HR Transformation and Current-State Analysis
The first step in any HR transformation must be to gain cross-functional alignment on the purpose for the transformation. Buzz words like “transformation,” “change” and “expansion” might sound good in a board room; yet they often create fear, confusion and chaos with frontline teammates and leaders. To avoid this potential misperception, HR leaders need to create a strong business case that clarifies the why behind the transformation. In other words, what are we solving?
Transforming with Purpose
This reason behind HR transformation is foundational to getting buy-in and transparent feedback from within HR and from external stakeholders. Often, large-scale change is not explained in a clear way from the start. Everyone then creates his or her own narrative about why the function is changing: affordability goals, poor quality, new leader needing to make an impression and even power struggles. None of these might be the true reason, yet that is the perception if leaders fail to socialize broadly the purpose for the needed transformation.
Also, many HR leaders transform their teams to address current issues. I wonder, though, how much the transformation itself would change if the HR leader focused not only on addressing current issues but even more so on addressing the future role HR must take in being a strategic business driver. This future purpose could totally change a decision to centralize or decentralize, buy or build solutions and even hire or reduce workforce. What type of HR will be needed for the organization to success 5 – 7 years down the road?
One purpose must be part of any HR transformation: the shift from administrative, tactical work to more strategic, business-driver solutions. Stereotypically, HR is a compliant-focused, manual, complicated function that provides solutions that offer only limited business ROI or long-term growth support. HR leaders can create the most beautiful organizational structures, the most interactive online portals and the most creative learning courses. If HR fails to shift from being a support function toward being the strategic business driver, it will be replaced by shadow HR groups within business functional areas or will be used as an order-taker function. Neither is a viable option. HR must transform itself strategically and purposefully.
Voice of the Customer
Once the purpose is finalized, HR must get input on how it is currently performing based on that forward-thinking purpose. The CEO, COO and CFO will be quick to provide direct feedback on how well HR is driving the business strategy discussion instead of only jumping into the conversation when talent management is discussed. This is a key difference HR leaders must grasp. Until we demonstrate strong business savvy and financial acumen at an enterprise level, we cannot drive the business. We are relegated to sitting second fiddle or sometimes even an audience seat while the operational leaders conduct business.
This voice of the customer from cross-functional groups needs to be at multiple levels: executive, frontline leader and frontline teammate. Focus groups, targeted pulse surveys and input from an annual engagement survey or HR customer satisfaction survey will provide valuable data. An HR Data Analyst can consolidate the data by key themes, top 5 areas of strength, top 5 areas of opportunity and top business functions that complain most about HR. It will be important to keep those functional areas informed throughout the transformation to impact their perception directly and consistently.
Another customer to interview is HR itself. Often HR teammates are as frustrated by outdated policies and processes as their business coworkers. They hear the complaints from their business counterparts, and they feel the pain of inefficiencies. Unfortunately, many HR teammates won’t feel safe in providing constructive suggestions to improve their own area. They might feel retaliation (yes, even within HR), or they might fear that changes could cause their job to be removed in a restructure. Bringing in a third party to conduct the HR voice-of-the-customer discussions will add a level of separation that might result in greater transparency and authenticity of feedback. Those third parties could be major consulting firms, leaders from other business functions within one’s company or independent consultants. It could even be trusted, informal leaders within HR by having them lead confidential focus groups that result in anecdotal comments without attributing them to specific names. It is always a revealing report that compares how HR views itself with the way the rest of the business views HR. If they are different, then HR isn’t listening and responding well to the way the business really feels. If the results are the same, then perhaps the issue is directly with HR leadership. After all, if HR teammates agree with the business on areas HR needs to change, then what has stopped the HR leaders from making the changes sooner?
If external resources are used to analyze the current state of HR, they will need a clear scope of work so they efficiently and effectively analyze the areas needed without boiling the ocean. They should conduct a thorough review of each HR area’s FTE count, budget, service level agreements and percentage of tactical vs. strategic work.
Next, HR needs to benchmark itself against institutions of similar size inside and outside the industry in order to gather insights into best practices. That benchmarking might reveal that many HR groups have similar struggles, yet usually a few will stand out as leaders in the HR space on driving their business. Looking outside of one’s industry also offers a refreshing perspective that directly attacks the common statement of “we don’t do that in [insert your industry].” One of the most progressive HR teams I worked in was in the restaurant industry. My perception coming from two Fortune 1000 companies was that hospitality would be antiquated. Quite the opposite. If I benchmarked only in the healthcare industry now, I would definitely be limiting my exposure to innovation and future-thinking solutions.
Conferences, webinars and online articles also provide a great source for input on the strength of the HR team. Individual networking can also be vital to sharing your own best practices but also to hearing what industry award winners are doing to shape the future of HR and business. Furthermore, many international companies have addressed issues that US companies are still struggling with (e.g., talent mobility, compliance and business impact ROI).
Clearly, voice of the customer and external input data will enable the HR leaders to make evidence-based decisions instead of following textbook models or gut reactions. That data will also be needed to garner support for additional budget or FTEs if needed. Data also can address initial concerns operational and financial business counterparts might have about the disruption to the business, change in how they will interact with HR and confusion about how the transformation will truly make sustainable difference.
Future of HR
HR must continue to transformation itself into the business driver of future work. It cannot live on past successes because those are usually outdated within a year. It must instead challenge itself to remain relevant by aligning its structure (greater focus on strategy) and resources (FTEs/budget dedicated to strategic priorities) to the HR solution model that leads the business instead of being led by the business. It must challenge itself to solidify its expertise in financial acumen, business acumen, strategic anticipation of the future, strategic analysis and strategic influence.
This is the second of a series of articles that focuses on Managing Intentional Disruption during HR Transformation. In future articles, we will dive deep into each phase of a systematic approach to HR transformation: plan development to address analysis results, team restructuring/upskilling, stakeholder buy-in/communication/change management and sustainability. Read Part I here.
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