Case Study: Functional Restructuring
Reorganizing a decentralized HR function to a shared service
Large ($800,000,000 annual revenue)
Restructuring a Decentralized Human Resources Organization
Situation: Myron Beard Executive Consulting (MBEC) was engaged in January 2013 to assist a client in reorganizing its human resources (HR) organization. The client was a national industrial construction company with revenues of $800 million. The company had grown organically and had multiple field offices throughout the West, South, Southwest, and Midwest. They had allowed significant autonomy in their field offices, with many of their functions decentralized, including HR. The company was beginning to realize that they were potentially losing efficiencies by being decentralized. A new Senior Vice President was charged with assessing the value of an HR Shared Service across the company, and he contracted Myron Beard Executive Consulting to assist in the reorganization.
Process: MBEC assisted the senior HR management team in establishing and implementing a comprehensive approach to restructuring the organization, including:
The MBEC Difference
MBEC helped this large organization centralize and consolidate disparate HR functions under an HR Shared Service model, resulting in a significantly more functional and efficient department.
- Shared Services Education: MBEC helped executives understand the rationale and principles of a Shared Services organization and the benefits and potential liabilities of creating a more centralized organization. This involved a series of sessions with key HR executives.
- Discovery of Current State Analysis: Once the executives conceptually agreed to embark on an HR Shared Services organization, the next task was to determine the current state of the HR organization. In order to adequately evaluate the current state, MBEC conducted interviews, reviewed existing documents across the company, and conducted focus groups. This included understanding the portfolio of services currently offered and conducting an analysis to identify service redundancies and gaps, as well as resource redundancies, gaps, and inefficiencies.
- Planning of Future State Design: The MBEC consultant facilitated a targeted task force of HR employees. This task force was engaged to define a future-state HR organization based on the data and recommendations from the discovery phase. This research resulted in a detailed plan, which included the creation of Centers of Excellence (COE) for a service-center approach, responsible for benefits, recruiting, legal, human resources information system (HRIS), and compensation. A new role, HR Generalist, was recommended as an individual who would be in the regional businesses, reporting to the centralized HR function and serving as a liaison between the business and the COEs. In addition, an estimated budget was established that identified both savings and new expenses. This became the business case for presenting the Shared Services approach.
- Internal Marketing: Because this model was such a departure from what the regional businesses were accustomed to, a “road show” was undertaken to both educate regional leaders and solicit their buy-in. Because many of them saw the COEs as a loss of control at the local level, the benefits of the COEs had to be sold. In addition, regional leaders were informed that they would have their own HR Generalist to serve as a liaison with COEs.
- Implementation of New HR Design: Once regional business leaders gave conceptual agreement to the new model, a small team of new HR leaders was identified and began implementation of the new design with the assistance of the MBEC consultant. This implementation involved both consolidating existing COEs and creating COEs in a service-center model. In addition, existing HR employees were invited to interview for the HR Generalist roles.
- HR Survey: For the first year following implementation, business leaders were given a survey about the effectiveness of the new HR Shared Services model. The results from this survey were used to refine and modify the model and served as a continuous improvement exercise.
Outcome: Two years after the reorganization, the HR Shared Services organization had been completely consolidated and adopted by all of the various business units served. The HR organization was functioning much more effectively than in the previous decentralized model. This was particularly true regarding their COEs, which were all able to capitalize on best practices and lessons learned to offer more streamlined and efficient services to the businesses. In addition, because of the aggregated talent pool, the right people were put into the right positions for maximum impact. Talent gaps were identified and, when necessary, professionals from outside the company were recruited to serve in key positions. MBEC was involved with this project from inception to conclusion, over two years in consultation with the client. The HR Shared Service is now going into its third year and is seen as a huge success by both HR and field leaders.