I. Executive Summary
This report recommends maintaining the status quo through an assessment of Ulrich’s proposed human resource business partnership and the current situation of the Lorien Plc. Without a shift in the structure of the business organization, the company will be able to reap cost benefits and competitiveness promised by business partnerships. However, this paper also recognizes the need for the company’s HR department in its strategic pursuits.
II. Lorien PLC: An Overview
The existence of business organizations like the Lorien Plc is associated with the growing popularity and wide acceptance of business process outsourcing in an international scale. Established in 1977, the company has been true in its commitment of “providing business critical recruitment, research, training, engineering, and print solutions” (Lorien Plc 2007). Owing to its strong performance and growth, Lorien Plc has been listed in the Alternative Investment Market in 1995 and has been subsequently moved to the London Stock Exchange during 1997. Currently, the business organization is recognized as one of UK’s leading provider of information technology recruitment and consultancy services. It provides job opportunities to 400 employees in six locations namely, London, Leeds, Manchester, Lichfield, Heathrow, and Edinburg. Lorien Plc continues to grow in revenue posting annual turnover of £129 million during the fiscal year 2005 (Lorien Plc 2007).
Lorien Plc is organized into five business units:
- Lorien Engineering Solution is engaged in the provision of engineering and project management services to various industries including brewing, drinks, food, industrial, and pharmaceutical manufacturing sectors (Lorien Engineering Solutions 2007);
- Lorien Research specializes in the provision of practical solutions that enable its clients to capture, understand, and act on customer and employee intelligence to build and sustain loyalty (Lorien Research 2007);
- Lorien Resourcing carries out the core activity of Lorein Plc which is the “provision of temporary, contract, and permanent IT recruitment services through the United Kingdom and Europe” (Lorien Resourcing 2007);
- Lorien Training is involved in the helping its clients get closer to their respective customers by “developing their brand through maximizing the link between customer information, customer communication, and customer service” (Lorien Training 2007); and
- Lorien Unique is the business which specializes in rendering customized marketing and publishing solutions (Lorein Unique 2007).
III. Human Resource Business Partner Model: A Review
Dave Ulrich’s book, Human Resource Champions, published in 1997, marked the introduction of a very important concept that is of great importance in the global business environment- human resource business partner model. During a time when the human resources department is dwindling in terms of organizational importance, Ulrich is at the forefront of presenting a bold redefinition of human resources the purposes and operation of HR. He introduces a framework which features the four roles that HR professionals should carry out in order for the department to contribute the greatest value to the business organization. This framework emphasizes that the human resource department must be involved the company’s strategic and operational pursuits as well as manage people together with processes. According to Ulrich, HR should focus on four roles or activities: strategic partner which aligns HR and business strategy; administrative expert which reengineer organization processes; employee champion which listens and responds to employees; and change agent which manage transformation and change (Ulrich 1997).
Through the course of time, Ulrich has been constantly changing his model to include his new ideas on human resource management. After revisiting the model in 2001, the author argued that “HR professionals must be more than partners; they must be players… in the game, not at the game.” He further states that as players they should take on the new roles including Coach, Leader, Conscience, Facilitator, Builder, and Architect (Ulrich and Beaty 2001). During 2005, Ulrich once again revised the model changing the human resource roles to strategic partner, functional expert, employee advocate or human capital developer, and that of an HR leader (Ulrich and Brockbank 2005). Because of these changes in the model that Ulrich presented, it is concluded that there is no single definitive model for business partnering because the functions of human resource evolves through the trends and developments in the firm’s external environment. In other words, human resource functions are largely dependent on the changes which pressure the business organization to implement changes.
Currently, the term “business partner” is loosely utilized by business organization to refer to the diverse jobs carried out by a company’s human resource department which involves administrative, strategic, and consultancy. In the real sense, business partnering involves more than just carrying these functions but entails the restructuring of the human resource into three specialist sub-functions namely, shared services, centers of excellence, and strategic partners (Goodge 2006).
The concept of business partner marks a major shift from the traditional human resource functions. This model clearly emphasizes the importance of the human resource department in attaining the goals of the business organization. The modern HR, as a business partner, aims to deliver a stronger, more competitive business and is judged on its success in meeting business objectives, including cost reduction, improvement customer service, quicker delivery and product innovation” (Goodge 2006). This new perception of the HR as a source of value for business is highlighted in its three specialist subfunctions as stated above.
Shared services unit is “a single, often relatively large unit that handles all the routine transactional services across businesses” (Goodge 2006). As mainly involved in administrative functions, shared services tasks ranges from absence monitoring, resourcing, payroll, and other employee relations issues. This is also the unit which primarily undertakes the provision of low-cost and efficient HR administration.
Centers of excellence are usually comprised of HR experts equipped with the specialist knowledge in gearing the company’s workforce. Their main task is to “deliver competitive business advantages through HR innovation in areas such as reward, learning, engagement, and talent management” (Goodge 2006).
Relatively, strategic partners in HR are less in number compared to the two aforementioned subunits. These professionals work closely with the company’s executives in the establishment and execution of business strategies. Strategic partners are tasked to align the company’s human resource into the various organizational goals: “The task of strategic partners is to ensure that business makes best use of its people and its people opportunities” (Goodge 2006). With this commitment, strategic partners identify the issues which are often neglected by executives and shape the human resource and make them most efficient for the attainment of organizational objectives.
In the case of the United Kingdom, the Chartered Institute of Personnel and Development presents three reasons behind business organization’s move in shifting from the traditional HR functions to business partnering. First, restructuring in the HR department is seen as a potent way of reducing organizational costs. This is through the economies of scale attained by having a single unit which will undertake the company’s shared services. Business partnering is also seen as pivotal in ensuring a business organization’s competitiveness. In recognition of the fast paced competition and intense rivalry in the market place and market space, companies turn in investing to their employees to build competitive advantage: “Organizations need HR functions that will deliver people who are skilled, creative challenging, motivated, flexible, and committed” (Goodge 2006). Lastly, companies, in an international scope is beginning to expect much from HR. This rising expectation challenges this department to contribute to the formulation and execution of company-wide business strategies.
IV. Human Resource Function on Lorien PLC: A Critique
The organizational structure in Lorien Plc is relatively flat with comprises only three level of management. Being a relatively centralized business organization, power emanates from the topmost layer of hierarchy to the lower ones. Overall the company’s human resource department is patterned following the more traditional HR management model. Lorien Plc also recognizes the importance of the HR department in all its activities. It should be noted that as the leader in resource process outsourcing and consultancy, the company leads in terms of knowledge in the trends and developments in the global HR function.
The HR department is comprised of seven employees namely, the HR manager, the HR officer, two HR administrators, the Payroll Manager, the Recruitment Manager, and the Training Consultant. Together, this team looks after the welfare of each of Lorien Plc’s workforce. The HR manager is the recognized as the primary force within the HR department. His main task is to ensure the smooth and efficient functioning of the whole department by making sure that the assigned responsibilities within the functional area are met. This also means overseeing the efficiency of his members and making the important decisions that concerns the department. Together with HR manager, the HR officer role is the deals with serious matters including grievance and disciplinary trainings, conduct HR forums and workshops, and ensure that various HR policies are adhered to. The two HR administrators are mainly involved in administrative tasks in the department together with the responsibility of responding to different questions and queries. The Payroll Manager is tasked to oversee and decide on all matters regarding the compensation and benefits that each employee receive. With this, he also has the tedious task of coming up with a compensation package which will motivate the employees to give their best for Lorien Plc. The Recruitment Manager mans the resourcing of individuals through assessment centers and CV searching. Lastly, the Training Consultant trains all the new starters on how to become a successful Recruitment Consultant.
The HR department of Lorien Plc is instrumental in attaining its leadership position in the industry. It should be noted that the company makes a strong commitment in maintaining a pool of workforce who can cope with the current level of competition. Thus, Lorein Plc’s HR designs various programs and trainings in order to boost and enhance the knowledge and skills of its workforce. The strengths and competencies of the company’s HR becomes a competitive advantage.
This organizational structure in the Lorien Plc’s department is observed from its establishment in 1977. It should be noted that amidst its growth and changes brought about by various factors in the industry, this has worked for the business organization. The advantage of adhering to this model is the company’s relative familiarity with it. Within this system, the functions of the individual team members are defined and delineated thereby eliminating the possibility of role conflict and role confusion. The relatively small size of Lorien Plc’s HR department also enables it to generate economies of scale as it efficiently distributes effort to cater to the needs of its entire workforce.
V. Human Resource Business Partner Model and Lorien PLC
After the review of the human resource business partnering model proposed by Ulrich and the organizational structure and operation of the Lorien Plc’s human resource department, it becomes apparent and logical to maintain the status quo. As mentioned above, the three main reasons to shift from the traditional model to business partnering are cutting costs, accelerating competition and rising competition. This report believes that Lorien Plc will not benefit from the aforementioned advantages. In fact, the mere size of Lorien Plc’s HR department makes it rather insensible for the company to restructure and segregate into three units.
In its Annual Report, Lorien Plc highlights its cost effectiveness. The company’s administrative costs have risen during the fiscal year 2006, yet this rise is compensated by a larger percentage mount in total turnover. Thus, even though administrative costs have risen, it remained low relative to total revenue. This report asserts that shifting to the business partner model will not bring a huge impact on the company’s current and future operational costs. Lorein Plc already reaps costs savings through economies of scale because of its commitment in fully utilizing the small number of employees in its HR department. The ardent desire of the business organization to stay competitive by training and enhancing the capabilities of HR is its response in accelerating competition.
However, this report also recognizes the limited participation of Lorien Plc’s HR department in the company’s strategic pursuits. This should be addressed by involving the HR manager in the formulation of organizational goals and strategies. The HR department should also take a more aggressive move in aligning its workforce to its strategies.
- Goodge, P. (2006) HR Business Partnering. United Kingdom: Chartered Institute of Personnel and Development
- Lorien Plc (2007) Retrieved 17 July 2007, from http://www.lorien.co.uk/
- Lorien Engineering Solutions (2007) Retrieved 17 July 2007, from http://www.lorienengineering.com/
- Lorien Research (2007) Retrieved 17 July 2007, from http://www.lorienresearch.co.uk/
- Lorien Resourcing (2007) Retrieved 17 July 2007, from http://www.lorienresourcing.co.uk/
- Lorien Training (2007) Retrieved 17 July 2007, from http://www.lorientraining.co.uk/
- Lorien Unique (2007) Retrieved 17 July 2007, from http://www.lorienunique.com/
- Ulrich, D. (1997) Human resource champions: the next agenda for adding value and delivering results. Boston, MA: Harvard Business School Press.
- Ulrich, D. and Beatty, D. (2001) From players to partners: extending the HR playing field. Human Resource Management. Vol 40, No 4. pp293-307.
- Ulrich, D. and Brockbank, W. (2005) The HR value proposition. Boston, MA: Harvard Business School Press.
- Goodge, P. (2004) Competencies for HR partners. Competency & Emotional Intelligence. Vol 12, No 1. Autumn. pp25-28.
- Goodge, P. (2005) Ready for HR partnering? Human Resource Management International Digest. Vol 13, No 4. pp32-36.