The HR Canvas: A Strategic Human Resources Management Tool
HR is at the center of attention in most of today’s business problems. Whether it is talent shortages, ensuring worker productivity, or enabling digital transformation, HR is actively involved. These urgent and ever-changing challenges require the HR function to evolve. Specifically, HR has to continuously adapt its service delivery model to reflect evolving business models, organizational demands, and employee needs in an agile way.
To help HR practitioners succeed in this effort, this article presents a new strategic management tool called the HR canvas as well as a downloadable HR canvas template.
HR’s (lack of) strategic contribution
One of HR’s biggest challenges today is its lack of strategic impact. Often referred to as not having a ‘seat at the table’, HR struggles to be in the lead of strategic people conversations and show its added value to the business.
The problem here is not that the business doesn’t want HR to be a strategic player. Rather, the business is not seeing the alignment of HR solutions to the key challenges it faces.
To help solve this problem, we have taken a common business tool and transformed it into a strategic HR management tool. This tool will help HR align with the business through a common language. The tool can also be used to help drive internal HR alignment and focus, helping HR articulate its value and contribution to business success.
The HR Canvas
More specifically, the HR canvas helps provide a clear strategic overview of the HR organization, its customers, value proposition, activities, strategic differentiators, and cost drivers. Taking the time and effort to clarify all of these elements will help HR professionals define their service delivery while articulating HR’s strategic impact and value.
This HR canvas (or, in full, HR Service Delivery Model Canvas) is inspired by the Business Model Canvas. The Business Model Canvas is a management tool widely used by startup founders and executive boards alike. It helps summarize all critical areas of business in a comprehensive yet clear one-pager. Similarly, both HR and business leaders can use the HR canvas in small organizations as well as enterprises.
The framework guides HR professionals to use a shared language understood by the rest of the organization. Doing so helps leaders articulate HR’s value and contribution to the business while also allowing them to easily design and redesign an HR service delivery model that maximizes value creation. Without such a shared language, it will be harder to iterate, improve, and innovate how HR contributes to the business.
This canvas helps answer questions such as ‘How should we organize ourselves?’, ‘What (business) problems are we trying to solve?’, and ‘What value are we delivering?’ Discussing these questions using a structured framework helps create the internal alignment required for successful service delivery.
The HR canvas has nine distinct fields. There is a sequential order in which the fields should be filled in.
For each component, you can ask yourself a couple of questions that will help you fill in the field. Let’s go over all nine fields in order of completion.
1. Core customer segments
Who are your core customer groups?
This includes all relevant stakeholder groups in and outside of the organization for which HR is (or rather, should be) creating value. This includes employees, managers, customers, shareholders, employee representation groups, and so on. The aim here is to create value for external stakeholders (i.e., customers and shareholders) through value creation for internal stakeholders (i.e., employees, line managers, and so on). Questions to answer here are:
- Who are we creating value for?
- Who are our most important external customers?
- Who are our most important internal customers?
2. HR value proposition
What value do you provide for your customers?
For each customer segment, you have a specific value proposition. These are the bundles of HR practices that create value for these customers.
- What do our Customer Segments expect from us as a function?
- What is HR’s key contribution to each Customer Segment?
- What customer problems are we helping to solve?
- What needs of our customers are we meeting?
- What sets of products and services are we offering for each Customer Segment?
3. HR Operating Model
How are your services delivered to your customer segments?
This is the way you create value and deliver the value proposition to your customers.
- How do we shape the HR operating model?
- How are we reaching & servicing our customer segments?
- How do we collaborate?
- How do we ensure both operational excellence and strategic added value?
- Do we have HR service evaluation processes in place?
4. Customer relationships
How do you manage your customers and continuously add value?
This focuses on the management of customer relationships and helps to inquire if the HR department is investing in the right relationships and managing them adequately.
- What type of relationship does each of our Customer Segments expect us to establish and maintain with them?
- Are we maintaining the right relationships?
- Are we continuously providing additional value?
5. HR Value Drivers
What strategic value does HR drive for the business?
This is arguably the most challenging part of the HR canvas to complete as it is one of HR’s weak spots. Don’t just list your HR activities; ask line managers and senior executives how HR contributes to the organization’s competitive advantage.
- What are HR activities the business would pay a premium for?
- How does HR drive value for the business?
- How do we build unique capabilities and contribute to strategic advantage?
- What value does the business most appreciate?
- Which strategic capabilities we’re delivering on help the business win in the marketplace?
6. Key Activities
What activities do we need to execute to deliver on our value proposition?
This list focuses on the core activities of HR required to realize the value proposition and value drivers.
- What activities does our value proposition require?
- How do we strategically differentiate from the competition?
- Which strategic capabilities help us deliver on our value proposition?
7. Key Resources
Which resources does our value proposition require?
The execution of the HR Service Delivery Model requires certain physical, human, and financial resources. A match between the resources available and the Value Proposition is a key factor for successful HR service delivery.
- Which physical, human, and financial resources does our value proposition require?
- Which competencies enable us to deliver our value proposition and HR activities?
- Which competencies would enable us to drive more value?
- Which competencies do line managers need to deliver on HR’s value proposition?
8. Key Partners
Which partners are required to deliver on the value proposition?
These partners include vendors, consultancies, and upskilling partners that are regularly used to optimize HR service delivery.
- Who are your key partners and suppliers?
- What services and resources are we acquiring from partners?
9. Cost Drivers
Which activities are the most expensive?
Cost drivers form the final box, which helps balance the activities required to fulfill the value proposition with the available resources.
- Which key activities are most expensive?
- What are the most significant costs inherent to our HR value proposition?
- Which partners are the most expensive?
- Where are the greatest opportunities for digitization and automation?
- Is HR seen as a cost driver (focus on cost efficiency) or a value driver (focus on value creation)?
The HR canvas isn’t something that stands in isolation. This has two consequences that are good to consider before filling in this document. Firstly, the organizational strategy and key business priorities are the starting point, or input, for the HR canvas. Based on these priorities, your Customer Segments will shift as well as the value you produce for them.
Secondly, once the nine HR canvas dimensions are filled in, the HR department can use them to define their key performance indicators. This enables you to measure and assess:
- how well the HR organization is doing,
- if it is delivering on its priorities,
- and, as a result, if it is contributing to the business strategy.
Filling in the HR canvas: An example
Let’s illustrate how the HR canvas works using an example. In this case, we describe EdgeDotGrow, a founder-led, Software as a Service company with 50 full-time employees, a recruiter, and a newly appointed HR manager.
The strategic priorities of the company are:
- Retention of existing clients
- Scaling the organization
- Building the next version of the software product
- Establishing foundation governance and business processes required to sustain its fast growth
During their onboarding, the HR manager spoke with the relevant stakeholders and filled in the HR canvas. Core customer segments include the investors, founders, management team, employees, as well as critical third-party vendors.
After interviews with the different HR customer segments, the HR value proposition was defined, and the operating model was specified. The HR manager aimed to move towards an increasing degree of self-service for employees. Key activities included attraction and employer branding and establishing standard policies and processes. The most significant value drivers are in having talent ready whenever the organization needs to expand. This will be done through building a strong employer brand, optimizing the recruitment cycle while being compliant with basic norms, and ensuring the workforce stays motivated by providing a great employee experience.
The HR manager completed the canvas based on this information, identifying HR’s core customers, the value proposition, operating model, value drivers, activities, partners, and resources. The process resulted in the following overview.
This example shows how the HR canvas can provide a clear direction for the HR manager and their team, the actions they need to take to reach their goal, and the partners and resources they need to be successful.
A final word
The HR canvas is a management tool that helps strategically map and define HR’s contribution to the various business stakeholders. Filling in the tool can take anywhere between 30 minutes to multiple days, depending on the number of people involved, but it will pay off almost instantly. That’s because nothing can be more detrimental to a company’s future than the department in charge of people policies being out of sync with the company’s vision, goals, and mission.
There are several final considerations that we haven’t mentioned yet. First, align with your stakeholders (Customer Segments) when filling in the canvas. They know their own needs best.
Second, filling in the tool may require you to collect additional data on things like the business strategy, value drivers, the way relations should be managed, and so on. Collecting this data will help to create a better-aligned HR organization.
Third, when you complete the canvas, check back with your key stakeholders. Use this moment as the litmus test to ensure that HR will contribute significantly to its stakeholders while ensuring that scope creep does not occur.
Fourth, the tool can easily be used as input for other business processes, such as budgeting (using the Cost Driver category), strategy reviews, and HR performance measures.
With this in mind, the tool is suitable for enterprise-size teams where it helps the senior leadership team align on the HR value proposition, priorities, and strategic contributions. With the help of the HR canvas, they will be able to define and test their HR operating model to see if it is suitable for today’s business reality (and their own business’ needs).
For small HR teams, it helps to align the HR leader with business leaders. The canvas helps clearly specify the intended added value of HR, how HR services are delivered, how HR drives business value, and the major cost drivers of the HR organization.
HR’s contribution to business value is being more and more recognized across the board. For businesses to thrive in the current volatile and unpredictable economy, they need to embrace the power of HR and, through it, the power of their employees. But this move will have no real positive impact unless HR itself is ready and willing to align with the ever-changing business it serves.