The need for a capability-revamp in the HR function

We have hit the ‘circular reference error’ in our capability-workbook, trying to refer to our function’s capability in understanding line-management/business challenges. Historically, the Behavioural school vouched for a specific set of key attributes in people in order to bring in higher productivity through employee engagement, vis-à-vis the Classical school of Taylor’s Scientific Management with its deep (and almost narrow) focus on the job itself and efficient adaptation of employees to work-processes. According to the Behavioral school, it was necessary to have a set of people whose insights had to be deeper and wider than just running the line, by having an independent, equity-based, fair and neutral view of it through the rush and the rigmarole of production and targets. The circular reference error is in the context of the repeated emphasis on the HR function’s ability to understand business interests when the function itself grew out of the ‘line’ initially, and in context of a larger dilemma in maintaining HR professional identity vs. organizational identity.

HR capability-building seems to be overemphasized in context of the ability to cater to business interests, demonstrating a group-identity and perception of belonging to an organization¹. Though this is an important construct which enables that extra mile in the interest of the organization, the functional or professional identity seems to have been overshadowed and therefore has a significant bearing on the direction, quality, and nature of investments in HR capability building. Organizational identity “…can foster behaviors detrimental to the long-term interests of the organization…”² In striving towards being a strategic business partner, the HR function has been encouraged to become more aligned with organization’s strategic goals in order to contribute to the bottom-line, resulting in organizational or Corporate values to be stronger than professional values (and identity) in the HR community.³

As the complexities of conducting business increase, so does the volatility in talent, bringing in a new set of capabilities required for the HR function; but the challenge has been, to maintain the core of the HR function and its professional identity while aligning to organizational identity.

The following are the observations and experience in trends in HR capability building.

A movement from compliance to a commitment level in the context of a psychological contract between the employer and employee, where HR enables creating a larger and deeper sense of Employee Value Proposition.

Building an individual but high-trust environment, moving from the personnel-management era of collective-but-low-trust platforms that existed between employer and employees.

Post strategic-human-resource-management and the way ahead of the era of personnel management, HR capability building is synonymous with building the function into the strongest brand of the organization – as it faces social media, digital landscapes, and at least 3 generations (Baby-boomers, X’ers, Y’s or millennials, and Gen-Z) panning the workforce.

A high focus on bringing the function to be more process-driven and data-oriented, keeping the original essence and strength of HR as an ‘Insights-driven’ function.

There is significant ability required on the HR front to be ‘digital’ and ‘quantitative’. This shifts HR knowledge-skill-abilities from earlier stages to one that defines talent-data requirements to drive insights real-time. Contemporary forms of engagement-gauges and employee-behavior data has enabled a movement away from old-order organizational climate surveys in an attempt to improve quality and relevancy of engagement-interventions through filtered talent-views at multiple altitudes, longitudes, and latitudes of the organization.

Organizations high on increasing HR capability as a technology-proponent are focusing not just on digitizing employee records, or disseminating learning through an e-learning platform that has only 35 percent adoption, the movement is towards:

Creating platforms that lead to enterprise-level visibility on employee life-cycle events helping upstream decision-making (e.g. there is a critical employee attrition, but the organization knows where the replacement exists; a sudden unique project in the pipeline but the organization knows where to pull the team from, internally; benefits and incentive design customized to specific employee-cohorts, etc)
Contemporary and deeper engagement related to Job-design, Manager-effectiveness, Work Environment)
Institutionalized behavioral-changes, ease of use, ease of access, accuracy/consistency and repeatability of people-processes independent of headcount-volume and optimized on HR FTEs
Providing curated learning-content that brings in higher productivity (e.g. a virtual augmented reality that simulates a near-real experience of a sales-call etc) and is relevant to business (something different from what any employee can anyway do on YouTube/TEDX or any other external MOOC platforms)
Deeper investments in building HR technology-proponency as a capability area to garner multi-point insights and profile-patterns of employees to help engage faster, through a study of demographics, learning styles, life-stage of employees, etc

Over the last few years, a closer look at the Job description of HR personnel at different levels and also the induction-template and post-induction training content for HR personnel being brought into the organizations show a clear step towards this reality or recognition of capability-revamp in the HR function.

Organizations are focusing on building line-manager capabilities to understand HR-risks and action-consequences better, much as they are building HR capability to relate to/participate in:

Business financials in context of HR as both a cost and investment line-item in the overall scheme of it (principles of accounting, financial statement analysis, key financial ratios, operating metrics, financial lingos related to operating budgets, revenue (gross/net), EBITDA, cash flow, etc.)
Legal matters related to understanding contracts and documents in the context of contract tenures, exit-clauses, risk mitigation, exception management, authorized signatories, etc.
Audit and Company secretarial matters related to nomination and remuneration, corporate communication content related to social responsibility interventions and Directors’ reports, audit-observations and actions, etc.
Project management related to understanding project pipelines, work-breakdown structures, roles and responsibilities, deliverables and timelines, risks and constraints and resource-requirements at each phase.

This enhanced capability or requirement on knowledge/skills/abilities in the HR function is intended to:

Drive constructive and crucial conversations with multiple functional stakeholders.

Keep HR at the center of sustainable strategic interventions.

Maintain a balance between organizational identity vis-à-vis HR professional identity.

Re-build HR capability to synchronize with the 4th Industrial Revolution to cater to business and an employee population that rides the high wave of it.

Respond better to environmental and internal factors without morphing the key identity of the function that fundamentally exists to make decisions that affect an employee’s being in the workplace.

For example,

an audit observation related to over-billing of customers may be appreciated in an HR context as an org-structural issue in finance, billing and/or operations teams, or a systems issue that requires restructuring/investment;

an EBITDA pressure that business discusses as a salary-wage-benefits issue may be countered effectively if there is understanding of slackness on other line items in the P&L sheet or financial ratio analysis;

a project management knowledge will clearly indicate stages of resource-planning that reduces resource cost on a prorate basis;

an understanding of productivity metrics related to business helps crucial conversations with line managers to balance out utilization, headcount budgets, and indents, costs.

There are possibly no readily-available assessment tools that help in identifying gaps in the current capabilities vs. required capabilities in HR in a business world that has unique and volatile requirements. Organizations that intend to develop HR capability create platforms of exposure for HR personnel and assess them on their ability to assimilate business-realities. The better of the lot, create another platform of high empowerment that allows HR personnel to understand, question and deliver. Any diagnostic or assessment tool should ideally be the one that assesses certain key horizontal characteristics related to openness, conscientiousness, learn-agility, etc. Like any other capability-building, it is also about bringing in to the functional diversity of work-experience from across industries and domains, deciding a mix of build vs. buy, prioritizing investments towards capability building, and most importantly, being on the ball and the trend of the game.

References:

Trybou et al, 2013

Ashforth et al, 2008

Beer et al, 2015

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The need for a capability-revamp in the HR function

The following are the observations and experience in trends in HR capability building.