- HR transformation underlies organization effectiveness.
- Utilizing the Organization Guidance System, HR transformations shift from a descriptive approach to a prescriptive approach.
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The crises of our day (global coronavirus pandemic, racial and civil unrest, global immigration, economic decline, political squabbles, and personal and emotional malaise) have accentuated the importance of human resource issues to help an organization succeed in the marketplace.
Numerous HR innovations in programs, processes, practices, and digital apps have occurred under the rubric of HR transformation. We believe it is time to offer guidance on the extent to which organization effectiveness initiatives in talent, capability, and leadership deliver results to employees, strategies, customers, investors, and communities. We have developed and offered a free Organization Guidance System (OGS) to guide the portfolio of these efforts.
HR transformation underlies organization effectiveness. We have written 13 books and 100’s of articles, collected data from over 100,000 respondents, offered hundreds of workshops, and consulted on how to deliver HR transformation. We have evolved the study of HR transformation into four stages of maturity and nine domains of action.
Figure 1 provides a comprehensive template for assessing overall HR Transformation along 9 domains for each of the 4 levels of maturity (36 cells overall).
|Domain||Stages of HR Maturity|
|Essential Foundation||Functional (best practice)||Strategic||Outside-In|
What is HR known for?
|HR Compliance||HR Functional Excellance||Strategic HR||HR Outside-In|
Who are HR's customers?
|We are employee champions||We are advisors to managers||We are strategists||We are business proponents|
What is our HR mission? Why do we exist?
|We exist to do the basics well||We exist to design and deliver innovative HR practices||We exist to partner with business leaders to help make strategy happen||We exist to add business value that impacts external stakeholders|
How is the HR department organized?
|HR is an efficient organization||HR organizes to offer specialized solutions||HR organizes to match the business organization||HR organizes to build market value|
How does HR facilitate the right organization?
|HR delivers organization role clarity||HR delivers organization systems||HR delivers organizational capabilities||HR delivers ecosystem for external stakeholders|
How can HR use information to make better decisions?
|HR Scorecards or Dashboards||HR Predictive Analytics||HR Strategic Interventions||HR Guidance for Stakeholder Value|
How do we create and deploy HR practices?
|HR delivers essential work||HR delivers leading edge practices||HR delivers practices to enable strategy||HR delivers HR solutions that benefit external stakeholders|
What HR professionals need to be, know, and do to be effective?
|Trusted Operators||Functional Experts||Credible Partners||Engaged Business Partners|
How does HR go about doing its work?
|HR individual contributors||HR team players||HR as members of business teams||HR stakeholder partners|
Our point of view on HR Transformation is NOT limited to these 36 cells, but the extent to which the work in these 36 cells delivers results. We believe that describing what the maturity and activity of HR can be dramatically advanced by prescribing which of the stages of maturity and domains of activity should be focused on.
Report Guidance on Human Resource Transformation
After 18 months of creating an Organization Guidance System, we can now report how well companies perform on the four stages of maturity and nine domains of HR and the impact on results. Figure 2 reports pilot results (with a sample of 148 respondents) about the performance and impact of the four stages of HR maturity on four key results. This figure reports the overall mean (column A) of the four stages of maturity (with outside in being the lowest score) and the relative impact of each of the four stages (rows) on four outcomes we measured in the pilot (columns B, C, D, and E). We used proprietary analytics (variance decomposition) to understand how different levels of HR maturity (rows) will deliver different results (note: in the pilot, we focused on 4 results; we now have added a fifth, social citizenship).
The results from the Organization Guidance System are startling! First, we had assumed that foundational/essential HR work was not as critical for results as the strategic and outside in HR work. Our results show that doing HR foundational/essential work is critical to all results (green scales in columns B, C, D, E).
|Level of Maturity||A
Strategic / Business
|Essential/Foundation||3.40||Very impactful on outcome||Moderately impactful on outcome||Very impactful on outcome||Very impactful on outcome|
|Functional (best practice)||3.47||Slightly less impactful on outcome||Not very impactful on outcome||Not very impactful on outcome||Slightly less impactful on outcome|
|Strategic||3.54||Impactful on outcome||Less impactful on outcome||Less impactful on outcome||Not very impactful on outcome|
|Outside-In||2.95||Not very impactful on outcome||Very impactful on outcome||Moderately impactful on outcome||Slightly impactful on outcome|
Second, we worked to understand these results and discovered in Figure 3 a very different view of the stage of HR maturity and results depending on who answered the survey. HR professionals saw an improved financial performance from doing essential/foundational work; while nonHR respondents (business leaders) see HR outside in as much more critical for financial performance. This dramatic difference in the perceived impact of HR stage and financial results may suggest that HR professionals and line managers see the impact of HR work differently.
Third, in Figures 2 and 3, we found that functional excellence (best practice) and strategic HR are highly correlated (r=.82) and neither focus delivers results that matter. It may be time to do less “best practice” or even “strategic” HR work and more focus on aligning HR to external stakeholders.
|Stages of HR Maturity||HR||Other Leaders|
|Essential / Foundation||Better||Very Poor|
|Functional (best practice)||Good||Below Average|
In Figure 4, we report the findings by the nine domains of HR activity. The results in Figure 4 are also striking as they inform the effectiveness of HR transformation. First, the attention on “HR organization” (#4) does not show much impact on any of the results. We still find that most “HR transformation” work obsesses on the HR design. This research shows that HR practices (#7) has the most impact on the results. Second, it is interesting that each result (column B, C, D, E) is shaped by different HR domains. We need to explore more why these results require different domains of HR transformation.
|Domains of HR||A
Strategic / Business
These findings from the Organization Guidance System dramatically shift the discussion of HR transformation from what is done to what should be done. While these findings are with a small pilot sample, the implications of this human resource guidance are profound. Rather than randomly create innovative HR initiatives, business and HR leaders can use the Organization Guidance System to receive rigorous guidance on where to focus for results.