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HR future state operating model

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I envisage the HR ecosystem changing significantly over the coming decade and see the need for a dynamic operating model for the HR function to stay in sync with this.

HRM today is a rapidly changing space. Hitherto dispersed employee data - performance, learning, social media etc. is now presented in a cohesive manner through Human Capital systems for the benefit of decision makers. I envisage the HR ecosystem changing significantly over the coming decade and see the need for a dynamic operating model for the HR function to stay in sync with this.

HR product companies have introduced several V2.0 products offering sophisticated features including integrated talent & performance management and analytics. Line managers now have more collaborative decision making opportunities creating the need to closely align HR with the business environment. Here are my thoughts on how we could harness this change of operating scenarios.

Let's look at HR models over the years - from a services only framework to lead organization effectiveness and strategy, they have been delivered through multiple sub groups. "One HR" policy was followed for process delivery across functions. HR was expected drive Engagement through a seamless end user experience; Service delivery through processing models; Biz adoption by realizing people value  through performance management. HR teams adhered to a pyramid structure ensuring transactions delivery and strategic support were balanced through tail to head FTE ratios. Subsequently, CMMs became an integrated part of the HR framework - each function rolled out silo operating models and tactical tools to breed healthy delivery.

Shared services came next with large and medium scale global organizations moving to a consolidated services model. The pyramid continued to co-exist with the bottom seeing increasing transaction volumes. The governance layer was simultaneously enhanced to ensure that the back bone of centralized services support continued. We observed a transformation of Services delivery through "Click", "Call" and "Face" and the HR industry progressed to distinct disciplines such as:

  1. HR Generalists only
  2. Generalists + Service delivery + Specialist functions
  3. Generalists + Service delivery + Specialists functions + Shared Services

The transformation continues even as the current technology-enabled generation "taps" through tablets, smart phones and cloud applications, replacing the "clicks" and "calls". This force needs more agile and flexible policies, influential data, connectedness at work, power to take informed decisions, faster job role changes and better compensation to live up to the social value. Of course it is part of the corporate ecosystem along with the older generations creating the need for an operating model that can engage all without a one size fits all approach.

Section 2: Future roles within HR
The end user experience, service delivery and biz adoption is now dependant on tools with Cloud and SaaS having the potential to make them even more attractive. I came across a recent study showing that ~50% of the large/medium sized organizations are inclined to invest in better HR systems with most HCM's looking at adopting better transaction processing modules, self-sufficient capabilities on performance management, talent planning and derived analytics. However, I feel legacy systems would exist until a new technology wave sets in and the next decade would be driven by a hybrid model as investments already made will demand ROI.

Here are the projected roles which I envisage would be addressed by certified in-house /vendor practitioners depending on the organization's budget and talent mix. 

HR Future State 1_Dilshad.jpg 

I believe, organizations could outsource HR services with vendors contributing with interfaces, middleware and other data management techniques across legacy and cloud systems. HR vendor management would be in-house or outsourced. Investments in software to achieve compatibility will reduce as these become plug and play modules. CIO and CHRO will have reduced dependencies if data migration techniques are aptly anchored and consumed bringing additional focus on Vendor Managers.

Generalists will focus on deriving business value and will be expected to contribute to organization change as line managers (more of the Gen X and Baby Boomers who continue to be 60% of employee base) see change in ways of working. Learning services and performance management will see consolidation.

Considering diverse systems across HR functions, technology enablers will run services of the technology back bone bringing in perspectives on transition, technology effectiveness and pricing.

Services delivery will govern the tactical side of business though vendors and captive shared services will continue to dominate this area via hybrid models.

Evangelists and policy keepers will continue to operate across verticals with the focus moving away from traditional models of advocacy to more participative rules - influence working level changes in policy making and adherence.

Section 3: Future Target Operating Model
Here is my HR operating model, considering the above.

As you notice, the model moves from being a pyramid to a more retained delivery through tools, reducing the transaction (tactical) agenda items - a model with less of transaction - bottom layer of the pyramid and significant middle and top layer, in the next 5 years.

HR Future State 2_Dilshad.jpg 

Tools will bring in more transaction processing ability and vendors will continue to invest in cloud based models. Product vendors will offer increased capabilities and services and cloud will contribute to deployment of changes. However, as mentioned earlier, a hybrid operating model is envisaged. Maintenance effort will be optimized and cost driven. I feel, an organization needs to identify impacting factors such as:

  • Budgets (move towards a structure that optimizes cost)
  • Organization structure: layers and span to bring in effectiveness
  • Distinct roles identification: to contribute to effectiveness agenda
  • Capability requirement against roles: a moving agenda as organizations transition into a dynamic environment
  • Products: sustainability of existing v/s future investment required
  • Talent demography: strategize and hire based on talent required
  • Learning organization agenda: Drive learning culture through talent planning

HR remains the focus of most new-generation and legacy organizations and transformation is inevitable. Innovation in HR will drive engagement, performance and productivity. Future employees will look forward to differentiating policies which offer flexibility. A workplace of tomorrow will need to delve deep and appropriately strategize alignment of HR function.

Download White Paper: Future State Human Resources Operating Model - Redefining HR operations to drive business value

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