The best is yet ahead

10 Provocative Evolutions in Human Capability

Dave Ulrich

Many thoughtful colleagues continue to evolve HR by building on the past to create a better future. Much of this evolution comes from responding to the changing context of business (Covid-19 pandemic, political toxicity, technology, ESQ, social patterns) and is captured with emerging insights based on innovative theory, research, and practice.

HR has historically focused on talent (or human capital) as the HR agenda. Our (and others) work shows that organization has far more impact on results than talent and that HR can be the architect of creating organization capabilities. Thus, in order for HR to continue successfully serving its key stakeholders, it needs to evolve from working on human capital to human capability (see figure 1). This figure shows that human capability expands human capital in two ways: [1] by studying talent (human capital) + organization + leadership and [2] by creating value for internal stakeholders (employees and strategies) + external stakeholders (customers, investors, and communities).

To better capture the emerging human capability agenda, we have engaged in three recent significant research projects: HR Competence and Capability Study (HRC2S) with 28,000 respondents, Organization Guidance System (OGS) with a thousand organizations, and Governance and Governance for Growth (G3) with 5,700 organizations). These studies show that the vast array of “HR” related initiatives can be clustered into a “human capability” framework with four pathways.

Talent (often called “human capital”) deals with individual competence, people, workforce, and employees.

Leadership focuses on individual leaders at all levels as well as leadership capability throughout an organization.

Organization refers to organization capability, culture, workplace, teams, and systems.

Human resources (HR) defines the characteristics of the HR department, practice, and people.

This framework itself is an evolution of “HR” thinking, which has historically focused on talent (or human capital) as the HR agenda. Our (and others) work shows that organization has far more impact on results than talent and that HR can be the architect of creating organization capabilities.

Exciting and emerging ideas are occurring in each pathway. Let me offer an overview of some of the evolving ideas in each pathway, building on the superb work done by so many.

Talent Evolutions 
Talent refers to the people (individuals, employees, workforce) in an organization and how they are continually acquiring competence (knowledge, skills, ability) and developing sentiment (commitment, engagement, experience) to do their work.

1. Accessing Competence to Accomplish Work
Putting the right person in the right job at the right time with the right skills is the legacy of talent management. This delicate matching effort created workforce planning where full-time employees are matched to job assignments. Talent, or the resource to get work done, has since evolved to include contingent employees in a workforce ecosystem and a focus on work skills more than jobs. More recently, worktask planning has emerged, which includes getting work done without formal jobs but by delivering on tasks either with people or technology.

2. Improving Employee Sentiment
Employee sentiment (attitude, perception, response to, and so forth) about work continues to evolve, with emerging thinking about the employee experience that deals with emotional well-being and mental health tied to being safe, believing, becoming, and belonging. Additionally, organizations around the world are increasingly framing their mission and their work in ways that makes it easier for employees to be safe, believe, become, and belong amidst global upheaval and challenges.

3. Sustaining Diversity Equity and Inclusion (DEI) 
Both in practice and our research, DEI has become a major agenda for business and HR. We found that HR professionals who championed DEI were able to have a higher business impact. We posit four phases of DEI work that have moved from tracking affirmative action numbers to action, to strategy, to implementing two sustainable DEI beliefs and actions: everyone has something to offer and leaders use their power to empower others. Implementing these beliefs moves DEI from an aspiration to a commitment.

Organization Evolutions 
Organizations shape how people (employees, customers, suppliers, investors) think, act, and feel. The study of how organizations operate has evolved both in defining the organization form and in creating an organizational culture.

4. Reinventing Organization Form
The logic and design of organizations have evolved. Organizations were originally conceived as bureaucracies, with hierarchy being the dominant logic. They have evolved to where the organization is not the structure of a firm but the capabilities, which are focused on building market value.

5. Reimagining Organization Culture
Culture is not a new concept; its beginnings are focused on anthropology and sociology. And in the organizational setting, culture is accepted as a critical factor for long-term success. The evolution of culture goes from a focus on internal values and behaviors to an external identity in the marketplace made real to everyone in the workplace.

Leadership Evolutions 
Leadership is one of the most studied topics in the human capability field (google leader and you will get six billion results; five billion for leadership). Individual leaders engage talent (people and workforce) and create organizations (culture and capabilities) through the competencies they possess. Collective leadership is when a leadership brand exists at all levels of the organization and the actions of all leaders throughout the organization are consistent. In our review of leadership, we identified five general leadership competence domains that characterize what we call the Leadership Code. This code has evolved with new leadership competencies required for changing business conditions.

6. Defining Skills of Effective Leaders
The five code domains are relatively constant over time and place, but the specific skills have evolved depending on the changing external context. Figure 8 lays out in some detail the emerging skills given the recent business context.

In the human capability logic, for talent, leadership, and organization to occur, HR work (the function of HR and the people of HR) needs to be continually upgraded. Let me highlight some of the evolutionary ideas that indicate HR’s progress.

7. Redefining HR’s Agenda and Purpose 
Why does HR exist in a company? What value does HR create and contribute to business success? The mindset and assumptions of HR’s agenda and purpose have evolved from the “administrative experts” to true “business partners” who deliver value through four waves of activity: administrative, function, strategy, and outside-in value.

8. Improving HR Information/Analytics
When human capability issues are discussed with the management team, what information does the HR profession contribute as a member of the management team? Most HR professionals are aware of the need for analytics and evidence-based decisions, but the focus of the information that underlies analytics has evolved. HR often brings benchmarking (how do we compare) or best practice (who is good that we can learn from) information to business discussions. In our work, we have built on these legacies to offer guidance, which prioritizes and informs which HR initiatives will help each specific organization deliver the results they care about.

9. Leveraging Technology for Digital HR
In every list of future trends for business in general and HR in particular, technology is a (the) dominant agenda. At its simplest level, technology innovations (e.g., internet of things, machine learning, artificial intelligence, meta verse, robotics, and so forth) provide digital information to make better decisions. HR clearly contributes to a strategic digital agenda for their organization, but HR should also deploy technology for better digital information and practice in human capability. In the four-phase model in figure 11, most of the HR digital innovations remain in wave 2 with thousands of new HR apps being released every year. Using technology to access information and shape the employee experience are likely emerging steps in the technology and digital HR space.

10. Defining HR Competencies
Ultimately, HR services are provided (or at least designed and facilitated) by HR professionals. The skills and quality of HR professionals have evolved dramatically over the last 35 years, as has the profile of an effective HR professional including the CHRO, generalists, and specialists. We have been directly involved in eight rounds of research over 35 years to evaluate not only the competencies of HR professionals, but which competencies deliver personal effectiveness, business results, and stakeholder value.

In the eighth round of data from over 28,000 respondents and in partnership with 19 HR associations, we saw a conceptual shift in defining the competencies of HR professionals. Legacy HR competencies were about a role described with an adjective and noun (trusted advisor, credible activist, change agent, strategy ally). In our latest research, we used verbs instead of nouns. Verbs denote action and what HR does to be effective more rather than what or where they play a role.

11. Additional Areas
I have also seen additional exciting evolutions in learning, career management, communication, performance management, total rewards, change/agility, HR structure, and so forth. Add areas of evolution that you have seen in the comments.

In our work at RBL, we are committed to building on the past to create a better future. We know that other areas are evolving in the human capability field. These 10 evolutions are based on insights (theory, research, and practice) and they are the foundation for HR’s continued value creation. By building on the past, HR will create a better future, and the best is yet to come.

Ulrich is Rensis Likert Professor, Ross School of Business, University of Michigan. He is also Partner at The RBL Group.

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