The first step to effective HR transformation
These days, there are a multitude of articles about HR transformation. In today’s volatile, uncertain, complex and ambiguous world, many of us, if not all, have been affected by transformation of one type or another. HR is often the go-to department to support transformations in other parts of the business, as well as implementing their own functional transformations.
About the author
Philippa Penfold is a former senior HR manager at Infosys Consulting, and start-up advisor.
It’s easy to get caught up in the details of what often becomes a very complex set of changes in the business, and too easy to forget why we are doing it. But not all HR transformations are the same. It is important to remain cognisant about what originally triggered the transformation, so that all the activities can remain in context and aligned.
Many HR transformations in the past were about changing the HR function to Dave Ulrich’s well-renowned model of 1997, as outlined in his bestselling book Human Resource Champions. Such transformations often included the implementation of an HR Information System, which offered rudimentary (by today’s standards) online self-service for employees and managers.
Today, HR transformation often means moving to cloud-based software and digitising HR processes. The market is awash with new HR technology companies, some offering terrific platforms upon which new and existing HR services can be offered. The key question HR needs to be asking for any transformation is: “Why?” If the answer cannot be linked to the objectives of the business, then HR should be focused on something else.
Understanding the strategic rationale for a business transformation is critical if HR is to alter the function appropriately, as well as help the organisation to change. This is more than simply knowing the vision statement or the headline goal. It is about understanding the reasons driving the transformation, or the transformation “triggers”.
Business transformations can be grouped into three different categories:
- Operations - Businesses may change their operations, triggered by the need to improve efficiency and reduce cost. Changes to business operations may also be triggered by changes in compliance, regulation and legislation, and the introduction of new technology.
- Business Model - Changes to the business model, fundamentally around how the business generates value, are becoming more frequent, and are usually quite complex transformations, affecting nearly every part of a business. Examples of transformation triggers can include competitors introducing a new service alongside an existing product, or reduced revenue triggering the need for the business to be more customer-centric so that it can speed up product or service improvement. Business model transformations can also be triggered by anything from new market entrants and opportunities, changes in key resource availability, and economic dynamics. Such changes tend to take a few years to complete.
- Strategic – These changes are rarer but significant. Commonly cited examples of strategic transformations include: Nokia’s move from a conglomerate producing products like paper and tyres, to a company focused on mobile handsets and telecommunications; and Fujifilm’s move to apply their colour pigment nanotechnology to cosmetics. Common triggers of strategic change today are advances in technology.
Triggers for HR-specific transformations can also be grouped into the following categories:
- Operations – Key triggers can include new legislation or regulations (very familiar to those working in banking or insurance), and the bottom line need to reduce costs.
- Employees – Transformation triggers in businesses driven by knowledge workers often arise through increased employee expectations and the need for HR to deliver a positive employee experience to contribute to retention and performance increases. The expectations of employees around the use of technology is a strong trigger. Most of the time the technology we use in our personal lives is more advanced than what we use at work and HR is constantly trying to play catch up to ensure the employee experience is both comparable to the personal experience and competitive when compared to other organisations.
- Business Leaders - Some HR departments have also been transformed in response to different expectations from business leaders. Today many HR departments are expected to produce people analytics, which is driving a need to introduce new skill sets to the department.
It is not uncommon to see a need for capabilities outside the traditional realm of HR. These could be a practicable understanding of agile methodology, the ability to apply an understanding of digital user interfaces to the employee experience, as well as the statistical and technological ability to develop quality people analytics.
Understanding the triggers helps us understand the different types of transformations for both the business and the function. It’s rare that any will exist in isolation, as companies are often trying to transform in response to multiple triggers simultaneously.
Remembering the triggers that gave rise to a transformation can help HR maintain focus and purpose, and ensure the changes and activities being implemented are appropriate to support the business and HR transform successfully.