Thomas Otter of Vendorprisey has been writing challenging posts here and here about HR's strategic role. Related posts and responses have been posted by Jim Holincheck here, by SystematicHR here and here.
These are not posts to comment on lightly, since this is really where the rubber hits the road with HR and this is also where HR has struggled historically. Solving the problem of how to optimize HR's strategic involvement is a little like solving world hunger.
But let me venture to say that the next decade will present a golden opportunity to HR to transform itself and become a much more integral part of how an organization is put together to pursue its goals.
Why in the next 10 years? It would be hard to miss that there's been an explosion of sorts in the talent management area. It is significant that we've moved on - technologically - from core transactional integration to the 'soft' functions in the span of what? 6 years? We're also talking much more about optimal practices and optimal processes and we're trying to put mechanisms in place for sharing these - e.g. the BPX community in the SAP world. Structuring organizations around processes and having the technology to measure and improve those processes are becoming more and more prevalent. And we're living in a world where employee self service is mainstream, we're living in a world where folks are putting how-to videos on YouTube. There's a culmination of theory, practice and technology that might very well lead to a 'tipping point' for HR.
To explain how I see HR's in helping an organization reach it's goals, first a bit of a lead up: here's how I've come to see the kernel of a business organization and HR's role in it:
- We have an organization with strategic goals.
- This organization accomplishes these goals with processes - the processes are aligned with the goals.
- These processes are performed by machines and people.
- The people need to be sourced, recruited, hired, educated in the ways of the organization and they need to know where they're going career-path wise
- The people are organized in some sort of structure, be it functional or team-based or something in between.
- The performance of these folks on the processes is measured, always keeping in mind what the processes are and hence what the strategic goals are.
- The performance of these processes themselves is measured so we can improve the processes where need be and change processes as the goals change.
- And finally the employees are rewarded appropriately to foster an environment in which the goals of the organization areefficiently pursued through relevant processes and through the continual improvement of those processes.
This is an x-rayed business in a nutshell. According to me.
So what is HR's role in all this? Obviously quite a bit. But what we're saying is that in order for HR to play a strategic role it has to align everything it does with the goals of the organization and it has to be able to measure how what it does translates into value-add for customers and for shareholders.
How? Well, here's my utopian view.
It's analytics for starters, and it's analytics beyond turnover and headcounts. The slightly in-ward looking performance measures of the APQC should be provided without question. Full stop. Moreover, it's not only knowing what the cost of turnover is, but it's knowing this in detail - the costs of finding replacements for a lost employee, re-scheduling shifts to make do in the meantime and bringing new recruits up to speed. It's knowing what the cost of turnover is, but it's also setting a benchmark for what healthy turnover is. Dan Short pointed out in a very good paper a few years ago, entitled 'Why analyzing turnover is not enough', that not only do we need to measure Time-to-Hire, but we also need to measure the cost of Time-to-Competency.
But ultimately it's making an attempt to tie back to financials and to other concrete ways of measuring value-add the out-ward looking measures Laurie Bassi and Daniel McMurrer write about in their HBR article in March 2007, Maximizing your return on people'. As these 2 authors state, it's knowing more than how many training courses are delivered - it's also knowing what the training expenditure is per employee. And then HR needs to also know where the natural knowledge 'centers' are in an organization and make sure the organization and processes are designed to take proper cognisance of these centers.
Just looking through Bassi and McMurrer's list of practices I'd say roughly half of these can be executed and measured on an SAP ERP system today. Many of the rest can be addressed with increased incorporation of web 2.0+ collaboration and communication technologies - which, if I'm right, bodes well for SAP who in many ways gets web 2.0. What remains may be hard to tie back to an organization's top or bottom line.
HR ought to work with the folks in Finance to come up with novel ways of tying measures such as these to figures that says something. I don't want to gloss over how hard this is but in the spirit of co-operation who knows what's possible.
So how does HR align itself with the strategic goals of the organization and ensure, thereby, that it adds value, practically automatically?
It's in making sure an organization knows how to model and manage processes. It's providing an organization with human resources who have the ability to facilate process modeling sessions. Sessions that will result in processes aligned with the goals of the organization and in optimal processes to reach those goals.
It's in HR participating in these process modeling discussions because HR is going to have to ensure the staff is there to work these processes. It's HR who's going to drive design of an organizational structure that pushes decision making down to the optimal level. An org structure that ensures that knowledge centers and acquired knowledge - which HR is servicing through learning centers - are sitting at the right level. It's HR that's going to model the organizational structure so it's more than just a reporting structure, more than just a structure that reflects the financial structure of the organization.
It's HR who's going to need to ensure that process teams are appropriately skilled and scheduled. HR will do this e.g. by providing the proper learning services, and it's HR who has an opportunity to bring web 2.0 technology into the workplace to make learning fun and addicting through viral distribution of learning content. It's HR who's going to try and do something about the sometimes formalization-resistant definition of jobs and qualification catalogs and try and use folksonomies to improve on traditional methods.
It's HR who's going to help managers formulate KPIs against the processes they're helping staff and which HR's process modeling facilitators will have helped design and are helping measure. It's HR who has to come up with a way for managers to get more value out of performance reviews and start seeing more real value come out of it. Ongoing job reviews and KPI adjustments rather than bi-annual job reviews anyone ?
It's HR who's going to put compensation plans in place that exhorts the process-focused business to come up with better and different ways of staying ahead.
Taking this view, HR is almost subsumed by the business. Instead of a completely separate functional silo, it becomes inextricably enmeshed in the business. It is no longer possible to design, measure and reward a process-driven organization without HR, and so HR's role in contributing to the strategic goals of the business becomes unquestionable.
HR can also lead the way by other means.
It's HR who can practice the gospel of process and services centricity and reduce process handover by performing HR, benefits and payroll processes with teams instead of with individuals from each functional department. There are segregation of duties guidelines to keep by but even so improvement is possible. It's HR whose teams should be the first to be measured by customer satisfaction - i.e. EMPLOYEE satisfaction, in HR's case.
It's HR who can stay ahead of the curve technologically and provide employees with tools to change their home address without having to log on to ESS even - a tool that will allow them to update their address at their employer, their bank, social security, the post office, all in one go. Why wait for someone else to do this ? Talk about employee satisfaction!
It's HR who can provide more meaningful presentations of analytical data than your typical bar charts and 'oil gauges'. Take for example the Markov analysis (below) of workforce movement depicted by Peter Howes and Anke Doerzapf in an SAP insider article (April-June 2005), entitled 'What your workforce can tell you about your bottom line'. Who wouldn't want to have this kind of single-page, graphical expose of what's going on in terms of employee movement?
For HR much else remains to be done of course that may need to be done in a functionally more distinct compartment - industrial relations, workers compensation, setting HR policy, handling exceptions in transaction processing etc. But by more clearly separating this work and exceptions from the rest the absolutely necessary overhead of HR to the organization becomes clearer.
Comments