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«The Global HR Delivery Model Diploma thesis edited for the achievement of the HES diploma by: Olivier JOSEFOWITZ Diploma thesis counselor: Gilles ...»

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The Global HR Delivery Model

Diploma thesis edited for the achievement of the HES diploma

by:

Olivier JOSEFOWITZ

Diploma thesis counselor:

Gilles REGAMEY, lecturer at HEG

Geneva, August 15, 2008

Haute École de Gestion de Genève (HEG-GE)

Filière économie d’entreprise

The Global HR Delivery Model

JOSEFOWITZ, Olivier

Declaration

This thesis has been edited within the final examination at the "Haute École de

Gestion" Geneva, for the achievement of the diploma "économiste d'entreprise HES".

The student accepts, the confidentiality provision if applicable. The use of conclusions and recommendations mentioned in this thesis, without anticipation of their value, does neither engage any responsibility of the editor, nor of the Diploma thesis counselor or the jury of HEG.

"I certify having edited the present thesis on my own, without having used any other source than those cited in the bibliography."

Finalized in Geneva, August 15, 2008 Olivier JOSEFOWITZ The Global HR Delivery Model JOSEFOWITZ, Olivier i Acknowledgements A practice oriented diploma thesis is a great way to finalize four years of studies with parallel professional experience. This thesis gave me an opportunity to analyze a subject in one of my fields of interest with the support of the tools that HEG provided me during my studies. First of all I would like to thank my counselor, Gilles Regamey, who was a great mentor as a lecturer in HR and more specifically as a counselor for this thesis.

I would also like to express my gratefulness towards DuPont and Dominique Rorive, who enabled me to analyze the HR model implemented within the company. I very much appreciated the support of Roger Gambart, who did not spare any effort to provide me with information to analyze the current situation and the consequences of the new model.

Special thanks go as well to my mentors and former Managers Sarge Carlson and Frank Van De Pol, who inspired me to analyze the subject and helped me to stay on track with my analysis.

Finally I would like to thank Luigi Pierleoni from Procter & Gamble and Daniel Weidmann from UBS, who shared the transformation of their respective companies to a new HR model and made therefore the broader perspective of this thesis possible.

The Global HR Delivery Model JOSEFOWITZ, Olivier ii

–  –  –

The way companies manage their employees has changed a number of times in the past 100 years. The current trends such as technological innovations, globalization, cost containment, speed in market change, importance of knowledge capital and rate and magnitude of changes, promise future changes in what is today called Human Resource (HR) Management. These changes are even more significant in the competitive environment of globally operating companies.

How should the HR function organize itself to be able to respond proactively to the demand of these trends? HR needs to find a cost efficient way to continue to attract, retain and develop talent to ensure the competitiveness of any company, while respecting the constantly shifting requirements of the global marketplace.

The HR model of the Harvard Professor Dave Ulrich has inspired most of multinational companies in the reorganization of their HR function with the objective to add value to the business. The model consists of multiple roles through which responsibilities are shared with other individuals of the corporate world. By using different delivery channels, of which some may be outsourced, HR is enabled to add value to the business and can become more professional through a clear definition of the roles.

A number of challenges in putting in place the Ulrich model can be named, such as:

–  –  –

A case study analyzing the new HR model of DuPont brings insights from practice.

After having identified two challenges, the company has decided in 2001 to go on the HR Transformation journey and moved in 2006, after having gone through a

–  –  –

The above mentioned key challenges do not stop in front of DuPont and the $ 1.1 billion outsourcing contract over 13 years. They appear as a result of the company’s culture and the specificities of the transformation to the new model. Today, the challenges can be summarized in three key issues that can be tackled with a number of recommended actions.

A brief look at the models implemented in three other multinationals, IBM, Procter & Gamble and UBS, show that beyond the differences and similarities of the transformations there are a number of common challenges. Finally, we conclude saying that the transformation of the HR function does not remain without a significant impact on the company culture and on individuals within the company as part of the society in which the company operates.

The Global HR Delivery Model JOSEFOWITZ, Olivier iv

Contents

Declaration

Acknowledgements

Executive Summary

Contents

List of Tables

List of Figures

1. Introduction

Part I: Theory

2. Global Trends

Technological Change

2.1 Increased Globalization

2.2 Continued Cost Containment





2.3 Accelerated Speed in Market Change

2.4 Growing Importance of Knowledge Capital

2.5 Increased Rate and Magnitude of Change

2.6

3. Historic Development of the HR Role

From the Early Days until 1970

3.1 The 1970s and 1980s

3.2 The Ulrich Model (1997)

3.3 3.3.1 The Multiple Role Model

3.3.2 Responsiblities within Ulrich’s Four Roles

3.3.3 The Organizational Structure of HR

3.3.4 Myths That Keep HR from Being a Profession

4. HR Outsourcing

Part II: Practice

5. From Theory to Practice

Challenges in putting the Ulrich model in practice

5.1 5.1.1 Customer relation

5.1.2 Customization

5.1.3 Customer dissatisfaction

5.1.4 End-to-end process understanding

5.1.5 Centralization

5.1.6 Offshoring

5.1.7 Outsourcing

5.1.8 Transformation

5.1.9 Cost efficiency

5.1.10 Strengths, Weaknesses, Opportunities, Threats (SWOT) of the Ulrich Model

5.1.11 Conclusion

Defining goals and measurements of a new model

5.2 The Global HR Delivery Model JOSEFOWITZ, Olivier v

6. Case Study: Du Pont’s new HR Model

The company

6.1 Description of DuPont’s new HR Model

6.2 6.2.1 Two challenges

6.2.2 Choosing a suitable model

6.2.3 Three phases of HR Transformation

6.2.4 Effective Change Management

Challenges in the current situation (July 2007)

6.3 6.3.1 Customer relation

6.3.2 Customization

6.3.3 Customer dissatisfaction

6.3.4 End-to-end process understanding

6.3.5 Centralization

6.3.6 Offshoring

6.3.7 Outsourcing

6.3.8 Transformation

6.3.9 Cost efficiency

Analysis and Summary of DuPont’s current situation

6.4 Recommendations

6.5

7. The HR Models of IBM, Procter & Gamble (P&G), DuPont and UBS.... 50 IBM’s Integrated Managed Business Process Delivery (IMBPD)......... 50 7.1 P&G’s Global HR Delivery Model with delivered services by IMBPD.. 52 7.2 The UBS HR Model

7.3 Comparing the four models

7.4

8. Conclusion

Bibliography

Appendix 1 Abbreviations and Accronyms

Appendix 2 Articles

1. Human Resources Outsourcing Survey Report (2004)

2. WORKFORCE MANAGEMENT, March 26, 2007

3. HR Today, June, 2006

4. DuPont HR Model Presentation

–  –  –

Table 1 The three great eras of Globalization

Table 2 Ulrich’s Definition of HR Roles

Table 3 Examples for Deliverables of the Strategic Partner

Table 4 Examples for Deliverables of the Administrative Expert

Table 5 Examples for Deliverables of the Employee Champion

Table 6 Examples for Deliverables of the Change Agent

Table 7 Delivery Channels of HR services

Table 8 Differentiating Service Centers and Centers of Expertise

Table 9 Myths That Keep HR from Being a Profession

Table 10 Reasons for HR Outsourcing

Table 11 Goals, Methods and Challenges of HR Transformation

Table 12 Goals, Methods and Challenges of DuPont’s HR Transformation................. 41 Table 13 Actions to improve ability to change across the HR frunction

Table 14 Actions to improve ability to change across employees

Table 15 Actions to improve ability to change across Managers

Table 16 Actions to improve Transition Management

Table 17 Actions to improve Service Quality

Table 18 Actions to improve Process Understanding of the HRBP

Table 19 Actions to improve Process Understanding of the Customer

Table 20 Comparing HR models

–  –  –

Figure 1 The Ulrich Model

Figure 2 Shared Responsibility in the Ulrich Model……….

Figure 3 Ulrich’s Centralization versus Decentralization Quandary………............... 14 Figure 4 SWOT of the Ulrich Model……….

Figure 5 Criteria for “what goes where?”……….

Figure 6 Customer Satisfaction across company levels……….

Figure 7 Strength and Weaknesses of the DuPont HR model……….

The Global HR Delivery Model JOSEFOWITZ, Olivier viii

1. Introduction In the past 100 years, the way companies manage their human resources has significantly changed a number of times. The later established Human Resource (HR) function adapted itself constantly to its environment and reacted to what the companies expected it to do. The past 10 years however have brought fundamental changes and have required a significant transformation of HR, mainly in the competitive environment of globally operating companies.

How should the HR function organize itself today to be able to respond proactively to the demand of the modern world and of the business environment? How can HR adapt to the constantly shifting requirements of the global marketplace? As a graduating HR Professional, the editor of this thesis explores the journey through HR’s transformation to a global delivery model.

Staying away from any process description, this thesis focuses on the organizational structure that enables the HR function to add value to the business. In the following pages the business units of a company are referred to as “the customer”, a result of the paradigm of HR as a delivery organization. “Delivery” refers to services distributed as a result of customer needs. As such it is today the customer’s need to have an efficient HR function that adds value to the customer. The efficient HR function ensures on one hand high quality service for its mission in attracting, retaining and developing the workforce needed and on the other hand cost efficiency so that the company can invest its financial resources into business growth.

The increased pace of change driven by trends such as technology, globalization, profitability, customer demand and mass of information, puts the spotlight on HR as the function who manages the employees who have to respond to these trends in order to stay competitive - as the company’s employees and as individuals. As a driver of HR’s transformation the six most important trends that shape our occupational and private environment are laid out at the beginning of the thesis.

After showing the historic development of the HR function, the HR model that currently inspires most of multinational companies is thoroughly described. As an integral element of the debate, HR Outsourcing (HRO) is briefly brought up towards the end of the first part of the thesis that focuses on the theoretic foundation of the Global HR Delivery Model.

The Global HR Delivery Model JOSEFOWITZ, Olivier 1 When going from theory to practice, a number of key challenges are identified before describing the transformation that four globally operating companies, headquartered in the western world, have gone through in the past 10 years. As such, the US based science multinational DuPont, is taken out of the four, with a particular focus on the organizational design of its HR function. Based on information obtained through HR Magazines and interviews with Senior Managers of the companies, the current situation of four companies is described and, in the case of DuPont, deeply analyzed.

Finally the thesis ends with a set of recommendations for DuPont’s European business, based on the analysis of the information at hand. The conclusion puts the Global HR Delivery Model into a larger economical and sociological context.

The consequences of the model for the individuals are saved for the conclusion, to enable full focus on the organizational design of HR within the body of the thesis.

–  –  –

2. Global Trends A study led by the Pennsylvania State University Professor William J. Rothwell identified the most important trends that will shape organizations and their HR

management. Rothwell and his team defined them as following1:

–  –  –

2.1 Technological Change Technology refers to tools that are used to achieve work results. This includes information technology (IT), technology used to reengineer business processes and others. It also mainly includes the know-how needed to make the tools work. Therefore, it influences the skills that workers must have in order to do their jobs.

The HR function has started using technology in the late 90ies and has learned to use it to achieve its strategy.

2.2 Increased Globalization Globalization refers to commerce without borders. Indeed, today it is possible for more people than ever to collaborate and compete in real time across all continents with almost equal opportunities.

In addressing this trend, Line Managers and HR Managers must collaborate across country borders and cultures as they seek solutions for their global organizations. This means drawing more attention to diversity, open thinking and constant willingness to embrace change.



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