Reshaping HR

The Role of HR in Organizational Change

Julie Hodges, Mark Crabtree

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000280456
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The aim of this book is to explore the contribution HR can make to how organizations enact change within the context of an environment of increasing complexity driven by global forces for change. In particular the book focuses on the role of HR in creating value for organizations and engaging stakeholders during transformations.

This aim is achieved in several distinct ways. First, a critical perspective is provided of the role of HR in organizational change by examining evidence-based theories, models and frameworks. Second, the book is grounded in empirical evidence from a study conducted by the authors amongst managers and HR professionals across the globe. This provides unique data on the challenges and opportunities which the practice of HR faces within the context of organizational change. Third, consideration is given as to how HR can play an active and constructive role in co-creating sustainable change with managers, employees and other stakeholders. Fourth, the book identifies the capabilities required by HR professionals in order to engage effectively with organizational change. Finally, aware of the dangers of prescriptive lists, the HR practices offered in this book are provided as a basis for amendment, as necessary, by readers depending upon the context of individual organizations.

The book will be of value to practising HR professionals as well as students studying HRM and change and development in organizations. Our proposal in this book is that since people are of significant importance to the success of change, and HR knowledge and expertise is vital to the experience and engagement of individuals and teams, internal and external to the organization, there needs to be clarity about the role of HR in transformations. We suggest that HR's raison d'être is to focus on the people aspect of organizational change and that this needs to be done within the context of improving organizational effectiveness and wellbeing.

PART 1

The context

1
INTRODUCTION

The essence of HR

Introduction

Anyone who has been on a long car journey with a child has heard the repeated question, ‘Are we there yet?’ At first, the question captures the excitement of the child anticipating a new place, but after a while the questioning becomes exasperating and only adds to the length of the journey. Similarly, the Human Resources (HR) function seems to have been asking the same question for some time, ‘Are we there yet?’ and appears to have spent years looking for, but never arriving at, their destination. Indeed, there are few HR functions that have not, at some point, embarked upon a journey of transforming the way they are organized and how they deliver their services, including moving from being a low level administrative and maintenance function to operating as a core organizational function and a strategic business partner. Much of this change has been based on a desire to achieve a greater alignment between business strategy and HR strategy and to drive more cost-effective and improved delivery of services. To help HR as a profession and function with its transition there have various books and articles written about how to implement a strategic HR business partner model, vast amounts of money poured into outsourcers, consultants, advisers and technology platforms, and hours of reflection spent by senior leaders wondering why attempts at transforming the HR function have not achieved the benefits expected, both for the function and for the organization itself, and what they need to do next. The ‘What comes next?’ and ‘When will we be there?’ questions have been floating around for years, but few coherent propositions have emerged, and even fewer fully implemented as alternative operating models for HR. Consequently, there is still an ongoing debate about where HR is going next with various options having been suggested. For instance, in an article in the Harvard Business Review Ram Charan (2014) proposes that, based on research which shows that CEOs across the globe are disappointed in their HR people, it is time to say goodbye to the Department of Human Resources. Charan points out that CEOs would like to be able to use their Chief Human Resource Officers (CHROs) the way they use their Chief Finance Officers (CFOs), which is as sounding boards and trusted partners. They would also like to rely on the capabilities of CHROs in linking people and numbers in order to diagnose weaknesses and strengths in the organization, as well as finding the right fit between employees and jobs, and advising on the talent implications of the company’s strategy. It is, however, a rare CHRO who can serve in such an active role since most of them are process-oriented generalists with expertise in specific areas such as recruitment, reward and industrial relations who are focused on internal matters such as ensuring that the employees and the work that they do are aligned to the organizational strategy. What they do not do very well is relate HR to real-world organizational needs. To address this Charan (2014) suggests that the CHRO role should be eliminated and that HR functions be split into two: (i) an administrative function that manages compensation and benefits, and reports to the CFO; and (ii) a leadership and organization function that is staffed by high potentials from operations and finance who rotate through the role on their way to the senior management layers of the organization. This proposal has, however, been criticized by HR executives and researchers who believe that it is not the best way to improve the strategic role of HR, although, as yet, there have been few suggestions of how this might happen. Charan’s (2014) proposal does highlight the duality of the role of HR, that is, the transactional, internally focused role of how employees are managed, and the transformational which is the more strategic, future-focused and externally facing role. This raises the question whether these two roles are still applicable, and if there is a need for HR to consider reorientating its purpose and for attention to be given as to what is the best strategic role for HR.

Context

The need for the repositioning of HR is particularly acute as organizations attempt to navigate through several complex trends in a post-Covid world. First, forces for change in the external environment (see Chapter 2) are accelerating the need for organizational transformations and for HR to support them. Technology, in particular, is driving rapid digital transformations across organizations and also within the HR function with the growth of e-HR solutions. Second, the complexity, speed, depth and global reach of these forces for change mean that HR practitioners may be working for managers that operate transnationally and are based in a different location, or even country. Third, the nature of change is changing – it is becoming more complex and the pace is accelerating. Consequently, as organizations attempt to reshape their operating models and become ever more streamlined and agile, they are inevitably focusing their attention on the people element of their enterprises, and thus on what they expect from HR. Fourth, Chief Information Officers (CIOs) and CFOs are increasingly concerned with efficiency and therefore see the devolution of HR responsibilities to line managers and the use of e-HR as a way to deliver reductions in expenditure. They may also see outsourcing as another means of driving down numbers, if less obviously costs, creating what has been described as the ‘balkanization’ of HR, as more and more bits are externalized (Tyson and York, 2000). For some this raises the concern that organizations might throw out the ‘strategic people management baby’ with the ‘administrative bath water’ by viewing HR too narrowly and delegating or outsourcing administrative activities (Philpott, 2001). Fifth, is the shift from employee engagement to employee experience. Employee experience constitutes the entire journey an employee takes with the organization from pre-hire to post-exit interactions and everything in between. While engagement describes the basic psychological needs that must be met in order for an individual to perform well, for instance knowing what is expected of them and having the resources they need, as well as emotional and social needs, such as doing work that they are good at and connecting their work with the higher purpose of the organization. So improving the employees’ experience of the organization will, in turn lead to more engaged employees. Each of these five factors is driving change in organizations which necessitates the need for HR practitioners to be able to effectively engage with organizations in supporting transformations.

Within the context of the changing global landscape this book considers the role of HR in organizational change. Some of the underlying thinking in the book is based on the results of a global study which we have conducted. The study comprised a survey, interviews and focus groups with HR and non-HR Managers across the globe. The survey involved 500 HR practitioners and non-HR Managers from 30 countries, operating in 20 industries including education, automotive, banking, consumer and retail, energy, healthcare, finance, telecommunications, manufacturing, technology and entertainment. Overall 60% of participants were female and 40% were male. The majority of HR participants were aged 35–44 (34%) and 45–54 (41%). The average length of time in their role was five years (65%) with 25% having been in HR for over ten years. Nearly half (45%) had a post-graduate qualification and a quarter (25%) had obtained a professional qualification. The job titles of the HR participants included Global Head of People; Chief HR Officer, HR Director, Deputy Director of HR, People and Culture Director, HR Manager, HR business partner, HR Administrator, Head of People, HR Consultant, Learning and Development Manager and Human Capital Head. The majority of non-HR participants were aged 35–44 (32%) and 45–54 (52%). The average length of time in their role was five years (54%) with 20% having been in their role for over ten years. Over half (65%) had a post-graduate qualification, while the minority (15%) had obtained a professional qualification. Interviews were conducted with a sample of survey respondents (HR and non-HR roles) from different sectors across the globe. Overall, the findings from the study indicate that HR practitioners are: largely operating in the transactional space; reactive rather than proactive; supporting change, mainly during its implementation; performing the role of adviser to line managers during change; and still controlling the management of human resources. Thus the role of HR practitioners in organizational transformations is ambiguous in that they advise and support managers but still adopt a policing role. This supports previous studies which have led to the function’s role being described as caught in a cleft stick, with it being criticized for being too interventionist (Whittaker and Marchington, 2003). Consequently, there have been calls for the HR function to adjust its role from tactical, short-term firefighting to something longer-term and more strategic, in order to avoid it continuing to find itself following behind line managers and clearing up their mess, such as in the form of employment tribunals, or employee relationship problems. To address this and to become more proactive in organizational change means HR moving from being merely a supporter, oiling the cogs of change, to becoming a facilitator and a thought leader working at a strategic level, in order to add value to organizational effectiveness and well-being.

The challenges for HR

The importance of HR and its contribution to organizational success has for a long time been questioned (Boselie, Dietz and Boon, 2005; Guest, 2011). The fundamental challenge that runs through the heart of HR and is reflected in this book, is how can HR fully engage throughout the organizational change process, as the external environment in which organizations operate becomes ever more complex and unpredictable. This proposition for HR to reorientate itself is being driven not only by the forces for change (outlined in Chapter 2) but also by the necessity to address several ongoing challenges which the function faces and which were revealed in the research findings for this book and which include the need for the HR function to be:

1. Transformational
2. Relevant
3. A value creator
4. Stakeholder-centric

Transformational

Over the decades the HR function has been exhorted to play a more strategic, transformational role, particularly in organizational change. Yet there appears to have been little shift towards this, since an overwhelming 80% of participants in our survey described HR as being primarily focused on transactional issues, with only 20% agreeing that HR is primarily focused on strategic issues. This perceived lack of a strategic focus was highlighted by an HR Director (HRD), based in the manufacturing sector in Asia, who pointed out that, ‘when people are asked about HR, the majority always think about operational activity’. This attention by HR on operations issues was described by a Head of Development (Telecommunications sector, North America), as leading to an HR model which ‘is outdated, transactional, and reactive, as well as compliance and process focused’. This view was supported by non-HR Managers, for instance a senior manager (Automotive sector, Europe) stated that, ‘HR is bogged down in the stuff that just needs to get done. They don’t seem to be able to, or in a position to, challenge the status quo and become more strategic. They don’t add to the business apart from dealing with the day to day stuff.’ This view that HR needs to focus less effort on the transactional /administrative tasks and become more strategic in focus is not new. There is a plethora of academic and practitioner literature on the need for the HR function to have a more strategic focus (Heismann and Fox, 2019). In practice, while in some organizations HR has made a great deal of progress moving towards shaping and facilitating change, in others the identity of HR remains in the comfort zone of responding to, and implementing change. As one manager, (Manufacturing sector, North America) pointed out, ‘while there should be a strategic role for HR in leading change most often this is reactive rather than proactive’. This was supported by an HRD (Education sector, UK) who said that ‘HR acts primarily as a support function to assist in the mechanics and communication of change initiatives, rather than being actively involved in the strategic plan or design of change programmes.’ Such quotes highlight that the HR function continues to be transactional rather than strategic and transformational in its approach.

This continued focus on being transactional seems to suit not only some HR practitioners but also non-HR Managers. As an HR Director (State Services sector, New Zealand) stressed, ‘Line managers want HR to hold their hand … they want to be told what to do and they want hard rules.’ For some managers the emphasis on strategic at the expense of operations is seen as ‘hurting the HR function’ and they warn that in their rush to become a strategist, the function has dropped the ball on some fundamental aspects of HR. This is supported by some researchers who warn that it is leading to the HR function becoming ‘human remains’ or ‘an endangered species’ (Pfau and Cundiff, 2002). To be or not to be strategic thus leaves HR with the paradox that if it does not change and become more strategic it will die but even if it does successfully readjust, it will need to become a chimera or else it will become extinct. The challenge is how does HR make the necessary changes in its role while at the same time retaining its relevance?

Relevance

With the rapidity of change, organizations need to be responsive to market shifts and changing customer needs and expectations and this requires organizations to be more flexible, adaptive and agile. As organizations globally move to more agile ways of working, operating as networks, and in cross functional project groups, HR is under pressure to ensure its relevance. The results from our survey indicate that the HR function continues to face the challenge of how it can be relevant with 65% of participants rating this as a top priority for HR. The lack of relevance was described by a manager (Technology sector, North America) as HR having ‘a tendency to over-cook things, be over complex, and at times irrelevant’. This view is reiterated in a survey by KPMG¹ of over 1,300 HR executives from across the globe, wh...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of figures
• Acknowledgements
• PART I The context
• PART II Changing
• PART III Connecting
• PART IV Capabilities
• Index