WHAT IS NEXT FOR HR? By David Ulrich, Ph.D.
The HR profession is in a state of constant flux. This is not a surprise since most of the world we live in is in flux. Change is happening all around us and HR cannot be immune. This paper lays out what might be "next" for our HR profession. The ideas are drawn from people whom I admire deeply. In the last three years while on sabbatical, I have been a bit away from the daily routines of HR. But, I have stayed in contact with the book "The Future of HR" edited by Mike Losey, Sue Meisinger, and me. We asked 61 other thought leaders to answer the simple question, "what is next for HR?" and we received very insightful and creative essays. Their collective work has informed my thinking, and I draw from it. In addition, Wayne Brockbank and I have worked together for over 20 years to think about and prod the profession we care about. In the process, I can seldom separate my ideas from his, but need to acknowledge that my thinking has been profoundly influenced by this exceptional colleague and dear friend. Our book "The HR Value Proposition" contains most of the ideas in this paper. But this paper extracts them and offers an executive summary of HR and where it is going.
Defining the future for a profession has two parts: theory and action. Theory offers insights on where the profession should be headed, questions it should be dealing with, and the rationale for why things should be as they should be. Action turns theory into ideas and makes sure that ideas have an impact. Theory without action is abstract and inane. Action without theory is random and unfocused. We need both.
I like to connect theory and action with the image of a diamond. At the top, we start with simple questions, then as the diamond gets larger, these questions turn into more elegant responses which become complex at times. At the wide angle of the diamond, the theory becomes rather intricate as the subtleties of the theory become apparent. Here is where theory is both the best and worst. At its best, theory explains why things happen in enough detail to predict the future with some degree of certainty. At its worst, theory becomes academic and so complex and removed from reality that it cannot lead to change. So, the bottom half of the diamond is critical to turn the elegant and complex theory into simple and doable actions. This requires working on the questions "so what does this mean?" and coming up with specific responses. So, this paper will be organized by the numbers:
- 1 fundamental message
- 5 key elements or factors to this message
- 14 criteria for the new HR
- 3 conversations you should hold
- 1 enduring thought and reminder
1 Fundamental message
We exist as an HR profession because we add value. Value means many things. It comes from the Latin word "valuta," which means to be worth something. In our modern-day, value as a noun may refer to the values and beliefs we hold or to the monetary value of an item. As a verb, it refers to the process of assigning monetary worth of an item or to consider something highly (I value your opinion). Regardless of its use as a noun or verb, the fundamental message of value is that value is defined more by the receiver than the giver. Let me give two personal examples of how value is defined by the receiver more than the giver. We are in the process of selling a house in Michigan. We have invested a great deal in this house. We think it is a marvelous house with the right bedrooms, living space, and offices for our family for the past 15 years. We designed the house, and it has met our needs. So, we figured out what we felt it might be worth by comparing it to other (obviously less good houses in the neighborhood) and listed it with a realtor. A few months later after no offers and traffic, we lowered the price about 12%. Immediately neighbors who recently bought homes called us to chastise us for "hurting the neighborhood" by having lowered our price. Our simple response was that the market picks the price, not us and our desires. Value is defined by the receiver more than the giver. And, we have had to lower the price again to make the sell.
Second, and I have shared this before. I know that in my relationship with my wife of 30 years, the value of a gift I select for her is defined by her more than me. My preferred gifts (e.g., tickets to the NCAA finals) may not mean as much to her than me. So, I learn to give her gifts that mean something to her, the receiver, more than me, the giver. This means varying the gifts and offering what might mean more to her than me. Recently, this meant offering her a gift of weight loss, which she readily accepted, and I have attempted to do.
So what does value have to do with HR? Simply stated, we exist as a profession because what we do creates value for someone else. If we do not carefully consider the value we create, we will focus on what we want, not what our stakeholders need and desire. We may build elegant programs and practices, but until and unless someone finds them of value, they are not.
1 fundamental message: Value is defined by the receiver more than the giver.
5 factors or elements to determine value
So, how do we go about turning this message of value into something more elegant. We propose a five-factor "solution" to the HR value proposition. Each factor represents a key element of HR's creation of value. These five factors are the elements that will enable HR professionals to determine and create value.
Factor 1: External Business Realities
To define an HR value proposition, we do not begin with who we are or what we know and do, but with the context of where we do our work. We have to understand and appreciate the world that our stakeholders live in so that they can trust us to understand them. HR actions inside a firm must reflect and influence business realities outside that firm. HR professionals should be able to cogently discuss these external realities—the technology, regulatory and economic factors, and demographics of the global business environment—and connect them to their day-to-day work. Knowing business realities makes it possible to put HR practices in context, tie them to competitive challenges, and relate them to concerns facing line managers. These contextual factors offer the rationale for why an HR transformation should occur. Everyone in your HR function should be conversant with both the realities of the external world and how HR actions will help your firm compete in this changing context.
Factor 2: Stakeholders
Value is defined by the receivers of HR work—the investors, customers, line managers, and employees—more than by the givers—HR professionals. HR is successful if and when its stakeholders perceive value from it. Delivering what matters most to stakeholders focuses on the deliverables (outcomes of HR) rather than on the doables (activities of HR). The deliverables of HR involve those outside the firm and come in the form of investor intangibles and customer share. The deliverables also come from activities inside the firm like organization capabilities and/or individual abilities.
The context and stakeholders are those things that happen outside our HR world. We start there because by going outside/in we learn what we need to do to create value.
Factor 3: HR Practices
HR practices institutionalize beliefs and values and make them real to all stakeholders. For example, the way you hire, train, or pay people or the way you organize work sends messages to employees about what matters most. There are almost an unlimited list of HR practices that focus on all sorts of things ranging from internet hiring to performance appraisals to coaching teams to communicating with employees. We have taken the liberty of organization HR work into four flows, each representing a cluster of HR activities. These flows are HR practices around people, performance, information, and work flows. Within each of these flows, HR professionals may create and/or identify HR practices to manage this flow. We like the metaphor of a menu. On a menu in a restaurant you have categories of food (appetizers, salads, main course, drinks, desserts, etc.). Within each food category, are a list of choices that the patron might select from. Likewise, the HR menu may be clustered into people, performance, information, and work pages with menus of choices in each category. These HR practices deliver value to internal and external stakeholders when they are appropriately aligned with your organization goals. They also ensure that the organization outlives any individual leader. They become cultural pillars for your organization.
Factor 4: HR Department or Function
The HR function within your company needs to be thought about as a business. As a business embedded within the company, your HR function needs a strategy and structure that will deliver value. The strategy will help you focus attention on key factors and respond appropriately to business realities; the structure will organize HR resources in ways that govern how HR work is done. The strategy and structure of your HR department will ensure that HR resources are deployed where they add the most value.
Factor 5: HR Professionalism
Each HR professional in your organization must learn to play a role and master competencies to deliver value. Roles represent what people do; competencies define how they do it. HR functions are only as good as the people who inhabit them, so having clear roles and distinct competencies ensures that they will deliver they value they intend. And HR Professionals must invest in themselves and continually improve.
That's it.
- 1 principle: HR must add value
- 5 factors to creating value: external realities, key stakeholders, HR practices, HR departments, and HR professionals.
This is a simple logic. It makes sense
From Pakistan, Lahore
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5The HR profession is in a state of constant flux. This is not a surprise since most of the world we live in is in flux. Change is happening all around us and HR cannot be immune. This paper lays out what might be "next" for our HR profession. The ideas are drawn from people whom I admire deeply. In the last three years while on sabbatical, I have been a bit away from the daily routines of HR. But, I have stayed in contact with the book "The Future of HR" edited by Mike Losey, Sue Meisinger, and me. We asked 61 other thought leaders to answer the simple question, "what is next for HR?" and we received very insightful and creative essays. Their collective work has informed my thinking, and I draw from it. In addition, Wayne Brockbank and I have worked together for over 20 years to think about and prod the profession we care about. In the process, I can seldom separate my ideas from his, but need to acknowledge that my thinking has been profoundly influenced by this exceptional colleague and dear friend. Our book "The HR Value Proposition" contains most of the ideas in this paper. But this paper extracts them and offers an executive summary of HR and where it is going.
Defining the future for a profession has two parts: theory and action. Theory offers insights on where the profession should be headed, questions it should be dealing with, and the rationale for why things should be as they should be. Action turns theory into ideas and makes sure that ideas have an impact. Theory without action is abstract and inane. Action without theory is random and unfocused. We need both.
I like to connect theory and action with the image of a diamond. At the top, we start with simple questions, then as the diamond gets larger, these questions turn into more elegant responses which become complex at times. At the wide angle of the diamond, the theory becomes rather intricate as the subtleties of the theory become apparent. Here is where theory is both the best and worst. At its best, theory explains why things happen in enough detail to predict the future with some degree of certainty. At its worst, theory becomes academic and so complex and removed from reality that it cannot lead to change. So, the bottom half of the diamond is critical to turn the elegant and complex theory into simple and doable actions. This requires working on the questions "so what does this mean?" and coming up with specific responses. So, this paper will be organized by the numbers:
- 1 fundamental message
- 5 key elements or factors to this message
- 14 criteria for the new HR
- 3 conversations you should hold
- 1 enduring thought and reminder
1 Fundamental message
We exist as an HR profession because we add value. Value means many things. It comes from the Latin word "valuta," which means to be worth something. In our modern-day, value as a noun may refer to the values and beliefs we hold or to the monetary value of an item. As a verb, it refers to the process of assigning monetary worth of an item or to consider something highly (I value your opinion). Regardless of its use as a noun or verb, the fundamental message of value is that value is defined more by the receiver than the giver. Let me give two personal examples of how value is defined by the receiver more than the giver. We are in the process of selling a house in Michigan. We have invested a great deal in this house. We think it is a marvelous house with the right bedrooms, living space, and offices for our family for the past 15 years. We designed the house, and it has met our needs. So, we figured out what we felt it might be worth by comparing it to other (obviously less good houses in the neighborhood) and listed it with a realtor. A few months later after no offers and traffic, we lowered the price about 12%. Immediately neighbors who recently bought homes called us to chastise us for "hurting the neighborhood" by having lowered our price. Our simple response was that the market picks the price, not us and our desires. Value is defined by the receiver more than the giver. And, we have had to lower the price again to make the sell.
Second, and I have shared this before. I know that in my relationship with my wife of 30 years, the value of a gift I select for her is defined by her more than me. My preferred gifts (e.g., tickets to the NCAA finals) may not mean as much to her than me. So, I learn to give her gifts that mean something to her, the receiver, more than me, the giver. This means varying the gifts and offering what might mean more to her than me. Recently, this meant offering her a gift of weight loss, which she readily accepted, and I have attempted to do.
So what does value have to do with HR? Simply stated, we exist as a profession because what we do creates value for someone else. If we do not carefully consider the value we create, we will focus on what we want, not what our stakeholders need and desire. We may build elegant programs and practices, but until and unless someone finds them of value, they are not.
1 fundamental message: Value is defined by the receiver more than the giver.
5 factors or elements to determine value
So, how do we go about turning this message of value into something more elegant. We propose a five-factor "solution" to the HR value proposition. Each factor represents a key element of HR's creation of value. These five factors are the elements that will enable HR professionals to determine and create value.
Factor 1: External Business Realities
To define an HR value proposition, we do not begin with who we are or what we know and do, but with the context of where we do our work. We have to understand and appreciate the world that our stakeholders live in so that they can trust us to understand them. HR actions inside a firm must reflect and influence business realities outside that firm. HR professionals should be able to cogently discuss these external realities—the technology, regulatory and economic factors, and demographics of the global business environment—and connect them to their day-to-day work. Knowing business realities makes it possible to put HR practices in context, tie them to competitive challenges, and relate them to concerns facing line managers. These contextual factors offer the rationale for why an HR transformation should occur. Everyone in your HR function should be conversant with both the realities of the external world and how HR actions will help your firm compete in this changing context.
Factor 2: Stakeholders
Value is defined by the receivers of HR work—the investors, customers, line managers, and employees—more than by the givers—HR professionals. HR is successful if and when its stakeholders perceive value from it. Delivering what matters most to stakeholders focuses on the deliverables (outcomes of HR) rather than on the doables (activities of HR). The deliverables of HR involve those outside the firm and come in the form of investor intangibles and customer share. The deliverables also come from activities inside the firm like organization capabilities and/or individual abilities.
The context and stakeholders are those things that happen outside our HR world. We start there because by going outside/in we learn what we need to do to create value.
Factor 3: HR Practices
HR practices institutionalize beliefs and values and make them real to all stakeholders. For example, the way you hire, train, or pay people or the way you organize work sends messages to employees about what matters most. There are almost an unlimited list of HR practices that focus on all sorts of things ranging from internet hiring to performance appraisals to coaching teams to communicating with employees. We have taken the liberty of organization HR work into four flows, each representing a cluster of HR activities. These flows are HR practices around people, performance, information, and work flows. Within each of these flows, HR professionals may create and/or identify HR practices to manage this flow. We like the metaphor of a menu. On a menu in a restaurant you have categories of food (appetizers, salads, main course, drinks, desserts, etc.). Within each food category, are a list of choices that the patron might select from. Likewise, the HR menu may be clustered into people, performance, information, and work pages with menus of choices in each category. These HR practices deliver value to internal and external stakeholders when they are appropriately aligned with your organization goals. They also ensure that the organization outlives any individual leader. They become cultural pillars for your organization.
Factor 4: HR Department or Function
The HR function within your company needs to be thought about as a business. As a business embedded within the company, your HR function needs a strategy and structure that will deliver value. The strategy will help you focus attention on key factors and respond appropriately to business realities; the structure will organize HR resources in ways that govern how HR work is done. The strategy and structure of your HR department will ensure that HR resources are deployed where they add the most value.
Factor 5: HR Professionalism
Each HR professional in your organization must learn to play a role and master competencies to deliver value. Roles represent what people do; competencies define how they do it. HR functions are only as good as the people who inhabit them, so having clear roles and distinct competencies ensures that they will deliver they value they intend. And HR Professionals must invest in themselves and continually improve.
That's it.
- 1 principle: HR must add value
- 5 factors to creating value: external realities, key stakeholders, HR practices, HR departments, and HR professionals.
This is a simple logic. It makes sense
From Pakistan, Lahore
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