Effective HR: why organisations should look outside and not inside

Have you observed that, increasingly, the HR function at the modern organisation is requested to recruit staff for other functions, but by the time such staff are selected, their skills are no longer a requirement for the organisation? That is how quickly change happens at the modern organisation. How can HR be effective in a 24/7 fast-moving world?

HR in the spotlight

HR in the spotlight

HR needs to get better at aligning itself outside of the organisation, Dave Ulrich, a professor at the Ross School of Business, University of Michigan told delegates at the HR Directors Business Summit. HR has grown as a function, he said, from one that was first seen as administrative, to functional, to strategic and now the professor is urging HR departments to shift their focus to external market demands. “Don’t look at what your business is struggling with, ask what your market is struggling with,” Ulrich said. “Instead of strategy being a mirror, make it a window. Look through your strategy to the outside world.” In his latest book, Ulrich urges HR professionals to turn their insight on external demands and expectations and then use that knowledge to create innovative aligned HR practices. This will drive organisational capability and development, he said.

The truth about HR: HR at the modern organisation continues to undergo the transition from clerical to a complex but still operational, and more recently, increasingly strategic outfit. The immediate consequence of this transition is that HR staffing and skills continue to reflect a hodge-podge of individual profiles and skills. Depending on how far along the transition trajectory an organisation has advanced, you will come across a range of HR skills. From the orthodox, hybrid, to the business strategy survey MBA-type HR professional. In itself, this is a constraint to changing the HR paradigm at the modern organisation

Of course, the type of HR staff you find at the modern organisation is determined by the organisations’ HR paradigm. Organisations that embrace HR as a strategic function tend to recruit more sophisticated and business-savvy HR professionals. On the other hand, organisations that still consider HR a clerical/operational or hybrid function, have a tendency to recruit ‘unfinished’ HR staff.

Therefore, whether an organisation has an effective HR function or not, depends to a large extent on its’ HR paradigm. Organisations may choose to treat HR as a ‘demand’ fulfilling FUNCTION for the other functions of the company, or a ‘supplier’ of market-driven strategic insight and value-addition. The HR function should be seen to drive a little more than it currently does, the ‘supply’ dynamic at the modern organisation.

HR and the external market: Dave Ulrich advises that to have an effective HR function, calls for looking at the ‘outside’ and not ‘inside’ of the organisation. At the effectiveness-lab, we have always advocated for individuals, functions, and organisations to occupy spaces, outside their traditional boundaries. When HR functions look outside, they begin to occupy territory beyond the traditional. For as long as I can remember, HR functions and practitioners find it extremely hard to abandon the routine business and explore new territory. Let us use an example from the development industry. Development organisations all over the globe, are under pressure to prove their relevance in the face of changing and unpredictable development discourse. ‘Development gods’ continue to insinuate that the answer to sustainable development lies with national governments, the poor themselves, and the private sector. Yet to our surprise at the effectiveness-lab, HR practitioners in the development industry continue to recruit staff from the development sector as opposed to the private sector, and while many will question this, government. Development industry HR practitioners are a true reflection of the failings of modern HR; they simply have forgotten about the outside/market. I hope to live long enough to see development recruit the majority of their CEO’s from the private sector, government (as applicable), and the MBA-type. It is the latter and not the orthodox development-senior, that will deliver the development ‘product’ as demanded in current development discourse.

HR and analytics: HR practitioners cannot explore and analyse the external market without the right tools. HR practitioners may have the right mindset but not tools. Marketers continue to rate highly, the power of data and analytics – I am sure they know what they are talking about. If HR practitioners are to make sense of trends in the market, and tailor strategies to those trends, they need to have the tools, skills, and support to do analytics. Analytics is an emerging function at the modern organisation and one that the HR practitioner won’t normally consider part of their work tool box. How do we get to re-focus HR away from orthodox HR metrics like the number of staff, sex, age, tenure, etc to external market metrics like product/service demand and trends, plus looping that back into HR and overarching organisation strategy?

Can HR ever get authentic ‘space and voice’? We are all familiar with situations where individuals and functions are accorded a place at the organisation strategy table, but their voice never heard. At the effectiveness lab, we refer to this practice as ‘ticking-boxes’. Companies will do what is politically correct, i.e. invite HR to the strategy decision making and implementation table, but continue to disregard what HR says. It is the case of the ‘present, but ‘voiceless’ HR function’. Does that sound familiar to you? Top leadership at the modern organisation should understand that before HR looks outside the organisation, it has to be accorded ‘authentic space and voice’ – the good will from top leadership has to exist for effective HR to thrive.

The new, respected, & effective HR that works from within an integrated eco-system of functions:

While HR can attain effectiveness from looking outside than inside, the ground for that to happen needs setting – it cannot happen from an accident. The effectiveness lab lists below three critical factors that organisations need to attain a market-driven and effective HR function:

  • Working across functions: While HR has to work across functions, it is normally on the terms of the ‘other’ functions and not HR’s. Under the new and effective HR paradigm, HR and other functions have to bring different practice to cross-function working. HR shall not only answer to the ‘demand’ side of the cross-function engagement but also, the ‘supply’ side. As a matter of fact, HR practitioners should drive ‘supply’ side issues even more than certain other functions at the modern organisation. After all, in this ‘supply-push’, HR still influences demand, albeit from a different and more effective lens.
  • Getting the right HR skills: HR practitioners need certain types of skill to deliver to the above new cross-function paradigm. This is not your traditional HR-type, with HR specialisation at University. HR skills for the new paradigm need to extend beyond orthodox HR, to understanding strategy analysis and design, markets, business analysis, etc. The effectiveness lab’s typical choice of skills for this new HR staff typology is the MBA-type, graduates of the Institute of business analysis, seniors from dynamic private sector firms and the fail-safe monk. It cannot continue to be business as usual in HR
  • Viable HR architecture: The modern organisation should ensure that not only are HR voices heard but that HR is party to the senior staff accountability-deal. It is not far fetched for organisations to consider running a matrix structure, where the usually muted HR voice, gets loud and louder when it comes to senior staff accountability discourse. Matrix architecture at organisations is an effective route to achieving this proposition

My takeaway: Well, HR functions at many organisations are yet to set their footprint sustainably on to the organisations’ strategy-landscape. Organisations that disregard the role of HR in strategy-making and implementation will continue to operate ineffective HR functions and a compromised bottom-line. The lack of an effective HR function is amongst the top, and yet off-the-radar factors, that are undermining value creation at the modern organisation

Start today your organisations’ journey to build an effective HR function, but remember, it all starts with the top leadership at the organisation and not HR

Which of these tips for building an effective HR function will you implement first? Please share your insight in the blog comments section or through Facebook and Twitter links below



Categories: Strategy

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2 replies

  1. ABG, Gabazira’s blog has become my MBA class and I look forward to it every Monday morning! The difference here is – my Professor is a practitioner as well!

    In this particular blog you introduce a key subject – Effective HR at organizations. How can HR be effective in a 24/7 fast-moving world when HR Heads have turned themselves into Personal Assistants (PA) to CEOs or MDs? and I think that is the reason HR function is increasingly getting outsourced – creating virtual HR departments by organizations that embrace HR as a strategic function. I know (and I guess you also do) of a very senior HR practitioner in this country who presided over a fraudulent staff sacking exercise simply because he was asked to.

    You asked which of the tips described for building an effective HR function I would implement first; my answer is simple – build a structure (matrix) that would ensure HR voice is independent and heard, then get the right HR skills that will work across functions to determine departmental HR supply chain.

    Like

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