How Effective Is HR In Your Organization?

The evolution of HR in four waves

The answer to the question about HR’s effectiveness has evolved over the last 70 years as the management of people has shifted from seeing people as an intangible asset (like property, plants, and equipment) to an intangible asset (like intellectual property, reputation, and goodwill) to a strategic resource that helps the organization win in the market place through individual competence (talent, workforce), organization capability (culture, workplace), and leadership (beyond individual leaders). We have been privileged to join many thoughtful colleagues in the last 25 years of this HR effectiveness evolution (see some of the key ideas and books):
 

 

There are many committed colleagues who are providing valuable insights on how HR can continue to be effective. Some focus on HR redesign and how to find ways to coordinate the work of HR specialists and generalists; others highlight technology and how digital information will change how HR makes decisions; others emphasize HR analytics and how to track HR activities and outcomes, yet others spotlight HR innovations and best practices; and so forth. Each of these ingredients of HR’s overall effectiveness is important.
 

We believe that the cookies (one of my food preferences) that result from mixing the ingredients (e.g., add coconut to the mix) matters more that separate ingredients; that the puzzle matters even more than the individual pieces; and that the whole should be more than the parts.  

For HR’s effectiveness, this means creating an overall logic of what HR (departments, practices, and people) can and should be, know, and do to be more effective. This logic has two parts:  [1] maturity and evolution and [2] domains and activity.

As noted above, “HR” has evolved. HR people are no longer merely trying to “get to the table” and be seen as commercial, but to deliver value when there; HR practices are no longer about isolated functional excellence in staffing, training, rewards and other practice areas, but to offer integrated solutions to business problems; HR departments are no longer just about coordinating HR resources improve talent, but about helping the business win in the marketplace through talent, leadership, and organization.  

We have captured this evolution of HR in four waves that show a maturation of HR work (see Figure 2).  In our executive programs at the University of Michigan and consulting through the RBL group we often start with what participants want to learn or do through our engagement. The answers are often desirable work like improve succession, build a culture, upgrade talent, design a total rewards system, etc. When we put the two words “so that…” behind these answers, we move through the waves, ultimately defining value from the outside in and how improvements in HR work results in customer, investor, and community value.  

These waves also help us focus dialogue on emerging and next HR issues, not recycling or repeating previous work.  For example, in the culture space, we want to move beyond describing a culture to predicting the “right” culture as defined by the outside in or to move HR analytics from scorecards and dashboards the map the present to guidance that will create the future as determined by customers and investors outside the company. 
 

 

Figure 2: Waves of HR Evolution

 

The four waves in Figure 1 represent an evolution, or maturation, in definitions of HR effectiveness. Determining HR effectiveness then requires the dimensions or domains of HR that can be tracked along these four dimensions. As noted above, many select one dimension of HR, e.g., HR department structure or design, HR practices, HR analytics, HR technology, or competencies of HR professionals. Each of these individual domains of “HR” can be tracked through the four waves.

In our work, we started by looking at the HR department structure or roles (see book HR Champions). We have evolved our thinking about domains of HR and identified nine domains. We continue to update these nine domains into the following:

1. HR Reputation: What is HR known for?
2. HR Customers: Who are HR’s customers?
3. HR Purpose:  What is our HR mission?  Why does HR exist? 
4. HR Design: How is the HR department organized? 
5. Organization Capability: How does HR facilitate the right organization for the business? 
6. HR Analytics: How can HR access information to make better decisions?
7. HR Practices: How do we create and deploy HR practices?
8. HR Professionals: What do HR professionals need to be, know, and do to be effective?
9. HR Work Style: How does HR go about doing its work?

These nine domains can be assessed at each of the four levels of HR maturation.  For a full review of this HR assessment
 

Stages Of HR Department Maturity

Domain	Foundation/ Administrative	Functional	Strategic	Outside in
1 HR Reputation What is HR known for?	HR has a reputation for excellence in compliance and administration HR Compliance	HR has a reputation for effective HR practices related to people, performance, information, and work. HR Functional Excellence	HR has a reputation for linking HR work to the business strategy  Strategic HR	HR has a reputation for anticipating general business trends and meeting requirements of external stakeholders (customers, investors, communities)  HR Outside-In
2 HR  Customers   Who are  HR’s customers?	HR’s customers are primarily employees   We are employee champions	HR’s customers are primarily line managers We are advisers to managers	HR’s customers are primarily business leaders responsible for strategy We are strategists	HR’s customers include external stakeholders (customers, investors, communities) We are business proponents
3 HR Purpose What is our HR mission?  Why do we exist?	HR’s purpose is to deliver essential services related to compliance and administrative processes  We exist to do the basics well	HR’s purpose is to design and deliver innovative HR practices  We exist to design and deliver innovative HR practices	HR’s purpose is to bundle HR practices to enable business success We exist to partner with business leaders to help make strategy happen	HR’s purpose is to co-create the talent, leadership, and culture that increases value for external stakeholders (customers, investors, communities) We exist to add business value that impacts external stakeholders
4 HR Design How is the HR department organized?	HR is organized around cost efficiency and standardized delivery of products and services HR is an efficient organization	HR is organized around expertise in HR functional areas (e.g., staffing, training, rewards, etc.) HR offers specialized solutions	HR is organized to implement the business strategy with generalists and specialist roles HR organizes to match the business  organization	HR is organized to meet the needs of external stakeholders (customers, investors, communities) HR  organizes to build market value
5 Organization Capability How does HR facilitate the right organization for the business?	HR clarifies organizational roles, rules, and responsibilities within a hierarchy  HR delivers organization role clarity	HR aligns organizational systems  HR delivers organization systems	HR helps create the right  organizational capabilities HR delivers organizational capabilities	HR helps identify and embed the required ecosystem capabilities that deliver value for external stakeholders (customers, investors, communities) HR delivers ecosystem for external stakeholders
6 HR Analytics   How can HR access information to make better decisions?	HR focuses on basic reporting and benchmarking metrics   HR Scorecards or Dashboards	HR focuses on metrics to gain predictive insights about people and organization  HR Predictive Analytics	HR focuses on analytics to determine  which interventions help deliver strategy   HR Strategic Interventions	HR focuses on analytics that guide which investments increase value for external stakeholders (customers, investors, communities)  HR Guidance for Stakeholder Value
7 HR Practices How do we create and deploy HR practices?	HR practices are designed for efficiency  HR delivers essential work	HR practices utilize the latest research and industry practices HR delivers leading-edge practices	HR practices are designed to accomplish the business strategy HR delivers practices to enable strategy	HR practices are designed based on expectations of external stakeholders (customers, investors, communities) HR delivers HR solutions that benefit external stakeholders
8 HR Professionals What do HR professionals need to be, know, and do to be effective?	HR professionals are administrators Trusted Operators	HR professionals are experts in their respective disciplines  Trusted Experts	HR professionals understand and delivery the business strategy   Credible Partners	HR professionals understand and promote the expectations of external stakeholders (customers, investors, communities)  Engaged Business Partners
9 HR Relationships   How does HR go about doing its work?	HR works in functional silos to improve processes  HR individual contributors	HR works as an integrated team of experts  HR team players	HR collaborates with business leaders HR as members of business teams	HR builds relationships with external stakeholders (customers, investors, communities) HR stakeholder partners

         

Dave Ulrich is the Rensis Likert Professor of Business at the Ross School, University of Michigan and a partner at the RBL Group. He has helped generate award-winning databases that assess alignment between external business conditions, strategies, organization capabilities, HR practices, HR competencies, and customer and investor results. Connect Dave Ulrich Follow @dave_ulrich