Beyond the Vision:What Makes HR Effective?Edward E. Lawler III and Susan A. Mohrman, Center for Effective Organizations, Marshal! School of Business, Universityof Southern California

CoqDorations are undergoing dramatic

changes with significant implications for

how human resources are managed and the

HR function is best organized and managed.

The forces driving change include the rapid deploy-

ment of information technology, globalization ofthe

economy, and the increasingly competitive dynamic

business environments that corporations face. There

is a growing consensus that effective human capital

is critical to an organization's success and that the

HR function's focus must be more strategic. But,

how can the HR function get beyond the rhetoric

of wanting to be a strategic business partnership and

make it a reality? How should the HR function itself

be organized and managed to help corporations deal

with and succeed in this new era? This article reports

the results of the second HRPS sponsored Center for

Effective Organizations (CEO) study of HR in large

corporations. The major focus of the study is on the

practices, structures, and activities that determine the

effectiveness of HR organizations with particular

attention to the development of a business partner

relationship and the use of information technology.

10 HUMAN RESOURCE PLANNING

Staff functions, in general, are under fire inorganizations because they are frequently per-ceived as controlling rather than adding value,and as not responding to the demands for changethat operating units need lo make. They arebeing asked to change to provide expert supportto the strategic initiatives of the company, andto take advantage of technology and otherapproaches to deliver more efficient and respon-sive services. Despite compelling argumentssupporting the view that HR management is thekey strategic issue in most organizations, HRexecutives historically have not been strategicpartners (Lawler, 1995; Brockbank, 1999). TheHR function has been an administrative functionheaded by individuals whose roles are largelyfocused on cost control and administrative activ-ities (Ulrich. 1997).

One study of large corporations and anotherstudy that focused on a eross-section ^ ^ ^ ^ ^ ^of firms found that the major focusof most HR functions is on control-ling costs and on a host of adminis-trative issues (Lawler, et al., 1993;BNA, 1994). Missing almost entire-ly from the list of HR focuses werekey organizational challenges suchas improving productivity, increas-ing quality, facilitating mergers andacquisitions, and improving the abil-ity of the organization to bring newproducts to market. These are likelycritical business concerns, so wemust ask why they were not themost important focuses for the HR executives.Most likely, the executives in these firms simplyfelt the HR function could not have an impact inthese areas. This view is supported by studiesthat have found that HR is seen as most success-fial by HR executives when it comes to adminis-tration (Csoka and Hackett. 1998).

This situation is changing, and the HR func-tion is beginning to redefine its role (Wright, etal, 1999). A number of studies have investigatedthe changing directions needed for the HR func-tion (Conference Board Study by Csoka andHackett, 1998: The Human Resource PlanningSociety (HRPS) study by Eichinger and Ulrich,1995; American Productivity and Quahty Centerstudy by Smith and Riley, 1994; Becker andHuselid. 1998 & 1999). There is a growing bodyof evidence that HR can be a value-added func-tion in organizations. Tbe most important work

Firms with the

greatest intensity

of HR practices

that reinforce

performance

had the highest

market value

per employee.

on the relationship between firm performanceand HR practices has been conducted by Beckerand Huselid (1998). In their study of 740 corpo-rations, they found that firms with the greatestintensity of HR practices that reinforce perfor-mance had the highest market value per employ-ee. They go on to argue that HR practices arecritical in determining the market value of a cor-poration and that improvements in HR practicescan lead to significant increases in the marketvalue of corporations. They conclude that thebest firms are able to achieve both operationaland strategic excellence in their HR systems.

Ulrich has championed the argument that theHR function needs to be redesigned to operate asa business partner (Ulrich, 1997; Ulrich, et al.,1997). Brockbank (1999) has argued that the HRfunction needs to become "strategically proac-tive." A recent HRPS-^sponsored five-year study^ ^ ^ ^ ^ _ of tbe critical issues in the changing

business has found that business chal-lenges of growth, globalization, andrapid change have intensified, andthat there is now broad consensusaround the need for HR to go beyondits administrative expertise and beexpert at strategic business partner-ing, change management, andemployee advocacy (Wright, et al.,1999). The researchers conclude thatit is imperative to go beyond talkabout what the role should be and geton with executing it. Another studyhas found broad agreement on the

competencies required for HR leaders and man-agers (Walker and Reif, 1999), confirming theprimary importance of the business partner roles.Yet, in this same study, both line managers andHR leaders identify the most critical HR capabilitygaps in such business-oriented areas as strategicassessment, organizational design, developmentand leaming, strategic staffing, and envisioningthe organization of the future.

Given the amount of attention during the pastdecade to the importance of HR becoming abusiness partner and the apparent slowness ofactual progress in this direction, it is clear thatdescribing the new HR role and associated com-petencies constitutes only the first step in transi-tioning HR to this new role. A second step isneeded. The HR function has been organized tocarry out an administrative function; enacting anew role requires organizing the HR function tocarry out its new role.

HUMAN RESOURCE PLANNING I

A forward-looking view of the HR futictionwas presented in the Corporate LeadershipCouncil's Vision of the Future (1995). It project-ed a gutting of the HR function as we know ittoday; the transfer of many HR functions to theline, outside vendors, and high-efficiency pro-cessing centers; and an almost exclusive focuson business consulting and the management ofthe organization's core competencies. Certainly,changing HR's role will require a different mixof activities and may necessitate reconfiguringthe HR function to support changing businessstrategies and organization designs (Mohrmanand Lawler. 1993). It also will require that theHR function make much greater use of informa-tion technology. Automating the transactionalaspects of HR may free up resources to take onthe new business partner activities and, just asimportantly, changes the relationship of HR toemployees by empowering employees to dothings that HR used to do for them. A movetoward e-HR also offers the potential for a per-sonalized interface with individual employees.Additionally. HR can take advantage of databases and powerful analytical tools to tracktrends and data useful in determining strategicHR policies and practices and ensuring that theorganization maintains its needed talent pool.

Are HR functions implementing the changesin their own organizations that are required tosupport the new roles and capabilities that theirbusinesses need? One study found that 64 per-cent of the companies examined report that theyare transforming their HR organization (Csokaand Hackett, 1998). In 1995, our first wave ofthis CEO-HRPS study of the HR organizationfound some evidence of change in HR activities,structures, and practices, but noted that theremay be more discussion of change than actualorganizational change (Mohnnan, et al., 1996).In 1998 we once again examined whether thestrategically oriented changes that have been pre-dicted for HR organizations are actually occur-ring, and what difference they make for HReffectiveness.

MethodologySurveys were mailed to medium and large

companies that are either sponsors of the Centerfor Effective Organizations at the University ofSouthern Califomia or members of The HumanResource Planning Society, or both. The surveyswere filled out by HR leaders who are in a direc-

tor-level or above position with corporatewidevisibility to the HR function. In 1998. 119 usablesurveys were received (17.9 percent responserate.). In 1995 we had a slightly higher responserate and a sample of L30 companies. One hun-dred and fifteen companies responded to bothsurveys; thus, this second study offers a goodpicture of the amount of change in the HR func-tion in this sample of compajiies. The surveyswere generally filled out by large companiesfrom a variety of industries. The average organi-zational size in 1998 was .34,948. Therefore,these findings must be considered as characteriz-ing large companies.

The 1998 survey was an expanded version ofthe 1995 survey.' It covered nine general areas;

1. General descriptive information about thedemographics of the finn and the HR function.2. The organizational context that the HR func-tion serves, including its broad organizationalform and the amount and kinds of strategicchange and organizational initiatives beingcarried out by the company.3. The changing focus of the HR function mea-sured in terms of how much time it is spendingin different kinds of roles compared with five toseven years ago.4. The extent of emphasis that a number of HRactivities are receiving.5. Human resources' use of various organiza-tional practices to increase efficiency and businessresponsiveness and the extent to which humanresources is investing in a number of strategicinitiatives to support strategic change.6. The use of shared service units and theireffectivene.ss (new in 1998).7. The use of outsourcing and the problems thathave heen encountered (new in 1998).8. The use of infonnation technology and itseffectiveness (new in 1998).9. The changing skill requirements for employ-ees in the HR function and satisfaction withcurrent skills.

Staffing of the HR FunctionIn the firms studied, the average number of

employees in the HR function was 402, a slightincrease from the 377 number in 1995. The ratioof HR employees to all employees was I to 87.This ratio is slightly lower than the median I to100 ratio reported in the Conference Board Study(Csoka, 199.5) and lower than the I to 92 ratiofound in our 1995 survey, thus suggesting growth

12 HUMAN RESOURCE PLANNING

in the HR function of large organizations. A sim-ilar result is reported in the SHRM-BNA surveyof HR functions which shows a slight growth inboth staff and budget from 1997 to 1998 (BNA,1998). Thus, as of 1998, there was no evidenceof a shrinkage of the HR function.

Demographic information on the staffing ofthe HR function for the ftrms responding to thestudy is portrayed in Table 1. Of the total HRstaff in these organizations, 59 percent werecharacterized as professional/managerial and 46percent were described as generalists. The per-centage of the HR professional/managerial staffthat are part of a centralized corporate staff func-tion is 43 percent. Overall, there was no signifi-cant change in staffing of HR functions from1995 to 1998.

HR Generalists and Specialists

Percentage of humanresources employees

• Professional/Managerial

• HR Generalists

• Corporate Staff

1995

57

46

44

1998

59

46

43

Companies in the survey typically operated inseveral countries: 63.3 percent had more than 5percent of their revenue come from outside theUnited States. In the companies that operatedinternationally, 17 percent of their HR profes-sionals were located outside the United States,whereas 21.5 percent of their employees wereoutside the United States. This suggests that tosome degree there is less staffing of the HRfunction outside of the United States than insidethe United States. Undoubtedly this is becausesome corporate services from the United Statesare provided to employees in other countries.The locations oulside the United States were typ-ically staffed by local nationals. Seventy percentofthe companies reported that they use onlylocal nationals outside the United States. Nocompany had most of their intemationai HR staffcome from the United States.

Seventy-five percent of the top HR executivescame up through the HR function, ln the other25 percent of cases, these executives came from

functions such as operations, sales and marketing,and legal. This number is slightly higher thanthe 21 percent we found in 1995. Hence, asubstantial number of firms continue to placeexecutives over the HR function who iu e nottrained as HR executives.

Change in the HR Organizationand Activities

In order to become a business and strategicpartner, the HR function must go beyond devel-oping administrative systems and practices anddelivering HR services to ensuring that thecompany's human resources have the neededcompetencies and are motivated to performeffectively. It also must help the organizationtransform and develop itself to accomplish itsstrategy and be successful. Thus, the HR func-tion should be positioned and designed as astrategic business partner that participates inboth strategy formulation and implementation.

When asked to look retrospectively, HR lead-ers in both 1995 and 1998 reported that duringthe last five to seven years there has been a sig-nificant decrease in the amount of HR timedevoted to maintaining records, and auditing/controlling the HR practices of the organization.They also report that there has been a significantincrease in time spent on the development of HRsystems and practices and on being a strategicbusiness partner. In 1995 they reported adecrease in time spent delivering HR services,bul in 1998 they reported that there has been nochange in this area. When asked to estimate thepercentage of time currently spent in these areas,the only significant change between 1995 and1998 is a reported increase in the percentage oftime spent on service delivery—the implementa-tion and administration of HR practices. There isno decrease in the time spent on record keeping,control and audit and no increase in the develop-ment of systems and processes or strategic busi-ness partnering activities (see Table 2). Thus,although HR leaders may have the Impression ofa shift in the way their function is allocating itstime, there does not appear to be much of a shiftin the time spent in these broad categories ofactivities.

The perceived increase in service delivery in1998 might reflect an expansion of HR servicesso that more of the services are strategicallyfocused. Indeed, when asked about the focusof HR on specific activities (see Table 3), the

HUMAN RESOURCE PLANNING 13

Percentage of Time Spent on Various HR Roles

Maintaining RecordsColiecl. track, and maintain data on employees

Auditing/ControllingInsure compliance Co internal operations, regulations, legal, and union requirements

HR Service ProviderAssist with implementation and administration ot'HR practices

Development of HR Systems and Practices

Strategic Business PartnerMember of the managetneni team. Involved with strategic HR planning, organizationdesign, and strategic change

1995

15.4

12.2

31.3

18.6

2t.9

MEANS

1998

16.1

11.2

35.0"

19.3

20.0

' The change is significant in all companies. The perceniflge of change is significantly higher in companies with severalgroups or sectors of businesses.

respondents see an increase in focus on suchstrategic and business support areas as strategicand HR planning and on organization design anddevelopment, as well as on talent and pertbrmance-oriented issues such as employee development,compensation, performance management, bene-fits, and recruitment and selection. HRIS also hasincreased in focus, no doubt reflecting the shiftto automated systems. There has been no changein the focus on traditional HR areas of control,audit, and "care" of employees, such as legalaffairs, affirmative action, and employee assis-tance and union relations. A slight decrease infocus on record keeping is reported.

A number of changes in structure and processhave been advocated in order to increase busi-ness responsiveness of staff functions (Lawler

in Focus on HR ActivitiesSignificant Increase

HR Planning

Organizational Development

Organization Design

Strategic Planning

Employee Development

Management Development

Career Planning

Compensation

Perfonnance Appraisal

Benefits

HRIS

No Change

Employee Record Keeping

Legal Affairs

Affirmative Action

Employee Assistance

Union Relations*

' very sliglit decrease

and Galbraith, 1993; Mohrman, et al., 1998).Table 4 shove's the relative extent of use of them.Business-support-oriented practices that are fre-quently applied in these firms include decentralizingHR generalist support to operating units, the useof HR teams to support the business, and the useof joint HR/Line task teams to develop HR systemsand policies. Additionally, these companies areemploying corporate centers of excellence, andthe centralization of administrative processing.Interestingly, this pattern of organization showsa blend of centralization and decentralization thatmay explain why the percentage of HR employeesthat are at the corporate level has not gone down,despite the fact that companies also say they areto some extent trying to maintain a very smallcorporate staff. Practices that have been advocatedto increase the business orientation and respon-siveness of HR but that are currently less widelyused include outsourcing, providing employeesand managers with the HR self-service, rotationof people within and in and out of HR, and self-funding for HR services. It is instructive to notethat the infrequently utilized approaches are moreradical in the sense that they blur the boundariesof the HR organization and change its relationshipto the business.

Determinants of HR EffectivenessA basic premise underpinning the discussion

of the appropriate HR role is that being a busi-ness partner is essential to HR effectiveness.Table 5 shows the relationship between the typeof business partnership that the HR organization

14 HUMAN RESOURCE PLANNING

i Change in Application of.Organizational Approaches

Low Overall Use

Rotation into &, out of HR

Rotation within HR

Self-Service

Outsourcing

Allowing HR Practicesto Vary**

Self-Funding forHR Services

Higher Overall Use

Corporale Centersof Excellence *

DecentralizingHR General ists*

HR Teams to Supportthe Business*

Centralizing AdministrativeProcessing

SniaD Corporate StafF

Joint HR / Line TaskTeams to Develop HRSystems*

•Increased in use from 1995 to 1998**Degiined in use from 1995 lo 1998

has antl its rated effectiveness in a number ofareas. Ftir this analysis each HR function wascharacterizeti as either a full business partner ornot a full business partner based on the companies'answers to the questionnaire. The results forthese two groups are significantly different on

most of the measures of effectiveness. Theyclearly establish tbat HR rated itself as moreeffective when it is a full business partner. Tbereare a few exceptions. Business partnership doesnot change the effectiveness of managing out-sourcing, shared services, and centers of excel-lence, activities tbat for tbe most part transfer thetraditional transactional and the expert functitmalroles of HR into new units. These results suggestthat making HR a business partner can enableHR staff to deliver business-oriented servicesmore effectively. This makes sense because ifHR executives understand the business strategy,tbey can do a better job of supporting the businessstrategy and may even influence tbe businessstrategy so that it is more realistic in terms ofthe kind of support HR can offer.

This is simply a statistical relationship, andtbe causal direction between effectiveness andbeing a business partner could operate in thereverse direction. Tbat is. HR effectiveness migbtbe the price a HR organization bas to pay inorder to be regarded as a full business partner.Our estimate is that tbe influence is predominate-ly from business partner to effectiveness, butbotb directions of causation may be operating.

Relationship of Type of Business Partner to Effectiv

Performance Effectiveness *

Providing HR Services

Providing Change Consulting Services

Being a Business Partner

Developing Organizational Skills and CapabiLities

Tailoring HR Practices to Fit Business Needs

Helping Shape a Viable Employment Relationship for the Future

Helping Develop Business Strategies

Being an Employee Advocate

Overall Pertormance

Managing Outsourcing of Transactional Services (e.g., Benefits)

Managing Outsourcing of HR Expertise (e.g.. Compensation Design)

Operating Centers of Excellence

Operating Shared-Service Units

enessMEANS

NOTPARTNER

{N=84)

6.0

6.9

5.3

6.1

5.S

6.6

5.4

5.6

6.5

6.4

6.4

6.1

5.4

5.7

FULLPARTNER

{N=35)

7.0*

7.3

6.0*

7.5*

6.r7.5*

6.6*

7.6*

7.5*

7.3'

6.9*

6.4

5.8

5.7 n

'Significant difference (p < .05) between the two categories.Scale response; 1 - Not Meeting Needs, iO = Al! Needs Met' Scale Score tor 9 Items that Eollow

HUMAN RESOURCE PLANNING 15

^ la t ionsh ip of HR^

Effectiveness'

Providing HR Services

Providing Change ConsultingServices

Being a Btjsiness Partner

Developing OrganizationalSkills and Capabilities

Tailoring HR Practices to FitBufiiness Needs

Helping Shape a ViableEniploymenl Relationshipfor the Future

Helping to Develop BtisinessStrategies

Being an Employee Advocate

Overall Performance

Managing Outsourcingof Transaction al Services(e.g., Benefits)

Managing Outsourcingof HR Expertise (e.g.,Compensation Design)

Operating Centersof Excelience

Operating Shared-Service Units

^ole to Effectiveness

NOTPAFtTNER

(N=84)

-. I9t

-.32***

IT***

-.15

-.I7t

-.25*^

-.14

-.25^=*

- .25*

-.06

- . 2 2 -

-.16

FULLPARTNER

(N=35)

-.20*

-.07

-.12

-.12

-.10

-.05

-.14

-.15

-.19^

-.16^

.08

.00

-.08

-.12

Activity Areas

PROVIDINGHR

SERVICES

-.19*

.00

-.21*

-.25'^

-.05

-.17^

-.15

-.23*

.03

-.13

-.09

-.14

-.03

-.01

DEVELOPINGHR SYSTEMS

.15

-.02

.19*

.12

-.12

.01

.12

.07

-.01

.10

.10

-.02

.08

.01

STRATEGICBUSINESS

PARTNERING

.44***

.17'

.46***

,53***

.24*

.29'

.24*

,46***

.18^

.14

-.01

.16

.11

Zero order correlation; ' p< 0, H) *p < 0.05 " p < 0.01N=l 19 I Scale Score for 9 Items that Follow

Table 6 shows the relationship between howtime is spent by the HR organization and theeffectiveness of the HR organization. The tableshows a negative relationship between theamount of time spent on records, auditing, andproviding services and effectiveness. On theother hand it shows a strong positive relationshipbetween the degree to which a HR organizationspends its time as a strategic business partner andits perceived effectiveness.

The results strongly support the idea that inorder lo be effective the HR organization needsto decrease the amount of time it spends main-taining records and doing auditing and control-ling, and increase the amount of time it spends asa strategic business partner. This conclusion isreinforced by the areas of HR performance

"''p< 0,001

where effectiveness is most strongly related tobeing a strategic business partner. The correlationis highest for helping develop business strategies,providing change consulting services, and beinga business partner. Tliis suggests that being aneffective business partner leads to the view thatthe HR organization is effective. It is also consis-tent with the work of Brockbank (1999). whichfinds that perfonnance is higher when HRdepartments focus more on strategy.

Table 7 shows the relationship between effec-tiveness and how much HR organizations haveincreased their attention to certain activities.There are highly significant positive relationshipsbetween effectiveness and increased attentionto organizational design and development. Inparticular, increasing the amount of activity in

16 HUMAN RESOURCE PLANNING

' Relationship of HR Activity Increases to Effectivene

Design & Organizational Development •

IiR Pkmning

Organizational Developtnent

Organizational Design

Strategic Planning

Employee "Care"^ =::

Beneilts

Employee Record Keeping

Legal Affairs

Affirmative Action

Employee Assistance

Employee & Management Development^

Employee Training/Education

Management Deveiopmcnl

Recruitment & Selection^ /

Recruitment

Selection

Compensation "

HR Information Systems

Performance Appraisal

Career Planning

Union Relations

ssEFFECTIVENESS

. 46 -*

.30***

.33***

.43***

,40***

-.09

-.03

-.11

.03

-.13

-,05

.16^

.17'

.13

.17*

,18"

.13

.07

.11

.10

•07 ; !»

-.14

Zero order correlation: 'p<0.10 *p<0.05N=119I Scale Score tor 4 Items - Scale Score for 5 Items

p<O.Ot

' Scale Score lor 2 Items

the area of strategic planning, organizatiotialdesign, organizational development, and HRplanning are all significantly related to high ral-ings on effectiveness. Spending more time inother areas of activity, with the exception ofrecruitment, a hot topic, is not significantly relat-ed to effectiveness. Even an increased focus onsuch core areas as compensation, performancemanagement, and employee and managementdevelopment is nol related to HR executives'own ratings of their futiction's performanceeffectiveness. This represents a sea change fromthe era when purely functional excellence wasthe standard by which HR was judged.

We have argued that HR must not only helpthe business with its organizational design, butthat in order to develop new capabilities and

perform differently, it must pay more attentionto its own organizational design. Table 8 showsthe relationship between how the HR functionis organized and its rated effectiveness. Anumber of significant relationships are inthe predicted direction. For example, havingcorporate centers of excellence and thedeployment of resources to business units areassociated with high levels of effectiveness.Also associated with effectiveness are the rota-tion of people within HR, self-service, the useof HR teams to provide service and to supportthe business, and development of HR systemsthrough joint line/HR task forces. The laterrelationship is particularly strong and highlightsthe importance of having line managementinput and ownership.

HUt^AN RESOURCE PtJ>.NNING 17

T A B L E 8 - - - . . .

Relationship of HR Organization to Effectiveness

Shared Services'

Administrative Processing Is Centndized

Corporate Centers of Excellence

Deployment of HR Resources to Business Units'

Decentralized HR generalist's support business units

Very Jimall corporate staff - most HR managers and professionals out in Businesses

^^otation into and out of the HR Function'

People rotate into HR

People rotate out of HR to other Functions

Self-Service'

Some activities that used to be done by HR are now done by line managers

Some transactional activities that used to be done by HR are done by employeeson self-service basis

Outsourcing'

Transaciional work is outsourced

Areas of HR expertise me outsourced

HRTeams Provide Service and Support the Business

HR Practices Vary Across Business Units

Self-Funding Requirements for HR Services

HR Systems and Policies Developed Through Joint Line/HRTaskTeams

People Rotate Within HR

EFFECTtVENESS

.21*

,08

,26"

.24*

.18^

.21*

.15

,15

,13

.28**

.25**

.22*

.16^

,19"

,07

.24'-

-.06

.00

.33"

.27**

Zero order correlation: ' p < 0.10 "p < 0.05N=119' Scale Score for 4 Items ^ Scale Score for 5 Items 3 Scale Score for 2 Items

A key organizational challenge i.s how toincrease the level of activity in the business sup-port areas of organizational design and develop-ment and planning without greatly inflating thenumber of HR professionals in the organization.Clearly, organizational changes such as the cre-ation of shared services and centers of excellenceand a reliance on self-service are ways to lever-age resources throughout the organization andfree up headcount to deliver business support.The effectiveness of this approach depends, how-ever, on having a quality of information systemthat can efficiently link decentralized businessunits and employees to centralized systems andservice units.

One way to judge the impact of informationtechnology (IT) on the effectiveness of the HRorganization is by the relationship between the

degree of IT use and HR effectiveness. Table 9shows the average overall effectiveness ratingof organizations with different degrees of HRprocess automation. It shows a pattern in thedirection of more automation leading lo greatereffectiveness. When statistically comparing thecomponents of effectiveness across companieswith different levels of IT process capability, theareas of effectiveness that are most enhanced byincreasing IT process automation are providingHR services, tailoring practices to fit businessneeds, and operating shared service units. Thus,it appears that the HR function can indeed be amore effective service deliverer, can leverageservice across business units, and can tailorservices more easily if there is good processautomation. Process automation currently doesnot. however, appear to impact significantly the

18 HUMAN RESOURCE PLANNING

ability ofthe organization to provide strategicbusiness support in such areas as change consul-tation, developing business strategies, and beinga business partner, presumably because itdepends more on responsive support fromknowledgeable HR professionals. On the otherhand, by automating transactional and somefunctional services, it may be possible to freetime and people for business support activities.

Relationship of HR Processtomation to Effectiveness

Completely Integrated HRInformation System

Mo,st Processes are Automatedbut Not Fully Integrated

Some HR Processes are Automated

Little Automation Presentin HR Function

No Automation PresenI

MEANEFFECTIVENESS

RATING

6.6

6.6

6.0

6.4

5.9

Response Scale: 1 - Not Meeting Needs, 10 = All Needs Met

ConclusionOverall, the results show relatively strong

relationships between how the HR organizationoperates and its effectiveness. This study pro-vides considerable support for the argument thatHR organizations need to be business partners. Itsuggests that focusing on strategy, organizationaldevelopment, and organizational change is a highpayoff activity for the HR organization. It alsosuggests that infonnation technology andchanges to HR organizations can lead to a moreeffective HR organization. For HR to do morethan simply talk and think about becoming moreof a business partner, it is imperative that itchange the way it organizes its resources and itsmix of activities. Although there is someprogress, it appears that at this point in time mostHR organizations have been adding new activi-ties and focuses and that the hard work of elimi-nating some lower value-adding focuses andstreamlining others is still a journey in process.

Biographical SketchesEdward E. Lawler II! is a DistinguishedProfessor of Business and Director of the Center

for Effective Orf>anizatlons in the MarshallSchool of Business at the University of SouthernCaiifornia. He has heen honored as a top con-tributor to the fields of organizational develop-ment, organizationai hehavior and compensation.He is the author of over 200 articles and thirty-hooks. His most recent books include Strategiesfor High Performance Organizations - The CEOReport (Jossey- Bass, 1998), The LeadershipChange Handbook (Jossey-Bass, 1999),Rewarding Excellence (Jossey-Bass. 2000).Creating a Strategic Human ResourcesOrganization (Center for Effective Organizations.2000), and Corporate Boards: New Strategies forAdding Value at the Top (Jossey-Bass, 2001).

Susan A. Mohrman is Senior Research Scientistat the Center for Effective Organizations in theMarshall School of Business at the University ofSouthern California. Her research is in the areasof organization design and effectiveness.

Her recent hooks include Designing Team-Based Organizations (Jossey-Bass. 1995),Tomorrow's Organization: Crafting WinningCapabilities in a Dynamic World (Jossey-Bass.1998); Strategies for High PerfonnanceOrganizations (Jossey-Bass, 1998); and Creatinga Strategic Human Resources Organization(Center for Effective Organizations. 2000).

She received her BA. in Psychology fi'omStanford University, and her Ph.D. inOrganizational Behavior from NorthwesternUniversity. She has served on the Board ofGovernors ofthe Academy of Management and iscurrently on the Board of The Human ResourcePlanning Society.

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Csoka, L.S. and Hacken, B. 1998, Tramforming the HR Function forGlobal Business Success (New York: Conferent-e Board).

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Eichinger, B, and tJlrich. D. 1995. "Human Resources Challenges:Today and Tomtirrow." The First Annual State-of-the-Arl CouncilReport from The Uuman Resource Planning Sociely (New York:HRPS).

Lawler. E.E. 1995. "Siraiegic Managemeni: An Idea Whose Time HasCome." In B. Downie and M.L. Coales (eds.). Managing HumanResources in the t99ih and Beyond: Is the Workplace BeingTransformed? (Kingston. Canada: IRC Press): 46-70,

Lawler. E.E.. S.G. Cohen, and L. Chang. 1993. "Strategic HumanResources Management," In P. Mirvis (ed.). Building the CompetitiveWorkforce (New York: Wiley): 31-59.

Mohrman. A.M., and Lawler. E.E. 1993. "Human ResourceManagement: Building a Strategic Partnership," In J.R. Galbrailh andE,E, Lawler (eds.). Organizing for the Future: The New lugii: forManaging Complex Organizariom (San Franciseo: Jossey-Bass).

Mohrman. A.M., Galbraith. J,R,. Lawler, E,E,, & Associates. 1998.Tomorrow's Organization: Crafting Winning Capabilities in aDynumir World (San Francisco: Jossey-Bass).

Mohnnan. S.A.. Lawler. E.E,. and McMahan, G.C. 1996. Directionsfor !he Human Resources OrganiiuHon (Los Angeles, CA: Center forEffective Organizations).

Smiih, L,H, and Riley, CE. t994. Human Raomces Alignment Study.Best Practices Report: Achieving Success Through People (Hou.sion:The American Productivity and Quality Center).

Ulrich, D. 1997. tiuman Resource Champions. (Boston, MA: HarvardBusiness School Press).

Ulrich, D.. Losey. M,R,, and Lake, G. (eds.). 1997. Tomorrow's HRManagement. (New York: Wiley).

Wrighl, P.M., Dyer. L. & TakIa, M,G, 1999. "Whafs New? KeyFindings from the 1999 State-of-the-Art & Practice Study" HumanResource Planning. 22(4): 12-20.

Walker, J.W, & Reif, W.E, 1999. "Humaii Resource Leaders:Capability Strengths and Gaps," Human Resource Planning, 22(4):21-30.

I. A complete copy of the questionnaire can be found in Lawier, E.E.and Mohnnan, S.A. (2(X)0). Creating A Strategic Human ResourcesOrganization (Los Angeles. Center for Effective Organizations).

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