The 3 Levels of HR
All too often, the trend among small to medium size businesses is to focus on head count subscribing to the rule of thumb that each person must do their share by holding multiple role responsibilities. If, however, you hope to grow your organization, your HR department should be the first place to start.
In order to understand why your Human Resource department is critical to the growth and profitability of your business, it is important to understand exactly what role your HR department holds. Essentially, your Human Resource department functions on 3 distinct levels, with each level requiring specific expertise. So while simply adding a new responsibility to an existing role may sound like the perfect solution, it creates inefficiencies that can be costly to your bottom line.
The Three Tiers of HR
Tier One: Transactional
Think of transactional as the daily tasks and routine that must be maintained in order to insure that your organization operates within compliancy guidelines and that your payroll and benefits are correct and on time. Although this role is critical to your organization’s survival and does require expertise, many new HRIS systems allow these tasks to be effectively managed at the administrative level. This role typically does not include authority over direct reports and holds limited decision making authority.
Tier Two: Operational
Where Tier One serves to maintain the daily operations of your organization, Tier Two focuses on developmental advances and mid-range goals that are necessary to meet long term strategic objectives. This level, engages decision making abilities that have a direct impact on the immediate status of the organization. Central to this role is organizational development with a focus on: training, recruitment, and talent retention. Individuals at this level may or may not hold HR credentials but should have a minimum of collegiate level business studies and work experience that demonstrates proven abilities.
Tier Three: Strategic
Although the Operational Level includes decision making at the mid-range level for immediate goals, the focus of Strategic is far more overreaching. Strategic level planning should include a voice in both the annual and long range fiscal planning and development of the organization, and as such requires a seat at the C-Suite table. This role holds responsibility for succession planning, long range goals, and advanced talent training and development. In order to successfully fulfill this role, your strategic HR partner must have the knowledge and expertise to work alongside all key decision makers for your organization. This role should include HR certification credentials, a minimum of a bachelor’s degree (although preferably higher) and proven work expertise in long range goal planning.
By taking a critical look at your present HR expertise, you can determine where and how to best address your organizational needs. Expecting your transactional level staff to assume strategic duties is both impractical and ineffectual. Likewise, tasking your operational level HR member to assume both transactional and strategic level responsibilities will lead to underperformance at the strategic level and underutilization at the transactional level. Rather than overpaying your Tier Two and Tier Three level HR to conduct administrative tasks, consider outsourcing where appropriate. Today, any of the tiers can be managed cost effectively through a third party partner. Maintaining cost efficiencies requires the best utilization of your in-house talent and executing your goals as you grow. The right investment in HR today will insure dividends for your future.
For assistance with any or all of your human resources needs, HR Affiliates, provides solutions.