We believe this is a logical evolution in thinking because, if people are a source of competitive advantage to you and your advantage is based on differentiation in the market, then your internal architecture needs to emphasize that differentiation.
Many years of tough business conditions have put pressure on typical corporate support functions. The result is that HR departments often scrambled to demonstrate their worth by rolling out ‘cookie cutter’ programs and benchmarks that do not reflect the needs of the businesses they support. HR functions across organizations are typically carbon copies of one another.
These actions have not improved HR’s credibility with senior management. A KPMG International 2013 survey, Tune in to Talent (PDF 1.24 MB), conducted by the Economist Intelligence Unit found that only 24 percent of C-level executives felt that their HR team excelled at core talent management issues in their business.
It’s a vicious circle since, without any evidence-based metrics that measure where and how value is generated in the business, HR is viewed only as a cost function that keeps the firm lumbering along.
Often, HR is out of step with the company it supports. For example, an insurer’s mission may be to “sell and retain profitable business,” which speaks to the need to distinguish itself in sales, customer support and actuarial expertise. However, the HR group may not be configured to recruit, develop and retain each of these three very different talent segments.
Opportunity for change
In reality, the HR function wields incredible promise to shape organizational success. For example, in a company that hopes to build a customer-focused business model, HR has the tools to drive this strategy. HR leaders have the means to map out precisely what customer-centricity means from a people perspective, and then design hiring, training and reward programs that fit that vision.
Fortunately, many insurers are now eager to break from traditional, universal models of HR.
The process begins by defining your company’s specific people issues in terms of the challenges you face. By first recognizing how value is created through people, your firm can establish a people agenda and then map out exactly how HR can drive and enable this value.
Let’s bring that to life. An insurer that hopes to strengthen customer intimacy may base its new people agenda on empowering employees to deliver better service. Then, it could refocus its HR architecture on employee engagement and targeted recognition programs.
Similarly, a firm that wants to improve its customer delivery channels may refine HR architecture by placing HR recruiters right within the channels, closer to the end-customer. Or, it may concentrate talent management strategies on key roles along the value chain that really drive customer satisfaction.
Some companies may baulk at tinkering with the HR function they depend on for day-to-day hiring, firing and administration, but the payoff can be significant.
While HR transformation can be a multi-year journey, you can absolutely begin generating benefits within year one, both in terms of cost reduction and unearthing new value drivers. They can take time, effort, change management and leadership to deliver, but these programs are hugely beneficial if you get them right.
By Robert Bolton, Head of KPMG’s Global HR Transformation Centre of Excellence and Mary Trussell, Global Insurance Focused Markets Lead and Partner, KPMG in the UK
|| Mary’s experience covers the entire range of insurance markets, from life assurance and personal lines to property casualty insurers and reinsurers, across Asia Pacific, Europe and North America. She is the author of KPMG’s Intelligent Insurer and Valued Insurer publications focusing on current and future industry trends.|
|| Robert has a broad and varied experience in leading both private and public sector engagements that focus on organisation performance improvement, behavioural change, organisation and operating model design and HR Transformation. He is the author of KPMG’s HR as a driver for organizational innovation.|