CIPD - HR business partnering

Corporate and HR strategy

Revised October 2008

This factsheet gives introductory guidance. It:

introduces HR business partnering and its origins
considers why organisations are moving towards this model for HR
provides advice on appointing and developing business partners
summarises the implications for HR careers
includes the CIPD viewpoint.

What is HR business partnering?

The concept of business partnering emerged in the mid 1990s. It was one of a number of key HR roles proposed by Dave Ulrich necessary for HR to transform itself into a ‘value adding’ function. In his initial work, Human resource champions¹, Ulrich referred to the role as that of ‘Strategic Partner’. In essence the role involves working closely with senior business leaders on strategy execution, in particular designing HR systems and processes that address strategic business issues: a big departure then for HR from the responsive approach adopted in the past. Most commentators agree that today’s HR function needs to be much more business-focused. In practice this means being more customer-focused; cost efficient; innovative, and structured in such a way that it can quickly respond to changing priorities.

The business partner role, however, cannot work in isolation. In his original work Ulrich suggested three other complementary roles, as indicated in the table below.

Strategic Partner	Aligning HR and business strategy: ‘organisational diagnosis’
Administrative Expert	Reengineering organisation processes: ‘shared services’
Employee Champion	Listening and responding to employees: ‘providing resources to employees’
Change Agent	Managing transformation and change: ‘ensuring capacity for change’

In practice there is often overlap across some of these roles. Strategic Partners for example may also take on the role of Change Agent. Equally HR practitioners in roles other than Strategic Partner adopt a more strategic focus. Practitioners operating as Administrative Experts can play a strategic role; an example would be putting together a business case for implementing a shared service, something which if not implemented effectively can damage the employee relationship.

Not surprisingly HR structures and HR roles are not static, They need to evolve to reflect changing business priorities. Despite the popularity of Ulrich’s model, not all organisations have implemented it in its ‘purest’ form. Research by CIPD into the changing HR function indicates that although Ulrich’s model appears to be a popular structure adopted for the HR function in the UK, in practice less than 30% of survey respondents had introduced the model in full. A further 30% indicated that they had partially introduced the Ulrich model.

Find out more about our Changing HR function research report

The research identified that a variation of Ulrich’s model, referred to as the ‘three-legged stool’ model has been adopted by several larger organisations when re-structuring their HR function. Broadly these three functional areas include:

Shared services – a single, often relatively large, unit that handles all the routine ‘transactional’ services across the business. Shared services typically provide resourcing, payroll, absence monitoring, and advice on the simpler employee relations issues. Shared services’ remit is to provide low-cost, effective HR administration. For further information see our factsheet on HR shared service centres.
- Go to our HR shared service centres factsheet
Centres of excellence – usually small teams of HR experts with specialist knowledge of leading-edge HR solutions. The role of centres of excellence is to deliver competitive business advantages through HR innovations in areas such as reward, learning, engagement and talent management. Some major multinationals have ‘centres of expertise’ focused purely on developing the HR talent pipeline.
Strategic business partners – senior HR professionals working closely with business leaders influencing and steering strategy and strategy implementation. The role can vary enormously depending on organisational size and business priorities. Some activities that strategic partners are likely to be involved in include:
- organisational and people capability building
- longer term resource and talent management planning
- using business insights to drive change in people management practices
- intelligence gathering of good people management practices internally and externally, so they can raise issues that executives may not be aware of.

Few organisations create clear boundaries between these different functional areas and here is often a degree of overlap. For example, although complex employee relations issues might be handled by a centre of excellence, strategic partners can find themselves entangled in local employee relations issues, particularly if they do not have the relevant skills or support from other functional areas. For business partnering to work successfully there needs to be good working relationships between HR practitioners in different functional teams. If not, the reputation of the whole HR function will be in jeopardy. As business partners work more closely with seniors they are the ones that will have to deal with negative feedback about the HR function overall.

Why are organisations embracing business partnering?

Business partners (or Strategic Partners) have been introduced as part of a broader HR transformation agenda. The key drivers are:

Cost efficiency. Whilst the introduction of shared services is seen as being particularly important to achieving savings, these cannot be realised without other roles operating effectively. In the US, partnering appears driven not by cost pressures but by the need for HR to support a smarter, stronger organisation. HR services that are distributed across a number of businesses or geographical locations may be likely candidates for restructuring. Relatively large HR functions are also probable targets, where ‘large’ is often interpreted as more than one HR professional per 100 employees. HR functions that can’t show bottom-line business benefits will sooner or later be cut back.
Accelerating competition. HR has become central to business competitiveness. Organisations need HR functions that can deliver skilled, creative, motivated, flexible and committed employees. Innovative world-class HR has become a commercial necessity; hence the growth of centres of excellence, especially in knowledge-based sectors where the expertise and energy of employees is critical.
Rising expectations of HR. Organisations are beginning to expect more from HR. Business leaders see HR in other organisations contributing to strategy, enabling the execution of business plans, and delivering tangible commercial benefits. Inevitably they go on to ask how their own HR functions need to change to make real differences to their businesses. The popular answer is the appointment of strategic HR partners who become engaged with and accountable to the business, yet are the eyes and ears of HR. Strategic partners shape both what the business does and what HR does; they exist to ensure HR meets the new expectations of business leaders.

Implementing business partnering

Whilst business partnering can bring significant business benefits, organisations often experience a number of issues implementing the role as part of a broader HR transformation agenda.

Organisations thinking about introducing business partners as part of a broader HR transformation agenda need to consider:

Ensure that there is a clear rationale for the proposed changes and that this is a joint decision between the business and HR, not one that HR tries to foist on the business. Without a clear rationale and clear vision the expected cost efficiencies may not be realised.
Assess and prepare the ground for change. Success of the business partner role is very much dependent on the organisation’s receptiveness to HR practitioners adopting new roles. Sufficient time needs to be allowed to ensure that there is a common understanding of what the role is and what it is not.
Ensure sufficient time to openly discuss partnering, what it means and what adjustments are needed both within HR and across the wider business. As line managers will be most affected by the changes it is important that they are consulted and adequately prepared for the changes.
Assess the skills needed to perform the business partner role. It is important to avoid making the assumption that existing HR managers have the necessary skills and behaviours to move into business partner roles.
Think through the likely barriers to achieving a smooth transition to the new structures:
- Line managers’ reluctance to take on more people management responsibilities, or lack of skills to do so.
- Poor, or slow transactional HR services and intranets.
- The absence of a consistent business strategy with which HR can work.

Strengthening partnering

Very few organisations get partnering right first time. It is important that the relationship is reviewed on a regular basis, both informally and formally. HR functions can strengthen partnering through the following:

Taking an interest in the key business performance measures, for example, sales, costs, production, utilisation.
Making sure that business partners are involved in the business planning process at the outset and that they are well prepared for planning meetings. This requires spending time reading up on broader economic, social and political trends affecting the business.
Setting the personal objectives of strategic HR partners (and perhaps those in centres of excellence) so that they are aligned to those of managers in the business areas that they are assigned to. Maintaining an on-going debate about how HR is performing. Ask the organisation’s leaders, line managers, HR professionals and other functions. All of HR should be listening to, and responding to, its stakeholders. Use tools like 360 degree feedback and customer satisfaction surveys to obtain a broad range of views on how well the HR function, including business partners, are fulfilling their role. See our factsheet on 360 feedback for more information on that topic.
- Go to our factsheet on 360 feedback
Building teamwork within HR through joint projects, knowledge sharing, away-days, peer coaching and celebrating successes. Where partnering seems to be faltering, get all the HR professionals involved in addressing the problem.
Making HR a role model for other functions by benchmarking HR team performance against HR teams in competitor organisations.

Appointing and developing business partners

Finding good business partners is proving difficult. Some US research concluded half of HR professionals lack the skill sets needed². In the UK, demand for, and salaries offered to, business partners have risen significantly³.

The appointment of business partners presents special challenges. The capabilities required by business partners are different to those required in other HR roles. They need to develop different skill sets, such as strategic thinker, consultancy skills, relationship management, expert networker, business and financial understanding, change management, as well as influencing and political awareness skills. Recognising that the skills and behaviours needed by business partners are different to those found in traditional HR manager roles many organisations are using assessment centres to select the right people - see our factsheet on Assessment centres in recruitment and selection.

Go to our factsheet on Assessment centres

Those in the role often have to ‘hit the ground running’. Though they may need development, if business partners don’t deliver successes in their first few months, their credibility and confidence falls and they can revert to being helpful HR generalists, so it is important that development covers business and personal development.

Implications for HR careers

Partnering implies big changes in HR careers.

Whilst there will always be jobs for HR generalists, in the future there may be fewer of them. An increasing number of HR professionals will have to choose which specialist role is right for them. HR professionals will need to actively manage their own careers. Our research report Managing and developing HR careers shows that career paths may not be as clear as in the past and individuals may need to pursue ‘zig-zag’ careers to progress. In addition more attention may be needed to create pathways by which individuals can acquire the experience to perform senior HR roles.
- Find out more about our Managing and developing HR careers report
HR directors and line managers will want HR professionals who have added significant value to organisations. Qualifications, years of experience and leading-edge projects may count for little, unless practitioners can demonstrate how they have added value.
Branding is crucial. HR functions that shape and implement business strategy will attract the most able HR professionals, whereas those that tinker with a strategy largely decided by managers will struggle to get good people.
Ulrich has commented on the importance of ensuring the right HR leadership to lead the HR function: a role that involves:
- leading the HR function
- collaborating with other functions
- setting and enhancing the standards for strategic thinking, as well as ensuring corporate governance.
In addition the HR leader will need to ensure that there is a robust talent management programme for the HR function ensuring a future supply of skilled and agile HR professionals.

CIPD viewpoint

The key value of Ulrich’s model does not lie in outlining new structures but in his analysis of HR roles. Business partnering refocuses attention on some basic issues about how HR is to achieve its aims: supporting line managers, aligning HR activities with the business and delivering efficient services. However, partnering is not simply a repackaging of good HR practice. Partnering is a ‘paradigm shift’ for most HR functions, one that requires a step change in HR’s values, operation and skills. The function must ensure that it has the right structures and roles in place to meet organisational and employee needs rather than slavishly following a specific model because it seems fashionable to do so.

Many of today’s interpretations of partnering could mean a diminution of Ulrich’s ‘Employee Champion’ role. Some writers have commented how HR, with its increasing allegiance to strategic business partnering, is taking its eye off employee needs4. There is uncertainty in many organisations about who, if anyone, is responsible for promoting employee engagement (see our factsheet on employee engagement).

Go to our factsheet on Employee engagement

If organisational performance would benefit from more emphasis on the ‘Employee Champion’ role, an effective HR function needs to provide it.

References

ULRICH, D. (1997) Human resource champions: the next agenda for adding value and delivering results. Boston, MA: Harvard Business School Press.
MOHRMAN, S.A., LAWLER, L.E. and MCMAHAN, G.C. (1996) New directions for the human resources organization. New York: Human Resource Planning Society.
BECKETT, H. (2005) Perfect partners. People Management supplement: The Guide to Recruitment Consultancies. April. pp16-17,19-20,23.
FRANCIS, H. and KEEGAN, A. (2005) Slippery slope. People Management. 30 June. pp26-28,30-31.

HR business partnering