* ao Six Actions for HR to CT TON CLOG Siv Artiane far UD ta Croatoa So oma con More stakenolder value Geni) By Dave Ubich, Renss Likert Professor, Ross School of Business, University of Michigan, Co-founder, G3HC (doug@umichedu) & Norm Smaliwood, Co-founder, G3HC (nsmaltwood@rblnet) le Oeonment PD Sme exe. How can HR create more value for ll stakeholders? ‘Answering this question will enable you and your organization to: 1. Make informed choices with actionable insights about where ta prioritize your HR work, 2. Intentionally disclose what you are deing, its impact, and improvernent plans. ‘Making informed choices and intentional disclosures i relevant for many stakeholders (see figure 1). (Note: To access our latest insights, go Sie aot OS ee. Figure: Stakcholders for Human Capability Why do stakeholders care about human capability?\We have both summarized others’ research on value-added work; and in the last few years, we have been actively engaged in four major studies to further this agenda (se figure 2), Bie Study Name Sample ‘Topi staid RGompstney —Overi20 00 espuadents | + Onanizton apatites Suir over asyeas| b Miaigariment competences ‘esi Cia Mundrssatepaniations; | Leaders leave donne Ine Moosdvoflnasige: | Lent bead inpeovenentia Alle Deore Sie tng SEC ‘econ ‘eseig mate een | peo epee ad TNL anys Based on this work, we suggest six specifi ations and questions that allow business and HR leaders to create more value from their HR work 1. Articulate a point-of-view: What is our point-of-view about or how do we define HR? Your company needs to define what HR means, Too often the HR space is Que Oeonmant 92m exe: (eg, great resignation, quiet qurting, rybra wore, LEO pay ratios, skil-Dasea pay, ete). These interesting and popular initiatives often are independent efforts tegrated with other initiatives nor cumulating and building on previous Incurwark, we have evolved the definition of HR to move from isolated HR. initiatives to an integrated human capability framework Our human capability framework organizes 37 HR initiatives into four categories (talent, leadership, ‘organization, and HR function) Conceptually, this logic is called a middle-range ‘theory that creates a typology for organizing and unifying diverse ideas. tt moves HR towards a dlscipined science. Pragmatialy this human capability framework Que Oca sue exe. Figuze Haman Capa Frames: Ingrating 7 nites ino Four Pathways Bie Deewana GEC2. Derine, seek, ana track outcomes more than activities: How ao we know we have done well? When improving human capabilty, many emphasize activites (eg, number of days of training, time to hire, types of emplayees, etc). Many of the HR benchmarks compare these activites to others and share them as a dashboard, This activity focus is like measuring a sales person by the number of cals rather Qite Deonmant PshHe 60025. 2anne To create value, our wok has focused more on how investments inthe four human capability pathways 37 initiatives deliver stakeholder value. Instead of merely describing activities, we work to prescribes how activites deliver stakeholder outcomes. An outcome focus moves beyond benchmatking and best practice to guidance for impact (see figure 4). Figure _Hvolvng from Benchmang to Gulance for Impact 2 i ce Ue @Qeonment Se HR Analytisiinforma 3. Prioritize what matters most: How do we figure out where to focus or start our HR work? dum © mn Psmte doing it” "We dda survey asking respondents what they wanted us to focus on.” (or "My instinct tells me to do this initiative” These subjective views may be valid, but they are not explicitly tied to value creation for stakeholders Inourvalue-focused work, we seek mote objective criteria to prortize human capablity investments. These objective critria are often based on: ‘+ Impact (How much value does the initiative deliver to stakeholders?) ‘+ Weaknesses How well do we do the initiative today?) ‘+ Variance (How much opportunity do we have to improve?) Bue Oeewwant Ime 0002) anne 4. Apply relevant and innovative methodology: How do we ‘measure our work and track progress? The prevalent methodology to determine where or how to create human capability value is to ask respondents their opinions through interviews and/or surveys, then perform analysis on responses to see patterns. People's opinions, collected through interviews or surveys, are relevant, but more accurate data is identifying what people actually do, For example, | may perceive and report that |am eating healthy, butf someone tracks what | actually consume, my perception, Ale Deonent DP siae C06 sone Incour most recent work, we have been able to adapt an innovative artificial inteligence (Al) approach to measure progress towards outcomes. By appiying natural language processing (NLP), we have been able to score what companies actually report in their required public documents (EC); and overtime, we will be able to the “scrape” (or score) other existing documents (e.g, prony staternents, earings cals and comments, board oF executive committee minutes, public imerviows, senior leader presentations and so forth). By focusing less on opinions land mote on actual reported information, we have a relevant and innovative methodology to determine value Qe Deen Pome ee How often do presentations, reports, or proposals share information that does ‘not lead to action? To move information beyond being interesting to having Impact requires thatthe information help stakeholders make informed choices that help reach their goals (nique 1) In our work, we offer stakeholder information that willimpact their decisions When we present insights (theory, research, and practice), we frame them in terms of how these insights wil improve specific choices and decisions leading to ‘outcomes they care about. By sharing human capability information with each stakeholder, choices ean be made about how to create stakeholder value. By Qwe Qeeowent Psmte 200 2) 32mm accurately invest in and boards better advise and monitor a management agenda 6. Scale, leverage, an: be continually improved? prove work: How can our value created Many efforts to create value ae single events that paint a picture of a current state using thought leadership to create a report, presentation, or initiative imately, creating stakeholder value must be a sustainable, long-term agenda: it is not just a picture but an ongoing movie that shares results overtime, Our work be Deeoment sme ene ‘Summary By specifying actions, answering questions, and taking fist steps (see figure 5), business and HR leaders can better create stakeholder value overtime, You can alzo access our latest work by going to www.g2humancapabilty for ideas, tools, and exercises. Figures ‘Six Actions, Questions, and Next Steps to Create Stakeholder Vale from Human ‘Capit comie? 2 Howdowe | Deseibe what we do Prise wbat we boul Define seek, | Know we have_| with a descriptive model do suceced with our sadtrack dogewell” | hathenchmasks hers stakeolders 3 Howdowe | Rely onsubjectivity and) Compute objective data Peorte figureout | pertonalopinions based on impact, what matters | were to foeus ‘weakness, and variance hot Uratart our HR (Copan) wor 4 How dowe | Use sre o interviews | Faamine wnt people or Apply’ | measureour | towackiwhat people organizatlans do, say ct fleantand | workand track | ve thiakrorfee! | report Alte Deonwent Pe 2002) ne ‘Translteto_| information we | presentations reports, | chaices and decisions stakeholder | elle? Endscorecards with withall stakeholders valve ‘management inside and out © Hwan our | Faint pctareoftolay’s Create a movie of Seal,” | valuecreted | curent state ‘continuous and Teverage, _ | beenatinualy Satainable improvement Sndimprowe improved? ‘overtime wor Dave Urich is the Rensis Likert Professor at the Rose School of Business, University of Michigan, and a partner at The RBL Group, a consulting firm focused Qe Deonmant Fame 20025 anne Puined by QQ re mre nap rrnensenconsny eee a6 ares tke Deonmant Fst C085) 2h onnee Reactions 0 6 © © © © © © Oo Oo 39 Comments Go os QO ores a ‘ie i wate abt yor aah hoot pH pent arta ft ‘eta creole an ata cnc seman tan D2 ke COB S| ay 2a rE nnermnentesity nitty oii” (hE Tarmac your ind comments My nt at tee" Ice sue bt al sins ao es, Te leh v2ue Om han pI oe [etary Barer auees Manan capably te me moapenert ae ‘pines + ade) eon HE probes for buses cess HR SSeS heUe Os | ti @ ere on fn cs Qe Seen osm e005. le @2| Ro SESS se ty veto sth ts ver ppc ns pets tars Sand opt neh aoe ‘Sid woaten te ctl prt™ 1 00 te lon on sehen we shu oop? @ core 2 yea Sei Ron Tg ete Cy et en pin ab yan Net ue jou ae ng hit rer? ak sb ttl” a Ines evel aon of ary Scheie true eke cs EON re eee lle Deorwent se 2002 sme he 1 | ty & Mote from Dave Ulich “rays on naan Pst Tan Mf Opprunty nto ar Ne es Hand forme lookfoctond Rey town Sion tes Oe Meet secant, ‘ee on nk Soo ll 228 artis anon your cunt and ry tt Oe