Modern HR must take on many roles to demonstrate competence and effectiveness, say DAVE ULRICH, JON YOUNGER, WAYNE BROCKBANK and MIKE ULRICH, who celebrate 25 years of research. Can HR turn base metal into gold? A first cut of the results... Additional interviews by DAVID WOODS
Any good HR professional wants to be better. This begins with a desire to improve, followed by a clear understanding of what it requires to improve.
As the number of global HR professionals climbs close to one million, so it becomes important for this relatively new profession to define what it means to be effective. HR effectiveness matters more than ever, because leaders of businesses and not-for-profit organisations increasingly recognise the importance of individual abilities (talent), organisation capabilities (culture) and leadership as key to their success. HR professionals should become insightful advisers and architects on these matters. In a constantly changing world, there has never been a greater need to identify what HR professionals must be, know, do and deliver to contribute more fully to their organisations.
Since 1987 - 25 years and still counting - we've chronicled what it means to be an effective HR professional. Our 2012 data set marks six waves of data collection that trace the evolution of the HR profession(see methodology).
This research is important because it defines what it means to be an effective HR professional: not just knowing the body of knowledge that defines the profession, but being able to apply that knowledge to business challenges.
In this round of research, we have identified six domains of competencies HR professionals must demonstrate to be personally effective and to have an impact on business performance. These competencies respond to a number of themes facing global business today:
- outside/in: HR must turn outside business trends and stakeholder expectations into internal actions
- business/people: HR should focus on both business results and human capital improvement
- individual/organisational: HR should target both individual ability and organisation capabilities
- event/sustainability: HR is not about an isolated activity (a training, communication, staffing, or compensation programme) but sustainable and integrated solutions
- past/future: respect HR's heritage, but shape a future
- administrative/strategic: HR must attend to both day-to-day administrative processes and long-term strategic practices.
Our research found that by upgrading their competencies in six domains, HR professionals can respond to these business themes and create sustainable value. These six HR competence domains come from assessment by HR professionals and line associates (more than 20,000 global respondents) of 139 specific competency-stated survey items.
Strategic positioner. High-performing HR professionals think and act from the outside/in. They are deeply knowledgeable about external business trends and able to translate them into internal decisions and actions. They understand the general business conditions (eg social, technological, economic, political, environmental and demographic trends) that affect their industry and geography. They target and serve key customers of their organisation by identifying customer segments, knowing customer expectations and aligning organisation actions to meet customer needs. They also co-create their organisations' strategic responses to business conditions and customer expectations by helping frame and make strategic and organisation choices.
Credible activist. Effective HR professionals are 'credible activists' because they build their personal trust through business acumen. Credibility comes when HR professionals do what they promise, build personal relationships of trust and can be relied on. It helps HR professionals have positive personal relationships. It means to communicate clear and consistent messages with integrity.
As an activist, HR professionals have a point of view, not only about HR activities, but about business demands. As activists, HR professionals learn how to influence others in a positive way through clear, consistent and high-impact communications. Some have called this 'HR with an attitude'. HR professionals who are credible but not activists are admired, but do not have much impact. Those who are activists but not credible may have good ideas, but not much attention will be given to them. To be credible activists, HR professionals need to be self-aware and committed to building their profession.
Capability builder. An effective HR professional melds individual abilities into an effective and strong organisation by helping to define and build its organisation capabilities. Organisation is not structure or process: it is a distinct set of capabilities. Capability represents what the organisation is good at and known for. HR professionals should be able to audit and invest in the creation of organisational capabilities. These capabilities outlast the behaviour or performance of any individual manager or system. Capabilities have been referred to as a company's culture, process, or identity.
HR professionals should facilitate capability audits to determine the identity of their organisations. Capabilities include: customer service, speed, quality, efficiency, innovation and collaboration. One such capability is to create an organisation where employees find meaning and purpose at work. HR professionals can help line managers create meaning, so that the capability of the organisation reflects the deeper values of the employees.
Change champion. As change champions, HR professionals make sure that isolated and independent organisational actions are integrated and sustained through disciplined change processes. HR professionals make an organisation's internal capacity for change match or lead the external pace of change. As change champions, HR professionals help change happen at institutional (changing patterns), initiative (making things happen) and individual (enabling personal change) levels. To make change happen at these three levels, HR professionals play two critical roles in the change process. First, they initiate change, which means they build a case for why change matters, overcome resistance to change, engage key stakeholders in the process of change and articulate the decisions to start change.
Second, they sustain change by institutionalising change through organisational resources, organisation structure, communication and continual learning. As change champions, HR professionals partner to create organisations that are agile, flexible, responsive and able to make transformation happen in ways that create sustainable value.
Human resource innovator and integrator. Effective HR professionals know the historical research on HR, so they can innovative and integrate HR practices into unified solutions to solve future business problems. They must know the latest insights on key HR practice areas related to human capital (talent sourcing, talent development), to performance accountability (appraisal, rewards), organisation design (teamwork, organisation development) and communication. They must also be able to turn these unique HR practice areas into integrated solutions, generally around an organisation's leadership brand. These innovative and integrated HR practices then result in a high impact on business results by ensuring that HR practices maintain their focus over the long run and do not become seduced by HR 'flavour of the month' or by another firm's 'best practices'.
Technology proponent. In recent years, technology has changed the ways in which HR people think and do their administrative and strategic work. At a basic level, HR professionals need to use technology more efficiently to deliver HR administrative systems such as benefits, payroll processing, healthcare costs and other administrative services. HR professionals also need to use technology to help people stay connected with each other. Technology plays an increasingly important role in improving communications, organising administrative work more efficiently and connecting inside employees to outside customers. An emerging technology trend is using technology as a relationship-building tool through social media. Leveraging social media enables the business to position itself for future growth. Those who understand technology will create improved organisational identity outside the company and improve social relationships inside the company. As technology exponents, HR professionals have to access, advocate, analyse and align technology for information, efficiency and relationships.
Because these six domains of HR competence respond to the external trends we identified, they have an impact on both the perception of the effectiveness of the HR professional and on business performance where the HR professional works (see Table 1 on p23).
This data shows that to be seen as personally effective, HR professionals need to be credible activists who build relationships of trust and have a strong business and HR point of view. They also have to have a mix of competencies in positioning the firm to its external environment (strategic positioner), doing organisation capability and culture audits (capability builder), making change happen (change champion), aligning and innovating HR practices (HR integrator) and understanding and using technology (technology proponent). These competencies explain 42.5% of the effectiveness of an HR professional.
We found that this same pattern of HR competencies holds true across regions of the world, across levels of HR careers, in different HR roles and in organisations of all sizes.
HR competencies also explain 8.4% of an organisation's success. But it is interesting that the competencies that predict personal effectiveness are slightly different to those that predict business success, with insights on technology, HR integration and capability building having more impact on business results. The key issue is for HR professionals and departments to work together and to mutually reinforce their efforts so they collectively achieve high performance.
These findings begin to capture what HR professionals need to know and do to be effective. Some implications of the data for HR professionals include:
- Learn to do HR from the outside/in, understand social, technological, economic, political, environmental and demographic trends facing your industry and knowing specific expectations of customers, investors, regulators and communities - then building internal HR responses that align with these external requirements
- Build a relationship of trust with your business leaders by knowing enough about business contexts and key stakeholders to fully engage in business discussions, by offering innovative, integrated HR solutions to business problems and by being able to audit and improve talent, culture and leadership. Earn trust by delivering what you promise
- Understand the key organisational capabilities required for your organisation to achieve its strategic goals and meet the expectations of customers, investors and communities. Do an organisation audit that focuses on assessing key capabilities your company requires for success and their implications for staffing, training, compensation, communication and other HR practices
- Make change happen at individual, initiative and institutional level. Help individuals learn and sustain new behaviours. Enable organisation change by applying a disciplined change process to each organisational initiative. Encourage institutional change by monitoring and adapting the culture to fit external conditions. Be able to turn isolated events into integrated and sustainable solutions.
- Innovate and integrate your HR practices. Innovation means looking forward with fresh and creative ways to design and deliver HR practices. Integrate these practices around talent, leadership and culture within your organisation, so HR offers sustainable solutions to business problems. Evolve your organisation's HR investments to solve future problems.
- Master technology, both to deliver the administrative work of HR and to connect people inside and outside to each other. Make social media a reality by using technology to share information and connect people both inside and outside your organisation.
We also found that an effective HR department has more impact on a business's performance (31%) than the skills of individual HR professionals (8%). HR professionals need to work together as a unified team to fully create business value..
We are optimistic about the present and future of the HR profession and we have empirical reasons for our optimism. We now have specific insights on what HR professionals need to know and do to become better and more effective at delivering value to employees, organisations, customers, investors and communities. We know the HR department should excel at helping businesses be successful.