Adaptable By Design: A Future-focused, Fit-for-purpose HR Operating ...

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Posted by Mike Kemp, Pete DeBellis, and Jeff Mike on December 8, 2020

All eyes are on HR. Disruptions such as the global pandemic and social justice movements along with shifts in demographics and changing expectations around the workforce experience have combined to usher in a new world of work. This current state of affairs has created an unprecedented opportunity for HR functions to reshape the way their organizations compete, access talent, and show up in the communities where they operate.

To deliver new forms of value, HR needs to reassess the outcomes the function is committed to delivering and the way in which those outcomes are achieved. This effort may require a reconsideration of the work, the skills and capabilities of the workforce, the environment in which the work is done, and how these three (the work, workforce, and workplace) interact in support of new outcomes. In response to never-ending disruption, many high-performing organizations are designing their general operating and management models for adaptability.[1] HR functions might be well-served to follow suit.

The evolution of HR operating models

The HR operating model is an abstract representation of how the HR function is organized and operates to deliver outcomes to its various stakeholders inside and outside the organization. The operating model should be grounded in the business outcomes HR must drive and should be built upon:

• What outcomes HR is committed to delivering—typically through the combination of products and programs (e.g., learning and development), transactional services (e.g., benefits enrollment), and consultative services (e.g., change implementation)
• Who delivers the outcomes (e.g., HR business partners, centers of expertise, HR technology, shared services, project teams)
• How outcomes are delivered (e.g., through guiding principles such as customer focus, teamwork, and data-driven decision-making)

Because no two organizations are the same, there are infinite possibilities for the “what, who, and how” of HR. Therefore, no two HR operating models will be exactly the same because they exist in different contexts and strive to meet different needs.

The challenges of designing a future-focused, fit-for-purpose HR operating model are further exacerbated by three traditional assumptions about work that no longer holds true in today’s rapidly changing business environment.[2]

As fundamental assumptions about work change, so does the foundation upon which HR is based. In the new world of work, HR is called to “expand focus” and “extend influence.”[3] To accomplish this, HR should reconsider the “what, who, and how” of the HR operating model to best address the business’ changing needs and new reality.

Building for the future

The new world of work continues to bring exponential expectations for HR. The HR operating model should reflect not just today’s business and workforce needs but also those of the future. A future-focused HR operating model supports a function that is adaptable, agile, architecting, and augmented.[4]

Realizing fit-for-purpose

The traditional, three-pronged approach to the HR operating model—shared services, centers of expertise, and business HR—has gone generally unquestioned for decades. However, this model tends to be ill-equipped to meet the needs of organizations undergoing a5 massive change in response to constant disruption. As organizations experiment with and iterate on new business models, strategies, and structures to gain competitive advantage (e.g., product-oriented models, agile processes, flexible workforce pools), our research shows there is no one-size-fits-all HR operating model that can support limitless variations across businesses.6 Instead, to realize a fit-for-purpose operating model that aligns with the unique context of the organization, HR should consider redefining the way the function delivers outcomes through the Discover-Design-Deliver cycle illustrated below.

Next steps

As an iterative and ongoing process, designing a future-focused, fit-for-purpose HR operating model acknowledges the future is uncertain and likely wrought with change. Therefore, the HR operating model should evolve to quickly and continuously address changes in partnership with HR’s business stakeholders and workers. Operating model redesign doesn’t need to be a massive overhaul of the entire system. Instead, HR functions can look for opportunities to use the Discover-Design-Deliver cycle described above to identify and implement incremental improvements that address gaps in the current model and build momentum for ongoing refinement.

Deloitte’s Human Capital Research & Sensing team will continue to provide research-based insights on the evolution of HR, including new mandates impacting HR leadership, opportunities to expand the focus and extend influence through HR strategy, and the changing state and needs of HR operating models. Stay tuned in the coming months for insights, tools, and opportunities that can help take your HR operating model to the next level.

If your organization is innovating in the area of HR operating models and the future of work, we’d love to hear your story. Contact Mike Kemp (mickemp@deloitte.com) and / or Peter DeBellis (pdebellis@deloitte.com). If you aren’t a Research & Sensing member but want to learn more, please contact Burt Rea (brea@deloitte.com) or take a test drive on our platform.

Originally published as part of Deloitte's Capital H Blog Series

Authors:

Mike Kemp, Ph.D., Manager, HR Research Leader, Deloitte Consulting LLP

Pete DeBellis, Vice President, Total Rewards Research Leader, Deloitte Consulting LLP

Jeff Mike, EdD, Vice President, Head of Research & Insights, Deloitte Consulting LLP

Endnotes:

[1] Six Top Findings for Designing Tomorrow’s Companies Today, Deloitte Consulting LLP / David Mallon and Timothy Davis, 2019, https://humancapitalresearch.deloitte.com/article/six-top-findings-for-designing-tomorrows-companies-today-8384/.

[2] “A Memo to HR: Expand Focus and Extend Influence” from the Deloitte 2020 Human Capital Trends report, Deloitte Consulting LLP / Erica Volini, Brad Denny, Jeff Schwartz, David Mallon, Yves Van Durme, Maren Hauptmann, Ramona Yan, and Shannon Poynton, 2020, https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2020/changing-role-of-human-resources-management.html.

[3] “A Memo to HR: Expand Focus and Extend Influence” from the Deloitte 2020 Human Capital Trends report, Deloitte Consulting LLP / Erica Volini, Brad Denny, Jeff Schwartz, David Mallon, Yves Van Durme, Maren Hauptmann, Ramona Yan, and Shannon Poynton, 2020, https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2020/changing-role-of-human-resources-management.html.

[4] “Exponential HR: Break Away from Traditional Operating Models to Achieve Work Outcomes,” Deloitte Consulting LLP, 2020, https://www2.deloitte.com/us/en/pages/human-capital/articles/exponential-hr.html.

5 High-Impact HR Operating Model research, Deloitte Consulting LLP, 2019.

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