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91Creating a Tipping Point 91
Building an Effective and Efficient Strategic HR Operation
We’re living in a time when a new economic paradigm— characterized by speed, innovation, short cycle times, and cus- tomer satisfaction—is highlighting the importance of intangible assets, such as brand recognition, knowledge, innovation, and particularly human capital. This new paradigm can mark the beginning of a golden age for HR.
[Becker, Huselid, and Ulrich, 2001, p. 4]
IF THE CURRENT ERA IS TRULY to be the beginning of a golden agefor HR, we must look beyond the current state of HR in higher education to its bright future. We are, in fact, at the “starting point of a new tipping point.” Emerging as a “chief integrative leader,” HR is increasingly called on to pull all the pieces together in a global context (Avolio, 2005, p. 95). New economic realities demand a stronger, more vital HR operation that can align workforce strategy with institutional vision and mission. Put simply, the main focus of HR’s efforts must be to deliver value and to serve as a strategic asset (Becker, Huselid, and Ulrich, 2001; Ulrich and Brockbank, 2005; Ulrich and others, 2008). This evolutionary role is not a way for HR practitioners to jus- tify their existence, but has implications for their survival and the survival of the institution as a whole (Becker, Huselid, and Ulrich, 2001). In higher edu- cation, HR is particularly challenged, since often it has not garnered the insti- tutional recognition needed to advance from a supporting to a contributing and even leadership role.
We have seen the research evidence supporting the direct or indirect impact of a strategic HR system on intangible assets and organizational capabilities. The benefits of an integrated HR system require that the HR role be aligned with another intangible asset: the university’s strategy implementation system (Becker, Huselid, and Ulrich, 2001). In this regard, three complex questions arise regarding the evolution of HR’s strategic role in higher education:
• How can HR assess and demonstrate empirically its success in delivering value and strategic efficiency?
• What innovative HR approaches will help sustain the university’s precious talent resources in the face of challenging financial pressures?
• How can HR attain the vision of chief integrative leader with greater voice and participation at the higher education decision-making table?
To answer the first question, we look to the rich literature that has emerged from the private sector on designing a solid, empirically based metrics (see, for example, Becker, Huselid, and Ulrich, 2001; Fitz-Enz, 2010; Huselid, Becker, and Beatty, 2005). For guidance in this process, we return to the find- ings of the research demonstrating the relationship between high-performance HR systems and organizational performance (Becker and Huselid, 2006; Huselid and Becker, 2000; Huselid, Becker, and Beatty, 2005; Ulrich and others, 2008). We then discuss how an HR efficiency and effectiveness audit can help delineate HR’s progress toward a greater strategic contribution.
To answer the second question, we share a representative range of entre- preneurial, cost-effective HR strategies in the public research university designed to preserve employee trust and morale while simultaneously reduc- ing or minimizing budgetary expenditures. And finally, to answer the third question, we close by offering perspectives on the next wave of the HR trans- formation in higher education.
HR Analytics As HR seeks to evolve as a strategic partner, a clearly defined metrics will help guide its efforts to create a viable internal HR structure and define the pathway
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to its transformation. Measurement, of course, is not an end in itself, and it is valuable only as it produces meaningful direction to the HR function and con- tributes to more effective analysis of the drivers of organizational performance (Hubbard, 2004). Measuring activity is not the same as tracking increased value creation and fundamental transformation (Ulrich and others, 2009). In essence, HR is seeking to create value through evidence-based change for sustainable advantage (Boudreau and Jesuthasan, 2011).
The concept of predictive HR analytics is forward looking: it focuses on the future and involves environmental scanning, workforce planning, analy- sis of processes, and predicting future trends through strategic, operational, and leading indicators (Fitz-Enz, 2010). Since financial measures are back- ward looking, the focus of performance measurement must be on the leading indicators, or HR performance drivers, that link to institutional strategy imple- mentation (Becker, Huselid, and Ulrich, 2001).
One of the definitive, empirically based approaches to HR measurement based on more than a decade of academic research is the HR scorecard devel- oped by Becker, Huselid, and Ulrich (2001). The scorecard as a measurement methodology emerged following strategic performance measurement systems such as Kaplan and Norton’s balanced scorecard (1996) and sees the HR sys- tem as an integrated high-performance work system designed to optimize human capital (Becker, Huselid, and Ulrich, 2001).
The development of an HR scorecard involves a seven-step process (Becker, Huselid, and Ulrich, 2001, p. 50):
1. Clearly defining the institutional strategy. 2. Creating a business case for HR as a strategic asset. 3. Developing a strategy map. 4. Identifying HR deliverables in the strategy map. 5. Aligning HR architecture with HR deliverables. 6. Designing a strategic HR measurement system. 7. Implementing management by measurement.
The strategy map is a visual and dynamic representation of the intersection between HR and institutional strategy. The map identifies HR performance
93Creating a Tipping Point
drivers, or the measures that address core employee capabilities or assets (such as employee satisfaction, competence, or diversity) and contribute to value cre- ation in the institution (Becker, Huselid, and Ulrich, 2001). It also includes HR enablers, or specific strategies that reinforce HR performance drivers, such as a change in the reward system that recognizes diversity leaders or training programs that build specific employee competencies. In addition, the strategy map involves consideration of which HR deliverables will contribute to insti- tutional performance drivers (Becker, Huselid, and Ulrich, 2001).
The strategy map is an essential precursor to the development of a mean- ingful, institution-specific HR scorecard. Kent State University’s HR Strategy Map provides a clear example of the translation of the strategy map frame- work into the research university environment. The map delineates the align- ment of university strategic goals, key themes, and projects and HR directions. It then identifies the HR deliverables resulting from this alignment (“Division of Human Resources,” 2011b).
We now move from the strategy map to the construction of the HR score- card itself. The scorecard develops the interrelationships identified in the strat- egy map into an organizationally specific metric framework. Good scorecards contain both outcome measures and organizational performance drivers (Hubbard, 2004). Essential elements of the scorecard keep the twin HR imper- atives of value creation and cost control in balance and include workforce out- comes, HR systems alignment, HR’s contribution to organizational efficiency, and identified HR deliverables. Each of these components in turn has distinct measures that remind stakeholders about the issues and keep the performance dimension of HR programs at the forefront (Becker, Huselid, and Ulrich, 2001).
An HR scorecard can be designed specifically for the university context based on the AQIP principles and using the framework provided by Becker, Huselid, and Ulrich’s model. In Table 4, HR’s impact in relation to the AQIP principle of “people” is assessed in a matrix that includes high-performance work system measures and HR deliverables linked to institutional strategy. The scorecard incorporates both strategic efficiency measures that reflect investments with strategic impact and core efficiency measures based on expenses that do not have strategic impact.
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The thought process involved in building a scorecard helps HR depart- ments to capitalize on reflexivity (learning from past experiences) and set future goals based on the concepts of symbiosis (building a bridge between internal capacity and the external environment) and alignment (process integration).
The HR Audit In an era of economic scarcity, the HR audit is a way for HR to ascertain whether it is adding value and to determine how it can streamline existing ser- vices in light of diminishing resources. It also provides a vehicle for assessing HR’s strategic architecture, competencies, and overall contribution to organi- zational effectiveness. Stakeholder feedback is a key component of an HR audit. Transformation of HR from the outside in emphasizes the principle that the value of HR services is determined by stakeholders, and not by HR itself (Ulrich and others, 2009). The audit signals to stakeholders that HR is seri- ous about its transformation and intends to engage in the change process based on feedback and metrics that gauge its progress. The audit also offers the oppor- tunity to ensure legal compliance, improve employee communications and morale, strengthen perceptions of management, develop entrepreneurial ini- tiatives, and stay current with world-class HR practices.
The HR audit can shed significant light on the extent to which senior management recognizes the strategic contribution of HR and the need for integrated HR systems that have a long-term impact on organizational out- comes. The foundation of workforce success begins with the HR function, and an organization in which HR professionals are focused on only adminis- trative compliance and organizational efficiency can never fully attain the strategic value of its workforce (Huselid, Becker, and Beatty, 2005).
Due to the importance of objectivity and independence in the audit process, results of the HR audit will be most credible when performed by knowledgeable external reviewers with significant HR expertise. Reviewers can be faculty experts in human resources at the home university or consist of a team that includes an HR expert from private industry.
The following data are needed to provide the empirical basis for evalua- tion of HR operations:
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• HR and university organizational charts. • Process flowcharts and work flow narratives. • Position descriptions. • Performance evaluations. • Résumés. • Performance standards. • Quantitative data such as cycle time and processing statistics. • Qualitative data from, for example, focus groups and employee comments. • Stakeholder survey on the effectiveness of HR services. • HR policies and procedures. • Benchmarking data from institutional peers.
The following areas of focus in the audit illuminate HR’s contribution to organizational effectiveness: (1) operational functions, including goals, processes, and outcomes; (2) HR’s partnerships with line management in man- aging people; (3) the relation of HR to executive leadership in the develop- ment of organizational capabilities; and (4) the effectiveness of HR policies for which HR serves as steward (Kunstel, DuBois, and DuBois, 2010).
A written report with the consultants’ findings will provide HR with an agenda for changes in current operations as well as identified directions for future growth. The report needs to identify how HR can evolve further in its role as strategic partner. Comparative benchmarking data gained from sources such as the CUPA-HR Benchmarking and Workforce Planning Survey will allow direct comparison with other public research universities in terms of level of responsibility and staffing resources for each functional HR area.
Guidance in the process of developing an HR audit within the public research university environment can be gained from HR audits and diagnostic tools developed at Ohio University, Kent State University, and the University of North Carolina at Greensboro (Kemper, 2005; Kunstel, Dubois, and Dubois, 2010; Lowe and Young, 2011). Another prominent example, although not solely focused on HR, is the Carolina Counts initiative launched at the Uni- versity of North Carolina at Chapel Hill and designed to reduce administrative costs and improve efficiency. A study prepared in 2009 identified ten areas of review including the HR function and provides specific recommendations for
97Creating a Tipping Point
HR process simplification, platform consolidation, and restructuring, with an estimated savings of $1 million to $3 million over one to three years (“Cost Diagnostic,” 2009).
We next turn to the question of how HR can optimize the university’s tal- ent resources through entrepreneurial initiatives. In the public research uni- versity, the ability of HR to design and deliver cost-savings talent strategies and generate revenue to offset reductions in the HR budget represents an important future direction.
Entrepreneurial HR Strategies To attain the golden age of HR, HR is now called on to develop creative, entrepreneurial initiatives that realize cost savings and yet preserve precious talent resources. Typically the finance division in the public research univer- sity has been viewed as the primary developer and communicator of cost- reduction initiatives and programs. HR has been seen as a budget outsider, often excluded from strategic budget decision making. Yet this perspective is beginning to change in the wake of resource reductions.
As the primary steward of talent resources, HR is gradually assuming a more prominent role in streamlining and simplifying operations, recom- mending innovative cost-reduction programs, involving stakeholders in the budget reduction process, and leading organizational learning and communi- cation initiatives. HR’s emphasis on the protection of talent resources, its expertise in organizational culture and change, and its focus on the preserva- tion of employee morale and commitment make it important to the budgetary reduction process. In addition, HR can develop innovative, voluntary approaches to revenue enhancement that reduce the need for traditional across-the-board budget cuts.
A Cost Reduction and Employee Engagement Survey of HR executives at 518 companies illustrates the importance of how cost-cutting measures are implemented in terms of employee morale. The survey found that 47 percent of the HR leaders felt that employee trust had declined as a result of the way the companies handled budget reductions (Hewitt Associates, 2009).
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Since HR professionals are knowledgeable about organizational culture and the processes of organizational change, their expertise is essential in forecasting how cuts will be received and developing proactive communication strategies. In considering budgetary alternatives, HR practitioners offer perspectives from applicable federal and state employment laws, university personnel policies, and labor contracts. As part of the strategic budgetary planning team, HR profes- sionals can project potential workforce outcomes based on in-depth data analy- sis and recommend alternative strategies. With their prospective focus on talent management, HR professionals can help build a protective firewall around pre- cious university talent resources and design strategies to sustain employee morale in the absence of compensation increases and other financial incentives.
Consider the situation at the University of California and the California State University systems, where an additional $100 million in cuts is sched- uled for 2012 on top of the $650 million hit implemented in the current bud- get (York and Watanabe, 2011). While the magnitude of such cuts is staggering, the involvement of HR in workforce strategy is critical to address- ing future needs and ensuring that budget cuts do not erode vital talent. In response to budgetary belt tightening, the University of California at Berke- ley has undertaken a major initiative, Operational Excellence, in which HR plays a lead role in a high-performance work culture initiative that addresses target talent development. The university plans to invest $595,000 on learn- ing and development programs that position the workforce to meet its future needs (“Target-Talent Development,” 2011). And the Organizational Sim- plification Project will consolidate the delivery model for HR services from over two hundred campus locations to a central delivery model (“About Shared Services at UC Berkeley,” 2011). These programs specifically delineate the role of HR in attaining operational excellence.
Traditional Approaches to Cost Reduction The range of traditional approaches to cost reduction in the research university includes hiring and salary freezes, program review, travel restrictions, layoffs, reduction in part-time personnel such as adjunct faculty, involuntary fur- loughs, job consolidation, and increased employee cost sharing in the areas of benefits and retirement. Most of these approaches relate to the workforce.
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While consideration of across-the-board strategies is arguably necessary in the current economy, the notion of one size fits all may fail to take a number of institutionally specific factors into account. These factors include the dif- ferential needs of divisions and departments, the historical allocation of resources, program and process redundancy, comparative staffing levels for the same functions performed across the university, potential adverse impact on women and minorities, the requirements for negotiations with labor unions, and the distinctive value of programs that contribute to institutional compet- itiveness. HR can add value in the evaluation of these factors and the devel- opment of creative alternatives and adjustments. The intersection of union contracts and federal and state law is just one area in which HR guidance is needed when considering involuntary furlough programs, layoffs, and down- sizing. Furthermore, due to the importance of equity and consistency in bud- get reduction, university leaders will benefit from the expertise of HR practitioners in the development of criteria and processes.
Voluntary Cost-Reduction Initiatives As an alternative to across-the-board involuntary budget cuts, innovative vol- untary strategies have been introduced by HR in the public research univer- sity that in some cases have saved millions of dollars while avoiding more severe measures such as layoffs or pay reductions. Among these programs are voluntary employee severance plans, four-day summer workweeks, voluntary furloughs, shared services, and revenue-generation models.
Voluntary Severance Programs. A voluntary employee severance plan is a creative alternative to traditional cuts, since it allows long-term employees to voluntarily separate from the university and receive a significant cash incen- tive. Such plans are distinct from state retirement vehicles, but they can be combined with traditional state retirement options to increase the incentive for voluntary separation. These programs can be offered for each employee group (faculty, staff, and administrators) with different incentive levels based on analysis of cost factors and potential revenue savings. The university then has the option of full or partial replacement of positions.
Revenue is also realized from the fact that new employees are typically employed at less senior levels, providing both salary savings and the opportunity
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to address projected workforce needs. For example, Kent State University imple- mented a voluntary employee severance plan in 2009 that was accepted by 150 faculty and staff. Other Ohio universities such as Wright State University, Ohio University, and Bowling Green State University followed suit. Ohio State Uni- versity chose to implement a decentralized version in which each college and administrative unit could offer an incentive plan with a payment of twelve months’ salary, not to exceed seventy-five thousand dollars for separating employ- ees (Farkas, 2011).
Flexible Scheduling. Progressive organizations are using a wide variety of flex- ible and alternate work schedules such as telecommuting, job sharing, flex- time, flexspace, and four-day and compressed workweek scheduling. One important voluntary option is the implementation of a four-day summer workweek. For staff, this option consists of a ten-hour schedule completed over four days. The program can be offered as a compressed workweek pro- gram, each individual choosing his or her day off, or as a four-day workweek with a common day (usually Friday) off. These programs are most effective when offered university-wide to allow maximum participation.
In an era when salary increases are not available, this flexible scheduling program can offer periods of personal time. Advantages of the four-day work- week are the reduction of absenteeism, attributed to the staff member’s abil- ity to have more personal time for appointments; improved scheduling for peak workloads by using overlapping shifts; increased cross-training to accom- modate periods of lighter coverage; the ability to work on projects with longer periods of uninterrupted time; increased productivity; and enhanced recruit- ment and retention. In addition, this program can provide electrical cost sav- ings to the university from building closures and reduce commuting costs and carbon emissions. Examples of summer four-day workweek schedules are those implemented by Florida A&M University, Florida International University, Kent State University, Kentucky State University, Northern Michigan Uni- versity, and Northern Illinois University.
Furlough Programs. Additional voluntary scheduling reductions include the creation of voluntary furloughs that allow employees to take time without pay for a defined period in order to help relieve the financial stress of departmental
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budgets. Examples include the University of Minnesota’s voluntary furlough pro- gram that allows faculty and staff to take a maximum of ten unpaid leave days in a fiscal year, without impact on vacation, sick leave, or holiday accrual (“Volun- tary Furlough Questions and Answers,” 2011). The limit of ten days is designed to ensure that the furlough days do not require replacement of a position.
Collaborative Initiatives. HR collaboratives formed through multiuniversity partnerships not only reduce costs but leverage the power of member institu- tions in attaining desired outcomes. For example, the Michigan Higher Edu- cation Recruitment Consortium consists of a group of twenty-seven colleges and universities that work collaboratively to pursue top faculty and research talent and accommodate trailing spouses. The consortium provides an avenue for universities to find placements for faculty spouses to avert the risk of losing top candidates (“Conference,” 2011).
Since professional development has often been the focus of budget reduc- tions, the formation of HR consortiums for training and development has been a viable cost-savings approach that capitalizes on the synergy and intel- lectual resources of member institutions. These collaborative programs allow participating institutions to share limited development resources, capitalize on opportunities for knowledge sharing and networking, develop online and face-to-face course or certificate offerings, and engage high-quality speakers. For example, the Georgia Professional Development Consortium consists of seventy-one HR professionals from system institutions who design and imple- ment online and face-to-face training courses that can be accessed at regional training centers (“USG Professional Development Consortium,” 2010).
HR Revenue Generation. Programs that generate revenue internally for HR provide the opportunity to help cover staffing costs and provide operating expenditures as state revenues are reduced. Such entrepreneurial initiatives include the use of temporary employment pools and the development of HR organizational services that can be marketed externally. The HR temporary employment pool operates with a surcharge or service fee to departments (typ- ically 10 percent) but provides departments with a readily available resource for short- and longer-term vacancies due to unexpected illnesses, absences, spe- cial projects, and workforce fluctuations. Since the pool is prescreened and credentials have been verified, this service provides departments with the ability
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to staff temporary vacancies quickly. Examples of self-sustaining temporary employment services housed in HR can be found at the University of Califor- nia at Davis (“Temporary Employment Services,” n.d.), the University of California at Irvine (“Guidelines for Campus Temporary Employment Services,” 2011), and Auburn University (“Temporary Employment Services,” 2011).
External organizational consulting is another potential area for revenue generation. These arrangements can involve marketing HR programs and ser- vices to both private and public sector organizations or being an HR service provider for some or all aspects of HR for other institutions. We have already mentioned the innovative, self-supporting University Consulting Alliance at the University of Washington that increases efficiency by managing HR-related consulting contracts for university departments (“Organizational Develop- ment,” 2007). In another example, the HR Department at the University of North Carolina at Greensboro has formed a collaborative relationship with faculty experts in the university’s Bryan School of Business to market profes- sional development programs externally to regional universities and commu- nity colleges in the Piedmont Triad of Greensboro, Winston-Salem, and High Point, North Carolina. Within a three-year period, this collaboration is expected to cover staffing for HR’s professional development program that had been reduced through budget cuts.
HR as Chief Integrative Leader When will HR take its seat at the higher education decision-making table as a chief integrative leader and strategic partner? Is such a role possible in an institution as diverse and decentralized as the public research university? Will HR be able to garner the institutional support needed to move from a pri- marily staff-oriented role to one that increasingly includes faculty?
The value of HR’s contribution lies in its ability to integrate systems and processes that create a high-performance workplace. As demonstrated by the research literature, increasing organizational capabilities—the ability of the orga- nization to use resources, accomplish objectives, and create a culture that leads to desired outcomes—is the key to future value and success (Ulrich and Smallwood, 2003a). The contributions of HR in enhancing organizational capabilities through talent management, diversity, OD, and employee engagement have
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been highlighted in the previous chapters. In taking its seat at the table, HR brings a nuanced understanding of university culture and the differences among employee groups that will help sustain and build the institutional talent base and architectural infrastructure needed for the university’s future growth.
HR can help the public research university in the creation of an abundant organization: a work setting characterized by individuals who through their attitudes, aspirations, and actions contribute to the creation of meaning for themselves, stakeholders, and society at large. The challenges of the current work environment include declining job satisfaction, increased environmen- tal demands, the growing complexity of work, increased social isolation, and low employee commitment (Ulrich and Ulrich, 2010). HR’s efforts to strengthen employee morale and job satisfaction while building a workplace characterized by respect, dignity, and compassion will expand the university’s capacity to foster employee commitment and discretionary effort. HR pro- fessionals can help create positive work cultures that affirm and connect peo- ple within the institution, create high-relating teams, align organizational purposes with individual motivation, and shape not only employees’ compe- tence but also their sense of contribution (Ulrich and Ulrich, 2010).
Yet elevation of HR’s role in the public research university clearly involves a change process. The critical errors that inhibit transformative change iden- tified by John Kotter (1995) seem particularly pertinent to HR’s evolution. These errors include not creating a strong sense of urgency, not building a powerful enough guiding coalition for the change, and not having a vision for the change. In practical terms, change will not occur in HR’s role unless HR receives support from powerful institutional forces that envision the value added from a strategic HR operation. Whether the guiding coalition for such change is led by the chancellor or president, executive vice chancellor, or provost, faculty, or governance groups, institutions no longer have the luxury of time to address the winds of budgetary change. Reaching a critical mass for the idea of strategic HR requires that a significant enough number of stakeholders have internalized the concept so that it becomes embedded in the organization. The tipping point at which significant and long-lasting change occurs depends on the accumulation of small changes—not home runs, but finding ways to simply get on base (Ulrich, Kerr, and Ashkenas, 2002). Throughout this monograph, we have
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identified incremental yet substantive ways in which HR departments in the public research university are articulating a strategic agenda.
Concluding Perspectives We return full circle to the premise of this monograph: HR departments in higher education need to reflect the best practices of high-performing organi- zations and move from transactional, siloed operations to strategic, inclusive models that serve the university as a whole. In an era of dwindling resources, the public research university must be positioned to use its declining financial assets to meet the needs of diverse students in a more effective manner. The student population has expanded not only in terms of sheer numbers and demographic representation, but also in terms of the growth of nontraditional students and those who require remedial preparation.
A recent forecast released by the U.S. Department of Education indicates a projected increase in total college enrollment of 13 percent between 2009 and 2020, with a 21 percent increase in students ages twenty-five to thirty- four, a 16 percent increase in enrollment of women, and a 46 percent increase in Hispanic students. Doctorates are projected to increase the most rapidly of all degree types, with a 57 percent increase overall and a 70 percent increase in degree attainment for women (“New Report Projects,” 2011). Enrollment pressures coupled with the importance of delivering high-quality education to an expanding population of students with diverse needs will require repriori- tization of the university’s scarce financial resources.
In this context, a transformational HR operation will help the university function in a more effective manner. The evolution and revolution needed to accomplish the HR transformation will ensure the development of a strong and adaptive organizational culture that supports institutional performance and effectiveness (Roberts and Hirsch, 2005). A strategic HR operation that focuses on building organizational capability will help the university withstand the shrinking of budgetary resources through alignment of talent resources. This increased capacity will contribute to institutional viability and agility in the current economy and position the public research university to fulfill its educational mission of teaching, research, and service.
105Creating a Tipping Point
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