HR as a Business – Huh

Have you ever finished reading an article that just spoke to you?  You were reading all the thoughts that had been jumbled around in your head, but someone organized and articulated them?

I just finished “A critical review of the three-box model for HR organization design” by Mark LaScola and Simon Davies, in the First Quarter 2011 WorldatWork Journal.  In it, the authors assert that the very popular organization design for HR of 1.)strategic business partners, 2.)centers of excellence and 3.)shared services model is seriously flawed.  Their rationale is that the model gives little pieces of whole work to several different parts of the HR team, which causes fragmentation and artificial boundaries.  While they don’t use the word “silos”, it screams at me.

While I have groused about HR silos for many years, I don’t think I ever thought about the organization design as being a factor.  I always attributed it to lack of communication and cross-function awareness.  But they raise a really good point, reflecting on organization design as described by Treacy & Wiersema in “The Discipline of Market Leaders” (1995) – a huge influence on business in the 1990s, and one that I often see misquoted or misunderstood, using the term “operational excellence” without really understanding the premise.

Treacy  and Wiersema postulate that there are basically three organizational designs, and a successful organization needs to be very clear on which design they adopt because it guides all of their decision-making.  The basic premise is that a successful organization cannot be all things to all people and do anything well.

Back when I first studied their concept, we talked about great visual examples of the three designs that made great sense and stuck with me.

  • “Operational Excellence” is defined as “best total cost”.  The way to do that is standardized and consistent processes.  Sort of “when you eat at McDonalds, you get a burger with ketchup, mustard and pickles”.  If you want something different, you have to wait.   (Well, that was in the 1990s – today they’re a little more flexible)
  • “Customer Intimacy” is defined as “best total solution”.  You provide custom solutions as defined by the customer.  Think “have it your way” at Burger King.
  • “Product Leadership” is defined as “product differentiation”.  The focus is on always staying ahead of customer needs and wants – Think Apple designing products that no one even knew they wanted.

When you think about these three models, it is easy to see how organization design, skills and competencies and decision-making are different based on the approach, right?

When you are clear on your model, decisions become easier.  You can educate the workforce on the values and parameters and let them loose.

Back to HR….LaScola and Davies suggest that HR has put themselves in the position of trying to be everything to everyone – customer-driven, timely and efficient, and highly innovative.  They suggest that HR teams have a dialogue about who they are and define their value proposition, using input from the end-user, and design their work to fit the needs of the end-user, and keeping whole processes together to ensure that someone is looking at and responsible for the whole.

That makes a lot of sense to me….how about to you?

LaScola, M. & Davies, S. (2011). A critical review of the three-box model for HR design.  WorldatWork Journal.  Vol 20:1.

Treacy, M. & Wiersema, F. (1995). The Discipline of Market Leaders”.  Addison-Wesley: Reading MA.

5 thoughts on “HR as a Business – Huh

  1. Carol, thanks for referring to Simon and my article. Just a quick clarification… Treacy and Wiesrma refer to the three choices as strategy choices — each with its own competitive advantage. The rule here being you have to choose one as king or queen… Consequently, the choice then creates very real organization design and concept of operations implications… If you look critically at Ulrich’s three-box model, each “box” has ONE of the three choices as its focus then organizes them within Functional and sub-functional structures without acknowledging the significant work interdepence across the three boxes. Ulrich gives us a great example of how not to do it — particularly to the unsuspecting HR Leader. Unfortunately, this exposes how little Ulrich and HR really know about “designing” a business or a function.

  2. When I first started reading the article, I went there – oh wow – each of these three disciplines of HR maps to one of T&W’s three models. But where I was going in the post was (I hoped) to echo what you said – they are three disparate models requiring very different skills and business decisions. As I read your article, it struck me that what you were describing was actually creating the silos I have spent many years being frustrated about.

    I have heard too many HR professionals use the phrase “find a way to say yes” and it felt like chalk on a blackboard to me but was told it was “anti-motherhood and apple pie” to say no to customers. But you can’t be all things to all people, and that is when HR has to make a decision to be a business within a business and figure out what they do, and what they don’t do.

    The HR Business Partner/Center of Excellence/Shared Services model has set up HR to be internally competitive because there is no real owner of any business process – I do believe that strong leadership at the top can be effective with that org design, but I have not encountered a lot of strong leaders.

    So, I am right there with you – your article helped me see a root cause of the dysfunctions within my profession that I would not otherwise have seen. I need to think more on that….

  3. Hi Carol ~ Thanks for a really thought-provoking post. In my experience, the ‘end user’ has an image of HR’s role in their business but often fails to communicate it effectively or to see beyond its traditional placement as a “back office” entity. To me that means HR must not only get clear about its primary purpose, it also must convince the larger organization that this primary purpose is important and will serve it well. That is an effort requiring collaboration that goes beyond giving input toward establishing HR’s “fit” in the organization and the resultant expectations that come from it.

  4. Hi Gwyn – nice to see you here. Your point is a good one. One observation that I have made for several years is that other areas of the business are stepping up to fill the void that could/should have been HR’s to fill. I’m talking about disciplines like process improvement, Lean, Six Sigma, project management, strategy….all are disciplines built around change leadership and behavioral change. I have found myself in competition with these groups internally, because while I have the experience and background required, the stigma is that HR does not.

    If HR is the “people” group, then in my mind that means everything people including true performance and productivity, not just programs that the end user doesn’t see as value-add.

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