“When we sit down as an HR group to discuss cultures, reputation, customers, values, analytics, data, AI, HR systems, practices, skills that drive values, and so on, pick the highest effective value. Customers of HR are at the bottom, employees, responding to people's problems helps HR build relationships,” said Dave Ulrich, Co-founder and Principal of the RBL Group, Rensis Likert Professor, Ross School of Business in a masterclass session on ‘Charting a New Course for HR Work: Action Plan for CHROs' at TechHR India 2023. 

Starting the masterclass session, Dave said, “My aim is to assist you in envisioning a fresh direction for HR. Specifically, I'd like to guide you in establishing a proficient HR function that enhances our overall effectiveness. Hopefully, I'll be able to initiate a productive dialogue on this matter.”

How effective is our HR function?

To identify the effectiveness of an HR strategy, one needs to introspect and identify it. Dave questioned, “How efficient is my, or rather our, HR function? How well is it really performing? Can I evaluate the effectiveness of my HR function? And can I strategically determine where our focus should lie? When you think about your HR function and your collaboration with the head of HR, how effective do you perceive it to be? How about we rate it on a scale of 0 to 10? Zero indicates low effectiveness and ten indicates high effectiveness. The average rating comes out to be 7.33”

During the keynote session at TechHRIN, Dave underlined the concerns of HR, and emphasize the idea that the current scenario is the time of HR. Therefore, consulting firms must analyse the components of the effectiveness of HR. He said, “I took the initiative in January 2023 to explore the activities of ten consulting firms including PwC, KPMG, McKinsey and more. I extracted information directly from their official websites. I'm genuinely intrigued, these domains boast a multitude of talented individuals. McKinsey is forging impressive HR models, and KPMG is making commendable strides in the realm of HR. Therefore, analysing these models, I questioned, ‘What can we deduce from them?’ and here's where our research comes into play. We've undertaken three significant studies and embarked on a study of HR competencies. Over a span of 35 years, we collected data from a staggering 120,000 respondents. The most recent dataset included 28,000 individuals. Furthermore, we developed an organisational guidance system involving 1000 companies. We examined 37 initiatives assessing their impact on business outcomes and ventured into some fascinating recent work utilising machine learning and AI technology. This involved scrutinising 7000 companies that had disclosed details about their human capital. Through an analysis of their public documents, we gleaned insights into their HR practices.”

Key competencies and questions for the future of HR 

By analysing the data, here are the 10 things that organisations need to improve for making HR effective: 

HR Reputation - What is the HR department known for by the stakeholders? HR needs to have a good reputation. We need to have a reputation we need to be known we need to have an identity, we need to have a brand if you will. 

HR Customers - Who are HR’s customers? We have to serve the right customers. Employees are also the customer of a company. If you don't succeed in the marketplace, there is no workplace. The customer is also an investor in the community. We've got to serve our customers inside the company and outside. 

HR Purpose - What is an HR’s mission? Why do we exist? Dave commended the work of Brian Sommer on HR strategy and purpose. How many of your companies have an HR vision mission or purpose statement? Does it tell who you are? What you do, and why you do it. That's it. That's what an HR mission is about. 

HR Design -  How is the HR department organised? Structuring yourself the right way, and figuring out how do we organise the HR world? How do we have our specialists working with generalists in a small medium enterprise? In HR transformation, it's often about how we structure.

HR Capability - How does HR facilitate the right human capacity for the business? Focused on crucial questions - Do we have the right talent? Do we have the right organisation? And do we have the right leadership? All of those focus on stakeholder value, and talent. Are we hiring the people our customers would hire? Are we training them in things our customers care about? Are we paying them for the things customers buy? Culture is the value of your values to your customer and that is human capability. It's what our leaders do so that our customers will buy more from us. 

HR Analytics - How can HR facilitate the right human capability for the business? We've got to have analytics and data, as well as insights. Analytics is a hot topic. And a lot is going on in analytics to improve decision-making 

HR Digital Technologies - How can HR use technology to manage outcomes? Technology is a hot topic at TechHRIN. It’s the movement in AI and what AI is doing, and how we become good at information. 

HR Practices - How do we create and deploy HR practices? We have got to have good HR systems practices, hiring, and training to develop, how do we build those practices and people performance? 

HR Professionals - What do HR professionals need to be, know and do to be effective? We have got to have great skills for HR people. We've got to have great HR people who have the competencies and skills. And a lot of the competency work is a set of skills. We like skills that drive value. 

HR Relationships - How do HR go about doing its work? Do we work well with each other? Where do I invest to build a better HR function? 

Is AI the future of HR?

A very critical question today is whether or not Artificial Intelligence is a solution to all the problems of the world. Dave said, “AI is everywhere right now, So I tried it, asking, ‘What's the future of HR in 200 words? And within 10 seconds, I got results, which was good, and then I read it again. It's what I've written over the last 10 years, which is why I thought it was so darn good. That's not the future of HR, because it is like looking backwards. AI doesn't create new content, rather it goes back into the data and pulls out the themes using a very clever algorithm, but it's old yet packaged beautifully.” 

He further explained, “AI also presents challenges. For instance, when combining data from different sources, such as a survey from your 20 friends and a dataset from 28,000 individuals, it's important to consider their inherent differences. Treating both datasets equally isn't appropriate due to their disparate natures. Moreover, AI lacks the discernment to identify negative or harmful content on the internet, nor can it actively prevent individuals from contributing such content. Addressing these issues requires not just AI, but a thoughtful integration of technology, analytics, and human intervention. There are three things: 

Impact: Which of all those HR initiatives will have the most impact on the outcomes of the right that I care about? 

Status: Where am I doing good or bad? I want to work on things that have impacted what I'm not doing very well at. Do you care about it? Is it good? 

Differentiation: Sometimes everybody's doing the same thing, but I want to differentiate, and where to focus? 

The journey towards optimising HR practices involves numerous steps:

• The focus should be on common purposes and a shared reputation both within HR and among stakeholders. 
• Customers of HR include employees, senior executives, boards of directors, and investors. 
• Intangibles like brand, technology, and organisational culture significantly affect a firm's value, underscoring HR's impact. 
• The HR agenda can be split into two dimensions: digital business strategies and leveraging HR technology to enhance efficiency, innovation, information access, and employee experience.
• Elevating HR practices requires a keen focus on building human capability, fostering collaboration, enhancing communication, and simplifying processes.
• Additionally, as HR professionals, we must foster growth in ourselves and others, aiming to be catalysts for positive change.
• Finally, nurturing effective relationships within HR and across the organisation is essential. We can learn valuable lessons from successful relationship dynamics, such as having a shared purpose, showing respect for differences, focusing on positive interactions, and nurturing growth together.