Executive summary

This is a collection of thought pieces about HR operating models (also known as HR structure, HR delivery models, HR architecture, HR systems). Here when we use the term HR operating models, we are talking not only about the organisational structure of HR but the roles within that structure, the capabilities required to deliver those roles, the processes within the structure, and the enablers such as technology, governance and measurement. The authors of these thought pieces may have a slightly different definition, but essentially the debate is the same. What will the HR function of the future look like?

This collection brings together a number of lead thinkers: academics, practitioners and consultants who are active in the debate about the future of the HR function. We asked them to talk about HR operating models from various angles to provide a summary of the key themes for HR practitioners.

So what does the HR model of the future look like? There's no dispute that the model synonymous with Dave Ulrich, a model of shared transactional services, centres of expertise and HR business partners, has dominated conversations about the structure for HR for the past decade or so. The driving force for the most part has been efficiency and standardisation, but we need to move on and focus more on effectiveness – adding value to the enterprise, and playing our full part in shaping its future direction. And that means challenging the operating models for HR, to ensure they align with the business and business needs, and that we have the right capabilities in the right places.

In this collection, Edward Lawler and John Boudreau from the Center for Effective Organisations, Marshall School of Business, University of Southern California, present the findings from research looking at the relationship between the design of the HR function and HR's role in organisational strategy. Their research found a correlation with the essential elements of the so-called Ulrich model – the existence of centres of expertise, decentralised HR generalists supporting business units and administrative processing centralised in shared services units and a strategic role for HR. Allan Boroughs from Orion Partners reflects on the success the Ulrich model has had in driving efficiency in the delivery of HR operations. But with the need for HR's focus still to shift more from the administrative to the strategic and to the development of organisational capability and talent. The centres of expertise need to be the focus moving forward.

HR's role in the business is evident. Josh Bersin of Bersin by Deloitte talks about their research-informed high-impact HR, which focuses on the need to bring specialist skills into the business where they can drive the most value. Bersin talks about these as 'networks of expertise' because of how highly connected the specialists are despite being aligned with and embedded in different parts of the business. A lot of focus has been on the role of the HR business partner, the role in HR most aligned to the business and the role argued to enable HR to bring strategic value to an organisation. The implementation of this role is varied. What does this role actually do? Is it specialist or generalist? A lot of the discussion about this role has been focused on the required competencies to perform the role. Nick Holley from Henley Business School, drawing on the work of organisational psychologist Elliot Franks, raises an interesting debate about how we could be asking some HR business partners to operate at a level that's beyond their intellectual capability. This is particularly relevant and interesting where HR functions have renamed HR generalists from the old 'personnel' model to HR business partners without building their capabilities, or fundamentally changing the activities they perform from being administrative to strategic. It is also interesting for the debate on HR competencies and the myriad courses and books designed to help HR business partners develop the necessary skills. According to Holley, HR might just need to be a bit more realistic with the business about what it can deliver based upon the capability of the function and its HR business partners. Lawler and Boudreau also highlight some interesting findings on the relationship between HR's strategic role and the career paths of professionals working in HR.

HR operational efficiency although no longer the main driver, remains important within organisations, particularly as many organisations are yet to achieve this. Lawler and Boudreau's research also found a correlation between 'administrative processing in centralised shared services units' and, more significantly, the standardisation of HR practices across business units. Gareth Williams, HR Director for Travelex, talks about the impact of the implementation of cloud HR technology on the HR function. The implementation of HR cloud technology has changed roles within HR, it has achieved operational efficiency and successfully improved line managers' ability to perform people management activities. As a result the HR business partners are performing a more strategic role. Andy Spence from Glassbead Consulting presents a point of view on the future of outsourcing in HR, facilitated by the greater use of cloud technology.

However, the strong message coming from nearly all of our contributors is although the 'Ulrich model' is a good starting point, there is not one model that fits all organisations. Jill Miller's piece looking at HR in SMEs is also a good example. From her research she has developed a four-stage framework of SME growth or maturity and emphasises that each stage is associated with particular people management approaches, including the HR operating model adopted. From Dave Ulrich's contribution to these thought pieces, it is clear that the Ulrich model was never thought to be appropriate for all organisations. In his piece he talks about the importance of the wider organisation structure and states explicitly that the 'HR organisation should be structured in a way that reflects the structure of the business'.

This link between strategy, organisation structure and HR structure becomes increasingly evident when we recognise how organisations are changing and no longer dominated by large multinational corporations. Paul Sparrow from Lancaster Business School provides an example of this based on the work he has done with CIPD Researcher Jill Miller in Beyond the Organisation research. Sparrow talks specifically about the design options available to organisations that are entering into partnership arrangements such as joint ventures and how HR can respond to these complex organisational structures. According to Sparrow, there are three design options available to an organisation.

There is no doubt that we need to continue to research and discuss the structures and operating models of HR as part of building the profession for the future. In practice, you can change the conversation to one focused on capabilities or competencies, but the reality is that you still have to organise to deliver. We support the view that there is not one model for delivering HR that is suited to all organisations. How an organisation should structure its HR function should be based upon its organisational strategy, wider organisational structure and the requirements of its customers and the organisation it is supporting. We support the view advocated by Anton Fishman and Barry Fry that HR functions need to design themselves in the same way that they design their wider organisation, and many organisations need to start at the organisational level. It would, however, be interesting to understand if there are some universal principles that could be applied in all organisations.

The CIPD is going to progress research into this area. If you would like to comment on the CIPD viewpoint, the collection of thought pieces or be involved in shaping the research, please email j.cooper@cipd.co.uk, or tweet using #changinghr.

 

Changing HR operating models

This collection brings together a number of thought pieces by lead thinkers who have contributed to the CIPD report 'Changing HR operating models'. The full report is published by the CIPD.

 

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

Jessica Cooper considers the latest thinking and practice in terms of HR operating models and a new report - 'Changing HR operating models' - which summarise the relevant issues, challenges and questions associated with the debate about how to structure HR.

 

CIPD viewpoint

CIPD reflects on evolving operating models for HR posing a series of questions for future consideration and thanking the various contributors whose thought pieces have added so much to the debate.