Innovation in HR
HR teams must provide strategic, insight-led solutions like never before. So it’s crucial that leaders are open to innovation and explore new opportunities to boost their business. As the economy changes, how can HR maximise data, use technology and influence culture while showing real value?
Responding to change
Being able to anticipate shifts in expectations, develop HR capabilities and proactively manage change at a fast pace are key challenges for HR this year, says Andrew Steels, HR practice leader at Towers Watson. “Encouraging each other to think in new ways about how work, such as the annual pay round, is delivered, can be just as challenging as responding to new service delivery requirements from business leaders,” he says.
Typically, HR is working hard to respond to changing demands, says Steels. In global and multinational businesses especially, HR teams have been centralising, harmonising and standardising wherever they can. For Steels, re-engineering HR processes is a growing theme, and shared services, manager and employee self-service are commonly involved in driving greater efficiencies.
However, he argues that many HR departments struggle to work out how to drive competitive advantage and maximise their value for the business: “Specific business segments and employee groups often need time-sensitive and tailored solutions to talent issues.”
Steels believes we have reached a ‘fortunate convergence’ of increasing and complex expectations of the HR function, with a marketplace presenting new and more effective HR technologies. “This convergence creates an opportunity for re-engineering, leveraging and enhancing HR processes, programmes and roles.”
As a result, 2014 will see organisations continuing to refresh their primary HR systems with Software as a Service (SaaS) technologies, as well as enhancing the employee experience with improved HR portals, and using mobile applications – signalling HR moving beyond ‘early adopter’ stage.
Steels also anticipates that organisations will be looking to HR to innovate. “HR roles will be more complex and project-focused, challenging the usual boundaries,” he says. “Governance will be increasingly valued in coordinating the ‘moving parts’ of HR and the business, with HR analytics functions more prevalent.”
- Evolve from being process to solution-oriented, and from operational to strategic
- Challenge yourself to rethink your HR functions and carefully select best-fit technology
Focus on technology
For many HR leaders, there’s still a challenge to be seen as strategic partners in their businesses, argues Graeme Yell, director at Hay Group. “All too often the perception is still one of ‘pay and rations’, or worse,” he says. Yell feels this has often arisen through ‘unthinking adherence’ to certain HR operating models, without considering whether they suit an organisation.
For HR teams seen as genuine strategic partners, demographic, generational and technological changes are continually influencing the function, says Yell. This highlights three key focus areas: being able to develop leaders who can lead a new generation, shaping the future workforce and embracing new technology.
Yell believes rapid growth in technology will put self-service in the hands of line managers in 2014. “Up until now this has been constrained by cumbersome HRIS platforms but that is going to change imminently with the launch of smartphone apps,” he says.
As an HR professional, you must understand employee needs and have the flexibility to respond to these, while possessing a high level of business understanding. “This is a much more consultative way of working than the prevailing Ulrich model, which has done a lot to separate out ‘techies’ and ‘generalists’. This has created barriers between them in a way that hasn’t advanced the cause of HR,” he says.
For Yell, too many HR departments fall into one of two traps – being too focused on themselves (“we do it this way/we are organised this way because we always have”) or too focused on the outside world without thinking about employees. “This is often seen in being too ‘faddy’ but not taking into account what the business needs from them,” he says. “Successful HR departments need to understand the issues that affect their business and be flexible enough to organise themselves and the support they offer in a way that reflects this.”
- Understand your customers and try to deliver what they need – not what you think they should want.
- Give managers the tools they need to manage their people more effectively.
Delving into analytics
According to Mark Quinn, talent leader at Mercer, HR has reached a tipping point with its ability to boost value from data and workforce planning. “Predictive HR analytics are now seen as a core business process which informs and drives business change, in much the same way as strategic planning and financial modelling,” he says.
“It’s never been so easy to get data but organisations typically focus on their HRIS as the sole basis for analysing their workforce and talent needs. Multiple sources of data provide a greater level of insight.”
For Quinn, when HR teams focus on key workforce issues such as: ‘What happens to our critical hires after they join?’ and ‘Where should we focus efforts to boost representation of women at the top?’ and consider what data is needed to understand the various factors, they can add value in a way that differentiates that HR function and can lead to real advantage for their businesses in the market.
Quinn predicts that in 2014 we will see an increased demand for analytics and workforce planning as HR departments become more strategic and commercially focused. “As an HR leader, you need to put forward convincing arguments for change based on business and people analysis. By doing so you will be seen as a partner in driving commercial success,” he adds.
- Ensure your current and future workforce is ‘fit for purpose’ to deliver your organisation’s strategy
- Make more data-driven decisions
- Think about your personal brand.
Shaping the culture
Carolin Oelschlegel, principal at Strategy& (formerly Booz&Co), highlights HR’s role in managing culture. “In our recent culture and change management survey, 84% of managers and employees said culture is critical to their organisation’s success, yet 45% say culture is not being managed effectively in their business,” she says. While Oelschlegel feels the HR function cannot be completely responsible for an organisation’s culture (she argues this is an issue for line management), she says there’s a key role for HR to play in helping leaders evolve the culture while supporting business strategy.
Oelschlegel also points out that HR departments need to continue to run hard to keep up with the pace of change. On the one hand, she says, there’s pressure to get the basics right (such as workforce planning and performance management) as efficiently as possible.
At the same time there is pressure to ‘up the game’ on business alignment, cultural impact and strategic input. “There is also usually a range of change initiatives that HR leads or is involved in, which makes it even harder to keep up,” she adds. “Continued focus and investment in building HR capabilities will be required to keep pace or risk falling behind.”
According to Oelschlegel, HR leaders must develop strategic problem-solving skills to act as true strategy advisers. The ability to engage across the business and help facilitate transformational change and cultural evolution is key. She identifies four key competencies:
- Translating business strategies into HR priorities – alignment of HR efforts to match what is needed for business success
- Aligning the operating model in line with priorities – development of a blueprint of the necessary organisation and operating process for HR
- Deciding how best to allocate resources – to improve the value proposition for critical employee segments that hold essential people capabilities
- Actively managing an organisation’s culture – supporting and enabling leaders to play an active role in managing cultural evolution so that it energises the behaviours critical to strategic and operational performance.
In the coming year, Oelschlegel anticipates a continued focus on ‘doing more with less’, such as efforts to minimize transactional HR costs while investing in value-adding activities. She also expects a shift from austerity to growth – which she hopes will translate into organisations investing in distinct capability systems and make savings in areas that are not core or capability enhancing. “This means more attention to attracting, recruiting and onboarding talent for employees groups that are critical to this growth strategy,” she says.
Finally, Oelschlegel expects more HR leaders will find ways to work with and within their organization’s culture to energize strategic and operating performance. “These leaders will need to learn how to use the culture as a source of energy and strength, mobilise peer-to-peer networks and pride builders to enhance emotional commitment to a change effort.”
- Invest time understanding the needs of the business and the realities of their cultural situation
- Be bold and push for clarity on business strategy and cultural priorities so that you can align the HR functional agenda accordingly
- Aim for coherence by prioritising time, resources and efforts to best meet the needs of the business and avoid change fatigue
- Don’t be afraid to look outside your organisation to learn best practices and how to apply them to your situation.
HR practice leader, Towers Watson
Andrew specialises in improving HR function effectiveness for the organisation’s UK operations.
director, Hay Group
Graeme specialises in leadership development, assessment and talent management.
talent leader, Mercer HR
Mark is a partner and leader of Mercer’s talent business in the UK. He advises clients across a range of talent service offerings.
principal, Strategy& (formerly Booz&Co)
Caroline is also European lead of the Katzenbach Centre, Booz&Co’s centre of excellence and innovation.