In today’s business, HR professionals need to establish organizations that leverage individual talent through collective actions
Organizations should be defined less by their structure and more by their ability to establish the capabilities required to win—that is, to serve customers in ways that competitors can not readily copy
With an outside in perspective, HR professionals offer unique information, insights, and recommendations to deliver competitive advantage. In formal and informal business discussions, each staff group brings unique insights to drive business results: Finance talks about economic performance with information about revenues, costs, and financial returns; marketing discusses customers with recommendations on targeting key customers, customer response (e.g., net promoter score), and customer connection; operations makes recommendations and systems, quality, and supply chain. When HR partners in these strategy discussions, we propose that they provide insight, information, and recommendations on talent (people, workforce, human capital), capability (culture, processes, key success factors, systems), and leadership.
At the risk of grossly oversimplifying, let me suggest that there is actually a deceptively simple formula for talent that makes people more productive: Talent = Competence + Commitment + Contribution. All three elements of this equation need to be considered and integrated to fully manage talent. Competence means that individuals have the knowledge, skills and values required for today’s and tomorrow’s jobs. One company clarified competence as right skills, right place, right job, right time.
For example, an emerging trend in the workforce planning domain of competence improvement is to identify key positions and match people to positions. Competence should start outside in by turning customer expectations into the talent requirements for the future. Committed or engaged employees work hard and do what they are asked to do, but may be doing the wrong things. With an outside in focus, committed employees focus attention on work and activities that will deliver value to customers, investors, and communities. Committed employees have an employee value proposition that balances what employees give to the firm with what they get back. Dozens of engagement studies have shown that more committed employees are more productive. Contribution refers less about behavioral engagement and more about emotional connection to the organization. When employees find meaning (sometimes called well being or growth mindset), they become personally connected to the values of the organization. Their engagement comes from within and ensures over time. In our book Why of Work, we identified seven factors that help employees find meaning from work.i
1. What am I known for? Discover one’s signature strengths and weaknesses that shape an identity.
2. Where am I going? Determine what matters most to an employee and what gives them a sense of purpose.
3. Whom do I travel with? Learn to build positive teams and relationships.
4. How do I build a positive work environment? Create a positive work setting and culture.
5. What challenges interest me? Help people solve problems that matter to them.
6. How do I respond to disposability and change? Allow employees to learn and growth from their work. This area has been expanded with recent work on growth mindset, resilience, and learning agility.
7. What delights me? Help people find joy and fun from work tasks.
With these ideas in mind, HR professionals focused on talent outcomes can raise questions such as:
To what extent do our employees have the knowledge and skills required to deliver on our expectations for customers, investors, and communities?
To what extent do we have an employee value proposition that increases commitment and engagement of our employees to the right goals?
To what extent do our employees find meaning and purpose from their work so that they are self-motivated to accomplish work?
Three Dimensions of Competitive Organization: Capability, Culture, Management Action
|Key question & focus
|Audits that can be done
|Analogue with individual
What is the organization good at doing and what should it be known for? Competitive differentiators.
Resources and Strategic capabilities
Capability audit: What do we have to be known for and good at to win? This should be tightly linked to strategy.
Measure the extent to which priorities are shared about capabilities required to win
What is my personality? We each have a persona-lity that can be dissected into five core personality traits based on what comes naturally to us
How do we shape the right patterns that will enable us to win? How the organization works: Event, pattern, identity.
Do we have the right patterns
for thinking and behaving?
Measure the clarity and accuracy of the culture
What habits that my lifestyle and identity? We each have habits or routines that determine who we are.
Management action 1:Intellectual agenda
Create a clear message about the desired culture to share inside and outside
Do we have a shared culture?
Do we make recognize implicit
Measure unity of culture and
clarity of assumptions.
What are my thought patterns (schema)?
2: Behavioral agenda
Turn culture identity into employee actions
Do employee behaviors link to the culture?
Measure behavior alignment and change
What are my daily actions? (calendar test)
Management action 3:Process agenda
Create, shape, and reinforce culture through management practices
Process or system audit:
Do we have processes that reinforce and embed the culture?
Measure process alignment and change.
How do my emotions shape my experience and sustain my desired routines?
In the last 15 to 20 years, the HR profession has been shaped by remarkable work captured in the ‘war for talent.”ii To win the war for talent, many have built systems for bringing people into the organization (sourcing, having a value proposition), moving them through the organization (development, performance management, engagement), and removing them from the organization (outsourcing). iii
But, in today’s business, HR professionals need to establish organizations that leverage individual talent through collective actions. Talent is not enough. The whole organization should be greater than the separate parts. Teams outperform individuals. Individuals are champions, but teams win championships. Some simple statistics show the importance of teamwork over talent:
In hockey, the leading scorer is on the team that wins the Stanley cup 22 per cent of the time
In soccer, the winner of the Golden Boot (leading scorer) is on the team that wins with World Cup 20 per cent of the time
In basketball, the player who scores the most points is on the team that wins the NBA finals 15 per cent of the time.
In movies, Best Movie of the year also has the leading actor (25 per cent) and actress (15 per cent) of the time.
Talent matters, but in many cases, organization matters more.
Let me propose a three step process (summarized in Table) for HR professionals to bring discipline to moving from war for talent to creating victory through organization.iv
In Step 1, organization capabilities represent what the organization is known for, what it is good at doing, and how it allocates resources to win in its market. Organizations should be defined less by their structure and more by their ability to establish the capabilities required to win— that is, to serve customers in ways that competitors can not readily copy. Organization capabilities might include ability to respond to or serve customers, drive efficiency, manage change, collaborate both inside and outside, innovate on products and business model, access information, and establish the right culture. HR professionals can facilitate capability audits to determine if the organization has prioritized the right capabilities to win.v
In Step 2, the culture becomes a key capability. Using the outside in perspective, an organization’s culture is less about events (rituals, symbols, or artifacts) or patterns (values, norms, expectations) and more about an identity (reputation of the firm in the mind of key external stakeholders made real to employees). The right culture takes what the key customers know about the organization and uses this external identity to shape internal thought and action. This template for culture change suggests that a firm’s culture changes when its customer promises change, that culture should vary across businesses to the extent that customer promises vary and that culture ultimately creates value through increased customer share. HR professionals can audit the extent to which an organization has the right culture.
In Step 3, management actions can be identified and implemented to create and sustain the desired culture. My colleagues and I have classified these actions into intellectual, behavioral, and process agendas. Intellectual agendas ensure that managers create a shared culture inside and outside the organization; behavioral agendas show the extent to which all employees behave consistently with the desired culture; and process agendas institutionalize the culture through management practices.
In business dialogues, HR professionals can be the architects (defining the logic and blueprint) and anthropologists (interpreting the right pattern) of capability by raising the following questions:
To what extent have we defined our culture from the outside in, making sure that our external firm brand becomes the basis for our internal ways of thinking and acting?
To what extent have we created a discip lined process of evaluating and transforming our culture?
To what extent do our management actions (intellectual, behavioral, and process agenda) reflect our desired culture?
Ultimately, leaders bring together both individuals and organizations to solve customer problems. But, there is a difference between leaders and leadership. The term “leaders” refers to individuals who have unique abilities to guide the behavior of others. Leadership refers to an organization’s capacity to build future leaders. An individual leader matters, but an organization’s collective leadership matters more over time. Looking forward, HR professionals will need to not only help individual leaders be more effective through coaching, 360 feedback, and individual development plans, but build leadership depth.
The outcome of effective leadership is not only employee engagement and organization goal achievement, but shareholder(debt or equity) confidence. In recent work, I proposed a leadership capital ratings index (like the Moody’s credit worthiness index) that could be used to define effective leadership.vi This index would have two dimensions, or domains: Individual and organizational Individual refers to the personal qualities (competencies, traits, characteristics) of the key leaders in the organization. Organization refers to the systems (often called human capital) these leaders create to manage leadership throughout the organization and the application of organization systems to specific business conditions. Using these two domains, previous leadership and human capital work may be synthesized into a leadership capital index that investors and others can use to inform their valuation decisions and HR professionals to enhance their impact. By using a leadership capital index, the requirements of effective leaders could be defined and clarified from the outside/in.
In business settings, HR professionals may prod a discussion of the right leadership with questions such as:
To what extent do we recognize the importance of collective leadership in reaching our goal?
To what extent do we create a leadership brand that defines how leaders inside our company better serve external stakeholders?
To what extent do we regularly assess our leadership capability to discover areas of strengths and weakness?
To what extent do we seriously invest in developing future leaders who will respond to future business requirements?
i Dave Ulrich and Wendy Ulrich. 2011. Why of Work: Creating the Abundant Organization. New York: McGraw Hill.
ii Ed Michaels, Helen HandfieldJones, Beth Axelrod. 2001. The War for Talent. Harvard Business School Press.
iii Justin Allen and Dave Ulrich. 2013. Talent Accelerator: Secrets for Driving Business Growth In Asia.
RBL Group and Ministry of Manpower (Singapore).
iv Dave Ulrich. 2015. Leadership Capital Index. To be published.
v Dave Ulrich and Norm Smallwood. 2004. Capitalizing on capabilities. Harvard Business Review. 119128. Dave Ulrich. 1997. What is organization?. Leader to Leader, 1997(5), 4046
vi Dave Ulrich. 2015. Leadership Capital Index. To be published