There is not one-size-fits-all HR operating model but must create value for stakeholders!

💡 Do you really need to change your HR operating model? This is the question that almost all People Leaders have asked themselves one day and we are going to review the reasons and solutions together.

🚩 With business needs constantly shifting, it’s crucial that the operating model evolves to align with the organization's goals, vision and strategy.

➡️ HR leaders are most likely to say their current operating model aligns to the Ulrich+ (48%) and employee experience-driven (47%) archetypes, based on McKinsey & Company research

➡️ Only 11% of businesses have systemic HR functions, operating like problem-oriented consulting firms instead of a supportive function to the business, based on The Josh Bersin Company research.

➡️ HR functions are no longer transactional support functions or cost centers that predominantly focus on recruitment, and must focus on human capability delivers value to all stakeholders, according to a new interesting research published by CIPD using data 📊 from interviews of senior people professionals across the private, public and third sectors, in organizations ranging from 1,000 to 330,000 employees.

✅Why do leaders need to change the current HR operating model?

Researchers believe HR leaders should ask themselves the following questions before considering an operating model change

• What factors are driving operating model transformations?
• Whether current operating models serve future needs?
• Which new models are emerging?
• What makes an effective HR operating model transformation?
• How the role of the HR business partner is evolving?

✅The drivers that influence operating models

Researchers have categorized three main reasons for organizations to rethink their HR structures:

1️⃣ As a reaction to internal or external factors

Whether it’s evolving the employee experience in line with changing workforce expectations or capitalizing on advancements in technology, AI and automation, external trends and developments will have an impact on people processes and structures.

2️⃣ To align with changes to the organization's strategy and purpose

An optimized HR operating model enables the people function to effectively contribute to organizational goals.

3️⃣ To increase the efficiency of HR delivery

The need to transform may not be always be due to changes in business strategy. Instead, over time, small and gradual changes within the business may have resulted in the HR operating model being less fit for purpose, with inconsistent or inefficient processes or user experiences.

✅The ‘Ulrich' model or the ‘three-legged stool’

First published in the 1990s, and by far the most widely adopted operating model within HR, is the ‘Ulrich’ model.

This model is a significant shift away from HR as a generalist service to one that’s organized into three distinct areas:

• Shared service centers
• HR business partners (HRBPs)
• Centers of excellence (CoEs).

✅The HR Operating model of the future by Gartner

Gartner researchers developed a vision of the future HR operating model to address this reorientation.

This model is driven by five imperatives, which are outlined below along with recommended staff allocation.

1️⃣ Replace the HRBP role with strategic talent leaders Allocation: About 10% of HR staff Many HRBPs today aspire to be more strategic.

However, the breadth of work, time-consuming employee-relations tasks and capability gaps limit their strategic impact.

2️⃣ Create a dynamic pool of problem solvers Allocation: About 40% of HR staff Critical to the success of the future HR operating model is a dynamic pool of problem solvers who work on a variety of projects. This pool will be the heart of the HR function, creating and upgrading most resources, practices and policies used by HR and the workforce.

3️⃣ Provide agile support with next-generation COEs Allocation: About 10% of HR staff COEs today face an uneven demand challenge: While dominating a significant portion of the HR agenda and resourcing, COE utilization fluctuates greatly throughout the year.

4️⃣ Evolve talent analytics into human capital intelligence Allocation: About 10% of HR staff The human capital intelligence (HCI) team is a deeply embedded analytics function to serve employee and manager needs, providing robust talent data to help leaders make better talent decisions.

5️⃣Build a robust HR operations and service delivery team Allocation: About 40% of HR staff The HR operations and service delivery team is led by an HR chief operating officer (COO) and is responsible for the function’s operational support

✅The Human Capability model by Dave Ulrich

Recently Dave Ulrich and his colleagues of The RBL Group reviewed the nine recent approaches of leading consulting firms and showed why human capability delivers value to all stakeholders in today’s changing business context, thus building the case for HR functional excellence from a value logic.

The main corposant of Human Capability are:

✔️ Talent +

✔️ Leadership +

✔️ Organization +

✔️ HR

For them, this is what defines the effectiveness of the HR function.

✅The common trends across all HR proposed models

Researchers summarized that clearly, a common theme across these emerging HR models is that people functions are no longer transactional support functions or cost centers that predominantly focus on recruitment and that there is a need for a development on the following points:

✔️ The need for greater impact: People teams, however large or small, are striving to deliver more impact, have greater influence and contribute to the bottom line through their people strategy. More mature functions are building their capability and expertise to consult with the business and find people solutions to business problems.

✔️ Development of multidisciplinary pools of talent: Creating developing teams that consist of multispecialty capabilities, as opposed to organizing teams as functions (such as learning and development, organizational design, talent development) will reduce siloed working and duplication of effort. Increasing cross-collaboration across disciplines will also pool resources and improve problem-solving power.

✔️ Making employees key stakeholders: In a competitive market for talent, employee experience and personalization of the HR offering is a growing trend. By leveraging technology advancements and simplifying user journeys, businesses can modernize the employee experience and enable the workforce to interact more easily with HR services.

✔️ Making employees key stakeholders Future models need to allow flexibility to adapt to changing business environments, workforce needs and people considerations.

👉 Finally CIPD researchers conclude that there is not a one-size-fits-all HR operating model that is suited to all organizations.

A people function should be built around business needs and requires a thorough assessment of the gaps in your current model and future vision of the function’s operating model, before building a detailed target model.

HR Leaders will need to consider the structure, specialist talent and HR capability (such as roles, responsibilities and skills) and other enabling factors (such as the use of data to drive decisions, HR technology and cultural change) to successfully embed any new model. 

☝️ 𝙈𝙮 𝙥𝙚𝙧𝙨𝙤𝙣𝙖𝙡 𝙫𝙞𝙚𝙬:

The question of the HR operating model has been an exciting subject for consulting firms in recent years and especially after the Covid period with the change in work model and the dominance of hybrid work. What is certain is that the Ulrich model will still be around for years but like any model there is a certain evolution and leaders should follow the advice of its founder Dave Ulrich about Human Capability model. HR Leaders must instead ask themselves the question of changing other elements of their organization - rather human - rather than wasting time changing their HR model...

Thank you 🙏 CIPD researchers team for these insightful findings:

Rebecca Peters Peter Cheese

Dave Ulrich

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