The new, agile role of HRM
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Illustration 1: Hierachical vs. Agil Organizstion, Own representation based on AOE.com (n.d).
The surroundings in which businesses are operating has changed dramatically over the past 30 years into a VUCA system environment. Many companies are therefore introducing agile working and organizational forms in order to achieve a better reaction speed. However, these innovations cannot be considered detached from the existing structures and processes in the company, since there are many and varied correlations. This article answers the question how the role of Human Resource Management (HRM) is changing and how it must adapt to effectively support agile working and organizational forms. By Paul Heck he HRM is the “division of a company that is focused on activities relating to employees. These activities normally include recruiting and hiring of new employees, orientation and training of current employees, employee benefits, and retention” (BusinessDictionary). In the following, the impact on the core HR areas of Recruitment and Performance Management, which are essential in shaping the agile work environment, will be considered in more detail.
The first major task of HRM includes all activities that are concerned with supplying the company with personnel like personnel marketing, personnel selection and employer branding.
In classical organizations, the personnel requirement is determined on the basis of medium-term strategic planning (usually 1-3 years). On the basis of these, requirement profiles are created in order to decide, on new hires. The criteria and instruments for the selection of candidates are largely related to such job-related requirement profiles. In general, only the HR department and the respective supervisor are involved in the entire process. They are also responsible for making the selection decision and completing the talent acquisition process as soon as a suitable candidate has been found. (Lochmahr, Müller, Planing and Popović, 2019, p.40)
The agile environment makes changing demands on the recruitment of personnel. The personnel requirement is determined at significantly shorter intervals in coordination with the agile teams. Because they are best able to assess the needs and qualifications of new employees, the planning of personnel requirements is increasingly decentralized. In addition, employees in agile organizations rarely carry out one and the same activity over a very long period of time, which puts job-related competencies in the background. Other skills are increasingly being considered. The agile mindset and associated competencies such as self-leadership, anticipation, self-responsibility or the ongoing will to learn play a far greater role in recruiting and selecting candidates. It must be ensured that all employees support the company's mission and values and understand how their performance contributes to them. (Cappelli and Tavis, 2018)
In order to prepare agile teams for the recruitment, the HRM increasingly has the role of knowledge provider and moderator in the process. The individual teams are taught methodologies ranging from needs assessment to contract negotiation. In practice, the Lufthansa Group is already testing selection tools that check the agile mindset of applicants. Flexibility, attitude and the ability to adapt to change play a central role. (Lochmahr, Müller, Planing and Popović, 2019, p.40)
Concerning the recruiting, the role of the HR department in agile companies is changing. Instead of the controlling and executive task, the focus is increasingly on the coordination of personnel requirements and professional training of the teams in the selection process. The agile mindset plays a far greater role for applicants than job-related competencies. In addition, companies invest in their employer brand through HRM and maintain continuous relationships with talented individuals. (HR Trend Institute, 2016)
The second major task of HRM includes all activities that are concerned with managing the performance of employees in line with the company's objectives like personnel development, personnel assessment and the task of remuneration.
In classical organizations, the defined corporate goals are broken down into the individual departments and then into the individual employees. As a rule, the achievement of the respective subgoals is discussed once a year in a discussion between HR and the employee. Subsequently, a performance assessment is prepared. On the basis of this, the respective employee may receive a monetary bonus and a promotion, depending on the company guidelines. This system is controlled top-down, which means that the HR department mainly plays a conceptual and executive role. (Lochmahr, Müller, Planing and Popović, 2019, p.41-42)
In an agile environment, performance is understood differently, giving performance management a new role. Action results are no longer measured for individual employees, but for entire teams. The team goals are defined and agreed in close coordination with the agile teams. Care must be taken to ensure that neither the goals nor the team's internal roles or activities are defined rigidly and over a too long period of time. This is due to the fact that in an agile environment changes should be reacted to as quickly as possible. In practice, the so-called Objectives and Key Results (OKRs) have been defined for this purpose. These enable flexible team goals as well as concrete action results, which are reviewed and redefined at least every three months. OKRs have been used at Google, one of the leading agile companies, since 1999. (Pawar, 2016)
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Illustration 2: Agile Onion, Own representation based on Llewellyn (2019).
In addition, HRM supports the teams through ongoing training and thus contributes to the shift to agile roles and the associated mindset and skillset. Old role models of long-time employees have to be broken up and new roles such as product owner have to be taught. The constant promotion of the agile and discovery-oriented way of thinking of the teams and the team members moves in the focus. While in classical organizations only employees who are below average in their current role or who are preparing for a new position are supported, agile HRM offers employees the opportunity to learn and develop independently of a concrete, job-related goal. (HR Trend Institute, 2016)
The feedback process is also changing: By using agile methods, employees work on projects of varying lengths, in constantly changing teams and with changing managers. Therefore, the one-time performance feedback per year does not seem to make much sense. Many companies have switched to a continuous feedback process, often conducted project by project. This enables teams to become faster, improve their performance and learn through iteration. (Cappelli and Tavis, 2018) SAP has been using this approach in practice since 2017. The guideline is: "Future-focused conversations are at the heart of SAP Talk," which means that feedback rounds take place at least quarterly and not once a year, as it was the case previously. (SAP, 2016)
As a result, the annual bonuses are also eliminated. As the WorldatWork Research on "Cutting-Edge Performance Management" shows, rewards have the greatest effect if they are given immediately after the desired behavior (2016, p17). Annual increases, on the other hand, are less effective because too much time passes. In addition, HRM should be encouraged to experiment with further incentives. It is becoming increasingly clear that traditional, primarily monetary HR practices are less attractive to younger employees and that intrinsic motivational factors need to be encouraged. (Moreira, 2017, p.251)
As shown, the organizational chart of agile companies differs greatly from that of traditional pyramid or waterfall organizations. Hierarchies are flat, employees work in changing teams and values such as commitment, openness, courage and personal responsibility are increasingly in demand. This has a big influence on the two core areas, Recruitment and Performance Management. HRM plays a decisive role, especially in the transition to an agile organization, because the employees mindsets are vital to the success. The HR department is there to communicate and establish agile values and methods. For teams and individuals, it takes on the role of a coach and mentor, who provides ongoing support and regular feedback on development. It supports the ability to work, whereby the range of tasks changes from traditional guidance and control to mediation, facilitation and empowerment. HRM takes on a new role, moving away from simply implementing controls and standards to supporting programs and strategies that improve organizational agility, innovation, collaboration and decision-making.
- Quote paper
- Paul Heck (Author), 2019, Human Resource Management (HRM) and its new, agile role, Munich, GRIN Verlag, https://www.grin.com/document/909271