HR Transformation- An operating model

In terms of driving effective transformation, the studied success-experience shows that the key to success or failure lies within the HR operating model. This is where HR strategy is put into action and the area which was universally identified by organizations as inhibiting progress. The key areas of the HR operating model are sourcing, infrastructure and governance.

Sourcing Strategy
The sourcing strategy provides the greatest opportunity to reposition the function entirely and get the most out of limited resources. The main options are:

insourcing – when all operational, technological and human capital functions are developed and maintained internally;

co-sourcing – involves a partnership with vendors to share responsibility for operational, technological and human capital functions and resources; and

outsourcing – where there is a contract with suppliers to provide all operational, technological and human capital functions and resources.

Global studies show that outsourcing HR activity happens almost everywhere, but current outsourcing decisions are rarely taken as a strategic view of sourcing. In recent years, maturing vendor capabilities and advancing technologies have expanded the breadth and depth of sourcing alternatives available in the marketplace. Determining the optimal sourcing mix for the organization requires HR to apply rigorous business analysis and decision protocols. An effective sourcing strategy will maximize the return on internal resources by concentrating investments on the areas of core competence and of highest strategic relevance to the organization. It will also enable organizations to take advantage of external suppliers' investments and specialized capabilities that are often prohibitively expensive to duplicate internally. Thirdly, it will provide a variable cost structure leading to the ability to scale service capacity to meet organizational needs – an essential requirement given the dynamic nature of today’s marketplace.

Technology and Transformation
Over the last few years, the HR function has invested a great deal of money into technology without realizing a return on the investment. Frequently, HR technology projects don’t deliver the expected results, and a key factor in this is a failure to define functional requirements clearly. By not rooting these requirements in a solid HR strategy, organizations spend too much money on ad hoc software purchases or, even worse, under-use expensive HR software suites by not implementing modules that could be of significant value. Within many organizations a large portion of purchased functionality in Human Resource Information Systems (HRIS) goes unused, ending up as shelfware – in other words, software modules are bought but not implemented. The modules most likely to be left on the shelf are those considered key to operational human capital management, including competency and career development, recruitment, performance management and succession planning.
Along with the right software, clean data and tight integration are critical success factors which are often overlooked. Key stakeholders must have access to accurate, consistent, integrated data which cannot happen unless HR and IT objectives are fully aligned. This successful alignment requires an understanding that changing technology alone will achieve little. Change starts to deliver its value only when supported by and integrated with other elements of the infrastructure – and when part of an explicit HR strategy.


-Anshumali Saxena www.soilindia.net