> Academy of Management Executive, 1990 Vol. 4 No.

Repositioning the Human

Resource Function:
Transformation or Demise?
Randall S. Schuler, New York University

Executive Overview
The human resource department is being presented with an opportunity to
become a significant player on the management team. This is occurring because
the human resource (HR) function is being transformed into a significant
management function. Environmental changes are confronting organizations
with people issues of great importance and uncertainty. People issues are thus
becoming formulated as significant business issues. One result is that line
managers are reaching out to take control and ownership over the HR function.
This is being facilitated by many HR departments that remain focused on issues
involving functional expertise rather than business-relatedness. Examples exist,
however, of companies in which the HR departments are seizing the opportunity
to become vital members of the management team and working with line
managers to tackle the people-related business issues. Doing so, however,
appears to require a virtual repositioning of the HR department. This, in turn,
involves new roles, new competencies, new relationships and new ways of
operating for both HR and line mangers. The result is an HR department that is
a management team player with a business issue and customer focus and a
bottom-line orientation. New roles for both line managers and HR managers and
enhanced organizational effectiveness in addressing people-related business
issues may result.

Article

"Right now there is a place for corporate HR in company-wide recruiting efforts

so it can recruit in one division but with the needs of other areas in mind so
there can be company-wide flexibility. Corporate HR is not taking the lead on
this situation. Flexibility is needed for worJdwide needs but the department does
not see themselves as doing this. They see themselves as "doctors" not business
managers: not part of the team."

This comment, made by a senior vice president of executive development, points

to a general lack of understanding of the business (its strategy, the way it works,
the dynamics of the industry, etc,) in today's human resource departments, A
seeming reluctance to perceive the line manager as customer, prompted Art
Maine at Revco, another senior personnel manager to observe:

"The real role of HR is in the areas of human productivity, quality and

performance, yet these are being done increasingly by line managers, especially
in the highly innovative successful mid-sized companies. The HR staff just do the
administrative stuff which could be downloaded someday to the accounting and
legal departments."

In this extreme scenario, the HR department is dissolved, and the function split
among the accounting and legal departments, outside consultants, and line
managers. While this situation has significant implications for HR managers and

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staff and all line managers, it does not mean that the HR profession is witnessing
an irreversible trend. To the contrary, the profession could be seeing through its
clearest window of opportunity yet. Taking advantage of this opportunity,
however, appears to require nothing less than the total repositioning of the HR
department. According to Robert Galvin, CEO of Motorola,

"Generally we're seeing the HR manager and HR department being offered the
opportunity to be transformed from a functional specialist to management team
member and it is expected that the shift from "employee advocate" to "member of
the management team" will continue into the 1990s. Human resource professionals
will be called upon to think and act like line managers to address people-related
business issues. Managers will increasingly expect HR to think and act, and to
view human resource activities from a business perspective."'

real role of HR
is in the areas of
human productivity,
quality and
performance, yet
these are being done
increasingly by line
managers, especially
in the highly
innovative successful
mid-sized companies.
The HR staff just do
the administrative
stuff which could be
downloaded someday
to the accounting and
legal departments."
Having a business perspective means concern with the bottom-line, profits,
effectiveness, and survival. It also means addressing human resource issues as
business issues—seeing them in the context of business strategies and operation
plans, considering the issues at each organizational level, and considering the
perspectives of all stakeholders. Thus, rather than being redundant, HR
departments could seize the opportunity to be a vital member of the management
team.
Whether HR departments seize this opportunity remains to be seen. Failure to
grasp it may prophesize the demise of the HR department. However, a virtual
repositioning of the HR department will be required to become a member of the
management team. Failure to reposition would shift significant HR activities to the
line managers. While this may enhance the effectiveness of the line manager, it
requires significant understanding of human resource management and
commitment of additional time by the line manager.
Dramatic Environmental Changes
Fundamental changes in the business environment have created the sudden shift
of importance of the HR function. These changes include:

• Rapid rate of business change; high uncertainty

• Rising costs; increasing competitive pressures on margins
• Rapid technological change; increasing demands for new skills through
sourcing, education, and retraining
• Complex organizations; product, geography, technologies, business function,
customers/markets
• Flatter, leaner, more flexible organizations
• Changing demographics, limited labor availabilities
• Responding to external forces: legislation and regulation, litigation, union
relations and union avoidance, etc.
• Increasing multinational competition and collaboration; multilateral relationships

These environmental changes are leading to the acknowledgement by line

management that human resources (i.e., people) are important to the business
and growing uncertainty associated with key human resource issues.

People Are Critical

Increasingly organizations such as Federal Express indicate the importance of
people by including them in the philosophy of the company. Fred Smith's
philosophy, active since day one of Federal Express, is "People, Service, and
Profit."

President and COO of Stop and Shop Companies, Carol Goldberg, noted that.

50
Schuler

"In most service businesses, but in particular in a business as service intensive as

supermarkets, people are a company's most important asset."^

As this importance is recognized, people not only get included in the philosophy of
the company but in the strategic planning process as well. According to Kathryn
Connors, vice president of HR at Liz Claiborne,

"Human resources is part of the strategic planning process. It's part of policy-
development, line extension planning, and the merger and acquisition processes.
Little is done in the company that doesn't involve us in the planning, policy, or
finalization stages of any deal.^

And it seems that when organizations do strategic planning, line managers are
more likely to see the importance of HR issues. According to Revco's Art Maine,
"The problem seems not be one where line managers don't see HR issues as
relevant. Rather it seems that these issues are becoming more important as firms
do strategic planning. When forced to do this scenario building, they see that HR
issues pop up, especially supply of skilled folks or having people adaptable
enough or willing and able to deal with ambiguity. Notice that all these are
business issues really: if they are not provided for, the essence of the business is
threatened."

Companies are beginning to recognize the importance of people to the business's

success. More human resource issues are really "people-related business issues"
in that they influence the essence of the business—profitability, survival,
competitiveness, adaptability, and flexibility.

People Are Uncertain

There is a growing level of uncertainty surrounding several key human resource
concerns. Increasingly, companies can't be certain of:

• a sufficient supply of people

• how to attract, retain, and motivate an increasingly diverse workforce
• getting or having individuals with the right skills, biowledge, and abilities
• employees behaving in ways necessary for the company to be competitive,
domestically and internationally.

The two human resource issues together are transforming how the HR function is
regarded. They are also causing enough of a problem for organizations to take
action—to transform the HR department (manager) from a functional specialist to
a management team player with a business understanding.

The transformation of the HR department to management team player is

impossible without repositioning. The ideal organization has the HR manager
jointly working with the line manager solving people-related business issues.

Transforming the HR Function: People-Related Business Issues

Issues previously regarded as "people issues" are now being thought of as
"people-related business issues" because they very well could threaten the
profitability of the business. Although they are strategic, many of these issues call
for immediate action and short term resolution. For example, according to Tom
Moyers, VP of HR at Perdue.

"What is happening in the entire meat industry is the concern for the repetitive
motion syndrome from highly repetitive work. OSHA is trying to get poultry
producers to reduce the speed of line work and the firms are trying to get their
supervisors to increase the level of job rotation (reducing repetition, etc.).

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Academy of Management Executive

Supervisors are resisting this because this reduces the efficiency of their workers
(despite efforts to change the compensation system to reward behavior for HR
concerns). Nonetheless, top management is concerned with this issue, because of
the immediate threat to profitability and survival of the business and the health of
the consumer."

To be certain, not all people issues are being translated into people-related
business issues. However, the growing number of them are and line managers
are getting involved; even to the point of assuming the HR function. Companies
where line managers and HR managers work together on issues generally reflect
a situation in which repositioning of the HR departments has occurred or is in the
process of occurring.

Because the rise of people-related business issues is having such a profound

impact on the behaviors of line and HR managers, it is useful to examine them.
There are four major issues that are being regarded as people-related business
issues:

• Managing for employee competence. Increasingly, individuals coming into the

workforce lack sufficient skills or as employees they become obsolete due to
technological advances or organizational changes.
• Managing workforce diversity. This means attracting, retaining, and motivating
individuals with diverse and varied backgrounds regarding race, sex, ethnic
origin, age, and language.
• Managing for enhanced competitiveness. A major recognition of organizations
today is that success and survival depend upon greater levels of operational
and strategic effectiveness efficiency. Broadly, this is being translated into
restructuring and downsizing operations, reducing costs of operation, enhancing
levels of the quality of goods and services and continuous and systematic
innovation of new products and services.
• Managing for globalization. The entire world is the arena for the purchase of
goods and services and for manufacturing. This arena must be understood and
mastered by organizations to compete successfully.

Managing for Employee Competence

This major people-related business issue has two targets. One target is the current
and projected group of management talent. Employees who suddenly lack
appropriate skills because technology changes are the second.

Managerial Talent. At Allstate Insurance, Frank Berardi of the Corporate HR

department believes that HR and line managers have been viewing HR issues as
people-related business issues since Allstate started using Michael Porter's
competitive strategy framework two years ago. In the process, they identified a
concern about managerial talent.

Allstate first identified 14 business groups and then identified if the groups should
pursue differentiation or cost strategies. Part of Porter's final analysis is to state the
implications for technology and HRM. Because the HR implication section was too
brief for Allstate, Berardi used it to build on an HR component. He did a gap
analysis with 14 units asking them to identify their current practices and what they
would like to and need to have, given their new strategies. At this point, Allstate
created the corporate HR planning unit. Each business unit, with its own HR
department, tailored or was in the process of tailoring, its HR practices to the
businesses. Based on this exercise, line managers saw gaps. For example, lack of
management talent in the near future in a rapidly changing world was identified.
The need for a new type of manager, who can creatively deal with a diversity of
workers and programs was also lacking. While concern for numbers existed, a
concern for skills was paramount. Allstate's line managers wanted HR to help

52
Schuler

them develop management education programs and new succession programs.

This is a strategic line issue that is HR in nature.
Current Employees and Technological Changes
The technological revolution has meant major change. Organizations are
continually developing plans and philosophies that promote the acceptance of the
technological revolution. It brings numerous changes:
number and types of jobs,
skills required,
training needed,
new organizational structures and reporting relationships,
supervision form and style adjustment (likely to require major unlearning as
well as learning efforts),
obsolescence fears,
continual retraining and adjustment,
organizational flexibility,
willingness to adapt quickly to unpredictable change.

Thus, technological changes have major implications for the human resource
/unction. But, they are also providing opportunity to both human resources and
line managers.
This is the case at the Barden Corporation in Danbury, Connecticut. A
manufacturer of precision bearings, the company recognized that they would
have to continually install computerized numerical control (CNC) machines.
Barden, under the leadership of Donald Brush, vice president and general
manager, identified this as a major people-related issue for the business and
defined it as follows:
The technological evolution of increasingly complex machinery and related
manufacturing equipment, and the development of trained workers to operate
and maintain these machines and equipment.
"We perceived this to be serious problem, and we approached it by creating an
ad hoc committee to study the problem and propose solutions. The committee
included a senior manufacturing engineer, the manufacturing engineer
managers. It was chaired by the director of industrial relations. The committee
concluded that CNC machinists would have to be developed in-house, and it
blocked in the technical competencies (machining, trigonometry, basic computer
programming, etc.) that would be required. The training unit then put together a
specific course of training including the hours involved, identified instructors,
worked out a full apprenticeship program with the State Department of Labor,
and assisted in identifying employees with acceptable minimum qualifications."
A team of line managers, chaired by the HR manager, attacked the
people-related business issue of skill shortage. The team identified the strategic
and managerial aspects and then handed the operational aspects over to the
specialists in training.
This example offers an illustration of the HR department as a management team
player and of HR and line managers working together on a people-related
business issue.
Managing Workforce Diversity
The radical demographic workforce transformation means that business needs to
develop knowledge and understanding in managing a very diverse workforce,
i.e.. Black, Hispanics, women, Asians, etc. Successful organizations will react to
diversity as the important business issue it is by implementing proactive, strategic
human resource planning. Short-term strategies designed to circumvent the

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situation will keep an organization from effectively positioning itself in tomorrow's

world of cultural, gender, and lifestyle diversity.^

The radical Organizations are casting the topic of workforce diversity in terms of business
demographic issues. Bill Fuller, human resources director at the Bank of Boston Corporation,
workforce describes companies that value diversity as winners and points out that the costs
transformation means of programs that support diversity do not compromise a company's ability to
maximize profits. On the contrary, companies that value diversity are also
that business needs to financially successful; indeed, some of the companies that lead in valuing
develop knowledge differences rank among the United States' most profitable. Fuller said, "In the
and understanding in valuing diversity company, you see employees who are less risk averse, who play
managing a very to win rather than not to lose, and as a result you see more creativity, more
diverse workforce, leadership, more innovation."^
i.e.. Black, Hispanics,
women, Asians, etc. Businesses are changing in response to this diversity issue. Digital Equipment
Corporation now has a manager with the title of manager of valuing differences.
Honeywell has a director of workforce diversity and Avon Products has a director
of multicultural planning and design.^ According to Stona Fitch, vice-president of
manufacturing for Proctor & Gamble:

"The first companies that achieve a true multicultural environment will have a
competitive edge. Diversity provides a much richer environment, a variety of
viewpoints, greater productivity. And not unimportantly, it makes work much fun
and interesting."''

Hewlett-Packard conducts training sessions for managers to teach them about

different cultures and races and about their own gender biases and training
needs. ^ Proctor & Gamble has implemented "valuing diversity" programs
throughout the company. A mentor program designed to retain black and female
managers was developed at one plant, and one-day workshops on diversity were
given to all new employees.^

At Merck, where the overall recruiting responsibility has shifted from the human
resource departments to the line managers, significant progress has been made in
hiring and promoting females and minorities. Also, specific hiring and promotion
goals have been established during the past two years for blacks in the exempt
and professional categories.

To achieve these goals, Merck targets recruiting activities at minority schools. It

also offers training programs to executives, managers, supervisors and all levels
of employees in affirmative action planning. In these seminars, participants learn
appropriate behavior in the workplace, about labor relations as it relates to
affirmative action, sexual harassment, and more.'°

Equitable Life Assurance Society encourages minorities and women to form

support groups which periodically meet with the CEO to discuss problems in the
company pertaining to them. Avon has several councils representing various
groups, each having a senior manager present at meetings. These councils inform
and advise top management.

Going beyond programs to recruit and retain black and female managers,
companies are also designing programs to manage the diversity of individuals
with different language skills. Barden, the precision bearing manufacturer
described previously, recently developed a special language program to facilitate
the business' opportunity to grow. According to Donald Brush:

"By mid-1988 it had become evident that we had an opportunity to significantly

increase our business. In order to achieve otherwise attainable goals, we would

54
Schuler

need to increase our hourly workforce by a net of about 125 employees (that is, in
addition to normal turnover, retirements, etc.) in one year. I asked Personnel to
test the waters, recognizing that unemployment in the Danbury labor market had
reached an unprecedented low of about 2.5%. The answer that came back to me
was a qualified yes. That is, we could do so by using our imagination, (e.g.,
bounties to employees for successful referrals, imaginative publicity such as an
open house) and, importantly, by recruiting workers whose English was very
poor."

Human resource staff Managing for Enhanced Competitiveness

are expected to guide As the economy and the nature and level of competition change, jobs and
and support company organizations change. The issues described previously are likely to continue to
efforts in developing spread to more and more firms in the United States during the 1990s. All the efforts
managers as leaders required to create a successful organization depend upon significant changes in
human resource management. For example, downsizing efforts involve
for the new flat, lean, outplacement, retirement, severance pay, management succession, and better
and flexible human resource planning programs to reduce the need for further downsizing.
environment. Decentralizing involves training employees in decision making, new performance
appraisals, changes in compensation, and new leadership skills.
"There are no flexible organizations, only flexible people," an executive observed.
Human resource staff are expected to guide and support company efforts in
developing managers as leaders for the new flat, lean, and flexible environment.
General Electric believes that teamwork, company-wide perspective, global
insight, and customer orientation are critical attributes for its leaders. With fewer
managers and management levels, management capabilities are more important.
Providing challenging and broadening experiences is the key to developing
flexible managers. However, in flat and lean organizations, job rotation and
mobility are difficult because there are fewer managers—and increased time
pressures and demands on unit and individual performance. Business units have
little slack and have difficulty releasing talented managers for broadening
assignments, even a temporary one.''
Mergers and acquisitions create the need for programs in workforce reductions,
relations with communities where closed facilities are located, realignment of
reporting relationships, and integration of two previously independent and
perhaps antagonistic organizations. While all of these efforts have significant
implications for human resource management, the following two examples
demonstrate how HR and line managers can work (indeed must work) together to
sustain programs to make organizations effective.
J.C. Penney. In service businesses, quality often means improving customer
service. In the retail clothing business, getting more cooperation between the
clothing buyer and seller means better service. During the past several years, J.C.
Penney has identified this need and responded. According to Jim Stahler in the
HR department at Penney:

"This is an interesting situation because it was a macro move {or the firm and it
essentially has been completed. It was certainly long term. The change has been
under way for about 10 years.
During the early mid-1970s, the company started to notice that margins were
shrinking due largely to the competition of the Wai-Marts and K-Marts. All the
stores here were trying to compete in the full range of goods, including
automotive, house and garden, etc. They all wanted to Jbe the one stop shopping
place, mostly in a mall environment.
At this time they discovered the satellite and the ability to link buyer and seller
with instantaneous, paperless communication. So the character of the folks

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needed for buying and selling changed. The buyers needed platform skills (and
one thinking more like a customer and having some backshop knowledge) in
order to deal with manufacturers and even the sellers. They had to develop a
cooperative attitude with the sellers and not be so ready to fix the blame on the
sellers. The sellers had to change too. Some sellers went to the buyer organization
and vice versa. This was critical to the entire change. Not until the Ford Motor
change effort of Quality Is Job 1, were quality and team development seen as
critical to the success of or a major turnaround of a large organization."

Grand Union. Grand Union, the nation's third largest food store chain also
decided to become upscale to enhance its competitiveness and profitability.
According to Bill Reffett, senior VP of human resources:
"To go upscale meant customer-focused and high quality products. More
customer-focused meant more concern for what the customer wanted, more
attention to customer complaints and more courtesy from employees (associates).
Higher product quality meant better products and more products that they
currently didn't have, e.g., their own freshly baked goods."
For Grand Union, the major HR area of impact was training and development.
Customer-focused meant paying more attention to management and recognizing
performance (previously, there was essentially none of this). The store managers
had to be trained in management skills, especially in giving performance
appraisals and taking them. Reffett and his team installed a popular performance
appraisal system given monthly for the store managers and every six months for
other associates.
Managing for Globalization
It is certain that "globalization" will continue to be an inescapable buzzword.
Businesses will operate in an interconnected world. With continuing advances in
computers and communications, world financial markets are melding.
Manufacturing capabilities are appearing almost overnight in new Taiwans and
South Koreas.
Managers have to shape organizations that can respond quickly to developments
abroad. As speed and agility become critical, we will see even more
decentralization, with responsibility closer to the operating level. ^^

Expatriate, third
country, and host
country personnel
policies have to be
articulated to create a
worldwide workforce.
Speed, customization, and agility are becoming imperative skills in modern
companies. Organizations must develop a world or global structure and
perspective.
This global structure is characterized by a decentralized but coordinated
framework. Human resource policies need to mirror the necessary organizational
characteristics. According to E. Jeffrey StoU, director of Merck's corporate
personnel relations,
"Because 50% of our business is from overseas, we must be globally competitive
in terms of human resources, internationally and domestically. If not, then we
won't be where we want to be five years from now."'^

Expatriate, third country, and host country personnel policies have to be

articulated to create a worldwide workforce. The expatriate assignment needs to
be made an attractive one for the best employees to pursue. Assignments
anywhere have to be seen as vital components of the whole. According to Jerry
Junkins, the CEO of Texas Instruments, overseas managers need to look beyond
their own fiefdoms to consider the capabilities and needs of the company as a
whole. Junkins now has all the members of its worldwide management group
working together. TI's worldwide strategy meetings—

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Schuler

"ensure that the company knows enough about its customers' needs to invest in
the manufacturing technologies that will satisfy the greatest numbers of buyers,
no matter where they come from. The strategy seems to be working: After steep
losses in 1985, TI has posted seven consecutive quarters of profit. In the troubled
semiconductor business, that counts as a win."
Implications of the HR Transformation on the HR Department
The potential for the HR department's demise is a major implication of the HR
transformation. The examples of Allstate, Grand Union, and the other companies
mentioned, however, illustrate that demise is neither necessary nor desirable. In
fact, the companies described suggest the opposite. What appears necesary,
however, is for the HR manager and the HR department to be connected to and
knowledgeable about the business, and to be perceived as credible by line
managers.
What appears Repositioning of the HR Department
necessary, however, is While a formal process of repositioning is not necessary to ensure that the HR
for the HR manager manager and the department are transformed, it can offer suggestions and
and the HR guidelines that might not otherwise be considered. There are four major phases to
department to be any program to reposition an HR department: 1) finding out the current state of
things, 2) developing action agendas, 3) implementing the agendas and, 4)
connected to and evaluating and revising them.'^
knowledgeable about
the business, and fo Key New Roles and Competencies for the HR Manager for Transformation
be perceived as Being a member of the management team and dealing with people-related
credible by line business issues means that the HR manager assumes some new key roles. '^
managers. Playing these new key roles means several things. One of the most important is
that: "HR people have got to stop conceptualizing their role as a 'professional'
individual contributor and realize that their job is to help provide corporations with
leadership on HR issues."'^ They must acquire the competencies to perform these
roles. Because these roles are so important and will continue to be so, the
question is: "How can these competencies be attained?" The following represent
some possible developmental activities vis-a-vis each of six of the new key roles.

Be a business person
Function as business executive, not just personnel specialist
Understand and communicate how human resource programs directly impact business
objectives and bottom line
Be a shaper and agent of change
Anticipate and focus on the management of change
Help articulate and build evolving company culture and value system
Become a driving force in making change happen in attitudes, behavior, skills
Be a consultant to the organization and act as a partner to line managers
Become an advisor and counselor on human resource matters to CEO and other senior
managers
Earn acceptance by being a creative problem solver
Be a strategic planner—formulator and implementor
Integrate planning into corporate human resource strategic planning process
Translate specific business strategies into key people requirements and culture
Identify gaps, evaluate alternatives, develop programs, push delivery
Be a star talent manager
Find the best management talent
Anticipate the human resource needs of the firm
Do outstanding succession planning
Be a proactive asset manager, cost controller and server of customers
Contribute cost-control ideas and programs
Extend workforce management into productivity improvement
Develop pay plans that are productivity related and cost-effective
Exhibit 1

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Academy oi Management Executive

Business Person: (1) articulation and reinforcement of management's expectation to

be a business person first—and an HR practitioner next; (2) participation in
courses on finance for non-financial executives, as well as marketing; (3) exposure
to marketing organization; (4) participation on task forces, business planning
teams, acquisition/divestiture teams; (5) rotation of HR and line positions; (6) lunch
with "customers"—the line; (7) feedback on performance and HR development
needs from the line.

Shaper of Change: (1) participation on teams with outside consultants when

change is happening; (2) off-site meetings to visualize possibilities, establish
missions, set goals, discuss change process; (3) team-building exercises; (4)
formalized mentor relationships; (5) research on change process; (6) courses, such
as "The Looking Glass," held by the Center for Creative Leadership; (7)
out-of-company work in professional organizations or teams with other companies;
(8) outside consulting for non-competitors.
Consultant to Organization/Partner to Line: (1) volunteer work in professional
organizations, health care coalition, charities or company consortiums; (2)
counselor selling workshops, such as those by Wilson Learning; (3) classes and
experience in negotiating; (4) participation in computer systems projects, which
are formally documented and show how to structure a large project; (5) proposal
preparation; (6) time tracking on a "billable" basis; (7) coaching/performance
evaluation; (8) pairing of junior and senior staffers, and consulting with internal
staff; (9) seeding of internal staff with those with consulting backgrounds.

Strategy Formulator and Implementor: (1) learn content of business strategy; (2)
read business-oriented periodicals; (3) become knowledgeable in the strategies of
all the businesses or divisions; (4) describe the human resource implications of
these various strategies; (5) articulate these implications in the strategy planning
sessions with line management; (6) demonstrate how human resource activities
can be used to help valued customers or suppliers; (7) study the human resource
practices of successful companies, i.e., engage in benchmarking.

Talent Manager: (1 )constantly talk to all line managers; (2) monitor what the
competition is doing; (3) attend conferences to develop network; (4) constantly talk
with recruiters and placement firms; (5) attend seminars on succession planning.
Asset Manager and Cost Controller: (1) take courses on finance and accounting;
(2) read journal articles on utility analysis; (3) have conferences with those in the
finance and accounting departments; (4) learn the accounting procedures in your
firm.
Several organizations have already begun developing these new HR roles. IBM,
General Electric, and Digital Equipment are tailoring programs to the needs of
their human resource personnel. Some are adapting university programs on
human resource topics, and business and strategy perspective.^ Human resource
departments are learning line managers' business needs and tailoring the human
resource activities accordingly. The result of this program is better human
resource service to the line and also a more excited, challenged, and motivated
human resource staff. This is the essence of repositioning the HR department.

Summary and Conclusion

Traditionally human resource departments have been functional specialists, doing
staffing, appraising, training, and compensating in the most detailed and
professional ways. But they have not done these with the mind set of how they
can make the organization more competitive and effective (i.e., they have not
treated them as people-related business issues). Consequently, HR departments
are not easily assuming the task of becoming business-oriented and a part of the
management team.

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Schuler

HR departments (their managers and staff) are in a real dilemma: they can
continue in their functional specialists mode or they can reorient themselves and
see HR issues as business issues and help line managers solve them.

The former alternative may mean the eventual demise of the HR department while
the latter is likely to result in the department being accepted as an active and
valued member of the management team. The former route requires no change in
behavior on the part of HR departments although line managers assume a greater
workload. Taking the latter route, however, requires HR departments and line
managers to substantially change. It requires a virtual repositioning of the
department and an acceptance by line managers. To reposition, the HR
department must treat the rest of the organization as customers and gain a total
understanding of business needs.

As previously suggested, HR departments must also learn to play new roles and
acquire new competencies. While doing all of this represents a substantial
organizational change, it appears necessary if the HR department is to flourish.
The evidence suggests that if the HR department fails to make changes, line
managers will assume total control of the HR function relegating perfunctory
personnel activities such as payroll and staffing to other departments such as
accounting and legal. The organization would then lose the functional expertise of
the HR department. Line managers would also be faced with doing a great deal
more work. Thus, the stakes involved in who owns and administers the HR
function are high for the organization, the line manager, and the HR department.

Endnotes The author is grateful for the quoted
materials used and unreferenced in this paper.
They were obtained by the generous cooperation
of several individuals. The individuals and their
companies include Bill Reffett at Grand Union;
Jim Stahler at J.C. Penney; Frank Beraidi at
Allstate; Tom Moyers at Perdue; Art Maine at
Revco; Donald Brush at Barden; Dick Parker at
Merck; Jerry Goodman at Swiss Bank Corporation
and Jack Berry. The author also thanks Jim
Walker, Susan Jackson, Michael Mitchell, Tessa
JoUs and several human resource managers, all
of whom provided extensive input and
commentary for this article.
' R.W. Galvin, "Keynote Address," Human
flesource Planning, March 1989. 3.
^ J. McCormick, "The Case of the
Not-So-Supermarket," Harvard Business Review,
March-April 1969, 19.
^ S. Lawrence, "Voice of HR Experience,"
Personnel Journal April 1989, 61-75.
* B.P. Foster, "Workforce Diversity and
Business," Training and DeveJopmenf/ournai,
April, 1988, 39.
' Lawrence, op. cif.
^ L. Copeland, "Valuing Diversity, Part 2:
Pioneers and Champions of Change,"
Personnei, July, 1988, 48.
' Lawrence, op. cit.
® J. Nelson-Horchler, "Demographics Deliver a
Warning," Industry Week, April 18, 1988, 58.
^ Copeland, op. cif.
'° Lawrence, op. cit.
" J.W. Walker, "Human Resource Roles for
the '90s," Human flesource Planning, March,
1989, 55-60.
'^ "Managing Now for the 1990s," Forfune,
September 26, 1988, 45.
'^ Lawrence.
" Kupfer, op. ci(.
'^ R.S. Schuler and S.E. Jackson,
"Customerizing the HR Department," Personnel,
June, 1988, 36-44.
'^ , "Roundtree Report," Hfl fieporfer,
December 1987, 3-4.
" Walker, 1988, op. cit. These ideas and
suggestions also find support in D.C.
Hambrick, J.W. Frederickson, L.B. Korn and
R.M. Ferry, 2Jsf Century fleport.- fleinvenfing
(he CEO, (New York: Korn/Ferry International
and Columbia University School of Business,
1989).

Study Methodology Extensive mail surveys with these and 250 other human resource managers
followed up with telephone interviews were the source of the uncited quotes used
in this paper. The mail survey was conducted during 1988 and the interviews
were conducted during the first four months of 1989. More extensive case studies
with Chad Frost at Frost Inc. and Michael Mitchell at Swiss Bank Corporation,

59
Academy of Management Executive

North America were helpful in formulating many of the major ideas here. These
were conducted in 1986 and 1988, respectively.

About the Author Randall S. Schuler is research professor. Stern School of Business, New York
University. His interests are international human resource management,
organizational uncertainty, personnel and human resource management,
entrepreneurship, and the interface of competitive strategy and human resource
management. He is a Fellow of the American Psychological Association.
Currently, he is studying how companies align human resource practices with
strategy. He is specifically looking at three competitive strategies: cost
reduction, quality improvement and innovation and needed human resource
management practices. He is also studying the movement of the human
resource function to line managers.

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