Pressure has been building for HR organizations to address strategic business needs in a more powerful and valuable way.  There has been continual motion in the market: shifts in the mix of customers, segments, competitors and intermediaries; increasing scarcity of resources, interconnectedness, dependency and the threat of negative domino effects; and erosion of familiar sources of profitability.  Impressive as these forces for change are, they preceded the dramatic financial turmoil we are currently facing.  All these things, at a broad and fundamental level, are causing leaders to assess their business models.  They are questioning the longer-term economic viability of their core businesses and what they, as senior leaders, must do well to guide their organizations through these unprecedented times.  The result is a healthy reevaluation of strategies, organizational designs, and the alignment of behaviors and cultures to meet the emerging market needs.

How are HR leaders redefining their purpose, services and value in this environment?  We have done a substantial amount of work with HR executives over the past 15 years.  Recently, we have seen a dramatic increase in the volume of HR transformation initiatives sponsored by both senior HR executives and business leaders.  We believe this is the consequence of leaders realizing they must manage their human capital in a fundamentally different way.  Dramatic changes in business models and the turbulent financial times are driving the need for the commensurate level of change in how organizations’ human capital is deployed and managed.  While it is possible that a steady incremental approach to change worked in the past, our experience and the market are telling us that today, the business needs are greater, and more dramatic change is required.  In short, HR executives are being called to co-create, with business leaders, new business models and to lead the organizational and cultural changes required to support those models.  This presents an opportunity for HR to step up and increase its value dramatically.

Reflecting on our client work, we have developed some thoughts on the critical components of successful HR transformations, especially relevant in these turbulent times.  Our clients have found the following ideas, tools and practices to be not only helpful guides, but thought provoking:  HR Mandate, HR Value Pyramid, HR Delivery Model, Role of the Manager, and HR Leads/Leaders Own.

We also share with you some critical success factors which have emerged in our HR Transformation work.  These frameworks and CSF’s have helped HR and business leaders think about their situations and opportunities in clear and often different ways as they blaze their own unique transformation trails.

Business Link: HR Mandate
Experience shows that many transformation efforts have been insular: HR analyzing itself (howsoever earnestly) and rebuilding from an inside-out point of view.  Especially in turbulent times, when business models are evolving quickly, HR leaders must fully understand both the current and emerging business strategy, and must ensure their transformation work is aligned to the strategy.  In other words, HR must determine its mandate.  That mandate, along with the supporting strategic imperatives, becomes the North Star for transformation work.

The HR Mandate succinctly describes what the business needs from HR over a two-to-three year horizon.  Imagine the mandate sitting under an HR organization’s vision and mission, which should have a longer-term view.  The mandate and imperatives create direction and focus for the transformation work.  When done well, the imperatives will provide a way to prioritize transformation efforts, and lead to a comprehensive plan that business and HR leadership can execute against.  The HR mandate must be established with senior business leaders who help to draft and refine it.  Only then can both parties commit to the HR Mandate – a commitment which we have found to be essential to successful HR transformations.  In addition, the mandate definition process becomes the foundation for a long-term, on-going dialog between HR and business leadership as business needs and conditions change.  The mandate discussion then becomes integrated into the ongoing planning and governance system of the business.

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