IBM Global Business Services

IBM Institute for Business Value

Human Capital
Management
A new
approach, a
new capability
The strategic side of
Human Resources
 IBM Institute for Business Value
IBM Global Business Services, through the IBM Institute for Business Value,
develops fact-based strategic insights for senior business executives around critical
industry-specific and cross-industry issues. This executive brief is based on an
in-depth study by the Institute’s research team. It is part of an ongoing commitment
by IBM Global Business Services to provide analysis and viewpoints that help
companies realize business value. You may contact the authors or send an e-mail to
[email protected] for more information.
A new approach, a new capability
The strategic side of Human Resources

Executive summary “strategic partners,” yet only 33 percent currently perform

4
this role. These findings, coupled with our research,
“If HR does not force its way into the suggest that the migration toward a more strategic HR
organization remains, for many companies, a work in
heart of strategic planning in organiza- progress.
tions, it will default to a technical and
Competing in today’s environment requires companies
transactional dead end.” 1 to focus on building a more responsive, flexible and
– Helen Drinan, former president and CEO, Society for Human resilient workforce. To do so, organizations must do a
Resources Management more effective job of sourcing talent, allocating resources
across competing initiatives, measuring performance and
Increased competition, changing workforce demo- building key capabilities and skills. HR organizations that
graphics and a shift toward knowledge-based work are provide strategic guidance on these issues can become
requiring companies to place an increasingly higher proactive drivers of organizational effectiveness, rather
priority on improving workforce productivity. Organizations than simply a supporter of these efforts.
are now looking to the Human Resources (HR) function
To better understand the challenges and good practices
to go beyond the delivery of cost-effective administrative
associated with developing a more strategic HR orga-
services and provide expertise on how to leverage human
nization, the IBM Institute for Business Value conducted
capital to create true marketplace differentiation. Facing
interviews with 17 companies and tapped into a range of
these challenges, many HR organizations have been
experts who have worked with companies undergoing
actively revamping to more effectively deliver the strategic
this type of transformation.
insights the business requires.
As a result of our analysis, we recommend that organiza-
Improving the strategic capability of the HR organiza-
tions focus on three areas to improve their strategic HR
tion is not, by itself, a new idea. Spurred on by leading
capability:
academics such as David Ulrich and Edward Lawler,
organizations have worked for the better part of the last • Enable HR professionals to apply human capital data
decade to build more strategic capability into their HR and information – on par with what the CFO would
2
departments. However, the perceptions of many HR expect in Finance – to drive business decisions
personnel and their internal customers suggest that • Develop a talent model for HR that encompasses the
most have not reached this goal. A survey by the Society need for new skills and capabilities and is built through
for Human Resource Management indicated that only improved selection, employee development and perfor-
34 percent of executives viewed the HR function as a mance management
3
“strategic partner.” A similar study from the Chartered
• Build a roadmap for HR transformation that builds
Institute for Personnel Development in the UK found
momentum and embeds strategic changes into the
that 56 percent of HR professionals aspired to become
DNA of the business.


IBM Global Business Services

Study background to be comfortable that their data is consistent with the data
To investigate how HR organizations are transforming used by their peers in other functional areas to avoid the
themselves to focus on more strategic issues, we took a need to revisit their assumptions and recommendations.
three-step approach. First, we reviewed relevant secondary
literature to understand existing transformation theory, “The database became one source
models and practices. Second, we conducted interviews of truth…they (the HR Business
with academics and experienced practitioners – inside and
outside of IBM – who have worked with companies on
Partners) could be confident in
HR transformation efforts. Third, and most importantly, the data…that had been an issue
we conducted interviews with senior HR executives from
between HR and Finance.”
17 companies that either have undertaken, or are under-
taking, strategic HR transformations. These companies – Airline participant
represented a range of industries, including manufacturing,
financial services, technology and transportation from HR professionals need data to assess the effectiveness of
across North America, Europe and Australia. For these their own work
interviews, we selected companies that previously had HR employees must evaluate two aspects of human
addressed the administrative transformation of their HR capital programs: the effectiveness of design, as well as
functions through outsourcing or the use of an internal the execution of those programs. For example, a company
shared services organization. that has adjusted to flexible working hours needs to
understand what types of questions employees are asking
about the program, along with whether the program is
Data, data, where is the data? having an impact on retention rates of target employee
One of the most important lessons learned from our groups. Without either comprehensive case management
discussions is the critical nature of data and informa- data from a shared services environment or the ability to
tion in enabling the strategic HR organization. While in produce trend analyses for different employee groups, the
many organizations, human capital data remains in the HR staff has little ability to go beyond anecdotal evidence
purview of IT architects and payroll providers, our study – upon which the HR function has long been accused of
participants were adamant about the critical need for HR relying too heavily in its decision making process.
to have access to data and information that is both timely
and relevant to the challenges facing different business Providing self-service capabilities can enable employees
units. Among the reasons why human capital data and and managers to more easily address their own questions
information play such a central role are the following: HR professionals are not the only ones who need
access to reliable HR data and information. Employees
Without accurate and reliable human capital data and and managers need the capability to answer their
information, strategic HR professionals cannot make fact- own questions regarding basic issues such as payroll,
based decisions that provide insights to their business expenses, benefits, vacation, performance ratings and
clients the like. Providing this data and information in an easy-
For HR to contribute to higher value issues facing their to-use format that is accessible without the assistance
business units, such as performance and talent manage- of HR professionals enables individuals to quickly obtain
ment and workforce development, they need to assess answers to routine questions and update changes in their
the current situation, develop business cases and provide own profiles in a timely manner. Without this self-service
recommendations that can withstand the scrutiny of the capability, HR professionals are frequently bombarded
larger organization. To accomplish this, they need access with questions that take away from their time and ability to
to data and information that have the same level of timeli- perform more valuable work.
ness and validity as those provided to their counterparts
in marketing and finance. Further, HR professionals need


 A new approach, a new capability

Overall, the strategic HR professional needs to have access New HR responsibilities

to, and the ability to use, human capital data and informa- In recent years, companies have often retitled their
tion. Much as the Chief Financial Officer depends on a HR generalists as “Business Partners” in an attempt to
company’s cash flow, income statement and balance sheet connote a closer and more strategic working relationship
to make decisions about the financial assets, the strategic between the HR department and the operating units.
HR organization needs the same level of quality information However, for many companies in our study, the very nature
to provide guidance on managing the firm’s human assets. of the work of a Business Partner has been redefined.
However, while many in the Finance organization already For one, much of the answering of routine questions and
have the analytic inclination and experience to transform processing forms has typically been moved to a shared
information into insight, the HR organization, as we will see services group. At the same time, a significant amount
in the next section, often faces a shortfall in the number of of the front-line employee relations work was also trans-
individuals with this key capability. ferred to a combination of line managers and dedicated
shared services personnel. For some organizations, these
changes eliminated up to 70 percent or more of the
Building strategic capability: The roles of the
workload of the traditional HR generalist role.
HR Business Partner and Centers of Expertise
At the heart of the strategic reinvention of the HR orga- In its place, HR Business Partners were generally asked
nization are the roles of the HR Business Partner and to take greater accountability for more strategic tasks
the Centers of Expertise (CoE). While much has been that need to be accomplished over a longer time horizon.
5
written about the changing nature of these roles, we find These could include activities such as: consulting with
that organizations continue to struggle with a number of business unit leadership on a new productivity initiative;
factors (see Figure 1), including: rolling out a new competency framework; developing
• Defining the new job responsibilities and performance a talent capacity plan for a new product or service
measures for HR Business Partners and CoE members launch; and developing a three-year labor outlook for an
emerging set of skills and capabilities. These activities are
• Identifying the capabilities necessary to meet the new
designed to look beyond employee transactions at how
role expectations
the business unit can make the best use of its current and
• Defining the number of individuals needed to fill each of future human capital resources.
these roles
For individuals working in CoE, the focus shifts toward
• Identifying and addressing sources of resistance when
playing two roles: thought leader and integration manager.
HR personnel are asked to focus on more strategic
As thought leaders, CoE personnel need to be responsible
activities.
for designing HR programs and processes, identifying
and applying good practices from outside the organiza-
tion, monitoring program effectiveness, and providing
Figure 1. Areas of focus when transforming strategic
HR positions. subject matter assistance to Business Partners and shared
services personnel. In addition, CoE personnel need to
manage the relationships with outsourcing vendors for their
particular discipline, including the monitoring of service
Capabilities Capacity level agreements and conducting root cause analysis to
Resistance address ongoing issues.
to change

Responsibilities

Source: IBM Institute for Business Value analysis.


IBM Global Business Services

New capabilities an insurance company commented, “We said to people,

Based on the new tasks of the HR Business Partner, ‘Can you tell the story? You have to know the market and
study participants identified five key capabilities that are the business.’…even [so], I still have only a dozen people
needed to make a strategic contribution to the organi- who can do it. This does not come easy to an HR person.”
zation: analytical skills; business acumen; consulting
skills; change leadership skills; and the ability to share HR Business Partners will have to serve as lead advisors
knowledge across the HR organization. to their business units on human capital issues. To do so,
a number of consulting skills are essential, including the
HR Business Partners need analytical skills to develop abilities to build trusting relationships with senior execu-
evidence-based recommendations and effective tives, diagnose organizational problems and determine
business cases. They must understand how data flows root causes, develop recommendations and business
through various HR and financial systems, and how to cases, and create action plans. Further, they must have
obtain and analyze human capital data that supports the strength and conviction to deliver difficult messages
their recommendations. HR Business Partners also need to senior leaders, even if those messages may prove to
to be proficient in developing models and scenarios be unpopular.
that determine the cost and impact of changes in HR
policies and procedures. Participants in our study found HR Business Partners also need to be effective at driving
that they were unlikely to have sufficient depth in these change through the organization. This includes solic-
skills within their own HR organizations and considered iting and initiating participation from individuals within
them among the most difficult to develop. the business unit to support change efforts, aligning
recognition and performance measurement systems to
“We haven’t worked with our Business support desired activities, and effectively communicating
with multiple stakeholders. As one engineering services
Partners on how they access and company commented, “We’re looking for people who are
shape the data into something useful… proactive and can make an impact on people.”

they don’t even have access to the HR Business Partners not only need to provide expertise
system. Being able to use and analyze to the business units they support, they also should share
knowledge across the HR organization. One way to do
the data is a competence [we are] this is to regularly connect with peers in other business
lacking right now.” units to share relevant practices, while another is to work
– Engineering company participant, just starting its with individuals in the CoE to pass along new learnings.
HR transformation One banking organization developed a “Business
Partner Forum” to share information and best practices.
HR Business Partners also need business acumen in According to the leader of the transformation program,
the form of understanding their business unit’s strategies Business Partners are charged “not only [to] come and
and operations. To serve as true advisors to the business, listen, but to take [information] back to their management
they must understand the dynamics of their industry, as teams and get the message out there.”
well as the day-to-day activities performed by different
functional units and how individuals within the units are For individuals residing in the CoE, study participants
evaluated. They also have to understand the needs of identified a different set of required capabilities: deep
customers and partners to better see how their human functional expertise; the ability to partner with internal
capital decisions impact stakeholders beyond the organi- stakeholders; process design and stewardship; and large-
zational boundaries. Many organizations reported that this scale project management.
in-depth knowledge of the business was often in short
supply within their HR groups. As one HR executive from


 A new approach, a new capability

CoE personnel must possess deep functional knowledge As the HR organization becomes increasingly strategic
and an understanding of leading practices within their and vital to overall business operations, CoE personnel
particular disciplines. Because the CoE serves as must be capable of managing larger projects that involve
both the developer and arbiter of HR policy, individuals stakeholders from various parts of the business. As one
working in this area must apply technical knowledge insurance company noted, “There are certain big projects
of their discipline and understand its application to the the CoE [is] still running. You have to determine the
overall business. As one banking organization noted, “I projects where you work with the line and where you work
expect the CoEs to focus not on best practices, but next more with the Business Partners.” For many organiza-
practices…they need to be the ones supporting the tions, this includes overseeing multiple vendors providing
[Business Partner] to make sure that forward thinking is external services. To keep these projects on track,
getting implemented at the ground floor.” they must develop detailed action plans and regularly
track progress against those plans, as well as manage
In the more collaborative environment that character- budgets and associated financial systems. Finally, they
izes transformed HR organizations, individuals working must communicate progress to key stakeholders on an
in CoEs need to partner with others across the organiza- ongoing basis.
tion to design and implement effective policies. As one
banking organization indicated, “I want [the CoEs] to work
with the shared services group as it relates to changing Figure 2. Summary of HR Business Partner and Center of
Expertise capabilities.
policies and procedures…there is more collaboration
[required] to reach out and work as a team on things Key capabilities of an HR Key capabilities for individuals
like surveys and talent management.” CoE personnel Business Partner working in a Center of Expertise
might be called to work with Business Partners to design
programs addressing business unit needs, to work with • Analyze human capital data • Deep functional expertise
to solve business problems
shared services to implement cost-effective HR programs • Ability to partner with internal
that reduce employee confusion, or to connect with line • Understand the business stakeholders
and determine human
managers and employees to periodically assess the value • Process and program design
capital requirements
of CoE programs and services. and stewardship
• Act as a consultant to • Large-scale project
As leading corporations become larger and increasingly senior management management
global in scope – often through merger and acquisi- • Drive change through the
tion activity that brings together disparate processes for organization
similar activities overnight – the ability to create common, • Share and leverage good
institutionalized process activities and metrics is vital. At practices
the same time, CoE personnel must have the flexibility to Source: IBM Institute for Business Value analysis.

identify appropriate regional or business unit variations

and determine how those modifications need to occur. As Providing the right level of support to the business
one technology company explained, “One of our central One of the common questions asked by organizations is,
principles was going to more of an ‘architect and distribute’ “How many HR personnel do we need to support the new
model; with centers of excellence architecting how we do organization in the transformed HR model?” Our study
things and then distributing [information] out to the regions. found that companies did look at traditional benchmarking
We want 80 or 90 percent commonality, with 10 to 20 ratios obtained through a number of consultancies and
percent specialization for regional differences.” third-party providers. For example, a recent study of 20
U.S. companies by the PricewaterhouseCoopers/Saratoga
Institute indicated a median ratio of one HR Business
6
Partner for approximately 1000 employees. However,
companies are only using these ratios as a very rough
approximation in determining the appropriate level of HR
Business Partner staffing.


IBM Global Business Services

Instead, IBM study participants used a series of criteria professionals continue to spend significant amounts of
to evaluate the appropriate level of support – including time addressing administrative questions. This symbiotic
the strategic intent and complexity of the business unit, relationship, as several participants indicated, crowds out
the strength of existing management, the maturity of time and energy that HR Business Partners could use to
employee and managerial self-service tools, and the focus on more strategic issues.
geographic spread of employees within the unit. Each
of these variables can significantly impact the required “Some Business Partners were afraid
number of Business Partners. For example, a business
that by not providing (administrative)
unit that is poised for significant growth in an emerging
market may require additional Business Partners to answers, they were losing their cred-
support an employee population that is new to the orga- ibility with their business unit clients.
nization and requires greater “onboarding” and training
assistance. Similarly, an organization with experience in
We needed to give them incentives to
successfully implementing employee self-service tech- work the right way.”
nologies may need fewer Business Partners to answer – Energy company participant
routine inquiries.

Sources of resistance from HR personnel In some situations, we found HR Business Partners to

be uncomfortable using analytic approaches to develop
“My own HR people, hands down, insights and build business cases. As one insurance
were the biggest challenge. They liked company described, “My own HR people, hands down,
are the biggest challenge. They liked what they were
what they were doing…They didn’t doing…they didn’t like numbers…they weren’t very
like numbers. They didn’t like seeing analytical.” While training and coaching opportunities can
the organization as their client…They address these skill gaps, our study participants were clear
that not all professionals had the interest or inclination to
weren’t open to change…They weren’t work in a more quantitative environment.
very analytical.”
Simply reorienting existing work arrangements and rela-
– Insurance company participant tionships takes a significant amount of effort. Without a
clear, compelling reason to change (a so-called burning
Any time a large organization attempts to alter existing platform), these efforts can stall. Study participants high-
social contracts that have taken root, there will be stake- lighted the importance of not only explaining to people
holders who resist that change. In the evolution of the the rationale and benefits of change, but also the conse-
Business Partner role, we observed three specific sources quences of not changing. One participant described
of resistance: codependency; a lack of analytic skills; and how the head of HR told his direct reports, “If you haven’t
lack of a “burning platform” to incite action. transitioned that (administrative process) over, you better
hurry up. And if I come to your shop and find out you’re
Many so-called HR Business Partners remain comfort-
doing it yourself, you won’t be working here anymore.”
able providing short-term answers to line managers, who
in turn, appreciate this individualized service. Indeed, the As companies moved much of their administrative work
need to “provide service to the business unit” has histori- to shared services centers and outsourcers, the need for
cally been defined as providing rapid answers to routine larger, dedicated teams within Centers of Expertise often
queries. According to several individuals we interviewed in diminished. In many cases, the remaining individuals within
the study, this often leads to an unhealthy codependency the CoE found themselves hesitant to fully accept the
as business unit executives become reluctant to go to new strategic HR model for a number of reasons. These
the shared services centers for assistance, and the HR


 A new approach, a new capability

included having less direct access to internal customers outsourcer and list it as a project. Many (HR) technical
and having fewer staff to accomplish their work. experts find it difficult to operate in this model. They have
lots of angst and hard times. They need to be able to do it
For many study participants, personnel within the CoE on their own.”
found the need to work more closely with their HR
Business Partners and shared services personnel to be Timing: Determining the appropriate
a significant change. In the past, the CoE often worked sequence, speed and scope for change
directly with business unit executives to design and In addition to changing roles and responsibilities, we
deliver HR policies and procedures. Also, they tended to found that study participants learned a number of
work directly with line managers and employees to gauge important lessons regarding the sequencing, speed and
reactions and respond to inquiries about HR programs. scope of their transformation efforts. Among the critical
findings were:
In the new HR model, CoEs are now being asked to work
through HR Business Partners to determine business unit • The planning of the new strategic HR model needs
needs and collaborate with shared services to determine to occur concurrently with development and imple-
the effectiveness of HR policies and procedures. These mentation of the administrative changes in the HR
changes, which represent somewhat significant depar- organization
tures from past practice, often caused resentment among • Many companies took an aggressive restaffing
CoE personnel. An airline company reported, “[CoE approach to verify that HR personnel in strategic
personnel] didn’t understand the new three-pronged positions had the right experiences and capabilities to
approach to HR and that they were supposed to do do their jobs
policy and then hand it over to shared services…so they
struggled with the new concept.” • While a significant number of changes need to be
made in the first 18 months of the transformation effort,
longer-term change often required two to five years.
“We still have people who like to be
experts and tell others what to do, Most organizations we studied focused on developing
their new strategic HR model while they were building
and to tell the business line managers their administrative infrastructure. On the administra-
what to do, not to work with them as tive side, developing shared services organizations for
strategic Business Partners.” administration and employee servicing, implementing an
Enterprise Resource Planning (ERP) system, providing
– Insurance company participant basic data warehousing functionality and delivering
basic employee self-service functionality were all seen as
CoE personnel, whose organizational stature was previ- critical components to enabling a more strategic HR orga-
ously determined by the number of “bucks and bodies” nization. Without them, strategic HR personnel would not
(budgets and headcounts) under their control, often have the time, resources or information to develop insights
resisted surrendering the associated prestige and job that would provide value to the business.
security associated with overseeing large departments.
In many situations, projects once easily assigned to As the administrative infrastructure was being built,
CoE staff needed to be completed by outsourcers who companies simultaneously took the next steps in redefining
required special agreements – or even contract modifica- the new strategic HR workforce and organizational model.
tions – before assuming additional work. As a consultant Staffing, for example, involved assessing competencies of
who works frequently with HR transformation indicated, existing HR personnel and selecting individuals for new
“For bigger projects, the CoE needs to phone up your roles, both from within and outside of the HR organization.
As part of the new design, education was developed to
close any significant skill gaps. At the same time, articu-
lating new performance measures and goals helped to
keep HR employees focused on desired activities.


IBM Global Business Services

Most companies in our study took an aggressive However, to truly saturate an organization’s DNA with new
approach in putting new personnel into strategic HR ways of working, study participants recognized that longer-
positions. We found that the degree of aggressiveness term cultural change needs to continue long after the
was linked to several primary drivers, with more aggres- initial 18-month window. To sustain desired change over
sive organizations usually transforming HR as part of a the long term, HR organizations must reinforce behaviors
cost reduction movement or the need to align with other through a number of performance review cycles, holding
organizational units also being restructured. By contrast, to the needed changes while allowing individuals to have
slower, evolutionary changes tended to occur in organiza- time to adjust to new roles and responsibilities. In doing so,
tions that were focused on improving HR service levels HR leaders must continually foster working relationships,
and upgrading HR capabilities. and clarify roles and responsibilities among HR Business
Partners, shared services and the CoE.
More aggressive organizations tended to fill their
redefined HR positions by conducting competency Recommendations
assessments of existing personnel and filling positions Based on our discussions with senior HR executives,
from the top down. In these situations, anywhere from companies should focus on three areas as they work to
50 to 100 percent of HR positions changed hands, while upgrade the HR function’s strategic capability:
headcount was reduced between 25 to 50 percent.
• Enable HR professionals to apply human capital data
Their less aggressive counterparts replaced existing and information – on par with what the CFO would
positions only through attrition and less than 20 percent expect in Finance – to drive business decisions
of positions within the HR function changed at all. • Develop a talent model for HR that encompasses the
Furthermore, in these cases, less than 10 percent of need for new skills and capabilities and is built upon
positions were eliminated. While companies managing improved selection, employee development and perfor-
attrition through an evolutionary approach may have mance management
encountered less active resistance to change, most
• Build a roadmap for HR transformation that builds
companies reported that it was extremely important to
momentum and embeds strategic changes into the
staff strategic HR positions properly from the beginning.
DNA of the business.
As one insurance company indicated, “You need to take
drastic measures early with the HR BP organization. Don’t Enable HR personnel to apply human capital data and
kid yourself that people who have never been strategic are information
going to become strategic. Make your bold moves early.” As our findings suggest, human capital data and infor-
mation are the lifeblood of the strategic HR organization.
Any significant change at a large organization requires
Organizations looking to use data and information to build
visible, tangible action to let personnel know that the
fact-based decisions need to do the following:
old order has been undeniably changed and a new
paradigm has taken its place. Study participants consis- • Verify that the data sources used by strategic HR
tently cited the first 18 months of a change initiative as personnel are of high quality and consistent with other
the window for enacting significant change. Beyond reporting systems.
this point, study participants noted the difficulty of • Teach Business Partners and CoE personnel how
maintaining senior management attention. Further, they to translate human capital data and information into
indicated that employees can only tolerate the associ- compelling recommendations to the business. HR
ated disruption and uncertainty for a limited period of Business Partners need to use basic analytic tools and
time before morale begins to falter. statistics, both to develop hypotheses, as well as to
incorporate data into compelling presentations.


 A new approach, a new capability

• Work toward achieving high adoption of employee and • Support individuals as they perform their new jobs –
managerial self-service tools to build consistency in Providing mentoring to individuals as part of their
employee data and reduce the volume of questions day-to-day activities was also considered essential.
Business Partners face. To do this, increase marketing For example, in one organization, HR personnel were
and educational efforts on rollouts of applications that encouraged to come together and present analyses to
receive high volumes of employee traffic. one another before presenting them to their business
• Leverage employee contact center case management unit clients. Consistent coaching and mentoring allows
data to evaluate HR program clarity and effectiveness. individuals to receive feedback on their newly directed
capabilities – quickly addressing questions and rein-
Develop a talent model that can deliver higher value forcing positive actions. However, this ongoing support
services needs to be combined with clear performance goals
Given that many organizations have notable shortages in and targets that focus strategic HR professionals on new
the skills needed to provide more strategic services, we achievements and away from their former administrative
see five potential options for closing the gap: activities.
• Bring in HR professionals from outside the company – • Foster participation in outside development activities –
A number of study participants recognized the need to Identifying opportunities beyond the classroom for HR
hire outside HR professionals to attain the next level of professionals to broaden their skill bases was also seen
strategic capability. While recruiting experienced talent as an important development step. For example, sitting
from the outside can bring instant skills and capability, on the boards of not-for-profit and community organiza-
there is typically a lag time between finding talent in the tions was seen as a valuable way of obtaining business
outside market and getting them up to speed in their experience. Not only were individuals able to develop
new positions and environment. new skills, these opportunities were recognized as a
• Attract employees from within the company, but outside way for individuals to bring new ideas and practices into
the HR function – Many firms discovered that the talent the organization.
they need exists within the organization, but outside the Regardless of which combination of these skill-building
HR function. For example, given their knowledge of the options is followed, project leaders must provide ongoing
business and their comfort with analytics, finance and communication and mentoring of HR staff to build buy-
audit personnel were identified as potential candidates in for the changes underway. This process cannot be
for HR advisory positions. However, study participants overlooked, as consistent reinforcement and support
recognized the need for such individuals to rapidly can reduce the risk of individuals slipping back into old,
come up to speed on the fundamentals of HR manage- undesirable work habits. Ongoing communication is vital
ment to be effective in their new roles. – both with senior leadership to maintain buy-in and key
• Provide education to existing HR professionals   – stakeholders to avoid political maneuvering.
Continuing education was also viewed as critical to
Build, then follow a roadmap for HR change
building the capabilities of strategic HR staff. In one
Given that transforming large, complex HR organizations
organization, a structured set of distance learning
can be difficult, organizations need to craft a thorough
modules was developed, addressing business skills,
roadmap. To begin, the HR function should establish the
global resourcing strategies, industrial relations and
primary administrative building blocks – including shared
analytic decision making. It required that all HR staff at
services, a standard data platform and employee self-
a certain level complete each of these modules and
service tools – while, at the same time, formulate plans to
pass certification exams. Other study participants used
upgrade strategic HR capabilities. These building blocks
outside training courses to improve the ability of their
help provide strategic HR personnel with the right data,
HR staff to think strategically and provide consulting
time and resources to provide the necessary services to
services to their internal business unit clients.
their internal clients. The transformation of the administra-
tive side of the HR organization can be achieved through
internal transformational activities or through partnering
with an outsourcer.


While developing the administrative infrastructure, organizations need to build
a model for the new strategic HR workforce, determine the HR competencies
needed to enable that model, and create the supporting education and perfor-
mance measures to make the model successful.

To build success within a relatively short window, it is critical that individuals

with appropriate skill levels fill key strategic positions within the HR organization.
Often, this requires difficult choices regarding the number and types of people in
these key roles. To create momentum and early wins with the business units, it is
necessary to make significant changes to key roles, responsibilities, performance
metrics and developmental requirements early in the process. While it may take
time for these early strategic changes to fully take root, they can help business
units reap larger dividends down the road.

About the authors

Eric Lesser is an Associate Partner with the IBM Institute for Business Value. He
is responsible for conducting research and developing thought leadership on
a variety of human capital management topics. Eric is based in Cambridge,
Massachusetts and can be reached at [email protected].
Michael DeMarco is a Senior Consultant with the IBM Institute for Business Value
and focuses his efforts on Human Capital Management. He has eleven years
of consulting experience in a range of areas including human capital, financial
management and performance measurement. Michael is based in Fairfax, Virginia
and can be reached at [email protected].

About IBM Global Business Services

With business experts in more than 160 countries, IBM Global Business Services
provides clients with deep business process and industry expertise across 17
industries, using innovation to identify, create and deliver value faster. We draw
on the full breadth of IBM capabilities, standing behind our advice to help clients
implement solutions designed to deliver business outcomes with far-reaching
impact and sustainable results.

References
1
Jamrog, Jay J. and Miles H. Overholt. “Building a Strategic HR Function:
Continuing the Evolution.” Human Resources Planning. January 2004.
2
Ulrich, Dave and Wayne Brockbank. The HR Value Proposition. Harvard Business
School Press. 2005; Lawler III, Edward E., and Susan A. Mohrman. Creating a
Strategic Human Resources Organization: An Assessment of Trends and New
Directions. Stanford University Press. 2003.
3
Jamrog and Overholt. January 2004.
4
Chartered Institute of Personnel and Development. “Business Partnering: A New
Direction for HR.” 2003.
5
A thorough overview of this subject can be found in Hunter, Ian, Jane Saunders,
Alan Boroughs and Simon Constance. HR Business Partners: Emerging Service
Delivery Models for the HR Function. Gower Publishing: Hants, England. 2006.
6 .
PricewaterhouseCoopers/Saratoga Institute. 2004 HR Metrics Study.
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