HR Leads Business recently caught up with human resource management guru Dave Ulrich to define the disruptions that will transform HR practices in 2018. Ulrich, a Professor of Business at the University of Michigan and Partner of The RBL Group, believes there are eight disruptions that will continue to reshape HR.
Here are some of his thoughts:
The first disruption is about the focus of HR work. Simply stated, HR is not about HR, but the value HR creates. For decades, when talking about HR, the discussion focuses on the activities of HR (staffing, training, competition, etc.). Increasingly, we see the focus of HR work on the value these activities create more than the activities themselves.
HR focuses less on the HR work and more on how that work shapes investor, customer and community value. HR work also connects to changing business conditions so that the criteria of HR are less about efficiency, innovative HR, strategic HR, and more about responding to the outside world. For example, the customers of HR are not primarily the employees inside a firm, but the customers of the firm and investors in the firm.
For decades, HR focused on the outcome of talent as characterized by the war for talent. Dozens and dozens of HR investments have been made to upgrade talent, workforce or people. In today’s jargon, the importance of talent is being rediscovered through terms like the employee experience, which is old wine in new bottles. People, particularly employees, however defined, have been the outcome of good HR work for decades.
While continuing to create better talent (or employee experiences), HR should also focus even more on organization and leadership. Our research with over 1,200 businesses and 32,000 respondents shows that organization improvements have four times the impact on business results as talent investments. Individuals are champions, but teams win championships. Talent matters, but organization matters even more. And, leaders shape both the talent and organization by their modeling the right behaviors.
Within the talent outcome, disruptions are occurring as HR pivots from focusing on employee competence (right skills, right place, right time) to commitment (behavioral engagement and showing up at work) to contribution and well-being (emotional engagement and finding meaning from the work people do). One of the evolutions around the employee experience is that employees have more responsibility for creating their experience than the organizations. Organizations have an obligation to offer employees opportunity; but employees have the responsibility to be agents unto themselves and to act on these opportunities.
Employee experiences are lead indicators of customer experience and investor confidence. Employee sentiment is not the end, but a means to market and shareholder value. This connection disrupts the paradigm of emphasizing social values or financial success and shows that the two can not only co-exist, but be connected to each other. When a firm loses in the social value reputation setting (e.g., Volkswagen, Uber, Wells Fargo, United), the firm also loses in the financial markets. Connecting talent and market value impacts both.
Definitions of organizations have been disrupted from seeing an organization as a hierarchy or bureaucracy with clear roles, rules, routines and responsibilities. Organizations may now be seen as bundles of capabilities, or characterizations of what the organization is known for and good at doing.
When we ask colleagues which firms they admire, we get pretty consistent answers. When we then ask these colleagues how many layers of management they have, no one cares. We admire these firms because of their capabilities, or what they are known for and good at doing, not their morphology or structure. Organization is not structure, but capability.
In our research, we have identified which capabilities predict business success in today’s changing markets, including leveraging information, managing culture, creating change or agility, ensuring collaboration and innovation. As these capabilities become connected to market opportunities outside the organization, they disrupt how people think about, work with and shape organizations. Capabilities also become the outcomes of integrated HR practices. Staffing, training, compensation, communication and policy choices can be integrated around creating these key capabilities.
There are three disruptions in leadership. First, there is a pivot from the individual leader to the collective leadership team. Leaders matter, but leadership matters more. HR should not just be about helping individuals become better leaders, but building collective leadership depth throughout the organization.
Second, there is a disruption about the primary factor that will ensure leadership effectiveness. In recent years, leaders have been encouraged to have emotional intelligence, then learning agility (or grit, resilience, perseverance). In our research, navigating paradox has become the next wave in the evolution of leadership effectiveness. We found that when leaders can navigate the tensions inherent in paradox (long term and short term; divergent and convergent; top down and bottom up, etc.), they help organizations adapt to changing conditions.
Finally, effective leadership is defined when leader’s competencies reflect promises to customers and investors. In particular, we found that 25 to 30 percent of a firm’s market value comes from investor perceptions of quality of leadership.
We have pivoted from trusted advisor to credible activist; from knowing the business to strategic positioner; from implementing an HR practice to providing integrated HR solutions; from managing change to navigating paradox. And, we have disrupted the study of competencies away from merely having the competencies to showing how these competencies increase personal effectiveness, stakeholder value, and business results. Competency models are not about the competencies, but how those competencies deliver real value.
We have shown how technology investments can pivot in four phases. First administrative efficiency. HR technologies streamline administrative HR work by being much more efficient in delivering HR services. Second, HR innovation. HR technologies have created dramatic innovation in hiring, paying, training and governing organizations. This will continue with robotics and artificial intelligence replacing many of the traditional human tasks. Third, HR and business information. We found that access, analysis and application of information delivers real value to a business. Technology enables all three through big data, innovative analytics and decision insights.
Finally, social connection. Technology should enable people to connect with each other across time and space that create positive social experiences, thus overcoming the demoralizing effects of social isolation. A company can post a general manager’s weekly observations on a company website with little fanfare or polished video quality. But, employees can feel connected to him in remarkable ways.
By focusing on the business, the concept of HR analytics has been disrupted. Analytics has pivoted from a scorecard to insights based on big data to interventions about which HR practices have which results to business impact, where HR drives customer share and investor confidence. HR analytics are NOT about HR, but about the business.
Dave Ulrich is a Rensis Likert Professor at the University of Michigan’s Ross School of Business. He is also Partner of The RBL Group. For more information about the research Ulrich uses to make his predictions, read his latest book, Victory Through Organization. In addition, check out the related HR Leads Business blogs to learn more about the nine emerging competencies for HR, read more about how HR roles have become more complex, the need to HR must navigate paradox, how to be viewed as a "HR as Strategic Positioner" and the importance of HR and credible activism.