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Key trends driving future HR operating models

For several decades organizations and corporate houses have been adopting a relatively reactive and straightforward approach to managing people, but this trend is changing now. With today’s rapidly evolving, complex, and volatile business environment, the HR operating models of companies are being forced to transform and innovate at an unprecedented pace.

The preferences of the multi-millennial employees, demographic challenges, and workers attrition have contributed to driving organizations to collectively modify functions of HRM and adopt innovative operating models. Let us look at the top 5 emerging HR operating models and the innovation shifts that are propelling these models.

Top emerging HR operating models

The Ulrich Model

In the Ulrich model, HR roles are organized into HRBPs, HR CoEs (Centres of Excellence) ,and HR shared service centres.

This 3-part model can leverage the key parts and drive the effectiveness of functions of HRM.

Transactional tasks can shift from HRBPs to SSCs and can be delivered effortlessly, freeing up HRBPs for other crucial operations.

CoEs are downgraded to join the team of experts and a few HR business partners. They are also backed by MNCs and a solid digital operations infrastructure.

2. Agile Model

There are fewer business partners in the Agile model. There is an increased focus on organizational development and top management counselling.

The number and the size of CoEs are reduced and their focus is shifted to data and analytics, strategic workforce planning, inclusion and diversity.

The freed-up resources also manage cross-functional projects.

There is end-to-end responsibility that is manifested via flow-t work pools and task-to-team logic.

The Agile model is ideal for companies experiencing discontinuity or rapid growth as it promotes HR acceleration.

3. Employee Experience (EX) Driven Model

This model strives to help CHROs develop a top-class EX journey and gain a competitive edge.

Prioritize EX by allocating appropriate resources for selected activities that matter. For instance, certain departments such as IT or Operations can get complete authority to plan and implement an onboarding process.

Cross-functional silos and fragmented data can be eliminated by creating a world- class EX

This model is ideal for organizations that rely heavily on top talent who have a limited skill set.

4. Leader Driven Model

In this model, the HR accountability including recruiting, onboarding, and development is shifted to the business side.

The line managers are given back-office support and essential HR tools.

Lack of business acumen in HR and slow response times have led to companies giving more autonomy to line managers.

This model is typically adopted by companies that have much white-collar staff and emphasize more on research and development.

5. Machine Powered Model

In this model, machine algorithms are used to select talent, and analyze individual employee needs and causes for attrition.

CHROs can leverage the power of artificial intelligence, deep analytics, and machine learning to automate decisions and processes such as training and assessment.

HR can focus on counselling and advice of employees through high-touch interaction.

HR departments are challenged to reskill their workforce and build analytical expertise.

Innovation shifts driving the new HR operating models

Companies today are transforming at an unexpected rate to keep up with the turbulent and evolving business environment. The global pandemic and evolution of technology have propelled the adoption of several alternative HR working models and techniques to better handle monitoring employee performance and behaviour.

To navigate this upheaval, HR must adopt a high level of agility and responsibility for all functions of HRM. Some major shifts needed to stick to their goals are:

Adopt agile methods to ensure swift allocation of resources, prioritization of current HR capacity, and enable a quick rate of change in the business and with people.

Excel along the Employee Experience journey to maintain employee well-being and resilience and retain talent during peak attrition.

Empower frontline managers in the organization, create human-driven interactions, reduce complexity in processes and return decision-making powers to where they belong.

Offer customized HR services to meet the increasing demand for personalization and diverse expectations.

Productize the HR services to create tailor-made offerings aligned with the business goals and enable 360-degree accountability for those functions of HRM via cross-functional product owner HR teams.

To appropriately address key HR priorities, clarify ownership, and bridge the gap between design and delivery along with end-to-end accountability.

Shift focus from process to data excellence and tap into innovative decision-making techniques by leveraging machine learning and artificial intelligence.

Automate HR solutions by leveraging the capability of digitization in HR and drive efficiency.

The above innovation shifts are forcing organizations to adopt the new HR operating models, and re-think how they manage human resources.

The Final word

Adapting to the new HR approaches involves a 3 step process – First the leadership teams must choose the best HR operating model that suits their organization keeping in mind key business needs. Second, leadership teams must choose any 3 or 4 innovation shifts that can help them adopt the operating model of their choice. Finally, the HR teams must transition into the new operating model working towards achieving core benchmarks. They must mobilize resources for specific shifts while maintaining a systematic and integrated transformation agenda across functions of HRM and the business.

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