Like many HR Directors, I used to believe that things would really start to change once we had completed our HR Transformation. Our faith in these long, exhausting programmes appears to be undiminished. We continue to believe that the eye-watering investment, the drain on resources and the marathon effort will automatically deliver the Holy Trinity of manager-owned processes, self-serving employees and standardisation managed by a reduced group of experts at the centre. Eight out of ten large companies are currently running a programme to reduce the cost of their HR function with an average spend amongst the Fortune 500 of $10m every year. Yet, less than 20% of all HR Transformation programmes produce the desired results.
It’s a painful truth; HR Transformation rarely transforms HR.
Every transformation programme I’ve had the misfortune, or stupidity, to get involved with started with someone in Finance getting my team to do a benchmarking exercise as part of a cost-saving exercise. We duly obliged and benchmarked the hell out of staffing ratios, cost per employee, comparative investment in learning and so on. There would be loud tutting around the Board table as we appeared to be too expensive, overly resourced and, plainly, useless. Big consultancy firms, with equally big systems to sell, would explain how we could be so much better and so much cheaper. The feasibility study would show how we could centralise transactional tasks, standardise and automate our core processes and make huge savings – usually 25-30%. Weirdly, most of the savings seemed to stem from cumulative savings from bits of my team’s roles, but the means of actually turning this into hard cash wasn’t discussed. The savings were always the driving force – and only later would we talk up how much better it would be for managers and employees. We would get excited about how managers would relish having their org charts at their fingertips, how they could pore over key people data and analytics and how much fun they would have with automated succession planning charts.
I’ve been guilty of all of my sarcastic comments. There’s no higher moral ground being occupied here. But why were these Transformation programmes so painful and why did they fail to deliver the savings or the behavioural changes?
There are lots of reasons why HR Transformations fail to transform HR in my view, but here are a few of the more obvious ones.
- Every HR Transformation involves centralising and standardising to drive economies of scale. Local HR teams’ ability to respond to local needs, at pace, disappear and we are left with one-size-fits-all processes which are hard-wired into our systems – allowing no deviation. The accountants’ delight at this homogeneity is in direct opposition to the desires of managers and employees for their individual needs to be met. It also leaves the local HR Business Partner with little else to do other than implement and defend these processes and strips out many of the interesting elements of their role.
- Our end goal of self-service and managers taking ownership is undermined by the fact that our processes often don’t deliver the outcomes we want. Making it easier to do a 9 Box Grid exercise through automation when the process itself doesn’t add value only makes managers grumpy. Why, they ask, am I being made to do this on top of my day job? Something they would just about tolerate when it was being done for them by HR, becomes a real pain when they have to do it for themselves.
- These enterprise wide systems typically take 2-3 years to complete, create a huge distraction for HR and suck-up great HR talent into the mandatory project team. Every HR Transformation seems to hit a painful mid-point where everyone is fed up and tired, the end is nowhere in sight and Finance start to query whether the savings will actually be realised once the inevitable project overruns are taken into account. The smart HR teams simply bury it at this point and start seeing their old legacy HRIS through a nostalgic lens but many carry on a relentless path with increasing doubts about what they have been sold.
- The downside of these lengthy projects is that for any HR team buried in Transformation, the fantastic new digital products that have the potential to genuinely change the way we do things, are now not an option. Why, says Finance, would you be allowed to spend money on some whizzy new gadget when you will have a spanking new system in 2 years?
- Finally, these Transformation programmes are based on an outdated construct of how work is done. As part of the project plan, we spend ages giving people the right job title, working out who they report to, what level they are at and therefore what permissions they should have. But what about the people who work for us who aren’t actually employed by us? As Kennedy Fitch writes, we are witnessing “an explosive growth of the ‘off-payroll’ employee … and in less than a decade we can expect to have more than 50% no longer on our payroll”. Perhaps even more worryingly, for an effort that is all about making us work more productively – the actual work of organisations isn’t delivered through this neat organisational structure that we have so carefully populated. As Marcus Buckingham writes, “work gets done by agile, dynamic teams that are constantly changing”. Most new systems can’t cope with that.
So, it will cost you a load of money, will be a huge distraction whilst you’re implementing, will produce a system that won’t deliver what you want, is based around a dying organisation and employment model, will prevent you from taking advantage of new tech and will make your team and your clients unhappy. Apart from that they’re great!
For those of you on the brink of pressing the button on your HR Transformation, maybe it’s time to pause. Maybe it’s time to think through what will really help you transform – consumerisation of your employees’ experience, replacing tired old processes with humanised behavioural nudges, digital people products and analytics that reflect the way we actually work. If you’d like to hear about approaches to changing HR that really work, why not have a chat with us? firstname.lastname@example.org