Nigel Cassidy: Is your HR set up fit for purpose and value for money or is it time to radically change your HR Operating Model? I’m Nigel Cassidy and this is the CIPD Podcast. Now people professionals don’t need reminding how their working days, duties and responsibilities constantly change. So it’s kind of surprising that the human resource structures that determine who does what and who they report to haven’t really changed much in 30 years. Take the original tried and tested Ulrich Operating Model it’s the one that divided HR functions into strategic partners, administrative experts, employee champions and change agents. Because technology and employee needs, well, they change so much. Is it time to pick and mix from a welter of new HR models out there? Or can current models adapt and evolve to respond to all that pressure to be more agile and deliver better value. Well, we’re delighted this month to welcome the man behind that original HR business partner model no less than top management guru and HR thinker Dave Ulrich. Welcome Dave and thanks for getting up so early to join us from Salt Lake City.
Dave Ulrich: Nigel, thank you. I’m delighted to join the conversation.
NC: Our other two guests with a global HR strategist with a track record helping to optimise HR operating models while nurturing inclusive workforces. She’s Natalie Sheils Chief People Officer at Mosaic Group which unites mobile first companies. Hello Natalie.
Natalie Sheils: Hello, thank you for having me, Nigel.
NC: And we are spoiling you this month because we got yet another influential industry thinker in our lineup. The founder of People and Transformational HR Perry Timms who works to adapt and reinvent teams he says from dreams to moonshots. Hello Perry.
Perry Timms: Hello there, yeah, this is a moonshot for me. I am so pleased to be here. Thank you.
NC: Okay. So Dave Ulrich let’s start with you. If you are going to launch your model today what would it look like?
DU: I’ve never called it my model ha. I’ve never said this is the Ulrich Model. I stole it from some companies who are doing great HR work. And it was in 1997 did a work called HR Champions and I was thinking back that’s 27 years ago. 27 years ago, I don’t think anything is much the same. Phones aren’t the same, televisions aren’t the same, cars aren’t the same. The HR function has been through an evolving change and so it’s always been prioritising change. So if I were starting today, today I would start with HR is not about HR. HR is about creating value in the marketplace. Not just strategic value inside the company but value for a customer, an investor and the community. And the agenda for HR is not about its operating model it’s about the value that the HR services bring to the stakeholders of the company and that’s where I start.
I still see HR people going into a meeting with their executive team or their business team or their board and saying, here’s our programme. And their programme could be culture change or hybrid work or leadership or whatever employee experience some of the great work Perry has done. I think that’s not the place to start your discussion. I think today when HR people walk into that room the first couple of slides are, here’s our customers. We say HR is about people. Yes when our customers are people. Here’s our investors debt or equity or parent company. Here is the community. This is what we as a company are trying to accomplish in the marketplace. Then we’ll talk about employer experience, leadership, culture etc.
NC: I mean I absolutely get all that. But I mean you have to acknowledge though that there is a sense in which a lot of organisations are built on relatively traditional lines with those delineations btweeen strategic partners, the people who do the admin and the people who are brought in to make the changes all that.
DU: Oh, no question. And some of the principles are timeless. It’s interesting we did a summary of nine advisory firms who claim they have a new organisation design model. Not one is new. Here is what we find HR is composed of specialists who have deep expertise in compensation, training, learning, engagement. Deep expertise. And HR is comprised of people who apply that knowledge to a setting, it could be a business unit, it could be a function. Guess what those two groups have to work together that’s the agenda that’s timeless. HR has deep expertise and application of that expertise call it whatever you want to call it. Somebody said it’s agility, agility has been around for 50 years. We’ve got to put those two pieces together and then the third piece we’ve got a whole bunch of administrative things that have got to be done. You’ve got to get paid; you’ve got to get trained. Today we have Gen NI and I hope we’ll hear from Natalie about how technology is just doing that third thing.
So in any organisation in HR is a function you have specialists, deep experts, you have generalists who work in the field who apply that equity and you have administrative processes that make it work. Bringing those together is the challenge. Everybody loves to look at the HR operating model. In the last 25 years we’ve identified ten dimensions of an effective HR department. Which are reputation, which are purpose, what are your competencies, what are your analytics, what are your skills, what are your people, what are your etc. And then our commitment is to say which of those ten dimensions has the most impact on customers, investors, stakeholders. The HR Operating Model is not in the top five. What matters most is how well people work together and what the reputation is of the HR department so when we get into the HR Operating Model it’s actually a by-product of relationships and reputation.
NC: Well, Natalie, Dave has put an awful lot out there. But just to reiterate first things first if HR is under the cosh to offer better value we’ve already hard that word. What would you say is missing from the old models or maybe what could we dispense with?
NS: The old model has – there is a lot of legitimacy as to why it continues to exist. You’ve got people who are expertise in terms of what they do. And then there is also the realities of how day to day work actually happens at work. Right, when you’re sitting and you come in if I’m an Operations Manager I’m just focused on doing that. I’m focused on my people, I’m focused on what goals we have as a department and if there is anything I need I’m going to go to an HR team and I’m going to say, look, I need to know how many days my people have off. I need to know what this in compensation. I need to know what are we doing in terms of our employee engagement etc.
And so, if HR model is going to be moving it needs to move lockstep in terms of how the rest of the organisation starts to become more advanced. Right? Starts to think in a way that I would say disruptive. And the technology kind of advancement what’s happening now is actually forcing businesses to become that way. And so that’s one of the pros and I’d say one of the reasons why we probably start looking at the HR Model now and really we should was probably kickstarted by covid. The covid undertones are very similar to what disruption is doing, our technological disruption. It’s forcing us to come out of our silos and start to actually think, okay, as an HR how can we also start to actually impact the business in a way that’s really, really, really strategic? And how do we get that seat at the table? We did but how do you hold onto it? And there is many ways that we can kind of think about how we do that.
Looking at the old model, right, one of the things that is timeless about it is that the concept of strategic partner in with the businesses because it is kind of talking what Dave mentioned which is how do we become, how do we deliver value to the business as stakeholders, investors all of that? So that aspect continues to remain this is why you will see within every business there is a strategic business partner. But there is other things like admin that we have to start to look at in a different way and technology is forcing us to do that and helping us to do that.
NC: Okay. So turning to Perry now. What do the leaders think is missing almost in the design of the HR? Are there the same things that you find you’re building into the new models?
PT: Hmm, yeah, it’s really interesting hearing both those views because it takes me to the era that Dave started with the mid 1990s when I think it was about standardisation, replication and almost like instrumentality of work at the time. But I think work is very different now and we’ve just heard that from Dave and Natalie. So what leaders are saying is that temp and that framework is no longer relevant to mass personalisation and even things like exponential growth. It’s not what we need but we don’t know how to do that. And we don’t know what the people function can do for us when it comes to things like recourse planning and strategic workforce planning and so on. So it’s got a curiosity to it and it doesn’t quite know how to expect from HR what it can deliver that helps it strategic muscle, I suppose, in a new arena. But what’s really interesting is how people in the HR profession have interpreted Dave’s model. Because I’m not really sure that the HR business partner was ever a role. I think it was more a space where business and the HR profession came together. And people in those roles were relationships brokers, they were coaches, they were consultants, they were people scientists. They were performance analysts. But we tried to package it in a role and I think that’s HR doing the instrumental job design thing on itself and we’ve now created divisions instead of intersections.
So what business leaders say to me is, how can we rely on HR to help us deal with the completely and random circumstance when what we see in itself is silo thinking? So there is something about the incongruence of that. But I think we’re now starting to see that experimentation that Natalie talked about. How we are stepping into more project orientation and the experimental things that we need because we have to, because we’re facing things like artificial intelligence and automation becoming something so prevalent in administrative work. We’ve not done that before so therefore we have to experiment therefore we have to work across disciplines. I think that’s forcing us out of our own self-imposed silos into something much more intersectional and something much more product and project orientated. So that’s the kind of thing that I get asked to explain quite a bit. About why aren’t we getting what we need from HR and I think part of it is because we’ve been so busy trying to fix new and standardisation and instrumentality we’ve got stuck in that and we need to unstick ourselves first and then help you do that. That’s my take on it, Nigel.
NC: So Dave, do you want to say anymore about we unstick ourselves then? To use the phrase again.
DU: I don’t think HR anymore is just strategic. Strategy for me is a mirror and in the mirror of strategy you reflect what you do. You hire, you train, you develop. I think now instead of a mirror you have a window. You look through the strategy to the outside customer. In Perry’s world an employee experience and there is all kinds of words whatever you want to call it. Engagement, experience, wellbeing, flourishing. The correlation between employer experience and customer experience are generally point 6 to point 8. So my job in HR is not to deliver a strategy it’s to create a customer experience because of my good employer experience and that customer experience then leads to investor. So when I sit within executive I’m not sitting there doing HR and saying I want to create 25% economic value for this company. And I love the idea, Perry, of division is less important than intersection.
That is so critical because we have ten dimensions of a great HR function the one that comes out the highest well, two reputation is relationships. How well do we work with each other? And we always used to solve that in a governance way, Nigel. With everybody’s done RACI responsible, accountable. And we’ve all done RACI. I’ve been married a long time. Not once in our decades of our marriage have my wife and I sat down on Sunday night and done RACI. Oh, my goodness, we’re going to shop, we’re going to do food, we’re going to pay bills. Ooh, I’m accountable this week. We have a relationship. This week my wife is pretty busy this is an embarrassing thing after this call I’m going to go and do some shopping. And then later today I’m probably going to do laundry. Next week I’m busy and she’s going to do it. That’s what the relationship is about. That’s to me where I hope we move HR along and the debates about – remember I said the ten dimensions of a great HR function the organisation, the structure of the HR department isn’t even in the top four of what delivers value to customers and investors.
NC: Okay. Well, a lot to think about there. Let’s sort of try and be a little bit practical about this. Natalie, just talk us through a little bit when you work with organisations how you turn some of these ideas we’ve already heard so far about what HR should be like and how it can give better value? What does that translate to in terms of the way it’s structured, the roles if you like?
NS: Yeah, yeah. I think the way it’s structured is very, very important. As somebody who is operating as a Chief People Officer as well and as I also work at other CPOs as well. When we set out to do our roles as HR we generally have to think about we then delivering value to the business. In order to do that we have to think about the way that we position ourselves as a team and the way that we view the business as a whole. So one of the ways that we kind of think about our model or how I’ve thought about that model and how I would advice we think about it when we think about our new operating model is we need to look at businesses from the outside in. We need to be thinking about what are the forces that are impacting the businesses today. And those four says you’ll find that a very similar to what impacts HR. Right.
So when you talk about HR being a product and I’ll talk about how that links to the HR business models is when we look at the businesses right now everybody is employed by business, business does well from a revenue perspective. Everybody has got their jobs. If economic conditions are very difficult or suddenly a business needs to lay off that comes back down to HR and everybody else is impacted and those are the trends that tend to impact HR. So when we are thinking about things like AI, digitalisation all of that what is that looking like realistically for businesses today? It’s practically what is happening to our business model. What is happening to the way that we think about our products. What is happening to the way that we – how we are looking to our competition. Do we need to revamp our services? Do we need to restructure, where do we then redeploy capital and investment within the organisation? Right. If we are now redeploying capital and organisation to now being more taken abled to now maybe moving from changing our products to utilise AI we’re taking off capital somewhere. And usually that tends to be within operations teams within HR and etc.
The other thing that we should be thinking about that impacts us is HR professionals – obviously skill shortages. Those things impact how we think about how we set up our model as well. Skills shortages today are 77% high and we know that which digitisation more increased skills are going to be coming that’s going to be increasing the type of skills that organisations will need. That will impact how we need to be setting up our operating model as HRs. And then we think about how do we even start to deploy the right type of talent into the business. With the mindset of where the business is going, the capabilities it needs from a skillset perspective from a leadership perspective etc. And so that also impacts a lot our model. And then of course the environment today is uncertain, it’s dynamic, it’s ever changing, it’s exhilarating, it’s exciting. It’s scary.
And so, we need to be thinking how we’re creating a culture that is dynamic, that is easy to change, that is resilient. So I’ll go back to how that then looks like for us. So that means we’re not thinking about our operating models, we need to be thinking about how we’re creating models that are networked. That are idol, that are interconnected with other business units as well. And to a degree with ourselves that are independent. How we’re thinking about how do we upskill and develop a business and so how do we set up ourselves and develop the skills within a business. So how do we set up ourselves into our function? Do we old school L and D? Do we go talent management and intelligence? How do we start to think about that? And then what happens of course to all the tasks that we do on a day to day like admin, how do we free ourselves up to start to focus on those high-level things that again are cascading from the pressures from the business and impacting how we navigate and structure ourselves in order to serve our customers which are the business and the employees.
NC: Okay. I want to go back to Dave in just a second on this. But Perry, just tell us a little bit how this remodelling works for you in practice working with organisations.
PT: Yeah. I don’t wish to embarrass Dave about this but I’m going to use him as a predictor of something. So he co-authored a book called the Boundary List Organization. A real Bible for me because at the time people were trying to put everything in boxes and this went against that. So thank you Dave for that. Now Deloitte’s Human Capital Trends research report for 2024 talks about boundary list HR. And it absolutely is bringing this back into the modern times that we’re in now. So what Natalie has talked about is a new form of dynamism that’s needed in how we do that. But that can be very disconcerting for HR professionals who are seriously, strongly anchored in what we’ve created as professional disciplined fields, right. But as we’ve already sorted today that there’s this intersectionality that we can play in. So you can be an L&D or ER or talent acquisition professional but how you need to work now is what Natalie and Dave have been describing along a value chain that’s built around a product mentality for what we’re doing to create value for the businesses.
So products, systems, science and process. There is all those things going on at various points and that expertise needs to come in at certain points. It doesn’t need to be a kind of a really, handover fashion, we all huddle around that work. And that’s where we need to be more boundaryless. But that’s a challenge for people, that’s attention and a dilemma we’re not used to. If we think like we are which is what creates value for people into business. Let me just give you one example of policy. We write policies just above the point of misdemeanour so people don’t do bad things. We should write policies at the highest level of noble and brilliant performance and behaviour because that’s what people would buy if that was a consumable product. They wouldn’t necessarily buy what just keeps me legal, they’d buy what makes me come to life in the work that I do. So I think that’s the frame of reference we’ve got to change there, Nigel.
NC: Okay. Well, Dave, it’s like your life’s work has been well dissected already. Just in terms of what the model looks like now how much of it is exactly the same as it was?
DU: The absolute takeaway is when you’re in it for me. And I’ve said it before I’ll try to be very concrete. When I’m an HR person walking into a business meeting do not start with HR. Don’t even start with strategy start with customer, investor community outside the company. One quick, quick anecdote I was doing a talk in front of a company one of the four high tech companies and there were hundreds senior people and I was scared to death, scared to death because they’re all PHDs and chemistry and technology and physics and computers and my degree is in English literature – good grief. How do I get their attention? I said what do these companies have in common? These were Kodak, Digital Equipment, Compact, Toys R Us, Generally Electric Today. Somebody yelled out, they all went broke! And I yelled back I consulted for every one of them. And there was a moment of silence and then they started to laugh. And I said every one of those companies had great internal practices. And everyone did not understand what Natalie just talked about outside in. Eastman Kodak missed completely imaging and phone. They missed it they didn’t get it and as a result they’re gone.
NC: And of course, Natalie, it’s about creating those great internal practices. I just wonder I mean how we translate the big ideas, the boundarylessness, creating value for business. That has to turn into something tangible in how HR organise itself day to day and portions up the work. So just any tips on how you turn these big ideas into day-to-day operations?
NS: It starts from the outside. Start with what the business is trying to achieve. You have your objective and results that you then take out as a business and say, look, if we achieve these this is how we would perform within the marketplace. This is how it would reflect to our stakeholders, our board etc. Agreed. Certainly, businesses should be open enough to share this kind of information and say this is how we do, if we do this would you come back to us. Profitable businesses should be thinking that way. But then when businesses have these numbers these numbers to everybody within the organisation at the bottom are just abstract. So they now need to be internalised into some kind of numbers that they then give themselves aspirationaly that say then right, how do we help the business achieve these things?
And so, we as HR would then say having understood all of these departmental things that we are trying to achieve in service of this huge matrix that we have as a business is then to say, how do we make sure that the internal bit of the organisation have got the skills? Have got everything that the data that they need. Are we taking abled in order to support the business in that way? Are we making sure that are people are able to develop the skills that the organisation needs today? The organisation will need tomorrow? Whether that’s a marketing team, whether that’s a project team or sales team. And then we have to say what is actually disrupting our business when it comes to competition, when it comes to AI, when it comes to all of that? And we need data, data driven decisions that have been telling us what are the things that we need to do and not even just programmes but how do we need to look at our people. How do we need to change the experience that we do within the organisation as HR to make sure that our people are not burning out. We’ve got inclusion we’ve got all these things right. So we need to be set up in a certain way that does that and we need to have our own OPRs and KP metric that are highly tied to whatever else is happening across the business that is tied to everything else you’re trying to do externally. And that’s how we take these big ideas and bring them back home.
NC: Perry, what would you add to what you actually deliver the transformation to make the new model work?
PT: I’ve got an example, actually, and Dave will probably recognise this as not only a language shift but also a holistic approach to this, right. So there is this thing we call induction and for decades the thing has stank out the room. It’s not an effective process. Talent acquisition or recruitment at the time would get somebody who was validated by competencies, they’d pass them over to administration who would do their contract and the legal stuff and give them a start date who would then transact with the manager to say expect the new person on a day. Land D by the way can you come in and do an induction for them? And it was a horrific experience.
So I worked with a company it was a bank in Eastern Europe who took and end to end product approach to this and said, what are we trying to do here? What’s the OKR? The OKR is we want people who early on in their journey with us get a fantastic impression of us get their hands on some work and can serve customers in a way they want to. We don’t need to vacuum pack them for three weeks before we let them loose by giving them talking head corporate stuff that they forget anyway. So talent acquisition, HR administration and learning development and managers and new employees and prospective employees came together to create a new product. What happened? That bank saved themselves about a million euros a year on lost hires because people got fed up about, the early stage part of their career and got attracted by other employers who offered them something better. That’s an example where boundaryless means you don’t work in your handover verticals. You come together who’s got a vested interest in the outcome which is what the OKR would define and you work a bit together and you create something that has value. So there’s an example where I think this could work.
NC: Natalie, if you just look for potential new models there is so many out there from the McKinsey’s and other organisations like that all promising ways of refashioning the whole structure of HR. Just a quick through on those various solutions and whether they’re any good and how you find the right one?
NS: I think what I would say is if there is going to be a structure for HR I think business partnering and consulting remains just by purely looking at how a lot of our organisations are structured today, I’m talking about small to midsize companies. Even within big companies business partnering remains and what does business partnering do today practically is the team that teams up with our leaders that helps them with their day-to-day employee relations, strategy, project management around the HR task that we’re doing. So that’s something that is going to continue to be critical in the future. I think talent strategy and intelligence is a critical one where in the future I think it’s helpful for talent position to fold into talent management and there is a big reason for that. We can just look at the recent layoffs one the jobs that are most impacted is talent acquisition because businesses do not see it as a strategic function. It should be looking in at evolving to become more talent advisors folding into talent management and intelligence focusing on career mobility, skills intelligence, redeployment, workplace learning and development career mapping and planning and looking at all the skills that are going to be important to an organisation. Data analytics and intelligence is another one. People analytics is a crucial one that we should be thinking about in terms of how we structure our models as a team. And I would go and think about admin and think about fusing that sort of HR tech.
NC: Let me ask all of the beginning with you Dave. How proactive HR needs to be on remodelling itself – what’s the risk and what’s the prize?
DU: Again, I’m going to go back. I think HR has been remodelling itself always. There is not one new model. And one of the other things I have a pet peeve about is we love to see charge from to. I’m going from operational to strategic, from employer to organisation. From centralised to decentralised. I think that’s false thinking. It’s and / also. We need to do both. We need to be operational and strategic. Top down and bottom up, inside out and outside in. And that’s the intersection I think I hear Perry. Boundaryless intersection collaboration, eco system, whatever term you want to call it. The principle is the same we’ve got to get people in different groups collaborating and that’s what I heard from both Perry and Natalie.
Let me give an example of where I think HR is headed and why it’s exciting. I’m an HR person I go to a salesperson I say, can I join you on a customer call. And the salesperson says, why? And I say, I’m HR I’m here to help. By the way if you ever say you’re here to help in HR you should get thrown out. That’s just not – that’s rhetoric that is just superfluous. You go, the salesperson is selling a product or service to a customer and I’ve done a lot of these. The customer looks at me the HR person says, who are you? And I say, I’m from HR and they say, why are you here? I look at that customer and say, first of all, you have an incredible salesperson. They just sold you a product or a service that will help you be successful. I’ve not listened to you I know what you need in terms of people, skills, organisation, culture. I now know what you want from us.
I and HR have an accountability to back I call it an OKR to look at our people, our systems, our processes, Perry, I like your typology. Our systems, our systems, our processes, our staff. I’m going to go back and revisit every one of those. How we hire, train, who we hire. How we induct. How we develop. How we do DEI. How we do employer engagement. How we build culture. I’m going to go look at those so that we do what you need. Our salesperson just sold you a product. I want to build with you a relationship. And here is why, currently we have 40% of what you buy in us. Next year I’d like that to be 50 then 60, then 70, then 80. We want 80% of your customer share because I’ m going to help build a relationship with you by aligning all of our HR practices against what you said you need more from us. That’s very concrete. I don’t see that happening enough. I still see us in HR focusing inside the business and I think we’re going to see more of that outside in with customers and do the same thing with investors. That gets so exciting to me because it completely changes the agenda for HR. We don’t have rhetoric, we don’t have tools, we don’t have processes. We add customer value, investor value and community reputation. That’s for me a very exciting place where I think we’re moving.
NC: So Natalie, does that mean you really have to remodel or you can adapt like you’ve always done?
NS: You can adapt. And I would say the best place to start is by focusing on your business focusing on the forces that impact your business. Understanding again, one thing we probably haven’t really talked about is that when we are talking about HR operating models. It’s not a one size fits all because every business is different. In many, many of our businesses you’ve got a two person HR team. And you can talk about HR model all you want but the reality is you’ve got two people and usually right it’s an admin person and it’s a head of HR who does both recruiting, does learning and development and then you’ve got the admin person. But what I will say is what we should be thinking about going forward as an HR function is and I’m a massive fan of technology and the way it’s going to help us and this is where it’s going to be exciting for HR.
The first thing we need to be thinking about is, yes, how do we deliver value to the business? In order for us to be able to do that we need to make sure that we’re free, we’re available to be responsive to think about those high-level things to build those relationships cross functionally. To sit down with our CEOs, understand exactly what keeps them up at night. Understand what keeps the executive team up at night, understand where there is gaps. And in order we do that is when we bog and chain ourselves from all the day to day minutia that come with administration, that come with general employer relationships, questions and all of that. AI will 100% automate that for us. We can do that with it and it will free us up to start to think about those things. And then we can keep ourselves up at night about the things that are very important for a business which is going to be we make sure that business that we have has got the skillset within the organisation for it to thrive? And I think that becomes the big task of the next coming era for HR.
NC: Okay. And Perry Timms the risk of changing things and the prize?
PT: I think the risk is that we can frighten people and distract them from the outcomes that we ‘ve been talking about. So they will get too occupied with the model and not what the model is there to demonstrate. But I think the opportunity to remodel gives us a symbolic departure for people to get curious about and go, why are you doing that? How is that going to help me? And kind of invites some participation I suppose in what that model is there to do. So I’d like it simply as sports teams. Still have the same number of players on the pitch in similar positions but they might have a different mantra for how they are going to win their game and excite their supporters. So I think that narrative needs to kind of come through. And I think there is something about the key determinants of success here. We are going to help companies combine systems and energy in a way that’s come into whatever challenge they’re facing. Whether it’s technological, whether it’s consumer, whether it’s climate, I think we’ve got to be stronger on combing systems and energy. And I think there are two value conversations where what value is the company there to create? But what do people who come to work their value in life? That’s the congruency we’re there to promote and if we say, a model will help us do that with more strength and conviction and predictability and certainty then that’s how we pitch that model. Just to kind of show that departure and to give people a sense of something new is in town. That’s what I would say.
NC: Wow, clearly this was all about modelling but you need to have some deep thoughts first. Our grateful thanks to Perry Timms of People in Transformational HR. Dave Ulrich the University of Michigan Ross School of Business and Natalie Sheils Chief People Officer Mosaic Group. And do have a look at our recent back catalogues some hopefully really useful podcast on current workplace and people issues. Please subscribe to keep up with every new edition but until next time. From me Nigel Cassidy and all of our guests and the podcast team it’s goodbye.
