The concept of disruption comes from the technology world where change is rapid and on-going and transforms industries: Google disrupted on line search and advertising; Salesforce disrupted Customer Relationship Management (CRM); Amazon disrupted distribution; Uber disrupted transportation; Airbnb lodging; Facebook disrupted social experiences, and so forth.
For HR (and other disciplines like IT, marketing, finance, law), disruption denotes new ways to think about and solve problems. HR disruption is about delivery of HR services, but also about the logic behind that delivery. Disruption is not a noun with an end state, but a verb where the process of evolving HR continues. HR disruption is less about a shift leaving behind one idea for another (e.g., moving from operational to strategic) and more about a pivot of ideas building on each other (e.g., being operational and also strategic). The disruptive pivots in HR have been going on for decades and will inevitably continue. In this paper, I highlight some of the major HR disruptions that shape HR work today and in the near future. I pick these 8 disruptions, knowing that other disruptions clearly exist, but these 8 highlight the evolving landscape of HR.
1. Value added focus of HR: towards outside in
The first disruption is about the focus of HR work. Simply stated, HR is not about HR, but the value HR creates. For decades, when talking about HR, the discussion focuses on the activities of HR (staffing, training, compensation, and so forth). Increasingly, we see the focus of HR work on the value these activities create more than the activities themselves.
We have seen four waves of HR value creation, each building on the previous platform. HR has created value from administrative efficiency to functional excellence to strategic HR and now has pivoted to HR outside in with external stakeholders. Each of these waves disrupts and builds on the previous. The outside in wave focuses, for example, on how HR delivers value to customers, investors and communities outside the organization as much as employees and line managers inside (see book HR From the Outside In). HR focuses less on the HR work and more on how that work shapes investor, customer, and community value. HR work also connects to changing business conditions so that the criteria of HR are less about efficiency, innovative HR, strategic HR, and more about responding to the outside world. For example, the “customers” of HR are not primarily the employees inside a firm, but the customers of the firm and investors in the firm.
2. Evolution of Outcomes of HR: towards organization
HR delivers value to internal and external stakeholders in evolving ways. For decades, HR focused on the outcome of talent as characterized by the “war for talent”. Dozens and dozens of HR investments have been made to upgrade talent, workforce, or people. In today’s jargon, the importance of talent is being rediscovered through terms like the “employee experience” which is old wine in new bottles. People, particularly employees, however defined, have been the outcome of good HR work for decades.
In our research, we have found a disruption in that HR outcomes. While continuing to create better talent (or employee experiences), HR should also focus even more on organization and leadership. Our research with over 1200 businesses and 32,000 respondents shows that organization improvements have four times the impact on business results as talent investments. This remarkable finding shows up in many settings. In team sports, the leading scorer is on the team that wins the championship about 20% of the time; 80% is teamwork. In movies, the winner of the academy award for best actor or actress is in the movie that wins movie of the year about 20% of the time. Music groups outperform the individual artists when the groups disband about 80% of the time. Individuals are champions, but teams win championships. Talent matters, but organization matters even more. And, leaders shape both the talent and organization by their modeling the right behaviors. HR outcomes are disrupted from only talent to talent, leadership, and organization.
3. Talent outcome disruptions: towards wellbeing
Within the talent outcome, disruptions are occurring as HR pivots from focusing on employee competence (right skills, right place, right time) to commitment (behavioral engagement and showing up at work) to contribution and wellbeing (emotional engagement and finding meaning from the work people do). As noted, others capture this talent disruption by focusing on the overall employee experience which highlights the wellbeing that employees find from work. Ensuring that employees experience wellbeing from work (See our book Why of Work for 7 factors in making this happen) disrupts and evolves the talent agenda. One of the evolutions around the employee experience is that employees have more responsibility for creating their experience than the organizations. Organizations have an obligation to offer employees opportunity; but employees has the responsibility to be agents unto themselves to act on these opportunities.
In addition, the disruptive outside in logic (in #1 above) emphasizes that better talent is assessed by the extent to which talent increases customer and investor value, not just talent for talent sake. Employee experiences are lead indicators of customer experience and investor confidence. Employee sentiment is not the end, but a means to market and shareholder value. This connection disrupts the paradigm of emphasizing social values or financial success and shows that the two can not only co-exist, but be connected to each other. When a firm loses in the social value reputation setting (e.g., Volkswagen, Uber, Wells Fargo, United), the firm also loses in the financial markets. Connecting talent and market value impacts both.
4. Organization outcome disruptions: towards capability
Since “organization” has 4 times the impact on business performance than “talent”, it is important to define what we mean by organization. Definitions of organizations have been disrupted from seeing an organization as a hierarchy or bureaucracy with clear roles, rules, routines, and responsibilities. Organizations may now be seen as bundles of capabilities, or characterizations of what the organization is known for and good at doing. When we ask colleagues which firms they admire, we get pretty consistent answers. When we then ask these colleagues how many layers of management they have, no one cares. We admire these firms because of their capabilities, or what they are known for and good at doing, not their morphology or structure. Organization is not structure, but capability (see very early introduction of this concept in the book Organization Capability).
In our research, we have identified which capabilities predict business success in today’s changing markets, including leveraging information, managing culture, creating change or agility, ensuring collaboration and innovation. As these capabilities become connected to market opportunities outside the organization, they disrupt how people think about, work with, and shape organizations. Investors who see these capabilities will increase market value; customers will form long term relationships; top employees will join and stay; and strategic intents will be realized. Capabilities also become the outcomes of integrated HR practices. Staffing, training, compensation, communication, and policy choices can be integrated around creating these key capabilities.
5. Leader outcome disruptions: towards leadership, navigating paradox, and brand
Leaders and leadership are some of the most studied concepts in both personal experience and management literature. There are three disruptions in leadership. First, there is a pivot from the individual leader to the collective leadership team. Leaders matter, but leadership matters more. HR should not just be about helping individuals become better leaders, but building collective leadership depth throughout the organization. Any leader is ultimately known for the leadership who succeeds him or her.
Second, there is a disruption about the primary factor that will ensure leadership effectiveness. In recent years, leaders have been encouraged to have emotional intelligence, then learning agility (or grit, resilience, perseverance). In our research, navigating paradox has become the next wave in the evolution of leadership effectiveness. We found that when leaders can navigate the tensions inherent in paradox (long term and short term; divergent and convergent; top down and bottom up; etc.), they help organizations adapt to changing conditions.
Finally, effective leadership is defined when leader’s competencies reflect promises to customers and investors (see book Leadership Brand). In particular we found that 25 to 30% of a firm’s market value comes from investor perceptions of quality of leadership. We have now found ways to codify, quantify, and improve the leadership to give investors more confidence in future firm performance (see Leadership Capital Index).
6. HR competencies disruptions: towards competencies that deliver outcomes
For thirty years and with 7 rounds of major data collection, we have disrupted the competencies for effective HR professionals. We have pivoted from trusted advisor to credible activist; from knowing the business to strategic positioner; from implementing an HR practice to providing integrated HR solutions; from managing change to navigating paradox. We have conclusively shown that HR professionals have made enormous progress in acquiring and demonstrating these competencies over the last 30 years. The HR profession is improving the quality of HR professionals.
And, we have disrupted the study of competencies away from merely having the competencies to showing how these competencies increase personal effectiveness, stakeholder value, and business results. Competency models are not about the competencies, but how those competencies deliver real value.
7. HR Technology disruptions: towards connections
We see lots of emerging trends with technology: internet of things, robotics, artificial intelligence, social media, and so forth. With the advent of technology, HR has been continually disrupted.
We have shown how technology investments can pivot in four phases. First administrative efficiency. HR technologies streamline administrative HR work by being much more efficiency in delivering HR services. Second, HR innovation. HR technologies have created dramatic innovation in hiring, paying, training, and governing organizations. This will continue with robotics and artificial intelligence replacing many of the traditional human tasks. Third, HR and business information. We found that access, analysis, and application of information delivers real value to a business. Technology enables all three through big data, innovative analytics, and decision insights. Finally, social connection. Technology should enable people to connect with each other across time and space that create positive social experiences thus overcoming the demoralizing effects of social isolation. A company is posting a general managers weekly observations on a company web site with little fanfare or polished video quality. But, employees can feel connected to him in remarkable ways.
8. HR analytics disruptions: towards business impact
HR analytics has been an increasingly popular topic for HR professionals with books, papers, and conferences proclaiming the advent of evidence based HR. We found that just doing analytics does not have business outcomes one might expect. Without linking analytics to business results, the statistics do not tell the right story. By focusing on the business, the concept of HR analytics has been disrupted. In the 1990’s I coauthored (with great colleagues) the book HR Scorecard. Today that book is out of date. Analytics has pivoted from a scorecard to insights based on big data to interventions about which HR practices have which results to business impact where HR drives customer share and investor confidence. As Dick Beatty says, the scorecard for HR is the business scorecard. HR analytics are NOT about HR, but about the business.
Continual HR disruption …
These 8 disruptions are only a smattering of the HR disruptions that have gone on, are going on, and will go on as HR pivots to deliver value. In reality HR disruptions are a continual process that HR professionals need to recognize and master. The exciting disruptions HR faces today are critical to the ongoing process of HR delivering value. In my teaching, I recognize the half-life of knowledge, when 50% of my teaching materials are out of date because of the pace of HR change. For me, half-life of my teaching materials is about every 2.5 to 3 years when I need to have 50% new insights on HR (and handouts, case studies, and tools). Disruption is both a challenge to stay fresh and an opportunity to continually renew.
Article by Dave Ulrich – Speaker, Author, Professor