Case Example Illustrating Aspects of the Model

This Oil and Energy Services company had grown both organically and through acquisition into a global organisation employing 64,000 staffs in 80 countries. To create high levels of customer service it depended on high levels of international team working and knowledge sharing. This reliance on knowledge and technology caused them to describe themselves not only as a leading oilfield services provider but also as information systems specialists, who could support their customers by translating data into useful information, and then transform this information into knowledge for improved decision making around the globe. Given their strategy of creativity, collaboration, and high levels of customer intimacy, the levels of understanding of customers' needs, managing international diversity and knowledge sharing required a great deal of international teamwork.

HR Strategy

The HR function was seen as pivotal to the development of international team-working and knowledge sharing. The HR function had a crucial role in developing culturally sensitive management and in so doing was required to shed its administrative workload to concentrate on culture management and change issues. The HR function was being gradually transformed into a more strategically oriented function, in which HR staff worked more closely with managers in the new operating structure.

To achieve this, the HR function was first divided into the now common shared services and business partner model. Shared services provided administrative and policy support with HR business partners providing direct support to business-facing managers in the field. Second, shared services adopted a global HRIS to allow it to become more efficient and effective in providing globally available data for all service lines and all business groups from the same database. This allowed consistency and integration of performance management and other HR practices and policies throughout the company. Third, Web-based HR was introduced to improve service delivery by opening up the access to the HRIS using manager and employee self-service applications.

HR Service Goals

Thus, the HR service goals were primarily concerned with improving service quality and freeing up time for HR staff to address more strategic issues.

So when we looked at it we realised that in order to do that we had to take off a lot of the administrative load from the HR function in each of the groups and let them focus much more on people and then…work with one another around people issues because that's the cultural driver and let all the support stuff be taken care of somewhere else. 
(UK HR Director)

HR Service Architectures

First, these goals were to be achieved through the development of a common HR portal, through which all online services could be accessed. The intention of this portal was also to help HR to create a greater sense of corporate identity among employees in the extended enterprise using an internal employer branding strategy. Second, the company implemented a global HRIS, comprising a set of basic information systems and the first set of Web-based HR tools. These technologies were a combination of out-of-the-box applications, derived from the global HRIS, combined with bespoke tools, many of which were developed in-house'.

The parent company's internal analyses had shown that

There is a cost saving …but that cost saving does not offset the cost of implementation and investment cost. It might do in the long term but if you're looking at sort of two/three year returns it doesn't work. (UK HR Director)

The real benefit being sought was an improvement in HR service quality, providing more accurate and reliable data and enabling more informed management decisions. The company, however, had a longer term transformational goal of introducing ICT to improve human capital management through the development and introduction of a bespoke global 'career centre'.

Service centres were established to handle transactional enquiries from line managers and employees. The emphasis was on the internal sourcing of HR technologies, unless a compelling case could be made for outsourcing of services. As the HR Director explained:

I think outsourcing overall is quite dangerous because outsourcing is … in many cases it's cost driven and if it's cost driven why should another organisation be able to take some cost out which you can't?

HR Service Outcomes

A mix of intended and unintended outcomes emerged. On the positive side, managers were satisfied overall with the level of transactional support provided by the shared service centre and the quality of data available via employee and manager self-service tools. There were issues, however, with some Web-based HR applications, in particular the 'career centre' which was supposed to enhance opportunities for international mobility but failed to live up to its promise. Managers also reported problems with 'service ambiguity', in the sense that they were not always sure what services to reasonably expect from different parts of HR, citing potential conflicts and overlaps between specialists and business partners.

This example, supported by the framework described earlier, points to a number of important points for practitioners to be aware of when considering different HR service delivery approaches:

• Consider carefully the specific HR services goals that define the purpose of the investment in the project(s)
• Design an architecture which is appropriate for the defined goals
• Implement the solution with a determination to achieve positive, intended outcomes which reflect the defined project goals
• Check carefully that a 'line of sight' has been established between HR strategy, goals, architectures and intended outcomes

Some of these architectural design decisions are now examined in some detail, as these are often a source of anxiety and confusion for HR professionals.

Structural Issues

Where structural lines are drawn between HR delivery channels, the attendant issues will vary from organisation to organisation. The main questions that will need to be addressed are the following:

• What activities need to be centralised to take advantage of economies of scale and consolidation of expertise?
• Where do we need to decentralise to ensure that we remain close to the business and take account of the unique needs of different parts of the organisation?
• Where do we draw the line between those activities that are performed internally and those that are better performed externally?
• Where do we draw lines of responsibility for people management between internal organisational boundaries — both between the HR function and line managers/employees and within the HR function itself?
• How do we leverage technology to deliver HR services?

In answering these questions, there are many contingent factors, such as the ambition or ability of the organisation to implement Web-based HR solutions; current capability of line managers in people management; attitudes to in-sourced and outsourced provision; maturity of the HR function; suitable outsourcing options and so on. This means that your decisions around HR delivery will ultimately be the product of trade-offs and contingencies that reflect the situation your organisation faces.

We are seeing some significant changes in the way the HR function is working, what HR professionals are doing and how they are contributing. The key point to note is that it is not the labelling or even where organisational lines are drawn that is important. What is important about the structural dimension is the alignment of HR delivery with the strategic goals of the organisation and the focus on the internal business clients.

A useful model which illustrates the alignment or 'line of sight' between HR strategy and HR service delivery approaches or architecture is shown in Figure 1. The model draws upon the prominent, relevant literature and our own practical experience and research and shows four central elements — HR strategies, HR service goals, HR service architectures and HR service outcomes. In effect, this creates a 'line of sight' between the adopted HR strategies of an organisation and the HR service outcomes. The moderating elements reflect the changing and dynamic nature of HR service delivery in its varying organisational contexts. Consequently, every organisation can engage with this model at a different point. Some may already have advanced technology-based applications or tools in place, whereas other organisations may be engaging with these more advanced technologies for the first time, as HR seeks to move from a traditional support function to a more strategic partner.

 Figure 1: Framework linking HR strategy with HR service outcomes

These drivers can address HR's transactional or transformational goals. The former focus on reducing the costs of HR services or improving its productivity, and improving service delivery to managers and employees; the latter focus on freeing up time for HR staff to address more strategic issues rather than basic administration, and by transforming the contributions that HR can provide to the organisation (its 'business model'). The transformational goals involve extending HR's reach to more remote parts of the organisation to create a sense of 'corporateness' or internal integration in extended enterprises (e.g., through HR portals); enabling more sophisticated recruitment searches (e.g., through widely available social media to uncover people not actively seeking jobs) and (self) selection through online tools; creating new forms of organisational community and methods of communications through new applications of Web 2.0, for example, interactive employee engagement surveys, virtual communities of practice, 'blogging' and 'wikis.

The extent to which an organisation focuses on any or all of these goals should, in theory, influence the types of HR services architectures it adopts. The architecture refers to the HR data, systems and technologies but also how these are sourced and the choices made over the human resources organisation. For example, some organisations have set up in-house shared services centres and applied Web-based HR solutions to them but simultaneously outsourced major applications such as pay and pensions.

It follows, therefore, that an organisation which places an emphasis on transactional goals, such as cost reduction, would seek to design and build a Web-based HR services architecture which streamlined HR processes and deployed self-service tools for managers and employees to access them.

Similarly, HR services architectures concerned with addressing transformational goals would involve elements such as sophisticated search technologies, career development tools, human capital management systems, social software, e-learning and knowledge management platforms and virtual meetings software.

The sourcing of these systems (in-house vs. outsource) and the implications for the skills and capabilities of the HR function are also important considerations.

As the model shows, the HR services architecture will be moderated by the absorptive capacity of HR to seek out knowledge and exploit these architectures to the full. Absorptive capacity in this context can be defined as the potential for the HR function to seek out and assimilate knowledge about HR technologies and incorporate these into their vision for a changed HR function. It can also be defined in terms of the capacity of the HR function to realise potential by good implementation practices and ongoing support.

One of the major debates in the practitioner world is whether Web-based HR technologies should be adapted to existing or revised HR processes (customisation) or whether HR processes should be adapted to fit usually bought-in technologies (the 'vanilla' solution). Evidence to date suggests that the vanilla solution is winning out because of the difficulties in changing existing Web-based HR technologies at reasonable cost. This realisation phase is also marked by the ability of the HR function to combine face-to-face and technology-mediated HR approaches to produce a new business model for HR previously discussed; that is, HR's ability to transform what it can currently do with available knowledge and technology into a more strategically oriented function that addresses the key strategic drivers of the organisation.

The organisation and resourcing of the HR function refers to the different configurations of organisational structures used by organisations to deliver their human resources strategy, including decisions on centralisation of decisions, outsourcing and specialisation among HR professionals. Different models are currently being adopted, all of which involve choices on the development of shared services, centres of HR expertise, managerial and employee self-service and HR business partnering. These developments are often associated with the research and prescriptions of Ulrich (tripartite model) and others have pointed out, there are many variations on this theme, with large HR departments still being organised along functional lines.

Finally, the adoption of specific HR services architectures should lead to specific HR services outcomes. Note that these outcomes can be both intended or unintended, and also positive or negative. It should also be noted that the positive/negative classifications will sometimes depend on where one stands. For example, the headcount reduction of HR is often used as a justification (positive outcome) by the organisation for adoption of Web-based HR but it also has potentially damaging consequences for organisational knowledge, as well as those HR staff displaced by the reduction (negative outcome).

Again it should be noted that these outcomes will be moderated by the change models and approaches adopted. The change management literature is extensive, analysing how different approaches to change produce better or worse results; controversy still exists over the merits of 'top-down' versus 'bottom-up' change, incrementalist approaches versus 'big-bang' and the pace at which change should be driven, including the competence of HR to manage such change effectively.

One of the most important factors shaping the success of technological change is user acceptance. Thus, important moderating factors that need to be considered are architectural system design decisions and reactions to the Web-based HR technologies.