1. All support functions are in the same boat
The business partner model is not unique to HR; all staff functions are trying to find ways to deliver more value to either top line growth or to bottom line profitability.
The need for greater business performance has put all support functions under a microscope. If they are not delivering definitive and sustainable value, they have been given the mandate to change, be eliminated or be outsourced. Information systems, finance, legal, marketing, research and development and HR are all under scrutiny and pressure to create greater value for their companies. This is especially true of transaction and administrative work that can be standardised, automated or outsourced.
2. The aim of the model
The aim of the business partner model is to help HR professionals integrate more thoroughly into business processes and to align their day-today work with business outcomes.
This topic has been approached from several perspectives. For example, we have talked about focusing more on deliverables (what the business requires to win) than do-ables (what HR activities occur). Instead of measuring process (for example, how many leaders received 40 hours of training), business partners are encouraged to measure results (for example, the impact of the training on business performance). This approach focuses on HR's role in the creation and maintenance of the capabilities that an organisation must have in order to deliver value to its customers, shareholders, employees and communities.
3. Four main HR roles
Being a business partner may be achieved in many HR roles. HR professionals tend to fit into four categories: corporate HR; embedded HR; HR specialists; and service centres.
Corporate HR professionals define corporate-wide initiatives, represent the company to external stakeholders and meet the unique demands of senior leaders.
Embedded HR professionals work as HR generalists within organisation units (business, function, or geographic). They collaborate with line leaders to ensure that their organisations deliver value to stakeholders by defining and delivering competitive strategies. They help shape the business strategy, conduct organisational diagnoses to determine which capabilities are most critical, design and deliver HR practices to accomplish strategy, coach business leaders to behave congruently with strategy, and manage the strategy development process.
HR specialists work in centres of expertise where they provide technical insights on HR issues such as staffing, leadership development, rewards, communication, organisation development, benefits, and so forth. They deliver value when their recommended HR practices are on the forefront of their respective areas of expertise and when they create new practices that add value beyond that of their competitors.
HR professionals who work in service centres add value by building or managing technology-based e-HR systems that enable employees to manage their relationship with the firm. They govern activities such as processing benefit claims and payrolls and by answering employee queries. These individuals may work inside or outside the company. They deliver value to all stakeholders by reducing costs of processing employee information and by providing accurate and timely services.
Sometimes, one of the above roles is uniquely defined as business partnering when, in fact, each of the roles is a partner to the business as they work to create value for employees, customers, shareholders, communities and management.
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4. Talent and organisational capabilities
Business success today depends more than ever on softer agendas such as talent and organisation capabilities. HR professionals are centrally involved in providing the right people with the right skills in the right job at the right time. The 'war' for talent rages and will likely continue in an increasingly global knowledge economy. HR professionals also partner with line managers to identify and create capabilities such as speed to market, innovation, leadership, collaboration, fast change and culture management. These less tangible business activities increasingly have an impact on shareholder value and are top of mind among CEOs and general managers.
Effective HR professionals not only work with business leaders to draft strategies, they also focus and collaborate on how to make strategies happen. Talent and organisational issues become the mechanisms to best deliver a strategy. Business leaders are increasingly attuned to the importance of talent and organisation as a way to turn aspirations into actions and strategic intent into business results as they co-ordinate closely with their HR professionals.
5. Intellectual and process leadership
As talent and organisation issues increase in business relevance, HR professionals may help respond by being architects, designers and facilitators. General managers ultimately are accountable and responsible for talent and organisation issues. Just as they turn to senior staff specialists in marketing, finance and IT to frame the intellectual agenda and processes for these activities, so they turn to competent and business-focused HR professionals to provide intellectual and process leadership for people and organisational issues.
Effective HR business partners are those who respond to these general management challenges. The business partner model focuses on the issues that general managers need help with to deliver business results. And because of the changing nature of business, the requirements of a business partner model are more pressing than ever before.
6. Some will never be business partners
There is concern that some HR professionals cannot perform the work of a business partner and cannot link their day-to-day work to business results. Our research shows that the HR profession as a whole is quickly moving to add greater value through a more strategic focus. We have shown that high-performing HR professionals have greater business knowledge than their low performing counterparts. Thus, there is empirical evidence to support the business partner model.
But also empirically supported is that some HR professionals are not able to live up to the new expectations. This dynamic is true for almost all change efforts. In any change there is almost a 20-60-20 grouping of those involved. The top 20% of individuals asked to change are already doing the work the change requires. The lower 20% will never get there. With training, coaching and support, the other 60% can make the move.
Occasionally, some pundits and researchers selectively report either extreme: the 20% who either can or cannot make the change. Those that want to find failure focus their reporting on the bottom 20%; those that want to find success focus on the top 20%. Likewise, some leaders often like to spend time with the successful 20% and claim they had caused it when they had not. Leaders often feel forced to spend time with the bottom 20% and try to ensure universal acceptance when they cannot. They should spend time with the middle 60% and work to inform, motivate and move them to be more successful. The same is true for HR professionals.
As with all support functions, it is undoubtedly the case that some HR professionals may never become business partners. They are mired in the past administrative HR roles where conceptually or practically they cannot connect their work to business results.
Other HR professionals are natural business partners, seeking first and foremost to deliver business value through the work that they do. Most are somewhere in between.
We see the majority of those in between moving towards rather than away from business relevance. If you look at the content of HR conferences over the past 20 years, it is clear that a shift is occurring in what HR professionals want and need to know. A decade ago there was a clamour to 'get to the table' and to become part of the business. Today, many effective HR professionals are already at the table and need to know what to do now they are there.
Being at the table poses a new set of challenges in language and logic of being an HR professional. For example, historically many HR professionals use the term 'customer' to refer to internal customer. At the strategy table, the customer is generally the external retailer or end users. When HR professionals are at the table, the question, 'what do we need to do to make our customers happy?', has a different meaning from that of HR's traditional meaning. As HR professionals assume the business partner role, the standards for HR success shift along with the expectations of their language.
7. Don't blame the gadgets - teach the users to use them
Being a business partner requires HR professionals to have new knowledge and skills. Traditionally, HR professionals have tended to focus on negotiating and managing terms and conditions of work and administrative transactions. The required HR skills focused on admin issues such as policy setting and administration, union negotiation and managing employee transactions.
Today, the business partner model requires HR professionals also to connect their work directly to the business. Some HR practitioners lack these skills. If they fail to acquire them, their ability to function as business partners is diminished. This strongly supports the business partner model.
Our research indicates that as HR professionals acquire the skills and knowledge necessary to be business partners, they add significant value to financial and customer business results. Likewise our research shows that those that do not make the transition in knowledge and skills are less likely to have business impact. When HR professionals are business partners, business success follows. By way of metaphor, if a person cannot work the remote for the new electronic gadget, we should not blame the gadget, but should teach the user how better to use the gadget.
8. Reasons for failure
The inevitable failures in the application of the business partner model may be due to several factors.
As indicated above, 20% of HR professionals will probably never be able to adapt to the full business partner role. Asking HR professionals who have focused on policies and transactions to do talent and organisation audits and make major changes may be too great a shift for some.
Some may not make the shift to business partners because of personal interests that deter them from engaging in the business partner role. Their interests and abilities may make them focus administrative detail rather than embrace the larger and more complicated perspective of the business as a whole.
Some HR practitioners may want to be business partners but simply do not how to proceed. Such individuals need to understand the frameworks, logic, knowledge, and skills that are necessary for them to grow into the business partner role. Substantial empirical evidence shows that HR professionals who are provided with such information can quickly apply it in adding greater value to the business.
For example, defence and aerospace company BAE Systems undertook a serious commitment to enhance the competencies of its HR professionals. As a result of the developmental programme, HR's perceived impact on business performance increased dramatically (the percentage of line managers rating HR as four or five in business effectiveness increased by 120%.)
There may be some cases where an organisation's success does not depend on individual abilities or organisational capabilities. For example, a company may have a monopoly, and may be protected from competitive pressures. In such circumstances business performance may be dictated primarily by the maintenance of that monopoly. Internal dynamics will have relatively less to do with business success than the maintenance of the monopoly.
Therefore, HR professionals who push for alignment, integration and innovation in talent and organisation are less likely to contribute to business success. In addition, our recent empirical work together with our colleagues, Alejandro Sioli and Arthur Yeung, shows that HR is most closely associated with business performance under conditions of significant change and has substantially less influence under conditions of little change. So, HR's impact on business may vary depending on the business setting.
Some line managers have trouble either accepting the importance of talent and organisation and/or accepting HR professionals as significant contributors to these agendas. This may be due to their having a limited perspective on the changing nature of business or due to past bad experiences.
Research by a number of consulting firms shows that senior level executives are focusing more on issues such as strategy execution, leadership, talent, and change - all HR agendas. Therefore, managers often want and need what effective HR professionals can help them deliver.
9. What's the alternative?
There are really few other options. When someone said to us that the business partner model was not working, we asked: 'What would you suggest?' The following are the two responses we received.
First, 'Some HR professionals do not know the business well enough to be able to function as business partners'. Second, 'Some HR professionals are too enmeshed in transactional administrative work to be able to function as business partners'. Both of these problems have direct and obvious solutions.
The solution to the first response is that HR professionals need to learn the business inside out. They must know it well enough not only to do better HR work but also to be able to contribute to the strategic decision-making processes of the senior management team. The solution to the second is that much of the admin work will need to be outsourced or digitalised for electronic processing.
The reality is that HR professionals must evolve into being the best thinkers in the company about the human and organisation side of the business. The nature of business is dramatically changing. Changes are occurring in virtually every element of the social, political, and economic environments that affect business. They include technology, globalisation, communications, regulations, competitiveness, demographics, shareholder demands and a tight labour market for key talent.
Under such conditions, the human side of the business emerges as a key source of competitive advantage. Therefore, specialists in the processes of human and organisation optimisation become central to business success. These specialists should reside in the HR department as business partners.
Read part two, The Challenges Ahead, published in our Year Ahead publication with the 2009 January issue.
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