Recently, ChapmanCG had the pleasure of co-hosting two HR leader networking sessions in New York. Along with our hosts Richemont and Firmenich, we gathered 50 experienced HR professionals from varying industries and company lifecycles to talk about the evolution of the HR Operating Model. Most HR functions are currently structured around the Ulrich model, a three-pronged operating model set for HR business partners (HRBPs), Centers of Excellence (COEs) and HR Operations/Shared Services.
Who Still Uses the Ulrich Model?
Multiple sources of research have found that more than 70% of the Fortune 1000 are using the Ulrich model. Findings from Gartner, Inc. suggest that in order to succeed in the future, an HR operating model should be structured to improve operational efficiency, customer-centricity, and agility. Although this was roundly agreed upon by our group to be core, other important factors were also considered to be key in designing the model. Culture, purpose, and values of the organization, along with employee experience and engagement, succession and talent planning, and career development were elements the group felt should be present in any HR model.
Adapting and Improving a Historical Model
Rather than a complete overhaul of the Ulrich model, leaders shared that improvements and adaptations can be made to tailor and custom fit the HR model to the current needs of a business. Being aware of business needs and demands allows for greater opportunity to demonstrate real strategic HR value, realigning the infrastructure to what the HR team can deliver.
We used Gartner, Inc.’s 2019 research as a backdrop to our discussion as it suggested key imperatives that CHROs should consider when designing the HR operating model of the future. Following are some of the key points covered in our discussions:
1. Create a dynamic pool of problem solvers by deploying a variety of skilled HR professionals where they are needed within the workplace.
We viewed this group of ‘skilled HR professionals’ as a set of project managers, the critical people who can parachute into combat against any challenges facing the business. This function requires agility and a desire to utilize resources only where and when necessary.
However, the challenge comes when ‘business as usual’ might be the order of the day. In this case, where does the team go? Do they fall back into other areas of HR? If so, what happens to competing time demands? So, we create a SWAT team of experts, with broad skill sets. These individuals will no doubt be engaged by the prospect of gaining varied experience and by a feeling that the work done is critically important. Additionally, this team would be motivated by solutions that are easy to see and easy to measure.
How does a CHRO keep these people in the function? What is the career plan for this group? Do they represent a jack-of-all-trades and master-of-none which impinges future prospects not just within an organization but also others who may not share the same operating approach?
Problem-Solvers and the HRBP
Imagine that we take away the traditional model of HRBPs and create a space for the group of ‘problem solvers’. We have to then ask if the business will have an appetite to communicate with multiple people depending on the issue at hand, or will they cling to the one HRBP that has created trust and understanding of their needs over time?
In some of the success stories shared, the HR team as a whole was notified of critical projects via an internal communications channel and could raise their hand, at will, to participate.
2. Provide agile support for the problem-solvers pool by adding external expertise to serve in next-generation CoEs
It was widely agreed that over the last 12-18 months we have seen a reduction in headcount across the COE spectrum. This will likely continue as the emphasis of implementing the enterprise-wide strategy is placed more-and-more in the hands of HRBPs.
Gartner’s research saw the future COEs becoming lean, supporting the problem-solvers groups with subject matter expertise, but not existing as a full-time headcount. Instead, this function would be led by one senior expert and supported by consultants and contractors on a need-by-need basis.
What’s Next for Talent Acquisition?
In the area of Talent Acquisition, we have already seen organizations move out of the center and sit within business lines, reporting directly to business leaders or HRBPs in an attempt to get closer to the business.
This is also being driven by the desire to evolve the TA function as the ‘eyes and ears’ close to the ground, how potential talent is viewing the organization and whether its Employee Value Proposition (EVP) makes the organization an attractive place to work. This is typically reflective of business operating models that focus on a customer-centric approach.
Talent Profit and Loss Approach
Forward-thinking organizations are working closely with the business and adopting a Talent P&L approach, sharing the responsibility with business leaders to identify segmented groups of talent at different levels of the organization. In doing so they can attach targets for each group that are measured and fixed to a leader’s bonus.
3. Create a strategic talent leader role by eliminating HRBPs and replacing them with VP-level experts who tackle the most pressing business opportunities and challenges in the company
There was much conjecture as to whether this was just redefining the role of an HRBP in its current form. We have seen an increased demand in the market for HRBPs who bring additional skills to the table, from Finance, Operations, Technology, and Engineering. There is a real drive from businesses to have senior HR leaders and develop the skills of their teams so they can be more data-savvy, speak the business language and solve business challenges through people-focused strategies.
We discussed the removal of all layers below the lead and moving these people out from under an HR Operations team. This would take care of all transactional and process-focused HR matters, such as employee relations, compliance, and payroll. We are certainly seeing the reduction in transactional activities from the HRBP teams and it does make sense, as agreed by the group, to keep the lead role supporting the business as capability focused as possible. However, there was a healthy dialogue assessing the pros and cons of removing the direct support sitting within business lines altogether. There is a strong sense that to have an effective succession plan and keep the knowledge in-house, the 8-10 years at HRBP level needs to be beefed up, developed and given more frequent exposure to business leaders to be more effective.
4. Create a global business services (GBS) team by eliminating shared services and replacing it with a team better suited to partner with customers. Also, provide analytical support and address the growing needs for operational support by building a centralized HR operations and service delivery team
We looked at the above points not in isolation, but as possibly the one area seeing the most evolution across the HR function. This is particularly true with regard to the impact of technology, automation, and analytics. In contrast to the COEs, it was generally agreed that headcount would increase across HR Operations and Services. More process-driven, transactional activities could eventually be automated or managed through a chat-bot or tech platform like ServiceNow, aimed at improving workflows. They are being moved into a central hub that some call ‘People Relations’ or ‘People Services’.
With the ‘#me too’ movement gaining momentum and increasing awareness of workplace grievances, we are seeing employee relations responsibilities already move out from under HRBPs. This is due to the time needed to process the volume of recorded grievances.
The Critical Role of Data
The group agreed that companies are turning more toward data analysts as they seek to understand not only their own talent analytics, but the activities of their customers. Harnessing the power of data and developing predictive analytics models is the next step in getting ahead of the competition and having a real pulse on an organization’s engagement and capabilities.
It was also widely agreed that overall investment in HR technology is increasing and will for some time to come. And moreover, what is needed is a dedicated team that understands how this technology actually benefits and intersects with the organization and how it can be readily customized.
The relative lack of tech expertise residing in the HR function is a concern for many, and the question remains: “do we teach an HR leader to understand the technology or a technology expert to understand HR?”
What about Wellbeing, Mindfulness, and Mental Health?
There remains debate about who should be responsible and accountable for such programs and who should oversee them. Where in the HR operating model of today and tomorrow is this addressed? Increasingly, in the area of Mental Health, we are seeing the emergence of third-party vendors offering platforms that utilize app technology as a ‘safe space’. These are created to offer employees the opportunity to share their situation before it is reported back to the organization in an appropriate way. The effective nature of these platforms remains to be seen, but the importance of a laser-focused approach to this is needed.
During the networking session, we were not seeking to analyze the Gartner research, but rather use it as a platform to ignite debate. The research is very relevant and a welcome insight into a particular representation of CHROs’ thinking. What became evident over the course of the session’s conversation is that any HR model needs to fit-in with the purpose of the business. For instance, a 100,000-person Fortune 20 technology or pharma company’s demands will differ greatly from a 1,000-person automotive car parts manufacturer. The Ulrich model was never intended to be one-size-fits-all, but it is generally considered a good place to start.
Our discussions brought to light further questions for HR leaders to consider: Are we creating an HR Operating model solely to support the activities of the business, such as the need to improve performance and productivity, or is it a much wider consideration? Are we looking to create, grow and maintain employee engagement? Should we then be constructing an HR operating model that also offers the best chance of improving the employee experience (most HR leaders would agree this to be critical)? And in doing so, enable career progression and exposure to varied experiences, thus keeping the knowledge in-house, which in turn will ultimately benefit the organization (and its productivity) for years to come.
It appears that the more progressive HR leaders bring the business along on a collaborative journey to define an appropriate HR operating model that supports the unique goals of the business they serve. It is not an exact science, but the desire and the will are largely there to create places of work which value efficiency, performance, customer centricity, agility and also engagement.
We would like to thank the HR leaders who joined and participated in discussions around this fascinating topic that squarely addresses the future of work, and the future ways in which we will work, as well as the values we all bring to our working lives.
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