How to Get Results from Your HR Transformation

By Dave Ulrich ? [email protected] ? Co-Founder, The RBL Group, Norm Smallwood ? [email protected] ? Co-Founder, The RBL Group and Alan Todd ? [email protected] ? Founder, CorpU

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).

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 OGS, 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). 

These results 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). 

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. 

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.

Implications

These findings 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 receive rigorous guidance on where to focus for results. 

 This OGS is FREE to anyone. Simply visit www.rbl.ai to get started.

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Dave Ulrich is the Rensis Likert Professor at the Ross School of Business, University of Michigan and a partner at The RBL Group, a consulting firm focused on helping organizations and leaders deliver value.