HR STRATEGY
COMMENT
It is important to have an holistic view of HR and how it contributes to strategy and organisational development
Several models are used to provide insights and they include:
The Harvard Model
The Ulrich Model
Other Essential Business Models
The Harvard Map of HRM
Adapted from Human Resource Management in a Business Context, 3rd edition (2007)
Beer et al (Managing Human Assets by Michael Beer, Richard E. Walton, Bert A. Spector, 1984) argue that when general managers determine the appropriate human resource policies and practices for their organizations, they require some method of assessing the appropriateness or effectiveness of those policies. Beer et al devised the famous Harvard Map (sometimes referred to as the Harvard model) of HRM.
This map is based on an analytical approach and provides a broad causal depiction of the 'determinants and consequences of HRM policies.' It shows human resource policies to be influenced by two significant considerations:
* Situational factors in the outside business environment or within the firm such as laws and societal values, labor market conditions, unions, work-force characteristics, business strategies, management philosophy, and task technology. According to Beer et al these factors may constrain the formation of HRM policies but (to varying degrees) they may also be influenced by human resource policies.
* Stakeholder interests, including those of shareholders, management employees, unions, community, and government. Beer et al argue that human resource policies SHOULD be influenced by ALL stakeholders. If not, 'the enterprise will fail to meet the needs of these stakeholders in the long run and it will fail as an institution.'
The authors also contend that human resource policies have both immediate organizational outcomes and long-term consequences. Managers can affect a number of factors by means of the policy choices they make, including:
- the overall competence of employees,
- the commitment of employees,
- the degree of congruence between employees' own goals and those of the organization, and
- the overall cost effectiveness of HRM practices.
Beer et al state that these 'four Cs' do not represent all the criteria that human resource policy makers can use to evaluate the effectiveness of human resource management, but consider them to be 'reasonably comprehensive' although they suggest that readers may add additional factors depending on circumstances. And various authors have done so.
Beer et al argue that: "In the long run, striving to enhance all four Cs will lead to favorable consequences for individual well-being, societal well-being, and organizational effectiveness (i.e., long-term consequences). By organizational effectiveness we mean the capacity of the organization to be responsive and adaptive to its environment. We are suggesting, then, that human resource management has much broader consequences than simply last quarter's profits or last year's return on equity. Indeed, such short-term measures are relatively unaffected by HRM policies. Thus HRM policy formulation must incorporate this long-term perspective."
ULRICHS MODEL : Extracts from the Changing HR function research report
The research identified that a variation of Ulrich’s model, referred to as the ‘three-legged stool’ model has been adopted by several larger organisations when re-structuring their HR function. Broadly these three functional areas include:
* Shared services – a single, often relatively large, unit that handles all the routine ‘transactional’ services across the business. Shared services typically provide resourcing, payroll, absence monitoring, and advice on the simpler employee relations issues. Shared services’ remit is to provide low-cost, effective HR administration. For further information see our factsheet on HR shared service centres.
* Centres of excellence – usually small teams of HR experts with specialist knowledge of leading-edge HR solutions. The role of centres of excellence is to deliver competitive business advantages through HR innovations in areas such as reward, learning, engagement and talent management. Some major multinationals have ‘centres of expertise’ focused purely on developing the HR talent pipeline.
* Strategic business partners – senior HR professionals working closely with business leaders influencing and steering strategy and strategy implementation. The role can vary enormously depending on organisational size and business priorities. Some activities that strategic partners are likely to be involved in include:
o organisational and people capability building
o longer term resource and talent management planning
o using business insights to drive change in people management practices
o intelligence gathering of good people management practices internally and externally, so they can raise issues that executives may not be aware of.
Few organisations create clear boundaries between these different functional areas and here is often a degree of overlap. For example, although complex employee relations issues might be handled by a centre of excellence, strategic partners can find themselves entangled in local employee relations issues, particularly if they do not have the relevant skills or support from other functional areas.
For business partnering to work successfully there needs to be good working relationships between HR practitioners in different functional teams. If not, the reputation of the whole HR function will be in jeopardy. As business partners work more closely with seniors they are the ones that will have to deal with negative feedback about the HR function overall.
Why are organisations embracing business partnering?
Business partners (or Strategic Partners) have been introduced as part of a broader HR transformation agenda. The key drivers are:
* Cost efficiency. Whilst the introduction of shared services is seen as being particularly important to achieving savings, these cannot be realised without other roles operating effectively. In the US, partnering appears driven not by cost pressures but by the need for HR to support a smarter, stronger organisation. HR services that are distributed across a number of businesses or geographical locations may be likely candidates for restructuring. Relatively large HR functions are also probable targets, where ‘large’ is often interpreted as more than one HR professional per 100 employees. HR functions that can’t show bottom-line business benefits will sooner or later be cut back.
* Accelerating competition. HR has become central to business competitiveness. Organisations need HR functions that can deliver skilled, creative, motivated, flexible and committed employees. Innovative world-class HR has become a commercial necessity; hence the growth of centres of excellence, especially in knowledge-based sectors where the expertise and energy of employees is critical.
* Rising expectations of HR. Organisations are beginning to expect more from HR. Business leaders see HR in other organisations contributing to strategy, enabling the execution of business plans, and delivering tangible commercial benefits. Inevitably they go on to ask how their own HR functions need to change to make real differences to their businesses. The popular answer is the appointment of strategic HR partners who become engaged with and accountable to the business, yet are the eyes and ears of HR. Strategic partners shape both what the business does and what HR does; they exist to ensure HR meets the new expectations of business leaders.
Implementing business partnering
Whilst business partnering can bring significant business benefits, organisations often experience a number of issues implementing the role as part of a broader HR transformation agenda.
Organisations thinking about introducing business partners as part of a broader HR transformation agenda need to consider:
* Ensure that there is a clear rationale for the proposed changes and that this is a joint decision between the business and HR, not one that HR tries to foist on the business. Without a clear rationale and clear vision the expected cost efficiencies may not be realised.
* Assess and prepare the ground for change. Success of the business partner role is very much dependent on the organisation’s receptiveness to HR practitioners adopting new roles. Sufficient time needs to be allowed to ensure that there is a common understanding of what the role is and what it is not.
* Ensure sufficient time to openly discuss partnering, what it means and what adjustments are needed both within HR and across the wider business. As line managers will be most affected by the changes it is important that they are consulted and adequately prepared for the changes.
* Assess the skills needed to perform the business partner role. It is important to avoid making the assumption that existing HR managers have the necessary skills and behaviours to move into business partner roles.
* Think through the likely barriers to achieving a smooth transition to the new structures:
o Line managers’ reluctance to take on more people management responsibilities, or lack of skills to do so.
o Poor, or slow transactional HR services and intranets.
o The absence of a consistent business strategy with which HR can work.
Strengthening partnering
Very few organisations get partnering right first time. It is important that the relationship is reviewed on a regular basis, both informally and formally. HR functions can strengthen partnering through the following:
* Taking an interest in the key business performance measures, for example, sales, costs, production, utilisation.
* Making sure that business partners are involved in the business planning process at the outset and that they are well prepared for planning meetings. This requires spending time reading up on broader economic, social and political trends affecting the business.
* Setting the personal objectives of strategic HR partners (and perhaps those in centres of excellence) so that they are aligned to those of managers in the business areas that they are assigned to. Maintaining an on-going debate about how HR is performing. Ask the organisation’s leaders, line managers, HR professionals and other functions. All of HR should be listening to, and responding to, its stakeholders. Use tools like 360 degree feedback and customer satisfaction surveys to obtain a broad range of views on how well the HR function, including business partners, are fulfilling their role. See our factsheet on 360 feedback for more information on that topic.
o Go to our factsheet on 360 feedback
* Building teamwork within HR through joint projects, knowledge sharing, away-days, peer coaching and celebrating successes. Where partnering seems to be faltering, get all the HR professionals involved in addressing the problem.
* Making HR a role model for other functions by benchmarking HR team performance against HR teams in competitor organisations.
Appointing and developing business partners
The appointment of business partners presents special challenges. The capabilities required by business partners are different to those required in other HR roles. They need to develop different skill sets, such as strategic thinker, consultancy skills, relationship management, expert networker, business and financial understanding, change management, as well as influencing and political awareness skills. Recognising that the skills and behaviours needed by business partners are different to those found in traditional HR manager roles many organisations are using assessment centres to select the right people - see our factsheet on Assessment centres in recruitment and selection.
Those in the role often have to ‘hit the ground running’. Though they may need development, if business partners don’t deliver successes in their first few months, their credibility and confidence falls and they can revert to being helpful HR generalists, so it is important that development covers business and personal development.
Implications for HR careers
Partnering implies big changes in HR careers.
* Whilst there will always be jobs for HR generalists, in the future there may be fewer of them. An increasing number of HR professionals will have to choose which specialist role is right for them. HR professionals will need to actively manage their own careers. Our research report Managing and developing HR careers shows that career paths may not be as clear as in the past and individuals may need to pursue ‘zig-zag’ careers to progress. In addition more attention may be needed to create pathways by which individuals can acquire the experience to perform senior HR roles.
o Find out more about our Managing and developing HR careers report
* HR directors and line managers will want HR professionals who have added significant value to organisations. Qualifications, years of experience and leading-edge projects may count for little, unless practitioners can demonstrate how they have added value.
* Branding is crucial. HR functions that shape and implement business strategy will attract the most able HR professionals, whereas those that tinker with a strategy largely decided by managers will struggle to get good people.
* Ulrich has commented on the importance of ensuring the right HR leadership to lead the HR function: a role that involves:
o leading the HR function
o collaborating with other functions
o setting and enhancing the standards for strategic thinking, as well as ensuring corporate governance.
* In addition the HR leader will need to ensure that there is a robust talent management programme for the HR function ensuring a future supply of skilled and agile HR professionals.
SOURCES OF INFORMATION
“The Strategic HR Network is a strategy forum for HR Directors and Senior HR Management”
This
exclusive network meets regularly to discuss the latest issues in
strategic HR and focuses on the way people strategies can positively
impact an organizations performance. The seniority of the audience and
our discussion based events allow for benchmarking and networking in
both formal and informal environments.
HR Strategy Bulletin is exclusively for UK HR Directors in large organisations and covers components such as outsourcing, talent management, technology, law and other key HR areas.
Dont miss the the CIPD thought leadership report on NEXT GENERATION HR
CIPD viewpoint
The key value of Ulrich’s model does not lie in outlining new structures but in his analysis of HR roles. Business partnering refocuses attention on some basic issues about how HR is to achieve its aims: supporting line managers, aligning HR activities with the business and delivering efficient services.
However, partnering is not simply a repackaging of good HR practice. Partnering is a ‘paradigm shift’ for most HR functions, one that requires a step change in HR’s values, operation and skills.
The function must ensure that it has the right structures and roles in place to meet organisational and employee needs rather than slavishly following a specific model because it seems fashionable to do so.
Many of today’s interpretations of partnering could mean a diminution of Ulrich’s ‘Employee Champion’ role. Some writers have commented how HR, with its increasing allegiance to strategic business partnering, is taking its eye off employee needs
Jon Ingram : Strategic Dynamics Consultancy Services Ltd
Jon is a Writer, speaker and consultant helping companies develop human, organisational and social capital for competitive advantage
Strategic Dynamics Consultancy Services Ltd is a human capital and change management consultancy with a difference. What makes us unique are our beliefs that:
People are a key source of innovation and competitive advantage - we use this insight to help transform people and organisational capability
People are the focus of effective change – we work with, not against, the quirks of human spirit and the dynamics of human behaviour
People work best in open, challenging, collaborative relationships – our consultancy services are based on this approach.