HR Operating Model -- A Reset

Over the course of past several decades, HR has experienced evolution and to a certain degree organizational structural realignment or transformation. However, HR’s transformational journey has not yielded the results that were intended, such as, defining and executing alignment between corporate and people strategy. The reasons for this are multivariate; but, to identify a few it is safe to say that:

a)       HR has predominantly operated from an inverted lens of what ‘it’ perceives’ adds value rather than truly understanding the business’s dynamic nature and imperatives.

b)       The function has often been expected to play a strategic role in achieving business goals through people strategy. But its operating model and organizational structure has not been structured to support that expectation.

c)        The function’s skillsets have been grossly underdeveloped and have not evolved to keep up with business agility.

In most high performing organizations, HR is expected to drive value for its business by aligning with the business strategy and creating programmatic solutions that would help drive performance gains from the business lens rather than what HR might perceive the next shiny solution might be. To achieve this outcome, HR must shift its operating paradigm and rethink its model to drive business success through focus on who delivers the work, whether we call that talent employee or worker, does not matter they both go through the employee life-cycle experience. that is, the employee or the worker. The reason, I am using introducing the term worker here is in keeping with the workforce demographics of today. The current workforce is a representation of evolution that has taken place from defining the workforce in the most narrow and traditional terms as employees who are either full time or part-time terms to now a host of different types of workers who have joined the labor market to contribute to the work carried out by organizations of all sizes. These worker types include seasonal employees, gig-workers, consultants and contractors. Therefore, the recipients of HR’s services cannot be neatly grouped into one category alone. There are myriads of recipients or end users of HR services as discussed above.

Second, HR also needs to upskill the requisite talent needed to execute against the operating model and the people strategy. Lastly, it must continue to self-reflect in the context of the value it delivers and focus on solutions that have an impact on business performance along with improving its own functional efficiencies.

From HR’s operating model perspective, there are two aspects to consider: the models’ overall structure; and the distribution of HR workforce to support the new structure.

In this article, I will first describe a much-needed operating model of the future and second discuss the organizational structure to support it. It is important to bear in mind that what I am proposing is for high performing organizations where ‘people strategy’ is at the core of defining business success.

Client Lens: Understanding the people who HR supports, enables, and impacts is a critical input to all the work we do as HR professionals. The operating model I propose is designed with the client experience at the forefront, as that experience will inform all the HR work and help the function to determine what is important. The term “clients” encompasses more than just employees or divisions within a company; the client lens includes employees, managers, leaders, BOD, etc.

Discovery & Input: This component of the model takes insights from the business (“client lens”) and use those insights to drive the prioritization of both work and budget.  Key decisions are made here, including those that require a cross‐company perspective. Leaders and business partners are a key part of this process, as will other groups and key roles who can provide client insights.

Employee Experience Journey: For the purposes of HR’s org effectiveness/strategy work to date, the employee experience journey translated through -- Talent sourcing; Talent management; Talent development and growth; and Talent engagement and experience – is the key. It means that HR looks at the work from the perspective of the journey personas and the outcomes HR wants to achieve vs. a purely functional, programmatic lens.

Integrated Solutions Proposed Criteria: Important in solving a long‐term, strategic business need is to have a robust offering of integrated solutions to address the ‘body of work’ that HR must execute against. For a successful execution of the body of work will require accountability, responsibility, and partnership from most internal clients to meet the outcomes. It will also require HR’s discerning eye to determine whether as an example, the integration requires communication vs. a true integration and knitting together of pieces of work.

Book of Business: It is important to capture the book of business work that is expected of any function to execute against. Book of business which is owned by each HRPA is understanding of the client’s needs and alignment of HR resources to meet those needs. Sometimes these needs, though identified in one functional vertical can have a global impact and can take on a priority work for HR.

Shared Services / Platform: This body of work is separate due to the need to have a high degree of centralization (re: philosophy, tools, approach). Consider work that is (or should be) consistent, repeatable, and scalable in nature. Figure 1 visual shows typical examples of what could be considered this type of centralized work.

To facilitate the success of such an operating model, it is critical to have the right organizational structure, resource allocation and skillsets to carry out the HR work. In the next section, I discuss each of those components in depth.

In Figure: 2, the organizational structure is depicted having two parts and each of these parts is spearheaded by Chief Strategy Officer (CSO) and HR Operating Officer (HROO) respectively, reporting into the CHRO. These two new roles have emerged to support the CHRO whose primary focus should be on what needs to get done as opposed to how it gets done. CHRO’s area of influence would include providing business and HR alignment, overseeing HR governance and leadership, and owning the overall HR strategy. When it comes to ‘how the work gets done’ that is where a CHRO will be better served by having a CSO and COO who can facilitate the execution of the HR agenda.

As shown in Figure 1, the CSO oversees the HR strategy and process planning, design and creation of programmatic solutions led by the performance advisors. COEs and data analytics teams.

The COO on the other hand specializes in the day-to-day administration and operation of the HR function and how the function supports the business. In other words, HR COO is responsible for tying HR service delivery, as well as driving improvements, to provide efficient, effective, and compliant HR services.

Let’s discuss each of the sections of the HR structure as introduced in Figure: 2. I will first shift our attention to the areas of responsibility under the CSO, which I refer to as the Strategic Aspects of the Organizational Structure and how they are integrated into each other, the type of unique skills that are needed for this component to succeed.

Strategic Aspect of the Organizational Structure:

The strategic aspect of the organization structure on the left side of Figure 2 reports into the HR Strategy Officer who has a direct reporting line into the CHRO. The HR Strategy Officer (HRSO) oversees the performance advisors who are embedded within the business. They replace what was erstwhile referred to as the HRBPs. It is not only a change in the nomenclature but also in the experience and skillset that is needed for the business of today.

Performance Advisor - the evolved HRBP

The role of the Performance Advisors who will constitute 20% of the organizational structure will be to identify organizational performance gaps through the ‘client lens’. For performance advisors to be able to deliver value to the business they will need the following skillsets:

1.       Business management skills – understanding the fundamentals of how the business makes money and then making sure that HR strategies align with that money making process. They will be able to conduct this only if they have sound grounding in determining how the business unit drives revenue, what types of indicators does a business balance sheet offer for its growth and talent sourcing and alignment. This type of approach will help facilitate an alternative HR operating model (discussed above) which maintains the ‘client experience’ as the center of its focus and execution and would significantly benefit the organization.

2.       Talent translator – ability to translate business needs into talent profiles, given how work is expected to be carried out. For example, determining whether a role is best filled by internal talent, external talent, part time workers, contractors, etc.

3.       Agile transformation – the ability to scale agile transformation. Focusing on individuals and interactions over processes and tools, collaborating with the talent through solution iterations and responding to change over following a plan.

4.       Human centered design experience – obsessive focus on understanding the perspective of the employees. Within the employee life cycle, determining the employee needs through employee personas or journeys and developing solutions to meet those needs. 

Centers of Expertise (COEs)

The Centers of Expertise (COEs) will consist of 25% of the HR workforce in the new operating model with a renewed approach on creating programs using the agile methodology. Create next-gen centers of expertise[TV11]  [UB12] (COEs). In the past many HR organizations that created COEs charged them with setting strategy, designing solutions and developing global policies. Yet in too many cases, COEs were not as effective in their ability to fulfill this role because they continued to handle a large quantity of transactional work as well. Therefore, what is truly needed are COEs that will work with the HRPAs to develop policy, practices and solutions throughout HR and address the ‘employee experience journeys’; ‘integrated solutions’ and ‘book of business’, as per the operating model. Relying more on contract workers, COEs could flex as per talent needs.

In the new HR organizational structure, the data analytics team will comprise 10% of the HR workforce and will be the cornerstone of modern workforce planning. Modern, data-driven workforce planning which focuses on the future needs of the talent by assessing current hiring needs and modeling how those needs would evolve. As a result, the data analytics team will partner with the performance advisors in providing predictive modeling on the future of talent.

Now, let’s transition to the execution and service delivery part of the proposed HR structure and its key components and the percentage of HR workforce that should ideally be aligned to this operational component.

Execution and Service Delivery Aspect of the HR Structure:

This function led by HR Operating Officer (HROO) would oversee the digitization of processes, HR technology and HR generalists, agile change management who would serve more as relationship managers working in consort with the HRPAs. This team of Execution & Service Delivery would consist of 45% of the total HR workforce. Service Delivery component of this team is broken down into three sub-components – HR Generalists, Agile Change Management (ACM) and HR Technology.

HR Generalists

Tasked with solving the transactional nature of employee’s issues and problems, this group of HR professionals role will also encompass addressing the onboarding needs of new hires and managing ongoing employee relations issues. This team will have a dotted reporting relationship with the HRPAs to ensure client needs are identified and met as well as escalate the issues to the HRPAs for the overall client management perspective.

Agile Change Management (ACM)

 The ACM team will be aligned to different projects to support the change and project management needs emerging either from the ‘book of business’ initiatives or driven by HR agenda such as the system upgrades and/or implementation. This group of talent will have a dotted line reporting structure into the HRPA and COEs and will serve as a change enablement resource for them on the client facing new programs and solutions rollout.

HR Technology

HR technology team owns technical infrastructure and has an important role to play in its digital transformation. Introducing automation and digital, data-led processes which empowers employees with a digital mindset to improve workforce processes enhances HR productivity. To take advantage of a burgeoning demand for automation, HR should develop sophisticated and technology savvy team. This innovative HR technology teams will use emerging and proven technologies to strategically evolve the function. The team will be responsible not only for providing and managing the technology itself but also for supporting employee experience and efficiency outcomes.

While the HR organizational structure of the future can be customized to suit the needs of a particular organization, focusing on the strategic components of the model are going to be critical to facilitate the value for business. Also, this structure may not be for all types of organizations, particularly those that are still trying to determine what role HR should play or play any if at all. But it is ideally suited for organizations that are high performing and ‘people strategy’ is considered a linchpin to their business success.