If its admin can be streamlined and most of its functions outsourced, what is the role of the HR department? A recent survey carried out by accountancy firm Price Waterhouse Coopers asked 165 HR directors about their priorities. Some 85% said attracting and retaining talent will become their biggest challenge over the next five years; 65% said providing clear metrics for HR performance would also be important.

These are concerns that mirror those of many a chief executive, says Michael Rendell, partner in HR services at Price Waterhouse Coopers: securing the succession of the business, managing the talent group, and becoming measurable and accountable.

HR does seem to be submitting itself to close scrutiny and looking to raise its game. A recent study by the Chartered Institute of Personnel Development showed that 56% of HR professionals aspired to becoming strategic partners within their organisations. Only 33% said they were already performing at that level.

Neil Roden, HR director of the Royal Bank of Scotland (RBS), is clear that his team is there to focus on the commercial aims of the business. He acknowledges, however, that, across the HR community generally, this is not an area where people have performed well. “A lot of HR people are not very commercial. And there’s a deeper question here: what is HR here to do? Is it here to shove paper around or is it here to add value? We’re here to help the organisation make profits, helping to make people more productive, getting people that other people can’t get, keeping people that others might lose. HR is a means to an end,” he says.

Certainly addressing the question of outsourcing head on — and managing it if it becomes a reality — is a key area where HR professionals can win ground. “The problem with HR outsourcing, as it’s currently described, is that it’s probably hitting at what HR people spend most of their time doing. And for some people it’s probably personally challenging,” says Roden.

Outsourcing is by no means inevitable, however. “You have to bear in mind that it’s a cost-oriented thing. Now that’s all right, but what about service?” he argues. While RBS does outsource some functions (its flexible benefits system is handled by Hewitt Associates), Roden is sceptical about the ability of outsourcing suppliers to do a better job than the bank itself. With more than 100,000 employees in the UK, RBS is bigger than many outsourcing vendors and comes with its own persuasive economies of scale.

HR professionals need to get their heads around how they can contribute, says Mark Withers, director of Mightywaters Consulting.

“What they will bring will be a deep knowledge of the organisation, which marries well with the expertise that external consultants have,” he argues. “Using consultants gets expensive, and organisations need to sustain change from within.”

The business case

Spending her early HR career in retail — two years at Marks & Spencer and seven at Kingfisher — gave Sharon Doherty, early exposure to commercial realities. “You have exposure to metrics, to how you make money, to the profit and loss. And it’s very real-time.”

Doherty, 38, is now director of HR and operational effectiveness at BAA, as well as being a divisional director at Heathrow. She says she didn’t harbour ambitions to become a CEO or a managing director, but HR nevertheless gives her a grandstand view of how businesses evolve and how people perform. “You have a legitimate reason to look across the whole business. If you’re interested and you are a good enough leader, you will get experience in areas that are vital to the organisation.”

At Kingfisher, Doherty worked on talent management, internal communications programmes, evaluating the requirements for new ventures, and following through with recruitment. These were all initiatives that contributed to Kingfisher’s forward momentum and they gave her experience of communicating at board level.

Her HR skills are portable and give her a passport across an organisation, she says. “You get a 360-degree view of the business. You genuinely do things that impact on people’s lives: both developing employees — the most valuable asset an organisation has — and, through them, the business.”

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