HR professionals must focus on a few critical areas in order to effectively contribute to business results, writes Wayne Brockbank
For the past 25 years, the University of Michigan and the RBL Group have conducted the Human Resource Competency Study with research partners from around the world to look at business results. In the most recent round of this research (2012), we identified several important patterns through which HR adds value.
One major finding is that HR professionals who integrate and align HR activities with a few but critical business issues will have the greatest impact on business results. They will contribute more to business performance than those who exhibit excellence in other competency categories including change management, personal credibility, contributions to strategy formulation, excelling in technology and building organisational capability.
High-performing HR professionals ensure that desired business results are clearly and precisely prioritised, that the necessary organisation capabilities and their accompanying behaviours are powerfully conceptualised and operationalised, and that the appropriate HR practices, processes and structures are jointly aligned to create and sustain the identified organisational capabilities. As they do so with discipline and consistency, they help the collective HR practices reach the “tipping point” of impact on business results.
“HR professionals who integrate and align HR activities with a few but critical business issues will have the greatest impact on business results”
Statistical evidence is supported by anecdotal examples. For instance, the HR department of a major global financial institution recently worked closely with its line executives to identify key output performance indicators and the accompanying business behaviours that result in sustainable financial performance.
The HR department then ensured that all HR practice areas (such as recruitment, promotions, outplacement, performance management, reward, transfers, training, leadership development, communications, job design and organisation development interventions) were designed and delivered with these output metrics and business behaviours as the explicit targets. The impact on institutional effectiveness and business performance was quickly evident and recognised.
The reverse can also be true.
Occasionally, sub-processes within HR departments fail to integrate around common criteria. As an example, the HR department in a major energy company prepared its annual HR strategy. Because of a temporary monopoly over raw materials, this company had enjoyed an extremely profitable couple of years.
As a result, each HR practice area was able to engage its own consulting firm to develop its own state-of-the-art approach. In a two-day HR strategy meeting, each HR practice area presented its plans for the coming year. An outsider was invited to take notes and provide feedback. At the end of the second day, the outsider emphasised how impressed he was with the state-of-the-art overview for each practice area.
“To optimise its contribution to business results, HR professionals must be fully integrated and must focus their collective efforts on a few but critical business results and their accompanying behaviours”
However, he also noted that each practice area was designed and delivered against a different set of criteria that had been suggested by their respective consultants.
He stated: “I understand your state-of-the art approach for each practice area but I am unclear about what you as a total HR department are trying to do.”
At that point, the senior HR executive stood up and said: “This is useful. Now I better understand why I hear from our line leaders that they have no clue about what we in HR are trying to do.” The HR department had sent mixed messages and its impact on business performance had been suboptimal.
The empirical and anecdotal evidence is clear. To optimise its contribution to business results, HR professionals must be fully integrated and must focus their collective efforts on a few but critical business results and their accompanying behaviours. When this is done, the odds of these individuals adding greater value to the business will be substantially enhanced.
- Key points
- Identify a few but critical business outcomes and their requisite organisation capabilities.
- Ensure that all HR practices are specifically targeted on these few but critical business outcomes and organisational capabilities.
- Avoid “flavour of the month” HR initiatives
- Build credibility with line executives through a disciplined focus on business results.
- Regularly review the steadfast alignment of all HR practices with business and organisational targets.