Time for a new HR operating model?

CRF’s 2020 research report HR’s Agenda in the Organisation of the Future investigated the impact of macro trends on HR’s purpose and priorities. We found that, while the factors affecting the future of HR are largely unchanged, the pace at which they are impacting our organisations has accelerated.

Through the coronavirus pandemic HR functions have been called on as never before to help organisations adapt, and support the performance and wellbeing of the workforce – truly demonstrating its value in serving the business and its employees. In many organisations, HR has enhanced its standing and will be well positioned to build its profile and credibility as it maps out its future agenda.

However, what does this mean for HR’s operating model?

TOWARDS A NEW OPERATING MODEL FOR HR
The new HR operating models we see are typically designed for flexibility, agile allocation of resource, collaboration across specialisms, optimal use of HR technology and to leverage specialists across the business. They aim to break down the silos between different parts of the HR model and move experts out of centres of expertise and closer to the business.

One driver for this way of working is that increasingly, HR’s work is project-based rather than transactional. Armin von Rohrscheidt, Partner and HR Transformation Leader at Mercer, said: “On average we find that 40% of HR work is delivered through projects, and that proportion is increasing. Your organisation design has to be geared up for that, otherwise you’re only accounting for 60% of HR’s deliverables.

Another driver is the focus on designing and delivering the employee experience end-to end. The HR plan identifies key employee experiences and interactions that need to be redesigned. Cross-functional project teams come together to design, prototype and develop new solutions. This approach allows for resource to flow to where the greatest business need is, rather than being bound by a standard HR-to-employee ratio.

What are the common features of new models?

• They are designed to reconfigure resources without having to restructure all the time. There’s less ‘hard wiring’ of generalists to business teams. Specialists are allocated to work in a fluid way. Work is delivered through multi-functional teams who come together to solve specific business challenges such as launching new learning pathways or running an OD intervention. For example, Thomson Reuters has established a Strategic Resourcing team, which brings together OD specialists to support transformation projects in the business and undertake HR projects that impact the broader organisation, for example developing learning pathways for new managers. The team uses Agile project management methodologies to determine its priorities and govern how its work is delivered.
  
  
• There are only a small number of business partners dedicated to business units. They operate at a senior level and act as business consultants focusing on strategic topics such as talent management and OD. As much as possible, they are disconnected from the day-to-day HR liaison role that many business partners traditionally play.
  
  
• Business partners act as a pooled resource, allocated to work according to business priorities. For example, at ABN AMRO, the Dutch bank, each business unit has an HRD at ExCo level. Instead of each HRD of the business line having a number of business partners in their team, all business partners (called business consultants) are centred in a pool. The pooled resources ‘swarm’ to projects according to business priorities. In this way HR can allocate its resources according to highest strategic value for the business. HR Business Partners benefit from developing strategic consultancy skills and adding value to multiple business lines in their role. A critical enabler to allow the pool to work well, is that day to day questions from managers and employees are addressed via a Tiered Service model with information provided via intranet, call centre or second line support.
  
  
• Centres of expertise are smaller and focus on developing common technology platforms, processes and standards rather than providing centralised services.
  
  
• The specialists who historically would sit in centres of expertise are either allocated or embedded in the business and operate in ‘networks’ in collaboration with other experts.
  
  
• They employ a higher proportion of specialists to generalists than in the traditional model. Amy Kates, Managing Partner, Kates Kesler Organization Consulting, said: “HR work is increasingly about bringing experts together to solve a specific issue as a team. Delivering HR services is done less through generalists. It’s about bringing specialists together in teams to diagnose, create a solution and deliver, using toolkits and approaches that create efficiency and consistency.”
  
  
• Central talent management is a small team focused on developing common processes and programmes. The bulk of the work of operationalising talent and succession management is led in the business by business partners.
  
  
• Some organisations no longer use the term ‘business partner’. Instead they use terms such as Talent Leader or Talent Partner to reflect the greater specialisation of the role. They are measured on talent-related metrics such as attrition, internal promotion etc.
  
  
• HR’s deliverables are redefined as products that can be delivered by small, cross-functional self organised agile teams, which involve both HR experts and internal customers who cocreate solutions.
  
  
• They are supported by a strong technology-enabled service capability that reduces the administrative burden on business partners and lets people manage their own HR transactions. Nigel Sullivan, Chief People Officer at BUPA, said: “Our new HR systems have taken most of the administrative load away. It’s got HR out of the filing cabinet and it’s creating capacity for more strategic work.”
  
  
• An essential feature of the model is to have a programme management office within HR which sets plans and priorities, allocates resources and tracks progress.

How widespread is the agile HR model today? Our survey showed that just under a third (29%) of HR organisations have begun to move away from dedicated HR business partners allocated to business units towards a more flexible/agile resource pool that can be reassigned in line with business demand.

KEY CONSIDERATIONS IN DESIGNING THE HR OPERATING MODEL
As HR teams consider the design of their operating model, it’s important to keep the following in mind:

• There isn’t one single HR model that works in all circumstances. The model has to reflect the business strategy and work consistently with the business operating model. For example, in a holding company with highly autonomous business units, HR is also likely to be highly decentralised with a small central team and HR practices might vary significantly across the businesses. Similarly, HR in a fast growing, innovative technology company will look different to HR in an engineering firm with an ageing workforce.
• Start with the key priorities and objectives the model needs to address. A model that’s designed to deliver a low-cost, lean HR service will look different to one that’s focused on developing top notch talent or a strategic OD capability.
• There also isn’t necessarily a correct ‘solution’. Choosing an operating model inevitably means trade-offs, for example between being able to act with speed and agility and delivering services at low cost.
• In designing the operating model, you must identify HR’s key stakeholders and their needs, and make sure the model is aligned with their expectations.
• HR’s operating model needs to work with the design of other functions and business units. There’s no point designing a highly innovative HR model if interfaces with the business don’t work.
• The design needs to consider what processes, behaviours and skills will be needed to make the model work in practice. Do those exist today, and if not, can they be developed?

In defining the agenda for HR in the organisation of the future, the function’s core deliverables around talent, performance, leadership and operations remain the same, but how they play out in practice is changing in multiple ways. While HR’s purpose remains constant: to support the business in building the people and organisation capability to execute its strategy for the benefit of its stakeholders; its plan is also shaped by the context in which we operate, and must reflect wider changes in the workforce and society.

The coronavirus crisis has significantly changed HR’s profile and standing in many organisations, providing a platform for the function to demonstrate its value in supporting business strategy. HR can build on this to have greater influence in advising the board and executive team, making sure the people agenda is core to the business strategy, and shaping the future direction of the business.

In the organisation of the future, HR professionals must act foremost as business people. To be effective, we must continue to build commercial understanding, apply deep HR expertise to the challenges faced by our organisations, and make sure our operating model is set up to deliver both operational excellence and strategic impact.

This article is adapted from our full research report HR’s Agenda in the Organisation of the Future.