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    Global hr forum2009-dave_ulrich-hr people and hr transformation Global hr forum2009-dave_ulrich-hr people and hr transformation Document Transcript

    • HR transformation has become all the rage as the function seeks to deliver value. But transformation efforts that focus exclusively on improving HR are bound to fail, warn Dave Ulrich and Justin Allen At workshops with HR professionals, we often begin by asking: “What is the biggest challenge you face in your job today?” As we go around the room, the challenges mentioned usually range from getting HR practices right and relating to business leaders to managing the increased personal demands of the job. Heads generally nod in agreement until we say that all these answers are wrong (or incomplete). Silence then ensues. Our point is that HR professionals often focus internally on their own function and roles, rather than externally on what their customers need. We believe that the biggest challenge they face today is helping their organisations succeed. That’s not to say that activities such as hiring people, developing leaders or building incentive programmes do not matter. They obviously do. However, our argument is that HR professionals should be at least as concerned with the outcomes of these activities – the value they create - as with the activities themselves. The same goes for efforts to transform the HR function. Initiatives such as implementing e-HR, restructuring the function or designing new HR practices are often described as transformational. However, our experience of working with many thoughtful and innovative HR executives, as well as over 20 years of research suggests that these actions will not be transformational and are unlikely to be sustained unless they are tied to clear business objectives. HR transformation, in other words, is not about doing HR more effectively, but about building business success. To help practitioners achieve this goal and avoid the mistakes that are often made along the way, we have developed a four-phase model for HR transformation. Phase 1 consists of building the business case for transformation, phase 2 of defining the outcomes, phase 3 of redesigning HR, and phase 4 of engaging line managers and others in defining and delivering the transformation. Phase 1 addresses the question: why do transformation? We believe that HR transformation should begin by making sure that all those involved in the process have a clear understanding of the context of the business. When HR professionals start thinking about the outcomes of their work as defined by the business context, they change their conversations with line managers and are able to justify and build a business case for the transformation. They are also more likely to avoid the common mistake of seeking to implement internally focused ideas that come across as solutions looking for problems. The approach we propose has a number of practical implications. For example, many HR leaders launching transformation programmes call an all-hands meeting to share the vision and goals of the new HR organisation. We strongly recommend beginning this event with a detailed discussion of the business and the challenges it faces, as this will set the agenda for the entire HR transformation. © 2009 The RBL Group 1
    • The second phase of a transformation programme involves defining its expected outcomes. We recommend that you start by picking the stakeholders you are most worried about and then discuss and define the outcomes that will be most important to them. For customers, customer share represents the relationships with customers. For investors, the intangible value as identified by the par price/earnings ratio within your industry becomes relevant. For communities, the reputation of the organization becomes relevant. These stakeholder outcomes should be tracked over time to measure the progress of your HR transformation. At the same time as delivering outcomes that are important to the recipients of HR services, HR transformation should also change the fundamental identity, culture, or image of the organisation. We refer to this outcome of HR transformation as defining and building capabilities. These capabilities become the identity of the firm, the deliverables of HR practices, and the keys to implementing business strategy. For a retail or hotel firm, service might be the critical capability. For a firm moving into Asia, collaboration with business partners might be the capability. For a pharmaceutical firm, speed of innovation might be the capability. Senior leaders must be clear about the two or three most critical capabilities the firm must have in order to execute its strategy. Our experience suggests that while there is no magic list of desired or ideal capabilities, certain capabilities seem to be inherent in most well-managed firms. For example, they are good at building leaders who generate confidence in the future, at creating a shared agenda around business strategy, at fostering enduring relationships of trust with customers and at working together across organisational boundaries. They also tend to have a strong reputation for corporate social responsibility, innovation, efficiency and accountability. The third phase of our transformation model focuses on redesigning the HR function to make sure that it is aligned with business strategy. We have found that the most successful designs are those where the structure of the HR function reflects that of the business organisation. So if the business has a centralised structure, HR should also be centralised, or if the business is decentralised, the HR function should be similarly decentralised. The HR organisation should also mirror the structure of any professional service organisation. This means that there will often be centres of expertise where specialists with distinct knowledge – of learning and development or reward, for example - are charged with turning that knowledge into productivity. Finally, the redesigned HR function needs to differentiate between transactional and transformational HR work. These design principles can result in an HR organisation with five distinct - and at times overlapping – elements or channels. These are corporate HR, which oversees the whole function and is also responsible for top management, corporate initiatives and HR careers; operational executors, including project managers and those responsible for implementing initiatives; embedded HR, including both strategic business partners and generalists, and finally service centres that carry out transactional work. (See figure below) Some organisations try to transform the HR department by focusing on just one of these channels. For example, they may create a service centre using a new HR information © 2009 The RBL Group 2
    • system. This can increase the efficiency of HR administration, but it will not be a complete HR transformation unless the other roles are also redesigned. When the HR function is redesigned, HR practices may also need to be revamped. HR transformation means doing the work of HR in a different way. If we change the HR structure but not the work of HR, then real HR transformation has not occurred. To transform HR work, we need to describe it. We divide the vast array of HR practices into four domains that represent the flows or processes central to organisational success. • Flow of people: how people move in, through, up, and out of the organization. • Flow of performance management: what links people to work - the standards and measures, financial and non-financial rewards, and feedback that reflect stakeholder interests. • Flow of information: the information people need to do their work can flow up, down, or laterally. It can flow from the outside in or from the inside out. • Flow of work: who does the work, how and where work is done, and how it is supported through business and operating processes to turn individual efforts into organisational outputs. To transform HR, work in each of these four flows of HR practices should be innovative, aligned to customers and integrated with each other. Ultimately, HR transformation depends on the quality of HR professionals, who may need to upgrade their competencies to enable them to perform their roles in the new organisation. HR transformation has therefore raised the bar for the profession. We have identified six domains of competencies required of HR professionals using data from just over 10,000 people around the world. • Credible activist: being able to form relationships of trust with others while having a strong point of view about the business • Business ally: understanding the business and knowing how it makes money and serves customers • Strategic architect: contributing to the formulation and implementation of strategy by creating strategic stories and aligning HR practices and leadership behaviors • Operational executor: making sure the day to day work of HR is done with flawless execution • Talent manager/organization designer: ensuring that HR practices around talent and organization are innovative and integrated • Change and culture steward: making change happen and sustaining that change into new cultural norms tied to customers These competencies are not the entry standards into HR (certification), but the differentiators of those who succeed in delivering value from HR. © 2009 The RBL Group 3
    • The fourth and final phase in our HR transformation model is concerned with accountability. Four groups of stakeholders should be involved in any HR transformation: HR, line managers, customers and investors, and external consultants. HR’s role is to design the process and facilitate the implementation of the transformation. However, it is line managers who are ultimately accountable for ensuring that the organisation has the right talent and right structures in place to deliver on the expectations of customers, shareholders, and communities. So line managers need to work with HR on implementating the transformation and also make sure it is aligned to business goals. Another group of stakeholders, external customers and investors, can play a role in guiding HR decisions throughout the transformation, while consultants and advisers can work as partners to advance the transformation. Clear role definition and rigorous accountability will help an HR transformation succeed While we have listed the four phases of a transformation sequentially, in reality they are likely to occur concurrently. For example, while knowledge of business conditions has to frame the HR transformation (phase 1) having the right transformation team (phase 4) is critical to initiating the process. The challenge for HR professionals throughout is to remember that HR transformation is not an end in itself but a means to helping their organisations succeed. Figure: This article This article draws on the book HR Transformation by Dave Ulrich, Justin Allen, Wayne Brockbank, Jon Younger, and Mark Nyman, published by McGraw Hill, 2009. For further information, go to www.TransformHR.com © 2009 The RBL Group 4