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The role of Human Resource Manager: Change Agent vs. Business Partner?

Research into HRM in Italy

Daniele Boldizzoni, Luca Quaratino IULM University of Milan

Abstract

The paper explores the extent to which HR departments in Italy are characterized by a shift from administrative roles to roles focused on valuing human capital and supporting organizational change, or as business partner and change agent, from the perspective of HRM (Boselie, et al. 2009).

After exploring the theoretical background by analysing the different roles of HRM highlighted in the literature, and referring to Ulrich (1997), a survey was conducted in 102 large companies operating in Italy. The data analysis highlights critical dynamics in the process of adopting the roles of business partner and change agent:

the on-going economic crisis seems to have contributed to a slowdown in the adoption of roles more focused on investing in people and organizational development and a step back from administrative roles and the short-term perspective;

from the quantitative perspective, the role of change agent is adopted less than that of business partner; nonetheless, change agent, when adopted, appears to be sounder and based on rather consistent programmes and actions, while business partner seems to correspond more to a formal label, coherent with managerial fashions, than to real role behaviours.

The main limitation is due to the impact of the economic crisis during the data collection and the necessity to test the hypotheses on more representative samples. The paper identifi es possible areas of intervention for the HR manager in order to become a change agent and business partner. Its value is mainly due to being one of the few quantitative studies on HR roles in the Italian context.

Keywords: Business Partner, Change Agent, Human Resource Department, Human Resource Management, Human Resource Manager.

Daniele Boldizzoni is a Professor in Organization Theory and Human Resource Management at IULM University of Milan. He graduated in Economics completing his studies at the Tavistock Institute (UK). He developed his professional experience as both HR manager and consultant/trainer for the most relevant Italian companies between the 70s and 90s. Today his research interests deal with the growth of small and family businesses, new developments in learning/training processes in postmodern society, and the evolution of HRM in Italian companies.

E-mail: [email protected]

Luca Quaratino is a researcher in Organization Theory and Human Resource Management at IULM University of Milan. He has graduated in Law and completed his studies at the Industrial and Labour Relations Department at Cornell University (USA). For more than fi fteen years he has worked as consultant/trainer in HRM and organizational development issues for major Italian companies. Today his research interests deal with “train the trainer” processes in transition economies, the relationship between organizational culture, business strategy and performance, and the evolution of HRM in Italian companies.

E-mail: [email protected]

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State of the Art and Evolution of Human Resource Management (HRM)

Many classic contributions in the literature on the state of the art and the evolution of HRM focus on the links between the environment and corporate strategies on the one hand, and HRM policies and tools on the other (Schuler and Jackson, 1987; Wright, Snell, Dyer, 2005; Boxall and Purcell, 2008), underlining the continuous effort in adapting HRM policies and processes to strategic and organizational changes. This approach includes all the contributions related to “strategic human resource management” (Fonbrun, Tichy, Devanna, 1984; Noe, Hollenbeck, Gerhart, Wight, 1994). From this point of view, the evolution of HRM is considered a diffi cult and continuous adapting to changes both in the environment and in the strategies and structures of the organization. Accordingly, HRM has two main tasks. On the one hand, it should support the top management in defi ning the corporate strategy, and on the other hand, it should set up all the processes and tools necessary to put the strategy into action (Wright and Mc Mahan, 1992).

Within this stream, consistent literature has developed analysing the role of HRM professionals in defi ning and implementing policies and tools coherent with the strategic goals of the organization (McKee, 1997; Sparrow and Marchington, 1998; Wright and Snell, 2005).

In particular, Ulrich (1998) maintains that in order to face the challenges coming from the competitive environment, the HRM function should be able to cover different roles, sometimes even contradictory, which can be defi ned according to two main variables:

- strategic/long term or operative/short term

- managing processes or people

The matrix coming from these variables outlines the following roles (see fi gure 1):

Business Partner: the main task of the HR manager is to align the contribution of human resources with the company’s business strategy;

Functional Expert: the main task is to design and manage effi cient and effective HRM systems (procedures, methods, tools);

Figure 1: The HRM roles (Ulrich, 1998)

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Employee Advocate: this role refers to managing employee commitment and contribution to the company. It means monitoring personnel satisfaction with the working conditions on a daily basis. The basic assumption is that personnel satisfaction has a positive impact on both productivity and company performance;

Change Agent: this role implies the involvement of the organization in change management, and HRM professionals have to identify and overcome resistance to change, and to generate fl exibility and adaptability among the personnel.

Ulrich believes that the effi ciency and effectiveness of the HRM function depend on the ability to play all these roles at the same time, mixing them up according to the environmental contingencies and strategic goals.

Nonetheless, observations of real practice points out that while the roles “functional expert” and “employee advocate” can be easily adopted, “change agent” and “business partner” are more diffi cult to play (Losey, Meisinger, Ulrich, 2005), given that the fi rst one implies a longer term orientation and a stronger focus on valuing people, and the second one calls for higher strategic coherence.

In the fi rst case, even if the role of leading organizational change is generally recognized in theory to belong to HRM professionals, it can actually be seen that in recent decades changes have mostly been led directly by top management, supported by external consultants rather than internal HRM professionals, who are probably considered less competent and reliable (Boldizzoni, 2009). It can be observed that “personnel departments are very often considered to be the rear-guard towards innovation, fl exibility and change, acting as the guardians of traditions deeply rooted in rules and procedures, rather than as explorers of innovative pathways” (Ulrich, 1998), while the

acquisition of competencies useful to support change are critical for both the credibility and success of HRM professionals.

The adoption of the “business partner” role is even more diffi cult because it is not just a matter of acquiring new competencies, but it deals with effectively settling the structural confl ict with line managers related to human resources management. This confl ict is due to the fact that while line managers are mainly interested in managing human resources according to productivity and the short- term perspective, HRM professionals should consider people management from a long- term perspective and with a specifi c focus on competence development (Barney and Wright, 1998; Paoletti, 2008). And that is the most compelling challenge against which HRM is expected to measure itself.

In recent decades, studies conducted on the state of HRM in the Italian context have pointed out highs and lows, partly confi rming a slowdown in its evolutionary process: on the one hand, the models of “personnel administration” seem to have been abandoned and the mere role of “functional expert” is considered insuffi cient. At the same time, the shift towards “human resources development” models and roles, which are more consistent with strategic orientations, seem to be quite a distant target (Camuffo and Costa, 1993; Boldizzoni, 1997, 1999).

Research Objectives and Methodology

The research presented here aims at contributing to the discussion on the role of HRM in Italy, trying to understand, in particular, if the intention of adopting new and more challenging roles, fi rstly those of change agent and of business partner, had a concrete translation into real practices in recent years.

The data was collected in 2009 through an on-line questionnaire sent to more than 500

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people in charge of a HRM department. The target group of respondents was selected from a mailing list of Human Resource Managers, members of one of the main Italian HRM associations. A total of 102 answers were considered valid for our statistical analysis.

Here follows the most important characteristics of those 102 companies:

- national/multinational profi le: slightly more multinational companies (53.9%) than national (46.1%);

- industry: companies are equally distributed between manufacturing (51%) and service sectors (49%);

- size (companies were grouped in the following classes): from 250 to 500 employees (36.4%), from 501 to 1,500 employees (37.7%), from 1,501 to 5,000 employees (13.1%), more than 5,000 (12.8%).

The companies involved in this survey cannot be considered representative of the entire population operating in Italy, which is mainly composed by small and medium- sized enterprises (97% of the companies have less than 15 employees) where generally no specialized HRM function or competence is present.

We decided to focus on companies with at least 250 employees, given that they are generally characterized by the following features: the existence of a formally appointed Human Resource Manager operating as a staff of the CEO (Chief executive Offi cer); a HRM function articulated in specialized units (e.g. recruitment, training, industrial relations, etc.); and the presence of formal HRM processes and systems. From this point of view, our sample of 102 companies represents 2.98% of all Italian companies with at least 250 employees, which total 3,148 in 2007 according to the Italian National Institute for Statistics.

Results and discussion

The Roles of the Human Resource Manager

Beginning from the analysis of the collected data, here follows a discussion of the trajectories of the evolution of HRM in Italy, referring in particular to the roles of Change Agent and Business Partner in order to understand whether and to what extent Italian HRM departments are actually moving in these directions.

The data analysis was based on a pivotal question in the questionnaire asking: “Among the following roles, which one best represents the nature and the activities of Human Resource Management in your company today?” (Note 1)

Referring to Ulrich’s model, the collected data indicates that the role of Business Partner is by far the fi rst option (29.9%), followed by that of Functional Expert (19.5%) and Change Agent (14.3%). Nobody chose Employees Advocate (0%).

The analysis of this data suggests two possible main considerations (see fi gure 2).

Firstly, the focus on processes is defi nitely stronger than that on people, suggesting that human resource managers are much more committed to answering requests coming from the organization/management than listening to single employee’s needs. In economically and fi nancially bad times, supporting organizational effi ciency and effectiveness comes fi rst: so the human resource manager spends his/her time “partnering” line management to achieve business results and improving the functional processes he/she is responsible for.

Secondly, it seems that the human resource manager has somehow lost his/her profi le

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as “missionary” (Employees’ Advocate), taking care of people’s everyday operational problems and requests. The focus on people survives only if it is meant in terms of adapting the human capital to the change management processes of the organization, and working on its fl exibility skills.

Comparing this data with that collected in a previous survey conducted on the same companies ten years ago (Boldizzoni, 1999), it is possible to highlight the evolution of these orientations in Italian HRM departments referring to the last decade (see fi gure 2).

The fundamental trajectory of evolution shows that there has been a signifi cant increase of focus on processes, with the quantitative growth of both the Business Partner and the Functional Expert roles; at the same time there has been a relevant reduction in the Change Agent and the disappearance of the Employees’ advocate roles, witnessing a weaker focus on people inside the organization.

As mentioned above, it is possible to link this strong emphasis on processes to the recent worldwide economic crisis, during which the Italian economy reported a particularly

negative performance. This was followed by attempts by some companies to maintain their competitive advantage, especially through a search for the highest effi ciency in their internal processes. As a matter of fact, if the data is analysed according to sector of activity it is possible to observe that the role of Business Partner is much more present in the manufacturing industry than in services (78.3% vs. 54.55%); perhaps because the companies belonging to the former were urged to restructure in order to face the competitive pressure coming from rising economies.

Moreover, if we compare national and multinational companies, it is not surprising that a stronger orientation defi nitely exists among multinational companies in adopting the role of both Business Partner (78.3% vs. 27.7%) and Change Agent (81.82% vs. 18.18%). The reason is very likely the traditional sounder focus on human resource management policies and systems by multinational companies, partly ‘pushed’ by the tight relationship with the main consultancy fi rms at the international level, who frequently represent a signifi cant source and vehicle for managerial innovations and fads.

Figure 2: The evolution of HRM role (2000–2010)

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Business Partner vs. Change Agent: Data Analysis

In this section the orientations and actions characterizing the roles of Change Agent (CA) and Business Partner (BP) are analysed, trying indicate the gaps and differences compared to the overall sample. As a matter of fact, the aim is to understand whether, beyond the formal statement of having adopted such roles, it is possible to identify policies, approaches and concrete areas of engagement differentiating these HRM departments from the others who participated to the survey.

In particular, the following areas of analysis were considered: the objectives of the HRM

department, criteria for the assessment of its performance, the main problems and areas of engagement, and concrete actions implemented in some key innovative areas of human resource management.

HRM strategic objectives

The fi rst question was aimed at identifying the strategic objective of HRM departments in order to make a distinction between “conservative” policies centred on respect for norms/contracts and on maintaining a good internal climate, and “development” policies based on contributing to the development of the organizational system and the complete expression of the human potential available.

Table 1: Objectives of the HRM department

CA Total BP Ensuring respect for norms and contracts and managing relations with labour unions

9.09% 19.48% 8.70%

Ensuring equity of treatment and maintaining good internal relations

9.09% 10.39% 4.35%

Improving the effi ciency of human resources coherently with processes of organizational restructuring

9.09% 24.36% 34.78

Contributing to the development of the organizational system by integrating human resources with all the system’s components

27.27% 24.68% 21.74%

Developing human potential at all levels of the organization 45.45% 23.38% 30.43%

Note: it was possible to give only one answer

Compared to the overall sample, generally both CA and BP show a stronger orientation towards valuing people.

CAs are clearly oriented towards valuing people and integrating them into the organization. On the one hand, they have the objective of being proactive in integrating human resources into the overall organizational system (strategy, structure, culture, technology, etc.); on the other hand, it is even more strategic (the difference with the overall sample is more than 20%) for them to develop human potential at any level in the organization – sustaining the competitive advantage of the organization through people (Pfeffer, 1998).

BPs instead, seem to have a slightly more ambiguous orientation that is less distinct from the total sample. If on the one hand, they show a sounder commitment to valuing people, even if to a great degree this is lower than the same in CAs (the difference with the overall sample is around 7%), at the same time their prevailing objective is to ensure the effi cient use of people, according to restructuring processes. In other words, they seem to interpret the role of BP more in terms of adaptation to the requests for effi ciency coming from the line management than as a contribution to relaunching the company in terms of organizational development.

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Criteria for assessing HRM performance

The question of the criteria for the assessment of HRM performance was aimed

at understanding the expectations that the different internal stakeholders/customers have towards HRM professionals: What do they expect the HRM department to focus on and ensure for the organization?

Table 2: Criteria for assessing HRM performance

CA Total BP Functional competence 27.27% 38.96% 21.70% Management of staffi ng and labour costs 36.36% 38.96% 36.00% People development 90.91% 50.65% 48.00% Management of relations with labour unions 27.27% 20.78% 21.00% Service orientation 27.27% 33.77% 43.50%

Note: two answers were possible

Compared to the overall sample, for both CA and BP the dimension of the pure functional competence of HRM experts seems to count less, while attention to labour costs and staff management is in line with the total sample.

A differentiated outline does emerge. For CAs, the clearly prevailing criterion is that of “people development”, an area absolutely consistent with the stated objective of the function (see above), and on which CAs perceive they have to account for their actions and results. As far as it concerns the BPs, the distinctive criterion appears to be that of orientation to service instead, while referring to people development, the fi gures are slightly lower than the overall sample (48% vs. 50.65%), suggesting that the

main driver is towards satisfying the requests of internal customers (the line manager responsible for specifi c organizational processes) and not necessarily those of single employees with whom the partnership seems to be a little bit weaker.

Main problems and areas of engagement for HRM today

One specifi c question had the objective of investigating what primary problems face HRM departments today; in other words, which areas of engagement is it called to direct its energies and actions towards in order to provide an effective answer to the requests coming from the organization.

Table 3: Problems of HRM today

CA Total BP Effi ciency and control of costs 54.55% 50.00% 30.40% Organizational fl exibility 36.36% 21.79% 13.00% People training and development 45.45% 29.49% 34.80% Change management 0.00% 1.28% 4.30% Management of work atmosphere, culture and values 27.27% 23.08% 34.80% Service to internal customers 54.55% 33.33% 21.70% Diversity management 9.09% 10.26% 21.70% Work and life quality 0.00% 1.28% 0.00%

Note: it was possible to give more answers

Compared to the total sample, once again CAs show an overall orientation that is more clearly differentiated and focused towards the

development of people and of the organization. As a matter of fact, these HRM departments are more engaged in certain critical issues:

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management of work atmosphere, culture and values (54.55% vs. 50.00%); training and development of people (45.45% vs. 29.49%); and search for organizational fl exibility (54.55% vs. 33.33%). It is interesting to observe that attention to effi ciency and cost control also remains fundamental for CAs – any organizational change and development action, in time of crisis, cannot leave this dimension out of consideration.

BPs on the contrary show a profi le which is closer to the overall sample, with a differentiation on the training and development of people (34.80% vs. 29.49%) and most of all on service to the internal customer (21.70% vs. 10.26%) as already noticed.

What is striking here is the absence of both CAs and BPs on the topic of work/life quality – in

line with the overall data, this seems to highlight a certain delay in the entire Italian social and economic system, which even companies that say they have adopted more advanced roles in human resource management are unable to avoid.

HRM present practices

The last question aimed at identifying actions concretely implemented by HRM departments in the deployment of their functional policies. In particular, attention was set on specifi c cutting edge issues (beyond the traditional human resource management leverages), which should in themselves more clearly show the transition of HRM departments towards the adoption of more innovative roles.

Table 4: Present HRM practices

CA Total BP a) To increase effi ciency and productivity Outsourcing/spin-off programs 27.27% 15.38% 17.40% Internal entrepreneurship programs 27.27% 11.54% 4.30% Introduction of new types of fl exible jobs (part-time, job sharing, fl exible time)

45.45% 23.08% 8.70%

Introduction of remote-working 9.09% 2.56% 0.00% Introduction of variable rewards 45.45% 4.,59% 60.80% b) To improve the service orientation Systematic monitoring of the quality of service 63.64% 33.33% 6.10% Internal customer segmentation 9.09% 12.82% 8.7% Introduction of internal accounts 18.18% 12.82% 13.0% Internal marketing/communication plans 18.18% 11.54% 17.4% Award for the quality of service 9.09% 11.54% 8.70% 360° appraisal methods 36.36% 12.82% 13.0% c) To develop potential through: Mobility/career policies segmented by educational qualifi cation

27.27% 12.82% 13.0%

Mobility/career policies segmented by age 18.18% 10.26% 4.30% Mobility/career policies segmented by professional seniority 27.27% 8.97% 13.0% Mobility/career policies segmented by gender 27.27% 12.82% 4.30% Policies and plans for Equal Opportunities 36.36% 7.69% 4.30% Inter-company training programs 54.55% 26.64% 30.40% Inter-functional training programs 36.36% 32.05% 34.80% Plans for individual and professional group competency development

36.36% 25.64% 26.10%

d) Work and life quality “Work-life balance” programs 9.09% 5.13% 0.00% Agreements with sport, health-care, family services providers etc.

54.55% 32.05% 30.40%

Introduction of corporate nursery 18.18% 10.26% 8.70% Plans for the improvement of the work environment (beyond those required by law)

27.27% 29.49% 30.40

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Anti-mobbing plans 9.09% 6.41% 8.70% Customized support/development (counselling, mentoring, etc.)

9.09% 12.82% 17.40%

Note: only one answer per section (a, b, c, etc.) was allowed.

Generally, a weak initiative on these crucial issues does emerge, indicated by the limited differentiation of CA and BP behaviours from the overall sample.

Focusing on each single sub-section of HRM practices, it is possible to draw some insights for the present analysis:

productivity: CAs search for effi ciency and productivity not only through variable rewards, but also through fl exible solutions oriented to people’s needs (e.g. remote working) and the promotion of internal entrepreneurship; BPs limit themselves to introduce variable rewards;

service orientation: BPs state that service orientation is the main criterion for assessing the performance of the function, but they are poorly engaged in consistent actions (e.g. monitoring of customer satisfaction); CAs instead implement a signifi cant range of actions, like monitoring internal customer satisfaction and introducing the role of the account (hard), as well as 360° evaluation, a cutting edge method for developing people’s competencies (soft);

potential development: CAs show a strong and defi nite orientation, given that they invest in segmenting their policies, towards Equal Opportunities and focused plans for competency development (tailored for groups and individuals), as well as towards an opening towards external experiences (intercompany training); BPs are actually indistinct from the overall sample, so less proactive on potential development;

work and life quality: CAs seem to be more focused and committed to people (“work- life balance” programs, corporate nursery,

agreements with services providers, etc.). Also on this issue, BPs appear fundamentally less oriented towards people.

Overall it seems to be confi rmed that while the statement of having a role of CA is generally supported by a stronger orientation towards valuing people; on the contrary, that of being a BP appears to be less substantially founded, almost a mere formal label with no consistent practices and actions corresponding.

Conclusions

The aim of the research presented in this paper was to understand the progress of companies operating in Italy in their transition from an “administrative approach” to new and more challenging roles, particularly those of change agent and business partner, according to Ulrich (1998).

The analysis of the overall data highlights that the two trajectories of the evolution of human resource management seem to be only partially confi rmed in the Italian context. Even with the caution necessary when drawing generalizations due to the limited number of companies participating in the survey, the choice of some companies defi ning themselves both as business partner and change agent seems to be only weakly tied to human resource management policies and practices actually coherent with these “labels”.

Nonetheless, the collected data allows us to highlight rather different situations related to the two roles analysed.

On the one hand, it is possible to underline that “business partnership” in the Italian context appears to be a weak concept, given

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that it doesn’t seem to be univocally related to an organic set of variables referring to the objectives and the activities of the HR department. As a matter of fact, HRM departments defi ning themselves as Business Partner, at the same time declare that they adopt practices and actions not strictly consistent with BP.

It is possible to advance the hypothesis, yet to be confi rmed by further surveys on more representative samples of companies, that business partnership is intended more as a “formal label”, adopted by HRM departments in order to suggest to their internal (top management, line management, employees) and external stakeholders (HRM professional community, experts and scholars) they are “up-to-date”, than as a driver useful to guide behaviours and concrete actions (Ulrich, 1997; Huselid, Jackson, Schuler, 1997). Referring to neo-institutional theory (Powell and Di Maggio, 1991), it possible to assume that the HRM department is engaged in activating isomorphic processes that are both mimetic (in times of uncertainty, organizations decide to imitate what the believed benchmarks are doing) and normative (organizations decide to uncritically adopt managerial models developed and disseminated by the owner of “professional knowledge and know how” as business schools and consultancy fi rms).

On the other hand, it is possible to point out that if the role of change agent in the last decade has reduced its diffusion from a strictly quantitative point of view, at the same time, it seems to be much sounder today. As a matter of fact it is characterized by the adoption of HRM objectives, strategies and practices that are rather coherent and based on the idea of valuing human capital – according to Ulrich’s model, a long-term orientation to people. So HRM departments seem to interpret the change agent role in terms of strong care for people through dedicated policies, systems

and innovations likely based on the assumption that organizational change and development processes can be effectively carried out only by investing in human capital – the one organizational resource that can support them successfully.

At the same time, the quantitative drop of the diffusion of the change agent role can be explained by referring to the on-going economic crisis, an issue recalled more than once in this paper. It might have urged many HRM departments involved in company restructuring towards a short term perspective and a stronger focus on the effi ciency of the function’s processes (here also a strong increase in the functional expert role).

In short, while there are many HRM departments defi ning themselves as business partner, but limiting themselves to recall a “label” not supported by consistent actions, there is a smaller number of HRM departments declaring they are adopting the role of change agent, but these are prevalently coherent in their concrete behaviours and practices.

The evidence from the research indicates that a realistic possible development of the studied roles (change agent and business partner) is based more on identifying specifi c useful contributions that the HRM department can give the organization than on the statement of having adopted an abstract role.

So, it is not a matter of simply claiming the role of change agent or business partner, but of building over time a sound relationship with the different stakeholders with the aim of analysing and understanding their specifi c needs, suggesting coherent interventions and actions, answering to organizational needs for change and development, and offering continuous support to top and line management to achieve business results.

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As a matter of fact this approach appears to be consistent with some of the most recent trends characterising research on human resource management, which focus more and more on the links between HRM policies and practices, and overall company performance (Chang and Huang, 2005; Becker, and Huselid, 2006; Akhtar, Ding, Ge, 2008). And the analysis of these links might represent an interesting perspective for future research into HRM roles.

Notes

1 - The possible answers were not limited to those indicated in Ulrich’s model (functional expert, employees’ advocate, change agent, business partner), but also included two more alternatives – “top management advisor” and “line consultant” – resulting from the debate on the role of HRM in the most recent Italian literature. These two are not part of the present analysis.

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Abbreviations

HRM: Human Resources Management

HR: Human Resources

BP: Business Partner

CA: Change Agent

CEO: Chief Executive Offi cer

The role of Human Resource Manager: Change Agent vs. Business Partner? Research into HRM in Italy

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