As the dissatisfaction with the traditional “three legged stool” model for HR increases, many HR professionals are asking the question “What is the next generation HR structure?” We have almost given up trying to find enough outstanding (and affordable) HR Business Partners. We continue to struggle to find and keep CofE professionals who can deliver truly innovative, commercial and flexible approaches that are relevant for today’s world. And those of us who have spent time in outsourcing, shared service hell are beginning to get nostalgic about the days when it was all in-house.
Moreover, the demands of our clients increase daily. There doesn’t seem to be any C-suite executive who hasn’t read about how other companies are getting rid of appraisals and are questioning what we are doing about it. Those pesky Millennials won’t stop making demands for greater flexibility and wanting everything on their Smartphone. And just when we thought our budget might increase for the first time in a few years, the FD’s begging bowl has reappeared.
More for less. Greater productivity. More innovation. All HR professionals face the same challenges, regardless of sector.
Of course, focusing on the future HR organisation structure is a bit of a “physician heal thyself” scenario. For, as we would urge our clients not to leap to the org chart, so we need to ask some fairly fundamental questions about what we do and how we do it if we are going to actually deliver more productivity and innovation. But, I have been asked to give my thoughts on the HR org structure that can meet the demands of a modern world so that’s what this blog aims to do.
Describing an organisation structure that would work for any type of company would be fairly meaningless, so instead I am going to focus on 5 key trends in HR design that we’re seeing that will offer greater opportunities for real creativity, increased capacity to deliver and happily, should save money too.
The 5 trends in HR org design
1. From Business Partner to Account Management
When looking for a new HRBP, I was often tempted to advertise for a Super Hero with strong interpersonal skills…..
“We need a strategic and commercial HR business partner. They must have experience in the full range of HR elements, be a coach, a law enforcer, a spoon-feeder, a tear-drier and the conscience of the business. They must be prepared to come up with lots of new ideas, only to have them ignored, take the blame when things go wrong, and always to have their item put last on any team meeting agenda, after finance, operations, marketing, IT and problems with the toilets. They must be relentlessly cheerful and be prepared to listen to the ravings or woes of anyone who seeks them out. Above all, they must be able to present the latest Group-wide HR initiative that has absolutely no relevance to their business unit, to their MD as if it’s the best thing since sliced bread.”
When you look at what we want from them, it’s amazing to me that we can find one, let alone the numbers that most HR structures depend upon.
Estimates vary but it was seen that typically between 20-30% of traditional HR advisers would be unlikely to make the step up to full HR Business Partner. In my experience, it was significantly higher than that and most companies can count on one hand the number of HRBPs that can fulfil all that is required. Given this resource is both scarce and expensive, we are seeing a move to reducing the number of them and moving towards more of an account management role. This person does the strategic and commercial parts of the role, the relationship building, the diagnosis of what’s required, the resource planning and the oversight of the delivery. They then call upon a pool of HR generalists and/or technical experts who can deliver. The key benefits of this approach are a reliance on a fewer number of HR generalists, a genuine strategic/commercial focus from HR and the deployment of non-partisan generalists who can go to the greatest point of need.
2. HR Advisory – More than a Transaction
All of us who bear the scars from outsourcing our well-loved and local HR advisers have learned some hard lessons. We have come to realise that seeing HR advisory as a transactional service that can cost less by simply lobbing it over the organisation fence to an outsourced provider who offers ruthlessly efficient processes has some major flaws. Our HR processes are rarely beautifully streamlined at the point of transfer and so we import significant additional costs as the provider tries to navigate all of the “special and different” approaches we have historically accommodated. We ignored the loss of institutional memory as we marched these advisers out of the door. But most critically, we forgot the fact that when a line manager is asking about a particular policy – they are not actually asking about a policy – but how to get round it! The in-house HR adviser knew their line managers and their employees and deployed a big chunk of judgement along with their advice. They would weigh up the maturity of the line manager, the precedents that had already been set, the risks with this particular employee, etc, etc. The painful outsourcing experiences of recent years have led some organisations to take this service back in-house. But we are also seeing a new trend – of next generation outsourced providers who are fundamentally different. One example of this is Adviser Plus who have built in an intrinsic understanding of the value and risks of HR advisory into their service – for example, providing a proactive phone call to a manager who is downloading a policy document that can be more high risk if they get it wrong, such as redundancy policy – and seeing if they want to talk anything through. HR advisory will continue to offer significant opportunities for outsourcing – but with a new style of approach that involves empathy, understanding, capability development and the ability to assess risk.
3. Employee Experience not Centres of Expertise
The approach we take at Disruptive HR is based upon our unique EACH model – Employees as Adults, Consumers and Human beings. We therefore really welcome the next key trend – to cluster Centres of Expertise around a focus on the employee experience – as it supports and reinforces one of these elements – the employee as a consumer. One of the (occasionally legitimate) accusations that is levelled at the CofE teams is that they are too focused on their own discipline and producing the perfect recruitment, talent, development, diversity, performance management, reward (delete as appropriate) solution and fail to connect to the needs of the business. In the same way that many consumer organisations have grouped many of their functions around a Head of Customer Experience, so this is starting to be adopted by HR for their people.
This is more than just a change of job title. By re-focusing on the actual experience that is desired at each stage of the employee life cycle, organisations can create a more joined up and holistic employee proposition that is greater than the sum of its HR parts. Driven by improved and genuine employee insight (not just an annual engagement survey but a blend of qualitative and quantitative analysis), created through effective user-centred design and delivered in ways that are relevant to each segment of their employee “market” – there are huge opportunities to increase cut through and reduce wasted effort.
4. Building capability not just compliance
This trend comes largely through a fresh response to a disrupted world where the abundance of employment policies and rules often stifle innovation and increase frustration of employees. The role of HR as The Enforcer is not what many of us who went into this profession wanted but is one we have continued to play. Of course rules matter. But any of us who have had to draft interminable employment policies recognise that this comes at a cost – to our capacity to focus on building the capabilities of line managers. I am often brought in to provide fresh challenge and ideas for HR teams. Whilst they like the innovation, they equally are concerned about their ability to deliver as their managers “wouldn’t do it”. They may be right but this means we are stuck in this vicious cycle where – we don’t trust managers to manage – we therefore produce rules and processes that make them do it – we spend our time enforcing and monitoring the process to make sure they have – which means we don’t have the time to develop their capability – so we don’t trust them to manage – and so on ….
Moreover, our seeming reluctance to let go of the role of Compliance Officer seriously dents our HR brand. If we spend our time ensuring cost efficiency and operational compliance – then why should we be taken seriously when we start to talk about value creation? I know it is hard to see a way out – I have tried and failed often, but only when we release ourselves from the compliance burden and focus instead on building judgement, insight and space for creativity will we be able to break the cycle. The Netflix HR team’s determination to steer clear of the role of HR police is well documented, but we are starting to see this as a trend in HR and not just a one-off. Interestingly, it is gaining traction in sectors that are often perceived as less innovative – the public and not-for-profit sectors. The continual cuts in support functions has forced them to consider a more radical alternative than some of their commercial and less cash strapped cousins. I know of examples in the Housing, FE and Local Government areas where they are having to focus on rolling back HR’s role in compliance – with highly productive results.
5. Contingent vs Permanent
This final trend has been evident in piecemeal form for many years. We have regularly deployed contractors, temps, and consultants to supplement or enhance our FTE levels. But we have rarely used them as a strategic choice – more as a tactical fill in. The accelerated pace of innovation in the HR space, the continued pressure on costs and the need to deploy rapidly to resolve issues or bring about change all lead you to question whether a standing army of HR people is relevant in the future. This trend is about “Smart Contingency” – a belief that you can get a better level of innovation, a better resource flow and increased delivery capability if you include non-permanent resources as a key part of your HR team. This is more than getting in additional bodies to fix a problem or to cover maternity leave, it’s more than buying a consultant to give specialist advice – it is about building an eco-system of a mix of contingent HR capabilities that meet your medium and longer term needs. Contemporary HR org structures are building up their abilities to commission work and to contract effectively to get the most from this growing resource.
But you haven’t mentioned digital?!
I do realise that not mentioning digital in an HR blog about the future is likely to get me chucked out of HR club (not for the first time!) but I have done so intentionally. Digital is a channel, a medium and an underlying approach that should permeate everything we do and is not, IMHO (as my daughter puts it) an organisation trend. Of course we may need to create a specific focus on this in the short term to raise its profile and build our capability. But very shortly, it will be simply the means by which we deliver our services – after all we wouldn’t have an Email team or Face to Face team would we?
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