TRANSFORMING YOUR HR DEPARTMENT TO A WORLD-CLASS SERVICE DELIVERY FUNCTION: FROM MEDIOCRITY TO VALUE-ADDED HR by Marius Meyer Lemar Consulting Over the last ten years I have personally visited the HR departments of more than 200 companies across South Africa, Namibia, Swaziland, Europe and America. Reflecting on these visits resulted in concluding that HR departments can be categorised into three groups: Value-added world-class HR (estimated at about a fifth of companies), mediocre HR (half of the companies) and sadly, also underperforming HR (a third of companies). The following table encapsulates the differences between the three types of HR departments I observed. TYPES OF HR FUNCTIONS UNDERPERFORMING HR (BUREAUCRACIES) MEDIOCRE HR (MEDIOCRATIES) VALUE-ADDED HR (CENTRES OF EXCELLENCE) Work against the business, no or little service delivery Tries to satisfy the business and their own needs, but several service gaps (50% of companies) • • HR attempts to align with business strategy HR practitioners try hard to help line complying with laws, policies and procedures HR uses policies but still provides service Certain standards, but not in agreements Mediocre service delivery (some errors, some successes) Pockets of excellence Dual HR systems (manual and computerised) Clear HR value chain with little gaps between sub-functions Co-operative HR-line interface Some HR involvement in the business HR and business makes rules together and implement Comply with laws, but (30% of companies) • • HR knows little about business strategy HR is controlled by bureaucrats who police HR laws, policies and procedures HR hides behind policies No service level agreements Poor service delivery (e.g. incorrect salary payments) Serious inefficiencies Manual HR systems (e.g. traditional leave forms) No HR value-chain, gaps between different HR sub-functions Confrontational HR-line interface HR is little involved in the business HR makes rules and the business has to implement it Compliance to laws Proactive, service-oriented and dynamic HR that actively drives business strategy (20% of companies) • • Complete alignment with business strategy HR balances performance and compliance regarding laws, policies, procedures Modern service oriented policies used Clear standards and service agreements Excellent service delivery (great success stories) Consistent excellence Technological HR systems (fully automated) Seamless integrated HR value chain with no gaps between subfunctions Excellent HR-line interface Major HR involvement in the business Business makes rules and HR provides support/facilitation All laws met, but • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • UNDERPERFORMING HR (BUREAUCRACIES) MEDIOCRE HR (MEDIOCRATIES) VALUE-ADDED HR (CENTRES OF EXCELLENCE) Work against the business, no or little service delivery Tries to satisfy the business and their own needs, but several service gaps (50% of companies) • do not police rigidly Some elements of HR governance used, but inconsistently applied Certain elements of HR quality used Periodic benchmarkking, but usually only in own industry Mediocrity is tolerated and thus perpetuated HR maintains culture of mediocrity Mediocre HR staff Occasional HR measurement, but little financial measures Annual satisfaction surveys, but not always follow-up improvement Some HR audits, but little improvement Isolated attempts to experiment with 360 degree feedback Occasional change management Fragmented or little talent management Mediocre employment relations (some disputes, grievances and CCMA cases) (30% of companies) • mentality HR governance framework is nonexistent No HR quality management system No real concern for what goes on in other companies Under-performing HR is tolerated HR maintains a sick organisation culture Incompetent HR staff No measurement of HR impact, let alone financial measures Few satisfaction surveys and nothing done about results No or few HR audits, but no improvement Culture is not ready for 360 degree feedback A lack of change management No talent management in place Reactive problemcentred employment relations (many disputes, grievances and CCMA cases) Proactive, service-oriented and dynamic HR that actively drives business strategy (20% of companies) • proactively applied Clear HR governance framework consistently applied Integrated HR quality management system Regular benchmarking across all industries No deviation from service excellence HR drives culture of excellence Brilliant HR staff Regular HR measurement, several financial measures (e.g. ROI) Regular satisfaction surveys and action plans applied Frequent HR audits, and radical improvements 360 degree feedback is part and parcel of doing business Progressive change management Dynamic talent management system Excellent employment relations climate prevents disputes, grievances and CCMA cases • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • While it is indeed positive to see that several HR functions have evolved into world-class valueadded HR departments over the last five years, 80% of HR functions are either underperforming or mediocre. However, it is certainly not possible to jump from underperformance to world-class performance over night. In other words, shifting from the one paradigm to the next takes time and effort. You may have taken three years to progress from an underperforming HR department to a mediocre HR function, and it may take you another five to ten years to reach world-class status. Part of the problem is that the HR department does not always know from which paradigm it currently functions. This lack of self-insight means that the status quo is simply perpetuated. Use the above table to plot yourself under each one of the bullets. Where do you fall under each item? Once you have completed this self-assessment, review the box with the most ticks. You will see that you could be world-class at a few elements, mediocre at others, as well as underperforming in certain areas. The challenge then is to institute clear action plans to move to the right, i.e. transforming to world-class HR. A prerequisite for this transformation is to have the right HR people on your team – people who are passionate about service excellence, people who want to make a difference and walk the extra mile for each and every employee in the company. There is no place for HR bureaucrats anymore – HR practitioners who hide behind labour laws and rigid policies and procedures that do not add any value. HOW TO TRANSFORM HR Assuming you want to pursue HR world-class status, here are a few practical guidelines that will put you on the road to transforming your HR function: • • Identify key HR priorities linked directly to the overall business strategy and drive this consistently by means of HR centres of excellence. Eliminate any red tape or bureaucracy in HR. If you can not do HR work with speed, outsource it to someone who has the capacity to deliver according to the business need. Get rid of HR bureaucrats and mediocrats – the modern and future world of work can not afford to allow them to continue doing the damage that they have already done. Align all HR processes and practices to your business strategy. Retrain HR practitioners in HR business partnering and customer service excellence. Read the annual reports and other business planning documents of your company to increase your business acumen. HR should visit the coalface and learn about the real business – go down in the mine, to the factory floor, to the shop and observe what is going on. If they don’t want to do it, institute HR-line job rotation so that HR can learn and work in the business and vice versa. This will promote mutual understanding of problems, challenges and opportunities for improvement. Form productive relationships with line managers and employees. Invite line managers to HR meetings. Ask line managers to chair HR meetings. Reward line involvement for excellence in people management matters, e.g. by awarding prizes like people manager of the month. Reward exceptional HR service, e.g. HR practitioner of the month for superior customer service. Let line decide who should get the award. Create an HR code of conduct with clear principles for ethics and service delivery. Ensure that HR applies the values of the company. Start every HR meeting with the values. Conduct regular HR customer satisfaction surveys and take immediate action to address shortcomings. Clarify roles and responsibilities between HR and line. Form an HR governance body consisting of line and HR. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Develop an HR governance framework to ensure the effective governance of HR. Openly invite the business to criticise HR in an open forum and take action to rectify all shortcomings. Develop and implement a robust HR quality management system. Establish HR service level agreements and manage service delivery according to these agreements. Have clear standards for HR performance and sanctions for non-delivery, e.g. if HR is not able to fill a vacancy within four months. Throw the HR forms away and automate the HR system with advanced technological applications. Manual forms belong to the previous century. Eliminate all barriers between HR sub-functions and between HR and the rest of the business. Do continuous benchmarking within your sector but also across industries. Create and enable a motivated team of HR professionals – people who are passionate about service delivery and reward performance. Refocus HR work from traditional HR functions to an integrated talent management and human capital approach. Eliminate unnecessary and non-value added HR jargon, buzzwords and acronyms. Conduct regular employee satisfaction surveys and take immediate action to improve problems areas. Ensure that you have a dynamic 360 degree performance management system. Arrange HR audits to identify areas for improvement. Establish clear HR metrics and measure the impact of HR interventions, especially in financial terms. Apply professional change management methodologies to all HR work. Some of these action could take a day, others a week, and others several months or even years. Transforming HR from underperformance to mediocrity to value-added HR requires a major paradigm shift. A total new way of doing things is required. However, as the above guidelines show, a few simple actions can already put you on the path to world-class excellence. The new world of work needs dynamic HR practices facilitated by enlightened and customer-oriented HR champions. As with all other major change management efforts, it normally starts with one person who sees the light. That HR change agent then needs to convince his or her team members of the need to take HR to the next level. While it may be a huge challenge to ensure effective HR transformation, the rewards are great – a value-added HR function that is respected by line and employees, for the simple reason that they are satisfied with the quality, quantity and speed of services provided by HR. Marius Meyer consults for Lemar Consulting on HR Strategy and Governance. He can be contacted on firstname.lastname@example.org or 082 859 3593.