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Master Thesis

Beyond vision: Exploring Paradox in HR Service Delivery Models

Ilja Bitterling 10894802

MSc in Business Administration: Track Leadership & Management

University of Amsterdam

Supervisor UvA: Dr. A.E. Keegan

Internship supervisor Berenschot: Hella Sylva MSc

Submission date: 29-6-2015. Final Version.

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Statement of originality

This document is written by Ilja Bitterling who declares to take full responsibility for the contents of

this document.

I declare that the text and the work presented in this document is original and that no sources other

than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of

the work, not for the contents.

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Acknowledgements

First and foremost I offer my sincerest gratitude to my supervisor at UvA, Anne Keegan, who has inspired

me immensely to go on this exciting journey into the world of paradox and who supported my

unconditionally throughout my whole thesis, and, especially when I started to lose my cool. I would also

like to express my gratitude to Berenschot, who gave me the opportunity to contact two of the case

companies through their network and many of my HROI colleagues who provided me with insights

regarding the complex nature of HR in practice. Special thanks goes to my internship supervisor at

Berenschot, Hella Sylva, who joined me on the majority of the interviews and who helped me clarify my

thoughts, not only regarding my thesis. Finally, I would like to thank the case companies for giving me the

opportunity to conduct my research there and all the interviewees that provided rich, insightful and honest

accounts of the intricacies and present-day challenges of the HR models they work with.

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Contents

Abstract 6  

1.   Introduction 7  

2.   Literature Review 9  2.1.   Origins of the Ulrich model 9  2.2.   The rise of shared service organizations 11  2.3.   The Three-legged-stool 14  2.4.   Three-legged-stool: signals of inherent problems? 15  

2.4.1.  Operational execution: the fourth leg of the stool? 15  2.4.2.  Line managers 16  2.4.3.   Increasing fragmentation 16  

2.5.   Concluding thoughts 17  

3.   Paradox theory 18  3.1.   Categorization of organizational paradoxes 18  3.2.   Responses to paradox 19  

4.   Methodology 21  4.1.   Sampling method 21  4.2.   Data collection 21  4.4.   Data analysis 23  

5.   Results 25  5.1.   EnergyCo 25  

5.1.1.  EnergyCo HR function 25  5.1.2.  Emergence of the present HR structure 26  5.1.3.  Emerging tensions 27  5.1.4.   Interpreting the results: Constructing a local/global paradox 29  

5.2.   UtilityCo 30  5.2.1.  UtilityCo’s HR function 30  5.2.2.  Emergence of the present HR configuration 30  5.2.3.  Emerging Tensions 31  5.2.4.   Interpreting the results: Constructing an efficiency/flexibility paradox 33  

5.3.   OilCo 35  5.3.1.  OilCo’s HR function 35  5.3.2.  Emergence of the present HR structure 36  5.3.3.   Interpreting the results: Constructing an efficiency/flexibility paradox and a Power paradox 38  

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6.   Discussion 41  6.1.   Efficiency versus HRM professional vision 41  6.2.   Too few and too many legs 42  6.3.   Commonality and contrasts in HRM paradoxes 43  6.4.   Theoretical contribution 44  6.5.   Practical implications 45  6.6.   Limitations 46  

7.   Conclusion 47  

References 48  

Appendix 52  

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Abstract Ulrich’s (1997) influential book Human Resource Champions has defined the overarching paradigm

guiding much of the thinking among HRM practitioners over the last two decades. Therefore, the Ulrich-

inspired three-legged model of HR service delivery seems pervasive as a general design approach, but

not much is known about its use and the dynamics of the model in practice. The aims of the research are

to explore evidence of three-legged design models in practice, the reasons for why such HR structures

come about and the tensions and paradoxes encountered by actors working within these models on a

daily basis. Using a qualitative approach, 20 interviews were conducted with HR directors, managers,

professionals and (senior) line managers in 3 large organizations operating within the Dutch energy &

utility sector. Findings reveal that the three-legged-stool model is alive and well within these organizations

and that improvements to the model are driven by HR’s continuous focus on delivering strategic value. By

adopting a paradox lens to systematically examine the tensions inherent in the observed HR structures, I

find that HR structures are characterized by three paradoxes: a global stakeholder paradox, an

efficiency/flexibility paradox and a power paradox and that the HR function in itself, is, paradoxical. Based

on the findings I argue that that the future of HR function design lies in how well HR practitioners can cope

with organizational dynamics characterized by shifting boundaries, complexity and business goals that are

interrelated, yet contradictory.

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1. Introduction

Human resource management (HRM) is at the core of any business (Welbourne, 2012). In its broadest

definition, HRM constitutes “the management of employment” (Marchington & Wilkinson, 2005, p. 26) and

includes “anything and everything associated with the management of employment relations in the firm”

(Boxall & Purcell, 2000, p. 184). Over the last several decades, HR academics and practitioners have

increasingly focused on how the HRM function can add strategic value to the business (Wright, Snell &

Dyer, 2005; Marchington, 2015). Following Boxall and Purcell (2011), strategic here means that the

“people management” practices designed and implemented by the HR department elicit employee

behaviour that can lead to sustained competitive advantage. Some scholars go even further by arguing

that HRM is strategic only when firms’ strategic decisions are finalized after the HR implications are

discussed (Boxall & Steeneveld, 1999). Given HR’s legacy of having relatively little influence in strategic

decision-making, HR practitioners and researchers alike have long been interested in HR models

emphasizing the strategic contribution of HR.

From a historical perspective, commentators have often lamented the “hodge podge nature” of HR

activities and the ambiguity of HR practitioner roles is a long-standing debate in the field (see Legge, 1978,

Guest and King, 2004). Perhaps as a result of the multifaceted and ambiguous profile of HR

responsibilities traditionally seen in the literature on HRM, it is unsurprising that a model promising clarity,

simplicity and, most importantly, strategic impact, would gain influence. Even accepting that, the rise of the

so-called Ulrich model of HRM organization has taken many, and many HRM academics in particular, by

surprise.

In his seminal work, Ulrich (1997) advocated that if HR wanted to overcome its beleaguered reputation of a

highly bureaucratic and inefficient organization, it had to shift focus from what HR people do (the practices

they employ) to what they deliver. The HR function needed to become strategic, value-adding and

business aligned and Ulrich advocated the adoption of shared service arrangements and role

specialization (Reilly, Tamkin & Broughton, 2007). What emerged is the so-called three-legged design of

HR service delivery which comprises shared service centers delivering administrative support to line

managers and staff (e.g. payroll administration and support), centers of excellence providing specialist

support in specific HR areas, such as recruitment or training & development, and business partners who

would work closely with line managers to ensure alignment between business goals and HRM.

Interest in the Ulrich-inspired three legged stool model of the HRM function has spread itself across the

organizational landscape to an impressive extent. Talk of the model is ubiquitous (Robinson, 2006) and,

as Marchington (2008: 8) argues: “Ulrich’s work has attracted a mass of publicity and research, and many

organisations have adopted the business partner role or some variant of it (Brown et al., 2004; Reilly et al.,

2007)”. That said, there is little empirical research into the reasons why organizations might adopt the

three legged model, the exact nature of the three-legs (Robinson, 2006) and their relationships with each

other, nor especially the challenges HR practitioners and other important HR stakeholders encounter when

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working within such a configuration (Caldwell, 2003). Furthermore, while the face validity of the model

appears to strong, this may have engendered a complacency of kinds among academic researchers

where it appears taken for granted that an organization will adopt some kind of Ulrich-type mode and

empirical enquiry into variations, exceptions, and diversity of modelling HRM along the three-legged stool

kind is very under developed at this time (Reilly et al, 2007; Francis and Keegan, 2006).

I will argue in this thesis that we need better reflective engagement with the kinds of configurations

emerging in HRM practice in different contexts. For example, we do not currently know enough about the

different reasons for adopting (aspects of) the three-legged-stool model, the contextual challenges for HR

actors based on the differences in adoption types, and tensions arising from adoption including

paradoxical tensions. A better and more contextually rich understanding of these issues might aid in the

practical understanding of the consequences of the three legged stool, and help address important

theoretical questions such as are three legs enough (Robinson, 2006), what challenges face actors in

systems configured along these lines, and whether paradoxical tensions are responded to in active or

passive ways leading to vicious or virtuous cycles (Legge, 1978, Smith and Lewis, 2011).

To that end, this thesis addresses the following main research questions:

RQ: How do organizations configure their HR function and what paradoxes do they face based on the

configurations adopted?

To answer this question a number of sub-questions will be answered:

• Do organizations conform to the Ulrich-style three-legged stool type configuration?

• How do the configurations they adopt come about?

• What are the key tensions faced as a result of adoption of the identified configuration and are

these paradoxical in nature?

In order to answer these questions, I first review the literature on the structuring of the HR function. This

review provides a basis for describing the historical development of, and current understanding of, how the

HR function might arrange its activities and roles to meet the demands most commentators describe as

confronting the HR function and individual HRM practitioners. The literature review provides insight into the

main model offered in the academic HRM literature, which is the so-called Ulrich three-legged model. In

the empirical part of the thesis, I carry out a systematic analysis of the data on three case studies

conducted in one industry to examine the structure of the HR function. I then draw on paradox theory

(Smith and Lewis, 2011) to systematically examine the tensions described by case participants interviewed

during the study, to understand the tensions arising from the particular ways of configuring HRM activities.

I describe the responses to tensions the participants describe. On the basis of a comparison and contrast

of the data on each company, I provide insight into the diversity as well as overlap in empirical practice

regarding the configuring of the HR function.

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2. Literature Review

Since the publication of his most famous work HR Champions in 1997, the Ulrich-inspired three legged

stool model of the HRM function has gained widespread attention and is the source of much discussion in

academic and practitioner circles. However, while the model is pervasive (Marchington, 2015), there is

little empirical research into reasons why organizations adopt the three legged model, how organizations

implement the model, the extent to which it is adopted wholesale or piecemeal by companies, the exact

nature of the three-legs and their relationships with each other, or the challenges HR practitioners and

other important HR stakeholders encounter when working within such a configuration. This combination of

widespread attention to and discussion of the model, and lack of empirical evidence regarding how it is

used and the challenges associated with it, constitute the main puzzle (Alvesson and Karreman, 2007)

driving this thesis and the empirical study carried out that is reported here. First though, some background

to the model is needed.

2.1. Origins of the Ulrich model In the years before publication of Ulrich’s (1997) seminal book ‘Human Resource Champions’, there was

growing talk about whether the HR function could be fully outsourced or even abolished.

Nestling warm and sleepy in our company, like the asp in Cleopatra’s bosom, is a department whose

employees spend 80% of their time on routine administrative tasks. Nearly every function of this

department can be performed more expertly for less by others. Chances are its leaders are unable to

describe their contribution to value-added except in trendy, unquantifiable and wanna-be terms … I am

describing your human resources department, and I have a modest proposal: Why not blow it up?

Stewart (1996), p. 105.

While others have not been as forthright as this, there was a trend of seeing the HR department in ‘crisis’

as HR struggled for legitimacy and status in an era of corporate downsizing (Redman & Wilkinson, 2008).

Despite the rising recognition that HR issues are vitally important to organizations, many senior managers

seemed to think that personnel management was far too important to be left to the HR department. This

had all been fueled by growing concerns among senior management about the quality and responsiveness

of in-house HR functions (Greer, Youngblood & Gray, 1999). In fact, HR departments were generally seen

as ‘bureaucratic’ and ‘isolated from the outside world’ (Guest & King, 2004). In his scathing analysis of why

“actuality has fallen so far below expectation in personnel management,” Skinner (1981, p. 106) argued

that the problem is rooted in the problematic role of HRM in corporate decision-making and the challenge

of aligning HR strategy with the different needs of the business. As discourse on human resource

management sought to overcome the HR department’s poor reputation, the view emerged that HR needed

to become more aligned with the strategic imperatives of the organization, with a clear focus on how to

deliver value, else it might see a painful demise.

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In this context, Ulrich (1997) provided a contemporary focus, arguing that the value of the HR function is

not defined by what’s inside of it, its practices or activities, but rather by what it delivers to its end users. In

this respect, he proposed that the HR function needs to attend to four ‘result domains’, namely 1) the

management of strategic human resources, aligning HRM with business strategy, 2) the management of

transformation and change, developing organizational capabilities for change, 3) the management of

employee contribution, listening and responding to employees and providing them with the resources

necessary to perform, and 4) the management of firm infrastructure, constantly improving the organization

of an efficient HR administration. The model is depicted in figure 1. These domains are corresponding with

four core roles that HR professionals need to adopt, the roles of strategic partner, change agent, employee

champion and administrative expert. This framework formed the basis for Ulrich’s ‘from doing to delivering’

argument, which incorporated dominant ‘best fit’ and ‘best practice’ approaches while emphasizing focus

on delivering economic value.

In his framework, Ulrich (1997) argues that HR professionals must be both operational and strategic,

focusing on the long term and the short term. However, commentators have warned for ‘role ambiguity’

and ‘role conflict’ within the HR profession as different constituencies, such as senior executives, line

managers, corporate HR and employees, prioritize different aspect of the role (Buyens & de Vos, 2001;

Caldwell, 2003). Caldwell (2003) reports that as HR is tailored to the needs of the business (operational

focus), it runs the risk of becoming short term and reactive, which can undermine HR’s potential strategic

contribution in the long run. Similarly, Wright and Snell (2005, p. 181) argue that HR professionals “must

distinguish between decisions that are driven by the business and decisions driven for the business. A

focus on short-term financial returns for fickle investors may be made at the long-term cost of

organizational viability.” Moreover, several commentators report that in HR’s eagerness to become more

strategic, HR professionals have been encouraged to aspire to the role of strategic business partner,

causing their role as employee champion, i.e. making sure that employee concerns are being heard, to

shrink (Francis & Keegan, 2006; Brown, Metz, Kregan & Kulik, 2009). As Guest & Woodrow (2012, p. 110)

succinctly summarize: “despite the appealing rhetoric, the need to fulfil multiple and potentially competing

roles serves mainly to highlight the challenges facing HR managers and outlining the four roles does not in

itself resolve the inherent conflicts.” The challenge, thus, lies not in believing the vision, but in putting it to

practice, moving beyond the vision.

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Figure 1. Ulrich's (1997) 4-role typology

2.2. The rise of shared service organizations In addition to outlining the roles of strategic partner, change agent, administrative expert and employee

champion, Ulrich (1995, 1997) set out to describe how HR could best be organized to fulfill these roles.

Over the years, HR had been organized in a variety of ways. Some functions were characterized by a

highly decentralized structure, with each part of HR looking after a certain business unit or geographical

location. Others were characterized by a highly centralized structure, with HR professionals and managers

providing service to the various business units or locations from a centrally coordinated center. Looking at

the HR department itself, there might have specializations by work area or by employee grade or group

(with some looking after clerical staff whereas others would provide services to higher management)

(Reilly et al., 2007). There were also several accounts of HR lacking a structure of sorts. For instance,

Skinner (1981) described how personnel managers had engaged in many different techniques to acquire

an effective, loyal, and committed group of employees and as the HR department continued to pursue all

sorts of ‘expertise’, the HR function could resemble what Drucker (1961, p. 243) described as ‘a collection

of incidental techniques without much internal cohesion … a hodge podge.’ In the context of subsequent

changes, it is also important to highlight that administrative HR tasks were carried out within (local) HR

teams.

Within this context, Ulrich (1995) argued that organizations needed to become shared service

organizations, comprising shared service centers, centers of excellence and business partners. These

seem, on face value, required or valued “parts” of a HRM function, but what does each represent? What

problems does it seek to solve? And finally, is there anything missing? The following sections explore in

more depth what is known about the three legs as well as raising questions about what aspects of the

legs, or the connections, are still, perhaps, problematic.

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In Shared Service Centers (SSCs), common administrative tasks and activities associated with the HR

function are consolidated and standardized across different business units into one single service center

(Maatman, Bondarouk & Looise, 2010). In this way of organizing, business units that used to perform

administrative tasks locally, pool their resources and ‘share’ in the service delivery, resulting in cost

benefits through economies of scale (Reilly et al., 2007). The main task of a SSC is to efficiently process

paperwork and to supply information and advice on HR policy and practice to employees, line managers

and HR staff (Ulrich, 1995; Reilly, 2000). Shared service centers rely heavily on IT and E-HRM

applications and are characterized by a tiered system, often consisting of on-line support, a call center and

specialists that handle inquiries that need special attendance (Maatman et al., 2010). Shared service

centers often follow a click-call-face philosophy in which employees and line managers are encouraged to

first look for answers to their questions on-line, before calling the service desk or meeting with a specialist.

Although resources from the field are shared and bundled, the control over the use of these

resources resides with clients and end-users, “the user is the chooser” (Ulrich, 1995, p. 14). In fact, shared

service centers resemble sourcing arrangements where business units articulate the “type, level and

quality of services they want from the center, at the price they are willing to pay” (Quinn, Cooke & Kris,

2000, p.13). These tend to be formalized within Service Level Agreements (SLAs) in which the terms,

against which HR activities need to be delivered, are specified (e.g. Farndale, Paauwe & Hoeksema,

2009). Whereas Oates (1998) suggests that SSC’s could be seen as a form of internal outsourcing, Quinn

et al. (2000) argue that SSCs can be seen as an interim step between in-house production and

outsourcing. Since the implementation of a SSC involves formalizing the terms of delivery, the availability

of such criteria makes comparison with other providers a logical next step.

Centres of excellence/expertise (COEs) combine distributed talent throughout an organization into a

shared service, acting as an interface for line managers and HR staff dealing with complex issues that

require specialist knowledge (Ulrich, 1995). Consequentially, HR specialists no longer work in separate

divisions but come to together in one central business unit, which responds to all calls for expertise within

the organization. Centers of excellence often include global or regional teams, which specialise in a

particular HRM discipline, for example recruitment, legal issues or learning (Ulrich, 1995). By creating a

shared pool of resources, the organization will become more flexible and dynamic, i.e. resources can be

shifted quickly to meet business needs (Ulrich, 1995). These centers of excellence are often also

concerned with the design of corporate policy.

Shared service organizations are driven by multiple logics. They are driven by goals of efficiency and cost-

effectiveness as well as increased customer experience and increased flexibility in the allocation of

resources (Farndale et al., 2009). However, Farndale et al. (2009) warn for the fact that a focus on

achieving cost effectiveness can undermine the degree of customer orientation of the HR function and the

quality of its services. In fact, the challenge of simultaneously pursuing efficiency (cost effectiveness) and

flexibility (customer orientation) has been highlighted across various HRM literatures. For instance, within

literature on ‘green HRM literature’ or the literature on sustainable approaches to HRM, Ehnert (2014)

highlights the efficiency-substance-paradox. The challenge of the efficiency-substance-paradox lies in

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focusing not only on financial criteria and the current workforce but also on meeting the resource demands

of the future, which requires flexibility and a long-term focus. Similarly, Francis and D’Annunzio-Green

(2003) used the term paradox to describe the tension between ‘hard’ and ‘soft’ versions of HRM.

Organizations that follow the imperative of standardization (hard HRM) might achieve cost-effectiveness

(efficiency) but run the risk of limiting their employees in terms of creativity and commitment. However,

organizations that follow the imperative of delivering customer-focused quality might elicit entrepreneurial

behaviours (soft HRM) but run the risk of reduced management control. As of yet, it is not clear how the

competing forces of efficiency and flexibility play out in the HR shared service structures of today.

Besides shared service centers and centers of excellence, Ulrich (1995, 1997) argues that HR

professionals need to become business partners in order to align HR practices with business goals. The

aim is that business partners are deeply ingrained within the organization and develop and maintain close

relationships with senior managers and specific business units. They carry the main responsibility for

translating HR initiatives into business results and “become the dominant interface between shared

services and business requirements” (Ulrich, 1995, p. 18). Although Ulrich (1997) originally applied the

concept of ‘business partner’ to all four roles (strategic partner, change agent, administrative expert and

employee champion), the term business partner has mostly been used in conjunction with the role of

strategic partner, i.e. the strategic business partner. “HR professionals have mistakenly defined business

partnership as taking place exclusively in the strategic arena, not recognizing the importance of with, and

for, employee contribution” (Ulrich, 1997, p. 126). The emphasis on business partners becoming more

strategic can be understood if we take into account the ‘strategic fit’ ambitions that have been haunting the

HR function and HR professionals for years (Keegan & Francis, 2010). Moreover, a focus on strategic

issues presents HR with an opportunity to regain some of its professional legitimacy that has been

challenged by the continuous devolvement of HR work to line managers and the outsourcing of peripheral

HR responsibilities to specialist organizations over the years. So, given HR’s legacy, its emphasis on

strategic contribution only makes sense.

With regard to the structure of the HR function, Ulrich himself did not use the term business partner as a

category of HR function design in his original work. The emergence of business partners as the third leg of

the stool must have come from HR practitioners and consultant interpreting Ulrich’s original work (cf.

Francis, Parkes & Reddington, 2014). In later works (Ulrich & Brockbank, 2005; Ulrich, Younger &

Brockbank, 2008), Ulrich incorporated strategic business partners under ‘embedded HR,’ reserving the

term business partner to be used in conjunction with different HR roles.

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2.3. The Three-legged-stool

While references to the three-legged stool are common, precisions regarding the origins of the model is

lacking in academic writing on HR function design. In their discussion on the origins of the three-legged-

stool approach, Hird et al. (2009) note that the earliest reference they found was in an HR magazine article

written by HR consultancy firm Mercer, in 1999 (see exhibit 1).

It is likely that the emergence and further development of these Ulrich-style structures has been led by HR

consultants and practitioners, driven by functional concerns about improving the efficiency and quality of

HR service delivery (Francis et al., 2014). These improvement to the model are important as Hird et al.

(2009) argue that a successful implementation of the three-legged-stool model relies on the organization’s

skill in aligning and balancing how shared service centers, centers of expertise and business partners are

integrated with each other, which demands an understanding of the model beyond its prescriptive

principles. The HR structure must truly reflect the needs of the business model and the line managers

within that model, it needs to be ‘fit for purpose’ (Hird et al., 2009, p. 26). To date, few empirical studies

have been undertaken to examine if organizations adopting (some variation of) the three legged stool

model have practices or processes in place that would constitute the type of balancing or alignment raised

by HRM researchers discussing the organization of HRM activities.

Exhibit 1. First mention ‘three-legged-stool’.

The traditional design typically includes a vice president of HR, then a manager of compensation and benefits,

a manager of HRIS and payroll, a manager of employment, and so on… However, the emerging model is more

like a three-legged stool. One leg of the stool includes an administrative service center, which processes

payroll, benefits and the like and focuses on efficiency in transaction functions. The second leg is a center of

excellence (or expertise), in which managers and specialists work. These employees concentrate on design

rather than transactions and will have line managers as their customers. HR business partners make up the

third leg. These are generalists who may report directly to line managers and indirectly to HR. Business

partners do not get involved in transactions, but instead act as consultants and planners, linking the business

with appropriate HR programs… about 80 percent of businesses today have a mix of the traditional and three-

legged stool models

Joinson, (1999, p. 5)

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It is, at this point, also worth a minor digression to consider the implications of implementing a three-

legged-stool model in international contexts. Despite the fact that the Ulrich model seems to have been

adopted by many multinational corporations (MNCs) (Hird et al., 2009), the implementation process of a

three-legged-model for global organizations does not appear to follow a common path. For instance,

Boglind, Hällsten and Thilander (2011) found in a sample of 7 Swedish MNCs, that the adoption of Ulrich’s

three-legged model from blueprint to actual practice followed successive translations according to local

context. Literature on international HRM has often investigated the (HR) strategies of MNCs through a

framework of globalization-localization (Bartlett & Ghoshal, 1989). In order to compete on a global level,

MNCs are often pressured to standardize HRM policies and practices across subsidiaries to seek

economies of scale or scope (internal consistency) and simultaneously adapt business strategy to

changing local demands, e.g. legal requirements (external consistency). However, whether a three-legged-

stool model accommodates a structure that balances these competing demands in international settings, is

not (yet) clear.

2.4. Three-legged-stool: signals of inherent problems? The evidence on the uptake of the three-legged stool indicates it is pervasive as a generic design type.

However, the trend in HR publications over the last couple of years seems to indicate that the model

doesn’t always work, or at least not without tensions. Based on the current literature, I will now highlight

three potential problems that can surface in three-legged Ulrich-inspired HR service delivery models.

2.4.1. Operational execution: the fourth leg of the stool?

In a survey among 800 senior HR professionals, Reilly et al. (2007) report that the most common problem

encountered in implementing a shared service model is boundary disputes, followed closely by gaps in

service provision and communication issues. Upon closer inspection, a central concern of splitting the

function into three distinct entities is that it can leave a hole at the very heart of HR operations (Reilly,

2006). This often concerns the execution of operational services in areas in which line managers need

most assistance. Examples include handling interdisciplinary issues, attending performance review

meetings and processing changes to employment contracts. These operational tasks are usually not taken

on by shared service centers since they often require personal attention and sometimes physical

presence, centers of expertise are usually limited to an advisory role and are not ingrained enough in the

business to be of assistance anyway and line managers often lack the knowledge or resist acquiring it.

Reilly (2006, p. 36) refers to this as the ‘polo’ problem where “HR is unable to provide operational support

because it’s not a specific part of anyone’s job.” As a consequence, business partners often report that

they are “getting drawn into the wrong activities” (Reilly et al., 2007, p. 13) as they find themselves forced

to take on operational work that conflicts with their strategic objectives. In a yearlong ethnographic study,

Pritchard (2010) found that strategic (business) partners struggled to be released of their previous HR

generalist role, but also noted that their continuous involvement in day-to-day HR activities was necessary

until new ways of working were fully established. In any way, confronted with role ambiguity, business

partners run the risk of taking on more operational work then their role prescribes, causing their strategic

objectives to fall by the waste line. The lack of provision in the execution of operational HR services has

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led some researchers to debate whether an additional leg, concerned with operational execution, would be

necessary in order for the model to function optimally (Hird et al., 2009; Reilly, 2006). From the current

literature it is not clear, however, whether organizations have elaborated on their three-legged design and

if so, whether it has led to less role ambiguity.

2.4.2. Line managers

Although not explicit in the model, the strategic rise of the HR function has raised the question of whether,

or not, ultimately, it is line managers who are responsible for putting HR into effect (Kulik & Bainbridge,

2006; Whittaker & Marchington, 2003). Ulrich (1998) argues that line managers have ultimate

responsibility for both the processes and outcomes of the organization and thus play the most important

role in fully integrating HR into the business. Purcell and Hutchinson (2007) identify line managers as

essential to the successful application of HR practices and, in turn, to the way employees evaluate the

presence and effectiveness of HRM practices. Using LMX (leadership member exchange) theory and

social exchange theory, Purcell and Hutchinson (2007) stress that HRM practices and their effective

implementation are strongly linked with line manager leader behaviour and that this mediates employee

perceptions of, and reactions to, HRM practices. However, others ask if this is a realistic aim, if line

managers have time, competence and opportunity to be the main delivery mechanism for HRM practices,

given their short-term focus and business orientation (Whittaker & Marchington, 2003). Moreover, by

continuously devolving HRM activities to the line, HR might relinquish an important source of power, that of

control over HRM, while still being responsible for the effective management of employees (Sheehan, De

Cieri, Greenwood & Van Buren, 2014). As previously highlighted, issues of powerlessness and marginality

have plagued the HR function for decades (Legge, 1978; Caldwell, 2003). What are the implications for

the credibility and power of the HR function when organizations adopt HR models that encourage the

continuous devolvement of HRM activities to the line?

2.4.3. Increasing fragmentation

Another issue related to boundary disputes is the increasing fragmentation of the HR function (Hird et al.,

2009). Driven by cost, value and service delivery, the HR function is increasingly forced to be segmented

into specialist centers, subsumed by line management or outsourced to external parties. Gratton (2003),

professor at London Business School and expert on HRM functional design refers to the increasing

fragmentation of the HR function as ‘the humpty dumpty effect:’

While the HR function may at one time have been a rather inefficient, but pleasant and kindly “Humpy

Dumpty,” it has now fallen from the wall and shattered into fragments on the hard pavement below. …

This fragmentation of the HR function is causing all sorts of unintended problems. Senior managers

look at all the fragments and are not clear how the function as a whole adds value

(Gratton, 2003, p. 18)

A consequence of the increasing fragmentation of the HR function is ambiguity surrounding responsibility

and accountability. Ambiguity tends to surface especially in interdisciplinary issues that require the

17

involvement of service centers, specialists, line managers and business partners. Take for instance

relocation services. Such cases often require the cooperation of various HR entities and the current

theoretical model is unclear as to who can be held responsible. Furthermore, even among HR

professionals it’s not always clear how responsibilities are distributed or even, where expertise resides,

especially in large global organizations where a geographical dimension increases complexity. As for line

managers, fragmentation results in maintaining relationships with various HR professionals. As Reilly

(2006, p. 36) explains: “Managers may simply become frustrates that there’s no longer a one-stop shop to

handle all HR matters. Instead, they must search the internet for basic information, ring a call center when

they have a specific query, speak to an expert if the question is complex and take strategic advice from a

business partner.”

The three-legged-stool model seems to portray a world without HR-HR and HR-line boundary issues and

ambiguities even though empirical studies emphasise that this is the reality in organisations (Marchington,

2015; Gratton, 2003; Legge, 1978). Whereas the face value of splitting up HR activities across various

specialist entities might be captures in terms of efficiency, the increased fragmentation of the HR function

might also account for more complexity and ambiguity.

2.5. Concluding thoughts The review presented here suggests that there are various tensions and ambiguities surrounding the

adoption of a three-legged HR model. Many tensions resulting from role ambiguity have emerged from the

intricacies of the model itself, such as the tensions surrounding the role of the business partner, the

increasing fragmentation of the HR function and the continuous devolvement of HR responsibilities to the

line. If so, it raises the question about whether the HR structures organizations currently employ in terms of

the three-legged-stool, where devolvement trends are clear and boundary issues are not resolved, might

account for the tensions between the different elements HR professionals traditionally deal with in doing

HRM work. Or rather, is the HR structure organizations employ related to the tensions that actors working

within these structures encounter? And, are these tensions inherent to the model? These questions will be

considered through my empirical research by drawing on a paradox perspective inspired by recent

theorising in organizational studies (Smith and Lewis, 2011). Paradox theory provides an opportunity for

understanding dynamic complex organizational settings characterized by tensions and oppositions (Poole

& Van de Ven, 1989; Eisenhardt, 2000; Lewis, 2000). Paradox theory is useful for systematic examination

of the tensions arising from particular ways of configuring HRM activities and exploring tensions between

elements that are related, persistently, over time. Before presenting the results of my empirical research, I

will now review the literature on paradox within organizational settings.

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3. Paradox theory

The notion of paradox has long captured the interest of philosophers, psychologists and more recently,

organization theorists (Lewis, 2000). Most definitions of paradox address contradictory elements (tensions)

that seem logical in isolation but absurd when juxtaposed (Poole & Van de Ven, 1989; Lewis, 2000; Smith

& Lewis, 2011). In one of the most recent definitions, Smith and Lewis (2011, p.382) defined paradox as

“contradictory yet interrelated elements that exist simultaneously and persist over time.” Some confusion

has arisen from the inconsistent and sometimes synonymous use of the terms paradox, tension,

contradiction and duality in different journal articles, however, a detailed exploration of terminology is

beyond the scope of this thesis. For current purposes, it suffices to understand that paradoxes are

composed of two contradictory elements and that they –unlike dilemma’s or either/or choices –signify two

sides of the same coin simultaneously (Lewis, 2000).

3.1. Categorization of organizational paradoxes

Paradoxes emerge from contradictory elements (tensions), which come in many forms. In their

categorization of organizational tensions, Smith and Lewis (2011) discern between paradoxes of

belonging, learning, performing and organizing.

Paradoxes of belonging arise between the individual and the collective as actors strive for both

self-expression and collective affiliation. According to Smith and Berg (1987), such paradoxes are driven

and fueled by a self-referential cycle: strong and resourceful groups are formed through team members

expressing their individuality, which in turn engenders group conflict. For instance, in their study of string

quartets, Murnighan & Conlon (1991) found that actors joined string quartets, rather than large orchestras,

to have more impact. However, quartets were successful if they continuously strived to achieve

transcendence, integrating their music.

Learning paradoxes emerge from tensions between old and new, such as tensions between

episodic and continuous change or radical and incremental innovation. They surface as organizational

dynamics change and actors are confronted with tensions between the comfort of the past and the

uncertainty of the future (Lewis, 2000). These paradoxes revolve largely around processes of

sensemaking and transformation.

Paradoxes of performance arise from the plurality of stakeholders and conflicting managerial

demands. Tensions surface as stakeholders seek divergent organizational success, such as an

organization’s social responsibility program, in which both financial as well as social goals are to be

attained (Smith & Lewis, 2011).

In turn, organizing paradoxes address the conflicting aspects of organizational design (Lewis,

2000). These tensions “depict the intricate nature of performance, empowerment, and formalization as

managers seek to encourage commitment, participation, and trust and increase efficiency, coordination

and security” (Lewis, 2000, p. 767). As an illustration, effective manufacturing often relies on organizational

structures driving efficiency as well as flexibility (Adler et al., 1999).

19

In their framework, Smith and Lewis (2011) argue that tensions operate within as well as between these

categories. For instance, organizing and performance tensions surface when the competing goals of

driving performance and managing people are juxtaposed. “Focus single-mindedly on delivering profits,

and you disenchant your workforce, destroying you capacity to drive needed strategic change.

Concentrate solely on employees, and you slide into complacency, eroding your competitive vitality”

(Eisenstat, Beer, Foote, Fredberg & Felming Norrgren, 2008, p. 50). As this thesis is primarily concerned

with the organization of HR and the roles of HR professionals therein, focus will be on paradoxes of

organizing, performing and adjacent tensions.

3.2. Responses to paradox Responses to paradox revolve around the debate regarding the ontology of paradoxes. Some scholars

argue that paradoxes are inherent features of a (social) system whereas others conceptualize paradox as

social constructions that arise from people’s cognition and rhetoric. Clegg (2002, p. 2) addresses this

division by discerning between representing paradoxes – social constructions of our lived experiences –

and materializing paradoxes – residing in the material world, “where vibrant organizations, groups, and

individuals change by simultaneously holding the two states.” From a material perspective, organizations

and their various subgroups are regarded as complex human systems that are inherently paradoxical

(Lewis & Smith, 2011).

In contrast, from a representing perspective, paradoxical tensions are seen as the constructions of

dialectical minds. Elements only seem contradictory from the perspective of an observer, when in fact they

are part of a larger whole (Ford & Ford, 1994). As Ford & Ford (1994, p. 760) clarify: distinctions “reside in

the observer(s), not the observed.” Such social constructions help actors to make sense of complex

realities, and once such frames of reference are entrenched, they become highly resistant to change

(Lewis, 2000). So, in an effort to understand complex situations, actors tend to place boundaries around

certain elements, to see the trees for the wood. But as such boundaries and contradictions become

grounded in one’s perception, actors tend to regard their perceptions as distinct and immutable (Lewis,

2000). This ontological discussion has implications for strategies to managing paradox (Lewis & Smith,

2011). The literature tends to distinguish between strategies of acceptance and strategies of resolution.

In their seminal article on managing paradox, Poole & Van de Ven (1989) identified four strategic

responses to paradoxical tensions: 1) opposition (acceptance), keeping opposing poles separate and

studying their differences, 2) spatial separation, allocating opposing poles across different organizational

units, 3) temporal separation, choosing and switching between opposing poles over time and 4) synthesis,

adopting a new perspective that accommodates the opposing poles. In this typology, the opposition

strategy is one of acceptance whereas the latter three are aimed at resolving the underlying tension.

Researchers calling for strategies of acceptance argue that learning how to ‘live with’ paradox offers a

sense of freedom (Schein, 1990). It helps actors to avoid debates and potentially destructive conflicts and

focus on their primal tasks. If we return to Mungham & Conlon’s (1991) study on group dynamics we find a

relevant example. It turns out that members of string quartets tend to ‘play through’ rather than confront

tensions, resulting in high performance and the avoidance of group conflict. Such a strategy can be

characterized as passive acceptance. However, other researchers argue that it can be a powerful, pro-

20

active strategy as well. In their action research, Lüscher & Lewis (2008) show that helping managers

understand tensions as paradoxical helped them in their sensemaking processes. Managers tend to

regard paradox initially as a dilemma. However, as they became increasingly aware of the fact that

choosing between opposing poles of a polarity would intensify the needs of the other, they began to adopt

both/and thinking instead of either/or thinking, resulting in a more workable situation.

Other researchers, however, call for actors to resolve paradox. Here, resolution doesn’t mean

eliminating a tension, but rather “finding a means of meeting competing demands or considering divergent

ideas simultaneously” (Smith & Lewis, 2011, p. 386). While Poole & van de Ven (1989) suggest spatial

separation, temporal separation and synthesis, these strategies are aimed at managing paradoxical

tensions that are inherent to the system, as they involve physical separation of opposing poles and

underemphasize cognitive efforts to resolve tensions. However, if we assume that paradoxes are (partly)

socially constructed, then apparent contradictions might also be resolved by shifting one’s frame of

reference (Smith & Berg, 1987).

In reality, not all actors adopt constructive responses to paradoxical tensions. Lewis (2000) argues that if

paradox is treated with ambivalence or repression, actors may become trapped in vicious cycles that

perpetuate and exacerbate the underlying tension. A relevant example that has plagued the HR function

for years is the vicious cycle caused by the difficulty of identifying the unique contribution of HR in

business outcomes. Legge (1978) has argued that since it is often unclear how the personnel department

contributes to organizational success and how its unique contribution could be measured, personnel

managers – uncertain about what tasks to prioritize (ambivalence) – are tempted to adopt a reactive

attitude, waiting for matters to be passed on to them. As a result, the HR department was viewed as being

engaged in relatively unimportant, necessary chores, which encouraged line managers to burden the

personnel department with a variety of minor issues, spurring the vicious cycle.

Instead of being trapped in vicious cycles, Lewis & Smith (2011) propose a dynamic approach and argue

that actors can fuel virtues cycles, which fosters creativity, continuous learning and long-term

sustainability, by inherently accepting paradoxes and then vacillating between strategies of

splitting/choosing (spatial and temporal separation) and strategies of synergy (accommodating opposing

poles). The argument is that when actors assume that paradoxical tensions can and should coexist, they

can explore the dynamics between the polarity, which increases their confidence in developing more

complex and challenging resolution strategies.

In sum, paradox theory provides a theoretical lens through which tensions and subsequent responses can

be systematically identified and understood. In organizational literature, scholars have discerned between

paradoxes of learning, belonging, performance and organizing and actors responding to paradox can

enable either vicious or virtuous cycles.

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4. Methodology

This study examines HR structures and tensions and their possible relationship within the context of

several large companies based in the Netherlands. Given that this research aims to shed light on areas in

which specific relationships are as yet unclear, I conducted qualitative research in the form of a

comparative case study approach and followed Patton’s (1987) proposal to use semi-structured interviews

to capture the complexity of the data. The case study approach has been described as “an empirical

enquiry that investigates a contemporary phenomenon in depth and within its real-life context, especially

when the boundaries between phenomenon and context are not clearly evident” (Yin, 2009, p. 18). In a

comparative case study approach, the case organizations are treated as experiments, with the findings of

each case helping to confirm or disconfirm the findings drawn from the others (Yin 1994). In line with

prescribed methods of comparative case study research (Eisenhardt, 1989; Yin, 1994), cases were

selected using a theoretical sampling method and data was analysed using iterative, inductive analysis.

The aim of this research was to balance the rich-story logic of each case with well-grounded theory in

order to present compelling propositions that are supported by the rich narratives of the case participants

(Eisenhardt & Graebner, 2007).

Conducting this study was part of my internship at Berenschot Consulting. It is also part of a larger project

examining the intricacies of HR configurations within large organizations operating in the Netherlands. The

project is a joint collaboration between Berenschot Consulting and the Amsterdam Business School.

4.1. Sampling method

The research was conducted among three large energy and utility companies based in the Netherlands:

EnergyCo, UtilityCo and OilCo (pseudonyms related to the organizations’ core activities were used to

represent the organizations for confidentiality). The cases were selected on the basis of theoretical

sampling. I focused on case settings and respondents that could be potentially insightful (Eisenhardt,

1989). The three cases included represent contrasting settings within which the organization of HR and

associated tensions could be explored. The case organizations all operated in the energy & utility sector,

as to control for different institutional pressures that might influence HR configurations across industries

(see Farndale & Paauwe, 2007). Thus, differences in configurations can be largely attributed to internal

design choices.

4.2. Data collection

The participating companies were contacted through the combined networks of Berenschot and the

Amsterdam Business School. I established one contact person per company who facilitated access to the

interviewees we selected on a theoretical basis. Data was collected through semi-structured interviews

with the following HR stakeholders: HR director on a national level, HR business partner, HR shared

22

services employee and several line managers. By utilizing multiple sources of information, internal validity

was strengthened (synchronic primary data source triangulation) (Paauwels & Matthyssens, 2004).

Interviews were held at the interviewee’s office location and each interview lasted one hour. Most of the

interviews were carried out by two person teams: I would handle the questions, while the other focused on

taking notes and raising issues that required clarification (Eisenhardt, 1989).

An interview protocol was designed to unravel the tensions encountered by HR professionals and

stakeholders, but we did not ask informants to reflect on specific tensions. The interview covered general

subject areas such as the structure and history of the organization’s HR function, relationships with team

members, HR professionals and line managers, current and past challenges and in the case of line

managers, questions regarding the effectiveness of the organization’s HR service delivery. Given the

inductive nature of this research, we encouraged interviewees to wander freely in their answers and asked

for clarification when necessary. Interviews were conducted in a single time frame and interviewees were

encouraged to reflect on present challenges as well as past challenges, allowing us to collect present as

well as retrospective data. In total, 5 interviews were conducted at EnergyCo, 7 at UtilityCo and 8 at OilCo,

making for a total of 20 interviews. All the interviews were recorded on audio and then transcribed. An

overview of interviews is listed in table 1.

Table 1. Interview data

Case study Participants

Number of Interviewees by Function

Company Number of

Employees

Worldwide

(2014)

Total

#

HR

director

sr. HR

manager

Business

partner

HR

professional

(COE)

Employee

shared

services

Manager

shared

services

Line

manager

UtilityCo 7,000 7 1 2 1 1 2

EnergyCo 2,688 (59,784)* 5 1 1 1 2

OilCo 92,000 8 1 1 2 1 1 2

• Number employees MotherCo

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4.4. Data analysis

HR configurations In order to reduce the enormous volume of data I first drafted detailed descriptions of each case study,

describing in broad outline the HR configurations employed and how they came about (Yin, 1994). The

second level of data analysis consisted of cross-case analysis to compare systematically the

configurations employed with the evidence from each case in order to allow for differences and similarities

to emerge (Eisenhardt, 1989).

The emergence of tensions I openly coded the interviews in Nvivo in order to identify patterns and variance in descriptions of tensions

using verbatim indicators such as: tensions, dilemma, balance, duality, yet, but, either/or, one the one

hand, on the other hand, etc… In 19 of the 20 interviews I identified references to tensions in how HR is

configured.

In a second step I proceeded to pattern-matching (Yin, 1994), wherein I searched for relationships

between and among these categories, resulting in several higher-order themes. Following methods of

inductive analysis, I allowed concepts and relationships to emerge from the data, rather than being guided

by pre-determined hypotheses (Strauss & Corbin, 1990). From this analysis, themes could be captured in

three general paradoxes: the global stakeholder paradox, the efficiency/flexibility paradox and a power

paradox. Data revealed that the paradoxes were specific to the HR configurations employed, as in,

different paradoxes were identified in each case organization. The data analysis procedure that yielded

these three paradoxes is depicted in figure 2. In this figure, it is also apparent which paradoxes emerged in

which organization.

In a third step, I studied how HR professionals discursively respond to these tensions. Here, I used

a framework of acceptance/resolution (Poole & Van de Ven, 1989; Smith & Lewis, 2011) to identify

different modes of response to tensions. To this end, I sought verbatims in the case participants’ discourse

that indicated a particular response mode.

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Figure 2. Data structure: three paradoxes

25

5. Results The purpose of this section is to present the results of the case based empirical analysis of HRM

configurations and to interpret the results in terms of paradoxes evident in the three case companies. To

achieve this, the section is organized as follows. First, I will describe how the HR function is organized in

each case company. Second I describe how this came about and the reasons for the choices we see

today. Finally, I provide results on what paradoxes are evident and can be constructed from the case

informants’ discourse, based on the interview data. In this I follow the example of Andriopolous and Lewis

(2009) on constructing paradoxes from discourse (see also Lüscher and Lewis, 2008).

5.1. EnergyCo

EnergyCo is the largest energy producer and provider in the Netherlands, providing over 2 million private

and business customers with gas, electricity and energy services. It is headquartered in ‘s-Hertogenbosch

and employs over 2,700 employees. EnergyCo operates several power plants in the Netherlands, which

are fired using coal, biomass, wood gas and residual gases and steam from nearby waste-incineration

plants and chemical producers. Furthermore, EnergyCo operates 12 windparks and several hydro power

plants. In 2009, it became part of a German electricity and gas company (MotherCo) that is currently one

of the five leading power suppliers in Europe, with more than 66,000 employees providing over 16 million

customers with electricity and over 7 million customers with gas. EnergyCo’s executive board consists of a

chief financial officer and a chief commercial officer that report though MotherCo Retail to the executive

board at MotherCo.

5.1.1. EnergyCo HR function

EnergyCo restructured its HR function in 2014 and introduced a four-legged-stool, based closely on the

work of Ulrich. As such, the case of EnergyCo provides insights of considerable interest for this thesis due

to the recency of the restructuring and the conscious choice to model the new HR configuration a la Ulrich

(as it were). According to the current EnergyCo HR configuration, HR activities are distributed across four

functional entities. These are (1) an in-sourced HR services department, (2) centers of expertise, (3) HR

advisors and (4) HR business partners.

HR services handles all of HR’s administrative processes. Most of the correspondence with

personnel is through e-mail. There are plans for employee self-service system (ESS) and a manager self-

service system (MSS) but at the time of the study these were still underway. The HR services organization

reports hierarchically to their HR services counterpart at MotherCo, which is headquartered in Essen,

Germany.

EnergyCo employs two centers of expertise: people development and compensation & benefits.

A third COE, HR control, is currently being introduced to help HR with making more fact based decisions.

Its core activities have not been specified specifically as of yet, ‘it’s still a rather vague COE at the moment’

(HR director, EnergyCo). The local COEs report to their parent COE in Germany. Present focus is on

reducing the high number of employment condition regulations that are making HR policies highly

bureaucratic.

26

EnergyCo makes a distinction between HR business partners and HR advisors. HR business

partners have a highly specialized role and serve the leadership teams and help businesses realize

success through use of human resources. HR Advisors serve middle management and are concerned with

operational management such as the management of personnel in- and outflow. HR advisors report to an

HR operations manager. HR business partners and HR advisors jointly constitute the local HR

organization, which is coordinated by EnergyCo’s HR director. The decision however to distinguish the

local HR organization in terms of HR business partners and HR advisors is an important design element in

the four legged model at EnergyCo.

5.1.2. Emergence of the present HR structure

How did the current EnergyCo HRM configuration come about? The most important point to emerge from

the results is that the current model was explicitly and consciously introduced in 2014 as part of

MotherCo’s efforts to drive uniformity and efficiency across the support organizations, including HR, of all

of its subsidiaries. Besides scale efficiencies, the model was also introduced to improve communication

and to support strategic decision making for HR or, in the words of the HR Director, to “increase the

effectiveness of internal resourcing, to understand each other better, to speak the same language and to

make integrated strategic choices” (HR director, EnergyCo).

With regard to the reasons as to why this specific model was introduced, these seem to be largely

institutional in nature, in the sense of driven by mimetic isomorphic institutional pressures (DiMaggio and

Powell 1993) or, put simply, the pressure to copy perceived best practices. During the interviews, the

Ulrich model was framed as the most logical and perhaps even the only viable option.

So why this particular model? I think it’s a model that is being implemented by many multinationals.

You regularly hear about it here and there. I was recently visiting ChemCo and they are literally

configuring their HR function in the same way, albeit on a larger scale. I think it’s an accepted model

for structuring HR within multinational companies.

(HR director, EnergyCo)

It was about time that we used Ulrich to organize HR.

(HR business partner, EnergyCo)

These utterances from the data highlight the extent to which Ulrich’s approach to HR is perceived to be

institutionalized and it suggests that adoption is driven by mimetic isomorphic pressures (Dimaggio &

Powell, 1983).

With the introduction of this model, some detailed aspects are worth explaining in more detail. Firstly, the

adoption of the four-legged model and the separation of HR advisors and HR business partners was

implemented to the effect that HR business partners were stripped of their daily operational

management responsibilities so that they could focus more on their strategic activities.

27

HR business partners have been stripped of their hierarchical power over HR advisors, so that they

can focus more on content and be more strategic.

(HR business partner, EnergyCo)

However, the outcome is that business partners now seem to be forced into a ‘sales’ role in which they

have to sell business needs to COEs, HR services and even their own HR organization. Whereas HR

advisors used to report to a business partner, they now report to an HR operations manager. The HR

business partners have to lobby to have their operational HR work executed.

It’s almost approaching a sales function, it’s always been like that with regard to the business, but now

it also requires stakeholder management towards my own HR organization.

(HR business partner, EnergyCo)

What further complicates this situation is that the COEs and HR services are now reporting to the

MotherCare HQ in Germany. The result appears to be that this has decreased their ability to understand

the relevance of certain issues for the business. As a business partner explained: “Now I have to convince

somebody [at the COE] who is thinking: help me remember, which business was this again and what are

they doing exactly?” (Business partner, EnergyCo).

5.1.3. Emerging tensions

When analysing the discourse on the challenges emerging within EnergyCo’s HR configuration, two

specific themes can be induced that suggest the presence of two core HR elements in opposition and at

the same time co-existing simultaneously. These are pressures for localization versus pressures for

globalization.

I like to refer to it as ‘building the plane while flying’; on the one hand we are focused on supporting our

local businesses, which are under a lot of pressure, and simultaneously we are reorienting ourselves

internationally. This combination is an interesting one.

(HR director, EnergyCo)

Case informants stress the importance of both globalization as well as localization. On the one hand, the

underlying reasons for emphasizing globalization appears to revolve around increasing the consistent

application of policy across businesses.

When you are serving different businesses, you would like to have that employment condition

regulations are applied consistently across these businesses. … If you don’t, you run the risk that

people start improvising with the conditions, resulting in a number of exceptions and we cannot

possibly explain that to each other.

(HR business partner, EnergyCo)

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You can introduce an internationally integrated compensation & benefits department, but if you can’t

manage 1 remuneration policy for your level contracts, what’s the point of having a COE in the first

place?

(HR Director, EnergyCo)

On the other hand, responding to the needs of the business appears to be simultaneously important in

order to ensure success within the business units. Tensions emerge as serving both the interest of the

business and the interest of the parent company proves often contradictory. It appears from the data that

the local needs are not always understood by the parent company and vice versa. In selling local demands

to the internationally coordinated COEs, a business partner explained:

They are thinking: ‘the Netherlands, the Netherlands, we currently have another problem that requires

our full attention in that we have to reduce the bureaucracy of our employment condition regulations

from 600 regulations to 1.’ So before you know it, the local capacity that we need and have always

needed, is used for solving these international issues. From an objective perspective this makes

sense, it’s part of the game, but it still leaves us with a capacity issue.

(HR business partner, EnergyCo)

Despite awareness regarding the importance of meeting business demands, it also appears that in the

tension between two simultaneous pressures for local responsiveness and global standardization, HR is

emphasizing global standardization. For example, in response to the question as to why current business

needs are not being met, a line manager explained:

It’s all derived from increasing complexity and simultaneously focusing on reducing FTE, which makes

it impossible for staff to deliver output to the business the way they are supposed to. Instead of looking

at what the business needs and trying to deliver service efficiently, we argue: this is standard service

and this is the maximum amount of staff we make available to deliver the service.

(Line manager, EnergyCo)

This indicates that the tension is being responded to in a way that seems to be leaning towards one

element and away from the other. A line manager recalled telling EnergyCo’s HR director:

If we continue along this path, you’ll have to accept that the service you provide to the business will

become worse and worse and you will not able to control it anymore.

(Line manager, EnergyCo)

The tension between globalization and localization appears to be particular salient within EnergyCo’s

present HR configuration, with both HR services and CEOs reporting to Germany while the local HR

organization is held accountable for end-to-end processes and meeting business needs.

29

The business sees us as 1 HR organization. They don’t care much whether we provide service from

one box or the other. I have to make sure that the end-to-end processes run smoothly for our

businesses, across the different boxes, but I am not responsible for those boxes [HR services and

COEs]… I can understand that this model can yield benefits of scale when implemented properly, but it

doesn’t make my work here locally any easier.

(HR director, EnergyCo)

The tension is also particularly salient for business partners as they happen to be in the middle of the

cross fire, without any hierarchical power to exert and constantly dealing with COEs or shared services

that are not coordinated locally. Even a line manager suggested:

I would give business partners more power, so they can manage processes end-to-end. It’s great if

specialists are assisting them, but they [specialists] shouldn’t have the power to decide.

(Line manager, EnergyCo)

5.1.4. Interpreting the results: Constructing a local/global paradox

The results from the analysis of the case data for EnergyCo indicate the presence of a global

stakeholder paradox as the HR organization is pressured to meet the (parent) company’s global

demands for standardization and simultaneously the demands of local businesses for responsive,

tailored and non-standardized assistance. The global stakeholder paradox can be seen as an example

of what Lewis and Smith (2011) refer to as a paradox of performance. HR is confronted with multiple

stakeholders that exert conflicting demands and performance requirements on them. The results from

this case based research suggest, however, that the global stakeholder paradox is largely ignored at

EnergyCo as the global pressures are responded to at the expense of attending to the local pressures.

This may be a cause for concern as paradox theory suggests that when actors ignore paradoxical

tensions or try to resolve them by emphasizing one side of a polarity, they inadvertently intensify

pressures from the other side, potentially becoming trapped in a vicious cycle (Lewis, 2000). This is

echoed in the comment that “If we continue along this path, you’ll have to accept that the service you

provide to the business will become worse and worse and you will not able to control it anymore. (Line

manager, EnergyCo)

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5.2. UtilityCo UtilityCo is the largest energy network operator in the Netherlands. It distributes gas and electricity to

consumers, businesses and institutions and delivers network-related services in the field of complex

energy infrastructures and public spaces. UtilityCo employs over 7,000 people and is headquartered in

Arnhem. UtilityCo consists of 3 subsidiaries: 2 regional network operators and one knowledge hub. The

regional network operators manage the energy grids for electricity in 5 provinces across the Netherlands,

including North Holland and Amsterdam. They jointly provide connection to, as well as transport of, gas

and electricity to over 2.8 million customers. Their main focus is on keeping the energy networks in good

condition. The third subsidiary is UntilityCo’s knowledge center and is largely responsible for the technical

innovations for the distribution and transportation of gas and electricity. All shares of UtilityCo are held,

directly or indirectly, by Dutch provinces and municipalities.

5.2.1. UtilityCo’s HR function

UtilityCo’s HR organization is three legged and comprises of shared services, centers of expertise and

business partners, similar to Ulrich’s original classification. HR services handles all of HR’s administrative

processes. UtilityCo has implemented manager self-service software (MSS) in which managers can

perform a variety of HR tasks, such as making salary changes. These are tasks that were previously

handled by HR advisors. More complex inquiries or changes, that require customized handling, can be

passed on to a business partner who then takes it up directly with shared services.

UtilityCo’s HR specialists are distributed across three centers of expertise: a career center, a

training & development unit and a management development unit. The career center provides employees

with career planning, self-assessment and outplacement services. It is also concerned with the recruitment

and selection processes within UtilityCo. UtilityCo’s career center is interesting in that it transcends the

function of a center of excellence in its purest form because it is also concerned with operational HR work

such as managing poor performance cases or assisting displaced employees. UtilityCo’s MDOD

department (management development & organizational development) is concerned with the development

of company policy, adherence to legal requirements, talent management and succession planning. The

training & development unit handles staff education. Like EnergyCo, UtilityCo is now introducing a fourth

COE, HR analytics, which is currently under development.

In the third leg of the archetypal stool, UtilityCo’s business partners serve as the linking pin between

the business and HR and are focused on strategic as well as tactical activities. The business partner is

required to understand what the business imperatives are and what HR can offer, “so that they can align

demand and supply” according to a HR business partner at UtilityCo.

5.2.2. Emergence of the present HR configuration

References to the reasons as to why the model was initially introduced are framed largely in terms of

increasing the consistency of firm-wide HR policy and the pressures experienced by HR personnel to

become more efficient.

The model was introduced since each business unit within [Former name of company] at the time, had

its own HR department. So, HR had to be centralized, … in order to make HR policy more uniform.

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(HR Business manager, UtilityCo)

There was a great emphasis on becoming more efficient. … HR processes and systems were

optimized, and we were able to downsize the department significantly.

(Manager HR services, UtilityCo)

Furthermore, UtilityCo wanted to elevate business partnering to a higher level by automating most of the

administrative HR processes and making line managers responsible for processing their department’s

personnel changes. Previously, UtilityCo worked with HR advisors who “served as the line manager’s right

hand” (HR business manager). HR advisors would be concerned with processing personnel changes and

other operational HR tasks. Over time, these processes were automated and the responsibilities for

making these personnel changes have been devolved to line managers. As HR advisors were gradually

being released of their administrative responsibilities, they would be transformed into strategic business

partners, to signify the strategic focus of their role.

Another change that has taken place is the integration of recruitment, outplacement services and career

advice into UtilityCo’s career center. According to respondents, the career center was introduced to

stimulate cooperation and to provide end-to-end services, “with recruiters focusing on the demand side

and career advisors focusing on the supply side” (HR business manager).

The present focus is on increasing the strategic focus of HR without losing alignment with business needs.

This proves a challenge as some business still require operational assistance whereas other do indeed

value the strategic contribution of HR business partners. This issue will be further explored in the next

paragraph.

5.2.3. Emerging Tensions

When analysing the respondent’s discourse on the challenges eminent within UtiliyCo’s HR configuration,

two specific themes emerge that build an opposition: efficiency versus flexibility

Efficiency versus flexibility

So we are in a constant squeeze: to what extent do we keep standardizing our processes and

procedures and to what extent do we respond to the needs of the business partners and the business

units in a flexible way.

(Manager HR services, UtilityCo)

This quote exemplifies a paradox as the HR organization is pressurized to standardize processes in order

to increase efficiency while simultaneously pressurized to meet a variety of business demands that require

flexibility in terms of service delivery and policy implementation. The underlying tension appears to be the

tension between efficiency and flexibility. On the one hand, UtilityCo’s HR organization is pressured to

reduce costs and become more efficient.

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We constantly have to cut costs. That’s creating tensions. Sometimes I think: there’s nothing left to

cut!?

(HR business manager, UtilityCo)

On the other hand, however, HR is pressured to be flexible in the way it attends to business demands. For

example, case informants indicate that there is considerable variance across the business units in terms of

culture, skill level of line managers, and business focus.

The IT business unit is focused on its vision and mission. We are more advanced in terms of strategy

compared to more operational business units such as construction.

(Business partner, UtilityCo)

However, given the variance across business units, informants indicate that HR needs to build in some

flexibility with regard to policy implementation so it can effectively serve units of different kinds even

though this goes against the pressure to serve the organization efficiently, in a standardized manner.

Clear tensions are expressed as a result affecting the ambitions to be able to do both and a strategy for

coping with the tensions that involves a differentiated model depending on the unit:

A large part of the company is not ready for this new model. So we’re adopting a hybrid model in which

this new way of working will be implemented and developed in certain business units whereas other

business units need more time and will adopt the model in due time.

(HR Business manager, UtilityCo)

Allowing flexibility of this nature in turn challenges the consistent and efficient implementation of corporate

policy. Furthermore, allowing flexibility in standardized processes and procedures creates liabilities.

We work with standardized systems and processes. If HR is approached by a business unit who

claims to have a valid reason for an exception … then it still has to fit within our systems somewhere.

That’s customization, in other words, we’ll have to change something which results in an update and

every time we do that, we run the risk that it will not be connected properly to our existing processes

because you are messing with your basic functionality. And if, because of that, adjacent functionality

starts to fail, we can’t provide an optimal service and we’ll definitely hear it.

(Manager HR services, UtilityCo)

However, attending to the needs of the different business units is of course of strategic importance as is

achieving efficiency which, as I will now discuss, appears to engender paradoxical tensions in UtilityCo.

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5.2.4. Interpreting the results: Constructing an efficiency/flexibility paradox

The results of the case suggest that the direction HR is currently taking is creating an efficiency/flexibility

paradox. Efficiency and flexibility are contradictory elements that seem logical in isolation but absurd when

juxtaposed. This paradox is an example of what Lewis & Smith (2011) would call a paradox of organizing,

as efficiency and efficiency require competing organizational designs and processes. Responses to this

paradox indicate that on-going dialogue and open communication is required, between HR, shared

services and the business.

The tension between a support unit (shared services) and a business unit will always remain salient…

But we try to focus on cooperation. Instead of blaming shared services if they can’t deliver on a

customized request, … we have a lot of meetings in which we explain to each other what we do and

why we do things. That fosters a deeper level of understanding and it increases cooperation.

(Manager HR services, UtilityCo)

The results from the interviews denote that there are strategies of acceptance to deal with paradox.

Acceptance in this case however does not imply submission or avoidance. Rather, as the quote here

suggests, it denotes a new understanding of inconsistencies and conflict, which fosters more natural

working conditions (Poole & Van de Ven, 1989). Lewis & Lüscher (2008) in a study on efficiency and

flexibility paradoxes found that such awareness reduces tendencies to blame executives and shifts focus

to actors to find means of living with paradox, which corresponds to a large extent with our informants’

responses.

However, the results also suggest that the dual emphasis on efficiency and flexibility and perhaps the

tendencies towards ambidextrous HR organising also puts a lot of strain on business partners. As part

of UtiliyCo’s efficiency goals, some of the operational HR work has been devolved to line managers. This

in theory should help business partners to increase their focus on strategic activities. However, not all line

managers accept these additional tasks and keep pressuring business partners to assist them in

performing these HR tasks, rendering these business partners unable to attend to their strategic matters.

That’s the dilemma of the last couple of years. To perform our role successfully, we should take on

less operational work so that we can spend and focus more time on strategic activities. That’s not what

happens in all cases unfortunately and therefore business partners are sometimes pressured

excessively.

(HR business partner, UtilityCo)

This has also resulted in a growing concern among line managers fearing that the workload of business

partner will transcend beyond acceptable limits.

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It’s a precarious balance. I worry about business partner overload. And if they start to fall ill, that could

initiate a chain reaction and that’s something that concerns me deeply.

(Line Manager, UtilityCo)

So, despite the fact that paradox may be managed constructively among key stakeholders, its salience

has resulted in business partners being highly pressured and tensions arising from managing the paradox

are clearly evident and not resolved but rather absorbed, in this case, by the business partner. This case

suggests that handling paradoxes may also be related to cognitive and emotional capabilities of key actors

who, like business partners, perform as it where in the eye of the storm where the intricate interdepend-

dencies in HR work, for example bridging efficient and flexibility without quashing either, are materialized.

Furthermore, the results from UtilityCo suggest that the basic three-legged Ulrich model may need further

elaboration to prevent that business are overwhelmed by demands as the case of UtilityCo suggests is

happening. The need for ‘operational execution’ appears to be big.

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5.3. OilCo

OilCo is a global group of energy and petrochemicals companies with over 90,000 employees in more

than 70 countries. It is headquartered in The Hague and incorporated in England and Wales. OilCo is

organized into three business groupings: Downstream, Upstream and Projects & Technology. OilCo’s

upstream business searches for and recovers crude oil and natural gas and operates the necessary

infrastructure to deliver oil and gas to the market. Its activities are geographically organized, with Upstream

Americas covering the upstream activities in North and South America and Upstream International

covering the rest of the world. OilCo’s downstream business manages its refining and marketing activities

for oil products and petrochemicals. The downstream business includes a retail petrol station network, the

manufacturing and marketing of lubricants, bitumen, fuels and liquefied petroleum gas (LPG), the

production of petrochemicals used in the further production of plastics, coatings and detergents, and the

trading of crude oil, oil products and chemicals. These products are shipped for home, transport and

industrial use. OilCo’s Projects & Technology (PT) organization manages the delivery of large-scale

projects and is focused on the development of new technologies and innovation. Furthermore, it provides

the technology, support and technical capabilities in OilCo’s internal upstream and downstream activities

and several external industrial licensees.

5.3.1. OilCo’s HR function

OilCo’s HR function is organized as a three-way matrix, characterized by a functional, a geographical, and

a business unit dimension. First, HR activities are functionally distributed across shared service centers,

centers of expertise and business HR (comprising business partners and advisors), similar to Ulrich’s

archetypal three-legged-stool approach.

Transactional HR activities are consolidated into shared service centers based in the Philippines,

Malaysia and Krakow, Poland. Service centers are the primary interface for employees with regard to HR-

related questions and requests. The service centers rely heavily on globalized HR systems that provide

detailed information on company policy. They provide employees and managers with the possibility of

submitting a range of requests online, including requests for expatriation, leave or approved absence and

benefits. HR specialist expertise is centralized in several centers of excellence, each with a different

focus area, such as remuneration, learning, and talent management. COEs are concerned with the

development and adjustment of (global) company policy, and operate in close cooperation with the

business. Business HR provides support to line managers and leadership teams operating within the

business. OilCo makes a distinction between HR advisors and HR account managers. Account

managers work with the senior leader teams and help “define the strategy for the business unit including

the HR component” (Lead HR account manager, OilCo). HR advisors also support the business but are

less senior than HR account managers and are concerned with operational HR tasks. HR account

managers rely heavily on HR advisors to get operational aspects of HR work executed.

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In terms of the matrix, on top of the three-legged configuration and attending division of HR

priorities, HR activities are also split geographically. There is a country policy team that translates

corporate policy (developed in COEs) to the legal requirements of that specific country. Furthermore, since

2009, HR business partners and advisors have been also split into ‘HR in the business’ and ‘HR in

country’. Responsibilities have been distributed between the two entities, with the former contributing to

strategy development at a senior leadership team level and the latter providing country-specific support to

local line managers. Whereas HR in the business covers subject areas such as succession planning, long-

term resourcing and talent management, HR in country deals with more operational HR work such as

managing a rehabilitation program following poor performance reviews or dealing with a chronically ill

employee, usually processes that are subjected to local laws and policy.

Third, COEs also have representative departments in the different business organizations,

corresponding with a split on business unit level. Again, global COEs work on general strategy

development whereas the COEs ‘in the business’ focus on policy implementation and translation in order

to ensure alignment with business requirements.

5.3.2. Emergence of the present HR structure

OilCo is one of the world’s largest companies and has the most complex HR configuration among the

three companies studied, but also compared to other companies in empirical studies of the HR function.

The initial functional split of HR activities into shared service centers, COEs and business partners was

introduced in 2006/2007. References to the underlying philosophy for adopting this model seemed to be

framed largely in terms of increasing the consistency of HR policies across business units and becoming

more efficient.

At a certain point, every business unit was approaching HR service delivery differently. Our upstream

business was doing it differently than our downstream business. Upstream has always been very

profitable and I don’t want to frame like this, but it was sort of the Wild West. There was policy, but

people deviated from it left right and center. At a certain point people said: This is madness and we’ll

never achieve process excellence in this way. We are not consistent in our policies and it is not cost

effective. Then people realized, you can achieve process excellence if you put people together.

(HR director, OilCo)

So in terms of the philosophy behind why it’s been split like this, … it’s all been driven by efficiencies,

cost awareness, all the basic principles.

(Lead HR account manager, OilCo)

In 2009, the HR function underwent a dramatic reorganization that included the geographical split of

business HR into HR in business and HR in country. The original Ulrich model is centered around the idea

that the business partner acts as the principal interface for line managers. However, as project teams

within OilCo easily span 15 countries, business partners cannot be expected to have knowledge of the

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specific policies and legal issues of all these different countries. The original Ulrich model, it would seem,

was not requisitely complex for the challenges of an organization like OilCo.

It’s almost impossible to be the primary interface for all line managers and have knowledge of all the

country-specific policies. That’s when we introduced the geographical split.

(Global HR manager, OilCo)

As business partners are expected to act as a sparring partner in discussing matters such as

underperformance, chronic illness or career advice, processes that should be compliant with country-

specific legal guidelines, the HR in country organization was introduced to assist line managers in

operational matters that required country-specific knowledge.

Over the years, continuous improvements have been made to the model as HR professionals

responded to impediments that emerged from working with the model on a daily basis. For instance, since

global policy was now being developed in the COEs, they indeed became increasingly more sophisticated

and consistent but had now proven to be very difficult to implement.

Then it was decided that the one responsible for the development of new policy should also be made

responsible for implementation and execution. This is something that has evolved over time. … So in

the end, the vice president of HR services now has a direct report to the executive vice president of

remuneration and benefits, which is great because then the whole process from development to

implementation is centrally coordinated.

(HR director, OilCo)

In fact, as OilCo’s HR processes and policies are reaching a high level of standardization, focus is

increasingly shifting towards the integration of services and simplifying policies and procedures.

We've been trying to get things more consistent globally for a while, but now, I think we're being

consistent as far as we can go. Now it's around simplification … and then you know improving

employee experience as well. And more integration.

(Regional Manager HR services, OilCo)

In line with this new philosophy, part of the operational work that is still carried out by HR in the country

is now gradually being transferred to HR services, so that HR advisors can spend more time in the

business and focus on more strategic activities and HR services are managing the processes more end-

to-end and receive more business insights.

We can get more efficiencies because we manage something end-to-end. And also it's more important

as well, because that's really good business intimacy. So we understand why in a location there might

be certain activity coming from there and why it's important.

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(Regional Manager HR services, OilCo)

My role has been changed in such a way that I’m now more able to spend time in the business,

physically, to listen to what’s going on and to provide HR support where necessary.

(HR advisor, OilCo)

Interesting to note here is that Ulrich’s model initially served as a tool for differentiating HR activities

effectively across HR entities. Although this model can effectively drive efficiencies, as all three cases

seem to suggest, a different focus is needed to address issues such as employee experience which are

largely absent in explanations for why HR in OilCo, but also the other cases, moved towards their current

configurations.

So I think we shouldn't segment HR activities too much, which I think is what Ulrich in his original-- I

mean he's a great person, but I think originally it's all about segmenting stuff, I think less segmentation

is probably better. … I think the more you break things up, the more complex it gets, the more you end

up breaking up processes, and I think it becomes harder for employees to understand how things work

and for each HR person as well. … I think the model we have has served as really really well, but this

is the next step that we need to take.

(Regional Manager HR services, OilCo)

5.3.3. Interpreting the results: Constructing an efficiency/flexibility paradox and a Power

paradox

When analysing the discourse on the challenges eminent within Oilco’s HR configuration, two paradoxes

emerge: an efficiency/flexibility paradox and a power paradox, with the latter much more salient than the

former.

The efficiency/flexibility paradox

The tension between efficiency and flexibility clearly emerges in this highly complex and differentiated

organization, something which has been noted for some time in organizational theorising (cf. Adler et al.,

1999). The quotes supporting the construction of an efficiency/flexibility paradox have been summarized in

figure 3 (see appendix). However, the paradox in OilCo between efficiency and flexibility is not particularly

salient and this seems to be connected with the fact that OilCo, as informants indicate, is at a very

advanced stage of what Lüscher & Lewis (2008) call ‘working through paradox.’ In fact, responses

resembled the ‘workable certainty’ (Lüscher and Lewis, 2008) stage signifying that a manageable mess

has been created from which manager might work.

When you explain to them: listen, this is our general principle, we want to actually treat people fairly, so

have these policies which try or already have the flexibility built in, and you know, your situation doesn't

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meet that but nor do we think it's a valid reason to allow an exception. … And when you explain that to

employees, particularly managers, they do understand it. But it needs to be explained first, if you don't

explain that well, they just think it's HR being, you know, black and white about something.

(Regional HR services manager, OilCo)

Moreover, by building some flexibility into the policies, “to make it easy to administer,” (Regional manager

HR services), OilCo’s HR organization seems to have adopted a perspective that accommodates both

poles of the tension, corresponding with what Poole & Van de Van (1989) would call resolving paradox

through synthesis. Therefore, while the efficiency/flexibility paradox is evident, OilCo appears, unlike the

other two cases, to have “worked through” this paradox well.

The power paradox: devolved HR responsibilities versus driving strategic contribution

From the findings it also appears that a power paradox emerges from the simultaneous pursuit of

devolving HR responsibilities to the line and driving strategic contribution. On the one hand, case

informants stress the importance of line managers as the main drivers for employee motivation and

performance.

The best scenario would be that you have such excellent line managers, that’s what I try do with mine,

that you don’t need to have an HR person. Because they are such great leaders, they can motivate

people, not through a package or flexible policy, but they just make those people so enthusiastic that

they love coming to work and work for them.

(Lead HR account manager, OilCo)

Furthermore, as human capital development is increasingly being devolved to line managers, Business HR

is able to focus more on their strategic activities. On the other hand, HR professionals express that one of

HR’s most value adding contributions lies in assisting senior high potentials in their development, since

these are leaders of the future and help the company to reach new heights.

You want to assist talented individuals in their career choices; they should be able to talk to an

independent HR professional about their choices and plans. … We are now looking at how we can get

closer to our talent.

(Global HR manager, OilCo)

OilCo adopts an inclusive approach to talent management where the focus is on identifying high potentials

who are expected to contribute to the organization’s sustainable competitive advantage and which have

greater resources and attention focused on them (Collings & Mellahi, 2009, p. 304). “Other” employees

have no direct interface with HR and receive no attention from HR apart from the service provided by the

service center and direct contact with their line manager.

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The responsibility for identifying talent in OilCo therefore lies with line managers. However, there is

considerable variation in the performance management skills of line managers.

Not all of them invest in people development to that extent, but I do expect it from them.

(Senior Line manager, OilCo).

We know which Line managers are not performing well since we conduct a people survey each year.

(HR Director, OilCo)

This leaves the organization vulnerable to unidentified or inadequately handled high potentials. This is

exemplified in the following quote.

Our talent processes are rather robust: potential performance ratings, talent reviews, pull through

processes, but are they effective? I’ve had a few talented individuals who said to me: you are the first

(HR professional) I see. Then I’m thinking: this is a senior executive potential. That’s rather… [bad].

(Global HR manager, OilCo)

Furthermore, OilCo hosts a managed open resourcing system in which managers enter job positions

themselves and every employee is eligible to apply for the advertised positions. The idea is to generate

transparency and consistency in resourcing procedures. However, there is very little guidance and

employees might not always take decisions that are necessarily in their best interest.

I think we should better coach our people in terms of career development … Every employee can

apply to every position. That doesn’t necessarily mean that all have equal chance of coming through

but you do see some people making rather peculiar decisions regarding their careers that are not

necessarily in their own best interest, nor in the organization’s. They need coaching.

(Line manager, OilCo).

So, as Business HR is devolving human capital development to line managers and sourcing processes are

increasingly being automated with career development left completely to the discretion of the employee,

business HR is increasingly able to focus on strategic matters. However, it is simultaneously losing control

over the development of (senior) high potentials, resulting in a strategic liability. This paradox is an

example of what Lewis & Smith (2011) would call a paradox of organizing as the complexity of the

system creates competing designs to achieve strategic outcomes. This tension is closely related to HR

literature on structural legitimacy as devolvement of HR activities to the line goes hand in hand with a

decline in the status and legitimacy of the HR department, as it no longer performs what it knows best,

causing HR’s involvement in strategic activities to be less effective (Teo & Rodwell, 2007). The results

from OilCo suggest that awareness of this particular tension is emerging but that responses are currently

not well developed, as highlighted in the above quote from OilCo’s global HR manager, which indicates

that a problem is recognized, This perhaps corresponds with Lüscher & Lewis’ (2008) second stage of the

sensemaking process in their model of working through paradox.

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6. Discussion

This thesis has offered an exploratory, empirical study of how organizations configure their HR functions

and the subsequent paradoxes they face based on the configurations adopted. I have argued that

although Ulrich’s three-legged-stool functional design has proven pervasive in practice as a general design

type, not much is known about the reasons for adopting such a model, the exact nature of the three legs

and their relationship to each other. Most importantly, we have little empirical evidence regarding the

tensions and challenges HR professionals and other HR stakeholders encounter when working within their

particular HR configuration. The results presented in chapter 5 highlight that although HR configurations

might be based on Ulrich-like structures, there is considerable variety in how each model is implemented

and developed over time. The findings also reveal that actors encounter paradoxes in the way HR is

organized, and that these are related to the specific HR configurations employed. In this chapter, I step

away from the specific details of the study to ask what, generally, the results suggest about the nature,

rationale for choosing, and implications are of the configurations identified in this thesis. The discussion is

divided into three main themes, these are (1) efficiency versus HRM professional vision (2) too few and too

many legs (3) commonality and contrasts in HRM paradoxes.

6.1. Efficiency versus HRM professional vision The data from the three case companies indicate two things about the adoption of Ulrich HRM

configurations. The first is that the typical three-legged HR configuration is alive and well. The second is

that those participating in this study express a sense of inevitability about going Ulrich-style. Regarding the

first, concretely, the HR configurations employed are all characterized by a functional split of HR activities

across shared services, COEs and business HR, consistent with the original model. It is clear, and

consistent with previous research, that the phrase ‘Urlich model’ carries a great deal of currency in terms

of the members of the organizations I interviewed. In HR circles generally, the three-legged-stool is

pervasive as a generic design type (Reilly et al., 2007).

Regarding the second, respondents reported that the main reasons for adopting a three-legged

structure revolved around notions of efficiency. Under efficiency motives are cost savings, achieving

process excellence, transparency in cost patterns, standardizing service levels, etc. In order to achieve

efficiency, the adoption of an Ulrich-inspired HR model almost seems to be taken for granted. Some

respondents framed it explicitly as the most logical and perhaps even the only viable option for HR

service delivery. The findings also indicated a tendency toward making HR policy (globally) consistent and

relying more and more on E-HRM technology. Although some previous research suggests that the

introduction of shared service models is primarily centered on creating a centralized unit which remains

responsive to local businesses and is driven by a ‘professional logic’ of HR, followed by the ‘delivery logic’

of cost savings (Farndale et al. 2009), accounts of a professional logic driving the adoption of the three-

legged-stool, did not emerge from this study. It is unclear why this is the case, but what is clear from the

data is that efficiency pressures for adopting the Ulrich-style model are well represented (see table 2) in

the interviews and account for the vast majority of reasons coded during the data analysis phase.

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Table 2. Initial reasons for adopting the Ulrich-like HR model

* 11 respondents were in the position (function-wise) to answer this question.

6.2. Too few and too many legs While reasons for adopting the model were captured largely in terms of efficiency, reasons for keeping it,

as well as further developing it, were centered around the case organizations’ strategic aspirations. Across

all three cases, the HR function’s potential strategic contribution is emphasized as a top priority that should

come from adopting the model. However, findings indicate that the basic three-legged model needs further

elaboration still to allow this contribution to be realized. Concretely, the only way to prevent that business

partners become overwhelmed by demands to carry out operational HRM work that is conflicting with their

strategic objectives, is that more legs, as it where, are needed to keep the stool from toppling over.

Business partners tend to be drawn into activities that are not relevant to the role and they feel pressured

to serve the competing interests of corporate HR and the business, a finding consistent with previous

research (Reilly et al., 2007; Hird et al., 2009). Ulrich’s recent publications also suggest that more

emphasis should be placed on activities associated with operational execution alongside shared service

centers, centers of expertise and embedded HR (Ulrich et al., 2008). However, findings indicate that

simply ‘having’ a fourth leg might not be enough to fully capitalize on HR’s strategic potential.

Respondents at EnergyCo highlighted that since business partners do not have (hierarchical) authority

over HR advisors (operational executors), they have to lobby to have operational work executed, a time-

consuming matter that is conflicting with their strategic endeavors. Therefore, it appears to be of particular

importance to consider contextual variables, in this case hierarchical structure, when implementing HR

service delivery models. This is consistent with Hird et al.’s (2009) ‘fit for purpose’ argument, i.e. that

successful implementation of a three-legged model requires skills in aligning and balancing how shared

service centers, centers of expertise and business partners are integrated with each other, taking into

account the dynamics of the organization at large.

While it is also clear from this study that a focus on operational execution is really lacking in some

cases, the findings from this study also highlight that a fully developed Ulrich-inspired HR model needs

simplification as it can grow highly complex, especially in an international setting. Each additional

specialized organizational unit leads to further differentiation. Adding an additional leg of the stool dealing

with operational HR matters leads however to additional tensions in the HR function. As we have seen in

all cases, on the one hand the role ambiguity surrounding HR business partners calls for differentiation but

Reasons for adopting original HR

model (n = 11)*

Example # References

Cost reduction/Efficiencies "To become more efficient" 11

Centralizing services "From decentralized to centralized" 3

Institutional "Because it's the Ulrich model" 5

Consistency/Uniformity of policy "To make corporate policy more consistent" 8

Corporate pressures "This is a MotherCo model, they liked it" 3

Consolidating capabilities "To unite capabilities and competencies" 4

43

on the other hand, the increasing segmentation of HR function calls for more integration of HR activities, to

reduce the extra complexity involved in segmentation and to maintain communication and cooperation. My

results are therefore consistent with previous research that suggests that “the logic of business partnering

can create both an agenda for integration and HR fragmentation” Caldwell and Storey (2007, p. 33). In that

sense, the configuration of HR can be seen as a paradox in itself such that differentiation and integration

are both needed, and seem logical and sensible both in and of themselves, but when juxtaposed, are in

opposition. The respondents also echo this when they discuss the complexity and difficulty of keeping an

overview, as well as the fact that some things get lost in the process of segmenting HR work in

increasingly higher degrees.

6.3. Commonality and contrasts in HRM paradoxes Three main paradoxes are identifiable from the case informants’ discourse while the data suggests that the

salience of paradoxes is related to the specific HR configurations that are adopted. The three main

paradoxes identified are a global stakeholder paradox, an efficiency/flexibility paradox, and a power

paradox.

At EnergyCo, the global stakeholder paradox was particularly salient. The globalization/localization

paradox emerged from competing pressures to meet the (parent) company’s global demands for

standardization and simultaneously the demands of local businesses for responsive, tailored and

customized assistance. This is consistent with an underlying tension often discussed in the broader

transnational HRM literature, i.e. that organizations face conflicting pressures for achieving internal

consistency across subsidiaries (global standardization) and external consistency with different local

demands, i.e. compliance to legal requirements (local responsiveness) (e.g. Bartlett & Ghoshal, 1989;

Rozensweig, 2006). In the case of EnergyCo, my findings indicate that global integration is prioritized over

local customization, potentially spurring a vicious cycle in which HR is continuously not able to meet local

demands. Because customized HRM practices are of great importance to a subsidiary’s financial and non-

financial performance (cf. Cogin and Williamson 2014), particularly in situations of high environmental

uncertainty, the need for both/and thinking, or paradoxical thinking, appears urgent. EnergyCo needs to

find ways to work through this paradox more systematically and take into account both globalization and

localization as critically important in order to facilitate the actors involved to come up with constructive

responses.

The HR configuration at UtilityCo is characterized by an efficiency/flexibility paradox. In essence, the

efficiency/flexibility paradox is similar to the globalization/localization paradox insofar as both highlight the

opposition between elements of standardization and consistency on the one hand and elements of

responsiveness and adaptation on the other, albeit without the geographical dimension. Adding a

geographical dimension presents additional complexities in terms of compliance with country specific legal

requirements, cultures and other institutional pressures. Here, my findings indicate that the paradox is

particularly salient for business partners, as they perform, as it were, in the eye of the storm where the

intricate interdependencies in HR work, in this case bridging efficiency and flexibility without quashing

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either, are materialized. This is in line with Smith and Lewis’ (2011) framework in which contextual factors,

i.e. plurality (divergent objectives), change and scarcity can render latent tensions salient. In this case, the

business partner at UtilityCo has multiple objectives that have to be balanced and lacks assistance in

operational execution (scarcity of resources), which has rendered the efficiency/flexibility paradox

particularly salient for UtilityCo respondents.

Finally, the findings at OilCo highlight several accounts of constructive coping with paradox over a

sustained period of time. The efficiency/flexibility paradox was clearly identifiable from the case

participants’ discourse but the underlying tension appeared to have become latent following constructive

responses of acceptance and resolution (synthesis). This is consistent with recent theorizing in paradox

literature, highlighting the cyclical nature of paradoxes (Smith & Lewis, 2011). However, the findings reveal

that another paradox, a power paradox, recently emerged from the continuous devolution of HRM

activities to the line. The evolution of the HRM configuration at OilCo, initially driven by efficiency motives,

has set in motion the devolution of additional HRM activities to the line. By doing so, the OilCo HR

department has set out to relinquish an important source of power, while still being responsible and

accountable for the development of employees, which is of strategic importance, especially where talented

employees are concerned. While the notion of HR struggling with power issues can be traced across

decades of HRM literature, we see in this case that HR’s power base is continuously shifting, and, in an

effort to increasingly serve strategic levels in the organization, the letting go process is a continuous

challenge. Whereas HR functions initially struggled for power to overcome its marginal influence in

strategic decision-making (Legge 1978, Caldwell, 2003), the findings from OilCo reveal that HR is now

confronted with a radically different set of issues that, nonetheless, still revolve around notions of

ambiguity and power. As, Guest and King (2004, p. 421) argue: “The problems facing HR managers today

are rather different from those facing personnel managers in the 1970s as presented by Legge. But

ambiguities and vicious circles continue to plague the [HR] role.” It is therefore interesting to note here that

the HR function and power issues seem persistent companions, and also that in such a developed and

advanced HR model as the one employed at OilCo, new paradoxes keep emerging. Therefore I would

argue that the HR function is inherently paradoxical and I would follow Legge’s contention (1978) that the

complexities and ambiguities surrounding the HR function cannot be solved by means of boundary setting.

Rather, a paradoxical approach is warranted.

6.4. Theoretical contribution First, although this study is based on the experience of limited number of case companies, the fact that all

three case companies employ a HR configuration based on the Ulrich-inspired three-legged design type,

adds empirical ground to the currently weakly supported claims in the literature that are made about the

pervasiveness of the Ulrich model in practice.

Second, the findings presented in this thesis are consistent with Guest and King’s (2004)

contention that despite major changes in employment relations in the last few decades, much of Legge’s

analysis (1978, 2005) retains its relevance: the HR function is plagued with role ambiguity and thorny

issues that cannot be resolved with strict strategy/operations boundaries. This is evident in my own finding

45

that even after many years of making continuous improvement efforts to HR’s most popular design model,

the HR department is still struggling with issues of control and power in its persistent quest to establish

strategic credibility. Furthermore, the findings highlight that issues of role ambiguity, especially surrounding

the business partner role, seem to drive both integration and differentiation agendas. However, as this

study makes clear, the solutions in terms of optimal HR structures are not obvious, and the question arises

as to whether it is realistic to assume there is an optimal configuration at all. Given these ambiguities, I

would argue that we need better language for describing organizations, and in particular HR

configurations, in terms of complexity and contradiction.

Third, the findings indicate that the HR function is inherently paradoxical and that the adoption of

paradox theory as a lens to study tensions and complexity within the HR function is potentially very

insightful. It can provide insights in how paradoxes and their corresponding responses account for and

explain the challenges and dilemmas encountered by HR managers and professionals. This is in line with

recent paradox literature that has emphasized the richness of adopting a paradox lens in studying

phenomena in various organizational fields, such as organizational innovation (Andriopoulos & Lewis,

2000), change management (Jay, 2013) and Sustainable HRM (Ehnert, 2014).

Finally and perhaps most importantly, the configuration of HR itself can be seen as a paradox.

This would implicate a theoretical shift in focus from how the HR function can be structured in the most

optimal way, to how HR practitioners can respond constructively to paradox to deal effectively with the

contradictory demands that keep daunting on the HR function.

6.5. Practical implications The findings highlight that each HR structure has its own intricacies and complexities. The paradoxical

nature of the challenges emerging indicates that specific challenges do not necessarily emerge from sub-

par implementation of the model. Rather, they are inherent to the complexity of the organization. HR

practitioners should therefore be cautious with adopting a three-legged-stool blindly, since Ulrich’s (1997)

vision of strategic integration based on unproblematic cooperation between HR professionals and line

managers in their fulfillment of multiple competing roles, may promise more than HR practitioners can ever

deliver. In fact, organizations implementing or further developing a three-legged model, or any other HR

model, should consider how to balance and align the HR structure with the needs of the business and

other organizational variables. In general, HR practitioners could benefit from a move beyond the

prescriptive vision of a fixed model that is offered in the literature and instead be supported by research

that explores the importance of a paradoxical mindset that deals with shifting boundaries and competing

pressures inherent in all organizations.

Furthermore, the paradoxes illustrated in this study highlight that the HR function and

organizations in general are characterized by ambiguity and complexity. HR managers and practitioners

should be aware that cognitive and emotional coping mechanisms are crucial in constructively dealing with

paradoxical situations. As the findings of this study highlight, focusing on one side of the paradox, can

inadvertently intensify pressures from the other side, resulting in potentially vicious cycles. However,

constructively managing paradox by strategies of acceptance and resolution, can help managers to cope

with complex situations and engage in creative problem solving, spurring virtuous cycles. Therefore, HR

46

practitioners could focus on developing a better conceptual and theoretical understanding of paradox. In

their action research, Lüscher and Lewis (2008) showed how paradoxical inquiry – the transition from

either/or thinking to more constructive both/and (paradoxical) thinking – helped managers at Lego to move

from a state of ‘paralysis by complexity’ to a newly expressed comfort in dealing with contradictory

demands. By highlighting the paradoxical nature of HRM configurations, the contribution of this study is to

elicit thinking and constructive dialogue amongst HR practitioners and HR managers about how to adopt a

more paradoxical mindset to deal with the complexity of current HRM configurations in a constructive way.

6.6. Limitations The study has several limitations that, given the exploratory nature of this research, can be considered an

agenda for future research. First, the small number of organizations in the sample restricts the

generalizability of the findings to other organizations. The limitations of this study are consistent with case

study research where the aim is generalization to theory rather than statistical generalization to a larger

population, as is common in quantitative survey research (Eisenhardt, 1989, Yin, 1994).

Second, the study of three cases within the same industry allows for some mitigation of external

contextual features as a source of variation. Although this allowed for a rich inter-case analysis without

having to account for differential industry-specific institutional pressures, future research should investigate

the interplay between institutional, cultural and geographical variables and the paradoxes observed within

HR configurations.

Third, the data on the introduction of the Ulrich-inspired HR model in the cases is retrospective.

Therefore, accounts of the reasons as to why the organization adopted a three-legged-model, might be

less accurate then if we would have interviewed senior executives who are currently actually making the

decision to introduce the model. However, the data does reflect the perceived reasons for adopting the

model by organizational members which we can assume, given that all data is triangulated by

observations of members of both HR and the line and management functions, provides insight as to

corporate priorities and communications as to HR’s priorities. Further research is desirable however to

confirm the generalized perceptions of why the model was introduced in a broader population, to see if

there are significant within and between group variations at the company level.

Lastly, I did not conduct any interviews with employees. The focus of this research was on the HR

configurations organizations adopt and the particular paradoxes encountered by actors working within

these configurations. While employees would have been able to provide insights on how the chosen

configurations impact on them, especially given the recent trend of continuous devolution of HRM activities

to the line (cf. Keegan, Huemann & Turtner, 2012), it was beyond the scope of this study to interview

employees to get a more complete picture of the perceived effectiveness of HR service delivery and of the

HR function. I would suggest that the employee perspective could be incorporated in future research.

47

7. Conclusion Given HR’s legacy of a bureaucratic and cost inefficient organization, HR academics and practitioners

have long been interested in HR service delivery models focused on delivering strategic value. By

introducing a three-legged design model for HR service delivery, Ulrich (1997) has set out a vision of

efficiency and strategic value and the model seems to have influenced the design choices of many HR

organizations across the world. However, very little is known about the actual HR configurations

organizations employ and the tensions and paradoxes encountered within these configurations. The

findings of this study highlight that the three-legged HR model is indeed alive and well within the case

organizations studied and further improvements to the model are driven by their on-going strategic

ambitions. However, HR academics and practitioners should be not be beholden to the past in assuming

that three legs will remain three legs forever. In fact, the intricate dynamic between HR professionals, HR

specialists, corporate HR, senior executives and line managers can make rigid boundary setting, as in

splitting HR activities up into SSCs, COEs and business partners, a cause of role ambiguity and

complexity. Furthermore, findings reveal that three paradoxes could be constructed from the case

respondents’ discourse: a global stakeholder paradox, an efficiency/flexibility paradox and a power

paradox. These paradoxes offer rich explanations for the challenges faced by HR practitioners working

with the three-legged-stool model. The most important contribution of this study, however, comes from the

insight that the HR function itself is inherently paradoxical. Focusing on one business objective is

potentially dangerous since it could be inextricably linked with other organizational goals that might be

neglected along the way, spurring negative vicious cycles. Rather, the adoption of both/and thinking and

other coping mechanisms is needed to understand the interrelatedness of – and often the contradictions in

– pursuing (different) business objectives related to optimal HR service delivery. Based on these results I

argue that HRM literature is in need of more empirical research that explores the importance of a

paradoxical mind-set that deals with shifting boundaries and competing pressures inherent in all

organizations. It is time to move beyond the vision of an unproblematic route to delivering strategic value,

and look at how HR function design can move forward, taking into account the interrelatedness and

contradictions of the matters encountered by HR practitioners in modern-day organizations.

48

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Appendix

Efficiency/Flexibility Paradox

Efficiency

“The culture in OilCo is always looking to continuous improvements and efficiencies” (Lead HR account manager, OilCo) “So the goal is to make sure that the organization around HR services is efficienct and effective” (Global HR manager, OilCo)

Flexibility

“I think the world’s just gonna get more dynamic. As HR fucntion we need to be able to flex with that … so we have to grow the HR function in a way that it can have that flexibility” (Regional manager shared services, OilCo) “My role has been changing, I can now spend more time in the business, to listen what’s going on and to see where we can be of assistance.” (Global HR advisor, OilCo)

Figure 3. Constructing an efficiency/flexibility Paradox at OilCo