Insight - Out on a limb.

(From Financial Director)

Byline: Roger Trapp.

In many modern organisations, human resources departments are increasingly finding themselves in a sticky situation. Continuing talk - even in these less exuberant times - of the war for talent and of the notion that people are our most important assets should put HR directors in a powerful position. And yet, with few exceptions, they have so far failed to make much progress in achieving their long-held ambition of assuming a strategic role alongside the chief executive, the FD, or even the sales and marketing director.

Part of the problem has been that HR departments have traditionally been seen as dealing in soft issues that, while important in helping an organisation run smoothly, are often difficult to value. That's particularly true for FDs, who are accustomed to dealing with hard data.

The issue is being brought to a head by both the continuing tough trading environment, which is forcing FDs to become even more hard-nosed in their attitude toward costs, and the arrival of new technology, which according to its providers offers great opportunities for cutting these costs.

At the heart of this is the trend for outsourcing. Just as happened in finance and IT, companies are being encouraged to transfer certain back-office aspects of HR, such as payroll and benefits management, to specialist suppliers which claim to offer these services at a fraction of the cost of doing it in-house.

Thanks to the internet, employees can gain access to these services without really being aware that they are no longer provided by the company. Moreover, conducting this sort of business over the web - what is known as e-HR, or electronic HR - means companies can often avoid a lot of the expensive startup costs that are associated with new IT projects.