HR facilitates the organizational transformations that have become crucial for firm survival and growth.
Traditionally regarded as a support or administrative function, the role of the HR function is changing dramatically with increased awareness of the need for a more people-focused, “art and science” based approach to business and the critical role that HR plays in organizational transformation.
A recent trend in this area has been the adoption of strategic HR in which HR leaders are involved in the development of top-level strategies and goals, making full use of their expert knowledge of labour markets, business models, and organizational capabilities. Another is the increasing adoption of new technologies and innovative delivery models that enable HR to be better integrated with the business and improve the overall efficiency of the function.
HR facilitates the organizational transformations that have become crucial for firm survival and growth. Schroeder & Schroeder’s Art and Science of Transformation® framework was developed in response to emerging evidence that the soft, people-related aspects of change are just as important as the application of formal change management tools and processes. The key to success, however, is achieving the right balance of “art” and “science”, and adopting a holistic approach in which the organization’s people, culture, systems and processes are all aligned with the transformation objectives.
HR plays a critical role in art- and science-based transformation by developing a people strategy, which ensures that the organization has the right capabilities and competencies in place to achieve its transformation goals; realigning the “change shaping levers”, such as the performance management system to promote the necessary cultural and behavioural changes, and conducting change readiness assessments to identify and address any people-related barriers to successful transformation.
The Growing Importance of Human Resource Management
Traditionally, HR was regarded as a support or administrative function that developed and implemented recruitment exercises, compensation schemes and training programs, and was rarely involved in business strategy development. This is changing dramatically with the increased awareness of the need for a more people-focused, “art and science” based approach to business and the critical role that HR plays in organizational transformation.
Key Drivers of Change in Human Resource Management
The Importance of Human Resources: A significant body of research provides evidence that organizational project failures are most often caused by people-related factors, in areas such as leadership, culture and communications. There is also an increased awareness that the unique capabilities of an organization’s people are often the main differentiator in competitive business markets.
The Need for Frequent Business Transformation: Today’s business environment requires organizations to continually transform in order to remain competitive and achieve their goals. HR is increasingly acknowledged as a critical facilitator of organizational change and agility.
New Business Models and Global Labour Markets: Although many firms retain a core of permanent co-located staff, it is also now common to form and dissolve virtual networks and project teams over time, according to evolving business needs, and often across national borders.
Shifting Demographics: The “Millennial” generation has grown up with advanced computing technology and use of the Internet, social media, and mobile devices is second nature to them. Being natural networkers, they drive wider changes in the nature of work, with an increased emphasis on collaboration and a demand for flatter organizational structures. They also have different expectations of work, with an emphasis on shared values, job satisfaction, and a work-life balance.
Technological Change: Advances in digital technology, such as social media, mobile, cloud, big data, and analytics are both driving and necessitating developments in HR. They are transforming the ways in which people carry out their work and the types of support they need from HR, and enabling new approaches to delivering HR services.
Two Main Developments in Human Resource Management
Strategic HR: The most forward-looking organizations are transforming HR from its traditional transactional role into a strategic, value-adding core organizational function. HR is now focused on ensuring that the organization has the right human resources in place to achieve its overall goals and objectives and that organizational culture and systems are designed to maximize the potential of human capital. They encourage a proactive role for HR in the development of top-level strategies and goals, making full use of HR specialists’ expert knowledge of labour markets, business models, and organizational capabilities.
New HR Technologies and Delivery Models: The adoption of new technologies and innovative delivery models enable HR to be better integrated with the business and improve the overall efficiency of the function. The uptake of cloud or “software as a service” (SaaS) solutions has been a dominant trend within HR in recent years, especially for the more transactional HR functions such as recruitment, talent management, and benefits and compensation. A full human capital management solution based on SaaS and incorporating core workforce planning and management systems is predicted to become the dominant HR model in the near future as organizations increasingly outsource their data storage and non-core support functions to vendors offering “cloud”-based services.
Key Challenges for HR
Developing a Strategic Focus: Ensuring that HR is properly integrated with the business at a strategic level requires a new type of HR leadership with strategic awareness, business acumen, and the ability to cultivate partnership-based working relationships.
Developing and Promoting New Mindsets within HR and in the Organization: HR professionals need a global mindset, a good understanding and awareness of new business models, and the ability to think “outside the box” in identifying the best ways of meeting the organizations human resource and talent requirements in the new business environment.
Demonstrating the Impacts and Value Generated by HR: HR departments are increasingly being held accountable by senior executives for their contribution to the business and are expected to be able to demonstrate the return on investment, in both quantitative and qualitative terms.
Developing or Securing New Skills and Expertise within HR: Some of the most important HR skills now include strong leadership, collaborative abilities, procurement and contract management expertise, analytical skills, and social media expertise.
Developing the Ability to Promote and Support Organizational Transformation: HR plays multiple roles in the success of transformation. Most importantly, HR ensures that the organization has the right capabilities and talent to achieve the desired transformation goals and takes steps towards securing or developing these as necessary.
HR and the Art and Science of Transformation
Schroeder & Schroeder’s Art and Science of Transformation® framework was developed in response to emerging evidence that the soft, people-related aspects of change are just as important – and sometimes more so, than the application of formal tools and processes. The “science” is defined as the use of change management tools and techniques, and the “art” as the important skills and attributes needed to manage the attitudes and behaviours of people to bring about a successful transformation. HR plays a number of critical roles in facilitating organizational transformation based on this approach:
Developing the People Strategy: To ensure that the organization can achieve the desired transformation objectives in the most effective and efficient way through the capabilities of its people. A well-designed people strategy will ensure that the right people and capabilities are in place and that contractual arrangements reflect the most efficient and cost-effective way for the organization to achieve its goals, within the scope of its core values.
Identifying Organizational Capabilities and Required Competencies: In today’s business environment, there is a continual need to identify the critical strategic capabilities required for sustained business performance, translate these into individual level competencies, and address any identified gaps through, recruitment, training and development or career management initiatives.
Designing the Employment “Deal”: Today’s workers require more than monetary compensation in return for their organizational contributions. They typically seek satisfying, interesting work; organizational values and culture that are similar to their own, terms and conditions of employment that enable them to achieve a good work/life balance, and opportunities for ongoing learning and development. Getting this right is important in ensuring the organization can attract the human resources needed to achieve its business goals.
Realigning the HR Change Shaping Levers: Once the people strategy has been developed and the most appropriate “employment deal” is articulated, it is necessary to realign the HR “change shaping levers” that promote the organizational culture and employee behaviours necessary to achieve the transformation objectives. These include, for example, the performance management system, the Compensation, Rewards and Benefits system, and the system for deploying individuals to roles within the organization.
Organizational Readiness: HR also plays a key role in evaluating organizational readiness for change and identifying or implementing improvements. A project management skills audit and organizational readiness assessment exercise can be used to facilitate this.