For over 35 years, with eight rounds of research from over 120,000 respondents, and in partnership with 19 global HR Associations, Ross Executive Education at the University of Michigan and the RBL Group have explored how to be more effective in HR.
In the 8th, the most recent round of research with 29,000 respondents, we have defined how to Navigate HR’s Impact on results that matter.
Figure 1 shows the overall model as organized around three questions:
- What competencies do HR professionals need to deliver results (Path A).
- What should be the characteristics of an effective HR Department (Path B) and what individual HR competencies shape HR department effectiveness (Path D)?
- What business or organization capabilities should HR help create to deliver business results (Path C) and what individual HR competencies help embed business capabilities (Path E).
Before addressing insights on each of these questions, an overall result is worth highlighting: HR’s great impact on business comes from making the whole more than the parts.
The HR department and Business capabilities that HR helps create have 6 to 8 times more impact on business results than individual HR competencies, consistent with previous research in the book Victory Through Organization. For HR, the whole being more than the parts has many implications:
- l It is not enough for HR to focus only on individuals (people, talent, competencies, employees, or workforce), but on the collection of how those individual people join together into an organization (process, culture, capabilities, systems, or workplace), by using what we call a human capability blueprint. It is not enough to isolate and improve a single HR practice area (e.g., hiring people, orienting new employees, training employees, or paying employees), but to emphasize the integration or bundling of these separate HR practices into integrated solutions and patterns, often called high-performance work systems.
- It is enough to focus on HR time-based events (annual succession planning, payroll increase, quarterly reviews, or new orientation), but on how HR events meld into and create patterns of activities over time.
- It is not enough for HR to focus on a single stakeholder (e.g., the employee or line manager), but on a broader stakeholder map of employees, line managers, customers, investors, and communities.
Figure 1: Navigate HR’s Impact
HR Competency Study Round 8
With this overall finding, we can offer some insights on each of the three questions:
1. What competencies do HR professionals need to deliver results (Path A).
We found that there are five competencies HR professionals should demonstrate to deliver business results (see Figure 2).
HRCS Round 8
Overall HR Competency Model
For 25 years, we labeled competence domains as roles with adjectives defining those roles (e.g., business partner, strategic contributor, paradox navigator, credible activist, etc.). In this round, we focused on verbs and outcomes (accelerates business; advances human capability; mobilizes information; fosters collaboration; simplifies complexity). Roles imply position; verbs imply action. In the 2020–21 crises, HR professionals have had to act expeditiously to respond to the uncertainties and jolts. The HR “role” is less important than the actions that create value for others.
Accelerates business requires starting from the outside-in to recognize market conditions that shift the HR agenda. HR should become business literate to know not only the language of business (e.g., financial, marketing, and strategic ideas), but how the business makes money by adapting to changing market conditions.
Advances human capability refers to what HR contributes to business discussions by discussing human capability:  talent (attending to employee needs, particularly diversity, equity, and inclusion in today’s world) and  organization (offering HR solutions in terms of organization capabilities).
Mobilizing information is grounded in the technology revolution. New technologies are emerging daily (e.g., AI, machine learning, IOT, robots, virtual reality). These technologies create digital information which in turn shapes decision-making.
Fostering collaboration is about relationships and working together. It starts by having personal credibility and being trusted and trustworthy. Personal credibility enables HR to form positive relationships with others.
Simplifying complexity is a challenge of today’s increasingly information-laden world. There are so many ideas, but not all ideas have an equal impact. Thinking critically means being able to separate the “wheat from the chaff” and to focus on those ideas that will have the most impact for your organization.
1. What should be the characteristics of an effective HR Department (Path B) and what individual HR competencies shape HR department effectiveness (Path D)?
Almost every organization has an HR “department” (or function) with reputation, customers, purpose, governance, and accountabilities. In HR departments, HR professionals come together to design and deliver HR practices around people, performance, information, and work to increase value to customers, investors, communities, business strategy, and employees. In HR departments, HR professionals learn, have career opportunities, and build relationships.
From the research, let me reinforce two observations about how to upgrade and transform your HR Department. First, focus the HR department on the right priorities. Instead of asking “What are our HR priorities?” the first question should be, “What are the business priorities?” Then comes the question, “How can our HR work support those priorities?”
By focusing on business more than HR priorities, HR contributes to business performance.
Second, ensure that HR transformation is more than structure. Our research finds that an effective HR department is not just tweaking the HR operating model, or structure. In the Organization Guidance System research, we identified nine dimensions of an HR department that may create value for employees, business, customers, investors, and communities (see figure 3). Figure 3 shows that the results (columns C, D, E, F, G) are affected by different dimensions of HR (rows). The green cells in Figure 3 indicate the highest impact of an effective HR department.
Row 9 (relationships) has a high impact on strategy (column D), customer (column E), and financial (column F) results which means that HR people need to learn to work together and build relationships to deliver these outcomes. Note: you can go to www.rbl.ai and take the Organization Guidance Survey to determine what matters most in your organization. If you fill in the 12 to 15 minute survey, you will get a free report similar to Figure 3 for your organization.
What business or organization capabilities should HR help create to deliver business results (Path C) and what individual HR competencies help embed business capabilities (Path E).
When an HR professional is invited into a business conversation (about strategy, customer service, financial results, digital transformation, or something else), what does HR uniquely bring to that conversation? We identified three contributions of HR to business goals (Figure 4) which we can call human capability.
Individual focuses on the people, talent, employee, or workforce. People are the raw ingredients of any organization. They carry with them skills and attitudes that make up an organization. HR’s work is to help employees realize their potential, improving their competencies, and create positive experiences.
Organization focuses on how individuals come together to collectively work together to become more than their separate efforts. An organization may be defined less by its structure (morphology, hierarchy, roles) and more by the capabilities it possesses (what the organization is known for and good at doing). HR’s work is to identify and develop the organization›s capabilities that deliver employee, strategic, customers, financial, and community results.
Leadership refers both to individual leaders at all levels of an organization and to the overall leadership capability (or leadership brand) of an organization. Leaders (individual competencies) and leadership (organization capability) shape both individual behavior as people do what their leaders do and organization processes as organization capabilities often reflect leaders’ competencies.
With these three contributions of human capability defined, strategic HR then refers to how an organization can invest in talent, leadership, and organization to deliver stakeholder results. Whenever HR is invited to a business discussion, the simple but profound question is: “What are the talent, leadership, and organization initiatives that will deliver targeted results?”
Can we answer with some degree of confidence the question: What is required to be more effective in HR?
Yes! Make the whole more than the parts by creating a great HR department and contributing to business conversations by delivering organization capabilities. And, start by demonstrating five personal HR competencies.
In these incredibly demanding business conditions, HR can hopefully rise to the opportunity and make a difference.
Ulrich is a Professor at Ross School of Business, University of Michigan and Partner at RBL Group. He can be reached at email@example.com.