Ensight Study: „What is the current status of HR in Romania?” (second edition, 2012)

Ensight Management Consulting presents the results of the study „What is the current status of HR in Romania?”, second edition. The scope of this initiative was to make a diagnosis of the HR function maturity in companies operating in Romania

The results of our study reflect the feedback we received from 37 medium and large companies with a combined number of 40,000 employees. The vast majority of our respondents are HR practitioners reporting directly to the CEO or another member of the board.

The behavior of business leaders continues to be influenced by the troubled economic situation in Romania. Our data shows that over 50% of businesses chose to apply restructuring measures in 2011, that half of the surveyed companies are continuing restructuring in 2012 and an additional 14% plan to maintain it in 2013.

Layoffs remain the most widely used measure for cutting HR-related costs, followed by cutting back on training, a measure that increased significantly in comparison to the previous year. Solutions like technical unemployment and unpaid leave dropped substantially. Only about 10% of responding companies resorted to cutting salaries, quite similar to the previous year.

Regarding the role and positioning of the HR department, there is good news: year upon year HR departments feel more in charge with providing modern HR tools to support the business, with the importance of the administrative side declining a little. Continuing the positive trend, almost all HR managers consider themselves to be involved in business strategy definition, alignment and implementation, while in over half of the responding companies management co-opts HR managers in all strategy stages. That signals that at least in 50% of medium and large companies HR has earned its long awaited status of a business partner.

On a less optimistic note, our data shows that 85% of our respondents estimate that employees have a medium or low awareness regarding company strategy, which points at management not communicating strategy into the depth of their organizations.

Turning to the role of the business in HR related matters, the wide perception of HR practitioners is that managers do not take their task of people leaders as seriously as they should. There is a 50% gap between the importance of their role and what is happening in reality in the areas of performance management, employee development and compensation & benefits.

With regard to the maturity stage of HR areas, three areas are in great need of development in the eyes of HR practitioners: competency management, career models and compensation & benefits. One positive development – there are more companies which adapt pay level to performance than in the previous year. However, even if around three quarters of companies have a performance management system in place, there still are businesses paying out bonuses without having a proper process for monitoring employee’s results. Another interesting – and somewhat worrying – finding related to performance management is that in only 20% of companies low performance is communicated clearly and possible consequences will be executed.

This year’s focus area, Talent Management, brings promising facts: around half of our respondents have set up a talent management system and 20% plan to create one in the near future. Virtually all companies which have a talent management system have included team leaders in it; regular staff is present however only in half of the cases.

Regarding the biggest challenges for HR practitioners in the next two years are the way employees understand HR policies and practices, the degree to which senior management gets involved and line management delivers HR initiatives and the way HR activities are integrated in business strategy.