The Economist has just posted an article on HR Transformation. It begins:
Human resources transformation refers to the massive restructuring of corporate human resources (HR) departments that took place in the decade or so after 1995. Before that, the staff in HR departments had generally been seen as administrators, not as people to be involved in high-level strategic discussions. HR staff saw themselves as lifetime career specialists with little need for knowledge or experience of what the rest of the business was about.
Actually, a lot of them still do. This paragraph implies that the great HR transformation has happened but, as the article later concedes, it is still very much under way.
Whatever the theory behind HR transformation, most organisations did it for three reasons; to cut costs, to get more innovative HR solutions and to bring HR closer to the business. These objectives broadly correspond to the three ‘legs’ of a re-engineered HR function; shared services, centres of expertise and HR business partners.
For the most part, the first objective has been achieved. As the Economist reports:
The consequences of HR transformation have been dramatic, and in some cases painful. On average, it has been reckoned that around 25–30% of HR staff have lost their jobs in the transformation process, with another 20% or so following them over the next few years. A study by IBM’s Institute for Business Value estimated that some transformations eliminated up to 70% or more of the workload of the traditional HR generalist.
But this is because, typically, HR transformation projects focus primarily on setting up the shared service centre, then on the specialists in the corporate centre. The development of the HR Business Partners has, all too often, been an afterthought. It is assumed that the old HR generalists will somehow just evolve into strategic business partners.
And this, of course, is where the whole thing falls down. As Dave Ulrich said last year, in an article defending his model:
20% of HR professionals will probably never be able to adapt to the full business partner role. Asking HR professionals who have focused on policies and transactions to do talent and organisation audits and make major changes may be too great a shift for some.
The tragedy is that many HR generalists had been saying for years that they’d love to do strategic stuff if only they didn’t get bogged down with all that admin. Then, when the admin was taken away, they didn’t know what to do next. At least transactional stuff helps you to justify your existence. Trying to be strategic, when you don’t even know what it means and no-one has helped you find out, is debilitating and makes you feel stupid. It’s no wonder that so many people failed to make the transition.
This hasn’t done the HR function any favours. Whilst CEOs were glad to cut costs it appears that some of them were actually serious about wanting a more strategic HR function and have been left disappointed. As the Economist notes:
The great expectations that HR transformation aroused, however, were largely frustrated. After a decade, fewer than 5% of executives said they thought that their organisation’s management of people was not in need of improvement. Part of the problem lay in making traditional HR people think strategically. “Don’t kid yourself”, said one senior executive, “that people who have never been strategic are suddenly going to become so.”
Two years ago, a survey by Deloitte and the Economist found that, while CEOs saw the management and development of people as increasingly curcial to business success, most of them did not look to their HR functions for innovative ideas and support in these areas. In other words, while HR issues were becoming more strategically important, there was no corresponding rise in the status of the HR function.
As if that isn’t bad enough, even HR directors are having a go too. Last week, Asda’s former HR director said:
A lot of people in HR are completely inappropriate and they give the profession a very bad name. They talk ‘HR speak’ and it’s meaningless. They are not well regarded by their line managers and they are a laughing stock in many companies. I suspect there are fewer good guys and more bad guys.
Not to be outdone, Simon Nash, HR director at legal firm Carey Olsen, said that only one in ten HR professionals are really fit for purpose.
Of course, HR directors must bear some of the responsibility for this. In the rush for HR transformation too much time and effort was spent on IT infrastructure and shared services and not enough on developing the business and consultancy skills of those who were supposed to become HR Business Partners. In short, we made the classic change management mistake; we implemented new structures and systems while assuming that the people would just change by themselves. We, who always bang on at Operations, IT and Finance mangers, “Don’t forget the people issues” when they are implementing their change programmes. What is it they say about cobblers’ children?
The quote from the McKinsey report “A Dearth of HR Talent” gives a clue to what needs to be done.
The troubling gulf between the needs of the business and the ability of HR to respond will force many companies to rethink their approach to the recruitment, training and development of HR employees.
If they’d thought about that when they first embarked on their HR transformation projects, perhaps HR directors wouldn’t now feel the need to stand up at conferences and dis their staff.