What does the HR operating model of the future look like?

By Jessica Cooper, Research adviser - Resourcing. @JessicaCooperHR

In September 2014 I joined the CIPD’s research team on a maternity cover.  A couple of months earlier, Ram Charan’s thought-provoking article in the Harvard Business Review had been published suggesting that the function be split up. This brought discussions about the future of HR and the structure of the HR department in organisations to the forefront of the mind for many HR professionals and business leaders. So, my brief was to tap into the latest thinking and practice in terms of HR operating models. The result is a selection thought-pieces by key academics, practitioners and consultants, which summarise the relevant issues, challenges and questions associated with the debate about how to structure HR. 

It would be wrong to say that I entered into this research without carrying some bias. By background I am an HR professional who has consulted and worked in organisations undergoing HR transformation, which included changing the operating model for HR.  I’m also undertaking a PhD in the same area. 

Initially I wanted to understand more about the Ulrich model, the model that had dominated the rhetoric of ‘how to structure the HR function’ for several decades.  I wanted to understand what Dave Ulrich had really written and spoken about and had been trying to get the HR profession to address.  I wanted to understand why his model had received so much criticism from HR teams in organisations that were not achieving their objectives (wrongly directed criticism, in my opinion).  I wanted to understand the realities of implementing this so called Ulrich model. And more than anything, I wanted to understand what the future HR operating model might look like - and why.

Some people, both inside and outside the profession, argue that others are too preoccupied with how HR should structure itself. These are probably the same people who believe that HR procrastinates too much on whether it should be called Human Resources, People Management or something entirely different!  I think it’s important to focus conversations on the role of HR, the capabilities it should be helping to develop in the organisation and the competencies that the HR team needs to demonstrate. But, drawing on my practice experience, structure is important too; fundamentally, you need to organise the roles, reporting lines, design the processes and implement the enablers such as technology to support them. 

As the professional body for HR and people development, the CIPD has published these thought pieces on the assumption that HR has got a future.  Our chief executive, Peter Cheese, argues in the foreword to the series that with the macro issues organisations are facing, the role of HR will only grow in importance.   But, we know the world of work and the employment relationships between individuals and organisations are changing, so we need a  better understanding of what HR will look like in the future, so our research does not begin and end with these thought pieces. Over the coming months the CIPD will be going back to first principles to explore what the basic principles of good people management and development look like, regardless of context, and from there seeking to define what  this means for the future of the HR profession.

In the meantime, I firmly believe the debate around HR operating models is relevant and important. Over the next few weeks I’ll be hosting some Round Table sessions with organisations exploring some of the challenges their HR structures are posing, in light of various external and internal factors at play.  I am also looking at some research to better understand the business partner role and the impact that technology is having on HR.   The CIPD’s view, which I share, is that there is not one model for structuring HR that is suitable for all organisations.  There are probably a set of principles (some may call it ‘best practice’) that could be applied to all organisations, but the HR operating model must be designed to fit the needs of the organisation.  This should not be approached as piecemeal, it should be done as part of a thorough review of the entire organisation design.  External and internal factors driving the design should be recognised and managed to try and mitigate against any changes being the result of a new leader’s agenda, or other non-strategic reasons. 

Some argue that the HR structure should follow the structure of the business. I can see the sense in this, but I need to understand more why this is the best approach.  Surely this approach can only be successful if there’s confidence that the enterprise organisation design is fit for purpose in the first place: that is, is it adequately enabling the organisation to fulfil its strategy and meet its objectives? If not, why would we align HR to such a model?

If organisational capability is recognised as the source of sustained competitive advantage, I am interested in how HR functions can best structure to deliver this.  Equally I acknowledge that the best way of structuring to deliver this might not be within the boundaries of what has traditionally been HR.  That’s why I’m excited to see the CIPD’s research into the future of the profession unfold over the coming months.  Meanwhile, I’m keen to keep the debate about HR operating models alive, as there as still so many questions looking for answers:

  • What is the relationship between strategy and structure?  What are the other factors that affect structure?  In my opinion, there’s a relationship between strategy and structure, I need to understand why, but I also think factors such as size of organisation, maturity and other factors will influence the design.
  • How do the drivers to change impact the structure of the function? If the driver is cost-saving, is the focus of the redesign is on operational efficiency? f it’s to create organisational capability, improve culture and leadership, is the focus on the roles in HR that can deliver this?
  • What is the role of HR in the business? Do these roles become more specialist than generalist?  In my opinion, it cannot be disputed that those with specialist HR knowledge need to better understand the business in which they are working and get better at applying their knowledge.
  • How does HR improve its ability to work across silos?  What does good governance look like in HR?  Could project team, cross HR working, focussing on issue resolution solve this?
  • Who in HR has the relationship with the business? Those in traditional business partner roles? Those with the specialist knowledge to solve the business issue?  Whichever, it must be simple for the business to understand who to go to about what, and the business must have a positive experience when doing so.
  • How will advancements in technology change how HR is structured?  Will robotics automate aspects of the operational function and reduce the size of the HR function?
  • How important is the line manager role in affecting the design of the HR function?  Many line managers do not choose to be people managers, they take on people management whilst advancing their career.  How can we make line managers good people managers? HR’s success in adding value in the organisation depends on this!
  • What other creative ways can HR structure to deliver?  Should organisations who have invested in their resourcing function, offer this as a service to other organisations?  Can organisations join together to ‘share services’?  Where is it appropriate to call on the specialist skills of consultants?  Will Cloud technology make outsourcing an attractive option?
  • How do you measure the effectiveness of your HR operating model?  Are there a number of measures that organisations can report on that are directly related to delivery of business performance?  Can different parts of the HR function be attributed to these measures?


There is food for thought in answer to some of these questions in the thought pieces kindly contributed by Dave Ulrich, Josh Bersin, Ed Lawler and John Boudreau, Professor Paul Sparrow, Dr Jill Miller, Gareth Williams, Andy Spence, Nick Holley, Allan Boroughs and Anton Fishman and Barry Fry.  We thank them kindly for their involvement and participation in this discussion, and now we turn to you to contribute to the discussion by commenting below, or on the authors’ own blogs, or by Tweeting with the hashtag #changinghr

To read the collection of Thought-pieces click here.
   

Thank you for your comments. There may be a short delay in this going live on the blog page as we moderate the comments added to our blogs.

  • Anonymous
    Anonymous

    This is an excellent and long overdue look at the future of the HR operating model.  Whilst the original ideas in 'Human Resource Champions' remain valid today, too many organisations have relied on the Ulrich Model as a 'recipe book' to deliver a quick fix to the HR function.  


  • Hi Jessica, as promised here are my thoughts on the report: strategic-hcm.blogspot.co.uk/.../cipd-hr-operating-models.html


  • Surely the answer to the question is that how you structure and equip HR depends on the Business. Strategy proceeds structure so firstly  the Business needs to be clear as to its purpose and its goals. The structure is then designed to deliver on these goals. It is within this framework that HR 'fits'; the degree of fit will depend on how well it is aligned to the business strategy and how well equipped it is to the deliver on the people issues that are created by the strategy. That is why I think the wrong question to ask is "how HR should be structured" because the answer is contingent on the business strategy and structure. I think we need to start with the business and not with HR.