HR Transformation was first proposed by Dave Ulrich in 1995, and at the time it was a revolutionary idea.
Concepts like COEs, HRBPs, and HR Shared services were ahead of their time, and have since become the standard for how HR departments are structured. Organizations deploying this model, or some variant, expect this transformation will lead to impactful business results, but in practice, this hasn’t been the case.
One of the underlying problems is that HR Transformation has too often resulted in inwardly focused process optimizations–how do we run HR better–and that does little to empower other departments in the business, let alone the managers and executives who are expecting to see the outcomes of transformational change.
The bright promise of HR Transformation has not played out.
Instead, time and time again, we’ve seen organizations spending millions of dollars pursuing HR efficiency without fulfilling the overall promises made to the business.
But that’s doesn’t need to be the end of the conversation. In fact, HR Transformation as a concept works. We just need to reframe how we think about HR and get more strategic in the way transformation is approached.
Today’s HR Transformation Won’t Benefit the Entire Organization
HR Transformation has not worked. It can be a sore spot when talking to executive-level sponsors, who’ve poured millions into transformation efforts only to benefit little in return. And yet, we continue to look to the new wave of advancements in technology as the solution to the current problems.
Many HR leaders believe that new technologies, like cloud-based HCM software and robotic process automation (RPA), will help make HR transformation successful. The general idea comes down to HCM software enabling more efficient transactional processes, which would give HR practitioners more time to focus on strategic projects like talent development and retention.
One of the underlying problems is that HR Transformation has too often resulted in inwardly focused process optimizations…and that does little to empower other departments in the business.
Simply put, we have invested in removing the barrier to being strategic, but we have not invested in actually being strategic. So we are left only with the promise this will eventually lead to better business performance and outcomes, which is a promise echoed in previous iterations of HR Transformation. In reality, this only creates soft productivity savings.
This is not to say that a new HCM application, whether an HRIS, ATS or LMS, doesn’t have its place, or provide value.
As a best practice, there is a baseline requirement for HR to record and manage employee data effectively, which these transactional systems do very well. But what they do not provide is that broader business application; ultimately it’s just a better tool for collecting the data managers have been asking to see for decades.
HCM applications are just one more example of tools that solely benefit HR, not the organization, and that disconnect is always going to be a point of contention when it comes to showing value.
The same argument can be made of RPA. RPA allows an HR department to automate standardized tasks that would otherwise be repetitive. Examples of this would include, simple rules-based interactions with employees or routine tasks like absentee management.
Simply put, we have invested in removing the barrier to being strategic, but we have not invested in actually being strategic.
Now, this all sounds great, and often these projects do offer improved efficiencies and better data management. However, what tends to happen in these cases is businesses see automation as a means for replacing HR people with machines, rather than as an opportunity to free those people up to do more useful, strategic work.
So if current methods aren’t the answer, then what is?
HR Transformation That Leads to Better Business Outcomes
I’m going to take a bold stance here and recommend that any business currently undergoing an HR Transformation, or thinking about doing so, stop immediately unless your stakeholders can clearly state why, and you know explicitly how to measure success quantitatively.
In an environment where we’ve been told that staying competitive means keeping up with the latest technology advances, let me explain why this advice is not as counterintuitive as it seems.
First, it’s fair to say that the majority of large enterprises have gone through at least one HR Transformation in the past decade or so. This means there is already adequate structure, technology, and processes put in place for the HR organization. Rather than thinking about how to adopt all sorts of new talent management technologies, organizations can use existing information and data within their companies to make decisions that improve their business outcomes–which is what it means to be strategic, and what analytics was designed for.
Let’s look at one example of how, rather than looking to implement new HR Tech, a global consumer products company enlisted their current processes, alongside analytics, to find a better way.
In order to better understand the financial performance of each region, the people analytics team was brought in to map workforce performance with financial performance. They ultimately found one region was far exceeding others (by over 15%) in terms of how well they were utilizing their workforce compared to their overall revenue targets. Due to this discovery, the company made the finance leaders from that country partners in process improvement for the other subsidiaries. This is a direct and tangible benefit that HR delivered to the organization, using data they already had, just with a different approach in mind.
HR Transformation has often been about piecemeal adoption of “best practices” which turn into projects to update a system or process. But to be successful, the transformation needs to be systemic and akin to a lifestyle change. From the CHRO through to every business partner, the expectation has to be one of connecting people decisions to business outcomes. This lifestyle change means bringing business acumen and analytics to every discussion.
HCM applications are just one more example of tools that solely benefit HR, not the organization.
The good news is our HR Transformations have already removed the barriers to being strategic, and now it is time to invest in the planning, analytical and business skills to become strategic. If the argument above has not convinced you to take a second look at the HR Transformation, then I recommend this exercise.
Write down the top three business decisions that came as a direct result of your last HR Transformation, and beside each quantify the business benefit. If you can’t do this, then why did you undertake the transformation?
As we move ever closer towards a changing future of work, these processes are not going to help companies gain a competitive advantage. Only meaningful business insights that drive strategic change will; this will be the hallmark of a true HR strategy and an actual HR Transformation.
A version of this article first appeared on HR Technologist.