European companies appear to be struggling to find human-resources professionals with the right mix of skills to support business unit managers. A survey of HR directors at 20 global corporations based in the United Kingdom also found that core HR services such as employee data management and recruiting are often poorly executed. The troubling gulf between the needs of the business and the ability of HR to respond will force many companies to rethink their approach to the recruitment, training, and development of HR employees.

These findings echo our experience throughout Continental Europe and should worry boards and senior executives, who spend increasing amounts of time on people-management issues. Sixty percent of the HR directors we interviewed, for example, said that the senior-management teams of their companies devote more than one day a week to such issues (exhibit). One leader commented, "Everything we do today is a people-management issue."

While half of the HR directors in our sample thought their function was "well positioned" to meet the goals of the company's management agenda, more than one-third admitted that it wasn't. The latter group's unease appears to be founded on two interrelated problems. First, several respondents said they simply didn't have enough HR professionals with the business savvy to support the efforts of business unit leaders in managing people for high performance. At many global companies, this business partner role has helped define the prevailing HR model for the past ten years and has strongly influenced the way organizations structure and utilize their HR departments. As one respondent noted, "The model is fine, but what it fails to mention is that a critical success factor is good people." Another reported that his company had reduced the number of positions for HR employees supporting the business units by 35 percent "because we just didn't have the capability."

The implications of this shortage—dissatisfied stakeholders and a lack of integration between the HR and business agendas—were vividly described by another respondent: "We know we're not aligned. We've changed the business strategy significantly two times in the past five years, but our HR strategy is exactly the same."

The second complaint addressed the inefficient and ineffective delivery of HR services. The shortage of skilled business partners was often compounded because the HR personnel were too busy propping up poorly managed service operations and navigating overengineered processes to add strategic value. One HR director lamented that his company's processes were "so complex that even our HR people don't understand them."

The survey supports our view that the role of the HR generalist is at a crossroads. On the one hand, HR needs employees with cross-functional, service-focused skills in order to become a true partner of the business. On the other, it must provide higher-quality services at a lower cost. An effort to accomplish these complementary goals with the same individuals, within the same career structures, and with the same HR leaders is almost bound to fail.

Under a new approach adopted by a number of large companies, skilled HR generalists are focusing more on tasks at the business unit level. The divide between the generalists and the specialist service providers (who have the requisite expertise to design, run, and continually improve HR processes) is growing wider, however. Since the roles and responsibilities of these two groups are quite distinct, they increasingly require different approaches to recruiting, training, and career planning.

Companies need to redefine the skills, the intrinsic capabilities, and the range of experiences that are required of HR practitioners. Business partners should be chosen for their credibility in the business, their interpersonal skills and problem-solving capabilities, and the breadth of their experience in applying people-management principles to business situations. They will need to be supported by a distinct cadre of service providers—those who excel at flawless process execution and possess deep expertise in a particular service area.

Currently, this distinction isn't clear. Business partners don't trust the processes or aren't confident enough to let go of their generalist roots, and the service providers want to play a more strategic role. At first glance, this model may appear to be fine, but the lines have not been drawn clearly enough when it comes to execution. To deliver on what the business needs, HR must put its own house in order, starting with the skills and capabilities of its staff.