Editor’s Note: This is the 11th of 12 essays from the new book, The Rise of HR; Wisdom From 73 Thoughts Leaders. It’s compiled by Dave Ulrich, Bill Schiemann and Libby Sartain, and sponsored by the HR Certification Institute.
By Robert E. Ployhart
Dave Ulrich’s 1997 book, Human Resource Champions, helped capture the role of HR professionals for the modern world. It shifted the view of HR as a compliance function to HR as strategically valuable.
In turn, many HR leaders blossomed from administrators to strategic partners.
Although there is still a long way to go, the HR function and HR leaders have generally become more strategically valuable over the last 20 years. Yet questions remain.
- Is HR as strategic as it should be?
- Are HR professionals as effective as they could be?
- And most importantly, what do HR professionals need to know and do in order to be effective in today’s and tomorrow’s business world?
There has never been a time in history when HR has been more important to business. Indeed, a number of social, economic, and political factors have converged to make HR the most important function in many organizations today.
As a result, HR is being thrust into the spotlight — and this is the moment for HR to step forward and realize its strategic destiny. Will HR professionals embrace the lead role with courage and conviction? Or will they remain within the shadowy margins, clinging to a past that is comfortable and reassuring? Will they be reluctant champions of the HR profession?
For HR professionals to achieve their potential, they need to redefine their role and understand how they fit within this brave new world. The trends shaping the future require fundamental shifts in both the way HR professionals view themselves and the competencies they must master in order to add value.
In this new world, HR professionals are no longer compliance officers or strategic advisors. Instead, they coordinate and align talent, data, and strategy in a profitable manner while balancing the interests of relevant stakeholders.
Trends shaping the future of HR
Several macro trends are already in play that are shaping the future of business. What makes the present situation so unique is the number of distinct trends that are quickly converging. While these trends are interrelated, each has its own implications:
- Globalization – The “Great Recession” made it painfully clear that no firm is an island. Economic problems (or opportunities) that afflict other parts of the world are not isolated. With greater connectivity comes greater complexity and greater risk. The U.S. military calls this a VUCA world, for volatile, uncertain, complex, and ambiguous. How can HR help organizations survive and even thrive in a VUCA world?
- Demographics – Baby Boomers will sooner or later have to retire, although the manner in which they will retire is unclear. Some Baby Boomers may continue working on a part-time basis, while others may venture into freelance consulting. Firms will struggle with the large numbers of people exiting the workforce and with the loss of the knowledge they will take with them. At the same time, workforces in developing countries are growing rapidly—but most of these workers lack the requisite skills. In both developed and developing countries, newer workers are also much more diverse (by gender, ethnicity, etc.) than Baby Boomers. How can HR manage this diversity?
- Mobile technology – There is more technology in a smartphone than in the computers used in the Apollo 11 moon landing. We have moved from the “static Internet” (desktop devices) to the “mobile Internet” (smartphones) to the “Internet of Things” (devices such as parking meters, street signs, and household appliances that are connected to the Internet). Technology flattens hierarchies, provides more access to information to more people, and enhances transparency. Technology also divides the world into those that have the technology and those that do not. As we become more connected, it also becomes easier for fewer people to cause greater damage (think hacking but on a grander scale). How should HR balance the opportunities and threats that technology creates?
- Data and information – IBM CEO Ginni Rometty has said that data will be the most important “natural” resource in the near future. People and things generate massive amounts of data. This data contains information that is useful for making powerful predictions and decisions. However, the same information can be used to ruin people and organizations. Employees and potential employees create millions of data points every day. Consequently, “Big Data” is fundamentally an HR issue. So how can this data be used for good and not evil?
- Competition – The days of “sustainable” competitive advantage are over for most firms. Today, one can only hope for a series of short-term competitive advantages. Industry boundaries are disappearing and time horizons are shortening. With fewer external resources, firms are turning inward to search for efficiencies. How can HR help firms make do with less and grow with shrinking resources?
Sitting at the intersection of all these trends is HR. The HR function continually touches every part of the organization and also spans the boundary between internal and external stakeholders.
The HR leader has a difficult job, with success not defined in terms of winning but in terms of maintaining balance. It is a zero-sum game — and it’s going to be like that for the foreseeable future.
The old HR will not be successful in this environment, and HR professionals who are reluctant to make the mental transformation to think of their roles and their function differently will fade away. HR could own the future of business — but it will take a new kind of HR leader to do it.
HR needs to be the organization’s conductor
A useful analogy of the new HR leader is that of a conductor of a large orchestra (in various ways, this analogy has been used by Frank Barrett, Peter Drucker, Lee Faller, and Karl Weick, among others). The conductor’s main job is to coordinate the individual elements (musicians, instruments) so that the overall sound is pleasing.
The conductor is not an expert in most of the instruments, but is only generally familiar with them. He or she must balance several tensions or paradoxes. One tension is between the motivations and incentives of individually gifted musicians versus the orchestra as a whole.
A second tension is between musicians or sections that are strong or vital to a piece versus those that are supporting. A third tension is balancing the flow, timing, and tempo of individual sections to create a harmonious temporal experience.
Last but not least, the conductor must balance the needs of patrons, musicians, and owners, and do so in a manner that is enjoyable to all.
HR leaders need to be conductors of the organizational orchestra. In the past, they brought content expertise to assist business lines (e.g., knowledge of staffing practices, understanding of compensation systems). This would be similar to the conductor having deep knowledge of each instrument, where each instrument is like an HR practice. However, the actual playing of the instrument was left to the musician (i.e., the line manager).
In contrast, new HR leaders add value by coordinating the orchestra rather than having deep expertise with each of the instruments. The new HR leader needs to be comfortable balancing the various tensions (individual versus firm, star versus supporting players, timing, and flow) without having the benefit of knowing how to play any particular instrument. This HR leader lets the musicians do what they do best — maximize the performance of their instruments — while the conductor does what he or she does best — maximize the coordination of the musicians in a manner that creates value through intangible resources.
What makes this new HR identity so scary is that the HR leader moves away from what has historically made him/her unique — HR practices — and adopts a role that relies more on coordinating three key elements: talent, data, and strategy. HR leaders own the coordination of these elements. Indeed, they are the leaders that most understand how to create, implement, and develop competitive advantage in the modern economy.
Elements of the new HR
There are three key elements underlying the new HR.
- The first is talent. Understanding how to accumulate, develop, maintain, and divest of talent, both individually and collectively, remains a critical element in the new HR. Although this was true of the old HR, the new HR must address these issues within a very different environment. For example, globalization changes where talent is located, and technology changes how talent is sourced. The management of individual talent also differs significantly from talent as a collection of interdependent individuals.
- The second element is data. Big data is largely HR data, and HR leaders will need to be comfortable working with data analysts who may have little knowledge or appreciation of the “human” nature of their numbers. Predictive modeling makes it possible to conduct all kinds of decision analytics. These analytics will fall under Title VII regulations and related legislative guidelines. HR leaders will need to know how to work with data in a legally appropriate, ethical, and professional manner.
- The third element is strategy. To argue that HR managers need to think strategically is certainly not new. What is new is that a firm’s differentiation strategy is increasingly based on people and how they are organized. That is, employees don’t just help implement the strategy — they are the strategy. In turn, HR managers need to embrace new methods for demonstrating the strategic value of talent.
It is the HR leader’s job to understand how to leverage and orchestrate these three key elements to generate profitability and value for stakeholders. Some might say, “We already do this.” For example, doesn’t workforce planning consist of people, data, and strategy?
My answer is no. Workforce planning is important but not the right strategic solution because it is based on predictions about a future that is probably not going to exist. In contrast, orchestrating people, data, and strategy enables real-time planning that is flexible and agile.
Orchestrating people, data, and strategy requires an ability to coordinate alignment across different levels of the organizational hierarchy. Most prior HR training has focused on teaching the skills needed to create talent pipelines (or supply chains) that may exist at the individual or firm level. Yet in the new economy, it is not enough to create alignment horizontally.
In the search for doing more with less, HR leaders must learn to orchestrate alignment vertically as well. Vertical alignment occurs by ensuring alignment between individuals, teams, strategic business units, and the entire firm. Simply getting good people doesn’t ensure better firm performance if those people can’t work together or are underutilized.
The orchestration of talent across levels creates synergies where the whole is greater than the sum of the parts, but it requires the use of data to understand the required talent configurations that most strongly contribute to strategy execution.
The future should be an exciting time for HR, but will HR leaders cling to the comfort of practices and compliance — or will they embrace the spotlight by orchestrating talent, data, and strategy?
Will HR leaders be the champions of a VUCA world — even if reluctantly?
Compiled by Dave Ulrich, Bill Schiemann and Libby Sartain, and sponsored by the HR Certification Institute, The Rise of HR: Wisdom from 73 Thought Leaders is an anthology of essays addressing the critical issues facing business and talent professionals today. The full eBook can be downloaded @ www.riseofhr.com. Reprinted with permission of HRCI.