In the 2022 Gartner HR Priorities Survey[i], HR leaders report that 66% aim to improve operational excellence, 65% will execute business transformations, and 64% will support business growth. To achieve their goals, HR leaders need to build critical skills, develop organizational design and change management, grow the current and future leadership bench, prepare for the future of work, and focus on diversity, equity, and inclusion. With high stakes, it is widely recognized that succeeding in strategic HR investments is critical to achieving an organization’s objectives and sustaining competitive advantage.
An Unknown Effect
The challenge is often to understand how well human capital investments turn into operational excellence, successful transformations, or business growth. To get these strategies right and grasp their effectiveness, it is critical to measure facts and evidence. In 2013, a Hackett Group Study[ii] reported that only 20% of typical HR organizations reported metrics for HR-managed projects. Unfortunately, Human Capital Analytics is still not used enough. Hackett Group’s report also found that world-class HR organizations reported metrics for HR-led projects over three times more often than the average.
A Shift in Validation Request
A decade ago, the CEO or a senior business stakeholder often asked to understand the business impact of people investments. Today, all CXOs—CHRO included—want validation of program effectiveness. In leading organizations, CHROs and senior HR leaders are hyper-focused on questions such as: How successfully will critical skills translate into business growth? How will we assess if our DEI strategy is effective? How will we establish the “readiness” of our people? What value will our people programs translate into?
The most critical question we at Aartha hear from leaders is, how can we implement strategic HR programs to improve the organization’s chances of success?
Outcome-based Program Implementation
Essentially, leaders want strategic project implementation to be outcome-based. This means projects must have well-articulated measurable objectives, stakeholder agreements, and toolkits in place for tractable implementation. It is impossible to run an outcome-based program without progress metrics or close business alignment. Lacking targets, interim objectives, or milestones measurable in business KPIs, or sans an infrastructure for early indications, organizations operate blindly and struggle to achieve operational effectiveness, business transformations, or business growth through any investment.
A Clear Way to Achieve Results
To improve their chances of success, leaders must shift their teams from being input-oriented, where results are measured by counting the number of meetings held, people who participated, hours spent, etc. Instead, the focus must be on measuring outcomes such as the effect on users, behavior shift, readiness, retention, engagement, promotions, and the ultimate impact on business. This shift will happen if the implementation teams:
- Align their projects to business needs and objectives: Develop a close and well-defined connection between project elements and their impact on HR and business metrics.
- Structure the projects for measurability: Put in place a tractable process at every step.
- Develop an infrastructure of stakeholder alignment, communication, and decision-making criteria to support project implementation.
How HR Leaders Support the Change to Outcome-based Programs
Successful HR leaders leverage an outcome-based approach by:
- Prioritizing what matters the most: All investments, projects, and processes do not produce equal value. Assuming the 80-20 principle, where 10-20% of projects generate 80% of the results, leaders should help their teams prioritize projects best suited for outcome-based implementation. The top 10-20% of projects should be implemented with in-depth business alignment and objective success metrics[iii].
- Recognizing accountability of project outcomes is here to stay. Implementing projects with credible measurement is a learned skill that needs practice. Leaders should support their teams to learn and practice measurement methods such as the ROI Methodology and provide coaching support as they incorporate the toolkits into their work.
- Establishing success cases: Leaders should focus their team’s attention on developing success cases of projects for the broader organization to learn from by sharing information, developing knowledge libraries, and more.
- Setting the expectation for their strategic implementation teams to work in close alignment with stakeholders, hold the system accountable for outcomes, and insist on a continuous improvement mindset.
The Necessary Shift to Measurable Results
Many projects are expected to deliver business results but are not designed or implemented to do so. Strategic HR projects cannot be run similarly to projects of lower stakes with the expectations of different, more successful outcomes. To achieve strategic objectives such as organizational effectiveness, business transformation, or growth, industry-leading HR leaders lead their teams to implement the most strategic programs or projects from a different point-of-view. A view that clearly ties the input and effort to verifiable business outcomes. One that emphasizes that investments need to work to make things better. This type of implementation is an outcome-focused implementation, and it starts differently from a typical project whose effectiveness remains unknown.
Want to Know More?
We offer many possibilities to improve the quality of projects and programs; please get in touch with us to learn more.
If you want to learn the skills to measure outcomes, we offer programs on a regular basis. The next 2-day ROI Skill Building program is scheduled for July. Learn more and register here >>