The survey also asked about
seven features of HR’s operating
model. For each one, the survey
respondents were asked to rate
how true it is of their organisation
on this scale: 1 = little or no extent;
2 = some extent; 3 = moderate
extent; 4 = great extent; 5 = very
great extent. In Table 1, the average
rating of each question among the
US leaders is shown both for the
2013 survey and a survey of similar
HR leaders in 1995. Also shown
for 2013 is the percentage who
answered to a great or very great
extent.
The right-hand column shows the
correlation between the question
about HR’s role in strategy and
each rating of HR operating
characteristics.
Looking at the average ratings, we
see that the operating models of
HR have not changed very much
in the last two decades. The 2013
ratings are virtually identical to
the ratings we obtained in our
survey of HR leaders in 1995, with
two exceptions: there has been a
significant increase in the extent
to which HR centres of excellence
provide specialised expertise and
a significant decrease in the extent
to which HR practices vary across
business units.
It is also interesting that while
the highest-rated operating
model feature is decentralised HR
generalists supporting business
units, one of the lower-rated items
is HR practices varying across
business units. Indeed, variation
has significantly decreased. Thus,
it appears that the dedicated
business partners are supporting
the businesses in ways that do
not include tailoring HR practices,
but rather working with centres of
expertise and HR administrative
service units to deliver an array of
similar services to the businesses.
The use of common practices most
likely reflects efforts to simplify
and to achieve scale leverage in
some HR activities, and perhaps
the tendency of companies to
be in fewer unrelated businesses.
There are economies of scale to be
gained when corporations use the
same HR practices in all their units.
This is particularly true in the case
of transactions and the creation of
IT-based self-service HR activities.
However, when it comes to talent
management, different business
strategies may call for different
practices.
The bottom three rows of Table 1
reflect the talent development
elements of the HR functions’
operating model and they assess
the extent to which individuals
rotate within, out of and into the
HR function. They are three of the
lowest-rated operating elements
of HR, and have been since 1995.
Rotation within HR is rated below
the scale midpoint, but even more
striking is that rotation into and out
of HR is particularly rare, with less
than 2% of the companies reporting
great use.
Looking at the correlations with
HR’s role in strategy, it appears
that most HR functions are doing
some of the things that lead to their
having a strategic role while failing
to do others.
In the fourth row of Table 1, the
correlation is negative, indicating
that greater variation in HR
practices across units is negatively
associated with HR’s role in
strategy, and the averages for this
item show that there has been a
decrease in HR practice variation,
perhaps reflecting this negative
association. The top row is another
example of the usage trend being
consistent with the correlation.
Centres of excellence are positively
associated with HR’s role in strategy,
and the use of this HR operating
characteristic significantly increased
from 1995 to 2013.
Table 1: Survey correlations
Survey question 1995 mean
2013 % of
great or very
great extent 2013 mean
Correlation
with HR role
in strategy
Centres of excellence provide specialised expertise 2.5 56.7 3.5 0.30***
Administrative processing is centralised in shared
services units 3.5 54.6 3.4 0.18*
Decentralised HR generalists support business units 3.6 65.5 3.6 0.11
HR practices vary across business units 2.9 18.2 2.4 –0.25**
People rotate within HR 2.6 26.8 2.7 0.39***
People rotate into HR 1.8 1.4 1.7 0.24**
People rotate out of HR to other functions 1.8 0.7 1.6 0.28***
17 Changing HR operating models
Overall, there are untapped
opportunities regarding rotational
assignments. For all three items,
the correlation with HR’s role in
strategy is significantly positive,
and this has been true in every
survey we have conducted since
1995. Yet, the extent to which
HR organisations use all three
elements is consistently and
stubbornly low. The correlations
cannot prove that greater rotation
causes a stronger strategic role
or vice versa. Still, it is likely that
the strength of HR’s strategic role
is enhanced by efforts to create
career movement within the HR
organisation, and even more
significantly across the boundary
between HR and the organisation.
Efforts to create movement
across the HR boundary can lead
to extreme approaches, such as
eliminating the role of the CHRO
and making it a rotational position
for other disciplines. Such extremes
are likely to be dysfunctional
in many organisations because
they risk removing vital HR
functional expertise from the top
positions. That said, more nuanced
approaches do seem warranted.
Having HR leaders gain first-hand
experience as business leaders
throughout their careers seems
likely to prepare them more fully
for true business partnership than
does having only HR jobs.
Perhaps even more important
is having leaders outside of HR
rotate into the function, which is
also associated with a stronger
HR strategic role. Such rotations
enhance the business awareness of
the HR function because the inward
rotations bring valuable expertise
from outside. This may facilitate
‘retooling’ HR8
by recasting HR
decisions and processes into the
logic of frameworks from finance,
operations, marketing and strategy,
making them more accessible and
better understood by leaders in
these disciplines.
Rotation of non-HR leaders into
and out of the HR function can
enhance the HR sophistication
of those non-HR leaders as they
return to their original or previous
business roles. Dedicated HR
business partners need to remain a
common element of HR operating
models, but their role is not so
much to tailor HR activities to
the business as it is to deliver
a common set of activities and
expertise. Having non-HR leaders
with first-hand experience in the
HR function can help those nonHR
leaders become more aware
of the value and nature of the
services and HR expertise. This can
make them better partners and
consumers of that expertise when
they return to their business roles.
We believe there can be a bright
future for the HR function if
it is designed and managed
strategically. Our research shows
that most organisations are doing
many of the things they need
to do in order to be strategic
contributors, but are failing to
do some important ones. HR
operating models that create
a more permeable boundary
around the HR function seem to
be a particularly powerful way to
enhance the strategic role and
contribution of HR going forward.
‘Having HR
leaders gain firsthand
experience
as business leaders
throughout their
careers seems
likely to prepare
them more fully
for true business
partnership than
does having only
HR jobs.’
8BOUDREAU, J. (2010) Retooling HR: using proven business tools to make better decisions about talent. Los Angeles, CA: Center for Effective Organizations, University of Southern California.
http://ceo.usc.edu/news/retooling_hr_-_new_boudreau_bo.html
18 Changing HR operating models 19 Changing HR operating models
Technology is changing the world
we live in as consumers and as
employees. In a world where
consumers want access to anything,
from anywhere, at any time,
businesses have to offer services,
whether they be products or other
services, to meet the customer
demand. In addition, there is a
new type of employee, one who
is more concerned with whether
there is a woman on the board of
directors and what they can wear
to work than with compensation,
which would probably feature as
priority four or five on their list. It’s
this digitisation of the world that
is changing the expectations of
people. I believe that the customer
and employee experience should be
aligned: the omni-channel consumer
at some point has become the omnichannel
employee.
What does this technologicaldriven
change mean for HR?
Many organisations are increasingly
automating traditional HR
and people management
activities, particularly through
the implementation of cloud
technologies.
The first thing that organisations
have to get right is the operational
basics: HR technology can support
the delivery of seamless processes
that are automated. Organisations,
regardless of size, should try to put
as much standardisation as possible
into operational HR business
processes such as administration,
payroll and recruitment. If you don’t
get the basics right, you do not
earn the right to play in any other
space and you shouldn’t try to
move up the value chain. Servicelevel
performance metrics and
qualitative feedback will help you
recognise when you know you have
done enough and you are ready to
move on.
In my organisation, I now have
the team supporting the cloud
technology solution that runs
the optimised operational HR
processes in my team, in the centre
of excellence. I have IT business
analysts, technology development
and a technical architect: I’m the
CIO of HR. I’m not dependent on IT
anymore. It’s a team that focuses on
continuous improvement: how do
you improve the technology? The
user experience of the technology?
And the service proposition around
technology? The benefit of using
cloud is that it is highly adaptive
and changes can be made within
seconds. Even the team working
in the global shared services
centre, reporting into the centre
of excellence, are experts in cloud
computing within HR.
HR technology also changes the role
of HR people in the business. In my
organisation, the HR managers who
support the business leaders and the
HR partners who are the generalists
supporting the business both go to
work armed with technology.
The HR managers, responsib