Chartered Institute of Personnel and Business partnering Development A new direction for HRa guide
1 Business partneringBusiness partneringA new direction for HR– a CIPD guideWritten by Duncan Brown Raymond Caldwell Kevin White Helen Atkinson Tammy Tansley Peter Goodge Mike Emmott
Contents Introduction By Duncan Brown Page 3 Part 1 In search of strategic partners By Raymond Caldwell Page 6 Part 2 Driving change through HR business partners By Kevin White Page 14 Part 3 Are you passionate about HR, or are you passionate about the business? By Helen Atkinson and Tammy Tansley Page 25 Part 4 Partnering journeys By Peter Goodge Page 34 Part 5 Business partnering: a new direction for HR? By Mike Emmott Page 40 References Page 48Business partnering2
3 Business partneringIntroductionWriting in the Harvard Business Review (January/February 1998), Dave Ulrich, Professor of Business at theUniversity of Michigan, pointedly asked:Should we do away with HR?This was somewhat ironic coming from someone whos been described as both a leading prophet and thepotential saviour of the function. However, he went on to suggest that, rather than abolish HR, the answerwas to create a new role and agenda that focuses not on traditional HR specialisms and activities but on thewider business and outcomes. The strategic HR movement had for years, of course, been beating the business impact drum, and the CIPDand other organisations had produced strong evidence for the links between people management practicesand business success. But Ulrich and his colleagues’ genius lay in researching and identifying four key rolesfor HR functions to play, along with the requisite competencies and skills. HR should become:1 a partner with senior and line managers in strategy execution2 an expert in the way work is organised and executed so as to increase efﬁciency and reduce costs3 a champion for employees, representing their views and working to increase their contribution4 an agent of continuous transformation, shaping processes and culture to improve an organisation’s capacity for change. Ulrich’s analysis clearly struck a strong chord with the HR community in the UK, and many have used his HumanResource Champions as a blueprint for reorganising and reorienting their function. One major UKheadquarteredmultinational is currently reorganising its HR function into technical centres of excellence, regional administrativecentres and businessbased business partner and change agent roles. The recruitment pages of our PeopleManagement magazine now contain regular references to the job of HR Business Partner.The CIPDs HR Survey: Where we are, where we’re heading, with 1,200 respondents from UK and Irelandbased organisations and published in October 2003, conﬁrmed the inﬂuence of the concept. We found thatone in three senior HR practitioners see their current role predominantly as that of a strategic businesspartner, while more than one in four see themselves as change agents. More than half would like tobecome strategic partners in future. According to one respondent:HR is having to fully understand both the business agenda and HR practices, delivering effective solutions tomaximise business performance.
The beneﬁts for the function, according to another, were that: HR is taking on new levels of importance as companies realise shareholder value is an empty goal and not what gets people out of bed in the morning. Yet the survey also highlighted some of the challenges in attempting to achieve and deliver this aspirational role and position: • Thirtyﬁve per cent believe the HR function in their organisation is currently too focused on operational issues, compared with 27 per cent who describe it as heavily strategic, though the direction of change is strongly in the latter direction. • Almost half felt that their strategic input was constrained by the time they were having to devote to administrative activities, with the direction of change gradually towards greater use of outside providers, particularly in administration, plus a modest increase in the use of internal shared services. • Three in ﬁve believe line managers have not accepted full responsibility for people management decisions and actions with respect to their staff. Some of the questions raised by our survey include: • Do all those who see themselves as, or would like to become, HR business partners have the same model in mind? • People want to be more strategic, but what do they mean by being strategic? • Have HR managers given up on the sometimes thankless task of working with reluctant line managers, preferring to concentrate on getting more inﬂuence in the boardroom? • What does HR partnering mean for the HR function as a whole? And what happens to other aspects of the traditional HR manager’s job? • Does HR partnering mean a wholly new kind of HR function? • Does HR partnering work? Does it produce added value for the organisation? • What do HR partners actually do differently? Is this a new role and set of activities or just the latest name change? • How does the different legislative framework in the UK and Ireland affect and possibly reorient and constrain the role envisaged by Ulrich? • Has the change agent role deﬁned by Ulrich been underemphasised as a critical requirement to improve the success rates of the increasingly frequent reorganisations that are occurring? • Ultimately how do you do and deliver businessimpacting HR strategies and play the business partner roleBusiness partnering rather than, as Professor John Purcell puts it, simply creating illusions in the boardroom?4
5 Business partneringIs there in fact a single model of the HR business partner? Ulrich offers a number of clues as to what being abusiness partner might mean in practice. Some key elements emerge clearly enough. For example, the HRbusiness partner needs to:• focus on outcomes not process• measure results• help to resolve business problems• be able to hold their own in discussion with line managers• ensure that HR strategy is aligned with business strategy.Ulrich emphasises that the primary responsibility for transforming the role of HR must rest with seniormanagement, which is also responsible for making strategy. He also says that HR should be a partner in strategyexecution – getting away from the popular concept that being strategic simply means inﬂuencing the seniorteam – and that being a business partner doesnt mean abandoning many of the traditional personnel and HRactivities, which are critical in establishing the credibility of the function. But many questions and issues remain. In the end, the Ulrich model can only go so far in helping to clarify what an HR business partner should doand how to demonstrably add value to the organisation. Organisations need to try it for size and adapt it totheir own circumstances. At the CIPD, were committed to providing our members with information, tools and ideas to help them playa more valueadding and personally fulﬁlling role. This brings together the experiences of a number oforganisations from both the public and private sectors that have adopted the HR business partner model,along with some more indepth and rigorous academic analysis of the concept. We aim to help to addresssome of the outstanding questions and support organisations and their people management professionalswho are playing, progressing and thinking of moving in a similar direction. You can let us know what you think of this guide, and your own personal issues and experiences, email@example.com You can also refer to our website where youll ﬁnd a wealth of other materials from ourlongrunning research stream on people management and business performance.We are very grateful to all the organisations that were willing to have their experiences used as case studiesand to the authors who gave their time to writing them up. We are also grateful to Raymond Caldwell for hisfurther analysis of the 2003 HR survey, which helpfully clariﬁes the characteristics of respondents who seethemselves as business partners. Duncan BrownAssistant Director General, CIPD
Part 1 In search of strategic partners Introduction HR professionals are increasingly taking on the roles of strategic partners in their ongoing search to integrate business strategy and people management practices. Recent CIPD (2003) survey data conﬁrms that this ambition is widely espoused by HR practitioners. Of 1,188 practitioners surveyed, 56 per cent indicated that they aspired to become strategic partners, although only 33 per cent were currently performing this role. The most inﬂuential formulation of the strategic partner role has been outlined by Ulrich (1997). HR professionals are exhorted to become strategic partners by executing business strategy, meeting customer needs and becoming overall champions of competitiveness in delivering value. Unfortunately, Ulrich’s model tends to be prescriptive and inspirational, rather than empirical and practical. The model presents a potentially unifying aspiration for the HR professional, but seriously underplays the multiplicity of HR roles and the diversity of practices in real organisations. In this respect, Ulrich leaves many questions unanswered (Caldwell 2003). What is the scope and nature of the strategic partner role? How can it be integrated with other HR roles? What are the current and perceived impediments to the greater uptake of this role? One way of partly addressing these questions is to reexamine the recent CIPD survey data, with a new and sharper focus on what distinguishes strategic partners from other HR roles. This review highlights six interesting areas of possible differentiation: • strategic versus reactive role proﬁles • involvement and inﬂuence in the business strategy process • management perception of the HR function • time allocations for HR activities • key personal competencies • performance evaluations of HR. By examining each of these areas, we may be able to throw some light on what makes strategic partners different. Business partnering6
7 Business partneringBackgroundThe CIPD carried out a major postal survey of HR practitioners in July and August 2003. Some 5,000 questionnaireswere distributed and 1,188 completed forms were returned, making a response rate of 23 per cent. The scale ofthe survey and the sample size make it an excellent source of practitioner insights into the current challenges facingthe HR function in the UK. The full report of the ﬁndings has been published by the CIPD. One of the important questions in the survey asked practitioners to classify their current and desired HR rolesusing Ulrich’s matrix of roles: strategic partner, change agent, employee champion and administrative expert.Onethird of respondents, the largest subgroup, saw their current role as strategic partners while well over ahalf saw this role as the one they would most like to play in the future. In contrast, less than a quarter ofrespondents saw their current role as an administrative expert and only 4 per cent wanted to play this role inthe future.Here the CIPD survey data is reexamined by splitting the sample into two broad subgroups: those whocharacterised their role as strategic partners (323) versus other HR roles (714). Respondents who chose morethan one role have been excluded from the analysis (151) so as to allow a clearer focus on the distinguishingcharacteristics of the strategic partner role. In other words, we are interested in what it means in practice ifsomeone perceives their role as a strategic business partner. Who are strategic partners?A third of strategic partners have a seat on the board, compared with less than a ﬁfth of other HRprofessionals. But strategic partners are just as likely to work for public as for private sector organisations. Nordo size, industry sector or whether the organisation is a multinational appear to really matter. This conﬁrmsthat the strategic partner role is widely dispersed. Role proﬁlesStrategic partner roles are often associated with a more strategic and proactive agenda for the HR function andthis is invariably presented as a counterimage to more reactive and administrative conceptions of oldstylepersonnel management. The CIPD survey data partly helps illuminate these perceived differences. Respondentswere asked to describe the current and future state of the HR function using two key measurement scales:how far is HR either strategic or operational and how far is it either proactive or reactive? Strategic partners are more than twice as likely as other HR practitioners to perceive the current HR function intheir organisation as strategic (47 per cent versus 23 per cent). Correspondingly, only 15 per cent of strategicpartners view the current HR function as operational, while 40 per cent of other HR professionals do (Figure 1).
A similar picture emerges in examining proactive–reactive perceptions of the HR function. Strategic partners are more than twice as likely as other HR professionals to view the current HR function as proactive, and correspondingly they are twice as likely not to view HR as reactive. By combining the strategic–operational and reactive–proactive scales one can plot an interesting picture of the strategic partner compared with other HR practitioners (Figure 1). Strategic partners occupy a signiﬁcant portion of the strategic–proactive segment of the matrix, although they would, in principle, have to occupy much more if they were to fully embrace the strategic partner role. More disconcertingly, however, other HR professionals appear to be currently positioned almost exclusively in the reactive–operational segment of the matrix. Fortunately, this picture shifts signiﬁcantly when other HR professionals outline where the HR function needs to be in the future. In a future state, the strategic partner and other HR roles assume almost identical strategic–proactive mapping positions, although the latter have clearly a much longer journey to reach this goal. This once again reinforces the inspirational challenges of the strategic partner role. Figure 1: HR roles and perceptions of the organisation Strategic HR 47% Strategic business partners (395) 23% 21% 23% 40% Reactive HR Proactive HR 47% 15% Administrative experts (395) 40% Operational HR Business strategy: HR involvement and inﬂuence The CIPD survey asked respondents to describe how much involvement and inﬂuence they had at various stages in the development and implementation of business strategy. This is an important issue becauseBusiness partnering involvement in the early stages of planning can make an important difference to how much inﬂuence the HR function exercises.8
9 Business partneringStrategic partners are more involved at all stages of the business strategy process, from formulation toimplementation (Table 1). Inﬂuence follows a similar pattern. Unlike strategic partners, other HR professionalshave relatively low involvement and inﬂuence. What is most striking, however, is that other HR professionalsare more than three times as likely to have low involvement at the outset or planning stages and three timesas likely to have low inﬂuence at these stages. This suggests that this is a crucial issue, given that involvementappears to follow inﬂuence at all other stages.More research needs to be done to unravel this important relationship, because strategic partners appear tohave more involvement in planning and are able to exercise inﬂuence, even though only a third of them havea place on the board. This ﬁnding complements earlier research by Budhwar (2000), who found that threequarters of the HR departments surveyed were involved in business strategy at the outset of the consultationprocess, although only half of them had a seat on the board. Table 1: Business strategy: HR involvement and inﬂuence Strategic partners Other HR roles Signiﬁcance (323) (714) Involvement in strategy High (%) Low (%) High (%) Low (%) 0.01% Outset of planning 53 7 27 29 0.00 Development 59 5 36 17 0.00 Discussion/agreement 66 3 43 10 0.00 Implementation 74 2 57 7 0.00 Inﬂuence on strategy Outset of planning 43 9 21 31 0.00 Development 50 4 29 19 0.00 Discussion/agreement 60 3 34 13 0.00 Implementation 64 2 46 8 0.00CEO and management perceptions of HRSurveys of CEO and general management perceptions of the role and value of HR often make disappointingreading for HR professionals (Guest et al 2004). While boardlevel executives and senior managers may beconvinced of the value of effective people management, at least in principle, they are often unaware of thelinks between HR and performance. More disturbingly, they often remain unconvinced that there are clearguidelines, strategies or welltested methods for translating HR practices into performance improvements(Guest and King 2004).
Although one would no doubt expect HR professionals to present a betterinformed and positive assessment of opinions about HR held by boardlevel executives or managers, what is interesting is that this assessment tends to differ between the different HR roles. Strategic partners are generally more optimistic about management perceptions of HR in their organisation. For example, they are much more likely to believe that the chief executive views HR as playing a key role in achieving business outcomes. In addition, they are twice as likely to believe that HR issues are fully taken into account in the business planning process (Table 2). This once again highlights the way in which involvement and inﬂuence may be mutually reinforcing, especially if overall management perceptions of HR are positive. Table 2: Perceptions of the importance of the HR function (% saying strongly agree) Strategic partners Other HR roles Signiﬁcance (323) (714) 0.01% The executive board frequently discusses HR issues 59 41 0.004 The CEO believes the HR function has a key role to play in achieving business outcomes 64 43 0.000 HR issues are fully taken into account in the business planning process 35 17 0.000 HR managers are comfortable discussing business issues 47 35 0.002 How do strategic partners use their time? Despite the overall aspiration of most HR professionals to be strategic partners, the CIPD survey evidence indicated that this ambition is being frustrated. Practitioners appeared to spend nearly three times as much time on administration as on business strategy, and this was reinforced by the high percentage of time (70 per cent) spent on various implementationrelated support activities for line managers (CIPD 2003, p12). What is interesting, however, is that this picture begins to take on a different signiﬁcance when strategic partners are contrasted with other HR professionals (Table 3). Strategic partners spend much more time on strategy and much less time on implementation or line support activities. In addition, while half of other HR professionals spend over half their time on HR administration, less than a third of strategic partners do. The lessons of this evidence for those aspiring to be strategic partners appear to be twofold: • Less time on administration means more time on strategy.Business partnering • Developing and inﬂuencing HR strategy is ultimately more important than handson implementation related activities. 10
11 Business partneringTable 3: Time Spent on HR Activities Strategic partners Other HR roles Signiﬁcance (%) (%) 0.01% Business strategy 31 10 0.000 Implementing HR policy 39 54 0.000 Developing HR strategy 52 42 0.001 Providing specialist input 56 44 0.000 Providing support to line 63 74 0.000 HR administration 31 52 0.000Strategic partner competenciesThe CIPD (2003) survey asked HR practitioners about the most important competencies for establishing theirpersonal effectiveness, and which of these represented the biggest challenge. Not unexpectedly, inﬂuenceand political skills were considered central by 61 per cent of the respondents. The three factors, however, that appear most important in distinguishing strategic partners from other HRprofessionals are: strategic thinking, business knowledge and leadership abilities (Table 4). This focus ﬁts wellwith strategyoriented models of the HR function, which emphasise knowledge of the business and theexercise of leadership skills (Ulrich 1997). Certainly, without knowledge of the business, the HR function mayhave limited scope to exercise leadership. Table 4: Perceptions of most important competencies/capabilities (%) Strategic partners Other HR roles Signiﬁcance (323) (714) 0.01% Strategic thinking 51 43 0.012 Business knowledge 40 30 0.001 Leadership abilities 40 31 0.004
Performance matters Measuring the impact of HR has always been controversial (Paauwe 2004). The root of the problem is not just a measurement issue, it also relates to the intrinsic difﬁculties of linking HR administrative efﬁciency with goals of strategic effectiveness. This is partly summedup by the increasing emphasis on moving HR from what is done to what is delivered. There is growing evidence that this message is widely accepted by HR professionals (CIPD 2003). Strategic partners, however, are more likely to perceive themselves as working for organisations in which line managers views, business outcomes and employee feedback are central to performance (Table 5). Similarly, while most HR professionals say they work for organisations in which the HR function is assessed, strategic partners appear less likely to work for organisations in which HR performance is not assessed. In this respect, strategic partner roles and the assessment of performance outcomes appear more closely aligned. Table 5: Assessment of the HR function Strategic partners Other HR roles Signiﬁcance (%) (%) 0.01% Line managers views 77 67 0.000 Business outcomes 76 52 0.000 Employee surveys 59 47 0.000 Cost–beneﬁt analysis 32 24 0.006 HR not assessed 5 15 0.000 Are strategic partners different? The survey evidence broadly suggests that strategic partners are different in six main areas: • Their current role proﬁle for the HR function is perceived to be more strategic–proactive, rather than operational–reactive. • They believe they have more involvement and inﬂuence in the business strategy process. • They are generally more positive about CEO and management perceptions of the HR function. • They spend more time on strategy and less time on implementation or HR administration. • They place greater emphasis on the HR competencies of strategic thinking, business knowledge andBusiness partnering leadership abilities. • They perceive themselves as working for organisations in which HR performance outcomes are measured.12
13 Business partneringIf these ﬁndings suggest some distinguishing aspects of strategic partners relative to other HR professionals,they must also be treated with caution. The differences are matters of degree, rather than absolute contrasts.The strategic partner role is part of a multiple role set and so it overlaps with other HR roles (Ulrich 1997, p38).In addition, the survey evidence is based on selfperceptions, and perception mapping can be misleading(Wright et al 2001). The major dangers are that strategic partners may inﬂate or overrate the effectiveness ofthe HR function, perhaps not deliberately, but as a form of pragmatic selfbelief in the value of their role andthe strategic mission of HRM. Nonetheless, the consistency of the survey ﬁndings suggests that there may be some useful lessons here forother HR professionals who aspire to become strategic partners. If strategic partners currently occupy a morestrategic–proactive HR role, have more perceived involvement and inﬂuence on business strategy and aregenerally more positive about CEO and management perceptions of HR and its performance, how can otherHR professionals learn from this? As a whole the survey evidence suggests that if HR professionals want tobecome strategic partners, they need to spend less time on HR administration and implementation issues andmore time on developing their strategic thinking, business knowledge and leadership abilities. Only in thisway can they perhaps fully embrace the performance implications of the strategic partner role. While such a recipe may, in principle, make perfectly good sense, the real challenge is creating the contextsand practices through which the strategic partner role can be realised. This is no easy task as the HR functionseeks to balance a panoply of often conﬂicting priorities: enhanced professional expertise, greateradministrative efﬁciency, increasing cost savings and constant performance improvements. If, however, HRpractitioners can discover the contexts and practices through which the strategic partner role thrives, theymay be well on the way to translating a widely espoused professional aspiration into a reality. Raymond CaldwellBirkbeck College, University of London
Part 2 Driving change through HR business partners This part sets out why we introduced HR business partners into the Department for Work and Pensions (DWP), outlines the wider context of modernisation for the DWP as a whole as well as for the HR function and assesses the effectiveness of the new arrangements and future developments. The views expressed are my own. I would like to thank not just those business partners and managers who helped with the survey but also all the staff working in HR within the DWP for their huge contribution to the Departments success. The Department for Work and Pensions The DWP came into being in 2001. It was formed from the Department for Social Security and the labour market policy elements of the Department for Education and Employment, including the Employment Service. The DWP brings together welfare policy functions and delivers welfare services for children, workingage adults, and pensioners. It was formed to engineer a fundamental reform in the modernisation of welfare policy and delivery and is at the forefront of modernising government. The DWP is a very large department with currently 130,000 staff (wholetime equivalents). We touch the lives of most citizens of this country. Each day, for example, we conduct 10 million transactions involving welfare support for our customers. We comprise more than a quarter of the home Civil Service. We spend about £120 billion a year and our annual administration costs are over £7 billion. The DWP is not just large but complex. We have Group and Department of State functions and deliver our services through large executive agencies: Jobcentre Plus, The Pension Service, the Child Support Agency (CSA), and the Disability and Carers Service. The very great majority of our staff carry out administrative and junior executive functions. About 120,000 of them are personal adviser or frontline supervisor level (Executive Ofﬁcer or below). Conversely, we face a huge management challenge in delivering consistent internal or external services, with 10,000 managers at Higher Executive Ofﬁcer level or above. The DWP was formed to create change in welfare delivery but has a signiﬁcant programme of internal reform and modernisation covering HR, ﬁnance, IT and other support services. This article is about how we have been making change in the HR function, particularly through the introduction of HR business partners, and how successful that change has been. Modernising HR Right from the start, the senior HR team, including the HR directors of the main delivery businesses (which is the term we use to describe the Departments agencies), was clear that we needed to bring about aBusiness partnering fundamental transformation of the HR function. The DWP was a merger between different departments and the HR function itself was an amalgam of those different departments and functions.14
15 Business partneringLooking at the people in the function, it was clear that we had a lot of talent to work with. The Civil Serviceas a whole, as well as the HR function in particular, attracts and retains a large number of talented, interestedand very hardworking people. Our HR staff had a dedication to their job, a very strong sense of fairness andquality standards and, above all, a desire to do things better.We felt nevertheless that our HR function exempliﬁed many of the areas for improvement we associate withan oldfashioned bureaucracy. To make the point through an element of caricature, it was a rulebasedfunction with a primary focus on the development of effective and exemplar policies. HR was seen as aservice provider, but all too often as a factor linemanagers and businesses needed to adjust to or workaround rather than as a partner. We had virtually no effective IT and had cumbersome systems with poor,slow or nonexistent management information. We tended to be inwardlooking. Best practice was doingwhat we did best rather than looking at how we might do better by learning from others. The culture ofdisengagement between HR and line management meant that we tended not to see HR from the linemanagers point of view and the line manager tended to regard HR as our function rather than theirs. Thisconﬁrmation of our traditional role was often comforting for HR and managers alike.We also knew that our current systems and operations were extremely inefﬁcient. We estimated there wereabout 5,500 staff working on HR (including learning and development). A signiﬁcant number of them werenot on HRs books but were in management lines, often in dispersed units, providing administration andlocalised support.That meant, overall, we had one person working on HR for every 24 employees in the DWP. Given the overallprogramme of efﬁciency in the DWP, and the investment in new resource management systems underway,that level of stafﬁng was just unsustainable. Dispersed and localised teams also meant that standardisation ofservice and a coherent change focus was much more difﬁcult to achieve. The HR leadership team thereforecommitted to doubling that ratio to 1:50 in the years to April 2006, with the knowledge that we would needto be looking for signiﬁcant further efﬁciencies beyond that.It was clear that what we needed to drive forward the change was a new vision and a renewed change focusfrom the top. Investment in new information systems, targets for the modernisation of service delivery andefﬁciency, and the stimulus of a signiﬁcant programme of external recruitment at HR director level and belowwere all vital ingredients for that.Our visionThe top team formed a new vision for HR within the DWP. We formed a vision for a smaller, more expert andprofessional service with smart information systems supporting centralised shared services, the engagement
of HR as a support to business operations and, alongside this, the full acceptance by line managers that their accountability for delivering results embraces the accountability for developing, managing and leading their people to achieve those results. Our HR modernisation programme had, therefore, a very broad and ambitious focus, encompassing: • developing the expertise and professionalism of the HR function and delivering signiﬁcant stafﬁng reductions • introducing effective shared services based on a new integrated information system with an employee and line manager selfservice front end • introducing a new technologically enabled blended learning environment • simplifying the HR policy framework and enabling line managers to use it • aligning HR with the businesses, helping and supporting line managers to deliver results through their people rather than doing it on their behalf. This represented a huge cultural change for people working in HR as well as for the DWP line managers. But there was a signiﬁcant appetite for this change. We all knew instinctively that we couldnt continue with the old ways and all of us in support functions could envisage the transformations and improvements in service delivery across the DWP as a whole and were keen to be part of that. To help focus that change, we consolidated the message for all HR staff: Meeting the challenge: HR design criteria • HR is only there to support the delivery of services • Line managers are the ‘front line’ of HR • HR services must support managers: – Expert advice ‘at the shoulder’ – Policy frameworks to help line managers – Minimising the bureaucracy • We will maximise the role of intelligent IT • HR work should only be done once • We must meet both business and corporate needs – We must be exemplars of the valuesBusiness partnering Source: Department for Work and Pensions 16
17 Business partnering The HR model how HR will operate We will not be: We will be: • administrators • change agents • taking sole ownership of HR issues • business focused • surrogate managers • technical experts • only functionally focused • customer focused • inward looking. • championing Values • fair. Source: Department for Work and Pensions HR business partnersThe introduction of HR business partners was a fundamental part of the new HR model. They were anintegral part of the service delivery model, building alignment between the HR function and business goalsand requirements and supporting and commissioning HR services to meet business needs. But they were alsoa key driver to help make the change by supporting line managers through the introduction of new HRsystems, supporting the implementation of the new HR arrangements and improving the development of HRpolicies and systems through frontline feedback. We saw them as agents for change as well as embodyingthe change themselves.The key to modernising the HR function, we believed, was establishing a positive and mutually reinforcingrelationship between HR and line management through which HR would be seen as a part of businessdelivery, supporting business strategies. Line managers would increasingly take over accountability for thepeople dimension of their role, helped and supported by expert HR systems and advice. The comprehensiveintroduction of business partners across the DWP was designed to focus the energy of our change on the linemanagers/HR nexus which was always going to be either the engine for positive growth or a signiﬁcantinhibitor to the development of a modern HR function.Our expectations for our new business partners were, accordingly, high. We wanted them to:• Demonstrate that HR was focused on business goals, both of a strategic as well as local and speciﬁc nature.• Be an agent for change both in respect of changing HR functions but also in respect of the signiﬁcant change and modernisation programmes DWP businesses are going through at the same time.
• Be the ﬁgurehead for a more expert and professional HR function, adding value to business discussions. • Improve HR service delivery, helping managers meet their goals. • Help HR to implement its change programme and provide feedback to improve implementation strategies and policy developments for the future. • Coach and skill line managers helping them to deliver their own objectives and to understand how they can get the best from this new HR service. • Play an increasing role in the identiﬁcation and delivery of skills training as we sought to refocus the energy of learning and development down the business line. • Help to make sure that we put people at the heart of our change agenda, for example, by leading on actions rising from our staff surveys and playing a key role in managing employee relations. The simple way of presenting these expectations is to show how they map against the Ulrich HR capability model. Future • being part of the business team • being a change agent and role model • having valueadded strategic input • upskilling line managers • developing planning and resourcing • meeting the capability growth of the strategies organisation. Processes People • achieving effective service commissioning • putting people at the heart of the change and delivery • championing DWP values • implementing strategies for new HR • having good communications policies • having sound employee relations. • giving feedback to service and policy development • upskilling the HR function. Day to day Resourcing and developing the function We had a lot riding on the investment in business partners and wanted to get it right. We undertook detailed internal studies to identify the different levels and characteristics of HR business partner roles, with support from external advisers (PA Consulting to start, then Capgemini). We made clear from that start that HR in the DWP encompassed learning and development. HR business partners are accountable for learning andBusiness partnering18
19 Business partneringdevelopment strategies for their businesses as well as resourcing or other areas of employee policy. They aresupported by staff with speciﬁc functional responsibilities but their remit covers the whole patch.We knew we had a signiﬁcant degree of homegrown talent. But we also knew that much of that talenthad been developed within the context of a historical service delivery model and that, however talented thoseindividuals were, it was essential that we didnt simply rebadge existing HR roles as business partners. Wedrew up very clear job descriptions and competency proﬁles and went to the external market as well as toour internal market to ﬁll them. That was a departure from previous exercises and, unsurprisingly at a time ofoverall staff reductions, this was not a universally popular thing to do. But it was the right thing to do.We are a large and complex organisation and we have a large HR business partner structure. We identiﬁed140 business partner roles at a senior level, as follows:• 4 at Grade 6 eg lead business partner for a large Jobcentre Plus region of up to 10,000 staff (3 ﬁlled by external appointment)• 52 at Grade 7 eg a Pension Service or CSA regional lead for a large Jobcentre Plus district or central department policy directorate (17 ﬁlled by external appointment)• 84 at Senior Executive Ofﬁcer eg smaller Jobcentre Plus district role (15 ﬁlled by external appointment).Of our 140 senior business partners, 35 were new entrants to the Civil Service, bringing a variety of differentexperience and expertise from the broader public and commercial sectors. Those new entrant businesspartners have been vital for us, not just in bringing new knowledge and experience but also in being able torolemodel for other business partners how we would like to see the role performed. Even though many ofour talented people knew there was something missing, they couldnt know what they didnt know and it isimpossible I believe to overestimate the contribution that new people modelling the right kinds of skills andbehaviours can make in helping to develop internal capability. Although we were very keen to make rapid progress, inevitably the role development and recruitment ofbusiness partners took longer than wed hoped. We were clear about this direction from early 2002. Designwork had taken place during the summer of 2002, although the ﬁnal sizing and identiﬁcation of the numbersof different posts at different levels was not complete until the start of 2003. We went into the internal andexternal markets between September and November 2002, with interviews held and appointments made fromJanuary 2003 onwards. The pace at which we were successful in completing the establishment of businesspartner teams varied from area to area and, indeed, some posts remained unﬁlled until later that year.Given the strategic importance of the HR business partner community to the DWP and the importance ofenabling an exchange of information between business partners from different backgrounds, from the startwe were keen to establish a capability framework and clear opportunities for business partners to develop
capability and exchange experience. Our capability framework was developed during the ﬁrst half of 2003 and is based on the Ulrich model. It provides a selfassessment and planning toolkit1 against which business partners can review and identify their development needs, along with information about relevant CIPD and Centre for Management and Policy Studies (CMPS) development programmes. The toolkit has been well received and is currently being reviewed. Its also being used as the model for capability work elsewhere across the HR function. Across the DWP there has been an increasing focus on growing and developing the business partner community, for example, through networking and bestpractice meetings, and we bring together all the senior business partners for an annual awards conference. How was it for us? (Or, did the organisation move!) We placed a great deal of hope and expectation in our new business partners. They were key agents for change as well as representing the key change itself, being introduced at a time of transition for the DWP as a whole and when the other elements of the HR modernisation programme were also in development. We havent yet, for example, introduced our new information system that will enable employee selfserve and improve the effectiveness of our shared service delivery. Our blended learning programme is still in development, and were making fundamental changes in our performance and development (appraisal) systems and our reward strategies. None of this is easy. So, 18 months on, and in the context of this wider background, I asked a random sample of 30 business partners and line managers what they thought of the changes business partners had brought. I asked them for comments in ﬁve areas: • What are the main beneﬁts of delivering HR through a business partner structure as opposed to more traditional structures? • What role do business partners have in the achievement of business targets? • What changes to the way HR is perceived have there been since the introduction of business partners? • How should the role develop in the future? • How could we have introduced business partner arrangements better? The responses to the survey are summarised in the box on pages 22–24. They are in many ways reassuring in that business partners and line managers see these new arrangements as delivering the changed relationship between HR and the business that we wanted to see. HR has become and is seen as being more aligned to business requirements and more accessible and more expert. This is hugely important and very encouraging.Business partnering 1 The toolkit can be accessed at www.dwp.gov.uk/publications/dwp2004/hrtoolkits.pdf20
21 Business partneringThe ﬁndings also show that we have a long way to go to complete the effective delivery of our modernisedHR function. The fact that we dont yet have employee or line manager selfserve, that the shared servicescentres are not yet operating as well as they should be or that our blended learning environment is only in itsinfancy all prevent business partners from operating at the right level and inevitably inﬂuence businessperceptions of HR. The ﬁndings also show that we have more to do to ensure that line managers across theDWP understand what business partners are there to do, how they can help them and what their role is inpeople management.Looking ahead, there is a very strong desire that business partners should be able to play a more strategicrole (spending less time ﬁreﬁghting and supporting speciﬁc service delivery activities). There is also a strongconsensus that, looking ahead, business partners would want to be more inﬂuential in bringing their businessalignment to bear on the development of HR policy and that they can add increasing value as organisationalchange consultants.Would I do it again? Yes, I would. The business partner revolution in the DWP has been one of the mainsuccesses of our HR modernisation programme. It lays the groundwork for so much of what we are doingand is a key to the effective engagement of HR with business objectives and the development of the bestpossible HR function – to all of which the senior HR team in the DWP is ﬁrmly committed.Kevin WhiteDWP Group HR Director
Summary of ﬁndings 1 What do you consider are the main beneﬁts of delivering HR through a business partner structure as opposed to the more traditional style of HR structures? All respondents identiﬁed understanding and alignment with business goals and objectives as the primary beneﬁts of the new structure. Speciﬁc factors drawn out, in order of frequency of mention, were: • clarifying accountabilities between HR and line managers (with business partners providing advice and expertise and line managers taking accountability for their people decisions) • the opportunity to have a more strategic input • understanding of the local business context • a more consistent and effective deployment of HR policies • support with the upskilling of line managers • accessibility of HR expertise • increasing expertise and professionalism of HR • HR acting more as a change agent • HR as a help, not a hindrance. Within the overall ﬁndings, the particular emphasis from line managers in the survey was on the provision of more expert, accessible and professional services with clear accountabilities, support for upskilling line managers and the prospect of better HR provision through business partner feedback. 2 What role do you feel HR business partners have to play in the achievement of the organisations business targets? A number of factors were drawn out, with little differentiation between the business partner and line manager views. The factors, again listed in order of frequency of mention, were: • support for line managers in delivering organisational performance • effective support and delivery, as appropriate, of key HR activities driving performance eg discipline or attendance management • putting people at the heart of business planning and decisionmakingBusiness partnering22
23 Business partnering• ensuring the right people are recruited at the right time• growing the capability of our people• delivering culture change• skilling line managers.Perhaps not surprisingly, respondents at more senior levels of business or HR structures laid moreemphasis on the role of HR business partners acting as people champions and organisationalchange catalysts, putting people at the heart of the business agenda, as opposed to their role inhelping line managers tackle speciﬁc performance issues (such as attendance).3 What changes have you seen in the way in which the organisation views HR since the introduction of business partners?There was almost universal recognition that HR is now seen much more as part of the businessrather than as a remote function developing policies that, likely as not, hindered rather than helpedbusiness operations. The key factors drawn out to evidence this were:• HR working in partnership with the businesses• the provision of a human face, expert and accountable, and able to explain the purpose behind HR policies• the opportunity to inﬂuence HR policy through business partner feedback• support for line managers, including coaching around skills transfer• more effective support for speciﬁc HR activities eg resourcing and performance management exercises.The responses to this question also show clearly, as we knew, that we have further progress tomake in delivering the full elements of the modernised HR model system on which the effectivenessof business partners in part depends. There is also a worry that some line managers see the changein accountabilities as being dumped on as we ask them to undertake a further task without theskills or support they need. And theres a corresponding concern that the new service is increasingthe expectations line managers have of HR which the HR community may struggle to meet.
4 How would you like to see the role of the business partner develop in the future? There was a considerable consensus on the areas of futures development, which were: • a more strategic role with less handholding and administrative support offering greater added value to the business, as line managers need less daytoday support and as the HR systems come on line • greater inﬂuence in policymaking, enabling greater operational knowledge to be brought to bear on HR policy development • greater expertise and professionalism for the function, with a greater emphasis particularly on the roles of organisational change agent and internal consultant • more external recruitment and benchmarking of services against external organisations. 5 What would you have changed about the way in which the organisation introduced business partners? There was, again, a very strong consensus here. The two key things we should have done better were: • Inform and communicate the new structures and accountabilities of business partners so that line managers understood from the start what the role provided and how best to work with business partners. • Ensure the emergent function was staffed up and skilled from the start. There was also a consensus that there was too much variety in the deployment and support of business partners across the various DWP businesses (ie this model should operate to common corporate standards) and that we didnt sufﬁciently pool and share the expertise of new external recruits across the organisation. NB The survey was a freeform questionnaire and received 30 responses, 23 of which were from current business partners and 7 from line managers.Business partnering24
25 Business partneringPart 3 Are you passionate about HR? Or are youpassionate about the business?This is a story about how an HR department operating on broadly traditional lines has used the businesspartner model to move towards adopting a strategic rather than operational focus. Who are we?For over 360 years, Royal Mail has been servicing the homes and businesses of the United Kingdom. It has aproud history of brand and tradition. Royal Mail became a plc on 26 March 2001 and is wholly owned by theUK Government. The framework for change was the Postal Services Act 2000 that created a commerciallyfocused company with a more strategic relationship with the Government. Royal Mail provides an essential public service. Notwithstanding the introduction of email and other electronicmessaging, and the continuing use of faxes, the volume of mail delivered each day is some 82 million itemsand continues to grow. There is a statutory duty to provide a letter delivery service to each of the 27 millionaddresses in the UK at a uniform price, irrespective of the distance travelled. The duty also includes anobligation to carry out at least one collection daily from each of the Royal Mail letterboxes. In the UK, Royal Mail operates under the brands Royal Mail, Post Ofﬁce™ and Parcelforce Worldwide. PostOfﬁce Ltd is a wholly owned subsidiary of Royal Mail Group plc and operates under the Post Ofﬁce™ brand.Managing a nationwide network of around 16,000 Post Ofﬁce branches, it is the largest post ofﬁce networkin Europe and the largest retail branch network in the UK, handling more cash than any other business.Parcelforce Worldwide is focused on the growing express market for UK timeguaranteed and nextdayservices and international parcels. It provides access to the worlds largest delivery network, covering morethan 99.6 per cent of the global population.Royal Mail Group plc has over 220,000 employees at over 2,000 sites all over the UK. In addition, a number offranchises and owner/operators operate through the Post Ofﬁce and Parcelforce Worldwide network. Withoutputting too ﬁne a point on it, Royal Mail is big business – in terms of size, geography and complexity.The case for the change: the business contextThe transformation of the HR function within Royal Mail took place in the context of a business in crisis. Afteryears of success as a business, Royal Mail found itself with increasing costs and declining contribution andquality of service. The business had a negative cash ﬂow and needed some radical changes to transform amonolith into a commercially aware and viable organisation.
The commercial environment that Royal Mail operated in was also changing, as the industry began to deregulate and markets began to open up. Customers began to have greater choice and increased buying power. But the business found itself having to balance commercial imperatives against the Universal Service Obligation (USO), a legal requirement of the business to deliver mail to every address in Great Britain. In 2002, the Renewal Plan was developed – a threeyear plan that sought to arrest the decline of the business, and produce a turnaround with a £400 million proﬁt by 2004/05. This was a challenge of enormous proportions requiring a dramatic change effort in an industry that was in the process of deregulating. Cultural context In the delivery ofﬁces, postmen and women were committed to serving the communities in which they worked, but had a limited concept of the ‘commercial buying customer’. In mail centres, the factory environment and culture prevailed and in many mail centres there was limited pride in being a Royal Mail employee. The culture manifested itself in a high incidence of bullying and harassment and high levels of unplanned absence. There was low investment in both capital and people. The organisation seemed to retain all the negative elements of a traditional public sector culture – wastefulness and a lack of commercial focus. In addition, despite generous HR policies and practices, employees didnt perceive that they worked for a generous employer. Rather, there was a paternalistic expectation of care. The psychological contract was similar to that in the public sector – employees expected a job for life with little or no change to their ways of working. The personnel function Personnel managers were proud of the service that they and their teams provided and managers generally received quality advice and support on people issues. The personnel department was comprehensive, with each operational area allocated a personnel manager and personnel team, and a shared ‘transactional services’ that looked after payroll and other routine operations. But due to the lack of linkage between business goals and HR, HR activity largely took place in a vacuum, removed from the strategy of the business. Transaction and strategy were mixed up and lacked clarity. What strategy there was was traditional and functional, more like action plans than strategy and dealing with the transactional elements of issues such as absence, reporting and industrial relations. By and large, operators simply didnt see themselves as responsible for people issues. Consequently, there was little ownership of issues such as attendance and resourcing. Operational managers didnt see their people as delivering the results for them, and they certainly didn’t see themselves as leaders and coaches. Rather, theBusiness partnering model exacerbated the operational view that managers looked after the mail, and personnel owned the people problems. 26
27 Business partneringIf people were the business’s fundamental competitive advantage, then the HR strategy was a key element ofmoving the business forward. With a business in crisis, it was clear that it was not only the operations thatneeded to change. HR had to reinvent itself – quickly and fundamentally. The visionIn January 2003, Tony McCarthy became Group Director for People and Organisational Development (P&OD).Inheriting a committed personnel function, but one that was overstaffed, traditional and lacking in focus,Tony needed to ﬁnd a way to make better use of its talent, while providing an innovative and forwardthinking HR function that supported the business and moved it forward. In addition, Tony was charged withreducing personnel overheads by at least 40 per cent by March 2005.The vision was:• People will be at the heart of all our major business decisions. The function will facilitate and support our people by delivering worldclass solutions and services.• The P&OD function will be professionalised, with key capabilities underpinning every role, in addition to the key capabilities identiﬁed as core to the business.The threebox modelIn his previous role as Group HR Director for BAE systems, Tony had used a version of the HR business partnermodel developed by Dave Ulrich, and had seen its beneﬁts. He sought to introduce this model at Royal Mailto help make the vision a reality and provide a framework for the HR strategy. Figure 2 demonstrates therelationship between the renewal plan and the HR strategy.Figure 2: HR strategy in Royal Mail Grow HR strategy Focus Fix Year 1 Year 2 Year 3 Post- renewal plan renewal plan renewal plan renewal plan
The Royal Mail model is based on three boxes (Figure 3). The move demonstrated a fundamental shift from traditional personnel to the new approach of people and organisational development. The change in functional title was the ﬁrst step in signalling that change was on its way. Figure 3: The Royal Mail threebox model of people and organisational development People and Organisational Business partner Services (P&OS) Experts Transaction The roles for each component of the model are described in the appendix on pages 32–33. As an example of the new structure, within the Letters business (which is by far the bulk of the business, with over 160,000 employees), 31 business partners were created, one for each area. Areas vary in geographical size and have between 3,000 and 6,000 employees and are split between three territories – East, West and North. Business partners are referred to as people and organisational development advisers (PODAs) and they partner the most senior manager in each area, the area general manager. The PODAs are senior managers in their own right and sit on the Area Management Team. Each PODA reports to the head of P&OD for that territory. Each of the heads of P&OD (East, West and North) partner their respective territory directors, who are the most senior operational managers within the Letters business, reporting to the UK operations director. Are you passionate about HR, or are you passionate about the business? Royal Mail was attempting the biggest turnaround in British industry – and the personnel structure, passionate though it was about the HR services that it provided, simply couldnt enable the organisation to move forward to meet and exceed the renewal plan and to be competitionready. The new model provided HR with a structure that would, in theory, help them do all that and more. First, however, the board had to be convinced that the new model would help deliver the renewal plan. Second, approval had to be sought for the investment that would help facilitate the new structure. Third, theBusiness partnering28
29 Business partneringchanges had to be managed in an environment of extreme operational turbulence and change. And ﬁnally,ongoing HR support for the business was still required while the changes were taking place.One only need scan the HR job advertisements to see that many organisations overlay the business partnermodel on their existing structures – changing titles in the apparent belief that this will reﬂect a businesspartner approach. However, in order to deliver the vision described above, Royal Mail had to completelydisassemble the personnel function and reassemble a new vision, structure and strategy. This was never goingto be done without some pain. The 3,150 employees within the personnel function had to apply for 2,250 new positions within the newstructure. And, for the ﬁrst time, Royal Mail was actively going out to the open market to recruit. That meantfewer jobs, and more people in the pot. For example, a Royal Mail area that previously had 20 personnelemployees servicing the population of 5,000–6,000 operational employees was reduced to having one visiblebusiness partner in the area, supported by a centralised and drastically reduced shared service.There was a challenge in drawing on the talent among existing employees and creating an environmentwhere the change was welcomed, while at the same time creating a compelling vision for those externalrecruits. In addition, for the 18 months that the resourcing process was being completed and the newstructures bedded down, the organisation was going through some difﬁcult operational changes – reducingits headcount by up to 30,000 employees and introducing some radical changes to the network. While the new transactional People and Organisational Services (P&OS) division undertook its owntransformation by dramatically reducing its staff and completely overhauling its processes, the newlyappointed business partners had to live with dual roles. On the one hand, they were told to be ‘strategic’ but,on the other, there was still the transactional work to be done and no one to do it. The operations neededhelp to effect and manage the changes they were going through, and didn’t much care for the fact thatthere was a new HR model that changed the way that things were done. Without courage and resilience, the changes might never have happened. And there was certainly initialresistance. Operations mourned the loss of their personal personnel managers, while the personnel managersmourned the loss of their teams, and struggled to come to terms with what the new roles meant. Step one of the journey Business partnering was off to a shaky start. However, two key elements have helped to shape a much morepositive approach to business partnering:
1 The progress of P&OS in their transformational processes. As transactional work has been removed from the business partners, they have been able to start the true work of understanding the role of partnering the operations. 2 The introduction of the new P&OD capability model (Figure 4) and the associated development programme: • The development programme consists of three mandatory programmes covering consulting skills, business knowledge and strategy, and organisational capability. • In addition, every business partner has been given a development budget and can choose electives within the programme (or, if appropriate, from external sources). Electives include facilitation/action learning skills, managing change, coaching, and measuring P&OD value. • Programmes have been run by leadingedge providers such as Professor Wayne Brockbank (University of Michigan). • An annual P&OD conference brought together recognised leadingedge experts in industry and HR, and best practice from within the business was demonstrated and recognised. Figure 4: The Royal Mail capabilities Consulting Uses a consultancy approach and techniques to challenge, solve problems, facilitate and coach others to improve current and future organisational performance P&OD knowledge Organisation design Understands leading-edge and development P&OD thinking and is able Utilises organisational to decide what P&OD development tools and process/ interventions processes, to build a could be used to improve Consulting structure and culture which current and future delivers the current and business performance P&OD future business strategy; knowledge OD&D meets and, where appropriate, challenges assumptions Delivering Personal results credibility Delivering results Effectively achieves results Personal credibility through their ability to Role-models leading and build strong relationships influencing behaviours. Is in a more fluid Business knowledge intellectually and environment emotionally intelligent Business knowledge Understands and utilises commercial acumen and awareness of external environment to enhance Royal Mail’s current and future business performanceBusiness partnering30
31 Business partneringSo, what is a business partner?The P&OD function is only just beginning the journey of understanding what potential a true businesspartnering model can bring. This is critical if the P&OD function is to support the business in meeting renewalplan targets, improving the current level of quality of service and tackling the cultural issues pervasive withinthe business. The role needs to demonstrate value and be differentiated from the previous personnelmanager role.Business partners need to be able to demonstrate to operational colleagues that they understand thecustomer, the business and the competitive environment within which all this ﬁts. Business partners need tocontract with the operations to analyse a problem in the light of these inputs, work with the experts todevelop an appropriate solution/product/strategy or response, and then work with P&OS to deploy such aresponse. Equally, the business partner needs to be a coach to their operational partner.The business partner needs to be able to create an environment to be able to focus on longerterm strategicissues: a challenge when faced with operational partners that focus on a daily repeatable task. Theorganisation will continue to face changes, and so the role of the business partner must be to helpoperations face those changes head on, develop an appropriate response and then evaluate the deployment.What we’ve learnedMaking the change under the circumstances detailed above meant that the implementation wasnt perfect,but the ﬁrst step of the journey is always the hardest and there is never an ‘ideal’ time to implement such amagnitude of change – if you don’t start, youll never get where you want to be.There has been a dichotomy between shortterm business requirements resulting in processes that didn’t letthe model work properly, and which gave people permission to return to their comfort zones, and the factthat the business so desperately needed the model to work, to get out of daytoday tactics, and to look atthe longerterm cultural and strategic issues. There has been a body of work necessary to communicate and educate the operations on the new model,how it operated in practice and what this meant for their role in managing their people. There is still notperfect understanding of the model, nor of the role of the business partner. Its the responsibility of all the parties within the threebox model to make the shared services (P&OS) asuccess. Without a strong, efﬁcient transactional component, its hard to build true credibility as a businesspartner.