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Reach New Heights
Vol. 57   No. 6
The best HR business partners connect human resources with business strategies.

By Adrienne Fox  6/1/2012
 

It's a familiar tale of two HR business partners. One is supported by a model that alleviates the administrative tasks that can distract HR business partners from strategy. The other handles a little program design, a little paperwork and a little strategy.

One has the full support of leaders who have made it crystal clear to business unit managers why the HR business partner was embedded in the unit. The other works with managers who were not told what the HR business partner's role is.

One is highly trained in the business and in human resources–and carefully matched with the business unit and its leader. The other is expected to learn on the job and was assigned to the unit with little thought about fit.

It shouldn't be a surprise that the first HR business partner has a better chance of making a positive impact than the second HR business partner.

Many organizations around the globe have adopted–and adapted–the HR business partner model to suit HR and business needs. Even though it has been 15 years since Dave Ulrich first articulated his vision for a new HR model in his book Human Resource Champions (Harvard Business School Press, 1997), assessments of the model's effectiveness are decidedly mixed.

To reach the potential in Ulrich's vision, the next generation of HR business partner models needs effective implementation and highly trained and strategic HR people in those roles.

The Structure: Three Vital Parts

The HR business partner model in medium-sized and large organizations typically has three components:

Shared services. This unit houses central teams of HR professionals tasked with handling routine requests, complaints or questions about functions such as payroll, employee relations and benefits. Shared services are transactional and administrative, and they may reside in-house or be outsourced.

Centers of excellence or expertise. These centers contain specialized and seasoned teams of HR professionals with deep expertise in various HR functions. They build enterprisewide processes and implement initiatives in talent management, learning and development, and compensation and benefits.

HR business partners. If the HR operation has the first two components, generalists and strategists are freed up to become HR business partners assigned to senior business leaders throughout the company and usually embedded in the line organization. The HR professionals partner with business unit leaders to plan and implement HR solutions aligned to the business unit and pull in resources from shared services and the centers of excellence.

In this model, "HR business partners play a role like that of an account manager having a deep knowledge of the client, matched with deep knowledge of where to go to bring services and solutions," explains Jason Geller, a principal and the Global and U.S. Human Resources Transformation Practice leader at Deloitte Consulting in New York City.

In a recent survey of HR executives at 444 organizations across several industries, 54 percent of the respondents reported having an internal HR shared services model. Overall, 59 percent use an internal or external shared services organization, according to the 2011-2012 HR Service Delivery and Technology Research Report from Towers Watson.

Learning how others have implemented a productive HR business partner model can help employers realize Ulrich's vision.

Models: Shaped by Needs

Inspired by Ulrich's book, Kurt Cowles, SPHR, joined Mitre Corp. in 1999 to help implement the HR business partner model at the information technology and science research government contractor. Cowles, an HR business partner manager, has overseen the model ever since.

Each of the McLean, Va.-based nonprofit's five major business units has an embedded HR business partner organization that provides broad HR management expertise and support for business objectives. That includes talent management, leadership development, succession and workforce planning, employee relations, and employee advocacy.

Each HR business partner organization has an HR manager and about 30 HR business partners supporting more than 7,000 full-time employees companywide. Mitre's centers of corporate expertise handle compensation, benefits and quality of work/life issues.

Mitre leaders "wanted HR expertise directly aligned to the major customer segments to upgrade the level of HR support," Cowles recalls. They "wanted to simplify the process for leaders to reach out for HR guidance." The HR business partners report in a solid line directly to HR and in a dotted line to business unit leaders.

The HR business partner model is found in many large organizations but also works for smaller companies. "Business partners aren't always a function of head count," explains Mike DiClaudio, regional practice director in the HR Service Delivery Practice at Towers Watson in London. "They're more a function of business types and geography."

Cowles adds that models vary, depending on business needs. "For instance, because talent management is so critical to our organization, we have built delivery of recruitment into the HR business partner role," he says. "Other organizations leave that delivery to their centers of excellence, and the HR business partner is solely a broker who pulls in resources from other areas. So, it's not a one-size-fits-all model."

Not every business unit needs its own HR business partner, or one at all. Units that have similar needs can be bundled and assigned one business partner.

Competencies: Craft a Strategic Vision

When placing an HR business partner in a business unit, Cowles looks for an HR leader who can craft a vision and stay the course in terms of delivery. "Strong HR competence and relationship-building skills are necessary," he says.

Marla Bradley, principal at management consulting firm Bradley/Lambert in Los Angeles, describes an "insider-outsider role. You understand the business and the players, but you can stand back, hand off [the details] to the specialists, and objectively provide input and solutions that work for everyone."

Deloitte's Geller agrees: HR business partner positions call for "people who have strong project management capability, who are adaptable to new projects and who can draw the most out of the centers of expertise."

The Quality of Relationships Drives Business Results

Years of research on HR business partners' effectiveness sheds light on what it will take to realize the potential of the model.

Some research, such as HR at the Executive Table: Linking People Strategy to Business Outcomes by Capgemini Consulting, reveals positive assessments. In the 2011 global survey of 307 HR executives working in companies of varying sizes with an HR business partner model, 80 percent agreed that the model helps HR act as a partner to the business.

The report says HR business partners add value to the business by "aligning HR strategies with business objectives, owning and being held accountable for local HR results, and partnering with business units to understand and support needs and requirements."

The Corporate Executive Board's Corporate Leadership Council found that two-thirds of the impact HR has on an organization is a direct result of the quality of HR professionals' relationships with business leaders and not the specific duties they perform. For its 2008 Building Next-Generation HR-Line Partnerships report, the council surveyed more than 17,000 line managers and 3,700 HR professionals.

The council found that when business units receive effective support from HR professionals, employee performance increases by 21 percent and employee retention improves by 26 percent. Revenue and profit increase by 7 percent and 9 percent, respectively.

Here's the bad news: The majority of the relationships between HR business partners and business leaders are ineffective. Only

34 percent of the line managers surveyed by the council said their HR business partners were effective. Worse, chief human resource officers rated their HR business partners' strategic performance poorly. Only 15 percent said it was effective, 10 percent said it was ineffective, and 75 percent reported it was neutral.

Similarly, in Capgemini's survey, 48 percent of the HR executives said their business partners aren't sufficiently using "verifiable, quantified data to show contribution to the bottom line."

In 2008, when researchers at the Corporate Executive Board's Corporate Leadership Council asked 17,000 line managers to name the HR business partner activities that have the most impact on the business, slightly more than one-third cited each of the following:

  • Developing next-generation leaders.
  • Understanding the talent needs of the business.
  • Understanding how to support the business.
  • Identifying talent issues before they impact the business.

The Fit: Personalities Must Mesh

To give the HR business partner model the best chance to work, DiClaudio says, top executives and business unit leaders need to show support. "If the top executives make it clear that they are behind the new HR structure, you're halfway there in getting support from the business unit leaders," he says. Getting that support "depends on the HR person's financial acumen–understanding how the business makes money and how to drive results through people strategy–as well as good, old-fashioned chemistry between the HR business partner and the unit leader."

Fit is often overlooked, DiClaudio notes. "Personality, communication style, business approach and vision have to mesh," he explains. "If you get that wrong, it will make it ten times harder for the next HR business partner to come in and prove himself or herself."

Too good a fit can also be a problem in the long term. Business units can get bogged down by keeping an HR business partner in the same role too long. "You want both the HR business partner and the leader to be challenged and provoked and for fresh ideas to be introduced," DiClaudio says.

‘You want both the HR business partner and the leader to be challenged and provoked and for fresh ideas to be introduced.’

Cowles admits that Mitre has several long-standing relationships. The "managers like their business partners, and the business partners like the line organizations where they work. So we haven't been able to move people around as much as we would like."

Reporting Lines: Clear Duties Are Crucial

Whether the HR business partner reports with a solid line to HR and a dotted line to the business unit leader or vice versa doesn't have much of an impact on the relationships, DiClaudio says, pointing to unpublished survey data. Rather, clearly defining and communicating the responsibilities of the HR business partner has the biggest effect on whether the model works.

"Clarity will eat organizational reporting lines for breakfast," he sums up.

Five Key Attributes Are Evident When Business Partners Shine

Experts and HR business partners in interviews and research have identified the following key attributes for a business partner:

Analytical ability. Business unit leaders can provide usage data, such as how many people are using sick leave, vacation time, educational assistance or other benefits. An HR business partner will tell you why people aren't using the benefit and what can be done to increase its use, according to Marla Bradley, principal at Bradley/Lambert.

Or, the HR business partner will analyze, for instance, whether it makes sense to buy a small competitor with the talent the organization needs or to build the talent within the organization through training.

Courage. HR business partners make tough calls. "It's not enough to come up with ideas. You have to make a recommendation and back it up with the kind of data the organization values," says Mike DiClaudio, a Towers Watson regional practice director.

Willingness to delegate. The HR business partner must identify the business unit's needs and pull in the HR people who can respond. "A good HR business partner can step away from the administration of the solution," DiClaudio says. "It is not a good sign when the HR business partner says, 'I was a training director five years ago, so I can do this myself.' That shifts the focus away from the strategy—not just your focus but the focus of the business leader as well, who will stop seeing you as a strategist" and start seeing you as more of an administrator.

Ability to see the big picture. HR business partners are silo busters. "The [corporate] HR person may see things from his point of view—for instance, that there's a problem with the performance management system. The [business unit] leader may see things from his point of view—for instance, that the compensation plan isn't high enough," Bradley explains. "The business partner sees all sides and can cut through the bias and determine what the real issue is."

Power and influence. Effective HR business partners have the ability to tell a compelling story and provide robust data to make changes that get results, according to Bradley.

Rayana L. Mariland is a perfect example of the Towers Watson findings. Mariland joined 15,000-employee Spirit AeroSystems Inc. in Tulsa, Okla., in June 2010 as the facility's first HR business resource specialist. In that role, she supports 230 engineers who design and build aerospace products. She reports to the vice president of HR and has no reporting relationship to the chief engineer. But it was a lack of clarity, she says, not the reporting structure, that proved to be the biggest obstacle.

Corporate leaders hadn't communicated clearly with managers about Mariland's role. "At first, there was a lot of backlash because they didn't understand why I was there," she recalls. "Some people thought it was a trap and that corporate had sent me to sit in on meetings to report back problems."

Being received positively by the business unit leader is often a challenge for an HR business partner, especially if the manager is new to the idea of an HR business partner, DiClaudio says. "You're going from 'Hi, I'm here to manage a transaction' to 'Hi, I'm here to challenge you on your business strategy and tell you about implications of your strategic decisions.' Those are two very different relationships, and unit leaders are much more familiar with and comfortable with the first type of HR person," he notes.

Mariland had experience as an HR business partner and had worked with C-suite executives, so she knew how to win managers over. "I told them that while I can't design a part or do a stress analysis test, I can show them how to motivate their staff, how to develop employees and how to communicate with them," Mariland says.

"You can't tell people what to do; you have to work shoulder to shoulder with them in solving problems," she adds. "It's a two-way partnership. As an HR business partner, you are showing them the business impact of the people-related decisions the leaders are making. You are using the data from their reports to support your reasoning."

Heidi P. Barry, SPHR, senior HR business partner at Cambridge, Mass.-based CDM Smith in Fairfax, Va., says reporting to the HR leader makes her more effective at the consulting, engineering, construction and operations company owned by its nearly 6,000 employees.

"This structure allows for more team building and support from the HR side," Barry says. "I have more opportunity to learn from the [business partners] in other groups by hearing what's working for them. And I can use them as sounding boards to see if they are experiencing similar issues. At other firms where I reported into the business unit, the leader didn't understand everything I did in HR from a performance review standpoint and also wasn't as tuned into my career development needs or goals."

Barry is among three HR business partners supporting two business groups with 800 employees. She oversees strategies affecting employee relations, engagement, succession and workforce planning, and performance management. The other business partners supervise other strategic duties, including employee training and organizational development.

HR Business Partner: 'A Trusted Advisor'

HR business partners can come from within the HR department, from the business or, in the case of Susana Suarez, from both. In January, Suarez, group HR executive, assumed the HR business partner role at Fluor Inc.'s industrial and infrastructure business group, made up of roughly 7,000 employees in Greenville, S.C. Her promotion came after 21 years in the global engineering and construction company's sales, marketing, project engineering and HR functions.

‘I love this role because it allows HR to be so connected to the business and to see how everything fits together up close.’

"I have been where all my clients are now, so I understand their needs. And with my HR knowledge, I can connect the needs to the resources," Suarez explains. "The business partner works from the inside, identifying the needs and acting as a bridge between the business group and the subject matter experts [the centers of excellence] in corporate."

Suarez has dual reporting lines to the group president and the HR leader, and her performance gets reviewed by both. "I am measured based on my internal clients' satisfaction, and the speed with which I deliver solutions and the quality of those solutions," Suarez says. "I have the formal reviews, but I also have the informal, constant feedback I get with my internal clients," she adds, laughing. "They will let you know immediately if something isn't working."

She measures effectiveness by whether business leaders come to HR business partners before acting. "When the business leader listens to you and takes your advice, and you have created a legacy of talent in the organization, you are successful," she says.

Suarez adds, "When an employee is being considered for a potential assignment, management and HR work hand-in-hand matching their skills and capabilities to the position's requirements. And we do much more. We analyze and discuss how the assignment will help the candidate get the exposure he or she may need to grow to the next level."

Two years ago, HR Manager Mollee Lamb, SPHR, became an HR business partner at Salt Lake City-based Intermountain Medical Group, supporting 1,200 employees and physicians in clinics across Utah. The medical group–a division of Intermountain Healthcare, with 32,000 employees–has had the HR business partner model in place for many years, so Lamb's challenge was to prove her credibility.

She immersed herself in the business, becoming fully educated on industry data and market trends that unit leaders rely on. It's not until you have a handle on such information that you can start to point out deficiencies and present solutions, she stresses.

When the model works well, it breeds a spirit of collaboration and agility throughout the organization. At Mitre, Cowles says the ease of access to quality HR expertise improved, as did the quality of HR support. "Cross-pollination occurs when the HR business partner becomes immersed in the business and the business leaders have direct interaction with HR's capabilities, and that's beneficial to the entire organization," he notes.

"I love this role because it allows HR to be so connected to the business and to see how everything fits together up close," Suarez says.

Adds Barry: "I measure my success by whether or not I'm considered a trusted advisor – not just on HR issues, but in all aspects of the business. That's how we can truly elevate the role of HR."

The author, a contributing editor and former managing editor of HR Magazine, is based in Alexandria, Va.

Discuss your experiences as an HR business partner and your thoughts about the model.

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