Andrey Kulikov, SAP

March 2021

Building Future HR Operating Model

2

Journey To The Future HR Operating Model

Design the target HR operating model

Evaluate current HR capabilities

and identify gaps between

current and target states

Execute the roadmap to resolve

gaps and establish criteria for

measuring successful execution

1

23

3

Design the target

HR operating

model

1

4

Why Should You Change Your HR Operating

Model?

To achieve HR agility

To improve operational efficiency

To make HR customer-centric and value-driven

Some Inspiration Ideas

6

Future HR Model: McKinsey Agile Scenario

Automation and analytics reduces CoE size: fewer global expert roles, but with deeper focus

Business partners focus on talent value and become Talent Value Leaders

Pool of multiskilled professionals capable to perform most HR actions

7

Five Approaches to Drive Next-Gen Operating Model (by McKinsey)

https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20

Digital/Our%20Insights/Introducing%20the%20next-

generation%20operating%20model/Introducing-the-next-gen-operating-model.ashx

8

Future HR Model (Gartner)

9

Future HR Model: 5 Imperatives (Gartner)

Create a dynamic pool of problem solvers

(about 40% of the staff)1

2

3

4

5

Provide agile support with next-gen CoEs (10%)

Replace HRBP Role with Strategic Talent Leaders (10%)

Replace Shared Services with GBS (15%)

• Create an HR COO role for strategic oversight

• Build an HR Technology Team to own technical infrastructure

• Add people relations manager to provide necessary functional

support

Source: Gartner „HR Operating Model of the Future“ 2019 report

Build a robust HR operations and Service Delivery Team

• Their job is to define, test and build talent solutions

• May come from traditional COEs, HRBPs or other LoBs

• Flatter network of interconnected teams

• Provide deep expertise in HR subject areas

• Employ more contractors and external experts

• Goal is to solve critical challenges

• Remove HRBP from all transactional activities

• They should own talent management strategy for their Bus

• Replace junior level HRBPs with people relations managers

• GBS function is much more customer-centric, not only

transaction-driven

• May perform long-term projects

10

Insights from Deloitte „High Impact HR Operating Model“ Research (1/2)

Adaptability

High-performing HR organizations are designing

their operating and management models for

adaptability in response to never-ending disruption

Segmentation and Flexibility

High-performing HR organizations are creating the

future of work and enhancing worker performance

while customizing the worker experience through

workforce segmentation and flexible HR offerings

11

Insights from Deloitte „High Impact HR Operating Model“ Research (2/2)

Platform-Oriented Technology Strategy

High-performing HR functions implement a

platform-oriented technology strategy to redesign

work and to stimulate high-value human

interactions

Agility across Functions

To meet the demands of the future of work, and to

fully leverage the benefit of the changing workforce

composition, HR must take a broad network-based

and workforce ecosystem perspective to its offerings

to assemble and activate teams of workers from

across the workforce spectrum (full-time, part-time,

contract, gig, and other workers, along with AI

integration).

12

„Next Gen HR Operating Model“ (PwC)

https://www.pwc.de/de/human-resources/pwc-shaping-the-next-generation-of-hr.pdf

13

People Value Chain Model (EY)

https://www.ey.com/en_gl/workforce/future-hr

14

HR Architecture Approach (KPMG)

https://assets.kpmg/content/dam/kpmg/pdf/2012/07/designing-next-generation-hr.pdf

15

Designing Operating Model with Different Canvas (Osterwalder‘s Canvas)

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Designing Operating Model with Different Canvas (Wardley Maps)

Value Chain – series of interdependent activities required to meet user needs

Evolution – maturity of each activity, ranging from unique to commodity

Wardley Map – map of structure of business capabilities needed to serve the customer

17

Evaluate current HR

capabilities and identify

gaps between current

and target states

2

72%of HR leaders are operating or currently

implementing the three-part (Ulrich) model

Source: Gartner 2019 Report “The HR Operating Model of the Future”

54%of HR leaders are unsure about

alternatives to the three-part model

19

Most Frequently Implemented Changes

20

Common HR Operating Model Challenges

HR functions lack digital

tools and skills to remain

competitive

HRBPs suffer from too

much transactional work,

lack strategic tasks

COEs lack flexibility

and resources to

properly respond to

business requests

21

Example of Assessment of Existing HR Operating Model (PwC)

https://www.pwc.de/de/human-resources/pwc-shaping-the-next-generation-of-hr.pdf

22

HR Operating Model Change: An Example

Strategic HR

HR Consulting and Partnering

HR Operations and Services

Strategic HR

HR Consulting and Partnering

HR Operations and Services

More leadership support

More HR projects

More transparency of HR

value to business

More user engagement

More people insights

Less process steps support

Less service brokering

Less go-to person

10%

30%

60%

20%

60%

20%Automation Simplification

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Governance Matters More Than Structure

https://humancapitalresearch.deloitte.com/article/five-top-findings-for-bringing-exponential-change-to-the-hr-operating-model-9854/

“There is a tendency in HR to

overemphasize structure when

considering the HR operating model,

thereby limiting the ability to anticipate

and address business needs”

Rather than a heavy focus on

structure, HR should look more closely

at governance. Governance is defined

as “a system by which an organization

makes and implements decisions in

pursuit of its objectives.”. A focus on

governance incorporates customers,

processes, and objectives required for

an operating model but shifts the focus

from structure to interactions and ways

of working

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Possible Change: HRBP Alignment

1

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Possible Change: Flexible Project Teams of HRBPs and Specialists

Example A:

Example B:

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Possible Change: HR Team Owning HR IT Infrastructure

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Possible Change: Evolution of COEs

https://www.gartner.com/document/code/712489?ref=authbody&refval=3979979

How Does SuccessFactors Enable

Changes in Operating Model?

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SuccessFactors Enablers for Future HR Operating Model

Stakeholders SAP SuccessFactors Enablers Outcomes

Self-services

Mobile access

Dashboards and reports

Automated and integrated workflows

Employees and

Managers

Greater level of autonomy

Faster time to complete processes

Improved user experience

Better decision making

Holistic employee data structure

Automated workflows

Ad-hoc reporting

HRBPs

Less time lost on data checks and error corrections

Transactional work moved to operations

More time for strategic HR projects

Standardisation of processes

Holistic employee data structure

Ad-hoc reporting

Automated workflows

COE experts

Time savings on manual reporting

Transactional work moved to operations

More resources for strategic HR projects

Services and Operations

Specialists

Self-services

Authorizations and workflows

Dashboards and reports

Integrated eco-system

Less time on manaul transactions

Less requests due to self-services

More time for value-added services

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End-To-End Processes for All Stakeholders Enabled by SuccessFactors

(„Manage Workforce“ Process Example)

Candidate/New Hire/Employee/Contingent

Next Level Manager/HC Approver

HR Business Partner

(Sourcing) Recruiter

Manage Positions

(Create/Update

Position)

Manage

Probation

Recruit &

Onboard via

Attract & Acquire

Process Bundle

or external

processes

Manage

Hire/Rehire/

Administer

Internal Hire/Add

Contingent

Worker

Update

Personal

Data

Update

Employment

Data (Data

Change/

Promotion/

Demotion/

Lateral Move)

Manage

Temporary

Employment

Administer Off

Cycle Salary

Adjustment

Manage

Termination

(Voluntary/

Involuntary/

Retirement/

Death)

Manage

Leave of

Absence

Manage Global

Assignment

(Start/

Monitor/End)

Global Mobility Specialist

Host Line Manager

Manage

Organizational

Data

Hiring/Line/Home Manager

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SAP SuccessFactors Leading Practice as Enablers

A service providing a

ready-to-use solution

for SAP

SuccessFactors

Based on leading

practices and

processes from SAP

reflecting real-life

implementation

experience

Offers end-to-end

HR processes, a

proven implementation

approach, clear

guidance, and

predictable outcomes

Reduces cost, avoids

typical implementation

risks, achieves a high-

quality implementation

and an unmatched

time-to-value for our

customers

SAP® Model

Company

In the next part of the document we will provide the list of Leading Practices based on real-life HR

implementations experience (part of SAP Model Company offering) and evaluate the relevance of

the practice for different components of HR operating models.

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Consider the Impact of Change When Deploying HRIS system

“Digital Transformation Is Not About Technology…

…if people lack the right mindset to change and the current organizational practices are flawed,

digital transformation will simply magnify those flaws”Harvard Business Review, 2019

• Working in the cloud requires an agile mindset, is the business prepared to take ownership?

• Consider the “to be” span of control; new processes and data will become available to your employees and managers

• Be clear about your new HR and IT operating models; changes must be clearly communicated with your organization

• Leverage the Leading Practices; adopting standard processes will lead to multiple business benefits, but individual

groups will need to change their ways of working

• Stakeholders need to have clear expectations and understanding of, and at the same time need to support the change

to their current ways of working

• With more people using the system, a clear definition of roles and responsibilities is essential; managers will have

increased ownership over talent processes, and the harmonization of processes may impact existing roles and activities

• Don’t underestimate data gathering; adopting a pre-built solution will inevitably lead to a change in what data you collect

today

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Examples of Changes in the Support Model

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Example of Service Delivery Approach

35

Execute the roadmap to

resolve gaps and establish

criteria for measuring

successful execution

3

36

Harvard Model for Human Resource Management

Stakeholder Interests

• Stakeholders

• Management

• Employees

• Government

• Community

Situational Factors

• Workforce characteristics

• Business strategy

• Labour market

• Law & societal values

• Techology

HRM Policy Choices

• Human Resourceflows

• Reward systems

• Work systems

• Employee Influence

HRM Outcomes

• Commitment

• Congruence

• Competence

• Cost-effectiveness

Long termConsequences

• Org. effectiveness

• Individual wellbeing

• Societal wellbeing

Harvard Framework for HRM (Beer et al. 1984)

We should define target indicators and

measure success

37

Example of Integrated Value Scorecard

38

Establishing Alignment of Priorities and Metrics (Example)

39

Examples of Metrics To Be Used in New Operating Model

Metric Type Metric

Time Savings

Time spent by HR administrators on personnel administration and org. management

Time spent by managers on personnel administration and org. management

Time to complete employee HR requests

User Adoption

Number of employees using self-services

Number of managers using self-services

Number of employees using mobile app

% of user adoption for new solutions

User ExperienceEmployee NPS

Employee Engagement Score

HR Efficiency

HR FTEs per 1000 employees

Total HR cost per employee

Number of local process deviations / number of harmonized processes / process steps reduced

Number of ad-hoc requests per year

Number of paper forms

% of HR data that is accurate

Number of data errors

Andrey Kulikov

HR Value Advisor at SAP SuccessFactors

Andrey.kulikov@sap.com

Twitter: https://twitter.com/varkalos

LinkedIn: https://www.linkedin.com/in/andrewkulikov/