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Five trends that continue to evolve the HR field and how it delivers value to business

The business partner model has been instrumental for creating value for many staff functions, including HR. In this article we offer future perspectives on where the ideas may evolve

As we look forward, there are many excellent thinkers who continue to examine how HR professionals can deliver value to the business. With their input, the business partner model continues to evolve.

Many of the critics of the model look at today’s problems through yesterday’s solutions and wonder why they don’t get solved. This is like trying to run today’s software on yesterday’s computers. Of course, it won’t work. The HR business partner model in the 1990s has changed in recent years to adapt to today’s business challenges. We are comfortable projecting five trends that will continue to evolve the HR field and how it delivers value to business.

1. HR will deliver value to multiple stakeholders

Over the last 30 years, we have both anecdotally and empirically seen steady progress in the HR field as it has moved toward greater strategic understanding and relevance. We anticipate that this progress will continue. HR professionals will continue to deliver value inside an organisation by helping employees find meaning and wellbeing from work (sometimes called employee experience or re-humanising HR) and organisation results by being a central component of strategy formulation and implementation. HR insights make the right strategy happen.

Talent matters and it is important to continue to fight the war for talent. But organisation matters much more and to win the war requires more capable organisations

But, moving beyond an internal focus, our recent research shows that when HR departments and professionals focus on external as well as internal stakeholders, business performance improves. We call this focusing HR from the outside/in, not looking at strategy as a mirror which reflects HR practices but as a window to the outside world. Customer-focused HR shifts from focusing on being the employer of choice, to becoming the employer of choice of employees our customers would choose. Likewise, customers can participate in the design, delivery, and participation in training, 360s can become 720s, standards can be set with customer involvement. Culture can be defined less as internal patterns of work (values, beliefs, behaviours, and norms) and more as an identity of the firm in the mind of key customers made real to employees.

Investor focused HR accesses the requirements of capital markets. The recent burgeoning research in finance and economics on 'intangible assets' is emphasising the increasing importance of human capital assets and HR practices that create and sustain those assets. Empirical evidence has clearly shown the investment community is learning to account for practices such as succession planning, leadership development, setting and meeting performance targets, corporate culture and executive compensation as considerations in buy or sell decisions. Companies that are able to create credible leadership capital are more likely to enjoy price earning ratios above that of their competitors. As business partners, effective HR professionals play a central role in defining, creating and sustaining leadership capital that is valued by investors.

2. HR valued outcomes will move beyond talent to organisation and leadership

Delivering talent will continue to be an important HR outcome, with a focus on finding employees who meet customer and investor requirements (see above) and creating a positive employee experience or wellbeing. But, in our recent research, we found the quality of an HR organisation or department had four times the impact on business performance as the quality of the HR professionals. Generalising from this research, talent matters and it is important to continue to fight the war for talent. But organisation matters much more and to win the war requires more capable organisations. Shifting the focus from individual competencies to organisation capabilities broadens HR outcomes. In addition to delivering talent, HR work will deliver capabilities like speed/agility, information/analytics, collaboration, the right culture, innovation and so forth. When HR delivers individual talent, organisation capabilities and leadership, both internal and external stakeholders get more value from HR. This requires HR business partners with broader business skills.

3. To be business partners, HR professionals will have to master the right competencies

In the most recent round of our competency research with over 32,000 global respondents, we found nine competencies for HR professionals. Each of these HR competencies is important for the performance of HR professionals. To get invited to business discussions, HR professionals need to be credible activists who influence through relationships of trust. To serve customers and investors, HR professionals need to be strategic positioners who understand business context and can think and act from the outside-in. To deliver business value, HR professionals need to be paradox navigators who effectively manage the inherent tensions in the business.

4. HR will become more technologically efficient

The routine work of HR must still be done, and done well. Digitisation of HR has arrived and newly emerging technologies will continue to be applied to improve the efficiency of HR administrative work such as payroll, benefits administration, entry level staffing and employee record keeping. But HR technology will evolve from efficiency, to innovation, to information, to connection 

5. HR will be a source of both structured and unstructured information to improve business impact

HR analytics is ultimately about providing information to improve the business. We have shown four levels of information: scorecards to insights, to intervention to impact. As HR moves to analytics driving business impact, they will need to source all kinds of information. Structured information occurs in spread sheets with traditional statistics representing about 20% of information that can be used for business impact. Unstructured information that comes from observations, intuition, and other insights comes from HR professionals being anthropologists more than statisticians and represents about 80% of impactful information. As HR shifts information and analytics to deliver business impact (phase 4), HR professionals need to access both structured and unstructured information.

Summary: The way forward for HR business partner

In the future, HR business partners will continue to morph. The bar has been raised on HR and some HR professionals will and others will not make the grade. There are emerging business issues where HR can and will contribute value. The future for HR is filled with both challenges and opportunities. As we look to the future, HR professionals as business partners will continue to deliver value and help businesses manage the enormously difficult and exciting challenges ahead.

 

Dave Ulrich is Rensis Likert professor of business at the University of Michigan and partner, The RBL Group. This article was written with Wayne Brockbank, clinical professor of business, Ross School of Business at the University of Michigan

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