How to Structure HR So That It’s Efficient - and Effective
Centralized HR functions are more efficient, but the Institute for Corporate Productivity’s (i4cp) ongoing research into how to best position HR to manage and mitigate talent risk has found that there are no inherent effectiveness gains from structuring the function in that way.
In fact, how HR is structured has no correlation to an organization’s market performance—i4cp’s research found that what matters most is HR’s alignment to the needs of the business. The challenge is that HR needs to be increasingly agile to be truly effective, while also remaining efficient. i4cp’s new white paper, Four Steps to Enable HR to Support an Agile Business, outlines how HR can accomplish both.
“This white paper is an excellent outline of how to think through the question of how HR can add the most value (quantitatively) to the business,” said Kurt Fischer, i4cp Board Chair and former head of HR at the Bill & Melinda Gates Foundation.
The four steps, which provide detailed recommendations, checklists, and more to create an agile HR function that drives strategic value are:
- Understand the business model and areas that drive value
- Define the business strategy and the opportunity for HR
- Determine how the HR strategy will drive business performance
- Assess the skills and ability of the HR professionals
The critical role of the HR business partner
If the structure of HR has no direct bearing on effectiveness, what does? The answer: HR’s ability to align with the business.
i4cp's continuing research on the future of HR has found strong consensus on the role that will be most
pivotal to achieve this: the HR business partner (HRBP), which is defined as a professional with the capabilities to perform more than one diversified function, rather than specializing in or having responsibility for one specific HR function.
Many of the HR leaders surveyed by i4cp as part of this latest research cited their ability to transform HR business partners into business people as imperative, and that five years from now, the HRBP is likely to be viewed as the most important role in HR. Ensuring that HRBPs have a common skill set that enables them to understand the key area of HR and a thorough understanding of the business strategy is critical.
However, only 1/3 of organizations currently have HR business partner roles—slightly higher in high-performance organizations (43%).
This highlights a potential alignment gap between HR and the lines of business, but not one that cannot be resolved. To address gaps and maximize the return from the HRBP role, organizations should place priority on three important responsibilities, which are detailed in the white paper (available to i4cp members only).