Hr refine-the-hr-org-structure-and-optimize-department-efficiency-sb

McLean & Company 1

McLean & Company is a research and advisory firm that provides practical solutionsto human resources challenges with executable research, tools, and advice that will have a

clear and measurable impact on your business. © 1997-2014 McLean & Company.McLean & Company is a division of Info-Tech Research Group Inc.

Refine the HR Organizational Structure and Optimize Department EfficiencyWhether your organization is requiring you to grow or asking you to cut down on costs, make sure that your department is structurally efficient.

McLean & Company 2

HR leaders tend to let their department structures “happen” instead of actively shaping their departments for efficiency and usefulness.

Introduction

HR leaders who need to change their department structures due to:

• Growth

• Cost and/or inefficiency

• Internal HR team conflict

Plan a redesign project that ensures alignment to business goals.

Assess different options for structuring your HR department.

Learn about the organizational design principles that shape your structure.

Determine the movement or role change of employees in the new structure.

This Research Is Designed For: This Research Will Help You:

Redesigning HR structure is not a fix-all project; look at other areas of potential change, like programs and processes, before engaging in a project this extensive.

McLean & Company 3

The Situation:• Many HR departments let their structures evolve, focusing on current need without considering

business strategy or future needs. This means that their structures are not meeting the needs of the business or are compromising their chances of future success.

• If your HR structure isn’t optimal, this leads to excess costs, low efficiency, and low employee engagement.

The Challenge:• HR leaders are hesitant to undertake HR structure changes because they seem too daunting.• HR leaders get lost in convoluted redesign processes, and end up with structures that don’t meet their

unique needs.• HR leaders implement HR structures believing that what worked for other organizations will work for

them, and then wonder why they fail.The Solution:• Use this toolkit to guide your redesign process and ensure that your new structure will deliver on

business needs and goals.• Use organizational design principles to make smart structural choices that address your pain points or

areas of opportunity.• Select a new structure and communicate to HR and the rest of the business to ensure clarity and buy-

in.McLean & Company Recommends:• Using a RACI (Responsible, Accountable, Informed, Consulted) chart to ensure role clarity, both at a

leadership level and with functional teams.• Setting objectives based on business inputs to ensure that the HR department redesign promotes

business alignment.

Executive Summary

McLean & Company 4

How to use this blueprint

We recommend that you supplement the Best-Practice Blueprint with a Guided Implementation.

For most McLean & Company members, these Guided Implementations are included in your membership plan.* Our expert analysts will provide telephone assistance to you and your team at key project milestones to review your materials, answer your questions, and explain our methodology.

McLean & Company’s expert analysts will come onsite to help you work through our project methodology in a 2-5 day project accelerator workshop. We take you through every phase of the project and ensure that you have a road map in place to complete your project successfully. In some cases, we can even complete the project while we are onsite.

Do-It-Yourself Implementation

Use this Best-Practice Blueprint to help you complete your project. The slides in this Blueprint will walk you step-by-step through every phase of your project with supporting tools and templates ready for you to use.

Project Accelerator Workshop

You can also use this Best-Practice Blueprint to facilitate your own project accelerator workshop within your organization using the workshop slides and facilitation instructions provided in the Appendix.

Book your workshopnow by emailing: [email protected]

*Gold and Silver level subscribers only Or calling:1-877-281-0480 Ext. 3001

There are multiple ways you can use this McLean & Company Best-Practice Blueprint in your organization. Choose the option that best fits your needs:

Do-It-Yourself Best-Practice

Toolkit

OnsiteWorkshops

Free GuidedImplementation

mailto:[email protected]

McLean & Company 5

Book a free guided implementation today!

McLean & Company is just a phone call away and can assist you with your project. Our expert Analysts can guide you to successful project completion. For most members, this service is available at no additional cost.*

Here’s how it works:

1. Enroll in a Guided Implementation for your projectSend an email to [email protected] Or call 1-877-281-0480 and ask for the Guided Implementation Coordinator

2. Book your analyst meetingsOnce you are enrolled in a Guided Implementation, our analysts will reach out to book a series of milestone-related telephone meetings with you and your team.

3. Get advice from a subject matter expertAt each Guided Implementation point, our Consulting Analyst will review your completed deliverables with you, answer any of your questions, and work with you to plan out your next phase. *Gold and Silver level subscribers only

This symbol signifies when you’ve reached a Guided Implementation

point in your project.


McLean & Company 6

Guided Implementation points in the HR Department Redesign project

Book a Guided Implementation Today: McLean & Company is just a phone call away and can assist you with your project. Our expert Analysts can guide you to successful project completion.

Here are the suggested Guided Implementation points in the HR Department Redesign project:

Section 2: Pre-work: Understanding your options

Check your understanding: Review drivers, structure options, and organizational design principles to optimize your HR structure and ensure that you have key understanding of the options available to you in this project. Determine if other external options are an avenue you would wish to explore further.

Section 3: Gather data and select a structure

Collect data and select a structure: Review business inputs and consolidated information as well as objectives and parameters, discuss structural options and selections, interpret results of gap analysis, and discuss organizational design principles.

Section 4: Arrange your team within the new structure

Assess current HR team’s skills & capabilities and identify gaps: Assess current team’s capabilities, identify resource shortages or surpluses with HR leadership team, determine HR leaders’ accountabilities using RACI charts, select metrics/scorecard method, create and present business proposal.

Section 5: Implementation: Communication and monitoring

Implement the redesigned structure: Create a communication plan for HR and business teams, have each of the function leaders complete the RACI chart with their teams, finalize metrics and determine key milestones, discuss short- and long-term plans for success.

To enroll, send an email to [email protected] or call 1-877-281-0480 and ask for the Guided Implementation Coordinator.

This symbol signifies when you’ve reached a Guided Implementation

point in your project.


McLean & Company 7

What’s in this Section: Sections:

Make the Case

Make the Case

Pre-work: Understanding Your Options

Gather Data and Select a Structure

Arrange Your Team Within the New Structure

Implementation: Communication and Monitoring

Appendix

• Factors affecting organizational structure

• Effective vs. ineffective structures

• Do you have a structural issue?

• Determining the driver of the project

McLean & Company 8

Before continuing, learn why HR department structure matters

Organizational Structure is the formalized way in which members of an organization interact with each other, as well as how their roles are designed, and how accountabilities are assigned. Organizational structure dictates reporting relationships and lines of authority.

Why should you care about HR structure?

• HR structure is key to ensuring that the HR department is capable of delivering on business goals.

• Effective HR structures enable business support and delivery of services.

• A good HR structure is essential for efficiency and cost effectiveness.

• A good department structure and implementation helps HR members perform their jobs more effectively.

McLean & Company 9

HR organizational structure impacts more than just the HR department

HR structure is linked to the fast and effective delivery of HR services and alignment to business goals.

HR structure is important to Strategy: A comprehensive and well thought-out HR organizational structure will enable HR to support business leaders in achieving business objectives.

HR structure is important to Business Leaders:Having an organizational structure that is flexible and adaptive to the ever changing needs of the business will create stability in HR, avoiding the need to change constantly in support of dynamic business needs.

HR structure is important to HR staff:Clarity of roles and accountabilities in an HR structure gives the HR team the ability to focus on the right goals and behaviors to drive the business forward.

The McLean & Company 2014 Trends survey indicated that only 20% of business respondents felt their HR department’s structures were very effective in supporting the business – get feedback to fix this problem!

McLean & Company 10

As the business changes, the HR structure needs to evolvewith it

Always look through the lens of your clients, or of your

organization. Take your HR hat off, sit on the other side of

the table and think about what would be valued.

Understand what/where their pain points are. Don’t

introduce [options] that are not connected [to business

needs].-- John Hovnanian,

VP of Human Resources, Intermedix

The global environment is changing constantly. HR must remember that business is becoming more complex and the need to be agile and adaptive to succeed has never been greater. Having a solid HR structure to help drive business success is an imperative.

The role of an HR leader is to provide guidance to business strategy, align HR strategy to support the delivery of those business goals, and then ensure that there is a solid HR structure in place to deliver on the strategy.

A flexible and adaptive approach to designing your new HR structure will support the organization in responding to future challenges and opportunities.

McLean & Company 11

There are three key factors that go into organizational design decisions

Additional factors to consider in your HR organizational design include the following:

• Whether or not your organization is multinational

• The size of your organization and HR department

• Whether or not your organization is unionized or non-unionized

• Operational effectiveness at a global level

• The most appropriate structure that will best fit with your organizational culture

A good structure will be designed with all of these factors in mind. When these factors are disjoined or misaligned, it leads to structural problems.

Organizational Strategy

Environmental Forces

Current HR Department

Structure

The business makes decisions (hiring, expanding into new geographies, etc.) and HR must support and enable these decisions.

Cost cutting, periods of high growth, and organizational culture are all outside factors that affect how HR structures itself.

The current HR structure will be impacted by any new proposed or refreshed structure. In many cases, problems with current structure are easy to identify.

McLean & Company 12

There is no one right HR organizational structure, so create one that is right for your organization’s needs

Every structure decision you make should be based on an identified need, NOT because it is trendy or “sounds” like a good idea. Be informed before you embark on HR organizational changes.

The more complex question than figuring out your structure is in figuring out what role HR plays in being able to influence, support

and develop the organization [through

structure.] -- Joanne Taylor, President,

Pinch HR Services Inc.

• Be sure to understand how HR structure relates to and links with the various components of the organization to choose one that offers the best support.

• HR organizational structure can make a real difference to the way an organization performs. However, be mindful that emulating one organization’s structure into a different organization may not work.

• There are a number of common HR organizational structures that are appropriate in different circumstances. None of them are necessarily ideal for every organization, and they don’t take into account the reality of what exists for different kinds of organizations.

• It is common for HR to have a combination or hybrid organizational structural type. When considering your organizational structure, analyze the environment, assess your internal needs and capacities, and then make sure your structure is a good fit with business strategy and environment.

McLean & Company 13

While there is no “correct” organizational structure, there are effective and ineffective ones

Effective HR Structures: Ineffective HR Structures:

Allow HR to strengthen its relationship with upper-management, enabling upper-management to have more confidence in the HR strategy and provide more support.

Have the HR leader reporting directly to the CEO/President or Executive VP/COO.

Adapt well to the changes in the external environment, and allow for quick responsiveness.

Support engagement by providing role and accountability clarity to employees.

Enable line managers to deliver human resources management to staff. As the “agents of HR,” their role is crucial in engaging employees to put in discretionary effort.

Support quality HR service delivery.

Ensure proper delivery of day-to-day HR operations.

Allow HR to be visibly involved with the organization.

Do not support HR having a strong relationship with upper-management, or being closely tied to business goals. HR does not have a “seat” at the executive table.

Have the HR leader reporting to a non-executive management level personnel.

Do not allow HR to be visibly involved with the organization. Decreased visibility means HR is less likely to work closely with employees to understand their needs.

Split HR into silos with boundaries that may cause interdepartmental conflict.

Do not define lines of accountability, causing confusion over roles and responsibilities.

Do not allow proper support or delivery to the business.

McLean & Company 14

HR Organizational changes are based on the need for greater efficiency and quality

Recent industry trends have demonstrated that a review of HR organizational structures is being prompted by the following reasons:

Source: Towers Watson

According to a recent McLean & Company survey, 52% of respondents in Human

Resources fields said that “having an HR structure that supports the business” was a top

priority, while 49% of business respondents said the same.

Business and HR leaders agree: HR structure is important.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

74%

34%

53%

Organizational EffectivenessCost SavingsQuality improvement

You know you should consider redesigning your structure if:• You haven’t actively planned your structure

– it just “happened.”• You are aware that your department is not

providing needed support.• Your structure is outdated and the business

strategy or goals have changed since the last time a redesign initiative occurred.

• You have to cut costs.• Your organization is growing and HR cannot

keep up.• You’re experiencing: work duplication, role

conflict between members of the HR team, and/or inefficiencies.

McLean & Company 15

There are three key reasons why HR should consider an organizational design refresh

Growth

• Your organization is growing and you need a better way to support the needs of the business.

• The current HR organizational structure has not kept pace with business needs and you now need to expand your own department in support of business goals.

Cost & Efficiency

• Your HR team is not delivering to the business, and there has been a number of complaints from key business leaders with respect to time delays and a lack of skills/qualifications in HR to meet their needs.

• You have been requested to reduce HR operational costs.

Internal HR Team

Conflict

• Your HR team is in conflict with one another – there is a lack of clarity around roles and accountabilities.

• You believe there are a number of ways to be more efficient by outsourcing some administrative roles and allowing the HR team to be more strategically focused.

Although there are many possible reasons to conduct a redesign project, these three are the most common and most related to structure.

McLean & Company 16

Determine if you have an HR department structural issueReview the following statements to determine if you have a structural problem that needs to be addressed.

Growth

External stakeholders seldom complain about the level of service and delivery on business objectives from the HR team.

External stakeholders seldom complain about the time it take for HR to respond to them.

External stakeholders, namely those outside of the HR team, are clear on who is responsible for what in HR.

Cost & Efficiency

The HR team has the necessary skills, knowledge, and experience to deliver on business needs.

The HR leadership team is quick to react in delivering quality service even when the environmental and/or business shifts.

Roles within the HR team do not overlap.

Internal HR Team Conflict

There is a good deal of coordination within the HR team, with teams working well together.

There are no signs of conflict within the HR team: each group supports the other in achieving HR goals.

Roles within the HR structure are very clear; HR team members know who is accountable for what.

Very little falls through the cracks due to confusion about who is doing what.

The HR team is highly engaged and motivated.

If you could not answer Yes to most of these questions, then it is time to refresh your HR organizational design.

McLean & Company 17

To deliver on its commitments to the business, Pfizer HR had to convert itself from a bloated function with an internal focus to an efficient one with a business and industry focus.

Pfizer set forth on a redesign project and streamlined its function

Industry:Segment:

Source:

PharmaceuticalEnterprise“HR Transformation: Building Human Resources from the Outside In” by Dave Ulrich, Justin Allen, Wayne Brockbank, Jon Younger, and Mark Nyman. Pub. by McGraw-Hill, 2009

• Pfizer went through a series of acquisitions and organic growth.

• The company tripled the size of its headcount in just over a decade.

• Due to all its acquisitions, it had a variety of different processes and programs functioning through the various parts of the company.

• It had a variety of HR structure projects in place, but due to HR leaders leaving, the projects were never completed.

Situation• Using metrics and internal data,

the HR team decided their composite structure was too large and costly.

• They created an action plan to fix structural issues and aligned themselves to business needs and strategy by speaking to business leaders.

• They created a multi-stage plan to accomplish all their objectives.

• The Pfizer team aimed to centralize certain functions, streamline processes, and reduce headcount and cost.

Action

• Pfizer HR reduced its size and improved efficiency at a great cost benefit.

• The HR team also redefined roles to achieve more clarity and efficiency within their team.

• They eliminated costs to the tune of approximately $42 million in 2008 alone.

• The cost savings were largely due to this redesign project, the more efficient management, and the more streamlined structure that resulted from it.

Results

Source: Chris Altizer and Michele Bolden

McLean & Company 18

Putting the right HR structure in place is complex and seems daunting but the outcome is worth the effort

Solutions DO exist. Use this toolkit to create solutions for your structural issues.

Possible problem that could arise: Solution:

HR is often too busy putting out fires and being tactical which causes them to fail to react. When business changes occur, HR is slow to respond.

Outsource administrative duties, or switch to a shared services model to allow HR to play more of a strategic role.

HR teams are often confused as to where accountability starts and stops within their own organization, which leads to confusion and conflict.

Clarify structure down to a role level. Use a RACI chart to clarify roles and accountabilities.

Some HR organizations just don’t have a view of the future – they don’t know where the business is headed.

Identify business needs and goals and align your HR strategy to those. When designing an HR department structure, ensure that HR will be able to support business needs.

HR organizations don’t know where to start – they think re-design is an overly complicated and burdensome process.

You don’t necessarily have to re-vamp your entire structure! Identify your priorities, as well as what’s currently not working to start optimizing your HR structure.

HR leaders face resistance from the business leaders who see HR projects as taking up too much of their time.

Design your structure with this in mind. Leaders are often looking for one HR person that will represent their needs and be their trusted HR partner. The HRBP model is most effective in these circumstances.

Talk to the business to understand what are their expectations, how do they perceive the service they get, what would they like, what are they willing to give up in order to get new competencies and

capabilities?

-- Amy Kates, Managing Partner, Kates Kesler Organization Consulting

McLean & Company 19



Make the Case





Appendix

• Structure options

• Organizational design principles

• Alternative options (outsourcing, third-party vendor, etc.)

McLean & Company 20

There are a number of different structures to consider when you undertake an HR organizational redesign

Customize your selected structure based on the needs of your function, and selected organizational design principle choices.

The bigger picture, I think, must be formed by what the organization’s aims, priorities, and organizational structure are.

-- Peter Reilly, Director, HR Research & Consultancy

• The different “typical” HR department organizational designs (functional, divisional, matrix, business partner, solutions center)

• The big picture and individual units of different structures

• When each structure works best or worst and the pros and cons of each

• The organizational design principles• Alternative options for the department

structure (outsourcing, shared services, etc.)

Use this section to get a better idea of:Different

Structure Types

Organizational Design

Principles

Alternative Options

This section is primarily informational. If you feel confident in your knowledge of structures, organizational design principles, and

alternative options, then please proceed to the next section.

McLean & Company 21

Understand how you will get to your final structure decision

Before you begin your structure redesign, ensure that you have a clear need and driver to guide the project.

Identify the driver behind the redesign

Understand the different structure options

Apply org

design

principles

The most appropriate structure

After viewing the various structure options available to you, you will select a structure that satisfies your needs, as it relates to your need or driver. Consider the organizational design principles through the lens of your structure choice.

Understanding the organizational design principles will help you to sketch out the finer details of your structure, and will help you to optimize your department through informed choices. Finally, considering alternate options will ensure that you have looked at all possible redesign options and made the best choice for your department.

This visual indicates the decision points that determine your overall structure. Learn more about these points in this section.

McLean & Company 22

Before you embark on an HR department redesign, establish the primary driver for your project

Before you begin, understand what you are trying to solve:

• Understand what your overall driver is BEFORE you begin the project.

o Are you redesigning to accommodate growth?

o Are you trying to cut down on costs and/or become more efficient?

o Are you trying to resolve internal HR team conflict?

• Have a clear and related reason to redesign department structure: trying to do a redesign to solve “problems” isn’t sufficient.

• Determine the business value of this project. Is a redesign ultimately going to help cut costs? Is it going to help your department become more efficient? Don’t attempt this project without clear rationale.

The HR reorganization should identify what it is that the organization needs and organize itself to deliver that.


At this point you should have identified a broad but critical driving motive (e.g.

increase efficiency, prepare to meet the needs

of the company as the company grows, etc.) as the driver of the project. You will create specific

goals later in the project design process.


McLean & Company 23

The most popular HR department structure is the HR Business Partner (HRBP) model

• Our research indicates that the most popular and compelling structure is the HR Business Partner model.

• It is the most commonly used, and an ideal choice since it incorporates both generalists (business partners) and specialists in the Centers of Excellence (COE), allowing for a broad mix of skills, while achieving costs savings through shared services.

• This structure allows you to invest resources where your organization most needs them – you can create Centers of Excellence where you would like to invest resources, and allow Business Partners to manage client relationships and strategy for the organization.

• This model allows for better partnering and alignment with the business through strategic HR delivery.

• Using this storyboard, you can learn how to adapt the Business Partner model to address pain points and the driver behind your redesign. Many HR leaders find they have issues with the HRBP model because the roles and accountabilities are not always clear between the HRBP and COE, leading to confusion and conflict. This issue can be easily addressed thorough a RACI exercise.

• The other models are for informational purposes; they might work in some organizations, but the HRBP model is considered a best practice.


All of our industry experts agreed that this was the best model to base your structure on, although it needs to be implemented with caution.

McLean & Company 24

Functional structures work best for smaller organizations

Head of HR

Total Compensation

Talent Acquisition

Learning & Development

Performance Management

What is it? Pros Cons• Divides the work units by function

(i.e. Talent acquisition, compensation, etc.)

• Functional structures are fairly simplistic, and this is why they tend to work better for smaller organizations

• Work rarely overlaps between the different units

• Works well for bureaucratic cultures

• Reporting structure is clear, and the structure is generally fairly flat

• This structure promotes deep knowledge within each function group as work falls under the same umbrella– employees become experts within their silos

• Responsibilities and type of work done within each function is clear, particularly to other departments

• Improves efficiency and standardization

• Does not support growth or complicated business structures

• Could deter close client relationships – creates habit of becoming HR-focused instead of business focused

McLean & Company 25

Divisional structures promote client interaction

What is it? Pros Cons• Divides the work units by one of

four methods: process, product, geography, or customer

• Works best when HR structure matches business structure, i.e. if business is divided geographically, each business unit should be supported by HR

• This will ensure proper support, as well as local compliance

• Enables business alignment since HR structure mirrors business structure

• Improved client support• Promotes faster decision making, as

each division has more autonomy• If geographical division is used, it

helps ensure local compliance is achieved and decisions are made according to local norms

• If divided by product, customer, or process, it allows HR teams to become experts for those units and adapt to their individual needs

• Makes standardization more difficult, as each unit has more autonomy

• Requires more resources than a functional design

• Division of power is decentralized so there is less control over decisions made at each work unit

• Functions must be replicated for multiple different work units, so it becomes more expensive

Head of HR

Houston Division

Total Compensation

Toronto Division

Total Compensation

Talent Management

Tokyo Division

Total Compensation

Talent Acquisition

McLean & Company 26

Matrix structures work best in collaborative environments

What is it? Pros Cons• Combination of functional

and divisional structures, meaning there are multiple project teams

• Employees have two business leaders

• An exclusively matrix structure is rarely applied to HR

• When done well, the matrix structure helps employees develop their skills in different areas

• Projects benefit from having multi-skilled people involved

• More agility and flexibility in who works on projects, which can help get work done faster

• If there are two equally critical production elements, then the matrix structure weights both of them equally, ensuring that neither factor is neglected

• This type of structure definitely requires the right work culture; Matrix structure can be extremely unproductive unless collaboration is encouraged and already exists

• It can be difficult for employees to prioritize, particularly when they’re reporting to two different bosses

• Can result in inefficiencies since there are a lot of moving parts, and it can be tough to coordinate, and determine accountability

Head of HR

Marketing

Finance


Project team A

Project team B

Talent Acquisition

Project team A

Project team B

McLean & Company 27

The Business Partner model is the most common of all structures within HR

What is it? Pros Cons• “3-legged stool” model, developed by

Dave Ulrich• Attempts to efficiently use resources

while maintaining client satisfaction• Shared Services mostly

administrative duties that are required for the entire organization, i.e. benefits

• Centers of Expertise Specialists who develop programs and do deep research

• Business Partners Frontline interaction with clients, responsible for getting feedback from business leaders and resolving day-to-day issues strategically

• Mix of generalists (Business Partners) and specialists (COEs) creates good breadth of skills

• Allows for efficient delegation and separation of client facing duties, research, and administrative tasks

• Optimizes centralization/de-centralization to reduce costs

• Since administrative tasks are resolved through shared services, COEs and business partners are able to focus more on strategic work

• Good model for larger/more complicated organizations

• There is often confusion of client ownership between COEs and Business Partners, resulting in inefficiencies

• Some HR professionals don’t like being pigeon-holed into either a Business Partner, COE, or Shared Services role; if the right work distribution isn’t found, it can lead to disengagement

Head of HR

Business Partners

Line Managers

Shared Services

(Mostly administrative)


Talent Acquisition


Centers of Excellence

McLean & Company 28

The Solutions Center model is the next frontier for HR

What is it? Pros Cons• This model is like the Business

Partner model but with an add-on of a “Functional” team of HR specialists that are responsible for the delivery of programs developed by the COEs

• “Turns HR into an internal professional services firm” – Amy Kates, (Re)Designing the HR organization

• The business partner unit is a lot smaller, and works to manage client relationships more than anything else

• Attempts to resolve the client ownership conflict within the Business Partner model

• The work of implementation relies mostly on the Functional Team, and this makes the roles of the Business Partners and COEs clearer and less complicated

• Less resources are dedicated to the Business Partners and COEs and funneled into the operational team so department headcount remains a similar size

• Gives lots of flexibility to the functional team so they are able to act quickly to resolve problems

• Transitioning to this system could be tough; even though the titles are the same (Business Partner, COE, etc.), their roles are very different

• Because the system is more complex, good lines of communication, as well as a collaborative environment are required to ensure efficiency

Head of HR

Business Partners

Line Managers

Shared Services



Talent Acquisition


Centers of ExcellenceTraining

Recruiting

Functional Teams

Note reduced size

McLean & Company 29

Use the organizational design principles to further define your department structure

Now that you have a good understanding of the various structure choices, the next step is to understand and apply the organizational design principles to further flesh out your structure.• The organizational design principles will help you to decide:

◦ How narrow or broad the roles within your structure will be.

◦ Whether programs and policies will be developed from a central location and applied throughout the company OR whether they will be developed and applied at a local HR level.

◦ How authority and decision making power will be spread out among employees.

◦ How many people report to the same manager.

◦ How clearly roles are defined and communicated.

◦ How many levels or layers exist between the Head of HR and the lowest ranking employee.

• After reading about the organizational design principles in this section, postpone making decisions until Section 3 (Gather Data and Select a Structure) to decide on how you will use the principles to your advantage.

Apply

org design

principles

McLean & Company 30

Understand the organizational design principles that affect the entire department structure redesign process • The organizational design principles are a common set of guidelines by which a structure takes shape.

• These principles determine, among other things, the levels of hierarchy in your structure, the number of direct reports a manager has, and where power is dispersed within your organizational design.

• The overall structure you select will be customized to your needs by choosing which ends of the spectrum you wish to be on for each principle.

Structure Type + Organizational Design Principles = Unique Department Structure

SpecializationNarrow vs. Broad

Organizational Design Principles

StandardizationStandardized vs.

Localized

CentralizationCentralized vs. Decentralized

FormalizationDefined vs. Undefined

Span of ControlFew direct reports vs. Many

direct reports

Chain of CommandMany layers vs. Few layers

McLean & Company 31

The degree of specialization determines the scope of the roles within your organization• Determine how narrow or broad the roles are within the organizational design.

• For example, an HR generalist is a broad role, and could include a variety of responsibilities whereas a recruiter for medical professionals has a narrower scope of tasks.

Narrow Broad

• Roles are very specific, variety of tasks is low, and employee knowledge must be highly detailed (e.g. Employee Engagement Specialist).

• Employees are hard to replace, and have a particular skillset, which might not always be required.

• Roles are general, variety of tasks is high, and employee knowledge should be expansive (e.g. HR Generalist).

• Risk of team not knowing enough about specific topics, but due to general employee knowledge, mobility increases.

McLean & Company 32

The degree of standardization dictates how similar policies and programs are from business unit to business unit• Decide whether programs and policies will be developed from a central location and applied throughout

the company OR whether they will be developed and applied at a business unit level.

• For example, is recruiting conducted through a central channel or is each business unit responsible for doing its own hiring?

Standardized Localized

• Policies/programs are designed and/or implemented from a central level (e.g. head office).

• Ensures that there is consistency throughout different business units, but decreases rollout time, and individualization of programs to business units.

• Policies/programs are designed and implemented at a local level (e.g. Houston office vs. Montreal office).

• Better alignment to business needs, more agile, but there is a risk of straying from overall business goals to accommodate individual units’ needs.

McLean & Company 33

The degree of centralization demonstrates how power is distributed throughout your structure• Determine how authority and decision-making power will be spread out among employees.

• What can HR team members approve or implement without seeking approval?

• For more information on centralization/decentralization options, please see McLean & Company’s, Determine the Degree of Structural Centralization.

Centralized Decentralized

• Decision-making authority rests with fewer people.

• Allows leaders to check for quality and consistency, gives them more clarity over what is going on within the units.

• Takes a long time to make decisions, and employees can feel disengaged due to lack of autonomy.

• Many people have authority to make decisions.

• If employees are given decision-making power, it could lead to poor or inconsistent decisions.

• Decisions can be made more quickly, and employees have a greater opportunity to learn.

• Less management needed.

http://hr.mcleanco.com/research/ss/hr-determine-the-degree-of-structural-centralization

McLean & Company 34

The span of control indicates the number of people reporting to a manager• This refers to the horizontal depth of your structure: decide how many people report to the same

manager.

• This in large part depends on the difficulty of the work done by direct reports, and the amount of work needing to be done by the manager. If the employees don’t need a lot of oversight, the span of control can be larger, while the opposite is true if the employees require more oversight.

Many Direct Reports Few Direct Reports

• Faster decision making, but if a manager has too many direct reports, it will create too much stress and the manager will have less time for each direct report.

• More cost efficient. In roles that are essentially the same or similar, broad spans of control are easier to implement/manage.

• Slower decision making, but managers have more time for their direct reports, and accountability is clearer.

• Supervision is able to be more concentrated. In highly specialized areas, it is usually recommended to have fewer direct reports.

McLean & Company 35

The degree of formalization shows how much variability there is in the way the roles are carried out• The degree to which roles are clearly defined (whether it be by policy, or common practice, etc.)

• For example, does one of your payroll specialists ONLY do payroll OR do they get called in to do recruiting on an irregular basis?

Formalized Generalized

• Role responsibility and accountability is very clear.

• Every employee within a function, or in the department as a whole, has a clear idea of his or her own work and the work of others.

• Work between employees rarely overlaps.

• Usually depicts a team of generalists.

• Undefined roles mean that people can work on different projects and have freedom to develop varied skills.

• It can also mean that work may overlap more and there could be skill duplication in your team.

McLean & Company 36

The chain of command demonstrates how many levels of hierarchy there are in your structure• Determine the vertical depth of your structure. Between the Head of HR and the lowest ranking

employee, how many levels or layers are there?

• A very hierarchical structure will be shaped like a pyramid, with many layers between the top and the bottom (and therefore many reporting levels), while a structure with fewer layers will have more of a flat shape, and a more direct reporting structure.

Many Layers Few Layers

• It takes a long time for decisions to be made and for information to travel up and down the layers.

• More layers of management, so each manager can have more oversight of teams.

• More appropriate for large organizations.

• Allows for faster decision making. • Generally supports more talent

mobility, as people feel less confined to their particular silo and will more likely volunteer for different kinds of work.

• Usually works better for smaller organizations.

McLean & Company 37

As the last step in your understanding, consider these options to prepare for your organizational redesign

Outsourcing:• Many HR departments have

completely outsourced their administrative duties, such as benefits, payroll, and background checks.

• It’s possible to outsource almost any type of HR task.

• Outsourcing is cost effective, and allows HR departments to focus on more strategic projects.

• See McLean & Company’s Assess HR Outsourcing.

• “I think everyone in the U.S. should use an outsourcing partner for their compensation and benefits that can properly advise them on continuously changing compliance requirements.” -- Avi Singer, Training and Organizational Development Consultant

Third-Party Vendor:

• Look to a third-party vendor, particularly when tasks need to be done faster than your team has the capacity to complete them, or if there is a short-term project that requires expertise which won’t be needed in your team in the future.

• For example, many third-party vendors offer assistance with high volume hiring. If you are going through a growth period but hiring and screening recruiters would take too long, use a third-party vendor to help get the work done quickly.

Shared Services:

• Shared services generally take on the role of administrative HR. Shared services is mostly accountable for payroll, benefits, and sometimes pension plans.

• For more information on shared services, please see McLean & Company’s Implement HR Shared Services.

E-HR (manager & employee self-serve):

• Advances in technology have made it possible for much of HR administrative work to be resolved online.

• Using an e-HR system, employees can find answers to many of their HR questions, and perform simple HR-related tasks, which leaves HR employees free to do more strategic work.

These options might work if the current operation of your in-house functions isn’t satisfying your needs.

http://hr.mcleanco.com/research/ss/assess-hr-outsourcing



http://hr.mcleanco.com/research/ss/hr-implement-hr-shared-services

http://hr.mcleanco.com/research/ss/hr-implement-hr-shared-services

McLean & Company 38

Ensure that you are ready to move on to Section 3

Identify in Section 1 that you do have a structure issue

Identify/define a driver for the project



Apply org

design

principles

The most appropriate structure

Review the various structures

Select a structure or at least have a good idea of which one you will use

Ensure that selected structure suits the needs you have identified through the driver

Understand the organizational design principles

Review alternate options

If you have not completed the checkmarks for each decision point, go back to review and complete each point. These steps are essential.

McLean & Company 39

Arrange a call now: email [email protected] or call 1-877-281-0480 and ask for the Guided Implementation Coordinator.

Check your understanding

Prior to the Guided Implementation

During the Guided Implementation

Value & Outcome

1. Take the test in Section 1 to see if structure is an issue.

2. Review structure options.

3. Review organizational design principles.

4. Review alternative options.

A McLean & Company Consulting Analyst will discuss with you:

• Determining if you do indeed have a structural issue.

• Reviewing the structure options in more detail.

• Reviewing the organizational design principles in more detail.

• Answering any questions and addressing any concerns.

At the conclusion of the Guided Implementation call, you will have:

• Confirmation that you do have structural issues.

• A deeper understanding of the information required to make educated structure decisions for your organization.

Your action plan will encompass:• Structure options• Drivers supporting the

redesign

• Organizational design principles

• Business strategy• HR strategy

mailto:[email protected]?subject=Refine%20the%20HR%20Organizational%20Structure%20and%20Optimize%20Department%20Efficiency%20-%20GI#1

McLean & Company 40



Make the Case





Appendix

• Collecting business input

• Facilitated discussion with HR leaders

• Key objectives and parameters

• Structure selection

McLean & Company 41

Use the McLean & Company HR framework to ensure that all HR functions are represented in your new structureThe HR Framework has been designed to represent and categorize core HR functions. We will be using this framework in a number of processes and tools throughout this blueprint, as it offers a comprehensive view of all HR core functions.

McLean & Company 42

Follow these steps to lead you to an ultimate redesign decision

Business Inputs

HR Leadership

Team Consultation

Gap Analysis

Structure Decision

Fit Test

• Conduct business interviews

• Document information • Interpret

business inputs

• Set objectives• Outline

parameters• Document

information

• Use HR Department Redesign Tool to assess organization-al design principles alignment

• Use inputs to make structure decision

• Document

• Use Fit Test to determine suitability of new structure

This portion is done with HR

leadership team

Identify Key Stakeholders

Arrange Your Team

Implementation

Next Sections:

McLean & Company 43

Identifying your key stakeholders early on in the process will ensure you involve the right people at the right timeBe clear on who you should involve in this initiative at the onset, using the McLean & Company Key Stakeholder Power Map.

Be sensitive. Looking for greater efficiency can mean downsizing and headcount cuts to many HR employees. Be certain you involve the right people: be aware of who needs to be involved and who might be impacted by an efficient organizational design. Create your team once you have determined this.

Download the McLean & Company

HR Department Redesign Key Stakeholder Power Map Worksheet

.

Caution

• Stakeholder identification enables you to involve key stakeholders, meaning only the people who will play critical roles in your project.

• This streamlines your process and guarantees that no one’s time is wasted.

• It also helps to ensure you are gathering a number of key inputs from the right people.

http://hr.mcleanco.com/research/hr-department-redesign-key-stakeholder-power-map-worksheet



McLean & Company 44

Solicit input from key business leaders on yourdepartment gaps or strengths

Conduct personal interviews with business leaders using the questionnaire as well as any other questions you find pertinent.

• Understand future business needs, and where your department might need to grow.

• Identify areas where efficiency could be improved.• Pinpoint gap areas where structure changes would

add needed support.

HR Service & Delivery:Do you feel that the HR team has the skills and capabilities to deliver on future business goals and plans?

Is it clear who supports you from a HR perspective? Do you feel that you are spending too much time with too many HR people?

Does HR spend most of its time being reactive instead of proactive? Do HR issues get resolved in a timely manner?

Do you see that each function in HR is working towards the same ultimate goals to deliver on your business needs?

Business Strategy:What are your key business priorities for the next 2-5 years?

What new geographies will you enter or exit?

Do you see your business scaling up or scaling down?

Where do you believe HR could provide more support or less support?

What new business areas will you enter that may require a different skill set or knowledge base?

Consider HR Business Vision as a means to receiving business input. This in-depth benchmarking report provided by McLean & Company will provide you with:• An HR Satisfaction Report Card• An HR Alignment & Capacity Scorecard• Stakeholder Satisfaction Report Cards and Stakeholder

Feedback sheets from each department

Interview Guide

Business Inputs

http://hr.mcleanco.com/employee-surveys/vision



McLean & Company 45

Use this tool for a number of steps in this section:

• Tab 1:

◦ Document consolidated business inputs, HR feedback, objectives, and parameters.

• Tabs 2 & 3:

◦ Conduct the gap analysis portion of the tool, including your current state and desired state diagnostics.

• Tab 4:

◦ Obtain the results of the gap analysis, and recommendations on how to get to your desired state.

• Tab 5:

◦ Capture skills, competencies of current team, and identify gaps as well as next actions for employees.

• Tab 6 is where you:

◦ Document costs of additional/reduced FTE.

Use the McLean & Company HR Department Redesign Tool to document decisions & receive structural recommendations

Download the McLean & Company HR Department Redesign Tool.

http://hr.mcleanco.com/research/hr-department-redesign-tool



McLean & Company 46

Using the feedback collected from the business,review and capture key themes and trends Use Tab 1 of the HR Department Redesign Tool to take the following steps:

1. Based on business priorities and strategies input, document the impact of business inputs on core function areas in the tool:

• Identify to what degree the different functions will be impacted

• Analyze trends and key themes

• Document gaps

2. Review input from the business on HR service and delivery:

• Highlight areas of concern and areas where HR is performing well

• Identify gaps and potential overages in resources

Next, you will set up a meeting with your HR leadership team that was identified as part of your key stakeholder power mapping exercise.

• Involve the HR leadership team early on to ensure buy-in and acceptance of future changes in the HR structure. Doing so enables transparency, helps to engage them, and ensures a variety of inputs create the final design.

Business Inputs

Getting input along the way is important but ultimately, as the HR leader, you need to have responsibility for the vision and direction of a

project. Own the task: this is critically important. It cannot be delegated.


Tab 1

McLean & Company 47

Gather the HR leaders to interpretbusiness inputs

Take the following steps to collect feedback from the HR team on structural needs, based on your consolidated business input.

Business input discussion: Organize and conduct a meeting based on the following agenda:

• Outline the overall objective of the initiative. Let the team know what the reason is for undertaking a structural review at this time.

• Introduce the tool and share the input that has been collected from the business leaders.

• Collect their thoughts on a) business strategies and impact to HR structure and b) feedback from the business.

• With the team’s input, confirm the areas/functions that will be impacted by business needs (e.g. growth, budget cuts, etc.) and determine gaps in regards to skills, resources, delivery, or other.

HR Leadership

Team Consultation

McLean & Company 48

Now that you have solicited HR input, set specific objectives for the redesign as a team

Develop specific and clearly defined objectives and goals to guide the redesign process and achieve clarity of purpose.

We need to do an assessment and understand how big the gap is from the current state. Are we building something totally new or are these just

improvements? Where are the big issues, are we missing roles or units of work that need to be done?


Objectives:

Determine what you want to have accomplished by creating the new structure. For example, “we want our department to have better role clarity,” or “we want our structure to enable faster decision making.”

Have each of the HR leadership team members discuss the goals they believe should be set and why.

1. Collect all feedback on a flip chart.2. Highlight key themes and similarities.3. Review, confirm, and agree on objectives.4. Document objectives in Tab 1 of the HR Department Redesign Tool to ensure that

they are always kept in focus as part of the redesign.

HR Leadership

Team Consultation

McLean & Company 49

With objectives in mind, assess parameters to ensure that your redesign will be realistic

Having a set of parameters before you map out your new structure will help guide your decision-making process and ensure you stay on track.

Parameters:

• Talk to your team about the parameters that have been set for this project.

• Key parameters would include the following:

◦ Budget or cost constraints

◦ Short-term vs. long-term needs

• Outline as many details as you can now so that you don’t end up creating a structure plan that isn’t feasible later. You must keep your limitations in mind.

• Document these limitations in Tab 1 of the tool.

You now have all of the input you need from your HR leadership team, so you may end the team consultation here. Proceed

through the next steps on your own; where needed, seek input from HR leaders.

HR Leadership

Team Consultation

McLean & Company 50

Complete the gap analysis portion of the HR Department Redesign Tool to choose a design

Use the Organizational Design Principles gap analysis portion to:

• Determine your current placement along the organizational principles spectrums.

• Identify your ideal placement along the organizational principles spectrums.

• Obtain results from this input, which will provide you with information on how to transition from current to desired state, as well as optimal structure suggestions.

Gap Analysis

Tabs 2-4

Build that foundation of your department like a pyramid; assess the needs of the organization, address those needs, and build a solid foundation of functions, then over time bring in more strategic value. Each layer needs to have something to

rest back on.-- John Hovnanian, VP of Human Resources, Intermedix

McLean & Company 51

Each organization is unique. The guidance here is broad and intended to have you think about whether the outputs of the tool would be effective in your structure considerations. There are general best practices based on the three drivers we introduced at the beginning of section 2:

• If Efficiency/Cost is your driver, consider:

◦ Wider spans of control.

◦ Broader specialization; however, this will only work where your HR department is not highly technical or specialized.

◦ Standardizing, as this will help reduce costs.

• If Growth is your driver, consider:

◦ Narrower spans of control so that managers don’t become overwhelmed with the number of individuals reporting to them.

◦ Narrower specialization, particularly if your organization is becoming more specialized in particular HR functions (i.e. implementing a Center of Excellence).

◦ Moving from a generalist to a center of excellence design point.

• If Internal HR Conflict is your driver, consider:

◦ Formalizing roles and accountability to mitigate the confusion that leads to HR team conflict.

◦ Becoming more localized to allow for greater autonomy within the HR team.

◦ A chain of command that has fewer layers, which will allow for speedier decision making and minimize roadblocks.

Select organizational design principle options while keeping in mind your original driver for the project

McLean & Company 52

Use the tool to select a structure and map outchanges that need to be made

Map out your new structure based on the decisions you’ve made; creating a visual reality helps you to assess how all the different functions look together within the department.

• Use the blank templates in the Appendix or create one that works for you.

Remember your key objectives; make decisions based on accomplishing your goals.

• For example, look at Learning and Development. If cost is your priority, it might be beneficial to you to centralize it. However, if there are strong cultural differences in your different geographical locations that will make that less effective, decentralize the function to stay effective.

Refer back to Tab 1 to recall your business inputs, HR leader input, parameters, and objectives.

Use all of the inputs you’ve collected, knowledge of your own pain points and organizational culture, and your best judgement to make decisions.

You work out what are the costs and benefits of commonality or difference. To take an example, if having differentiated HR information systems is high cost

and low benefit, why would you allow that to happen? -- Peter Reilly. Director, HR Research & Consultancy

Structure Decision

McLean & Company 53

Create the structure that’s right for your department, not one that simply fits with your current staff’s skills and knowledge

Do not include any names at this stage. • Once you have completed Tab 5, the “Skills &

Capabilities” tab, you will be in a better position to assign names to boxes.

• Capture the following in each box on the organizational structure:

o Job titleo Job grade/bando Department o Locationo For management roles, number of direct

reports reporting to the role.− You may need to revisit this particular

area if span of control pops up as an issue. Consider assigning team leaders or supervisors to lessen the load on managers.

When designing your structure, leave names blank for now so your staffing decisions aren’t biased.

McLean & Company 54

“Each department hired their own training staff and it was only right before we got acquired by Google where we sat down and said this isn’t working. There are some pain points here. Let’s consolidate. Let’s centralize our training resources under HR versus business functions.”

-- Avi Singer, Training and Organizational Development Consultant

Case study: A training developer used pain points to optimize his department’s structure

Industry:Segment:

Source:

ITSmallInterview

• A start-up tech company was growing rapidly. Its HR team was tasked with helping the company double in size over the course of two years.

• The HR team proceeded to focus on hiring and training, as those were the department’s most pressing needs.

• Once the hiring speed plateaued, a training developer noticed that various departments within the business had implemented their own training programs.

Situation

• The training developer realized that all of these different training programs resulted in duplication of effort, and he wanted to create a more streamlined process.

• He spoke to the creators of each individual program to address their needs, and learn what they had found valuable in their unique training programs.

Action

• The training developer and his team consolidated the different training programs into a centralized program under HR to improve efficiency and reduce costs. He also ensured that best practices were developed and maintained while minimizing work duplication.

• He restructured his function using clear pain points to identify need and create a cost-effective solution.

Results

Structure Decision

McLean & Company 55

Use the McLean & Company Fit Test to ensure that your new design accomplishes your goals

Before you move on, do a self-check to make certain that you haven’t gotten lost in the process. Does your structure accomplish what you need it to?

Fit test:• Does your structure help your department meet business goals?• Does your structure provide required support to all business units and geographies?• Are your priorities within the new structure the same as business priorities? Are you investing in areas

that the business needs investment in?• Does your new structure promote HR alignment with business objectives?• Does the structure facilitate communication between HR functions? Between HR and other business

departments?• Does your structure make decision making and service efficient and timely?• Have you eliminated any redundancies/components that are no longer serving your needs?• Will this structure still be applicable in 2-5 years, based on what we know of business needs?• Are function heads agreed upon span of control and chain of command?• Are operations seamless and processes coordinated?• Do the changes you’ve made, and does the new structural plan meet the criteria of your outlined

parameters?• And most importantly, are your key objectives and goals met with the new structure?

If all of these questions have been answered to your satisfaction, proceed to the next step.

Fit Test

Arrange Your Team

McLean & Company 56


Interpret data collection and select a structure



Value & Outcome

1. Conduct interviews with business leaders and consolidate business input using the HR Department Redesign Tool.

2. Decide on and document objectives and parameters.

3. Complete gap analysis portion of the tool and identify areas for structure improvement and change.


• Issues or concerns discovered during the data gathering phase.

• Ownership for correcting issues/concerns.

• Action plan for correcting problems and associated timelines.

• A review of your structure and validate best fit based on targeted objectives.


• A decisive plan of action to address problems or concerns.

• Advice for most appropriate department structure.

• Validated fit test.

Your action plan will encompass:• Policies• Current organization

department structure

• Quality• Business strategy

• Service delivery• HR strategy


McLean & Company 57



Make the Case





Appendix

• Skills and capabilities assessment

• Employee movement

• Action plan

• Business proposal

McLean & Company 58

Use tabs 5 and 6 of the HR Department Redesign Tool to get an accurate picture of the people in your departmentThe big picture is important, but you now need to focus on roles and people to fully flesh out your structure.Use Tabs 5 & 6 of the HR Department Redesign Tool to:

• Create an inventory of all the people in your department.

• Map out your team’s key skills and capabilities and their current functions.

• Identify areas of potential function movement for employees, based on other key skills.

• Identify gaps and redundancies.

• Track salaries/costs to ensure that you are falling within your allotted budget.

• Send the tool to HR leaders to have them fill in details about their team members.

• Using completed chart, and pre-identified business needs, determine skills/knowledge/competency gaps, and map out some general observations to present to function heads during meeting.

Right from the beginning, you need to acknowledge the fact that not everybody will be right for their role, that you’ll need to invest in people’s development right from the start, and that may condition what you do by

way of change.


Prior to meeting with HR leadership team:

Tabs 5 & 6

McLean & Company 59

Meet with HR function heads to present structure decisions and determine overall employee movement

Share your structure decisions and reasoning with your team to determine next courses of action at an employee level.• Gather function heads together to describe the new

structure. Be prepared to explain your rationale.

• You should now have a clear idea of the missing skills or redundancies within each function, so use this information to guide the discussion.

• As a team, look at the big picture and determine what specific actions will take place, such as:

◦ Which employees will have expanded or compressed roles.

◦ Which employees will need to be let go.

◦ Which employees will move to other functions.

• Ensure that during this process, any decisions made which concern employee movement:

◦ Fall within budget.

◦ Allow each function to perform as intended and optimally by using the key parameters you outlined earlier.

• Using the skills and capabilities tool, map out your decided actions to ensure that all plans fall within budget and all required skills are accounted for.

Based on this exercise, you will now be in a better position to assign names to boxes in your new org structure.

• Go back to your org chart and insert names beside job titles in the org structure diagram.

• Have your HR functional heads review the structure for alignment and agreement.

Now that you know which employees’ roles need to change to support the new structure, clarify how that change will happen. Create an action plan to set clear guidelines for next steps, timelines, and accountabilities.

• As a team, decide on reasonable timelines based on: 1) Ease of implementation 2) Current projects and deadlines.

• Then, with individual function heads, ensure that everyone is clear on what actions need to be done as far as their own teams are concerned, such as:

◦ Who will advise impacted employees and when this will happen.

◦ When will role responsibilities be outlined and communicated.

McLean & Company 60

Use the McLean & Company RACI chart at a leadership level to determine personal and team accountability

Use the McLean & Company RACI to figure out how roles/responsibilities will be distributed among function heads:

• Ensure clarity about:

◦ Whose team is responsible for what.

◦ What each leader is personally responsible for.

• Try to work out any areas of potential function overlap and delegate those out appropriately.

• Role clarity is a key component to avoiding work redundancies and overlap and avoiding conflict. Download the McLean & Company HR

Department Redesign RACI Chart Template

.

You now have to get down to a more granular level, and look at the key mandates within your structure to ensure efficiency and clarity of roles.

http://hr.mcleanco.com/research/hr-department-redesign-raci-chart-template



McLean & Company 61

Determine how you will measure success

• Develop a scorecard which includes:

◦ Your key objectives (the measures by which you know your structure is successful).

◦ A ranking system.

• The scorecard should be completed by collecting business inputs, as you did in section 2. Conduct this process on a yearly basis (or as you deem necessary) to ensure that your structure is evolving along with business needs.

• Next, determine if there are any metrics you will track to measure the success of your structural changes. Possibilities include:

◦ Employee engagement within the HR department.

◦ Costs savings within the HR department through reduced headcount, or change of process (e.g. outsourcing).

◦ Level of business satisfaction - Re-conduct manager one-on-one interviews to assess for improvement.

◦ Turnover within the HR department (voluntary and involuntary).

You’re designing, you’re organizing toward a future desired state and as

you get close to that, you’ll re-evaluate and say, okay what is the

next horizon we’re heading towards? -- Amy Kates, Managing Partner, Kates Kesler

Organization Consulting

Monitoring the success of the redesign is critical; if there are structural issues, you will notice and resolve them more quickly by having a scorecard in place.

McLean & Company 62

Fill out the McLean & Company HR Department Redesign Business Proposal Template which includes the following sections:

• Key objectives

• Effects on business/HR department

• Timelines & next steps

• Cost

• Tracking/monitoring plan

• Present all the different components of your structure plan to show value, demonstrate business alignment, and explain the rationale behind your project.

• Once you have approval, you are in a position to move forward with the next section, implementation.

Use data from your previous steps to prove your case:• HR Department Redesign Tool

o Consolidated business feedback from Tab 1 o Structure choices based on the gap analysis

• Skills and capabilities assessmento Budgeting and employee information

• HR Department Redesign RACI Charto New leader responsibilities

Gain approval for your redesign project using the McLean & Company business proposal template

Create a business case in preparation for your approval meeting with the CEO.

Download the McLean & Company

HR Department Redesign Business Proposal Template

.

http://hr.mcleanco.com/research/hr-department-redesign-business-proposal-template

http://hr.mcleanco.com/research/hr-department-redesign-business-proposal-template

McLean & Company 63


Assess current HR team’s skills & capabilities, andidentify gaps



Value & Outcome

1. Use the HR Department Redesign Tool to capture current team member capabilities.

2. Identify gaps, resource shortages, or resource surpluses with HR leadership team.

3. Document actions and next steps.


• Issues or concerns discovered during the skills & capabilities assessment phase.

• Action for resolving employee movement issues.

• RACI chart and accountability concerns.

• Metrics and scorecards.


• A decisive plan of action to address problems or concerns.

• Advice for determining accountabilities and employee responsibilities.

• Validated scorecard.

Your action plan will encompass:• Skills & capabilities

assessment• Metrics • Accountability and role

mandates• Employee movement or

termination


McLean & Company 64



Make the Case




Implementation: Communication & Monitoring

Appendix

• Communication plan

• Defining roles & creating accountability

• Tips for implementation success

McLean & Company 65

Create a communication plan that addresses both HR and the rest of the business to ease implementation

HR:

There are multiple messages to be communicated to your team; be mindful of the right format for each conversation.

• Have one-on-ones with people whose roles are changing. This is the most sensitive approach, particularly for those whose roles are being terminated, and it creates a chance for employees to seek clarity. Do this first so that no one is taken by surprise.

• Have a town hall with all of HR to directly address the redesign. This gives you an opportunity to ensure that everyone hears the same message, and allows you to explain your rationale.

• HR function leaders should address their own teams in group meetings. Each function should gather together and discuss team accountability, and how the redesign affects the way their team operates. This encourages openness and clarity.

Business:

Ensure that the implementation goes smoothly by communicating changes clearly to everyone in the business.

Employees from other departments need to know:

• How the HR change affects them.

• If the way they communicate/work with HR is different.

• Who their new HR representative is.

• When these changes will take place.

Implementation is where many redesign efforts fail! Use a communication plan to gain employee buy-in and get the project off the ground.

A communication plan will help you to:• Explain your organizational design rationale to the entire department to get employee buy-in.• Clarify role changes with employees within HR so there is no confusion.• Explain to other departments within your organization how their relationship with HR will change.

Your communication plan will have two parts: one to discuss changes within the HR department, and one to discuss changes with the rest of the organization.

McLean & Company 66

Use the McLean & Company HR Department Redesign Communication Plan to document your communication plans

Using McLean & Company’s HR Department Redesign Communication Plan, you will document:

• Key messages

• Who is responsible for communicating what and to whom

• Delivery method

• Expected outcome

• Recipients

• Delivery date

• Status

Consider creating a specific project management team to assist with the implementation of the new structure. “The most important thing is putting in place a real project management infrastructure that says if this is going to take us 18 months, we need to dedicate time and resources to it, whether it’s full-time or part-time, but make sure there’s someone accountable.”


Download the McLean & Company HR Department Redesign Communication Plan

.

http://hr.mcleanco.com/research/hr-department-redesign-communication-plan

http://hr.mcleanco.com/research/hr-department-redesign-communication-plan

McLean & Company 67

Define role accountability within each functional team to address redundancies and work overlap• The RACI charts should be used now to

determine the accountabilities and responsibilities of every employee, not just the leadership team.

• We strongly recommend that the HR functional leaders set aside time to work with employees through RACI charts to allow for role clarity and employee buy-in within their functions. Make sure to translate those responsibilities into performance management objectives.

• In order for your HR team to operate effectively, tasks need to be separated; for example, business partners shouldn’t be doing administrative work if you have a shared services team to do that.

• This step should happen as a part of the team meetings recommended for each function within the communication plan.

In terms of tips – it’s simple, really; be clear about what the job is of the business

partner and what the jobs are in the centers of expertise, what the jobs are at shared services and be clear about where

the boundaries exist between them.


Download the McLean & Company HR Department Redesign RACI Chart Template

.

In dynamic and ever changing work environments, job descriptions are a becoming a thing of the past. Instead organizations are leaning more towards role mandates, and identifying objectives and key deliverables. Use a job description to get people in the door, but be sure to clarify accountabilities and responsibilities using mandates and objectives.



McLean & Company 68

Actively manage and assess structure to make sure the entire redesign process isn’t required again

Facilitating the new structure implementation requires long- and short-term planning. Manage the implementation process using these steps.

• Set up skills and development plans for employees whose roles are changing.

• Conduct multiple check-ins with function heads over the first three to six months of the project to get feedback and address any hiccups that arise.

• Be prepared to listen to employee feedback and complaints. Expect some pushback, and be creative and compassionate in dealing with it.

You don’t have to see things through. You can make a plan, you can start to implement the plan, you can have a few bumps in the road, and you can re-evaluate. Sometimes the best thing to do is just say you know what? That wasn’t the right move to make; let’s figure out

a new one.

-- Avi Singer, Training and Organizational Development Consultant

• Use the metrics and scorecard from section 4 to continually assess the success of your structure.• Adopt your new department structure choices to inform succession planning, professional

development, training opportunities, hiring, etc. These steps will ensure that you are continually addressing potential gaps and shortages.

• Get business input continually to ensure that your structure is suited towards accommodating future goals; the business is bound to keep changing, and your department has to change with it.

Short term:

Long term:

McLean & Company 69


Implementing the redesigned structure



Value & Outcome

1. Create a communication plan for HR and business teams.

2. Have each of the function leaders complete the RACI chart with their teams.

3. Finalize metrics and determine key milestones.


• Issues or concerns discovered during the implementation phase.

• Appropriate methods of communication.

• Key success points.


• A robust communication plan based on key stakeholders’ needs.

• An action plan for determining roles and accountabilities that are clear and concise.

• A method for measuring success based on key milestones.

Your action plan will encompass:• Success points• Communication methods

• Metrics• Next steps

• Accountability and role mandates

• RACI chart


McLean & Company 70

Summary

Optimal HR structure helps you to deliver on organizational goals and strategies

Use organizational design principles and HR/business leader inputs to make smart decisions

Arrange your team to get the most from your structure

• HR structure is more than just how people are arranged; structure affects service delivery, support to the business, decision-making speed, and a number of other critical factors.

• Conducting business interviews to ensure that your HR structure enables business goals and future needs means that your department will be strategically designed to succeed.

• Once your structure is selected, examine the individual employees within your department to get an accurate idea of where skills gaps or surpluses are. Identify gaps, and put actions in place to close gaps.

• Use RACI charts to make roles and responsibilities clear, and avoid work duplication between employees.

• Organizational design principles shape your structure: know them well and use them to make structural decisions that meet your organization’s unique needs.

• Get feedback from your HR leadership team to make sure that the needs of each of your functions will be met in the redesign.

Implementation and monitoring ensure the ongoing success of your redesign

• Use a scorecard to assess the ongoing success of your redesigned structure, and address any issues that arise.• Create a communication plan that explains the redesign clearly and logically. Be prepared to address sensitive issues.

McLean & Company 71


Appendix

• Research methodology and contributors

• Works cited

• Blank structure templates

• Workshop slides

Make the Case




Implementation: Communication & Monitoring

Appendix

McLean & Company 72

Research Methodology and Contributors

In November and December of 2013, McLean & Company interviewed several Organizational Design experts, and HR professionals with extensive experience in designing HR department structure.

The following people contributed to the research for this solution set:

• Amy Kates, Managing Partner, Kates Kesler Organization Consulting

• Avi Singer, Training and Organizational Development Consultant

• Joanne Taylor, President, Pinch HR Services Inc.

• John Hovnanian, VP Human Resources, Intermedix

• Peter Reilly, Director, HR Research & Consultancy

McLean & Company 73

Works Cited

Cichoki, Patricia and Christine Irwin. Organization Design: A Guide to Building Effective Organizations. Kogan Page, 2011. Print.

Kates, Amy. “(Re)Designing the HR Organization.” Human Resource Planning 29.2

Reilly, P., D. Robinson and H. Wolfe. “Business Models and HR: Logic or Fashion?” Institute for Employment Studies, 2005. Pages 1-17.

Ulrich, Dave, Justin Allen, Wayne Brockbank, Jon Younger, and Mark Nyman. HR Transformation: Building Human Resources from the Outside In. McGraw-Hill, 2009. Print.

Weingarden, Steve. “Building the Future: HR’s Role in Organizational Design.” Society for Human Resource Management, 2011. Pages 1-39.

Towers Watson. 2013 HR Service Delivery & Technology Executive Summary Report.

McLean & Company 74

Template Instructions

• Choose the template that most closely resembles your desired structure.• Alter as needed.• Depending on the size of your department, either fill out the blue box with one

individual name or the name of the function and list names underneath.• Consider creating a rough draft of the structure with sticky notes: this lets you

visually create different structure options but is easier to change than the PowerPoint template. Once you have your final version, create it in PowerPoint, or any other program of choice.

McLean & Company 75

Template - Functional

Head of HR

Talent Management

Total Compensation


Operations & Infrastructure

(enter text) (enter text) (enter text) (enter text)

McLean & Company 76

Template - Divisional

Head of HR

Texas Atlanta New York Business Partners

Total Compensation


Total Compensation

Talent Acquisition

McLean & Company 77

Template - Matrix

Total Comp. –Legal teamLegal Learning &

Development

Engineering

Head of HR

MarketingTotal Comp. –

Marketing team


Recruiting & Branding

Total Comp. – Engineering

team

McLean & Company 78

Template – HR Business Partner

(enter text)

Centers of Expertise

Business Partners

Shared Services

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

McLean & Company 79

Template – Solutions Center

(enter text)


Business Partners

Shared Services

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

(enter text)

Functional Teams

(enter text)

(enter text)

McLean & Company 80

McLean & Company is a research and advisory firm that provides practical solutionsto human resources challenges with executable research, tools, and advice that will have a

clear and measurable impact on your business. © 1997-2014 McLean & Company.McLean & Company is a division of Info-Tech Research Group Inc.

Workshop: Refine the HR Organizational Structure and Optimize Department EfficiencyWhether your organization is requiring you to grow or is asking you to cut down on costs, make sure that your department is structurally efficient.

McLean & Company 81

This workshop is a modified version of McLean & Company’s HR Department Redesign Blueprint

Module 2: HR Skills and Capabilities Assessment

2

Module 1: HR Department Redesign1

The HR Department Redesign process has been adapted to suit a workshop setting. Note that some processes will need to be completed PRIOR to the workshop.

The steps of this workshop include 2 modules:

Delete this slide before presenting this workshop.

The Participants of this workshop:

Head of HR and HR Functional

Leaders.

McLean & Company 82

Module 1 – HR Department Redesign

Timeline for this section Level of difficulty: Easy

Activities Tasks Duration

1.1: Getting Started • Understand the key principles of organizational design. Be aware of the various organizational structures and alternative ways to design your structure

• Understand HR Functional framework.

1 hour

1.2: Business Goals and HR Input • Outline the overall objective of the initiative.

• Share the input from the Business Leaders

• Discuss impact on a) Business strategies to HR Functions and b) Feedback from the business

• Determine gaps

1.5 hours

1.3 Set the Direction • Set objectives and parameters for redesign initiative

• Select organizational design

3.5 hours

Duration: 6 hours

McLean & Company 83

Understand the organizational design principles that affect the entire department structure redesign process

Overall Structure + Organizational Design Principles

= Unique Department Structure

SpecializationNarrow vs. Broad

Organizational Design Principles

StandardizationStandardized vs.

Localized

CentralizationCentralized vs. Decentralized

FormalizationDefined vs. Undefined

Span of ControlFew direct reports vs. Many

direct reports

Chain of CommandMany layers vs. Few layers

1.1

McLean & Company 84

Degrees of Standardization & Specialization

Standardized Localized

Narrow Broad

Standardization

Specialization

1.1

McLean & Company 85

Degrees of Centralization & Formalization

Centralized Decentralized

Formalized Generalized

Centralization

Formalization

1.1

McLean & Company 86

Chain of Command and Span of Control

Many Layers Few Layers

Chain of Command

Many Direct Reports Few Direct Reports

Span of Control

1.1

McLean & Company 87

As the last step in your understanding, consider theseoptions to prepare you for your organizational redesign

Outsourcing:

Third-Party Vendor:

Shared Services:

E-HR (manager & employee self-

serve):

Sending work outside of the organization to be completed long term – usually administrative work is outsourced.

Working with an outside team to complete a project or process, but usually shorter term than outsourcing.

Pooling resources (generally for administrative functions) so that they are standardized across business units.

Self-service HR, done through an intranet or online. Employees can resolve many of their own questions and perform basic tasks, thereby freeing up time for HR staff.

1.1

McLean & Company 88

Functional structures work best for smaller organizations

Head of HR

Total Compensation

Talent Acquisition



What is it? Pros Cons• Divides the work units by function

(i.e. Talent acquisition, compensation, etc.).

• Functional structures are fairly simplistic, and this is why they tend to work better for smaller organizations.

• Work rarely overlaps between the different units.

• Works well for bureaucratic cultures.

• Reporting structure is clear, and the structure is generally fairly flat.

• This structure promotes deep knowledge within each function group as work falls under the same umbrella– employees become experts within their silos.

• Responsibilities and type of work done within each function is clear, particularly to other departments.

• Improves efficiency and standardization.

• Does not support growth or complicated business structures.

• Could deter close client relationships – creates habit of becoming HR-focused instead of business-focused.

1.1

McLean & Company 89

Divisional structures promote client interaction

What is it? Pros Cons• Divides the work units by one

of four methods: process, product, geography, or customer.

• Works best when HR structure matches business structure; If business is divided geographically, each business unit should be supported by HR – this will ensure proper support, as well as local compliance.

• Enables business alignment since HR structure mirrors business structure.

• Improved client support.• Promotes faster decision making, as each

division has more autonomy.• If geographical division is used, it helps

ensure local compliance is achieved and decisions are made according to local norms.

• If divided by product, customer, or process, it allows HR teams to become experts for those units and adapt to their individual needs.

• Makes standardization more difficult, as each unit has more autonomy.

• Requires more resources than a functional design.

• Division of power is decentralized so there is less control over decisions made at each work unit.

• Functions must be replicated for multiple different work units, so it becomes more expensive.

Head of HR

Houston Division

Total Compensation

Toronto Division

Total Compensation

Talent Management

Tokyo Division

Total Compensation

Talent Acquisition

1.1

McLean & Company 90

Matrix structures work best in collaborative environments

What is it? Pros Cons• An exclusively matrix

structure is rarely applied to HR.

• Combination of functional and divisional structures, meaning there are multiple project teams.

• Employees have two business leaders.

• When done well, the matrix structure helps employees develop their skills in different areas.

• Projects benefit from having multi-skilled people involved.

• More agility and flexibility in who works on projects, which can help get work done faster.

• If there are two equally critical production elements, then matrix structure weights both of them equally, ensuring that neither factor is neglected.

• This type of structure definitely requires the right work culture, as it can be extremely unproductive unless collaboration is encouraged and already exists.

• It can be difficult for employees to prioritize, particularly when they’re reporting to two different bosses.

• Can result in inefficiencies since there are a lot of moving parts – it can be tough to coordinate, and determine accountability.

Head of HR

Marketing

Finance


Project team A

Project team B

Talent Acquisition

Project team A

Project team B

1.1

McLean & Company 91

The Business Partner model is the most common of all structures within HR

What is it? Pros Cons• “3-legged stool” model, developed by

Dave Ulrich.• Attempts to efficiently use resources

while maintaining client satisfaction.• Shared Services mostly administrative

duties that are required for the entire organization, i.e. benefits.

• Centers of Expertise Specialists who develop programs and do deep research.

• Business Partners Frontline interaction with clients, responsible for getting feedback from business leaders and resolving day-to-day issues strategically.

• Mix of generalists (Business Partners) and specialists (COEs) creates good breadth of skills.

• Allows for efficient delegation and separation of client-facing duties, research, and administrative tasks.

• Optimizes centralization/decentralization to reduce costs.

• Since administrative tasks are resolved through shared services, COEs and business partners are able to focus more on strategic work.

• Good model for larger and more complicated organizations.

• There is often confusion of client ownership between COEs and Business Partners, resulting in inefficiencies.

• Some HR professionals don’t like being pigeon-holed into either a Business Partner, COE, or Shared Services role; if the right work distribution isn’t found, it can lead to disengagement.

Head of HR

Business Partners

Line Managers

Shared Services



Talent Acquisition



1.1

McLean & Company 92

The Solutions Center model is the next frontier for HR

What is it? Pros Cons• This model is like the Business

Partner model but with an add-on of a “functional” team of HR specialists that are responsible for the delivery of programs developed by the COEs.

• “Turns HR into an internal professional services firm.” – Amy Kates, (Re)Designing the HR Organization

• The business partner unit is a lot smaller, and works to manage client relationships more than anything else.

• Attempts to resolve the client ownership conflict within the Business Partner model.

• The work of implementation relies mostly on the functional team: this makes the roles of the Business Partners and COEs clearer and less complicated.

• Less resources are dedicated to the Business Partners and COEs, and funneled into the operational team so department headcount remains a similar size.

• Gives lots of flexibility to the functional team so they are able to act quickly to resolve problems.

• Transitioning to this system could be tough, even though the titles are the same (Business Partner, COE, etc.), their roles are very different.

• Because the system is more complex, good lines of communication as well as a collaborative environment is needed to ensure efficiency.

Head of HR

Business Partners

Line Managers

Shared Services



Talent Acquisition



Training

Recruiting

Functional Teams

Note reduced size

1.1

McLean & Company 93

Use the McLean & Company HR framework to ensure thatall HR functions are represented in your new structureThe HR framework has been designed to represent and categorize core HR functions. We will be using this framework in a number of processes/tools throughout this workshop, as it offers a comprehensive view of all HR core functions.

1.1

McLean & Company 94

Before you embark on an HR organizational redesign, establish the primary driver for your project

The HR reorganization should identify what it is that the organization needs

and organize itself to deliver that. -- Peter Reilly, Director, HR Research &

Consultancy

Driver

Internal HR

Team Conflict

Cost/ Inefficiency

Growth What is the main

driving force behind

redesigning your department?

The Head of HR should be able to outline the driver at this point.

1.2

McLean & Company 95

Tab 1

Document feedback

HR Department Redesign Tool 1.2

McLean & Company 96

Group exercise: review business input

Review consolidated input from key business leaders and comment on the following:

• What other themes and trends are you seeing that have not yet been identified?

• What might the impact be on the various functional areas in HR?

• What feedback from the business resonates?

• What feedback is a surprise?

• What other comments would you like to add?

1.2

McLean & Company 97

Group discussion: Set specific objectives and parameters for redesign

Identify specific objectives for the redesign process and achieve clarity of purpose.

• Use the organizational design principles to guide your decision.

• As a team, identify key themes.

• Review and confirm key objectives.

• Objectives will be documented in the tool for future reference.

1.3

McLean & Company 98

Small Group Exercise: Complete the gap analysis portion of the HR Department Redesign ToolEach team will be assigned a category.

Use the Organizational Design Principles gap analysis portion to:

• Determine your current placement along the organizational principles spectrums.

• Identify your ideal placement along the organizational principles spectrums.

• Obtain results from this input.

• Each team will present their findings to the larger group, based on the category they completed in the tool.

• Conduct group discussion and alignment.

Tabs 2-4

1.3

McLean & Company 99

Breakout Activity: Map out HR function redesign

• Function leaders will map out the new structure of their own functions, using current organizational charts and creating a new one.

• Highlight any changes or gaps in each function based on the new structure.

• Function leaders will present their proposed new department structure to the team.

• Collect team input and feedback to confirm actions and next steps.

• Use a flip chart to capture gaps in skills, knowledge, or resources as well as staff surpluses. This information will be used in Module 2.

1.3

McLean & Company 100

Module 2 – HR Skills & Capabilities Assessment

Timeline for this section Level of difficulty: Moderate

Activities Tasks Duration

2.1: HR Skills & Capabilities

2.2: Role Mandates

• Review HR skills & capability and determine staff changes based on redesigned org structure

• Confirm actions and next steps• Complete cost analysis (high level)

• Introduce RACI chart• Identify and capture high level tasks at

a leadership level• Establish RACI based on input from HR

functional areas• Review and confirm for alignment

purposes

2.5 hours

2 hours

2.3: Monitoring • Establish metrics and collection methods

• Establish key milestones for evaluating progress

0.5 hour

Duration: 5 hours


Group Exercise: Skills & Capabilities Assessment

• Review Skills & Capabilities Assessment for each of the HR functional areas.

• Each function leader talks high level about team members.

• Reference gaps and surpluses from module 1.

• Review flip chart from module 1.

• Collect input from other function leaders to see if they have gaps that can be filled by surplus staff.

• Surplus staff will also be looked at in reference to role expansions or role upgrades.

• Capture actions and next steps in tool.

• Confirm agreement on actions and timing.

Tabs 5 & 6

2.1


Group Exercise: Align Role Mandates

As a team, determine what roles and job mandates have changed as a result of the redesign.

Individual Exercise:• Each HR functional leader identifies tasks in the left hand side of the RACI chart.• Each HR functional leader identifies RACI based on the various HR team members.

Group Exercise:• Functional leaders will present their RACI and collect input from the team.• After group discussion, RACI will be updated.

2.2


Determine how you will measure success

• Develop a scorecard which includes:

◦ Your key objectives (the measures by which you will know your structure is successful).

◦ A ranking system.

• The scorecard should be completed by collecting business inputs, as you did in section 2. Conduct this process on a yearly basis (or as you deem necessary) to ensure that your structure is evolving along with business needs.

• Next, determine if there are any metrics you will track to measure the success of your structural changes. Possibilities include:

◦ Employee engagement within the HR department.

◦ Costs savings within the HR department.

◦ Improved business satisfaction. Re-conduct manager one-on-one interviews to assess for improvement.

◦ Lower turnover within the HR department.

◦ HR costs per employee.

2.3

Hr refine-the-hr-org-structure-and-optimize-department-efficiency-sb

Recruiting & HR

hr structures

hr organizational structure

hr departments

hr department redesign

hr structure changes

redesigning hr structure

introduction hr leaders

mclean company members