Over the last half a century, HR has evolved into a global profession recognised as one of the key functions in most organizations. Many heads of HR now carry the job title of Chief which puts the function and the role at the same level as other senior executives in the company. Since 1987, David Ulrich a university professor, author, speaker, management coach, and management consultant who founded RBL Group, has done extensive research in this area across the globe. Together with his team at RBL Group, Ulrich has redefined HR and its professionals. He highlighted the competencies needed for the function after many years of research and meeting with business executives who recognize the function as a strategic partner for the business. In other words, the business relies on their HR function because it is just as important as any other core operational function.
In his book, “HR from the Outside in” 2012, Ulrich and his fellow authors outline six key competencies that the HR function must possess. We will look at these competencies in a while, but first it is important to note one important aspect of these key findings. As the authors put it, “The bar has been raised for HR; HR must create and deliver value in real business terms.” What does it mean for HR, to create real business value? How are Chiefs of HR creating business value? The answer is very straight forward, implementing and executing it is another story. HR needs to show impact on the bottom line and builds a clear strategy on how it intends to impact business performance. In other words, the business of the HR function is “business” (i.e. contributing to the service or product being offered to its stakeholders in positive terms).
Understanding the Business Context today and anticipating the future
Businesses are impacted by a couple of factors that are mainly driven from the outside rather than the inside. These are, but not exclusively, Society, Demographics, Technology, Politics and Environment. Society has to do with the lifestyle we chose to adopt within our families and community at large, which then spills over at the workplace. Demographics are constantly changing statistics about education, and income level which affects consumer behaviour and therefore drives different business demands. Technology has made this world highly global and constantly connected where the reputation of a company, service or individual has never been so easily accessible and vulnerable at the same time. Politics define the regulatory environment and create the conditions in which businesses must operate. Political unrest has major repercussions on the economic well-being of its country and the businesses that operate within it. Finally we mention the environment which revolves around the resources needed for growth, which are decreasing overtime, and thus impacts the social responsibility of every individual and business organization to contribute toward sustainable development.
Strategic HR professionals must be aware and sensitive to these “outside” conditions and determine how these will impact their business whether to generate business growth or anticipate trends that will support business growth. This leads to the next step for HR, which is to define and understand who their stakeholders are. They need to create a strong relationship with their stakeholders and ensure they respond to their needs, or even better, be a step ahead. A good exercise within your HR team is to discuss or define who your stakeholders are and how you will be managing their needs and expectations. Shareholders, customers, employees, management, community and partners within the supply chain are all stakeholders that HR needs to have a gauge on so as to better support them. How much of your time as an HR professional are you spending on the “outside” vs. the “inside” (i.e. company politics, internal turf wars, performing too many administrative tasks, creating HR processes and systems that result in big investments with little or no ROI for the business, etc). In order for HR to truly become a strategic business partner, Ulrich has outlined six key competencies. There are: Credible activist, Strategic positioner, Capability builder, HR Innovator & Integrator, and Change Champion and Technology proponent. These are outlined briefly as follows.
“Credible activist”: Simply defined is that you are a person the company can count on. They are able to challenge based on sound data and beliefs that will benefit the whole organization.
“Strategic positioner”: HR professionals understand the business context in which they are operating and are able to create annual plans with clear business goals.
“Change Champion”: They build the ability to change and drive change within the organization. They build the case for change and sustain the new practices or processes that they have executed across the company.
“HR Innovator & Integrator”: HR can innovate by creating new processes, and structures that generate business impact and create competitive advantage.
“Technology proponent”: Being up to speed with technology, implementing HRIS systems that make employees and stakeholders more connected with the organization.
“Capability builder”: HR needs to be an enabler that develops and builds bench strength and creates a healthy talent pipeline focusing on the competencies needed in the future.
These key competencies are crucial for HR professionals to master. Demonstrating these key competencies inside and outside the organization will provide HR with a seat “on the business table” and not just “at the table”. So where does HR stand in Malta based on the above observations and research? At best HR in Malta has just started to scratch the surface of the 6 HR competencies. More often than not, HR in Malta is still seen as an Administrative function where its job revolves around preparing employment contracts, payroll, and dealing with grievances. Many HR professionals in the local market complain that they are rarely invited to business discussions but in the same breath they admit that they are not proactive in asking to be involved either. Many of those who work in big organizations, very rarely build business plans and propose new business strategies with a clear HR business case (Ulrich et. al 2009: HR Transformation: Building HR from the Outside In). Many admit that they have the theoretical knowledge to start with but lack the practice because they rarely have been given the opportunity to prove themselves to their business leaders.
HR professionals in Malta state that they rarely network as there are few occasions where they can get out there. The choice is small indeed when it comes to HR Best practices awards in Malta. One or two organizations in our country have come up with a framework that recognizes good HR Practices. This makes the function stagnant as there are few occasions where the function can benchmark itself with the outside world. This state of affairs is both present in the public and private sector. The context within which we operate and the level at which the function is required to operate, is still at the basic level and far away from the strategic level. At a national level there is still little investment in the function to make it grow and flourish. In fact, many HR professionals pursue HR studies abroad as they admit that local academic institutions don’t provide such curriculum at higher levels. On the other hand, there are those HR illuminati who openly admit that when they think and act strategically, their own organization pushes them down. Their senior management is not ready to have an HR leader who acts in a strategic way demonstrating the key competencies outlined in this article. Some HR professionals admit that their organization is too small to implement the processes and practices from big organizations. This belief is wrong because then HR itself will be limiting the company to grow and prosper.
All the big companies started at ground zero; they all started small. HR needs to demonstrate their capabilities much more in order to be allowed a seat in the executive room. The time is ripe for HR in Malta to demand a seat “on the business table” and redefine the HR function. We will know that HR has become strategic when the CEO of the company states, “HR is just as important as finance and operations in our company because they are operating with an outside in approach creating stakeholder value.”