In the last month I have been asked on three separate occasions whether I think it is time to find an alternative to the current orthodoxy that HR Departments should be organised into Shared Services (SS) for administrative activity, Centres of Expertise (COE) for specialist functions and HR Business Partners (HRBPs) as embedded expert advisers. To question this model is tantamount to heresy in HR circles but as any archaeologist will tell you, a stone is just a stone but three stones found together could be the foundations of something important. So what is potentially at the core of this growing disillusionment?
Let’s start by dismissing the least probable line of enquiry. The aggregation of HR teams such as trainers and compensation specialists into COEs has generated remarkably little debate in recent years and numerous surveys, such as Capgemini’s 2011 HR Barometer show that satisfaction in the role and performance of COEs is generally high. This should come as no surprise since these are the part of the operating model that has been asked to transform the least since the days of traditional Personnel Departments.
Both Shared Services and Business Partnering, however, represent more radical responses to the twin pressures of being more efficient (SS) whilst also adding more value to the business (HRBPs). It is the competing nature of these two objectives that contains the seeds for failure within any business case for HR Transformation that must differentiate between the hard financial benefits of Shared Services and the promise of ‘intangible’ value from Business Partnering. Ultimately, maximising the financial return on Shared Services rests on a reduction of HR headcount – not least in HRBPs. Sure, this is predicated on a removal of their administrative burden but this needs to be matched with a commitment to invest in the BPs that remain to do things differently.
This is important as there is little evidence that the trend towards Shared Services and its’ logical extension to Outsourcing (HRO) is going to reverse any time soon. Last month UK Outsourcing giant Capita announced a £500m deal to handle recruitment for the British army amidst the usual outcry about public money being spent on private contractors. Naturally the response was twofold; it would save money and it would free up specialists, in this case soldiers to do what they do best.
To be sure, Capgemini’s Sourcing Strategy Survey 2009-10 illustrates that cost reduction remains the main driver with international benchmarks agreeing that HRO releases 20-35% efficiencies (depending upon a range of variables including technology platform, onshore/offshore models and processes in scope). What is generally less clear is whether the second assertion that specialists- more commonly HR professionals – are liberated to focus on strategically value add activity is always true.
The 2010 Capgemini Global Survey of HRD’s showed clearly that HR Business Partners, the ‘inheritors’ of the space to innovate strategic business solutions, are caught in an activity trap of operational tasks that should by now be performed elsewhere. In fact the top two constraints cited were (1) too may operational tasks and hence too little time – 65% (2) Business Partners lacking the skills – 52%.
The first of these is perhaps the most difficult to reconcile with the maxim that the introduction of shared services and associated HR systems creates the freedom for HRBPs to add more value.
Capgemini’s 2011 HR Barometer of 300 HR Executives reveals that whilst most of their companies have made efforts to streamline processes and technology, these efforts do not always translate into enhanced delivery of HR Services and the results of massive investment in technology infrastructure have been mixed.
With cloud based Software as a Service (SaaS) solutions now adding to the traditional SAP and Oracle ERP offerings, it would be a shame if HR lost faith with Business Partnering just at the point where the ‘liberating’ potential truly begins to match the rhetoric.
The second and perhaps more intractable obstacle on the list is the capability of Business Partners to transition from the operational to strategic. HR Transformations are quickly seduced into a focus on the financial business case achieving elements of Shared Services and e-HR whilst quietly forgetting the promise to develop the mindset, methods and capabilities of strategic HR partnering. Consequently rebranded HR generalists desperately cling to the familiar operational tasks that they and their clients are comfortable with whilst reflecting nervously on the prospect of redundancy if they succeed in transitioning their bread and butter workload to shared services or automation. Occasionally BPs may even be tempted to bolster their own security by tacitly undermining their shared service colleagues or colluding with the business to create a shadow HR operation. Altogether not a good recipe for a seismic shift in HR delivery!
The solution lies in the development of a compelling vision for Business Partnering that doesn’t flinch from difficult decisions about the capability of individuals to make the transition from HR generalist to strategic partner. BPs cannot for much longer be allowed to continue to use the weight of operational tasks as an excuse for not delivering the much vaunted ‘added value’ to the business. In a misguided attempt to cling on to the work that provides familiarity and instant gratitude from business managers they are dooming the role to a messy ‘generalist’ compromise that neither transforms HR nor the Organisational Capabilities that should be their focus.
To overcome this implies investment in mindset development and the methods, such as strategic workforce planning or talent management that the business will truly value. We also need to educate the business to expect something more from their HR Business Partner. Above all, it means not using the opportunities afforded by technology and shared services merely to cut Business Partner Headcount.
So ultimately, at the root of the issue is the original business case for HR transformation now collecting dust on the CFO’s bookshelf. Unsurprisingly, the tangibles associated with cost reduction and data integrity retain attention long after the ‘intangible’ possibilities associated with strategic business partnering have faded from memory. Until they are the target of sustained investment rather than cost cutting we will continue to see disappointment in the ability of HR to truly transform.
Yes we need to cut costs in HR but we mustn’t lose sight of the need to add more value too.