Organisation and HR functions are highly impacted by global trends. In the past, HR focused on becoming a people-person, managing employee-related issues such as recruitment and retention. Although today HR remains bearing the same responsibilities around management and development functions, their works are completely transformed through advanced automation, outsourcing, and self-organising teams – and organisations have to reshape their DNA to ensure their HR operating model is up to pace.
Next generation HR model
In the 90s, traditional HR was based on Ulrich’s principles, such as Centers of Expertise, Shared Services, and HR Business Partners interacting with Business Units. The traditional role of HR also differentiated employees based on job contact and customer needs, as well as tended to choose to work with large and stable organisations.
The next generation HR, however, is required to be more adaptable to the needs of businesses during different stages of change. Future HR also places advisors and experts closer to business leaders and managers, promoting and understanding specific business needs. They are also expected to be more flexible and resilient in their job.
In fine terms, next generation HR operating model should:
- act in flexible, resilient, and virtual structures and teams;
- drive the strategic HR agenda;
- support business transformation;
- deliver harmonized HR programs and services, customer-centric with high reliability, and business value; and
- ensure HR policies adhere to employment practices and organisation practices.
See also: The End of HR Trends: What Shifts Should HR Make?
Next generation HR transformation
Looking ahead, HR should not only support business strategy but also enable it. HR is expected to help a business grow by developing a standard, repeatable system, process, and capability that make it fast and easy for the company to enter a new geographic market and integrate new acquisitions.
To gear toward HR capabilities that enable successful business strategy as mentioned, it is important to understand the critical drivers that are shaping that strategy. According to Deloitte, there are at least eight drivers affecting HR transformation. These drivers provide the foundation to support and facilitate business strategies. Nevertheless, the following drivers should not be considered as the only parameters because the actual drivers might change over time depending on business, industry, and region.
- Growth. Growth is essential, and pervasive other drivers listed here are related to it. Revenue and market growth are essential for competitiveness and long-term shareholder value. The key to growth is to develop new capabilities that can enable a business to expand as timely as efficiently as possible.
- Globalisation and emerging markets. Many businesses have gone global these days. In that case, companies should improve their ability to build and manage a global workforce. Hiring remote workers and remote contractors is a good option to optimise global workforce. However, to thrive, companies need HR capabilities that can enable them to effectively realign their workforces with their changing global footprint. HR should consider creating an operating environment in which global and virtual teams can thrive.
- Cost pressure. Many companies are under constant pressure to reduce costs. Therefore, it is important to remember that HR should not only be efficient but also effective and compliant. To have a greater impact on cost, HR should focus on people-related costs that are outside the HR budgets, such as pensions and healthcare. HR can also contribute to reducing the company’s costs by working and maximising initiatives on things like productivity and management of contingent employees.
- Talent. Companies need to consider developing new HR capabilities for managing a global supply chain for talents. Many companies continue to face a mass exodus of retiring older generations and they struggle to deal with an influx of younger workers. This changing workforce requires new talent management capabilities in an area such as leadership management, workforce planning, alignment, and diversity.
- Innovation. HR has a valuable role to play in helping companies use innovation as a competitive weapon. For example, bring people closer together, working with the business to create a more innovative culture, or developing new rewards programmes.
- Emerging technologies. Tech and automation have become widely discussed topics. From cloud computing to mobile devices, no tech or automation is useless to HR. At this point, HR can use these emerging technologies to satisfy ever-increasing expectations and to deliver new innovations quickly and affordably.
- Mergers and acquisitions (M&A). Mergers and acquisitions have become a standard part of business strategy. Having HR capabilities that make M&A fast, efficient, and repeatable will save the company’s time and cost.
- Risk and compliance. Organisations face a constantly evolving risk management landscape. Employee training and shared information are essential to mitigate the risk. And an effective HR system can be very useful for supporting compliance throughout an organisation.
- Business-driven. Business leaders should focus on high-impact HR activities that can create significant value for a business. Ideally, HR should be integrated with the business strategy to develop sync with business and be available when needed.
- Scalable. Organisations need to establish HR capabilities that can effectively, easily, and efficiently adjust to changes in business demand. With the fast-changing business market around the globe, companies need different scalable strategies involving HR to scale back in the face of a global slowdown, ratcheting up for growth, or navigating twists and turns of local markets.
- Repeatable. This means to develop demonstrated HR capabilities that can be rapidly and efficiently deployed in new situations. Repeatability is especially important for business events that are likely to recur.
- Standardized. HR should create systems, processes, and policies that are standardised as much as possible.
Leading organisations are making targeted investments to develop an operational capability that supports the needs of all business stakeholders through cross-functional processes and well-developed technology. When the investment is successful, businesses can survive even during an upheaval.
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