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Rapid growth, expansion of business lines, changing talent needs, or adoption of new technologies often outstrip the policies, processes, and procedures originally established in a business. What was once a key advantage of the business becomes outmoded and may even begin to hamper success. This is as true for the work of Human Resources as for other parts of the business.
In China, a difference is that typically the work of HR is the last business function to have its processes—the way it does its essential work—addressed and improved. And even when improvements are made, they may be made slowly, so that in the meantime, the business has again moved on.
If HR is to deliver optimal services and results for the business, then HR must focus attention on how it does the work that accomplishes those services and results. That focus will most certainly involve making the work more efficient. But more important than simple efficiency will be the quality of the outcomes those services produce.
This requires alignment of process outcomes, and their supporting steps and resources (staffing, tools, and technologies), to the strategy of HR and, in turn, to the business strategy. For example, the outcome of a staffing process is not simply hiring staff, but rather hiring staff that prove effective in their jobs as evidenced in subsequent performance reviews.
The success of a business is sustained through the alignment between the intertwined elements of the organization — what can be termed the "organizational DNA" - achieved and maintained through action on results feedback.
As shown in Figure 1, to maintain organizational effectiveness, the interplay among elements that enable business performance must be understood and synchronized. Each step down and to the right represents an increasing level of detail.
Processes reflect the organization of work activities that actually get work done and produce outcomes. For HR, these processes may include such activities as employee relations and communication or workforce planning. Processes, and their supporting technologies, form a bridge from the more conceptual and organizational level of a business to the specific detailed efforts that actually yield results for the business. They provide the standards for how work is expected to be performed and are key to assuring quality and efficiency.
It is important to recognize that processes owned by HR do not necessarily begin or end within HR. There are other stakeholders who need to participate in the design and maintenance of HR processes — from the business side and from such supporting functions as Finance, Information Technology, and Legal.
When HR-owned processes are addressed, they need to be considered from end-to-end, encompassing all the stakeholders who provide inputs to or receive outputs from the process. For example, recruiting begins with the identification of a need within the business for a new role or the filling of a vacancy. Recruiting does not begin as a process within HR.
Processes are examined, defined, and documented in terms of steps, decisions, and outputs at successive levels of detail — such as at the process, sub-process, activity, procedure, and task levels. They are organized into a process group, typically, by the related purpose of their outcomes and by the linkage between their outputs and inputs, as the output from one process becomes the input for the next. For example, outputs flow and become inputs in the process succession from business/HR strategy to workforce planning to talent source planning to recruiting/internal staffing to training to performance management.
A typical organization of processes is shown in Figure 2, although actual process organization will vary according to many factors, including a company's strategic emphasis, HR business model, relative maturity of its processes, extent of process automation, and use of outsourcing services.
HR processes are often classified by their general purpose: strategy, program design, administration, and operations. Certain processes are core to HR's mission, such as recruiting. Other processes are non-core and may or may not be owned by HR. Payroll, for example, is frequently managed by HR, but just as often is a Finance or Administration process. Additional non-core processes may be associated with HR, especially in field locations where the work is managed in whole or in part by HR managers, as in the Figure 2 example.
In thinking about processes, it is critical to distinguish between HR's organizational structure and the processes themselves. Just as stakeholders exist for HR-owned processes outside of HR, different stakeholders exist within the broad HR function, such as HR leadership, HR discipline or practice experts organized by centers of expertise (COE), service center management, and HR divisional partners and field representatives.
A particular COE or the service center may own a process and be responsible for assuring the definition, documentation, management, and improvement of the process — but other HR parties participate in those activities, in terms of inputs, actions, decisions, and outputs.
The process owner has primary responsibility for four activities:
|1. Defining the process – this involves identifying:|
|2. Documenting the process – capturing the process definition through documentation of:|
|3. Managing the process – ensuring that the process is being followed by the stakeholders, as well as:|
|4. Improving the process – assessing opportunities for improvements in the process, such as:|
Process improvement is best achieved through the application of a process maturity model and audit methodology, as shown below. Under such a model, all processes are periodically reviewed against a set of standards. At each review, actions may be defined by the stakeholders for improvements and targets set for the next round of maturity auditing. Figure 3 illustrates such a methodology:
As Chinese companies move from their current state to a future HR business model that is typically based on the three pillars of Field or divisional HR partners, centers of expertise, and HR service centers, this change occurs in successive phases of adoption. While a future-state design for processes based on the target model is developed, interim process states will be in use as the business model's building blocks become operational. The working processes and documentation of those processes may also move step-by-step through interim stages of redefinition to reflect the advantages and improvements as they occur.
As an example, one China-based company with a large global presence relied on a human resource management system (HRMS) for workforce administration for its Chinese employees, but had not extended the HRMS to its global workforce, nor taken advantage of additional HR modules or point solutions for enhanced capabilities, such as compensation administration. Many processes within HR were handled manually or were supported by in-house built applications that were not integrated effectively with the HRMS or even each other.
The results were slow response rates, many manual errors and much reworking, as well as a lack of current organizational and employee data to inform decision-making by the business. To address these problems, the company defined a new business model for HR, including an effective technology infrastructure. It then reset process expectations across HR, developing a set of future-state process designs, which are being adopted in stages as the new business model with its technology applications is put into place.
A method for determining where the greatest attention is needed for process improvement is to compare the relevance of processes to business strategies with the effectiveness of such processes in achieving objectives. The 2010 Aon Hewitt HR Effectiveness Greater China Survey points up the variance in focus between leading companies and more typical businesses, as indicated in Figure 4 below.
The steps taken in future-state process design typically involve:
Following this process, the design may be piloted on a test basis, evaluated, and subsequently refined and re-documented before being widely deployed.
For organizations that have not previously defined their current-state processes, there may be a learning curve among stakeholders before true design and documentation can take place. Understanding process concepts can require the process owner and key stakeholders to:
Failure to define, document, manage, and improve HR processes can exact a steep price for a business. At a minimum, the absence of clarity in how work should be performed by HR will create inconsistencies in the quality of results and ambiguity in the use of authority and the maintenance of controls. At worst, this failure will significantly affect the competitiveness and success of an organization.
If you want HR to deliver results for your dynamic and expanding business — to supply you with qualified talent, gain high performance from the workforce, grow effective leaders, create a compelling employment relationship, and achieve value from acquisitions, then you should devote time and effort to developing clearly defined, integrated, documented, and well-managed processes.
Tom Sundell is a Senior Consultant, Aon Hewitt's Global HR Effectiveness Practice, and can be reached at email@example.com