The role of human resource in taking business decisions lies both in strategy formulation and implementation. However, strategy implementation is more significant and human resource has a great role to play in it because human resources are more flexible than organizational strategies (Sluijs, Klyutmans).
Traditionally, Human Resource was considered to be an administrative department only with almost no role to play in business planning and decisions. Gradually, the function evolved and played its role in performance management, managerial development, competency mapping, succession planning, change management and business networking. Inputs from HR started being a part of business decisions. Today, administration and line management is only one of the roles of HR. Human Resource has evolved to become an essential component of management teams for decision making.
Many of the line management tasks in Human Resource have become transactional in nature and are therefore controlled by information systems. For example, there are information systems for recruitment, Learning & Education, Employee benefits, Payroll, Performance management and Expenses. Therefore, the role of HR has been oriented more towards strategic planning and change management. The line management part of HR has been replaced by her which a company can even afford to outsource to an It organization or internal IT team but it is the strategic part where key inputs are required from Human Resource (Edward, 2001).
Inclusion of Human Resource in strategic decision making leads to greater profitability of the firm. HR being a strategic partner ensures higher management support in training and education activities which leads to increased productivity and workforce engagement. HR can justify required fund allocation for various activities such as training, recruitment, increasing salaries and benefits.