An HR business model for Millennials
By definition, business transformation involves change – doing things differently than in the past. Examining business models is a crucial, yet often underplayed, dimension of transformation.
I often write about digital transformation, which involves a long-term strategy of adaptation to electronic, Internet, and mobile processes. For most companies, business model change is a fulcrum around which digital transformation can occur. Genuine digital transformation demands considering how an organization operates, hires, develops products, understands customer needs, and takes advantage of technology to deliver greatest value. In other words, examining business models.
The importance of business models can hardly be overstated, so I asked investor, teacher, writer, scholar, and business model expert, Deb Mills-Scofield, to author a guest post. She is a co-creator of Alex Osterwalder’s widely used tool, the Business Model Canvas, and therefore is qualified to write about this topic.
In this guest post, Deb develops one example of a business model that HR departments could use to manage their relationship with Millennial workers. The model she proposes is neither complete nor definitive, but is a step in the right direction.
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How can a company innovate and keep its competitive edge? By continuously iterating business models that create, deliver and capture value. Few companies do this well with external markets and customers, let alone for internal groups. When stakeholders do not view IT, Finance, Procurement, and HR as effective, perhaps it is because functional leaders do not treat their areas like a business and discover the real needs of customers.
HR is in desperate need of a new business model. The combination of boomers retiring, Millennials expanding their presence in the workplace, intense competition for top talent, confusing and changing regulations, and new technology make HR ripe for change.
As a business, HR must satisfy the needs of numerous groups, including the legal department, hourly employees, union labor, near-term retirees, high-potential workers, company leadership, department managers, and Millennials.
Millennials: A proposed HR business model
Let’s examine an HR business model that addresses the needs of Millennials passionate and an increasingly influential group who want to make a difference and always be learning. We will use the Business Model Canvas as a framework.
Here is what a basic HR business model oriented toward Millennials might look like:
Partners: HR can’t do its job alone and needs partnerships for talent acquisition and non-traditional learning opportunities. Universities and colleges, NGOs, industry associations, and non-typical organizations like TED and Business Innovation Factory (BIF) that enable a broader, more diverse network are potential partners.
Key Activities: Fundamentally, HR must attract and retain Millennial talent. HR activities related to these two core goals include branding, social media, recruiting, and professional development.
Key Resources: Benefits packages are a given. However, professional development is also paramount to Millennials. Opportunities for continuous learning need not be expensive or formal, but must be meaningful, useful, and relevant. Mentors are critical.
Channels & Customer Relationships: Modern technology is necessary to attract and retain Millennial talent. Social media, blogs, and collaboration tools enable internal talent development, especially with people scattered across the globe. Still, Millennials also desire face-to-face contact and companies should plan to accommodate that.
Cost Structure & Revenue Streams: To understand costs, consider HR “revenue” as impact on the corporation. Although impact is not easy to quantify, it is HR’s key to sustaining the business. Great talent enables an organization to innovate and accomplish its activities in all areas; talent management is, therefore, one of the core aspects of any successful company.
Value Propositions: At a high level, a successful HR team provides effective, efficient, and individualized professional development that meets constituents’ needs. Enabling work/life balance is another area that can create a competitive talent advantage. Training managers how to lead and drive benefit to their teams and the company, beyond performance appraisals, is still another area where HR can provide significant benefit. In general, the real value of HR lies in supplying and retaining the most important component for all innovation and growth: human capital.
Millennials: A proposed HR business proposition
Business models should include the fit between customers’ needs and the company’s value proposition. The Value Proposition Map can help us examine Millennials’ real needs and identify ways HR can meet, even exceed, them.
Millennials’ desire for continued learning and growth means that HR must provide a comprehensive program of individualized professional development (IPD). To develop this value proposition, consider the “jobs” that Millennials want to have done in an IPD.
Millennials want a diverse set of work experiences to grasp the bigger picture, and understand the implications while also learning about the work of others in the organization. They seek to learn continuously about other jobs, projects, teams, and experiences.
This is a problem in many companies, which only train employees on issues narrowly related to their business or industry. More enlightened organizations recognize the value in helping employees gain a broader perspective that can benefit the company with new knowledge and points of view. HR can work with Millennials to create a diverse network that brings the company new ideas, perspectives, customers, suppliers, and partners. We can’t overstate the importance of mentors, including from other parts of the business, who can present a more complete picture of the company and help younger employees better understand internal politics and priorities.
What can HR do? Empower cross-functional teams and experiences, identify specific areas of interest for Millennials to explore, help them acquire diverse skills and knowledge, and offer incentives that encourage managers to provide time and funds for training and development. HR should consider offering its own set of products and services: sabbaticals, rotational assignments, mentors, and continual learning plans that include both internal and external resources.
Business models are a foundation for success in today’s digital world. By rethinking business models of internal functions and operations, we can train our employees to innovate in ways that will delight customers and generate profit.
Also read:
CxO-Talk with Deb Mills-Scofield
CxO-Talk with Alex Osterwalder
Digital transformation and the innovative CFO
Digital transformation and consulting/outsourcing firms
Social business maturity and digital transformation
Digital transformation: CIO / CMO and the crisis of confidence
Digital marketing and CIO / CMO relationships
Digital transformation and the high performance enterprise