Transaction cycles: a simpler future for an effective HR function?

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In large organisations, HR can be an unknown world for employees. In their view it should be quite simplistic. It pays them, hires new employees for them and helps develop them. These apparently straight forward requests, however, come with complex and lengthy processes spread across multiple, unseen and sometimes seemingly unconnected teams. Isn’t it time we helped out our colleagues and made HR simpler? And maybe, by doing this, we can find some benefits for HR too.

What is the issue?

The majority of interaction most employees have with HR is at a transactional level. Most managers call HR when they have a vacancy, for example, or someone has “misbehaved” in their team.

The issue is that the HR processes that sit behind these seemingly simple requests can actually be quite complicated, often with expertise required from many sources. If we take the example of hiring a new employee, this often goes through several different individuals before a candidate is in place – frustrating a manager who is a team member down.

This frustration at the transactional elements of HR damages the reputation of the function and inhibits its strategic influence – be it with the time wasted following up requests or the distrust the business has of HR due to these pain points.

The Ulrich model

The reason for this is the way HR is organised. Many HR departments, particularly in larger organisations, are structured around Ulrich’s three legged model of HR; HR business partners, centres of excellence and operational/administration teams.

This is great for HR’s own organisational design, however, it makes providing a clear and measurable service to the business confusing – interfering in the real valuable tasks undertaken by the function.

So, though a manager comes to HR for what they deem a simple request – hiring a new employee for example – what they are actually engaging are several different and often unconnected processes across many different teams. No one individual has oversight of these processes and as such what seemed to be a simple request can appear lost and the service ineffective.

Issues for reporting costs

Even greater problems are presented when business heads ask HR to quantify the cost of a particular service, for example how much does it cost to hire someone. HR can provide costs based on various parts of the process; however, an accurate and representative cost of the whole process is difficult to achieve.

The reason for this is because the costs are spread over separate teams, often reporting into different business heads and different cost centres.

Problems for continuous improvement

This lack of sight across the end-to-end service means that true improvement of HR processes is difficult, often involving large scale, costly change for incremental results.

If we return to the hiring of a new employee example, resourcing teams cannot improve the time to hire if the problem sits with the processes owned by the operational teams.

A new service

This disconnect between the expectations of the business and the complexity of HR can be seen through the common complaint of HR professionals, that they loath to be referred to by the collective noun of “HR”.

Yet, to our colleagues in the business, this is the service they are requesting – they do not care if the process is split across three or four teams.

So, in order for HR to close this gap – and in turn, improve its efficiency and standing in the business – it needs to realign its services with the expectations of the business.

Transaction cycles: exactly what they are

One way of doing this would be to align the function into transaction cycles. A transaction cycle is a set of interlocking processes that form a full operation. By doing this HR can simplify the wide ranges of processes it currently owns to a small number of transaction cycles.

Example transaction cycles could include:

  • Hiring
  • Exit
  • Long Term Absence
  • Learning and Development
  • DC&G

So, if we take the “hiring” transaction cycle, teams that are involved in the selection and processing of new hires will all be aligned in one team, rather than across the function.

One service owner

This provides the opportunity to create an overall service owner who has oversight of the whole process from start to finish. These individuals will be accountable for the performance of the service and responsible for the resolution of pain points.

As they have complete oversight they will also be able to report on the entire cost of the service and recommend cost savings if necessary.

Finally, they will be able to initiate change in whatever part of the service to ensure that it fits appropriately with the needs of the business.

Simplification for colleagues

This will mean a more simplistic HR for colleagues. They will be able to see which team they need to contact to deal with their request, easily see the status and follow up with an appropriate individual if there is an issue.

Benefits for HR

This will also present tangible benefits for HR. Firstly it will improve the understanding of HR by the business and so foster trust, improving the relationship.

Secondly it will improve the efficiency of HR processes – saving costs and helping the function become more lean and effective.

Finally it will free up time for teams to think more strategically, as they will not have to waste time following up operational issues. This will help the function understand the needs of the business and the external market in greater detail.

Why is this important?

This combination of a better relationship, cost savings through greater efficiency and increased strategic thinking will help add tangible value to the bottom line of a business.

This, in turn, will increase the value and effectiveness of the function – and help our colleagues navigate this sometimes confusing world. 

About Adam Morris

Adam Morris

Adam Morris is a HR Process Specialist, working across HR functions to improve the service they offer to their businesses. He is committed to providing new and innovative solutions to HR professionals so they have the best tools to advise their business and add tangible value to their organisation. He regularly writes about impacts of developments in Technology, Sociology and Economics on HR, and how HR can harness these factors to improve the role they play.

Outside of work Adam is a keen football supporter as well as being an avid fan of the theatre

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