HR should focus on building a capable HR department, according to Wayne Brockbank, who says this approach yields better financial performance and long-term stakeholder value
The 2016 results from the Human Resource Competency Study from the University of Michigan and the RBL Group provide important insights into how to enhance the effectiveness of HR. Among the most remarkable findings is that the impact of the integrated HR department practices has substantially greater impact on short-term business performance and stakeholder value creation than does the competencies of individual HR professionals. To be specific, when compared with the competencies of individual HR professionals, integrated HR department activities have four times more impact on short-term (3 years) business performance and value created for investors, line managers and employees and more than twice the impact on external customer value.
To a great degree, these findings are intuitive. When all HR activities integrate around a few but critical business issues, their impact on business performance and stakeholder value creation makes much sense. Integrating the core HR activities of staffing, performance management, rewards, training and development, communications, and organisation development around the firm’s required capabilities enhances both short-term financial performance and long-term stakeholder value.
“The impact of the integrated HR department practices has substantially greater impact on short-term business performance and stakeholder value creation”
Two obstacles stand in the way.
First, since the emergence of competency modelling three decades ago, HR departments and professional associations have focused considerable attention building HR competency frameworks and models. They have provided training programs and certification examinations that are designed to enhance the skills, knowledge and behaviours of individual HR professionals. Such has been the case for every major HR association around the world.
Given the importance of the growing the number of individual dues paying members, the focus on individual competence development is understandable. Plus individual HR professionals are motivated to enhance their individual competence so as to contribute to their respective HR functional areas and also to enhance their personal marketability.
Continually developing the competencies of individual HR professionals is an important agenda. However, the focus on individual competency certification and development might have a tendency to displace the substantially more important agenda of building and sustaining well-integrated HR departments.
“When all HR activities integrate around a few but critical business issues, their impact on business performance and stakeholder value creation makes much sense”
Second, it is clearly easier to develop skills, knowledge and behaviours for individuals than it is to integrate the disparate parts of HR into an effectively functioning department. Pulling the pieces of HR into a cohesive whole can indeed be a formidable challenge. Each functional area within HR tends to develop its unique logic and approach. They emphasise different time frames with some focusing on short-term business results and some focusing on long-term results. Some focus on output results; other focus on behavioural or ethical inputs. Some emphasise individual performance while others focus on institutional results.
It is, therefore, understandable for training and development, measurement and rewards, organisation development, hiring and promotions and communications might tend to go in somewhat different directions. This tendency is partially underscored by HR consulting firms whose practices frequently focus on functional specialisation rather than comprehensive integration across all HR functional areas.
Regardless of the challenges, the data is clear. The focus within HR should be on building capable HR departments. This is the agenda that should receive the intellectual and operation focus of HR leaders.
4 action items for HR
- Recognise that having HR department capability is significantly more important than having competent individual HR professionals.
- Have a clearly defined set of business outcomes and organisational capabilities on which each HR functional area can focus.
- Regularly examine the shared mission and focus of the HR department and its constituent parts.
- Ensure that operational points of each HR functional area are clearly identified, integrated and collectively leveraged.
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