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HR has spent a considerable amount of time focussed on internal stakeholders but as more ‘outside’ parties look to HR for answers, the focal points for many HR leaders and their teams, needs to change to ensure they continue to deliver value to their business.

What Does the HR of the Future Look Like?

HR has reached a point where the only place left to look for information on how to improve is outside the immediate business.

Many HR professionals will stand by the idea that their internal employees are their customers and whilst this is true, it is not the whole truth. The customer of HR is ultimately any customer of the business. Without people buying your company’s products or using its services, there won’t be any employees for HR to manage or a culture to build.

As Dr David Ulrich explained: “We think the next step in HR is to go outside. Let’s look outside the company to see where we can do our jobs better.”

“When we go outside we go to customers, investors, communities and government agencies, and HR becomes a lever for those external factors.”

Investors, local communities and government agencies are taking an increased interest in a business’s people and its culture. Most investors base decisions on the same tangible data such as a company’s finances, brand or strategy but to get an edge, they’re starting to build an appetite for information on a business’s leadership structure and overarching culture, and this creates a fantastic opportunity for HR to create value.

Local communities and government agencies have strict expectations from businesses around sustainability and accountability, and as a result, want more transparency and openness from organisations. Additionally society today is looking at how organisations are actively addressing social issues such as workplace diversity and the gender pay gap, and the spotlight has fallen on HR. 

What Do HR Leaders Need to Focus On?

For years HR leaders have fought to gain a seat at the executive table and now that they have it, they need to ensure it’s being used to accommodate all their customers, internal or otherwise. As Ulrich explained in the above interview, when it comes to providing value to external customers, investors, local communities or government agencies, taking an ‘outside-in’ approach is key. This means connecting every HR practice and strategy to the external stakeholder to ensure what HR is doing is adding real value.

The methodology behind achieving such an approach will slightly differ depending on the stakeholder in play but the first step is to understand what your external stakeholders expect. For example, local communities and governments want to see how your business’s culture and leadership is rising to the challenge and creating better communities for all. Another example is that the growing appetite investors have for less conventional information, creates an excellent opportunity for HR to show how their culture and leadership strategies are helping the business to succeed.

Once you understand your stakeholders, you can then start building a HR function that meets their expectations. Look at your HR practices such as recruiting, learning and development and succession planning to ascertain whether they’re aligned with what your external stakeholders standards and expectations. Are these practices integrated with each other? And finally, analytics is becoming a huge part of the HR role, so should be able you support and justify your recommendations and decisions with the right data and insights. 

Summary

The world of HR is changing but it is not too late to get ahead. As HR teams and functions take on more responsibilities, great executive leadership is a necessity as more and more stakeholders need to be considered not just your internal customers. If you’re looking to bring forward-thinking HR executives into your business, get in touch with me today.