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EXECUTIVE EDUCATION

RESEARCH REPORT
BE EXCEPTIONAL. THE HENLEY WAY.

HR with Purpose:
Future Models of HR

Professor William Scott-Jackson

and Professor Andrew Mayo (Oxford Strategic Consulting)
With additional research by:
Professor Nick Holley (Corporate Research Forum); Professor Chris Brewster, Dr Liz Houldsworth, Mark Swain (Henley
Business School); Don Barratt, Dr Najat Benchiba-Savenius (Oxford Strategic Consulting), Professor Nick Kemsley

henley.ac.uk/hrc
2
FUTURE MODELS OF HR
Contents
1  Background to the study 5
1.1  Our objective 5
1.2  Some definitions 7
1.3  Acknowledgments 8
2  Executive summary 9
2.1  Overview 9
2.2  Where we are today 9
2.3  Where we need to be 10
2.4  How to get there – now! 11
3  The evolution of the HR function 12
3.1  From welfare to a profession 12
3.2  Dave Ulrich and the HR function 13
3.3  Problems with the business partner concept 18
3.4  State of the HR Function 18
3.5  The organisation of the HRf 19
3.6  Variations in the label used 22
3.7  Dispersing work 22
3.7.1  Outsourcing 22
3.7.2  Insourcing 24
3.8  Delivery vs strategy 25
4  The future context 26
4.1  The forces for change 27
4.2  The future of work 28
4.3  The search for talent 30
4.4  The influence of technology 31
4.4.1  Data systems and cloud based services 32
4.4.2  Social media and mobile apps 34
4.4.3  Branding, transparency and reputation 34
4.4.4  Learning and development 35
4.4.5  Artificial intelligence 35
4.4.6  Application of analytics/big data 36
4.4.7  Managing stakeholder expectations 39
5  Impact on the HR function 42
5.1  No universal concept 42
5.2  The need to improve 42
5.2  HR practitioners’ development and careers 44
5.2.1  Future skills 44
5.2.2  Having business experience 45
3
 5.2.3  Career development 46
5.2.4  HRf leadership and strategic role 48
5.3  Alternative models for HR 48
5.3.1  Radical ideas and experiences 48
5.3.2  The triumvirate 49
5.4  Section summary 51
6  Future choices 52
6.1  Is there one best way? 52
6.2  Evolve 54
6.2.1  The evolution of the human resources function 54
6.2.2  From talent to organisation 55
6.2.3  Organisational flexibility of the HRf 55
6.2.4  The role and perception of the HRf 56
6.2.5  The societal responsibility of the HRf 57
6.2.6  The evolved HRf organisation 58
6.2.7  Delivery (shared service) 58
6.2.8  People expertise (centre of excellence) 60
6.2.9  Human resource strategy (business partner) 60
6.2.10  Roles and career paths 61
6.3  Transform 63
6.3.1  Re-purposing HR 63
6.3.2  Strategic capabilities in theory 67
6.3.3  Providing those capabilities 67
6.3.4  Building organisational capabilities 69
6.3.4.1  Clarify strategic intent 71
6.3.4.2  Define required capabilities 72
6.3.4.3  Identify current capabilities 72
6.3.4.4  Define the differentiating capabilities 72
6.3.4.5  Define the delivery vehicle for that capability – AI, robotic,  
human, cloud etc 72
6.3.5  Transformed organisation 73
6.3.6  Roles and career paths 74
6.3.7  Issues with the transformation 74
7  Conclusion and next steps 75
7.1  The purpose and the opportunity 75
7.2  What can we do – now? 75
8  References 77

4
 1   Background to the study

1.1  Our objective

The objective of this study was to investigate and recommend well founded
practical suggestions on how HR functions (HRf) might best add value and organise
themselves, given the likely changes and challenges in the socio-economic and
business environment of the next 5 to 10 years. We also aimed to suggest how these
various scenarios might impact the capabilities required in the HR function itself and
how they might be developed. The objective was not to duplicate the many surveys
and research studies assessing the current effectiveness, priorities or challenges
of HR, although we did review these thoroughly to provide a base from which to
extrapolate some challenges for the future. For that reason, the method combined
in-depth interviews with selected thought leaders (both senior practitioners and
Both HR and business
academic) and an extensive review of existing studies and analysis. We have tried
to generate new ideas and perspectives, which were debated at a major summit at leaders, on average,
Henley Business School. A key question is, of course, ‘What is the purpose of the HR rated HR’s performance
function?’. This has proved to be quite elusive in previous studies and prescriptions, as low; furthermore,
even while there is considerable recognition among line and HR leaders that people business leaders rated
and their capabilities are extremely important in all organisations.
HR’s performance 20
The research focused on larger organisations in the public, not-for-profit and private percent lower than did
sectors and included contributions from several regions of the world including the
HR leaders ...perhaps
US, Europe, the Middle East and Asia Pacific. The research team had also worked on
building human capabilities at the national level in various countries around the because of these
world, which provided other perspectives and a wider body of knowledge to draw dim views of HR’s
from. Given the ‘idea generation’ objective, our aim was to garner the ideas, opinions performance, we found
and experiences of people who had contributed to thinking on the topic. The
an increasing trend of
interviewees were chosen on the basis of reputation and contribution, but it is by
no means claimed that they represent the only thought leaders in this field. We also CEOs bringing in non-
carried out a comprehensive review of the extensive relevant literature, ranging from HR professionals to
academic research through to consultancy-led studies, case studies and practitioner fill the role of CHRO.
publications.
Once the interviews and literature review had been carried out, the team conducted
brainstorming sessions to analyse the findings and generate ideas. These were
then reviewed, analysed and weighted for feasibility, value and novelty (in order to
challenge perceptions), resulting in the chosen options presented in Section 6.
The importance and urgency of this study is exemplified by the findings of previous
research (Figure 1) by Bersin (2016), which concluded that:
Both HR and business leaders, on average, rated HR’s performance as low;
furthermore, business leaders rated HR’s performance 20 percent lower than did
HR leaders ...perhaps because of these dim views of HR’s performance, we found an
increasing trend of CEOs bringing in non-HR professionals to fill the role of CHRO
[chief human resources officer].

5
 Deloitte, 2016
HR 8% 21% 32% 34% 5%
GPA: 1.65

Non-HR 14% 24% 34% 24% 4%

GPA: 1.32

Underperforming Getting by Adequate Good Excellent

Figure 1: HR performance rated by HR and non-HR leaders (Bersin, 2016)

This perception is not confined to the West, as a study of HR in the Gulf Cooperation
Council (GCC) also found that:
Business (line) leaders recognize the critical importance of human resource
capabilities for the strategic success of organizations and for countries of the GCC;
but even HR leaders themselves do not currently believe that the Human Resource
function contributes effectively to the development of these capabilities.   
(Scott-Jackson et al., 2014)

The business leaders also perceived that the activities the HRf was good at, were not
the priorities for the business (Figure 2) and that the HRf was less capable in the areas
that were more important!

MONITOR MAINTAIN MAINTAIN

Developing Functions with
and training the above average
importance and
Workforce planning workforce and above average
CAPABILITY - MEAN SCORE PERFORMACE

leaders capability

Managing and
controlling pay
and reward MONITOR
Increasing Functions with
employment Recruiting the right below average
of nationals people to meet importance and
Evaluating and
above average
improving employee Enhancing employee business needs capability
performance engagement/commitment
to the organisation
IMPROVE
Cost effective HR Functions with
administration - Creating effective below average
records, visa, IT, HR strategy
importance and
below average
employment law etc Facilitating capability
organisational Support and help
change for employees
PRIORITY
Functions with
IMPROVE PRIORITY above average
importance and
below average
IMPORTANCE - HR PRIORITIES capability

www.oxfordstrategicconsulting.com  © Oxford Strategic Consulting

Figure 2: Gap analysis of HR activities: the views of line leaders on relative importance and capability (Scott-Jackson et al., 2014)

Interestingly, our recommendations on how the HRf can best serve organisations
also applies to the HRf itself, as an organisation with its own strategic objectives and
capabilities.

6
1.2  Some definitions
There is often a confusion, when discussing ‘human resources’, between the function
or department of human resources, the people themselves (inaccurately, and
somewhat derogatorily, labelled ‘human resources’) and the management of those
human resources (which is not exclusively the job of the function), so in this research
we have worked to the following definitions (Figure 3):
Human Resources (HR) are the organisationally-relevant capabilities of groups and
individuals (including contingent workers, suppliers and anyone else that provides
any capability for the organisation). ‘Team-working’ or ‘innovation’ could be a human
resource. HR is not the people themselves. There is no need to use an alternative
term for people! People are people. People employed in an organisation could also
be described as ‘personnel’, ‘staff’ or ‘employees’ but, again, ‘personnel’ are not
the same as human resources. So, the evolution or rebranding of the Personnel
Department, as the Human Resources Department, should have indicated a real
change in function, not just labelling. Transforming from ‘looking after the people’
through to ‘building key resources’.
Human Resource Management (HRM), which in this report includes Human
Resource Development (HRD), is the creation, utilisation, development and
retention of human resources. This is mostly carried out by line managers, of course.
The Human Resource function (HRf) is the entity responsible, in most organisations,
for delivering people-related administration and services and, in many organisations,
for advising, designing and implementing programmes to do with people. The
function can have various other roles, such as mentoring CEOs or managing health
and safety, and can take or aspire to take a strategic role.
The research and findings in this study apply to HR functions in both the public and
private sector. If we use words such as ‘business savvy’, ‘compete’ or ‘competitive
advantage’, we are taking the view that public sector organisations are meant to be
run in an effective and efficient ‘business-like’ fashion, to ‘compete’ in fulfilling their
strategic aims just as well as or even better than similar entities. If we quote language
that seems only to relate to business (e.g. ‘maximising shareholder value’) then we
ask the reader to assume a public sector application.

People
Human Resources (HR) Generate/‘contain’ the human resources
the organisationally-relevant capabilities the organisation needs. This includes
employees, contingent workers and any
of groups and individuals other contributing people

Human Resource Management (HRM)

the creation, utilization, development and retention of
human resources.
The HRf influences
HRM through
people processes
and guidance

The HRf influences

Line Management
HRM through HR Largely responsible for HRM
programmes
The HRf influences HRM through
influencing line managers

The Human Resource function (HRf)

Delivers people services/processes and advises on people issues

Figure 3: The (simplified) relationship between the HRf, line management, HRM and human resources
7
 1.3  Acknowledgments
Authors:
Professor William Scott-Jackson
Professor Andrew Mayo

The research was carried out by a team from Oxford Strategic Consulting in
consultation with academics and practitioners from Henley Business School.

Professor Chris Brewster Henley Business School

Dr Liz Houldsworth
Mark Swain
Professor Nick Holley Corporate Research Forum
Professor William Scott-Jackson Oxford Strategic Consulting
Professor Andrew Mayo
Don Barratt
Dr Najat Benchiba-Savenius
Professor Nick Kemsley

We would like to thank all the thought leaders who kindly provided their ideas,
experiences and case studies for this research. These include:

James Baker Jaguar Land Rover Penny Lawrence Oxfam

Francois Barbier Flextronics Jim Matthewman JMA Associates
Celia Baxter Bunzl (now at Bekaert) Dave Milner IBM
Colin Beames Advanced Rob Ollander-Krane Gap
Workforce Planning Peter Reilly Institute of
James Bennett Sage Employment Studies
Even Bolstad HR Norge Jon Restell MIP Healthcare
Leasil Burrow BT Sarah Sandbrook Deutsche Telecom
Andy Campbell Oracle Paul Sparrow Lancaster University
John Cooksey Affinity Recruitment Paula Stannett Heathrow Airport
Carol Elderfield Amey Construction Angela Szymusiak Adobe
Dave Gartenberg Slalom Consulting Julia Tyson LV=
Huda Ghosen Saudi Aramco Dave Ulrich RBL Group
Simon Haben Royal Mail Jamie Ward BBC
Mike Haffenden Corporate Research Forum Steve Windsor Hertz UK
Salma Hajjaj Gulf Bank Gavin Walford-Wright CCAD, Abu Dhabi
Wendy Hirsh Institute of Evan Wittennberg Box Group
Employment Studies Alan Woolford Qinetiq
Jon Ingham Strategic HCM Patty Woolcock CSHRP, USA

8
 2   Executive summary

2.1  Overview
This study confirms that changes in technology and how people engage with
organisations present major opportunities for the HR function to demonstrate real
strategic value, but that, excepting some thought-leaders, the function in general
has been under-valued and has lacked the purpose or capability to maximise these
opportunities. HR leaders have the choice of simply re-skilling in response to change,
to provide better tactical value through people-processes and expert advice on
people issues, or transforming the function to exploit its potential critical strategic
contribution.
The recommendations provide not only a vision for the evolved or transformed
function but also immediate steps that can be taken to achieve this strategic role.
Although the organisation and structure of the function is important, it is much more
important, and possible, to demonstrate immediate strategic value by carrying out a
relatively straightforward process.

2.2  Where we are today

The focus and organisation of the current HR function has arisen through an
evolutionary process. This process has been partly based on a very patchy
implementation of some of the more superficial components (often just the names)
of recommendations of various theorists (notably Dave Ulrich); it has been partly
due to a changing of the role over time (including welfare, industrial relations and
talent management); and has partly evolved in response to the changing needs of
organisations and deciding how those needs might be fulfilled.
This has resulted in a major issue for the HRf: its purpose, in practice, has also evolved
over time and largely results from, and is defined by, things it happens to do. But a
purpose, mostly unarticulated, such as: ‘We deliver HR services (such as recruitment)’
is nothing more than a definition of activities.
Hardly surprising, then, that senior leaders, while consistently acknowledging that
people and their capabilities are their most important strategic asset, also believe
that the ability of the HRf to deliver people’s potential is extremely low. Pleas for
‘a seat at the table’ and attempts to train HR practitioners in ‘business savvy’ will
be to no avail if the function is seen as having little strategic value and as having
not much to add to strategic debate, even if the ‘not much’ is couched in the right
business language.
We also found that the much vaunted role of the business partner, in practice, most
often had little strategic impact or involvement; incumbents are forced to act as
account managers, mediating between the business and HR delivery and expert
functions. This is, of course, a valuable and necessary role and is well described in its
title. But it does not, as implemented, represent a strategic role of the HRf.
Dramatic and continuing improvements in process technology have meant that
delivery of people-related processes has improved dramatically, and the HR function
has taken some credit for these tactical improvements. However, future fundamental
changes in how people engage with organisations, and developments in technology,
will have a disruptive impact on the management and delivery of human resources,
and this justifies and demands a transformation of the role and impact of the HRf.

9
 The organisation of the HRf has commonly ‘settled’ into two functions: a reasonably
clear delivery function, with the responsibility of understanding and utilising
advances in process technology, and an expert function, which, given the increasing
need for specialist expertise, will typically be accessed externally. In addition, many
HR functions also include various roles (including the leader’s) that aim to be
‘strategic’, and this is where the opportunity for the most dramatic transformation in
strategic value occurs.

2.3  Where we need to be

The study reviews the significant changes in the future of work (Section 4.2), the
search for talent (Section 4.3) and rapid advances in relevant technology (Section
4.4), and concludes that there will be a dramatic impact on the HRf, as well as
significant opportunities. Overall, though, the function has the opportunity to
maximise the positive impacts and to mitigate the negative, in order to demonstrate
strategic value.
This study adopts the following logical process to achieve strategic value:
1. Define the purpose of the function.
2. Define the process by which that purpose would be best achieved.
3. Define the organisational options for how that process could be delivered.

We define the purpose of HRf as:

The delivery of capabilities needed to achieve outstanding

strategic success.
This definition is central to the achievement of organisational strategy and allows the
use of well proven models and methods to define and deliver strategic capabilities.
A process for defining and delivering strategic capabilities is described in Section
6.3.4 and immediate actions are recommended in Section 7.
In terms of organisation (Figure 4): the most commonly adopted, current
organisational structure (steady-state) is not designed to achieve this purpose.
An evolutionary structure of the HRf would respond to the above-defined purpose
by taking responsibility for the definition and delivery of strategic human capabilities
(the original sense of the phrase ‘human resources’).
A transformed organisation would respond to this purpose by developing expertise
in capability definition and delivery, with human resources/capabilities as one
instance, to be evaluated alongside capabilities based on technologies such as AI.

10
 Achievement of Strategic Organisational Goals
(expressed through strategic intent)

To deliver the [human] capabilities needed to

achieve outstanding strategic success

Delivery Expertise
Processes to acquire, develop and retain Advice and programmes on specified
strategic [human] capabilities [human] capabilities and their development

Figure 4: The purpose and organisation of the HRf

2.4  How to get there – now!

As mentioned earlier, it is quite possible to demonstrate an immediate strategic
impact with no changes in organisation in the short term.
This can be achieved through a relatively fast and cost-effective process (as described
in Section 7) to identify the required strategic capabilities and define how they can
be delivered through, for example, changes to HR processes and HR initiatives.
This report demonstrates that HR leaders have the opportunity to demonstrate
clear strategic value, not by asking for a ‘seat at the table’, not by relying on the fear
of people-related risks and other phenomena, and not by focusing on the mystique
of engagement, but by delivering the capabilities needed to achieve outstanding
strategic success.

11
 3   The evolution of the HR function

It is important, in proposing new models for the HRf, to have a brief understanding
of the development of the function to its current, steady state and to recognise the
driving influences that have guided that development. In particular, we find that at
several points, well considered, insightful and powerful recommendations on the
shape and strategy of the HRf have been diluted or distorted. The transformation
option for the HRf, proposed in Section 6, respects, develops and utilises much of this
original thinking.

3.1  From welfare to a profession

The forerunner of the Chartered Institute of Professional Development (CIPD), the
Welfare Workers' Association (WWA) was formed at an employers' conference in
York on 6 June 1913. The meeting was chaired by Seebohm Rowntree. Along with
his company, Rowntree's, around fifty other companies were present, including
Boots, Cadbury and Chivers and Sons. The WWA was founded as ‘an association of
employers interested in industrial betterment and of welfare workers engaged by
them’ (Winstanley & Woodall, 2000). Its name changed several times and in 1946
became The Institute of Personnel Management. After a merger in 1994 with the
Institute of Training and Development, the then IPD was incorporated under Royal
Charter in 2000, and by then reported a membership of 120,000 practitioners. Its
status as a profession in its own right was established, and it gave rise to a host of
qualifications, including Bachelor’s degrees for young people straight out of school.
It was not until 1948 that the American Society for Personnel Administration (ASPA)
was founded. It was run only by volunteers until 1984, and in 1989 it changed
its name to the Society for Human Resource Management. And so began the
widespread use of the label of HR, which spread across the world and largely replaced
the term ‘personnel’ (although Germany still uses ‘personell’).
So why did personnel change its name to HR? Alongside the entirely practical
personnel focus on people, their contribution and their welfare, a body of theory in
the field of strategy was emerging (Barney 1991), driven by business leaders, which
suggested that firms could enjoy competitive advantage if only they possessed or
could build ‘resources’ that were otherwise scarce, valuable and hard to copy. This
resource-based view (RBV) of the firm is now a major strand of strategic thinking.
In the late 1980s it was picked up by academics working in the field of personnel
management, such as John Storey (1989), who began to develop models and theory
on ‘human resources’, as a specific type of strategic resource, and ‘human resource
management’, as the way in which it could be acquired, developed and maintained.
The label ‘human resource’ was duly appropriated by the personnel profession but
without, in general, adopting many of its principles (for example, that resources were
not the same as the people themselves) leading to the charge, still levied today – that
HR is simply ‘old wine in new bottles’, a relabelled personnel. This phenomenon, of
taking the ‘label without the content’, has more recently been repeated in respect of
Ulrich’s business partner models, as will be seen below.

12
Why does this matter? Well, because the valuable insights and contributions to
effectiveness that were originally proposed have largely been lost. In particular, the
opportunity to acquire a clear strategic purpose with defined outputs for the HR
function has, to date, been generally missed. One of the conclusions of this study
is that there is now a renewed opportunity for the HRf to declare a clear strategic
purpose and to demonstrate its significant contribution to organisational success.
Until Dave Ulrich’s rethinking in the mid-nineties, most of the work in HR (or
personnel) still centred around the administration of people and employee relations.
The most common delivery model was to have accessible ‘generalists’ in each part of
the organisation, together with employee relations and recruitment officers where
needed. They would be directed by an HQ with a few specialists, such as pensions
and management development. In a large organisation, there would be hierarchical
layers in between. As the first computerised record systems came on board in the
80s, firms also centralised their payroll and administrative systems.
Meanwhile, mostly outside of organisations, consultants and academics studied
many aspects of work and organisations. These included industrial psychologists
such as Herzberg and Maslow in the 50s and 60s, and the invention of the discipline
of ‘organisation development’ by Schein, Beckhard, Harrison and others. Charles
Handy and Andrew Kakabadse in the UK studied organisation design, and had many
influential ideas in the mid-nineties about the future of work. However, only the
larger, more innovative HR departments paid much attention to these developments.
The growth in legislation and the economic turbulence from the late 80s onwards
gave a lot of extra work to HR departments, mostly to do with staff reductions or
employee negotiations, but it did not make them well loved. This was encapsulated
by the character Catbert, the ‘evil director of human resources’ in Scott Adams’
Dilbert cartoons. Catbert was supposed to be a one-time character, but he resonated
so well with readers that Adams brought him back as the permanent HR director.
Constant criticism led to an epidemic of self-doubt and introspection for the ever-
growing HR profession until they found a new champion.

3.2  Dave Ulrich and the HR function

Dave Ulrich, a professor at the University of Michigan, has been the undoubted,
dynamic and globally acclaimed champion of the HR function for the last 20 years.
He prefaced his influential book Human Resource Champions (1997) by saying ‘the
next ten years will be the HR decade’. His book explicitly set out to focus on what HR
delivers, rather than the detail of what it does as a department. His key focus remains
today on the value that an HR function adds.
‘HR must recognise and correct its past,’ he said. ‘It has spent more time professing
than being professional.’ His mission was to explore how HR can create competitive
organisations through a partnership between managers and professionals, with a
body of detailed knowledge about people and organisations. The foundation of
his approach was to see the contribution of HR placed in four quadrants, as shown
in Figure 5.

13
 FUTURE/STRATEGIC FOCUS

Strategic Change
PROCESSES Partner Agent

PEOPLE
Administrative Employee
Expert Champion

DAY-TO-DAY/OPERATIONAL FOCUS

Figure 5: The dimensions of an HR function (Ulrich, 1997)

The two dimensions used here are ‘people vs processes’ and ‘day-to-day vs future
focus’. Ulrich defined four roles to go with these quadrants, as shown in Figure 6.

Role Deliverable Metaphor Activity

Management of strategic Executing strategy Strategic Partner Aligning HR and business

human resources strategy
Management of infrastructure Building efficiency Administrative Expert Managing processes and
services
Management of Employee Increasing commitment and Employee Champion Listening and responding to
Contribution capability employees
Management of Creating a renewed Change Agent Ensuring capacity for change
Transformation and change organisation

Figure 6: The dimensions converted to roles (Ulrich, 1997)

The HR profession in the years that followed seized upon the top left hand quadrant
and many HR professionals renamed themselves as ‘Strategic Business Partners’
(echoing the previous empty appropriation of ‘HR’ itself). In the process, the second
role, ‘administrative expert’, became a candidate for outsourcing, and the ‘employee
champion’ role was more or less forgotten, at least prior to the rise of ‘engagement’
as a key concern. The ‘change agent’ role was also very patchily carried out.
Many surveys have been carried out over the last 15 years that ask HR people
how much time they spend on ‘being strategic’ as opposed to being involved in
administrative matters. The implication always is that the latter needs to decrease
and the former to increase – that the mark of arrival is when most of the time is
spent on strategic matters. However, administration and compliance must be done,
and done at as low cost as is consistent with delivering an acceptable service. The
standards of delivery of that service should be high, since mistakes and delays cause
immense irritation and have a high ‘price of non-conformance’ (Powell, 1995). How
14
much time do managers themselves spend on ‘being strategic’? How often do we
review strategies in organisations? Annually, or when a crisis forces us to do so? The
research consistently finds that significant changes in strategy are a relatively scarce
event – implementing chosen strategies is much more relevant and the focus of most
leaders’ everyday efforts.
Ulrich is at pains to point out that the concept of business partnership is the sum
of all these roles, emphasising that contributing to strategic issues is but one part.
Indeed, at a conference in Rome in 2008, where some criticism was directed at his
‘unworkable’ business partner model, he justifiably defended himself by saying he had
been misinterpreted. His key message, then and now, was for HR to become more
business orientated.
In his 2005 book, Ulrich (and Brockbank) revised the original model, although this
has not generally replaced the original in the practice of organisations.
The four roles became five (see Figure 7), and are described below.

Human
Capital
Developer

Employee HR Strategic
Advocate LEADER Partner

Functional
Expert

Figure 7: Revised HR roles model (Ulrich & Brockbank, 2005)

• Strategic partners are HR professionals with knowledge of business, change,

consulting and learning. The role involves ‘partnering’ with line managers to
help them reach their goals through strategy formulation and implementation.
• Functional experts are the repository of specialist knowledge in foundational
HR practices and organisational effectiveness.
• Employee advocates listen to employees’ opinions and needs, manage work
conditions and well-being, deal with communication and grievance resolution
and manage diversity.
• Human capital developers focus on staff, more as individuals than as
‘processes’, in terms of learning, development, effective teams, coaching and
talent management.
• HR leaders provide functional leadership.

15
 Ulrich’s models have continually evolved and become more complex and, therefore,
not so well known. His organisation carries out a review every few years of
competencies needed in HR and his models have developed. The latest one is below
(Figure 8), and compares with the recent competency models produced by the
professional bodies Society for Human Resource Management (SHRM) (Figure 17)
and CIPD (Figure 18).

Human
Capital
Organisation Curator
Culture Total
Enablers and Change Rewards
Champion Steward

Core Strategic Paradox Credible

Competencies Positioner Navigator Activist

Technology
Delivery Compliance
and Media
Manager Integrator
Enablers Analytics
Designer
and
Interpreter

Figure 8: HR competencies model, round 7 (RBL Group, undated)

The above and subsequent models have not generally replaced the original in the
practice of organisations. What has happened, in the urge to be strategic, and in the
development of distributed technology, is that the original ‘employee champion’
role, the ‘human face’ of HR, has diminished. What has developed are call centres for
queries, and ‘business partners’ preoccupied with management or process issues. No
longer would anyone join HR because they ‘liked working with people’.
One reason for this is that the CIPD in the UK, in a 2005 paper written by Peter
Goodge, interpreted the Ulrich approach as the restructuring of HR into three
distinct sub-functions:
• 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.
• 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.
• Strategic partners: a few HR professionals working closely with business
leaders, influencing strategy and steering its implementation. The task of
strategic partners is to ensure the business makes best use of its people and its
people opportunities. The role is to highlight the HR issues and possibilities that
executives don’t often see. It also aims to inform and shape HR strategy, so that
HR meets organisational needs.  (Goodge, 2005)
16
This became known as Ulrich’s three-legged stool model – although Ulrich himself
denies any ownership of it. It has become the currently accepted model of the
modern HR department in the UK (and to some extent elsewhere), although it
seems to be little different from the ‘generalists, specialist and administration’ format
that was common in the 80s. Technology has undoubtedly enhanced administrative
delivery, and the range of contribution of an HR function has been extended – but
the concept of experienced functional managers being aligned to business teams is
nothing new.
Its application however is inevitably highly varied. Depending on resource availability,
it is often the case that so-called business partners are too thinly spread to be able to
truly get involved in the business issues of operational teams, except right at the top
of an organisation. There is also the tendency, given the priorities of the line manager
‘clients’, for business partners to simply act as account managers for the delivery of HR
services and advice.
The tension between the priorities of line managers and the HRf is a long-standing
issue, illustrated by the experience of one of the authors, Andrew Mayo, below. This
study aims to help redress that conflict.
In 1980 I secured my first HR business partner role. Of course, that was not my
job title – it was rather Personnel Manager. But I was responsible for the whole
function in a subsidiary company of 2,000 people in an international IT group, I
was a member of the management team and I reported to the Managing Director,
Tony. Soon after starting, I booked an appointment with him in order to agree my
objectives for the coming year. I sat down and he looked at me quizzically. ‘Andrew,’
he said, ‘I asked you to join us because I know you know what you are doing in
managing your department and I trust your judgement to recognise any needed
changes to our Personnel and Training. I will judge you by the extent to which our
other colleagues around this table find you helpful in achieving their objectives.’

After two years, our subsidiary was ‘restructured’. Tony invited me to take a
marketing role in one of the new offshoots. With much trepidation, I accepted and
spent the next two years so immersed in the excitement of my particular business
objectives that I found – to my dismay – that I was looking on the Personnel
department as a ‘necessary nuisance’.

All the activities that engaged me so seriously before seemed irrelevant. It

was getting new customers that mattered. I eventually did go back to HR, a
much wiser man.

Two lessons remained with me, as I returned to HR. The first was that HR’s agenda
is but a small part of the line manager’s preoccupations. And the second was that
to be a valued partner (or colleague, as I would have said then) I needed to focus on
what managers were trying to achieve as the priority, rather than what I wanted to
accomplish professionally.

Ulrich has, of course, continued to research and develop his ideas and contributed to
this study. These ideas are referred to and developed in Section 6, below.

17
 3.3  Problems with the business partner concept
Nick Holley (2015) examined the reality of the business partner leg of the ‘stool’. He
gives a powerful analogy of the difficulty of this role.
One of the causal factors has been that as organizational structures become leaner
I don’t think the Business
and ever more matrixed, partner roles become the knot in the bow tie, where they
Partner concept has are pivotal in ensuring the whole model functions effectively. Nowhere has this been
worked – so-called more prevalent than in HR.  (Holley, 2015)
business partners get
The difficulty is increased by many former roles being re-labelled ‘business partners’
‘dumbed down’ by line
without understanding the capability needed to make this truly effective. Ulrich
managers. They should and colleagues at the Ross School of Business, University of Michigan, have seen
be renamed HR advisors, thousands of students through their advanced HR programmes; he informed our
co-located together, researcher of the 20–60–20 distribution of capability that they observed:
and running strategic The top 20% are brilliant and really ‘get it’ – and 60% are ‘willing to learn’. The
interventions guided remainder will never get it. The reality is that many people have gone into – or been
by the appropriate moved to - HR because they are not very interested in business itself.

centre specialist. One cannot, after all, declare unilaterally that one is a partner – as HR functions
have frequently done. HR functions have generally meant ‘partnering with’ rather
than ‘partnering in’. The former is another way of allocating resource to a part of
the organisation. ‘Partnering in’ is much closer to Ulrich’s intention, the mindset
being: ‘all you achieve is through people and we in HR are here to help you achieve
your business goals’. This is not heard very often. A more accurate term for many –
and indeed used by many – is the ‘HR Adviser’, allocated to look after a part of the
organisation.
I don’t think the Business Partner concept has worked – so-called business partners
get ‘dumbed down’ by line managers. They should be renamed HR advisors, co-
located together, and running strategic interventions guided by the appropriate
centre specialist.

3.4  State of the HR Function

There are frequent investigations into the state of the HR function, its challenges and
priorities. They nearly all take place in large international organisations, and standard
themes emerge. We will not quote too many of them here.
Allan Boroughs of Orion Partners, an established HR Consultancy reports that:
In early 2014 we surveyed business and HR users in 40 organisations, each with more
than 10,000 employees – complex beasts by anyone’s standards. The survey showed,
as expected, that in the last ten years investment in the HR operating model has
become the norm, with over 95% of organisations having undertaken some sort of
HR transformation. Of those, more than 50% had invested in what they termed the
‘Ulrich model’ for HR. The scope of HR transformation usually incorporated elements
of centralised shared services, business partners and centres of expertise. However,
we found that the most significant areas of investment were nearly always in the
development of HR shared services and associated IT systems.  (Boroughs, 2015)

18
When it comes to measuring the performance of the model, the results are
compelling. Firstly, more than 90% of organisations felt their HR function to be more
efficient and commercially focused than it had been ten years ago, with the majority
(77%) attributing this success to the ‘Ulrich model’ (Figure 2).
This sounds like a very positive endorsement. However, this success could be said to
be primarily due to the significant developments in technology that have improved
HR operations. Orion also found that transactional HR still dominated most functions.
One can argue that perhaps this is inevitable and correct, as the platform of the
HR service.
Orion went on to state that:
against a background where 97% said that people issues are ‘highly important’ or
‘critical’ to the business, it suggests that the search for HR efficiency has deflected HR
from its true mission and that it has neglected those areas that have the potential to
offer the greatest level of commercial benefit.

Mercer LLC is one of the firms of consultants that conduct regular research into
HR related matters. Their report, ‘Future proofing HR’ (2016a), was the first of such
studies to seek the views of both employers and employees, and it included 1,730 of
the former and 4,500 of the latter. One section was entitled ‘Redefining the value
of HR’. Compared across five global regions the percentage of organisations that
felt their HR function was viewed as a strategic business partner ranged from a high
of 11% in Australia to only 3% in Asia and 4% in North America. But across the world,
between 54% and 66% of employees gave their experience of the HR function a
C-grade or lower.
These are very low figures. A lot depends on how the question is asked. Lawler
and Boudreau (2015) asked a different question – about the involvement of HR in
the determination of business strategy. They found (in a global study of 416 large
organisations) that 21% reported a full involvement of HR in business strategy and a
further 54% reported that HR made inputs into it.
The CIPD produces the annual ‘HR outlook’ (CIPD, 2016a), which compares the views
and priorities of HR leaders with an approximately equal number of non-HR leaders.
In the winter 2015/16 edition they found that while 72% of HR leaders believed they
were contributing to the strategic business priorities, only 26% of non-HR leaders
saw it that way; a study in the Gulf Arab States (many of whom employ Western HR
directors) found very similar results (Scott-Jackson et al., 2014). This raises questions
about the visibility, impact and communication of HR functions. When looking at
where HR leaders were focusing their attention in the priority of cost management,
51% were focusing on improving HR service delivery and 49% on restructuring.
Only a quarter of non-HR leaders saw these as priorities – for them performance
management and staff retention were top priorities. Similarly, the Scott-Jackson et al.
(2014) study found a wide discrepancy between HR and line priorities.

3.5  The organisation of the HRf

Wendy Hirsh, a very experienced researcher, and Principal Associate at the Institute
for Employment Studies, summed up her perspective as follows:
Perhaps the two suggestions made most often about the HR function are that it
needs to be more business focused and more strategic. I support these intentions but

19
 with some caveats. Being business focused requires us to remember that ‘business’
should be shorthand for the sustainable health of the organisation, not being a
management lackey or doing whatever the CEO wants. It is part of the role of HR to
challenge the executive to take a broader and longer term view of organisational
effectiveness.

The ‘strategic’ role of HR should be about looking forward and focusing on the
issues that are important for the business and its workforce – issues such as:
productivity and work design; finding, developing and motivating people with the
skills the business will need; and managing change more effectively. Sitting in a back
room with the door shut and designing ever more complex procedures and forms
for managers to fill in is not being strategic. Technology should support people
management; it will not help us if we just waste people’s time in the same old way,
but using flashier kit.

HR needs to work in close partnership with managers and also more actively seek
The ‘strategic’ role of
the insights of employees. The Institute for Employment Studies has found that senior
HR should be about managers, line managers and employees want HR to be ‘responsive’ and helpful;
looking forward and ‘proactive’ in anticipating and addressing key issues and ‘professional’ in using
focusing on the issues evidence and giving relevant advice, not just following fads and fashions.
that are important for
In line with a major theme of this study, the role of the HRf is seen differently by our
the business and its various experts and is unclear, leading to an issue of how to demonstrate value:
workforce... ...Sitting
The current and future role of HR will remain unchanged, the essence of which is to
in a back room with execute the business strategy through the workforce strategy, including building the
the door shut and people and organisational capability to do so. However, such workforce strategies
designing ever more are typically only at a rudimentary stage, so there is a significant mindset and
complex procedures education deficit for boards, CEOs, executives and HR professionals to address
and forms for managers regarding the effective management of their largest budget cost item. The concept of
the ‘T Manager’, applied to the HR Director/Manager, will become ever more salient
to fill in is not being
with the vertical part of the ‘T’ constituting deep, subject-matter people expertise,
strategic. Technology
and the horizontal part constituting broad business and commercial understanding.
should support people
management; it will HR should become ‘CEO Advisory’ and not be a big management function in its own
right. Also a global model of HR is not appropriate. It is clear that emerging markets
not help us if we just
have a range of politico/economic/environmental influences that place different
waste people’s time
demands on HR, not to speak of the variety of images HR has depending on top
in the same old way, management. It is clear that the so-called Ulrich model does not work everywhere.
but using flashier kit.
The challenge for HR is the same as 30 years ago – how to add value. In some areas
scope has reduced, e.g. where central procurement exists, HR often has little say
in suppliers such as consultants and head-hunters. They assist CSR (not a major
thing in Australia) but rarely drive it. Most HRD specs in hands-on businesses (retail,
manufacturing) are still very traditional and transactional. The more strategic ones
are in technology and professional services.

And there is an acknowledgement, as noted above, that the business partner role is
not implemented in practice as it is described in theory.
The HRBP role still struggles but seems to be the continuing model. We are seeing
more chief talent officer positions. HR seems to have lost its original principles of
representing both management and employees.

20
The organisation itself will be impacted by technology developments:
There is the potential for lower level jobs to be much reduced as technology is
harnessed more. In many organisations delivery is more complex, with flexible
working and borderless virtual offices ... this leads to more self-service. It is a
challenge to coordinate and align specialists who often pursue their own separate If we define HR as doing
agendas and initiatives – and the generalists or BPs are on the receiving end. HR we will adopt an

Nick Holley echoes Ulrich’s thinking: internally focused view,

but if we define HR's role
HR seems to be fixated with one model of HR. In reality, we need to develop models
that are relevant to the organisation of which HR is a part. The key question we need as building the capability
to ask isn't how to organise HR but what is the role of HR, as this will define how we of an organisation to
organise ourselves. If we define HR as doing HR we will adopt an internally focused deliver its strategy and
view, but if we define HR's role as building the capability of an organisation to deliver create value this will
its strategy and create value this will drive a more outward focused model that will drive a more outward
depend on these commercial and strategic challenges.
focused model that
And Angela Szymusiak of Adobe notes: will depend on these
We often bemoan ‘Where are our leaders of tomorrow?’ and ‘Why aren’t our leaders commercial and
of today stepping up and leading their businesses and people like we want and need strategic challenges.
them to?’. Do our practices encourage leadership that takes ownership to truly lead
and drive business success? Or are we unintentionally supporting lazy behaviour
or lack of accountability? We must challenge ourselves with building leadership in
everything we do. Thinking creatively about the problems we need to solve, taking
bold steps and being deliberate in execution will help us to add greater value and
impact in helping our businesses succeed.

Not surprisingly the senior practitioners interviewed expressed a range of views.

Once again though, there is no real consensus on the role of the function and its
organisation and structure also varies widely from the traditional ‘personnel’ to
include a great range of people related activities.
Many described their organisation in terms of the three-legged model:
We are moving to a three-part model – factory (workforce), centres of expertise, and
strategic partnership with the business line. The issue being grappled with is how to
divide time and resources between them.

The key centres of excellence have a strong link to workforce planning and strategy,
though we still do payroll (not part of Finance), and comp and benefits. We see the
critical role of the function as being a Business partner – its role is to constructively
challenge the business.

We are quite recently wedded to Ulrich model – we will continue to deploy and use it.

I think the HR Business Partner and centres of excellence model has real flaws –
Business Partners need to become specialists, not generalists, and then a lot of the
routine will be outsourced.

I see much more a move to a model adopted by Qantas – strong Business Partner
approach, lean and having a team of change consultants which add value to the
business on a project-by-project basis. There are HR functions that would be better
placed in Operations – leaving HR to concentrate on adding value via change
management expertise.

21
 However, many practitioners have added other related functions to their
responsibilities, largely due to specific role focus on, for example, compliance or
employee brand:
In our company, procurement was put into HR and also corporate communications.
As CHRO I am much involved with governance – would say about a third of US
HR functions are in this area. HR has also claimed the mantle of Organizational
Effectiveness which I see as the most important determinant of the impact of
the function.

Getting much closer to the business – currently we work in close harmony with Chief
Customer Officer and Brand Director. HR needs to follow through the mantra: great
employee = great customer experience.

3.6  Variations in the label used

HR has a generally The label ‘human resources’ has engendered much derision over the years since it
bad image so [it was developed from ‘personnel’. Relabelling is, of course, a key tool available in so-called
‘transformation’ and, indeed, this is taking place once again. So, we increasingly see
considered] better to
the use of the word ‘people’ in entitling the function with, for example, a ‘chief people
rebrand. In Box, we officer’. In Adobe, they have created a function entitled ‘people resources’, which
have People Operations, includes the customer experience team. The use of the more impersonal ‘human
People Partners and capital’ now seems to be confined to the major consultancies and a few organisations
in the Middle East.
four specialist groups.
Being a relatively As we discuss in section 6, some more radical options present themselves for
breaking out of the traditional ‘HR’ silo. The Royal Mail for example has a ‘Director
new and expanding
of Operational Excellence’ which incorporates performance improvement activity
company we anticipate and is heavily integrated with HR. Box, an IT company in California, told us: ‘HR has a
the scope of the People generally bad image so [it was considered] better to rebrand. In Box, we have People
Department to expand. Operations, People Partners and four specialist groups. Being a relatively new and
expanding company we anticipate the scope of the People Department to expand.’

3.7  Dispersing work

3.7.1  Outsourcing
HR functions have typically outsourced some activities for many years. Examples are
senior level recruitment, running a payroll, specialist legal advice, career transition
counselling, psychological testing, expatriate packages and so on. The range of
specialist firms who will promise to do things better and cheaper widens every
day. Many lessons have been learnt about the dangers of outsourcing as a pure cost
reduction exercise, one which further distances employees from the HR function. As
one of our interviewees put it:
HR has to balance activity vs impact. Things that other people can do better I
outsource, such as payroll, reference checks and so on. But – outsourcers are driven
by their own profit agenda and not by employee experience. So, this has to be
balanced. Also ‘vendor management’ is not a common skill in HR.

There are many firms to whom one can outsource the entire HR function, and they
provide services to smaller organisations particularly. Larger organisations are more
discriminating (having more resources themselves) about what they will allow others
to take over. The top reasons for utilising external expertise are:
• It frees up time to concentrate on ‘strategic’ issues.

22
 • It saves money (or at least appears to) – the specialist organisation can utilise
economies of scale.
• It improves compliance. As regulations and legal pitfalls increase, it helps to put
them in the hands of those who do it every day.
• Specialists in recruitment or expatriate packages, for example, and who do it Things that other
every day, are likely to do a better job. people can do better
• Dedicated firms are likely to have the latest appropriate tools and technology. I outsource, such as

However, it does not give a good message to, for example, UK employees – that their payroll, reference
problems can be solved by a call desk in India. We found a great range of approaches checks and so on.
to this area. Some comments from those in companies were: But – outsourcers are
Employee brand development leads to recruitment being kept in house rather than driven by their own
(as more and more are) being outsourced. Social media management – at present profit agenda and not by
this is outsourced but ineffective – brings it back in-house. A lot more functions employee experience.
could be outsourced, but only to high quality providers which reinforce the brand, So, this has to be
examples being benefits and payroll.
balanced. Also ‘vendor
Areas like reward are ripe for outsourcing but there is no need for shared services to management’ is not a
be outsourced. common skill in HR.

More and more is outsourced on a managed partnership model to organisations

that specialise. For example: training administration, purchasing, major legal
case management. We have a head of HR delivery whose job is to create a
seamless service.

[Outsourcing] will increase as the company examines where it needs expertise (e.g.
with employee benefits) and finds the appropriate partner to deliver.

And by ‘observers’ we were told the following:

There are increasingly complex models of outsourcing. For large scale, administrative
outsourcing, the administrative work can be automated and done more efficiently
outside the organisation. These are services that do not create competitive
advantage and industry parity is sufficient. There are other outsourcing partnerships
where an organisation forms alliances or partnerships to win by building an eco-
system of competencies inside and out. It is important to know the purpose of the
outsourcing or contingent works.
More and more is
There will always be a need for the ‘high touch adviser’ – but routine things can be outsourced on a
done differently and avoid ‘the variable quality of the HR person’. managed partnership
I only see two areas for HR to retain – OE/OD and Talent Management (or not model to organisations
motivated to do so). Everything else can be outsourced (or insourced, as above). that specialise. For
It is “Capability” that is key to organisational success – at department, team and example: training
individual level. HR has to own culture, though it may subcontract analysis and administration,
feedback as it may be seen as too biased internally.
purchasing, major legal
You cannot outsource core HR, but transactional stuff will increase. Too much is done case management.
by procurement today – a form of internal outsourcing of some key decisions. We have a head of

Recruitment should be in-house, including head-hunting, because culture fit is HR delivery whose
so important. job is to create a
seamless service.

23
 There are many examples of where internal and external expertise are combined
in an ongoing partnership – indeed consultancy firms value these highly. One
interesting model is the Australian company Talent Intelligence, which combines
an organisation’s internal succession plan with proactive headhunting for external
alternatives, even when there is no vacancy.
3.7.2  Insourcing
The meaning of ‘insourcing’ in this context is ‘outsourcing in house’, i.e. getting
another part of the organisation to do some activities. An example would be the
setting up of a corporate administration unit or service centre, including more than
HR, such as is discussed later.
The classic debate is about the respective roles of an HR function and line managers.
Many organisations developed an HR dependency – which gave HR a not unwelcome
sense of power – so that all matters to do with people were handled by them. This
was (and is) compounded by the prevalence of promoting first line managers
because of their technical or professional – rather than managerial – skills. Public
sector bureaucracies are particularly prone to this syndrome. The pendulum has
swung over the last 10–15 years to put people management back where it belongs (i.e.
with line managers).
When an organisation is first created, managers do most of the administration until
they realise it will be more effective to release their time and get someone else to do
it. This case for the effective use of time does not go away. The pendulum swing often
confuses the strengthening of relationships between a manager and their people
(clearly desirable), and the administration of them (questionable).
However, technology has now intervened to enable progress on both fronts. Many
companies have extended the distributed HR service direct to employees so that
they can ‘self-manage’ themselves on standard HR processes. And there are an
increasing number of apps and tools that make it easier for managers to manage
their people. The take up is only beginning however.
Dave Ulrich commented as follows:
We have proposed for some time that line managers are primarily accountable for
HR (talent, leadership and capability) outcomes; HR professionals are architects and
anthropologists who bring unique insights to improved decision making. I see this
continuing, with these role differences being minimised.

Others commented:
I personally believe HR is there to support and take away ‘non-business activity’. Line
has people responsibility up to a point.

Yes – much more partnership, HR adding value (via change management) rather
than ‘routine tasks’ being performed. This would need a substantial attitude change
by both parties.

Apart from giving managers more HR admin to do (is it really their job?), the big
lack is in basic management skills training. Focusing all the time on leadership does
not help – too many assumptions that the basic skills are there. Some companies are
bringing back first line management skill courses (GSK, Standard Chartered).

Lots of self-service growth – applications such as Workday and Fusion are being
utilised. Managers managing people is really important and all ways to help them
are valuable. Technology can significantly help more collaboration.

24
 HR sees its role as empowering the managers of the business, by acting as a coach
and partner; with up to 40% of the labour force being contract/casual/part time,
much more energy needs to be deployed to that segment of the workforce.

Self-service is system driven – so it very much depends on the system and what it
allows managers to do.

3.8  Delivery vs strategy

It is both impossible and inappropriate to generalise about any ‘right’ solution,
since each organisation needs to work out its own model based on its needs and
its complexity. Although some organisations are just at the stage of introducing
the ubiquitous ‘three-legged stool’, most have broken out into their own preferred
models. The pressure on the costs of the function make it genuinely difficult for
many organisations to find the added value time for so-called ‘strategic work’. We
also live in a world of increasing regulation and legislation, as well as litigation – and
all of this increases the demands on the compliance and monitoring roles of HR. HR sees its role as
The more risk averse the culture, the more HR are asked to manage those risks (as empowering the
particularly noted by Nick Kemsley). All this takes away from time and resource
managers of the
that can be devoted to making an impact on organisational effectiveness. So long
as the transactional and compliance needs are linked together with the strategic business, by acting as
development of capability in one function, for most, this tension will continue. a coach and partner;
with up to 40% of the
labour force being
contract/casual/part
time, much more energy
needs to be deployed
to that segment of
the workforce.

25
 4   The future context

The main imperatives for carrying out this study at this time were the perceptions
that: a) the HRf itself was questioning its purpose, role and impact; and b) the
context or environment within which the HRf operates was changing, or about to
change, requiring a similarly dramatic re-evaluation of the HRf. Sarah Sandbrook, HR
Director of T-Systems, provides a very interesting case.

Sarah Sandbrook, HR to cover long term leave and short term

CASE STUDY

Director T-Systems requirements. For organisations like ours a mix

of permanent, contract, nearshore, offshore and
‘EMERGING TRENDS REQUIRE STRONG HR third party resources are the norm. A manager
LEADERSHIP’ will typically have a mix of all these available to
meet customer demands. For HR, it is not just
Impact of new ways of working
about the resourcing, but issues such as how
We have experienced that a combination to blend such teams effectively, the impact on
of enabling technologies, such as online engagement, how to preserve an organisation’s
collaboration tools and voice and video values and brand when many of the team are
conferencing, have created opportunities for not steered by that organisation and, perhaps
both individuals and our organisation. One most importantly, the impact on the skills and
example of the impact of this is that there is no competencies that managers need in this new
longer the need to restrict our search for talent world. The demands on managers and leaders
to small geographical areas close to offices, at all levels are changing out of all recognition,
and for individuals, opportunities much further but in many cases the traditional management
from home have suddenly opened up. Potential development approaches still apply.
employees are, as a result, likely to favour those
Sector differences
organisations that offer such flexibility. It also
throws open the whole issue of space planning, For organisations like ours, we are able to take
with home-working, hot-desking and hub offices advantage of these changes and challenges on a
becoming more mainstream. HR must now be consistent basis. In other sectors the complexity
at the forefront of these emerging technologies can be added to by the fact that not all people
and trends, to anticipate the impact on their can take advantage of these opportunities
specific organisations and to help directors and because they are tied to location by reason of
managers to develop strategies to benefit from the jobs they have, such as retail, logistics or
them. The pace of change means that we simply manufacturing. Even more problematic is where
can’t just react but must anticipate and advise in certain parts of an organisation are being driven
a strategic context. to these new agile methods because they are
competing for the same talent (e.g. IT), while
Blended resources
other parts are restricted because of the work
Another aspect of this technology is that being undertaken. The impact on engagement
traditional resourcing types are breaking down. and the need to avoid creating a two-tier system
Gone are the days when an organisation had requires strong leadership from HR.
90% of its people on permanent contracts
in a single workplace with a few contractors

26
4.1  The forces for change
It seems a constant truism that everyone always feels that change ‘has never been
faster’. Certainly, as far as technology is concerned there are a multitude of studies
that show its development to be exponential. Other things change little, however;
human nature does not change, even though its aspirations and comfort zones
do. And repeated experiments in novel organisational structures have eventually
reverted to the hierarchical norm in the absence of their original champions.
Organisations continually struggle with the paucity of effective leadership and
available talent, with the transient nature of employee motivation, with the variance
in people management capability, with cultural collisions and with ethical dilemmas.
It is not that there is a shortage of knowledge, experience or even solutions in these
areas. But it seems each generation must find its own answers.
In between the extremes of technological change and human nature are changes
that move more gradually, but are steady and significant trends. These include:
• stakeholder expectations (including transparency)
• legislation and regulation
• demographic change
• the economic environment, which is cyclical and has its own impact on shorter
term decisions – often with devastating effects
Many reports and articles continually urge changes in HR – such as its connections
with ‘the business’ and its strategy. The day-to-day pressures, and the general
ignorance of business dynamics by many HR people, mean that this connection is
unlikely to happen without the dynamic intervention of an innovative CEO or CHRO.
The normal distribution tells us that 15% or less of top leaders fall into this category.
This is why we get the same recommendations year after year but with a very slow
adoption, mostly by thought leaders in key positions. Deloitte’s recent report (Bersin,
2016) for example has several headlines such as:
‘Softer’ areas such as culture and engagement, leadership, and development have
become urgent priorities

and recommendations such as:

Today’s CHRO must be innovative and business-savvy and be able to stand toe to
toe with the CEO. At the same time, a CHRO must know how to bring the HR team
together and help it evolve into a more distributed, business-integrated function.
CHROs must also be comfortable adopting and embracing technology and analytics,
which are integral to HR’s future success.  (Bersin, 2016)

These are somewhat perennial conclusions. But we will look at the active forces in
different areas of impact, starting with the effect of technology and then stakeholder
expectations. Legislation, regulation and demographic changes – especially the
ageing workforce that many more established organisations experience – are not to
be ignored, but are generally beyond the scope of this report. We should just note
that several developments – such as the ‘living wage’ in the UK, the economic and
labour force impacts of major political events such as Brexit in the UK or Saudi Vision
2030 in the GCC, increasing rights of temporary workers, and the need for people to
work longer to attain a better pension – all have their effect on a workforce mix that
is affordable, willing and available.
Of course, these changes, and indeed the whole of this study, applies to the HRf itself
and those within it, as much as any other people in work.

27
 4.2  The future of work
Dave Milner of IBM reinforces that:
The future of work is here now – HR must not only embrace changing work practices
but start to lead the way in how organisations can maximise the people and digital
technology relationship.

It is almost entirely technology, and its innovative application, that causes jobs
to disappear and, indeed, appear. Overall, the number of jobs available probably
increases because technology and innovation create different kinds of jobs. However,
all the changes, both the losses and the gains, provide challenges for organisations
and their HR functions.
John Boudreau (2016) listed five forces shaping the future of work and organisations
from his own research, as outlined below.
1. Social and organisational reconfiguration
Organisations will be more flexible, shifting towards power-balanced forms
and project-based relationships. Talent will engage on aligned purpose, not
just economics. Networks and social and external collaborations will make
leadership more horizontal, shared and collective. And organisations will be
increasingly transparent to stakeholders.
2. All-inclusive global talent market
Data proves the workforce in Africa and Asia is growing and becoming a talent
majority. People are also working longer, creating multigenerational workforces.
Finally, social policies support boundaryless work beyond traditional full-time
employment.
3. A truly connected world
Work is increasingly virtual and occurs anywhere and anytime through mobile
personal devices with global real-time communications.
4. Exponential technology change
Robots, autonomous vehicles, commoditised sensors, artificial intelligence and
the Internet of Things reshape the work ecosystem so that flexible, distributed
and transient workforces adapt to rapid business reinvention. Organisations and
workers balance long-term bets and flexibility under uncertainty by engaging
automation to adapt to frequent changes and rapid skills obsolescence.
5. Human–automation collaboration
Analytics, algorithms, big data and artificial intelligence increasingly abolish
work previously performed by humans, but also create new work at the interface
of humans and automation.
We are not so sure about all these predictions. History is very much on the side of
traditional organisational structures, especially for organisations above a certain
size. Many different models, with eminently sensible rationales, have come and gone.
We see some of these things happening in some places – and they tend to get the
publicity. The ‘anytime, anywhere’ virtual work certainly exists where the business
lends itself to that model. Most organisations cannot live that way – they rely on
people working together, or directly interacting with customers or machines.
Deloitte report that:
• Companies are taking a more sophisticated approach to managing all aspects of
their workforce, including the hourly, contingent, and contract workforce.

28
 • More than one-third (34 percent) of all workers in the United States are contract
workers, and more than half (51 percent) of our respondents say their need for
contingent workers will keep growing over the next three to five years.
• The on-demand workforce offers companies the ability to tap into extensive
networks of innovators, technical experts, and seasoned professionals. To The future of work is
engage and retain them, companies should think broadly about how their HR
here now – HR must not
programs, strategies, and analytics tools could be applied not only to full-time
employees, but also to contingent and part-time workers.  (Deloitte, 2015) only embrace changing
work practices but
Media and advertising is one industry where full-time employment of creative people
is no longer the model. Creelman, Boudreau and Jesuthasan (2014) reported the start to lead the way
following example: in how organisations
Look at what Tongal is doing to advertising. Unlike ad agencies, Tongal doesn’t can maximise the
employ any of the creative talent they use to make ads. Instead, Tongal’s talent people and digital
platform connects advertisers with free agents who make ads. Established technology relationship.
advertising agencies are not laughing when they see blue chip clients like Nestle,
Lenovo and Ford send work to Tongal, which offers service at low prices they can’t
match. But the cost savings from using free agents without the employment
overhead is only part of the story. Tongal doesn’t just match an advertising job
to the talent who can do it – their platform provides a system for organising the
work. Tongal’s system crowdsources ideas and videos with a contest. Ideas must be
expressed in 140 characters and the top few ideas win the contest and get paid; then
the video producers pitch how they would handle the advertisement, and the top few
pitches get paid again. The winner gets to make the advertisement (the advertiser
decides on and compensates the winners). Behind the scenes, Tongal simultaneously
protects creative talent from client demands that exceed the original scope, and
helps the ad buyers find and track the quality and reliability of the freelancers.

According to a report in UK newspaper The Observer (October 2016):

Self-employed workers in the UK earn less than they did 20 years ago, according
to the Resolution Foundation. A report from the think-tank found typical weekly
earnings in 2014/15 were around £240 a week, less than in 1994/95 once inflation was
taken into account. The number of self-employed workers has also increased 45%
over the past 16 years to 4.8 million.

Automation is changing job design, and has been doing so for a long time. Perhaps
the most significant trend is artificial intelligence, where decision-making is taken out
of the hands of previous human decision-makers. For example, there are a number
of areas in the UK where magistrates have no discretion over sentencing, as it is
determined for them by a pre-ordained algorithm. Investments by firms like Google
and IBM in this area are enormous. Hence recent discussions about the ‘polo’ or
‘bagel’ effect, where jobs in the middle are being hollowed out and made redundant.
This not only applies to middlemen and agents but to managers and supervisors.
Thus, in many automated process plants there is nobody between the plant
operatives and the overall works manager, hierarchically. There are just specialists
who provide ‘horizontal’ services.
If ever there was a case for business partnership between HR and Operations, it must
be in the forward planning of job and resource changes – which might be described
as ‘strategic workforce planning’. This is a discipline and process, much neglected
over past years, that is coming back into focus.

29
 It is likely that the percentage of employees that are ‘contingent’ i.e. not on
permanent employment contracts, will continue to rise in most private sector
organisations – some to the extent of 100%. Similarly, the numbers of people working
reduced or flexible hours has increased significantly in some sectors. It is the role of
the HR function to open channels of recruitment and to develop effective selection
methodologies with a view to facilitating line managers to choose such workers. This,
combined with technological advances, will mean that increasingly a centralised
recruitment function will require different skills (such as data analytics) and will
target different kinds of people using different methods, including the increased
reliance on social media data.
Looking at current trends in the workforce and workforce demographics, the
conclusion is that there will be a lot less reliance on 9 to 5, Monday to Friday. So, HR
needs to get ahead of this curve and others.

4.3  The search for talent

If there is one priority that CEOs and HR leaders agree on, it is the ongoing need for
the best people and the best leaders. There is nothing new about this, and it will
always be the case. But many factors make it increasingly difficult. These include
more global competition, increased mobility and higher expectations of individuals.
The search for talent (including leadership) and its retention will never go away. In all
areas of scarce expertise, individuals can sell themselves to the highest bidder and
the individual’s ability to identify and sell themselves to opportunities has increased
rapidly via internet facilities. The challenge of continual engagement, challenge and
Our company is all
‘well-being’ as drivers of retention will continue to be a top priority.
about clever people.
Again, there is a multitude of reports produced each year asking questions about
Our HR function is
talent. For example, Mercer LLC recently produced their report Global Talent Trends
at the heart of our 2016, which found that:
major strategy of
Employers are experiencing ever-growing competition for labour. At the same time,
attracting, retaining and unemployment remains high in many countries around the world. The issue goes
developing talent in a well beyond lack of available talent,’ said Ilya Bonic, Senior Partner and President of
range of competencies. Mercer’s Talent business. ‘It’s a lack of the right talent where and when it is needed to
We have national and drive competitive advantage and deliver business results. For talent that has analytic
international niche skills, inspirational leadership capability, and a global mindset, demand continues to
exceed the supply.  (Mercer LLC, 2016b)
expertise, which is
rare and could be These conclusions will probably always be the case. Some comments from our
even one person practitioner interviewees were:
deep. We also have a Our company is all about clever people. Our HR function is at the heart of our major
demographics issue – strategy of attracting, retaining and developing talent in a range of competencies.
being heavily weighted We have national and international niche expertise, which is rare and could be
even one person deep. We also have a demographics issue – being heavily weighted
towards the older.
towards the older. Managers have been slow to understand the drivers of the new
Managers have been
generations. Gen-Y is more interested in employability.
slow to understand
the drivers of the new
generations. Gen-Y
is more interested
in employability.

30
 So now we’re reversing the investment in L&D … and moving it to a centrally
coordinated model to ensure that we are spending wisely – on business strategy
(top down and bottom up) rather than life-style training. The L&D element has to be
part of the retention challenge. Investing in skills not only makes the individual more
skilled but widens employability internally.
To remain relevant,
We are seeing in the search business more Chief Talent Officer positions. HR teams will need to
be curious about and
4.4  The influence of technology embrace developments
As noted by Julia Tyson: in the digital economy to
To remain relevant, HR teams will need to be curious about and embrace evolve their contribution
developments in the digital economy to evolve their contribution to the emerging to the emerging
business challenges. business challenges.

Technology is the fastest force for, and most powerful driver of, change in today’s
world, and a major challenge is to exploit it proactively. It has many impacts on the
work of an HR function, especially in the areas of:
• People data management systems
• Distributed access and ‘self-service’
• Online opinion gathering and feedback
• Use of mobile device applications
• Social media applications
• Artificial intelligence and decision algorithms
• Knowledge and instant learning availability
• Robotics
• Flexible and virtual working utilising cheap audio-visual communication
• ‘Grab and go’ how-to videos for processes
• Use of cloud based services
• Sentiment analysis
• Gamification, virtual reality and other immersive technologies
This is not the place to go into all these in detail; it is the impact on the HR function
delivery models that are our concern. Dave Ulrich’s response to our question is well
worth quoting – he sees four phases of development:
First, HR technology is used to design and deliver HR practices more efficiently.
Through self-service portals, employees become responsible for accessing
and integrating HR solutions for them. HR technologies like mobile apps and
gamification also help facilitate HR innovation in staffing, development, rewards and
involvement.

In phase 2, HR technology enables transparency and sharing of information.

Through big or cloud data employees’ skills are public domain and companies
may approach them without their applying for work. Technology-enabled training
enables insights to be shared from training platform to application and also among
the individuals that are trained.

31
 In phase 3, HR technology encourages connections by involving more people in
decision-making and by facilitating collaboration. Some of this collaboration comes
from crowdsourcing, which allows firms to hand off some tasks to workers outside
the enterprise. Salesforce.com uses LiveOps’ ‘cloud contact centre’ to deliver global
customer support services, which involves tapping contractors who work from
Employees are often home and set their own hours. The platform tracks performance and rewards high
looking less for a job performers with recognition, more work and better pay and allows responsiveness
or even a career, and to demands.
more for an experience
Finally, in phase 4, HR technologies shift towards an experience economy where
that will increase
employees and customers don’t just want information, but the emotional
their personal identity experiences from it. The experience economy is one of the trends shaping personal
and well-being. lifestyle and being woven in architecture choices and organisation processes.
Employees are often looking less for a job or even a career, and more for an
experience that will increase their personal identity and well-being. Leaders learn
from more experience-based training than classroom settings. Technology broadens
access to experiences and magnifies the experiences through sharing them.

He concludes:
Technology should enhance experience not isolate it.

There is so much technology available today, with many start-ups seizing what they
see as new opportunities, that selection is a difficult challenge for HR. In fact, some
reported they were appointing their own fulltime Technology Officers or even units.
However, Wendy Hirsh reminds us:
Technology should support people management, but will not help us if we just waste
people’s time in the same old way but using flashier kit.

4.4.1  Data systems and cloud based services

The HR modules of ERP systems have historically been imposed on HR functions
and caused many difficulties due to their lack of flexibility. In the CIPD ‘HR outlook’
(2016a), 41% of HR leaders expressed concern about ‘outdated and inflexible HR
systems’. The few IT companies that hold this space are, of course, now working hard
to provide more flexibility and functionality.
The influence of ERP systems such as SAP has not been good – the function has
been led by the machine! HR modules have been poor at both history and trends,
and have been driven by administrative and cost needs rather than strategic
requirements.

Companies like Oracle are continuing to ease the delivery of HR processes and
systems while developing tools, including apps, for leaders to analyse and utilise the
detailed data provided to aid key decisions.
Andy Campbell, of Oracle, predicts that:
Cloud-based enterprise systems will provide the heavy-duty data storage, processing
and analysis, while smart apps will provide the easy-to-use interface that managers,
and employees, need in order to lead and work more effectively and more easily.

New systems like Workday are making headway and are being mentioned by several
interviewees. Workday claims 150 large organisations as customers and claims that
its Human Capital Management module:
makes it easy for your managers to find great candidates, bring them on board, and
enable them to succeed. With workforce planning, recruiting, talent management,
32
 and learning together in one system that works across your devices, you gain
complete visibility into your global workforce. Understand what your employees
need to help them make connections and become future leaders – all from an
easy‑to‑use HR system built for the way people work today.

It is these systems that are enabling the empowerment of managers and employees Cloud-based enterprise
to manage without HR and will eventually change the shape of the whole function… systems will provide the
in those organisations that can afford them. A cautionary note was provided by one
heavy-duty data storage,
interviewee:
processing and analysis,
It is important to first redesign your processes, and then use technology.
while smart apps will
Empowerment is fine, but one mistake that is often made is to assume that people provide the easy-to-use
are prepared for the responsibility and to neglect their needs in being able to take on interface that managers,
personal responsibility.
and employees, need
The ‘digital divide’ is growing. There is a greater reliance on individuals to take more in order to lead and
responsibility – risks are being shifted to the employee. This reduces the need for
work more effectively
supervision. HR has a key role in helping create a more resilient workforce, and in
and more easily.
educating top management in appropriate ways of managing and empowering.
Education on MBA courses also needs to change – they are often stuck with
traditional agendas.

Peter Reilly of the Institute of Employment Studies observed:

Technology will, inevitably, significantly impact transactional HR by simplifying and
speeding up processes and reducing functional headcount. Technology will also ease
many of the data management and reporting tasks but will also facilitate planning
and analysis. But the most interesting conundrum may be with operational HR.
Managing people is not going to get easier if workforce diversity continues and
activities are more spread out temporally and spatially. Giving managers an app
to help them deal with people issues might not be enough. Keeping the best may
require more rather than less nurturing, leading to ‘high tech’ not ‘high touch’. Or
there will be high touch for some and a very basic deal for others.

According to the KPMG annual ‘HR transformation study’ (2016), many organisations
are pursuing cloud computing to revolutionise the HR function with data-based
decision-making, cost advantages and new value for the bottom line. However, they
are discovering that HR transformation entails much more than simply plugging
into the cloud.
Investment in cloud HR continues to grow at an exponential rate and the survey
shows that a growing number of HR executives who have selected new HRMS
technology are opting for cloud-based solutions. The report said that 42% of the 850
surveyed had already or were planning to replace their HR systems with a cloud-
based model. Users report much enhanced self-service for managers and employees,
better access to processes, and better management information. However, like many
IT solutions that promise much, only 24% could say it had enhanced their ability to be
more strategic.
It is not just employee data that these services are used for: one example of other
uses is sentiment analysis, which uses social media feeds to identify sentiment and
mood about particular topics.
There is a greater use of (cloud-based) apps for employee input but also less obvious
but advanced areas such as ‘mood assessment’ (e.g. see www.theysay.io).

33
 4.4.2  Social media and mobile apps
This ever-expanding area presents many challenges and opportunities. On the one
hand, it enables more information to be collected both about people themselves for
recruitment purposes and also about their opinions. It can provide instant feedback
on ideas and experiences.
The recruitment process has been affected more than most by the growth in
technology. It is not just about finding out about people but is also about positively
harnessing media in a marketing sense, such as company Facebook pages.
In the old days, we would get 300 applications per job advert and manually rank
them by pointless criteria. Now we use social sourcing to cast the net wide. We use
Facebook to show them what it’s really like to work here. Then we allow them to
check against some “disqualification questions” before doing an online situational
judgement questionnaire and cognitive ability. We may now get 800 applications
but the recruiter only gets to see the top 25. Finally, we hold a video interview. If
The technology we like them, they do online psychometrics and competency assessments. The
allows us to attract technology allows us to attract more candidates, find the best much more easily and
more candidates, carry out much more thorough assessment via a much quicker process.

find the best much Checking social media profiles is routine (but only an addition – I have never seen a
more easily and candidate disqualified because of it). Internal social sharing is an opportunity that
carry out much more will grow – CEO messages, internal webinars, YouTube videos of workers (e.g. Tiger
thorough assessment Airways stewardesses) and as a recruitment device. As an example, we got 1,000
applicants in 6 weeks.
via a much quicker
process. When it comes to feedback, we live in the age of the instant experience. Immediate
continuous feedback can be much more valuable than an annual survey taken on one
day in the year, but also requires careful evaluation as each day has its own variations.
It also places much greater demands on monitoring, response and action – and runs
the risk of these being overlooked in the pressure of time. Engagement, for example,
is a state of mind that is experienced daily, not just once per year, and apps like
iLeader (www.ileaderapp.co) provide this instant feedback.
We are using an instant feedback tool every Friday with our consultants – asking
a) did they find work meaningful this week and b) their level of satisfaction with
the work. We are seeing connections with engagement and performance, and are
working with managers to examine the “so-whats” of the results.

Daily engagement and productivity can be checked. All leaders have iPhones but
with big security constraints, so it’s tricky – and of our first line managers, the
majority don’t have smart phones.

It is ever easier for firms to keep their finger on the pulse – of employee feelings,
customers etc. But along with this availability goes the need to monitor and respond
–it’s a double-edged sword, and it changes the ‘balance of power’. Everyone has access
to so much more information as well, which has its own risks.
4.4.3  Branding, transparency and reputation
Social media is a two-way process – it provides channels for employees
and prospective employees to use. This requires constant monitoring and
selective responses.

34
 We now have got a cadre of people who are much more tech savvy. Tools in
consumer lives are much better so we have to provide and utilise the same tools [at
work]. It leads to much greater transparency – plus the sharing of ideas etc and the
democratisation of innovation. It is difficult for managers to hide.

[The HRf] definitely needs to have access to economists and social media experts. We are using an
Social media is boundaryless. ‘Glassdoor’ has to be watched – whether it reflects the instant feedback tool
truth or not. Internal chat rooms; access to the CEO; communications opportunities – every Friday with our
HR needs to get in front of and harness them all.
consultants – asking
4.4.4  Learning and development a) did they find work
There is nothing new about ‘e-learning’. What is growing fast is the instant availability meaningful this week
of training and the ability to get questions answered through mobile devices – where and b) their level of
they are available to employees.
satisfaction with the
I can be critical of our own learning tech. But others are even worse! Tech has an work. We are seeing
increasing part to play, but not by itself. There will always be a place for traditional
connections with
learning in the 70/20/10 model [which suggests that 70% of learning is informal and
engagement and
self-directed, with only 10% occurring in a formal setting]. E-learning plays a part in
repetitive training – e.g. mandatory requirements – and [we are] looking hard at performance, and are
materials for iPads etc. working with managers
to examine the “so-
Volume training will be much more mobile than classroom based.
whats” of the results.
A recent report by the Chartered Management Institute (Scott-Jackson et al.,
2016), which focused on leadership development, concluded that new technology,
especially mobile, had the potential to fundamentally change the way people learn,
but that, to date, this potential had not been harnessed as most online training
was basically ‘content dumping’. New applications which help learners to do things
in real time and in real situations (rather than learning and remembering) and
which provide accessible curated knowledge, will begin to realise this potential
(e.g. iLeader).
4.4.5  Artificial intelligence
Companies like Google and IBM are investing enormous amounts in this area,
including buying up university spin-outs and other fast-moving start-ups. IBM’s
Artificial Intelligence engine, Watson, for example, claims in its publicity that 80% of
data in the world is unstructured. It claims that Watson can:
• analyse unstructured data
Daily engagement and
• understand complex questions productivity can be
• present answers and solutions checked. All leaders
Watson was mentioned by two interviewees who commented on its power. The have iPhones but with
potential applications in the complex areas concerning people are very substantial. big security constraints,
One such application is in recruitment. Not many interviewees commented so it’s tricky – and of
on its use as this is a new application of a relatively new technology, but one
our first line managers,
practitioner said:
the majority don’t
Artificial intelligence can take the human bias out of processes. People-based
have smart phones.
decisions are tricky because we’re all different. We have now a full-time HC
technology officer and a unified technology platform (including a learning
management system, reward, care-giver and so on).

35
 However, a recruitment consultant commented:
Artificial intelligence algorithms used to filter candidates can come to quite wrong
conclusions as they are very dependent on the ‘garbage in, garbage out’ principle.

Although there are always privacy issues at stake, one can envisage artificial
intelligence and social media (such as Glassdoor) combining to give richer pictures
than the current ‘star weightings’. One organisation was rolling out a mobile app
to provide a ‘virtual career counsellor’. However, just as we see family members
gathering together to focus on their individual devices instead of talking to each
other – technology creates a dilemma between its personal availability and
convenience, and the risks of reduced face-to-face contact in organisations. In
a recent study for a major bank, we found that many supervisors would rather
communicate by instant messenger to their team members, even when the team
member was less than 20ft away.
4.4.6  Application of analytics/big data
This remains an undeveloped area in many organisations, where it’s application
is limited to basic reporting. The existence of good data itself is a challenge for
many as they migrate their systems or struggle with integrating different ones
due to restructuring. Many also have a limited understanding of how to use them
effectively, how to relate people-related metrics to business data and how to use
them for prediction. Consequently, most operational managers do not understand
how people-related metrics could help them to manage better. The problem is
compounded by a lack of knowledge and capability within HR functions.
In the CIPD ‘HR outlook’ (2016a) only about a third of HR respondents indicated a
‘managed’ and robust approach to analytics. The study also found a wide discrepancy
between HR’s perception of communication in this area and non-HR leaders’
awareness of them.
Deloitte’s ‘Global human capital trends’ (2015) comments that:
Analytics is on the agenda of almost every HR team we surveyed, with three in four
respondents rating it as ‘important’ or ‘very important’. But despite this interest,
our research shows only a small improvement in analytics capabilities. Thirty-five
percent of this year’s respondents reported that HR analytics was ‘under active
development’ at their organisations …and this year, only 8.44 percent of the
respondents surveyed believe their organisations have a strong HR analytics team in
place, a very slightly higher percentage than last year’s figure.  (Deloitte, 2015)

‘Stuck in neutral’ is the headline the researchers at Deloitte used.

There are some enviable role models which are hard to imitate. Outstanding in the
field is Google. John Sullivan (2016), writing for ERE, a consultant firm, says, ‘Google
has the only HR function on the planet that is managed based on people analytics’.
He lists his top ten most powerful illustrations of Google’s practices, which include:
• The PiLab – which conducts evidence-based research into the most effective
ways of managing and ensuring productivity
• A retention algorithm, predicting employee risks of leaving
• A unique hiring algorithm
• Calculating the value of top performers

36
Dave Ulrich commented:
Metrics in HR are not new. Good HR has always been based on good data. Today,
there are four phases of HR analytics, each using different data:

Phase 1: HR scorecard: Presenting basic institutional employee data (number of

We need to engage
employees in what job and demographic categories, performance history data,
with big data for
etc), HR initiative metrics (did specific assignments get done on time and within
specifications? – a new on-boarding program). decisions, predicting
and suggesting. We
Phase 2: HR insights: Looking for broad insights in the volumes of existing HR data,
need to become much
often called cloud (or big data) analytics.
more analytical – with
Phase 3: HR interventions: Discovering the relative impact of HR practices (i.e. data scientists that
comparing those hired, trained or paid in one way versus another). can drive, manage and
Phase 4: Business impact: Determining how business challenges (financial, customer build the systems.
or market results) are affected by HR practices.

The emerging trend is to start analytics at Phase 4, defining business outcomes, then
showing how HR investments will impact those outcomes

Other observer interviewees commented that:

HR could make much more progress – it has the tools. But it needs to learn
to make sense of the data it has and transfer it into knowledge, using it for
intelligent decisions.

The use of metrics has not developed much yet beyond reporting; they should be
used more for evidence-based studies, investigations and forecasting – both hard We definitely need a
and soft measures. ‘heavyweight’ data
and analytics function.
The feelings of practitioners were very mixed, from frustration with lack of progress
Predictive analytics
to enthusiasm for what they could achieve.
will be a crucial
We have real-time digital analytics on people, performance, using mobile apps such
competitive tool.
as iLeader. We need to engage with big data for decisions, predicting and suggesting.
We need to become much more analytical – with data scientists that can drive,
manage and build the systems.

Yes, the use of analytics and interpretation of the information will become ever more
important. Using data to manage today and predict tomorrow is absolutely critical –
ripe for outsourcing to the right partner.

We definitely need a ‘heavyweight’ data and analytics function. Predictive analytics

will be a crucial competitive tool.

There is too much current focus on what can be counted, as opposed to

what should be.

The availability of so called ‘big data’ is seen by some as a great benefit and others as
confusing. One of the weaknesses of many attempts at analytics is to report them
as standalone numbers, or at best present them as trends. But it is the connection
between the metrics that turns data into knowledge. Arguably the question of
productivity should be an HR issue – after all it is about what people produce. The
question is ‘Which characteristics of people and the way they work can we show have
the greatest influence on performance? ’

37
 In 2013, Nick Holley studied the impact and application of big data on HR. His
comprehensive survey concluded:
It’s a massive opportunity for HR so long as we follow these golden rules:
1. Drive your data analytics from the business issue not the data.
Recruit HR people who
2. Don’t be seduced by the tools and technology; focus on people’s ability to use
get it: commercial, them to address business issues.
action oriented, focused,
3. Don’t overinvest in your data initiative; start small and prove the concept.
willing to challenge,
4. Join your HR data with your finance, marketing, risk and other data.
agile and curious.
5. Don’t worry too much where your data analytics team sits but make sure they
are connecting the data to the business issues and the HR solutions.
6. How you present the data is as important as the data – insightful, impactful,
simple and relevant.
7. This will change HR, so recruit HR people who get it: commercial, action
oriented, focused, willing to challenge, agile and curious.
8. Develop data comfort in the whole HR function.
Mayo (2012) suggested that just as line managers are given a budget, a regular
report against that budget and a periodic balance sheet, that – since their people
were actually the drivers of all that they do – they should also create with each line
manager a ‘people and organisation plan’ (backed by customised and deliberately
chosen metrics). This would have regular reporting (Figure 9) against it, perhaps
quarterly. Each year a balance sheet (Figure 10) would be prepared which
would weigh up the strengths and weaknesses in that manager’s team and the
way it worked.

A NEW BUSINESS MODEL

WHERE WE WHERE WE
HAVE BEEN ARE NOW

Budget
FINANCE

Balance Sheet
Regular progress
statements
Assets & liabilities
Profit & Loss Account

People and
Organisation Balance Sheet
PEOPLE

Plan
(backed by customised metrics) Assets & liabilities
People Plan Report

Figure 9: The New Business Model (Mayo, 2012)

38
The balance sheet would be constructed as follows:

On the asset side On the liability side

People and teams who add value to our stakeholders People and teams who ‘subtract’ value from our
stakeholders

Areas of capability superior to our competitors Areas of capability inferior to our competitors

Aspects of our people policies and practices that Aspects of our people policies and practices that
motivate and retain our key ‘assets’ cause dissatisfaction and cause the ‘wrong’ people to
leave

Aspects of our culture that support us in maximising Aspects of our culture that constrain us in our ability
value to stakeholders to maximise value to our stakeholders

People measures that are ‘good’ = better than target People measures that are ‘not good enough’ = below
target

Figure 10: The people balance sheet (Mayo, 2012)

4.4.7  Managing stakeholder expectations

In a commercial company, the key stakeholders are usually seen as the shareholders
or owners. Their desire for a good return on investment does not change, but the
routes towards it have become better understood, especially in regard to reputation.
The growth in transparency attributable to social media leads to pressure on HR to
play its part in managing this.
Sites like Glassdoor publish employee comments about what it is like to work in
562,000 companies. Accenture, for example, has over 20,000 reviews on the site.
93% of the employees approve of the CEO and 81% would recommend working there
to a friend. Sites include interview experiences and ratings as well as employee
comments on pros and cons of working in the organisation. This is a classic example
of how external data is becoming as important as any internal surveys.
CSR programmes are an investment that HR is often involved in, though we could
not find much evidence of them being owned by the HR function. Designed to show
a caring face onto social and sustainability issues, programmes often involve giving
time and/or money to employees to take part in charitable work.
In the ‘war for talent’, prospective employees are key stakeholders, and young people
of Gen-Y have their own demands and expectations.
HR will always have roles in the CSR area if not direct accountability. For example,
the current millennial generation are very switched on to sustainability and this can
be a make or break in attracting them.

Young people are very focused on sustainability and this is a recruitment issue.

They also have increasing expectations about flexible working – building the job
around ‘me’ rather than the other way around. This varies very much with culture but
is particularly strong in UK/US. It includes opportunities to work from home and to
have hours that suit domestic circumstances.
Businesses are ready to support the ways people work and their expectations, with
roles becoming like a contract between equals. Jobs are expected to be less paternal,
have a lot more flexibility and in certain sectors the employee has the power to
choose whether to stay and to dictate when and how they work, and whether the
role is permanent or fluid.

39
 The expectations of external customers are constantly raised by often unfulfilled
promises of customer care. Nevertheless, as in the model known as the service–
profit chain (Sasser, Heskett & Schlesinger, 1997) (Figure 11), the level of employee
satisfaction was found to be critical. Companies in retail and other service sectors
know this well. One of our interviewees said:
We are getting much closer to the business – currently working in close harmony
with Chief Customer Officer and Brand Director. HR follow through the mantra
‘great employee = great customer experience’. Customer and employee branding
need ever closer synergy.

Employee Revenue
Retention Growth

Internal External
Employee Customer Customer
Service Service
Satisifaction Satisifaction Loyalty
Quality Value

Employee
Profitability
Productivity

…… workplace design …… service concept: …… retention

…… job design results for customers …… repeat business
…… employee selection …… referral
and development
…… employee rewards
and recognition
…… tools for serving …… service designed and delivered to
customers meet targeted customers’ needs

Figure 11: Service–profit chain

CEOs are of course a major stakeholder, and studies are often carried out to discover
what they look for in an HR function. Nick Holley carried out research into this in 2014
and his paper references many such studies. What he concluded was:
They expect you to be getting on with the HR basics in the background but they
don’t want to be bothered by unnecessary detail. The only time they’ll care is if
there is noise in the system. If they are hearing from the business that the basics
aren’t being done, or doing them is getting in the way of people fulfilling their core
roles, then they will become interested. So, you’d better focus on doing the basics
simply and non-bureaucratically, focusing on enabling the business rather than
enabling HR, because their focus is on the business not on HR. What they really want
from the function and care about is your support in enabling the business strategy,
building the people and organisational capability to deliver the business strategy.
Indeed, what they value most in an HR Director is the director bit, less so the HR
bit.  (Holley, 2014)

40
Outsourced, insourced or whatever the model, the basic HR processes and
administration must be done well to give the function a platform of credibility. He
goes on to add:
They expect you to bring your HR functional expertise, but above all they expect you
to be a ‘corporate director’ like any of their other direct reports. They expect you
to contribute beyond your functional role. They don’t want silence until a people-
related issue is raised.

They also expect a more personal element to your position. They are under huge
pressure in what is often a lonely role. They need someone they can trust, whom they
can turn to for confidential advice or just to be a sounding board.

The most important finding of our study, the most consistent theme, was the need
for absolute integrity. The lack of this was the most common reason for letting go of
an HR director. They hold HR to a higher standard on this than others – it’s integrity
that decides if you’ll win the gold medal.

Change is always with us, but some of those forces move faster than others. Some
have demands that give no choice – such as regulatory changes, and the impact of
technology on the jobs mix in organisations. Others are discretionary in the way
in which we choose to respond or harness them. There is often not enough time
to give to the discretionary areas. However, there are great gains to be made from
deliberately and innovatively harnessing the technology available – whether for
operational seamless excellence, or for enhancing the employee experience. From a
business perspective, the ability to selectively deploy and manage analytics can make
a real difference – but operational managers are unlikely to see the benefits until they
are shown them. Doing so can only increase the sense of partnership between line We are getting much
and HR. Finally, understanding and responding to stakeholder expectations is the key
closer to the business
to providing value to them, the goal of any support function like HR.
– currently working in
close harmony with
Chief Customer Officer
and Brand Director.
HR follow through
the mantra ‘great
employee = great
customer experience’.
Customer and employee
branding need ever
closer synergy.

41
 5   Impact on the HR function

5.1  No universal concept

The HRf is not a universal concept and never will be. Most of what is written about HR
as a function assumes the function has a universalism that applies to it – that what
applies to one HR function applies to all. This is very far from the case. The majority
of research and studies are carried out in the context of large international, private
companies – and these actually represent a very small part of the workforce.
Even large national companies have a different dimension – they are subject to
one legal framework and maybe a national union environment, and are inherently
less complex.
SME’s tend to be national and have different challenges. The HR functional resource
may be much leaner. They may not afford the complex modern software that enables
self-service, or some of the fancy employee applications we see elsewhere, but HR
may also be closer to the business. There are many examples of people-centric CEOs
partnering with their CHRO and together creating role model cultures; likewise,
there are opposite examples of HR being seen as a purely administrative and
compliance function.
Most public sector organisations are characterised by risk averseness; line managers
will not move on people matters without HR’s approval. They themselves are
absorbed by often complex processes and traditionally have been seen as being apart
from the operational side of the organisation. They tend to follow fashions, typically
sometime after the private sector.
There are national differences too. In many countries, so called ‘strategic HR’ would
not be seen as the realm of an HR function at all. Senior management takes more
ownership of this – for example in the GCC countries.
The forces of change outlined in Section 4 are universal. But there is no one
prescription or formula for responding to them.

5.2  The need to improve

Millions of words are written annually in prescriptions to improve the HR function.
Probably no other function is so given to introspection and self-doubt – largely, we
consider, because of the lack of a clear purpose. Deloitte (2015) for example says:
HR is at a crossroads. Once designed primarily as a compliance function, today’s
HR organization must be agile, business integrated, data-driven, and deeply skilled
in attracting, retaining, and developing talent. These business imperatives demand
not only a new organizational model for HR itself, but also a massive reskilling of HR
professionals around the world. They also create an unprecedented opportunity for
HR to play a preeminent role at the highest levels of business strategy.

Such a highly aspirational view of HR is not new.

It’s easy to find examples of sexy, new and exciting developments. In most
organizations however, HR is still very much designed around getting [people] in,
getting them to work well, developing them and getting rid of them.

42
In early 2011, Henley Business School produced a paper, Zero-based HR, a Henley
Centre for HR Excellence research study into the current and future value of HR by
lead researcher David Birchall.
Their conclusions are remarkably similar to those we find 5 years later:
Technology and automation will be key factors in delivering increased HR value It’s easy to find
moving forwards, both as enablers to cost reduction and simplicity, but also to examples of sexy,
support decision making in an environment where a more data-based approach to new and exciting
risk management is becoming commonplace. developments. In most
HR must try to break through the barrier to developing greater commercial acumen organizations however,
and strategic agility since the current approach does not appear to be bearing fruit. HR is still very much
It should perhaps look to more fundamental issues around assessment and career designed around getting
development in light of this. [people] in, getting
HR must become comfortable in creating and using data differently and must take them to work well,
greater steps to ensure its accuracy. developing them and
getting rid of them.
Excellence in project and programme management is seen as a key enabler for
organizations but increasingly for HR itself. If HR cannot manage its own projects
well, what right does it have to support change in the wider business?

There is an increasing need for risk management to become part and parcel of HR’s
role. In particular, a need to achieve a comfortable balance between governance and
flexibility. This will test HR’s ability to be pragmatic.  (Birchall, 2011)

We could reference a multitude of reports over the last 5 or even 10 years that come
to very similar conclusions, and indeed many of our interviewees confirmed well
known challenges and dilemmas. Those that take non-HR perspectives into account
as well as HR functional ones always find differences in priorities. This is inevitable.
Getting such feedback internally in an organisation is very valuable, if the function is
prepared to listen and evaluate it objectively.
Chris Brewster of Henley commented:
I see increasing bifurcation – in large, high-tech, international, rich businesses more
and more becomes self-managed and there are opportunities for the use of big data
for strategy. On the other hand, the vast majority of organisations carry on with
standard models. So, we have a polarisation – at the one end enormous investment
in technology and, at the other, a struggle with legacy systems.

The size of the organisation is a critical factor in HRM: in small organisations

relationships are more informal and personal, HRM decisions are taken by the owner
of the business and everyone knows their colleagues. In giant multinationals, HRM
has to be more formalised, decision-making more structured and devolved. The
trick would be for the smaller businesses to be as aware of the consequences of their
HRM decisions as the larger businesses are; and for the larger businesses to retain
their awareness of the employees as individuals. And, of course, human resource
management varies markedly around the world. This is not just because some
countries are backward, it is because different things work in different places; every
HRM specialist in multinational organisations deals with this every day of the week.
Cultures and institutions are very different in Latin America than in the People's
Republic of China; very different in India than in Sweden – and consequently how
people think about HRM and what works in HRM are different too.

43
 5.2  HR practitioners’ development and careers
This is an area of key importance. Digitalisation may eventually remove all the
traditional HR knowledge and skill areas as self-service and AI algorithms take over
routine activities. In many organisations, this transition will be slow but there will be
The size of the pioneers to learn from. It will be a case of the hollowing out referred to in Section 4,
organisation is a critical and this will present significant challenges to the traditional career in an HR function.
Indeed, as we explore in the next section, HR as a function in the traditional way may
factor in HRM... The
not have a long-term future.
trick would be for the
Not that the need for intelligent and professional knowledge about people and
smaller businesses
organisations will go away. What Ulrich calls the architect and anthropologist roles
to be as aware of the continue – indeed his latest model has nine very demanding skill areas. Rather, it
consequences of their is that these skills need to be combined with finance and systems to give a unified
HRM decisions as organisational effectiveness capability.
the larger businesses A major issue is frequently voiced about HR professional education, at least in the
are; and for the larger UK and Europe, and recently, for example, in countries such as the UAE and Saudi
Arabia. The CIPD reset its ‘professional map’ (Figure 18) and the educational syllabus
businesses to retain
to support it in 2009, but it remains weak in the business acumen area. In fact, the
their awareness only business module in the CIPD Advanced Level 7 syllabus Is called Investigating
of the employees a Business Issue from a Human Resources Perspective, which is all about how to do
as individuals. research. There is another module, Developing skills for Business Leadership, which
has one sub-module on finance and IT, but otherwise it is about personal transferable
skills. It is not surprising, therefore, that HR functions struggle to be more business
orientated.
CIPD is too basic for future needs – It needs much more emphasis on business issues
like change management and talent management. There is a big question whether
CIPD is relevant for future needs of HR.

There is little professional development for HR people in Norway. The more successful
businesses have recruited senior HR people from business lines. Business competence
of HR people is a major barrier.

The wider concern, of course, is that if the role of the HRf, particularly the strategic
role, is unclear or varies widely, then the capabilities required and the logical career
path will also be unclear.
5.2.1  Future skills
However, we had many comments about the future skills needs of HR practitioners
(which we will revisit in Section 6).
There is a dominance of psychology rather than sociology and labour market
economics, which needs rebalancing. HR needs to focus less on individuals and
more on teams.

There is a need for the skillset of how you manage tensions between things: talent
growth vs purchase, for example.

Because HR is becoming more and more integrated, the skillsets are different. At
the bottom it’s only operational; the medium level is a mix; at the top it’s strategic.
[There is the] challenge of how to develop HR people, who tend to have operational
process expertise which doesn’t work upwards. e.g. heads of operational recruitment
service need very different skills to those creating a strategic workforce plan.

44
 Because HR will become more focused, rather than continuing generalism – e.g. Because HR is
talent management, OD, L&D, workforce management – there will be a much
becoming more and
greater need for HR to understand the business and be seen as part of it.
more integrated, the
Change management ability and experience is a key need, as is coaching. skillsets are different.

‘Business acumen’ is an ongoing need and not many HR people have it. A bit like At the bottom it’s only
leadership – is it born or made? Intuitive or trained? HR needs to learn to think operational; the medium
more like an investor; be better at making the business cases and ROI for projects level is a mix; at the top
and programmes – at least making sure the function has accessible expertise in it’s strategic. [There is
these areas. the] challenge of how to
Currently guys in HR don’t understand the business because they start in HR. develop HR people, who
tend to have operational
The key skills HR will need are psychology and understanding people, developing
process expertise which
compelling and effective organisations, collaborations and partnerships.
doesn’t work upwards.
5.2.2  Having business experience e.g. heads of operational
When we consider careers in HR, there was widespread agreement in this research recruitment service
that it was advantageous to bring people into the HRf with business or operational need very different
experience. However, except for the most senior jobs, this is rare in practice. As the
skills to those creating a
profession, has consolidated its status, people enter HR as a career in itself. However,
the development discussed in this report puts traditional career development at strategic workforce plan.
risk. We see the operational delivery becoming more side-lined and technical, and
the need for HR Advisors overtaken by increasing self-service. Specialists will be
true specialists in order to contribute effectively. The paths and ladders within the
function begin to show real gaps.
Nick Kemsley made a very interesting observation:
The rise of hybridised HR roles at senior levels and the requirement to deal with
complexity needs flexibility, ability to deal with ambiguity etc. So, we’d do well to
develop breadth earlier – in HR, out of HR and so on. Whereas, in fact, careers tend
to be specialist. Expertise might exist in specialist organisations but actually HR
has very few real specialists (as experts in, for example, trade union negotiations,
executive pay, employee mobility, employment law etc, are brought in anyway). L&D
and talent are not in depth specialisms but suitable for people with good process
expertise. We should lose the hyperbole around specialism and generalist. A Head of
Business acumen’ is an
Talent needs general skills as does an HR Business Partner. HR work is complicated
ongoing need and not
and is a great place to spend time on the way to the top. Mars do it very well – you
cannot be a VP unless you have been through HR. many HR people have
it. A bit like leadership
The recognition that actually there is very little HR work that is truly specialist,
– is it born or made?
requiring years to develop, is a reality, however unpopular.
Intuitive or trained? HR
Nick Holley also commented:
needs to learn to think
In our recent research, organisations found the best way to develop the capability of more like an investor;
HR and the people in it was to rotate people into and out of line roles. Despite this it
be better at making
was the least used way to develop them. In today's world, strategy is evolving at light
the business cases
speed, so how can we expect an organisational model for HR developed twenty years
ago to be relevant? In this, as with so many issues we debate in HR, we need to get and ROI for projects
away from asking what is right for HR to asking what is right our organisations. and programmes – at
least making sure the
function has accessible
expertise in these areas.
45
 5.2.3  Career development
There is wide acknowledgement that the capabilities needed to succeed at the
strategic/leadership level of the HRf will not be gained through a career in delivery
or even expert functions, but will need to have been gained through wide business
experience. It is easier to quickly acquire a reasonable understanding of HR than
The best way to
it is to acquire business acumen and strategic vision. This disconnect between
develop the capability the strategic role of the HRf and the delivery of HR processes is suggested in the
of HR and the people following interviewee comments.
in it was to rotate The capabilities needed for HR Management in the future will not be acquired
people into and out through the current career model. HR people will come from the line, from
of line roles. Despite consultancies, from high potential programmes. Most of the capabilities HR
this it was the least professionals acquire today will not be required in the future as they will be delivered
used way to develop by technology or outsourced. The HR function's only objective should be to build the
capabilities required to achieve strategy and add value to stakeholders.
them. In today's world,
strategy is evolving at HR delivery isn't defined by the boundaries of its own capabilities but is managed
light speed, so how through an ecosystem of expert providers – a critical role, therefore, is the selection
can we expect an and management of these key partners.

organisational model Another interviewee commented that:

for HR developed The companies that were ‘HR schools’ (Ford, GSK etc) are no longer providing this
twenty years ago contribution.
to be relevant?
Lawler and Boudreau (2015) also looked at the crossing of functional boundaries
by HR people in their career development (in the USA) and found that less than 2%
of companies reported rotation in or out of the HR function. The fact that a large
majority of HR people have no experience of any other function makes them very
focused in the comfort zone of their own agenda. Some companies do insist on
operational experience, especially for the most senior roles, but they are rare.
The capabilities
HR is moving to being more strategic but lean. It will have no more than a dozen or
needed for HR so in the centre, using more outsourcing and contingent labour. Specialist expertise
Management in the will be primarily in OD and Talent.
future will not be
‘My’ HR function would have 3 specialisms in the core unit: psychologist,
acquired through
econometrician and workforce analyst. Whether in HR or not is not important; they
the current career would all be highly curious and would eat data and turn it into knowledge.
model. HR people will
Some other comments made:
come from the line,
from consultancies, I recall a previous study identified that the best performers in HR are those with a
‘zig zag’ career. i.e. not ‘HR lifers’
from high potential
programmes. Most Sadly, many people are still drawn to HR ‘because it pays better than social work’.
of the capabilities Or it’s a place to park people or encourage diversity. But I believe more business
HR professionals people will be drawn into the function as it becomes more strategically important
acquire today will in the future.

not be required in Most good senior HR people don’t come from HR.
the future as they
The ideal is to circulate around the business. Have a spell in HR. Have a different
will be delivered
career, in and out of the function. Develop business credibility and know the
by technology or language. Build the capability to implement strategy and the knowledge to
outsourced. deliver strategy.

46
 We will need broad skills in every part of the business, including developing ‘My’ HR function would
programme management and change management skills. Send HR high potentials
have 3 specialisms in the
into operations. Encourage people to go around rather than just up.
core unit: psychologist,
A mix of HR and non-HR backgrounds is the most healthy. CIPD qualifications are econometrician and
very light on business but they do have good courses to provide HR knowledge and workforce analyst.
skills to non-HR people.
Whether in HR or not
Working in a service centre does not equip anybody for a strategic HR contribution is not important; they
and one can get stuck in ‘one of the legs of the stool’. would all be highly
curious and would
HR people need to be a mixture of ‘HR professionals’ (CIPD trained) and people with
the right attitude who have worked in the business eat data and turn it
into knowledge.
On transactional issues – it’s easy to hop from one thing to another. But once we
get people in, there is a danger that we’ll get people pigeon-holed early in, say,
recruitment; it may become difficult to move. Career maps will need to look different.

Peter Reilly of the Institute of Employment Studies sums up a likely future scenario:
A different implication of the hollowing out of HR might be to see a more flexible Most good senior
team delivering HR. There will be those in charge of systems and data outputs; HR people don’t
those concerned with planning and analysis; but then there might be a more come from HR.
disparate range of HR specialists and generalists called in to assist as required.
This workforce might be a mixture of a few retained staff, with a fluctuating set
of interims, temporary colleagues and consultants brought in for their specialist
expertise. This group are the ones that design change in the HR offerings and deliver
it to the organisation. This suggests that, while internal cultural capital will remain
The majority of
important and be cherished by the small internal team, much of the impetus will
come from contingent skills sitting outside the organisation. organisations find
themselves in the post-
Liz Houldsworth of Henley points out that: Ulrich implementation
We all know that HRM people have been criticised as not being commercial enough stage. However, they
and not knowing the business. These sorts of criticisms have been well rehearsed – do not seem to find
see for example Hammonds (2005) on ‘Why we hate HR’. So, what happens next?
any ‘steady state’,
The majority of organisations find themselves in the post-Ulrich implementation just a constant set of
stage. However, they do not seem to find any ‘steady state’, just a constant set of new challenges both
new challenges both from the internal and external competitive environment. It from the internal and
therefore seems reasonable to presume that a key challenge for HRM is around
external competitive
how to support and enable organisations through ongoing change. This was a
environment. It therefore
key finding of prior empirical work in 2008 by the Henley Centre of HR Excellence,
which highlighted transformational skills as a key competence area for the future. seems reasonable to
More recent literature-based work by the centre, in 2016, has echoed this theme, presume that a key
highlighting the need for the HRM function to have technological and project challenge for HRM
management capabilities alongside organisational development, while at the same is around how to
time being able to ensure that the day-to-day processes are in place to ensure support and enable
ongoing management and motivation of workforce through times of change.
organisations through
ongoing change.

47
 5.2.4  HRf leadership and strategic role
Given the common separation of the three sub-functions of the HRf (delivery,
expertise, strategy), one issue is that, currently, the management of the functions is
conflated with the strategic role. So the CHRO has to be versed in strategy, as that
is a major component of the role. We would argue that each of those functions
needs a strong leader resulting from an appropriate career path, and we challenge
(in the transform recommendation below) the need for an overarching HRf to
encompass these three distinct entities. So the leader of the delivery function
would have capabilities in people-related process design, analytics, technology and
so on. The leader of an expert function would have capabilities in people-related
issues, such as engagement, wellbeing and retention. The leader of the strategy
function would have expertise in developing strategy and designing capabilities from
organisational strategy.

5.3  Alternative models for HR

Just as ‘revolutionary’ organisation designs tend to fade away when their champions
move on, the same can be said for those who radically dig into the traditions of an HR
function. We will return to this in Section 6. However, it is worth noting some of the
more radical ideas and experiences to date.
5.3.1  Radical ideas and experiences
To this day, few have matched the ideas of extraordinary employee empowerment
proposed by Brazilian manufacturer Ricardo Semler. After assuming control of
Semler & Company (Semco) from his father in 1980, he began a decades-long quest
to create an organisation that could function without him. He studied and then
implemented what could best be called ‘corporate democracy’, allowing employees
Hire, reward and tolerate to design their own jobs, select their supervisors and define pay levels. He then
only fully formed adults applied the same principles to education, banking and hospitality. It seems it takes his
personal presence for this extraordinary vision to all work.
– people you can trust,
so you do not have to There are other modern examples of course, especially in small start-up companies.
In 2014, Harvard Business Review ran an article (McCord, 2014) about Netflix, which
write complex policies to
summarised the partnership between CEO Reed Hastings and Chief Talent Officer
control the small number Patty McCord. Some of their policies included:
who cannot be trusted
• Hire, reward and tolerate only fully formed adults – people you can trust, so
you do not have to write complex policies to control the small number who
cannot be trusted
• Expenses – just act in the company’s best interest
• Performance bonuses – if you have the right people you don’t need them;
people will do their best anyway
• Leave – take what you need (if its more than 30 days please talk to HR)
• Tell the truth about performance and forget formal paperwork
• Choose how much of your salary you would like in equity – and no
golden handcuffs

48
Andrew Mayo wrote an article for HR Magazine (1997) in which he argued for the
break-up of traditional HQ functions and a restructuring into:
• Corporate administrative and legal services
• Strategy management
• Organisational performance and professional consultancy
• Intangible asset management
An unlikely organisation, Hackney Borough Council, had an innovative CEO, Tony
Elliston who was adopting this thinking. ‘I don’t want people at the centre to be
drawn into the mire of being narrow experts with defined allegiances,’ he said.
However, this was generally asking too much of functional loyalties – and the
Hackney experiment failed.
5.3.2  The triumvirate
Recently the much-respected guru Ram Charan has proposed something similar to
the Hackney Borough Council example. His core theme is that people create value,
not organisations. His model is to create a powerful triumvirate of the CHRO, CFO
and CEO who should work closely together. This requires the CHRO to release a lot of
time-consuming activities:
For example, the transactional and administrative work of HR, including managing
benefits, could be cordoned off and reassigned, as some companies have begun to
do. One option is to give those responsibilities to the CFO. At Netflix, traditional HR
processes and routines are organised under the finance function, while HR serves
only as a talent scout and coach. Another model we see emerging is to create a
shared service function that combines the back-office activities of HR, finance and IT.
This function may or may not report to the CFO.   (Charan, Barton & Carey, 2015)

This triumvirate idea was actually previously proposed by Antony Hesketh and
Martin Hird (2009) of the Lancaster Centre for Performance in HR – they called it the
Golden Triangle. This was not so much about restructuring the HR function as about
ensuring the CHRO was fully involved in strategy through a triangle of mutual respect.
As always, this cannot be guaranteed just by job titles. As Paul Sparrow put it when
talking to us:
The future needs flexible structures which HR will play a part in and may or may
not lead. For example: CSR, ethics, innovation, productivity, supply chain – none of
these is unifunctional. Innovations often depend on individuals and when they leave,
the project loses its steam. Too few CEOs are willing to meddle with established
structures. At Lancaster, we have advocated the Golden Triangle of relationships that
can work very powerfully – but break a relationship link and they fail.

We spoke to one company in California who had adopted the corporate shared
services model so that ‘the People function’ could focus on talent and strategic issues.

49
 Other comments included:
Create a Chief Performance Officer, covering HR, Marketing and Finance – will give
greater credibility to HR.

HR will be a profit rather than cost centre, demonstrating the business value of
The HR function
what it does.
has been evolving,
particularly in new, fast Its role will include creating frameworks for operational managers, to enable them
growth start-ups, but not to improve business performance.
fast enough. We need a I see it going to a ‘corporate services delivery’ model – which combines Finance, IT,
new perspective and a some legal – into one transactional department. Technology is enabling this, despite
complete transformation. all the promises of ERP systems. New apps such as Workday (expensive, but as
good as you can get) will enable this. Seeing this in conglomerates in mining and
manufacturing. Enables HR to focus on strategic contribution.

The HR function has been evolving, particularly in new, fast growth start-ups, but not
fast enough. We need a new perspective and a complete transformation.

The future will focus increasingly on the whole person and improving their
experience of working for ABC. Thus, areas like real estate – where employees are
physically located – come under the jurisdiction of the function.

As Nick Holley describes it:

HR isn’t defined by boundaries but should manage an ecosystem of providers with
specialist knowledge. It’s not about the structure of the function but the expert
purchasers. Understand what good looks like, and commission. Centres of Expertise
can be outside. So, you have an onion layer of expertise and HR capability could
sit anywhere.

Figure 12 illustrates the kinds of organisations being proposed, which distribute the
various HR capabilities and roles across the organisation.

From HR to ...?

CEO

CFO COEO
Chief Finance and
Chief Operational
Corporate Services
Excellence Officer
Officer

Provision of all corporate Professional teams combining experts

administrative and compliance in HR, OD, L&D, IT, Strategic Planning,
Services, including People, Process Design, Performance Management,
Finance, Admin and IT Help Desk Analytics - used across the organisation

Figure 12: From HR to…

50
5.4  Section summary
We started this chapter with a note of caution – that reports like this use the term
‘HR function’ as if it has universal design and application, and that this is far from
the truth. Dave Ulrich would argue that the right structure for an HR function is
determined by the organisation structure that it serves (see Figure 14). What can
be achieved in practice is limited by the resources and capability available. We have
noted also the reality that much of what an HR function does in its basic services is
prescribed for it, and it is only resources and resourcefulness that enables it to make
the discretionary choices about where to add additional value to stakeholders.
When we look at the new capabilities needed, again the same applies – it depends
on what the function is there to do and what it wants to achieve. Nevertheless, the
traditional professional career in HR as a profession, especially in larger organisations,
is certainly under threat as technology and empowerment redistribute the
traditional service.
Finally, the question is ‘Would we start from here?’. Is the continuance of an HR isn’t defined by
independent silo called HR the right way forward? There are powerful arguments boundaries but should
in favour of looking at other models for providing operational and administrative
manage an ecosystem
support and internal consultancy to organisations, which we will explore further in
Section 6. However, a firmly entrenched sense of professionalism in HR will probably of providers with
leave such changes to the small number of CEOs who are organisationally innovative. specialist knowledge. It’s
not about the structure
of the function but the
expert purchasers.
Understand what
good looks like, and
commission. Centres
of Expertise can be
outside. So, you have an
onion layer of expertise
and HR capability
could sit anywhere.

51
 6   Future choices

Human Capital is the most critical resource, not just for organisations but also for
fast-growth countries such as the Kingdom of Saudi Arabia (see case study below).

Ms Huda Ghoson, Executive human resource models that can produce a

CASE STUDY

Director, Human Resources, healthy labour market in an era of globalisation,

Saudi Aramco technological advancement and urbanisation.

Saudi Arabia, along with the rest of the world, is

The Kingdom of Saudi Arabia is going through
continually evolving, perpetuating drastic shifts
a transformation that will impact the nation’s
in the labour market where some previously
operating models. The Kingdom is aspiring
traditional roles will become obsolete while
to assume a leadership position in multiple
other newly specialised jobs will be created.
areas as outlined in the Vision2030 and
Technology and urbanisation will drive many
the 2020 National Transformation Program.
of these changes, directly or indirectly, and
The journey can neither start nor reach its
stimulate a fundamental restructuring of the
destination without the right and qualified
Saudi labour market. Workers’ skills and
mix of talented men and women. The country
capabilities require constant adaptation to
faces multiple human capital challenges on
keep pace with the new format of work and
the path to greater prosperity and sustainable
future jobs. The impact of digitisation and
economic development. Both governments
other changes is shortening the life cycle of
and businesses recognise the critical role that
employees’ competencies, and workers need
highly skilled workers will play in the execution
to proactively reskill and upskill throughout their
of their vision and strategies. Major challenges
professional lives. A serious revamp of the whole
generated by technology, socio-economics
HR value chain and our role as HR leaders and
and demographics will fundamentally transform
professionals is crucial to support the shifts in
labour market structures and the future of jobs.
the employment landscape.
With increased business complexity, economic
uncertainty and global volatility, it is more In conjunction with these shifts, the Saudi labour
important than ever that we are able to attract, market will face three main HR challenges as
develop and retain the talent we need to be we progress towards achieving the Vision2030
successful. aspirations: demand alignment, capabilities
building and policy agility.
This introduces a tremendous challenge on
the design and implementation of robust

6.1  Is there one best way?

As previously noted, we start from the proposition that there is no single ‘best way’
for the HRf to define its role and to organise itself to add value. The HRf, even more so
than the finance or marketing functions, must be adaptive to the organisation and its
context and even, as pointed out by Mark Swain of Henley Business School, to reflect
the key driving attributes of the organisation:

52
 The HR function needs to reflect the ‘fundamental force’ of the business, where,
for example:

Banks are built on risk and reserves, which leads to the structure and compliance
you see in HR (leading, for example, to the most beautifully arranged top talent
programmes). The HR function
needs to reflect the
Retailers are built on customers and trade, and therefore there’s usually a tendency
or desire to treat talent as a consumer, to follow customer trends and to provide ‘fundamental force’
development around business acumen. of the business.

Energy companies are based around infrastructure and pricing, and therefore
HRM needs to be robust but also agile to reflect the dramatic swings in company
performance that come from market fluctuations (which, in down times, takes
money away from HR investment).

Very rarely does the HR model fit the fundamental force. Think of any small and
entrepreneurial company that grows big. They will all say that new-HR hampers the
business. It’s because the model is about HR – vital basics, complying with legislation,
and then the silos of talent, learning, resourcing, OD etc. It ties people up, and takes
them away from what made the company great.

But it’s a big ask to get HR people to understand the value chain, and adopt a
structure that supports that value and the interconnectedness of modern business.
Maybe thinking about a fundamental force might be a good way to start.

And similarly, the HRf needs to understand, adopt and commit to the key strategic
imperatives of its organisation (e.g. in banking, the cost/income ratio) as this
also results in a shared world view, shared priorities and a shared language of
the organisation. On the other hand, there do seem to be some over-arching
commonalities in the logical evolution of the HRf. For example, the separation of the
delivery of people-related services from consulting on people issues (sometimes
labelled ‘strategic’) is now ubiquitous, and the increasing use of technology for
delivery and centralisation of services (internal or external as in outsourcing) is
predictable, logical and makes good business sense.
There are, as we have noted, many potential ways in which the HRf could organise
itself to meet the challenges of the future and to deliver the capabilities needed to
achieve outstanding strategic success. The HRf could continue in the current ‘steady-
state’ but this is not designed to effectively achieve the purpose. In the interests of
stimulating debate, we present two contrasting options below which vary widely in
their scope and degree of change.
1. Evolve: continues the general evolution of the HRf in applying its capabilities to
a strategically significant role, combined with greater and greater efficiency in
delivery and expertise in matters relating to people. This essentially takes a set of
capabilities and applies them to the organisation.

Or
2. Transform: responds to the future needs and context of business in the context
of a defined purpose and outputs. This essentially identifies a critical strategic
organisational need and creates new entities to meet that need, building on the
capabilities that the HRf has developed.

53
 6.2  Evolve
The HRf, since its inception, has gradually adopted a general organisational model
which appears capable of meeting the needs of the organisation, but also requires
adaptation to specific organisational contexts and now requires improvements in
capabilities and delivery to maximise the effectiveness of people in organisations.
6.2.1  The evolution of the human resources function
The HRf is, of course, continuously evolving in response to business pressures,
environmental changes and best practice advice from experts. This evolution
happens at an organisational level (for example if centralisation is being
implemented) but also at a level of the discipline itself, as ideas and practices
are disseminated. This dissemination follows proven best practice (e.g. if Google
demonstrates something) as well as models proposed by experts (e.g. models
proposed by Ulrich). This process ought in theory to result in every organisation
adopting the best possible model and being able to imitate the best. But, as in
economic theory, information is neither complete nor accurate enough to allow
effective imitation, the advantages and benefits of a particular approach are often
not clear enough to merit adoption and inertia prevents adoption even if the model
is understood and the benefits are clear. This means that organisations with highly
effective and differentiated HR functions are still safe from imitation – even when the
models and the evidence are presented in some detail at conferences, in magazine
articles and in academic papers. The use of new technology and platforms has the
potential to transform the performance of HR processes (as shown in the case
study on Du).
Ulrich recently noted the evolution of aspects of the HRf from the previous ‘historical
myth’ to the current ‘modern reality’ (Figure 13).

Historical myth Modern reality

HR professionals go into HR because they like people HR is not just about liking people, but about understanding and
solving people-related problems in organisations. In fact, HR often
requires tough people choices to assure business results
HR professionals don’t believe in or rely on numbers HR has relied on data for years; now more than ever, predictive
analytics guide HR decision-making
HR professionals want to get ‘to the table’ where business HR professionals are now invited to the table; the challenge is
decisions are made knowing what to contribute in order to stay
HR’s customers are the employees in the company HR’s customers are the customers of the company; HR work
helps both internal employees and external customers
HR’s measures of success come from delivering the practices HR is about delivering business results; the scorecard of HR is the
related to HR (e.g. staffing, training, compensation, etc) business’ scorecard
HR is responsible for the organisation’s talent, leadership and Line managers are the primary owners of talent, leadership and
capability culture; HR professionals are architects who design blueprints and
inform choices
HR’s primary role is to keep the organisation compliant with laws Good HR leaders help the organisation make good business
and regulations decisions that match the risk tolerance (or appetite) of the
organisation

Figure 13: Myths of HR (Ulrich, Schiemann & Sartain, 2015)

54
6.2.2  From talent to organisation
Recently, Ulrich co-wrote an article (as preliminary to his forthcoming book)
for Strategic HR Review (Ingham & Ulrich, 2016). He argued that the last 15 years
have become consumed by talent management and that the ‘war for talent’ that
has promoted the cult of the individual so much, needs to be replaced by ‘victory
Capabilities – What is
through organisation’. The theme of this latest proposal is that groups of people
working as an organisation can be far more effective than the same number of the organisation good
individuals, even if those individuals are ‘stars’. In this context, he sees the three key at doing and what
contributions of the HR professional as: should it be known
• Talent for? Competitive
• Leadership differentiators.

• Organisation
In today’s rapidly changing business world, the challenge of building the right
organization complements and super-cedes the talent challenge. Talent is not
enough. HR professionals need to establish organizations that leverage individual
talent through collective actions. The whole organization should be greater than the
separate parts. Teams outperform individuals. Individuals are champions, but teams
win championships.  (Ingham & Ulrich, 2016)

He includes three dimensions under ‘organisation’:

• Capabilities – What is the organisation good at doing and what should it be
known for? Competitive differentiators.
• Culture – How do we shape the right patterns that will enable us to win? How
the organisation works: event, pattern and identity.
• Management action – Create a clear message about the desired culture to share
inside and outside; turn culture identity into employee actions; and create,
shape and reinforce culture through management practices.
He proceeds to emphasise what he calls ‘organisational diagnosis’ as the heart of
strategic partnership – analysing what factors make for effectiveness and generating
ways to assess and improve those. His new book, Victory through Organization, due
in 2017, expands these themes.
6.2.3  Organisational flexibility of the HRf
Although many HR functions are organised according to the three-legged stool,
which suggests this structure has some value, the HR function in many organisations
also includes responsibility for somewhat unrelated areas, such as facilities or
premises. This had led some to comment that the lack of a clear purpose has made
the HRf a dumping ground for ‘orphan’ functions.
However, it could be argued that one of HR function’s strengths is, ironically, that the
ambiguity of its role allows it to adapt to specific organisational needs: if health and
safety is a key issue, then HR is ready; if the CEO needs a counsellor, then HR is ready;
if people represent a key risk area…, if employees need representing…, if the business
needs to recruit loads of people …then HR is ready. From this perspective, the HRf
is not a dumping ground but a safety net which can carry out functions that might
otherwise be missed.

55
 Ulrich has always maintained that the added value of HR is essentially about its
impact on the business, and that its structure and agenda should be led by that. Too
often it is led by a “me too”, so called ‘best practice’ internal agenda. In an article this
year he and Jon Ingham (Figure 14) outlined the kind of HR operating structure that
suits different business models (Ingham & Ulrich, 2016):

Business organisation form HR department organisation

Centralised functional organisation HR organised around HR specialty (recruiting, training and

compensation)
Horizontal process/project-based organisation HR operating in multi-functional teams dealing with HR-related issues or
outcomes
Community-based organisation HR professional groups, e.g. projects on digital HR or HR analytics
Network-based organisation HR professionals connected across organisation to deal with particular
issues or requirements
Decentralized independent businesses (autonomous HR specialists operating within each business unit (e.g. recruiting,
business units, holding company) training, compensation functions for each autonomous business)
Related/diversified organisation (matrix, multi divisional HR organised as a professional services firm with centres of expertise
company) (specialists) and embedded HR (generalists) plus project teams,
networks and communities

Figure 14: Aligning business organisation form and HR department (Ingham and Ulrich, 2016: 134)

As part of this research, Ulrich told us:

The perspective or way of thinking about HR should shift from what HR does to the
value created by HR. This mindset is relevant to all HR professionals. Kind of like a
restaurant or hotel committed to customer service. All employees should be aware
of and act on this agenda. HR value-added is a mindset more than an activity. It
should shape how HR professionals think and act, how HR practices are conceived,
integrated and implemented. It shapes how to organise an HR department. Value
creation is not just about employees inside the organisation, but customers, investors
and communities outside.

Under this model, the response to the changes and challenges outlined in Section 4
would be to:
• Demonstrate value through use of advanced data analytics
• Identify and take on critical ‘orphan functions’, e.g. ethics, CSR, wellbeing
• Become the acknowledged experts in people management and people issues
• Become a close advisor to the CEO and board
• Become an expert in future work and how this can impact the organisation
• Become ‘business savvy’
• Manage extremely effective people processes
• Carry out effective account management (through business partners) to
maximise ‘client’ satisfaction
6.2.4  The role and perception of the HRf
The general consensus, as portrayed by professional magazines, press and indeed
many academics and practitioners, is that the HRf is failing to fulfil the huge potential
implied by the well-accepted and increasing importance of human resources
(the capabilities, rather than the function) to all organisations. The impression of
line leaders (as seen in the surveys previously cited) is that the HRf has failed to
56
fulfil the opportunity to maximise the organisations’ human resources. There are
regular calls to improve, get rid of the HRf altogether and to define the ‘burning
platform’ which should drive dramatic change in the HRf. Given the continued lack
of effective measurement of the impact of human resource management (HRM) on
organisational success and, even more so, given the difficulty of assessing the impact
of the HRf on HRM itself (as the main direct impacts come from line managers) then The perspective or way
it is unlikely that this consensus is based purely on fact. Our impression is that HRf of thinking about HR
experts, academics and practitioners are relatively thoughtful and introspective, should shift from what
because people and their attributes are complex and unpredictable and are studied
HR does to the value
from many perspectives. As a result, the HRf has sometimes been seen as lacking
in confidence, especially from a strategic perspective. We believe this is due to the created by HR. This
strategic role being unclear, but HRf leaders often suggest that the solution is to mindset is relevant to
measure impact or use business language or to be more efficient. These actions, all HR professionals.
while valuable, cannot replace the lack of a clear strategic purpose and contribution. Kind of like a restaurant
However, several of our interviewees felt that the need for change and the apparent or hotel committed to
impression that HRf was generally failing were exaggerated and, indeed, false. customer service. All
It was felt the general role of HR would not, and should not, change and that
employees should be
its organisation and functions would remain largely as now, while being highly
responsive to the specific needs and context of the organisation. HR’s perception of aware of and act on
itself is too negative and is due to measuring itself against the wrong yardsticks and this agenda. HR value-
taking too much responsibility. For example, recruitment is an extremely important added is a mindset
responsibility of the HRf and the process has improved dramatically over recent
more than an activity.
years. In this view, the HRf does a good job and, in any case, the line are at least 50%
responsible for success or failure.
Arguably, the HRf needs to do more to demonstrate its value and impact to correct
what might be an inaccurate impression. This would require the function to review
current and future issues that might damage its reputation or value and to redress or
mitigate those issues.
6.2.5  The societal responsibility of the HRf
Many have noted that the HRf has a crucial role in managing and mitigating
organisational risk, as the organisation needs effective People Management, like it
needs effective Financial Management.
The HRf has also sometimes taken a super-organisational stance, with a responsibility
to the wider society to defend the wellbeing and rights of people employed in the
organisation, to safeguard the ethics of the organisation, to provide a moral compass
and so on, and the HRf has built organisation and expertise to do this over the years.
The HRf has to do this despite what business leaders want – like occupational health
or legal department – we have a wider duty and are obliged to fulfil it.

The HRf in some organisations therefore carries out business-critical functions

which include:

• Risk management
• Ethics
• Defender of the people
• Willing helper (who else would do health and safety or wellbeing?)
• Coach and advisor
• Critical systems management (e.g. payroll/visas)

57
 This supra-organisational function can be realised by HR strategy at a strategic level,
by HR delivery at an operational level, and by HR experts at a policy level. HR strategy
should advise on ‘people’ good practice, as much as the finance director advises
on financial good practice, and the delivery function should implement processes
that encapsulate good practice in the same way that the accounts processes should
reflect good practice and mitigate risk.
In order to respond to, and maximise the opportunities of, the rapid changes
outlined in Section 4, the main recommendations concern the types and quality of
skills required. As noted by several respondents, including Ulrich, the organisation
of the HRf is less important (and has generally ‘settled into’ the three-legged
model) than the focus of the work that it does and the capabilities of the HR
practitioners themselves.
6.2.6  The evolved HRf organisation
The organisation of the HRf can be described as a modified three-legged stool:
• HR delivery (shared services, outsourcing etc), which includes the account
management functions of most current ‘real-world’ business partners
• Experts (centres of expertise), providing expert advice to line managers, HR
delivery and HR strategy, on people-related issues such as engagement,
leadership, culture change
• HR strategy (which includes the strategic elements carried out by a few current
business partners) responding to, and contributing to, business strategy to
maximise the effective impact and utilisation of human resources.
6.2.7  Delivery (shared service)
The delivery of HR administration and processes is most often carried out by a
distinct function, shared service or outsourced operation and this trend will continue.
This has led to greater efficiency and potentially allows the rapid adoption of new
technologies and processes that become available. This function will increasingly be
carried out through technology including AI and this will have, and is already having,
a significant impact on the skills required. The skills required to manage the delivery
functions include account management/customer service, digital expertise, data
analytics, process management, effective procurement and supplier management.
Many of these skills apply to any delivery/process management function and it is
likely that process management across functional areas may become centralised
and integrated to include, for example, financial and people processes. These
organisational units will provide services to line units to maximise effectiveness and
efficiency not only by running processes but also through the provision of useful and
timely decision-making metrics. The profession believes that the credibility of the
HRf is damaged by not being able to measure HR and, in particular, not being able
to measure the impact of the HRf itself. This has led to an increasingly sophisticated
range of measurements, scorecards and dashboards, which is beginning to have
the effect of driving decision-making (the true purpose of measurement), and the
increasing efficacy of big data and data analytics is dramatically increasing the value
and use of measures and analytics. For example, the recent appearance of sentiment
analysis companies, which enable emotional responses to issues to be measured and
analysed via social media feeds, is currently mainly applied to societal issues such
as voting intentions or investment propensities. But this technology could easily
be applied within organisations as social media becomes even more ubiquitous
and as sentiment analysis techniques become ever more sophisticated (e.g. www.
theysay.io).

58
Gavin Walford-Wright, Senior and Adidas) and a literature review of the latest

CASE STUDY
Director, Talent Acquisition updates in the recruitment field, the Director of
& International Mobility at Talent Acquisition decided to introduce a unique
Cleveland Clinic Abu Dhabi ‘tech stack’ that would transform the recruiters
into the Talent Acquisition Partners that the
HOW TALENT TECHNOLOGY AND organisation required. It was not only about
ANALYTICS CAN DRIVE TALENT identifying which tools could help in the current
ACQUISITION STRATEGY situation, but at the same time, it was about
being able to customise them as a ‘best fit’ for
After only 10 years from its conception, du
the company’s requirements and get the best
(Emirates Integrated Telecommunications
results out of it. It quickly became apparent that
Company) is currently the fastest-growing
there was not a single applicant tracking system
telecoms company in the Middle East and
(ATS) that could incorporate all the elements and
North Africa, as acknowledged by Changeboard
requirements for the transformation. Therefore,
Magazine in June 2016. The company is
the customisation involved designing a unique
characterised by continuous innovation and
stack of various technologies that seamlessly
improvement and, in order to stay ahead of
worked together. The use of ‘realistic job
competition, du plans on recruiting on average
previews’ allowed candidates to assess the
between 500 and 600 people annually, within
company before applying and to self-select
different functions of the company: Operations,
if they wanted to proceed. The introduction
Commercial, Support or New Business and
of the ‘disqualification questions’, ‘cognitive
Innovation. The aim is to hire top talent for the
ability assessments’ and ‘situational judgement
organisation which will create a competitive
questions’, which were integrated with the new
advantage in the market and at the same time
ATS, transformed the manual, time-consuming
fulfil the strategic ambitions of the company and
work of sifting through hundreds of applications/
become the employee of choice.
CVs. The process became an automated, non-
While the organisation has successfully and biased task, which produced only the highest
consistently grown its revenue, the Talent calibre of candidates whose behaviours
Acquisition (TA) team couldn’t achieve the most suited the organisation (Figure 15). The
same level of success, evidenced by a previous asynchronistic video interviewing platform
satisfaction survey, which showed that only helped candidates to save time and gave them
33% of the employees surveyed were satisfied an opportunity to ‘sell’ themselves, in addition to
with the service offered by the TA team. This low the classical CV.
score was mainly due to the fact that the TA team
In addition to an automated process and a better
lacked the strategy and vision to understand
experience provided to the candidates, the ATS
where it stood and where it was heading. In
addressed a more pressing issue: it afforded
addition, other major issues were identified
the opportunity to measure each step of the
following discussions and focus groups with the
process and bring improvements. The talent
leadership team and the Hiring Managers. The
analytics resulting from the ATS implementation
issues reflected a manual recruitment process
are helping the TA team not only with improving
which increased the time to hire and cost per
candidate experience, but also with creating a
hire, and created a poor relationship with Hiring
sound base for predictive analytics to attract,
Managers (lack of trust) mainly due to the low
develop and retain the rising talent within the
quality of candidates identified. There was also
organisation. By connecting the data with
no individual development plan for the TA team
employees and business performance, the
members. The key performance indicators
analytics allows the organisation to stay ahead
monitored were basic and took a long time to
of competition. Following the implementation
identify and present to the leadership team.
of the unique tech stack, another satisfaction
After a thorough research of best practices of survey was run, which showed that satisfaction
various key players (Emirates Airlines, PepsiCo had increased from 33% to 73%.

59
 AUTOMATED

Realistic Job Online Disqualification Assessment: Talent

External Preview: Career Application: Questions SJQ & Ability Acquisition
Vacancy Portal Career Portal (24 hours) (48 hours) Review

Up to 10 Video Interviews

– Corporate Career Approval

– Linkedin
– Referrals Psychometric Assessment
– Job Portals
– Direct Approach*
– Social Media**

MANUAL
Line Manager + TA
Manpower Interview
Approval

Post Recruitment Activity

Internal Internet
Vacancy Application
Offer

Hold/Direct
Mapping/ Onboarding
VIP++

* Open Days, Career Fairs, Government Dept, Printed Media, Universities, External Agencies Walford-Wright, G.J. (2016)
**Twitter, Instagram, Facebook etc

Figure 15: Talent rising (provided by Gavin Walford-Wright).

Like any other service organisation, the HR delivery function should certainly carry
out account management and in many organisations, the so-called ‘business partner’
actually carries out this role.
6.2.8  People expertise (centre of excellence)
Organisations require expertise in people-related issues in order to advise on how
to maximise productivity, well-being, engagement and so on. This is essentially an
advisory and consulting role and could be provided by internal or external experts.
Given the pace of research and discoveries in the fields of neuroscience (and its
relevance to leadership, for example), behavioural economics (which focuses on how
behaviours can be modified), positive psychology (with an impact on engagement
and happiness) and a host of other fields, it would be impossible to own all the
relevant expertise. Most likely, therefore, is a combination of internal generalists
(with extensive knowledge across the spectrum of human capital) who identify key
issues and solutions, consulting and commissioning projects from external experts
and organisations.
The capabilities required here would include a general up-to-date knowledge of
people-related topics; the ability to identify and define and propose solutions for
key people-related issues; procurement and project management expertise. This
function would both respond to organisational requirements and spot opportunities
to enhance people performance. Its outputs would be operationalised through line
management and the HR delivery function above.
6.2.9  Human resource strategy (business partner)
This is the area in which the HRf’s contribution varies most widely between
organisations while, overall, being seen as relatively ineffective. In some organisations,
a business-like, persuasive and strategy focused CHRO has had a major impact –

60
contributing as well as responding to strategy. In many others, the HRf is seen
as irrelevant to strategy, with the main requirement being to meet specified
business needs by carrying out recruitment, training and so on. In our study, the
main difference between these two extremes was the degree of experience and
understanding of the business (or the public sector) by the leaders of the HRf.
Typically, this expertise would not have been gained in more junior HR roles, but in
real-life business positions. It appears that it is easier, or more effective, for a business
person carrying out the HR strategy role to acquire sufficient knowledge of HR (and
to rely on the delivery and expert functions) than it is for an HR person to acquire the
required business knowledge.
We would also argue that this strategic role differs from the account management/
representative role that many so-called business partners adopt. We recommend
that business partners, as currently positioned, should adopt, embrace and focus on
the account management role, and to do so effectively as an outward-facing activity
of the delivery unit.
The HR strategy role should only be carried out at a level where organisational
strategy is effected – typically, centrally for a whole organisation, whereas the
business partner/account manager role would be replicated for each major customer
group of the delivery function.
The main capability required in this strategic role is business/organisational acumen.
As we saw earlier, the CIPD and other professional bodies are trying to solve the issue
by focusing on teaching the language of business and ‘business savvy’ but this is
nowhere near enough. For example, the CIPD identified four foundations of ‘business
savvy’ (which seem self-evident), which HR practitioners should adopt:
• Understanding the business model at depth
• Generating insight through evidence and data
• Connecting with curiosity, purpose and impact
• Leading with integrity, consideration and challenge
The fact that the professional body believes that these very basic ideas need to be
explained to HR practitioners is somewhat alarming, but of course the guidance
might well be aimed at less experienced members.
Many of those taking part in this research suggested that HR practitioners should
experience non-HR roles and, indeed, that non-HR leaders should experience
working in the HRf.
The obvious conclusion, however, is that a traditional HR development path does
not provide the skills required for a strategic HR role (except for rare individuals)
and that a varied business career is a much better foundation. The HR expertise
can be acquired relatively easily, supported by access to the experts and the
delivery function.
6.2.10  Roles and career paths
This evolved model of the HRf organisation brings into sharp focus an issue that
has troubled the HR profession for some years. The skills and experiences needed
for the three different functions do not overlap and do not allow for a consistent
development path, as would be preferred by professional bodies and those wishing
to preserve the disciplinary integrity of HR.
For the delivery function, development and a career in digital/process/analytics may
well be the most useful.

61
 For the (very few) HR strategists, a wide business career with some formal HR
knowledge acquisition and support of delivery and expert functions seems
more effective.
The role where a general development in people-related subjects still appears crucial
is the expert function.
This lack of commonality in career development is also reflected in the question as to
whether these three functions need to report to one CHRO (Figure 16). The evolution
may result in the disintegration of the HRf into three separate entities:
• Delivery as part of a general shared service/process function
• HR strategy as part of a central strategy unit
• Experts as a self-standing HRf, if it is not entirely outsourced to specialist firms
and individuals

INTEGRATED HR FUNCTION UNDER CHRO

CEO/Board

CHRO

Delivery HR & People Expertise HR Strategy

Includes Business Partners as
account managers

DEVOLVED HR FUNCTIONS
Strategy
CEO/Board (including
HR Strategy)

Line Managers

Delivery HR & People Expertise

(including
HR/Finance etc)
Includes Business Partners as
account managers

Figure 16: Options for evolved HRf – integrated or devolved

62
6.3  Transform
An alternative to the evolution of the HRf in response to the changing context, is to
reconsider the basic purpose of the function, in the light of future organisational
requirements, and how that might be realised in this new environment.
6.3.1  Re-purposing HR
As we have seen, the human resource function’s role has most often been
considered from the point of view of what the function does – What can we offer
the organisation? – leading to a purpose and role based on the skills and expertise
developed within the function. For example, our purpose is to do recruitment,
training, pay and reward, or provide areas of expertise seen as being to do with
people, such as change management, engagement, leadership, employee relations
and motivation. However, given the challenges highlighted earlier, it might be wise to
first consider the strategic needs of the organisation and only then, how those needs
might resonate with HRf expertise.
In fact, a major conclusion of this work is that – while the role and operation of
the delivery and expertise components of the existing HRf seems relatively clear
and, therefore, relatively easy to predict – the impact of and sensible response to
technology and the role and operation of the consultative ‘strategic’ element of the
HRf is still not at all clear, beyond arguments for and against it or how the HRf should
claim a ‘seat at the table’ or become ‘business-savvy’. As noted by Storey (1989), the
HRf has traditionally delivered certain services (e.g. recruitment) and so the role of
the HRf has come to be defined as ‘to deliver those services’, whereas, he argues,
the purpose should be to meet some kind of organisational demand. The lack of
clarity about the strategic role of HR stems from a varied and ill-defined sense of
the strategic purpose of HR, ranging from ‘looking after, or representing the human
resources [people]’; ‘fulfilling the manpower needs of the organisation’; advising and
legislating on any matters related to people (such as engagement or leadership);
to ‘acting as personal coach to the CEO or other senior leaders’. Often, the purpose
of HR is not clearly articulated, understood or agreed by the organisation so that,
for example, leaders may feel that the HRf is interfering in their remit or the HRf is
standing against the organisation in defending the interests of staff.
Definitions dealing with the purpose of the HRf include:
• The primary purpose of an HR department is to keep a business supplied with a
competent and satisfied workforce. 1
• An essential business function leading the way in delivering bottom-line results. 2
• HR in any organisation should find and commit to a specific configuration
…that directly enables the value chain of the organization in its specific
circumstances (KPMG). 3
The CIPD aligns its professional map with ‘what the market tells us great HR looks like’
and defines strategic HR as the ‘strategic management of human resources aligned
with the organization’s intended future direction’. ‘It is concerned with longer-
term people issues and macro-concerns about structure, quality, culture, values,
commitment and matching resources to future need’ (CIPD, 2016b).

1
  www.reference.com/business-finance/purpose-human-resources-department-82c1cc6e20b894b
2
  www.uk.mercer.com/what-we-do/workforce-and-careers/hr-transformation.html
3
  https://advisory.kpmg.us/content/dam/kpmg-advisory/PDFs/ManagementConsulting/folder/designing-
next-generation-hr.pdf
63
 The Society for Human Resource Management suggests that:
In support of our company's principles, values, vision and mission, it is the mission
of human resources to support the total operation in meeting its goals through its
most valuable resource – its PEOPLE.  (Society for Human Resource Management, 2016)

Ulrich, in his soon to be published new work (Ulrich, in press) says that:
HR exists to deliver value to key stakeholders. The outcomes of HR become the
goals for the HR department, capabilities an organization requires to win in the
marketplace, and intangibles for investors.

Many authoritative texts on the subject are organised according to the various ways
of delivering HRM (recruitment, reward etc) with a plea that these functions should
be treated strategically.
SHRM, similarly, developed its competency model (Figure 17) based on what
represents successful performance across the HR profession, as judged by HR
professionals themselves. This results in a tautological definition of the purpose of
HRf being ‘to do what it does – well’.

RELATIONSHIP
COMMUNICATION MANAGEMENT

CONSULTATION ETHICAL
PRACTICE

SHRM
COMPETENCY
LEADERSHIP
& NAVIGATION
MODEL HR EXPERTISE
(HR KNOWLEDGE)

GLOBAL
& CULTURAL BUSINESS
EFFECTIVENESS ACUMEN

CRITICAL
EVALUATION

Figure 17: SHRM competency model

64
Similarly, the CIPD developed its professional map based on what HR professionals and experts reported were the
most useful competencies (Figure 18).

Curious Dec
el i si v

4
od et
m hi
le n BAND

ke
Ro

SERVICE
ORGANISATION

r
DELIVERY &
INFORMATION DESIGN

Sk
nge

illed
ge to challe

ADING HR
EMPLOYEE
RELATIONS
LE ORGANISATION
DEVELOPMENT BAND

influencer
Insights,
strategy &
solutions
Coura

EMPLOYEE
ENGAGEMENT LE
A D IN G H R
RESOURCING
& TALENT
PLANNING BAND 2
le
ib
red
Dr

PERFORMANCE LEARNING &

c
& REWARD DEVELOPMENT
iv

1
ly
en

to n
al
de o BAND
liv rs
er Pe
Collaborative

EIGHT BEHAVIOURS TEN PROFESSIONAL AREAS FOUR BANDS OF PROFESSIONAL COMPETENCE

Figure 18: CIPD professional map

Often, definitions of human resource management (HRM) are assumed to also define
the function of the HRf – on the basis that the purpose of the HRf is to ‘do’ HRM.
HRM is a comprehensive and coherent approach to the employment and
development of people   (Armstrong & Taylor, 2014)

A key conclusion of this study is that the activities and organisation of the HR function
should be derived from a clear purpose within a specific organisational context. HRf
should only do things because they achieve an overarching purpose. Storey (1989)
describes this as a demand perspective (what the organisation needs), rather than a
supply perspective (what the HRf does).
The Human Resources Manager starts ...from the organization’s need for human
resources: with the demand, rather than the supply.   (Storey, 1989)

The closest to a definition of the HRf’s purpose also comes from Ulrich (in press)
(although it is described in terms of outcomes):
The outcomes of HR are not just administrative efficiency or strategic execution. The
outcomes of HR have become the capabilities that an organization requires to win
in its marketplace. These capabilities likely include talent and leadership, which
are essential for any strategy, but also include capabilities such as innovation (in
product, market, services, business models), agility (speed of change or flexibility),
collaboration (teamwork, cross functional teams, merger or acquisition integration),
customer service, efficiency, managing risk, changing culture, and so forth. The
capabilities represent what an organization is known for and good at doing and
vary depending on an organization’s strategy. Capabilities represent the outcomes
of HR that enable strategy to happen, ensure customer share over time, and increase
investor confidence. 65
 Based on our interviews and review of the academic and practitioner literature, we
therefore propose that the purpose of the human resource function (Figure 19) is:

To deliver the capabilities needed to achieve outstanding strategic success.

Achievement of Strategic Organisational Goals

(expressed through strategic intent)

Strategic Capabilities
To deliver the [human] capabilities the organisation needs

Delivery Expertise
Processes to acquire, develop and retain Advice and programmes on specified
strategic [human] capabilities [human] capabilities and their development

Figure 19: The purpose of the human resource function, and its delivery

This incorporates both strategic aspects of capabilities (such as chemical engineering

or engagement) and tactical delivery of programmes and processes to deliver
capabilities (such as recruitment and retention) and raises some substantive and
useful questions, such as:
• What capabilities? How can we define the required capabilities? What are
the criteria for the capability? Can we substitute a capability that might be
easier to build?
• Why do we need that capability? What does it add to the organisation? Can we
know when it has added the predicted value?
• When will the capability be needed?
• Where, and how, can we acquire key capabilities?
• Who owns the capability? Is it necessarily a human capability or can it be built
via some other mechanism?
• How much of each capability will we need? How can we know when we have
enough, or not enough? How can we maximise the utilisation of the capability?
• How can we build, acquire, nurture and retain our key capabilities? If the
capability provides competitive advantage, then how can we protect it from
competitors?
• Do we already have capabilities that might contribute to our strategy or even
suggest modification to the strategy?
Many of these questions would be answered by the traditional HR functions of talent
acquisition and management, reward and so on, but the reason we are carrying
out those functions is to build the required capability and this could significantly
impact the types of things we do and the way we do them. Fortunately, there is a very
relevant body of research and recommendations emanating from the field of strategy
which can help guide the HRf in the identification, design and delivery of capabilities.

66
6.3.2  Strategic capabilities in theory
From the viewpoint of organisational strategy, there are two major themes (which
of course overlap and complement each other) which very much relate to the
building of organisational capabilities. The first, exemplified by Porter’s (1986) early
work, suggests that organisations should base their strategy on the requirements We therefore propose
of the market. The second, as mentioned in Section 3, exemplified by Barney (1991),
that the purpose of the
is the resource-based view (RBV) of the firm which suggests that the organisation
should identify its key unique capabilities and then find a market where they confer human resource function
competitive advantage. Not being subject to academic polarisation, we can take the (Figure 19) is to deliver
best of both viewpoints, of course. The resource-based view of the firm states that the capabilities needed
an organisation will enjoy sustainable competitive advantage if it has capabilities
to achieve outstanding
which are rare, valuable, inimitable and owned by the organisation in question. These
have been described as ‘differentiating strategic capabilities’ or DiSCs (Scott-Jackson strategic success.
et al., 2011).
The major issue in applying RBV theory has been to find instances of capabilities
which can be defined, but still remain hard to copy. Capabilities such as great IT
or access to finance may well confer advantage but can be copied or acquired by
competitors so cannot confer sustained advantage. Research over the past few
years has suggested that there are only two major sources of DiSCs: reputational
capabilities and human capabilities. The other issue, of course, is that in a fast-
changing environment, capabilities that confer advantage may need to be adapted,
and this has given rise to the model of dynamic capabilities (Teece & Pisano, 1994)
that evolve over time in response to the organisation’s environment. Human
capabilities arise through chance combinations of history (e.g. developing a certain
culture over time), leader influence, market pressures and so on, but also combined
with deliberate programmes such as recruitment, training and management support
for human capabilities such as innovation or friendliness. Because of this partly
random combination of factors, human capabilities remain hard to copy even if they
obviously confer advantage. So, Google, for example, is renowned for innovation
and its processes are well-known, yet it is hard for competitors to follow. Supposing
that human capabilities are a source of competitive advantage then how can they be
designed and built if they are so hard to copy? They are hard to copy because they are
partly built on the history, culture and leadership ethos of the organisation. So even
if they have been built ‘on purpose’ they cannot be copied by another organisation
with a different history, culture and leadership ethos. Recent studies have
demonstrated that it is indeed possible to build the strategic capabilities, including
DiSCs, that the organisation needs and that the HRf has a major role in defining and
An organisation will
building human capabilities. In this way the HRf takes a central strategic role in not
just responding, but also contributing, to the development and implementation of enjoy sustainable
organisational strategy. competitive advantage
6.3.3  Providing those capabilities if it has capabilities
Organisational capabilities can be defined (Figure 20) as: which are rare, valuable,
inimitable and owned
• Enabling capabilities: These are capabilities that most organisations will need in
order to succeed in any particular sector (public or private). Capabilities such as by the organisation
being able to effectively manage finances, maintain a brand, communicate with in question.
stakeholders, respond to changes in context and, of course, build and manage
the capabilities themselves through enabling capabilities such as leadership and
engagement (in the case of human capabilities). The traditional capabilities of
the HRf are enabling capabilities.

67
 • Best-practice capabilities: These are capabilities that are required to succeed/
compete in any specific sector. These could include capabilities such as chemical
engineering, oil exploration, actuarial expertise etc.
• Differentiating capabilities (DiSCs): These are capabilities which, through being
rare, valuable and hard to copy, can confer a sustainable competitive advantage
on the organisation.

Differentiating Strategic
Capabilities (DiSCs)
Capabilities that provide
sustainable competitive advantage
‘better than the best’ Rare, hard to copy, valuable

Best-Practice
Capabilities
Capabilities needed to Skills, expertise, sector/job specific
reach world-class ‘best
practice’ in a market

Leadership
Enabling Capabilities
Capabilities needed in every IT literacy
sector/discipline
Human resource management

Figure 20: Strategic capabilities: Enabling, best-practice and DiSCs (Scott-Jackson et al., 2014)

The HRf’s own scope of capabilities currently often includes talent management
(recruitment, development and retention of talent) and has often been deployed to
build and maintain enabling and best-practice capabilities in response to perceived
business needs. The capabilities focus enables the transformed function to apply
that expertise to better predict the enabling and best-practice capabilities needed
to achieve future strategic intent (reacting to strategic needs) but also allows the
function to contribute proactively to strategic intent by identifying and proposing
DiSCs, based on pre-existing history and culture. For example, a firm at the forefront
of automotive research was able to extend strategic intent to the wind-power
sector, due to a historical base of thought-leading innovation in gearing and turbines.
Similarly, the hotel group Jumeirah developed a ‘luxury brand’ strategy based on
exceptional personal customer interaction which was rooted in a long tradition
and reputation for friendliness which had developed over time. Having identified
‘friendliness’ as a key differentiating capability (DiSC), the group could not only
build strategic intent around this DiSC but could also ensure that relevant processes
(recruitment, measurement and so on) helped to build and maintain this DiSC.
It is clear that the focus on building capabilities can relatively easily be
accommodated within the role and skills previously defined for the evolved delivery
and expert functions (although we will suggest their reorganisation into other
units). The entity that would be most transformed by this new purpose, to deliver
the capabilities needed to achieve outstanding strategic success, is the function
previously described as HR strategy.
In order to explore this transformation, and to then define how it might be
reflected organisationally, it will be useful to briefly illustrate a process for building
organisational capabilities.

68
6.3.4  Building organisational capabilities
The process for building organisational capabilities has been developed within a
diverse range of organisations from a Television shopping channel (Figure 21) through
to a country (Figure 22)!

DRIVERS e.g: CAPABILITIES e.g: CUSTOMER WANTS e.g: BUSINESS OUTCOMES e.g: STRATEGIC INTENT

Engaging
personality
Likeable
Recruitment & Fan base,
retention Self followers
presentation
Identification Vendor
(like me) demand
Body language
voice
Long term
Learning & Sincerity revenues
Reputation etc?
Development Thinking like
customer

Trustworthy
Brand: tone &
voice

Short term
Management
Guest, vendor Confidence sales
relations

TV techniques/ Knowledgeable
skills e.g. Wraps Annual
profit
Efficient
Reward
Team skills: operation
Competent in
leadership, role
team work,
team member

Figure 21: Building the strategic capabilities for a shopping channel

‘Beyond best practice’

Effectiveness DiSC1: Wide Vision,
Laser Focus

STRATEGIC
World-class impact
ACCEPTABLE EFFECTIVENESS

on government Competencies
policy and delivery
Major projects on
time and budget
DiSC2: Socio-political
Provide valuable intelligence
Excellent global data and advice
and national to His Majesty and
reputation the government
Knowledge

TACTICAL Respected within DiSC3: Engaging the

and outside
government
team

Projects on time
and budget Seen as exemplar Skills
by public and
private sector
Effective, timely
responses to DiSC4: Effective
queries raised to Efficient delivery of Impact
the Diwan services

Figure 22: Strategic capabilities for a government cabinet department

69
 The building of organisational capabilities requires three distinct sets of skills. Firstly,
to define the capabilities required, including ‘what’, ‘when’ and ‘how much of it’.
Secondly, to build the capabilities cost-effectively to meet strategic needs, and thirdly,
to maximise capability utilisation through effective processes. These functions need
to be fast enough and flexible enough to adapt to changing strategic environments.
Jaguar Land Rover are already deploying some of these techniques within resourcing.
James Baker of Jaguar Land Rover (JLR) reports that JLR integrates talent acquisition
with workforce planning over the short term, medium term and longer term.
This provides intelligence that informs the HR and organisational strategy, talent
pipelining or immediate, live, recruiting activity depending on the timeline and focus.

James Baker, Global A broad scope would have been inefficient, so

CASE STUDY

Head of Executive Search, in order to shape the project, we worked with

Jaguar Land Rover the data from the strategy team to focus on
the three key technological pillars that were
DIFFERENTIATING STRATEGIC likely to significantly disrupt our industry. We
CAPABILITIES had current recruitment projects against all but
one, and subsequently confirmed with the HR
Once we are confident we have robust plans in
organisation that these were also a capability
place to fulfil the urgent short term needs we are
gap against our existing organisation for the
then able use our resources to look further out
target skills group against the business plan.
into the event horizon against the company’s
This determined our project scope and we
longer term strategic roadmap.
drafted a role profile against this brief for this key
To meet short term/immediate needs requires future capability, which is currently both rare and
knowledge and analysis of the current highly valuable.
organisational structure and the key gaps that
We then focused our activity on this skill set
need to be filled (internally or externally). For
and identified and approached the key talent
the medium-term we need to understand
at organisations that were seen as leaders
how organisational priorities and succession
in this field. We mapped the leadership of
planning will create gaps that we will need to
those organisations, approached them and
recruit against and to determine the actions to
presented back to the head of department
ensure we have talent identified and pipelined
the best candidates that were interested in an
as needed. In the longer term, we carry out
exploratory conversation, along with other key
targeted talent mapping, which is clearly linked
insights gained from the project.
to the organisational strategy roadmap, to grow
required capabilities and this exercise could The project outcome was that the head of
inform the organisation design process as well department met a selection of candidates
as being an outcome from it. We also maintain and developed a deeper understanding of
talent intelligence in key developing capabilities, the commercial value-chains around this key
which then informs workforce planning and area, an insight into the supplier base and the
recruiting activity globally, as well as decisions rationale behind our competitor’s organisational
about, for example, where to locate people and structures. We made a key leadership hire that
resources to facilitate our growth plans. will enable us to make a significant step forward
in building a rare, valuable and hard-to-copy
An example of this process is that a head
capability, which is critical for the future success
of department was seeking to benchmark
for the business.
their leadership talent and we were asked to
conduct a generic talent mapping exercise and
to submit interested ‘top talent’ from external
organisations.

70
6.3.4.1  Clarify strategic intent
In order to define and build the required enabling, best-practice and differentiating
capabilities, it is crucial to understand the organisation’s ‘strategic intent’ as well as its
formal, shorter term plans. ‘Strategic intent’ was first defined by Gary Hamel and C K
Prahalad (1989) to encourage Western companies to set ‘stretch’ goals which would The building of
be visionary, stable over time, deserving of personal effort and commitment, and that,
organisational
while fully utilising the organisation’s current capabilities, would also require their
enhancement and the development of new capabilities. Strategic intent should have capabilities requires
the following attributes: three distinct sets
• Sense of direction: A unifying and personalizing point of view about the long of skills. Firstly, to
term that the organisation aspires to. define the capabilities
• Sense of discovery: A competitively unique position which requires exploration. required, including
‘what’, ‘when’ and ‘how
• Sense of destiny: It is a goal that is inherently worthwhile.
much of it’. Secondly,
A readily grasped declaration of the course that the management of a business
to build the capabilities
plans on taking the company over some future time frame. The strategic intent of a
business needs to be easily understood by every member of the firm so that all staff cost-effectively
can be working toward a consistent overall goal.   (Hamel & Prahalad, 1989) to meet strategic
needs, and thirdly, to
There is a wealth of papers, consultancies and advice available on how to design and
maximise capability
implement strategic intent but here we are focused on the implications for capability
definition. Hamel and Prahalad’s suggestion was that strategic intent should be utilisation through
widely understood, and committed to, by everyone in the organisation. However, effective processes.
whilst formal strategic plans are often fully articulated, strategic intent is typically not
written down, but may exist in the shared aspirations of leaders or embedded in the
history and culture of the organisation.
An example of a formal strategic intent is:
UIS [The University of Illinois] will be recognized as one of the top five small public
liberal arts universities in the United States.   (University of Illinois, 2013)

The UIS then explains how this will be achieved:

We will achieve this by creating a world-class liberal arts oriented undergraduate
educational experience reflecting many of the characteristics and best practices
of small private liberal arts colleges while building on our many strengths. Among
those strengths are professional academic programs, graduate education, and
public affairs activities.

This clearly fulfils the criteria for a strategic intent and builds on existing capabilities
(strengths) as well as demanding new ones.
The best way to understand a strategic intent is to ask the leaders to describe it,
and there are various formal processes available. As an example, Oxford Strategic
Consulting ran a short workshop for the executive board of a major bank which used
brainstorming and weighting techniques to derive and agree a strategic intent. One
of the most interesting outcomes was the resolution of important but unrecognised
and unacknowledged differences in the board members’ aspirations for the bank.

71
 6.3.4.2  Define required capabilities
Given a clear strategic intent, and plan for the short term, it then becomes possible to
define the kinds of enabling, best practice and differentiating capabilities that would
be required to succeed (and gain advantage in competitive markets).
Taking UIS as an example, the enabling capabilities might include effective
educational administrative management and understanding of the global liberal arts
market. It could also include contextually effective leadership, and academic and
research excellence. The differentiating capabilities are best rooted in existing culture,
history or tradition. For a similar institution, the University of Oxford, it was identified
that the traditional and long-standing tradition of High Table was a key enabler of
a unique capability for interdisciplinary conversations and inter-working, which
has since been formalised in several colleges with the formation of special interest
‘clusters’. But the dining tradition, with its encouragement of sharing research
interests, having to summarise key findings and being expected to show interest in
one’s neighbours’ work, combined with various mechanisms to ensure that people
converse with people they don’t know, provided the basis for this more formal DiSC.
6.3.4.3  Identify current capabilities
Having identified high value capabilities required for the immediate and longer
term, the HRf would then need an understanding of current capabilities. So, in the
Oxford example, it might be that the interdisciplinary capability was already being
built (through the dining system) and perhaps this could be enhanced with new
technology (e.g. social media and networking) and to take account of much wider
networks (e.g. researchers from elsewhere) and people that may contribute to the
University but who are not employed by it or belong to it in the classical sense.
6.3.4.4  Define the differentiating capabilities
Having a clear view of the enabling and best practice capabilities required, as
well as the current capabilities (and history and culture), it is then possible to
identify potential differentiating capabilities (DiSCs) that might confer competitive
advantage. In the case of Jumeirah above, for example, the capability of ‘friendliness’
was already informally embedded in the culture and had the potential for
competitive advantage in the hotel sector. Once the three types of capabilities
are defined then consideration can be given to how those capabilities should
be delivered.
6.3.4.5  Define the delivery vehicle for that capability – AI, robotic,
human, cloud etc
For example, in the case of Jumeirah, ‘friendliness’ could conceivably be delivered via
a reception robot, by a user-friendly booking system, by advertising and by human
behaviours such as greeting on arrival. For many capabilities, it has long been possible
to substitute various sources or vehicles of capability. For example, a chair could be
produced by a person or a machine, or construction could be highly capital intensive
or labour intensive. Recent advances in technology, in particular, means that the
possibilities for substitution are greater than ever, to the extent, for example, that
surgery can be performed robotically and helplines could be provided via artificial
intelligence. In this context, it is arguable that the function responsible for building
capabilities should not assume that the capability can only be realised through
humans. In fact, the analysis and decision on what are the most effective vehicles for
a specific capability is a necessary and highly valuable part of the process of capability
building. This would suggest a further transformation of the HRf to become a
capability building function (CBf) and this is enabled within the role definition as
proposed below.

72
Having defined the:
• capabilities required (enabling, fundamental and DiSCs)
• current capabilities
• DiSCs
• most effective vehicle for the capability (human or otherwise)
then the required capabilities must be built, developed and maintained.
For human capabilities, this would be via a delivery function with similar capabilities
to those involved in current talent management (residing in the delivery/shared
services function). For capabilities to be delivered through AI or similar then the
relevant centres of technical expertise (internal or external) would be commissioned.
The new capability building function would essentially commission the relevant
internal or external experts to build whatever capabilities are required. This
combined function matches well onto a centralised shared services/process function
covering all process areas, not just HR.
For capabilities that already exist or have been built, then need to be managed,
maintained and retained and this could well be the function of the specialist process
unit, which runs (or manages the running of) all processes, HR or otherwise.
For capabilities like ‘engagement’ or ‘leadership’ the capability function would
need to call on internal or external expertise to help design and implement the
programmes needed to build and utilise the capability. If internal expertise is
desired, then this would be within a unit very much like the centre of expertise as
previously defined.
6.3.5  Transformed organisation
As described above (and as implied in Section 5, Figure 12) a transformed
organisation, capable of building the capabilities the organisation needs, could
comprise three separate units (Figure 23). The organisation is quite similar to the
devolved version of the evolved HRf (Figure 16) but the purpose, focus and skills
requirements are quite different.
Strategic capabilities – defining, specifying and measuring the strategic capabilities
required and their delivery vehicles – including technical and human.
Capability experts – experts in building various types of capability (reputational,
technical, human). Most likely external specialists but managed by the central
‘expert’ function.
Delivery – designing and running various processes, including people processes –
most likely through internal management with IT/outsourced delivery.
HR-specific functions would disappear, except perhaps as specific specialists within
the delivery function and, mostly external, ‘people-experts’ (such as psychologists)
within the expert function.
The strategic capabilities function would require extensive organisational/business
experience as well as a broad and up-to-date understanding of capability areas such
as technology, marketing, HR.

73
 Strategy
CEO/Board Capabilites

Line Managers

Delivery Capability Expertise

(including
HR/Finance etc) Managing external providers

Includes Business Partners

as account managers

Figure 23: The human resources function transformed to the strategic capabilities function

Ironically, in adding true strategic value by building the capabilities the organisation
needs, the HRf has effectively disappeared!
6.3.6  Roles and career paths
This transformed capability-based organisation implies that very different skills and
capabilities will be needed by the functions themselves and that career paths would
also be very different.
Strategic capabilities – this function would require extensive business/
organisational experience and an ability to grasp and analyse complex strategic and
market information. It would also need an ability to maintain an understanding of
advances in all areas of technology, socio-economics and people-related topics. This
is likely to be acquired through a wide-ranging career, in more than one organisation
and through direct experience of advanced tech and people management.
Capability experts – as well as the world-class expertise in particular subjects
(likely to be acquired externally), this function would need the ability to translate
requirements and specifications from strategic capabilities into proposals and
tenders for expert consultancy and projects.
Delivery – this function requires process and technical expertise, as well as data
analytics and, possibly, some specialist knowledge of specific areas like accounts or
recruitment. These capabilities could have been acquired through a technical career,
possibly with a service provider or outsourcer.
6.3.7  Issues with the transformation
The biggest potential issue (other than the disappearance of the HRf per se and
the professional bodies and so on that support it!) is that some functions that are
currently performed by the HRf might not fit elsewhere and might not be carried out:
Champion of the people – but this should be the role of leaders and, arguably, the
presence of HR has allowed them to abdicate! Of course, it is highly likely that, in
all organisations, the empowerment and engagement of people is a key enabling
capability in its own right.
Health and wellbeing – this should be defined as an enabling capability and so be
included in the remits of strategic capabilities, experts and delivery
Guardian of ethics and moral compass – this is the role of the board, and of the non-
executive directors in particular.
Mentoring the senior team – this can be provided by an internal process of
colleagues or external mentoring provider.

74
 7   Conclusion and next steps

7.1  The purpose and the opportunity

This report has reviewed the current state and perceived value of the HR function
and the likely impact of future changes in technology and patterns of work. These
present a major opportunity (and threat) for the HRf to add value through the
technologically enabled effective delivery of people-related processes and the
provision of advanced expertise in areas such as engagement, which these new
models of work will make even more important. But the main opportunity is to truly
demonstrate strategic value in the context of a clearly defined strategic purpose.
The report has presented two possible future structures for the HRf – Evolve and
Transform – both of which could be organised either within an overarching entity
or distributed, with delivery being part of a wider process management function,
expertise being accessed externally and strategy being part of the wider strategy unit
or reporting to the board separately.
These organisational options are based on a clarified purpose:

To deliver the capabilities needed to achieve outstanding

strategic success.
This purpose is clearly strategic in that it is crucial for the achievement of strategy, but
also enables the function to contribute to strategic direction, based on unique and
possibly under-utilised strategic capabilities which the HR function can identify. For
example, a privatised industry, newly competing with the private sector, identified
‘trustworthiness’ as a key differentiating capability, which could easily have been
destroyed if private sector best-practices had simply been implemented in the
interests of efficiency.
Even an apparently ‘soft’ capability like ‘trustworthiness’ can be built and enhanced
through selection, induction and development processes as well as consistent role-
modeling by senior leaders and so on.
In the ideal world, the HRf would reorganise itself to reflect this purpose but in
fact, of course, action to achieve that purpose is far more important than the
organisational structure itself and action towards that purpose can be taken
In the ideal world, the
immediately, even within a current steady-state organisation structure.
HRf would reorganise
7.2  What can we do – now? itself to reflect this
Our recommendation, therefore, if the purpose is broadly agreed, is to act now purpose but in fact,
to start to design and deliver the key capabilities needed to achieve outstanding of course, action to
strategic success. achieve that purpose
We have described above (6.3.4) the steps required to build strategic capabilities is far more important
and the starting point, which has significant value in itself, is to define what they are, than the organisational
based on a clear understanding of the organisation’s strategic intent.
structure itself and
Enabling and best-practice capabilities can be defined by carrying out research action towards that
into competitors’ capabilities across the sector. That is, by essentially answering
purpose can be taken
the question ‘What capabilities would we need to be as successful as the best in
our market?’. So, for a hotel group like Jumeirah, these could include the enabling immediately, even within
capabilities of leadership and engagement and the best-practice capabilities of a current steady-state
world-class cooking or efficient check-in. organisation structure.
75
 An effective way to identify the differentiating capabilities (DiSCs) is to hold a
structured workshop, ideally with the top team, which aims to clarify strategic
priorities and generate candidate DiSCs that can then be prioritised.
In a major bank, for example, this workshop used brainstorming and a mind-map to
capture the ideas of those present on the strategic intent (which itself highlighted
some disagreements, which were resolved), the key factors that would enable that
intent to be achieved and then a whole range of candidate capabilities that could
enable those factors. The candidate capabilities were then weighted by value, scarcity
in the sector and inimitability (how hard would it be for a competitor to copy the
capability). The highest rated DiSC, to the surprise but agreement of the Board, was
‘the most helpful staff’ (Figure 24). This scored very highly on inimitability (as the bank
had a long history and tradition of service, personal attention and empowered staff)
and differentiation (as competitors were constraining ‘helpfulness’ through a focus
on process and sales).

We want to be the highest margin bank in the world

maintaining high revenues with low costs

Very few High referral High retention Problems fixed

complaints rates of customers ‘first time’

Advanced IT Good Nice Skilled staff Good

processes branches facilities

The MOST HELPFUL staff

Figure 24: Defining a differentiating strategic capability for a major bank

As we have mentioned, it is increasingly possible for capabilities to be delivered

through non-human means and so it is useful to consider the appropriate ‘vehicle’
for building the capability. AI-based cashiers, for example, could at some point
be a potential vehicle for helpfulness, as is being demonstrated by systems like
Siri for the iPhone and Echo by Amazon. Assuming that the capability is delivered
largely through people, then the expert and delivery functions will be able to
modify relevant talent management and other processes appropriately. In the
bank example, it was found that the existing selection process, for example, had no
criteria or content to assess ‘helpfulness’ so an online pre-qualification was designed
to self-select people strong on helpfulness. Similarly, management processes and
appraisals were modified and used to start to measure ‘helpfulness’ in combination
with customer and colleague feedback. Leaders, from top down, encouraged and
rewarded helpfulness (over immediate sales) and subtle changes were made to
market and employee brand.
Thus, the HR function can finally demonstrate its true strategic contribution
and value to the organisation by delivering the capabilities needed to achieve
outstanding strategic success – now.
76
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79
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