Like any other element of an organisation, the HR department must be structured in a way that allows it to deliver value to a business. This article explains why.
There is a saying that when you point one finger in criticism, there are four fingers pointing back at you. This adage came to my mind recently as I read an article published in a McKinsey quarterly. The article was focused on the way in which HR departments are organised or structured. It got me thinking that maybe businesses might be best served if organisational re-engineering started with an examination of the structure of the HR organisation itself.
Like any other element of an organisation, the HR department must be structured in a way that allows it to deliver value to a business. The article in McKinsey, referred to a new trend in highly developed HR organisations of establishing centers of excellence (COEs) focused on strategic areas such as organizational development, talent acquisition, and talent management. These COEs are supported by business partners who are focused entirely on supporting operational leaders and an additional, at times outsourced, function that focuses on delivering transactional HR services.
The benefit of this arrangement is that it allows the HR function to be effective in playing three games at the same time. The three games being strategic, tactical and business focused. Rarely do HR functions have the ability to do all three well, and more often than not, whichever game they focus on playing, it is deemed unimportant or insufficient by some.
Whenever HR plays the tactical game it is criticized for being simply tactical – until someone finds an error on their paystub or someone has a critical illness and needs support, then tactical activities are appreciated. Then at other times it is criticized for being too high level and impractical – until there is talent flight because of the absence of clear career pathing within an organisation. At other times it is also criticized for being an obstacle to operational leaders and their objectives – until an operational leader’s actions trigger a lawsuit because there was no coordination with HR.
This structure of COEs, business partners and tactical service groups however, allows the HR organisation to play in all the games the business expects it to play. The COEs provide strategic guidance and keeps the organisation in a state of continuous improvement. Business partners are then allowed to focus entirely on operational leaders’ objectives and create partnerships that allow operational leaders to accomplish business objectives in a manner that it consistent with the overarching human asset management strategy the business has adopted. All this occurs without any diminished support for the mundane but necessary tactical things HR is expected to deliver quietly.
Like any structure, there are however requirements for success. Within this structure, that requirement for success is the business partner’s understanding of their role. It is very easy for a business partner in this structure to feel a little bit like being placed in purgatory, not having the heavenly authority of designing strategy but spared the sometimes hellish tasks of checking vacation days. The best description I have come across of the way the business partner’s role should be interpreted is that of a talent value leader.
This approach requires a movement away from the business partner being a generalist toward operating as a talent owner and becoming fully accountable for talent performance. This marries the objectives of operational leaders with the objective of the business partner since they are both accountable for an inter-related outcome.
Business leaders are understood to be responsible for business objectives. If business partners become responsible for the performance of human assets in the accomplishment of these objectives, then there is a genuine basis for partnership. This not only increases the relevance of the business partner in accomplishing business objectives but it might also move business partners out of “purgatory” and prevent them from simply being the executioners of COE’s strategies and the traffic wardens directing employees to outsourced service providers.
Whether businesses decide to get in on this new trend of HR organisational design or not, what is clear is that there is value in examining the structure of HR organisations to ensure they are able to realistically deliver on the needs of the business as opposed to trying to deliver the impossible with skeletal HR resources.