In recent years many large organisations have moved towards new operating models with Shared Services, Centres of Excellence and “Strategic” HR Business Partners.

Much of this is based on the so-called “Ulrich Model” derived from the writings of Dave Ulrich, one of the pre-eminent HR academics and consultants.

While the appeal of this model is obvious; the process of turning the theory into practice is not straightforward.

Bruce Harries, formerly a Consulting Director at Catalyste and currently a senior Human Resources executive at large financial services organisation, shares his experiences of ensuring an HR Operating Model can be translated into an effective HR function that delivers the expected value and benefits.

In Part 1 of this article, I discussed the importance of having a clear frame of reference when designing a new HR Operating Model, and being aware of the different types of HR structures and how they match to business needs.

Assuming the design decisions have been made, the next challenge is to implement the solution.  As previously mentioned, the most popular form of HR structure for large organisations is the “Matrix” or “Shared Services” HR structure.  This is typified by central HR strategy and solution development through Centres of Excellence with embedded HR Business Partners to co-ordinate delivery of HR services and translate business needs, supported by a centralised administrative function.

Here are some common issues that arise in the design and implementation of a Shared Services model, and some ideas on how to manage them and reduce the risks associated with such critical structural change.

  1. Management Buy In
  2. Solution Design
  3. Role Definition and Clear Accountabilities
  4. Capability & Motivation
  5. Service Delivery

1.    Management Buy-In
It is one thing for the HR Function to decide that a new operating model will help it to be more effective – it is another for the business at large to accept the changes. Invariably a move to a Shared Services model creates perceptions that service will no longer be “personalised”, or that centralised control will diminish the flexibility and relevance of HR services and support.

Managers are usually the ones that are most resistant as they feel they have the most to lose, particularly where there are pre-existing services based on dedicated teams and long standing relationships with HR people that “know what I want”. It is therefore essential that any change to the HR Operating Model is not just agreed to at an executive level, but also actively supported by the business leaders. While HR can spin the changes in terms of the benefits to the business, the greatest impact will come from the executive team members being part of the communication process and explaining the rationale for the changes and how it will work.

2.    Solution Design
Before making the changes the solution design must be documented in detail. This includes process flows, operating procedures and system solutions. If this step is done superficially the expected benefits are unlikely to be realised – or at best significantly delayed. Without a detailed Solution Design it is impossible to accurately assess how many people are needed, how work will be performed and by whom, how tasks will be handed off within or across teams and what service levels can be expected.

Typically a good solution design will be based on a broad strategic framework that is then broken down into an organisation structure, high level processes and standard operating procedures.

3.    Role Definition and Clear Accountabilities
It is essential that each of the functions within the HR Operating Model are clear about their roles and accountabilities. Again, this is not just for the benefit of the HR Team members – the business users of HR services need to know which person or channel they should use for each type of issue. Within the HR team, clarity of roles and accountabilities will reduce the risk of turf wars and duplication of activities.

For business users, clearly defined contacts will help to smooth the introduction of the changes and also aid in the efficient delivery of HR services and solutions.

Role clarity also requires the Line Managers to understand what is expected of them in the new HR Operating Model, as in most contemporary organisations a move to a Shared Services Model also requires the managers to be more accountable and self-sufficient in their staff management activities.

4.    Capability & Motivation
In the process of defining the roles, the required capabilities should also be determined. This should be more than a procedural exercise – each of the core functions within the Shared Services model require quite different skills and capabilities. Within the centralised administrative function skills such as process efficiency and customer service are key; for business partners the focus is more on skills such as coaching, influencing and diagnosis whereas for Centres of Excellence capabilities in areas such as process design and project management are relevant.

There are of course many types of skills and capabilities required for each function – this is simply to illustrate the point that one size does not fit all, and therefore a detailed capability assessment of the current HR team members is a necessary exercise to determine how well they meet the requirements for the roles in the new operating model, to quantify the gap and determine the strategy to address those gaps.

Motivation is also an often ignored element of establishing a new HR operating model, particularly when trying to redeploy existing team members into the new structure. For example, it may be  the case that a Business Unit HR Manager within a distributed HR structure has the skills and capabilities to be an HR Business Partner in a Shared Services structure, but they may not have the motivation to play the role of an advocate of group wide HR solutions and may actively or passively subvert the new model to maintain the status quo of their previous role by holding onto existing relationships or undertaking tasks for the managers in the Business Unit that should otherwise be serviced by an administrative support function or a Centre of Excellence.

This risk can be reduced by involving the affected HR Managers in the solution design so they have more buy-in to the new way of working and a better understanding of how to work effectively in the new structure. Switching the HR Manager to another Business Unit is also a way of breaking the nexus of historical relationships and ways of working, allowing the individual the freedom to take on the new business partnering duties with a different group of managers, unencumbered by the baggage of previous expectations and ways of working.

5.    Service Delivery
The final step is to ensure that service delivery expectations are set. Again, this should happen at multiple levels. At a relationship level it is important that the buy-in of the senior management team is demonstrated by a willingness to accept the new ways of working and not to subvert the solution design by working around the new model.

One of the keys to success is having the HR Business Partner accepted as a member of the management team within their client group(s), and while it is right to expect that an effective Business Partner will build trusted relationships with senior managers it is also right to expect that the channels for interaction and communication are established up front to give relationships a solid basis of professional interaction from which personal relationships can be built.

It is also imperative that managers understand how the new operating will work in terms of the roles and responsibilities of each segment of the HR function, as well as what is expected of them. Table 1 (above) above should also be the basis of defining the service expectations in terms of what HR will do and what the Line Managers are expected to do for themselves.

The implementation of a new Operating Model is also a great opportunity for HR to define new KPI’s and Service Level Agreements.

Ideally this should be done in conjunction with the business leaders so that the right measures are in place and expectations can be set at the outset.

Each of the HR functions should have clear and measurable service expectations. They are more easily quantifiable for the administrative functions as the services tend to be quality and time based, although a broader customer service mindset is also important to success. For staff in Centre of Excellence roles the measures will tend to be around the quality of solutions, project management metrics (on time and on budget) and responsiveness to business needs. HR Business Partners should also be measured on their responsiveness and quality of advice.

Stakeholder satisfaction is a key measure, but it should also be noted that an HR Business Partner is sometimes required to push back on line managers and prevent them from acting in a way that is against company policy or process, and this will not always endear them to their clients, so being an effective Business Partner is more than doing what is asked – the measure should focus on whether they are doing what is right.

To sum up, when embarking on a redesign of the HR Function, HR leaders should have a clear view of the desired outcomes and ensure the structure aligns to the wider business strategy. The “Ulrich Model” is no silver bullet – it provides a great starting point but to achieve the desired business outcomes you need the right structure and the resources and commitment to implement it successfully.

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