• Louis Scenti

Strategic HR is Not Only Organizational Structure

Introduction:

Our previous post in this series promised to explore some common pitfalls we have observed that undermine the delivery of effective HR solutions. This post is intended to set the stage for subsequent blog entries that will delve into individual Centers of Excellence and how they and HR Business Partners interact. Those posts will discuss some of the challenges and opportunities and will present solutions for practitioners to consider.

Ulrich redux:

We return to Dave Ulrich and his framework to enable a more strategic and less administrative approach to HR. In brief, he envisioned that HR would operate as small teams or individuals working collaboratively with managers of the organizations in carrying out strategic management and key initiatives. Accompanying that was the need to set up structures to segment administrative and operational work from that of the work that created business value.

At no time did the framework prescribe a specific organizational structure or service delivery model. That was left to practitioners. With the benefit of hindsight we now know that many organizations took Ulrich’s framework and applied it primarily by changing organizational structures. In the process, other drivers of organizational effectiveness were frequently underweighted. We forgot that structure is not strategy.

Organizational theorist Jay Galbraith’s Star ModelTM1 illustrates the need to go beyond structure as a determinant of organizational effectiveness. He identifies four additional dimensions, Strategy, People, Rewards and Processes, as critical to bring about a holistic approach to creating an effective organization. Put simply, in the rush to “be strategic” many HR departments changed the structure and neglected or gave short shrift to the other dimensions of organizational effectiveness.

Today we see an almost ubiquitous HR organizational structure and attendant service delivery model embodying three core HR disciplines:

  • The HR Business Partner (HRBP) e.g., an individual or small team facing off to a line of business as its central point of contact for all things HR;

  • The Centers of Expertise (COE), e.g., total rewards, talent acquisition talent development, organization development); and,

  • The Operational/Administrative Service Center, e.g., call centers designed to field, address and/or escalate administrative questions and problems that arise from the employee population.

As noted in an earlier post, HR leadership at the time of Ulrich’s call to action, many of whom came of age during the administrative and transactional era of HR, assumed that the role formerly known as “HR Generalist” would, through the alchemy of a new name, transform to embody the full range of capabilities and responsibilities associated with “being strategic.”

Learning how a business works, being fluent in other functional areas of HR, applying well-developed consultative and diagnostic skills and possessing the confidence to be the orchestrator instead of the heroic doer is not addressed solely by changing organizational structure. While HR Generalists were transforming into HRBP’s, areas of HR that had developed solutions for compensation, benefits, training, recruitment, were configured into small teams of subject matter experts who would develop products and services to be deployed to the organization.

Finally, teams were developed to respond to the vast array of administrative issues that exist in all organizations ranging from, employment verification to background checking to migrating employees and managers to self-service tasks such as address and phone number changes.

Focusing on structure and underweighting integrating mechanisms, upskilling, role clarity and internal service level agreements has spawned an HR model that frequently highlights the worst in the three core functional HR areas. Rather than harvesting the synergy across them, practitioners have often created competing fiefdoms. Consider, for a moment, the most pejorative stereotype associated with each of the core HR areas:

  • HRBP – Territorial gate keepers of the client relationship and hoarders of information

  • Centers of Expertise – Out of touch purveyors of rigid and one-size-fits-all programs and solutions

  • Operational Service Centers – Error-prone backroom clerks creating bottlenecks and delays

While we dramatize a bit for impact, the current model in many organizations falls short of delivering strategic business value. We believe this delivery model has become overly specialized and each functional area, in its own way, has become insular and self-serving.

While there is no doubt that some organizations have developed strong, strategic HR departments they are exceptions. Ed Lawler and John Boudreau’s “Human Resource Excellence,” (2018)2 covering a longitudinal study dating back more than 20 years concludes that HR has failed to move from service and administration provider to strategic contributor. Among other things they found:


  • HR has not significantly changed how it allocates its time since the first application of their research study in 1995;

  • HR executives consistently report that they spend more time providing strategic services than they did five to seven years ago, but the longitudinal data do not support that conclusion; and,

  • In all of the reporting countries, HR spends a majority of its time on services, controlling and record keeping.

The activities that differentiate HR as a strategic partner, for example, Strategic Workforce Planning, Integrated Talent Management, Organization Development and Design, to name three, remain situated in COEs and are commonly subordinated to the day-to-day, short cycle and reactive work often demanded of and by HRBPs. HRBPs, in turn, remain mired in transactions and compliance. Many HRBP’s struggle, through inability or lack of will, to fully leverage the COE capability to deliver genuine business value.

Conclusion:

Boudreau, Lawler and others have made clear that HR has not risen to the occasion. What Ulrich envisioned has not, in the main, been realized in many organizations. When we revisit Ulrich’s Principles:

  • Operate as small teams or individuals,

  • Work collaboratively with managers of the organizations in carrying out strategic management and key initiatives, and

  • Set up structures to segment administrative and operational work from that of the work that creates business value,

many would argue that HR departments have indeed applied those Principles and use them to guide action.

When viewed from an organizational structure perspective, that is largely true. However we believe that HR organizations need to fully explore the other elements of Galbraith’s model – Strategy, People, Rewards and Processes – as ways to optimize the Business Partnership concept and more fully realize the goal of delivering strategic HR aligned to business strategy.

What’s next?

Our next blog will address how HRBP’s can better partner with and leverage the expertise that resides in the Compensation COE.

1. Jay Galbraith, The Star Model, jaygalbraith.com

2. Human Resource Excellence: An Assessment of Strategies and Trends, Edward E. Lawler III and John W. Boudreau, Stanford Business Books, 2018

About the authors:

Louis Scenti is the Founder and President of Cognoscenti Associates, a consultancy specializing in executive and leadership coaching and organizational consulting. Prior to founding Cognoscenti Associates, Louis worked for more than 30 years as a practitioner of leadership development, organization development and talent management for several premier financial services firms, most recently as the Chief Talent Officer for the Federal Reserve Bank of New York.


He is currently an Adjunct Lecturer at Columbia University's School of Professional Studies in the Human Capital Management Masters Degree program. 

Somers HR Solutions is an independent consultancy dedicated to helping business leaders and their teams diagnose and solve people management challenges.  Managing Partner, Ken Somers, is especially adept at coaching HR Business Partners and business leaders to enhance their organizational impact.  He is passionate about delivering “answers for the real world.”


Ken’s career spans more than 40 years as both an HR practitioner and executive leader.  In addition to his domestic experiences, he has lived and worked in Singapore, Hong Kong, Japan, India, and Malaysia.  Ken completed his most recent assignment as the interim country head for an insurance company’s back office operation in Poland.  Ken’s vast international experience enables him to bring a multicultural and multi-generational perspective to solving client challenges.

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