A look at six creative successors to the aging “centre of excellence” operational HR model.
The world of HR is overdue for a shakeup.
As I discussed last week, the present dominance of the “centre of excellence” model that most large organisations use to meet their HR needs is starting to fail. HR executives ceaselessly tinker with the way their teams deliver services. But the changes they make are like putting a new coat of paint on a 20-year-old jalopy. What’s needed is replacement, not repair.
Replacement with what, though? This is a demanding question for HR execs to answer. Concocting a new operating model from within the confines of the old one is a bit like trying to look at the back of your own head without the aid of mirrors.
The truth is that no one can say for sure what operating model will best meet a given organisation’s HR needs in the future. But we can say with certainty that the pace of change in the financial services industry will likely remain fast, and that organisational needs are diverse. It seems likely that more than one organisational model will find adherents.
With that in mind, let’s look at six creative HR models proposed in new Accenture research.
The talent-segmented model
- This model unplugs HR business partners from their business units and instead assigns them to different talent segments. The segments can be defined to effectively target the business’ most important talent needs. A business might have HR teams for the talent in emerging markets, for the remote workforce, for Generation X workers, and for executive succession.
- Since this model focuses on meeting talent rather than business department needs, it is ideal for organisations that face stiff competition for critical talent. For instance, investment banks that wind up in bidding wars for critical hires could find talent-segmented HR very useful.
The professional services model
- This model leans in to the strengths of the centre of excellence model. It removes all business advisors from non-HR work and consolidates an organisation’s HR team in a single internal consulting group. This group creates talent solutions and provides advice on an as-needed basis. The HR group might use a charge-back function to bill its time.
- The professional services model excels at breaking down the silos within HR that can create conflicting solutions. It’s an ideal fit for fast-changing financial service firms like fintech or digital-first enterprises.
The lean HR model
- This model divides HR into three parts: a tiny corporate function with deep specialists, a shared services team, and a small number of planning and analysis experts. Large teams of business partners and large staffs in HR centres of excellence are eliminated. Talent practices are developed by the experts with help from external consultants when necessary, but such changes are rarely needed.
- Properly executed lean HR could eventually lead to “no HR” for some organisations. This model’s focus on operational efficiency makes it well-suited to organisations that largely compete on efficiency, like insurers.
The federated/decentralized model
- This model eliminates the centralised functions of the centre of excellence model. Federated HR disperses traditionally centralised functions to different business units. Even transactional services like benefits enrollment can be downloaded to business units.
- Federated HR works best for financial services businesses with a strong focus on speed and operations spread across multiple countries, like credit card providers.
The just-in-time HR model
- This model borrows from agile software development and lean Six Sigma to deliver innovative and flexible solutions on demand. It replaces the monolithic HR department of the centre of excellence model with a much smaller cross-functional team made up of experts in IT, facilities, and talent management. This group advises temporary teams that design talent solutions and execute HR’s other functions on an as-needed basis. The temporary teams are made up of people drawn from every level of the business.
- The bespoke solutions provided by the just-in-time model make it a great fit for financial services firms with diverse needs, like conglomerates.
The crowdsourced model
- This model uses digital tools to let employees define their own talent practices. Employees come together to teach each other skills, onboard each other, or even conduct performance reviews and select future leaders. A small, skilled team dedicated to HR establishes digital platforms and guidelines. Business coaches promote a culture of democratised talent management and advise leaders.
- Crowdsourced HR is well suited to financial services firms with strong internal cultures and biases towards democratic decision making, like hedge funds.
It’s important to note that each of these models is an ideal and not a roadmap. The best model for each organisation will be one that is tailored to its specific needs.
The fundamental challenge facing HR is to close the gap between what a business wants to do and how its people come together to do it. Total achievement of this goal is probably impossible. Nevertheless, by experimenting with one of these six new operating models, it may be possible for large businesses to make the gap smaller than ever.
Read the full report on new operational HR models from Accenture here.