5 Future Prospects For The HR Business Partner Model

Part 2 of 2 articles on state of the HR Business Partner model. For Part 1, click here.

(Written with Wayne Brockbank of the Ross School of Business at the University of Michigan.)

The business partner model has been instrumental for creating value for many staff functions, including HR. In another article, we summarized some of the lessons learned; in this article, we offer future perspectives on where the ideas may evolve.

As we look forward, there are many excellent thinkers who continue to examine how HR professionals can deliver value to the business. With their input, the business partner model continues to evolve. Many of the critics of the model look at today’s problems through yesterday’s solutions and wonder why they don’t get solved. This is like trying to run today’s software on yesterday’s computers. Of course, it won’t work. The HR business partner model in the 1990’s has changed in recent years to adapt to today’s business challenges. We are comfortable projecting five trends that will continue to evolve the HR field and how it delivers value to business.

First, HR will deliver value to multiple stakeholders. 

Over the last thirty years, we have both anecdotally and empirically seen steady progress in the HR field as it has moved toward greater strategic understanding and relevance. We anticipate that this progress will continue. HR professionals will continue to deliver value inside an organization by helping employees find meaning and well-being from work (sometimes called employee experience or re-humanizing HR) and organization results by being a central component of strategy formulation and implementation. HR insights make the right strategy happen.

But, moving beyond an internal focus, our recent research shows that when HR departments and professionals focus on external as well as internal stakeholders, business performance improves. We call this focusing HR from the outside/in, not looking at strategy as a mirror which reflects HR practices, but as a window to the outside world. Customer focused HR shifts from focusing on being the employer of choice, to becoming the employer of choice of employees our customers would choose.  Likewise, customers can participate in the design, deliver, and participation in training, 360’s can become 720’s, standards can be set with customer involvement. Culture can be defined less as internal patterns of work (values, beliefs, behaviors, and norms) and more as an identity of the firm in the mind of key customers made real to employees.

Companies that are able to create credible leadership capital are more likely to enjoy price earning ratios above that of their competitors.

Investor focused HR accesses the requirements of capital markets. The recent burgeoning research in finance and economics on “intangible assets” is emphasizing the increasing importance of human capital assets and HR practices that create and sustain those assets. Empirical evidence has clearly shown the investment community is learning to account for practices such as succession planning, leadership development, setting and meeting performance targets, corporate culture, and executive compensation as considerations in buy or sell decisions. Companies that are able to create credible leadership capital are more likely to enjoy price earning ratios above that of their competitors. As business partners, effective HR professionals play a central role in defining, creating, and sustain leadership capital that is valued by investors. 

Second, HR valued outcomes will move beyond talent to organization and leadership. 

In our recent research, we found that the quality of an HR organization or department had 4 times the impact on business performance as the quality of the HR professionals. Generalizing from this research, talent matters and it is important to fight the war for talent. But organization matters much more and to win the war requires more capable organizations. Shifting the focus from individual competencies to organization capabilities broadens HR outcomes. In addition to delivering talent, HR work will deliver capabilities like speed/agility, information/analytics, collaboration, the right culture, innovation, and so forth. When HR delivers individual talent, organization capabilities, and leadership, internal and external stakeholders get more value from HR. This requires HR business partners with broader business skills.

Third, HR will become more technologically efficient.

The routine work of HR must still be done, and done well. Digitization of HR has arrived and newly emerging technologies will continue to be applied to improve the efficiency of HR administrative work such as payroll, benefits administration, entry level staffing and employee record keeping. But HR technology will move from efficiency, to innovation, to information, to connection (see my article on doing an HR technology audit). 

Fourth, to be business partners, HR professionals will have to master the right competencies.

In the most recent round of our competency research with over 32,000 global respondents, we found nine competencies. Figure 1 (below) portrays the nine competencies we identified for HR professionals. Each of these HR competencies are important for the performance of HR professionals.[1] To get invited to business discussions, HR professionals need to be credible activists who influence through relationships of trust. To serve customers and investors, HR professionals need to be strategic positioners who understand business context and can think and act from the outside-in. To deliver business value, HR professionals need to be paradox navigators who effectively manage the inherent tensions in the business.

[1] The authors have available statistics on these 9 competence domains by gender, geography, respondents, time in HR, and other demographics.  

Figure 1: 2016 HR Competency Model: Round 7

Fifth, HR will be a source of both structured and unstructured information to improve business impact.

HR analytics is ultimately about providing information to improve the business. We have shown four levels of information: scorecards to insights to intervention to impact. As HR moves to analytics-driving business impact, they will need to source all kinds of information. Structured information occurs in spreadsheets with traditional statistics representing about 20% of information that can be used for business impact. Unstructured information that comes from observations, intuition, and other insights comes from HR professionals being anthropologists more than statisticians and represents about 80% of impactful information. As HR shifts information and analytics to deliver business impact (phase 4), HR professionals need to access both structured and unstructured information.

The Way Forward For HR Business Partner

In the future, HR business partners will continue to morph. The bar has been raised on HR and some HR professionals will make the grade and others will not. There are emerging business issues where HR can and will contribute value. The future for HR is filled with both challenges and opportunities. As we look to the future, HR professionals as business partners will continue to deliver value and help businesses manage the enormously difficult and exciting challenges ahead.