For the past 10+ years, various publications and prominent management gurus have circled like vultures over HR. They testify of HR’s increasing lack of relevance with titles such as “Why We Hate HR” and “It’s Time to Blow Up HR.” These articles, among many others, highlight the lack of progress from HR in connecting explicitly to market or business strategy, and therefore delivering tangible impact to the organization. When “real work” on strategic planning, organizational design, leadership development, culture or change is required the phone rings (in some companies) to an external consulting firm and not to HR.
To be fair, HR departments still operating as a “pair of hands” function (more concerned with delivering outputs than outcomes) deserve the criticism and are likely already on life support. These anchors to progress are dragging the rest of the profession down, and open us all to the criticism generated from the provocative headlines.
But to paraphrase Mark Twain, reports of HR’s demise have been greatly exaggerated.
At The RBL Group, my colleagues and I have the privilege of working with thousands of leaders and HR professionals who not only reject the headlines, but are proving that HR’s role in business success has never been more important. While none would admit they have everything fully figured out in a VUCA+ (or DRET) world, here are five necessary keys to deliver strategic value (outcomes) in organizations.
1. It’s not about HR. The first line of the recently published book Victory Through Organization (D. Ulrich, D. Kryscynski, M. Ulrich, W. Brockbank) offers a blunt reminder to the HR profession: “HR is not about HR.” If HR were about HR, we would be able to declare victory! We wanted a seat at the table. Got it. We wanted professional membership organizations, certifications and world-class conferences with legendary speakers and programs. Got those. We wanted robust systems for sourcing and assessing talent, managing learning and development, succession planning, connecting compensation to financial systems, etc. Have a bunch of those (although they don’t all talk to each other as they should). We wanted respect, and called ourselves “business partners” to accelerate that aspiration. Check. Somewhere along the way we got so good at administering HR, that we became a bit cloudy on HR’s true purpose - delivering value as defined by our stakeholders. HR is in place to deliver the capabilities that enable businesses to respond to external conditions. In other words, from the table below, HR needs to focus more on delivering the columns vs optimizing the rows.
What does that look like in more practical terms? Take a company like Amazon, for example. Amazon is winning today through the power of their distribution network. They continue to innovate in pursuit of building efficiency in their network, to get product to their customer as quickly as possible. They radically shifted the mentality of what consumers consider fast. There was a time not too long ago where critics said purchases via the internet would be limited to niche products because consumers wanted to pay and carry out their purchase now. Yet, today CEO Jeff Bezos, and team, convinced us that 2 days to our doorstep (or less in some markets) is amazing! To achieve this level of success, Amazon has a clear set of differentiating capabilities (Speed/Efficiency). HR can rally around that clarity to ensure the way they source, select, develop, onboard, develop, reward and move talent that is focused on Efficiency or Speed as a capability.
2. Business Acumen is not “nice to have,” it is a must have. While HR professionals are not expected to develop CFO level financial fluency, many are long overdue on building an adequate baseline. Long-time RBL Group, and University of Michigan collaborators and HR competency pioneers, Dave Ulrich and Wayne Brockbank stated back in 1987 that business knowledge was one of three critical HR competency domains, along with HR delivery and change (left side of image below). That expectation has only grown today to not only have business knowledge, but to be able to position that knowledge into the strategic context and actions of the organization (Strategic Positioner from our latest HR Competency model).
One of my mentors, retired RBL Partner Jon Younger, used to challenge HR audiences to be a “business person first, who has a major in HR.” In other words, he encouraged HR professionals to not sit back and just wait to give the “people update” in a meeting. Engage in the broader dialogue and ask questions. You work in the same company as the rest of the room, what do you think will grow the business? *For a quick business acumen quiz, scroll to the bottom of this posting. If you can answer these easily for your company, you are on a path to being business acumen conversant. If not, find the answers soon. And ask yourself, if I am not clear on these business fundamentals, are my HR deliverables connected to the right drivers of business?
3. Business Partnering is a mindset, not a role. Countless organizations have transformed their HR function to align with the “Ulrich Model”: Embedded Business Partners, COE’s, Shared Services, etc. Some have contacted us at The RBL Group to inquire either about “what’s next for HR and HR design” or to share that they have “transformed HR, but are still struggling to get strategic traction”. A challenge for those seeking to increase impact is not one of structure, but of mindset. The whole of HR has to have a business partner mindset, not just those in roles with “business partner” in the title.
We were hired by a CEO to do some HR Transformation work with a leading, global retailer based in North America. His opening comment to me was that he believed “HR’s goal is to be the roadblock to success in our organization.” Ouch! Upon further explanation he shared that his business generates nearly 60% of their annual revenue in the last quarter of the year, essentially October through December. However, year after year HR attempts to bring his organization to a screeching halt in that time period by launching annual performance reviews (Talent Management); coaching programs for managers to deliver the performance feedback (L&D); benefits open enrollment (Benefits); staffing and planning projections for the upcoming calendar year (Talent Acquisition), etc. He was on a roll! His fair question was, “Do they know how/when we make money? Don’t they ever talk to each other?”
As the findings shared in Chapter 2 of Victory Through Organization confirm, an integrated HR department of high quality has 4x more impact on business performance than the competencies of individual HR professionals.
4. Expand your stakeholder circle. The concept of “Outside-In HR” has really taken hold with our clients as a way to think differently about delivering competitive value. Many HR professionals when asked who their customers are generally list off a series of internal customers (employees, managers, etc.). HR’s stakeholders (intentionally more broad than customers) need to be the same as the stakeholders of the business. The stakeholder circle (which varies slightly by business type) needs to include customers, investors, regulators, community, etc. An Outside-In/stakeholder mindset would have HR professionals get really clear about the drivers of customer choice, investor and regulator ratings, community confidence, etc. and then prioritize/develop the specific programs, services and policies that enable internal actions of managers and employees to deliver those drivers of expectation. This isn’t HR “by best practice”, but HR by aligned stakeholder outcomes.
5. Navigate paradox with confidence. HR professionals are hard-working and resilient. They are often the cultural conscience of an organization. Yet, they are also hard on themselves. The latest round of the HR Competency Study (HRCS), co-sponsored by RBL and the University of Michigan’s Ross School of Business, highlighted lowest reported scores across the 9 competency domains for success coming from self and HR management.
We feel this lowered self-confidence is a barrier to increased effectiveness.
To tackle the confidence issue, in addition to focusing on the four items above, HR professionals need to become effective Paradox Navigators.
Paradox Navigator sits at the very center of the latest HR Competency Model and is my personal favorite, as I feel it best articulates the Hell that is an HR professional’s life (at times) – Strategic vs Foundational, Business vs People, Corporate vs Field HR, Outside vs Inside, Customized vs Standardized, etc. Paradox Navigator, while being the fifth (of 9) most important competency for individual effectiveness, is the #1 most important competency in explaining business performance. We must be confident in meeting these paradoxes head-on, helping our organizations to move forward and deliver results.
While some are ready to throw dirt on the HR function, I have never been more confident and inspired by the success stories of HR departments and professionals around the globe who are delivering tangible impact to the bottom-lines of their organizations. Focusing on the five items above can certainly accelerate your HR transformation, further positioning HR as a valued strategic partner by stakeholders inside and outside the organization.
Quick Quiz: How well do you know your business?
- Is company revenue and profit up or down versus last year?
- By what percentage? Why?
- Why do customers buy from us?
- Who is our largest competitor? Why do people buy from them?
- What is our market share within our industry? Is it growing or shrinking?
- Is our industry growing or shrinking?
- What are the top two or three strategic priorities for our business leaders?
- How do key stakeholders measure success—what metrics are important to them?
- What social and political trends are likely to disrupt our industry? How? Why?
- For publicly traded companies: Is our stock price growing or declining?
*Quiz from Chapter 8 in Victory Through Organization