HRM as a strategic business partner: insights from selected private commercial banks in ethiopia

Abstract

The HRM function is evolving from an administrative function that focuses on legal compliance to a strategic function that requires HR to be a strategic partner in improving business performance. However, there are still organizations that consider HRM merely a cost driver rather than a value-adding function. This study attempts to examine whether HRM is playing its strategic role to enhance competitive advantage in the selected private commercial banks and to assess the contributing factors for HRM to execute its function as a strategic partner. Data was collected by using a selfadministered questionnaire that was designed and distributed to employees of the HR department in the selected private commercial banks. The results of the study confirmed that HR involvement, mindset, competence, and role balance are enablers and contributors for HR to become a strategic partner. Furthermore, the finding indicates that mindset and competence can impact the role of HR as a strategic partner at large. It was further found out that the current status of HRM as a strategic partner is at its moderate level because its enablers do not exist at a higher level. Accordingly, the role of HRM as an administrative expert is still dominantly played as compared with that of a strategic partner, but it is observed that HRM is progressing towards a more strategic function than the administrative function. To realize the full strategic partnership of HRM therefore, HRM work units of private banks are recommended to exert more effort to continue with the current progress in shifting HRM function from routine administrative function towards strategic function by capitalizing on the enablers of HR strategic business partners such as mindset, competence, HR involvement, and role balance.