The Lessons of Five Companies
Human Resource Planning, 2002
The Drive for Major Change in the HR Function
For more than a decade, human resources management has recognized the need to act as a business partner to line leaders (Galbraith, 1992; Ulrich et al., 1994; Martell & Carroll, 1995; Conner & Ulrich, 1996). Many HR organizations are discovering how difficult it is to implement breakthrough change in the role of the function, especially on a worldwide basis. The irony is difficult to miss, given the pressing need for change-management expertise to support continuous and radical change in the business. It is clear that HR leaders must demonstrate high degrees of change-management skills to change themselves.
In this regard, Eichinger and Ulrich (1996) reported discouraging findings from interviews with line executives: “Individual members of the HR team are not strong enough or credible enough personally, to help HR succeed, much less the business.”
Many, if not most, large companies are actively engaged in campaigns to revitalize the human resource management function. Case studies in companies like AT&T (Conner & Wirtenberg, 1993), Nortel (Kochanski & Randall, 1994), and Whirlpool North America (Kesler, 1995) have outlined models for navigating a new course for the function. Many companies are pursuing a similar vision: to create a partnership role, aimed at adding greater value to the business. But vision and reality remain miles apart for many HR teams because of the size of the challenge and the many obstacles which lie in the path.
Many companies have completed the first and second phases of re-engineering the HR function. Numerous practices have been outsourced, and some are now being brought back to the inside of leading corporations in shared-services centers. While there have been breakthrough improvements, the limits of re-engineering and the difficulies in implementation are now actively discussed in public conferences, as well as meetings inside major companies.
Summary Description of the Five Companies
Five large, high-profile multi-nationals or major divisions of multi-nationals (four American and one German) in five different industries set out to make major changes in the role that HRM plays in making the businesses more competitive. While each of the five gave attention to the three factors, they did so to varying levels of effectiveness; and they utilized different tactics, to varying levels of success.
At the onset of each change initiative, executives in all of the case companies expressed dissatisfaction with the extent of the value-adding contribution of the HR organization. The driving forces for change in these HR organizations were similar to those identified by Andersen Consulting and The Conference Board (1995) in their research report on more than 300 companies:
- Major changes in business strategy require significant shifts in competencies and culture.
- HR must make a more strategic contribution.
- Major re-engineering efforts across the business require more people strategies.