Strategic Human Resource Management

Section Two
Examples of activities in the low strategic
value/transactional quadrant include such tasks as payroll,
benefits administration, employee records, and relocation
administration. These activities do not have immediate impact
on the firm’s ability to implement various strategies, such as
those emphasizing new product innovation, exceptional product
quality, or low costs. Nonetheless, such activities are important
to employees who become very concerned when their
paychecks are not in the right amount or they are having
difficulties with benefits such as medical claims. These activities
must be performed accurately, in a timely manner, and with
cost efficiency. The firm’s executives do not view these
activities as strategically important and do not become
concerned with them unless there is a problem. However, when
such activities are performed poorly, human resource
executives quickly get into trouble. Human resource
departments must ensure that the activities in this quadrant are
performed well before they can take on more strategic roles. In
many instances, these activities are good candidates for
outsourcing, which enables human resource departments to
shift their focus and staff resources to a more strategic venue.^73
Baron and Kreps make a similar recommendation in that they
argue that activities of low strategic importance and low social
interdependence should be outsourced and that the decision
criteria for such decisions are cost and flexibility.^74