Unleashing the Power of Human Capital

Transform Your HR Operating Model for Success

Stepping into the role of a new Chief HR Officer, you're greeted with a maelstrom of challenges: mastering the dynamics of an unfamiliar business terrain, forging crucial relationships with colleagues, assessing your team's strength, and gauging the HR maturity, while setting new operational rhythms. Amidst these challenges, there's a hidden work stream that could be instrumental to your long-term success - the HR Operating Model. The HR Operating Model is far from a generic, one-size-fits-all schema. Instead, it evolves over time as the business changes. With a new CHRO, it also warrants a personalized touch that harmonizes with the distinctive goals and demands of your organization.

Photo by Mitchell Luo

A CEO must be fully engaged in this process, as seamlessly aligning your organization's strategic direction with effective human capital management isn't a given. It's vital to remember that even if your preceding CHRO managed to trigger some positive shifts, the responsibility now falls on your new CHRO. They must be adequately prepared to not just maintain, but accelerate the momentum and make significant strides forward.

The Fundamental Pillars of HR

The HR function is underpinned by five key pillars: Total Rewards, HR Operations, Recruiting, Employee Performance and Development, and HR Business Partners (HRBPs). Each of these pillars is instrumental in shaping an organization's HR operating model, influencing its position and competitiveness in the marketplace.

Total Rewards:Total Rewards encapsulates an organization's compensation and benefits strategy. The art of creating a robust Total Rewards strategy is a complex endeavor that demands an in-depth understanding of market trends, an internal examination of pay equity, and a system for correlating rewards with performance. The goal is to ensure that the organization's Total Rewards framework is perceived as fair and motivating by employees, competitive in the job market, and in alignment with the company's financial capacities. A well-conceived Total Rewards strategy can become a formidable magnet for attracting, motivating, and retaining premier talent.

HR Operations: HR Operations involves collecting and analyzing data from employees and management via human capital technology systems (e.g., HRIS, engagement, applicant tracking systems, etc.) with a goal to enhance operational efficiency and drive evidence-based decisions. By harnessing advanced analytical techniques, organizations can glean insights into employee behavior, streamline HR processes, and enhance business results. This data-driven approach aids in talent acquisition, employee engagement, workforce planning, and performance management. It also enables the measurement of HR initiatives' impact and articulates their value to stakeholders. Additionally, it empowers compelling data visualization, thereby promoting narrative clarity and fostering organizational alignment.

Recruiting: Recruiting, or perhaps talent acquisition, encompasses the process of attracting, selecting, and integrating the right talent to meet the organization's needs. This involves cultivating a compelling employer brand, formulating accurate job descriptions, leveraging potent talent sourcing strategies, and implementing effective, efficient, and defensible selection processes. The goal should be to ensure that the organization's talent pool aligns with its current and projected business needs, the recruitment process leaves candidates with a positive impression, and to maintain a readily available pipeline of extraordinary talent.

Employee Performance and Development: Employee Performance and Development (EPD) is a strategic cornerstone of HR, directly contributing to enhanced organizational effectiveness. It covers a broad spectrum of activities, including employee training and development, leadership development, succession planning, organizational design, and change management. Years ago this was generally called “organizational development” but I’ve changed the description to be more focused on impact and less on design brilliance. The EPD team, steered by a senior HR leader, should liaise closely with the C-suite to align these activities with the company's strategic objectives. In doing so, the EPD team can cultivate a culture of ongoing learning and flexibility, build leadership competencies, and ensure the organization's structure and processes are primed for optimal performance.

HR Business Partners (HRBPs): HRBPs are instrumental in converting business strategy into actionable HR initiatives and practices. They serve as a conduit between HR strategy and its realization. An effective HRBP requires a profound understanding of the business and its objectives, coupled with the ability to consult with and influence business leaders. The HRBP's role fluctuates based on the organization's needs and strategic focus, varying from a strategic advisor to an operational executor.

The Fluid Role of the HR Business Partner

As business needs and HR's role within organizations have evolved, so too has the role of the HR Business Partner (HRBP), becoming increasingly fluid and adaptable.. The four key roles are:

HRBP as a Strategic Advisor: When acting as a Strategic Advisor, the HRBP lends strategic insights on critical aspects like workforce planning, talent management, leadership development, and organizational design. Collaborating closely with business leaders, the HRBP ensures HR initiatives seamlessly dovetail with, and support the realization of, the company's strategic objectives.

Nonetheless, a caveat here is that an excessive focus on the strategic advisor role could lead to a perception of the HRBP being detached from the day-to-day realities and challenges faced by employees. Moreover, it might underplay the significance of operational execution, potentially weakening the effectiveness of HR practices.

HRBP as a Change Agent: In the role of a Change Agent, the HRBP pioneers organizational change. This involves identifying the necessity for change, architecting change initiatives, and shepherding the change process to ensure smooth implementation and uptake.

However, a relentless emphasis on change can induce change fatigue within the organization. Employees, overwhelmed by a ceaseless state of transition, could face a dip in productivity and morale. Additionally, the HRBP, in their zeal to drive change, might sideline their responsibility to maintain consistent, high-quality HR operations.

HRBP as an Employee Advocate: When functioning as an Employee Advocate, the HRBP acts as the conduit for employees' voices within the management structure. They assure that employees' concerns and needs are heard and addressed by the management, playing an instrumental role in promoting a positive employee experience and preserving high levels of employee engagement.

Yet, overemphasis on this role might position the HRBP more as an employee representative than a business partner, potentially compromising their ability to provide balanced, objective business guidance. This could create a perception that HR is not adequately business-oriented.

HRBP as an Operational Executor: As an Operational Executor, the HRBP zeroes in on maintaining smooth HR operations. This involves honing HR processes for efficiency, assuring compliance with HR policies and regulations, and resolving operational issues promptly and effectively.

The pitfall, however, is that an overemphasis on this role might paint the HRBP as overly process-focused, overshadowing the human aspect. This could lead to an inadvertent neglect of strategic HR facets, such as talent development and organizational effectiveness. Furthermore, an extreme focus on operational execution could stifle innovation in HR practices, limiting the organization's adaptability to evolving business and talent landscapes.

What about the role of “employee relations”

The role of "employee relations" is not prominent in organizations that prioritize strong managerial performance. At Dreyer's Grand Ice Cream years ago, we emphasized the idea that "Management is People," recognizing the accountability for employee relations rests with the management team. While an HRBP may occasionally need to conduct hotline investigations with legal implications, the primary responsibility of employee relations lies in assessing and comprehending the overall atmosphere within a sub-organization. This role involves providing coaching support while ensuring that the management team remains accountable for fostering a positive and high performing culture.

Interfacing HRBP with Other HR Functional Roles

To shape an effective HR operating model, one needs to understand the crucial interaction between the HR Business Partner (HRBP) and other HR functional roles. Acting as a translator of business strategies into HR initiatives and serving as a liaison with business leaders, the HRBP plays a pivotal role in ensuring the design of HR services aligns with the company's strategic objectives.

Meanwhile, the HR functional roles are more execution-focused, dealing with the delivery of HR services while leveraging their expertise for efficient and effective outcomes. Let's consider an example: Compensation might conceive a data-driven approach for talent acquisition. However, it falls to the HRBP to ensure feedback into the design process to ensure the proposed approach meets the business's talent needs and aligns with its strategic objectives. Similarly, the HRBP plays a vital role in making sure that the compensation and benefits system designed by the Total Rewards function is broadly understood and seen as fair and motivating by employees.

In other words, they are the “voice of the customer” in the design phase and the “change agent” once something reaches the commercialization across the organization. Once in place, they own the process execution and the accountability to provide feedback for continuous improvement.

Decoding the Most Suitable focus for an HRBP

The task of determining the most fitting role for an HRBP within an organization falls to the CEO and CHRO, and it depends on the organization’s current maturity. Meeting the company where it is will influence the type of candidate needed for the HRBP role, it is more than just generalist skills and the ability to “click” with the internal customer group. To link the point in the lifecycle with the HR operating model necessitates reflection on key questions:

• How many “faces of HR” do you want to have your business leaders interface with?

  • Having a one stop shop with the HRBP often enables efficiency and more effective prioritization of business need. It also requires a seasoned and savvy incumbent in the HRBP role.

• How integral is human capital to our business strategy?

  • The centrality of talent to the strategy should determine how much the HRBP needs to act as a Strategic Advisor.

• How often does our business undergo significant transformations?

  • The frequency of transformations will dictate the extent to which the HRBP needs to be a Change Agent.

• What challenges are we facing regarding employee engagement and retention?

  • If these are major concerns, the role of an Employee Advocate might be necessary for the HRBP.

• How streamlined are our HR processes?

  • The maturity and efficiency level of these processes will guide whether the HRBP needs to be more of an Operational Executor.

• What is the existing HR capability in the organization?

  • An organization's current HR capabilities can help establish whether the HRBP needs to focus more on operational execution or adopt a more strategic role.

The organization's unique context and strategic focus should guide the choice of role and the incumbent profile. It's crucial to maintain a balanced mixture of these roles to allow the HRBP to support the business effectively, advocate for employees, and drive operational efficiency.

To illustrate, let's imagine a technology company in a growth phase with a talent-centric business strategy. In such a scenario, the HRBP might mainly serve as a Strategic Advisor, aligning HR initiatives with the rapid growth strategy. They might also act as a Change Agent, managing the continual changes synonymous with the startup environment.

On the other hand, in a mature, stable manufacturing company operating within a highly regulated environment, the HRBP might primarily function as an Operational Executor, ensuring efficient HR process execution. They might also take on the role of an Employee Advocate, addressing potential employee engagement and retention issues.

The Emergence of HRBPs as Problem Solvers

Many organizations may find that the most effective role for their HRBP is that of a Problem Solver, a role that encapsulates all four aspects. As problem solvers, HRBPs become strategic, adaptable, and agile, targeting critical business issues with their HR expertise. In this role, an HRBP spends most of their time understanding business problems, partnering with internal resources to develop solutions, and overseeing their effective implementation.

To be successful as a Problem Solver, an HRBP should possess certain essential skills and qualities in their tool belt. They need to be strategic thinkers, capable of identifying and understanding critical business issues and their implications for the organization. This involves analyzing data, conducting research, and staying updated on industry trends to provide valuable insights.

Adaptability is another crucial trait for an HRBP. They must be able to navigate through complex and evolving situations, adjusting their approach and solutions accordingly. Being agile allows them to respond effectively to changing business needs and tailor their HR initiatives to align with the organization's goals.

Collaboration and partnership skills are vital for an HRBP acting as a Problem Solver. They need to establish strong relationships with internal stakeholders, including business leaders, department heads, and employees, in order to gather diverse perspectives and foster a cooperative environment. By leveraging these partnerships, they can develop comprehensive and well-rounded solutions.

Effective problem solving also requires strong communication and influencing skills. HRBPs must be able to articulate their ideas, recommendations, and solutions in a clear and persuasive manner. This involves presenting data-driven insights, advocating for HR strategies, and gaining buy-in from key decision-makers.

Lastly, successful HRBPs in the Problem Solver role demonstrate a results-oriented mindset. They take ownership of driving the implementation of their proposed solutions and continuously measure their impact on the organization. By monitoring outcomes and adjusting strategies as needed, they ensure that the HR initiatives effectively address the identified problems and deliver tangible results.

By possessing these skills and qualities, HRBPs can excel as Problem Solvers, effectively addressing critical business issues with their HR expertise and contributing to the overall success of the organization.

"A-Player" Outcomes for an HRBP as a Problem Solver:

In keeping with the Topgrading model, we need to define the key outcomes for the HRBP role. In other words, if the incumbent achieves outcomes in the top 10% of similarly priced talent, we would consider them an "A-Player."

Improved Business Performance: This can be quantified in terms of enhanced productivity, revenue growth, and cost savings. An HRBP can contribute to these outcomes by aligning HR initiatives effectively with business strategy, optimizing talent deployment, bolstering employee productivity, and curtailing turnover costs.

Increased Employee Engagement: As an Employee Advocate, the HRBP can help foster an engaging and inclusive workplace culture. This could result in increased employee satisfaction scores, lower absenteeism, and higher individual discretionary effort.

Enhanced Talent Acquisition and Retention: A Problem-Solving HRBP can help improve the quality of hires by aligning talent acquisition strategies with business needs. They can also reduce turnover rates by identifying and addressing key factors influencing employee retention, such as career development opportunities and workplace culture.

Streamlined HR Processes: By ensuring the smooth operation of HR processes, the HRBP can reduce process cycle times, eliminate redundancies, and increase HR service delivery efficiency.

Stronger Alignment between HR and Business Strategy: The HRBP can ensure that HR initiatives support the business's strategic objectives. This could result in increased strategic alignment scores in HR surveys, and better business outcomes due to more effective talent management.

Conclusion

The significant role that human capital plays in business is undeniable. With ever-changing market dynamics, advancements in technology, and the unrelenting pressure to stay ahead of competition, it's crucial for organizations to tap into this potential by implementing a robust HR operating model. This model should not merely mimic existing, comfortable patterns; instead, it should adapt to meet the specific needs of each organization.

The pivotal role of HR Business Partners in this transformation is of utmost importance, acting as a bridge between business strategy and effective HR practices. From being strategic advisors and change agents, to employee advocates and operational executors, HRBPs can shape HR functions to meet the evolving needs of an organization. In tandem, the other facets of HR – HR Operations, Recruiting, Employee Performance and Development, and Total Rewards – are essential for creating an agile, competitive, and forward-looking organization.

As leaders in your respective fields, it is incumbent upon you to take proactive steps to analyze your organization's unique needs and determine the most appropriate HR operating model. Ask the difficult questions about the HRBP role, the effectiveness of your HR functions, and how central human capital is to your strategy. By doing so, you enable your organization to fully leverage its human capital and cultivate a sustainable competitive advantage.

Hence, the call to action is clear: Dismiss the one-size-fits-all approach to HR. Embrace the dynamism of a fit-for-purpose HR model. Recognize the unique context of your organization and strategically tailor your HR practices to maximize growth, spur innovation, and achieve a formidable presence in the marketplace. In short, don't just play the corporate game – aim to redefine it.