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A collection of thought pieces

February 2015

Changing HR
operating models

WORK WORKFORCE WORKPLA


CE
The CIPD is the professional body for HR and people
development. The not-for-profit organisation champions
better work and working lives and has been setting the
benchmark for excellence in people and organisation
development for more than 100 years. It has more than
135,000 members across the world, provides thought
leadership through independent research on the world of
work, and offers professional training and accreditation for
those working in HR and learning and development.
Changing HR operating models
A collection of thought pieces

Contents

Foreword 2

Executive summary 3

Thought pieces
A modern HR operating model: the world has changed 5
Josh Bersin, Bersin by Deloitte

 he future is centres of expertise: What impact has 18 years of the Ulrich


T 8
model had on the HR operating model and what does it tell us about the future?
Allan Boroughs, Orion Consulting

You cant put in what God left out: not everyone can be a strategic 12
HR business partner
Nick Holley, Henley Business School

The strategic role of HR: What does a strategic HR function look like? 15
John W. Boudreau and Edward E. Lawler III, University of Southern California

 loud technology in the HR operating model


C 18
Gareth Williams, Travelex

 ill the cloud have a silver lining for HR outsourcing?


W 20
Andrew Spence, Glass Bead Consulting

Reflecting on the past and looking to the future: the importance of 23


business structure
Dave Ulrich, Ross Business School, University of Michigan and RBL Group

Owning our HR operating model: an enterprise-centred organisational design 27


methodology for HR
Barry Fry, Slumbering Giants and Anton Fishman, Fishman & Partners Ltd

What does the future of HR look like in an SME? 29


Jill Miller, CIPD

Living in a collaborative world: implications for HR operating models 36


Professor Paul Sparrow, Lancaster Business School

CIPD viewpoint 39

Useful information 40

1 Changing HR operating models


Foreword

As the world of work grows to champion better work and to step up, to evolve and adapt, to
ever more complex, diverse and working lives. But to do that we attract new talent to the function,
ambiguous, traditional models need a shared understanding of and to invest more in building the
of working are starting to give what this means and what it might capabilities we need to define a
way to more flexible forms of look like in the context of new stronger future.
organisation and employment. and varied forms of employment
Technology, globalisation, relationship. We believe that there This collection of thought pieces
changing workforce demographics are basic principles that constitute brings together some of the most
and skills shortages add to the good people management and recent arguments in the debate.
challenges facing organisations. In development regardless of the Weve published them to surface
this context the role of HR must context, and are continuing our some of the challenges and
evolve and grow to play a greater research in this area. From there opportunities for the HR function,
part in developing organisations we can explore what this means and to make sure that ongoing
for the future. As widely for the HR function of the future debates about our future are as
accepted norms for managing and develop a set of principles comprehensive and well informed
the employment relationship that define good practice and as possible. Over the coming
change, so the pressure will grow professionalism. months well be following all these
for HR professionals to develop debates very closely and gathering
a deeper understanding of the In support of all of this, the way insights from successes and
global context, business needs and the HR function operates must failures as organisations try out the
strategy, and to innovate more continue to evolve. Some observers different models. But at the same
to be not just efficient, but more seem to want to dismiss the future time, well be going back to first
effective of the function, breaking it up principles with some new research
or separating out the strategic to define HRs role in championing
At the CIPD, our goal is to capabilities. Given the macro issues better work and working lives.
support HR professionals and organisations are facing, I would
the organisations they work for argue that the role of HR will only Peter Cheese
on this journey. Our purpose is grow in importance. But we have CIPD chief executive

Acknowledgements
The intellectual property in the individual thought pieces is retained by the authors. We would like to thank them
all for their contributions to this report.

2 Changing HR operating models


Executive summary

This is a collection of thought with the business and business the HR business partner, the role
pieces about HR operating models needs, and that we have the right in HR most aligned to the business
(also known as HR structure, HR capabilities in the right places. and the role argued to enable
delivery models, HR architecture, HR to bring strategic value to an
HR systems). Here when we use In this collection, Edward Lawler organisation. The implementation
the term HR operating models, and John Boudreau from the of this role is varied. What
we are talking not only about the Center for Effective Organisations, does this role actually do? Is it
organisational structure of HR but Marshall School of Business, specialist or generalist? A lot of
the roles within that structure, the University of Southern California, the discussion about this role has
capabilities required to deliver present the findings from research been focused on the required
those roles, the processes within looking at the relationship between competencies to perform the role.
the structure, and the enablers the design of the HR function Nick Holley from Henley Business
such as technology, governance and HRs role in organisational School, drawing on the work
and measurement. The authors of strategy. Their research found of organisational psychologist
these thought pieces may have a correlation with the essential Elliot Franks, raises an interesting
a slightly different definition, but elements of the so-called Ulrich debate about how we could be
essentially the debate is the same. model the existence of centres asking some HR business partners
What will the HR function of the of expertise, decentralised HR to operate at a level thats beyond
future look like? generalists supporting business their intellectual capability.
units and administrative processing This is particularly relevant and
This collection brings together centralised in shared services interesting where HR functions
a number of lead thinkers: units and a strategic role for have renamed HR generalists
academics, practitioners and HR. Allan Boroughs from Orion from the old personnel model
consultants who are active in the Partners reflects on the success to HR business partners without
debate about the future of the the Ulrich model has had in driving building their capabilities, or
HR function. We asked them to efficiency in the delivery of HR fundamentally changing the
talk about HR operating models operations. But with the need for activities they perform from being
from various angles to provide a HRs focus still to shift more from administrative to strategic. It is
summary of the key themes for HR the administrative to the strategic also interesting for the debate on
practitioners. and to the development of HR competencies and the myriad
organisational capability and talent. courses and books designed to
So what does the HR model of the The centres of expertise need to be help HR business partners develop
future look like? Theres no dispute the focus moving forward. the necessary skills. According to
that the model synonymous with Holley, HR might just need to be a
Dave Ulrich, a model of shared HRs role in the business is bit more realistic with the business
transactional services, centres of evident. Josh Bersin of Bersin about what it can deliver based
expertise and HR business partners, by Deloitte talks about their upon the capability of the function
has dominated conversations about research-informed high-impact and its HR business partners.
the structure for HR for the past HR, which focuses on the need Lawler and Boudreau also
decade or so. The driving force for to bring specialist skills into the highlight some interesting findings
the most part has been efficiency business where they can drive on the relationship between HRs
and standardisation, but we need the most value. Bersin talks about strategic role and the career paths
to move on and focus more on these as networks of expertise of professionals working in HR.
effectiveness adding value to the because of how highly connected
enterprise, and playing our full part the specialists are despite being HR operational efficiency although
in shaping its future direction. And aligned with and embedded in no longer the main driver, remains
that means challenging the operating different parts of the business. A important within organisations,
models for HR, to ensure they align lot of focus has been on the role of particularly as many organisations

3 Changing HR operating models


are yet to achieve this. Lawler and management approaches, including models of HR as part of building
Boudreaus research also found a the HR operating model adopted. the profession for the future. In
correlation between administrative From Dave Ulrichs contribution practice, you can change the
processing in centralised shared to these thought pieces, it is clear conversation to one focused on
services units and, more that the Ulrich model was never capabilities or competencies, but
significantly, the standardisation thought to be appropriate for all the reality is that you still have to
of HR practices across business organisations. In his piece he talks organise to deliver. We support
units. Gareth Williams, HR Director about the importance of the wider the view that there is not one
for Travelex, talks about the organisation structure and states model for delivering HR that is
impact of the implementation of explicitly that the HR organisation suited to all organisations. How
cloud HR technology on the HR should be structured in a way that an organisation should structure
function. The implementation reflects the structure of the business. its HR function should be based
of HR cloud technology has upon its organisational strategy,
changed roles within HR, it has This link between strategy, wider organisational structure
achieved operational efficiency organisation structure and HR and the requirements of its
and successfully improved line structure becomes increasingly customers and the organisation
managers ability to perform evident when we recognise how it is supporting. We support the
people management activities. As organisations are changing and view advocated by Anton Fishman
a result the HR business partners no longer dominated by large and Barry Fry that HR functions
are performing a more strategic multinational corporations. Paul need to design themselves in
role. Andy Spence from Glassbead Sparrow from Lancaster Business the same way that they design
Consulting presents a point of view School provides an example of this their wider organisation, and
on the future of outsourcing in HR, based on the work he has done with many organisations need to start
facilitated by the greater use of CIPD Researcher Jill Miller in Beyond at the organisational level. It
cloud technology. the Organisation research. Sparrow would, however, be interesting
talks specifically about the design to understand if there are some
However, the strong message options available to organisations universal principles that could be
coming from nearly all of our that are entering into partnership applied in all organisations.
contributors is although the Ulrich arrangements such as joint ventures
model is a good starting point, and how HR can respond to these The CIPD is going to progress
there is not one model that fits complex organisational structures. research into this area. If you
all organisations. Jill Millers piece According to Sparrow, there are would like to comment on the
looking at HR in SMEs is also a good three design options available to an CIPD viewpoint, the collection of
example. From her research she has organisation. thought pieces or be involved in
developed a four-stage framework shaping the research, please email
of SME growth or maturity and There is no doubt that we need to j.cooper@cipd.co.uk or tweet
emphasises that each stage is continue to research and discuss using the #changinghr.
associated with particular people the structures and operating

4 Changing HR operating models


A modern HR operating model:
the world has changed

The human resources profession is at function is being asked to lead the


a crossroads. As the global economy transformation of most companies
grows and technology has made towards a more engaged, high-
organisations highly interconnected performing, well-aligned and highly
and transparent, what HR does has capable organisation. And the
to change. number one issue CEOs still cite is
a weak leadership pipeline so HR
We recently completed a series must take ownership for this as well.
of major research studies on the
organisation and structure of HR1 Over the last 30 years HR Josh Bersin founded Bersin
& Associates (now Bersin by
and found that HR teams and their organisations have gone through Deloitte) in 2004 to provide
leaders are undergoing tremendous several transformations, moving research and advisory services
stress. While more than 90% of them from an operational role (the focused on corporate learning,
claim to have a good handle on their personnel department) to one leadership, talent management
and HR technology. Today he
budget, only 30% believe they have of HR as a service centre to is responsible for Bersin by
a reputation for sound business one focused on driving talent Deloittes long-term strategy,
decisions, only 22% believe they are outcomes. Most companies we research direction and market
adapting to the changing needs of talk with are somewhere between eminence. Josh is a frequent
speaker at industry events
their employees and only 20% feel phases two and three in Figure 1, and has been quoted on
they are adequately planning for the so they are heavily focused on talent management topics in
companys future needs. building integrated programmes to key media, including Harvard
attract and retain top people, drive Business Review, Wall Street
Journal, Bloomberg, Financial
What happened is simple: over the a compelling employment brand, Times, BBC Radio, CBS Radio
last few years talent has become improve and align the performance and National Public Radio. He
the number one issue on the process, and better manage and is a popular blogger for Forbes.
minds of most CEOs, so the HR transform L&D. com and has been a columnist
since 2007 for Chief Learning
Officer magazine. Josh spent
Figure 1: The four phases of HR 25 years in product development,
product management, marketing
What we observed: The four phases and sales of e-learning and
Changing drivers for transformation other enterprise technologies at
companies including DigitalThink
(now Convergys), Arista
Responsiveness Knowledge Systems, Sybase and
and Agility IBM. Joshs education includes a
BS in engineering from Cornell
Effectiveness Business-driven HR University, an MS in engineering
(High impact HR) from Stanford University, and
an MBA from the Haas School
Integrated Talent 4 Support business of Business at the University of
Efficiency directly and locally
Management California, Berkeley.
3 Attract, develop,
Operational HR manage talent

Personnel 2 Serve staff,


logy
Department automate
Te chno
ling
nab
a nd E
ces
1 Control
Resour
man
no f Hu
lutio
Evo
Copyright Deloitte Development LLC. All rights reserved

1 Bersin by Deloitte, High-impact HR, http://www.bersin.com/Practice/Detail.aspx?id=17743

5 Changing HR operating models


The core of high- Our research shows that as
companies move from phase to
between formal and informal
learning, and their training is
impact HR today phase, their purpose and mission
changes. As companies move to
integrated into their career
management and professional
is creating more phase 1 to 2, they focus on efficiency. goals.
Here they set up service centres,
specialists and rationalise the generalists and But as these various talent strategies
locating them assign business partners to reduce
inefficiency in service delivery.
are improved, and more analytics are
applied to each, the company must
closer to the Service delivery efficiency and
effectiveness is the focus.
also do something else: they must
move HR back into the business in a
business, where more local way. This is the essence
As companies move from phase 2 of high-impact HR it is a focus
they can drive the to 3, they focus on effectiveness of on changing the operating model
driving talent programmes. They to be less centralised and more
most value. now look at measures such as co-ordinated but distributed into
quality of hire, time to fill, training the business.
utilisation and leadership pipeline
as measures of success. Here the High-impact HR: focused
focus is on building world-class on specialised skills in the
talent programmes and embracing business
new technologies (often social The core of high-impact HR today
and network based) to extend the is creating more specialists and
companys brand, connect people, locating them closer to the business,
facilitate learning and collaboration, where they can drive the most value.
and build leadership. Recruiting, for example, is a highly
specialised problem recruitment
At phase 4, however, something teams manage the brand, they
different happens. The 510% of source, they assess and they sell
companies we talk with who have the company to strong candidates.
reached this new phase are focused In order to be effective, they
on something different. They have must understand the precise jobs,
built a strong HR service delivery management styles and culture
capability and they have spent of the team they support. In other
three to five years optimising their words, they should be local or as
talent programmes. And these locally assigned as possible.
programmes dont sit still; they are
continuously improved. For example: The same is true in learning. While
its terrific to have a strong corporate
Recruitment, for example, university and lots of online assets
is shifting entirely towards and content, each part of the
network recruiting, where company has its own particular
the drivers of success are learning problems. Rather than force
employment brand, candidate all the programmes to be centralised,
relationship management, we want local learning specialists to
the use of analytics to help each local group build their own
determine who are the best learning solutions.
candidates, and strong and
local relationships with hiring Does this mean HR has to move
managers. back to a model of anarchy with
Learning is shifting towards a lots of distributed groups embedded
self-learning digital learning in the business? Not at all. Today,
environment, where individuals unlike ever before, HR can rely on
can learn on-demand, decide standard technology platforms,

6 Changing HR operating models


standard frameworks and standard managers to connote their One large Japanese client of
tools to help HR professionals close direct responsibility for results. ours has 100 HR departments,
to the business solve their problems. These organisations have strong each distributed into different
Our research shows that the high- internal technology groups to business units. This is not
impact HR organisations actually do build common platforms and high-impact HR it lacks the
some unique and powerful things, avoid renegade talent, learning standards and co-ordination
very similar to how the military and payroll systems from needed to be innovative and
manages its distributed operations: popping up. They build strong share information and skills
analytics teams centrally and across the company.
They have more specialists and bring together compensation
fewer generalists. They do this analytics, engagement analytics, This new operating model, which
by implementing well-designed retention analytics and all the we have been sharing with clients
self-service systems to let other analytics teams into a for about a year, is very well aligned
people manage their own HR core central group that can help with the CIPDs Profession Map.2
transactions and put more of understand and plan the future of It pushes HR to be much more
HRs budget into specialised the companys talent needs. business aligned and accountable to
skills. High-impact HR teams are They have internal groups local business leaders.
almost 65% specialists, versus that focus on HR professional
less than 40% for non-optimised development, research, and tools Think about it like this. In the
teams. The role of generalist and methods. These teams, while coming years we, as HR leaders and
almost goes away. small, are critical to making professionals, are going to be the
They build networks of these HR teams successful craftsmen that build the organisation
expertise, not centres of because they make sure the of the future, attract top talent,
expertise. The recruiters or HR team is educating itself. fix and improve engagement and
learning advisers, for example, Today fewer than 8% of all HR learning challenges, and make
who may be assigned or organisations have a professional sure managers are well trained
embedded in the business, are development team for HR this for the future. As craftsmen, we
all connected to each other. is becoming a critical need and must be experts at our craft, we
They know each other and share one strong organisations fund must have world-class tools and
best practices using common and staff internally. we must be close to our clients. By
tools and methodologies They have chief human resource thinking about HR this way we can
wherever possible. The centre officers who are laser focused focus on our own expertise and
of expertise is small and focuses on the business and delivering bringing it close to the business in a
on technology platforms and on business outcomes, not just co-ordinated and scalable way.
standards not centralised operating HR as an efficient
services. provider of service. Of course One of our clients put it well: When
They have senior-level HR HR must deliver services this the HR function works well, everyone
business partners, often is core to its mission but the in the business thinks theyre just
operating as VPs of HR in the CHROs of these companies are part of the team and leaders feel
business, with local control. often business people (3540% they are making and owning the
These local leaders partner of all CHROs we now interview right decisions. Lets rethink HR
directly with local line leaders and work with are coming from and move beyond HR as a service
and they orchestrate solutions the business) and they push HR and designer of programmes and
and serve as consultants. These to solve local business problems. reimagine ourselves as consultants.
roles must be developed over They focus on effectiveness and This is the future we are moving into,
time because these individuals outcomes, not just efficiency. and it will be exciting and rewarding
need strong business experience Our research shows that these for us all.
and deep HR domain. Many high-impact HR organisations
of our clients tell us the title must go through phases 2 and 3
business partner is now before they can effectively get
obsolete, so these are essentially to phase 4 because otherwise
people leaders or talent they become highly inefficient.

2 http://www.cipd.co.uk/cipd-hr-profession/profession-map/building-capability-my-hr-function.aspx

7 Changing HR operating models


The future is centres of expertise
What impact has 18 years of the Ulrich model had on the HR operating
model and what does it tell us about the future?

The worst enemy of life, freedom and The research


common decencies is total anarchy; In early 2014 we surveyed business
their second worst enemy is total and HR users in 40 organisations,
efficiency Aldous Huxley each with more than 10,000
employees complex beasts by
A generation of anyones standards. The survey
transformation showed, as expected, that in the
It is 18 years since Dave Ulrichs last ten years, investment in the
book Human Resource Champions HR operating model has become
Allan Boroughs is a founding proposed a differentiation of HR the norm, with over 95% of
partner in Orion and leads the
HR technology practice with
activity based on the nature of organisations having undertaken
over 20 years experience in HR roles, which in turn led to the some sort of HR transformation.
designing, developing and organisation of many HR functions
delivering transformational into shared service operations, Of those, more than 50% had
change in HR. Before founding
Orion, Allan held senior positions
business partners and centres of invested in what they termed
in consulting, industry and the expertise. Although Ulrich never the Ulrich model for HR. The
public sector; he is a member of claimed to have invented it, the scope of HR transformation
the CIPD and has co-written four three-legged model for HR has, like usually incorporated elements of
books on HR technology and HR
transformation
Sellotape, Hoover and Biro, become centralised shared services, business
synonymous with his name the partners and centres of expertise.
Ulrich model. However, we found that the most
ABOUT ORION PARTNERS significant areas of investment were
Orion Partners is a research After nearly a generation of HR nearly always in the development of
organisation and advisory investment in the Ulrich model, HR shared services and associated
firm specialising in delivering we wanted to know what impact IT systems.
transformational change in
HR. Orion has a blue-chip
the model had had, whether it
client list across all sectors and had delivered on its promise and When it came to measuring the
believes that the way people what benefits and disadvantages performance of the model, the
are managed has a measurable organisations had seen. Most results are compelling. Firstly, more
impact on the commercial
success. We believe businesses
importantly, what could we than 90% of organisations felt their
are successful when they: learn from the experiences of HR function is more efficient and
give their people a clear
implementing the Ulrich model about commercially focused than it had
vision and direction the likely future direction of HR? been ten years ago, with the majority
(77%) attributing this success to the
focus on the talent that has
the biggest impact on the Ulrich model (Figure 2).
bottom line
o
 nly invest in the systems and Figure 2: The Ulrich model has had a positive impact on our HR services. (%)
processes that are relevant to
them and then operate them
to the highest standard. The Ulrich model has had a positive
23 impact on our HR serices (%)
www.orion-partners.com

Yes

No

77

8 Changing HR operating models


Typical benefits highlighted characterised as the delivery
include improved operational of strategies associated with
There are clear
efficiencies, improved capabilities
in HR and a closer alignment with
recruitment, performance, learning,
succession and reward). Most
indications
the commercial objectives of the frequently we found that these sit that, while
organisation; all highlighted this as within the centres of expertise
evidence of a positive direction of part of the model. When compared HR operations
travel for HR. The biggest area of with the results of HR operations,
impact is in HR operations, where satisfaction ratings for talent and skills have
95% class their HR operations as
good to acceptable (Figure 3)
services were less than half that
of HR operations. Nearly a third
improved, this
compared with ten years ago. said that talent management is not carried
represents an area of major missed
But the news is not all positive. commercial opportunity (Figure 4). through to other
There are clear indications that,
while HR operations and skills have The messages are clear: while a areas of HR.
improved, this is not carried through focus on the Ulrich model for HR
to other areas of HR. Many pointed has produced tangible benefits in
out that their HR business partner the quality and efficiency of HR
roles are still too transactional in operations, the benefits have not
nature and that they struggle to flowed through to other parts of
shed the administrative elements of the model. Most notably, many
their roles. organisations have neglected the
talent management agenda and, in
But the most surprising doing so, have missed a significant
shortcomings are in the area of opportunity to add commercial
talent management (which we value to the organisation.

Figure 3: Outcomes from HR Transformation talent management (%)

Outcomes from HRT


Talent Management (%)

30 Good: High levels of efficiency

Acceptable: Good service but


5 65
not consistent
Poor: We dont get basics right

Figure 4: Outcomes from HR Transformation talent operations (%)

Outcomes from HRT


17 HR Operations (%)

Good: We have an integrated talent


53 process and can make adjustments
Acceptable: Pockets of excellence
30 but still opportunities
Poor: We are missing a commercial
opportunity with talent

9 Changing HR operating models


The talent gap they highlight both a significant
It is clear that The reasons for this disaffection success story and a major missed
huge strides have with centres of expertise become
clearer under scrutiny. Only a third of
opportunity for HR and spell out the
priorities for future development.
been made in organisations maintained dedicated
talent specialists in each of the It is clear that huge strides have
organisations functional areas highlighted above. been made in organisations that
This suggests that critical skills in have moved from being barely able
that have moved talent management are missing from to produce a headcount to running
from being barely the HR armouries of some of our
largest organisations. Furthermore,
streamlined HR operations. This may
have been done as part of a shared
able to produce less than a quarter of organisations service centre, an outsourced model
maintain a fully integrated talent or just through the disciplines of
a headcount process in which recruitment, standardisation, centralisation and
performance, learning and reward automation, but this has been a
to running all share the same data and where major contributor to the improved
streamlined HR activity in one area is understood
in terms of its impact in the others
efficiency and effectiveness.

operations. (Figure 5). There can be no doubt either


that the changes of the last ten
We saw nothing to suggest that years were highly necessary. Any
the lack of progress in talent HR organisation that could not
management is a shortcoming of maintain basic standards could
the Ulrich model itself, but it did scarcely lay claim to a seat at
suggest that that this is a failure the table to participate in the
of the HR function to look beyond strategic agenda. An effective HR
basic efficiency savings. Indeed, operational/transactional model is
against a background where 97% therefore a minimum prerequisite
said that people issues are highly to building a strategic HR function
important or critical to the and we see little prospect of
business, it suggests that the search organisations making a major shift
for HR efficiency has deflected HR away from the standardised, shared
from its true mission and that it has model of HR operations.
neglected those areas that have the
potential to offer the greatest level Where there does seem to be
of commercial benefit. significant room for improvement
is in the centres of expertise,
An operating model for talent which show signs of serious neglect
So how do these findings inform in the rush for transformation.
the discussion on the future of Very few of the organisations we
the HR operating model? I believe spoke to could point to a fully

Figure 5: Approach to talent management (%)

Approach to Talent Management (%)

25

Integrated talent process

13 Invested in parts of process


62
Ad hoc approach to talent

10 Changing HR operating models


integrated talent process. Where managers so that performance a global retailer that overhauled
success in resourcing, performance and development are embedded in-store recruitment and
management or learning had been in day-to-day activity and that performance processes to
achieved, this was as likely to be the in turn demands leadership and address attrition rates that
result of a single capable individual a commitment to embedding threatened growth plans
working in isolation rather than a change from the top of the an engineering-based
coherent talent strategy. organisation. manufacturer that produced
demonstrable improvements in
Our prediction is that the next ten The case for change? productivity and output through
years of HR development will see the The case for investment in HR the effective use of succession
focus shift away from HR operations transformation has often been and development initiatives
and towards the neglected children compelling. Fragmented, localised an organisation selling complex
of the HR operating model in HR activity inevitably leads to technical solutions that drove
the centres of expertise (COEs). inconsistencies in the HR process, up sales by reducing lengthy
Based on our research, the highest a lack of standardisation, poor on-boarding periods and
priorities include: data and high costs. It stands to achieving peak productivity
reason, therefore, that streamlining earlier.
Alignment with the business HR operations would deliver big
model: talent processes should benefits, and many organisations in Of course none of these initiatives by
not exist in a best practice our survey had achieved savings on themselves represent new thinking.
vacuum the talent needs of a HR operational costs of 30% or more Such activity has always been at
retailer with a growth agenda will as a result of HR transformation. the heart of talent management.
be different from an engineering However, what we have seen
firm with an ageing workforce. But while the benefits have often amongst these organisations
Close alignment with the business been significant, they are inevitably and others is a marked shift in
to understand the precise nature limited. In the average organisation, focus towards the centres of
of the need is critical. the HR function accounts for about expertise in HR and investing in
Integrated talent process: COEs 1% of the workforce, and even the systems, common processes
can be the worst offenders in the most radical transformation and team capabilities to drive these
terms of maintaining siloed programme will be limited by what improvements systematically.
operations. All respondents can be cut from this figure.
emphasised the importance What does all of this spell for the
of an integrated talent By contrast, an integrated approach future of the HR operating model?
process, underpinned by to talent management offers the Overall, our research suggests
technology that recognised the opportunity to impact performance that HR has developed a greater
interdependencies between across all parts of the organisation commercial awareness and has
resourcing, performance, and incremental changes here invested heavily in an incremental
learning, succession and reward. might be expected to deliver a professionalisation of the function
Integration with back office: the disproportionate benefit. This means as a direct consequence of the Ulrich
best-thought-through talent that future changes to the HR model. However, there is a clear limit
strategy will be ineffective if operating model might be justified, to the benefits to be derived from
the execution of the supporting not on the grounds of operational excellence in HR operations and it
processes is lacking. Close cost reduction but on the potential seems clear that the next ten years
integration between the to make incremental improvements must bring an increasing focus on
COE and the transactional to business performance across the the commercial opportunities offered
service centre is an essential organisation. by effective talent management if
prerequisite to ensure credibility HR is to deliver on its true potential.
in talent operations. As organisations achieve more
Business integration: consistent levels of operational Ulrich comes of age a study of
management of business efficiency across HR operations, the impact of 18 years of the Ulrich
performance through people we have seen a marked shift in the model, can be downloaded free of
is not something that can be transformation process to look at the charge at http://www.orion-partners.
delivered by HR in isolation. impact the centres of expertise can com/study-ulrich-comes-age/
Talent strategy must be closely deliver to the business. Some recent
aligned with the role of business examples include:

11 Changing HR operating models


You cant put in what God left out
Not everyone can be a strategic HR business partner

In recent years the Ulrich three-box then match this to existing HR


HR model (shared services, centres capability. The simple fact is that
of excellence and HR business the ask has risen faster than the
partners) has become the standard capability of many people in HR
delivery model for HR. The model to deliver it. As a result, many HR
is fundamentally a sound model business partners have been unable
and has taken HR forward, but in to deliver what is required in the
our research we have found a big role or have dumbed down the role
gap between intention and reality, to a level they are comfortable with
Nick Holley is a visiting especially in the role of HR business but which doesnt deliver what is
professor and director of the
Centre for HR Excellence at
partners. Why? required by the business.
Henley Business School. Nick
brings a unique background Historically a lot of HR work has One of the causal factors has been
that combines experience as been about delivering processes to that as organisational structures
an army officer, ten years as a
successful futures and foreign
the business, administering payroll, become leaner and ever more
exchange broker with Merrill keeping out of tribunals, writing matrixed, partner roles become the
Lynch and sixteen years in senior terms and conditions, and so on, knot in the bow tie, where they are
organisational, leadership and so HR has attracted people with pivotal in ensuring the whole model
people development roles in
large global organisations.
the requisite skills and mindset. functions effectively. Nowhere has
The HR business partner role is this been more prevalent than in HR.
In the last eight years Nick
very different. Its about delivering This means that it becomes vital that
has worked with clients in the
UK, Belgium, Brazil, China, innovative ways of developing you have a big enough person in
Denmark, Finland, France, organisational and people capability, the role, which often isnt the case
Germany, Ghana, Hong Kong, building on deep data-driven because they are the same person as
Hungary, Indonesia, Italy, Kenya,
insights into the strategic and before the organisational change.
Luxembourg, Malaysia, Mexico,
Netherlands, Nigeria, Norway, commercial direction of the business.
Portugal, Qatar, Russia, Saudi This requires a different level of Elliott Jaques,3 one of the gurus of
Arabia, Serbia, Singapore, thinking, as the complexity and organisational psychology, identified
Sweden, Switzerland, Turkey,
degree of ambiguity inherent in the challenge that lies behind this
UAE, Ukraine and the US.
the role, and in the environment, in problem. In his research he identified
Nick has carried out research
which organisations are operating seven levels of work complexity,
in the areas of employee
engagement, HR and Big Data, has increased exponentially. each defined by increasing
HR careers and capability, HR in ambiguity, longer timeframes
the recession and recovery, HR In some cases the issue has been for decision-making success and
leadership, HR organisational
that no one has actually articulated greater delivery breadth. He also
models, leadership development,
talent management and what to the newly rebadged business identified that people can only
CEOs want from HR. Nick was partners how the role is different engage with complexity up to a
voted the 5th most influential or the new level it is operating at. level related to their intellectual
thinker in HR.
In others, no one has helped those capability to understand it. As Sam
with whom they are partnering Mussabini said to Harold Abrahams
understand what is on offer and in the film Chariots of Fire, You
how it differs from the past. In cant put in what God left out. The
many cases, however, there has essential problem with HR business
been a failure to understand the partnering is that in many cases we
business partner role and how it are asking level 3 capability people
differs from the old HR model and to do work at level 4. The issue isnt

3 JACQUES, ELLIOT (1997), Requisite Organisation: Total System for Effective Managerial Organisation and Managerial Leadership for the 21st century. London: Gower

12 Changing HR operating models


about developing them; the issue simply cant operate at. We need to has been higher than other
is that they are simply incapable of help people be the best they can functions in recent years.
operating at the right level, either at be, not try to get everyone to be
that time or potentially at all during something they cant be. Be clear what we are
the span of their natural careers. recruiting for
This has several implications: This isnt just about a competency
In our most recent research we framework; its about being realistic
asked what CEOs look for from Fit the person to the role about the level we are asking
their HR directors (HRDs) and one Not all HR business partner roles people to operate at. Its become
of the questions we asked was why need to operate at a strategic unfashionable to use tests of verbal
they had sacked their HRDs. Three board level. Not all HR business and numeric reasoning skills, but
issues came out. One was a lack partner roles are the same, so perhaps we should look at more
of integrity, which was the most match your level 4 people to level sophisticated and rigorous ways
consistent and most important 4 roles and level 3 to level 3. If you of assessing what level a person
insight from the whole research. have too many roles at the highest can operate at. We are letting our
The second was great talk but no levels compared with people who people and the business down
delivery. The third was that they can operate there, match the best if we recruit people to do a job
either werent up to the role or had people to the roles that have the they simply cant do. Levels of
outgrown it: biggest impact on the bottom line work suggest that by far the best
or on patient service or whatever predictor of success in higher
When we started we employed the key value driver is. complexity roles is judgement but
an HR admin lady who made this is rarely assessed.
sure the payroll worked, but we A simple test is to list on the left-
outgrew her. hand side of the page the business Match your development
It was a function of the agenda. units and how critical and material spend to what can actually be
The individual didnt have the they are to creating value. On the developed
capability to step up again. right, list your HR business partners It is very difficult to send someone
We had taken the game up a by their capability. Does the left- on a programme that develops
notch. We had someone who hand list match the right? Do your their intellectual capability or their
was successful in the old agenda best business partners face off to systemic thinking ability. But these
but not in the new. I would give the most critical business areas? capabilities can be more swiftly
them a reference. They werent a One final point here is dont build developed through a broader
failure; it depended [on] what we the list only on current returns but career-pathing approach which
wanted from them. also on future growth opportunities. tries to develop perspective (for
Intellect was the key. They It may be you want to match your example across different functions)
didnt have the ability to make best HR business partner to the and hence judgement. But this
sure my thinking on strategy smaller but higher potential and takes time and our research shows
was matched to their deep therefore more strategically critical that this kind of development is the
knowledge of the capability to growth opportunities rather than a least often used by HR.
deliver it. larger cash cow.
We are dealing with more Equally there are some key hard
complexity on a broader scale. There is a strong organisational skills that can be developed:
Once we got six variables to design driver here because level 4 understanding the business strategy
think about versus four, they is the point at which you have the and where value is created, data-
didnt have the capability to think biggest mismatch between roles driven insight development, and
at that level on a broader scale. featuring work at that complexity so on. We should focus our HR
level, and the natural incidence of development spend in these
In each case they didnt blame the people in the population with the areas. What is disturbing is when
person. They were good at what they ability to work at that level. This HR people tend to focus their
were good at, but the role required is not an isolated issue within HR, development on HR-related rather
them to be good at a different level. but is true of many roles in many than business-related areas: And
functions. HR just sees it more heres one more slice of telling
In these quotes lies the answer to frequently because I would argue SHRM data: When HR professionals
the conundrum. We shouldnt ask that the ratio of role complexity were asked about the worth of
people to operate at a level they increase to individual development various academic courses toward

13 Changing HR operating models


a successful career in HR, 83% Be willing to throttle back the
Levels of work said that classes in interpersonal promise
suggest that by far communications skills had
extremely high value. Employment
In a desire to be seen to be
responsive and relevant, there
the best predictor law and business ethics followed, at is a danger we overpromise and
71% and 66%, respectively. Where under-deliver. Perhaps we need
of success in higher was change management? At to be willing to promise a bit less
35%. Strategic management? 32%. and deliver a little bit more or
complexity roles Finance? Um, that was just 2%. 4 deliver where it is most critical
is judgement It also might be that you dont
versus trying to do it everywhere.
Many people will say, but that will
but this is rarely develop all these skills in every impact our short-term credibility.
business partner or even within HR. Isnt it better to be rigorous about
assessed. As an example, not everyone needs assessing the real capability of the
to be a data scientist, but everyone HR function and our HR business
needs to be comfortable with data. partners and match what we
It might be that you access the deep promise to the business to what
data analytical skills from elsewhere we can actually deliver? Perhaps a
in the business or from contractors dash of realism and humility might
who work closely with your HR serve us better in the long term.
business partners, but your HR As a previous boss once said to
business partners must recognise me, the longest route is often the
the value that issue-driven data quickest way to get somewhere.
analytics will bring to HR.
The Mihaly Csikszentmihalyi flow
model pictured below, is often
used in combination with Levels.
(Figure 6)

Figure 6: The Mihaly Csikszentmihalyi flow model

HR Increase capability to match desire


Throttle back to match capability

w
flo
Challenge ble
na
tai
S us

Capability

4 HAMMONDS, KEITH H. (2005) Why we hate HR. Fast Company. August. Available at: http://www.fastcompany.com/53319/why-we-hate-hr

14 Changing HR operating models


The strategic role of HR
What does a strategic HR function look like?

What are the features of an HR What is the relationship between


organisation that are associated the design and management of
with HRs strategic role? It is a the HR function and HRs role in
timely question. Talent and HR organisational strategy? This is the
management are becoming more key design question and one that
and more important determinants of can be answered by examining
organisational effectiveness. the research evidence from our
international survey of hundreds
A great deal of debate was of HR leaders7 that has been done
generated by Ram Charans recent every three years since 1995. John Boudreau is professor
proposal5 in a Harvard Business and research director at
the University of Southern
Review article that corporate HR Survey data were collected in 2013
Californias Marshall School of
functions be split. He called for from HR executives in companies Business and Center for Effective
eliminating the chief human resource with 1,000 or more employees. One Organizations, and author of
officer (CHRO) role and creating two executive per company responded, Retooling HR: Using proven
business tools to make better
functions. One function would be an usually the CHRO or a direct report
decisions about talent (2010),
administrative function that manages to the CHRO. Responses were Transformative HR (2011) and
compensation and benefits and received from 416 companies in Short Introduction to Strategic
reports to the chief financial officer. Australia, Canada, China, Europe, Human Resources (2012).
The other would be a leadership India, UK and US. The median
and organisation function that is company in the US sample had
staffed by high-potentials from 14,000 employees, while the median
operations and finance who rotate company in the international
through the role on their way to the sample had 4,200 employees.
top two layers of the organisation. The revenue of the US firms was
also greater: $5.0 billion (median)
Few HR executives and researchers versus $2.0 billion (median) for the
believe that this is the best way international sample.
to improve the strategic role of
talent and HR management in large We measured HRs role in strategy
corporations. Still, it is significant by asking the survey respondents Ed Lawler is director of
that such a proposal would be to rate HR roles in their company the Center for Effective
made by such a highly respected by choosing one of the following: Organizations and Distinguished
individual in a widely read general 1 = human resources plays no Professor at the University of
Southern California. He is the
management publication. As role in strategy (4%); 2 = human author of over 360 articles
Boudreau has noted,6 the attention resources is involved in implementing and 46 books. His most recent
it has received highlights the the business strategy (22%); 3 = books include Management
importance of organisation leaders human resources provides input Reset: Organizing for sustainable
effectiveness (2011), Effective
becoming more sophisticated about to the business strategy and helps Human Resource Management:
HR management and organisation implement it once it is developed A global analysis (2012) and The
design in order to avoid the (54%); 4 = human resources is Agility Factor (2014).
temptation to adopt such simplistic a full partner in developing and
and potentially harmful solutions as implementing the strategy (21%). The
the one proposed by Charan. responses indicate that HR is not a
full partner in most companies.

5 CHARAN, R. (2014) Its time to split HR. Harvard Business Review. July. https://hbr.org/2014/07/its-time-to-split-hr
6 BOUDREAU, J. (2014) Its time to retool HR, not split it. Harvard Business Review. August. https://hbr.org/2014/08/its-time-to-retool-hr-not-split-it
7 LAWLER, E.E. and BOUDREAU, J.W. (2015) Global trends in human resource management: a twenty-year analysis. Stanford, CA: Stanford University Press. http://www.sup.org/books/title/?id=24277

15 Changing HR operating models


The survey also asked about It is also interesting that while operating model and they assess
seven features of HRs operating the highest-rated operating the extent to which individuals
model. For each one, the survey model feature is decentralised HR rotate within, out of and into the
respondents were asked to rate generalists supporting business HR function. They are three of the
how true it is of their organisation units, one of the lower-rated items lowest-rated operating elements
on this scale: 1 = little or no extent; is HR practices varying across of HR, and have been since 1995.
2 = some extent; 3 = moderate business units. Indeed, variation Rotation within HR is rated below
extent; 4 = great extent; 5 = very has significantly decreased. Thus, the scale midpoint, but even more
great extent. In Table 1, the average it appears that the dedicated striking is that rotation into and out
rating of each question among the business partners are supporting of HR is particularly rare, with less
US leaders is shown both for the the businesses in ways that do than 2% of the companies reporting
2013 survey and a survey of similar not include tailoring HR practices, great use.
HR leaders in 1995. Also shown but rather working with centres of
for 2013 is the percentage who expertise and HR administrative Looking at the correlations with
answered to a great or very great service units to deliver an array of HRs role in strategy, it appears
extent. similar services to the businesses. that most HR functions are doing
some of the things that lead to their
The right-hand column shows the The use of common practices most having a strategic role while failing
correlation between the question likely reflects efforts to simplify to do others.
about HRs role in strategy and and to achieve scale leverage in
each rating of HR operating some HR activities, and perhaps In the fourth row of Table 1, the
characteristics. the tendency of companies to correlation is negative, indicating
be in fewer unrelated businesses. that greater variation in HR
Looking at the average ratings, we There are economies of scale to be practices across units is negatively
see that the operating models of gained when corporations use the associated with HRs role in
HR have not changed very much same HR practices in all their units. strategy, and the averages for this
in the last two decades. The 2013 This is particularly true in the case item show that there has been a
ratings are virtually identical to of transactions and the creation of decrease in HR practice variation,
the ratings we obtained in our IT-based self-service HR activities. perhaps reflecting this negative
survey of HR leaders in 1995, with However, when it comes to talent association. The top row is another
two exceptions: there has been a management, different business example of the usage trend being
significant increase in the extent strategies may call for different consistent with the correlation.
to which HR centres of excellence practices. Centres of excellence are positively
provide specialised expertise and associated with HRs role in strategy,
a significant decrease in the extent The bottom three rows of Table 1 and the use of this HR operating
to which HR practices vary across reflect the talent development characteristic significantly increased
business units. elements of the HR functions from 1995 to 2013.

Table 1: Survey correlations


2013 % of Correlation
great or very with HR role
Survey question 1995 mean great extent 2013 mean in strategy
Centres of excellence provide specialised expertise 2.5 56.7 3.5 0.30***
Administrative processing is centralised in shared
3.5 54.6 3.4 0.18*
services units
Decentralised HR generalists support business units 3.6 65.5 3.6 0.11
HR practices vary across business units 2.9 18.2 2.4 0.25**
People rotate within HR 2.6 26.8 2.7 0.39***
People rotate into HR 1.8 1.4 1.7 0.24**
People rotate out of HR to other functions 1.8 0.7 1.6 0.28***

16 Changing HR operating models


Overall, there are untapped
opportunities regarding rotational
rotations bring valuable expertise
from outside. This may facilitate
Having HR
assignments. For all three items,
the correlation with HRs role in
retooling HR8 by recasting HR
decisions and processes into the
leaders gain first-
strategy is significantly positive, logic of frameworks from finance, hand experience
and this has been true in every operations, marketing and strategy,
survey we have conducted since making them more accessible and as business leaders
1995. Yet, the extent to which better understood by leaders in
HR organisations use all three these disciplines.
throughout their
elements is consistently and
stubbornly low. The correlations Rotation of non-HR leaders into
careers seems
cannot prove that greater rotation and out of the HR function can likely to prepare
causes a stronger strategic role enhance the HR sophistication
or vice versa. Still, it is likely that of those non-HR leaders as they them more fully
the strength of HRs strategic role return to their original or previous
is enhanced by efforts to create business roles. Dedicated HR for true business
career movement within the HR
organisation, and even more
business partners need to remain a
common element of HR operating
partnership than
significantly across the boundary models, but their role is not so does having only
between HR and the organisation. much to tailor HR activities to
the business as it is to deliver HR jobs.
Efforts to create movement a common set of activities and
across the HR boundary can lead expertise. Having non-HR leaders
to extreme approaches, such as with first-hand experience in the
eliminating the role of the CHRO HR function can help those non-
and making it a rotational position HR leaders become more aware
for other disciplines. Such extremes of the value and nature of the
are likely to be dysfunctional services and HR expertise. This can
in many organisations because make them better partners and
they risk removing vital HR consumers of that expertise when
functional expertise from the top they return to their business roles.
positions. That said, more nuanced
approaches do seem warranted. We believe there can be a bright
Having HR leaders gain first-hand future for the HR function if
experience as business leaders it is designed and managed
throughout their careers seems strategically. Our research shows
likely to prepare them more fully that most organisations are doing
for true business partnership than many of the things they need
does having only HR jobs. to do in order to be strategic
contributors, but are failing to
Perhaps even more important do some important ones. HR
is having leaders outside of HR operating models that create
rotate into the function, which is a more permeable boundary
also associated with a stronger around the HR function seem to
HR strategic role. Such rotations be a particularly powerful way to
enhance the business awareness of enhance the strategic role and
the HR function because the inward contribution of HR going forward.

8 BOUDREAU, J. (2010) Retooling HR: using proven business tools to make better decisions about talent. Los Angeles, CA: Center for Effective Organizations, University of Southern California.
http://ceo.usc.edu/news/retooling_hr_-_new_boudreau_bo.html

17 Changing HR operating models


Cloud technology in the HR operating
model
Technology is bigger than gas and electricity its going to turn our
world upside down

Technology is changing the world space and you shouldnt try to


we live in as consumers and as move up the value chain. Service-
employees. In a world where level performance metrics and
consumers want access to anything, qualitative feedback will help you
from anywhere, at any time, recognise when you know you have
businesses have to offer services, done enough and you are ready to
whether they be products or other move on.
Gareth Williams was appointed services, to meet the customer
to the Travelex Executive demand. In addition, there is a In my organisation, I now have
Committee in March 2013 as the new type of employee, one who the team supporting the cloud
global HR director, representing
is more concerned with whether technology solution that runs
the critical role our 7,000+
colleagues play in making there is a woman on the board of the optimised operational HR
Travelex the business that it is directors and what they can wear processes in my team, in the centre
today. He is accountable for to work than with compensation, of excellence. I have IT business
the global people agenda and
which would probably feature as analysts, technology development
leads the generalist HR team,
the L&D team, the centre of HR priority four or five on their list. Its and a technical architect: Im the
excellence and the HR shared this digitisation of the world that CIO of HR. Im not dependent on IT
service centre across the world. is changing the expectations of anymore. Its a team that focuses on
Prior to Travelex, Gareth held
people. I believe that the customer continuous improvement: how do
a range of HR and business
transformation/change roles at and employee experience should be you improve the technology? The
Goldman Sachs, Sainsburys and, aligned: the omni-channel consumer user experience of the technology?
more recently, BT. Gareth holds at some point has become the omni- And the service proposition around
an MBA from London Business
channel employee. technology? The benefit of using
School and is also a Chartered
Fellow of the CIPD. He holds a cloud is that it is highly adaptive
non-executive role at Londons What does this technological- and changes can be made within
Guys and St Thomas Mental driven change mean for HR? seconds. Even the team working
Health Foundation. He is also a
Many organisations are increasingly in the global shared services
volunteer telephone counsellor
for the Terence Higgins Trust. automating traditional HR centre, reporting into the centre
and people management of excellence, are experts in cloud
activities, particularly through computing within HR.
the implementation of cloud
technologies. HR technology also changes the role
of HR people in the business. In my
The first thing that organisations organisation, the HR managers who
have to get right is the operational support the business leaders and the
basics: HR technology can support HR partners who are the generalists
the delivery of seamless processes supporting the business both go to
that are automated. Organisations, work armed with technology.
regardless of size, should try to put
as much standardisation as possible The HR managers, responsible
into operational HR business for the execution of programmes
processes such as administration, driven out of the centre of expertise
payroll and recruitment. If you dont and partnering with the business,
get the basics right, you do not have seen the implementation of
earn the right to play in any other the HR cloud technology solution

18 Changing HR operating models


allow them to leave the non-sexy feedback. We recognise the criticality insight and translating these into
HR activities to technology or to of first-line managers. They are in the interventions. These interventions
the shared services team. Its put single most important leadership role will be strategies that enable HR to
them up the value chain in that and they need to be educated on optimise the workforce. I also see HR
partner-to-player-type model. Via good people management skills: how people evolving their skills into those
iPads they have access to mammoth to have honest conversations, how that might have traditionally been
amounts of data about employees to differentiate performance, how seen in a marketing discipline. With
and they are able to play around to look at data and use technology. talent management still being at the
with this data, form hypotheses and With this population, you cant just top of the agenda, HR will have to
start to make decisions about how put in the technology, even with think about developing attraction
they can optimise the workforce in an excellent change management strategies and a value proposition
the business to which they provide strategy; you need to have a plan in the world of a talent war that
support. Alongside this they are able for sustainability which includes the turns much of what has been done
to provide a coaching and support upskilling of the line manager role. traditionally on its head. The new
role to line managers in the business. There is no question that technology types of employee that we are
has been the driving force of seeing have different priorities and
The HR partners are using case fundamental behaviour change of place demands for creativity on the
management technologies to help our line managers. HR function.
manage business HR issues through
their lifecycle; basic documents such In the last three years the role of HR The HR function at Travelex
as grievance letters or evidence for a has fundamentally changed. Three was recently congratulated by
case are centrally stored in the case years ago they were doing payroll, the chairman after winning the
management tool. We did consider high-level basic administration, NimbusNinety Cloud Innovation
putting case management into our issuing contracts, recruitment, Award, which recognises the most
offshore shared services but decided operational grievances and innovative application of cloud in
because of previous learnings not disciplinary work. It was different the enterprise, for becoming the
to do so. In a global world where in every country and there were enabling function of the business.
culture is a big part of some of the different capabilities in the HR team. In my view, the HR profession has
issues you face in disciplinary and We were a regional operating model a real opportunity to get out there
grievance cases, it doesnt work and we have moved to a centralised and add value. HR directors need
trying to manage them remotely. operating model. to be courageous, prepared to take
their teams into the unknown and
The role of line managers has also When asked about the future of be prepared to adopt this agile
changed with the implementation the HR department, which I have methodology of the combination of
of the technology. Line managers been asked a few times recently, I technology, human capital and data
manage everything, including basic say I passionately believe that HR to move the success of their function
leavers, joiners, analytics for their is beginning to play a huge role in into the future.
teams, holiday requests, talent business. I think the function in the
performance, all compensation and future might be larger but with lower
payslips via their mobile devices. The operating costs. I think the centre
mobile adoption rate is 80%; India of excellence model might change
and Bahrain are leading the way as the head of HR and HR manager
but there are no other significant roles supporting the business evolve
demographics around usage. What and the basic operational activities
is also interesting is that were are either automated, streamlined or
seeing more and more people do aggregated. The HR roles supporting
their workflow management and the business will take on more of
their basic HR processes outside what would have typically been
of their core working hours. To done by the centre; they are thought
accompany this change to line leaders in their own right.
managers roles, we are changing
the way we measure performance Analytics is going to disrupt HR,
and next year we will be introducing particularly predictive analytics. HR
self-assessment on performance and people are going to have to get
forcing teams to give their leaders comfortable with data, deriving

19 Changing HR operating models


Will the cloud have a silver lining for
HR outsourcing?

History and context First wave of HRO the early


Organisations have had to adopters
respond to the seismic shifts in the We all understood the logic of the
economy with the increased use of first wave of HR outsourcing in 1999
contractors, zero-hours contracts, freeing up HR to focus on strategic
interim resources, partnership aspects of the job. It is worth
arrangements, consultants and pointing out that outsourcing wasnt
outsourcing to weather the storm. a new concept in HR, with most
Andrew Spence is an HR This process has also been mirrored organisations already outsourcing
transformation specialist with in the HR world as HR directors their payroll as standard practice.
20 years experience leading
scrutinise how to source current
complex change management
programmes in the UK, Europe skills needed to deliver HR services. It was this desire for HR
and the US. Andrew established transformation that created ground-
Glass Bead Consulting in 2006 Outsourcing started out as a breaking global HR outsourcing
with the aim of providing an
necessity of doing more for less deals, with Exult-BP and
alternative approach to HR
transformation. and has increasingly become ePeopleserve (Accenture and BT).
standard practice, with many
In addition to his consultancy
work, Andrew regularly speaks
organisations using outsourcing The rationale for the buyer
at conferences around the to drive efficiencies. However, organisations such as BP and BT
world, writes and contributes before outlining why outsourcing was to use outsourcing to help
to thought leadership might rise again, it is worth a quick drive transformation, including
groups, sharing knowledge,
techniques and resources in HR
refresher of its history and some of standardised HR services, reduced
transformation with HR and the the lessons learned. HR cost to serve and access to
wider community. He has written new innovations such as HR portal
articles for the HR Transformer The birth of multi-process HR technology.
blog since 2009 and tweets @
AndySpence.
outsourcing came about in the
late 1990s as part of the first wave The thinking behind HRO vendors
of HR transformation, the goal of such as Accenture and Exult
which was to spend more HR time (eventually bought by AON Hewitt)
helping to deliver organisational was to build up a large global
strategy and less HR time on client portfolio and benefit from
administration. The tactics deployed labour arbitrage by offshoring
involved tools for managers to work to countries such as India.
do more people management The economic case provided a
and restructuring HR based on client with 1520% savings and
economies of scale. These included the possibility of making a 1520%
HR shared services and tactical margin over a ten-year contract.
outsourcing, and economies of
scale with business partnering and A longer-term aim was to provide
specialist HR teams. Some of the standard HR services using
enablers of these changes adopted the same technology platform.
ERP technology, corporate portals However, the problem was that
as well as the emergence of a multi- each client was taken on in a
process HR outsourcing industry. different state of standardisation,

20 Changing HR operating models


with a different configured HR
system, which meant that the
worth about US$3.3 billion globally. There is a lot of
service was very much tailored to Although the HRO industry excitement around
that organisation and couldnt easily consolidated, outsourcing contracts
be shared with other organisations lasting a decade were thin on technology as a
in other words, the antithesis of the ground when organisations
standardisation. couldnt see where they might driver for change,
The results of this first wave of HR
be themselves. Single process
outsourcing went from strength
particularly
outsourcing were mixed for both to strength, such as benefits in talent
client and vendor. As someone who administration, recruitment process
was involved in one of the very outsourcing, payroll and learning. identification
first outsourcing projects, I found
it exciting, but it caused many From my perspective working on and development,
sleepless nights! I witnessed at
first hand the trauma of moving
both the client side and the vendor
HRO side, there were a number
and workforce
the organisation to standardised of lessons learned in the first two productivity.
services, HR service centres for waves of HR outsourcing.
clients and also restructuring HR
with new roles such as business Key questions that need to
partners. be thought through before
considering outsourcing:
As Dave Ulrich, a professor at
the University of Michigans Ross How will outsourcing fit with
School of Business, reflected, your HR operating model and
Often the first pancakes or first HR strategy?
batch of cookies do not come out Does your organisation really
well. have the appetite to standardise
HR processes and services?
Second wave of HRO some Do you have required experience
vendor consolidation and managing third parties?
indigestion
The second big wave of change in My view is that cloud will have a
HRO contracts came around 2006, significant impact on HR and will
including Unilever-Accenture and help HR to deliver the original
Johnson & Johnson-Convergys. goal of freeing up time to focus
These didnt quite deliver our on strategic imperatives. And
dream of a standardised multi- outsourcing will play a big part in
tenant service enabling each client that for many organisations.
to benefit from new innovations
either. Instead, these services Third wave of HRO will the
offered bespoke solutions, tailored cloud give HRO its silver
to clients demands and meeting lining?
the particular nuances of their HR There is a lot of excitement around
operating models. They had some technology as a driver for change,
success; according to industry particularly in talent identification
analysts, Everest Group, the multi- and development, and workforce
process HR outsourcing market is productivity. HR continues to have

21 Changing HR operating models


challenging requirements, from the HR technology platform and how it fits with the HR operating
finding future top sales performers HR administration. This combined model and HR strategy.
to providing tools that monitor the offering of business process
performance of a global project outsourcing and software as a As we design a new generation
team. There is now a relentless service has been called BPaaS, of agile HR operating models, the
move to migrate HR systems from or business process as a service. adoption of cloud and outsourcing
on-premise to SaaS (software BPaaS offers standardised will pose some interesting trends to
as a service). At the 2013 HRO yet highly configurable HR watch, including:
Today Forum in London, Mike services, allowing organisations
Ettling, Global Head of Cloud and to standardise transactional HR SaaS will automate many HR
On-Premise at SAP, commented processes. The rise and rise of tasks; manual HR work will be
that: The game-changing impact of Workday, and others such as SAPs reduced substantially.
SaaS is the fact that SaaS is melting SuccessFactors, has stimulated the There will be less need for HR
business processes. In the past we HR outsourcing market with NGA service centres as cloud-based
designed our system around the HR, IBM and AON Hewitt all with systems manage to support
process; now we have to design our HRO contracts using SaaS. the move to self-sufficiency for
process around the system. managers.
As SaaS forces HR to standardise, There will be a new type
A great benefit of an SaaS solution there is less HR administration of HR outsourcing which
is avoiding the expensive and time- needed, therefore the BPaaS deals develops more around business
consuming customisation fudges, so far have been smaller in size. consultancy services and
for example trying to get the The BPaaS model fits nicely with specialist HR advice than service
system to map your exact paper- the new generation of agile HR centres/manual processing.
based performance management operating models. More HR resources will be
process. SaaS drives process allocated to solving business
standardisation because you get So with the potential benefits of a problems.
what you are given in terms of new generation of HR outsourcing,
functionality, and then configure it how might this impact future HR Summary
for your organisation. However, you operating models? The early innovators of multi-
still need to persuade employees to process HRO had the right idea,
work differently. Impact on HR operating but perhaps at the wrong time.
models The conditions for multi-tenanted
Cloud will force HR to become To benefit, HR will need to learn HR outsourcing are now possible
more standardised, requiring less from the past and execute a more because of cloud technology. Two
centralised HR teams to maintain standardised approach to the challenges HR will have to overcome
it and breathing life into the HR delivery of HR services. are a resistance and scepticism to
outsourcing market. outsourcing, after mixed results in
Software ultimately has to be used the past. Whether we use cloud or
A new offering business by us pesky humans. Good design, on-premise ERP HR systems, the
process as a service (BPaaS) robust governance, communications, hard work required to standardise
The impact of cloud technology training and support are always HR services across geographies
also gives HR some attractive needed irrespective of the next and divisions will still need to be
outsourcing options, for example, technological breakthrough. completed, but now the benefits will
move HR processes onto a be worth it.
standardised SaaS platform and And with any outsourcing, the same
outsource the management of questions need to be asked about

22 Changing HR operating models


Reflecting on the past and looking to
the future: the importance of business
structure

In the 1990s, the HR field was business requirements, and share


working to support competitive knowledge across business units and
advantage through something called to embedded HR professionals who
strategic HR. At a simple level, would customise solutions to their
strategic HR meant that different unique business strategies, become
business strategies (winning through advisers on talent and organisation
cost, product innovation, customer to the business leaders, and serve
service or geographic expansion) as a primary course of contact for Dave Ulrich is the Rensis Likert
would be better implemented business leaders. Professor of Business at the Ross
by aligned HR practices. In this School, University of Michigan
and a partner at the RBL Group
process, many advocated moving The basic goal of this HR governance
(www.rbl.net), a consulting firm
HR thinking and work from logic was to provide both strategic focused on helping organisations
administrative to strategic, day-to- insights and administrative and leaders deliver value. He
day to long term, and transactional efficiencies at the same time. studies how organisations
build capabilities of leadership,
to transformational. Other functional
speed, learning, accountability,
areas were also separating the Over the past 15 to 20 years, HR and talent through leveraging
administrative from strategic work work has become more granular. human resources. He has
(for example, managing money The outcomes of HR are not just helped generate award-winning
databases that assess alignment
was separated into finance and administrative efficiency or strategic
between strategies, organisation
accounting; managing information execution. The outcomes of HR capabilities, HR practices, HR
was separated into data centres and have become the capabilities that competencies, and customer
information systems). My work (HR an organisation requires to win in and investor results.
Champions9) argued that HR had its marketplace. These capabilities He has published over 200
to deliver both administrative and likely include talent and leadership, articles and book chapters
strategic work. which are essential for any strategy, and over 25 books. He edited
Human Resource Management
but also include capabilities such from 19901999, served on
Many tried to figure out how as innovation (in product, market, editorial board of four journals,
to organise HR departments to services, business models), agility on the board of directors for
deliver both administrative and (speed of change or flexibility), Herman Miller, board of trustees
at Southern Virginia University,
strategic work. Some of the routine, collaboration (teamwork, cross- and is a Fellow in the National
standardised, transaction work of HR functional teams, merger or Academy of Human Resources.
was done through shared services, acquisition integration), customer
which included outsourcing and service, efficiency, managing risk,
service centres heavily dependent changing culture, and so forth.
on technology. While this transaction The capabilities represent what an
work had to be done efficiently, the organisation is known for and good
more strategic work required both at doing and vary depending on an
specialised expertise and generalised organisations strategy. Capabilities
business application. This led to the represent the outcomes of HR
centres of expertise HR professionals that enable strategy to happen,
who could offer deep technical ensure customer share over time,
insights, tailor solutions to unique and increase investor confidence

9 ULRICH, D (1997) HR Champions. Boston: Harvard Business School Press

23 Changing HR operating models


Figure 7: Alignment of business organisation and HR organisation

Holding
company
Business organisation In sync

Diversified/allied
business
Most common

Single business/
In sync
functional
organisation
Corporate Shared Dedicated
functional HR services HR

HR organisation

as intangibles. The HR department single line of business, HR expertise Hathaway owns or controls
should be governed to ensure that most logically resides at corporate, Dairy Queen, NetJets, GEICO
these capabilities can be defined establishing company-wide policies Insurance and Fruit of the Loom.
and delivered. (there are no centres of expertise, Or another example of a holding
but functional specialists), with company could be News Corp that
In evolving the HR department, HR generalists in the plants or owns to name a few companies
we start with HR as a business divisions responsible for the HarperCollins, News UK (that is, the
within a business. As such, the HR implementation of these policies. Sun, The Times) and BskyB. Each of
organisation should be structured They do so because there is no these separate businesses has their
in a way that reflects the structure meaningful differentiation between own independent HR organisation
of the business. Companies the business and the corporation. with a full range of HR specialists
typically organise along a grid of Smaller businesses are functional serving that business. There are
centralisationdecentralisation, organisations by scale and probably few corporate or generalist HR
which leads to three basic ways 20% of larger businesses continue professionals.
in which a company operates as functional businesses.
(see Figure 7): holding company, Diversified/allied businesses:
functional organisation or Holding company: When the Most large companies are neither
diversified/allied organisation. company is composed of multiple, pure single businesses nor are
The HR department should mimic unrelated businesses that are they true holding companies. They
the structure of its business managed independently, it is best lie somewhere in between, either
operations. described as a holding company. in related or unrelated spectra
While pure holding companies of diversification. They create
Functional organisation: When are rare (probably about 10% operating or business units to
the company comprises a single of all businesses), we see some compete in different markets, yet
business, it competes by gaining resurgence of holding company try to find synergy among them.
leverage and focus. The role of structure associated with the rise They have shared services, centres
HR in the single business is to of large and well-capitalised private of expertise and embedded HR. Like
support that business focus in its equity and investment firms such any professional services firm, the
people practices. As long as the as Carlysle, Berkshire Hathaway and job of HR is to turn their knowledge
organisation remains primarily a Blackstone. For example, Berkshire (in specialised centres) into client

24 Changing HR operating models


Table 2: Functional HR, shared services and dedicated HR

Dimension Functional Shared or professional services Dedicated

Business organisation Single business Related or unrelated Holding company


diversification; often a matrix

Design of HR policies Performed by corporate Alternatives created by Designed and delivered by


functional specialists specialists in centres of functional specialists within a
expertise business
Implementation of HR Governed by corporate Governed by local HR Governed by local HR
practices specialists professionals who select specialists embedded in the
options from centre of business
expertise menu
Accountability Corporate HR Split between operations and Local business leader
HR

Services orientation Standardised services across Tailored to business needs Unique services for each
the corporation with consistency through business
learning and sharing
Flexibility Mandates use of internal Has flexibility as governed by Each business creates what is
resources the centres of expertise required

Chargebacks Business units pay an Business units pay for use of Business units fund their own
allocation of HR costs service HR costs

Location Strong corporate presence Wherever makes sense Small corporate HR office, with
with HR generalists on site HR staff at local level

Skills requirements for Technically expert in design Design expertise, but also Business expertise and
HR and delivery consulting and support technical specialty in business

Wealth-creation Corporate shareholder value HR value-creation for line Business unit profitability
criteria managers, employees,
customers and investors

results (through embedded HR HR department challenge. Some Clearly, the democratic Way of
professionals). This is the dominant have misinterpreted our work as Resourceful Humans has emerged
logic for many HR organisations advocating that HR should be as the most exciting alternative
today in large multi-divisional organised through shared services to structure a vanguard Human
companies. Some have called it the in all business settings. One well- Resources strategy beyond the
Ulrich model, although I did not intended study interviewed HR Predict & Control derived HR
create it, but observed, researched leaders in government agencies Business Partner concept.
and wrote about it. HR leaders used and SMEs and they critiqued the
this model to offer more granular shared services logic. Duh! These I cherish innovative HR thinking and
HR solutions to business problems. organisations were functionally practice by building on and evolving
driven and should not create an HR what exists. HR business partner
In recent years, some have tried organisation that is different from logic starts with how to win in the
to figure out whats next in the business organisation. marketplace, emphasising how to
how HR departments will be win with customers and investors.
organised. The challenge again Many have created a straw man Creating better talent, leadership
starts with the business and the of the business partner logic by and organisation capabilities
most basic question is, how saying that it is outdated, but then remains at the heart of this logic. It
will the business be organised? proposing exactly what the HR is useful to learn and move forward
The basic business structure business partner logic proposes. in the HR field by defining new
challenge remains grounded in This week, I received this blast required organisation capabilities
the centralisationdecentralisation email: and ways for HR to deliver these
grid and debate, and so does the capabilities.

25 Changing HR operating models


We are doing a fascinating cloud or also with external stakeholders
The obsession with open source project on the future such as customers, investors and
some about how of HR. We have asked about 60 to
70 thought leaders (loosely defined
communities.

to organise an HR with a mix of academics, consultants, 2 Outcomes of talent, leadership


association leaders and senior HR and capabilities: HR professionals
department seems leaders) to answer the question, have to make sure that their HR
What do HR professionals need to work delivers talent (competence,
to not be the most know or do to be effective in todays commitment and contribution
important part and tomorrows business world? of the workforce), leadership (at
all levels of the company) and
of HRs agenda to As we have culled their answers, not capabilities (unique identity of the
one essay has referred to how the workplace).
deliver value. HR department is organised. The
obsession with some about how to 3 HR practices: Ensure that HR
organise an HR department seems practices are aligned to business
to not be the most important part demands, integrated with each
of HRs agenda to deliver value. other, and innovative to offer new
This finding is consistent with our and creative ways to build agility
research that asked over 20,000 into the organisation.
HR and non-HR clients to rate
what HR departments should focus 4 HR professionals: Continually
on to deliver business value. The upgrade HR professionals to
highest ranked in terms of how well demonstrate competencies that
done and lowest ranked in terms enable them to drive business
of delivering business value was results by positioning their
reorganising the HR department. organisation to win, managing
change and agility, offering
We find that HR professionals deliver integrated HR solutions, building
the most value when they focus on: personal credibility, using
information to make informed
1 Perspective of outside in: Make decisions, and managing
sure that the HR work links to paradoxes inherent in business
external stakeholders. This means success.
aligning HR not only with business
strategy but also with general These seem to be some (clearly not
business conditions (for example, all) of the issues for HR professionals
social, technological, economic, moving towards responding to the
political, environmental and incredible opportunities facing the
demographic global changes), but profession.

26 Changing HR operating models


Owning our HR operating model: an
enterprise-centred organisational
design methodology for HR

There seems to be no HR function and GE and soon after adopted Barry Fry (MD
Slumbering Giants) Barry
that is not embarking on, is not by strategy consulting firms. Why
has significant global
part-way through, or has not these methodologies have not experience in the design
recently completed major change become part of the core knowledge and implementation
in the way it organises itself and base of HR is the subject for of major business
transformation projects,
how it delivers its services to the another paper; however, the
including globalisation,
organisations it supports. purpose of this one is to advocate complex international and national mergers,
and illustrate the benefits of fundamental restructuring, culture change
Much has been written on how to applying methodical organisation and major re-skilling initiatives and has held
roles in a number of HR transformations.
implement the ubiquitous Ulrich design to the reshaping of HR and
model. Billions have been spent on its operating model, an approach Barry was previously Global Director of
outsourcers, consultants, advisers that both starts and ends with the Organisation Development at BOC Group,
Global Line of Business HR Director at BOC
and technology platforms that enterprise as a whole. Group and Global Organisation Development
have apparently transformed HR. Director at The Linde Group. Barry is also an
Many hours of reflection have been Almost by default the drivers for experienced trainer, facilitator and consultant.
spent by businesses wondering functional improvement come from He combines mastery in instructional design
with deep subject matter expertise and
why the first, second or even third beyond the function itself, imposed ensures that there is humour and fun in his
rounds of HR transformation have on HR: internal instructions to programmes.
not achieved what they wanted, cut costs, cut numbers, improve Barrys previous clients include the BBC,
both for the function and the ratios, adopt the enterprise-wide Virgin Media, Orange, EE, Yell, SIG, Sanofi,
organisation itself. The What comes technology platform, get the Pfizer, Atkins, Dentsu, Aegis Network, Alvarez
after Ulrich? question has been basics right, standardise, simplify, and Marsal and University of Southampton.
floating around for a few years outsource and offshore. And a
now, but few coherent propositions cacophony of external voices: use Anton Fishman has
spent the last 30 years
have arisen and even fewer us as we know better than you say advising and working
fully implemented as alternative the armies of consultants, use our alongside HR functions
operating models for HR. technology, its better than theirs as they improve people
say suppliers, follow our star say processes, enhance
their HR functional
Our belief is that HRs struggle the gurus, and so the external voices capability, and learn to
with what comes next, and the go on. And so HR frequently follows. lead and manage their own function as well
near mono-culture we now see in as providing support to the business.
the way HR organises itself, is a More appropriately some Anton has has an MBA from Cranfield and
direct consequence of HR failing to enterprise-wide organisation has held previous roles in Hay Group. He
take a systematic and methodical changes do require HR to follow founded a successful change management
consultancy called Regenesis and its
approach to the organisation design suit and change its structure business psychology offshoot Corporate
of its own function. This would lead and ways of working: rapid Insights. He then became a partner
to designs that they themselves organisation growth, mergers, in Boyden Interim Management and
are the architects of and that are acquisitions, divestments, latterly co-founded Crowne Finch, the HR
transformation consultancy, helping establish
anchored in the current and future retrenchment, relocation, change it as a leading international provider of
needs of their businesses. of ownership, the introduction of consulting services to HR before becoming
matrix structures, centralisation, its chairman in 2013.
The disciplines and toolkits for localisation. Though HR is not Anton is now consulting in the HR, OD,
organisation design were developed often enough the architect of the capability and culture domains as MD of
and pioneered in the early 1970s new enterprise-wide restructuring, Fishman & Partners Ltd.
by internal change agents at IBM these topdown changes provide

27 Changing HR operating models


an ideal opportunity for HR to take It is a myth that there is a perfect complex and more global. With
the initiative in the organisation structure. Every structure entails a poor internal alignment and lack
redesign of their own function. series of compromises, for example of cross-functional effectiveness,
the loss of standardisation for the the organisation expends a lot of
The organisation design process benefit of localisation, or vice versa. its energy fighting with itself. Like
should always start at the enterprise The question that must be answered an octopus wearing roller skates,
level, with HR posing a series of is, Which compromises are we there is a lot of activity but little
questions about how effective the willing to make and where will we momentum. Most people whove
current enterprise operating model hold our ground? worked in complex matrices will
is in enabling the organisation relate to this metaphor. If HR isnt
to fulfil its strategy. Our belief is In designing an operating model focused on optimising the system as
that HR leaders are failing their for the function, a whole systems a whole, which function is?
organisations if they are merely approach should be taken to
designing HR organisations that identify changes to be made in Whether as an HR function or
perfectly fit anachronistic enterprise processes, governance, culture, an organisation effectiveness or
models. The first question should leadership, accountability, resource business transformation function,
be: To what extent is the enterprise allocation, boundaries and hand- the name is less important than its
operating model fit for purpose in offs, and so on, in order to create capacity to act with flexibility and
delivering the firms strategy? Only a coherent, self-sustaining and with pace, to partner the business
then should the focus move to the integrated way of working. in change, to develop and embed
HR organisation and its capacity to practical solutions that are owned
support the business strategy. What emerges then is not a and sustained by the business, and
porting-over of someone elses best that create a work environment that
Structure should follow strategy practice nor an implementation attracts and retains the HR talents
and the launch point for a review of a standard model nor one and capabilities the business needs.
of HR structure should be a people sold in by advisers who know
strategy that clearly differentiates better than the business. This is a HR directors and their leadership
the role that HR will play in structured, sequential, paced and teams have to be courageous
enabling the enterprise to deliver methodical process. As a result, and bold in anticipating their
its strategy. This is not a generic the emergent operating model organisations needs in this
list of HR activity and projects. is anchored in the business, the way, taking ownership of their
Strategy is about making choices. design is coherent and systemic, own change agenda rather than
It is about differentiation. So, which the business case is made, key responding time and again to
people-related choices are going to stakeholders have contributed to external pressures to change. By
enable this business to deliver its the shaping of the model and they continually making itself redundant
differentiated strategy and deliver become key to its implementation. and reinventing itself in this way,
its specific goals? This methodical approach results in HR can maintain its relevance to
diversity of HR operating models, the business and its centrality in
In answering this question, the alignment and innovation in design organisational performance.
organisation design team should be characteristics too often missing in
thinking not just of structural options HR operating models.
but about reshaping leadership,
capabilities, processes and the other So what does this mean for
elements of its operating model. the further development of
the HR operating model?
Organisation design criteria should Developments in IT have made
be determined and agreed early on employee and manager self-
in the process. These may be related service a reality, making HR largely
to fit and alignment to the broader redundant in basic personnel
enterprise as well as to elements processes.
of the people strategy. They
should then be used to evaluate While this has been happening, a
the contrasting benefits, costs and more significant change has been
transition risks of the alternative happening. Organisations have
organisation designs for HR. become increasingly bigger, more

28 Changing HR operating models


What does the future of HR look like
in an SME?

The term SME is broad, including My case study research


a wide range of organisations from demonstrates that the needs of an
a one-man band to a company of SME will also change over time.
250 staff which may look similar Decisions depend on a range of
to a large organisation in terms of factors, including workforce size,
structure and process. And so the sector, growth ambitions, industry
people management approaches and the owner/founders views on
adopted across this diversity the importance of investing in their Jill Miller joined the Chartered
of organisations will look very people. Institute of Personnel and
different. Development in 2008. As a
research adviser, her role is
My research with smaller
a combination of rigorous
To consider what the future of organisations has revealed a wide research, active engagement
HR may look like in SMEs, Ill first range of different HR approaches, with academics and
look at the current HR models from focusing only on contracts, practitioners to inform projects
and shape thinking, and active
and approaches being adopted in pay and admin, to a more holistic
dissemination of research
smaller organisations. Ill then go HR approach addressing the findings and thought leadership.
on to consider what the insights employee lifecycle and thinking She frequently presents on
from my in-depth case study about whats really going to key people management
issues, leads discussions and
research with a wide range of make a difference to the long-
workshops, and is invited to
SMEs could mean for the future, term health of the organisation: write for trade press as well
in particular what operating employee engagement, talent as offer comment to national
models could look like ten years development and career paths. journalists, on radio and TV.
from now, whether the capability Jills current research initiatives
requirements of HR will change, Some case study organisations focus on the role of people
and whether there are implications chose to hire a professionally management in driving SME
growth. She has conducted
for HR career models. qualified HR manager at an early research with both UK and
stage of business growth to ensure Singapore SMEs to propose
How do SMEs currently they have the right people in place a framework of how people
organise and develop their to meet their growth ambitions. management practices and
approaches need to change
people function? At the other end of the spectrum, as SMEs grow and transition.
In thinking about what HR may some companies have chosen not Her most recent work takes an
look like in SMEs in the future, to employ an HR professional, in-depth look at how SMEs can
lets first do a stock-take of the despite employing over 100 keep their culture and values at
the heart of the business and
choices SMEs are currently making staff. This doesnt mean they how SMEs can best recruit and
about how to best manage their dont take people management develop talented people.
people. The overarching questions seriously far from it. Many have
to consider are: whether and at adopted alternative approaches,
what stage does an SME typically for example leaders and managers
need an HR professional? Or take on HR responsibilities that
perhaps someone responsible for may not be expected in other
the people agenda, whether they organisations. Or an office
have HR in their job title or not? manager may operationalise
And what are the most important great people management and
people management areas to development with the support of
focus on? an HR consultant.

29 Changing HR operating models


As Harney and Dundon10 articulate: Between each stage is what Ive
A small the extent of formalisation of HRM referred to as an inflection or a
businesss people should not be seen to be indicative
of the substance of HRM. Its
tipping point. These are typical
points reached by SMEs where
requirements will clear that SMEs are not simply a the current people approach is no
scaled-down version of a larger longer suitable or effective for the
change over time organisation. They are unique in business. The needs of the business
their culture and whatever people- and hence its people management
as the company related decisions are made need needs are changing its through
grows and matures. to suit their particular organisation
context.
looking ahead to these transition
points and taking action to adapt
It follows that who or introduce new people-related
A small businesss people activities that the business will be
champions and requirements will change over sustainable.
time as the company grows and
delivers on the matures. It follows that who Not having the right approaches
people agenda will champions and delivers on the
people agenda will also change as
in place can stunt growth, lead to
turnover, failure to fulfil customer
also change as the the business demands change. orders, and ultimately require
extra effort to reconnect with staff
business demands A four-stage model of SME whove become disengaged. And
growth in organisations where no one
change. Through my case study research takes responsibility for the people
with a wide range of SMEs, across agenda, these issues will be clearly
sectors and sizes, I have proposed apparent.
a four-stage framework of SME
growth or maturity. Each stage is How does an SMEs HR
associated with particular people requirements change through
management approaches, including SME growth?
the HR operating model typically As a company moves through
adopted. the stages, the people challenges
change, with implications for the

Figure 8: Four stages of SME transition

Entrepreneurial Emerging Consolidating Established


edge enterprise organisation organisation

Inflection
point

10
 ARNEY, B. and DUNDON, T. (2006) Capturing complexity: developing an integrated approach to analysing HRM in SMEs. Human Resource Management Journal.
H
Vol 16, No 1. pp4873.

30 Changing HR operating models


nature and demands on the people hoc, including bereavement leave, issues, put in place the structure
role. As well see, it is likely that as someone handing in their notice or and process needed, or in a more
the company grows, so does the clashes between members of staff. ongoing general advisory capacity.
need for more specialist people
management capabilities. There Emerging enterprise The decision to hire HR or someone
are also more opportunities to If the business transitions into the to take on this role formally is
support the longer-term health of emerging enterprise stage (through determined by the business leader
the organisation. For example, a increasing workforce numbers or or founders views on people
larger workforce makes it possible needing a more formal approach), management and development.
to offer development and career more people issues come to the There is a marked difference in
progression. fore. In many of our case studies business approaches at this stage
this stage was associated with in terms of whether the owner
Entrepreneurial edge larger-scale hiring than previously just wants to have the necessary
In the start-up entrepreneurial and more operational staff. People policies in place to keep them out
phase of an SME, people issues and performance issues become of court, to the other end of the
tend to be dealt with (or not!) by more salient and some structure spectrum where they see their
the owner/founder, with no formal and procedures need to be people as fundamental to their
HR role. Overall the business tends introduced to guide work, define success, believing strongly in the
to be characterised by informality, job roles and create a sense of link between happy employees,
with an emergent strategy, fluid fairness across the organisation. happy customers and a positive
structures, flexible job roles and balance sheet.
tacit knowledge exchange. Within the emerging enterprise
stage a key transition point for My research has found there are a
In terms of its people, the focus the business is when the owner/ variety of impetuses for deciding to
is on hiring the right key people founder needs to delegate some hire/develop the businesss first HR
with the right skills to run a certain responsibility for the running of professional:
section of the business. The owner/ the business to other leaders and
founder takes responsibility for managers. Teams emerge and The business has reached a size
hiring, looking for someone who day-to-day people responsibility is where policies and procedures
fits with what their company is largely devolved to line managers are needed to guide work and
all about and is inspired by what or team leaders, often promoted on create a sense of fairness.
theyre aiming to achieve. The their technical capability with little The owner/founder feels that
people-related requirements tend or no management training. people issues are taking up too
to be minimal, centred on pay and much of their time.
contracts, with the rate for the On the whole, in the emerging People management is seen as
job set by the owner. Employees enterprise stage HR tends to be vital for growth and to achieve
tend to be self-motivated by the transactional and reactional. Payroll the companys vision.
businesss aims and learn through is usually the charge of the finance There is a specific people issue
doing, needing to get involved in manager and in many cases the that needs to be addressed, for
all sorts of activities beyond their office manager takes on some example tribunal cases, skills
core job role to make the company workforce-related activities, such as shortages, high turnover.
a success. The owners vision and establishing absence records and
their personal values guide both the holiday scheduling, and addressing Its important that an HR
what we do and how we do it. people issues as they emerge. professional understands the
This role has the tendency to grow leaders motivations for hiring
If there are more serious issues, into a more formal HR role in the them and also thinks about how
for example a tribunal claim, a next stage. they themselves position their
solicitor tends to be the first point role how can they influence
of call, or conversations with the In some organisations an HR people across the business through
bank or accountant for advice on manager is hired (full- or part-time) demonstrating their credibility and
where to go for help. There may be with the remit of putting in place value-adding role?
a similar reaction when the firsts the necessary procedures and
happen, such as the first pregnant policies. In others an HR consultant Consolidating organisation
member of staff on the books. was engaged in this stage with a The consolidation phase is
Most other events are dealt with ad remit to address particular people characterised by reflection and

31 Changing HR operating models


improvement and typically taking either hired an HR manager into around the internal context
a step back, ensuring that people the business (some organisations (culture, engagement and internal
practices support the longer-term had offered the HR consultant collaboration) and scanning of the
ambitions of the business. they worked with in their start-up external context of wider industry
stages a full-time position) or were and labour market trends.
Whereas in the earlier stages supporting the development of
the focus was predominantly an existing employee (typically an The HR function also typically looks
on responding to immediate office manager) to formalise their more like a department, with a
operational issues, now just putting HR role through study. generalist HR manager or director
a process in place to solve an and specialist HR professionals
issue isnt enough. With each issue Interviewees in my research flagged leading on recruitment and learning
theres a golden opportunity to the pros and cons of both options. and development.
also build on the organisations Developing someone whose
cultural foundations. There is a background is not in HR means Overall, the critical transition
huge risk by this point of growth they need to get up to speed point for our case studies moving
that what the business is all about, quickly as a generalist, but they from a transactional to a strategic
its founding principles and values, already have a sound appreciation people approach occurred
can become diluted and even of the business, peoples roles and between the emerging enterprise
disappear. HR is ideally placed to growth ambitions. When hiring an and consolidating organisation
keep these core business principles HR manager externally, business stages. Attaching workforce
alive by ensuring the values and leaders talked about the need to numbers to the stages didnt
purpose are threaded through the make sure they understand the reveal any particular pattern, with
people practices. business and what its all about SMEs growing and transitioning
and that introducing policies from at different workforce sizes,
A more planful approach to a corporate background werent depending on their strategy,
resourcing is needed, looking at necessarily going to work round the leaders view on people
long-term skills requirements, as here. management and the industry the
well as a more formal approach business operates in.
to management and leadership With prior focus tending to be
development. Consideration needs on recruitment and establishing So what does the future of HR
to be given to who assumes the policies, a different HR skill set is look like in an SME?
learning and development role to needed now. Whether the current Small business success depends
address these skills and training HR professional is a generalist on its people, their drive and their
issues. Furthermore, the size of or a recruitment specialist, their contribution. Someone needs to
the organisation at this stage attention needs to be focused on take responsibility for leading the
typically makes establishing career talent development, engagement people approach, making sure the
paths possible for the first time. and a more sophisticated reward right people are hired, and they
Some case studies talked about proposition. And as the focus are developed and managed in the
this stage being associated with of the business tends to now be most appropriate way.
people looking outside of their shifting to a longer-term view, the
organisation at their friends HR approach needs to do the same. This responsibility has traditionally
careers and wanting the same In some of our case studies there been thought of as the HR role,
opportunities. was an HR assistant responding but my research has shown that
to the day-to-day requirements the people agenda can take
In the same vein, many of the of HR, as well as an HR manager many different guises, and the
organisations Ive worked with have balancing the short- and long-term demands of the role change
introduced a more sophisticated demands. through business growth and
reward offering at this stage. maturity. Some aspects of people
Performance-related pay or profit- Established organisation management are more critical
sharing are common mechanisms In this final stage of the framework at different stages of business
used to promote staff engagement the SME is looking more like a development. This leads me
with organisation goals. larger organisation. A strategic to propose that we think more
approach to people is needed broadly in terms of a people role
HR tends to be in-house by this as the businesss focus is on for an SME.
stage. Most of our case studies had sustainability, combining expertise

32 Changing HR operating models


Many entrepreneurial small
companies already have this
business savvy. There is also huge
opportunity to get involved in all
The reality of
broader mindset, which is in stark aspects of the business, the speed working in an
contrast to the more traditional at which decisions are made and
large organisation mindset and change can happen, and the ability SME is that the
HR operating model. Adopting a to quickly see the impact of what
broader view presents a range of you do. scope of any job
possibilities for what the future of
HR looks like in an SME. I consider Adopting a fluid HR approach
role expands
some of what we need to look at It is clear from the case study beyond the one
in terms of its form and function, learning that people policies
and also how we think about HR and practices cant be seen as you are contracted
careers. set in stone. They need to be
fluid, changing as business and to do.
Will the key capabilities workforce needs change. What
needed by HR in SMEs works for a team of 30 people
change? wont necessarily work for a team
Working in an SME is clearly a of 100, where there is likely to be
different experience from working more people diversity.
in a large organisation. There is a
spotlight on certain capabilities HR A fluid approach helps to feed
needs to develop to have maximum innovation, with this mindset
impact on business performance. making it easier to trial different
The importance of these is unlikely people approaches, either shaping
to change, and I believe we need to and improving on beta versions or
be calling these out to both attract removing what doesnt work. But
the right people into the role and it also requires an HR professional
to steer personal development. to be comfortable with change,
uncertainty and operating in largely
Being comfortable with role unknown territory.
agility
A considerable amount of agility is Assuming a coaching role
required and a passion for personal More attention needs to be
development. You need to have given to ensuring the quality of
generalist knowledge, being able operational HR the translation
to manage the spectrum of people of policy into practice at an
management and development operational level. This means more
issues. But this needs to be investment in up-skilling managers
overlaid with a degree of specialist to effectively manage people.
knowledge in key areas which can HR needs to take a leadership
be tuned up or tuned down as the and oversight role on the people
business requires. Business acumen agenda, being able to coach line
and the ability to think ahead are managers to manage their teams
needed to ensure that this tuning most effectively.
up or down of specialist skills
happens at the right time. Operationalising HR policies
requires an understanding of the
Also, the reality of working in an particular business context, making
SME is that the scope of any job sure that the people practices are
role expands beyond the one you enacted in a way consistent with
are contracted to do. Despite the its culture and values. A close
increased workload, most people relationship with the rest of the
saw this as a positive thing as their business enables practices to be
role extended into other areas co-developed, tested and refined.
of the business, increasing their

33 Changing HR operating models


Developing and we attract and develop the people
Operating in an demonstrating business who are going to be most effective
HR role perceived acumen
Operating in an HR role perceived
in these roles?

as a bolt-on to as a bolt-on to the business is not Typically in an SME someone within


going to be nearly as impactful as another function takes on the
the business is not being able to influence business people role which develops over
decision-making. However, the time. These people tend to assume
going to be nearly reality is that sometimes the a dual role, perhaps later making
as impactful as expectation of HR is to keep the
business owner out of court.
the move to a solely HR role. This
career route means they bring with
being able to Here HR has to work really hard them operational understanding
to demonstrate credibility in a and business acumen, and combine
influence business wider business role. Being able to it with people knowledge and
articulate a clear business need insight.
decision-making. and demonstrate the impact of
people initiatives are vital skills In traditional HR career models,
for persuading the rest of the rotations in and out of HR are
business of the potential impact rare, with a study by Lawler and
that a more strategic approach to Boudreau (2015)11 finding that less
people management can have on than 2% of the companies they
productivity and profit. surveyed reported great use of
this practice. Is this combination-
In the words of one interviewee in style career model, and the general
my research: To be an effective HR closeness between all parts of the
manager in an SME you need to be business, a privilege of SMEs or a
perceived as a business person who model that has useful elements for
happens to know an awful lot about larger organisations, particularly
excellent people management. This around career rotations?
requires business acumen, a long-
term mindset, external as well as We also need to think about how
internal focus to be able to spot agility can be built into HR roles
trends that will affect the business a key facet of SME working. CIPD
in the future, and being able to survey research of HR professionals
communicate effectively with about their careers revealed that
different stakeholders. generalists tend to stay generalists
and specialists stay specialists. But
What are the implications for in an SME HR professionals need
HR career models? a combination of the two, having
The capability requirements generalist skills and wide-reaching
weve discussed lead us to think basic knowledge, but being able
differently about HR careers and to tune up or down particular
routes into the profession. As specialisms when required.
a business transitions through Demands on their knowledge and
the growth/maturity stages Ive hence agility are wide-reaching.
outlined, more people-related
challenges emerge and a more What might SME HR
sophisticated people approach operating models of the
is required. This does require future look like?
specialist people-related insight, The typical transitions the HR
knowledge and skill. So how do function goes through are from

11
 AWLER, E.E. and BOUDREAU, J.W. (2015) Global trends in human resource management: a twenty-year analysis. Stanford, CA: Stanford University Press. http://www.sup.
L
org/books/title/?id=242777

34 Changing HR operating models


having an HR consultant initially, administrative and strategic HR.
to hiring or developing an in-house HR professionals in SMEs often talk
HR professional, to gradually of the difficulty in splitting their
growing the in-house HR team. But time and resources between the
given the capability requirements more administrative tasks and the
discussed above of needing to flex longer-term approaches they need
generalist and specialist skills as to put in place for the sustainable
the needs of the business and the health of the business. Many were
workforce change, is this the only grappling with how to better
model to follow? balance or even split this tension.

We are seeing more and more Some small businesses that


networked and virtual organisations were keen to embed people
developing, particularly in the management and development into
small, entrepreneurial business the very core of how they operate
space. I wonder if this model will adopted what could be termed
increasingly spill over into the integrated HR. A distinct split of
traditional HR one? For example, transactional and strategic HR
could SMEs have a core, generalist duties was facilitated through more
HR professional in-house and share devolution to line managers and
specialists across an SME cluster? greater employee empowerment
Will regional or professional over their own development and
centres of excellence develop the way they manage their work.
which SMEs can dip in and out of?
Another feature of this integrated-
Given the emphasis SMEs put on style model was characteristic
ensuring the cultural and values of the mantra, If it doesnt
fit of their people practices exist or doesnt work, build it!
(and rightly so), having an HR embarked on collaborative
in-house person to oversee this innovation with other parts of the
is essential. And someone who business, co-developing systems
has the generalist knowledge to and practices that worked for them.
be able to select and guide the
right specialists makes sense. But For a more in-depth discussion of
ultimately one person cannot be the issues discussed here and case
expected to be an expert in every study examples of some of these
area of HR. increasingly emerging new forms
of organising and the capabilities
Another question around future required of HR in SMEs, take a look at
HR operating models in SMEs is our SME hub page: cipd.co.uk/smes
whether we will see a division of

35 Changing HR operating models


Living in a collaborative world:
implications for HR operating models

In the last two years I have been partnering success and to set a clear
working with the CIPD in general, strategic agenda for the function.
and Dr Jill Miller in particular, This will change the way that HR
on a project called Beyond the functions will work, and the way that
Organisation. In this work we have they organise and deliver their HR
built up a picture that shows the services.
wide-scale reliance on collaborative
Paul Sparrow is the Director of arrangements in the economy In a forthcoming research report
the Centre for Performance-led today, and the increasingly from the Centre for Performance-
HR and Professor of International inescapable need for organisations Led HR at Lancaster University
Human Resource Management at
to understand how to better and the CIPD entitled Realising
Lancaster University Management
School. He has worked as manage collaborative working. HRs Vital Role in the Success of
a Research Fellow at Aston Partnering Arrangements, we
University, Senior Research Employers are increasingly finding examine six different case study
Fellow at Warwick University,
that they not only have to manage settings across the public and
Consultant/Principal Consultant
at PA Consulting Group, Reader/ their own workforces, but also private sectors. In the private
Professor at Sheffield University have to manage workforces across sector we looked at industry-wide
and while at Manchester Business the partnering network. These partnerships in the nuclear industry
School he took up the Ford
responsibilities are becoming too at the Nuclear Decommissioning
Chair from 200204 and was
Director, Executive Education complex to be managed solely Authority/Sellafield Ltd. We have
200205. He has consulted with through contracts and formal studied developments at Shell in
major multinationals, public governance arrangements. Informal response to the complex portfolios
sector organisations and inter-
mechanisms that ensure good- of joint ventures in the oil and gas
governmental agencies, was an
Expert Advisory Panel member to quality and trusting relationships sector, and we have examined the
the UK Governments Sector Skills are vital to the success of the pursuit of collaborative business
Development Agency and was network. Yet customers expect and models at Rolls-Royce Aerospace
voted in the Top 15 Most Influential
need the relevant organisations and their use in the co-creation
HR Thinkers by Human Resources
magazine from 2008 to 2012 and to be brought together and to of value in aircraft engines. But
was voted in the Top 10 Most collaborate effectively, by operating operating in a collaborative world
Influential HR Thinkers by Human in a coherent and an integrated is not the preserve of the private
Resources magazine in 2014. His
way. This is leading to an expansion sector. In the public sector we see
research interests include cross-
cultural and international HRM, of responsibility, and heightened the pursuit of multi-agency working
HR strategy and the employment exposure to the risks of poor in local government, the growth of
relationship. He is co-editor of co-ordination and control across strategic collaborations in police
the Journal of Organizational
partnered arrangements. forces and the move from direct
Effectiveness: People and
Performance and Editorial Board provision to a commissioning model
Member for Human Resource The main business issues faced in the National Health Service we
Management, International Journal in partnering arrangements are have looked at West Sussex County
of Human Resource Management,
threefold: risk, governance and Council, Dorset Police/Devon and
British Journal of Management,
Cross-Cultural Management: capability-building. All three Cornwall Police and NHS East
An International Journal, issues are highly people-centric, Cheshire/Avarto in this context.
International Journal of Cross- and dependent on relationships
Cultural Management, European
and management behaviour. HR Our initial review of existing work
Management Review and Career
Development International. therefore has the opportunity to in this area uncovered six main
make a significant contribution to issues for HR to consider when

36 Changing HR operating models


deciding on the most appropriate internal projects and businesses to Do all organisations in the
HR architecture for their business some of their external relationships or network need to put in place
context. They need to: collaborative businesses; this is often the same model for it to be
done informally by secondment. effective?
understand the way the whole
partnering network operates to The shift from the management of We can be clear about these
inform HR choices immediate to longer-term integration questions. The answer to both is
support partnership arrangements issues across various forms of no. Organisations do not adopt
and build a core HR capability partnered working creates other only one solution; they might
around this challenges for HR: mix and match elements. An
differentiate the level of strategic organisation may use one structure
support that HR must offer As the organisation makes for one partnering arrangement
between and across collaborative important integration decisions, and a different structure for another
arrangements how do you ensure the spread relationship. In fact, in one partnering
develop leadership for the whole of important learning across arrangement, several different
network partners, and also ensure that models might be in place; Shell, for
design the HR delivery model such learning continues to take example, will broker in more or less
so that it can cope with crisis place? of their own resources in relation to
situations How do you hand over the the importance and risk of the joint
deal with the issue of employees insight that any HR expertise venture. Indeed, we do not believe
dual identity that exists in many dedicated to the collaboration that the choices we lay out below are
of these new arrangements. has created or arrived at, and the only ones each HR operating
then ensure that such insight model needs to be bespoke to the
Four responsibilities for the is subsequently acted upon by needs of the network and there will
HR delivery model others if needs be? be other solutions put in place, we
Collaborative working carries When important decisions are sure.
important implications for the way were arrived at during the
that organisations should think early or planning stages of This then helps answer the second
about the HR capabilities they need, a collaboration, how do you question. All organisations in
and in turn the most important HR hand over the insights arrived the network need to make some
structure and delivery systems. We at during the initial planning adaptations to their HR operating
found that the HR delivery model activity, or any decisions, model, and they need to have clear
has to be aligned to four overarching judgements or sensitivities that interfaces so the join is seamless,
responsibilities that become were arrived at in assessing the but once you get inside any
important in partnered working: pace of actual versus desired one member of the network, the
integration, to those people in internal business and operating
1 oversight of the intended strategy HR who might subsequently logics become the most important
become involved in operational force to shape their HR operating
2 ensuring the integrity of the matters? Or how do you justify model. The partners just need to
strategy as it is executed subsequent changes in this understand those logics and why
assessment? they are in place.
3 ensuring the integrity of the
operations Design solutions Dedicated project resources
Across the organisations we studied, So, the first design solution has
4 optimising the operations as the we found three broad responses been to create dedicated project
partnership evolves. or design solutions to these sorts resources within the HR function
of challenges. But before we lay that can be assigned to the more
Given a need for more cross- these out, there are two important strategic activity triggered by
organisation collaborative working, questions to consider: working on projects both within the
should partners not pool or share organisation, or those that operate
some of their HR resources with Do organisations need to adopt beyond your own organisation. This
other partners? Often each partner only one of the solutions below, also involves re-aligning the culture
has to deliver strategic project or might they mix and match and relationships between the
work by moving HR resources from elements? other major arms of the HR delivery

37 Changing HR operating models


mechanism. For example, in Rolls- duties across broader partners. importance in their upstream
Royce, independent of the need From an organisation design business. In Rolls-Royce strategic
to service a collaborative business perspective, often single points of integration roles have also been
model, changes have been made contact are important in managing created, but have been aligned
in the HR structure that introduce complex relationships knowing to the management of mergers
a major projects directorate who to talk to, to get things done, and acquisitions, which are critical
within the HR function. But this or to ask questions of. For example, to their business, and also to the
is well suited to a collaborative the Nuclear Decommissioning supply chain.
environment as well. Authority (NDA) has an organisation
structure in which a director and One thing though now seems self-
In the case of major business-as- a site-facing team face off to all evident. Whichever design solution
usual projects, activity is safely the nuclear management partners. an HR function might adopt, there
directed into a service operations The HR structure needed to echo are important questions to ask
team working closely with senior this. The NDA designed their HR about its delivery model and its
business partners and HR directors function by splitting the roles into capabilities. These developments
who can make sure the issue is those that face inwards to the NDA are starting to change the types
being executed in the right way. and those that face outwards to of skills or capabilities that
But where a novel or strategically the broader nuclear estate and the organisations need, either in the
important intervention has to be need for collaborative activity. The specific parts of the HR structure
made, say for example to help two separate arms the inwards- that work across organisations,
manage a partner or supplier facing and outwards-facing (to or within the HR function in
in distress, this is handled via a contractors) structures each general. They are bringing to
programme management office, face very different issues. The the fore specific HR skills, such
through a formal process that outwards-facing HR professionals as organisation design, skills or
brings together sector business have to be supported by a high- leadership development, employer
and regional HR directors and level organisation development relations and engagement. They
examines the whole pot of potential capability. Before they put their are changing the roles of business
activity, determines which activities own organisational design in place, partners and the way they
must have a call on what is a finite they relied on skills of appreciative have to work. In short, they are
amount of project resource, and enquiry in order to ask questions placing tensions on traditional HR
what needs to be dealt with in a around how people understood structures, which are becoming
different and more creative way. the relationships, the complexities increasingly unfit for purpose when
of how people worked across the one lives in a collaborative world.
However, those who operate nuclear estate.
a strategic portfolio system to How does an organisation entering
organise and allocate HR resource Strategic integrator role into a partnering arrangement
recognise that the scale and The third design solution has decide on the most appropriate HR
complexity of the work involved been to create various strategic structure to support the network?
creates its own unique demands. In integrator roles that operate Our work has shown that this needs
practice, stakeholder management across internal and external to be based on an assessment
becomes more complex, business businesses, and serve to bring of the level and types of risk the
partners can struggle in areas together dedicated expertise partnership carries, the form of
where its less clear who has under their leadership. The HR governance that has been adopted
accountability with whom and upon function addresses potential holes (contractual or trust-based) and
what they have to be collaborating, in their delivery model through the need for mutual insight into the
and potential cost savings might the creation of new strategic capabilities of the whole network.
therefore be difficult to achieve. integrator roles into which This must, however, be done with
they can concentrate dedicated an appreciation of their wider
Partitioned structure expertise. This expertise might be business structure.
The second design solution has aligned to different challenges. In
been to partition the HR function Shell these integration roles have
between those roles that maintain been established and aligned to the
an inward and own-organisation management of international joint
focus, and those roles that have ventures, which have a particular

38 Changing HR operating models


CIPD viewpoint

We need to continue to research


and understand the evolving
Do you understand the
capabilities your organisation
It is an exciting
operating models and structures of needs to deliver upon its time to be in HR.
the HR function. strategy?
Will the decisions above There is no doubt
We support the view that there is withstand change?
not one model for delivering HR
that the function
that is suited to all organisations.
How an organisation should
You should also consider: is changing and
structure its HR function depends Who are your clients and what will look decidedly
on its organisational strategy, wider do they need?
organisational structure and the What capabilities do you need different in the
requirements of its customers and within HR and how might these
the organisation it is supporting. be organised into roles? How can future.
These things can be influenced these capabilities be developed?
by other factors such as size and How will the different roles work
maturity of the organisation. together?
Potentially there are some How can you use technology
principles that can be applied in all to improve processes and your
organisations. client experience?
To what extent might you want
Decisions about how to structure to outsource some of your HR
the function should be taken activities?
using a rigorous approach to What role will your line
organisational design, starting managers be playing and
by looking at the organisation do they have the required
holistically rather than straight at capabilities?
the HR function. How will you evaluate and
measure HRs performance?
The following questions should be
asked: Its an exciting time to be in HR.
There is no doubt that the function
Does your organisation have a is changing and will look decidedly
clear organisation strategy? different in the future. Much
Is your organisation structured thanks goes to the contributors of
to deliver this strategy? these thought pieces, who have
Do you have a clear HR strategy helped highlight some of debates
that is aligned with your changing HR operating models. The
organisations strategy? CIPD would like to invite people
Does your HR structure replicate to contribute to this discussion by
your business structure? emailing j.cooper@cipd.co.uk or
Is your HR structure set up to tweeting under the #changinghr.
deliver your HR strategy?

39 Changing HR operating models


Useful information

Below are some of the CIPD Toolkits


resources that may of interest to HR Strategy
readers: http://shop.cipd.co.uk/shop/
bookshop/toolkits/organisational-
Other research development/hr-strategy
The Changing HR Function
http://www.cipd.co.uk/hr-resources/ Organisational Design and
research/changing-hr-function.aspx Capability Building
http://shop.cipd.co.uk/shop/
Annual HR Outlook survey bookshop/toolkits/organisational-
http://www.cipd.co.uk/research/ development/organisation-design-
outlook-series.aspx and-capability-building

Beyond the Organisation Tools


Understanding the business issues My CPD Map
in partnering arrangements Based on the CIPD profession map,
http://www.cipd.co.uk/hr-resources/ my CPD Map is an online tool that
research/understanding-business- enables you to build a detailed
issues-partnering.aspx picture of your strengths as well as
identify where there may be gaps
Beyond the Organisation in your skills or knowledge. Based
Organising HR for partnering on your responses, you will then
success receive guidance tailored to your
http://www.cipd.co.uk/hr-resources/ needs in the form of workplace
research/hr-partnering-success.aspx development recommendations,
further reading, research, events
Factsheets and activities.
Organisation design
http://www.cipd.co.uk/cipd-hr-
http://www.cipd.co.uk/hr-resources/
profession/profession-map/
factsheets/organisation-design.aspx
Training and events
Strategic HRM
http://www.cipd.co.uk/hr-resources/ HR Business Partner Conference
factsheets/strategic-human- http://www.cipd.co.uk/events/
resource-management.aspx. hr-business-partner

Outsourcing HR Analytics Conference and


http://www.cipd.co.uk/hr-resources/ Workshop
factsheets/hr-outsourcing.aspx http://www.cipd.co.uk/events/
hr-analytics

40 Changing HR operating models


Chartered Institute of Personnel and Development
151 The Broadway London SW19 1JQ United Kingdom
T +44 (0)20 8612 6200 F +44 (0)20 8612 6201
E cipd@cipd.co.uk W cipd.co.uk
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Registered as a charity in England and Wales (1079797) and Scotland (SC045154)
Issued: February 2015 Reference: 6871 CIPD 2015

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