HR Transformation: From brake pad to business booster (Part 2)

Agile processes, total workforce management, modern employer branding, a competitive corporate culture: In order to remain competitive in the age of digitalization, companies depend on professional human resource management. After having answered why HR is not sufficiently prepared for the challenges in business today in part 1, in part 2 I will discuss, why HR professionals are too often under the radar of their colleagues and how they can once again become an indispensable value driver in the company.

So how could this mismatch between the importance, expectation and performance of HR come about? I see two causes: First, to put it bluntly: It is also due to the HR professionals themselves. Too few recognize the need to understand the business model of their company. Too many ignore the need to recognize industry trends on an equal footing with their customers - in other words, their colleagues in the business units - and to draw the right conclusions for HR.

Secondly, one idea has led to an undesirable development that should actually improve HR performance - namely the tayloristic split of this unit into individual subtasks and roles: transactional activities such as payroll accounting or vacation planning are covered by shared service centers, advisory activities by the role of a HR business partner, and the competence centers reflect the professional expertise that HR mastermind Dave Ulrich had assigned to them a good 30 years ago. A division of labor that - unfortunately - proved to be less and less practicable in daily practice.

The consequences: On the one hand, HR silos are created without reference to local business, but with an increasing focus on efficiency and the reduction of personnel costs. On the other hand, investments in automation and digitization projects are not always consistently implemented or take longer than planned.

Why HR colleagues often walk under the radar

There are three key reasons why the generally viable idea of developing HR into a strategic partner at eye level did not work out:

1. The view of the entire HR value creation is lost
   By splitting HR into three roles, nobody feels responsible for a holistic customer experience and the quality of the end product. If different HR functions do not work together, the view for an overall picture from the different subtasks is lost - from personnel planning to skills management, possible staff reductions to the reorganization of the IT landscape.  The consequence: no one feels responsible for the end result anymore - HR customer experience decreases.
2. Classic management underestimates the influence of HR on economic goals
   The impact and significance of HR topics - such as culture, compensation, leadership or talent management - are often underestimated by classically oriented management teams and primarily short-sighted approaches are initiated. It is not uncommon for the issues to be dumped on HR - a foreign body in the organization without any relation to the business. The consequence: highly relevant topics can hardly develop impact.
3. Efficiency goals prevent redesign of the HR portfolio
   When companies initiate automation and digitization strategies, they usually include falling personnel decreasing in their considerations in the medium term. But they like to ignore this: The fact that before the harvest, investments must be made in order to implement agile processes, build up IT infrastructure and IT competencies. Resources for business-relevant topics are thus tied up in operational topics. The consequence: the transformation is stalled and there is no room for innovative topics.

Three measures to reach the goal

Granted: HR faces a variety of challenges - managing these three strategic thrusts is inevitable:

1. Radical alignment of the HR portfolio with the business needs of the company
   HR must again develop a better feel for the people issues in the respective business - closely linked to the business model with which a company wants to earn money now and in the future. HR should be able to ask and help answer the core questions: What does the future direction of the company mean for the know-how of current and future employees? Do today's processes still fit our tasks of tomorrow? Whom do I need to talk to - inside and outside my company - to answer these questions? In other words: HR must work with the thought leaders within a company and know its engine room in order to put the end user and customer in the center of the solution process.
2. Link organizational change to the maturity of the mindset Whether its processes or tools - companies need to review and adapt their goals from time to time - to their business model, overall economic development and new trends in their customers' industries. But this only works if HR organizations take a holistic view of customer concerns. Those who struggle with collaboration easily establish monstrosities of control and bureaucracy with ambitious transformation processes. The advantages of an agile structure quickly become a disadvantage. Executives and employees who are socialized in a classic understanding of leadership therefore need HR support on the way to a more flexible organization that requires more personal responsibility. And the willingness to invest instead of expecting immediate savings.
3. Commit the entire team to a holistic result
   In transformation, a commitment of all participants to two goals is essential: they must ensure both the adaptability of an organization and the maximum benefit for the user.

In other words: If the participants align all activities to these common goals and act as one team, HR will again have an exciting future.

In part 1, you’ll find the answer to the question why HR is not sufficiently prepared for the todays business-challenges.