Episode Transcript
Speaker 1 00:00:07 Hello everyone. Today I want to talk about the journey to world-class HR and what does world-class HR look like? And I don't need to tell you why HR is important, but just to remind you, everything that's going on in business is dependent to some degree on people. And everything that goes on on the people side of business should be taken care of by hr, hiring, sourcing, developing people, moving people into the right role, creating an innovative culture, improving D E i, improving retention, reskilling people, on and on and on. So what you find when we look at our research on the professional skills of HR is a very, very high correlation between the skills of HR and the business performance of that business unit. We have now done studies with many large companies to look at the capability levels of HR teams, and you find that the business units, the geographies, the sales offices, the operating groups that have highly skilled HR people clearly outperform in financial performance and retention and engagement, customer service and so forth.
Speaker 1 00:01:11 And that's because their people operations run better and their people are just better taken care of. So how do you get there from here? Well, a couple of things I want to share with you in this podcast to get you started. First of all, the HR profession itself is very complex. Just like every other profession in business, whether it be it, finance, marketing, sales, there are many different roles and many people who come to the profession in different roles. We did a very extensive study of this with MZ over the last two years and looked at 300, 400,000 job descriptions and job postings in HR and used AI to analyze the clusters of skills and requirements and experiences in each. And what we found that there are basically 14 tribes, and I call them tribes because from my perspective, human resources is really like an anthropology.
Speaker 1 00:02:04 It's like a whole bunch of animals working together in this big planet of that opportunities of this business area. And people come into the anthropology with different backgrounds and they tend to specialize in different areas. Let me just run through these 14 tribes because I think it'll help you understand what world class h r looks like. The first of course is administration, payroll, compliance, operations, staffing, time and attendance, labor scheduling, those kinds of things. That's the sort of traditional old-fashioned HR stuff. Then there's compensation, benefits, rewards, executive compensation, and sometimes wellbeing. That's a very specialized area. The third is the most common, which is the HR business partner, the person who is the VP of hr, the generalist, the person that works as a consultant that faces off against a business unit and tries to sit at the table with the leadership team to manage the ongoing operations.
Speaker 1 00:02:57 And they may be a traffic cop, they may be a consultant, or they may be administrator depending on how you're set up. The fourth is the learning and development people, people that run organizational development, chief learning officers, training managers, content developers. These people also understand leadership development, succession management, and many forms of professional training, and they understand the technologies and methodologies of education and training. The next is what I call employee experience, io psychology, analytics and design people. There is a whole domain of people in HR that have psychology degrees or they have backgrounds in analytics or statistics, and they work in employee survey and correlating data between different parts of the organization and what are the impact of various employee factors. The next are facilities people, people that worry about facilities, operations, logistics, maybe meals, workplace safety. All of that stuff is affiliated with hr.
Speaker 1 00:03:51 The next is labor relations. If you're in a regulatory environment or a labor union oriented company or a manufacturing company, there's people that deal with collective bargaining, legal negotiations, compliance, claims harassment, various forms of legal regulations. Then there's D E I people, a small but very important group of professionals that understand all the issues of fairness and equity and inclusion and various forms of D E I in the entire supply chain of the company in in every really domain of hr. Then there's talent acquisition professionals, people that deal with the highly complex area of sourcing, recruiting, assessing, interviewing, onboarding, finding people, creating an employment brand, understanding the relationship between recruiting and hiring managers and the entirely complex operations. Underneath that, then there's people in HR tech people that are basically technology professionals working in the domain of HR that understand how systems work and implementation of these systems and security and configuration and the integration with various IT systems.
Speaker 1 00:04:53 Then there's basically analytics people, data scientists, and a lot of companies have data scientists dedicated to HR who maybe don't have backgrounds in psychology, but just look at the data and they understand the role of ai, they understand rpa, they understand chatbots, they understand natural language processing. And finally, there's people that focus on health safety, sanitization testing, reporting public health and all the issues around that. Now, there are hundreds and hundreds of job titles within these tribes, but every job title somehow has to do with the roles or tribes within that group. And then of course, people are grouped into service delivery functions, center of excellence functions, and individual HR managers that work with individual HR teams. And what you find in really, really successful HR organizations is really a balance of two things. On the one hand, they're highly professionalized in every role. So each of the individual areas of HR that you do, if you're a fast growing company, it might be mostly recruiting.
Speaker 1 00:05:56 If you're a big global company, it might be all sorts of things on leadership and development and job mobility. They professionalize those roles. So rehr Professional is expected to be highly competent to understand the role of technology, to have specific goals and to be organized into a group that has a clear mission that relates to the mission of the company. The second thing that great HR organizations have is a clear and continuously improving service delivery model. Now, the original early days of hr, it was framed as a service delivery function because in the history of business, back in the old days when most companies were in manufacturing and very highly hierarchical, the HR function was kind of the compliance function and they prevented you from doing stupid things. So they were oriented around efficient or empathetic service delivery. Well, it's much, much more than that.
Speaker 1 00:06:53 Now, everything that happens in an employee's work life from losing a laptop to forgetting their password, to having an argument with their boss, to feeling underpaid or not understanding how to do their job could kick off a requirement for some specialized support from someone in hr, IT facilities, legal, or another part of the business functions that service delivery infrastructure is critical to your success. Now, there are companies that have hundreds and hundreds of HR professionals in the business doing that work, and that might feel good, and it certainly provides a high level of service. It doesn't necessarily create service excellence cuz these people aren't sharing information with each other. They're not very scalable, and they're frankly kind of expensive. So developing the service delivery model item two is critical and there's lots of expertise in doing that and lots of technology in doing that. The third characteristic of a fantastic HR function is what I call design and innovation used to be that you could kind of copy what GE or some iconic company did and say, we just want to do it the way they do it.
Speaker 1 00:08:01 You can't do that anymore. I would like it if you could, but the world is changing too fast and companies are trying to innovate in their people practices just like they are in their products and services to customers. So what you do in your hiring and promotion and culture and development process in your company really should be unique to what your company's trying to accomplish and how your company differentiates itself in the market. I've thought about this a lot and in every given industry, there are three types of companies. There are highly innovative companies that are always building best of breed new ideas and products. There are highly efficient companies that drive cost down and win business because they're cheaper and more cost effective than their competitors. And then they're what I call customer centric companies or customer intimate companies that have more of a full solution offering to their clients.
Speaker 1 00:08:50 Depending on which of those you are, your people practices are gonna be different. So this third area design of innovation is critical and a lot of companies are working on, uh, design thinking programs in hr, co-creation, building product management roles, and getting really serious about iterative development and continuous feedback from users. And so that's the third area of world, world class hr. The fourth is professional development of the HR team. Now just like professional development of salespeople or scientists or marketing people or finance and operation and IT people are important, so is true in hr. And what I've learned in the last two and a half years since we've been focused on our academy is that this is a very in-demand area with very immature solutions. It doesn't mean sending somebody to get their SHRM certification. It really means giving people job rotation into and out of hr, into and out of the business.
Speaker 1 00:09:47 An academy like the one that we offer access to, external experts in continuous education on best practices, evolutions of technology and culture and economics and science and what's going on in the business and industry. And so that's obviously an area we spend a lot of time on with companies. The fifth indication of world-class HR is world-class focus on technology. Now, it used to be you could be a great HR department and lag in technology, and that was true for a long time. When I was an analyst, I used to find that a lot. There were some really great companies that had very old archaic, clunky systems. That's not true anymore. Everybody's job is dependent on technology. Every decision is dependent on data. And if your technology is hard to use or you don't have data in one place, or the employees are struggling to find things or their productivity is hampered by simple activities they're trying to do in hr, you are definitely not functioning well.
Speaker 1 00:10:44 So what what great companies do is they invest in an HR IT architecture, they partner with the IT function. They are constantly looking at new tools and technologies because the market is changing so fast and they experiment and iterate and they feel a sense of competence around technology and HR technology in the HR function itself. And that's not hard to do, but you have to take it seriously. The sixth important area of world class HR is a focus on the employee experience. Now, I don't mean just buying an employee experience tool or doing surveys. I mean having a serious focus and a deep understanding of the critical roles, the personas, the journeys, the demographic makeup of your workforce, the transitions that people go through in your company, what impacts wellbeing, what impacts diversity and inclusion, and what are the various experiences and technology enablement that we can provide to make experiences better and better and better over time.
Speaker 1 00:11:46 And the employee experience stretches from the candidate experience to the new hire experience, to the experience of somebody who's in their job and growing and becoming a manager or leader to somebody who's becoming maybe even alumni and even a part-time worker. So that's a big area. It's not just one person sitting around doing surveys, it's a whole big area of hr. It's making sure that employee experience is central to everything you design. Number seven is optimization of the centers of excellence. Now, many people in HR know this, but the domains of HR are each complex. I mean, talent acquisition alone has, you know, hundreds of practices required to do it well, learning and development is similar. Compensation and benefits reward systems, how to build a career mobility system, how to do analytics. These are centers of excellence. Now, when I first heard the word center of excellence early in my career as an analyst, I kinda laughed.
Speaker 1 00:12:45 I thought, well, why isn't everybody excellent? So it's a little bit of a strange name, but the COE as they're now established, have to each be world class. And there has to be a group of people in that function that are constantly innovating and exploring best practices. And when one of the COEs is behind other COEs suffer. Because today, all of these centers of excellence are related. If you're recruiting, you need to understand diversity and you need to understand what skills are needed, and you need to understand what the issues are on internal mobility. So you can't just sort of go out there and start hiring people. You need to be well connected to these other business functions. If you're running learning and development, which many people used to think of as the opposite end of hr, you need to understand who the company's hiring, where the company's growing, what skills are in demand, what are the future skills the company needs in the future?
Speaker 1 00:13:35 What technologies are we gonna be basing all of our learning and development on? And it goes on into all the other domains. They're all connected. So the seventh issue in world HR is optimizing the COEs. Number eight is the team. And what this means is the HR function as a whole has to function as an integrated unit. Now, I know a lot of you have very, very large complex HR organizations. I mean, just this week I talked to three companies, each of which have HR organizations with thousands of people, and they're located in business units and they're in different countries. And some of them are reporting directly to line leaders and different business units. And every time you acquire a company, you get another HR team. But I would suggest that if you really want to be world-class hr, you need to think about this as one gigantic integrated unit.
Speaker 1 00:14:29 And that means a couple of things. It means an HR team that has personal relationships with each other, an HR team that is incentive to help each other by working on cross-disciplinary projects, an HR team that facilitates internal mobility. So people move from place to place. And an HR team that has a strong focus on helping each other and has common goals, optimizing each person's individual metrics is fine, but they have to understand that the greater picture of helping the whole company succeed is really why we're here. So if I'm working on a project and somebody in another part of HR needs my help, I should be more than willing to take some time and help them get their project done so in the future they will help me. Now, when you put this all together, it's a pretty complicated problem. And I think CHROs have in many ways one of the toughest jobs in business, particularly now you have to be good at operations and technology and data and understanding where the business is going and the cultural and economic issues in the outside world, and of course where the CEO wants to take the company.
Speaker 1 00:15:34 But I would suggest that underneath it all is a strong focus on development and growth of the HR function itself. And this is where we've had the most interesting experience the last couple years. You can read books and articles from consulting firms on best practices on how to do this and that. And you can go to a conference and meet somebody who's doing something great and say, oh, we need to do that. That's such a good idea. But those won't really work unless your HR team is ready to strap in, roll up their sleeves and get with it. And that takes a sense of confidence, a sense of competence, and a strong ability to listen and learn. And learning is important. And we can talk about learning all the time, and it always sounds like a little bit of a sideline, but in many ways HR is all about learning.
Speaker 1 00:16:23 Cuz you can't predict what a given organization's gonna do under stress or a given individual. I mean, you could have a PhD in psychology and be surprised the next day about something that somebody says or does. So we have to be a continuously learning and innovating group, and not just for ourselves, but on the behalf of the company. Because in many ways we are in one of the most high leveraged roles in the whole organization. When we do something well in recruiting and pay and rewards in skill development or whatever, the impact is massive. There's no question about the ROI of a great HR department. When the HR department is running well and all these HR things are getting done at a high quality in an innovative way, the company will outperform its peers. There's no question about it in my mind. And when bad things happen, which always happens to companies, there's a fire, there's an accident, there's some form of a business interruption or a competitor energy market, and the company has to adapt.
Speaker 1 00:17:23 It's all about the people knowing what to do and feeling comfortable moving to new positions and doing things in a new way. And we are the ones that make that possible. Now, the only reason I made this podcast is because in the last week I've had four meetings with very senior HR executives in very large companies that listened and looked at what we were doing in our academy and all of our services and came back to me and said, where do I start? And what I would suggest is what we're gonna do over the nest of this year and certainly over the coming years, is we're gonna show you what this journey looks like. It's not a one time thing, it's not a transformation you buy from a consulting firm and then you're done. This is part of turning this profession into the most important, most valuable part of the business it can possibly be. And I hope this podcast give you just a little bit of insights on how to do that. Thank you very much. I look forward to hearing from you.
