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Defining a High Performance Organization For years, HR departments have been regarded as “back office” operations supporting routine administrative tasks such as benefits, new hire processing, and payroll management – a role owned frequently by the finance department. Today, human resources is not only respected in boardrooms throughout the world, but also a valuable participant in key operational, financial and strategic decisions in most companies. As organizations seek to contain costs, improve shareholder value, and sustain a healthy competitive advantage, the importance of workforce performance becomes evident. What is a high performance organization (HPO)? It is an enterprise focused on providing top quality service to both internal and external “customers.” A high performance business improves faster than its competition and sustains that rate, while focusing on the needs of its stakeholders. HPOs are perceptive organizations that focus on strengthening enterprise productivity by acquiring knowledge – redesigning business processes, empowering managers, promoting teamwork, fostering company-wide communication, sharing corporate vision and direction at all levels, and investing in new technology. The HR organization is responsible for supporting strategy and implementing corporate vision by attracting, retaining, developing, and leveraging essential human capital. Best of breed software applications and services are also integral components of this solution. An area of priority for high performance organizations is how to manage human resource administration costs and deliver a consistent level of superior services to the workforce. Since even modest changes in a business or work environment can have significant impact on an organization, adopting HR management best practices through process improvement and technology enhancements can produce immediate benefits. Human resource management acts as the hub of data management, whether actual processing is performed by internal staff or purchased from 3rd party providers. HPOs focus on analysis versus data collection and must deliver solutions with the highest probability of success. HPO characteristics: • Have leadership focused on business vs. administration An organization that has a relatively flat hierarchy with well-developed learning programs. This entity will heavily utilize technology to minimize paperwork, support decision-marking, promote corporate culture, accelerate training, and facilitate business processes. As a result, the enterprise will typically have highly satisfied employees, low turnover, and strong productivity. The graphic below illustrates all of the components that support corporate growth and success. HR plays a vital role as catalyst and message agent supporting both leadership (corporate objectives) and other facets of the organization. Business efficiency can only be achieved through collaboration and change in culture, not just through strategy and communication. |
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| Figure 2. HR management is a catalyst to achieving business efficiency
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Aligning People, Process, and Technology Employees are a company’s most valuable asset and in many cases, its weakest link. As organizations struggle to execute corporate strategy by engaging the workforce, business processes become the supporting foundation that either fosters or hinders productivity. Highly efficient businesses have learned – quickly – that creating a self-sufficient enterprise requires an evolution of processes and a utilization of technology. A meaningful analysis of each business process should identify: • Process initiator (who or what causes the work) Building an HPO requires a commitment from senior management, communication of objectives, a focus on employee education, deployment of new technology and the development of measurement tools. Once adopted, the model must continuously evolve to support changes in business direction, and workforce characteristics. Finally, any technology chosen must be flexible and scalable enough to meet the dynamic needs of the company. As you build a strategy, consider the following: • Business processes are interrelated, so expect some anxiety
Reaching best practice for a particular business process begins with an analysis of how the organization manages workflow and production – at every level. Best practice, for example, does not necessarily mean printing paychecks faster; it could lead to outsourcing the entire function. Instituting HR best practices requires an empowered, focused team that can differentiate between strategic and tactical processes and how they should be administered. It might be strategic for an organization to outsource a large part of its HR operations in order to leverage key resources for other critical business objectives. Conversely, a business concerned with worker productivity may wish to install onsite software to closely monitor and enhance employee productivity against expected job competencies and goals. Outsourcing Options Outsourcing certain strategic and non-strategic processes can help organizations to focus on core business objectives as long as the selected solution delivers equal or improved HR services at an acceptable cost. There are many paths and directions an organization can take with regards to outsourcing technology, processes and/or people. Prior to selecting a particular option, an organization should examine their existing environment for core versus administrative processes, and make cost comparisons. When evaluating the outsourcing investment against internal costs, one should take into consideration multiple variables including overhead, capital outlay, changes in technology, and training. Application Service Providers (ASPs), created as a pure hosting service for application software via the internet, have limited knowledge of the actual business function. ASPs distribute applications or services through a network to many customers in exchange for a stream of smaller payments as opposed to one lump-sum price. They are an important alternative, not only for smaller companies with limited IT budgets, but also for larger companies as a form of controlling long-term capital expenses. Over the past few years, business process outsourcing (BPO) has become a viable option producing solutions that have enabled many organizations to reduce costs and increase productivity. This model delegates one or more IT-intensive business processes to an external provider that, in turn, owns, administers and manages the selected process(es) based upon defined and measurable metrics. According to research firm Gartner, in 2004, HR business process outsourcing is forecasted to reach $51 billion and represent 39 percent of all BPO revenue. The growth of this market is still being driven by payroll and benefit services. As organizations become more attuned to improving internal efficiencies, BPO will be introduced as a business strategy that provides access to “best in class” processes, ROI measurement and cost predictability. Many high performance organizations have already embraced this model and will be looking to increase their investment over the next couple of years. Optimizing Technology While HRM applications have been around for decades, only recently have organizations started measuring the results effectively – reducing the costs of the disparate and redundant software systems. Many organizations, for example, are leveraging self-service technology or human resource outsourcing options to reduce the cost of administration, improve the quality of service, and promote corporate culture and decision-making.
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Figure 3. Cost justification through process and technology analysis
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Building a Business Case As organizations make the decision to improve enterprise performance by adopting more effective HR technology, they must make an investment both financially and culturally. Justifying this expenditure requires HR executives to identify short- and long-term gains and savings through reduced or redeployed staff, improved processes, and increased productivity. When building a business case an organization must convey several key points. 1. Total cost of ownership
2. Impact on infrastructure
3. Impact on culture
4. Measurable results
5. Alignment with enterprise objectives
Conclusion People, process, and technology must all be weighed, connected and leveraged in order to build a high performance operation. As organizations analyze the impact of making incremental or even “sweeping” changes in technology and processes, they will uncover many opportunities with varying payoffs and associated costs. While the biggest impediment to achieving high performance is culture, lack of technology often restricts organizations from smoothly growing their workforce. Executives recognizing the need to address both will achieve the highest rates of return. Organizations that develop a model that continually invests in, engages and grows its human capital will improve faster than its competition and satisfy its stakeholders. Brian McIntyre Brian McIntyre, founder and CEO of WorkStrategy, has over 20 years of HR management experience – specializing in HR management, benefits and compensation administration, performance management, and process improvement. He has created HR service operations for a number of consulting firms and application vendors. He can be reached at brian.mcintyre@workstrategy.com or 410.715.1020.
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