Making HR transformations deliver better value

Getting processes right
Process management is a key element of HR transformation. The HR function is process-intense, but basic inefficiencies in many of those processes, which range from payroll administration to employment law compliance, prevent HR from delivering full value. Companies who are successful at managing overhead costs have a significant advantage over their competitors. In general, organizations can simplify almost half of their HR activities into common processes. Redesigning and streamlining processes can be the most difficult job facing the function. One of the most effective approaches to process redesign is through activity-based costing that assesses each activity’s time and cost, as well as headcount and full time equivalent involvement. Such an approach pinpoints the likely causes of operational problems, quantifies what they cost and reveals how best to solve them. Understanding the details of process cost, process overlap and process effectiveness is at the heart of identifying the opportunities and areas where significant improvements can be made. HR processes are generally where the function connects with its internal customer, yet process re-engineering often gets little focus or direct investment. Only a third of respondents from an international survey indicated HR process change as a current tool for HR transformation.

Making governance explicit
Most HR leaders have not been challenged to think formally about governance issues, so they operate with they operate with an implicit (and, usually, imperfect) model. In those rare cases where HR governance is explicit, it’s usually synonymous with compliance. Unfortunately, this view of governance is limited and does not reflect the fact that managing human capital makes the HR function responsible for investments that, on average, account for 36 percent of operating revenues. HR governance is not a strategic objective, but a systematic approach to management that enables the function to achieve strategic and operational objectives. It, therefore, plays a very important role in the successful transformation of the HR function.

Delivering successful HR transformation
The initial task is to define the current state of HR delivery within the organization, and determine the existing business strategy and priorities. It’s then important to gain an insight into what the customers of the HR function, the line managers and employees, think of the services they receive and examine the state of HR processes, assessing whether they are efficient and standard across the organization or if they vary by business unit or country.
By applying various tools it’s possible to look at the existing technology, the current organizational structure and the company culture, and identify areas of improvement for HR. The next step is to design a new operating model – which may include outsourcing, service centers and new technology – which is configured to provide the best delivery model for the organization. Getting it right is worth the effort. Successful HR thought leaders, describe effective HR execution as “the difference between plans that become reality and those that go nowhere.” These HR leaders regularly connect HR strategy and execution as they firmly believe that, “value add of any HR initiative is the end-result of the quality of that effort, the acceptance of stakeholders and its execution.”

Business executives first, HR specialists second
In organizations globally the most respected HR leaders are business executives first and HR specialists second. They partner with and are confidants of their CEOs and leadership teams and often find themselves at the epicentre of corporate change, being given credit for bringing about the toughest of business transformations. These HR leaders are also being recruited by progressive domestic and global boards. Responding to the intense focus on complying with new corporate governance legislation and increasing investor scrutiny, boards are retooling to ensure they have the right mix of highly qualified specialists, including HR experts. The price of failing to make the connection between overall business strategy and HR strategy is high. There will always be an option for the organization to hand over the HR services to an outsourcing organization who can effectively transform the function and make it work at considerably less cost. But HR functions which grab the nettle – those that convince the business of the value of transformation, can recognize that skills and capabilities in HR can change if needed and can harness technology – will become effective strategic partners and make a positive contribution to the continuing success of the organization.

-Anshumali Saxena www.soilindia.net