Restructuring HR: Where are we going

In the last year many of our research members and clients have come to us for help in restructuring their HR or Learning & Development organizations.  There have been three major forces at play here.

1.  Reducing costs:  In nearly every industry organizations are going through restructuring, mergers, or other cost-cutting efforts.  The HR department plays a major role in these changes – both by facilitating these changes and by eliminating duplication in its own operations.  Consider the merger of two regional Banks we just worked with:  both had talent management teams, both had compensation, diversity, and compliance organizations.  

Well the decision about what to cut and how to reorganize were not easy:  one of these banks focused on high net-worth individuals and small businesses, so it had a large workforce of account and portfolio managers providing customized services.  The other was a more traditional retail bank, staffed largely by people dealing with retail clients.

Bottom line:  the combined organization design required a sharp and focused look at the new workforce strategy, the key competencies and capabilities in place, and which of the HR teams had the expertise and understanding to execute the new combined bank’s strategies.  Some of the operations went to the traditional retail banking HR leaders, others (talent management, for example) went to the HR leaders from the smaller, acquired organization.

Advice:  consider your new workforce strategy and look for the most valuable HR skills and capabilities in dealing with the new workforce, and use this to guide your reorganization.

2.  Implementing new Talent and Capability Management Solutions:  The second major driver behind new HR organizations is a need to implement talent and capability management strategies.  Consider one of our clients who is a large, well known consumer packaged goods company.  This particular company has a well established talent management strategy which moves people across functional organizations (e.g. marketing, sales, manufacturing) from product line to product line.  These people rise through the organization in these functional roles and eventually have the opportunity to become general managers of consumer products.

This is a very traditional talent strategy, pioneered by Procter & Gamble and now used by Unilever, Clorox, Kraft/Altria, and many other consumer goods companies.

But how does this type of organization work when the company enters a major economic slowdown, an acquisition, or divestiture of an entire product category?  It builds functional skills which are supposedly transferrable into a new product.  But in reality, what our research has shown, is that many such CPG (consumer packaged goods) companies have old, long-established techniques for marketing which may or may not fit into such a new market.

Clorox, for example, creates entirely new marketing and product teams to enter new markets.  The highly successful “Green Works” product line from Clorox was incubated and developed outside of the company’s traditional marketing organization.

Bottom line:  as we find in almost every industry, the “magic” to a newly combined talent management organization is not to simply squash together all the organizational development roles, but rather to stitch them together with a strong focus on the company’s strategic business needs.  In our High Impact Talent Management research we find organizations which succeed with integrated talent management create talent “pools” which are treated in special ways based on their demographic, skills, and strategic role.  Oil companies, for example, must create special “talent pools” for exploration and production engineers, because they provide such high value and are in such short supply.

3.  Adoption and Integration of New HR and Learning 2.0 Technologies:  The third major change which is causing HR to change is the rapid adoption of new HR and Learning 2.0 (read “social networking“) technologies.  It is now possible to purchase an HRMS system which includes integrated functionality for goal alignment, performance management, succession planning, talent pooling, career management, and more.  And in the area of enterprise learning, today’s new learning management systems (LMS) now have social networking, collaboration, messaging, and content management embedded.

In addition, as our latest High Impact Learning Organization research shows, more and more of an organization’s capability-building expertise now lies in its ability to create internal collaboration and communities of practices — and less relies on traditional competency management and training. 

Consider a large pharmaceutical company.  We are working with three such companies right now and each are looking for ways to reduce L&D costs by implementing integrated technologies and organization structures to share knowledge, collaboration, tools, and infrastructure across sales, research, manufacturing, and other large business functions.   The traditional HR and L&D organization which may have decentralized groups must be changed to take advantage of these new integrated technologies.

Bottom line:  new technologies can be transformational, but make sure you consider how they will force and enable your HR and L&D organization to collaborate as well.  If you want to understand how these changes are occurring, read our new Social Software 2009 research or our just-published report The Essential Guide to Performance and Talent Management Systems.

In 2008 and 2009 we expect many organizations to grapple with these challenges:  what is the “new role” for corporate training?  What do we do with the HR generalists located in our business units?  How does the talent management team create strategies which can be customized for critical roles?  And what parts of HR should be globalized vs. decentralized?

While the traditional approach to outsourcing HR transactions continues to drive cost reduction, I believe it is these higher level issues which are really going to drive HR’s value in the next 12-24 months.  With the economy slowing and more than 30% of organizations going through some type of restructure or leadership change, we must think about how we will reorganize ourselves to provide cost reduction, integrated talent solutions, and enable new technologies all at once.

(We have a variety of tools and assessments to help organizations work through these issues – please contact us if you would like to learn more.)

Comments welcome…