Redesigning the HR Redesigning the HR DepartmentDepartment

Business Partner

"INFORMATION RESPONSIBILITY, THEN,BEGINS WITH CORRECTLY IDENTIFYING THEINFORMATION YOU NEED TO EFFECTIVELYCARRY OUT YOUR JOB, AND EXTENDS TOINSURING THAT THE INFORMATION FLOWSTO PEOPLE IN OTHER AREAS WHO STANDTO BENEFIT FROM IT, AND IN A FORM INWHICH THOSE PEOPLE WILL READILYUNDERSTAND IT.

...INCREASINGLY, HOWEVER, THE MEASUREOF THE EXECUTIVE WILL NOT BE HIS ABILITYTO INTERPRET DATA, BUT HIS ABILITY TODEFINE AND EXPLOIT INFORMATION."

PETER DRUCKER "ACROSS THE BOARD" DECEMBER 1991

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“What HR people do”

Staffing Development Compensation Benefits Communication

s etc.

“What HR people deliver”

Strategy Execution

Administrative Efficiency

Employee Contribution

Capacity for Change

What is What is HR?HR? Over the past few years, a debate has ensued

regarding whether or not we should get rid of HR…

HR Textbook Answer New Thinking

The REAL question:How can HR create value and deliver

results?

HR Through the Years...

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Basic Personnel Services

Basic Personnel Services

Control and

Compliance

Control and

Compliance

Specialized Expertise

Specialized Expertise

Strategic Business Partner

Strategic Business Partner

A very long time ago

Not so long ago

Recently

ASAP

High

Low

Bureaucratic and administrative aspects of dealing with employees

Aspects of dealing with unions (1930s and 1940s in US)

Dealing with discrimination legislation (1960s and 1970s in US)

Taking a business perspective initially in compensation, benefits, recruiting and personpower planning

Organizational effectiveness, business planning

Apply behavioral science knowledge for recruiting, evaluating, compensation, training

Provide strategic business support and assist in developing and implementing strategies

Assist in culture change and assist in defining and implementing values

Increase employee involvement and integrate supportive subsystems

Administrator

Enforcer

Expert

Business Partner

The role of HR has evolved and expanded over the years in response to people-related business challenges.

An Evolution in An Evolution in IntegrationIntegration

HR Through the Years...

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New Challenges for Human Resources

◦ Continued demand for workforce cost reductions◦ Managing a global workforce enabled by technology◦ Realizing the gains of mergers and acquisitions◦ Improving the effectiveness of Human Capital for

sustained competitive advantage

HR Today

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HR TransformationHR Transformation

Changes in the competitive balance for HR that leads to a refocusing:◦Refocus HR practices on the value chain,

rather than HR activities.◦Change, change, change◦How technology changes how our employees

do their jobs.◦Systematizing and controlling the cost of

transactional work through outsourcing or shared services.

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HR TransformationHR Transformation

The transformation has been a wrenching experience for HR:◦Focus on defined outcomes rather than

activities.◦A shared body of knowledge. (attorneys,

engineers, accountants)◦Essential competencies for the profession.◦Clear roles within the organization.◦Ethical standards maintained by collegial

jurisdiction.

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“Only 10% of current HR Contributionsadd value. The other 90% is

transactional nonsense.”Jac Fitz-Enz : Director of Saratoga Institute

“HR must re-invent itself ... in mindset, internal workings, image, status,

organizational position, and capacity to initiate and manage change.”

‘Work in America Institute: ‘The Partnership Paradigm for Competitive Advantage’

1995

The HR function... The HR function... perceptions...perceptions...

HR Today

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Quality and customer service

How does HR affect employee morale, commitment, competence and retention?

How well does HR integrate with strategic plans, employee needs and other staff (even HR) functions?

Cost

How does HR add value and affect profitability, cost, growth, cash flow and margin?

Responsiveness

How quickly can HR work be done without sacrificing quality?

How well can ideas be turned into actions with visible results in terms of employee behavior or benefits to the firm?

Today , human resources is challenged with how to create value and deliver results in this dynamic environment.

Typical challenges facing HR today

HR Today

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Workplace Flexibility

1. Collaborative cultures will be the workplace model.

2. Creative employment contracts will support more time off, flexibility in hours and work location, technological job aids and more pay at risk with significant upside potential.

3. Company intranets will become a major tool for communications, training and benefits administration; HR will play a lead role in developing this important tool.

4. Intelligence through knowledge transfer capability will separate the best employees from the rest.

5. Work hours scheduling will become less important as organizations focus on performance and results.

6. Company facilities will become ‘virtual’ through work-at-home, telecommuting and outsourcing.

7. Legislation will lead to greater portability of health, welfare and retirement benefits.

Global Business

1. The role of corporate HR will change to that of creator of overall values and direction, and will be implemented by local HR departments in different countries.

2. Technology, especially the internet, will enable more business to enter the global marketplace.

3. HR professionals will have advanced acumen in international business practices, international labor laws, multicultural sensitivities and multiple languages.

4. Megaglobal business alliances will grow, requiring great finesse on the part of the HR professional.

5. The continued emergence of a world marketplace will require the development of an international workforce.

Work and Society

1. Family and life interests will play a more prevalent role in people’s lives and a greater factor in people’s choices about work--there will be more of a ‘work to live’ than a ‘live to work’ mentality.

2. Employees will demand increases in workplace flexibility to pursue life interests.

3. Dual-career couples will refuse to make the sacrifices required today in their family lives and more people (not just women) will opt out of traditional careers.

4. Workers will continue to struggle with their need for work/life balance and it will get worse.

And the challenges will continue into the next decade.

The Future of HR

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Workforce Development

1. Lifelong learning will become a requirement.

2. The focus of training/learning will be on performance improvement, not just on skill building.

3. Employees with varied skills and competencies will be valued more highly than those with a depth of expertise in a single area.

4. Problem solving and decision making will become a required curriculum with practical work problems as the training medium.

5. Training will be delivered ‘just-in-time’ wherever people need it, using a variety of technologies and mediums.

6. As the computer-savvy generation assimilates into the workplace, employees will become much more productive in complex tasks and less dependent on people and departments.

Definition of Jobs

1. Organizations won’t pay for the value of the job but for the value of the person.

2. Versatility will be the key factor in determining employee value with strategic thinking, leadership, problem solving, technology and people skills close behind.

3. Compensation systems will be linked to business outcomes.

4. People will be organized in teams focused on a task, not organized around a hierarchy.

5. Positions will be defined by the competencies needed to be performed.

6. Employees will be more independent, moving from project to project within their organization.

Strategic Role of HR

1 The focus of the HR function will be human capital development and organizational productivity; HR may be renamed to reflect this.

2. Managers will grow to depend more and more on HR professionals as they realize that people management can be the next strategic advantage in the next decade.

3. A key role for HR will be multi-disciplinary consulting around individual, team business and corporate performance.

4. HR will have a ‘seat at the table’ as part of the top management team and report directly to the CEO in most companies.

The Future of HR

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CEO’s want the HR function to focus on workforce strategy & management, but HR is locked into operational daily problems and transaction processing

Refocus of HR functions on strategic workforce management

Outsourcing/Shared Service Centre Technology enabled HRM

Overall increase in added value

Decrease in HRFTE/FTE ratio

From Transaction to Process & Change

Customer Orientation

Cost

Balancing Cost & Added ValueBalancing Cost & Added Value

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HR activities carried out by line managers

Outsourcedadministrative services

HR organization/people focus

Target environment(Best practice)

Currentenvironment

Transition

60%Consultative services

20% Administrative

services

20%Strategic services

30%Consultative

services

10%Strategic services

60%Administrative services

+

Refocusing the HR FunctionRefocusing the HR FunctionCreate Value - by shrinking Costs and Improving Service Delivery...

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Managing Human Capital as an Asset of the Managing Human Capital as an Asset of the BusinessBusiness

Culture and

Leadership

Human Performanc

e Manageme

nt

Rewards

Human Performance Management

System that creates human capability -- competence and capacity -- to do the work needed to execute the strategy

Rewards The cost to acquire (and retain) the

asset Plays an incentive role

Culture and Leadership Aspects of the organization that

effect the spirit of people -- screen through which people will view and forces that will focus and inspire

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Managing HR as a Business

AssetsPhysical Capital

Human Capital

Technology Capital

HR Programs and Service Delivery Costs

Compensation and Benefits Costs

Managing HR operations as a business means managing human capital just as we would any tangible or physical asset. All assets, such as

machines, require investment to maintain and increase their efficiency and effectiveness.

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Organizational DesignOrganizational Design

HR organizations face the same dilemmas as the businesses they support:◦Build strong functional/product expertise

while aligning around customer segments.◦Design in flexibility without adding cost.◦Connect the front and the back of the

organization and have them work together seamlessly.

◦Deliver complex solutions through the formation and dissolution of teams.

◦Get the benefits of both centralized infrastructure and decentralized decision making.

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Organizational DesignOrganizational Design

A fundamental principle of organizational design is that a change in strategy requires a new set of capabilities and a realignment of the core elements of the organization.

There are some basic design choices but the uniqueness of each organization will determine what type of design is appropriate.

Organization design has become a core competence for HR.

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Models of HR DesignModels of HR Design

The shift in the work of HR was brought about by a number of factors:◦ The fear of massive systems failures leading up to

Y2K spurred the installation of Enterprise Technology Systems like SAP.

◦ The economic slowdown in 2000 exposed HR departments as ill prepared to help during the restructurings, downsizings and mergers that resulted.

◦ HR became an easy target of cost reductions. The 1990’s saw numerous programs that were not evaluated or measured.

◦ Other functional areas began to outsource repetitive, transactional, back office work and pushed HR to do the same.

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Model #1Model #1The Business PartnerThe Business Partner

The most common organizational design used in response to these changes is the business partner model.

It’s hallmark is a close alignment of HR staff to the lines of business.

It developed in response to the fear that HR was too centralized and disconnected from the business and too inwardly focused.

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The Business PartnerThe Business Partner

There are 3 components:◦A customer facing front end. “Business

partners” who are generalists. ◦A product focused back end. Small specialist

groups that produce programs, policies and provide decision support.

◦An operational service center. Reduce costs and improve quality by systematizing transactional work.

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The Front EndThe Front End

The business partner focuses on diagnostic, consultative and organizational development work.

Each line of business has a team of HR partners.

The partner is best positioned to understand the needs of the business and can build relationships by being located with them.

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The Back EndThe Back End

These specialist groups are the centers of excellence or the practice groups.

They provide specialized services (comp, training, diversity) and may or may not deliver the services.

Usually they depend on the business partner to bring them in and to roll out the programs.

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The Service CenterThe Service Center

By taking employee centered work away from the generalists, it should free time to focus on management focused work.

The service center can be centrally located, outsourced or provided through multiple vendors.

It processes transactions: payroll, benefits, generates data, answers questions.

Based on the philosophy that employees can and should take care of their own needs.

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The ChallengeThe Challenge

Each part of the model has its own mandates and sets of measures.

The staff members in each part have their own skill sets.

The challenge is how to pull them together so that the customer who sees HR sees one function and expects to receive seamless service from all three parts.

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The ChallengeThe Challenge

The experiences of those who have tried it show that there are obstacles:◦Who owns the client?◦Assembling teams◦Delivering OD services

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Who Owns the Client?Who Owns the Client?

Tension between the front end and the back end, including the centers of excellence.

The business partner determines when the specialists are brought in.◦Specialists are brought in too late◦Full capabilities are not used◦Client satisfaction is limited.

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Who Owns the Client?Who Owns the Client?

HR’s place at the table is not secure and neither are HR people.

HR people are not capable or not sure they want to be generalists.

The measures of success are fuzzy:◦Your client?◦Your colleagues?

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Assembling TeamsAssembling Teams

A majority of staff is dedicated to the line which reduces the ability to move people quickly when needs arise.

There is always work to be done but is it worthwhile work.

HR needs to be able to reconfigure itself quickly. As more work becomes project work, flexibility will be key.

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Delivering OD ServicesDelivering OD Services

No matter how much transactional work gets shifted, there is still transactional work to be done; high level transactional work, but non-the-less.

Rolling out a program, recruiting for a senior level position, dealing with a complex ER issue, leaves little time for OD work.

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Delivering OD ServicesDelivering OD Services

Centralized OD teams, located at the COE, but high level OD people want ownership, a fundamental problem.

Outside expertise is another solution especially for complex projects, but ownership is again an issue.

The personal relationships between generalists and OD specialist seems to be the only solution.

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Problems with the ModelProblems with the Model

Front end people have different priorities than back end.

Generalists “go native” especially to maintain their credibility.

How are HR initiatives funded, especially across business lines.

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Model #2Model #2The Solutions CenterThe Solutions Center

It has the same basic shape as the business partner model but the heavy loading is in the middle, not the front end.

Business partners are small teams with mixed skills centered on the work of organizational assessment, design, development and talent management.

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Model #2Model #2The Solutions CenterThe Solutions Center

OD may be integrated into the team.The front end staff acts more like a

customer relationship manager (CRM).Competencies include:

◦Influence◦Relationship building◦Political savvy◦Organizational agility

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Solutions ModelSolutions Model

High ratios: 1 to 500 or more.The CRM can only manage the client

relationship, diagnose issues, configure specialist teams and coordinate but not manage projects.

The extra hands from the partner model are now in the middle, rather than the front end.

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Solutions ModelSolutions Model

Front end teams now must use other parts of HR for delivery and support.

This makes it easier to redeploy assets and ensures the CRM does not try to do the work herself.

The COE is lighter as well with true specialists that do not deliver work.

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Solutions ModelSolutions Model

The middle is drawn from both sides with teams of semi-specialists around functional areas like recruiting and ER.

These can be organized into teams since they are not owned by the line units.

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Solutions ModelSolutions Model

Ability to configure teams around multiple dimensions that mirror the complexity of the work rather than the business hierarchy.

Broader and deeper analysis of HR issues and trends.

Alleviation of client ownership issues.

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Solutions ModelSolutions Model

The ability to assign resources against what is most important and the flexibility to reallocate them as priorities change.

Recognizes the reality of HR work. There is a need for skilled “doers.”

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The PlanThe Plan

The design of the HR team is a key element to making any model work.

There are at least three issues:◦Job rotation◦Governance◦Communication

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Job RotationJob Rotation

Well planned rotation will break down barriers and create better peer relationships.

Joint hiring and talent discussions also helps create interdependence.

A shared talent pool makes everyone accountable.

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Governance Governance

Most companies are federations with weak centers. The line of business that makes the most money get the most votes.

Conflicts among the lines of business must avoid the appearance of “victory.”

Creative and thoughtful governance is another way to knit the organization together◦Steering committees

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Communication Communication

Downward communication inevitably leaves staff feeling disconnected.

Multiple dimensions or work is more appropriate to vertical teams than to horizontal teams.

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A Decision ScienceA Decision Science

Boudreau makes the point that HR can be thought of as having two components:◦A professional practice◦A decision science centered on talent

management and organizational capability.

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A Decision ScienceA Decision Science

How to link the 2 components together would require the service center to be a source of data not just a way to save money and free up generalist time.

Technology and analytics could be used to forecast leader profiles and bench strength needs against projected business goals.

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Comments?Comments?04/11/23 HRinfo4u 45