HR - often side-tracked from strategy
During two earlier articles we discussed the fact that many international companies are facing challenges in their HR function and the fact that on the administration side, HR admin tasks are often duplicated across business units and countries – diverting focus from strategic HR tasks. We subsequently identified the 6 main ‘derailers’ why HR transformation efforts often fail and identified the 3 overwhelming enablers for HR transformation.
In the literature, the term 'HR transformation' is sometimes distinguished between first and next generation HR transformation:
The human capital model value triangle
Also, most HR professionals will have come across the following graph, which is often referred to as the ‘Human Capital Model Value Triangle’ describing the future state of HR post a next generation transformation:
Is there a business case for HR transformation?
The above graph displays the difference between more traditional and future HR models post transformation, however it fails to answer the following important questions:
Is there a business case for HR transformation? Why should HR change? Is it worthwhile to invest company money in HR transformation? How can a company move from their current as-is situation to a desired to-be end-state? And which are the exact steps that must be taken?
We’d like to focus on a model for successful HR transformation and by doing so, to provide some clear answers to the above questions. While HR transformation always needs to be reflected against and adjusted according to the setting and cultural context, there is a model identified which addresses the above in an holistic way:
Why are we doing it?
Firstly, HR leaders need to ask themselves: why are we doing it? In other words, what's the business context here? In order to be able to answer this question, you must understand a company’s overall business. This clearly means going beyond the HR knowledge in order to establish and comprehend the interests of key stakeholders who usually extend far beyond employees and line managers. As we all know by now, management support is a key factor in pursuing HR transformation. When talking about key stakeholders, we mean customers, shareholders, but also the competitors, suppliers, governmental regulators and the communities that are involved.
Therefore, any HR transformation needs a business case first whereby progress must be measured against defined milestones and outcomes. Such business case needs to be presented and must include an implementation task force group, which has full senior management and employee support working with a clear statement and articulation of the HR transformation. The rationale hereby is key and needs to be communicated widely and targeted at the same time so that everyone is on board accordingly.
What do we get if we do it well?
Secondly, HR leaders must be asking what do we get if we do it well? In other words, which outcomes need to be defined in order to be able to say when victory can be claimed?
Once relevant key stakeholders understand the rationale for HR transformation, HR needs to identify how each of these groups will be impacted both positively and negatively by this change. The positive indicators are a great way to measure successful outcomes. An example would be how much back-up talent is available for critical roles in a company. Another one would be the ability to export talent to other parts of the company as well as the ability to help make strategy happen through flawless execution.
Another great example for measuring success is measuring employee competence and readiness for present and future jobs, higher employee engagement, higher productivity or an increased retention of key talent. As you can see, for each stakeholder group there can be defined measures of success so that one can easily say whether the HR transformation is working the way it should or not.
How do we do it?
Thirdly, HR leaders need to ask the following question: how do we do it? In other words which department or departments will need to get involved, who the people assigned to this, which practice or model shall be applied in this model referred to as HR redesign.
After HR leaders have outlined the why and the what of their HR transformation, they need to focus on the how by auditing their HR setup and professional people. This typically begins with three questions, the first one being:
- Who are we? Inside the HR organisation. So what is the overall HR vision and what are the vital roles that HR needs to play? For some it is a coach, for others a facilitator, a change agent, a business partner and so on. The second question is then:
- What do we deliver? This should answer the HR mission statement. It may contain things like cultivating organisational capabilities that HR has promised to the organisation to nurture and deliver against. And the third question being:
- Why do we do it? This shall connect the HR activities to the overall business objectives. This typically contains each of the services and support that HR provides and finishes usually with “so that…” to pinpoint any results unmistakably.
The answers to the above three questions then form the “HR Strategy Statement”. The HR transformation should hereby focus on “content” which is what HR does and 'process', which stands for how HR can do it better.
The success of HR transformation will often rely on talents and peak performance of HR professionals. Therefore HR transformation efforts often go along with upgrading HR professionals’ skill-sets too.
Who does it?
Lastly, who does it? Whilst this question might look trivial at the beginning, it's important to define e.g. which role the line managers in the organisation will have to play next to the employees and last but not least the HR professionals on the ground, in this model referred to as HR accountability.
No HR transformation will ever be successful if critical stakeholders – which definitely includes your own HR leaders – but also line managers, clients, shareholders, and outside experts assume responsibility for and ultimately acknowledge it. You would be surprised how even your customers can provide very valuable points of view. If you choose to bring in specialised consultants, make sure it's done in a way that is clear, targeted and in the interest of your company and its transformations aims.
During this step, your final milestone will hopefully reflect that you have selected the appropriate task force team members to shape and implement a HR transformation that delivers the expected results, which your company needs and hopefully also wants for good reasons. In this spirit, happy transforming.
This is the last part of a three article series on HR transformation by Navid Nazemian and Dave Ulrich exclusively published on changeboard.com.
Click to see previous articles:
HR transformation conference
Effective HR services can be delivered through any channel – in-house, outsourced, centers of excellence, and others. HR practices in 2011 saw Cloud application, multi-sourcing and SaaS trying to innovate business models, improve service levels, and control costs. World class organisations are seeking to make optimum use of these new capabilities as part of their HR Transformation journey.
But best-in-class HR operations are still a long way off, considering that organisations have new options of deployment models (public, private, and hybrid clouds), as well as of service models (SaaS, platform as a service, and infrastructure as a service). The benefits vary in terms of efficiency, availability, scalability, and speed of deployment. Best-in-class HR functions will be attained when captive and outsourced HR operations, with the best suited deployment or service models, influence business outcomes effectively and deliver decision support and demonstrable bottom-line impact.
About the authors
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Dave Ulrich is an author, professor and a leading authority on leadership and HR. Ranked by Business Week as the #1 management educator and by Forbes as one of the top five business coaches in the world. He is an expert when it comes to HR.