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The way many human resources departments are structured and operate needs to change, says Josh Bersin, principal and founder of Bersin by Deloitte, Deloitte Consulting LLP a human resources research and advisory firm. As the need for talent grows, the traditional approach to “centers of expertise” with HR generalists has to change, argues Bersin, driving more embedded talent expertise within the business. Bersin suggests that companies have to redefine talent management from “integrated” to a configurable “talent system.”

Why are companies rethinking their approaches to talent management?

We are entering a crisis in retention and engagement. Coming out of the recession skills are in short supply and organizations need to reinvigorate the value proposition and work experience for their employees.  We like to call it “building passion in the workplace” – it goes far beyond the traditional definition of engagement. 

Over the last ten years companies have been focused on “integrated talent management” – bringing the various talent teams together to implement coaching, performance management, development planning and other practices. 

Now, in 2014, we need to take the next step, and build what we call the “corporate talent system” — not software. Rather than think about how to “tweak” or “change” the performance appraisal and compensation process to improve engagement or retention, for example, we now need to shift our thinking to all elements of talent management at the same time.  The whole talent “system” works together, so you really can’t change one process without looking at all the others.

Suppose you want to improve employee engagement and performance in a given business area. First, of course, you have to look at management skills and behaviors. But beyond this, the likely solution may involve a change in performance management, an increase in diversity and inclusion, changing the work environment and work rules, modifying compensation, tweaking the employee development environment, and just about everything else. Rather than look at one talent practice as a solution to a problem, now we need to look at the “system” as a whole.

This takes a consultative approach. In 2014 we have to design HR to think about these problems in a systemic way and then take a systemic approach to solutions. Companies are not only going to need integrated software, but they’re going to need to have teams that work on problems in a consultative way.

Describe a company that solved a problem by taking a jigsaw puzzle approach to HR?

A Midwest electric utilities company is having a hard time recruiting engineers to work in its two nuclear power plants. The head of the nuclear division told HR that he wanted to raise the compensation by 35 percent to attract engineers. 

The HR leader said “not so fast” and created a small consulting team of HR experts that’s basically a SWAT team. After several months of study, the team concluded, “Yes, we’re not getting enough candidates, despite there being people in the market for these jobs. The reason we’re not getting them has nothing to do with compensation — it’s our employment brand. We have no brand value proposition, we’re unknown, and no one thinks we’re a cool company. You can raise the comp all you want, but we’re still not going to get them.” They implemented these recommendations, and sure enough, within six to nine months they developed a strong pipeline of engineers. 

How can a company begin to change its approach to HR?

We have to redesign HR to think about the entire “talent system” as a whole — and put in place senior specialists in the field who can implement and tweak these processes as needed. 

Generally there are three things in the way of this. First, many people in HR lack domain expertise. In one of our most recent surveys, nearly 45 percent of respondents ranked “reskilling HR” as a top priority. Second, HR structure is designed well for integrated consulting. Companies have spent a long time setting up HR generalists that serve the needs of line managers — these people have to become embedded specialists, connected to the center of expertise. Third, we have defined the HR roles based on service delivery, and HR people get paid based on the “customer satisfaction” of their line managers. While this is a good thing, it draws them away from becoming consultants and encourages them to spend time on administration.  We need to shift HR teams into consulting roles and need to train managers how to implement HR practices through self-service wherever possible.

2014 will be a challenging year to hire and retain people. It’s time to rethink about HR and redesign our teams to build a highly engaging workplace, drive development and performance, and attract the most highly skilled candidates.