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HR Transformation 2.0
Vital Stats: Navid Nazemian is the global HR business partner for Roche, based in Basel, Switzerland. He has been with Roche since 2012 and has 18 years of experience at operational and strategic levels. As a global leader, his client groups are scattered across 160 countries. He is also known for co-writing a number of books and articles with professor Dave Ulrich. Before working in HR, Nazemian worked in sales and commercial roles for about six years, helping him to truly understand HR “from the outside in”.
We’re talking about HR transformation, and it’s fair to say HR as a whole has already done its fair share of transforming as a function. What do you think have been the biggest transformations?
If I’m really honest, it’s really hard to find a lot of evidence and examples of successful HR transformations. There is data talking about business transformation that shows one out of four business transformations are successful in the sense that it was able to produce a greater return on investment. One study found that about 22% of HR transformations have been successful.
It is hard to find many examples of successful HR transformation, partly because findings are often kept confidential. But I think in the past the typical HR transformation efforts were in essence trying to take cost out of the HR function by looking at the processes that can be either transformed internally or outsourced externally, and partly also looking at enhanced capabilities.
What does HR transformation mean to you?
There are so many definitions out there, but one of the best is from [Dave] Ulrich, which is that HR transformation is an integrated, aligned, innovative and business-focused approach to redefine how HR work is done within an organisation, with the ultimate aim that the business keeps its promises to the customers. I think this really captures the essence of HR transformation best.
Do you think HR leaders really understand what it means or are they still figuring it out precisely what it means to them?
A lot of organisations have a lot of history and a lot of legacy and culture attached to them, so when you transform HR you have to take that context into account. There are some organisations out there that have been successful with HR transformation, and others that have tried to do things without actually knowing where they want to get to, or what successful HR transformation really looks like for them, so you will find a whole spectrum of different understandings. For some, HR transformation isn’t even on their radar because they don’t see the real necessity for it.
Why wouldn’t they see the necessity for it?
It goes back to many different things. I have worked for a number of different multinational companies across many industries, and depending on how successful the business is, you may or may not have a burning platform to transform or feel the pressure to transform. And yet I’d argue that just because the business is successful, it doesn’t mean HR is as successful as it could be.
So the question here is, how much more successful could your business be if HR was fully aligned and set up for success?
You’ve spoken at events and written papers on something you call Transformation 2.0. Can you tell us a bit about what that means?
I often refer to Transformation 1.0 as a “failure” in my presentations, and so when I talk about Transformation 2.0, I title that “reloaded”; taking something that may or may not have worked, redoing it, and putting it out there and making it better. I could spend hours talking about this topic, but I think the best way to explain it, versus a more traditional transformation approach, is through five characteristics that truly stand out.
What are the five characteristics of HR Transformation 2.0?
HR Transformation 2.0 uses a proven framework, so it really works alongside a plan, and I think that’s the first thing. With that, you also need to look at typical failures in the past. I think a successful HR transformation looks at what the typical de-railers are and what the success enablers are, too.
Secondly, instead of purely looking at the administrative piece and how to downsize/outsource it, HR Transformation 2.0. looks at what HR solutions and products we want to offer, then looks at what HR capabilities are required to deliver those, and only then looks at the right HR infrastructure required to deliver those.
Is this why HR Transformation 1.0 was a failure, because the focus is off to begin with?
Yes, it often started looking at things like which vendor is the best to use for outsource, which geography to set up shared service centres and which technology to use and things like that, which typically don’t work because you sort of start at the wrong end. These are the questions you probably need to answer towards the end of your transformation planning journey.
OK, so what are the rest of the 2.0 characteristics?
The third characteristic is that HR Transformation 2.0 focuses on improved relationships within the HR function. Typically, HR functions are made up of HR business partners, centres of excellence and shared services centre operations. A vast majority of Fortune 500 companies have some sort of this HR model set up within their organisation.
Now, frankly speaking, a line manager couldn’t care less why something isn’t working within HR, or which of the individual parts of the HR function failed to deliver a message or got it wrong. Line managers consider HR as one. Hence, the HR function can only be successful if the relationships within the function are fully optimised too.
Characteristic number four is the suggestion that HR Transformation 2.0 uses business-oriented metrics. If, for example, one of the strategic business objectives is to grow the business, you can take that “grow the business” and translate it into HR metrics. For example, if we want to help the business grow, then we can look at things such as improving the quality of hires because the talent is going to grow the business.
And if you want to have a growth mindset you can look at how you can increase the workforce productivity by emphasising this in the people processes. We can also look at how we can maximise the return on our workforce by raising the engagement levels, because it’s evident that a more engaged workforce is more productive, and by being more productive you can help the business grow. This is only one example of how HR can contribute and speak the language of the business.
The fifth characteristic of any HR Transformation 2.0 is the fact it’s guided by the generational needs. So, if you take the current set up of the workforce, which is often a mixture of traditionalists, baby boomers, Gen X and Gen Y, and you take one HR process, such as performance management (or feedback), it’s clear this varies quite substantially across the different generations.
For a traditionalist or a baby boomer, feedback once a year might suffice, but Gen Y wants constant feedback, sometimes a few times per day. And yet we often find “one size fits all” solutions to performance management in many organisations.
HR Transformation 2.0 is specific in that it looks at what is needed for each generation and adjusts HR processes according to those needs. It is crucial to look at what composition you have in your respective workforce.
So, if an HR leader is going to start thinking about undertaking an HR transformation, when is the right time to do this? Is this something HR should always have on its agenda?
I don’t want to contradict myself, but I believe there is no right or wrong time to consider an HR transformation. If HR is truly appreciated and truly committed as a well-accepted business partner and has a lot of commercial knowledge and knows what the organisation needs, then there might not be any desire to transform HR; so it really has to be looked at as to whether there is a real need to transform your HR function or not.
How do you conduct that sort of analysis?
It can be quite a simple analysis with your business leaders and HR leaders, which is often useful because then you’ll easily know whether you are where you think you are. If you’re in a good place, then there’s probably no need for transforming HR. But if you have strong feedback suggesting the way you are organised is not optimal, then it is the right time for you to start thinking about transforming the way you serve the business and look at your capabilities and set-up.
What do you think HR should ask itself or be sure of before beginning an HR transformation journey?
You know, HR transformation can be one of the trickiest and most complex and difficult journeys. And sometimes with difficult journeys you have to have a framework with key pillars against which you can benchmark. This will ensure you are able to judge whether you are on the right track. There are many tools and frameworks out there, but one of my favourites is a simple four step approach that Dave Ulrich has identified.
1. Business context: Why do we need to transform HR? 2. Outcomes: What should change? 3. HR redesign: How are we going to change? 4. HR accountability: Who will be part of the HR transformation journey? Looking at this, the first step should be a solid business case. If you have a business case that justifies transforming HR, then it’s the right time to crack on.
Let’s talk about HR transformation in Asia. I imagine that depending on your local economy, industry or workforce demographics, that a transformation journey can differ in the time and speed at which it takes to transform. What are your views of this in Asia?
Generally speaking, I have found that a more developing HR environment in parts of Asia or Latin America are actually much more open to change than some of the more established markets. My experience shows that in developing regions people are used to change much more because they see it as a constant. When you look at a country like Singapore or Brazil and you look back 30 years at their growth rate, it is phenomenal what sort of transformation they have gone through. That kind of mindset translates into being able to transform at a faster pace, perhaps than more traditional, more mature markets.
What do you think are some of the bigger HR challenges in Asia?
I think one of the big challenges is how to keep up with the business growth. If that’s the environment you are in, how can you as an HR practitioner and an organisation keep up with that growth rate and environment, while at the same time ensuring you don’t burn out and allow your organisation to “breathe”. All this, while at the same time, keeping the topics that matter most to you, such as attracting, developing and retaining top talent, high up on the agenda.
How does big data and analytics fit into this? Is translating data something you really need to have a handle on as an HR function before embarking on a transformation journey?
An Accenture study noted that what they titled as “integrated HR information systems” is one of the key cornerstones to a successful HR transformation. The ability of customers to access the same data and have a shared view of HR interactions is vital. Another HR transformation study, conducted by the Shared Services and Business Process Outsourcing Association (SBPOA) in association with EDS, found that only 31% of respondents said that a “solid technology platform” was very important. That’s not really a big number, if you ask me.
Though there is a lot of buzz around these topics, big data and analytics have been around for a long time. While analysing massive amounts of data was not accessible previously to all, I think the difference now is that big data is much more accessible to regular users and applicable to the business at the same time. So, my view as to why this is gaining a lot of traction is because the more people understand the real value from data – for example, I recently read about Walmart analysing real-time social media data and then using that information to guide online advertising – then there’s a good reason to make smart use of big data.
You mentioned HR Transformation 1.0 is what you consider to be a “failure”. What are the biggest reasons that HR transformations fail?
The key reasons why HR transformation efforts fail have been analysed, and one of the main findings is “action before rationale”. This is when something hasn’t really been thought through and mapped out for what the business actually needs. The second de-railer is what we call “HR in isolation”, where there is a need for the HR function to strategise about the way forward and the rest of the organisation hasn’t really brought into that way of transforming the function.
The third reason or de-railer is “HR in increments”. It’s such a difficult journey that some organisations start with their ambitious transformation efforts, but end up doing small incremental efforts because of the resistance they face.
De-railer number four is called “HR by individual fiat”, which is more or less transforming based on an individual leader’s desire or influence, which may not necessarily be transformational. Or when the CHRO is the only one who wants to go about this transformation, and nobody else in the organisation is really convinced that it’s the right thing to do.
De-railer number five is about “placing HR strategy before business strategy”. If you think of an example of a very successful growing business, the HR structure needs to be adaptable and scalable. If the business structure is all about growth, then you need to make sure your HR organisation can deliver towards that business need.
And lastly, it’s “efficiency equals transformation”.
I think there’s no point in looking at how the HR function can be more efficient until you realise that efficiency by itself does not necessarily facilitate transformation.
What are the some of the enablers then? The tools or actions which support HR’s need to transform?
Here I have to go back to some research that Prof. Dave Ulrich and I conducted, where we looked at a whole host of different types of research to come up with the overarching key enablers of HR transformation. We looked at many available HR transformation studies publicised and distilled three key enablers that are crucial.
Firstly, it’s about senior management leadership and sponsorship. When saying senior management, we mean not just the HR leadership, but the entire business leadership.
Secondly, we found that internal capability and core skill sets are crucial. It’s the difference between being able to map out how your HR transformation is going to look like and having the capability that is needed in order to deliver.
Thirdly, it’s about appropriate funding and strong project leadership. There’s no point in trying to set yourself up for success in an area such as talent management if you don’t have sufficient funds. And if you can’t track your progress according to what you’ve set up to achieve then you’re likely to fail, too.
How long does a typical HR transformation take?
It really depends on the magnitude of the transformation effort. It goes back to the framework I mentioned. It’s fair to say a holistic transformation cannot be done within a few months. Realistically, it will take anywhere from six to 24 months or even longer, but it really depends on how much needs to change and what are the cornerstones and resistances along the way.
In that case, how regularly should you be reviewing the effectiveness of the framework and transformation plan you have in place?
Progress should be measured by the intended outcome, and it’s crucial to make sure that such business cases are presented by an implementation taskforce as well. This should include the full senior management working with a very clear idea and articulation of what the HR transformation success is going to look like. And it needs to be communicated widely because people need to understand what is changing and why it is that we need to change what we are doing.
At the same time it would be wrong to be too rigid about it. Set out your mindset and if your business realities start to shift, then it is fair to look at shifting the HR transformation journey alongside it. Look at tweaking it as and when needed. You cannot ignore the reality of needing to adapt if that is a necessity.
One of the biggest gripes we hear from HR leaders is the struggle to be a strategic part of the wider business or have an opportunity to prove themselves as a business partner. Why do you think HR is still being asked to prove its worth?
If I go back to when I used to work in commercial roles for about six years, I cannot recall a single time when this was even a topic. I mean, questioning our own being as sales leaders or critically reflecting every day as to whether we are actually delivering value to the business or whether we really deserve or have a seat at the strategy table or not. We would have probably considered any time spent on these as a missed opportunity to increase the sales and serve the customers.
To be brutally honest, I am personally sick and tired of hearing about this topic.
My humble opinion is that once we start adding value to our organisations that is recognised, we will stop questioning our own value and whether or not we deserve a seat at the table.
That’s an excellent point. HR needs to acknowledge its own value.
By the way, when I talk about value, I think it’s really important to highlight what that value is, in the end, what is conceived by the customer and not what we, in HR, think value is about. It’s really crucial to keep that in mind because in the end we might have different opinions on what value we provide versus what value is perceived by our customers and business partners.
What advice would you have for HR professionals wanting to head down a transformation path?
Find and establish a framework and make sure to follow the steps as highlighted above. And truly gather your HR people behind this, once the business has bought into the change journey. And while you’re on the journey, don’t forget to have a lot of dialogue with other organisations and leaders who have been there and done that well. You really shouldn’t be repeating other HR organisations’ and other HR functions’ mistakes.
And finally, have a lot of passion and energy for it, while having a lot of fun too. Arguably, this is going to be a difficult and tricky change journey, but it can also be a worthwhile and exciting one.
I think the ultimate measure of success is when the CHRO and the HR leadership team look back at the journey and say, “That was really, really difficult, but it was the right thing to do and well worth the effort”.
Contributions expressed in this interview are solely subjects opinion and do not necessarily reflect the opinion of the F. Hoffmann-La Roche Ltd. group