Our first article explained how HR’s administration and basic advisory activities should in future become part of a multi-functional service – more cost-effective than today’s functional silo offerings and, importantly, dedicated to enabling managers and employees to be as effective as possible. Smart systems to support this already exist. The speed of evolution depends on overcoming cultural and capability blockages, in both companies and external providers (to be discussed in our next article).
However, organisational success depends on creating value. How can HR better contribute to that?
A value-enhancing function
High performing organisations need a catalytic source of expertise to help the leadership tune and develop the organisation to its capacity – a combination of architect and performance coach.
If CEOs are unconvinced their HR departments can do this they typically turn to external consultancies. However, some consultancies tend to be formulaic. Without a strong internal partner to get the best out of them, consultancy interventions can do as much harm as good. An alternative is to create some other internal change team – for example under a chief transformation officer or similar title – which begs the question: what is HR for?
Some CEOs appoint non-HR practitioners to lead HR functions in an attempt to induce greater business focus. This tends not to work, as gaps in HR-specific knowledge often create different problems. A more fundamental and systemic approach is needed.
Our proposition is that the non-transactional parts of HR should be transformed into an organisation effectiveness function, designed to enable change and enhance performance and capability.
- 'Architect’ – working with the CEO, top team, board, and leaders of business units and functions on issues of strategy and strategy execution, change, M&As, restructuring, organisation and work design, culture, governance, risk, people policies, ethics, reputation, resourcing and workforce planning.
- ‘Coach’ – partnering with teams and managers at all levels to facilitate their performance and development.
These two terms are indicative; they are not job descriptions. An important principle is that line managers are responsible for performance, people and processes. Success for an OE function is vicarious – working with and through CEOs and the workforce as a whole as a catalyst, while also focusing single-mindedly on the quality of leadership through rigorous use of selection, development and reward levers. That includes ensuring managers at all levels are able to use ever more powerful self-service tools to lead and develop their teams.
Re-shaping the ‘head office’
The OE function should serve as an integrating force for central functions (finance, IT, marketing, legal, corporate communications, purchasing etc.), helping them work together to serve the organisation – less ‘head office’, more a cooperative team that shares an organisation effectiveness purpose. Employee-facing administration would now be delivered through the integrated service centre, which itself needs to work closely and collaboratively with central functions.
OE would particularly work hand-in-hand with strategy and business analytics functions.
- Strategy – expert input to enhance understanding of opportunities and risks, built on expertise in internal and external people factors, and how innovation, products, services and work will be affected by technology, demographics and socio-political developments; and then working with all parts of the business to facilitate strategy implementation and the learning loop.
- Analytics – ‘Business analytics’ would serve as an integrated source of expertise in performance metrics and evaluation across functions – subsuming any HR analytics unit – without any loss of specialist insight. Its work provides vital oxygen to fuel OE work: soft and hard data on organisational health to drive improvement in performance and capability, and insights from external scanning to enhance decision-making.
In SMEs there is liable to be less ‘structure’ within any headquarters, but the OE expertise we describe is no less necessary. Strategies still need to be devised, along with the plans and capabilities to execute them well. Likewise, smart analytics are critical to organisational effectiveness – indeed that is how many smaller enterprises can take on and compete with larger players – just as attracting, retaining and getting the best out of scarce talent is even more essential than in big well-known employers.
Feel the difference
The quality of an OE function should be a clear differentiator in an organisation’s capacity to succeed. Here’s a starting list of what performance and development experts should be doing.
- Working with executive teams at each level to analyse and drive performance and capability – including regular and formal organisational health assessments of all strategic business units and functions.
- Championing the setting of clear objectives and standards, focusing on what’s important and evaluation of outcomes, and avoiding over-abundance of initiatives and KPIs.
- Internal and external scanning and analysis to identify performance and development drivers, provide evidence to prioritise areas for decision and action, and challenge conventional thought.
- Facilitating teamwork and collaboration, disarming silos.
- Designing, orchestrating, project-managing and facilitating changes of structure, processes and jobs – both incremental and transformational improvement – built on a foundation of systems thinking and practice.
- Steering and assessing culture – including important facets such as performance orientation, customer-centricity, learning, ethics, balanced risk-taking.
- Designing people policies that clearly add to performance and capability as well as meet legal requirements, co-creating these with managers and employees to enhance embedding.
- Shaping leadership selection and behaviour at all levels – ensuring effective succession through building robust and diverse talent pools, recognising the critical few while inspiring contributions from all.
- Driving organisational adaptation to advances in technology, analytics and cyber risks, building the skills from boardroom to frontline to operate in a digitised, big data and AI world.
- Stimulating a compelling narrative about sustainable value creation from insightful robust data about people and capability – the triple bottom line and story behind the financial figures.
This is in contrast to merely being consulted on key decisions, or worse just seen as an ‘order taker’ and bit player in generating and reporting organisational performance results. The best HR operators have always been perceived to be ‘business people’ first, and functional specialists second. Now the aiming point is business experts, not just HR experts.
OE’s success will be measured by how admired the leaders and managers are in their organisation, and by the appeal of the employer brand. Like any top coach, the best OE experts will be in demand for their insight and influence, and ability to challenge and stretch. They will be of the calibre that can help the leadership to think the unthinkable and look well beyond their personal interests.
Our previous article signalled a simplification of the ‘three-dimensional model’ that so many HR functions put into effect. Too often organisations have ended up with business partners that under-impress, service centres that are low on service, and ‘centres of excellence’ that are light on specialist knowledge.
Driven by what organisations need rather than what conventional HR typically delivers, we envisage a function staffed with high calibre multi-skilled people working as an integrated team, with greater flexibility. The capacity to ‘partner’ business colleagues becomes a core skill, not a job title.
Some will fill specialist roles to deliver particular services and projects, and benefit by building their rounded portfolio of skills. However, they should work alongside genuine deep specialists such as reward experts, technologists, data scientists, trainers – some following non-HR/OE career paths and/or moving in and out of external consultancy.
We have no illusions about the challenge of closing the capability gap between where most HR functions are and what high-performing organisations need. How many currently in HR will make the grade? Where else can such talent and experience be found? We will address this conundrum in our next article.