It’s Time to Redesign HR

People love to write insulting articles about Human Resources.

The most famous was "Why We Hate HR" from FastCompany in 2005. A recent one here in LinkedIn comes from Bernard Marr, who dislikes the title of the department and then talks about why we need "people analytics." An article in the Wall Street Journal recently highlighted companies that have chosen to do away with the function entirely.

Remember Toby Flenderson, the HR manager from "The Office?" He seems to represent most people's idea of the human resources manager: a fairly quiet, passive person who seems to spend most of his time telling people what not to do.

Toby represents the archetypal HR generalist: easy to be with, kind, but mostly hanging around to help people stay out of trouble. Is that the type of image we want associated with our profession?

Absolutely not.

I just spent the last few weeks on a roadshow visiting and meeting with 30+ of some of the most powerful, intelligent, and hard working HR executives in the country. These are impressive individuals. They combine an amazing depth of knowledge about people, business, law, technology, and the general world around us.

I find great HR professionals to be quite expansive in their thinking. One day we are talking with a business leader helping him figure out the implications of a massive acquisition or major growth strategy. The next day we're trying to design a leadership development program that motivates high powered Millennials in India or China. And another day we are trying to select millions of dollars of enterprise software and figure out how to set up an advanced analytics function. Overall, HR is complex, multi-disciplinary, and extremely important.

But in many cases HR does function a bit like Toby. Too many companies feel like their HR department is costing too much money, it isn't delivering enough business value, and many of the HR staff do not have enough skills in business, consulting, analytics, technology, change management, or other technical areas.

In fact, our Deloitte Human Capital Trends research found that the #3 talent issue on the minds of business leaders is "improving the skills of the HR function." While many HR leaders and professionals are amazing craftsmen, many are under-skilled or in low value roles.

Time to Redesign HR - And The Roles We Play

It's time to design the HR function. Not only is the name out of date ("Human Resources" is a terrible term really), but the traditional model is as well. We are just completing three years of research in a program we call "High-Impact HR" and we identified a whole set of changes companies should consider making.

First, we have to define "HR" as a "talent" function. While human resources departments have to worry about regulations, labor relations, global payroll, and many other administrative areas, the real business value lies in HR's talent management role. Our research found that only 7% of HR's real value comes from its role as an internal people operations team: more than 5 times its value comes from its role in supporting, developing, and identifying leaders.

This means that we need far fewer "HR Generalists" (Toby types) and far more "HR Specialists." The world of High-Impact HR is filled with deep specialists, people who understand assessment, coaching, recruiting, data analysis, I/O psychology, training, and technology.

High-impact HR professionals today are consultants first, HR professionals second. Yes they know a lot about HR practices and disciplines, but they operate as business consultants. They can sit down with a line manager and listen to his or her challenges, recommend thoughtful solutions, and then roll up their sleeves and make things happen. And they can do it in innovative ways.

One of our clients, for example, found it very difficult to hire customer service people in their geography because of intense competition from similar firms. Their creative head of recruiting went into local grocery stores, watched the clerks who were most happy and collaborative with customers, and tapped them on the shoulder and offered them the opportunity to "audition" for a job. These turned out to be some of the best customer service people they ever hired, and these individuals were absolutely thrilled to be "recruited" by one of the city's most revered employers.

High-Impact HR professionals are informed and up to date. Sadly, only 8% of the companies in our Global Human Capital Trends study have professional development programs for their own HR teams. Our research shows that high-impact HR teams do this well: they have a small team dedicated to training, research, tools development, and certification of their own HR teams. Let's face it, HR professionals are designing some of the most important programs we have in the company (how we pay, manage, incent, and develop people). Shouldn't they have the top skills and knowledge in their field?

Not only do we need HR to be more specialized, we need business partners to be more business-savvy. One CHRO just told me she was no longer hiring any HR professionals who don't have background in statistics. Another told me he wants 50% of his HR business partners to have MBAs. And a third told me she wants at least 1/3 of her HR business partners to have worked in management consulting firms before they join her team.

The days of going into HR because you're a "people person" are over. Yes HR is all about people, but it's more about the intersection of people with business, technology, and organizational strategy than simply about being nice.

Our research shows that high-impact HR teams are Bold. Just like product development teams, they are innovative and creative. They try new things. They experiment and look at data. And when they see something that works, they expand it. There are hundreds of books on "standard practices" for almost everything in HR. I'd suggest that many of these "standard practices" are ideas from the turn of the century, and you'll find most of them don't work well today.

Some simple examples where HR strategies are undergoing radical change: performance management (rank and yank), succession management (replacement charts), HIPO programs, expat leadership programs, annual engagement surveys, interview-driven assessment. Every one of these practices was developed 50 years ago and if you aren't rethinking or redesigning them you're probably out of date. (Read It's Time to Rethink The Employee Engagement Issue or The Myth of the Bell Curve if you want some good ideas.)

And HR has to be technology savvy. New areas like Talent Analytics are revolutionizing the way we hire people, assess performance, and decide how to operate the business. New HR technologies are now highly integrated, letting the HR team see trends and insights like never before.

Finally, high-impact HR is highly interdisciplinary. Today every part of HR is connected to everything else. We can't design a compensation program, for example, without thinking about labor market dynamics, engagement, career ladders, and external competition.

Likewise problems like "time to competency" or "filling the leadership gap" require systemic thinking which includes leadership development, building a learning culture, as well as the implementation of new technologies for on-demand training, collaboration, and expertise sharing. The HR professional of today must be specialized but also cross-trained, understanding how their particular area is impacted by everything else in the world of talent.

I'm not saying HR is easy, believe me. Over the years I've become more and more impressed each year with the level of knowledge, judgment, and focus needed to run HR well. But we cannot afford to let the Human Resources of the past define the critically important HR function of today.

If you are an HR professional, take your professional development seriously. A lot is changing and there is a lot to learn - the more you "sharpen your saw" the more confident, innovative, and valuable you will be. If you are a business leader or manager, push your HR team to "up their game" and act as the valued technical consultants you need.

So What Does the New HR Organization Look Like?

Let me summarize our findings briefly here:

  • Create more specialists and fewer generalists. Specialists fall into the categories of Learning and OD, recruitment/assessment, and employee relations.
  • Redesign your COEs to include local specialists: local recruiters, local training partners, local coaches - reporting into the COE. These teams become what we call "networks of expertise," not "centers of expertise."
  • Redesign the business partner role to be more senior. Let these "local VPs of HR" design some of their own programs and innovate locally, then look at what happens and share their best practices.
  • Implement shared, common technology. It doesn't really matter if the tools have every features, easy of use and integration is key. Then you can start asking managers to implement their own "talent management" processes.
  • Set up an internal "professional development" and "methods and tools" group for HR. This small team should do research, benchmark, study labor markets, and look at new tools and vendors - and create a series of certifications and training programs for your HR team.
  • Start investing in talent analytics. Our research in this area clearly proves that the investment will pay off. We have a fantastic set of tools to help - it may take a few years, but the results will more than pay for the effort.
  • Innovate. Try new programs, new tools, and out of the box thinking. The HR practices of the past won't work well today - people, organizations, and technology have changed so much that most traditional HR programs can use a major update.
  • Focus on empowering and supporting leaders - they run the company, not HR. "Talent Management" is a business process, not an HR process - and if the business leaders dont "own it" you can't force it down peoples' throats.
  • Hire, develop, and push toward more business thinking within HR. Rather than getting bogged down with our own beautifully designed programs, spend more time thinking about the particular business issue your stakeholders face. You'll find that this clarifies and simplifies your program strategies, and ultimately you'll add more value.
We call this new set of structures and roles "High-Impact HR." Watch for our upcoming new High-Impact HR research coming soon.
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