Adaptable by Design: A Future-Focused, Fit-for-Purpose HR Operating Model | Deloitte US has been saved
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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 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:
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
Work outcomes are stable.
Customer expectations are rapidly changing due to technological advancement and access to information. Organizations should constantly reimagine the value delivered to customers. This, in turn, continuously changes the work being done in response to the shifting customer demands.
Jobs are predictable.
Jobs have become increasingly fluid and dynamic as a result of automation and work outcomes being in a constant state of flux. Jobs of the future may no longer represent fixed, task-based work.
People are replaceable.
People provide value in ways machines cannot (e.g., creativity, problem-solving, empathy). As such, each individual can bring a unique set of experiences, thoughts, and attitudes that can be combined to create new forms of value.
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.
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
Characteristics of Future-Focused HR Functions
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.
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 (firstname.lastname@example.org) and / or Peter DeBellis (email@example.com). If you aren’t a Research & Sensing member but want to learn more, please contact Burt Rea (firstname.lastname@example.org) or take a test drive on our platform.
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
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.
Pete doesn’t need to look too far to understand the unique challenges clients face—he’s likely been there himself. A leader of client delivery and a market-facing lead for Insights2Action’s research and service delivery, Pete has built a career that ranges from consulting and HC research to entrepreneurship and running small businesses. Pete’s direct experience drives his passion for making work better for people and people better at work—for clients and colleagues alike. He lives to break the monotony of the day-to-day and provide clients with a unique perspective to reach sustainable outcomes. Outside work, you can count on Pete getting in over his head with home improvement and wrangling his kids. Pete holds a BS in industrial and labor relations from Cornell University.
Jeff leads human resources (HR) research for Deloitte. An expert in building the capabilities of corporate HR teams, Jeff transforms HR professionals from process-oriented practitioners into strategic partners who are able to compete in complex global talent markets. His ability to combine research with innovative development activities was honed through experience as a faculty member in human resources development at Al Akhawayn University in Morocco. Also former head of human capital at IMPAQ International, Jeff has a Bachelor of Arts in English literature from the University of Washington, a Master of Science in organizational development and strategic human resources from Johns Hopkins University, and a doctorate in human and organizational learning from The George Washington University.