Why HR departments are not effective in most organisations?

Is the 'HR' department an administrative or strategic arm of an organisation? While numerous books, HR practitioners and business leaders will vouch that HR departments have a strategic significance in an organisation's DNA, the evidence on the ground says otherwise.
Just for the sake of empirical data, let me try to list down the interactions I have had with the 'people's department' across the various companies I've worked with:

1. During campus recruitment and subsequent interviews (including scheduling interviews).
2. While joining a new organisation and the induction program.
3. During the Exit Process.
4. While clarifying HR policy issues like Leave Encashment, Higher Education policy etc.
5. During team outings and team building exercises.
6. During 'informal activities' conducted in the workplace to add the 'fun' element at work.
7. Carrying out yearly routines like Performance Appraisals, Skill Assessment etc.
8. Filling out 'employee satisfaction surveys' (I am not sure whether the results of these surveys form the basis of evaluating the performance of the HR departments, I hope not!)

I am sure that a lot of you would have a similar list of 'encounters with the HR team'. None of the items I've enumerated point to the fact that HR plays a strategic role in the workplace. Why does HR departments fail to come out of their cocoon of carrying out routine and monotonous administrative activities and why do they monumentally fail to connect with the employees?
I found this article in the Strategy and Business magazine titled 'The Talent Lie' to be a penetrating analysis of the issue. An excerpt from the article which nails down the real reason for the failure of HR is given below:

"The best people coming out of business schools typically do not choose careers in HR. The field pays lower salaries and is not seen as a great starting point for the career of any would-be senior executive (except, of course, for HR executives). As a result, human resources is not a preferred concentration in most MBA programs. Almost none of today’s top executives have ever worked in an HR department. (A couple of exceptions are Anne Mulcahy at Xerox and John Hofmeister at Shell Oil.)

In most organizations, the HR function itself is staffed with competent professionals, but few have had middle or senior management jobs outside HR. As a result, they don’t have the experience that helps them think of their work in the context of the larger business and its priorities. This in turn means that they often have difficulty providing the kind of strategic direction and advice that is needed. PepsiCo, General Electric, and IBM are often cited as leaders in the deployment of HR, but even these companies do not systematically rotate their top management talent into the HR department. (They do, how­ever, recruit top talent into the HR department.)"

'People management' is not an activity that can be centralised and left to a team that has not worked amongst the people slogging on the shop floor - they will always remain disconnected from the realities of the workplace, the true aspirations of the workers, their needs and more importantly the solutions that can be put in place.