Strategic vs. Transactional Human Resource Management in the Public Sector

Norman O'Neil

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

The buzz today in professional human resource circles is focused on two different components of human resources – transactional versus strategic human resources (HR). Transactional HR is essentially handling the day-to-day administrative functions, such as preparing workplace policies, recruiting and processing new employees, and handling benefits administration and other workplace functions. Strategic HR, however, is more forward-thinking and complements the municipality’s mission or organizational strategy through long-term goals that are supported by transactional HR steps.

Today, HR professionals understand the importance of meeting transactional HR as a bare minimum, yet the landscape is constantly changing as new laws unfold, regulatory agencies extend their reach, and court decisions are issued.  For instance, once HR professionals finally grasp the regulatory implications of the Affordable Care Act (ACA), they may not have the time or energy to plan and execute strategic HR initiatives.

Part of the problem is that many municipal officials view human resource departments in the public sector as simple transactional mediums. However, the vast majority of what we do is to develop, revise, and complete the transactions that help meet the statutory and regulatory requirements imposed by others. And, in order to actively lead the organization in the right direction, HR professionals need to develop a strategic plan and identify the transactions that are critical to avoiding the risks and penalties associated with our business. So, how do we go about accomplishing this feat?

Strategic HR management in its simplest sense is the process of identifying how HR can assist the organization in achieving the vision, mission, and values of the organization. In order to be successful in this role, HR must accomplish a number of key steps:

  • Look at HR processes to streamline them and reduce the amount of time they take or the inefficiencies they create;
  • Encourage and assist others in looking organizational processes that are inefficient or ineffective and revising them as appropriate;
  • Develop skill sets and competencies that support the organization’s mission, vision, and values;
  • Identify the competencies needed to be effective;
  • Engage employees and supervisors in safety practices, wellness, interpersonal skills, development, etc.

So what is your organization’s Strategic HR Plan? Don’t have one? Don’t despair. First, develop a plan of action for one, three, and five years. As you refine it, you can add or revise the goals much in the same way a capital plan is developed. Think about where the municipality should be headed, both from a financial and organizational perspective, by reflecting on crucial issues: What investments are we making in our human resources that will help us attain our organizational goals? How are we working to improve our financial condition? How can we better recruit, motivate, and retain key employees, and support each municipal department and the overall mission of the organization?

Strategic HR is proactive, should be measurable, and must contribute to improving the bottom line of the organization if we are to engage the policy makers who help set the direction of our municipal organization. HR must understand the business needs of the organization. This goes beyond completing paperwork associated with orientations, open enrollment, and filling open positions. The department’s goals and objectives must be linked to overall business strategy.

Look at your organization’s mission, vision, and values; determine whether they been identified by the appointed and elected leadership who sets the strategic direction for the municipality and whether they have been incorporated into the recruitment process. In order to accomplish this, HR must work closely with administration and finance officials, the departmental directors, elected officials, and other stakeholders within our respective municipal structures.  Other options include mining data from your Human Resource Information System (HRIS) or Enterprise Resource Plan (ERP) and gathering statistics from recruitment, employee turnover, exit interviews, and workers’ compensation, property and liability, and health and wellness claims. Break the information down and transform this data into useful information for stakeholders and others to use by analyzing and interpreting what it means for process or organizational change. Use your benefits partners from Property-Liability Trust (PLT), HealthTrust, Primex, Interlocal Trust; SchoolCare; your Employee Assistance Program (EAP), and your broker(s) to assist you and look at implementing best practices. Use the Association of New Hampshire Public Employer Human Resource Administrators (ANHPEHRA) to assist you in providing professional guidance.

Most importantly, however, ensure the mission, vision, and values of the organization are included as part of your hiring and performance evaluation processes.  This entails identifying what core competencies are necessary to support this direction across your organization and then developing specific training programs to nurture these organizational competencies.

Hopefully this spurs each of the stakeholders, including elected officials, policy makers, managers, administrators, and human resource professionals, within your respective municipal organizations to begin looking at the strategic HR issues that are important to the success of your particular city or town. It will be no simple task but one that must be accomplished if we are to be successful in assisting the growth and development of our employee skills and competencies needed to face the future challenges of our respective public sector organizations.

Norm O’Neil has more than 25 years of public sector human resources experience having previously worked for the City of Laconia, City of Concord and Belknap County.  He is currently working part-time as the Interim Director of Human Resources for Sullivan County and consulting on human resource issues.