The new possible: How HR can help build the organization of the future

The importance of these is unlikely to change, and I believe we need to be calling these out to both attract the right people into the role and to steer personal development. In this final stage of the framework the SME is looking more like a larger organisation. In terms of its people, the focus is on hiring the right key people with the right skills to run a certain section of the business.

Dedicated HR business partners need to remain a common element of HR operating models, but their role is not so much to tailor HR activities to the business as it is to deliver a common set of activities and expertise. Having non-HR leaders with first-hand experience in the HR function can help those non-HR leaders become more aware of the value and nature of the services and HR expertise. This can make them better partners and consumers of that expertise when they return to their business roles. This model is an adaptation of the classic Ulrich model, with HR business partners developing functional spikes and taking over execution responsibilities from centers of excellence (CoEs). In turn, CoEs are scaled down to become teams of experts and selected HR business partners. They are supported by global business services and have a digital operations backbone.

McKinsey analysis has shown that a preponderance of executives recognize how much external partnerships help companies differentiate themselves. Increased value can be created through ecosystems where partners share data, code, and skills. Success now requires “blurry boundaries” and mutually dependent relationships to share value.

Tier 0 support provides employees and line managers with technology-enabled self-service support. When self-service is insufficient, Tier 1 support is provided by the HR shared services teams. Tier 2 support offers subject matter experts who have specialized knowledge and are working in the centers of excellence. The strategic partner role in this model helped HR progress from a strictly administrative and transactional role into a meaningful contributor to achieving organizational goals. In this strategic business partner affiliation, HR is connected with senior leadership, and people policies are merged into the overall business strategy.

Although the HRO industry consolidated, outsourcing contracts lasting a decade were thin on the ground when organisations couldn’t see where they might be themselves. Single process outsourcing went from strength to strength, such as benefits administration, recruitment process outsourcing, payroll and learning. Prior to Travelex, Gareth held a range of HR and business transformation/change roles at Goldman Sachs, Sainsbury’s and, more recently, BT. Gareth holds an MBA from London Business School and is also a Chartered Fellow of the CIPD. He holds a non-executive role at London’s Guy’s and St Thomas’ Mental Health Foundation. The biggest area of impact is in HR operations, where 95% class their HR operations as ‘good to acceptable’ compared with ten years ago.

We consider the critical elements of an effective operating model transformation over the next two articles within this series (publishing in July and August 2024). Timms’ model is also reliant on multidisciplinary domains, reaching beyond the typical HR domains within current people functions, such as system designers and people scientists. Professionalising these areas, he suggests, would offer far greater impact, influence and credibility and provide an alternative to arranging HR by functions aligned to the employee lifecycle. In a nutshell, the 5Ps HRM Model states that organizational performance is directly dependent on the performance of people engaged in processes and guided by organizational purposes and principles. This means that when we hire the right people, send them to the right training programs, and keep our key players, we improve the company’s performance. The Model reversed causality demonstrates that stronger financial performance can sometimes lead to more investments in HR practices and better HR outcomes.

Top 10 HR Models Every Human Resources Professional Should Know

As the business grows or pivots, the SSC can quickly adjust its services to support new requirements and initiatives. This adaptability is crucial for maintaining operational continuity and responding to market dynamics. The centralized structure allows https://chat.openai.com/ for efficient allocation of resources, ensuring that the organization can scale its operations without compromising service quality. Centralizing functions within a shared service model leads to improved data management and reporting capabilities.

Some have misinterpreted our work as advocating that HR should be organised through shared services in all business settings. One well-intended study interviewed HR leaders in government agencies and SMEs and they critiqued the shared services logic. These organisations were functionally driven and should not create an HR organisation that is different from the business organisation. The decision to hire HR or someone to take on this role formally is determined by the business leader or founder’s views on people management and development. This also involves re-aligning the culture and relationships between the other major arms of the HR delivery mechanism. For example, in Rolls- Royce, independent of the need to service a collaborative business model, changes have been made in the HR structure that introduce a major projects directorate within the HR function.

Innovation shifts shaping HR model archetypes

The team will also be considering moving data off of spreadsheets into a proper HRIS. As the company finds that the demand for objects dusted with Hollywood’s glamour is high, they need to start hiring a lot of new people. Improved productivity and reaching the set company goals remain the main focus of all HR endeavours. Although no model created to this day offers a perfect solution for all HR efforts, understanding HRM frameworks in their diversity is crucial.

The main signal for change is that the company now feels notably different than it did a year ago. Our basic HR operating model that consisted of an HR leader, talent acquisition specialist, and an HRBP now needs to grow up to offering the full range of HR services. Some case study organisations chose to hire a professionally qualified HR manager at an early stage of business growth to ensure they have the right people in place to meet their growth ambitions. At the other end of the spectrum, some companies have chosen not to employ an HR professional, despite employing over 100 staff.

“The HR strategy clarifies how HR will contribute to achieving the business objectives and helps to guide all HR activities,” explains Dr. Veldsman. While clearly a trial by fire, the pandemic also provides an opportunity for HR to accelerate its shift from a service to a strategic function, helping to shape a more dynamic organization that is ready to meet the postcrisis future. Culture is the foundation on which exceptional financial performance is built. Companies with top-quartile cultures (as measured by McKinsey’s Organizational Health Index) post a return to shareholders 60 percent higher than median companies and 200 percent higher than those in the bottom quartile. HR can also incorporate purpose-driven metrics into compensation and performance decisions.

So how do these findings inform the discussion on the future of the HR operating model? I believe they highlight both a significant success story and a major missed opportunity for HR and spell out the priorities for future development. When it came to measuring the performance of the model, the results are compelling. Firstly, more than 90% of organisations felt their HR function is more efficient and commercially focused than it had been 10 years ago, with the majority (77%) attributing this success to the ‘Ulrich model’. Anton has returned to consulting in the HR, OD, capability and culture domains as MD of Fishman & Partners Ltd.

This model is most common in smaller organizations, which are often centralized and functional. Rooted in policy management, HR expanded over the years to also focus on strategic HRM practices and earn a seat at the senior management table. A currently emerging position puts HR in a new era of being architects of the human experience. These inventive approaches have supported Canva’s global team growth from 1,000 to 4,000 employees in three years and produced a talent community with over 20,000 potential hires. Canva, a Sydney, Australia-based online graphic design platform, has experienced exponential growth since its 2013 start.

In the last two years I have been working with the CIPD in general, and Dr Jill Miller in particular, on a project called Beyond the Organisation. In this work we have built up a picture that shows the wide-scale reliance on collaborative arrangements in the economy today, and the increasingly inescapable need for organisations to understand how to better manage collaborative working. While it’s terrific to have a strong corporate university and lots of online assets and content, each part of the company has its own particular learning problems.

If you’re an HR professional, you must understand the eight models discussed in this article. As HR continues to evolve, future HR models are likely to incorporate technological advancements, such as AI and automation, into HR service delivery. Concepts like Agile HR and Sustainable HR are gaining traction, reflecting the ongoing changes in the nature of work and the workforce. You can foun additiona information about ai customer service and artificial intelligence and NLP. Finally, the Warwick Model of HRM provides a valuable and holistic framework for comprehending HRM within diverse organizational contexts.

Whereas in the earlier stages the focus was predominantly on responding to immediate operational issues, now just putting a process in place to solve an issue isn’t enough. With each issue there’s a golden opportunity to also build on the organisation’s cultural foundations. There is a huge risk by this point of growth that what the business is all about, its founding principles and values, can become diluted and even disappear. HR is ideally placed to keep these core business principles alive by ensuring the values and purpose are threaded through the people practices. In some organisations an HR manager is hired (full- or part-time) with the remit of putting in place the necessary procedures and policies. In others an HR consultant was engaged in this stage with a remit to address particular people issues, put in place the structure and process needed, or in a more ongoing general advisory capacity.

We identified three practices—managers’ coaching, linking employee goals to business priorities, and differentiated compensation—that increase the chances that a performance-management system will positively affect employee performance. Organizations can support this by helping HR evolve, strengthening the function’s capability so that it becomes the architect of the employee experience. Airbnb, for instance, rebranded the CHRO role as global head of employee experience. PayPal focused on HR’s capability and processes to create a better experience for employees, including coaching HR professionals on measuring and understanding that experience, and using technology more effectively. While the nature and purpose of the HR function have been evolving for years, the demands of the pandemic dramatically accelerated this transition.

By integrating IT functions into a shared services model, organizations can enhance the efficiency of their technology deployment, optimize IT resource utilization, and improve service levels. The centralized nature of IT shared services enables better governance and security and rapid response to emerging technological trends and challenges. This ensures that the organization’s IT capabilities align with its strategic goals and business needs. The primary goal of a shared service is to optimize the efficiency and effectiveness of an organization’s support functions. Shared services seek to streamline administrative tasks by centralizing them, aiming to eliminate redundancy, lower operational costs, and maintain a consistent quality standard throughout.

With talent management still being at the top of the agenda, HR will have to think about developing attraction strategies and a value proposition in the world of a talent war that turns much of what has been done traditionally on its head. The new types of employee that we are seeing have different priorities and place demands for creativity on the HR function. Fragmented, localised HR activity inevitably leads to inconsistencies in the HR process, a lack of standardisation, poor data and high costs.

Consider Tesla’s effort to create a culture of fast-moving innovation, or Apple’s obsessive focus on user experience. The roles needed to turn such priorities into value are often related to R&D and filled with talented, creative people. In year 1, HR needed to hire 60 people; this year, they will need to hire 100 new employees plus replacements of people who have left. Another signal is that there is a hint of a change in the culture of the workplace. HR will be wondering if and how they need to change the operating model, perhaps add a new role, to address that. Effective HR operating models are based on wider Chat GPT, which outline the HR’s role and positioning within the business.

Each archetype is typically based on one major innovation shift and supported by a few minor ones (Exhibit 3). This model is designed for talent development practitioners and serves as a roadmap of competencies that such professionals must build, in order to succeed in their careers. These competencies are grouped under two sections, ‘Foundational Competencies’ and ‘Areas of Expertise’ (AOEs), the former of which are base-level competencies that are used to build more specific competencies.

Companies are experimenting with a wide variety of approaches to improve how they manage performance. According to a McKinsey Global Survey, half of respondents said that performance management had not had a positive effect on employee or organizational performance. Two-thirds reported the implementation of at least one meaningful modification to their performance-management systems. In a rapidly scaling company, the main point to notice is that the HR operating model needs to change every year. How things are done in a 40-person company fails when it becomes a 200-person company, not to mention a 400-person company. A savvy HR professional will have a mental model of how the department needs to organize to meet current needs and how it will have to change to meet future needs.

An HR model, or a human resources management model, is a framework for articulating HR’s role and positioning within the business. It serves as a guide for human resource management and intersects with the HR strategy. The HR strategy visualizes the future, and an HR model breaks down the plan for getting there. The shared service model offers scalability and flexibility to accommodate the organization’s changing needs.

The SSC can ensure consistent and high-quality service delivery by standardizing processes and employing best practices. Centralization facilitates better control and monitoring of performance metrics, allowing for continuous improvement in service standards. As a result, internal customers experience more reliable and responsive service, which enhances overall satisfaction and drives organizational efficiency.

If we focus on measuring just HRM activities, we will automatically prioritize maximizing efficiency to reduce costs. Instead, we should focus on measuring HRM outcomes, as this helps to align our processes with our goals. hr models Furthermore, sometimes a stronger financial performance leads to more investments in HR practices and better HR outcomes. When performance is strong, employees are often more engaged, and engagement is an HR outcome.

This customer-centric approach fosters a strong partnership between the SSC and its service departments. As a result of the COVID-19 pandemic, clients and businesses increasingly seek flexibility, efficiency, and compliance. The shift towards remote work and digital solutions has accelerated these demands, making it essential for companies to adapt quickly.

The front-back delivery model is similar to the business partner model as it also has business partners, shared services, and centers of expertise. However, it does allow for more localization by having different strategies within each line of business. Technology is shared and centralized, but depending on the local needs, other technologies could exist within each of the lines of business. There are multiple types of HR operating models, including the business partner model, a functional model, hub and spoke, or a federated model. Whichever model fits the organization best depends on the organizational context and business strategy, as well as the available budget.

The 5Ps Model

Many hours of reflection have been spent by businesses wondering why the first, second or even third rounds of HR transformation have not achieved what they wanted, both for the function and the organisation itself. ’ question has been floating around for a few years now, but few coherent propositions have arisen and even fewer fully implemented as alternative operating models for HR. A great deal of debate was generated by Ram Charan’s recent proposal1 in a Harvard Business Review article that corporate HR functions be split. He called for eliminating the chief human resource officer (CHRO) role and creating two functions.

By consolidating data from various departments into a single source of truth, the SSC can provide more accurate and comprehensive insights. This enables better decision-making, as management can access reliable data for strategic planning and operational adjustments. Improved data governance also enhances transparency and accountability across the organization.

Ensure the right HR service delivery model – Evaluate the current HR service delivery model and assess how effectively it helps to meet the organization’s goals. You should also analyze the key HR enablers, such as HR systems, processes, and infrastructure. Optimizing these will help deliver HR services that add value to the organizational strategy. CIPD research from 2015 showcases Orion Consulting, who found that the Ulrich model improved the HR function’s operational efficiency, capabilities, commercial focus and alignment to the business.

• Two of these dimensions focus on HR design (how the HR department is organised) and HR relationships (how HR goes about doing its work), suggesting that both elements play a critical role in HR delivering value to the business.
• He has helped generate award-winning databases that assess alignment between strategies, organisation capabilities, HR practices, HR competencies, and customer and investor results.
• For example, the Nuclear Decommissioning Authority (NDA) has an organisation structure in which a director and a site-facing team face off to all the nuclear management partners.
• In the same vein, many of the organisations I’ve worked with have introduced a more sophisticated reward offering at this stage.
• More attention needs to be given to ensuring the quality of ‘operational HR’ – the translation of policy into practice at an operational level.

If we only measure HRM activities, we will automatically focus on cost reduction (i.e., maximizing efficiency). Instead, we should concentrate on HRM outcomes because this helps to align our processes with our goals. The unmediated HRM effect, which shows that some HR practices can directly lead to improved internal performance, is one of two intriguing relationships.

Human resources (HR) shared services are designed to manage and streamline various HR functions, including recruitment, onboarding, payroll processing, benefits administration, and employee relations. Centralizing HR activities allows organizations to provide consistent and high-quality HR services across all departments, improving employee satisfaction and productivity. By adopting this model, organizations can leverage advanced HR technologies and analytics to make informed decisions regarding workforce planning and talent management. Additionally, HR shared services play a crucial role in ensuring compliance with employment laws and regulations while promoting a standardized approach to HR policies and practices.

Exacerbated by demographic developments in many parts of the world, has intensified existing talent shortages. As the HR landscape continues to evolve, staying updated with these top 10 HR models is essential for HR practitioners in 2024. These models provide valuable frameworks for addressing talent challenges, aligning HR strategies with business objectives, and driving organizational success. By incorporating these models into their practice, HR professionals can contribute to their organization’s growth and adapt to the dynamic nature of the modern workplace.

Many CHROs believe the classic Ulrich model is not up to solving today’s HR challenges, with HR business partners lacking the skills and time to keep up with the latest HR developments. Inflexible CoEs limit agile reactions, while other organizational boundaries have steadily become more permeable. Multinational businesses with mature and stable business models are often the ones that experience these pain points. Stepping up to this new responsibility requires HR to transform itself, adopting the organizational principles and key performance indicators of core business functions. HR leaders need to drive more agile and fluid organizations, shift the role of business partners, and drive the employee experience—and do it all with a clear leadership mandate.

Strengthen leadership and build capacity for change

Between each stage is what I’ve referred to as an inflection or a tipping point. These are typical points reached by SMEs where the current people approach is no longer suitable or effective for the business. The needs of the business and hence its people management needs are changing – it’s through looking ahead to these transition points and taking action to adapt or introduce new people-related activities that the business will be sustainable. In the private sector we looked at industry-wide partnerships in the nuclear industry at the Nuclear Decommissioning Authority/Sellafield Ltd. But operating in a collaborative world is not the preserve of the private sector. Employers are increasingly finding that they not only have to manage their own workforces, but also have to manage workforces across the partnering network.

These models provide a roadmap for aligning HR practices with organizational goals, contributing to enhanced efficiency, employee satisfaction, and overall business success. As the world of work evolves, HR models will continue to adapt, ensuring their relevance in guiding HR strategies and practices. Contact Colin today to discuss how our expertise can benefit your organization.

It’s become unfashionable to use tests of verbal and numeric reasoning skills, but perhaps we should look at more sophisticated and rigorous ways of assessing what level a person can operate at. We are letting our people and the business down if we recruit people to do a job they simply can’t do. Levels of work suggest that by far the best predictor of success in higher complexity roles is judgement – but this is rarely assessed. This new operating model, which we have been sharing with clients for about a year, is very well aligned with the CIPD’s Profession Map.

We believe there can be a bright future for the HR function if it is designed and managed strategically. Our research shows that most organisations are doing many of the things they need to do in order to be strategic contributors, but are failing to do some important ones. HR operating models that create a more permeable boundary around the HR function seem to be a particularly powerful way to enhance the strategic role and contribution of HR going forward.

It also covers the kind of situations you might well run into in your career. As a result, the Model demonstrates how HR activities aligned with organizational strategy lead to improved business performance. According to this Model, HR will be effective only if its strategy is in sync with the business strategy (in line with the best-fit theory). The Model is based on many similar models published in the 1990s and early 2000s. The Model depicts a causal chain that begins with business strategy and ends with (improved) financial performance via HR processes. An HR model is a conceptual representation of how an HR department functions.

Find which model best resonates with your company, and implement it to enhance your business. Simply put, an HR model is an abstract representation of how an HR department works. Because it would be an arduous task to think about HR policies and functions from scratch while starting a new company or even revamping an existing one, HR models are used to map out the workings of human resource management departments. An effective model enables HR to execute the people strategy and realize the maximum value for the business. However, the model that works best will depend on the organizational context.