THE EVOLVING HR FUNCTION – MARKET INSIGHTS
CEOs and HR leaders of all organisations from small / scaleup businesses through to large corporates alike are changing their expectations of how the HR function should be structured and the capability required based on their expectations of what it can deliver. Whilst what the business needs is of course unique to the context and challenges it is facing into, there are some market trends that are emerging.
Small / scaleup businesses (typically <150 headcount)
Previously: given the pace of headcount growth and tight budgets, these organisations often hired a junior Talent Acquisition specialist and expected them to operate across both Recruitment and HR Operations.
However, given their lack of HR expertise, this leaves the business exposed due to a lack of legal knowledge, ability to build sustainable processes or organisational structures and inability to develop the leadership capability that is strongly needed in a young, ambitious organisation. Employees are often less engaged and perform poorly due to lack of role and career clarity and often have an inconsistent, inequitable and frequently changing employee experience. This often leads to both high turnover and a reduced ability to further attract quality talent to the startup thanks to social media branding such as Glassdoor ratings.
Equally, it creates a challenging and stressful experience for the TA / HR person themselves. Whilst they may be smart, well intentioned and have great hustle, they are ill equipped to deal with the People complexities that actually exist within a fast growing organisation with immature leadership, systems and processes.
Current trend: Some businesses are recognising the gap with the above approach however they also don’t yet need (and often can’t attract or afford) a high level HR leader on a full-time basis given the bulk of the work still needs to be at the operational / transactional level. Thus, they are taking a two-pronged approach of bringing in an HR Executive on a part-time or ad hoc basis to develop the leadership team, build the overall People strategy and design more complex elements such as the Remuneration structure. They also hire an earlier career HR or TA professional working full-time in the business. And the great thing about this model is that the earlier career HR professional has sufficient support and mentoring whilst still providing plenty of development scope. And all for an affordable cost to the business which pays for itself given the stronger outcome for employees and leaders.
Medium sized and maturing organisations (<1000 headcount)
Previously: these organisations have had a Head of HR heavily focussed on reactive, operational and transactional work; often reporting through to the COO or CFO. Their work was heavily dictated by the business leaders with little opportunity to influence outcomes and thus the work was focussed around very traditional HR processes, firefighting and would either be very compliance driven or almost non-compliant.
Current trend: These organisations have saturated the local Australian market and are now growing into new regional or global propositions and / or acquiring other business and growing their footprint locally. Smart CEOs (or their Boards!) recognise that they need to increase the capability in their HR function to enable the business to make the significant leap to the next level of revenue growth.
This needs a new level of HR thinking and an ability to articulate how each of the HR activities aligns with an overall People strategy and offers a cohesive experience for employees. This requires a mid-career HR leader (or perhaps a more senior HR leader who is keen to work 4 days per week) who is able to think strategically but still be able to manage the operational components closely given the HR function has previously been underfunded. They should be able to articulate the value that HR brings, build strong business relationships and influence through data, be capable of leading and developing a small HR team but still be capable and genuinely happy to be quite hands on to deliver the HR work.
They will be supported by several HR team members in Recruitment and generalist HR Advisors or Business Partners. Often these team members are asked to be both a generalist and also specialise in a key HR area such as Learning and Development or Employee Relations which is a great development opportunity for them too. Naturally, it is critical that each member is both capable within their roles and able to complement each other in terms of knowledge, skills and style.
Larger / more established organisations (1000+ people)
Increasingly, these organisations are undergoing significant enterprise-wide change whether it be that they are automating part of the business, changing the whole business operating model, moving from growth to consolidation mode, building a customer-focussed culture or some other transformation. At the heart of all these changes are people to design, support, enact and be impacted by these changes and needs to be managed with an equal focus on care and commercial.
Previously: organisations would bring in project managers and expensive consulting firms who work in a secretive bubble away from the rest of the business. They do a theoretical organisational redesign and can successfully prepare all the project components by focusing on processes, checklists and working within the secretive project team before finally announcing to the organisation what the change is going to be (and that it’s happening as of today!).
However, organisations who have undergone multiple changes have realised that they often don’t deliver the promised cost savings or customer growth. Equally, they are a huge disruption for the business given the uncertainty around job security and lack of role and process clarity. This leads to decreased employee engagement, decreased organisational performance along with poorly (re)designed work processes and missed opportunities due to lack of consultation with the people who actually do the work. Not to mention creating a culture of change fatigue and mistrust due to having to keep revisiting poorly designed change programmes!
Current trend: to counteract the above experiences and take a more thoughtful and impactful change that delivers the desired results, organisations are bringing in embedded Change or Transformation contractors for an extended period of time. This creates a greater sense of commitment from both parties and means that organisations can hire the right level resource/s for their projects for a much cheaper rate than using a consulting firm who assign early career consultants to them.
Ideally they are former HR leaders who specialise in organisation change management and have worked within similar organisations and thus actually lived with the results of the changes they make from a people, customer and process perspective. This allows them to take a more holistic approach and actually develop and deliver organisational redesigns that are sustainable and strike the right balance between care for stakeholders and commercial outcomes.
Some examples of recent assignments that Acquire has been engaged on: