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Agile: how HR is changing shape

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Anyone who joined the HR profession since the 1990s might be forgiven for believing that the Ulrich model is the gold standard against which all HR operations should be measured (Ulrich & Brockbank, 2005).

In practice however, many HR functions have been experimenting with alternative HR operating models, notably involving the application of agile principles to HR operations, widely referred to as ‘agile HR’ (see Biron et al, 2020).


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Agile HR: what does it even mean?

Being agile vs. doing agile

Why we need a new model for HR: part 3


We clarify what is meant by agile HR by distilling a working definition of this term, drawing on diverse research on the topic (see McMackin, and Heffernan, 2021).

Greater clarity about what it means will help practitioners assess where agile HR may fit within their own HR operating models.

Looking beyond the Ulrich model, we view the development of agile HR through the lens of the evolution of HR operating models since the origins of the HR profession.

Our analysis suggests that HR operating models have repeatedly evolved in response to changes in business strategy and HR strategies.

We propose that agile HR represents a logical evolution in HR operating model design that is not only strategic in origin but sustainable in the context of the increasing pace of change in the external environment.

 

Key findings

A key finding from our research is the development of a definition of agile HR.

This is important because our review of research in academic and practitioner publications surfaced a high level of confusion between two related but distinct topics.

The first, which we label HR for Agile refers to the design and implementation of HR systems to support agile implementation in the organisation – this topic has been the subject of a significant body of research by academics.

The second, which we term agile HR refers to agile as a HR operational strategy, in which agile principles are applied to the operations of the HR function; notably, this topic has not been explored by academic researchers to date.

Our proposed definition of agile HR states:

“As an operational strategy, agile HR seeks to minimise waste and optimise the flow of value to its customers by organising the HR function in multidisciplinary, empowered teams, that continuously align with changing business needs by sensing and adapting through open communication while operating in short cycles.

“Agile principles are reflected in all aspects of the HR operation including structures, roles, processes, and tools as well as skills and behaviours of HR management and HR employees (McMackin and Heffernan, 2021, p. 4).”

Our study suggests that if we take a long-term perspective, beginning with the early origins of the HR profession, we see that HR operational strategies have evolved in four waves:

  • Wave 1: From the 1950s to 1970s
  • Wave 2: From 1970s to 1990s
  • Wave 3: From 1990s to 2010
  • Wave 4: from 2010 to present day

Each of these waves shows a strong interconnection between business strategy, HR strategy and finally HR operating models.

In the first wave HR operated as a set of largely independent specialisms such as recruitment and industrial relations with bureaucratic efficiency as the key metric of HR (then called personnel management).

The second wave (1970s to 1990s) saw an evolution in HR operational strategy, bringing a broader focus on collaborative employee relations, strategic credibility and economic efficiency for HR operations, with the latter leading to the widespread adoption of outsourcing and shared services.

During the period from the 1990s to around 2010, HR operations became more of a ‘business within a business’, with the Ulrich model achieving global recognition as the optimal operational HR strategy to support organisations in attracting, retaining and motivating talent to support organisational strategy.

We suggest that the more recent adoption of agile practices in HR operations represents a fourth wave in the evolution of HR operating models.

“Agile HR seeks to minimise waste and optimise the flow of value to its customers”

Our analysis shows how previous waves have been driven by developments in both business strategy and HR strategy with subsequent impacts on HR operating models.

For example, the shift from the early bureaucratic models to a greater focus on strategic credibility in HR was preceded by the global focus on developing competitive advantage triggered by the introduction of Michael Porter’s ‘Five Forces’ and ‘Value Chain’ analyses.

Similarly, the widespread adoption of the Ulrich model was preceded by a shift to more internally directed strategic analysis as advocated in models of core competence and resource-based HR.

We argue that developments in organisational and HR strategies are also driving the current move towards more agile HR operations.

With many industries and sectors experiencing continuous disruption, the transient nature of competitive advantage has given rise to more agile strategy models designed to support continuous adaptation (McGrath, 2013), with innovation as a core organisational capability.

We conclude that the trend towards adoption of agile HR models is an adaptive response to long-term external developments, and that this trend is likely to gain further momentum as levels of volatility in the external environment increase.

 

From research to reality

This research has several implications for HR practitioners.

First we believe there needs to be a mindset shift in recognising that agile HR is not a fad or fashion but can be perceived as the logical next wave of evolution of HR operating model.

This implies that the time is ripe for a re-examination of current HR operating models, many of which are based on the Ulrich model – a need which has been highlighted by Dave Ulrich himself among others.

In many cases, current traditional HR operating models reflect and reinforce existing corporate structures, for example through the key role of HR business partners at division levels.

Yet agility requires mobility and rapid redeployment of talent across organisational boundaries, creating potential tensions between corporate effectiveness and divisional autonomy.

In the future, HR operating models will need to be more flexible and agile to strike a balance between these needs and tensions.

Second, a move towards agile HR has important skills implications for HR professionals.

Most HR leaders have recognised the growing reliance on technology and data management to add strategic value through HR, and the related need for greater data analytics, technology and AI skills among HR professionals.

However, realising the value-adding potential of these technical skills in HR may require a focus on agile skills for HR professionals – matching the levels of such skills that already exist in many manufacturing and service environments.

“We believe there needs to be a mindset shift in recognising that agile HR is not a fad”

Finally, HR practitioners will need to consider how to make the transition from current HR models to more agile HR.

Anecdotal evidence suggests that many HR operations are experimenting with agile practices – for example, by applying agile to recruitment practices in areas of the business (such as tech) which are experiencing severe talent shortages (see Agile HR Community, 2020).

This seems to have positive potential as part of a change management strategy.

It provides opportunities for skills development and proof of concept of new practices, as well as signalling a culture shift which can lay the groundwork for changes in structure that will need to follow if the transition to agile HR is to be sustained.

 

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