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Do we need HR? How the function has developed

In the Centre for Performance-Led HR’s latest book, Do we need HR: Repositioning People Management For Success, we ask some tough questions of HR functions. Our provocation is as old as the hills, but the context for HR delivery models is new.

The demand-pattern for professional knowledge inside organisations is changing, with a “hollowing out” and thinning down of the level and depth of knowledge for many existing functions that can be afforded in-house – but a strategic upskilling of the way such component knowledge is built into cross-functional insight.

Much “middle tier” skill can be handled on an as-needed basis by specialized and dedicated providers (commoditised knowledge around generic processes such as change, performance, talent and resourcing management) and remaining processes “leaned”.

What remains is traditional personnel management (but now highly e-enabled) and a pool of HR business partners, who arguably might go native and be owned by the line. They tell HR what is needed by their internal (and increasingly multiple-organisation) clients, rather than enforce standardised HR processes.

Much of the “strategic” element no longer needs to belong to HR. There are six performance challenges organisations need to solve: productivity, innovation, customer centricity, lean delivery, global capability and data-driven insight or analytics. They are all cross-functional problems. They sit “above” the HR function (and the other support functions as well). They require cross-business division experience and analysis – so even the best business-embedded HR business partners are too narrow.

Consider the productivity challenge – the solution requires better combinations of space, design, data, technology, systems and people. Data might be held by operations, intellectual models are influenced by technology management and economics, and whilst HR can wield insight into organisation, job design, motivation and skills resourcing, so too these days can most of the other traditional functions.

Organisations, then, are building new “networks” of specialist knowledge, and thinking beyond the traditional functions. The same applies to the other five performance challenges. We lay out many of the people and organization dimensions of these business challenges in the book.

The question for organisations is this. Do you want to “clone” people with this insight in every function – HR has its specialists in productivity, innovation and so forth, and so does operations, marketing, IT, finance ? Or do you “lean” this knowledge out from the functions and build new policy and project directorates above the functions, stripping out their need to replicate it? Think of the analytics debate – do you create a business intelligence unit that feeds from and into the contributing data functions (like HR) or does HR try and emulate analytics capability itself and undertake a parallel journey?

The “hollowing out” element comes from the way that HR might align its traditional centres of expertise against these “higher order” challenges. Each performance challenge of course has implications for rewards, engagement, talent, organization development, but it needs different combinations of each expertise.

HR is having to “mix and match” its traditional centres of expertise much more flexibly to match demand. And that changes their importance in the pecking order, and the power relationships within the HR delivery model. The centres risk being seen as over-siloed, too process driven, and not able to contribute the generic business model acumen that is being asked of them.

The traditional Ulrich model (a professional service and centre of competence way of thinking about HR) has served HR well for nigh on 20 years, but no longer matches the challenges that have to be managed.

Managing HR as a business, stripping out transactional costs and redeploying resources to embedded professionals has largely been handled, (hopefully) successfully. Now new hybrid skills and breeds of professional are highly sought after. A new world beckons.

Paul Sparrow is the director of the Centre for Performance-Led HR at Lancaster University Management School. He is ranked 10th on the HR Most Influential UK Thinkers list.