Don’t get me wrong – I am bought into Ulrich and his idea on Strategic HR. Who is not these days? – It is for the last 20 years the dominant HR organizational model. And it was a big success – but it also brought some headache to HR and its customers (Senior Management, Line Managers and Employees). This headache has multiple reasons, but one I would like to spend some time on now.
Ulrich and his idea of HR is grounded in the SHRM research – maybe not explicitly, but at least implicitly. And this research direction mainly claims that HR strategy and business strategy have to be in line to be successful (in short). Nothing wrong with that – however, it got translated into reality in a way that is at least questionable: HR has to be strategic, all of HR admin work goes to Shared Services including the direct customer (employee) contact, the operational HR on-site support for managers is removed. The result was in many cases a cheaper HR than before – but also a more effective? I doubt that! In fact, one who has been forgotten in this whole space of strategic HR was the customer – and with him, effectiveness: Senior Leadership got a strategic HR Business Partner – have they asked for it? …and lost operational support – have they approved this? Line Managers have lost most of on-site HR support and were moved into utilization of self-services – did they want this? And last but not least, all employees have lost f2f, individual contact to an HR representative, replaced by self-services and an 0800 number – are they happy with that?
For many cases I have seen myself or discussed with my consulting colleagues, the above asked questions can be answered with “no”. Very often, the customer of HR was left out in planning an HR transformation and in designing the future support and interaction between customers and HR. If these transformations were good, they at least had proper Change Management to support Senior Leadership, Line Managers and Employees on their journey. But I have only very rarely seen a proper upfront customer engagement and inclusion of customers.
HR is a support function, HR is a service function – and what we learn in services theory (for example from sales & marketing) is that you are most successful if you put your customer at the heart and center of your services strategy. Not new news – but why is HR not doing it then? Because it is very difficult in action. Integrating customers in upfront discussion of the why and how of an HR transformation is difficult as not many want to be involved, see the need or even understand what is going on. And the remaining ones that see an opportunity in being involved, often have views and wishes that are contrary to what HR wants to achieve with a transformation, making it difficult to respect these wishes. I am not arguing that however, believe that it is a necessity to deeper involve customers in the transformation of HR. How to?
Well, if you ask your customers how they would like their HR support to be or what they want to change, you probably won’t get very far with the answers. In fact, most will tell you that f2f support is the only way of interaction, that they do not need any strategic support, but HR to manage their people, etc. – who of you has not listened to such a story? What needs to be done is a full involvement of key individuals from all customer groups (however you slice and dice it inside your organization). These individuals need to understand the picture that HR wants to paint in terms of roles & responsibilities, technology support, and very important, understanding the concept of a modern leader (Line Manager), as well as what HR believes where they can add more value than today. Once you have achieved a proper understanding of that you can start the governance and structure based need discussions with your customers – and they should follow your ultimate thought of reasoning, but still have in mind what they need each day, week, month, year from HR to successfully enable their business and career. And this information is key in order to tailor your HR function towards what is needed and not towards what other companies did or some consultants tell you. No one except the business and employee representatives (and by that I do not mean the works council) know what they really need and HR needs to support this in the best possible fashion. Of course, this is a difficult and sometimes painful process to follow – but in my view it is the only way to be successful.
To support this customer focus and enable HR functions to respect it very early in their process, NEW HR is built on customer centricity first. Read my white paper on NEW HR to find out how.
The 5 generational workforce – the next big challenge for HR
A few years back we talked about the Generation Y and how it affects companies and their the workforces back then a big hype was created around a 4 generational workforce and that Generation Y is the first truly global generation with similar expectations, behaviours and skills. Actual studies of the Generation Y (once in they were in the workforce) have found out that this what not 100% true or right. They were not the same around the world. There was still a big difference between Generation Y in the US and Europe for example or between Europe and Asia for example. But one thing was true: They were very different from the generations before with very demanding habits and very different needs and expectations. This was something HR functions had to deal with in many ways: preparing the leaders of the company for this new generation, preparing policies, compensation packages, but most importantly, becoming better in communicating the reasoning of the company. Why does the company exist, why is the product or service good, what is it good for – and what does the company give back to society? Tough times for HR and leaders – and tougher times are coming!
The reasons for this big difference between the generations before and Generation Y are manifold and can be found in education, society, politics, etc. – and for a big part in technology. Generation Y was growing up with technology, with the internet. They were the first ones to be connected – and to expect this in professional life. Times are changing and a new generation is on the horizon: Generation Z – today’s teens will make up 36 percent of the global workforce in 2020. And this generation did not only grow up with technology as part of their lives – this generation spent their entire life “living” technology and social media. And they cannot imagine life without using technology and social media for everything everyday. This again raises the bar for HR functions and their workplace policies. But more importantly, it raises the bar for leadership and organization design.
We are at the beginning of the age of the 5 generational workforce: Generation Z, Generation Y or Millenials, Generation X, Baby Boomers and Traditionalists. And the differences between these generations can’t be any bigger. And this will also surface in the workforce and daily company life. An organization has to find answers to these differences: How do you lead and develop these different generations? How do you build multi-generational teams? How do you build effect organizations that are based on the strength of all of these generations? How do you ensure that every generation understands the others and also respect the other generations? How do you enable Line Managers to lead multi-generational teams? How do you upgrade ways of working to the age of Generation Z and still ensure that Traditionalists (most probably there won’t be too many of them anymore in the organization) and Baby Boomers can follow and be successful and productive in this new way of working? and more…
These are all questions that each and everyone responsible for people and for an organization should ask themselves – every day. And of you look at the questions in more detail, it should be HR to help answer these questions, to enable Line Managers. This is the new challenge for HR, starting yesterday. Is your HR ready for this? Many HR Organizations I have seen are not. To get ready for this as well as start answering the questions, start thinking about NEW HR and what really matters for HR from a task, responsibility and capability perspective. To learn more about NEW HR, check out this white paper.
The Capability Gap
Last weekend, I attended the yearly post-doc seminar of my Ph.D.-advisor. Many of his old students attended as well and we had some very lively and interesting conversations and discussions at the intersection of people, society, and HR. We talked about Intercultural Trust (Link), Organization Effectiveness, the Future of Work, as well as how to enable innovation within companies. Very interesting topics – and all have one thing (at least for me) in common: They all need the HR function as enabler, supporter, promoter and guide. I have said it already in one of my earlier posts – I believe (and am strongly encouraged by the academic discourse) that for a company to be successful in the next decade, it needs a strong, self-confident, enabled HR department which understands the business, business- as well as mega-trends, talent and talent needs, organization and organization needs. An HR function that has talent & organization performance at the heart and center.
After our academic meeting, I met an old friend of mine who is in the HR business for more than 30 years now, being an HR Interim Manager for almost 15 years. So he sees and acts in many different organization’s HR functions. And this mainly as an interim manager rather than a consultant. He really sees both, organizations and HR functions from the inside and lives within this world for a dedicated period of time as an (HR) Line Manager. I have very engaged and lively updated him on the conversations I had earlier that weekend and for a minute or so, we were both very happy to (a) have such a fantastic future ahead of HR and (b) be part of that. But very soon, we got to one important question: Is HR, are the HR functions that we have seen, worked in, consulted ready for this future? And this is something we then got concerned about.
The first question was about the organizational structure and governance of today’s HR functions. These are mainly following the Ulrich Model. But, very often in Germany, this needs to be looked at closer. We both agreed that in many of the organizations we have seen, the “Personalreferenten-Modell” just got a minor update in centralizing the administrative services, CoEs got somehow created and the current “Referenten” (Generalists in essence) were renamed to HR Business Partners and told to be strategic now. This is not what Ulrich had in mind and of course not, what his model is about. But we both believe, and there is sufficient empirical evidence that a more traditional HR model is not ready for the realities to come. But even if a state-of-the-art Ulrich model got introduced, this does not necessarily mean that the HR function is ready to tackle the challenges and opportunities to come. First and foremost, the Ulrich model itself is already around 20 years old (with minor updates/ additions over the years) – and having it operate across the globe in many different companies, has surfaced some shortcomings. In addition, there are some systemic issues within the model (see here) that make it a bit hard to work. And last, but not least, the realities have changed and will change even more and faster since Ulrich has shaped his model of HR. A look to NEW HR (in press) is something I recommend.
But besides this organizational and structural capability gap, there is an HR professionals capability gap. A recent empirical study on the capabilities of german HR professionals has surfaced that only a minority got the right training, got a chance to acquire the necessary skills and competencies necessary to operate within a modern HR environment (see here). HR professionals in Germany (for example) were mostly still socialized and trained in a more traditional HR model with a more traditional approach and understanding of what HR is about. Capabilities necessary for the Ulrich model are often too little or absent. This is even more dramatic than the structural shortcomings. Organizational shortcomings can be compensated by highly motivated and capable professionals – professionals that lack certain key skills and competencies can not be compensated by a superior organization. However, this is nothing to blame HR professionals – even if they wanted to or even if HR leadership identified this capability gap, today, there are only very little possibilities (except a specialized, in-house program with professional instructors or going abroad) to acquire these competencies anyway.
In any case, both are highly important homework to be done as soon as possible. The mega-trends, business trends, future of work, changes in society and workforce are not waiting. They are already here or approaching fast. I encourage all HR professionals to perform a readiness check of their HR structure, governance and capabilities to see if they are ready for tomorrow. – and if you identify gaps, act now.
Intelligent self-service selection: Purpose over possibility
In my last post I have clearly voted pro SaaS solutions, also because they have self-services and customer friendliness built-in from the beginning. This, however, should not be synonymous with implementing all of what SaaS offers. And this is true especially for (manager) self-services. Not everything that is possible, does always makes sense to be implemented.
Let’s have a look at what is possible for example in Workday (SuccessFactors does not look very different), managers can for example:
- view various reports about their team and specific employees
- request various adjustments to their team and specific employees such as promotions, terminations, requisitions, title changes, job changes, create, freeze or delete positions, initiate transfers, adjust their organizational structure and assignments, adjust pay, start disciplinary actions, change work locations, etc.
Basically, there is almost nothing a manager can’t do by her- or himself anymore. Wow, this is fantastic, isn’t it? This really enables HR to focus on the true strategic, value-adding activities – and, it enables a lean HR organization as many activities are now self-serviced by employees and managers. And of course, once you implement Workday or SuccessFactors, you pay for the whole package, so utilize the whole package, right?
Well, let’s step back for a minute and think through what we just did…the basic idea of self-services is to enable and empower employees and managers to do what they are anyway responsible for. And yes, when it comes to employee self-services, this is almost 100% right (changing addresses, bank account details, family status, etc.). But when you look at manager self-services, this needs a closer look and discussion. I actually recommend strongly to NOT enable all manager self-services, but to be very selective around these.
(1) Yes, manager self-services enable the HR organization to be more lean as activities are taken out and into self-services. But does that really serve the organization as a whole? – No, as the activities need to be done anyway – now the manager has to do it and I believe that in most companies, manager time is more valuable and expensive than HR admin time. So basically, self-services make HR activities more expensive.
(2) HR is performing HR activities every day, they are trained to do so and know how it works – both, from a process/ system perspective but also from a policy and legal perspective. The likelihood of mistakes is relatively low. Managers though do many HR self-service activities only a few times a year, so are not really familiar with the process/ system and most important, they are not trained in HR policy or labor law, so don’t know what they can/ should do and what not. The likelihood of mistakes is much higher – and therefore, the potential savings are mostly eaten up by wrong decisions or actions taken by managers.
(3) For some of the possible manager self-service activities, HR wants to have a strategic discussion first, like recruiting new employees or change organizational set-ups. These discussion are important and I believe that HR is adding value here, but does it really make sense that managers can execute these activities in self-service then? – either they are not talking to HR and just executing them via self-services (which is not in HR’s interest) or they first talk to HR and then have to do everything on their own? – where is the logic and customer orientation?
(4) What about company culture? – does your company culture actually empower managers to be responsible for these “HR” activities? If not, don’t go down that route as it is contradictive and will fail. Of course, I am a big supporter of empowering line managers and bringing responsibility (especially people responsibility) where it belongs, but not in all cases, the line manager should be the responsible person. It sometimes still should be HR.
Basically, it all comes down to being very selective about manager self-services. Yes, enable self-services where the line managers have or should have the responsibility like performance evaluations, managing their teams, etc. – but only if managers are ready to do so, which means trained in both the technical part to do so (which is really easy nowadays with the customer friendly interfaces of Workday or SuccessFactors) as well as the actual management part. Only when managers understand what they are doing, what it means and how it integrates into the bigger picture, only when managers are enabled to talk to their employees and have real people manager capability, only when your company culture enable and promotes this – only then, enable these self-services.
And of course, there are self-services that I believe should not be enabled in any case. These are self-services where HR has a vital role to play (like deciding about how a capacity gap is filled – recruiting a new employee is not always the right choice) and self-services where HR needs to ensure that transaction does not mess up the organisational structure of the company in the system (actually a lot is depending on this structure and once it is messed up, it usually brings hick-ups to all sorts of non-HR processes, too) like transferring employees from one department to another (yes, the decision of this is between line managers).
Intelligent, company culture and manager readiness based selection is the key to self-service success.
HR going SaaS
We are in the midst of a new HR Technology Wave. Many of my current client discussions are around new HR Technology – mainly about SaaS and the differences between SaaS and traditional on premise solutions.
First of all I am delighted to see that so many companies are actually considering an upgrade of their HR Tech infrastructure. It is really necessary as most of their systems are between 6 and 10 years old – and everything but state-of-the-art. But what should you do today? Which way should you choose? Renew your on-premise solution or go into SaaS? Before I answer that, let’s have a look into the two to understand the differences.
On-premise
On-premise solutions are the traditional HR technology. Basically your SAP HCM or your PeopleSoft. It is those big ERP solutions where you have everything in-house and you own the solution. Most of the time these solutions are heavily customized to fit the company’s HR processes and organization.
Advantage of these solutions is that you “own” it and that they are proven and reliable. Dis-advantage however is that basically all really relevant on-premise solutions will be obsolete in the new future. Both, Oracle and SAP have decided that the future of HR Technology is in the cloud and that on-premise solutions will be discontinued sooner rather than later. And even if they are still supported, they are not actively developed anymore. No new functionality.
HR SaaS
SaaS stands for Software as a Service – and that actually tells it already: You do no longer own the software and run it on your own servers, but you have a license to use the cloud based software, managed by the provider. Best known HR SaaS systems are Success Factors and Workday. Both were complete new players in the market when they started out. Today, only Workday is still independent. Success Factors was bought by SAP.
There are several factors that make these solutions superior to the on-premise solutions. But before I dive into that, the main disadvantage: A big part of these solutions is still developed on the go. These solutions are not yet final, ready. For example, none of these support european payroll. You need to have a separate payroll system to pay your employees. For Success Factors, SAP at least offers its on-premise solution for payroll as a quasi-cloud-software. Also, not all existing modules can be used in all countries. Both solutions come from the US and are designed with US regulations in mind, so when coming to non-US countries, you might face some difficulties with local labor law or data privacy. However, both companies work on that very heavily and for most countries, there are no issues anymore.
The major advantage of SaaS solutions is however, that they were designed with a different mindset. Where the on-premise solutions were designed with HR Admin in mind, SaaS solutions were designed with Talent Management and the employee and manager experience in mind. They are much more focussed around the current (and future) issues and questions HR is facing than the on-premise solutions: Analytics? – built-in! Easy to use, mobile self-services? – built-in!
Another advantage – and I am strong about that being an advantage – is that you cannot customize SaaS solutions. You can only configure them. This means that companies and their HR Organizations can no longer keep their old, antiquated, “we have always done it this way” HR processes – but they have to buy into the way that the cloud providers envision the processes. Of course, you can still configure them to be closer to what you as a company and specific HR Organization needs, but within limits. This is really great, as it enables global processes and focusses the discussion during HR transformations on the things that really matter.
In essence…
For me, there is no question what do to. SaaS is not the next revolution in HR technology, but it is already the norm. A recent Towers Watson study has shown that HR SaaS solutions are the dominant solution. Companies that either start with HR technology or are upgrading from a current system, choose HR SaaS systems: Workday in the US and Success Factors in Europe. In addition, if you want to prepare your HR function for the future, you can only do that with a SaaS solution. I do not see any reason to not go SaaS.
Performance Management – hoping for a revolution
Wow, since also Accenture chipped in and is doing away with Performance Management in the traditional way, the discussion got really big. Everywhere you look you see articles, comments, point of views on Performance Management. I am really, really happy about this as I believe that this topic is overdue for a revolution! When you then read these articles and comments as well as when you speak to clients, they say that they are doing away with it because it takes too much time from Line Managers and HR. Sometimes you even read that people involved in the process are starting to question if there is any value in this process at all – businesses are changing, organisations are changing, ways of working are changing, the pace is getting faster – and all of this should be supported by an annual process? Of course that cannot work – and these two reasons are two important reasons why Performance Management need to be rethought.
However, there are more important ones which are not too obvious. When you read on or talk more to clients, they all come to the same issues they see when thinking of doing away with Performance Management:
- But how do I decide who gets what bonus?
- But how do I decide whom to promote?
And these two questions really show me the need for a revolution here.
Let me explain. In most companies where I have seen Performance Management in the traditional way (and there are not yet many out there who are more futuristic), Performance Management actually is a process which serves three purposes:
- Ensure that Line Managers talk to their employees
- Plan and decide on bonus payments
- Plan and decide on promotions
- and sometimes a 4th one on communicating company targets and ensure understanding of it/ ensure that employees understand their importance for the overall company goals
The Performance Management process is perfect for these purposes, isn’t it? And on top, as it is an HR tool with numbers, objectives, target measurement, performance discussions and at the end a ranking of all employees (similar to the school report of your kids), it is 100% objective and ensures that only the best get promoted and that your effort you dedicated to work during the last year is valued monetarily. Fantastic … but wait… Let’s step back and have a look again what I wrote and make a reality check.
First of all: who has seen an objective Performance Management process? – this is nonexistent as at the core of this process humans assess humans, and therefore it is a mix up of many different subjective assessments. That does not make it objective. And how do you compare performance of different employees in different jobs? And how do you make sure that all Line Managers use the rating scale in the “correct” way? Truth is, the Performance Management process is used to mask the fact that it is a very subjective act in which the Line Managers with the most power distribute the money and future power (promotions) in a way that fits to their individual motives. In addition, I would even say that it is not used to motivate employees, but to “shut them up” and ensure that they act in conformity with a Line Managers thinking. Question: Is this what you want or need?
Second: It is called Performance Management – so at its core it is supposed to manage the performance of employees (aka motivate employees to bring their best every day). But when you read through the articles or listen to the discussions, it is all about bonus payments and promotions. And this is where the real revolution is necessary: Re-think how to motivate employees to bring their best every day. It was so easy in recent years to just “believe in” the bonus payment and promotion chances that many HR practitioners have forgotten about the core of Performance Management – and (most important) that a monetary reward does NOT necessarily lead to the performance and behaviour one might want or need.
We are all humans and have more than one (money) motive to go to work and bring your best performance every day. And not so new research shows that the traditional model of “better performance through more money” does only really work for manual work. But where do we really have pure manual work today anymore? Sure, it is still existent, but where we really need to manage performance, where it is really mission (and company) critical, we normally don’t have manual work, but mental work, brains. (interesting video here) And these need to be motivated in a very different manner.
What I am saying here is not new. Research in psychology, sociology, organisational science has proven this for years, but wasn’t listened to. I hope that now is the point to start listening again.
In essence, there are two paths you can go now:
- The easy path if you just need a process to distribute money (bonus), just call your process “Bonus Process” and all is fine:
- Tweak it a little to reduce the workload
- Slice it up into two or four pieces to reward performance closer to the actual behaviour that you want to support
- Give the money into Line Managers hands and let them decide how to allocate it as they can see performance and reward it more direct (which has proven to motivate better) – this also leads to Line Managers needing to speak more often to their employees (although it is sad that this is needed to motivate them to talk to their employees…)
- And be more honest and transparent about this as well as the career process; careers and promotions are not decided during the annual performance management process, but every day in a very subjective way – and this is not bad, it just shows that we are all humans.
- But if you really want to motivate your employees to bring their best everyday, you have to rethink what motivates people and how can you align this with the company strategy and business – and in the end you might do away with your annual bonus? – This is scary though, but necessary.
Let me know your thoughts.
What to do when I am still in pre-Ulrich HR stage?
In my last post I have started to talk about companies whose HR organization is still in a pre-Ulrich stage. And again, although I was surprised to see so many of them, the reasons that I heard made total sense to me:
- Some of these companies are size-wise at the border where the full Ulrich model makes sense
- Some of these companies had major (non-HR) transformations in the recent years and HR did just not have a chance to get their own house in order
- Some companies have failed HR outsourcing deals in their history that needed to be rolled back in
- Some companies don’t think that this “Ulrich-model” is applicable for them
- Some companies have heard stories of failed implementations at competitors
- Some companies were not able to show the Business Case for a transformed HR to get the business sign off (and funding)
And for most of the reasons, companies are asking themselves what to do next? – shall they go to the Ulrich model? Shall they leapfrog and move to the next stage? Shall they just stay where they are? – Today I cannot and don’t want to provide final answers – there is no one-size-fits-all. However, there are themes that can be applied based on the specific company and HR situation.
Theme 1: Small company, predominantly present in one country, values based on tradition
If your company falls into this range, you probably think that the Ulrich model does not make any sense for you. And for the most part you are right. Specializing your small HR department into the three pillars will most likely cause more issues than it will bring you to a point where you can gain the advantages of the Ulrich-Model. However, there are certain elements you should consider: HR Business Partnering and professionalized HR Admin outsourcing.
Business Partnering and the area of strategic HR is an area which potentially brings value to any size of HR organizations. This does not necessarily mean that you should install dedicated HR Business Partners, but that you either have the Head of HR or another senior HR practitioner have in addition to his/ her daily role play the role of an HR Business Partner. This is not an easy one as the skills and capabilities you need for a successful HRBP are very different from traditional HR skills. But even for small firms, it is important to start thinking strategically about HR. Why? – the war for talent is everywhere, talent today is more agile and mobile than ever before, etc. Small companies play in the same arena like mid-sized or big firms and need to be able to compete on the job market. In order to do so successfully, you need to start thinking strategically about your Human Capital – what kind of needs do we have, what does the business want, where will we be in 5 years…
Outsourcing is probably anyway something that many small firms do today – they just don’t call it outsourcing. But if you let your payroll run by any tax consultancy or small service provider, you are outsourcing already. The interesting thing about outsourcing for small firms is that there is a market now for selective outsourcing – on more than just payroll. And in many cases, this offer is better than the in-house process. And sometimes even cheaper. So really think about your HR services and which could be sourced out. The typical services to outsource here are payroll, learning services, HR legal services, recruiting services, master data services.
This is what I suggest to consider and assess. Again, this does not mean to go away from your traditional HR Generalist model. In fact, I suggest to keep it – just spice it up with some targeted Ulrich elements.
Theme 2: Mid-sized multinational company with agile and change proven workforce
Many of these companies are still in a more traditional HR Generalist model. This is often due to either the “wait and see” mentality or the understanding that Ulrich is just for big companies. Well, the maturity of the HR models today do no longer limit the Ulrich model to large companies – in fact if you are sized around 10.000 employees , you should seriously consider the Ulrich model. – and let’s face it: probably your core business units/ functions are extremely agile. If it would be any different, you would probably not exist anymore. Mid-sized companies are the most agile – both through necessities, but also due to their specific set ups. HR should embrace and support this agility. This means going into the Ulrich model. And doing it fast. Due to the nature of your workforce and business, you are change ready. Of course, change from and in HR is nothing the firm is used to (or HR for that matter) – but it is used to change in the core business. This is where you as HR practitioner should take advantage of.
In essence, don’t take a long change process, do it fast, straight to the latest evolution of the Ulrich model and don’t lose money or time on the way. There is no reason to.
Theme 3: Large, complex, global company
Now, this category is a tricky one. From my perspective and in my experience, large complex global companies are not the most agile – especially not when it comes to HR. However, it is no question to me “if” such firms should transform their HR departments. They should do that for sure. And they should start today. However, they need to do this step carefully and not too fast. And especially for firms like this, a leapfrog approach is not something I would recommend for various reasons. First of all there is not yet a proven HR model out their which is “next generation” – almost everything you see and read is still based and rooted in Ulrich or just pure theory – and firms like this need a reliable HR, not a testing lab.
But also, you need to take everyone with you. Changing to the Ulrich model is a huge step – as things will change for HR, for the business leadership as well as for each and every employee. This change needs to be made – not just “decided and implemented the next day”. Such a change needs time for all parties. And just jumping from the last century to the next one without a stop in “today” will overstretch everyone.
Still, the change towards the Ulrich model is really something which is out of the question. There is not a single reason why not to do it!
NEW HR – what is our means of existence
Welcome back to Chief HR Office – in my last post I have started to talk about a concept named “New HR” and I have promised to further elaborate on that. And today I would like to do so. As laid out in my last post, HR is a total mixed bag of activities and before we can talk about New HR, we need to align and get clear on what HR is about today. In other words, what are the areas HR is busy with today?
So, let’s start with the basic things:
- HR is responsible for all employee related data and it’s administration
- HR is often responsible for time & attendance data
- HR is responsible for paying employees
- HR is responsible for setting up and managing the rules and policies about how employees will be treated and what employees are allowed and not allowed to do
- HR is responsible for all contractual data and documents with/ for employees
- HR is often the first point of contact for employee for any policy or unspecific work related question
So, this was the basic stuff, now let’s get to the next level:
- HR is responsible for training employees
- HR is responsible for paying employees right
- HR is responsible for retaining employees and attracting the right new ones
- HR is responsible for engaging employees and keep them engaged
- HR is also responsible to manage employees out of the organization
And from the other perspective:
- HR is responsible for understanding and meeting business’ workforce needs
- HR is responsible for building effective teams and, the bigger picture, an effective company (organization structure)
- HR is responsible to support or even manage any kind of company reorganization
Not to forget, HR is also responsible to manage two important stakeholders that ONLY HR is managing: works councils and unions.
The lists by no means want to be exhaustive, but they illustrate an important finding. What we can see and learn from this list (again) is that HR is a total mixed bag and that various responsibilities lay with HR. How is one department or even one Leadership team supposed to manage all of this? And this from different perspectives: type of work, necessary skill-set, stakeholder involved, etc.
I believe that this is a question which should be re-raised and where Ulrich is no longer the final solution, but we need to raise it to the next level. More about that in one of my next posts.
New HR: What is HR about
During my recent blog posts, I have talked about the different clients HR has and what these clients expect from HR. HR is exposed to a variety of clients and these clients tend to be also very different in their thinking, their ambitions, their needs and wants, etc. That doesn’t make it easy for HR to collaborate with all of these stakeholders and also fulfill all different expectations. But before discussing these different stakeholder expectations in more detail, let’s focus on “What is HR about”.
HR or Human Resources as it is called is a pretty new concept, but the origins of that function are to be found in the Personnel Department and before that in actually Administration. This tells us many things:
- a) HR’s history is very diverse
- b) HR is an evolution and I suggest that this evolution is not over yet
- c) very different meanings and abouts are part of HR today
Fact is, that the origins of HR are nothing more than administration and paying employees. It actually started in Finance for many bits and was really focused on that. From there it evolved into the Personnel Department and had to deal with more than just Payroll and basic administration. And then came HR and today Strategic HR – wow, what an evolution. What a fantastic function… well, or not?
Let’s have a closer look at this: With each evolution only new, additional work and responsibility came to HR – nothing was ever taken away, so HR has become a “Gemischtwarenladen” as we say in Germany or in English a mixed bag. I would not question that any of the tasks and responsibilities of HR are unimportant – in fact the opposite. All of them are important, but also all of them are very different. There is pure administration of employee data, there is specialized payroll, there is benefits, there is performance management, there is organization effectiveness, there is… a multitude of very different responsibilities. Who ever has seen the process trees of for example HR and any other function recognizes immediately this multitude and also sees that HR is in fact very different to that part than other functions that go into Shared Services. Finance or other functions are more homogeneous whereas HR is very heterogeneous.
Now, how can this work? We have very different stakeholders, very different responsibilities and they all scream for specialized skills. I am saying – that cannot work. Specialization and focus is what should happen here. This idea is not new. Dave Ulrich has in the mid-90ies already started to work on this and was very successful in terms of HR functions being split into three distinct, focused areas. But – they are still in the most part HR and also the specialization did not always work out. The idea was new to HR back then and has definitely started something – but today, 20 years after, I feel that the next evolution – if this time not revolution – is necessary: New HR.
Stay tuned for more around New HR on this blog.
New HR: The role of the works council 3/3
Today I would like to close my plea for the works council. I do hope that my last two posts did start you thinking about the works council and how a new approach might change the interaction into collaboration – and maybe even some works council members have read my posts, too.
I would like to close with the two statements of:
- Align with the necessities of the speedy economy
- Act as co-owner
Align with the necessities of the speedy economy
Probably some of us do not like the above statement – speedy economy. Sometimes I don’t like it myself. But it is a fact. The speed of business transactions, turnaround times, trends, etc. has increased in the recent years – and it will increase further. I don’t want to discuss at this point if this is good or bad or nothing – it is a fact and each company has to play in this new, faster-paced environment. This means being fast itself or fail. Of course, fast decisions are not always the better ones and it is sometimes even better to think about it a few days more, but this is not always possible. The 2nd place is the first loser.
Some important decisions have to be co-decided with the works council and the works council should match the necessary speed. Not blindly and not in all instances, but if a decision needs to be reached fast, the works council needs to be able to find a decision – fast. In order to do this, the structures and meeting schedules of works councils need to adjust and be more flexible.
However, as I said, not in any instance, a fast decision is necessary, so my plea is still for the works council to question every decision and ensure that it is the right one. For this, not less speed is necessary, but closeness to the business and the markets. This brings me to my next point.
Act as Co-owner
The topic of co-ownership of employees is an old one and was utilized for many discussion already. I would like to utilize it non-ideologic, but reality based. The responsibility of the works council should never be underestimated. Each decision a works council makes or postpones or does not make influences the abilities of a company to be competitive and successful. This weight, this responsibility should be carried and understood by each works council member. In fact, for example the german BetrVG §80 says the the works council should support any measures that ensure or extend employment in a company. Now, this responsibility is a bigger one than „just“ supporting and representing employee needs or wishes. It is the responsibility to see the bigger picture, to understand the broader business situation, markets, company status and also decide against single employees or employee groups in the interest of the bigger company success and future. This is not something that a works council should only ask from the management, but this is a works council responsibility as well. I am calling this co-ownership. The works council is the co-owner the yang to the yin.
And with this, I am closing my plea for a modern works council, a competitive advantage in today’s economy.
Chief HR Officer 