Sector/Discipline/ the way we see it

Alliance

New Model, No Army

How the credit crisis provides the perfect catalyst to

radically redesign HR

We think we’ve cracked it! There is a percentage of managers concerned

viable alternative to the Ulrich model
that is capable of delivering higher
quality HR Services at a better price.
How? By applying a set of technology
enabled design principles and by not
being afraid to kill a sacred cow or
two. Our view is that it should be
possible to move the HR employees to
staff ratio from 1:100 to 1:250 or
better.
Background
Delivering HR services is palpably
more challenging given the current
global economic crisis. The percentage
of employees concerned about job
insecurity, lack of career opportunity,
career ethics and lack of reward has
skyrocketed. This puts much greater
pressure on those tasked with
delivering HR services.
Likewise the
with redundancy processes,
outplacements, talent attraction and
retention and the reengagement of the
remaining workforce has also spiralled
upwards. HR is under pressure and
the old model (usually a version of
Dave Ulrich’s model) is consistently
being found wanting:
Centres of Excellence – Are often
proving to be little more than Centres
of Nothing Special (CONS) containing
a rag tag mixture of good people who
we didn’t know what to do with when
we did our last organisational HR
restructure in the 90’s;
Shared Service Centres – Are often
failing to deliver on the promise of
more for less due to inherently poor
process design and technology. This
is often compounded by having
completely opaque charging structures
and no understanding of the
requirements of the business;
HR Business Partners – Are still
running around delivering tea and
sympathy and wading their way
through the administrative tasks.
Despite all the talk and exhortation
few have been able to act as strategic
business advisors to the businesses
they serve. Perhaps not surprising as
many were personnel managers who
have simply changed job title.
Add into the mix the new imperative
for many businesses to reduce both
the cost and size of the HR
department itself and all the elements
are in place to catalyse a revolution in
the HR model.
The good news is that in our wide
ranging discussions with senior HR
executives we think we have seen the
future. The absolute design is not
defined but we think we know the
principles behind it.
The bad news is that history and
evolution tells us that those who are
slow to leap to a new model will be
handicapped. Slow adaptation is not a
viable option - natural selection in
Financial Services is now a very rapid
process. If your plan for survival is a
safe implementation of the Ulrich
model, start worrying!
So what has changed to enable
us to see the New Model?
There are five major trends that will
each impact HR but when taken
together they have the power to
transform the current HR delivery
model. Together they represent the
Perfect Storm that will impact HR
over the next decade transforming it
entirely.
Trend 1 – A Global Credit Crisis –
2009 has provided an object lesson in
austerity in Financial Services –
discretionary spending has been
massively reduced, cost optimisation
is, predominantly, the only game in
town and particularly in the Retail
Banks all efforts are focussed on
restructuring. HR must contribute to
this agenda – both as an enabler for
the business and as a source of cost
reduction. To date in 2009 the HR
departments in FS have been flat out
supporting restructuring and have yet
to review their own operating models
in line with the new cost saving
imperatives (usually a COO driven
20/30% reduction). When they get to
it they will discover that trying to
“shave” 20% off the current model
will leave them well short of the
COOs requirements. A radical
solution is a must. The other relative
certainty is that this new austerity will
be a consistent theme for at least the
next three years. The silver lining is
of course that necessity is the mother
of invention – new low cost models
will emerge.
Trend 2 - The emergence of cloud
technology – The ‘00s was the ERP
decade. Most FS businesses invested
heavily in ERPs to ensure that they
had reliable and secure sources of
data, to ensure they reduced rework
in data entry and as a catalyst to
streamline and standardise processes.
However, 15 years on and despite the
promises from the big ERP suppliers,
it appears we have yet to come across
the pot of gold at the end of the
rainbow. Mirroring the challenges of
delivering hi-tech military solutions,
the rate of change of technology often
renders aspects of the ERP systems
obsolete and in need of frequent
expensive upgrades. The advent of
“cloud” computing provides an
alternative. The “cloud” enables
businesses to “buy” infrastructure
services from 3rd party suppliers
which are accessed via the web –
paying only for what they use, when
the use it and leaving the
responsibility for upgrading the
infrastructure and improving the
quality of the service in someone
else’s lap. As a result there are now a
growing number of providers who are
offering pay per use HR services. Our
research indicates that there isn’t an
HR service that you can’t currently
purchase from the “cloud”.
Trend 3 – Advances in mobile
connectivity - Traditionally most FS
businesses and their cousins in Retail
have claimed an inability to move to
“online” delivery of services to
frontline staff due to a lack of access
to technology - particularly in the
branch environment in Retail
Banking. This has ensured a “thicker”,
hybrid HR model than the traditional
Ulrich version which is predicated on
the ability to self-serve. However, with
the massive advances in mobile
connectivity, making internet access
through handheld devices an everyday
occurrence, it seems misguided not to
revisit the options for self-service that
these advances make possible. The
biggest barrier to this inevitable shift
is often the relatively entrenched
positions of central IT functions who
“worry” about security and loss of
control. On closer examination these
“worries” are based on integrating new
mobile solutions with very old (‘80’s
& ‘90’s) technology systems – this
issue goes away when you open up
the rent it from the cloud option.
Trend 4 – Web 2.0 and social
networking – The 00s has seen the
general public embrace the
capabilities of Web 2.0 at a much
more rapid rate than most established
businesses. Whereas individuals in
their private lives think nothing of
searching the Web for information,
advice, expertise, goods and services
we have been remarkably slow to
adopt a similar mentality inside our
businesses. In fact many organisations
have banned access to the Web and
social networking sites – often using
the pretext of security, when the real
issue is often the ability of old IT
systems to deal to provide the
processing power required. The gap

between private and corporate
experience and expectation has now
grown to such a size that the pressure
is really on businesses to provide new
access to sources of help, advice and
service
Trend 5 – The maturing of HR
outsourcing – the 00’s has seen an
inevitable improvement in both the
quality and quantity of HR
outsourcing services available. This
enhanced maturity has ensured that
price, commercial flexibility and
quality continue to improve. The old
mantra of you can’t control what you
don’t own is now looking very
redundant as in many cases the level
of service provision is proving
superior in the outsourced mode.
This trend will only continue to move
in an improving direction.
Outsourcing contracts wisely entered
into should hold no fear.
Taken together these trends generate a
new set of operating principles that
supercede the current model
assumptions. This makes change
inevitable - we suspect we should now
only be talking about the scale and
the pace of the change. See Figure 1.
Figure1
Current Model Assumptions
Ownership ensures instant
access
Quality service comes from
customisation
Only “our people” can
understand our business
Cost effectiveness is about
reducing Opex – Capex
expenditure is a necessary evil
Only “our people” can
understand our business
Sourcing van IT in de publieke sector
Capgemini Consulting
The New Model
And what does all this mean for the
future of the HR army? If you flow
with the trends and apply the new
model principles you quickly move to
a model where by you purchase pretty
much all of your HR services from
external providers – probably accessed
through either a handheld mobile
device or via a portal on the laptop,
leaving only a couple of HR roles
behind and vastly reducing the HR
headcount.
And the 2 roles…
Firstly the holy grail of a truly
strategic HR Business Partner becomes
reality. The business partner owns a
list of services, and drives innovation
by bringing new ideas to the business
as service options.
The second HR role is the
procurement specialist who delivers
you best value in what you buy and
ensures it is capable of being delivered
via a mobile device or portal and
manages the supplier contracts and
relationships.
New Model Principles
Instant access ensures instant
access
Quality service comes from
configuration
Smart people understand our
business
Cost effectiveness is
about reducing Capex and
maximising the return on Opex
Smart people understand our
business
the way we see it
So what can HR departments in
FS do as a starting point ? A
few thoughts…
If ‘centres of nothing special’ are not
going to bring excellence, then buy-in
the service you really need or
outsource provision. There is already
plenty of choice in the marketplace.
In many shared service centres the
only thing really shared is the
premises. Co-location can make some
savings but don’t stop there. HR,
finance and IT can share a lot of
processes to improve quality and cut
cost. And if banks become utilities,
delivering a highly regulated
homogenous service, basic support
requirements will be identical so you
could share with competitors.
Explore new options.
Outsource all your recruitment and
buy the people you need. Re-invent
talent management to find what really
makes your top talent tick, so you can
specify exactly what you want. You
can be very specific - there will be
plenty to choose from.
And finally, act like a business. If a
pilot exercise fails, abort it quickly
rather than the usual HR approach of
assuming patience will bring
improvement. Try something else as
the 2009 version of financial services
is not prepared to wait for results.
But don’t just take our word for
it …
In a few of the early adopters of the
new HR model we are starting to see a
move towards a far more agile and
‘composite’ HR function with the
growing adoption of software as a
service (SaaS) solutions. But to date
we have only seen people take a few
baby steps – the giant leaps are yet to
come – but they will come.
In June this year Siemens took the
significant step of signing a global
enterprise subscription with
SuccessFactors for their Talent
Management suite of products.
Ultimately these products will service
 www.capgemini.com

420,000 employees in 80 countries This is a global company opting to

and in 20 languages.
“Our board has a global vision which
is a worldwide strategic focus for us
today,” said Mrs. Horstmann, Head of
Corporate Human Resources, Strategy
and Leadership Development of
Siemens AG. “SuccessFactors will be
instrumental in helping us achieve
these core objectives by closing the
gap between strategy and execution. It
will also enable us to globalize onto a
single platform, clearly separate
strategic execution and management
from transactional HR.”
Mr. Kleinjohann, head of CIT, said
“The Enterprise Cloud Computing
business model is a strategic direction
for us. It not only lowers IT costs, and
creates faster end to end processes,
but can also grow with our
requirements both globally and
locally.”1
utilise a cloud solution for the ‘value
add’ aspects of HR rather than further
deploy their incumbent ERP solution
– and it wont please the ERP
providers. But once the technology is
outsourced or hosted then why not
the resources as well?
And in conclusion
So the new mantra for HR is really
“rent it, configure it then reconfigure
it”. Pay for what you really need and
only when you need it.
In the past we have referred to a
concept of ‘thin HR’ but in the ‘no
army’ world of financial services HR,
it becomes positively skeletal.

1 http://www.successfactors.com/press-releases/
detail/?id=1297042

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Rick Freeman Andy Crossey

Senior Vice President Vice President
Capgemini Consulting Capgemini Consulting
Head of Financial Services Head of HR Consulting
Tel. +44 (0) 870 904 5529 Tel. +44 (0) 870 238 8958
rick.freeman@capgemini.com andrew.crossey@capgemini.com

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