Human Investment Series – The New HR Transformation Model

Traditional Paradigms are Not Moving the Needle

The Conference Board’s C-Suite Challengeâ„¢ 2018 is “Re-inventing the Organization for the Digital Age.”⁽ⁱ⁾ Prior Conference Board surveys concluded the CEO’s #1 Challenge was their People Resources. That hasn’t changed but, with disruptive digital technology, has increased in urgency. Business and digital transformation highlight the need for people transformation to avoid disruption. This is a major opportunity and challenge for HR and businesses.

Most traditional HR strategies focus on optimizing HR functions such as talent management, organizational development, and performance management. Unfortunately, traditional paradigms may be meeting HR best practices but not moving the business needle.

For example, Gallup cites that 70% of U.S. employees and 87% of worldwide employees are not engaged. A simple review shows that these engagement numbers have gone up and down by a few percentage points but have essentially been flat for over 20 years. The lack of engagement costs businesses over $1 trillion per year. The Millennial generation is likely to create an even greater challenge. So how can companies move the needle?

Spending more money isn’t working. Spending has doubled without a significant impact.

How can CEOs and CHROs close the gaps?

Are there new disruptive paradigms for companies and HR that focus on cross silo, enterprise solutions that can move the needle?

We believe so.

The New HR Transformation Model

Effective HR Transformation cannot occur by focusing on business-as-usual best practices, employee programs, and technology improvements that don’t have measurable business results. The train headed your way is the digital age that will either disrupt or enable your company. Either way, change is coming. Resource allocations need to be prioritized to address root causes that move the business needle while leveraging digital technology to enable continuing improvements.

We recommend the first step be for the CEO to personally define the requirements that drive the business today and the required transition changes to the world of tomorrow. Our CEO Questionnaire, and soon to be App, facilitates this process along with employee feedback that highlights potential gaps and opportunities. Advisory services are also available to facilitate understanding of potential gaps and to develop strategic business initiative solutions.

Once the CEO blueprint is established, implementation projects can be planned and prioritized. This includes defining the company’s drivers for business, people, and digital transformation. Then, HR and business leaders can work as a cross functional team to align all systems and processes in support of the CEO’s defined requirements.

In other words, alignment to changing business requirements and engagement can only occur when the company first defines what definitions to align to and how employees can maximize their careers by engaging in alignment. This requires a global set of enterprise business alignment definitions, implementation actions, metrics, reporting, and governance.

Participation in this process is a major career opportunity for HR executives.

This also begins addressing the initial root cause of disengagement. Without defined and enforced enterprise alignment requirements, employees will experience confusion for how to successfully engage for business success and their personal career success.

Does the picture above resemble what goes on in your company within different levels, business units, and silos? The larger the company, the more intense, political, inward focused, and confusing the reality can become. No wonder there is such a high cost to businesses and impact to employee engagement.

Opportunity for Strategic HR Transformation

At this point, you may be thinking that I’m stepping on toes and interfering with your turf. However, here are examples from other support functions:

• Would you expect Procurement to write a bid specification for a $20 million RFP without the decision maker’s defining what he or she needed to drive the business? Procurement owns the acquisition process. Procurement guessing what is needed can result in six hundred dollar hammers.

• Finance owns the budget process, controls and creates a historical trend forecast. Yet, does finance decide the priorities of the company, who should receive major budget allocations, and how to spend the money?

• IT is absorbed with digital technology opportunities and competitive disruption threats while still having to manage existing technology platforms. Who ultimately decides the resource and new technology funding allocations that support the simultaneous business-as-usual and digital technology required for enterprise business transformation?

The CEO looks for input from his or her CXO team to determine how to transform the company while still running daily operations. However, input can arise from anywhere within or from outside the company to help CEOs and CXOs determine how to strategically change and tactically implement the required transformation changes.

HR has a major leadership opportunity for supporting the enterprise change requirements that take advantage of the changing digital business landscape. This will require People Transformation Initiatives that move the business needle and prepare the company for the Business Transformation required in today’s disruptive digital world.

For example, a report by CNBC cites:

“There is so much tech disruption going on, I don’t think investors and money managers are aware of the rate of change coming down the pike. The rate of change is too hard to fathom. But they need to be aware that many of today’s F500 are in danger. A study from the John M. Olin School of Business at Washington University estimates that 40 percent of today’s F500 companies on the S&P 500 will no longer exist in 10 years.”⁽ⁱⁱ⁾

HR can play a critical role in helping companies survive and thrive in the coming years.
Challenges will exist, but major career opportunities are ahead for those who can navigate and lead the changes required for the coming disruption.

Let us know if you would like additional insights for your company.

Author: Jim Villwock, Founder and CEO, Human Investment Advisory, Inc.
www.HumanInvestmentAdvisory.comOpens a new window
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