Capabilities and containers

Both should be developed for Business HR impact

Posted by Arthur Mazor, Gary Johnsen, and Joanne Stephane on June 29, 2017.

Innovative companies realize the importance of driving performance and productivity through their workforce. Because of this reality, many business leaders have increasingly turned to HR to design programs that attract, develop, engage, and retain the very best talent and deploy solutions that support a culture of innovation. Historically, Business HR resources, commonly known as HR business partners, are expected to provide strategic consulting and coaching needed to guide the business in managing their workforce. Organizations have had, at best, mixed results. Rather than dialing up the strategic repertoire, many HR business partners continue to be mired in delivering administrative services, with little change since the 1990s.1 Why is this? How do we get out of this predicament?

First of all, though there is agreement that Business HR should have sustainable impact on business results, the typical “partnership” consists of the business consulting on “people” issues it expects HR to solve. The “on the ground” Business HR resources often get caught in a reactive cycle that goes something like this: When the business has a people problem, Business HR intervenes to either police the action or develop a solution. Business HR resources get praise for their responsiveness and their heroic effort, considering the administrative activities they continue to engage in, and the business has their headache go away.

This issue-reaction cycle is reinforced when the enabling processes, metrics, and technologies are all focused on efficiency and compliance, and the effectiveness of being efficient and compliant. This cycle can prevent Business HR from seeing the bigger picture—the underlying workforce and business trends driving disruption for their organization and industry.

Secondly, many business and HR leaders have had limited success in course correcting. Some organizations have tried changing job titles and descriptions with the hope that with Business HR’s role redefined, it will know what to do to be strategic. A few have invested in upskilling Business HR resources with generic consulting skills, through generic learning approaches. Though focus on skills has helped, it still often falls short. In fact, even after the dollars and time invested in upskilling, 78 percent of company leaders say Business HR still lacks the critical capabilities to influence the business strategy.2 Even in technology-enabled transformations that free Business HR resources from the typical inquiries, transactions, and heavy administration, we have not delivered on the promise to transform the HR work most closely associated with addressing business needs.

What is missing?

A holistic approach. When we redefine roles, we are generally not addressing the environment in which we carry out those roles. When we focus on individual capabilities and skills, we often do not see the full Business HR model needed to reinforce the deployment of those capabilities. When we free up capacity alone through automation and operating model changes, we can create room for activities that often do not drive business value. What is missing is several parts of the Business HR big picture. In a word, we should address the container or infrastructure—the Business HR operating model—as well as capabilities to deliver on the expected impact and sustainable business results. Role definition changes and generic upskilling without addressing the factors that support new roles and skills can actually discourage and prevent Business HR from excelling.

Just as organizations define the overarching HR operating model toward achieving high impact, HR leaders should create a fit-for-purpose Business HR operating model, addressing the services, capabilities, org design, data, tools, metrics, and scorecard specific to Business HR, with ongoing change management.

When the only approach is to build capabilities and/or hire individuals to provide strategic Business HR, leaders can experience pockets of success. When building a Business HR function filled with capable resources, leaders can experience High-Impact HR across the enterprise. A recent Harvard Business School working paper highlighted this conclusion. Michael Beer, Magnus Finnstrom, and Derek Schrader summarize their research and assert that organizational change and development must accompany any training initiative for maximum return on investment in training.3

Enterprises cannot expect newly skilled Business HR resources to become strategy consultants—nor should that be the goal. And, to be fair, organizations can’t demand specific results without clearly articulating the specific service offerings, measures of success, or ways of working to successfully collaborate with the business.

One of two things typically happens when highly trained Business HR resources attempt to operate in the wrong model. They either go back to what they know and were rewarded for in the past—compliance and administration—or they leave and find another organization where they anticipate greater opportunity to practice their newly developed strategic consulting skills.

So what needs to shift to build Business HR for sustained performance?

Mind-set – to see Business HR as a function rather than a collection of individual contributors.

Vision – of a fit-for-purpose Business HR operating model (the container), with defined services, capabilities, organization, data, tools, metrics, and scorecard as well as a new approach to reward and recognition to incent focus on strategic partnering and business outcomes.

Approach – to drive collaboration and adoption through overall change management to form the road ahead for Business HR.

Development – identifying and building capabilities for your specific business strategy and environment, using innovative and proven approaches for 21st century learners.

Arthur Mazor is a principal with Deloitte Consulting LLP and the practice leader for HR Strategy & Employee Experience and Global HR Service Delivery. He collaborates with complex, global clients to achieve high business impact with a focus on transforming human capital strategies, programs, and services.
Gary Johnsen is a specialist leader with Deloitte Consulting LLP and the deputy leader of the HR Strategy & Employee Experience practice. He helps complex organizations design and deploy innovative HR strategies, operating models, and HR customer experiences along with enabling processes, tools, and capabilities that build the bridge between business and HR.
Joanne Stephane is a senior manager with Deloitte Consulting LLP. Her focus is on HR Strategy, Employee Experience and Service Delivery Transformation. She works with organizations to reimagine the way they define, design and deliver HR and Talent services and programs, to drive organizational performance through their people.

1John E. Boudreau and Edward E. Lawler III, How HR Spends Its Time: It is Time for a Change, Center for Effective Organizations, February 2012.
2Sources: Deloitte Consulting Global Human Capital Trends Reports 2015/2016/2017.
3Michael Beer, Magnus Finnstrom, and Derek Schrader, “The Great Training Robbery,” Harvard Business School Working Paper 16-121, 2016.

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