PROJECT SUMMARY PAPER
Title: Human Resources Transformation Team
Prepared by Jong Gyu Park (pvj5055@psu.edu)
I. Abstract
The HR Transformation Team was formed to analyze the workflow of HR processes and to ensure
their efficiency, effectiveness and responsiveness to the needs of the operating units. This was
achieved by following an intense 15-week project plan driven by data gathered from both
customers and emplotees with “bottoms-up” facilitative approach. Like this, the team adopted
Organization Development (OD) approach to changing organization. The end result of this effort
was to be the identification of processes that, if improved, would result in a step change for XYZ
Company.
The data gathered was analyzed to determine key issues, themes, and critical processes for
improvement. The team selected seven high-impact HR initiatives that could have significant
impact on the company’s performance. These processes are:
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Career Development and Training
Succession Planning
Workforce Planning and Recruiting
Performance Management
Compensation Administration
XYZ Award administration
Job Evaluation
For the seven processes above, the team did the following two-staged model - Current State
Assessment, and Future State Envisioning, consists of specific five phases: (1) identified problem
areas and weaknesses through a process mapping exercise; (2) conducted a current state
assessment and envisioned a desirable “To-Be” future; (3) prepared “To-Be” characteristics based
on employee opinions and best practices; (4) designed a service delivery model including an
information system; and (5) suggested a living systems keep self-organizing and sense-making to
help sustain the change. These five phases are applied from OD Effectiveness ModelTM – Inquiring,
Strategizing, Planning, Doing, and Revitalizing.
II. Overview
Effective management of human talent and HR processes is increasingly seen as positively
affecting XYZ Compnay’s performance. Accordingly, the transformation effort focused on
processes that, when implemented, will develop a “results oriented” & “organization deelopment
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and change oriented” future state of HR that is positioned to achieve the following contributions
and performance objectives:
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Organize HR to more efficiently and effectively support business strategy
Streamline work processes to improve HR staff effectiveness
Create a flexible organization that can quickly respond to changing business conditions
Guide the globalization of XYZ Company’s culture through integrated and consistent HR
programs
III. Organizational Profile
XYZ Company is a multinational energy company involved in oil exploration, production
of crude oil, natural gas, perchlorate, and uranium mining and milling in the United States and
abroad.
The following excerpts from XYZ Compnay CEO’s letter to employees announcing the
transformation process best describe the challenges and opportunities put before the project.
“Three years ago, we announced that XYZ Company’s strategic focus would be on the
growth and development of two core businesses: oil and gas exploration and production
and the production of titanium dioxide pigment. We also began the process of
transforming these businesses so they could become top-quartile performers. Our
employees benchmarked other companies and adopted best practices. An outcome of the
transformation process was XYZ pay-for-performance program that rewards top-quartile
performance and further aligns the efforts of our employees with each unit’s business
strategy.”
“Our corporate support groups play a critical role in the worldwide growth and success of
our operations, and it is now appropriate for these groups to participate in the
transformation process. This will involve the analysis and review of workflow at the
corporate level to make certain our corporate support groups are efficient, effective and
responsive both to the needs of the operating units and to one another as each works to
support our strategy. Our objective is to develop fast, accurate business processes and
information, and to eliminate any inefficient, non-value-added work.”
IV. Operational Performance Issues
Shortcomings in the delivery of specific HR processes were documented by an employee survey
and by studies previously conducted by the client organization – XYZ Company. These studies,
completed during the period 2012 to 2014, indicated that there was general dissatisfaction and
frustration within XYZ Company relative to HR information system delivery, performance
management, compensation, and career development/training. These competencies and
capabilities are at the heart of every effective and efficient HR organization and have direct ties to
business competitiveness.
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XYZ Company’s focus on growth and globalization requires that the Company have a motivated
and talented work force capable of producing products at low cost in a constantly changing
environment of commodity pricing. A successful organization must have a means to develop and
leverage human competencies and capabilities. The deficiencies identified in the earlier surveys
and studies dictate the re-examination of the role HR plays within XYZ Company’s.
The best indication of the frustration and concern with the delivery of HR processes comes from
comments extracted from interviews conducted with stakeholders across a wide spectrum of the
organization. The following quotes are from senior managers within the XYZ Company:
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“Corporate HR is good at reacting but not at being proactive.”
“HR needs to be in a partnership with the business units. They need to be proactive and on
top of the business situation in order to give good advice on what is needed to stay
competitive in terms of the people issues.”
“The HR department is not as professional or aggressive as it needs to be for a growing and
dynamic company.”
“HR must move beyond the administrative role and provide better business support to the
managers.”
“HR needs a seat at the table (rather than being an afterthought) in order to plan ahead”.
HR is needed as a strategic business partner. Two factors will determine whether this will occur.
First, HR must recognize its current shortcomings and remedy them. Second, senior management
must recognize the positive role to be played by HR in positively affecting business outcomes. HR
must earn the right to be considered a partner with management by exhibiting competencies that
the business environment demands.
The growth of the company is a given as outlined in directives from the CEO. This growth will likely
mean more mergers and acquisitions. How XYZ Company manages its workforce and information
systems will determine its overall productivity, growth, and globalization success. To ignore that
significant change is needed will take its toll on productivity, morale, creativity, and the ability to
successfully implement strategy.
V. Project Scope: Key Players and Targets
The scope of the project followed a two-staged approach consist of five phases of OD
Effectiveness ModelTM. The first stage, which is corresponding Inquiring and Strategizing phases
of the OD Effectiveness ModelTM, Current State Assessment, focused on gathering data
surrounding key HR roles and responsibilities across the company. The second stage, which is
corresponding Planning, Doing, and Revitalizing phases of the OD Effectiveness ModelTM, Future
State Envisioning stage took the findings from the Current State Assessment and developed
recommendations. The components of the two-staged process are:
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Stage 1: Current State Assessment
High Level “As-Is” State
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Stage 2: Future State Envisioning
High Level “To-Be” State
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Understand the current state of
XYZ Company’s operating
environment (Inquiring)
Review various people practices
(Inquiring)
Evaluate delivery of HR processes
Gather and evaluate process
information and data
(Inquiring/Strategizing)
Develop and map “As-Is vs. ToBe” models along with issues,
weaknesses, observations and
opportunities (Strategizing)
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Gather best practice and
benchmarking information
(Planning)
Develop “To-Be” models
incorporating data-based findings
from the “As-Is” state and
incorporate best practices (Planning)
Determine HR services delivery
model structure components
(Planning/Doing)
Prepare a business case presenting
final recommendations and impact
analysis (Doing)
Suggested a living systems keep selforganizing and sense-making to help
sustain the change (Revitalizing)
In the Current State Assessment Stage, information and data were gathered through individual
interviews with key stakeholders, focus group sessions with managers and employees and broadbased employee surveys to:
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Obtain quantitative and qualitative data on key business issues and the current state of HR
processes and support mechanisms at XYZ Company
Ensure that data and opinions were obtained from a broad cross-section of employees and
managers, both domestic and international.
During the Future State Envisioning Stage, “To-Be” characteristics were identified for each
process. Additionally a conceptual HR services delivery model was prepared.
The scope of the “To-Be” state incorporated the following components:
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New Process Description: Set out the essential characteristics of the new process.
Summary of Changes: Described the primary changes between the “As-Is” and the “To-Be”
states.
Musts/Wants: Detailed process characteristics that are required in the “To-Be” state in order
to meet best practice standards, to be responsive to customer feedback and supporting data
gathered through the assessment and analysis.
Critical Success Factors: Identified the characteristics and the delivery processes that must
prevail if the new process is to succeed and be sustained.
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Key measures: Identified suggested metrics by which the effectiveness and added value of
the new process could be quantitatively measured.
Evaluation Process: Established the organization dimensions against which the new process
impact is assessed.
A conceptual blueprint of a future HR delivery model was also prepared based on:
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A review of innovative HR philosophies, strategies and processes that have positively
impacted companies across many industries
An analysis of best practices for applicability to XYZ Company
An evaluation of the HR roles and responsibilities using a functional sourcing decision tool
Upon the completion of each stage, milestone presentations were made to Management, Advisory and
Steering committees to discuss findings and obtain feedback for the direction of the project.
VI. Project Goal and Objectives
The HR Transformation Team was brought together with representatives from HR, Oil and Gas,
Chemical and Corporate. The team began by creating the following mission statement that set the
overall direction for the project.
The HR Transformation Team mission is to review key HR processes and
make recommendations that will focus on being:
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Strategic Business Partner;
Organization Development Professional;
Change Agent;
Employee Advocate; and
Administrative Expert.
so that XYZ Company can compete with speed,clarity and focus in the
global marketplace
The HR Transformation Team was charged with identifying key processes that, when changed,
would positively impact the effectiveness of the organization.
With this in mind the primary objectives of the project were to:
 Identify problem areas or weaknesses in the HR processes that could be made better through
modification or change.
 Make a current state assessment of processes most in need of change
 Prepare envisioning documentation, that allows the identified processes to be modified so
that the business units can be better served
 Suggest methods of delivery, both in systems and in organization that might offer the
optimum manner in which the modified process could be delivered
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V. Situational Assessment: Diagnosis Processes
In the current state assessment, information and data were gathered through individual interviews
with key stakeholders, focus group sessions with managers and employees, and broad-based
employee surveys. The purpose of this assessment was to obtain quantitative and qualitative data
on key business issues, as well as the current state of HR processes and support mechanisms at
XYZ Company. Particular attention was paid to ensuring that the data and opinions obtained were
from a broad cross-section of employees and managers, both domestic and international.
The team divided into working groups to conduct the 110 interviews across 22 locations
worldwide. Using a standardized interview guide and the list of roles and responsibilities of HR,
developed by the HR Transformation Team, the team gathered individual comments and priorities
from the stakeholders.
The team also facilitated 40 focus group sessions covering 420 employees in 11 locations across
the world. Employee surveys were developed for XYZ Company’s employees in the US, UK and
Australia. The surveys were distributed to 2,568 employees. A total of 684 responses were
collected, representing a 27% response rate. Data gathering instruments were designed to identify
priorities and discuss what was working well and not working well in the current processes.
Data from the following sources were also included in this Current State Assessment Stage
evaluation and analysis.
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Employee Survey and Focus Group Reports
Human Resource Information Systems (HRIS) Deep Dive (a study conducted as part of the
IT Transformation process)
Performance Management & Compensation Transformation Team Report
Career Development and Training Team Report
The data were analyzed to determine key issues, themes, and critical processes for improvement.
These processes were reviewed to determine which, if improved, would have the highest impact
to the company. The results of the data-gathering phase identified seven critical processes
requiring redesign. The seven high-impact HR initiatives processes are:
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Career Development and Training
Succession Planning
Workforce Planning and Recruiting
Performance Management
Compensation Administration
XYZ Award administration
Job Evaluation
In analyzing the seven processes, the team considered the following:
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Current Organization and Delivery—Identified the mechanics of the process, who is involved
and at what points, how the process is perceived, and whether the process is planned or ad
hoc.
Identification of Issues—Described problems encountered with the process, where
breakdowns occur, where procedures are not followed or linkages do not exist.
Process Maps—Represented the processes pictorially showing the steps involved, decision
points, problems experienced, redundancies, multiple approvals and so on.
Observations and Opportunities—Stated findings from the process mapping, as well as
opportunities for improvement.
Current Technology—Explained the technology (or lack of technology) supporting the
process.
VI. Key Findings
Findings from the current state assessment indicated that the current HR function lacks a stated
strategy, has not been empowered, and has limited credibility with senior management.
Additionally, it is focused on transactional services and lacks the “right” resources and skill sets
to be a strategic partner. Indeed, feedback from the HR function revealed that many of the
transactional processes are broken and not supported sufficiently by existing systems and
applications. As a result, the function tends to operate in a reactive mode trying to solve customer
issues and requests on a manual basis.
At the same time, managers are finding it increasingly difficult to attract and retain quality
employees to ensure implementation of the business strategy. These same managers are looking
to HR for more assistance with workforce planning and recruiting, and are disadvantaged when
HR does not deliver. Although the integrity of the HR staff is quite high, the function is generally
perceived as not being responsive enough to satisfy the growing and diverse needs of a global
business.
Given these limitations and the lack of an HR mission, most processes within the function are
delivered in an unsystematic fashion which makes measurement of the function’s effectiveness all
the more difficult. Because of this, many important people practices such as recruiting,
performance management, career development and succession planning are not delivered
optimally. This hinders XYZ Company’s ability to retain key talent and, more importantly, does
not enable the company to project a progressive image. Consequently, XYZ Company is currently
at a disadvantage in the “war for talent”.
For all of the reasons discussed above, the current state assessment culminated in two major
findings: (1) the seven high-impact processes are in need of major redesign and (2) transformation
will require a fundamental rebuild of the HR organization incorporating best practices in HR
processes and systems.
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VII. Project Results: Solution Description
The solution recommendations are at two levels: (1) specific recommendations on improving the
seven processes and (2) a broader set of recommendations, presenting an HR service delivery
model and information management system.
At the process level, the team’s recommendations are directed toward addressing the weaknesses
and barriers that were identified in the process mapping exercise. In general, the recommendations
include the following facets:
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Aligning and integrating the HR processes with the business strategy and goals
Identifying and defining a set of minimum standards that apply globally, while allowing
customization at the local level for each process
Ensuring that the new processes are consistently communicated and understood by managers
and employees
Redesigning processes that are customer-oriented characterized by clearly articulated
philosophies, criteria, and approval paths
Incorporating technology to make the processes as efficient as possible
Measuring and monitoring process effectiveness through the use of metrics to enable
continuous improvement
Human Capital Continuum
HR
HRStrategy
Strategy
Source
&
Select
Develop
&
Counsel
Reward
&
Retain
Redeploy
&
Retire
HRIS
Workforce Planning
& Recruiting
Performance
Management
Core Competencies
Critical Skill Sets
Career Development
& Training
Job
Evaluation
Succession
Planning
• Integrated with business
planning & budgeting cycles
•Maps defined in terms of
competencies and skills
• Linked with career
development & succession
planning
Compensation
Administration
Alternate Work
Arrangements
SCORE
• Global Mobility
• Relocation
• Retirement
• Counseling
SAI
• Topdown approach & alignment
of goals
• Competency model linked to
business Strategy
• Successor Candidates identified
• Integrated with other HR
Processes
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•Defined compensation philosophy
• Clearly defined criteria & accountability
to identify target markets
• Communication & effective
administration
•Ensures programs reward value added
accomplishments
The team came to the conclusion that simply re-engineering the seven processes identified in the
current state assessment would provide only marginal results. As such, the team also recommended
a fundamental realignment of HR functions to address the service delivery and systems issues by:
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Shifting emphasis from a transaction-oriented organization to one that is more strategic
Changing the transaction processing from HR generalists and specialists to a corporate
service center enabled with web and knowledge management technologies
Enabling the local HR generalists to work in partnership with and as close to the business
unit customers as possible
Finding the best way to source the delivery of HR processes
Providing tools and technology to enhance employee and manager self-sufficiency
Further, the team recommended that the new service delivery model include three primary
components — Strategy and Planning, Transaction Processing, and Customer Facing. This model
is consistent with the drive for HR to shed its traditional administrative, compliance and service
functions by adopting a strategic role concerned with developing the organization and the
capabilities of its employees.
The Strategy and Planning component will focus on becoming a business partner to management,
as well as developing and maintaining people practices so that XYZ Company can compete with
speed, clarity and focus in the global market place. Team members making up this component
will ensure that the HR strategy is sustainable and aligned with XYZ Company’s business strategy.
The Strategy and Planning component will provide a global mindset in the design of programs by
establishing global minimums to foster a reasonable level of consistency while allowing for local
customization within the unique cultural setting of the locations in which the Company operates.
Furthermore, it will provide company-wide organization development programs, be collaborative
with the customer facing organization, and measure and monitor various policy and plan design
results. Finally, it will be instrumental in cultivating a philosophy of accountability for and
ownership of programs on the part of management so that the HR function is relieved of the
policing role they have traditionally played.
The Transaction Processing component will be responsible for creating a self-service environment
and a Customer Service Center to handle the day-to-day transactions of HR. The self-service
environment will include tools, such as web and telephone, to allow global employees and
managers to access information and initiate transactions anytime and anywhere.
The Customer Facing component will be made up of full-breadth generalists whose primary role
will be to support the implementation of business strategies. The generalists will work closely
with business unit management and their teams to assess, diagnose, and develop alignment of the
organization with the strategy. Focus will also be given to HR functions such as staffing, change
management, and organization effectiveness issues within the business unit.
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In addition to being employee advocates, the generalists will collaborate with Strategy and
Planning on plan design, be responsible for the day-to-day implementation of HR programs and
policies, and be responsible for implementation of corporate-wide organizational development
programs and line-specific initiatives.
The HR Advisory Group, comprised of business unit heads and HR leaders, will promote the
alignment of the company’s people practices, policies and processes with the needs of the business.
The team then developed a model describing the HR competencies that will be required in the new
service delivery model. Note that each of the three components—Strategy and Planning,
Transaction Processing, and Customer Facing—requires a different set of competencies for
effective performance. The research revealed that today’s HR professional requires a new skill set
from that required in the past. Indeed, the HR professional must first be a strong business person,
and second, a strong functional expert.
Finally, the team considered the impact on management, employees, and the general XYZ
Company culture for the new service delivery model to succeed. A major cultural shift will be
required on the part of XYZ Company management to fully understand and appreciate the new
roles the HR function must play to transform HR into a source of sustainable competitive
advantage. Employees will also undergo a paradigm shift as HR moves to a self-service
environment; enabling employees with self-service tools will ultimately leave them empowered,
not abandoned as some might believe. In regard to culture, the transformed HR initiatives need to
become a fundamental component of XYZ Company’s culture and business processes. This not
only includes all programs and practices embraced as part of the transformed HR function, but
also the new and expanded roles to be played by HR professionals in the future.
VIII. Cost and Benefits Analysis
Costs: The team estimated costs to implement and support the required technology/applications,
and associated process re-engineering described in the Solutions section.
Costs for a new core human resources information system (HRIS) to support the global, mobile
organization are considered outside the scope of this business case. However, new functionality
applications to support the redesigned processes have been considered including hardware,
software, consulting support requirements, and costs of enabling technologies to provide
employees and managers access to the new tools and services are identified.
The following table summarizes the estimated costs:
Technology/Application
Description
Core HRIS
Implementation External Costs
over 18-24 Months
$3MM - $4MM
(Included in Corporate Capital
Budget)
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Ongoing Costs
15-20% of License Fees
Annually
New Functionality
(Supports Redesigned
Processes)
Enabling Technology
(Web and Service Center)
Resource Additions,
Retrain and Replace
TOTAL
$1MM - $2MM
15-20% of License Fees
Annually
$1MM - $2MM
10-15% Annually
Required but dependent on final
organization model and
competencies
$5MM - $8MM
Continuous skill assessment
and training
Benefits: It has long been known that certain human capital processes drive employee
productivity and engagement. What has also been shown is that engaged employees drive external
service value, which in turn, clearly drives economic value creation in an organization. As such,
a range of benefits, both quantitative and qualitative, is associated with the recommended actions.
These include:
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Enhanced economic value. Studies have documented that significant improvements in key HR
practices are associated with economic value creation. Our team’s Human Capital Index is a
multi-year effort to research and quantify the links between superior human capital practices
and superior shareholder value creation. The results show that if XYZ Company improves its
implementation of human capital practices, the potential exists to realize a significant market
value gain.
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Improved employee commitment and engagement. Many research studies suggests that
employees who are committed and ultimately more engaged are likely to be more productive
and therefore, enhance the financial value of the company. Based on the 2014 employee
survey, XYZ Company employees compare favorably with US and industry norms on aspects
of commitment. As a result, these areas of strength can be built upon to further drive employee
engagement and enhance XYZ Company’s image as a favorable employer in the market.
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Improved retention. XYZ Company’s turnover for the most recent 12-month period at 10
percent compares favorably with benchmarks from the Saratoga Institute for the
chemical/petroleum products industry. By implementing the recommendations discussed in
this business case, XYZ Company should be able to improve its ability to retain high quality
employees, manage poor performers, and reduce the cost associated with turnover.
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Increased process effectiveness and efficiency. With HR transformation, XYZ Company
should be able to see a 20 to 30% reduction in direct and indirect costs associated with
delivering the redesigned processes. These projected savings are based on HR reengineering
projects over the past decade and are primarily a result of the elimination of non-value-added
steps and consolidation of processes. In addition, there are significant savings to be realized
by implementing self-service functionality for HR processes.
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Improved productivity. Improving the delivery of HR services by providing tools to employees
and managers can conservatively eliminate 5 minutes of “time on task” per day per employee.
This translates into approximately 70,000 hours of person time (or about 35 people) saved per
year by minimizing non-value added HR activities from the organization.
The benefits that will be derived from the solutions are focused on creating shareholder value
through providing superior human capital practices, improving employee commitment and
engagement, improving retention of employees, achieving process efficiencies and improving
overall productivity.
IX. Conclusions and Recommendations
The challenge for the Human Resources Transformation Team from senior management was to evaluate
the delivery of HR services and identify processes that, if redesigned, would result in a “step change”
in the implementation of the organization’s people practices. Through extensive data gathering
conducted throughout the organization on a global basis, the team selected seven HR processes for
redesign.
As the team analyzed the weaknesses in each process and identified issues to be addressed, it came to
the conclusion that redesigning only the seven selected processes would not ensure a step change. A
simple redesign of processes would not address the systemic issues of not having a clear strategy or an
HR service delivery model with supporting systems in place. Hence, the team recommends a
fundamental rebuild of the HR functional alignment incorporating best practices in HR processes and
systems. This entails:





Shifting emphasis from a transaction-oriented organization to one that is more strategic
Transitioning the transaction processing from HR generalists and specialists to a corporate
service center enabled with web and knowledge management technologies
Enabling the local HR generalists to work in partnership with and as close to the business
unit customers as possible
Finding the best way to source the delivery of HR processes
Providing tools and technology to enhance employee and manager self-sufficiency
Further, the team recommended that the new service delivery model include three primary
components — Strategy and Planning, Transaction Processing, and Customer Facing — with
support from a HR Advisory Group. This model is consistent with the drive for HR to shed its
traditional administrative, compliance, and service functions by adopting a strategic role concerned
with developing the organization and the capabilities of its employees.
In regard to next steps, it is imperative that this effort be addressed immediately following the
approval of the business case. Indeed, both the Chemical and Oil & Gas businesses continue to
grow rapidly and the market for skilled workers remains tight. This global growth combined with
significant competition to attract and retain quality employees demands that XYZ Company:
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Define the Phase II HR Transformation Team
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
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Develop the Human Resources strategy for XYZ Company
Crystallize the Implementation Plan for HR Transformation
Develop the HR Services Delivery Matrix
Address “Quick hits”—findings from Phase I that may be implemented at minimal cost and
effort
Create a plan to assess and transition HR competency gaps
Develop a strategy for HRIS
Articulate a change management and communication strategy
Initiate the design process
The opportunity exists to transform the HR organization into a strategic business partner, employee
advocate, change agent, and administrative expert. Redesigned people practices aligned with the
business strategy, as discussed in this business case, will yield sustainable competitive advantage
and ensure that the company operates with speed, clarity, and focus in the global market place.
X. Lessons Learned
At the first, the recommendations contained in this project are based on certain underlying
assumptions. As the team developed the “To-Be” recommendations, the following critical
assumptions were identified as key to successful implementation.
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Definition, communication and implementation of HR Strategy
Implementation of structural changes necessary in the HR function to execute the stated
strategy
Implementation of a redesigned service delivery model
Selection and implementation of new HRIS
Assessment of skills gap in HR and the organization and establishment of a plan to bridge the
gap
Commitment to stay the course even with changes in the business environment
Implementation of quick hits to gain buy-in
Phased approach to implementation to minimize disruption to current operations
Comprehensive change management (especially training) to be part of all aspects of the
implementation
Redesign of processes prior to implementing any technology solutions
Therefore, the team learned that successful implementation of the proposed process changes hinges
on a redesigned service delivery model that is guided by a well-defined HR strategy.
At the second, as an Organization Development (OD) professional, the team tried to adopt
bottoms-up OD approach for activities as much as possible. For instance, information and data
were gathered through individual interviews across a wide spectrum of the organization with key
stakeholders, focus group sessions with managers and employees and broad-based employee
surveys. The team also provided company-wide organization development programs, be
collaborative with the customer facing organization, and measure and monitor various policy and
plan design results. Nevertheless, the team had better apply another Organization Development
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approaches such as Appreciative Inquiry (AI) during the Future State Envisioning Stage to create
high and positive level “To-Be” state.
- End of Document -
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