Human Resources

In the future, the ways in which HR professionals will serve as business partners will continue to morph. The bar has been raised, and some HR professionals will - and others will not - make the grade.

As Ulrich and Brockbank persuasively argue [1], the HR business-partner model is not only alive and well, but also thriving. Based on Egon Zehnder International’s experience of executing more than 30,000 management appraisals conducted in the past five years, we are in a position to go beyond anecdotal accounts using our model of leadership that encompasses the indispensable competencies that top leaders possess. Of the more than 5,000 executives in the database who are at the C-level, more than 360 are chief human resources officers (CHROs) or the equivalent, representing leading companies in 20 industries on four continents. 

An analysis of this data produces some interesting conclusions. About 15 percent of the HR executives rank as “outstanding” on our competency scale and 45 percent rank as “good.”

Though an outstanding HR leader is, of course, highly desirable, good HR leaders can make a substantial contribution to a business. Nevertheless, there are significant and definable differences between the great and the good when it comes to the three leadership competencies—the demonstrated behaviors— critical for HR leaders:

1. Change Leadership: Both the good and the great have the ability to understand and overcome the barriers to change and to adopt new ways of working; but, at the highest level, the great HR leader induces other people to become change leaders and creates an agile culture that continually can adapt to change.

2. Strategic Orientation: The second largest differentiator between outstanding HR leaders and good HR executives lies in their ability to make strategic contributions. They don’t just carry out one- or two-year plans handed to them by others; they convert larger corporate strategy into appropriate HR plans or, in the very best cases, act as a full partner at the C-level, challenging the strategy and helping redefine it.

3. Results Orientation: As Ulrich and Brockbank observe, the results-oriented HR leader has the ability to translate HR actions and metrics into business results. The good leader works to meet or sometimes beat goals while the great leader not only works harder, but works smarter and introduces calculated improvements into the way things are done.

In each of these competencies, the great HR leader ranks a full standard deviation, or higher than the good HR executive, which is, of course, statistically significant. A clear picture of the great HR executive comes into focus: a strategic change leader capable of getting business results and inspiring other people to peak performance.

Perhaps most interestingly, our research shows that the top decile of HR performers have a fair amount in common with our dataset defining great CEOs. For example, with respect to the three leadership competencies discussed here, the difference between the great CEO and the great HR leader is statistically insignificant in two of them: results orientation and change leadership.

As we looked for further nuances we discovered some other statistically significant data that raises critical questions for the function. Only one-quarter of all HR executives in our database have had line roles at some point in their careers. All of those who had line experience outscored the remaining three-quarters on every single competency. And here the exline HR executives rank staggeringly higher in the areas of strategic orientation and driving results than those HR executives who have had only staff roles.

For the HR professional, there is much to ponder in these data, especially the implications for career development. Acting as a business partner requires specific competencies— not simply experience, but demonstrated behaviors. Developing those competencies may require some departures from the traditional HR career path, and on the part of companies, a rethinking of HR executive assessments. Those who aspire to be CHROs will need to adopt a more proactive style and show a larger appetite for helping shape the business. Incumbent CHROs who want to extend their role as business partners increasingly will position themselves as active participants in business debates and provide their business perspective, not merely the implications for HR.

Ulrich and Brockbank rightly conclude that the ways in which HR leaders serve as business partners will continue to evolve. With a clear understanding of precisely what competencies are required and to what degree, there is no longer any reason that individuals and companies cannot greatly increase their odds of success.

This article is published with the kind permission of People & Strategy.

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1 As fresh challenges arise, the importance of the HR business-partner model will continue to grow, predict Dave Ulrich and Wayne Brockbank, professors of the Ross School of Business at the University of Michigan . In one of a series of articles on the role of HR professionals featured in People & Strategy, they argue that HR leaders must become the best thinkers in a company about the human side of the business as a key source of competitive advantage. Stephen Kelner and Manuel de Miranda from Egon Zehnder International take these conclusions a step further by examining the differences between good and great HR leaders.Please click on this link to go back to the article.