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Why HR is critical to successful Agile transformation

In recent years, we’ve seen a radical change in almost every organisation we work with – Agile has extended from the technology domain into the wider enterprise. Organisational agility is now the default approach to all delivery, not just software delivery. And, more importantly, it’s defining cultures, leadership and how we work.

That’s not surprising. The original Agile Manifesto simply pointed out that individuals, interactions, collaboration and change are critical to project delivery. So, being agile is all about people, not what they’re delivering.

That’s why our research found that 68 per cent of leaders from the most successful businesses put culture before processes when becoming more agile. And findings from the 13th State of Agile Survey support the need to focus on culture – the top three reasons organisations fail in their Agile transformation are culture, change and people:

  • 53 per cent said their organisation’s culture is at odds with agile values
  • 46 per cent said there’s general organisational resistance to change
  • 42 per cent said there’s inadequate management support.

To be agile, you need to get the people stuff right

The problem is, traditional HR practices don’t work in an Agile setting. Performance management happens once or twice a year. Talent management relies on regular vertical progression. And recruitment can often take 3-4 months. Such HR practices constrain the performance of agile teams.

To overcome these constraints and show HR’s pivotal role in the success of Agile transformation, we need to embrace Agile HR. And that means both ‘Agile for HR’ and ‘HR for Agile’.

Agile for HR is about applying agile working practices to the HR function – focusing on customer value, iterating delivery and rapidly responding to feedback.

HR for Agile is arguably the more crucial element. It’s about HR becoming the Agile Coach for the organisation by creating cross-functional and flat structures, developing HR practices that liberate people and add value, coaching leaders in their new role, and shaping culture and values.

Taking on this role moves HR from a policy function to the forefront of organisational change. In our experience, there are five things HR teams need to do to make this change.

Did you know the top 10% of financial performers are 30% more agile than the rest?

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1. Create decentralised cross-functional people teams

HR is great at working in highly specialist teams. The Ulrich model – the only HR operating model used by organisations in the last 30 years – championed this siloed approach and helped HR become a strategic advisor. But while deep technical expertise is essential, the answers to people questions are rarely simple enough to fit into a single specialism.

So, it’s time to move on from Ulrich and restructure HR into cross-functional, value-driven teams tasked with delivering specific outcomes. For example, rather than structuring your HR function into Reward, Leadership, and Talent teams, create value streams such as 'Induction and Onboarding’ and ‘Grow and Develop Talent’. These cross-cutting teams bring together a range of HR specialisms to deliver the end-to-end customer experience.

2. Be data obsessed

As we think differently about our people – not as a cog in a machine, but as diverse humans who contribute value through creativity and innovation – the need for reams of HR policy and process reduces. And that means HR can evolve out of the policy making world and into the world of insight and coaching.

But to do this, HR needs to draw insights from its data. HR has a lot of information, but it’s often ‘dark’ – inconsistent, unexamined and inaccessible. HR needs data scientists, or to work with data teams, to draw out insights from this information. It could be possible to uncover why people leave after six months, or why women drop out of the recruitment process at a certain point. You could even predict how the average age of recruits will change in the next 20 years, or the likely ability to recruit cyber expertise in the next five years. Such insights will give HR a seat at the strategy table.

3. Experiment and learn

It can be easy for HR to design people practices behind closed doors. There are sometimes very real constraints to opening the conversation early, but by striving for the right answer without testing with real people and iterating based on their feedback, HR teams fail to deliver maximum value.

That’s why, when helping a large retailer redesign its performance management processes, we created several experiments to test with sections of the 50,000-strong workforce. This let us assess impact on both individual and team performance, so we could make informed decisions about scaling changes across the firm.

4. Accelerate onboarding

Many organisations rarely think about onboarding. Colleagues join, might get a day of induction briefings and then learn most of what they need to know on the job. But as people now drive value, great onboarding is key to accelerating time to value, a key marker of success found by organisational agility research.

So, rather than a single day of presentations, re-design on-boarding as an end-to-end value stream that brings together all the relevant expertise, including facilities, technology and HR. And think about starting onboarding before an employee joins, using digital tools to connect them with colleagues and share information.

5. Shift your model of leadership

Leadership development is key to becoming a more agile organisation. Leaders are the architects of culture and empower experimentation, but the role of leaders changes significantly in agile organisations.

In the past, organisations have appointed leaders for their technical expertise. But Agile teams take decisions about how and when they work, meaning leaders don’t need to be technical experts in everything. This can isolate leaders, who can lack clarity on how they add value to the organisation.

It’s crucial for HR to, support leaders with individual and collective coaching, clarify their new role, accountabilities and responsibilities, and reset leadership values.

HR can help lead Agile transformations

The transition to becoming a more agile organisation presents huge opportunities for HR to become an insight-driven strategic partner and coach. By reorganising in cross-functional teams, focussing on data, delivering iteratively, training people quickly and rethinking leadership, HR can stop being policy generators and start leading on strategy.

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Sam Bunting

Sam Bunting

Stephen Hughes

Stephen Hughes

Greg Beard

Greg Beard