Why Your 2017 HR Strategy May Involve a Reduction in Headcount

2017 HR strategy ideas

For many HR professionals, the first week of January is the beginning of a very busy period depending on when your fiscal year begins.

It also usually represents the beginning of your annual HR strategic plan.  Likely you either you have developed it– or in the final stage of its completion.

That is where I hope to help shape your thinking.

Human Capital Trends – Same Message, Different Year

If you have been following our blog, you will know that I am a big proponent of Human Capital and HR Trend reports.  I believe they add tremendous value, and drive the thinking as to the strategic direction of the HR function.  Deloitte, Gallup, Mercer and Glassdoor reports are something I always look forward to reading.

Can we start the new year off together with an honest conversation? 2017 HR Strategy Best Practices

In general they are all saying the same thing.  In 2015, 2016 and likely in 2017– you will be able to boil down the latest reports to what I will call the “Core 3” elements of where HR adds the most value:

2017 HR strategy best practices

Sure, there are more layers to the reports than that.  People analytics, digital trends, diversity, generational forces and HR capabilities to name a few.

Yet in the end, these other important elements ultimately support– or are related to– the “Core 3”.

2017 HR Strategy Ideas– Taking an Honest Look at Your HR Structure

There are some very positive signs that the HR transformation required for future success is well underway.

More than two-thirds of executives (68%) in the 2016 Deloitte Human Capital Trends Report stated their companies have solid development programs for HR professionals, and 60% believed they are holding HR accountable for talent and business results—both a higher proportion than in 2015.

You don’t need stats to prove this.  I am sure your LinkedIn feed is full every day with articles on HR transformation, talent, leadership & culture. 2017 HR Strategy Best Practices

In the same report, 92% of executives rated organizational design as a top priority, and nearly half (45%) reported their companies were either in the middle of a restructuring (39%) or planning one (6%).

Yet I see very little in my LinkedIn feed about HR org design and it has caused me to wonder why. 

Are we as HR professionals are so busy supporting organizational change, that we have forgotten about our own org design?  

Make no mistake, your HR structure is critical to your success in driving the “Core 3”. 2017 HR Strategy Best Practices

A Simple Framework

I was fortunate enough to come across a simple model early on in my HR career – The Adaptive Value Culture Chain. 2017 HR Strategy Best Practices

I can’t remember exactly where I got it from– one of the larger consulting firms was using it at the time.  I had a printed copy of it and placed it on the wall of every job I had to continually ask myself at what level I was operating as an HR professional. More aspirational than reality at times– it was always there to challenge me.

The model is a simple one.  It can be used from a holistic perspective e.g. at what level am I operating in my role overall – or on an individual task, goal, objective level e.g. at what level is this specific thing I am doing.2017 HR strategy best practices

  • Level 1– At this level there is no value-add, you are simply performing tasks that others could perform.
  • Level 2– You are operating as a “technical expert”.  You have a body of knowledge, expertise or experience which you are utilizing in a more reactive way.  Someone asks for “x” because you are the expert, and you deliver for them.
  • Level 3– A quantum shift from levels 1 & 2.  Here you are still the expert but you are proactively identifying a solution to a need before being asked to do so. The other shift is “wants” vs. “needs”. Sometimes the customer is not always right. Sometimes the customer does not know what they don’t know. You are shaping the discussion and driving a better solution.
  • Level 4– The ultimate aim. Here you are delivering insights, expertise and solutions that are driving business performance. My litmus test as an HR Business Partner was this. Was I asked to attend and/or participate in business planning discussions by the business leaders– or did I have to ask to be there?  Was I offering/and being asked for my POV on business strategies that are non-people related– or am I there for the people portion of the discussion?

The model is not meant to be a way to eliminate all Level 1 responsibilities and only focus on Level 4 work. Everyone has aspects of their job that fall into each level. 2017 HR Strategy Best Practices

The question is –where am I spending the balance of my time, and what is the opportunity cost of operating at levels 1 & 2?

For level 1 & 2 responsibilities, the next set of questions are also quite simple:

  1. Does the work need to be performed at all?  Would anyone care if the work stopped? (Typically Level 1)
  2. If it does need to be done, does it need to be done by me?  Could it/should it/would it be best performed elsewhere? (Typically Level 2)
  3. If it does need to be performed by me, how can I become more efficient at it to free up my time to operate at a different level.  The opportunity cost of time.

In no way am I suggesting I personally perfected this approach. Just thought about it– a lot.

The Adaptive Value Culture Chain Applied to HR Structure

The same exercise can be applied at an organizational level for your HR function.

If your HR strategy is centered around the “Core 3” then you need to take an honest look at the other responsibilities that fall under your HR team and complete a similar assessment.

Let me say right now– no two HR departments are the same– and there is no “one size fits all” model.  You may work in an extremely large department for a global organization with very specialized teams/functions.  Or you may work in a team for a small to mid-sized business where HR wears many different hats.  

Whatever your situation, you can still apply the same thinking process– and this is where the title of my article now connects. 2017 HR Strategy Ideas

Analyzing your org structure as to how it will support your HR strategy centered on TALENT – CULTURE – LEADERSHIP requires you to challenge the status quo, and take on the “red herrings”.

There are a few areas right off the bat I would question whether they need to be performed by your HR Department:

  • Payroll Processing & Administration– Typical arguments center on the confidentiality of information and the need for HR to own it. Can it be performed by Finance? They confidential information everyday. To me this is not an argument. If you are concerned about people in Finance not being able to handle the information in a confidential manner- do you have the right people? It can also be outsourced. I would advocate HR still owning HRIS and people analytics.
  • Benefits Administration– Similar argument to payroll processing. I am not talking about health and wellness plan design– that is integral to talent and culture.  But the day-to-day administration takes people, time and effort away from your “Core 3”. The opportunity cost of time. Perhaps this still falls under HR but you outsource it? Maybe this falls elsewhere? The questions need to be asked.
  • Operations/Facilities– In smaller companies HR can be the catch-all for other “administrative” responsibilities. Don’t continue to let that happen.
  • Union/Labor Relations– Here is a big “red herring”.  By definition a Collective Agreement is a codified set of workplace rules for unionized employees that is a binding legal document for the term of the contract. Why not let your Legal Department manage it day-to-day e.g. grievances & arbitrations?  Most Labor Relations specialists I have met have a legal background anyway. Perhaps Legal manages the day-to-day during the term of the contract with a dotted-line to HR with regards to how what is bargained impacts the “Core 3”. Maybe your HR Business Partners only get involved with the coaching/leadership aspects of disciplinary meetings and delivering feedback. Perhaps HR only gets involved in Collective Bargaining? Worth examining.
  • HR Legal Compliance– The biggest “red herring” of them all. The ever changing legal landscape and the impact on your HR policies and procedures must fall under HR right? Like Labor Relations, if you have an in-house Legal team they can handle keeping up with changes and workplace audits. When HR owns it– you end up having to get internal or external counsel to sanction changes to your policies anyway. Perhaps this is another example where it is dotted line to HR as it relates to your “Core 3” with Legal taking the responsibility of things like scanning the external legislative environment, timekeeping audits etc. Again, worth examining.

Again, there is no “one-sized fits all solution”.  However we must continually challenge ourselves to think differently by applying the questions listed above, and organize ourselves to be transformational in the “Core 3”.

Perhaps your organization tried it before and was not successful. That does not mean it will never work. Examine why, what you learned and how it could work differently next time vs. giving up the idea.

Giving Up Some Headcount

Applying the model to your HR structure also does not mean you simply shift the work but retain the headcount.

If you lead your HR function, it may require you to give up some headcount to other functions or outsource some of the work. These are important decisions that can not be taken lightly.

If I were a CHRO, I would rather have a smaller team focused on the “Core 3” than a larger one where you are bogged down with administration or compliance.

Perhaps you are in a job listed above and do not want to move outside of HR. I agree– you don’t necessarily need to.  Think of it as an opportunity to chart a different HR career path for yourself. Take some courses, get involved in projects, apply for new HR roles that are centered on the “Core 3”. That is the future of HR– and these roles are rewarding that can take you to new and exciting places.

Maybe your 2017 strategy does not allow for such an exercise this year. No problem. Then look at job responsibilities on a more granular level and see if there are some duties that can be done differently.

You may be reading this article and are thinking we have already done this. Excellent. Keep challenging yourself then to continually examine if you can take it even further.

The 2017 Deloitte Human Capital Trends Report will be a must read for me when it comes out. In the end we know the “Core 3” will be front and center.

Start thinking today about how you can best structure your HR team to create an engaging company culture where your talent can grow with a strong leadership pipeline. All for the benefit of your people– and the bottom line.
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