How Well Do You Manage Your "Portfolio” of Organization Effectiveness (HR) Initiatives?

By Dave Ulrich • dou@umich.edu • Co-Founder, The RBL Group, Norm Smallwood • nsmallwood@rbl.net • Co-Founder, The RBL Group and Alan Todd • atodd@corpu.com • Founder, CorpU

Few doubt that HR work delivers value to key stakeholders both inside (employees, business strategy) and outside (customers, investors, communities) the organization.

To deliver value and results to these five stakeholders, HR professionals provide insights and initiatives (programs, processes, practices) around organization effectiveness comprised of [1] individual competence (workforce, talent, people), [2] organization capabilities (workplace, culture, and process) and [3] leadership at all levels. In addition, [4] the HR department’s ultimate effectiveness is the extent to which HR initiatives deliver value to these five key stakeholders.  

Combining stakeholder results and organization effectiveness initiatives creates a simple but informative portfolio grid for how to prioritize and invest in organization effectiveness initiatives (see Figure 1). The columns in this figure suggest the five stakeholder results that a company may prioritize [1] employee (well being, competence), [2] business strategy (differentiated position, ability to execute), [3] customer (net promoter score), [4] investor/financial (profitability), and [5] social citizenship (environmental, social, governance). Organizational effectiveness from HR initiatives may occur along four pathways represented by the four rows: [A] talent,[B] leadership, [C] organization capability, and [d] HR department. 

Each of the 20 cells in Figure 1 represents where business or HR leaders could focus initiatives to deliver the five results. Allocating 100 points across these 20 cells describes the portfolio of organization effectiveness investments that deliver stakeholder results. 

Moving towards more precision, based on decades of theory, research, and experience, we have identified specific organization effectiveness activities in talent, leadership, organization, and HR department that might deliver the desired results. 

Talent Initiatives. In our work on improving talent, we have identified nine possible initiatives that increase competence (e.g., acquiring talent, managing employee performance, development employees, communicating with employees, retaining and removing employees), commitment (tracking employee engagement), and contribution (creating a positive employee experience). 

Leadership Initiatives. In our work on Leadership Brand, we have identified six possible initiatives for improving leadership: building a business case, agreeing on what leaders know and do, assessing leaders, investing in leaders, measuring leaders, and ensuring reputation. 

Organization Initiatives. In our work on creating the right organization, we have identified 12 key organization capabilities that can be created.

Human Resource Effectiveness. In our work on building more effective HR departments, we have identified nine domains of activity, each answering a question about building effective HR:

Using these more detailed initiatives in talent, leadership, organization capability, and HR department, we can create a more thorough HR portfolio with five outcomes (columns) and now 36 initiatives along four pathways rows (see Figure 2).

The initiatives represented by the 180 cells in Figure 2 (5 columns * 36 rows) represents a thorough portfolio of organization effectiveness initiatives where HR can prioritize and invest to deliver the five key stakeholder results (columns).  When we asked business and HR leaders who much they spend per year on initiatives in these 180 cells, they often don’t know specifically, but the numbers are large (e.g., $25 to $40M for firms of $1b up to $150 to $200m for firms over $10B). 

Using the portfolio grid in Figure 2, we can now offer an Organization Guidance System (OGS) to identify which of the 180 cells should receive increased and decreased investment to deliver the five results.  

Application of the Organization Guidance System

When we present Figure 2 to senior business and HR leaders, we often get glazed eyes at the enormous complexity of creating organization effectiveness (180 possible cells or initiatives). When we use the portfolio metaphor to describe the importance of selecting and deselecting some cells to invest in, eyes begin to focus. When we highlight, with empirical rigor, which of the 180 cells will deliver key results, eyes open with optimism. This level of portfolio guidance is now accessible because of the abundance of research on leadership, talent, organization, and HR and analytic statistics that ferret out the relative impact of specific activities on key outcomes (e.g., variance decomposition).  

HR’s opportunity to create value through targeted organization effectiveness initiatives in talent, leadership, organization, and HR can now be realized. A portfolio approach to these initiatives will better allocate resources (time, energy, money) to key organization effectiveness priorities.

We now offer this OGS free of charge to any leader who wants to manage their portfolio of leadership, talent, organization, and HR practices. Simply visit www.rbl.ai to get started.

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Dave Ulrich is the Rensis Likert Professor at the Ross School of Business, University of Michigan and a partner at The RBL Group, a consulting firm focused on helping organizations and leaders deliver value.