6 steps to designing and adopting the optimal HR operating model

6 steps to designing and adopting the optimal HR operating model

The operating model for HR is evolving away from a focus on traditional shared services to one which is more focused on a profit-centre, which delivers more strategic value to both businesses and more efficient service to employees, according to Gartner.

Most organisations have a fairly traditional HR operating model that provides business partnering, shared services and solutions delivered through centres of expertise such as L&D and recruiting.

“That said, we are starting to see an evolution in the operating model for HR, which is starting to look more like a profit-centre operating model,” said Robin Boomer, HR advisor for Gartner.

“Rather than delivering one-size-fits-all employee solutions and managing for operational efficiency, HR functions are being called on to deliver more strategic value to their organisations and employees are demanding more too.”

In analysing this trend in the HR operating model, Boomer said it was important to consider the shifts that many organisations have made from transaction-based enterprises to players in the subscription economy.

“Rather than just providing property insurance, you may find a provider offering risk mitigation and management services, to not just replace your property in the event of a disaster, but they can also monitor and advise to prevent or significantly minimise the impact of said disaster,” he observed.

“Or the shift from buying a record at a local shop, to having tens of millions of songs, curated playlists, and personalisation services at your fingertips.

“These shifts require organisations to not just sell their goods or services once, but demonstrate value and equip customers to use them to their fullest potential so that they continue to subscribe.”

There are corresponding shifts among employees, and in most developed nations, Boomer said employment is high and employees have valuable skills and a range of choices they can sell their skills to.

“HR functions are being called on to deliver more strategic value to their organisations and employees are demanding more too”

“No longer can organisations afford to provide HR solutions that deliver value only back to the organisation (for the most part),” he said.

“Employees expect to get more from their employers in terms of enabling their performance, supporting their work-life balance, and growing their careers.

“Just as the subscription economy has given rise to mature customer success practices, I expect rising competition and increasing employee expectations to give rise to mature employee success practices.

As such, Boomer said there are six central areas that HR functions should move towards in adopting an optimal operating model:

1. Drive: HR leadership and workforce strategy
2. Design: HR’s R&D + product development engine
3. Deliver: Implementation and support services aligned to different employee segments (not necessarily BU)
4. Demonstrate value: Account management and employee success to make sure that the organisation and employees (respectively) get value from their relationship
5. Discipline: Legal, employee relations, and policy governance
6. Discover: Analytics and insights which feed into all of the above

“In order to provide this sort of structural support without significantly increasing resource requirements, HR functions will have to move to more agile and pool-based structures, leverage technology more effectively, and shift their own mindsets around what HR owns and what constitutes best practice in traditional HR domains like performance management, development and hiring,” said Boomer.

Workforce planning in the face of disruption
Disruption is also throwing a spanner in the works of many organisational workforce planning strategies, however, Boomer explained that the best organisations are using people management processes as an exercise in collecting the information needed to feed into ongoing workforce planning.

“There’s a lot of buzz out there saying ‘the sky is falling’ and ‘the robots are coming for your jobs’”

“For example, when managers have career conversations with employees, they should be looking to understand what skills they are looking to build, what parts of their job they think could be automated or outsourced, and what they’ve heard from external/internal customers that they should be doing more or less of,” he said.

“All three of these provide excellent input into planning for development of current staff, opportunities for operational improvements, and staying ahead of shifting customer needs (which is the biggest factor disrupting organisations today, according to both CEOs and CHROs).”

Keys to getting this right include:
1. Motivating employees with personal growth; not using fear-inducing communications. There’s a lot of buzz out there saying ‘the sky is falling’ and ‘the robots are coming for your jobs,’ said Boomer.

“That doesn’t help – it has zero impact on employees skill preparation for their current or future roles.”

Instead, companies should use a communication approach that is 70/30, with 70 per cent of messaging concentrating on the intrinsic benefits that employees derive from skill development and 30 per cent on communicating and contextualising changing skill requirements.

This approach can improve employees’ skill preparedness by nearly 40 per cent, said Boomer, who added that organisations with high levels of skills preparedness close talent gaps with internal talent more quickly and easily.

2. Encourage leadership to think and plan within the context of uncertainty. For example, saying “we’d estimate this option has a 40 per cent chance of success, which is better than the other two options”.

“This forecasts the likelihood of failure, while signalling that due to factors out of our control, we need to pursue it as the best option available instead of getting stuck and leaving ourselves even more susceptible to disruption,” said Boomer.

3. Use scenario-planning to identify external threats and opportunities as well as internal strengths and weaknesses. This involves examining how workforce plans need to change, if the scenario succeeds or fails.