Home Leadership LEGO did it: Three innovative HR strategies that every company should consider

LEGO did it: Three innovative HR strategies that every company should consider

by forbes

The Danish company is redefining its approach to human relations with practices that prioritize agility, team integration, and continuous training by consolidating a management model that enhances its capacity for adaptation and growth.

Human relations (HR) is a fundamental pillar for any company. However, in many organizations, HR departments are trapped in a functional silo and fail to support business needs.

LEGO wanted to change this and set out to rebuild its HR function, integrating it closely with the company’s business functions. These efforts helped LEGO revitalize its talent acquisition strategy and respond more effectively to broader business challenges.

Here’s how the iconic toymaker reimagined its HR rollout, piece by piece.

Caught in a talent acquisition trap

Since its founding in 1932, LEGO has inspired generations of children with its iconic, colorful bricks. The company flirted with bankruptcy in 2003 but returned to profitability through a series of strategic investments in e-commerce and direct-to-consumer sales, which now account for nearly a third of its business.

However, LEGO ’s successful rebuild came with a drawback: functional silos, particularly in the HR department. I interviewed Loren I. Shuster about LEGO’s efforts to break out of this situation.

When Shuster took over as LEGO’s chief people officer (CPO) in 2017, he realized that the HR team was failing to support critical business initiatives. He recalls that, as he reviewed a list of upcoming strategic projects and initiatives where different parts of the company needed more support, he thought, “We were just running around asking ourselves, ‘How are we going to accomplish this? ’”

Shuster had transitioned into HR after serving as chief commercial officer (CCO) for two years. While not an HR expert, Loren was adept at identifying the need for greater strategic and cross-functional collaboration to deliver on business priorities.

«Since I took on this role, I have been constantly trying, together with my team, to find ways in which we could be more effective, more aligned, more integrated and closer to driving the core elements of our operating and business model,» he said in an interview in May 2024.

So Shuster began talking to HR experts, including Josh Bersin . The Josh Bersin Company , a recognized industry leader, represented a savvy resource for Shuster. The company’s report, «Talent Acquisition at a Crossroads,» concluded that talent acquisition leaders are «dealing with a notable lack of strategic support from HR and business leaders,» he added.

Only 32% of talent acquisition leaders feel they act as strategic partners within their organizations. In comparison, 46% feel like they are “running around” to keep up with ever-changing business priorities, the surveys revealed. Even more telling was the fact that 40% of respondents did not believe their company was ready to take a strategic approach to talent acquisition.

Shuster didn’t want HR efforts at LEGO to feel disconnected, so he worked with his team to prioritize the business problems the company sought to solve and consider the role of human relations in contributing to that solution. Through this effort, he challenged HR leaders to rebuild the HR function at LEGO, focusing on a few key building blocks.

Block 1: Redefining responsibilities

Under the previous HR structure at LEGO, senior leaders were overburdened with team management responsibilities. Moving senior HR leaders into a consulting role and freeing them up from administrative and staff duties allowed them to tackle larger issues alongside their peers in the business.

As McKinsey & Company noted in an April 2024 essay on talent systems, “The most effective HR organizations build agility into their operating models, typically with cross-functional resources flowing to the job,” it said. These changes helped LEGO maximize its return on talent and become what McKinsey called a “true talent steward,” it added.

However, these changes require a change in mentality.

«If you’re a senior HR partner and you’re used to having 30 people reporting to you, and all of a sudden, your CHRO says, ‘You know what? I’m going to create a team and you’re not going to have direct reports anymore,’ you start to face some conventional concerns about what it means to be a senior leader in an HR organization,» Shuster said.

Block 2: Breaking the silos

Prior to the restructuring of HR, LEGO HR experts were assigned to one of seven business areas, but this separation limited their involvement in the company’s most relevant strategic needs.

With the change, partners did not abandon their core focuses; instead, they dedicated up to 30% of their time to other business areas, fostering collaboration and allowing them to explore tasks according to their personal interests.

LEGO also focused on reducing silos by rethinking its HR-led “centers of expertise,” tasked with designing solutions for talent acquisition, compensation and learning. New “Communities of Excellence” bring together non-HR staff from across the company, which has increased collaboration and engagement and ensured that initiatives are solution-oriented and better aligned with departmental goals.

«If you allocate resources to specific functional areas, or in other companies, by division, there are different needs in different divisions or functional areas at different times,» Shuster said, alluding to the transformation in the company’s digital technology efforts.

«That was a nine-month process. We needed a lot of resources for that. But then, when it reached a stable state, we were able to allocate those resources to other initiatives,» he stressed.

I asked Josh Bersin for his take on what LEGO did: «The path that LEGO and Loren took is a brilliant example of what we call Systemic HR, where previously separate areas of HR work together, enabling HR to solve core business problems,» he said.

Block 3: Learning new skills

Continuous learning is critical for any business as it drives productivity, adds value, and bridges gaps in your workforce. This is especially important in areas such as talent acquisition, which has undergone a major transformation in recent years due to technological advancements, the growth of AI , and an expanding global talent market.

LEGO has made a strong commitment to developing the capabilities of its team members in key areas such as change management, ensuring that the team is more adaptable in the face of constant disruptions and opportunities.

New approaches require new skills, and the right HR efforts can help a company tap into and capitalize on the potential of its workforce. Bersin argues that “Every HR team, regardless of their current skill level, can follow LEGO’s example to evolve into a highly skilled, consultative, value-generating force that will help their company evolve, transform, and grow,” he said.

Conclusion

A siloed HR effort can undermine talent acquisition gains, while a collaborative effort can drive company-wide innovation. HR can be a dynamic process that strengthens a company’s cohesion and keeps its key players aligned. And as LEGO taught us from childhood, isn’t it more fun to build something special together?

Without a doubt.

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