1. The Challenge of HR Transformation Mike Watts Director, HR Transformation Directorate Cabinet Office

2. HR Transformation in the Civil Service – The dimensions Number of people in Civil Service566,700* (approx) Number of people in HR in Civil Service 12,500 (approx) £13.5bn p.a. £ 0.35bn p.a. Number of “main” departments 25 (approx 130 management units) * Figures from Civil Service Statistics as of 30 September 2005

3. HR Transformation Matters – the backdrop It goes without saying that managing people is a key task for any organisation. As employees represent both the major cost and the major driver of value creation, people management moves that lead to even small changes in operational performance will have a major impact on overall value and delivery. ( Harvard Business Review June 2005) Different organisations Different Skills Fiscal Pressures Customer expectations Increased demands Views on ways to get better value Workforce demographics Different demands of HR Delivery depends on Capable, Engaged, and Enabled People

4. HR Transformation – why bother? Value is driven by capable, engaged, enabled people … that requires capable, engaged, enabled HR functions 60 million lives 40% UK economy 560,000 employees less than 12,000 in HR

5. HR Transformation – Thinking systematically about HR design HR Capabilities Structures Integration Mechanisms Motivation Skills Capable Organisation Value

6. HR Transformation: what must HR be able to do? (a framework of capabilities ) 1. Operational Excellence & Service quality 2. Enabling Business Change 3. Building capability for Strategy execution (HCM) 4. Facilitating & Informing Strategic Choices

7. 1. Operational Excellence & Service quality 2. Enabling Business Change 3. Building capability for Strategy execution (HCM) 4. Facilitating & Informing Strategic Choices Employees/ Line managers Board(s) Senior managers/ SROs Board(s) HR Transformation: what must HR be able to do? (a framework of capabilities )

8. 1. Operational Excellence & Service quality 2. Enabling Business Change 3. Building capability for Strategy execution (HCM) 4. Facilitating & Informing Strategic Choices Employees/Line managers Senior managers/SROs Board(s) HR provides value for money HR adds value HR drives value HR creates value (Examples of positive and counter indicators of good practice available) HR Transformation: what must HR be able to do? (a framework of capabilities )

9. 1.Operational Excellence & Service Quality (HR provides value for money) Definition: HR defines and achieves excellence in operational efficiency & service quality Hr Focus: Excellent/consistent practice in all Key processes and relationships with users Good = SLAs being met and continuously improved Cost of volume transactions in acceptable range for scale (benchmarks are clear) Managers believe that they get a service that helps them do their jobs Experience is well regarded by employees An Example

10. 2. Enabling Business change Deeper resistance to change; and therefore Key changes take longer to embed Consequences of lack of capability Higher costs Unsupported managers Disenchanted employees Poorer choices Less commitment to the choices 4.Facilitating and Informing Strategic choices 1. Operational Excellence and Service Quality Reduced readiness to deliver; and therefore Reduced future delivery 3.Building capability for strategy execution

11. Where are we coming From? (on average) 1. Operational Excellence & Service quality 2. Enabling Business Change 3. Building capability for Strategy execution (HCM) 4. Facilitating & Informing Strategic Choices Fair to poor Fair Little evidence Fair (but Poor) Illustrative scales: Poor Fair Good Excellent Direction Stuck Planning Early implementation Implementation advanced Stuck – Early implementationStuck – early implementation Stuck

12. Delivering HR Services: Headline structures Administrative Services HR Leadership Team Focus: High quality HR expertise Focus: Cost-effective administrative HR processes Focus: Business leaders & Strategic impact Focus: Direction and sponsorship; Team leadership; Review HR value and impact HR Business Partners Centres of Excellence “Front – back model” requires 1 st class leadership

13. Common issues that we’re addressing Technology Base HR Silos Expectations of HR Line manager/People management skills HR Professionalism

14. What are we doing about the Issues? Technology base HR Silos HR professionalism Expectations of HR Line manager/people management skills HR standards Talent Management Professional Forums People management standards Consolidation of what represents “good” HR Capability Better return from Performance Management processes Shared Services transformation (convergence) Requirements of a common people record Signposting scaleable & repeatable good practise & pushing synergies Roles and relationships work

15. Human Capital Management - Takeaways HCM Matters HCM starts when your strategy is conceived. HCM is about “readiness to deliver”. HCM is impacted by good Change Management. HCM is underpinned by solid HR practices & a technology base. HCM is reliant on well designed HR Functions.

16. 1. Operational Excellence & Service quality 2. Enabling Business Change 3. Building capability for Strategy execution (HCM) 4. Facilitating & Informing Strategic Choices