75% of Large Companies Are Restructuring Their HR Functions—But Does It Really Matter?
Two years of multiple crises that required human resources (HR) to respond and lead decisively resulted in recognition of the valuable strategic contributions of HR leaders to business outcomes. The profile of the HR function has been broadly elevated since 2020, as has its ability to provide greater impact.
As part of HR’s multi-faceted effort to continue to deliver on these expectations—which include positioning the organization to best navigate the hyper-competitive talent landscape, clearly understanding and responding to the needs of the customer, and optimizing to achieve sustained high performance in this new era of work—companies are assessing and restructuring their people management functions.
In fact, 75% of large companies (those employing >1,000 people) have or are in the process of doing so, according to the recent Institute for Corporate Productivity (i4cp) survey conducted in partnership with HR thought leaders John Boudreau and Peter Ramstad.
Some of the findings—including trends in 21 HR functions—are available in a new white paper, HR Structure in the New Era of Work, exclusively for i4cp members.
Centers of Excellence dominate
The survey, which focused on HR structure, capability, and design, was conducted in October-November 2021, and captured responses from senior-ranking HR executives at 122 companies around the globe.
While i4cp analysis of current and planned structural characteristics revealed no statistically significant relationship to market performance, a few trends stood out. For one, centers of excellence are clearly the most widely adopted structures, especially in the various areas of talent management in which consistency and scale are critical.
More centralization is the trend
Though not the case for all HR functions, on average organizations are 5x more likely to be moving toward centralizing vs. decentralizing certain HR activities.The analysis—which examined 21 people management functions—demonstrates the increasing demand for disclosure of workforce practices and metrics from key stakeholder groups, the rapid acceleration of digitization and the digital transformation of business, and ability to sense and respond more quickly based on sentiment and other data.
HR structure doesn’t really matter, however
Perhaps the most interesting aspect of the study was what it didn’t find. When it comes to HR structure, research revealed no statistically significant relationship between organizations’ structures and market performance. Hence, where organizations place specific HR functions makes no difference to the bottom line. What matters most are HR's capabilities.
“Many people think structure alone might be the solution to a problem they’re trying to solve. It’s usually not. Structure is a support mechanism,” says Greg Till, executive vice president and chief people officer of Providence Health.
“Structural change is best used to enable new strategies, work components, and capability needs. In order to be a strategic value driver in HR, we need to contribute to new strategies, new ways of working, and new organizational and individual capabilities to meet current and future business needs. If we aren’t, structural change won’t help.”
We’ll explore the evolution of HR capabilities in an upcoming white paper. For the HR structure trends across the 21 people management functions, download the HR Structure in the New Era of Work white paper now (i4cp members only).
Jay is a futurist and has devoted the past 40 years to identifying and analyzing the major issues and trends affecting the management of people in organizations. Currently, Jay and the i4cp research team follow demographic, social, economic, technological, political, legal and management trends across 20+ broad human capital topics.
Over the years, he has helped some of the most innovative organizations gain a deeper understanding of the world's changing business environment and has helped them think strategically about today's actions and tomorrow's plans. Jay has confidential access to some of the most progressive organizations, and he's currently an active advisor to more than a dozen leading corporations. In addition, Jay conducts dozens of seminars annually for major corporations on subjects related to the changing nature of the workplace and workforce.
Jay has had articles published in several major business magazines and is frequently quoted in business publications and newspapers.
Prior to i4cp, Jay was Executive Director of the Human Resources Institute (HRI) for 25 years and distinguished lecturer at The University of Tampa. He has also held numerous management positions, including vice president of purchasing for a large import/export wholesaler. Jay has an MBA, and taught labor relations in the School of Management at the University of Massachusetts.
Kevin Martin is the chief research officer at the Institute for Corporate Productivity (i4cp); the leading research firm focused on discovering the people practices that drive high-performance.
In addition to guiding i4cp’s research agenda and deliverables, Kevin also advises corporate and human resources leadership teams on best- and next-practices in a broad range of topics that range from talent risk management and corporate culture, to human capital strategy and organizational agility. He also serves as executive sponsor of i4cp's distinguished Chief HR Officer Board.
Prior to i4cp, Kevin worked for several years at research firm Aberdeen Group where he built one of the industry’s leading human capital management (HCM) research practices and then held a variety of roles of increasing responsibility which included SVP of Research Operations with general management oversight of the company's 17 research practices, and SVP of International Operations where he led the firm’s expansion efforts in to Europe.
A highly sought-after international keynote speaker on all aspects of human resources and talent management, Kevin has been recognized as a “Top 100 HR Influencer” by HR Examiner. His and his team’s research have been cited in leading business media, including Forbes, The Wall Street Journal, Fast Company, Harvard Business Review, Inc. Magazine, Bloomberg, the Financial Times, CFO Magazine, CIO Applications, and on CNBC.
He is also an occasional contributor for the Financial Times.
Kevin currently serves on the advisory councils for the University of Dayton's school of business administration and school of engineering. He also serves on the board of advisors for Bullseye Engagement. From 2005 to 2014, Kevin served on the board of directors for Big Brothers Big Sisters of Central Massachusetts, which included a two-year term as board chairman (2009-2011). In 2006, Kevin was awarded the Commonwealth of Massachusetts's "Big Brother of the Year".
Kevin earned a Master of Business Administration degree from Boston University and a Bachelor of Science in Business Administration degree from the University of Dayton. He resides in the Massachusetts with his wife (Laura) and their three sons.