To deliver more value, the human resources function needs to spend more time accelerating operational improvement and less time on its traditional administrative and compliance activities. As Randy MacDonald, senior vice president of HR at IBM, told me, "It's important for HR to decide what is core and non-core. Administrative responsibilities such as getting paychecks out on time are not core. In HR, we need to focus on what is important."
Exactly how can HR accelerate process improvement?
Bring people into HR with extensive operational improvement experience.
To get the "people" part of process improvement right, HR needs employees who can go toe-to-toe discussing operational changes with line managers. HR professionals need credibility to challenge line managers on whether they are improving the attitudes and skills of their people at the same time they're redesigning their jobs.
In a previous post, I told the story of Tony Scibelli, vice president of HR and operations at Faxton-St. Luke's Healthcare, who wove continuous improvement into recruiting, rewards, and training at this central New York community hospital. Scibelli restructured the HR department by hiring a director of organizational development from the outside (since they didn't have this function) to help people adapt to process changes. The director oversees training and education, helps teams on group problem solving and team building, and oversees employee engagement. And Scibelli brought in other talent from outside the hospital industry and outside HR. Scibelli himself came from the retail sector.
Similarly, $49 billion home improvement retailer Lowe's hired Cedric Coco, senior vice president of learning and organizational effectiveness, from a general management background. Coco joined Lowe's HR function after a career that included process improvement and "Black Belt" experience at GE. He staffed HR people onto process improvement projects and added outside consultants with experience in performance improvement.
Streamline and offload HR's lower-value administrative services.
Managers of HR administrative services such as payroll and benefits need to focus on running a consistent, reliable operation at low cost. To do this, they need standard, simple, automated procedures. IBM's corporate HR function reduced 8,000 HR software applications (largely focused on the HR needs of individual IBM country units) to fewer than 1,000. That freed up huge amounts of time that HR spent on process improvement. Large organizations often use shared or outsourced services so that other entities can handle these responsibilities. Faxton-St. Luke's Healthcare implemented a new HR system to eliminate much administrative work.
Build an organizational development group in HR that includes operational improvement.
In response to my post on why HR doesn't typically lead change, many people suggested separating the compliance, transactional, and administrative roles of HR (e.g., in a group called "Personnel") from the more strategic improvement responsibilities (e.g., in a group called "Talent Development and Performance/Innovation/Productivity Improvement"). I agree. To focus on operational change, HR needs a department dedicated to it, as at Faxton-St. Luke's Healthcare and Lowe's. The group's objectives: Find ways to accelerate operational changes driven by new strategies and new business processes by developing people for new roles. Unlike the "Personnel" people who run a tight operation, these "Organizational Development" people should be change agents with a bias for operational innovation. And in addition to typical organizational development groups focused mainly on leadership development and training, this group should have operational improvement skills.
Martin Memorial Health Systems, a community healthcare system in Stuart, Florida, hired a process improvement expert as director of performance excellence in 2008. A year later, he selected three internal facilitators to form a performance excellence group, which reports to the head of HR. Their mission is to develop a pipeline of process improvement projects. For example, they've had great success in increasing patient flow through their emergency department, resulting in 0.7% of patients that leave without seeing a physician due to delays, which is among the top 10% in the country. They've also reduced turnaround time between cases for their operating rooms to 15 minutes, all while maintaining best in class quality outcomes in their Voluntary Hospital Association core measures peer group. Amy Barry, chief HR officer, told me that one of the secrets of their success has been developing internal people to facilitate rapid improvement workshops. By implementing the ideas they came up with, people achieve ownership and pride to sustain process changes.
Of course, like other corporate functions, HR needs to continue to do a good job at core administrative functions, and line managers won't accept offers of more value-added services if those basics aren't covered. And providing administrative services and ensuring HR policy compliance can be all-consuming and comfortable. It's easier to take orders from line managers and be a good service organization or enforce HR policies than it is to be proactive and take risks helping with the people side of operational change. But HR will continue to miss opportunities to deliver value if its leaders won't take some risks and drive the people side of operational change.
Questions: What HR functions have you seen refocus their activities on process improvement? How did they do it, and how did they fare?
This blog first appeared on Harvard Business Review on 2/8/2012.