This business focus is particularly important because, as several of the thought leaders observed in our interviews, the global HR profession lacks the same kind of standard, widely accepted, and proven methodologies that disciplines such as finance and marketing enjoy. In leadership development, for example, theories of effective leadership abound, but none are dominant or commonly accepted.
Pending the development of more consistent and accepted performance frameworks, the only way for HR to prove — and improve — its business impact is through business-aligned metrics. The best HR organizations are building that precise capability. They strive to measure their effectiveness by business outcomes, even when that measurement is difficult. For example, they track the performance records of people who have attended training and compare them to those who have not, in light of desired strategic business outcomes such as revenue or profit targets.
In many companies, HR leaders who restructure their function around business results are earning a “seat at the top table,” as full participants in the highest level of executive leadership. But the greatest value of innovative HR is not reflected in the elevation of the leader or function. It is the elevation of an idea: that people are a primary asset and competitive advantage, and that a compelling people strategy is required to realize their value. This strategy will work by habituating high performance in the people who work in every function, region, and business unit of the company.
In the end, without a focus on human capital, nothing else will change. Those who understand this hold the key to capturing the people advantage.
Reprint No. 08301
Richard Rawlinson is a partner with Booz & Company based in London. He focuses on the leadership agenda for consumer-oriented and public-sector clients.
Walter McFarland is a vice president with Booz Allen Hamilton based in Herndon, Va. He focuses on learning strategies and systems and human capital management for public and commercial clients.
Laird Post is a principal with Booz & Company based in San Francisco. He focuses on human capital management for the commercial market in the U.S. and globally.