Aligning the HR Structure (Bradley W Hall,PHD) - Part 2

HR Is Structured to Produce Programs and Policies Rather than Business Results

Let’s say, as a general manager, you see a leadership deficit in your business unit. Who in your HR function is accountable for improving leadership performance? The organizational development department is not; it creates competency models and assessment tools. The talent management department is not; it runs the succession planning cycle. The performance management department is responsible for appraisals, the compensation department makes pay decisions, and the training department develops and delivers courses. So which department manager will stand up and say, “My department is accountable for growing leaders”?

Today, the answer is “nobody.” 

The reason is that today’s HR is aligned by subprofession (e.g., training, staffing, compensation), the same as it was thirty years ago. Let’s call these subprofessions by their new name, Centers of Excellence (COEs). COEs are factories that produce state-of-the-art HR tools. They are not designed to produce business results and often operate as uncoordinated product development units, as indicated by Figure 3-4, which shows the COEs of one institution.

Many companies refer to both first-level (e.g., organizational development) and second-level (e.g., HR metrics) organizations as COEs. If this was an automobile engine, each COE unit  would be producing a different engine part. The problem is that there is no blueprint of what

the completed engine will look like or do. Just as it is unreasonable to build parts to an engine without a blueprint of the finished engine, it is unreasonable to build HR tools and processes without a Human Capital Strategy.

Aligning the HR Structure (Bradley W Hall,PHD) - Part 1

Today’s HR organizational structure is misaligned with a Human Capital Strategy of sustained competitive advantage through people. There are two critical areas of misalignment:

1. Strategic and administrative work remains tangled.
2. HR is structured to produce HR products and processes rather than business results.

Strategic and Administrative Work Remains Tangled

Several decades ago, sales and marketing organizations were commonplace. Over the years, marketing was split off into its own organization. Although the purpose of both functions is business development, each requires a different approach and skill set. The same is true with accounting and finance. Accounting is an old profession, and finance recently emerged from accounting with the rise of capital markets. The purpose of both functions is to leverage financial capital, but each uses different methods to accomplish the task. Like sales and marketing and accounting and finance, administrative and strategic HR are both about people, but each requires a different approach and skill set.

Over the past decades, the HR profession has aspired to create fundamentally different outcomes, but it has attempted to do so inside the walls of traditional HR. As the model presented in Clayton Christensen’s The Innovator’s Dilemma (Harvard Business School Press, 1997) would predict, it is difficult to create a business that represents a discontinuous change inside an old organization: The old will strangle the new. When an organization needs new capabilities, it may need a new organizational space where those capabilities can be developed. Christensen suggests that a successful approach is to spin off an organization so that the new capabilities can be managed in a very different way than in the mainstream business. This has not happened in HR; the old is strangling the new.