Inventing the Future of HR

Pressed by growing global demands, HR executives at Hewlett-Packard Co. needed a tool to help them stay competitive now and in the future. What they came up with could be a game-changer.

Thursday, April 1, 2010
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If necessity is the mother of invention, then the HR executives and engineers at Hewlett-Packard Co. deserve cigars and candy.

True, they might be more circumspect in celebrating their recently announced arrival of a new workforce-management tool, but they would no doubt admit -- if pushed, perhaps -- that it was forged out of demanding market pressures and their own sheer will to peer into the future to wield a competitive edge.

They also seem to know that their creation could be a game-changer in workforce management, and could alter the landscape of how HR works with key business decisions.

It couldn't have come a moment too soon. HP is the world's largest information-technology company, with a global workforce of more than 300,000. In 2009, the Palo Alto, Calif.-based company ranked No. 9 in the Fortune 500 listing of America's biggest revenue-producers. Just the year before, HP acquired Plano, Texas-based technology services and outsourcing provider Electronic Data Systems, which came into the corporate fold with a huge chunk of integration challenges. EDS had more 130,000 employees.

But in the world of technology, fortunes can change in a nanosecond. You've got to stay nimble or you'll lose your competitive edge to someone else's Next Big Thing. HP seems determined to invent its own future competitiveness.

Marcela Perez de Alonso, the executive vice president of human resources for HP, says her company's new tool doesn't just handle the challenge of integrating the workforce; it levels the playing field between business interests and HR, allowing human resource executives to talk on a peer-to-peer basis about business goals and workforce planning.

It isn't as if HP's executives hadn't already worked with or considered some of the major players in workforce-management services, Perez de Alonso and others say. Some products handle recruitment well, for example, but lack talent-management capabilities.

None of the tools, they say, provided the insight that would let HR turn a conversation with business leaders into a solid plan to help HP outperform its competitors. In the technology industry, that competitive edge is the brass ring, and HP is determined to keep its grasp on it.

Perez de Alonso says she didn't want HR to be a passenger on the business train; she wanted HR to help lay the tracks.

Developed in-house by HP's engineers, working with the company's human resource executives, the tool is called the HP HR Optimization Model, or the HROM. The model marries proprietary software with an almost philosophical viewpoint of integrated HR strategies. Some of those strategies are based on industry standard definitions of what entails workforce-planning concepts, such as learning and development.

But while the tool is inspired by such standards, HP executives stress that it is specifically tailored to their company's workforce needs to engage and align productivity with business demands. Benchmarks and analytical data can be extracted from the system to reveal snapshots of productivity, cost, engagement and workforce development over time. The data can form the basis of future scenarios to aid strategic business decisions.

The 60,000-Foot View

Work on the project began in October 2008, when Perez de Alonso and her team held an off-site meeting to discuss ways in which HR could fundamentally change its approach to workforce management. They needed more than a 60,000-foot view, she says; they needed a way to pull HR strategies together and use them to reliably predict business cases.

"When you look at [traditional HR], in all the models that I've worked with in my career, you're likely to see the season of talent management, or the season of ... performance management or the analytics around costs when you have to come up with salary increases or total rewards," she says. "The beauty of this is that we put them all together in one place. So, our HR professionals can have the conversations over the year, proactively, around any of these topics, and drive actions to make improvements."

Though Perez de Alonso says the company's acquisition of EDS was not a catalyst in the development of the HROM, the timing was auspicious.

"At the time we started developing the tool, we were working on the integration of EDS," says Perez de Alonso. "Immediately, EDS got [the] more sophisticated HR tools, because we started applying" the concepts and the developing tools of the HROM to the EDS integration. Staffing requirements, job architecture, location and other factors were entered into the HROM to help onboard the new staff.

Throughout 2009, Perez de Alonso and her team worked with engineers to refine the HROM; they unveiled the tool and began teaching HR executives and managers how to use it in October 2009. The following month, HP announced a deal to acquire the networking giant 3Com, based in Marlborough, Mass., so thousands more employees would be streaming into the HP system.

With the HROM, she says, HR no longer has to wait for business leaders to ask about workforce improvements; instead, HR can drive the conversation and show the data to support a business case for profit and productivity.

"We can go historically and say how this workforce looked a year ago, how it looks today and what we think it should [look like] in the future," given the business leader's goal, she says.

Four Quadrants

From the beginning, part of the challenge in planning the HROM was to round up all of the HR strategies into one easy-to-manage framework. It wasn't easy, says Ryan Robinson, the vice president of global functions of HR. Robinson was also one of the key planners of the HROM.

"I think it came back to thinking about, 'Where do we see the biggest impact for the investment of our actions?' If we're going to take an action and we want to make it have a significant impact to the organization, what are the core processes that have the biggest impact?" says Robinson.

The team decided on four key HR strategies, called quadrants: Productivity, Cost, Quality and Engagement. Into each of these strategies, they tucked processes that were essential to those strategies.

For Productivity, essential processes include workforce planning; for Quality, processes include talent management, staffing, and learning and development; Cost includes analyses on total cost of the workforce and job architecture; and Engagement includes rewards and recognition, and employee communications.

Team members also redefined their idea of culture to make it a key ingredient in their model (see sidebar).

Working with engineers at HP, the executives created the software component of the HROM -- a Web-based interface that allows them to query performance data for a variety of productivity metrics to produce snapshots at any time.

"Every business manager, every general manager, is interested in how they can make their workforce more productive, while also paying attention to their costs," says Robinson. "What this model allows us to do is to enter into that equation, enter into that dialogue right with them."

Robinson actually relied on the HROM recently when IT needed to consolidate 85 global data centers down to six and trim as many as 6,000 software applications by two-thirds.

"We had to think about the workforce; what was the right workforce that was going to increase productivity?" he says. "We had to think about the mix; we were spending most of our time sustaining IT infrastructure, rather than building innovative, new IT applications and infrastructure."

Robinson talked with HP's chief information officer, Randy Mott, and discussed ways to both control costs by downsizing the workforce as well as increase its capacity to innovate.

"This model helped us to think, 'OK, what kind of quality do we want to make sure that we own,' " he says.

Analyzing productivity, costs, engagement and talent, the HROM helped them pare down the far-flung data centers and increase innovation, he adds.

"By using this model, it allowed us to think, holistically, about all the levers we could pull to really drive a higher level of productivity for IT, and it's been a pretty dramatic transformation," says Robinson.

Tearing Down Silos

Karen Beaman, the founder and CEO of Jeitosa Group International, a San Francisco-based global HR consultancy, says the HROM appears to meld the silos of HR processes, one of the most vexing challenges to executives.

"That's been the problem with HR and HR systems in the past," she says. "You've got your recruitment organization, and they have their recruitment system, and you have your compensation, and they have their comp system ... ."

While some popular workforce-management vendors are cobbling together more integrated services in their software, Beaman says, a total workforce-planning system is the brass ring that remains an elusive goal.

"You're either a great recruiting vendor, or you're a great comp vendor, but you're not necessarily both," she says.

John Renfro, HP's vice president of HR for the imaging and printing group, and vice president of the company's global workforce strategy, planning and engagement, says he's all too familiar with the limitations of today's vendors. Before he arrived at HP, Renfro was the senior vice president and chief human resource officer for The Walt Disney Co., based in Burbank, Calif.

"There, we were always hoping that that next PeopleSoft version was going to incorporate the changes that we were talking to that firm about. They rarely did," he says. "We've created our own and we have a lot of nimbleness to create that kind of competitive advantage inside of HP. For me, that's been probably the most freeing [aspect] of working on the inside of HROM, versus trying to make an outside enterprise-software system work."

Renfro was among the planning team for the HROM. From the beginning, the HR planners worked to organize its quadrants, and then began to develop the software that would tie those quadrants together and allow managers to mine and analyze the oceans of workforce data.

"We wanted to look at the data in a much more quantitative way, pulling out insights into the future more clearly and ultimately driving competitive advantage," he says.

Though the tool is still young, Renfro says, the competitive advantage that it offers HP is tangible.

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"You know, the term 'future-proofing' has been used, where you try to get ahead of the future, so you get ready for the challenges that are coming," he says.

"There are hundreds of small opportunities to create competitive advantage," he adds, "and actually, if we can get out ahead of the business, to kind of future-proof where our businesses are going, be much more proactive in the way that we look at the workforce, I think this is a really big opportunity for us."

Renfro refers to the HROM as "kind of decision science 2.0," and although he says the tool is still somewhat young, it's developing quickly.

His workforce strategy and planning team has already begun to add apps -- those ubiquitous small programs that integrate into a system to focus on one or two specialized functions.

"We've built almost 25 apps now that are kind of protocols for business partners or talent managers," he says. "Some are tied to staffing or compensation, things that would be very insightful, quick analyses that we kind of pre-program."

He says he thinks the library of apps will continue to grow, and he's already started to consider how he can give credit to those who create value to the system by adding their own apps. And, as the system continues to develop, so does its ability to future-proof HP, he says.

"I think we're ahead of just-in-time business analysis already," he says. "I think we really have an aspiration of being more predictive, as we look forward."

Business Leaders Required

But the HROM is more than a "cool tool," says Perez de Alonso. With its ability to mine data and help HR leaders engage in predictive analysis comes the responsibility of thinking like a business leader, she says.

"I want business leaders in HR, not HR practitioners," she says. "You need to speak the business language, and you need to be able to think like the business that you are serving in such a way that, now, you are really being proactive on improving the quality and overall optimization of your workforce."

Speaking the business language may be a hurdle for many HR practitioners, she says. "You can have all this data, all these tools, but if you don't have the knowledge or you are not experienced working as a business analyst, too, I think you [will] have a problem."

Beaman says such a transformation in HR is still evolving, though most executives know they've got to raise their game.

"Obviously, there has needed to be quite a shift in the skill sets that HR professionals need in order to do their jobs," she says. "I see that shift happening. I really do. I've seen companies and HR professionals really making that shift to make the business better. Not everyone's there, but there are quite a number who are moving in that direction."

Robinson says the HROM lets HR executives drive the conversation of business planning because of its ability to analyze data and predict potential outcomes.

"It allows you to enter into that higher value of strategy discussion, where you're now beginning to think about influencing" the business, he says. "Business leaders are going to be interested in this stuff, because the analytics directly apply to them thinking about their productivity, which causes them to think about their overall strategy."

Using the one-two approach of workforce productivity from the HROM's philosophical point of view and the software tool that mines HP's employee data, for example, executives can base their plans on costs associated with engagement, size, location and support of their workforce.

The longer the HROM is in place at HP, says Robinson, the better its data analytics will become.

"That's something that I think will continue to evolve and grow," he says, but already, human resource executives can show business leaders a scenario of how a change in one aspect of workforce management, such as total rewards, can impact productivity over time.

In the fiercely competitive technology industry, Perez de Alonso says, the HROM will help HP keep its competitive edge even as the tech sector emerges from the recession.

"When things start recovering, we are ready," she says. "We have the plans and the tool really helps drive those plans."

And if the economy takes another unexpected dive? "The model helps you do both things," she says. "You can adjust staffing plans, learning plans. It allows the business to adjust very quickly."

But Perez de Alonso hedges when she's asked whether the HROM is on HP's radar to offer as a product.

"I think there is interest there," she says. "There is a lot of interest when I talk about it to my colleagues."

For now, she says, the HROM is proprietary to HP, and, she says "we are not really ready to tell you that this is a product we are going to sell."

See also:

HROM's Apps

To Build or Buy

Redefining the Meaning of Culture

Buying Workforce-Analytics Software

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