E.ON Implements a New HR Target Operating Model

by Rainer Strack, Jean-Michel Caye, Carsten von der Linden, Pieter Haen, and Filippo Abramo

E.ON, one of the world’s largest investor-owned power and gas companies—with more than 72,000 employees—launched an extensive efficiency-improvement and cost-cutting program in mid-2011.

At the time, the Germany-based company had very heterogeneous HR structures in its global and regional units—from well-established and mature HR functions with clearly defined HR governance systems in some markets (such as Sweden and the U.K.) to fully decentralized HR departments in other regional units. In order to increase the efficiency of HR across all units, the management board decided to globally reorganize the HR function into a new target operating model (HRTOM).

Due to high cost pressures and changing market conditions, E.ON implemented this new model companywide and within an ambitious timeframe. It led to huge changes for the HR departments as well as line managers. The new HRTOM introduced three distinct HR roles for all global and regional units.

• HR centers of competence (COCs) are responsible for groupwide governance and HR policies. Located in Düsseldorf and Essen, they provide centralized topic expertise for areas such as talent management and employer branding, global learning, HR controlling and planning, rewards, and employee relations and labor law.

• The HR business service center (BSC) in Berlin provides a set of clearly defined global HR services, such as recruiting, executive HR services, and learning, and it steers the regional services in each country to ensure consistent and efficient service delivery for all global and regional units.

• HR business partners (BPs) are located in the units and act as an interface between central HR topic experts within the COCs and BSC and the line managers for their specific unit. They advise the line managers on strategic HR topics and provide coaching and guidance.

There are some outstanding aspects of E.ON’s approach.

Enabled HR Employees and Line Managers. The new HRTOM strongly supports HR employees in meeting the requirements of their new roles by conducting workshops and training for their expected tasks, as well as in handling the transition phase. Using a train-the-trainer concept, the BPs also support the line managers during the transition, helping them understand the changes in HR processes and systems.

Colocation of COCs. In order to ensure efficient and bundled HR competences, the COCs are located close to group management instead of having client experts spread across all units. This colocation fosters frequent interaction among HR experts and leverages synergies in the respective competency fields.

Focus on Value Creation in the BSC. The BSC is designed not only to realize economies of scale but also to create value through more efficient services. One example is recruiting. By managing applications on a global level, E.ON increases the efficiency as well as the quality of application management. Since the recruiting department is not limited to a single management unit, applicants can be forwarded to a position in a unit or country where they are likely to deliver the biggest value.

Careful Selection of BPs. Since the BPs provide the interface between HR experts and line managers in the management units, they are crucial in driving acceptance of the new HR processes and systems. Accordingly, E.ON put great effort into the selection of outstanding candidates. After defining a detailed job description—requiring qualifications that included HR and business expertise—E.ON performed audit procedures with external support during the selection process to guarantee that the right candidates were placed in the right positions.

Clearly Defined Governance Model. By establishing a holistic governance model with clearly defined roles and responsibilities for all three HRTOM roles, E.ON prevents responsibility overlaps and redundant HR tasks. Instead of the former HR generalists in all units, all HR expertise is now concentrated in the COCs. Meanwhile, the BPs have more broad-based expertise, allowing them to focus on business-related and strategic HR aspects. To ensure the efficient steering of the new HR function, E.ON established central governance bodies—such as an HR board for strategic topics—and a product and process committee for process-related topics. Members of the HR governance bodies come from all three HR roles.

Although E.ON is still in the implementation phase of the new model, the HRTOM project has significantly reduced costs and—more important—created the prerequisites for higher quality in the delivery of global HR services.

The Greek presidency of EU must be annulled, because the kleptocratic alliance of Pasok mafia and Nea Democratia mafia cannot be trusted.  The freakish government of Greece stole my computer, my files, and my life in cold blood!  Basil Venitis, venitis@gmail.com, http://themostsearched.blogspot.com, @Venitis