The Business Impact Of HR Capabilities: It’s Far Bigger Than You Thought

This summer is the two-year anniversary of the Josh Bersin Academy and I want to give you an update. Not only have we grown to more than 30,000 members and 400+ corporate clients, we discovered something important. The capabilities of HR are the biggest opportunity you have to make your company grow. Let me explain.

As many of you know, we have not only introduced an entire academy of professional development for HR (more than 80 hours of credentialed training, 500 learning resources, 20+ learning accelerators), last year we introduced the JBA Global Capability Project.

In that Project, which has involved a year of research and collaboration with clients, we identified 94 business capabilities that define how HR professionals perform.

Today more than 4,000 Academy members have taken the capability assessment (it takes about 15 minutes), and our clients have been using the results. And as I discuss in the podcast, several of our large clients took the detailed data from the JBA Capability Assessment and correlated it against employee retention, engagement, and productivity.

And guess what they found. Among all the factors that contribute to employee experience and productivity, the capabilities of HR are among the strongest contributors.

In other words, developing and aligning your HR function may be the most important business imperative you have for the competitive labor market ahead.

Two of our clients are now using this data to specifically target our Capability Accelerators (the learning journeys that pinpoint learning programs for capability gaps) and creating strategic development programs for different HR teams. L’Oreal, for example, just told us last week that the most important factor in the success of their talent acquisition is the continuous training of their recruiters.

Other companies (Lego, Astra Zeneca, Walmart, and others) have similarly explained that their HR Business Partners, who are typically the most “pivotal” role in HR, are the critical point of need. These companies are using the JBA to pinpoint development programs, job rotation, and special assignments for HR Business Partners. And the Academy has an entire learning journey of education, case studies, and a special masterclass on consulting for HR Business Partners.

But There’s More

In our 2019 work with IBM on the HR 3.0 study, which surveyed and interviewed nearly 2,000 global corporations, we found an even stronger correlation. Let me summarize the findings.

In that study, we evaluated dozens of their HR Practices and correlated dozens of practices to company growth rate, profitability vs. competition, financial efficiency vs. competition, and innovation.

We then categorized each company’s HR Capabilities in five groups: A) very poor or no investment at all, B) Poor, C) Fair to good, D) Good to excellent, and E) World-class. And the results are astounding.

Revenue Growth:

Companies with World-class HR skills are 4.5 times more likely to be “significantly outperformers” in revenue growth and they are 1.5 times more likely to be “outperformers” in growth.

Companies with Poor and Fair to poor HR skills are half as likely to be outperformers in revenue growth and are never leaders in their industry in growth.

Profitability:

Companies with world-class HR skills are 5.5 X more likely to be “significantly more profitable than peers” and 2X more likely to be “more profitable than peers.”

Companies with good to excellent HR skills are 2.5 X more likely to be “significantly more profitable than peers” and 2X more likely to be “more profitable than peers.”

Companies with Poor and Fair to Poor HR skills are also half as likely to be outperformers in profitability and never leaders in profitability.

Innovation:

World-class HR skills companies are 6X more likely to be “significantly more innovative” and 1.8 X more likely to be “more innovative”

Companies with poor and fair to poor HR skills are again half as likely to be innovative, and never leaders in this category.

Impact of Poor HR Skills

Finally, if we look at the bottom “very low” HR skills companies, those who are very poor at HR, they are 10X less likely to be innovative and none of them are “more innovative” than peers. They NEVER outperform their peers in revenue growth. And they are 6X less likely to be profitability leaders.

Or to summarize, companies with world-class HR skills are in the 95% percentile in revenue growth, 92% percentile n innovation, and 86% percentile in profitability. Companies with poor HR skills are never revenue growth leaders, only 3% are above average in innovation, and only 10% are above average in profitability.

HR Capabilities Are The Key to Belonging and DEI

One more statistic. In our big DEI study Elevating Equity, we looked at 80 Diversity practices, and once again HR skills came out on top. Companies with strong HR capabilities in DEI are 4.5 times more likely to have a strong sense of belonging, 3.3 times more likely to engage and retain people, and 2.8 times more likely to be seen as a DEI leader among job candidates. Very important stuff.

(And, by the way, among the 94 capabilities in our HR model, DEI is the lowest-rated among global HR professionals – so this is one to pay attention to.)

This Is Why We Must Invest In HR

The bottom line is simple. In today’s competitive and highly disruptive labor market, companies must invest in the capabilities of HR. And that doesn’t just mean hiring a lot of people – it means training, upskilling, and providing job rotation, mentorship, and alignment programs for every single HR professional.

As I explain in the podcast, everything is about Employee Experience right now. The entire pandemic response and hybrid work craze is a massive focus on making employees safe, productive, and aligned. And as the labor market grows, companies are bending over backwards to make work easier, better, and more attractive.

The HR team is central to this mission. As a large Asian conglomerate client discovered, the business units with low HR capabilities have huge problems with retention, engagement, and performance. Why? They are not executing well at recruitment, onboarding, performance management, and leadership alignment. These are things strong HR leaders can fix – but in their case, some of their business units have HR teams that are totally transactional in nature.

We Are Here To Help

I don’t typically write articles to promote what we do, but as our two-year anniversary arrives, I want to reinforce how important these findings are. You now have a business case to upskill your HR team and implement the Josh Bersin Academy. Our program is proven (Our NetPromoter score is higher than Apple!), we tailor it to your company’s needs (we integrate it with your infrastructure and existing programs), and our Global HR Capability Project will pinpoint the precise areas that will help your company grow.

Source:https://joshbersin.com/2021/06/the-business-impact-of-hr-capabilities-its-far-bigger-than-you-thought/

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