR is moving away
from looking after internal services (which have been
outsourced in many organisations) and more heavily
into areas such as organisational development and
corporate social responsibility. The boundaries of the
HR function are becoming more diffuse as HR
establishes stronger links with other business
functions. The scale of response on internal
communications suggests that HR is competing
effectively with the marketing function for the job of
ensuring that messages are taken on board and
effective employer brands delivered. As organisations
are increasingly aware of the importance of trust in
maintaining employee motivation and commitment,
there are clearly opportunities for HR to strengthen its
position in this area.
28 HR survey
Follow-up work
In terms of further work, the survey points to a number
of areas where we need to know more, including:
● What are the significant variations in what is
happening to the HR function between one sector
and another? We will produce further analysis of
our data in this regard.
● Where organisations have adopted a ’shared
service’ model, how is this being organised?
● Why has outsourcing been slower to take off than
was predicted? Again, the CIPD will be carrying
out further research in this regard.
● How is HR helping front-line leaders, and how can
HR strategy best be delivered in practice? It would
be useful to know more about the nature of the
support that HR is giving the line and the extent to
which this is changing. This will be the subject of a
future CIPD publication.
● What changes are taking place in organisations
where HR services are the main product or service
offered, given that this survey has targeted the HR
function within organisations?
● How are the trends profiled affecting the
development and career paths of HR professionals?
This will be the subject of a follow-up CIPD study.
● How, and how well, are HR professionals
contributing in areas such as corporate social
responsibility and organisational development?
● What performance measures and processes are
being used for HR activity, and how do they relate
to general business and performance management
scorecard and processes? The CIPD is currently
updating its research on performance
management processes.
The CIPD will be following up these issues in the
coming months, in consultation with members,
executives, practitioners and thought-leaders.
 The CIPD explores leading-edge people management and development issues at a strategic level.
Our aim is to share knowledge to increase learning and understanding. Our purpose is to make
people more effective in their jobs and enhance their contribution to the business.

We produce annual survey reports on:

• employee absence
• recruitment and retention
• labour turnover
• training and development.

They can be downloaded from www.cipd.co.uk/surveys

Topical survey reports are also produced on key people management and development issues.
Issued: October 2003 Reference: 2872

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