The Platform organization for the HR function
The lower the cost of change within an organization, the greater its ability to navigate volatility in the market
In a nutshell,
the functional model provides the business with competence and efficiency but the need of the customer is diluted within a functional agenda;
the matrix model introduces the HR business partner, which brings customer advocacy and manages the go-to-market, but global, one-size-fits-all solutions are increasingly struggling meeting the needs of a business dealing with volatile markets;
the platform model inverts the roles. The purpose of corporate functions becomes to seed and facilitate the creation of local projects to meet local customer needs, to support them with functional competency platforms, and to scale up the most successful. Project teams act as micro-ventures who survive and thrive only if they meet internal demand, competing as well with external solutions.
In conclusion,
this model can be used with some HR capabilities where you favour innovation and customisation while maintaining central control on others where you need efficiency and consistency.
Minimizing the cost of change
Consider the three main support functions in a company, Finance, IT and HR. All of them have a double responsibility, to innovate their contribution and increase the effectiveness of the organization and to curate their services so to ensure efficiency and stability.
However, while Finance is externally constrained by accounting standards and local regulations, and IT by technological innovation and cost of infrastructure, the potential of HR to contribute to the efficiency and effectiveness of the business is mainly constrained internally, by the cost of change.
Therefore, to maximise HR’s contribution to the business the HR leader needs to minimise the cost of change for the organization, by
Referring also to Dave Ulrich ’s work on Business partnership, Innovation and leadership from Outside-In and the role of technology to enable the HR function, in this article I try to describe how the Platform organization, a model derived from the software industry, can help HR minimise the cost of change for the company in the inside, hence maximising its ability to navigate volatility in the outside.
The Functional and Matrix HR organizations
Every organizational model suits the needs of different business models and contexts.
No matter how important the need for flexibility and customer focus, designing scalable solutions that allow HR to reach every employee and is financially sustainable remains a major priority.
Reconciling this dilemma is the real challenge behind the redesign of how we can organise the HR function.
Efficiency and scalability
The Functional model is most effective in business models that favour depth of functional knowledge and efficiency of the specialised contributions of each function.
According to the nature of the business and the extent of responsibility of the people manager and autonomy of the employee, the separate HR capabilities can be aligned into a sort of assembly line, a workflow, following the different touchpoint of the employee lifecycle, or built around the manager-employee relationship as service on demand.
Customer excellence is very hard to champion in a functional organization because the employee is rarely considered in the design.
The biggest risk is therefore that each HR area becomes accountable for providing a task that is not sufficient to produce customer value on its own.
Pursuing efficiency and specialisation, the ability of this model to innovate and customise its offer is limited. As the investment in ERP-like HR systems are strongly dependent on scale and utilisation, it’s more difficult to test on smaller scale and to customise different options, keeping the cost of change higher.
Customer advocacy
The Matrix model combines two different structures: the traditional vertical, functional structures and a cross-vertical Business partnering function.
The introduction of the role of HR Business Partner and the adaptation of HR organizations into different product lines and geographies allowed the HR function to get much closer to its customers and increase its ability to create value both to the business and the employees.
The direct reporting line of the HR partner into the business leader allowed HR to earn a seat at the business strategy table at market and regional level.
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The multiplication of the HR support functions across geographies, although less efficient, increases the ability of the function to partly adapt its offer to the needs of different divisions, geographies or product-lines.
The adoption of the matrix organizational model has helped organizations depart from the rigidities and industrial mindset into a more dynamic and mission-based nature, distributing leadership to a larger number of managers and their HR partners inside the organization.
While creating a healthy tension between the customer-focused HR partner and the more specialty focused HR functions, the separate HR functions still own innovation, mostly focused on pursuing internal efficiency that requires scale and standardisation.
So even if customer advocacy in terms of business needs and employee experience in this model is at the centre of the HR strategy, the cost of change for the organization remains high.
The Platform HR organization
Like the matrix model introduced an element of customer advocacy in the functional agenda, a new alternative model should focus on reducing the distance between the solution design and the internal customer needs, and developing multiple solutions that can meet different sets of need.
Global talent management, recruitment or development solutions, designed by corporate functional teams prioritising efficiency and consistency, force the business to adapt its practices to a global standard even when it doesn’t meet the local needs.
Distributed leadership and full value creation
The evolution from the matrix organization into the Platform organization is therefore based on three principles:
The “platform organization” effectively helps the HR function overcome the traditional centralized approaches, distribute leadership more widely, and embrace total value creation built around real customer needs.
How the HR Platform model looks like
A decentralized, platform-organization model rests on two key elements:
- independent teams, mono- or multi-functional, that identify a need of the business and take the initiative to design a solution. They normally start small, can be in large numbers, and evolve to become larger over time;
- larger support “platforms” that provide either scalable basic functions and global capabilities that must remain centralised (e.g. long term incentives, workforce planning, senior talent management) or provide support with core competencies and company guidelines to maintain a global consistency (employer branding concepts, training design, short term incentive design)
If this was all, this model wouldn’t look that different from a normal global HR function that favours local initiative.
But typically platform organizations also feature two even more foundational differences:
Value to the customer rather than control to the top
To any HR professional working in a corporate, a model like this surely at first would look messy and inefficient.
This is because for years we have been measuring the success of HR in terms of neat, globally consistent processes, clean data collection and one-fits-all programs.
And because underneath all the nice words and ideals, the value proposition of HR to top management has been mainly one: control.
This model works with the opposite logic. It acknowledges that the only way for HR to support the business dealing with the increasing degree of complexity in the markets is to embrace such complexity and provide multiple solutions to multiple problems.
It accepts the hard truth that providing numbers at the fingertips of the CEO looks good and it is reassuring, but creates less value than allowing a market company to choose among more than one internal solution for the most suitable one.
By relying on emergence rather than appointment of optimal solutions, this model forces testing and learning prototypes, the competition of ideas, the adoption based on effectiveness rather than by mandate, and as a result it greatly decreases the cost of change for the organization.