By Dave Ulrich
1. HR Value Creation, Delivery, and Capture
HR value creation has evolved. HR people no longer merely try to “get to the table” but deliver value when there. HR delivers value through four waves that show a maturation of HR work (see figure 1). HR practices are no longer just about efficiency (wave 1); isolated functional excellence in areas such as staffing, training, reward, digital, analytics, and so forth (wave 2); or even integrated HR solutions to deliver business strategy (wave 3). In addition to these waves, HR is now about delivering value to customers, investors, and communities outside the organization (wave 4).
The outside-in wave moves from value creation to value delivery when HR “customers” are not just employees, leaders, or business strategies inside the organization but also stakeholders such as customers, investors (debt or equity), and communities outside the company. HR value delivery is captured when HR analytics are not about activities with scorecards, dashboards, and insights but about the impact of HR activities on key stakeholders (accomplished through an organization guidance system.
2. HR Unique Contributions to Business Success
HR professionals get invited to business dialogues because they understand value creation, delivery, and capture from the outside-in (wave 4). Once invited to business conversations, HR participates by offering unique contributions in the areas of talent, organization, and leadership. These three areas of contribution are not new, but they are even more critical in responding to current challenges and discovering future opportunities.
First, talent. Traditionally, HR offered unique insights around individual competence (called workforce, skills, talent, or people). HR’s legacy has been to fight the war for talent and focus on ensuring that employees have the competencies (right job, right place, right time), high commitment (employee value proposition), and contribution (a positive employee experience). Each of these talent-related efforts can evolve to be viewed outside-in to respond to changing times by ensuring that the right competencies are those that deliver customer and investor value, and by linking employee experience to customer experience. Many suggest that “people are our most important asset,” but today, that should be modified to “our people are our customers’ most important asset.” HR initiatives that foster the right talent for customers will have a much more lasting impact in a perilous world. As customers experience dramatic pandemic change; talent has to adapt as quickly (e.g., using digital information to access product and to manage people virtually). Building employee experience is not enough—HR must link employee experience to customer experience and investor confidence. Customers and investors can participate in talent-improvement initiatives to make sure that the talent adapts to customer requirements (e.g., invite customers or investors into hiring, training, compensation, and communication practices).
Second, organization. HR also offers unique insights about organization capabilities (called workplace, culture, or process). Wars are fought with people, but victory comes from how well the organization turns individual ingredients into organizational identities. Just like individual personalities (e.g., the big five) are more important predictors of personal well-being than traits (eye or hair color, height, weight), organization capabilities matter more than organizational demographics (number of levels, span of control). Our research (The RBL Group and the University of Michigan) found that the capabilities of an organization have four times the impact on business results than the competence of individuals. For example, teams with individuals who work well together as a team will outperform a team of individual all-stars that don’t work well together. HR professionals engage leadership teams in defining and embedding the right organization capabilities such as agility, external sensing, innovation, collaboration, or efficiency. These organization capabilities are “right” when they are chosen with an outside-in perspective that is dramatically changing in today’s world and capture value for customers, investors, and communities. For example, just describing a culture (values, behaviors, or roots of a tree) is no longer enough; identifying and ensuring the “right” culture (the fruits and leaves of the tree) that creates, delivers, and captures value for customers and investors is incumbent. The “right” culture can be defined as the identity of the firm in the mind of its best customers that then shapes employee behaviors and HR practices. In this volatile year, the right culture focuses on customer identity to help organizations stay connected to customer changes rather than being focused on internal values.
Third, leadership. Talent and organization are shaped and driven by leaders. Employees (individual competencies) often mimic what their leaders do, and organization capabilities often reflect leaders’ personalities. More importantly, leadership at all levels of the organization signals thoughts and actions that get attention. Again, defining effective leadership may be done with customers in mind (Leadership Brand work) and with investor impact (Leadership Capital Index work). In the current uncertain world, it is more important than ever to ensure that the right leadership exists to create value for customers and investors.
Conclusion: HR’s Ever-Evolving Contribution
HR professionals get invited to business discussions in today’s changing world because they add value not only inside but outside the organization (four waves). HR professionals more fully contribute to business impact because they create, deliver, and capture valuable insights on talent, organization, and leadership.
The year 2020 will likely be long remembered for the crises our world has faced. I hope that 2020 will also be remembered as a time when HR insights on talent, leadership, and organization enabled employees to find well-being, organizations to deliver digital and other strategies, customers to continue receiving products and services, investors to keep confidence, and communities to thrive through increased social citizenship despite all the crises. We hope those interested in this agenda will access the Organization Guidance System (OGS) at www.rbl.ai to perform a free assessment and receive a free report on how to make these contributions happen.
Dave Ulrich is the Rensis Likert Professor at the Ross School of Business, University of Michigan and a partner at The RBL Group, a consulting firm focused on helping organizations and leaders deliver value.
This article originally appeared at https://www.linkedin.com/pulse/hrs-ever-evolving-contribution-dave-ulrich/
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