Disruption is not a noun with an end state, but a verb where the evolving process of HR continues. HR focuses less on the HR work and more on how that work shapes investor, customer, and community value.
BY DAVE ULRICH
The concept of disruption comes from the world of technology, where change is rapid, perennial, and transforms industries. Google disrupted online search and advertising; Salesforce disrupted Customer Relationship Management (CRM); Amazon disrupted distribution; Uber disrupted transportation; Airbnb lodging; Facebook social experiences, and so forth.
For HR (and other disciplines like IT, marketing, finance, law), disruption denotes new ways of thinking and problem-solving. HR disruption is not only about the delivery of HR services, but, also about the logic behind that delivery. Disruption is not a noun with an end state, but a verb, where the process of evolving HR continues. HR disruption is less about a shift leaving behind one idea for another (e.g., moving from operational to strategic) and more about a pivot of ideas building on each other (e.g., being operational and also strategic). The disruptive pivots in HR have been going on for decades and will inevitably continue. In this paper, I highlight some of the major HR disruptions that shape HR work today and in the near future.
8 Disruptions HR need
I pick these eight disruptions, and even though there are other disruptions, these eight highlight the evolving landscape of HR.
1. The value-added focus of HR: Outside In
The first disruption is about the focus of HR work. Simply stated, HR is not about HR, but the value it creates. For decades, when talking about HR, the discussion focused on the activities of HR (staffing, training, compensation, and so forth). Increasingly, we see the focus of HR work on the value these activities create, more than the activities themselves.
We have seen four waves of HR value creation with each building on the previous platform. HR has created value from administrative efficiency to functional excellence to strategic HR, and has now pivoted on to HR from outside in, with external stakeholders. Each of these waves disrupts and builds on the previous. The outside in wave focuses, for example, on how HR delivers value for customers, investors and communities outside the organisation, as much as employees and line managers inside. 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.
2. Evolution of HR Outcomes: towards organisation
HR delivers value to internal and external stakeholders over the ways of evolution. 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 “employee experience”, which is similar to old wine in new bottles. People, particularly employees, however they are defined, have been the outcome of good HR work for decades.
In our research, we have found a disruption in HR outcomes. While continuing to create better talent (or employee experiences), HR should focus even more on organisation and leadership. Our research with over 1200 businesses and 32,000 respondents shows that organisation improvements have four times the impact on business results as compared to talent investments. Such a remarkable finding shows up in many settings. In team sports, the leading scorer is on the team that wins the championship about 20% of the time; 80% is teamwork. In movies, about 20% of the times, the winner of the academy award for best actor or actress is in the movie that wins movie of the year. Music groups outperform individual artists when the groups disband, about 80% of the times. Individuals are champions, but teams win championships. Talent matters, however, organisations matter even more. And, leaders shape both the talent and organisation by modelling the right behaviours. HR outcomes have been disrupted from only talent to, leadership to organisations.
3. Talent outcome disruptions: Towards Well-being
Within the talent outcome, disruptions are occurring as HR pivots from focusing on employee competence (right skills, right place, right time) to commitment (behavioural engagement and showing up at work) to contribution and well-being (emotional engagement and finding meaning from the work people do). As noted, others capture this talent disruption by focusing on the overall employee experience, which highlights the wellbeing that employees find from work. One of the evolutions of the employee experience is that employees have more responsibility for creating their experience than the organisations. Organisations have an obligation to offer an opportunity to the employees, but employees have the responsibility to be agents unto themselves to act on these opportunities.
In addition, the disruptive outside in logic (in #1 above) emphasizes that better talent is assessed by the extent to which talent increases customer and investor value. 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 co-exist, and 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.
4. Organisation outcome disruptions: Towards Capability
Since “organisation” has four times the impact on business performance than “talent”, it is important to define what we mean by an organisation. Definitions of organisations have been disrupted from seeing an organisation as a hierarchy or bureaucracy with clear roles, rules, routines, and responsibilities. Organisations may now be seen as bundles of capabilities, or characterizations of what the organisation is known for and is good at doing. When we ask colleagues about the firms they admire, the answers are pretty consistent. When we ask them 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 are good at doing, not their morphology or structure. An organisation is not a structure, but capability (see the early introduction of this concept in the book Organisation 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 organisation, they disrupt how people think about, work with, and shape organisations. Investors who see these capabilities will increase market value; customers will form long-term relationships; top employees will join and stay; and strategic intents will be realized. Capabilities also become the outcomes of integrated HR practices. Staffing, training, compensation, communication, and policy choices can be integrated around creating these key capabilities.
5. Leader outcome disruptions: Towards Leadership
Leaders and leadership are some of the most studied concepts in both personal experience and management literature. 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 should be about building a collective leadership depth throughout the organisation.
Second, there is a disruption of the primary factor that will ensure leadership effectiveness. In recent years, leaders have been encouraged to have emotional intelligence and 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 organisations adapt to changing conditions.
Finally, effective leadership is defined when a leader’s competencies reflect promises to customers and investors. In particular, we found that 25 to 30% of a firm’s market value comes from investor perceptions of quality of leadership. We have now found ways to codify, quantify, and improve the leadership to give investors more confidence in future firm performance.
6. HR disruptions: Towards Competencies
For thirty years and with 7 rounds of major data collection, we have disrupted the competencies for effective HR professionals. 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. We have conclusively shown that HR professionals have made enormous progress in acquiring and demonstrating these competencies over the last 30 years. The HR profession is improving the quality of HR professionals. 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.
7. HR Technology disruptions: Towards Connections
We see lots of emerging trends in technology: Internet of things, robotics, artificial intelligence, social media, and so forth. With the advent of technology, HR has been continually disrupted.
We have shown how technology investments can pivot in four phases.
- Enhancing administrative efficiency: HR technologies streamline administrative HR work and deliver HR services efficiently.
- HR innovation: HR technologies have created dramatic innovation in hiring, paying, training, and governing organisations. This will continue with robotics and artificial intelligence replacing many of the traditional human tasks.
- Merging lines between HR and business information: Since technology enables access, analysis, and application of information through big data, innovative analytics, and decision insights.
- Enhanced and regular social connection: Technology should enable people to connect with each other across time and space that creates positive social experiences thus overcoming the demoralizing effects of social isolation.
8. HR analytics disruptions: Towards Business impact
HR analytics has been an increasingly popular topic for HR professionals with books, papers, and conferences proclaiming the advent of evidence-based HR. We found that mere analytics does not produce the business outcomes that one might expect. Without linking analytics to business results, the statistics do not tell the right story. By focusing on the business, the concept of HR analytics has been disrupted. In the 1990’s, I co-authored the book “HR Scorecard”, and today, that book is out of date. 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. As Dick Beatty says, the scorecard for HR is the business scorecard. HR analytics are NOT about HR, but about the business.
Continual HR disruption
These 8 disruptions are only a smattering of the HR disruptions that are going on and will go on as HR pivots to deliver value. In reality, HR disruptions are a continual process that HR professionals need to recognize and master. The exciting disruptions HR faces today are critical to the ongoing process of HR delivering value. In my teaching, I recognize the half-life of knowledge, when 50% of my teaching materials are out of date because of the pace of HR change. Disruption is both a challenge to stay fresh and an opportunity to continually renew.
Top 8 HR Disruptions that are here to stay
- Value-added focus of HR
- Evolution of HR Outcomes: Towards Organisation
- Talent outcome disruptions: Towards Well-being
- HR analytics disruptions: Towards Business impact
- HR Technology disruptions: Towards Social Connections
- Leader outcome disruptions: Towards Leadership
- Organisation outcome disruptions: Towards Capability
- HR disruptions: Towards Competencies