License Agreement

By opening and using these SHRM Learning System for SHRM-

CP/SHRM-SCP student materials (the “Materials”), the user (“User”)
hereby agrees as follows:

i. That the Society for Human Resource Management is the

exclusive copyright owner of the Materials.

ii. Provided that the required fee for use of the Materials by User
has been paid to SHRM or its agent, User has the right, by this
License, to use the Materials solely for his/her own educational
use.

iii. User has no right to print or make any copies, in any media, of
the materials, or to sell, or sublicense, loan, or otherwise convey
or distribute these materials or any copies thereof in any media.
Acknowledgments
SHRM acknowledges the contributions of its volunteer leaders
and staff members who have served as subject matter experts
for the SHRM Learning System for SHRM‑CP/SHRM‑SCP.

Subject matter experts

Cheronn Collins, SHRM-SCP, SPHR
Independent Consultant
Gaithersburg, Maryland, U.S.

Susan K. Craft, MSHRM, SHRM-SCP, SPHR, GPHR

President, Consulting by Design of Princess Anne
Virginia Beach, Virginia, U.S

Ed Hasan, EdD, MBA, SHRM-SCP, SPHR

CEO and Managing Partner, Kaizen Human Capital
Adjunct Professor, Georgetown University

Tom O’Connor, JD, SHRM-SCP, GPHR, SPHRi

Human Resource Director, North America, BK Medical
Boston, Massachusetts, U.S.

Dr. Patricia A. Sullivan, SHRM-SCP

Leadership Coach/Culture Strategist
St. Petersburg, Florida, U.S.

Dennis Carr, MSIR, SHRM-SCP

Chief Human Resource Officer, Lane Community College
Eugene, Oregon, U.S.

Jennifer C. Loftus, MBA, SHRM-SCP, GPHR, SPHR, PHRca, CCP, CBP, GRP
National Director, Astron Solutions
New York, New York, U.S.

Past subject matter experts

Dennis Carr, MSIR, SHRM-SCP
Chief Human Resource Officer, Lane Community College
Eugene, Oregon, U.S.

Jennifer C. Loftus, MBA, SHRM-SCP, GPHR, SPHR, PHRca, CCP, CBP, GRP
National Director, Astron Solutions
New York, New York, U.S.
Introduction to HR
Competencies Module
Welcome to the SHRM Learning System® for SHRM-CP/SHRM-
SCP. This Learning System represents a significant investment in
your career. Whether you are using it to prepare for the SHRM
Certified Professional (SHRM-CP®) or SHRM Senior Certified
Professional (SHRM-SCP®) certification or to advance your
professional development, you will find that the Learning System is
comprehensive, complete, and easy to use.

The SHRM Learning System for SHRM-CP/SHRM-SCP materials

are based on the SHRM Body of Applied Skills and Knowledge™
(SHRM BASK™), which reflects SHRM’s significant research on the
HR profession.

This HR Competencies module includes the following:

“The SHRM Learning System” describes the Learning System’s

components and its development and how you should use the
Learning System to prepare for the certification exam.

“The SHRM-CP and SHRM-SCP Certifications” describes what

the certification exams are like and how they are developed and
maintained to ensure their integrity, security, and confidentiality.
It also covers the testing experience and how to decide which
certification to pursue.

“Review of Behavioral Competencies” discusses and illustrates

the nine Behavioral Competencies included in the SHRM BASK.
It will help you more fully understand the competencies as they
apply to HR.
The SHRM Learning
System
The SHRM Learning System
The SHRM Learning System for SHRM-CP/SHRM-SCP is
developed by the Society for Human Resource Management
(SHRM) and is intended to cover the SHRM Body of Applied Skills
and Knowledge tested by the SHRM-CP and SHRM-SCP
certification examinations.

Learning System Development

The SHRM Learning System is the market leader for HR certification
preparation, and one of the reasons for its success is the careful
process used to develop and maintain the program. SHRM begins
pre-project planning by assembling a development team to work on
the Learning System product. The development team includes
SHRM staff, subject matter experts who are themselves certified,
and an instructional development firm that includes content and
software developers, legal counsel, and editing and production
specialists. Each member of the team brings a special perspective
and talent to the development effort. Together, the development
team creates the Learning System and updates it every year. The
result is a living, breathing product that keeps pace with the changes
in the HR profession.
 Key Content

Each Topic Group in the Learning System’s modules

begins by stating the key proficiency statements from
the SHRM BASK that are addressed in that Topic
Group. However, the Learning System does not “teach
the test.” There may be some content in the Learning
System not covered by the certification exams, and
conversely there will be content tested in the exams
that is not covered in the Learning System. SHRM
makes no warranty that use of the Learning System
guarantees passage of the SHRM-CP or SHRM-SCP
examination.

Neither the SHRM Certification Commission nor SHRM

Certification staff have any involvement in the SHRM
Learning System. SHRM Learning System subject
matter experts and instructors have no access to
actual exam questions.

Learning System Components

The Learning System is a feature-rich product that allows you to
learn in the way in which you feel most comfortable. You may be
using the Learning System to study on your own, or you may be part
of a chapter or corporate study group, SHRM seminar, or college or
university class. In any case, you will want to be sure to use all of the
Learning System components to maximize your study efforts.

Learning System Modules

There are four modules in the SHRM Learning System for SHRM-
CP/SHRM-SCP. They include this HR Competencies module and
three modules that correlate to the Knowledge Domains that
comprise the HR Expertise competency: People, Organization, and
Workplace.

In addition to the content, the modules contain a variety of helpful

tools, including:
A bibliography that provides a list of resources related to the
module.
Glossary terms that appear in boldfaced text when they are first
used. Terms are defined at the back of the module.

In the print version, an icon calls your attention to key content.

At the start of the Topic Groups, brief scenarios, titled “Competency
Connection,” describe how the Behavioral Competencies listed in the
SHRM BASK apply to the Functional Area under discussion.

Learning System Software

A significant component of the SHRM Learning System for SHRM-

CP/SHRM-SCP is the online software. You should begin and
conclude your studies with the tools in the software. We encourage
you to use all of the software features.

Using the Learning System

Approach the Learning System in the following way:

1. Review the SHRM BASK to become familiar with the topics that
are eligible to be covered on the exam.

2. Take the pre-test to gauge your current knowledge.

3. For each learning module:

 Read and study the content presented in the Topic Groups,
including the Competency Connections that align to the
Behavioral Competencies.
When you have completed a Functional Area or a
Competency, take the associated quiz.
Study the flashcards for each area. The online flashcards are
located under each content area on the menu. The printable
flashcards are found in the Resource Center.

4. Visit the Resource Center to access additional resources,

related links, HR updates, and other helpful tools.

5. Take the post-test to demonstrate your overall learning and

close any gaps, practice your timing, and prepare for the
Practice Exam.

6. When you are ready, take the Practice Exam, which is made up
of items that have been recently administered on actual SHRM
certification exams. The Practice Exam is scored in the same
manner as the certification exams. You are encouraged to take
the Practice Exam at the conclusion of your studies to identify
any remaining gap areas needing focused study or for review
before your certification exam.
After completing the Practice Exam, review the Interpreting Your
Results document online for more information.
Key Content

The SHRM Learning System for SHRM-CP/SHRM-

SCP is not a textbook; it is a learning process. Be sure
that you use all of the components of the Learning
System. This will help you become well-versed in the
key domain areas that make up the SHRM Body of
Applied Skills and Knowledge. Together the
components help you to learn and retain key content
and prepare for the certification exam. Make use of
both the online tools at [Link], which
include the testing software, and the learning modules.

Regardless of the exam you plan to take, for more

opportunity to prepare and practice you can use both
the SHRM-CP and SHRM-SCP tests in the software. It
is always helpful to study both levels and get as much
practice as possible in answering questions. Note that
none of the questions in either Practice Exam will
appear on any operational exam form.
The SHRM-CP and
SHRM‑SCP Certifications
The SHRM-CP and SHRM-SCP
Certifications
The SHRM-CP and SHRM-SCP certification exams have been
developed and maintained to ensure their integrity, security, and
confidentiality. Understanding how to decide which certification to
pursue and learning about the testing experience will help you reach
your certification goals.

HR Certification
Many of you have already made the decision to sit for the SHRM-
CP® or SHRM‑SCP® certification; some of you may still be
considering whether certification is valuable at this point in your
career.

There are many reasons to consider certification:

Professional certification establishes credibility. Earning the
SHRM-CP or SHRM-SCP credential shows that a person has
mastered the SHRM Body of Applied Skills and KnowledgeTM
(SHRM BASKTM) and has remained current on HR
developments through the recertification process.
Certification recognizes professional achievement. It is a visible
reminder to coworkers and senior management of the holder’s
 expertise. Of executives in the SHRM HR Careers Study, 92%
state it will be important to hold a SHRM certification in the
future. Plus, certified professionals are much more likely to
report being respected by their colleagues and peers.
Certification elevates the status of the HR profession. As the
number of certified HR professionals grows, so does the status
and prestige of the certification.
Certification allows you to make a greater contribution to your
organization’s success. The knowledge and visibility you gain
provide you with an opportunity to make a difference in your
organization.

From a practical standpoint, there are other individual advantages:

Certification provides a sense of personal satisfaction based on
having undertaken and succeeded in a difficult endeavor. Many
newly certified HR professionals say, “I did it for myself.”
A highly valued certification gives you a distinct advantage in the
job market, and, when you are hiring, certification gives you an
extra measure of confidence in a candidate. Also, both SHRM-
CP and SHRM-SCP certificants report higher earnings after
earning the certification. In particular, SHRM-CP candidates
passing the exam show salaries that are 15% higher than those
of non-passers, and SHRM-SCP candidates show salaries that
are 14% higher. Plus, 88% of HR professionals in a large study
 agreed that SHRM certification increases the likelihood of
obtaining a promotion.
Certification is portable across different companies and
positions. It moves with you as you change companies and
careers. And, for many federal employees, certification helps
make the transition from the public sector to the private sector.

Selecting the Right SHRM

Certification Exam
The first step in selecting the right SHRM certification credential is to
determine your eligibility. Eligibility for the SHRM-CP or SHRM-SCP
certification is based on a combination of education and HR-related
work experience.

Individuals who perform HR duties and who wish to verify, validate,

enhance, and/or expand their HR capabilities are likely candidates
for SHRM-CP or SHRM-SCP certification. SHRM membership is not
required for eligibility, and individuals need not be employed at the
time they apply. Specific criteria for each credentialing level are as
follows.

SHRM Certified Professional (SHRM-CP):

 The SHRM-CP certification is for individuals who perform
general HR/HR-related duties or for those pursuing a career in
human resource management.
Candidates for the SHRM-CP certification are not required to
hold an HR title and do not need a degree or previous HR
experience to apply; however, a basic working knowledge of HR
practices and principles is recommended.
The SHRM-CP exam is designed to assess the competency
level of those who engage in HR work at the operational level.
Work at this level includes duties such as implementing HR
policies, supporting day-to-day HR functions, or serving as an
HR point of contact for staff and stakeholders.
Refer to the SHRM BASK for detailed information on proficiency
standards for this credential (i.e., only proficiency indicators for
all HR professionals).

SHRM Senior Certified Professional (SHRM-SCP):

The SHRM-SCP certification is for individuals who have a work
history of at least three years performing strategic-level HR/HR-
related duties or for SHRM-CP credential holders who have held
the credential for at least three years and are working in, or are
in the process of transitioning to, a strategic-level role.
Candidates for the SHRM-SCP certification are not required to
hold an HR title and do not need a degree to apply.
 The SHRM-SCP exam is designed to assess the competency
level of those who engage in HR work at the strategic level.
Work at this level includes duties such as developing HR
policies and/or procedures, overseeing the execution of
integrated HR operations, directing an entire HR enterprise, or
leading the alignment of HR strategies to organizational goals.
Applicants must be able to demonstrate that they have devoted
at least 1,000 hours per calendar year (January–December) to
strategic-level HR/HR-related work. More than 1,000 hours in a
calendar year does not equate to more than one year of
experience.
Part-time work qualifies as long as the 1,000-hour-per-calendar-
year standard is met.
Experience may be either salaried or hourly.
Individuals who are HR consultants may demonstrate qualifying
experience through the HR/HR-related duties they perform for
their clients. Contracted hours must meet the 1,000-hour
standard.
Refer to the SHRM BASK for detailed information on proficiency
standards for this credential (i.e., both proficiency indicators for
all HR professionals and those for advanced HR professionals).

For application procedures, contact your program administrator.

Even if you are eligible to sit for the SHRM-SCP exam, you may still
decide to pursue the SHRM-CP credential.

Another approach to selecting the right SHRM certification exam is

to read the SHRM BASK and assess which proficiency indicators
represent the work you perform on a daily basis. If your daily work
most resembles the proficiency indicators listed for advanced
professionals, then we suggest applying for the SHRM-SCP exam. If
your daily work most resembles the proficiency indicators listed for
all professionals, then we suggest registering for the SHRM-CP
exam.

Exhibit 1 shows the differences in national pass rates between the

SHRM-CP and SHRM-SCP exams.

Exhibit 1: Pass Rates for SHRM-CP/SHRM-SCP

Exams

Exam Window SHRM-CP SHRM-SCP

May–July 2022 65% 46%

December 2021–February 2022 64% 44%

May–August 2021 67% 48%
December 2020–February 2021 67% 51%

Once you earn your SHRM certification, you retain it as long as you
fulfill the recertification requirements. For more information on SHRM
certification and the recertification process, visit the SHRM website
at [Link].

SHRM Certification Exams

You will see two types of items on the SHRM-CP/SHRM-SCP
certification exams:

Knowledge Items test one piece of information, have a single

correct answer, and are anchored to a source. These items test
recall of knowledge or a candidate’s understanding of
information, ability to apply knowledge to solve problems, or
ability to apply knowledge to predict an outcome. There are two
types of Knowledge Items. Items referred to as basic Knowledge
Items (KIs) cover key concept topics in the HR Knowledge
Domains, while those referred to as Foundational Knowledge
Items (FKIs) cover key concept topics in the Behavioral
Competency areas. The exam presents four possible answers,
but only one is correct.

Situational Judgment Items (SJIs) assess a candidate’s

judgment and decision-making skills associated with the
proficiency indicators for each of the nine Behavioral
Competencies outlined in the SHRM BASK. Each set of SJIs is
 preceded by a scenario outlining a work situation experienced
by HR professionals. The two to four items that follow each
scenario require examinees to assess the situation and select
the “best” or “most effective” course of action to solve the
problem presented in the question. Each item presents four
possible options ranging from least effective to most effective or
best. All are viable resolutions; however, only one represents
the “best” or “most effective” option. Examinees will receive full
credit for choosing the key (another name for the best or most
effective course of action). An examinee receives no credit for
selecting any option that is not the key.

The online exams that are a critical part of the SHRM Learning
System include all item types. Using the online tools in the Learning
System will help you become more familiar with the format of the
items and the logic behind their construction.

Candidates for the SHRM-CP and SHRM-SCP exams will have 3

hours and 40 minutes to answer a total of 134 multiple-choice
questions, of which approximately 80 will be stand-alone Knowledge
Items and approximately 54 will be Situational Judgment Items.

Both exams include 24 “field test” items (discussed below) that do

not count toward a candidate’s final score. Of the items, 110 of 134
are scored and determine an examinee’s test results.
Please note that this test information is subject to change.

“Field Test” Items

Of the 134 items on the exam, approximately 24 are designated as

“field test” items, which are not scored. These items are interspersed
randomly throughout the exams so that candidates will not be able to
distinguish them from those that are scored.

Field testing allows items to be assessed for their quality and viability
before they are used as scored items. Field testing new items is
necessary in order to continuously refresh the material on the
SHRM-CP and SHRM-SCP exams for each testing window.

Distribution of Items

The distribution of items with respect to content and item type is the
same for both the SHRM-CP and SHRM-SCP exams. As shown in
Exhibit 2, approximately half of the items on each exam are allocated
across the three Behavioral Competency Clusters and the other half
are allocated across the three Knowledge Domains.

Exhibit 2: Distribution of Items Across Each Subject Area in

Certification Exams

Behavioral Percent of Cluster Behavioral Competencies in Cluster

Competency Scored
Clusters Items
 Leadership & Navigation
17% Leadership Ethical Practice
Diversity, Equity & Inclusion

Relationship Management
16.5% Interpersonal Communication
Global Mindset

Business Acumen
16.5% Business Consultation
Analytical Aptitude

Percent of
Scored Domain Functional Areas in Domain
Items

HR Strategy
Talent Acquisition
18% People Employee Engagement & Retention
Learning & Development
Total Rewards

Structure of the HR Function

HR
Knowledge Organizational Effectiveness &
Domains Development
(HR 18% Organization
Workforce Management
Expertise)
Employee & Labor Relations
Technology Management

Managing a Global Workforce

Risk Management
14% Workplace
Corporate Social Responsibility
U.S. Employment Law & Regulations
Exam Development Process
SHRM partners with organizations providing expertise in test
development, analytics, and test delivery to ensure that the exams
and the examination process meet the highest quality and security
standards. SHRM’s certification partners are industry experts who
provide services for a wide range of prominent testing programs.

The partners’ work helps ensure the validity and reliability of the
assessments, the security of test information, and the confidentiality
of applicant data.

SHRM certification exams undergo a rigorous development and

evaluation process at all stages to ensure that they meet the highest
possible standards. Exam development begins with SHRM-certified
practitioners (SMEs), who work with SHRM exam development staff
and professional exam developers to write and review exam items.
Item writers and reviewers are a geographically and ethnically
diverse group from varying organizational sizes and industries all
across the world who represent a broad spectrum of HR practice and
experience.

The exam development process is a multi-stage effort in which the

following activities occur:
 Item writing. Item writers are recruited and trained to write
quality items that accurately reflect the material outlined in the
SHRM BASK at the SHRM-CP and SHRM-SCP levels.

Item review. Items are put through a battery of reviews to verify

or improve clarity and alignment to the SHRM BASK, to ensure
consistency with HR best practices, to confirm readability and
understanding, particularly as it relates to an international
market, and to screen out insensitive content.

Score validation. SJIs are put through an additional review to

validate the effectiveness of each SJI response option. Items
must meet the minimum statistical criteria in order to be
approved for consideration for field testing.

Items that survive all the developmental stages are then placed on
the exams as field-test items. After they are administered, field-
tested items are analytically evaluated to ensure that they are of an
appropriate level of difficulty and appropriately differentiate
examinees who pass and those who do not.

Field-tested items that survive analytical review become scored

items on future operational test forms.

All items (both scored and field-tested) undergo additional analytic

review during and after the testing window to ensure that they are
functioning as expected. Exam items that do not function as
expected are reevaluated and may be removed from final scoring or
have their key corrected prior to the generation of final scores and
certification decisions.

SHRM Certification Commission

The SHRM Certification Commission serves as a governance body
for the certifying activities of SHRM. The Commission is responsible
for ensuring the quality and impartiality of the SHRM Certification
Program, which is designed to meet the highest standards in the
industry.

The Commission oversees all aspects of the SHRM Certification

Program, including the overall development of the exam, exam
eligibility requirements, and maintenance of certification
(recertification). Its responsibilities include review and approval of
such aspects as exam specifications and scoring, recertification
criteria, and maintaining the integrity of the certification process.

The Commission comprises individuals who have extensive HR and

business expertise from industries and organizations around the
world. Commission membership is voluntary, and, as such, members
do not receive financial compensation for their service but are
reimbursed for fair and reasonable expenses that are directly related
to Commission business.

Exam Experience
The SHRM certification exams are administered by Prometric,
SHRM’s test delivery vendor. Prometric operates a secure network
of thousands of test centers in more than 180 countries. The exams
are delivered by computer. The duration of the exam appointment is
4 hours. The time is broken down into four parts:
Confidentiality agreement reminder—2 minutes
Introduction and tutorial—10 minutes
Exam—3 hours, 40 minutes (220 minutes administered in two
equal halves)
Post-exam survey—8 minutes

This test information is subject to change.

As noted above, you will have the opportunity to complete a brief

tutorial prior to the beginning of your exam that will acquaint you with
the features and functionality of the testing platform. Candidates are
strongly encouraged to take advantage of this opportunity to
familiarize themselves with the software before testing. The time set
aside for this activity does not count against the time allotted for the
exam. Candidates may also preview the tutorial on Prometric’s
website at [Link]/shrm.

Upon completion of the exam, candidates receive preliminary

notification of their results at the testing center. The result will be in
the form of a pass or did not pass message. Several weeks later,
candidates are notified of the availability of their official score report.
The notification instructs candidates to go to the “My Results” tab in
the certification portal to retrieve the information. To protect
confidentiality, results are not provided by e-mail, phone, or fax.

The score report provides the following information:

1. A general statement of performance. Candidates are told that

they either passed or did not pass the exam.

2. A scaled score. Results on the exams are reported as a scaled

score. The range of possible scores is 120 to 200. All
candidates who pass the exam receive the maximum score of
200.

3. Performance feedback. A diagnostic diagram containing a

high-level illustration of a candidate’s performance in each of the
three Knowledge Domains (People, Organization, Workplace)
and Behavioral Competency Clusters (Business, Leadership,
Interpersonal) is provided. In accordance with certification
 program standards, detailed, item-level feedback is not
permitted or provided.

Candidates who pass the exam will receive an official congratulatory

letter and credential certificate, also posted in the “My Results” tab in
the certification portal. The letter confirms that they have passed the
exam, successfully completing the certification process. The order
process for a framed certificate and other collateral is initiated one
week after the official results are received. At that time, new
credential holders will receive an e-mail inviting them to place an
order for SHRM certification materials.

Key Content

SHRM shares Prometric test centers with many other

certification and licensure programs, so apply for and
schedule your exam well in advance of the testing date
so that your preferred time will be available. Most
examinees take the exams in the last month of the
testing window; schedule your appointment as soon as
you receive your Authorization to Test (ATT) letter.

You now have the option to take your SHRM-CP or

SHRM-SCP exam from home through live remote
proctoring, administered by Prometric. Taking the
 exam through the live remote proctoring option means
your testing session will be monitored by a qualified
proctor through audio-video and screen-share feed in
real time. Selecting this option also requires you to
meet certain computer system and testing environment
standards.

More information can be found at [Link]

proctoring-faqs. Please read the FAQs thoroughly
before deciding on in-person testing versus live remote
proctoring.

How Do I Register for the Exam?

To apply online:

1. Visit [Link].

2. Create a user account. Enter your name as it appears on your

unexpired government-issued identification.

3. If you are a SHRM member, use the same single-sign-on email

address you use for your SHRM membership.
 4. During an open registration window, select the SHRM-CP or
SHRM-SCP certification exam.

5. Complete the application form with your eligibility, job, and

demographic information.

6. Complete and submit paperwork for testing accommodations if

applicable.

7. Read and accept the following agreements:

SHRM Certification Candidate Agreement
SHRM Bylaws and Code of Ethics
SHRM Privacy Policy
Policies and procedures outlined in the Certification
Handbook

8. Submit payment for your certification exam.

Upon verification and/or audit, you will receive an Authorization to

Test (ATT) letter via e-mail within 10 business days. After receiving
your ATT letter, schedule your exam with SHRM’s test delivery
vendor at [Link]/shrm or call +1.888.736.0134. Choose
your testing date right away, and make your appointment.

Preparing for the Exam

SHRM recommends that candidates planning to take the SHRM
certification exams:

Review the SHRM BASK thoroughly. The SHRM BASK is the

content outline (also known as the blueprint) for the exams.
Candidates should study all of its aspects and content, including
the additional resources at the end of the document. Such
information could prove relevant to questions on the SHRM-CP
and SHRM-SCP exams.

Review the table shown earlier in this section titled “Distribution

of Items Across Each Subject Area in Certification Exams,”
paying particular attention to the percentage allocated to each
area. Candidates less familiar with certain topics, especially
areas covered by a significant proportion of test questions, are
advised to allow for additional study time.

Key Content

The Learning System’s software and learning modules

provide you with a multitude of questions to test your
knowledge and competencies. Use these questions to
hone your test-taking and reasoning skills. The more
you practice answering questions, the better you will
become at testing. The questions emulate the style of
 the questions in the certification exams and are based
on the SHRM Body of Applied Skills and Knowledge,
but you will not see these exact questions on the
certification exams.

The Learning System software also contains a Practice

Exam that consists of recently-administered items
tested on actual SHRM certification exams. It should
help you prepare for the certification exam.

Once you know as much as you can about the test, you can begin to
prepare for the test itself and engage in appropriate study habits. It is
important for you to take charge of your own study plan in addition to
taking the following study tips into consideration:

Set study goals and a study time line. Plan and allocate time in
your schedule for studying.

Study regularly. Research shows that learners are likely to lose

their memory of information unless that information is reviewed
frequently. It is suggested that you study an area and then
return to review the concepts you have studied to aid in
retention.
Relate the material you are studying to what you already know.

Key Content

The ideal preparation for tests is spaced reviews and

interaction with and reinforcement from others. A
single encounter with a piece of information is not
enough to ensure the type of long-term learning that is
necessary for success on the certification exams.
The SHRM BASK
The SHRM BASK
The SHRM Body of Applied Skills and Knowledge is the foundation
for the certification process, the certification exams, and this
Learning System. It is a complex document, but you should
familiarize yourself thoroughly with it. The complete interactive and
searchable SHRM BASK can be found at [Link]/certification.

The SHRM BASK focuses on knowledge, skills, abilities, and other

characteristics (KSAOs) that are both universal and global. Universal
KSAOs are accepted as good or best practices around the world;
global KSAOs equip HR practitioners to perform their responsibilities
in an increasingly global economy.

Key Content

It is critical for today’s HR professionals to appreciate

both the domestic and global dimensions of their
organizations and the impact these dimensions have
on HR practices. Organizations that maintain groups of
employees in different nations, offshore certain
functions, or assign employees outside the home
country are obviously global. However, HR
professionals are touched by global business practices
 and cultures in many ways, even in organizations that
appear entirely local. Organizations may:
Have customers located around the world.
Rely on global supply chains.
Employ individuals from other countries. Some
employees may come from third countries—in other
words, they are not native to the organization’s
home country or the country in which they are
working.
Have culturally diverse workforces.

You may think the global references in the SHRM

BASK and the Learning System do not apply to you,
but you should master this content for the exam and
develop your own global mindset. If the organization
you work for is not global now, it probably will be in the
near future, or an organization where you work in the
future will be.

Exhibit 3 illustrates how the KSAOs are integrated in the SHRM

BASK. This integration is the distinctive feature of the BASK.
 Exhibit 3: SHRM Body of Applied Skills and Knowledge

An HR professional must possess the skills and knowledge required

to perform sound human resource management (HRM) practices
effectively—the foundation layer of the pyramid, the three HR
Knowledge Domains. This technical expertise is only a foundation; it
must be complemented by behavioral expertise—behaviors that
have been observed in effective HR professionals. To provide an
organizing framework for the Behavioral Competencies, SHRM has
grouped them into three clusters: Leadership, Interpersonal, and
Business. These three clusters comprise the nine Behavioral
Competencies, which describe the behaviors and key concepts
required for proficient job-related behavior. The Behavioral
Competencies allow HR professionals to leverage their mastery of
HRM practices and generate “effective individual performance.” This
performance contributes directly to successful outcomes for their
organizations. It is not enough to have HR knowledge and skills. An
HR professional must be able to use HR expertise with effect in the
workplace. That requires a complete array of behavioral and
technical competencies.

Organization of the SHRM BASK

The HR competencies and knowledge that are assessed on the
SHRM-CP and SHRM-SCP certification exams are detailed in two
sections of the SHRM BASK.

Section 1—Behavioral Competencies

The nine Behavioral Competencies, which describe the behaviors

and attributes necessary for HR professionals to perform effectively
in the workplace, are grouped into three clusters: Leadership,
Interpersonal, and Business.

This section of the SHRM BASK is arranged by cluster. For each

competency within each cluster, the following information is
provided:
A definition of the competency
Key concepts describing the foundational knowledge for the
competency
Subcompetencies applicable to the competency, with their
definitions
Proficiency indicators, listed by applicability based on career
level (i.e., applicable to all HR professionals or to advanced HR
professionals)

Regarding the two sets of proficiency indicators listed for each

competency, it is important to recognize that the indicators relevant
to all HR professionals also apply to advanced HR professionals.
While HR executives, for instance, may not be specifically proficient
in certain transactional tasks required of early-career HR
professionals, they should nonetheless understand the concepts
behind those tasks, recognize their strategic importance, and be able
to mentor junior employees in developing the behaviors to implement
them. Such indicators of proficiency thus apply to all HR
professionals, from early-career to senior levels.

Section 2—HR Expertise

The single technical competency of HR Expertise is grouped into
three Knowledge Domains: People, Organization, and Workplace,
and further divided into 14 HR Functional Areas that describe the
technical knowledge required to perform key HR activities.

For each Functional Area within each domain, the following

information is provided:
A definition of the Functional Area
Key concepts describing the knowledge specific to the
Functional Area
Proficiency indicators, listed by applicability based on career
level (i.e., applicable to all HR professionals or to advanced HR
professionals)

Regarding the two sets of proficiency indicators listed for each

Functional Area, it is important to recognize that the indicators
relevant to all HR professionals also apply to advanced HR
professionals. While HR executives, for instance, may not be
specifically proficient in certain functions required of early-career HR
professionals, they should nonetheless understand the concepts
behind those functions, recognize their strategic importance, and be
able to mentor junior employees in developing the behaviors to
perform them. Such indicators of proficiency thus apply to all HR
professionals, from early-career to senior levels.
Review of Behavioral
Competencies
The Nine Behavioral Competencies
Human resource professionals have increasingly used the term
“competency” in recent years to describe a complex set of
interrelated skills, knowledge, and abilities that are often associated
with success in a specific job. This reflects the fact that acquisition of
specific knowledge and experience before performing certain tasks
does not necessarily produce the desired performance.

Success appears to require characteristics that may be harder to

identify and measure but nonetheless must be measured and
reported for hiring managers to make the most effective decisions.
Competencies—measurable or observable knowledge, skills,
abilities, and other characteristics critical to successful job
performance—fill this gap. Competency frameworks provide
structure around those competencies for job success.

The Society for Human Resource Management set a goal of raising

the caliber of the human resources professional. To do this, SHRM
realized that the profession had to apply the principles of
competencies and competency frameworks to its occupation. HR
needed to identify what competencies were associated with
effective, high-performing HR professionals. SHRM performed this
research with HR professionals in 33 countries. More than 32,000
HR professionals participated in the development and validation of
the eventual competency model.

SHRM’s competency model reflects the breadth of HR’s successful

practice with various constituents, including HR’s engaging:
With the organization vertically, from senior management to new
hires.
Horizontally across all divisions and functions of the
organization.
With external stakeholders as well as internal customers.
With groups, including entire workforces or individuals.

To succeed in this broad role, an HR professional must possess and

demonstrate the ten competencies described in the SHRM BASK—
Leadership & Navigation; Ethical Practice; Diversity, Equity &
Inclusion; Business Acumen; Relationship Management;
Consultation; Analytical Aptitude; Communication; Global Mindset;
and HR Expertise (HR Knowledge).

HR Expertise, a Technical Competency, is the ability to apply HR

principles and practices to the success of the organization. It is
thoroughly defined through the Functional Areas of the SHRM Body
of Applied Skills and Knowledge.
Here we will focus on the remaining nine competencies, which are
behavioral in nature. They can be identified and evaluated by the
way HR professionals perform the many and various transactions
and events that mark their professional lives—from entry level to
leadership positions.

The two levels of performance indicators described for each

Behavioral Competency—indicators that have been observed in all
effective HR professionals (SHRM-CP) and indicators that
characterize HR professionals working as leaders in their
organizations (SHRM-SCP)—reflect the fact that an HR
professional’s performance changes over time as individuals gain
both experience and responsibilities in their organizations.
Leadership & Navigation
Competency
Leadership & Navigation Competency
The first Behavioral Competency in the SHRM model is Leadership
& Navigation, defined as:

The knowledge, skills, abilities and other characteristics

(KSAOs) needed to create a compelling vision and
mission for HR that aligns with the strategic direction and
culture of the organization, accomplish HR and
organizational goals, lead and promote organizational
change, navigate the organization, and manage the
implementation and execution of HR initiatives.

Expertise in Leadership & Navigation enables HR professionals to

keep the organization focused on its goals, to use the talent in the
organization fully by generating greater collaboration among
employees and fostering continuous growth, and to help the
organization to overcome obstacles. This requires diverse KSAOs,
including using the leadership role to represent HR perspectives and
interests to the organization, fostering leaders within HR, using
influence to persuade others to support HR’s goals, and motivating
groups to work toward a common goal.
 Leadership

Proficiency indicators related to this section include:

Builds credibility as an HR expert within and outside of the
organization.
Defines actionable goals for the development and
implementation of HR programs, practices and policies that
support the strategic vision of HR and the organization.
Defines and elaborates on project requirements set by
leadership.
Demonstrates agility and adaptability when project
requirements, goals or constraints change.
Facilitates communication and decision-making necessary to
implement initiatives.
Identifies and monitors the resources necessary to implement
and maintain HR projects.
Identifies opportunities to improve HR operations that better
align with and support the strategic vision of HR and the
organization.
Identifies when resource allocation is inconsistent with project
needs and makes adjustments as necessary.
Sets and monitors project goals and progress milestones.
Supports the implementation of HR programs, practices and
policies that uphold the strategic vision of HR and the
organization.
Develops and socializes a broad plan to achieve the strategic
direction, vision and goals of HR and the organization.
Develops the long-term strategic direction, vision and goals of
HR and the organization to close the gap between the current
and ideal states of the HR function and the organization.
Envisions the current and ideal future states of the HR function,
organization and culture to identify gaps and areas for
improvement.
Monitors the progress of HR initiatives toward achievement of
HR’s vision, strategic direction and long-term goals.
Pivots HR strategy, approaches and/or programs in response to
significant changes within and outside of the organization.
Solicits feedback from executive-level stakeholders on strategic
direction, vision and goals.
Translates HR’s vision, strategic direction and long-term goals
into specific projects and initiatives with clear timelines and
goals.
Uses an understanding of complex relationships among
organizational leaders to facilitate the design, implementation
and maintenance of initiatives.
Key concepts related to this section include:
Leadership theories (examples include situational leadership;
transformational leadership; participative leadership; inclusive
leadership; leader-member exchange theory; servant
leadership; transactional leadership; trait theory; contingency
theory).
People management techniques (examples include directing;
coaching; supporting; delegating; mentoring).
Leadership
Effective HR leadership combines several critical skills: the ability to
see opportunities and problems, to envision a different future and
design a path toward it, to rally necessary support within the
organization, and to manage initiatives that create measurable and
sustainable benefits.

Competency Connection
The HR professional in this scenario helped her organization realign
head count to optimize benefits costs and managerial efficiency. She
used her Business Acumen and Analytical Aptitude competencies to
understand the issue more fully and then used her Relationship
Management and Communication skills to win support for and
implement a solution.

The HR professional is an HR director for a health and fitness

business with multiple locations. The business typically has about
350 employees, although employment does predictably rise during
vacation periods.

The chief financial officer came to the HR director with an interesting

and concerning observation: Head count had grown by 8% over the
past year although no new department programs or specific
positions had been added. Although the business was increasing its
revenue, this situation might be depressing revenue growth.

HR launched an investigation and discovered that hiring managers,

across all departments, had allowed employees to reduce the
number of hours they worked and then filled the open shifts with
additional staff. The reasons for reduction in hours were varied, and
sometimes they were understandable (for example, children’s school
activities, the demands of other jobs they were holding, university
class schedules). Sometimes an employee simply did not want to
work nights or weekends. Instead of insisting that staff maintain the
minimum number of hours required for their position, managers
allowed employees to work fewer hours. Many managers
commented that these were “good employees” or they had “worked
here a long time” and the managers felt bad about letting them go
because they could no longer work specific hours.

At HR’s suggestion, the company implemented a temporary hiring

freeze. To minimize panic, HR communicated with all employees
through an e-mail. HR positioned the freeze as part of an efficiency
study, not a tactic necessitated by poor revenue. The e-mail
expressed pride in the workforce but described the unsustainable
situation. Too many people were working too few hours. This put a
strain on customer service since employees with low attendance
were not available when a fitness center tried to change hours to
meet customer needs. It strained company costs since all
employees, without regard to the number of hours worked, enjoyed
the benefits of fitness center membership for all family members. It
also strained managers’ efficiency since they had to supervise more
employees. As a result, during the coming months, HR would be
working with departments to establish minimal expectations of hours
worked for current and future hires. HR and managers would work
with individual employees to meet these expectations.

The HR director was able to draw on her knowledge of business

needs and her understanding of the frequent time pressures on the
company’s employees. The initiative also benefited from the culture
that its leaders had created. The concept of sharing employees and
working together across department lines was accepted
enthusiastically.

The Role of the Leader

The term “human resource management” points immediately to the
role of management skills for HR professionals. The 20th-century
French management theorist Henri Fayol defined the functions of
management as planning, organizing, staffing, directing, and
controlling.
These management skills are necessary for HR professionals to
assist their organizations in implementing their strategies, but just as
important as management skills is the ability to create an
organizational environment that develops, releases, and includes
team talents and perspectives.

Daniel Goleman reported in the Harvard Business Review on

research into the impact of different leadership styles on factors that
help create motivation and engagement in a workplace. The
research indicated that leadership style affects:
Employees’ ability to make decisions that affect their work.
Employees’ sense of responsibility to the organization or team.
The standards employees seek to meet or exceed.
Employees’ belief that they will be rewarded for their work.
An understood mission and shared values.
A feeling of commitment to a shared goal.

Because environments differ and situations change, HR

professionals need to become more skillful at understanding their
team needs and their organizations’ cultures and more flexible and
thoughtful in being the leader that the situation calls for. They can
then help other leaders in their organization to fulfill their roles more
effectively.
Approaches to Leading

Six approaches to leadership are summarized in Exhibit 4. There is

no single effective approach to leadership. Different approaches may
be more or less effective in achieving results under certain
conditions. The different approaches also have different effects on
the organization’s environment. For example, coercive leadership
may be effective at certain times but tends to weaken the workplace
environment.

Exhibit 4: Leadership Approaches

Approach Suitability

Coercive: The leader imposes a Effective during crises when immediate and
vision or solution on the team and clear action is required.
demands that the team follow this
Ineffective at other times when it can damage
directive.
employees’ sense of ownership in their work and
motivation.

Authoritative: The leader Effective at times when there is no clear path

proposes a bold vision or solution forward and when the proposal is compelling
and invites the team to join this and captures the team’s imagination. Team
challenge. members have a clear goal and understand their
roles in the effort. They are encouraged to
contribute their own ideas and take risks.
Ineffective when the leader lacks real expertise.
 Approach Suitability

Affiliative: The leader creates Effective at all times but especially when a
strong relationships with and leader has inherited a dysfunctional and
inside the team, encouraging dispirited team that needs to be transformed.
feedback. The team members are Leader must have strong relationship-building
motivated by loyalty. and management skills.
Ineffective when used alone. For example,
opportunities to correct or improve performance
may not be taken because the affiliative leader
fears damaging a relationship.

Democratic: The leader invites Effective when the leader does not have a clear
followers to collaborate and vision or anticipates strong resistance to a
commits to acting by consensus. change. Team members must be competent;
leaders must have strong communication skills.
Ineffective when time is short, since building
consensus takes time and multiple meetings.

Pacesetting: The leader sets a Effective when teams are composed of highly
model for high performance competent and internally motivated employees.
standards and challenges
Ineffective when expectations and the pace of
followers to meet these
work become excessive and employees become
expectations.
tired and discouraged. In the leader’s attempt to
set high goals, he or she may focus exclusively
on the task and not give enough time to
activities that motivate team members, such as
feedback, relationship building, and rewards.

Coaching: The leader focuses on Effective when leaders are highly skilled in
developing team members’ skills, strategic management, communication, and
believing that success comes from motivation and when they can manage their time
aligning the organization’s goals to include coaching as a primary activity. Team
with employees’ personal and members must also be receptive to coaching.
professional goals.
Ineffective when employees resist changing their
performance.
 Key Content

It is important to recognize the difference between

coaching and mentoring. Mentoring helps an employee
navigate and understand the organization, which in
turn can help them determine a career path. It is an
approach to people management focused on both
character and fostering skills. When a relationship is
based on more than just a future promotion, the
mentor can help the mentee invest in and develop their
self-awareness, empathy, confidence, respect for
others, and relationship-building skills. A mentoring
relationship is most effective when the mentor has time
to commit to the relationship and when the mentee is
after more than just career advancement.

Universal Characteristics of Leaders

The importance of certain leadership characteristics will vary among

cultures, but in general effective leaders draw their authority less
from their hierarchical positions and titles and more from personal
characteristics and skills. They achieve results through their teams
and share recognition and opportunities for growth with team
members. They are not “solo leaders” who must direct everything.

Effective leaders tend to be trustworthy, ethical, motivational,

efficient, collaborative, and focused on continuous improvement.
Ineffective leaders are focused on their own needs and goals, poor
at developing and sustaining relationships, and given more to
ordering and demanding. Exhibit 5 lists characteristics associated
with effective and ineffective leaders.

Exhibit 5: Universal Leadership Characteristics

Universal Characteristics That Define Universal Characteristics That Detract from

Leadership Leadership
Universal Characteristics That Define Universal Characteristics That Detract from
Leadership Leadership

Trustworthy and dependable Asocial (doesn’t value relationships)

Just Poor at communicating (both sending and
receiving messages)
Honest
Thinks and plans ahead Noncooperative
Irritable
Encouraging
Positive Egocentric
Ruthless
Dynamic
Motivational Dictatorial

Confidence building
Decisive
Committed to excellence
Intelligent and informed
Effective, win-win bargainer
Administratively skilled
Communicative
Organized

Key Content

Although leaders’ personal styles may differ,

management experts agree about the behaviors that
distinguish effective and ineffective leadership in
organizations and in the HR function.

Effective HR leaders:
Develop and coach others.
 Build positive relationships.
Model their values and fulfill their promises and
commitments.
Have functional expertise.

Ineffective HR leaders:
Focus internally rather than externally, failing to
look outside the HR function to the organization’s
internal and external stakeholders.
Lack strategic perspective, focusing on short-term
objectives and daily tasks.
Do not anticipate or react well to change.
Resist “stretch” goals and act as a drag on the
organization’s attempts to innovate.

Leadership Theories
Although approaches to leadership can change, individuals often
develop a “default” style of leadership. Understanding theories of
leadership can help HR professionals to identify these default styles
—in themselves and in those they work with, both inside and outside
the organization—and to plan ways to adapt their own styles or to
work effectively with a colleague with a different style. Exhibit 6
summarizes key points of several leadership theories.

Exhibit 6: Leadership Theories

Theory Description

Trait Theory Leaders possess certain innate characteristics that followers do

not possess (and probably cannot acquire), such as physical
characteristics (for example, strength, stamina) and personality
traits (for example, decisiveness, integrity). Sometimes referred
to as the “Great Man” theory.
It equates these characteristics and leadership but without
evidence.
It may discourage leader development by implying that the ability
to lead cannot be acquired with study and practice.

Behavioral Leaders influence group members through certain behaviors.

Theories
 Theory Description

Blake-Mouton
Leadership involves managing:
Theory
Tasks (work that must be done to attain goals).
Employees (relationships based on social and emotional
needs).

Five types of managers, only one of which (team leader) is

considered a leader:
Country club managers (low task, high relationship)
create a secure atmosphere and trust individuals to
accomplish goals, avoiding punitive actions so as not to
jeopardize relationships.
Impoverished managers (low task, low relationship) use a
“delegate-and-disappear” management style. They
detach themselves, often creating power struggles.
Authoritarian managers (high task, low relationship)
expect people to do what they are told without question
and tend not to foster collaboration.
Middle-of-the-road managers (midpoint on both task and
relationship) get the work done but are not considered
leaders.
Team leaders (high task, high relationship) lead by
positive example, foster a team environment, and
encourage individual and team development.

Situational Building on behavioral theories, situational theories propose that

Theories leaders can flex their behaviors to meet the needs of unique
situations, employing both task or directive behaviors and
relationship or supportive behaviors with employees.
 Theory Description

Hersey-Blanchard
Leaders adapt their behaviors to meet the evolving needs of
Situational
team members. Like Blake-Mouton, the behaviors involve tasks
Leadership
and relationships.
As team members grow in skill and experience, leaders supply
the appropriate behavior:
1. Telling when the employee is not yet motivated or
competent.
2. Selling when the increasingly competent employee still
needs focus and motivation (“why are we doing this”).
3. Participating when competent workers can be included
in problem solving and coached on higher skills.
4. Delegating when very competent team members can
benefit from greater levels of autonomy and self-direction.

Fiedler’s
Leaders change the situation to make it more “favorable,” more
Contingency
likely to produce good outcomes.
Theory
“Situation favorableness” occurs when:
Leader-member relationships are strong.
Task structure and requirements are clear.
The leader can exert the necessary power to reach the
group’s goal.

Unfavorable situations must be changed to improve group (and

leader) effectiveness. This can include:
Improving relations between the leader and the team (for
example, by building trust).
Changing aspects of the task (for example, breaking a
project down into more manageable pieces, providing
more resources for the team).
Increasing or decreasing the leader’s exercise of power
(for example, to increase team involvement in and
ownership of ideas, to decrease harmful conflict or
resistance to change).
 Theory Description

Path-Goal Theory This theory emphasizes the leader’s role in coaching and
developing followers’ competencies. The leader performs the
behavior needed to help employees stay on track toward their
goals. This involves addressing different types of employee needs:

Directive—Help the employee understand the task and its goal.

Supportive—Try to fulfill employee’s relationship needs.
Achievement—Motivate by setting challenging goals.
Participative—Provide more control over work and leverage
group expertise through participative decision making.

Emergent Leaders are not appointed but emerge from the group, which
Theory chooses the leader based on interactions.
Transactional This theory emphasizes a leader’s preference for order and
Leadership structure. It focuses on control and short-term planning.

Employees and subordinates are expected to follow orders

from above.
Employees and subordinates are motivated by rewards and
consequences.
Employees and subordinates are closely monitored to ensure
that work is done properly and on time.
Creativity and inventiveness are not typically encouraged or
nurtured.

Transactional leadership is more commonly found in the military

and large and multinational organizations.
 Theory Description

Transformational This theory emphasizes a leader’s ability to inspire employees to

Leadership embrace change. Transformational leaders are able to encourage
and motivate their employees to innovate in their work, to seek out
changes that can add value and growth to the organization.
Transformational leaders do not micromanage. They give their
employees greater autonomy to make decisions and come up with
creative solutions. A leader will also lead by example, exemplifying
moral and ethical standards and values, and encourage the same
from others.
This leadership approach also encourages communication,
cooperation, and collaboration with others and can use mentorship
to help raise up future transformational leaders.

Leader-Member This theory focuses on a two-way relationship between leaders and

Exchange chosen employees. The leader mentors a selected team member
Theory (or members) and gives them access to more information and
resources in order to strengthen levels of trust and support. This
mentorship is intended to maintain the leader’s position through the
development of different two-way relationships.
This type of relationship can contribute to growth and productivity
but can also create in- and out-groups within the team. The in-
group may tend to strengthen and support the leader’s decisions
and position due to their closer relationship. Members of the out-
group may lag in development and productivity if they perceive that
they are excluded or neglected.
Servant The leaders’ goal is to serve the needs of their employees. This
Leadership theory emphasizes the sharing of power. Leaders should work to
help their employees develop and perform to the highest possible
level, and this will generate benefits within and without the
organization. It is a way of inverting the organizational/leadership
norm of bottom-up service.
Servant leaders tend to be more empathetic and more trusted by
employees. This can lead to greater innovation, collaboration,
performance, and participation. This approach to leadership can be
more resource-intensive and can take longer to produce results.
 Navigating the Organization

Proficiency indicators related to this section include:

Demonstrates an understanding of formal and informal work
roles, leader goals and interests, and relationships among
employees and executives.
Embraces and supports the business unit’s and/or
organization’s culture, values, mission and goals.
Manages project budgets and resources.
Promotes buy-in among organizational stakeholders for HR
initiatives.
Serves as an advocate for the organization or employees to
advance the organization’s strategic direction and goals.
Uses an understanding of the organization’s structure,
processes, systems and policies to facilitate the successful
implementation of HR initiatives.
Uses awareness and understanding of the organization’s
political environment and culture to implement HR initiatives.
Builds consensus among leaders about the organization's
strategic direction and long-term goals.
Collaborates with leadership to remove obstacles to the
successful implementation of HR initiatives.
Obtains and deploys organizational resources and monitors
their effectiveness.
Promotes the role of the HR function in achieving the
organization’s mission, vision and goals.
Uses HR knowledge and skills to influence business strategy.
Uses an understanding of the complex relationships among the
organization’s formal and informal processes, systems and
policies to facilitate the development and implementation of
HR’s strategic direction.
Uses an understanding of the organization’s political
environment to develop and implement HR’s strategic direction,
implement needed changes, and resolve talent needs and
issues.
Navigating the Organization
HR leaders create value through action—through routine HR
services and through special projects and initiatives. Effective
leaders know how to win support for their actions. Successful
navigation of the organization requires understanding the
organization itself and gathering support from influential individuals
in the organization.

Competency Connection
As a former career military officer, a relatively new HR manager was
accustomed to issuing orders and openly expressing an opinion.
Private industry, however, requires changing one’s approach to
Leadership & Navigation—acting more as a consultant and
communicating to influence rather than order.

Feeling frustrated about not being heard by the organization’s

leadership, the HR manager went to his HR VP. The VP reminded
him that the job of HR is to figure out how to help leadership
navigate to the company’s goals and to advise them of risks along
the way. She said to continually ask himself, “How do I navigate and
influence without using the word ‘no’?” He wrote that question down
and taped it to his office planner. That conversation adjusted his
focus, and his relationships and his job satisfaction improved
dramatically.

Learning the Organization

To navigate the organization and lead effectively, HR leaders—
especially those new to an organization or leadership position—
should understand the formal and informal structures of their
organizations.

Ideally, the informal organization will be aligned with the formal

organization. For example, an organization that is committed to
customer service will have communicated this value through its
formal organization—its mission statement and its systems (for
example, its hiring and promotion practices). The informal
organization also should reflect this and can be seen in a tendency
to treat colleagues as internal customers and in frequent
collaboration to deliver better service levels.

Formal Organizational Features

The formal aspects of an organization are usually documented in

organizational charts and policies, in announcements and
handbooks, and in organizational reports to stakeholders. They are
easier to see and can be slower to change than the elements of an
organization’s informal structure.

Formal organizational features include:

The traditional reporting lines that create the organization’s

managerial levels or hierarchy. HR professionals should learn
the types of responsibilities individuals have in their positions.

The decision-making process. Is there a formal process with

multiple hurdles of required approvals? How is the ultimate
decision made—by senior management or by a committee?
Whose sign-offs or recommendations are critical to acceptance
of a proposal? What type of factual support is most meaningful
to the decision makers?

The funding process. Will funding be part of the regular budget,

or can a project be funded separately? This will affect the timing
of the request.

The organization’s strategy, mission, and values. What does the

organization want to achieve? How does it want to be perceived
by customers and stakeholders? Aligning requests for support
with the organization’s interests will improve the chances for
success.
 Events that may have shaped or may be shaping decision
makers’ assessments. For example, competitive actions, market
conditions, or earlier decisions may be contributing to a greater
sense of uncertainty or risk. Similar past initiatives that did not
deliver promised outcomes may predispose decision makers to
say no to current propositions.

Informal Organizational Features

Informal organizational structures are more challenging to learn

because they are often based on interpersonal relationships that are
complex and subtle and can change frequently. The informal
organization can be seen in the organization’s culture and its social
dynamics. Values and beliefs are demonstrated through actions (for
example, mutual respect, honesty). Social dynamics include the
degree to which members of the organization form relationships with
each other across functional lines and hierarchical levels. It also
includes the way people communicate with each other (for example,
through meetings, e-mails, or group SMS [short messaging service]
texts) and what they communicate about. The informal structure
includes social networks of members that have formed around
common interests.
One of the most valuable tools for discovering the informal
organization is observation—watching how people interact in a
variety of situations and identifying people who are treated as
leaders by others in the organization.

Leaders are usually looked to for advice and comment. They put
forth ideas and plans that have a history of success. Management
may include them on critical projects. When leaders have been
identified, one can look more closely at the people around them. An
HR professional new to the organization can identify the people who
influence these leaders or who are members of that individual’s
community of interest and may provide access to leaders.

HR professionals can also learn about the organization’s informal

structure and culture by seeing what types of behavior are rewarded
and what types of ideas are accepted. There is much to be learned
from the way an organization responds to challenges, opportunities,
and crises—whether it reacts positively or defensively, how much
uncertainty it can tolerate, how it distributes praise or assigns blame,
and how well it adapts to change.

Finding Allies
HR professionals cannot work alone within an organization. Often,
one will need to gain a decision maker’s approval to allocate
resources to an initiative or project. This often takes more than just a
good business case. Approval often requires building support with
other stakeholders who can improve proposals and strengthen value
propositions to management. These stakeholders may be HR team
members—for example, experienced staff members who know the
organization and past HR initiatives or who have worked
successfully with a particular decision maker in the past. They may
be in other functions in the organization and can provide critical
knowledge about the initiative and the organization itself. They may
even be outside the organization—for example, key customers who
can benefit from HR’s work. Effective leaders are good at identifying
allies and creating mutually beneficial relationships.

Support may come from individuals with a variety of motivations and

skills. Some allies may be interested in the success of the
organization above personal gain and may be very politically
powerful within the organization; others may be purely motivated by
self-interest or convenience. To turn these potential allies into
partners, HR leaders must make an effort to understand the needs
and goals of potential allies, from both a personal and a functional
perspective. What motivates them personally? What strategic goals
are they pursuing? How can one work with them successfully?
Creating allies requires building one’s own influence and knowing
how to motivate others.
 Influencing

Proficiency indicators related to this section include:

Shares opinions about important issues, regardless of risk or
discouragement from others.
Advocates for the implementation of evidence-based HR
solutions.
Builds credibility for the organization regionally, nationally or
internationally as an HR expert.
Inspires HR staff, non-HR customers and executive-level
organizational stakeholders to support and pursue the
organization’s strategic direction, vision and long-term goals.
Serves as an influential voice for HR strategies, philosophies
and initiatives within the organization.

Key concepts related to this section include:

Influence and persuasion techniques (examples include
personal appeal; forming coalitions; leading by example; rational
persuasion).
Influencing
Effective leaders are able to influence others to engage their support
or collaboration or to resolve conflicts. Influence relies on using one’s
power and/or skills to change others’ perceptions or actions.

Competency Connection
In this scenario, an HR professional shares a story about an
ingenious colleague who was a master at influencing and managing
relationships.

The colleague was a training and development manager in a large

energy company. He had over 15 years’ experience in the field and
was a very affable, engaging person. But he also knew how to get
things done by influencing people. He was purposeful and went after
his goals with determination.

The HR manager was responsible for periodically assessing

organization talent. This involved identifying training and
development gaps, meeting with managers to discuss and clarify
needs, building training plans, and executing those plans. He had to
deal with difficult internal clients often—ones who never answered
his e-mail or submitted the information that he required or who were
just never available to meet. But he was persistent. Nevertheless,
one particular supervisor had eluded him for weeks. This supervisor
never returned phone calls or answered e-mails. He frequently
canceled or did not show up for meetings. All the HR manager
wanted was to sit with him and get the input he needed to complete
a simple document. The situation was affecting the HR manager’s
goals and his ability to deliver a training plan on time.

The HR manager decided to go to the supervisor’s office

unannounced and simply wait. Now, the office wasn’t close. It was in
the field, and the trip took the HR manager about three hours’ travel
over very winding roads. The HR manager had to walk down a long
corridor to the supervisor’s office. He saw the supervisor coming
down the corridor in his direction. The supervisor saw him too…and
casually turned around and headed in the other direction. The HR
manager quickened his pace. The supervisor took a little glance
back and also quickened his pace. The HR manager started to run.
The supervisor did the same, but he could only run to his office. He
was caught.

Now, the HR manager could have challenged the supervisor for this
silly waste of time, but instead he simply said, “Five minutes. That’s
all I need. I know you have a lot of demands on your time, but I’ll
make it easy. I promise.” The supervisor surrendered his time and
the necessary information.
What we do in HR often requires collaboration with stakeholders
throughout the organization. Effective leaders are willing to invest in
creating professional networks—to make repeated efforts, to drive
for hours, even to run, and to keep a good attitude about it all.

Types of Power
Using power to influence others requires understanding types of
power and the limitations of each type. John French and Bertram
Raven identified five ways in which leaders can create power:

Legitimate power is created formally—through a title or position

in the hierarchy that is associated with the rights of leadership.

Reward power is created when the leader can offer followers

something they value in exchange for their commitment (for
example, promotions, compensation).

Expert power is created when a leader is recognized as

possessing great intelligence, insight, or experience.

Referent power is created by the force of the leader’s

personality—the ability to attract admiration, affection, and/or
loyalty.
 Coercive power is created when the leader has the power to
punish those who do not follow.

Power can derive from factors that are external (legitimate, reward,
or coercive power) or internal (referent or expert power). All types of
power can be useful in certain situations and limited in usefulness at
other times. Exhibit 7 describes situations in which each type of
power can be effective or ineffective.

Exhibit 7: Leveraging Different Types of Power

Type of Power Effective Uses Limitations

Legitimate Can save time in decision making May be insufficient if leader is not
and focus team on the also competent and effective at
organization’s goals. leading.
Reward Can appeal to team members’ Is useful only when leader has
individual motivators. access to and can extend to
team members meaningful
rewards.
Expert Can improve a team’s efforts by Can create dependency and
offering advice and guidance. weaken team members’ initiative
Can win respect for the team and or discourage their own
its work throughout the contributions. Effect will weaken
organization. if the individual is a weak team
leader.
Referent Appeals to social needs of Will weaken if leader is not
individuals, the desire for competent, effective, and fair.
affiliation.
Coercive Likely to get immediate results. Damages team members’
motivation and self-direction over
time.
Persuading
Since coercion can damage ongoing relationships and the ability to
reward may be limited, effective leaders develop other ways to
persuade others to grant their support.

The most useful tactic is reasoning, explaining the advantages

of one’s view logically, clearly, and with examples. This is most
effective when it is combined with knowledge of the other
person’s needs and the potential for aligning interests for mutual
benefit.

When evidence is unavailable, one can appeal to mutually held

visions or values—for example, to a commitment to employees’
welfare and improvement.

HR professionals can also trade for what they want, using their
expertise or resources to fulfill another’s needs.

People who are effective at managing relationships can use all of

these approaches in a flexible, appropriate manner. They recognize
that everyone has a natural “influencing” style. They recognize their
own and those of the people they seek to influence, and they can
flex to use the type of influence that is most appropriate for the
situation and the people involved. For example, a person
unpersuaded by reasoning may be affected by an emotional appeal.
A complex or politically sensitive request may require an indirect
approach, using extensive networking to build support among allies
before approaching decision makers.

Key Content

Most importantly, influence must be used with honesty

and concern. It is always possible to manipulate others
by misusing emotional appeals (for example, playing to
fears or biases) or networking (for example,
intimidating or bullying), but, in the end, this type of
falseness and manipulation is a sure way to destroy
trust.
 Motivation Theories

Proficiency indicators related to this section include:

Identifies and develops solutions for overcoming obstacles to
the successful completion of projects.
Motivates HR staff and other stakeholders to support HR’s
vision and goals.
Empowers leaders to create an environment where there is
tolerance for risk taking and workers feel comfortable sharing
ideas.
Ensures accountability for the implementation of project plans
and initiatives.

Key concepts related to this section include:

Motivation theories (examples include goal-setting theory;
expectancy theory; attribution theory; self- determination theory;
equity theory; Herzberg’s 2-factor theory).
Personal leadership qualities (examples include vision; self-
motivation; self-discipline; risk taking; commitment to continuous
learning; growth mindset).
Motivation Theories
Motivating HR teams is critical to releasing team members’ creativity
and energy. However, motivation can be highly individual. Effective
HR leaders understand different motivators and how to apply them.

Competency Connection
An HR manager was fairly new in a company that distributed
industrial fasteners. He quickly learned that the company was
experiencing high turnover rates. Feedback during exit interviews
was consistent with lack of employee engagement and appreciation.

To address the issue, the HR manager developed a “culture

committee” that included representatives from each area and branch
of the company. The committee surveyed employees about their
needs and, in their analysis, prioritized areas that affected employee
engagement. To combat retention issues, the culture committee
developed weekly meetings, employee appreciation events, and
incentives. In addition, management was persuaded to become
more involved than they had been in the past, and this created a
bridge between employees and management.

It was critical for the HR manager to develop rapport and trust with
both employees and management. It was important for the HR
manager to take the lead on developing the culture committee and
provide the committee with directions. However, it was also
important to allow the employees to take the lead and feel that they
were contributing to the overall success of the company. These were
signals that the HR manager had mastered the Leadership &
Navigation competency.

Defining Motivation and Motivation

Theories

Defining Motivation

Motivation can be defined as factors that initiate, direct, and sustain

human behavior over time. Understanding why people behave the
way they do helps leaders influence behavior by appealing to the
right needs in the right [Link] perception of the role of motivation
in organizations has changed over time. Motivation is seen as more
central to the role of leaders and more complex.

Key Content

Effective HR leaders work to understand what drives

the individuals with whom they work. Each person is
unique because of differences in heredity and
 environment. What motivates one person will not
necessarily motivate another—even people in the
same workplace, economic class, or ethnic group.

Motivation Theories

Theories of motivation suggest different ways to look at the

challenge of motivation. They may provide clues about how to reach
—or, in the case of Theory X, how not to reach—certain types of
employees. Exhibit 8 summarizes key motivation theories.

Exhibit 8: Motivation Theories

Theory Description

Theory Motivation is seen as absolutely irrelevant (Theory X) or absolutely

X/Theory Y critical (Theory Y) in the workplace.
Theory X leaders micromanage and coerce team members
because they believe people do not like to work and must be
strictly controlled and forced to work.
Theory Y leaders believe that employees dislike rigid controls
and inherently want to accomplish something. Therefore, leaders
apply a more participative style that empowers employees.
Theory Y is considered more appropriate in today’s knowledge-
driven workplaces.

Needs Theory Individuals are motivated by a desire to satisfy certain needs.

Understanding these needs allows leaders to offer the right
incentives and create the most motivational external environments.
Common factors are achievement, a desire for social connection, and
some degree of control.
 Theory Description

Maslow
Five basic categories of needs must be met in an ascending order:
Physiological (basic needs related to survival)
Safety and security
Belonging and love (the need to belong, to be accepted)
Esteem (both self-esteem and admiration of others)
Self-actualization (the need to fill one’s potential)

A lower-level need must be relatively satisfied in order for a higher-

level need to emerge or serve to motivate.
No need is ever totally satisfied, however. The lower-level needs
will always have some influence on behavior.

Herzberg
Behavior is driven by intrinsic factors (innate desires) and extrinsic
factors (workplace hygiene).
Intrinsic factors: challenging work, meaningful impact of
work, recognition
Extrinsic factors: job security, pay, conditions

Satisfying hygiene factors can remove some areas of discontent

that interfere with motivation, but satisfactory workplace conditions
are not enough in themselves to create motivation.
Motivation is created by appealing to individual desires or needs.

In applying Herzberg’s motivation-hygiene theory, it is important to

remember that while good workplace conditions do not positively
affect motivation, unacceptable conditions will lead to job
dissatisfaction and can make a motivated employee look for another
job. Hygiene factor levels must be acceptable in order for the
motivation factors to become operative.
 Theory Description

McClelland
Individuals are motivated by three basic desires:
Achievement (accomplishment)
Affiliation (feeling part of a group)
Power (influence or control over others)

Employees have all three needs, but the needs’ relative

importance may vary among individuals. Effective leaders identify
and appeal to each employee’s primary motivators. For example:
Give an achievement-oriented employee an assignment
that will require and call attention to the employee’s
abilities.
Incorporate socialization events or opportunities into team
schedules for affiliation-oriented employees.
Delegate to power-oriented employees tasks that they can
control and direct, perhaps ones with high visibility in the
organization.

Self-
Individuals are motivated by innate needs, such as competence
determination
(McClelland’s achievement) and relatedness (McClelland’s
affiliation), but also by needs for:
Autonomy, or the need to feel that one has control over
one’s life.
Purpose, or the sense that one’s actions have effects
beyond the individual or the workplace.

Expectancy Effort increases in relation to one’s confidence that the behavior will
Theory result in a positive outcome and reward.
 Theory Description

Vroom
Level of effort depends on:
Expectancy. (With reasonable effort, the employee can
succeed.)
Instrumentality. (Success will result in a reward.)
Valence. (The reward is meaningful to the employee.)

All three factors must be addressed to create motivated

employees.

Attribution The way a person interprets the causes for past success or failure is
Theory related to the present level of motivation. A leader can help
employees attribute results to the correct causes and create
opportunities for success.
Heider, Weiner Success or failure can be attributed to internal factors (for
example, skills, diligence) or external factors (for example,
available resources, market events). Internal factors may be under
the employee’s control (for example, the employee can work
harder or be more careful), but external factors are probably
beyond the employee’s control.
A track record of success can create empowered and resilient
employees, while a track record of failure (even though the causes
were external to the employee’s control) can create “learned
helplessness” and even aggression or hostility in the workplace.
Leaders create opportunities for success for less-experienced
employees, perhaps by providing more resources, coaching, and
guidance. More-challenging assignments are given to employees
who believe they can (and are likely to) succeed.
 Theory Description

Goal-Setting
Motivation can be increased by providing employees with goals
Theory
against which they can assess their achievement.
Optimally, employees should be involved in designing goals and
supported in achieving their goals.
Effective goals are:
Specific and clear.
Important to the individual. This enables greater
commitment.
Realistic but challenging. Goals that are unrealistically high
can harm motivation.

Feedback helps employees determine the effectiveness of their

effort.

Equity Theory Motivation is based on an employee’s sense of fairness. An individual

compares their perceived value with that of others in similar roles and
makes a calculation based on their inputs and outputs:

Inputs—skills, training, effort, education, experience

Outputs—salary, bonuses, raises, promotions

When an employee considers the balance between inputs and

outputs to be fair—that is, they believe they are being compensated
and treated fairly—then their motivation will be maintained. If the
balance is perceived to be unfair—for example, if they believe
someone else is being unfairly promoted ahead of them or being
rewarded for inferior work/effort—they can become demotivated.

Personal Leadership Qualities

There are certain qualities that should be developed and embodied
by anyone hoping to take a leadership role in a department or an
organization as a whole. Developing these skills and practicing these
qualities can help you thrive as a leader.

A leader should be both self-motived and self-disciplined.

The ability to identify opportunities and challenges is extremely
valuable, and a leader will take steps to design and propose
strategies to address them without waiting to be asked.
Understanding the structure and dynamics within the
organization can help an HR leader navigate the best path
toward gaining support and an audience for their ideas and
proposals.

A leader should be (or become) comfortable with risk-

taking. Taking charge of an issue or designing a strategy to
address a challenge or opportunity can be a considerable
undertaking—one that might either be time-consuming and
difficult to achieve or be received with push-back within the
organization. A leader has to be prepared to share their opinions
and proposals with others, regardless of the potential for
discouragement or criticism. Similarly, they have to be prepared
to make mistakes. Organizations can’t innovate without taking
appropriate risks, and a leader should learn to tolerate failure in
the pursuit of innovation and create an environment in which
failure can be learned from.
A leader should be committed to continuous learning. As
technology continues to evolve and the nature of work continues
to change for employers and employees, it is important to help
create a culture of continuous learning in order to keep pace
with ever-changing skills requirements. This is a formidable
challenge for any organization, and it must be embraced by
leaders in order to appropriately meet the challenge. Learning,
re-skilling, and up-skilling should be integrated into workplace
practices on an ongoing basis. HR leaders should encourage
others to be self-motivated and seek out their own opportunities
to learn, in part by providing information on what skills are or
might be required for advancement and specific roles. HR
professionals should avail themselves of these opportunities as
well. Similarly, hiring practices should be adapted to take into
consideration future needs as well as current needs.
Understanding the changing forces within and without the
organization will help guide HR professionals to pivot their
strategies in order to meet significant changes.

A leader should embody a growth mindset. This refers to the

belief that an individual’s talents and skills can and should be
developed during the course of doing one’s work. It is a mindset
that sees employees (and oneself) as a source of potential,
which should be encouraged to grow (and should be rewarded).
For HR leaders, this can manifest through coaching and
mentoring but also by a willingness to take risks and learn. A
leader who internalizes this mindset and models it to their
colleagues and employees will reap benefits and can encourage
greater engagement, as it helps create an environment in which
risk taking and innovation are tolerated and employees feel
comfortable participating and sharing ideas. Research has
shown that, when a growth mindset is instilled in an
organization’s personnel, they are more likely to embrace
challenges and persist when obstacles appear. HR
professionals can reinforce this mindset during performance
reviews by praising employees who have made an effort to learn
new skills and develop their existing abilities. During the hiring
process, HR should consider and note a candidate’s potential
for growth, which can help instill a growth mindset in a new hire.
Ethical Practice
Competency
Ethical Practice Competency
Ethical Practice is defined in the SHRM Body of Applied Skills and
Knowledge as:

The KSAOs [knowledge, skills, and abilities] needed to

maintain high levels of personal and professional
integrity, and to act as an ethical agent who promotes
core values, integrity and accountability throughout the
organization.

HR professionals need to be aware of the distinctive ethical

obligations they face in their own jobs and the varied ethical
challenges that confront other employees in their own jobs. These
challenges vary by industry and by job description. They are also
evolving. Changes in the environment and in business practices may
present new tests. HR professionals and their organizations must be
alert to identify these emerging issues and help prepare employees
to apply organizational values to their actions.
 Ethical Issues in the Workplace

Proficiency indicators related to this section include:

Acknowledges mistakes and demonstrates accountability for
actions.
Applies, and challenges when necessary, the organization’s
ethics and integrity policies.
Balances ethics, integrity, organizational success, employee
advocacy, organizational mission and values, laws and
regulations, and organizational policies and procedures.
Does not take actions based on personal biases.
Empowers all employees to report unethical behaviors and
conflicts of interest without fear of reprisal.
Establishes oneself as credible and trustworthy.
Identifies, evaluates and communicates to leadership potential
ethical risks and conflicts of interest.
Maintains appropriate levels of transparency for HR programs,
practices and policies.
Maintains current knowledge of ethics laws, standards,
legislation and emerging trends that may affect organizational
HR practice.
Maintains privacy as appropriate and complies with laws and
regulations mandating a duty to report unethical behavior.
Manages political and social pressures when making decisions
and when implementing and enforcing HR programs, practices
and policies.
Provides open, honest and constructive feedback to colleagues
when situations involving questions of ethics arise.
Recognizes explicit and unconscious biases in oneself and
others, and takes steps to increase self-awareness.
Seeks opportunities to learn new skills and improve existing
skills to become a stronger HR professional.
Serves as a role model of personal integrity and high ethical
standards.
Shows consistency between stated and enacted values.
Takes steps to mitigate the influence of bias in HR and business
decisions.
Advises senior management of organizational risks and conflicts
of interest.
Applies power or authority appropriately without seeking
personal gain or benefit.
Balances ethics, integrity, organizational success, employee
advocacy, and organizational mission and values when creating
strategy, initiatives or long-term goals.
 Brings potential conflicts of interest or unethical behaviors to the
attention of leaders and executives.
Communicates a vision for an organizational culture in which
there is consistency between the organization’s stated and
enacted values.
Demonstrates agility and courage when making difficult
decisions or handling challenging situations.
Designs and oversees learning and development programs
covering ethics.
Establishes the HR team as a credible and trustworthy resource.
Helps others to identify, understand and address their biases.
Holds others accountable to their commitments.
Implements and maintains a culture and system that
encourages all employees to report unethical practices and
behaviors.
Makes difficult decisions that align with organizational values
and ethics.
Promotes the alignment of HR and business practices with
ethics laws and standards.
Withstands politically motivated pressure when developing or
implementing strategy, initiatives or long-term goals.

Key concepts related to this section include:

Ethical business principles and practices (examples include
transparency; authenticity; conflicts of interest).
Privacy principles and policies (examples include anonymity;
confidentiality; opt-in/opt-out policies).
Ethical Issues in the Workplace
Philosophers have long debated exactly what ethical behavior is, but
certain concepts consistently appear in these discussions:
adherence to socially accepted norms of behavior (such as honesty),
integrity (maintaining consistency between one’s values and one’s
actions), and commitment to the common good (as opposed to
personal gain as a sole or primary motivation). HR professionals can
help create workplaces that promote these behaviors.

Competency Connection
The vice president of HR (VP HR) has led the design of a new
leadership development workshop and is gathering nominations for
participants. The senior vice president (SVP) of finance, who has
been instrumental in providing funds for the workshop, is pressuring
the VP HR to provide additional participant slots for his department
at the expense of other departments.

While there were never any quotas communicated for numbers of

participants coming from each department, the program was always
discussed during its development as a learning forum that would be
available across the entire division. In choosing to discuss with the
SVP of finance why what is being asked is not possible and the
reasoning behind that decision, the VP HR communicates the
implications of loading the program with finance participants at the
expense of other departments and how both the program and the
SVP could be perceived as a result.

The VP acts with professional integrity and demonstrates the Ethical

Practice competency in communicating the program to all potential
participants despite the obvious financial support that has been
provided by the SVP. This reinforces the level of transparency in the
nomination process for the workshop. The VP HR also demonstrates
the Leadership and Navigation and Relationship Management
competencies in working to overcome finance’s request in a collegial
manner.

Creating an Ethical Workplace

Ethical workplaces begin with leadership’s definition of their
organization’s values. These may reflect commonly held principles
about transparency, honesty, and confidentiality in business dealings
and conduct toward others. Ethical workplaces aim for conduct that
respects the rights of others—their safety and well-being, their
dignity, and their privacy.
Leaders model these ethical values in their business actions, and
they celebrate organizational stories that demonstrate commitment
to values. Over time, these values are established in the
organization’s culture and become the organization’s norms of
behavior. They are also codified in the organization’s codes of
conduct and reflected in all of the organization’s processes.

Benefits of Ethical Workplaces

Ethical workplaces are considered by employees as good places to

work. Employees are proud of their association with the employer,
and they are more likely to treat each other better. Ethical behavior
leads to an atmosphere of trust, which can translate into greater
employee empowerment. From an HR perspective, an ethical
workplace has a natural advantage in attracting and retaining top
talent.

From a management perspective, an ethical workforce creates

opportunities and reduces risks.
Businesses with a reputation for ethical behavior attract
customers and investors and are also likely to attract better
candidates for open positions.
Ethical leaders and workers are less likely to violate laws, and
thus the organization is less likely to suffer costly lawsuits, fines
 and judgments, potentially criminal penalties, and damage to its
reputation.

Protecting the Rights of Employees

Ethical employers provide workplaces in which the rights of

employees are protected. This includes:

Creating a safe working environment, both in the physical

workplace and in extended workplaces for distance workers and
global assignees. A safe environment is one in which employers
take all reasonable steps to protect employees against illness
and injury caused by their work and workplace violence and
bullying. It can also include proactive measures such as steps
taken to increase employee wellness (for example, exercise
programs, stress reduction practices, healthy food options in
employee food services). The concept of a safe environment
also extends to communities in which the organization operates
that can be harmed by unethical actions by leaders and
employees alike.

Maintaining a fair working environment. This requires

policies that promote fair talent acquisition practices, access to
skill and career development, and compensation systems that
are compliant with local laws and regulations.
 Protecting employee privacy. Privacy refers to an individual’s
right to freedom from intrusion (by viewing, monitoring, reading,
etc.) into matters, actions, or information that is personal. The
line between “personal” and “public” sometimes can be
complicated. For example, if an employee is not using their
personal mobile phone for business, it would clearly be wrong to
examine text messages sent and received on that phone, but
what of checking e-mails sent from the company’s computer or
documents stored on a company server? Another example:
Cameras in a company bathroom would be wrong, but what of
security cameras in a stairwell?

HR’s Role in Supporting an Ethical Workplace

The three subcompetencies in the Ethical Practice competency

focus on the ways HR professionals participate in creating and
supporting an ethical organization.

Personal integrity. HR professionals model ethical conduct and

the organization’s values in all their actions. They strive to be
ethical and admit their shortcomings. They are courageous in
pointing out to others—including senior management—ways in
which the organization and its members are not meeting the
ethical norms and the organization’s values. They are prepared
to hold others accountable for their actions and also advocate
for others.

Professional integrity. HR professionals demonstrate

awareness of and commitment to ethics in their work. They
apply their Business Acumen competency to understand ethical
risks in their industries. The types of ethical challenges an
organization and its HR function face will vary by organizational
activity and employee jobs. As part of building their Business
Acumen, HR professionals should make it a point to learn their
organizations’ particular ethical vulnerabilities.
For example, in financial industries or in certain jobs such as
sales or accounting, the potential and rewards for committing
fraud are greater. Some industries are more highly regulated
and require greater transparency and compliance. Some
industries are inherently more physically dangerous. Diverse
workplaces or workplaces seeking to increase their diversity
may be challenged by both explicit and unconscious bias.

Ethical agent. There are certain actions HR can take to support

the organization’s ethical goals. For example, they can
communicate ethical expectations to all new employees and
administer those expectations consistently. They can create the
means for employees to report ethical issues and maintain
 confidentiality. They can ensure that all HR policies and
processes are ethical and compliant. A good HR professional
will also seek out opportunities to learn new skills and gain new
expertise in order to become a better, more effective member of
the organization.

Ethical Decision Making

It is impossible to describe to employees every ethical dilemma they
will face. Therefore, HR professionals should learn how to make
ethical decisions and ensure that employees are trained in this skill
as well.

A basic framework for ethical decision making contains the following

steps.

Recognize ethical situations as they arise. This requires

having an ethical compass, a sense of right and wrong. If the
possible outcomes of an action trigger uneasiness about ethical
or legal propriety, this is a signal to pause and consider the
situation more fully.

Establish the facts about the situation. The best decision will
depend on knowing such details as:
What are the different paths that could be taken?
 Who will be affected? What are their expectations, and are
they valid?
What will be the nature and extent of harm done?
Will a decision violate written and unwritten agreements?

Evaluate the ethical dimensions of possible actions.

Developing ethical criteria is difficult. One cannot adopt them
fully packaged in the form of religious beliefs or cultural norms.
Ethical criteria necessarily involve balancing interests and
sacrificing one’s own interests.
Various moral codes have proposed different ways of evaluating
actions ethically. They can be used to help one understand the
ethical implications of one’s actions more fully.
A utilitarian approach argues for the path that provides the
greatest amount of good for the greatest number.
A rights approach examines whether a decision violates any
basic human right, such as a right to truth, privacy, or physical
well-being.
A justice approach examines the degree to which an action
might be preferential or discriminatory.
A common-good approach considers the impact of the
decision on the entire group (or society, in more general
terms).
 A virtue approach asks whether an action will promote or
obstruct the decision maker’s character development and the
character development of those affected by the decision.

Apply relevant codes of ethics and behavior to the options.

Organizations and professions may have developed their own
codes of ethical behavior that can provide more specific
guidance. Global organizations often provide guidance in
situations in which the ethical norms of a parent country may not
align with the legal requirements and cultural expectations of
host countries.

Consult with others. HR leaders should identify people, inside

and outside the organization, they consider ethical mentors,
individuals who are known for their ethical behavior and the
ability to understand and advise on complex situations.
Maintaining an obligation of privacy to all those involved, leaders
can seek different perspectives. This is especially important in
ethical decisions involving cultural differences or legal matters.
One should note instinctive and immediate reactions; they often
point to basic ethical issues.

Make a decision, own it, and learn from one’s mistakes.

When the issue has been satisfactorily analyzed, a decision
should be made and communicated to those affected by it.
 Leaders should explain their rationales thoroughly and accept
reactions. Once the decision is made, it should not be remade
unless significant shortcomings in the original decision making
have been uncovered. However, the effectiveness of the
decision itself, the eventual impact on those affected, the
soundness of the criteria and processes used—these aspects of
the experience should be reevaluated so that the next decision
can be a better one.

Transparency, Honesty, and

Authenticity

Transparency

The concept of transparency supports trust in relationships with

stakeholders, who could be business associates, investors,
governments and communities, and employees. Transparency
commits an ethical organization to disclosing details about dealings,
transactions, or processes to those who have a vested interest.
Transparency provides assurance when behaviors cannot be
witnessed and it cannot be verified that they comply with laws, rules,
or policies. For example:
 A business partner can expect transparency about the terms of
a working agreement. If an organization signs a contract that
stipulates that it will not subcontract the work to another entity
without the agreement of the other party, it must inform its
business partner and seek their approval.
A government expects that an employer’s safety records
accurately disclose all information about accidents and injuries.
Documentation on hiring, promotions, and performance reviews
should comply with employment laws and organizational policies
and procedures.

Honesty

Honest dealings reflect a commitment to truthfulness and fairness,

abiding by social and business norms. In organizations, honesty
requires an avoidance of conflicts of interest and the use of bribery.
These actions violate the basic principle of transparency and
undermine the business relationship.

Conflicts of interest are situations in which a person or

organization may benefit from undue influence due to involvement in
outside activities, relationships, or investments that conflict with or
have an impact on the employment relationship or its outcomes.
Conflicts of interest can occur both on a person-to-organization level
(in which an employee’s personal interests conflict with the
employer-organization’s interests) and on an organization-to-
organization or organization-to-government level (in which an
organization serves a client in conflicting capacities or
simultaneously serves two clients whose interests conflict).

For example:
An employee is purchasing goods or services from or selling
them to a business owned by a friend or relative.
A company both supplies products to the government (such as
an arms contractor) and sits on the government board that sets
the criteria for awarding such contracts.

Bribery is the exchange of anything of value to gain greater

influence or preference. It is a challenge in all businesses, but it can
be a particular challenge for global organizations. Bribery and
corrupt practices are increasingly unlawful in many jurisdictions
worldwide. Key examples of laws dealing with bribery are the U.S.
Foreign Corrupt Practices Act of 1977 and the U.K. Bribery Act 2010,
which is now among the strictest legislation internationally on bribery.

Key Content

Legal opinions vary in different countries about what

constitutes bribery. For example, “facilitating”
 payments (small payments of money or goods)
awarded to perform (or speed up) routine
governmental actions are permissible in some
countries. However, they are not allowed under any
circumstances in the United Kingdom. HR
professionals should become familiar with local
business practices and local laws regarding bribery.

Implementing and maintaining an effective anticorruption program

can decrease corruption risks. Steps to implement a sustainable
anticorruption program will vary across multinational enterprises, but
they typically include:
Identifying specific risk areas where payments are made (for
example, promotional expenses, travel and entertainment,
facilitating payments, charitable donations, lobbying).
Instituting effective controls concerning the method and location
of all payments.
Providing culturally appropriate training and communication
programs.
Embedding disciplinary mechanisms within the business model
to help mitigate areas of risk.
Implementing robust monitoring, detection, and auditing
processes.
 Periodically reassessing all corporate governance and
compliance programs.

Authenticity

The concept of authenticity in the workplace has evolved in recent

years. In its simplest sense, authenticity refers to a person’s ability to
stay true to their values and maintain their integrity in both their
personal and professional lives. However, from an organizational
perspective, it refers to an individual’s approach to forming and
maintaining relationships with colleagues and others in the
organization.

Rob Goffee and Gareth Jones have suggested using a chameleon

as a metaphor. While a chameleon can shift color and tone in order
to blend in, it nevertheless remains the same creature. Authenticity,
therefore, refers to an individual’s ability to remain true to themselves
while being able to adapt to and cope with rapidly changing events.

If members of an organization at any level believe that you are

authentic in your dealings with them, they are more likely to be
receptive to what you might have to say. For example, if you have to
discuss a sensitive or delicate matter with a manager, they are more
likely to accept your advice or feedback if they believe you are being
honest and transparent with them.
There are times when employees might consciously be acting
against their authentic impulses—not through any malicious or
negative intent but as a professional strategy to navigate the
workplace. These instances typically arise due to cultural or social
biases, most often directed at under-represented groups such as
those based on race or gender identity. Diversity, equity, and
inclusion initiatives, discussed elsewhere, can help avoid these
instances and encourage all individuals to be their authentic selves
in the workplace.

HR’s role here is to promote an environment of learning and

flexibility—for themselves and for others, across all personal and
professional areas. Providing employees, managers, and HR
professionals with opportunities to acquire the skills and knowledge
to adapt their methods and style to an organization’s values and
welcome alternative perspectives and experiences can lead to
personal and professional growth. Encouraging a more flexible and
diverse environment can help break down barriers and confront
biases, leading to a more inclusive work environment and a more
engaged workforce.
 Codes of Conduct

Proficiency indicators related to this section include:

Ensures staff members have access to and understand the
organization’s ethical standards and policies.
Leads HR investigations in a thorough, timely and impartial
manner.
Uses discretion appropriately when communicating sensitive
information, and informs stakeholders of the limits of
confidentiality and privacy.
Audits and monitors adherence to HR programs, practices and
policies pertaining to ethics.
Collaborates with leaders to support internal ethics controls.
Creates and oversees HR programs, practices and policies that
drive an ethical culture, encourage employees to report
unethical behaviors, and protect the confidentiality of employees
and data.
Designs and oversees systems to ensure that all investigations
are conducted in a thorough, timely and impartial manner.
Develops HR programs, practices and policies that meet high
standards of ethics and integrity.
 Develops and provides expertise for HR policies, standards and
other internal ethics controls to minimize organizational risks
from unethical practices.

Key concepts related to this section include:

Internal ethics controls (examples include protection of
employee confidentiality; standards for employee
investigations).
Codes of Conduct
Organizations communicate their ethical expectations to their
members through codes of conduct. HR may be directly involved in
creating the organization’s code of conduct and making sure that all
employees are aware of the code and fully understand its
requirements.

Competency Connection
Making sure that an organization’s assets are used in a fiscally
responsible way is an ethical imperative for HR professionals. This
example demonstrates HR’s responsibility to act ethically and to
communicate ethical behavior to employees.

An audit discovers that employees are using company credit cards

for personal purchases, counter to policy. Misuse results in
corrective action. Cards are taken from the employees who have
misused them, and those employees are required to pay the
personal expenses. Employees who fail to pay are terminated.

The organization’s core values have been defined for five years and
published internally via various media (for example, the company
intranet, departmental posters, annual employee communications).
However, the employee commitment index data from a recent survey
illustrates poor knowledge and demonstration of these values among
the employee base and management. This has been further
confirmed during recent employee focus group meetings conducted
by HR.

In an effort to further educate employees regarding proper card use,

HR collaborates with representatives from the corporate social
responsibility department to draft a new policy that delineates the
purpose of the credit card and aligns the policy with the
organization’s core values, particularly integrity and accountability.
HR then incorporates this policy into the employee handbook, new-
hire training, and required annual training.

HR’s proactive leadership in addressing the company’s credit card

issue demonstrates its commitment to core values, leading by way of
example with the highest level of integrity and administering
corrective action where required to ensure accountability.

Code of Conduct Components

A code of conduct (or code of ethics) can be defined as principles
of conduct within an organization that guide decision making and
behavior. A written code of conduct can help an organization
promote ethical behavior by communicating to all its members the
organization’s commitment to certain values, by defining behavioral
expectations for all employees, and by providing direction to all
employees when they are faced with ethical decisions. A code
should not be seen as a static book of rules. An effective code is a
tool that employees can use to examine their own conduct and make
correct ethical decisions.

Key Content

A code of conduct should reflect the needs, concerns,

and values of the organization that creates, adopts,
and uses it. There is no definitive set of elements or
order of components. Whatever elements a given
organization’s code contains should be there because
of their usefulness and meaningfulness to the
organization. While HR professionals can look to
examples of codes from comparable organizations,
ultimately an effective code is one that management
can support by its example and investment and that
employees can understand and apply.

Because they serve both to communicate values and to guide action,

codes of conduct have two parts. One is values-based and the other
rules-based.

The values-based part describes the organization’s principles and

obligations to its internal and external stakeholders. These values
underlie or explain the rationale behind the rules that follow.
Beginning the code of conduct with clear and detailed statements of
the organization’s vision, values, and principles makes it a unifying
document rather than one separating management from employees.
Its tone becomes “what we all must do together” rather than “what
we expect you to do for us.”

The values-based part of the code of conduct includes:

Communication from leadership reflecting commitment to the
code and its enforcement.
The organization’s mission statement and/or vision statement.
A broad statement of organizational values and principles.
A more detailed statement of the organization’s ethical
obligations to all its various stakeholders.

The rules-based part of the code of conduct defines the

organization’s ethical expectations. It includes:
Ethical and conduct guidelines (for example, policies regarding
conflict of interest, bribery/corruption, confidentiality, privacy,
harassment).
 Examples of ethical and unethical behavior to help employees
recognize a potential risk or conflict when it arises and questions
employees can ask themselves to assess the ethical impact of
their actions.
Rules of conduct required to comply with laws and regulations.
This may be a function-specific document.
A description of the enforcement process, including how
suspected violations should be reported, how and by whom
reports will be investigated and assessed, and how employees
will be penalized for violations.

Creating an Effective Code of Conduct

Code creation (or revision) should begin with leadership’s
commitment to the end result and sufficient stakeholder input to
ensure that the code reflects the organization’s ethical needs and the
values the organization espouses. Stakeholders could include not
only managers and supervisors but also employees from these
functions. A code developed exclusively by an enterprise’s legal
counsel, HR department, or executive team will be unlikely to reflect
the cultural diversity of the organization’s stakeholders.

The process follows five basic steps:

Gather information. Query stakeholders through surveys or
focus groups about ethical risks and conflicts they have
encountered and important compliance requirements. Specific
descriptions of actual events can help make the code more
meaningful and applicable for users. HR professionals ensure
that all internal and external stakeholders are included in this
information-gathering step—all organizational functions and
experts on regulatory compliance requirements.

Draft and review. An effective code:

Is clear about its objectives.
Is understandable. The language should be brief, pointed, and
at a level easily understood by all employees. It should not
rely on legal terminology. For non-readers, the code may be
presented in audio. The code should be translated into the
languages of all countries in which the organization has
employees and reviewed locally for accuracy.
Equips employees to respond to real situations. It should
reflect the specific and unique challenges of the particular
organization’s industry and its locations.

Adopt the code formally and communicate it to the

organization. New employees should be introduced to the code
of conduct during orientation. An introduction is more than
 distributing a copy of the code. Key points should be reviewed
and employees’ understanding confirmed.

Monitor enforcement. This may include auditing for the

presence and effectiveness of bodies and processes described
in the code (for example, reporting channels, panels, outcomes).
Inconsistent enforcement can have legal consequences for the
organization.

Evaluate and revise the code periodically. Changes in the

organization and its external environment (for example, new
laws and regulations requiring compliance) may require
changes to the code. The revised code should be reviewed and
reintroduced to employees.

Internal Ethics Controls

Internal, or employee, investigations are a valuable tool available to
HR in the pursuit of maintaining and ensuring ethical standards
within an organization. Whenever information on workplace
misconduct arises, it is HR’s responsibility to investigate. This
information can come from either formal or informal channels, from
exit interviews, tips, third parties, and even rumors and office gossip.
Allegations of criminal activity or those filed by a government body
should be externally investigated.

Here are a few common steps and elements to any internal

investigation:

Investigator. An appointed investigator should be experienced,

neutral, and objective. The investigator may be a member of the
HR department, a third party, or legal counsel. Depending on
the scale of the complaint, a small team of investigators may be
used.

Investigation. All parties involved in the situation should be

interviewed, as should potential witnesses and third parties who
might be able to shed light on events.

Documentation. Throughout the investigation, keep careful and

detailed notes from interviews as well as any other relevant
documentation you might collect. Document objective facts;
avoid opinions.

Confidentiality. All HR professionals should maintain

confidentiality, agreeing to not share or make public personal
information. This is especially important during an investigation
of misconduct.
 Credibility. The most difficult part of an investigator’s job can be
to assess, based on the evidence gathered, whether the
allegations are true. Often, an investigator will be confronted
with a he-said/he-said situation, which cannot be the end of the
matter. In these instances, the investigator must assess the
credibility of the various parties involved.

Conclusions. Based on the evidence you gather, you must

come to a conclusion. Findings are presented in a confidential
written report, which is given to a separate decision maker who
determines what the appropriate outcome or punishment should
be.

The impact of an incorrectly conducted investigation can be wide-

ranging. In some instances, for minor examples of misconduct, it can
lead to strained work relationships or fractures in team cohesion and
engagement. In more serious instances, an organization could lose a
valuable, experienced employee as a result of a false accusation
and possibly risk legal consequences, such as a wrongful
termination lawsuit or other legal action should employee
confidentiality be breached in some way.

Codes of Conduct in Global

Organizations
Global organizations must carefully consider whether to standardize
or localize their codes of conduct. What is an acceptable behavior in
one culture may not be in another. While child labor and the payment
of bribes or fees are accepted business practices in some countries,
many global organizations choose to apply one standard in all their
locations and order local employees to avoid these practices.
Organizations need to provide clear and nonjudgmental ethical
guidelines to employees working outside their home countries.
Exhibit 9 recommends steps for creating codes of conduct for global
organizations.

Exhibit 9: Checklist for Global Code of Conduct

Ensuring Global Acceptability and Accountability of Organizational Code of Conduct

Ensuring Global Acceptability and Accountability of Organizational Code of Conduct

Assemble an international task force on Avoid home-country biases. Choose

which all affected cultures are words that are nonjudgmental and that
represented. translate well into other languages (for
Solicit feedback from a diverse cross example, “business practices” and
section of employees; be sure to involve “corporate responsibility” rather than
workers from all locations, levels, and “ethics” and “integrity”). Limit references
functional areas. to specific regulatory instruments to
those that are international in scope (for
Identify a set of shared principles and
example, the OECD Convention on
develop mutually agreeable policies to Combating Bribery of Foreign Officials
address each one. Incorporate enough in International Business Transactions
detail to effectively monitor and rather than the U.S. Foreign Corrupt
measure compliance and enough Practices Act).
flexibility to accommodate variations in
In addition to a company-wide code of
local practices.
conduct, consider creating ethical
Ensure that training materials are
guidelines specific to at-risk personnel
available in the local languages and that such as salespeople in countries where
translations are accurate and sensible. bribery is prevalent.
Diversity, Equity &
Inclusion Competency
Diversity, Equity & Inclusion
Competency
Implementing the principles of diversity, equity, and inclusion (DE&I)
is a major challenge for organizations today. A change of this type
and scope may generate significant differences of opinion across all
sectors of an organization. Even the way the organization defines
DE&I can shape the DE&I strategy and affect the broader success of
any DE&I programs within the organization.

For these reasons, DE&I initiatives should be taken as part of an

entire strategy. The strategy must have the backing of the
organization’s leaders, and its benefits and goals must be clearly
communicated to all members of the organization. The commitment
will necessarily affect the organization’s structures, policies, and
processes.

HR professionals are clearly important participants and agents in an

organization’s DE&I efforts. They must understand the importance of
the process behind successfully implementing DE&I initiatives.
Without a strong plan and persistent follow-up throughout the
implementation process, DE&I initiatives may fail to be impactful in a
variety of different ways.
 Creating Dynamic and Inclusive
Workplaces

Proficiency indicators related to this section include:

Consults with managers about behavioral distinctions between
performance issues and DE&I differences.
Contributes to the development and enhancement of an
organizational culture that provides access, opportunity and
equity for all employees.
Demonstrates support to internal and external stakeholders for
the organization’s DE&I efforts.
Designs and executes effective DE&I initiatives to achieve
business goals.
Develops and maintains knowledge of current trends and HR
management best practices relating to DE&I.
Identifies and communicates the benefits of DE&I to employees
and leaders.
Identifies opportunities to enhance the equity of organizational
policies and procedures to all employees.
Implements HR programs, practices and policies that encourage
employees to embrace opportunities to work with those who
possess diverse experiences and backgrounds.
Partners with people managers to hire new employees from
diverse groups across a variety of dimensions.
Provides professional development, mentoring, coaching and
guidance on cultural and diversity differences and practices to
employees at all levels of the organization.
Recognizes, supports and advocates on behalf of a diverse
workforce with representation across race, gender, sexual
orientation, ethnicity, religious beliefs, country of origin,
education, abilities and the intersectionality of the elements of
diversity.
Supports a workplace culture and team that invite interpersonal
risk taking, support mutual respect and trust, and do not
embarrass or punish team members for speaking up.
Advises business leaders on how to behave in more empathetic
and inclusive ways.
Advocates to leadership to increase workforce diversity with
representation across race, gender, sexual orientation, ethnicity,
religious beliefs, country of origin, education, abilities and the
intersectionality of the elements of diversity.
Creates and advocates for the organizational business case for
DE&I.
Creates and manages HR programs, practices and policies that
encourage employees to embrace opportunities to work with
those who possess diverse experiences and backgrounds.
Designs and oversees HR programs, practices and policies that
promote an organizational culture that provides access,
opportunity and equity for all employees.
Develops policies and programs to create a workplace culture
and team that support and reinforce the principles of
psychological safety.
Ensures HR staff members have up-to-date knowledge of
current trends and HR management best practices relating to
DE&I.
Identifies changes in the workforce and workplace related to
DE&I that are necessary to help an organization meet key
business objectives.
Incorporates DE&I goals and best practices into all HR
programs and policies.
Incorporates the results of equity assessments into HR strategy
and programs.
Partners with business leaders to develop, implement and
oversee enterprise-wide programs, practices and policies that
lead to an inclusive and diverse workforce.
Partners with leaders to incorporate DE&I goals into the
organization’s strategic plan.
Plans interventions to resolve identified inequities.
Provides a culture that encourages employees to be their
authentic selves, promotes courageous and honest DE&I-
 related conversations, and supports allyship among employees.
Seeks out and hires a team of HR professionals that is diverse
across a variety of dimensions.

Key concepts related to this section include:

Approaches to developing an inclusive workplace (examples
include executive sponsorship; leadership buy-in; allyship;
unconscious-bias training; employee resource groups;
mentorship; diversity metrics; psychological safety; using
preferred gender pronouns).
Characteristics of a dynamic workforce (examples include
multigenerational; multicultural; multilingual; multitalented;
multigendered).
Creating Dynamic and Inclusive
Workplaces
Through its responsibilities in the areas of employee recruitment and
development, HR promotes and monitors an organization’s diversity
policies and goals to ensure that the organization is living up to its
values and maximizing the quality of its workforce and the
opportunities that diversity can bring.

Competency Connection
A current affairs magazine has made a reputation for itself as a
champion of social justice issues and professional diversity. Four
months ago, the publisher ordered a diversity audit to examine
whether the magazine was actually practicing what it preached. The
results of the audit were presented by HR, who observed that the
magazine’s workforce had not met its diversity goals. While there
was a roughly equal gender split in the workforce, the office was not
as racially or socioeconomically diverse as expected. In an ever-
more competitive publishing and media environment, it was clear
that changes had to be made. With low turnover of staff, leadership
had become complacent about its diversity goals.
The magazine had a robust paid internship program, and a policy
was instituted to pair each intern with an older mentor. This was
expected to provide two-fold benefits to the organization: to help
develop the interns’ knowledge and skills and to inject some new
ideas and perspectives into pitches.

The interns also helped surface an issue related to organizational

diversity. During a meeting with the interns, 90% of whom were white
and had attended top-tier universities, it was pointed out to the
company’s managers that not enough outreach was being made to
minority and marginalized students who could also benefit from the
internship program. This was despite the fact that the magazine’s
offices were opposite a school that had an overwhelmingly minority
student body. HR professionals used their Communication and
Global Mindset competencies to examine and update their hiring
practices to improve outreach to populations who might not ordinarily
consider applying to the magazine—for full-time or internship
positions—which is expected to help diversify not only the racial
make-up of the organization but also bring in a broader range of
experiences and ideas.

Diversity, Equity, and Inclusion

Diversity

In an online article from SHRM, diversity is described as “the

similarities and differences between individuals, accounting for all
aspects of one’s personality and individual identity.” Within any given
population, these aspects of personality and identity may take
differing forms. This means that the application of diversity may vary
from organization to organization and country to country.

Some organizations look to expand their application of diversity into

new areas in a growing list of identity groups: race, religion, gender,
culture, ethnic background, age, thought (which refers to the unique
perspectives an individual brings), and so on. Others may change
how they view the whole concept of diversity. They may move from
viewing diversity defensively—as a matter of legal or ethical
compliance—to viewing it strategically—as a valuable asset that an
organization can use to compete.

HR organizations responsible for workforces in different countries

must be aware of differing legal standards, measures, and
requirements. Many countries, for example, have laws prohibiting
employment discrimination, though they may function differently, so a
multinational organization must be aware of the specifics in every
country in which it operates.
Three Types of Diversity

When considering diversity, it is important to consider these three

types.

Legacy diversity. Generally, traits that are easily recognizable

and visible, such as external physical characteristics. Culture,
ethnicity/race, nationality, gender, physical attributes, age, and
language are all examples of legacy diversity traits.

Experiential diversity. Diversity based on lived experiences, for

example, where an employee grew up, where they went to
school, and other life experiences (family, hobbies, interests).
Employees with similar or shared experiences can form
connections and work well together. At the same time, these
bonds can result in the formation of cliques, which can have an
exclusionary effect in some cases.

Thought diversity. Diversity based on different perspectives,

resulting from education and socioeconomic background.
Introducing thought diversity can help guard against “group
think,” inject new insights into decision making, and help identify
prime candidates to tackle urgent problems and issues.

Inclusion
Diversity asks, “Who do we bring into our organization?” Inclusion
asks, “How do we make them feel welcome and valued when they
get here?”

A SHRM article defines inclusion as “the extent to which each

person in an organization feels welcomed, respected, supported,
and valued.” An inclusive organization is one in which all members
feel involved and empowered to contribute, and the organization
works to sustain this state. The organization actively seeks out and
welcomes diverse perspectives.

Inclusiveness happens only when an organization has created a

culture and an environment in which the talents, skills, and
perspectives of everyone in the organization are recognized and
appreciated. By fostering and nurturing such an environment, the
organization will encourage collaboration and flexibility and create a
more fair working environment.

Attracting talent is a strategic benefit of inclusion (along with

recruitment and retention), as people will want to work for a company
that makes them feel included and valued. Or, put another way,
diversity is the byproduct of effective inclusion.

Equity
Equity asks, “How do we ensure that everyone has the same ability
to contribute to their fullest potential?”

Key Content

The term “equity” has several different meanings in the

world of business, so some clarification of its meaning
in this particular context may be helpful:
In finance, equity (almost always) means
ownership.
In compensation, equity (almost always) means
relative fairness in total rewards.
In hiring, equity means providing additional
resources to those who need them to take fair
advantage of opportunities within a company.

It is a common mistake for people to use the terms “equality” and

“equity” interchangeably. While connected, they are distinct, and it is
essential that HR professionals fully understand the difference.
Equality refers to a state of fairness—all employees are provided
with equal rights and opportunities within the organization and are
treated fairly. Equity, however, refers to the promotion of fairness and
justice via the organizational structure—that is, the organization
identifies ways to acknowledge specific demographic needs and
challenges and incorporates them into its DE&I decision making.
Exhibit 10 offers a visual representation of the difference between
equality and equity.

Exhibit 10: Equality vs. Equity

The goal of equity is to lift all employees up, to attempt to break

down demographic barriers and challenges, and to empower all
employees so that they can perform at their best and feel fully
supported and included by their employer. Organizations have
various tools, resources, and opportunities available to achieve this,
including wage equity, workforce education programs, skills-based
hiring and promotional programs, and others. For example, if an
organization’s HR function is attempting to create equity within the
workforce, it might provide additional tools and resources to minority
employees, such as training on topics that would help them
understand and handle any bias they might encounter in
professional interactions.

Benefits and Characteristics of DE&I

Diversity, equity, and inclusion are three parts of the whole. Value is
leveraged only by working from a definition of diversity that enables
everyone—employees, management, customers, prospects, and
collaborators—to feel that they are included and accepted, have a
valued place in the organization, and are equally able to contribute to
the fullest extent they can. This also keeps it from being “us” (the
majority) and “them” (the minorities). Everyone has a perspective to
offer—and their own preconceptions about others to deal with.

Given that, making the organization and the workplace more diverse
and inclusive is not only the right thing to do; it is also driven by a
common sense that a diverse workforce strengthens the
organization. The types of perceived benefits can vary, however:

Improved creativity and innovation. Diverse views make for

better business decisions and drive a high-performance culture.
This benefit derives from having groups with multiple
perspectives, life experiences, and learning and problem-solving
styles. This generates more ideas, but the experience of
working in a more novel group with different behaviors and
norms also fosters increased openness and flexibility. As
Columbia Business School Professor of Leadership and Ethics
Katherine Phillips explains, the discomfort caused by diversity in
and of itself helps promote innovation. Knowing that members of
a group have a different background and are likely to bring a
different perspective increases both the depth to which group
members critically examine their own assumptions and their
openness to alternative ideas.

Recruitment and retention. Demographic changes and local

labor markets have driven employers to develop diverse
workplaces. Here, as with so many aspects of DE&I, principles
must be applied to local needs. Recruitment gaps and
challenges may be very different for each local subsidiary of an
organization. Developing an inclusive and diverse workforce
enhances the employer’s ability to attract high-potential talent in
minority groups. Creating equal opportunities for everyone is
also simply the right thing to do.

Market strengths. Having a diverse workforce improves an

organization’s ability to understand the perspectives and needs
of its customer segments, to identify and reach new market
segments, and to develop new products that anticipate and
meet those needs.

Branding. The positive image of being a diverse, inclusive

organization can be a marketing advantage and selling point,
helping the organization to connect and identify a brand with
diverse markets.

Global integration and local differentiation. Local employees

add greater awareness of local laws and regulations and
business models and practices. They also bring potential entry
into social networks, sources of information, and influence.
Robust workplace diversity in an organization has a positive
impact on the economies and societies in which the business
operates.

Increased revenue. Diversity, equity, and inclusion are good for

business and can yield “a diversity dividend” of quantifiable
improvements in market share, a competitive edge in accessing
new markets, and a stronger bottom line. Each of the above
benefits of DE&I ultimately contribute to an organization that can
create greater long-term value and profitability, as they are able
to draw on a more diverse, engaged workforce made up of top
talent.
The rapid pace at which the workforce is changing across the globe
poses a significant challenge for HR leaders and the organizations
they work for. Generational turnover, cultural evolution, widespread
immigration, emerging markets, and evolving technologies have all
played and will continue to play a major role in creating an
increasingly complex organizational and business environment.

Workplace DE&I is a prominent part of many businesses and a

concern of the talent pools they pursue. With diversity, an
organization has the foundation to develop a more cohesive,
collaborative, and innovative work environment and the potential to
drive continued growth. Without diversity, an organization will face a
competitive disadvantage.

That, in turn, brings us to the strategic value of diversity. What

makes diversity valuable to an organization is, first and foremost, the
expanding range of perspectives and modes of thinking that it
provides. Gardenswartz and Rowe describe that strategic value as
“capturing talent, understanding markets, utilizing diverse
perspectives for innovation, knowing how and how not to pitch
products, and, ultimately, how to generate employee commitment.”

The potential strategic benefits of workplace DE&I are enormous.

These benefits are most likely to be realized by a top-down,
organization-wide effort, including a detailed process, supported by
clear metrics, data gathering, and analysis…and a clear definition of
what constitutes diversity, equity, and inclusion and why they are
important to the organization’s core business strategy. In accordance
with the importance of considering DE&I as a strategic imperative,
DE&I requires the full-fledged, organization-wide efforts of a
comprehensive strategic initiative.

Characteristics of Dynamic and Inclusive Workplaces

Dynamic and inclusive workplaces feature many common

characteristics. They are generally multigenerational, multicultural,
multilingual, multitalented, and multigendered. Each of these
characteristics is described in Exhibit 11.

Exhibit 11: Dynamic and Inclusive Workplace Characteristics

Characteristics Descriptions

Multigenerational
Different generations bring different skill sets and perspectives,
each of which can provide value.
Partnering employees from different generations can help
generate innovative and creative solutions and ideas.
Provides opportunities for cross-generational learning and
mentoring and knowledge transfer.
Different generations require different engagement strategies
(benefits, career path opportunities, management style).
 Characteristics Descriptions

Multicultural
Multicultural organizations have access to greater diversity of
thought and experience and can therefore benefit from more
innovation and creativity in decision making.
Can gain valuable insights into other cultures for the purpose of
market expansion and finding and appealing to new customers.
Opportunities to appeal to diverse talent and customers.

Multilingual
Multilingual environments can help foster greater diversity,
equity, and inclusion and therefore more innovation and
creativity.
Multilingual environments can attract top talent and new
customers.
Multilingual employees can provide opportunities for
organizational growth and are able to bridge certain gaps in
understanding and communication (with customers, vendors,
other employees).
Multilingual employees can help provide language support in-
house—for example, in customer service or with overseas
branches and offices.
Encouraging multilingualism can also benefit the workforce, as
they acquire new skills and ways of thinking, which in turn can
help engagement and retention.

Multitalented
Multitalented workforces are flexible and able to adapt to fast-
paced, changing situations and work environments.
Multitalented workforces can be more collaborative, which can
enhance team building and engagement.
Can lead to challenges with retention if multitalented employees
feel dissatisfied or unchallenged.
 Characteristics Descriptions

Multigendered
Gender diversity leads to more innovative thinking and
encourages diverse idea exchange.
Multigendered organizations are able to attract top talent
(especially top non-male candidates).
Can signify a forward-thinking organization and leadership,
which can attract more and diverse customers.

Developing an Inclusive Workplace

Successful DE&I initiatives require comprehensive, organization-
wide efforts. There are three main reasons why a strategic approach
is required: priority, complexity, and resistance.

Without focusing on DE&I as a priority, DE&I efforts will always have

a lower priority than more immediate concerns. Only when DE&I
becomes a strategic priority does an effort to increase DE&I become
a justifiable “safe” choice for a manager to make. In a competitive
global market, only a strategic effort, clearly linked to core business
strategies and with full organizational buy-in, will be able to
commandeer the resources and commitment necessary to achieve
any diversity goals—or more importantly, to enable DE&I initiatives
to really help the organization achieve its business goals.
Because the complexity of the DE&I problem requires a strategic,
organization-wide solution, any initiative aimed at creating a diverse,
inclusive organization has a lot of moving parts to consider. In
addition to the many dimensions of diversity and the associated
challenges that arise from them, global organizations must account
for the filter that each nation and region imposes on how diversity
issues are viewed and prioritized. If diversity, equity, and inclusion
are to be instituted across an entire organization, then every
department, every function, every subsidiary, and every location
must be involved, each with their own unique issues. It will involve
many of the functions of HR professionals and affect a diverse group
of shareholders. All of these complex issues require considerable
resource commitments—of time, money, energy, and effort. These,
in turn, require data-driven evaluations of the current base-line
situation, concrete goals, and development of detailed, how-to-get-
there steps.

DE&I involves major organizational change, which requires a

strategic plan—not just a generalized goal—in order to help avoid
resistance. Achieving diversity in an organization requires major
organization-wide change, affecting ingrained attitudes and habits as
well as established policies and procedures. A plan will define the
goals desired and how to achieve them; it also integrates the goals
and activities of the major business functions in order to achieve
organizational success.

Because DE&I is a complex issue with no simple solutions,

organizations may choose a number of different methods or
frameworks to achieve their DE&I goals. A 2018 SHRM article sets
out six basic steps:

1. Educate your leaders. Organizational executives and

managers are crucial to the success of DE&I efforts. Mandatory
training can help managers increase their understanding of
DE&I concerns and give them opportunities to discuss real-life
scenarios.

2. Form an inclusion council. This council, typically made of

eight to twelve members located a few levels below the CEO,
can assist with goal setting around hiring, developing and
advancing diversity in the workforce, and employee engagement
issues among underrepresented groups. The members should
be diverse across as many different dimensions of diversity as
possible.

3. Celebrate employee differences. Inviting employees to share

their backgrounds and traditions in the workplace highlights
diversity and helps create a more inclusive workplace.
 4. Listen to employees. Comprehensive assessments, including
the use of employee surveys and focus groups, can help
develop tailored and specific strategies to help support
inclusiveness in the workplace.

5. Hold more-effective meetings. Meetings are a prime

opportunity for employees to contribute and feel valued,
particularly among sets of coworkers who interact often.
Attention to flexibility on timing and format, sharing praise and
credit, and communication styles can go a long way.

6. Communicate goals and measure progress. As with other

initiatives across the organization, SMART (specific,
measurable, achievable, relevant, and time-based) goals are
important. Goals can help build a business case, and if efforts
are not achieving the desired results, corrective action may be
undertaken.

No matter what process is followed or across what timeline, certain

factors, tools, and processes are crucial to overall success. These
include:
Leadership buy-in.
Executive sponsorship.
Employee resource groups.
Allyship.
 Unconscious bias training.
Mentorship.
Psychological safety.
Using preferred gender pronouns.

These concepts are discussed in greater detail below.

Leadership Buy-In

DE&I can gain commitment at an organization’s highest level only if

it can demonstrate its ability to play a critical role in achieving core
business goals. A DE&I advocate must delve beyond general truths
about the benefits of broadened perspectives and diversity of
thought to create a business case linked specifically to the
organization’s unique mission, vision, and business objectives. This
may simply be a matter of applying diversity’s general benefits to an
organization’s specific situation and challenges. For example, to
make the business case for DE&I, an organization facing staffing
challenges tied to an aging workforce will require diversity initiatives
that can find and attract skilled younger workers—and/or better
retain its older, experienced workers. Similarly, an expanding
organization must understand the needs and priorities of the cultures
that are its expansion targets. DE&I efforts to bring members of
these cultures into the workforce, and especially into decision-
making positions, is a matter of business strategy, not just diversity
strategy.

It is worth noting that aligning diversity and business strategies is not

a new concept. In 1940, an American beverage corporation
implemented what would now be considered a diversity initiative to
compete against the market leader, because they recognized that
the African-American market was being ignored. By the late 1940s,
the organization had both an African-American sales force and print
advertising campaigns targeting an exclusively African-American
audience. According to professor of history and American studies
Grace Elizabeth Hale, writing in the New York Times, the success of
the campaign had long-term implications for both soft-drink leaders:
The innovator made diversity central to its corporate identity and
strategy, and the lagging market leader began marketing to African-
Americans and visibly donating to organizations such as the NAACP.

Key Content

Core business strategies generally face reevaluation

and repositioning every five years or so. This means
that DE&I must be ready, at the least, to realign itself
with new directions and, ideally, be positioned to
influence the direction strategic changes take.
 Organizational leadership will also eventually change.
Alignment with an organization’s evolving core goals
enables DE&I to continue a central role even after an
executive-level (corporate-suite level or senior
management) champion moves on.

Executive Sponsorship

Without executive-level leadership serving as role models and

advocates, DE&I cannot become a priority or demand resources.
This must be a real, active, and long-term commitment for the effort
to succeed—not a public relations statement or a symbolic gesture
but a highly visible and ongoing advocacy for a detailed program and
a commitment to specific resources and actions. Executives may
sponsor specific initiatives, such as an employee resource group
(see below), even if they are not primarily responsible for the entire
DE&I initiative.

As Gardenswartz and Rowe note, the real degree of executive-level

commitment soon becomes clear throughout an organization. As
they put it, “The message about the priority on diversity always gets
out.”
A Forbes Insights survey found that 70% of organizations felt that
ultimate accountability for their DE&I efforts rested on the shoulders
of executives, with 35% placing responsibility directly on the CEO.
Often, this is a literal chain-of-command matter, with the diversity
function reporting directly to the CEO or the CEO serving on or
chairing the organization’s diversity council.

Gardenswartz and Rowe explain, however, that leadership at all

levels must be involved—and HR should certainly take a leadership
role in promoting DE&I concepts and raising DE&I concerns.

Employee Resource Groups

An employee resource group (ERG), also known as an affinity

group or network group, is a voluntary group for employees who
share a particular diversity dimension (race, religion, ethnicity, sexual
orientation, etc.). Depending on how it is organized—and how
actively the parent company participates—an ERG can serve many
roles, from social network and support group, to career development
resource, to organizational think tank, to advocacy group. It can be a
channel for mentoring and educational programs, a way to provide
diversity council input, and a resource for new hires.

Exhibit 12 lists criteria for effective ERGs established by DiversityInc.

for its ranking of top 10 companies.
 Exhibit 12: Employee Resource Group Criteria

Criteria for Effective Employee Resource Groups

Whether groups have formal charters If the groups’ success is measured

Percentage of employees in at least one through retention, engagement, talent
group development, and other contributions to
business (focus groups, client
Racial/gender breakdown of groups
interactions, marketing ideas)
Percentage of top executives who are If resource group leaders have
sponsors of groups rotational positions on executive
Whether groups are used for diversity councils
recruitment, onboarding of new
employees, talent development,
marketing, mentoring, and diversity
training

Source: “The DiversityInc. Top 10 Companies for Diversity Councils,”

DiversityInc.

One critical element of ERGs is that they are self-selecting. By

joining an ERG, an employee chooses to focus on one of many
diversity dimensions that comprise their identity. An employee may
join an ERG for positive reasons—as an opportunity to make a
unique contribution to the organization or to pursue an avenue of
growth. Or there may be a negative impetus—it is the part of their
identity that they feel is least accepted or understood by the
organization. Either way, joining the ERG can in itself be
empowering.
The name “employee resource group” can have a double meaning;
ERGs often serve as a valuable resource for their parent company.
The Conference Board, a business research association, in a report
on diversity and inclusion, provides several examples of such ERG
service:
A Latino ERG at a foods company provided advice on targeting
a version of a popular Mexican product line to Latino consumers
in the U.S.
A pharmaceutical company’s disability-focused ERG suggested
product design improvements for a new medical testing and
injection product.
A company was experiencing high turnover of new Asian
employees. Their Asian ERG identified a cause—problems
spouses were having adjusting to life in the U.S.—and set up a
new-transferee spouse-support program.
One company turned to its ERGs to help resolve translation
problems in product and marketing materials. It gave the
employees a greater sense of product ownership, improved
translations, and saved costs.

A key service the ERG can provide is formal communication with the
diversity council, providing data, raising concerns, reviewing
projects, and so on.
Allyship

Allyship should exist at all levels of the organization, according to

SHRM Together Forward @Work. Allies can be relied on to model
empathy and be ambassadors for change, advocating for people
who are underrepresented in small ways and working to correct
uneven opportunities that those underrepresented people are
receiving.

These allies likely are unable to directly promote others but may help
shine the spotlight on or mentor others. Small actions that open
doors and help others advance their careers over time can have
long-term effects for those individuals. However, allies must cautious
to not assume or act as though other individuals are helpless and
must consistently attempt to provide the small boosts as they are
able. Allyship cannot be a one-and-done action.

Unconscious Bias Training

Unconscious bias, which is discussed in further detail elsewhere, is

the result of the implicit biases that everyone has. Research has
shown that this bias affects the hiring process more often than not,
leading to unfair results. This can hinder diversity, recruiting,
promotion, and retention over time.
Unconscious bias training is designed to illustrate the biases that an
individual may hold and how those may influence their attitudes and
behavior and thus decision making, despite the individual not being
aware of the biases. The goal of the training is to help reduce or
remove inequalities through this education by empowering
individuals to avoid the biases when making decisions.

As with other training efforts, it is important to follow through and

assess the results. Feedback must be gathered on an ongoing basis
to assess if the training is working and how it can continue to be
effective over time. One important question to ask is “Is the
organization achieving behavioral change?”

Mentorship

Mentorship, in the context of DE&I, can benefit both the mentor and
the mentee. Underrepresented employees who are being mentored
can benefit from enhanced exposure resulting in increased
opportunities. Mentors and mentees both can benefit from the
opportunity to build strong and deep relationships with someone
different from them across multiple different diversity dimensions,
helping them understand other perspectives better and enabling
them to better address explicit and implicit bias that they have or
may encounter in the workplace.
Mentorship can be formal or informal. Formal programs may be set
up with specific goals in mind, for example, to prepare
underrepresented individuals for promotion to leadership roles within
the organization. Specific goals like this may help an organization
achieve its DE&I and other strategic goals. Informal programs may
be used to generally increase visibility throughout the organization,
increasing opportunities for underrepresented individuals.

Mentorship may be seen as closely related to allyship. Individuals

engaging in allyship may chose to use mentoring as part of their
efforts. Mentorship may focus on career progression opportunities or
filling specific representation voids in an organization, where allyship
may work toward eliminating individual and systemic barriers that
create an imbalance in opportunity generally.

Psychological Safety

Psychological safety refers generally to an individual feeling that they

are able to speak up, question, ask for help, and admit mistakes.
This safety makes individuals feel valued and allows them to freely
contribute to a diverse and inclusive environment.

A study by Prime and Salib indicates that leadership that models four
positive and inclusive behaviors—empowerment, accountability,
courage, and humility— creates psychological safety in employees,
which helps lead to success in DE&I initiatives.

This psychological safety also leads to increased ease of

collaboration, especially when engaged in learning sharing, error
reporting, and innovation initiatives that are crucial to a company’s
success.

Using Preferred Gender Pronouns

Gender pronouns, such as “him” and “her,” are increasingly being

phased out by organizations and replaced with gender-neutral
pronouns such as (but not limited to) “they,” “their,” and “them.” The
nomenclature used continues to evolve, but organizations that stay
abreast of changes and use them in their organization can create
feelings of inclusiveness among non-binary individuals (those who
do not identify as male or female). This may include those who are
transgender, gender fluid, between gender, genderqueer, or third
gender. (Note that this is distinct from sexual orientation.) The term
transgender is often used as an umbrella term to describe the other
terms listed, though individuals may prefer to be recognized using a
specific term.

As this change occurs, organizations must pay attention to the usage

in multiple areas. Systems such as HRIS and organizational
documents such as handbooks and forms must be updated. This
may include the systems acquired from outside vendors.
Encouraging the inclusion of gender pronouns in e-mail signatures
and profiles can allow employees to make their preferred pronoun
known and allow for greater recognition of diversity in the workforce.

Organizational culture must shift as well. Training for employees and

managers, along with updated behavior and conduct statements,
can help reinforce the need for attentiveness when using pronouns
in the workplace, particularly in verbal interactions in the office. A
best practice is to ask people how they want to be referred to by
others and to respect that decision. Be aware that how an individual
wants to be referred to may change over time as well, so the
organization must encourage recognition and adoption of those
changes as they occur.

In addition to correct pronoun use, organizations should ensure that

employees are called by their preferred name. Individuals who are
non-binary may choose to use a different name than was given to
them at birth, and deliberately using the incorrect name can be just
as harmful as using incorrect pronouns. Deliberate misuse of
pronouns can be considered a form of harassment in some
jurisdictions.
Evolution and Integration of Diversity,
Equity, and Inclusion
It is important to integrate DE&I initiatives as fully as possible into
standard organization operations. For example, diversity training
becomes part of standard supervisory training rather than a stand-
alone topic, efforts to attract a more diverse workforce become a
standard element of normal recruitment procedures, and so on. That
is, to succeed, DE&I strategy should become integral to the
organization’s sense of “the way we do business” and “who we are.”

That doesn’t mean, however, than the initiatives are no longer

measured, revised, and reevaluated. As with any other core strategy,
continual reexamination and adjustment of both tactics and overall
strategic goals are essential to any success. In the particular case of
DE&I, this imperative is strengthened by evolving realities:
As an organization expands into new territories, new diversity
issues will inevitably arrive, requiring adjustments and
accommodations.
The initiative’s own success will change the nature of the issues
that need attention and resolution. An organization that has
become more diverse and inclusive will find it is communicating
at a different level, raising a different set of communication
problems (for example, the focus may shift from conflict
 resolution to creating new team structures that better leverage
differences).
The focus on diversity issues will shift over time. Currently,
attention is centered on demographic shifts in workforce ages,
issues concerning women in the workforce, and LGBT issues.
The attention will invariably shift, either as (to be optimistic)
current issues are resolved or as world events raise new
concerns. A DE&I strategy shouldn’t continually shift to the
“cause du jour,” but it does need to incorporate new concerns
and issues into existing policies and procedures.

Measurement of DE&I initiatives is covered elsewhere.

 Barriers to Success and
Addressing Them in the Workplace

Proficiency indicators related to this section include:

Identifies and communicates the benefits of DE&I to employees
and leaders.
Identifies and implements workplace solutions.
Identifies, confronts and addresses evidence of bias,
stereotyping, microaggressions and subtle acts of exclusion in
the workplace.
Implements and manages benefits and programs that support a
diverse and equitable workforce.
Identifies changes in the workforce and workplace related to
DE&I that are necessary to help an organization meet key
business objectives.
Identifies, advocates for and oversees benefits and programs
that support a diverse and equitable workforce.
Plans interventions to resolve identified inequities.

Key concepts related to this section include:

Barriers to success involving conscious and unconscious bias
(examples include gender-based discrimination; racism,
including systemic racism; stereotypes; ageism; ableism;
ingroup/outgroup bias; affinity bias; gender identity bias; sexual
orientation bias; social comparison bias;
extroversion/introversion bias; neurodiversity bias;
microaggressions; personal barriers such as imposter syndrome
and identity covering; cultural taxation).
Benefits and programs that support DE&I (examples include
caregiver options; workplace flexibility policies; paid leave
options; tuition reimbursement programs; global festivities and
events calendar).
Workspace solutions (examples include lactation room; prayer
room; Braille and screen reader; closed captioning; wheelchair
ramp; gender-neutral restrooms).
Barriers to Success and Addressing
Them in the Workplace
Any DE&I effort must include recognition of the various barriers that
arise along dimensions of DE&I and the effects they have. Only
when these barriers are identified and addressed can a DE&I effort
find success.

Competency Connection
A financial services company is in the process of overhauling its
diversity practices and policies. A recent high-performing hire has
expressed disappointment in the small number of accommodations
made for those with disabilities and other needs after seeing one of
their colleagues struggle. The employee’s manager and the HR
generalist agree, and they believe the organization should have had
accommodations in place already and that it should not have taken a
superstar employee to highlight the need for such workplace
solutions. The HR generalist is tasked with identifying
accommodations that existing employees would benefit from and
also planning for possible future needs.

First, the HR generalist uses her Analytical Aptitude competency to

examine how it was that those existing needs were left unaddressed
for so long. In part, it seems as though the fast-paced, high-pressure
work environment discouraged employees from expressing needs
that might make them appear “weak” to their colleagues—even
though there is no question that weakness has nothing to do with the
situation. Similarly, those from less-privileged backgrounds felt less
comfortable expressing their needs than did those who grew up in
privileged households. There was also a fear that appearing
demanding might harm short- and long-term professional
opportunities.

The HR generalist used her Leadership & Navigation competency to

generate a list of proposed solutions and presented it to
management. For example, more team-building exercises and
events were proposed in order to break down certain group
dynamics and barriers to relationship building. The organization
already offered student loan assistance but agreed to increase its
support. The company also set aside a couple of rooms to be used
for rest in order to provide employees with a space to recenter and
recharge.

Conscious and Unconscious Bias

Bias can be broken into two categories: conscious bias, which the
individual understands that they have, and unconscious bias, which
the individual is unaware of but which still shapes their actions.

Conscious bias results in intentional behavior and may manifest in

the form of physical and verbal harassment or other deliberate
actions such as exclusion. Because of the awareness of conscious
bias, it is more easily identified and thus may be easier to remedy at
both an individual and systemic level.

Unconscious bias may not result in overt and deliberate action, but it
still informs decision-making processes and behaviors, though an
individual or organization isn’t aware of it. In The Inclusion Dividend,
Donovan and Kaplan make the following points about unconscious
bias:
It is pervasive and universal—meaning that everyone has some
form of unconscious bias.
Though the actions resulting from it are often small, the impacts
to inclusiveness and fairness may still be large.
Though everyone has some form of unconscious bias and may
exhibit bias at the same levels, the effects of it are felt differently
by different groups.
Unconscious bias extends from the individual level to the
systemic level.
Organizations are unable to operate fully in the marketplace due
to the impacts of unconscious bias.
 The effects of unconscious bias may be reduced at both the
systemic and individual levels.

Unconscious bias can be difficult to address, because the

recognition of it often challenges the self-image of individuals.
Individuals who do not hold conscious bias or work to challenge
conscious bias may not want to acknowledge that they still may be
acting in a discriminatory manner, because they may believe that it
implies intent, which generates defensiveness and guilt.
Acknowledging it at the systemic level challenges notions of
meritocracy, which undercuts both belief in personal achievement
(for example, an individual may struggle to acknowledge that they
did not reach their organizational position solely through their own
hard work) and belief in the success of the system itself (for
example, an organization that prides itself on DE&I may not want to
acknowledge that unconscious bias still affects promotion tendencies
within its ranks).

It is difficult to attempt to divorce any discussion of unconscious bias

from the acknowledgment that it generally favors groups that are
already in power. This power often is based on differences in race,
gender, and other commonly recognized factors. However, it is
important when working to address unconscious bias that individuals
in those groups do not feel as though they alone are exhibiting or
benefiting from unconscious bias. (For example, if an organization’s
executive team is all straight, white, and male, the conversation must
take place in a way that does not alienate them for possessing those
traits.) It is important to recognize that everyone exhibits
unconscious biases and that the goal is not to punish or shame
those that have benefited from it but to reduce the disparate impact
of the underlying biases themselves.

Both conscious and unconscious bias may exist among multiple

dimensions, and the dimensions are not exclusive. No one is only a
certain race; they also may be subject to bias due to their age,
gender, sexual orientation, and other dimensions. Common forms of
bias, which may exist either as conscious or unconscious, are
defined in Exhibit 13 and discussed in further detail after the exhibit.

Exhibit 13: Forms of Bias

Bias Definition

Gender-based discrimination Assumptions based on an individual’s gender

Gender identity bias Assumptions based on an individual’s gender identity
Sexual orientation bias Assumptions based on an individual’s sexual
orientation
Racism (including systemic) Assumptions based on an individual’s race and/or
ethnicity
Stereotypes Generalizations about members of a group or social
category (including nationality, sexuality, etc.) with
regard to their qualities and characteristics
Ageism Assumptions based on an individual’s age
 Bias Definition

Ingroup/outgroup bias Assumptions made based on group-level similarities or

differences (gender, race, interests, etc.)
Affinity bias Assumptions made based on shared or similar
experiences (education, home town, etc.)
Social comparison bias Assumptions made based on perceived social group
Extroversion/introversion bias Assumptions made based on employee’s personality—
for example, quieter employees seen as unengaged or
less talented or louder employees seen as difficult or
overcompensating
Neurodiversity bias Assumptions made based on whether an employee is
neurotypical or neurodivergent
Microaggressions Subtle, common, and quick insults and behaviors that
convey negative or hostile messaging toward certain
marginalized people and groups

Gender-Based Discrimination

Gender-based discrimination often manifests through both conscious

and unconscious assumptions about individuals of different genders.
For example, women may face more difficulty in exhibiting effective
leadership due to the preconceived notions of their peers. This may
occur consciously, where an individual refuses to respect the
authority of their manager due to their gender, or unconsciously,
where an individual doesn’t recognize the credibility of the
information presented by a member of one gender but does when
similar information is presented by an equivalently (or less) qualified
member of another gender.
Donovan and Kaplan indicate that this sort of circumstance is often
why women leave the workforce or fail to advance beyond middle
management. Though it is often reported or assumed to be due to
work/life balance issues or issues relating to child care, it is more
often because of the corporate culture. It’s easier to explain the issue
as work/life balance, particularly when the employee is already
disillusioned or disengaged. Work/life balance is an important issue
(and cause for leaving) for both genders, which should be focused
on. But it’s more important to focus on inclusiveness across gender
lines and creating a positive environment where all contributions are
valued.

Gender Identity Bias

Gender identity bias refers to bias that occurs due to the gender that
an individual identifies with. As referenced elsewhere, this may
include transgender, gender fluid, between gender, genderqueer, or
third gender. Organizations may need to address different types of
conscious and unconscious bias relating to terminology used in
systems and documentation and with organizational partners,
bathroom access (and comfort in using a preferred bathroom), and
confusion on the proper way to address transgender individuals (for
example, communicating and enforcing use of proper pronouns and
preferred names, which may change as an individual transitions).
Individuals may exhibit conscious bias by deliberately misgendering
or misnaming an individual.

Gender identity is often grouped with sexual orientation (for example,

the commonly used acronym LGBT includes sexual orientations—
lesbian, gay, and bisexual—with transgender). This may partially be
due to stereotypes regarding the supposed desires of gay and
lesbian individuals to be a member of the other sex. However,
gender identity and sexual orientation are distinct concepts. An
individual who is transitioning from male to female may be attracted
to members of either gender or to members of multiple genders, and
that attraction is unrelated to their expression of gender identity.

Sexual Orientation Bias

To understand sexual orientation bias, it first must be accepted that

sexual orientation refers to purely sexual behavior. It more broadly
refers to romantic relationships, which are a basic component of the
sense of self for an individual. This is shown in family structures and
life changes such as getting engaged or married. It also arises in the
case of after-hours events to which team members are invited and
are expected to bring significant others. When individuals are unable
to freely share such core concepts of who they are, trust, teamwork,
and relationship-building efforts may be affected.
As Donovan and Kaplan indicate, organizations should set strong
expectations for inclusiveness with regard to sexual orientation (as
well as gender identity). Though some employees may hold religious
beliefs with regard to the morality of a certain sexual orientation, that
does not give them the right to limit or exclude others on that basis in
the workplace, much akin to how members of two different, non-
congruent religions would be expected to treat each other equally
and fairly.

Racism (Including Systemic)

Racism comes in many shapes and forms, but at a high level, it

leads to an advantage to a certain set of individuals on the basis of
race that results in and is sustained by a combination of
psychological and sociopolitical factors. Different forms of racism
include individual, internalized, and systemic:
Individual racism is the personal belief that an individual’s race
is superior to another.
Internalized racism occurs when a member of a race accepts
negative messaging regarding their self-value and abilities due
to their race.
Systemic racism, also called institutionalized racism, occurs
when an organization (which may include government functions)
imposes a set of philosophies, policies, and procedures that
 have either the intent or the effect of system-wide discriminatory
treatment of a group of people due to their race.

Stereotypes

Stereotypes are generalizations about members of a group or social

category with regard to their qualities and characteristics. These lead
to more rapid and simple perceptions and judgments that are often
exaggerated, negative, and resistant to change even in the face of
information that goes against the stereotype.

Stereotypes may lead to stereotype threat, where individuals that are

subjected to stereotypes regarding substandard performance are
influenced to conform to those stereotypes, resulting in substandard
performance compared to their capability.

Ageism

Ageism occurs when bias exists due to an individual’s age or

membership in a generation in the workplace. Multiple generations
exist in the workforce at any given time. The characteristics of these
generations impacts how an organization functions across many
levels, from benefits offerings to career advancement. However,
when an individual or an organization makes assumptions about the
qualities that another individual has due to their age, it can harm
inclusiveness and productivity. Stereotypes may indicate that
individuals of a certain age are more prone to think outside the box,
which could reduce the ability of an organization to solve problems
by causing behavior that ignores potential contributors or makes
potential contributors feel as though they are not valued or
welcomed to contribute.

These types of feelings can drive members of certain age groups to

associate more closely with other age groups, which can reinforce
stereotypes and biases and generate feelings of mistrust and
judgment and lead to misunderstandings between groups.

Ingroup/Outgroup Bias

Unlike some other forms of bias discussed here, ingroup/outgroup

bias originates at the group level, not the individual level. This bias
may occur along with other dimensions of diversity, such as gender
or race. Ingroup bias tends to be the more strongly represented
experience, so in a male-dominated workplace, males would be
considered the ingroup.

Members of the outgroup are typically more aware of the difference

in experience between the two groups, as they often have to
overcome barriers that affect only them, while the ingroup is less
likely to perceive the existence of those barriers. Many of these
barriers or bias examples may exist as microaggressions (addressed
below), but they add up to create an entirely different cultural
experience. Minor slights, exclusions, and inconveniences can lead
to a member of the outgroup feeling unwanted or unvalued.

Affinity Bias

Affinity bias exists because individuals tend to relate more to

experiences that are similar to their own. For example, a hiring
manager who went to a certain university may consciously or
unconsciously prefer candidates who went to the same university,
downplaying or devaluing deficiencies that such candidates may
have in comparison to other, more objectively qualified candidates
who went to a different university. This is harmful to diversity, equity,
and inclusion over time, as it can eliminate the existence of
additional perspectives, encourage “group think,” and lead to the
creation of additional ingroups and outgroups.

Social Comparison Bias

Social comparison exists when individuals compare themselves with

other individuals or use their membership in a particular group
(compared to another group) as a way to evaluate themselves.
In the workplace, individuals will often try to assess their position
within groups or departments or the organization at large, and it can
lead to feelings of inclusion or exclusion. Consistently feeling as
though they are treated differently or are of lower status can
decrease engagement and lead to reluctance to involve themselves
and offer their insights.

On the other hand, due to the pressures involved in the comparison,

the individuals may be more likely to look at themselves and own
group in a positive light, which can lead to feelings of superiority over
another individual or group and conscious or subconscious attempts
to achieve or maintain that superiority.

Extroversion/Introversion Bias

Introversion/extroversion bias refers to how the method through

which individuals handle social interaction and stimulation is
interpreted by others in the workplace. Introverts tend to prefer quiet
environments, with extroverts preferring the opposite. However,
workplaces tend to be biased toward extroverts, which may result in
the loss of benefits that introverts can bring to the table.

Intentional inclusion of both introverts and extroverts is the best

option. Particularly when it comes to communication styles between
managers and employees, balance is important. It can be difficult for
either to adjust to the other’s preferences, so mindful and open
discussions of preferences are crucial to success.

Neurodiversity Bias

Neurodiversity, also called diversity of thought or cognitive diversity,

refers to a workforce that approaches problems in a variety of
conceptual ways. Different conceptual thought approaches may
stem from other dimensions of diversity and includes individuals who
have atypical brain structure, which may manifest as attention deficit
disorder (ADD), attention-deficit/hyperactivity disorder (ADHD), and
anything categorized as existing on the autism spectrum (autism
spectrum disorder, or ASD). Individuals with atypical brain structures
may be referred to as neuroatypical or neurodivergent.

Creating an inclusive environment that embraces neurodiversity can

lead to innovation and can prevent “group think.” However, the
complexities of all of these different thought processes can make
inclusivity difficult—particularly when it comes to hiring these
individuals. Individuals with ASD, ADD or ADHD may struggle to
succeed in traditional interview situations. They may also find it
difficult to engage in traditional meeting environments due to sensory
sensitivities or difficulty processing speech, particularly when
multiple individuals are talking at the same time.
Incorporating job previews and job simulations, sharing meeting
agendas ahead of time to allow for questions or suggestions, and
providing alternate means to engage in a meeting such as virtual
representation, captioning, and chat functionality can help overcome
some of those barriers.

Microaggressions

Microaggressions are subtle insults (verbal, nonverbal, and/or visual)

that occur quickly and are not out of the ordinary and that convey
negative or hostile messaging to individuals due to their association
or membership with a marginalized group.

In the workplace, these may be behavioral (through actions),

environmental (arising from a lack of representation or diversity), or
verbal. Examples of these may include a joke that plays on a
stereotype of a group or invalidation or lack of recognition of another
individual’s ideas or identity. Though individual microaggressions
may not seem particularly harmful, noticeable, or egregious,
particularly to those not on the receiving end of them, they can be
additive and greatly harm feelings of inclusivity. They may be difficult
to address, as they do not meet typical conceptions of harassment
and may be explained away (honestly or dishonestly) as
unintentional.
Other DE&I Concerns

Impostor Syndrome

Impostor syndrome is typified by the feeling that success is due to

luck, not hard work or skill. This can lead individuals to feeling unfit
for their current role and as though they have fooled others into
believing that they are more competent than they really are. It can be
episodic (as opposed to lifelong), and most people will encounter it
at some point in their lives. It may affect those in the neurodiverse
community as well.

Individuals experiencing impostor syndrome may sell themselves

short and not perform at the level they are capable of. They may be
reluctant to step into the spotlight for fear that they will be exposed if
they do.

Covering

Covering is a defensive behavior that occurs when an organization

recruits a diverse workforce but, consciously or otherwise, promotes
assimilation rather than inclusion. The subtle (if unintended)
message to recruits is “you are welcome despite of who you are, not
because of who you are.”
Covering affects workers’ behavior along four dimensions:

Appearance. Adjusting their attire, grooming, and mannerisms

to “blend in.”

Affiliation. Avoiding behaviors associated with their identity

group (culture, ethnic minority, sexual orientation, etc.).

Advocacy. Avoiding engaging in advocacy on behalf of their

identity group.

Association. Avoiding associating with members of their

identity group.

Beyond the psychological costs to the individuals who engage in

covering, this represents a tremendous loss to the organization. The
unique perspectives and insights these employees can offer as
members of a particular identity group—a key value that a diverse
organization can leverage—are instead suppressed.

Cultural Taxation

Cultural taxation refers to the additional workload generated for

members of an underrepresented group due to their requested
participation in DE&I efforts. Most of this work is unpaid, and it can
represent a major additional source of work and stress. In many
circumstances, if an individual does not participate, their identity
group could be entirely unrepresented. This can make it difficult for
the individual to say no, even if they don’t have the time or additional
resources to focus on the DE&I effort, leading to burnout.

Workplace Solutions
In addition to implementing policies and procedures that address
barriers to success in DE&I efforts, organizations may look to make
changes to and accommodations in their facilities and systems.
Some of these may be legal requirements, depending on the
jurisdiction. Examples of solutions that may be used and their
benefits are seen in Exhibit 14.

Exhibit 14: Facility and System Solutions and Benefits

Solution Definition Benefit

Caregiver Includes resources that help Enables employees to

options manage responsibilities associated contribute more fully to the
with caring for children, the elderly, organization and balance life
and other relatives who need and work. Helps prevent
support. May include legal unnecessary losses of
assistance for estate planning and perspective and contributes to
guardianship, referral services for a diverse culture, especially
child and elder care services, where certain dimensions of
flexible work schedules, and diversity are more likely to be
returnships. impacted by caregiving
requirements.
 Solution Definition Benefit

Workplace Includes flexible work schedules, Enables employees to balance

flexibility remote or hybrid work, and other family obligations, educational
policies nontraditional working pursuits, and other needs. Can
arrangements. prove attractive to certain sets
of generational workers.

Paid leave Examples may include vacation, Leave programs may help
options sick leave, personal leave, personal attract more diverse sets of
time off, sabbaticals, and paid workers along many different
family leave. dimensions of diversity.
Gender-neutral parental leave
helps promote gender equality
and reduce gender-based
wage and career achievement
gaps.

Tuition Programs that help reimburse the Helps contribute to

reimbursement cost of continuing education, neurodiversity in the workplace
programs and including college tuition and while assisting
student loan certification programs. May also underrepresented groups to
assistance include student loan repayment close educational gaps.
assistance.

Inclusive Organizational calendars that Helps avoid ingroup/outgroup

events celebrate important holidays for all issues arising from
calendars groups throughout the year. predominantly represented
groups and allows members of
underrepresented groups to
celebrate and share their
cultural traditions.
Lactation Lactation rooms are dedicated, Improved productivity, reduced
rooms private spaces for women who are absenteeism, improved
nursing to express breast milk children’s health. Helps reduce
during the day. These may be gender gaps in the workplace
required by law. due to work/life balance.
 Solution Definition Benefit

Quiet or prayer Quiet or prayer rooms are Improved spiritual and mental
rooms dedicated spaces where individuals well-being. Helps
may escape the loudness of the neurodivergent individuals who
workspace and/or engage in their are sensitive to noise and
private religious practices during the allows employees to be their
day. They are not specific to any authentic selves at work with
religion. respect to their religious beliefs.
Braille and Braille is a system of raised dots Creates an inclusive
screen readers that allow vision-impaired environment for individuals who
individuals to read using their are vision-impaired to
fingertips. A screen reader is an participate fully in the
interface that helps vision-impaired workplace.
individuals read content displayed
on a screen and navigate computer
menus and programs.
Closed Closed captioning displays on- Helps those who are hearing-
captioning screen text matching the audio impaired or are neurotypical
component of digital content. engage and understand
Technology now provides the ability content more fully. This may
for this to be done in live time also be preferred by individuals
through artificial intelligence. not included in those groups
depending on their learning
style and preferences.

Wheelchair Wheelchair ramps provide mobility Allows individuals with reduced

ramps for wheelchair-bound individuals to mobility to engage and move
access areas that are at a different around the workplace.
elevation. These may be required Additional accommodations on
by law. this front may include
wheelchair-accessible water
fountains, bathrooms, and work
surfaces.
 Solution Definition Benefit

Gender- Gender-neutral restrooms are This provides individuals with

neutral available for anyone to use, the ability to be authentic in
restrooms regardless of their gender identity. regard to their gender identity,
These may be individual units providing a more comfortable
(designed for a single person at a working environment.
time) or multi-use units (with
facilities for use by several
individuals at once). Multi-use units
must include stalls with a high
degree of privacy to be considered
gender-neutral.
 Techniques to Measure DE&I

Proficiency indicators related to this section include:

Assesses equity using tools to determine the relationship among
empathy, inclusion and behavior.
Collects, reviews, analyzes and effectively communicates DE&I
metric results to show measurable effects on organizational
objectives and productivity.
Designs and executes effective DE&I initiatives to achieve
business goals.
Assesses an organization’s inclusiveness, diversity and
retention of diverse talent using DE&I metrics.
Incorporates the results of equity assessments into HR strategy
and programs.
Sets and tracks DE&I goals and metrics to measure the effect
on organizational objectives and productivity.

Key concepts related to this section include:

DE&I metrics (examples include gender diversity; race diversity;
retention rates for diverse employees; diversity of external
stakeholders).
Techniques to measure and increase equity (examples include
SHRM Empathy Index; diversity of employees at all
organizational levels; pay audits; pay equity reports; pay
transparency; employee surveys).
Techniques to Measure DE&I
It is important to measure DE&I initiatives, on an ongoing basis, to
assess their effectiveness. However, DE&I cannot be boiled down to
simple numbers like accounting can. It’s important to gather honest
feedback from throughout the organization and assess where the
organization is and how it can continue to improve over time.

Competency Connection
“Do our employees feel valued and included?” This is the question
that has been troubling the leadership of a multinational automobile
company. The company is headquartered in Germany and does
business throughout Europe and Africa. It has come to the attention
of the company’s leadership that there has been an increase in
social media criticism of competitors’ diversity, equity, and inclusion
policies and practices. The CEO and the board want to know “Are
we making the same mistakes?”

To answer these questions, HR is tasked with conducting an

organization-wide survey on diversity, equity, and inclusion. The goal
is not only to understand the overall picture of organizational DE&I
but also to identify how the company is doing on a regional level. For
example, is the company doing enough to recognize the needs,
preferences, and requirements of its employees in different
countries, or do too many of its policies seem to reflect the needs
and preferences of the home country and/or leadership? Similarly,
are its customers’ needs accurately reflected in its product offerings?

An HR generalist creates a survey using his Communication and

Analytical Aptitude competencies to examine the experiences of the
organization’s employees at all levels and in each region in which
they have operations—in particular focusing on career and
development opportunities. The survey will also gather information
related to perceptions of the company’s activities in different markets
to ensure that they are receiving appropriate feedback and input
from appropriate and relevant internal and external stakeholders.

DE&I Surveys and Metrics

Employee Surveys

Employee surveys are used in many areas, including for employee

engagement purposes. From a DE&I perspective, organizations can
use demographic data from survey respondents (while maintaining
personal anonymity) in order to gauge whether they are succeeding
in their efforts to improve diversity, equity, and inclusion in the
workplace. Comparing the different response levels across different
dimensions of diversity can indicate areas where the organization is
having success in DE&I efforts and areas that should be improved.

While diversity can be more easily examined (for example, by

collecting data related to racial, gender, and other diversity metrics),
inclusion is more qualitative. The only way you can gather data on it
is to ask people if they feel included. A survey to assess employee
inclusion should include questions that examine the following:

Overall DE&I efforts/culture. For example: Do respondents

believe leadership encourages inclusion? Do management
actions show that diversity is important to them? Does the
organization foster an inclusive and comfortable work
environment? Does management demonstrate commitment to
meeting needs of members with disabilities or other issues?

Hiring and recruitment. For example: Does the organization

take active measures to seek a diverse candidate pool? Will job
candidates see/meet a diverse range of people on their first visit
to the organization? Are diverse job applicants treated the same
as others?

Career development. For example: Are employees of different

backgrounds encouraged to apply for promotions? Are all
employees treated fairly in the internal promotion process? Do
 you believe all employees have a career path at the
organization?

Personal experiences. For example: Has your experience led

you to feel included? Have you had difficulty getting to know
colleagues from different backgrounds?

Policies and procedures. For example: Do the organization’s

policies and procedures encourage diversity, equity, and
inclusion? Are you aware of the organization’s DE&I policies
and procedures? Do you believe the organization will take
appropriate action to respond to discrimination against its
employees? Has the organization provided appropriate diversity
training opportunities?

Suggestions and comments. Surveys should also provide

space for respondents to give suggestions and other feedback.

Attention should be paid to areas where diversity intersects as well.

For example, a survey may indicate that individuals of all races feel
included at similar levels as well as members across all gender
identities represented. However, looking at both together may
indicate that black women do not feel positively about the
organizational efforts—results that were masked by higher-than-
average scores by black men and white women. Without looking
across the two dimensions together, the organization may not realize
that it is missing the mark with regard to that portion of the
organization and may begin to suffer retention issues as a result.

Importance of Metrics

Clear metrics and continual evaluation of results are critical to a

DE&I initiative. They enable course correction by providing feedback
as to the success or failure of initiative elements. And they provide
credibility, demonstrating the initiative’s impact on the organization’s
competitive strategy.

Gardenswartz and Rowe see measurement as addressing two areas

of concern:
Process measures assess “how we did, what went well, what
didn’t and why,” for example, the number of employees
participating in a mentoring program and their feedback on the
experience.
Results measures assess the difference it made to the
organization, for example, was there a decrease in turnover and
how much did that save the organization?

Comparative results will be needed at regular intervals for all the

measures taken in preliminary assessments, but new measures will
also be needed as the DE&I initiative evolves and incorporates new
programs and elements (ideally, at least partly in response to what
the measurements reveal along the way).

Finally, it is important that organizations resolve regional and

national differences in creating their metrics. In “Measure Global
Diversity by Thinking Locally,” Mary Martinez and Michal Fineman
offer three guidelines for generating useful DE&I metrics:
Let go of the notion that each country must have the same
measures.
Engage local staff fully in determining the “differences that make
a difference.”
Use a wide range of measures—beyond demographics—to
demonstrate progress toward inclusion and full utilization of
available talent.

Commonly used DE&I metrics are shown in Exhibit 15.

Exhibit 15: DE&I Metrics

Metric Description Use

Gender Examines the composition of the Can help organizations identify

diversity workforce broken down along the if hiring practices, including job
gender diversity dimension. postings and interview
practices, are equitable across
gender lines.
 Metric Description Use

Race Examines the composition of the Can help organizations identify

diversity workforce broken down along the if hiring practices, including job
racial diversity dimension. postings and interview
practices, are equitable across
racial lines.
SHRM Assesses inclusion in the workplace The SHRM Empathy Index was
Empathy using five different components, formed in recognition that DE&I
Index each scored from 0 to 100: is not possible without a focus
on empathy in the workplace.
Belonging The Empathy Index is designed
Inclusion to be used to quickly assess
inclusion, enabling
Openness
organizations to monitor
Conflict Management progress along this crucial DE&I
Non-Discriminatory Practices aspect.

Retention Examines the average turnover rate Helps organizations determine if

rates for and length of employment for DE&I initiatives, compensation,
diverse employees broken down along and other retention efforts are
employees various or multiple diversity working as intended for given
dimensions. diversity groups.
Diversity of Examines if there is a diversity of Helps organizations establish
external thought among those who are appropriate and effective DE&I
stakeholders helping to establish and drive the initiatives; provides better
organization’s direction. insight into diversity needs (of
employees, customers, etc.).

Diversity of Employees at All Organizational Levels

Examination of the diversity of employees at all organizational levels

is crucial to understanding the effectiveness of DE&I programs,
especially those designed to eliminate bias from the hiring and
promotional process and those designed to prepare diverse
candidates for leadership roles.

This will indicate if groups are underrepresented or overrepresented

at different levels. For example, an organization that emphasizes
diversity in leadership roles should make sure that leaders are
diverse across multiple levels in a meaningful way. Having a diverse
executive suite is wonderful, but if all members of the director level of
an organization share the same race and gender characteristics, the
organization is probably not achieving its goals.

Pay Measures
Measuring pay disparities between members of different groups,
such as those grouped along gender or racial dimensions, can
indicate widespread pay inequity in a workforce or an opportunity
gap that inhibits career growth for certain groups. Three useful tools
in this area include pay audits, pay equity reports, and pay
transparency.

Pay Audits

Pay audits analyze pay information across the organization to

determine if particular sets of individuals are paid less or more on
average than others. These audits can be conducted on an ongoing
basis to identify pay gaps and address them and determine the
results of efforts to reduce such gaps across the organization.

Pay Equity Reports

Pay equity reports disclose the results of a pay audit. Pay equity
refers to the salary paid to similar positions examined through the
lens of one (or more) dimensions of diversity. Equitable pay exists
when positions with similar responsibilities are paid the same. For
example, a marketing department at a large organization may have
30 marketing specialists. Between these similar positions, pay
should be roughly similar between groups. If the male specialists
average several thousands more in salary than the female
specialists, an inequitable pay situation may exist across gender
lines.

In many cases, pay discrimination between diversity dimensions is

forbidden by law, or governments may require reporting to generate
demographic data and determine if action should be taken.
Organizations may also use these reports to highlight bias in
promotional processes and ensure that individuals have equitable
opportunity to advance their career no matter what diversity groups
they belong to.
Pay Transparency

Pay transparency is important in the pursuit of pay equity. Pay

transparency, which from an organizational perspective includes
publishing pay scales, helps employees feel that their pay is
equitable throughout the workforce without having to directly
compare salaries with each other.

Evidence has shown that the practice of publishing pay scales helps
minimize the pay gap between certain groups and can serve as a
recruitment tool when organizations are looking to hire external
candidates for positions. It can also help reinforce to employees that
the organization is serious about achieving pay equity, undercutting
potential notions that an organization may be seeking to benefit from
a lack of pay equity by saving on labor costs while falsely claiming
they are working toward that goal.
Relationship Management
Competency
Relationship Management
Competency
Relationship Management is a complex competency that includes
the skills, knowledge, and abilities to:
Understand the needs of stakeholders inside and outside the
organization and create networks of relationships that will
increase HR professionals’ effectiveness.
Use relationship-building skills to participate in or lead teams.
Clear away the obstacles to productive relationships by
resolving conflicts effectively and supporting win-win
negotiations.
 Networking

Proficiency indicators related to this section include:

Builds engaged relationships with team members through trust,
task-related support, decision-making and direct
communication.
Creates and/or participates in project teams made up of HR and
non-HR employees.
Demonstrates concern for the well-being of colleagues.
Develops and maintains a network of external partners (such as
vendors).
Develops and maintains a network of professional colleagues in
the HR community at large for professional development and to
fill business needs (such as the identification of new talent).
Develops and maintains a pattern of reciprocal exchanges of
support, information and other valued resources with
colleagues.
Develops and maintains mutual trust and respect with
colleagues.
Develops working relationships with supervisors and HR leaders
by promptly and effectively responding to work assignments,
communicating goal progress and project needs, and managing
work activities.
Develops, maintains and leverages a network of professional
contacts within the organization, including peers in both HR and
non-HR roles, HR customers, and stakeholders (such as the IT
department).
Embraces opportunities to lead a team.
Ensures all HR team member and stakeholder voices are heard
and acknowledged.
Establishes a strong and positive reputation, within and outside
the organization, as an open and approachable HR
professional.
Fosters collaboration and open communication among
stakeholders and team members, regardless of location or
employment type.
Identifies and fills missing or unfulfilled team roles.
Supports a team-oriented organizational culture.
Understands the interests of executives and leaders within the
organization.
Uses technology to build and maintain strong relationships with
individuals who work at other work locations (such as remote
workers).
Creates and leads teams with senior leaders from across the
organization.
 Creates opportunities for HR employees to network and build
relationships with higher-level leaders in the organization and in
the HR community at large.
Designs and oversees HR initiatives that promote effective team
processes and environments.
Develops HR’s objectives and goals for relationship
management.
Develops and maintains relationships in the HR community at
large through leadership positions in other organizations.
Develops, maintains and leverages a network of contacts within
the organization (such as leaders from other business units) and
outside of the organization (examples include members of
legislative bodies, community leaders, union heads, external HR
leaders).
Fosters an organizational culture that supports
intraorganizational teamwork and collaboration (such as silo-
busting).
Leverages relationships to learn about best practices for and
new approaches to building competitive advantage.

Key concepts related to this section include:

Trust-building techniques (examples include emotional
intelligence; relatability; vulnerability; transparency; recognizing
individual strengths).
Networking
The object of networking is to create relationships that offer value to
you—by expanding your knowledge, perspective, opportunities, and
support—while at the same time offering the value of your expertise
and experience to others. As the number of contacts grows and their
diversity increases, HR professionals can build a web of connections
that multiplies their own abilities.

Competency Connection
The head of HR is concerned that the organization’s IT department
will be unable to support the execution of a large, critical, time-
sensitive project.

Several employees are to be sent on a long-term international

assignment at a subsidiary for the special project. The project
requirements appear to greatly exceed current IT processes and
resources.

The HR head meets with the IT lead to review the project

requirements. Following their due diligence and assessment, they
reach the same conclusion. If they follow the current approach, the
project will indeed exceed the capacity of the IT department and
could result in significant delays (potentially up to two weeks) for the
assignees’ laptops, information, and accesses to be ready at the
subsidiary destination.

Working together, HR and IT design new streamlined processes to

gather all the details that IT needs to configure the assignees’ user
IDs, create the new employee numbers, grant access to systems,
and transfer the information on their current laptops before they
arrive at the subsidiary. These actions eliminate the constraints that
would have caused the delays.

HR uses its Business Acumen, Consultation, Analytical Aptitude, and

Relationship Management competencies to understand the IT
processes, design a new process, and work collaboratively with all
the project’s stakeholders. The result: better business decisions that
minimize the potential negative impact on employee productivity and
avoid any disruption to the project and the organization’s operations.

The Value of Networking and Building

a Professional Network

The Value of Networking

Networking can be defined as a process of developing mutually

beneficial contacts through the exchange of information. Networking
is like building a large library of potentially useful information and
influence. You may not need a resource immediately, but when you
have a network and the need arises, you can turn to the right people
to provide expertise, a different perspective, experience, influence,
or other contacts.

Networks may consist of internal or external contacts.

Internal contacts can be people with whom you interact on a
regular basis in the course of your work (for example, another
HR staff member, a contact in accounting). They may also be
internal stakeholders in the organization who share interests
and can provide support.
External contacts can be people outside the organization with
whom you work regularly (for example, suppliers, community
contacts), colleagues in other companies, or connections
through professional associations such as the Society for
Human Resource Management.

Building a Professional Network

The process of building a professional network should begin as soon

as one enters a profession or joins a new organization. Contacts
take time to identify and develop. The goal is that they should be
available when you need them, not after.
Professional networks include people inside and outside one’s
organization, colleagues from the HR profession and from other
disciplines, face-to-face and virtual relationships. Chapter meetings
are a good way to meet other HR professionals. Informational
meetings hosted by other functions can provide opportunities to
expand internal contacts. Even break rooms can become a good
place in which to cultivate new contacts. Networking sites are
continually expanding their capabilities, and new sites are being
launched. They may include contact mechanisms and tools for
collaboration and information sharing.

A balanced network offers different types of value:

Colleagues in the HR discipline can build and maintain your

awareness of what is happening in the field. A fellow HR
professional can post descriptions of new books or articles.

Some individuals can act as career mentors or provide coaching

on specific skills. For example, a colleague in the finance
function can help you understand the organization’s financial
statements and how financial objectives may affect HR.

Some members of your network are effective collaborators,

helping you come up with new ideas and working through
possible problems. They may think like you, but they may also
complement your own cognitive style and life experiences.

A few highly valuable people are what the author Malcolm

Gladwell called “connectors” in The Tipping Point. These are the
people who seem to know everyone. They can quickly increase
the size and scope of your own network through introductions
and referrals. A vendor, for example, can be a connector,
helping you to find qualified providers of other services and
products.

Key Content

Networking takes time, but it can help HR

professionals to succeed in their current positions or
find new career opportunities. Effective networking
requires:
Finding people who have something you would like
to share.
Having something yourself that other people would
like to share—for example, expertise or experience,
referrals, or organizational support.
Allocating time to make and maintain connections,
even when there is no current need for support.
Exhibit 16 lists some advice on creating professional networks.

Exhibit 16: Creating Professional Networks

How to Create a Professional Network

Give deliberate thought to who you want to include in your

network. Networks take time to maintain, so their value should
merit the effort. Consider what areas of weakness you want to
develop. Identify business areas or groups that you want to
know more about or where you want to establish contacts.

In all social situations, introduce yourself, ask about the other

person’s work and life, listen, and remember.

Make yourself more visible. Attend conferences and workshops.

Present at chapter meetings. Participate actively in meeting
discussions.

Develop your own value. Work on becoming an expert in some

area or on some topic. Don’t be modest about what you know or
can do.

Do favors. Networking is bidirectional; value flows to both ends

of the connection. Look for opportunities when you can mentor
and coach others.
Identifying Stakeholders for a
Professional Network
An HR professional’s network should include key stakeholders, both
inside and outside the organization. These stakeholders can affect
what HR does and how successful it will be in these activities.

Key Content

The stakeholder concept proposes that any

organization operates within a complex environment in
which it affects and is affected by a variety of forces or
stakeholders who all share in the value of the
organization and its activities. Business objectives may
be more complex, shaped by the needs of the various
groups.

The organization’s stakeholders perceive the value they receive in

distinctive ways. Understanding these multiple perspectives can help
HR professionals appreciate the complex criteria that are needed to
measure an organization’s success. It will also improve the HR
professional’s ability to communicate with stakeholders effectively
and manage their expectations.
The stakeholder concept was first offered in the mid-1980s by R.
Edward Freeman as an alternative to the shareholder perception of
the corporation. The shareholder concept states that the objective of
a business is to create as much wealth as possible, which is
returned to shareholders in the business, and that managers’
objectives, both in the short and long term, should be maximization
of profit. The stakeholder concept recognizes the different types of
value an organization creates. Exhibit 17 illustrates the stakeholder
concept.

Exhibit 17: Stakeholder Concept

Each stakeholder defines the value it seeks from its perspective and
may prioritize some values over others.

HR’s Stakeholders
HR’s stakeholders cover a broad range.

External customers include those receiving or purchasing the

organization’s products or services and those who seek a return
on their investment in the organization.

Customers tend to define value in terms of their needs, which

may include economy, convenience, reliability,
responsiveness, or innovation. HR can help communicate
customer needs to new employees, recruit the type of
workforce that can deliver customer service, and develop
customer service skills.

Shareholders may see value as monetary (a dividend or an

increase in share value). They may prioritize short-term
returns or long-range growth. Some shareholders may also
expect results from the organization’s corporate social
responsibility strategy in the form of improved environmental
and social impacts. HR can help unify the organization behind
strategic goals and build organizational competencies.

Donors to nonprofit organizations want to see results and are

interested in the proportion of donations that goes directly to
the organization’s mission. HR can manage executive
compensation and support organizational performance.
Internal customers include a number of roles in the
organization.

Senior management needs HR data on workforce capabilities

and costs and HR expertise in identifying and managing risks
related to human resources, acquiring and retaining talent,
developing talent pools, managing relations with third parties
(for example, unions and works councils, workforce
suppliers), and aligning workforce size and skills to achieve
organizational effectiveness and efficiency.

Boards of directors rely on HR to attract senior management

talent, support succession plans, develop competitive and
compliant compensation plans, and support the organization’s
ethical environment and governance system.

Functional leaders rely on HR for support in staffing,

development, and employee relations.

Employees of the organization and the HR function seek

economic stability, fair and transparent treatment, safe
conditions, fulfilling work, and opportunities for development.
Different employee groups may have unique needs, such as
work flexibility, support for diversity, opportunities to affect
 society and the environment, and so on. HR can help address
these perspectives through its policies and programs.

Suppliers include short- and long-term staffing suppliers,

vendors providing or managing benefits, or internal functions
like IT that provide necessary support. Suppliers tend to value
economic stability, fair treatment, and control over their
businesses.

Communities, political groups, religious institutions, and

governments focus on shared interests:

Communities see an enterprise’s value as a source of

employment and neighborhood enrichment and stability. As
part of its portfolio, HR develops and maintains relationships
with groups within the community, such as educational
institutions that develop future talent and workers or partners
in corporate social responsibility programs.

Political groups seek support from the business community in

making changes in laws and regulation. HR’s relationships
with these stakeholders can improve the success of lobbying
efforts on behalf of the organization and the HR profession.

Religious institutions seek support for their own community

goals and can benefit from improved employment
 opportunities and corporate volunteer programs.

Governments value “good corporate citizens” that build

communities, strengthen economies, and support the rule of
law. HR monitors the expectations of government agencies
and fulfills its legal and regulatory obligations (for example,
compliance with employment laws and laws on visas and
workplace safety).

There is considerable debate about how to align stakeholder

perceptions of what value an organization should deliver with the
organization’s own business goals and needs. How will the
organization prioritize these stakeholders? Can the organization
negotiate with stakeholders to reach mutually acceptable objectives?
Is it sufficient for the organization and the stakeholders simply to
open a conversation so that they better understand each other’s
motivations?

Stakeholder Perspectives in Global Organizations

Local cultures may influence the stakeholder relationship in a

distinctive way. For example:
Customers’ expectations of service will vary globally. In China,
customers expect special treatment to be given to those who
 have personal relationships with a service provider. In other
cultures, favoritism would anger customers.
In a culture that values long-term relationships, suppliers might
not understand being asked to reapply for supplier status
periodically, but in a country where short-term results are
valued, the request may be expected.
Employees in different countries often value certain kinds of
benefits. In China employers are expected to build dwellings for
blue-collar employees who come from other cities or the
countryside. Employees in countries with high taxation levels
may value nontaxable benefits. Certain cultures place greater
value on work/life balance.

Benefits of Building Relationships

Inside and Outside the Organization
The key to networking, creating or working in teams, or negotiating
mutually satisfying agreements is the ability to build and sustain
relationships.

HR professionals form various types of relationships in their work.

These relationships may extend outside the organization (to peers in
other organizations, customers, or suppliers) and outside the HR
function (to internal customers or people who share the workplace).
They can extend upward, downward, and laterally through the
organization’s hierarchy to include bosses, direct reports, and
coworkers and fellow team members.

These individuals may be located in the same location or area as the

HR professional, or they may be at satellite or other off-site
locations. Engaging remote individuals may require the use of
teleconferencing technology, social media, and other methods. It
may also require more intentional interactions, since traditional
incidental interactions such as water cooler chatter are not present in
a digital environment.

Key Content

Effective relationships:

Improve the quality of communication. People get

the information they need, but they also get an
opportunity to develop a broader perspective on an
issue.

Increase productivity by supporting collaboration

and enabling efficient resolution of disagreements.

Create a positive work environment by fulfilling

human needs for socialization and attachment.
Characteristics of Good Working Relationships

Good working relationships are characterized by trust and openness.

The individuals in a work relationship may have their own business
goals, and they may use the relationship to advance their goals.
However, they do not use a relationship to manipulate other people
to act against their values or their own interests.

Effective work relationships are mutual. Each side gains something;

each side learns from the other. Understanding deepens over time,
and communication and conflict resolution comes more easily.

Exhibit 18 lists some recommendations for developing good

relationships.

Exhibit 18: Recommendations for Developing Good Work

Relationships

Paths to Effective Work Relationships

Strive for diversity in the range of your relationships—diversity in

age, gender, background, ethnicity, and expertise. This provides
an opportunity to expand your understanding of the rest of the
world.
 Invest time and energy in developing and sustaining
relationships. This means attending to others even when you
have no specific needs to fulfill. You are building a resource you
may need to turn to later.

Develop an ease with “small talk” about non-work matters. Look

for openings for conversation, such as photos or references to
leisure activities.

Talk about yourself without dominating the conversation.

Learn to ask about others without prying into personal matters.

Be considerate of other people’s time and obligations. Wait for

more opportune times for discussions.

Building Trust
Trust is associated with words like truthfulness and reliability. It is
built over time through repeated demonstrations. When trust levels in
a relationship are high, conflicts can be more easily resolved and
sometimes avoided entirely. Negotiations can proceed more quickly
to mutually acceptable conclusions. When an organization includes
trust in its core values and is able to cultivate that behavior in its
members, the organization as a whole benefits in its relationships
with all of its stakeholders.
Building trust is aided by certain characteristics of the individuals in
the interaction. How emotional intelligence is used; how relatable,
vulnerable, and transparent an individual is; and how they recognize
the other individual and their strengths all can help build trust.

Emotional intelligence (EI) is the quality of being sensitive to and

understanding of one’s own and others’ emotions and the ability to
manage one’s own emotions and impulses. It enables people with
very different backgrounds and perspectives to work productively
with one another. Whether these differences are cultural or
intergenerational or are related to class, sex, socioeconomic status,
or education, EI can turn differences into an organizational asset
rather than a potential liability.

HR must not only develop its own emotional intelligence but also
help develop EI throughout the organization. Without EI, the
behaviors needed to support a global mindset or diversity in the
workplace—empathy, cooperation, willingness to learn about and
accept differences—are practically impossible. EI has been found to
be related to professional success in all types of job roles.

Being vulnerable, transparent, and relatable helps others see

themselves as more similar to you. It helps them to believe that you
are not projecting an enhanced and false image and to trust that you
are being honest in your interactions with them. If you have been
transparent and vulnerable in situations where it may have been
uncomfortable to do so, they have reason to believe that you will do
the same in future interactions.

Research conducted by Robert Hurley found that while

characteristics such as honesty and predictability are necessary to
build trust, they are only part of the requirements. Building trust is
more likely when the person bestowing trust recognizes certain
qualities in the other person:

Common values. Finding commonalities helps overcome the

sense of “otherness.” People trust people who are similar to
themselves.

Aligned interests. When individuals share a common purpose,

they can see similarities and often find common ground to work
together and to find commitment to stakeholders. Trust is
possible to construct across differences in beliefs, experiences,
or culture; it simply takes time and communication.

Benevolence. A benevolent person is perceived as having

genuine concern about another’s well-being, above or at least
equal to his or her own interests.

Capability or competence. People must feel that an individual

can deliver on commitments. People who over-promise or do
 not follow through do not merit trust.

Predictability and integrity. A trustworthy person reliably

“walks the talk”—there is consistency between values and
behavior. Occasional acts of integrity are not enough.

Communication. Trustworthy people communicate often and

fully. They listen and respond to what they hear. They reveal
things about themselves, and they are open to hearing about
how others see them.

In addition to learning how to build trust in their own relationships,

HR professionals may be called upon to help organizations,
functions, or work units rebuild trust within the workplace. These
consultative HR services are built on mutual trust between HR and
its internal customers.
 Managing Conflict

Proficiency indicators related to this section include:

Encourages productive and respectful task-related conflict and
uses it to facilitate change.
Facilitates difficult interactions among employees to achieve
optimal outcomes.
Identifies and addresses the underlying causes of conflict.
Identifies and leverages areas of common interest among
stakeholders to foster the success of HR initiatives.
Identifies and resolves conflict that is counterproductive or
harmful.
Resolves and/or mediates conflicts in a respectful, appropriate
and impartial manner, and refers them to a higher level when
warranted.
Serves as a positive role model for productive conflict.
Designs and oversees conflict resolution strategies and
processes throughout the organization.
Facilitates difficult interactions among senior leaders to achieve
optimal outcomes.
Identifies and reduces potential sources of conflict when
proposing new HR strategies or initiatives.
 Mediates or resolves escalated conflicts.

Key concepts related to this section include:

Conflict resolution strategies (examples include accommodation;
collaboration; compromise; competition; avoidance).
Types of conflict (examples include relationship; task;
interorganizational and intraorganizational).
Managing Conflict
Conflict is not necessarily a bad thing in an organization or a group
or between two individuals. Constant conflict, however, can weaken
trust and erode relationships, obscuring a sense of common mission
and making collaboration difficult. From an HR perspective, it can
decrease employee productivity, morale, engagement, and retention.
It can increase risks of lawsuits and even violence.

Competency Connection
One of the ways in which HR provides service to the organization
and its members is by supporting resolution of the many possible
conflicts that can arise among the organization’s diverse members.
In the case described below, the managers in conflict come from
different cultures but also different disciplines. Still it is imperative
that they work as a team. By using the Behavioral Competencies,
HR can become the organization’s relationship manager.

The HR manager at a large resort in Las Vegas has to resolve a

conflict between the IT manager, originally from the Netherlands, and
the food and beverage (F&B) manager, originally from Trinidad. The
IT manager refuses to fix the F&B manager’s computer. The IT
manager argues that the F&B manager has been disrespectful to
him by ignoring all his e-mails. The F&B manager feels that her
status as a manager is being challenged when the IT manager
sends her lengthy e‑mails with directions for fixing the problem
herself rather than simply coming to her office to help her in person.

The HR manager knows from performance reviews and personal

contact that both are highly valued, competent managers. In a
follow-up meeting, she asks each to reverse roles and try to explain
one another’s problems. The IT manager struggles with the role play
but does eventually admit that perhaps his e-mails were a bit too
long, adding that he had wanted to make sure that all possible IT
issues were being addressed. The F&B manager mimicked the IT
manager’s accent, but then admitted that she could have tried
harder to resolve the computer problem using his e-mail directions,
despite her lack of formal computer training.

The HR manager proposes a compromise that both managers find

acceptable: The IT manager will conduct three-hour tutorial sessions
for the F&B head, who will in turn provide a guided tour of the F&B
operations, so he can see firsthand how they need to use the IT
system. By focusing on business objectives, HR has helped both
sides to better understand the real issues that are causing personal
conflict and work toward a resolution that will avoid future conflicts.
Types of Conflict
Conflicts can be distinguished in terms of what they are about and
who is involved. Understanding the types of conflicts can help
resolve them more quickly and thoroughly.

Conflict can derive from disagreements over how to do a particular

task, or it can relate to personal differences, such as culture,
cognitive and communication styles, or a need for control or
dominance. Resolving task conflict may be time-consuming,
because it often requires negotiation or consensus building to
establish the best path forward. Task conflict, however, can
sometimes lead to discovering better ways to do things—more
efficient approaches that save time and resources or more
innovative approaches that produce better results.

Interpersonal conflicts may sometimes be disguised as task conflicts.

Because the real issues are not being resolved, the conflict may
linger and distract teams from important work. Interpersonal conflicts
require that at least one of the parties in the conflict has emotional
intelligence and skill in negotiating. Or they require the intervention
of a leader who can impose ground rules for behavior and refocus
the team on the task. Like task conflict, however, some level of
interpersonal conflict may be acceptable. When team members
conflict because of issues related to diversity, the cost of conflict may
outweigh the benefits of having diversity in a team or organization.

Conflicts can occur inside a team (intragroup conflict) or between the

team and an outside group, such as another HR team or another
function in the organization (intergroup conflict). Conflicts within a
team may be related to task or personality, but conflicts between
groups are frequently about competition for limited resources or
conflicting goals. These intergroup conflicts may be resolved through
negotiation, but they may require intervention by a third party who is
not directly involved in the conflict. When called upon to intervene as
a third party in a conflict, HR professionals should remember to
apply their networking and influencing skills.

Conflict Resolution Modes and

Reducing Unnecessary Conflict

Conflict Resolution Modes

Exhibit 19 describes conflict resolution modes based on the work of

Robert Blake and Jane Mouton. The five conflict resolution modes
represent different ways of responding to two basic concerns: the
task that must be accomplished and the relationships between the
people in conflict.
 Exhibit 19: Conflict Resolution Tactics

Mode Description Comment

Accommodate The leader restores good Useful when there is little time to
(or smooth) relations by emphasizing be lost and movement forward is
agreement and downplaying needed. It does not, however,
disagreement. address the root conflict. If the
group continues, the conflict will
probably recur.
Assert/compete The leader imposes a solution. Useful in a crisis because it
(or force) One side wins and the other resolves the issue quickly; also
loses—hence the term when authority is being challenged
“win/lose” conflict resolution. or when the impact on future
relations with the group is minimal.
Like accommodation, it does not
permanently address the problem.
Avoid The leader withdraws from the Useful when the conflict will
situation or accepts it, leaving resolve soon without any direct
the conflict to be resolved by intervention or when the conflict or
others or remain unresolved. relationship is not worth the time
investment. Leaders should be
aware that avoiding conflict can
weaken their role in the
organization and may damage the
group by leaving a problem
unresolved or allowing it to be
poorly resolved.

Collaborate (or The leader and those in conflict Useful when the stakes are high,
confront) accept the fact that they relationships are important, and
disagree and look for a “third time allows. (It does require time
way,” a new solution to the and strong interpersonal skills.)
problem of the conflict. Since There is greater chance for an
both sides contribute to the enduring, equitable, mutually
solution, this may be seen as satisfying resolution.
“win/win” conflict resolution.
 Mode Description Comment

Compromise The leader asks those in conflict Useful for complex issues, when
to bargain—altering positions on both sides are determined to win,
different issues until a mutually and when time doesn’t allow for
acceptable solution is defined. true problem solving. Solutions
The solution relies on may be temporary and only
concessions. For this reason, it partially effective, but when strong
is often referred to as “lose/lose” personalities are involved, it does
conflict resolution. preserve the egos of all parties.

Taking an assertive or competitive approach typically means

rejecting compromise. As a “win/lose” tactic, it aims to maximize your
goals (win) at the expense of the other party’s (lose). There are
times when this might be the most useful or effective tactic to
choose. For example, it can be effective if the other party insists on
employing an assertive/competitive approach. Similarly, there are
times when a firm hand during negotiations can bolster the
reputation of a leader as strong and principled, for example, by
refusing to bend on environmental protections. However, to insist on
competing or asserting your own goals over others’ will likely result
in difficulties in the long run. One might develop a reputation for
being difficult or impossible to negotiate with, and relationships and
business will likely suffer. This can in turn cause the organization’s
culture to suffer, as morale and productivity drop. The important thing
is to ensure that competitiveness doesn’t change into something
destructive or become the default. By understanding why others
choose the tactics and strategies they do, conflict managers can
defuse the negative aspects and consequences of competition and
can work toward achieving a collaborative, mutually beneficial
approach.

There are times when each of the conflict resolution approaches

may be effective. When relationships are ongoing, however, a
collaborative approach has more enduring results, probably because
all sides have participated in creating the solution.

Key Content

In a collaborative approach:
Both sides express their own perspectives of the
disagreement.
They then paraphrase each other’s positions to
confirm their understanding.
Both sides (and the facilitator) brainstorm solutions
in a positive manner and focus on solutions that
both sides believe are workable.
All parties agree on next steps.
The facilitator works to end the meeting in a
positive manner, emphasizing the advantages of
the new solution to each side and to the
 organization and the benefits of the collaborative
approach.

Conflict resolution in a multicultural organization will be more

challenging. Leaders must take into account employees’ willingness
to raise issues and challenge those with more status. They must also
realize that some individualist cultures are more tolerant of and
comfortable with conflict than collectivist cultures.

Reducing Unnecessary Conflict

Because of the potential costs of conflict, HR professionals should

consider approaching conflict proactively. Many sources of conflict
can be eliminated through clarity and communication—by
establishing ground rules for conduct, clarifying authority and
responsibility, setting objectives with input from all stakeholders and
team members, considering the possible effects of decisions and
actions on others, creating avenues for communication, and
monitoring and checking in on team members periodically.

Team leaders can also reduce levels of conflict on their teams by

acting fairly and consistently—by being positive and unifying team
members behind a common goal, paying attention to group stress
levels, being attentive to group differences and the potential for
interpersonal conflict, distributing opportunities among team
members, treating all team members respectfully, and avoiding
favoritism.
 Negotiating

Proficiency indicators related to this section include:

Adheres to applicable negotiation- and bargaining-related laws
and regulations.
Applies an understanding of the needs, interests, issues and
bargaining position of all parties to negotiation discussions.
Evaluates progress toward an agreement.
Identifies an ideal solution or end state for negotiations,
monitors progress toward that end state and ends negotiations
when appropriate.
Maintains a professional demeanor during negotiation
discussions.
Offers appropriate concessions to promote progress toward an
agreement.
Achieves a mutually acceptable agreement in difficult and
complex negotiations.
Defines the parameters of negotiating boundaries on behalf of
the HR unit.
Negotiates with stakeholders within and outside of the
organization in complex and high-stakes negotiations.

Key concepts related to this section include:

Negotiation tactics, strategies and styles (examples include
perspective taking; principled bargaining; auction; interest-based
bargaining; position-based bargaining).
Negotiating
Negotiation is most effective when collaboration is used to create a
solution that satisfies key needs of both sides.

Competency Connection
An organization is preparing to negotiate a new contract with one of
its major HR software vendors. In anticipation of the contract talks
starting, the HR team is mobilized. It includes the director, a senior
manager, and a staff specialist. Each contributes, using the
Relationship Management competency, to make the process as
smooth as possible.

The HR staff member provides an initial point of contact with the

software vendor representative and works to establish a pleasant
and professional relationship, honestly communicating the function’s
needs and trying to learn more about the vendor’s interests in this
negotiation. The staff member prepares the HR manager and
director and takes steps to make meetings comfortable and
productive.

The HR manager must negotiate a difficult conflict with the IT

function. IT would prefer a different vendor, but this other solution
would not meet HR and employee needs. HR resolves the conflict by
creating a role for IT in all discussions, especially negotiation and
post-contract implementation.

The HR director has played an important role in securing IT’s

cooperation. She has met with and persuaded the IT function leader
to direct the function to collaborate in the vendor selection process
and support HR’s needs to the extent possible. The director has
cultivated this relationship carefully over the years, offering support
for HR issues before it was even asked and making sure that all of
IT’s HR requests received prompt attention.

Understanding Negotiation and

Approaches to Negotiating

Understanding Negotiation

It seems appropriate to discuss negotiation in connection with

conflict resolution. Conflict resolution may involve negotiation (as in
collaboration and compromise), or negotiation may involve conflict
(as in internal struggles over resources or objectives or external
relations with suppliers). Negotiation methods are similar to some of
those used in conflict resolution.
Negotiation is a process in which two or more parties work together
to reach agreement on a matter. It involves distinguishing between
needs and wants. Needs are essential to a leader’s goals—for
example, a budget to conduct a needs analysis preliminary to
designing a new policy or process. Wants are attractive but not really
essential. For example, it might be nice to have a 20% reserve for
the needs analysis project, but a leader can meet the ultimate goal
without it or with a smaller reserve.

Note that the type of negotiation described here does not take the
place of rules used in negotiating labor contracts. Such rules may be
defined in existing contracts and in local labor laws. While the
concept of win-win negotiation is often applied in collective
bargaining situations, negotiating grievances and contract
interpretations must be conducted within the existing legal
frameworks.

Approaches to Negotiating

There are different negotiating styles, but they are commonly

considered as soft, hard, or principled:

Soft negotiators value the relationship more than the outcome

and will back down on issues in the interest of reaching
agreement—even if they are no longer getting what they need.
Hard negotiators are committed to winning, even at the cost of
the relationship. These negotiators may pursue position-based
bargaining, which views negotiation as a zero-sum exercise and
relies on parties staking out opposite positions and slowly
making concessions until an agreement is made (or negotiations
break off entirely).

In principled negotiation, the negotiators aim for mutual gain,

applying a process developed by Roger Fisher and William Ury
called interest-based relational negotiating or integrative
bargaining. Fisher and Ury emphasize the need to focus on the
problem instead of personal differences and on mutually
beneficial outcomes rather than hard positions. Principled
negotiators can separate people from positions. They identify
common interests and make them a goal of the negotiation.
They are also creative: They come to the negotiation prepared
with different options that may satisfy both sides. In principled
negotiation, the goal is a win-win solution, requiring some
sacrifice of position from each side in order to gain meaningful
points.

Key Content
 You may read about various negotiating tactics that
rely on bullying, manipulation, or deception, such as
deadlines (“this is a one-time offer”), brinksmanship
(“take it or leave it”), or low-/high-balling (making
ridiculous, probably unacceptable demands). These
tactics are actually risky, especially when the
negotiation involves an ongoing relationship. They
destroy trust.

When faced with a negotiator who engages in these

negative tactics, HR professionals persist in their
commitment to win-win principles. They maintain a
quiet and professional tone. They do not retreat and
concede the core points of their negotiating position.
They continue to focus on mutual needs. If they must,
they walk away from the negotiation.

HR professionals should also be alert to unethical behavior in

negotiations—for example, to offers to cut costs by avoiding
regulations or using unqualified suppliers or to offer bribes or
demand quid pro quo arrangements. The potential violations should
be documented and reported to involved parties, such as the
organization’s purchasing function.
Negotiating Process
There are six phases to the principled negotiation process:

Preparation. The negotiator should identify critical needs, wants

that could be concessions, and possible demands from the
other side. An important tactic described by Fisher and Ury is
defining your “BATNA”—your best alternative to a negotiated
agreement. Knowing your possible alternatives if negotiation
fails helps in establishing a more accurate value and creating
proposals you can live with. Effective negotiators also try to
perform a BATNA analysis for the other side so they can
anticipate reactions.

Relationship building. Trust is built with the exchange of

personal information that reveals character. Many negotiating
tactics focus on creating an atmosphere that encourages
comfort and openness.

Information exchange. Positions and needs are explained by

both sides. A more thorough understanding of positions usually
leads to more-balanced agreements. This tactic is referred to as
perspective taking—seeing the issue from the other side. In a
negotiation, perspective taking helps negotiators anticipate
reactions to proposals and overcome negotiating obstacles.
Understanding the other side’s constraints and desires can help
a negotiator approach the problem from a different angle,
expand the options on the table to increase value for the other
side, and propose win-win solutions. Making the first offer is
usually considered an advantage, since it “anchors” or defines
the negotiating point. Unless the first offer is completely
unacceptable, it can set a reasonable range for negotiation.

Persuasion. Negotiators seek mutually beneficial options rather

than trying to win the other side to their own position. This is
possible since both sides have a broader understanding of each
other’s divergent interests and can find solutions that satisfy
needs on both sides. Fisher and Ury recommend that
negotiators focus on discovering interests rather than staking
out—and clinging to—distinct positions. Understanding the other
side’s underlying interest can help both sides discover a third
way.

Concessions. Both sides find wants that are not essential to

agreement. Some negotiators plan to make small concessions,
while others never make concessions—at least formally. In a
multi-party negotiation, one can try to get the other participants
to bid against each other in the manner of an auction.
 Agreement. Agreements may be legal instruments or verbally
expressed understandings. The requirement of a legal contract
may itself be offensive to some cultures, who view it as a sign of
lack of trust in the relationship. Negotiators must also be alert to
agreement that is only apparent and may result from a desire to
avoid conflict.

Negotiating in Multicultural Settings

Negotiators should be aware of the influence of culture on

negotiating styles. In International Dimensions of Organizational
Behavior, Nancy Adler argues that leaders who find themselves
engaged in cross-cultural negotiations should consider a “synergistic
approach” that recognizes the differences in negotiating styles
across cultures and uses those differences to craft agreements that
allow both sides to win. To do this, individuals should begin by taking
the cultural perspective of the other side in the negotiation—trying to
understand the values the other side brings to negotiations and what
they hope to achieve through negotiation. It is possible that, by
understanding differences, negotiators can avoid having to
compromise their desires. Since each side may want different things,
it may be possible to reach win-win agreements more easily. By
understanding the perspective of the other side, able negotiators
create ease, trust, and respect.
Communication
Competency
Communication Competency
The Communication competency is defined in the SHRM Body of
Applied Skills and Knowledge as:

The KSAOs [knowledge, skills, and abilities] needed to

effectively craft and deliver concise and informative
communications, to listen to and address the concerns of
others, and to transfer and translate information from one
level or unit of the organization to another.

Communication is one of the basic competencies that HR

professionals use in all aspects of their work and at all stages in their
career—from listening to employee grievances to presenting the HR
strategy to senior leaders.

Becoming a more skillful communicator begins with understanding

the process of communication itself, the obstacles to mutual
understanding that may arise in the process, and the tactics one can
use to manage those challenges. Achieving the impactful
communication needed to lead groups in discussions to gain support
for ideas and in implementing those ideas requires cognitive skills,
emotional intelligence, physical presence, and mastery of the media
used in different types of business communication.
 Communication Basics

Proficiency indicators related to this section include:

Crafts clear, organized, effective and error-free messages that
are consistent with the organization’s brand.
Interprets and understands the context of, motives for and
reasoning in received communications.
Listens actively and empathetically to others' views and
concerns.
Presents needed information to stakeholders on a regular basis
and refrains from presenting unneeded information.
Promptly responds to and addresses stakeholder
communications.
Seeks further information to clarify ambiguity.
Uses an understanding of the audience to craft the content of
communications and choose the best formal or informal
medium.
Welcomes the opportunity to hear competing points of view and
does not take criticism personally.

Key concepts related to this section include:

Elements of communication (examples include source; sender;
receiver; message; feedback).
Elements of nonverbal communication (examples include eye
contact; body language; proximity; gestures).
General communication techniques (examples include planning
communications; listening actively; checking for understanding;
asking questions).
Communication Basics
Whether a communication is spontaneous (such as an opportunity to
discuss a program with a stakeholder in a few moments in a hallway)
or carefully planned (such as the rollout of a new performance
management system to the entire organization), an HR professional
can apply the same knowledge, skills, and abilities.

Competency Connection
By using various HR competencies, an HR professional—an
assistant HR director in a public school district—succeeded in
balancing the needs of the organization with the needs of the
employee group. Sometimes new employees forgot that the school
district’s priority was the children and that the needs of the
employees were secondary. In this particular situation, a new
teacher requested a two-week absence from the classroom to go on
her honeymoon.

Although the HR professional was empathetic to her needs, the HR

professional needed to communicate to the employee the reasons
why this request was unacceptable. Leaving students in the care of a
substitute teacher was detrimental to the children’s education and to
their emotional needs as well. It was early in the school term, and
the students were very young and emotionally dependent on their
teacher.

There was an extra complication here: The district’s teachers were

unionized. The assistant HR director was determined not to
antagonize the union and complicate their relationship unnecessarily.

The challenge here was to communicate this in a way that would

increase the teacher’s understanding of the situation and empathy
with the district and the students. The HR director wanted the
teacher to see the experience from the perspective of the students,
their parents (who might be angry with the school administration for
allowing this), and her colleagues who would inherit the burden of
covering in her absence. Ideally, the teacher then would agree with
the need to find an alternative and would not file a grievance with the
union.

After a long and candid discussion, the teacher and the HR director
agreed on a plan. The teacher would receive permission to take a
long weekend to celebrate her actual wedding day and then she
would take her honeymoon during the summer months.

Because of the HR professional’s Leadership and Navigation,

Relationship Management, and Communication competencies, she
solved the immediate problem while improving her relationship with
the teacher and the teachers’ union.

Communication Model
The communication model shown in Exhibit 20 demonstrates the
potential difficulties of communication, whether it is oral, nonverbal,
or written.

Exhibit 20: Communication Model

At each link in this communication chain, something can go wrong

(the noise in the exhibit) that will derail the purpose of the
communication:

Communicator-message link. The communicator can be

ineffective in articulating the message.
It may be sent to the wrong person.
 The information may be wrong or insufficient or not what the
receiver needs.
The communicator’s attempt to appear confident may be
perceived as rudeness.
The message may rely on technical, historical, or cultural
knowledge the receiver does not have.

Message-medium link. The message may be sent at the wrong

time or in the wrong manner or form.
An e-mail about an event is delivered too early and the event
is forgotten.
A recipient overloaded with e-mails does not see a critical
one.
A proposal with grammatical or formatting mistakes damages
the credibility of the message and the communicator.
Attendees at a virtual meeting cannot follow a complex
presentation.

Medium-receiver link. The receiver may misunderstand the

message.
Interruptions or physical conditions (for example, noise,
discomfort) damage comprehension.
Different languages and expressions challenge
understanding.
 The receiver’s expectations differ, and the message becomes
confusing or dissatisfying.

Receiver-communicator link. The feedback loop does not

operate well.
There is no feedback loop. For example, there is no question-
and-answer period after a presentation, or a contact is not
included in an e‑mail.
The communicator does not understand or respond to
feedback.

How does one account or adjust for these different points of noise?
HR professionals have a greater chance of reducing the amount and
impact of noise by actively checking that their message has been
received—for example, by asking questions of their audience. In
addition, communicators should examine their own performance. For
example, did they use the correct method of communication? Did
they time the communication appropriately? Did they make it clear
that their audience could follow up with them if they had any
questions or needed clarification?

Key Content

The critical message in the communication model is

the idea of noise—that interference can occur at any
 point in the communication and that it can arise from
physical, personal, or social factors. Effective
communicators are aware of these possibilities and
plan ahead to minimize noise.

Effective Listening Techniques

Active listening is a technique used by communicators who are
fully engaged with their audiences, both physically and cognitively.
Essential principles of active listening include:

Inviting the other person or people into the conversation.

Allow gaps to develop in which the listener can speak. Avoid
interrupting or talking over the speaker. Ask questions that
encourage people to speak.

Focusing on what the other person is saying. This means

thinking about the message being communicated right now, not
what you will say as soon as the other person stops talking. It
also means showing physical signals of interest in what you are
hearing. For example, an active listener maintains soft, attentive
eye contact with the speaker—not a hard stare but interested
engagement. Active listeners may nod to encourage speakers to
continue or signal confusion to request repetition and
explanation.

Processing unspoken or nonverbal messages the other

person is sending. The listener’s nonverbals can signal the
way the listener is receiving the message—with interest,
opposition, or enthusiasm. Nonverbals include eye contact,
body language such as facial expressions and gestures, and
rate or pitch or volume of speech. Nonverbals also include
posture. Is the other person leaning away from you, arms
folded? This may mean that the other person is not convinced or
is resisting the message. Processing nonverbals can be
assisted by using emotional intelligence—seeing the
conversation from the other person’s perspective and imagining
how the other person might be responding to what is being said.

Being aware of the nonverbal messages you yourself are

sending. Your own tone of voice and posture can convey your
feelings about what you are saying. A confident tone and strong
eye contact can convey your commitment. Some
communication experts also believe that you can shape the
other person’s reaction to what you are saying by mirroring the
other person’s nonverbals. The idea is that by carefully following
the other person’s physical actions and postures with similar
postures and actions, you create a physiological connection that
can become a cognitive connection.
 Communicating Strategically

Proficiency indicators related to this section include:

Creates persuasive and compelling arguments.
Effectively communicates HR programs, practices and policies
to both HR and non-HR employees.
Effectively communicates with HR leaders.
Ensures the delivered message is clear and understood by the
listener.
Helps non-HR managers communicate HR issues.
Uses an understanding of the audience to craft the content of
communications and choose the best formal or informal
medium.
Articulates to senior leaders the alignment of HR’s strategies
and goals with the organization's.
Comfortably presents to audiences of all sizes and
backgrounds.
Communicates HR's vision, strategy, goals and culture to senior
leaders and HR staff.
Communicates difficult or negative messages in an honest,
accurate and respectful manner.
 Develops an organizational culture in which upward
communication is encouraged and leaders are receptive to staff
views and opinions.
Prepares and delivers messages on important, high-visibility HR
and organizational issues to senior- and board-level audiences.

Key concepts related to this section include:

Communication techniques for specialized situations (examples
include giving feedback; facilitating focus groups; facilitating
staff meetings; using skits or storytelling; creating
communication plans; translating technical jargon; facilitating
communication from an anonymous source; informal
communication).
Communications media (examples include phone; e-mail; face-
to-face; report; presentation; social media; town hall meetings;
videoconference).
General communication techniques (examples include planning
communications; listening actively; checking for understanding;
asking questions).
Communicating Strategically
Strategic communications have a purpose that must be served by
the content communicated and the way the communication is
delivered (its timing, tone, length, and media).

Competency Connection
An HR generalist has worked at an operation within a larger
organization for the past five years. Turnover has been high, and
sometimes HR has been understaffed. As a result, the generalist has
filled many HR roles over the years and has gained a wide range of
knowledge and familiarity with the multiple departments and
functions within the operation.

The operation’s management team, although employees for many

years, are new to their roles as managers. Additionally, the team
changes frequently, since top performers within the organization
have a tendency to advance very quickly into other positions. This
has made it challenging for the management team to become fully
collaborative, and the operation is not making the progress that the
rapidly growing organization needs.

One step toward greater collaboration is frequent meetings, which

force the team members to focus on working together as a team and
on learning how to communicate with each other. The HR generalist
does her part in making the management team work by:
Creating an engagement survey to help evaluate needs for the
team and the operation (Consultation competency).
Supporting a team member, a temporary transfer assignment
from an operation in a different country (Global Mindset
competency).
Continually reinforcing good communication and teamwork
practices (Leadership & Navigation and Communication
competencies).

Impactful Communication and

Understanding the Audience’s Needs

Impactful Communication

The SHRM workshop “Influence Business Decisions Through

Effective Communication” describes “impactful” communication,
communication that achieves its purpose. As Exhibit 21 illustrates,
impactful communication integrates:
An understanding of the audience’s needs and perspectives.
A clear message.
Effective delivery.
At the center of impactful communication is the communicator—the
perception communicators create of themselves.

Exhibit 21: High-Impact Communication

Source: “Influence Business Decisions Through Effective Communication,” SHRM

Understanding the Audience’s Needs

Whether the goal of communication is to deepen understanding of a

topic or to encourage a specific action, that goal is more easily
achieved when you understand who you’re speaking to—what this
audience expects to hear, what it wants to hear, and what it fears
hearing. The answers to these questions will affect what you say and
how you say it.

Before communicating, leaders should perform some level of

audience analysis:
Who should receive information about this topic? How many
distinct groups are there? Do they have different needs?

What does the audience know about this topic, and how much
do they need to know? Is the audience unaware of or familiar
with the issue? This will affect the level at which context,
supporting details, and explanation are delivered.

How will the audience react to the communication?

With surprise or confusion? If so, the communicator may need
to slow down and pay more attention to the audience.
With resistance? If they are likely to resist, the communicator
must anticipate possible objections and prepare response
strategies ahead of time. Not having supporting or
explanatory information at hand damages the communicator’s
credibility and influence.
With little interest? In this case, the communicator must find
ways to increase the audience’s engagement in the message
—for example, by emphasizing direct effects on the audience.

What rhetorical (persuasive) approaches will work best with

each group?
Hard, objective data?
Personal stories?
 Providing the information and letting them make a decision?
(This increases the audience’s investment and commitment to
the decision.)

Constructing the Message in

Communication
The term framing is often used in discussions of communication.
The term reflects the process of getting an audience to see
communicated facts in a certain way so that they take a certain
action. Reframing is changing the way an audience sees or feels.
When an HR professional manages an employee’s discouragement
over a change in the workplace by pointing out benefits and
opportunities created by the change, the HR professional is
reframing the facts of the change.

Effectively framing the message requires clarity and explanation.

This in turn requires:
Articulating the objective and desired outcome of the
communication.
Identifying the benefit to the audience.
Identifying the key points of the message and sequencing them
in a logical manner.
 Providing an explanation of and evidence for each point that
helps the audience see these facts in the desired frame.
Ensuring that the message clearly reflects and is consistent with
the organization’s brand and goals.

Impactful communicators are prepared to shorten their message to

key points if the audience is rushed or bored, tailor it if the audience
has more trouble understanding or accepting a certain point, or
expanding the message if the audience shows great interest.

Planning Communications
The delivery of the message involves choosing the communication
channel that best fits the message and the audience’s needs, a
place that minimizes distraction and allows the audience to focus,
and a delivery style that supports audience understanding and
engagement. Timing and awareness of the audience’s reactions are
also important.

While not all communications require extensive planning, the costs

of not planning are high. Impactful communicators create strategies
for critical and/or complex communications. These strategies can
include the following considerations.
How will the communication occur? Face-to-face? By
phone? In writing? It is more difficult to assess audience
reactions when the audience is not in front of you. In these
cases, communications should be reviewed by multiple people
who can point out areas where audiences may be confused or
respond strongly. The communicator can include additional
support or acknowledge possible audience reactions. Complex
topics addressed in presentations usually require written support
materials that allow the audience time to study the message.
Discussions about sensitive issues may be conducted best in
person or at least by phone rather than by e-mail.
Communications regarding allocation of resources above certain
limits may start with individual discussions with the audience
and then move on to written reports that are followed by formal
in-person presentations and possibly by further informal
discussions or written responses.

When will the communication occur? Some messages

require staging, releasing portions of the message to different
people in a certain sequence. HR professionals should also
consider organizational timing. What other communications
might be occurring at this time that can distract from their
message? Communicators should be conscious of how much
time they have, and they should respect time limits unless
invited to continue.

Where will the communication occur? For sensitive

discussions, the setting must safeguard confidentiality. For
group communication events, the setting should be comfortable,
with a right-sized and quiet room, good ventilation, and natural
light if possible. All settings should minimize the risk of
distractions and interruptions.

Who will communicate? Some communications require a

presenter with authority in the organization. Others require
expertise and the ability to respond to technical questions. Still
others require communicators who are adept at listening,
understanding an audience’s changing needs, and responding
in a positive, unthreatened way.

What support will be required? This might be analytical help

to create supporting evidence. It may be graphic help to create
figures, administrative support to create and distribute copies, or
coaching to critique a communicator’s delivery.

What media will be used? Communicators must consider the

appropriateness of the medium to the message and the
audience’s ease with different media, which can be affected by
 factors such as reading level, access to technology, and the
effects of time zones. HR professionals can communicate in
various media, each of which presents certain challenges and
requires different types of planning. Exhibit 22 summarizes
some key challenges for these various communication media.

Exhibit 22: Advantages and Challenges of Commonly Used Means

of Communication

Medium Advantages Challenges

Face-to-face Provides immediate verbal and Takes time

(or small nonverbal feedback Requires good listening skills
group)
Useful for complex, sensitive Requires care to avoid
issues (such as conflicts, conveying wrong message
negotiations, problem solving)

Phone call Requires good listening skills

Provides more opportunity for
since there are no visual cues
feedback, questions
Faces more competition for
attention
Takes more time

Voice mail
Saves time (when used to Does not provide feedback or
relay content, not make direct confirmation of understanding
contact)
 Medium Advantages Challenges

Video- Saves time (no travel required) Potential technical issues

conferencing (Internet connections,
Allows participants to attend
remotely substandard equipment)

Saves money Missing in-person

communication cues
Makes scheduling easier
Overuse leading to burnout
Can be used to host live
Can be time-consuming
events
Encourages focus

E-mail Saves sender time Requires more care to create

Allows detail accurate message and convey
correct tone
Includes multiple parties easily
Does not necessarily provide
Documents communication
desired feedback
Can be missed or perceived as
nuisance

Short Saves time for both parties Limits content that can be
messaging (for communicated
Can be broadcast to announce
example,
information (for example, Can be missed or perceived as
texting, chat)
promotional, emergency) intrusive

Social media Can be broadcast to large May not reach all audiences
audiences Requires review since the
Reaches certain audiences message will be widely viewed
efficiently and can elicit
immediate feedback (for
example, quick surveys)

Written report Allows full presentation of topic Takes time and care to create
Can reach a large audience May need to conform to
and encourage thoughtful organizational expectations
responses (templates)
Provides documentation of Takes time to get a response
communication
 Medium Advantages Challenges

Oral Can allow immediate questions Requires skill and time to

presentation and feedback and adjustment practice
of message Requires time and expense to
Can incorporate visuals, video, create support materials
handouts

Town hall Promotes leadership visibility Can be complex to plan and

meeting and accessibility organize
Encourages and improves Requires comfort in public
engagement situations to participate
Promotes collaborative
teamwork
Can reinforce culture and
values

How will audience feedback be managed? Communication to

large groups may require using e-mails or video messages, but
even in these situations, communicators should incorporate
some feedback channel for the audience.

What organizational rules will shape the communication?

Most organizations have rules regarding communications, some
written but often unwritten. For example, most organizations
have policies regarding communication with external audiences.
These communications may have to be reviewed by an internal
communications office. In some organizations, certain types of
information are always communicated in writing, although the
level of formality—reports or e-mails—will vary. In some
 organizations, group presentations always include slides and
those slides must use a standard template.

What is the appropriate tone of the communication? Should

the communication be formal or informal? While this might be
affected by organizational culture and norms, it is important to
recognize the appropriate tone for a communication. Any
communication of official information should be conveyed
formally. For example, a notice of dismissal should always be
delivered formally (such as a meeting or phone call). On the
other hand, an invitation to lunch could be informal (which could
include text messaging, social media posts or events, and
informal conversations in the break room). Selecting the
appropriate level of formality can enhance the message content,
while selecting the wrong tone can obscure how important a
message might be.

Becoming a More Impactful

Communicator
Communicators are perceived as impactful for a variety of reasons.
Some factors may be difficult to create or control, such as status in
the organization or physical attributes. But the most potent ways to
have impact are available to all determined communicators:
projecting credibility and creating an effective presence or physical
image.

A communicator’s credibility clears away much of the initial static or

“noise” in the communication process. The audience is more willing
to listen and to believe. Perceived credibility involves building a
reputation for expertise, reliability, and integrity.

Engaging with an audience requires supporting your message and

your credibility with a physical presence that is appropriate and
engaging. Impactful communicators use their words, their bodies,
and their voices as an element of the message. This includes:

Posture and movement—maintaining an erect but relaxed

posture, moving slowly, following and mirroring the posture of
audience members if appropriate.

Gesture—using hand movements to emphasize key points but

not overusing gestures or using them at the wrong time.

Eye contact—establishing soft (not piercing) contact with the

eyes of audience members, shifting gaze slowly to include all
members of the audience (not picking one spot or person to
engage, not letting the gaze dart nervously about the room).
 Vocal qualities—speaking clearly, loudly enough to be heard,
and at a reasonable speed. Varying speed and volume in a way
that supports the message can avoid creating tedium.

The major enemies to presence are falseness and nervousness.

Falseness can derive from assuming a manner and personality that

are so distant from your own that they interfere with your ability to
connect directly with the audience. It can also derive from dishonesty
—lying about facts or avoiding answering questions.

Nervousness in itself is not problematic. Most people are nervous in

speaking situations, and most audiences forgive that. A prolonged
state of nervousness tends to be contagious, however. The audience
becomes uncomfortable and perhaps skeptical. It’s a good practice
to identify what you do when you feel nervous and to develop
strategies for blocking these habits. If your speech tends to speed up
when you’re nervous, practice conscious breathing and build pauses
into your delivery. Practice speaking in informal situations without
using interjections such as “um” or introducing comments with self-
deprecating remarks (“I may be wrong here, but…”). If you move
your hands nervously, fold them together or place them on a table
top.
When looking at physical and vocal cues in communication, it is
important to take neurodiversity into consideration. For example,
individuals on the autism spectrum or those diagnosed with dyslexia,
ADHD (attention-deficit/hyperactivity disorder), dyspraxia, or social
anxiety disorders may not exhibit the same social cues as other
people. If such cues indicate that there may be a miscommunication
present, it is important to recognize when appropriate
accommodations might be needed and to verify that messages are
being sent and received accurately. This may also be true for
individuals from different cultures, who may have different norms
with regard to cues such as personal space and eye contact or
gestures. Adopting a flexible approach to communications is a sound
strategy, which may mean allowing some leeway in method and
medium. It is also important to provide employees who have different
perspectives with the opportunity to learn and use social skills and
practices common in the organization. Providing these
accommodations isn’t always easy, but incorporating this flexible
approach into the culture of HR and the organization can help
nurture talent and generate benefits for the organization.

Evaluating the Effectiveness of

Communication
Communication should not be a formulaic activity, performed only
because it is expected or because it attracts attention. The point of
communication is to initiate or support action. If the outcome does
not advance the objective, the communication has failed.

Significant communication events should be evaluated as soon as

possible to identify strategies that worked and things that could be
improved:
Was the audience analysis complete and on target?
Did the audience react as anticipated?
What points did they seem most or least interested in?
Where did they get confused?
Where were they most engaged? What engagement tactics
worked and which didn’t?
How could feedback mechanisms be improved?

Signs of effective communication within your HR team and within the

organization could include:
High levels of engagement reported in employee surveys.
High levels of retention.
Positive comments on the organization’s social media channels.
Effectiveness of teams in meeting their commitments and
department budgets and schedules.
High levels of collaboration.
 Workplace Communications

Proficiency indicators related to this section include:

Solicits regular feedback from employees and leaders, and
adjusts as necessary.
Uses appropriate business terms and vocabulary.
Voices support for HR and organizational initiatives in
communications with stakeholders.
Demonstrates fluency in the business language of senior
leaders.
Establishes processes to gather feedback from the entire
organization about the HR function.
Implements policies and initiatives that create channels for open
communication throughout the organization, across and within
levels of responsibility.

Key concepts related to this section include:

Communication techniques for specialized situations (examples
include giving feedback; facilitating focus groups; facilitating
staff meetings; using skits or storytelling; creating
communication plans; translating technical jargon; facilitating
communication from an anonymous source; informal
communication).
Workplace Communications
The techniques of impactful communication can be applied to many
situations in HR. The SHRM Body of Applied Skills and Knowledge
mentions five specific situations: giving and receiving feedback,
facilitating group discussions, leading staff meetings, creating
communication plans, and translating technical jargon.

Competency Connection
The way in which an organization handles an ethical dilemma affects
customers and shareholders, but it also affects employees. An
employer’s ethical reputation is an important part of the employer
brand for younger employees. The following case shows how
maintaining an ethical compass and using communication skills help
a company maintain its relationship with its employees.

A well-known organic juice company has spent the last 25 years

building a reputation of reliability and high quality. Over the past two
months, a number of complaints of food poisoning have come into
the organization, including some complaints where individuals have
been hospitalized. The media has shared this information and is
pressuring the company to recall the products, which would be
costly. If this is not handled correctly, the company could face loss of
customers and damage to its external reputation and its internal
reputation with employees. Employees are concerned over job loss
and are not sure if they should start to look for other employment.

The president of the company, the HR director, the public relations

director, and the production director meet to decide how to manage
this situation. The company has to decide if they want to take a
proactive or reactive approach with external customers and internal
stakeholders (employees). The company chooses a proactive
approach and announces a plan to recall the products.

The HR director takes a lead role. Working in partnership with the

public relations director, the HR director drafts employee
communications that include:
Announcing the recall to employees.
Ensuring that the entire leadership team is fully aware and
knowledgeable about all issues and the time frame to address
them.
Addressing what this means from an employee perspective;
trying to predict possible questions and having answers readily
available.
Communicating what is known (recalling the product) and what
is not known (the length of time it will take to review the source
 of potential contamination, the impact to continued
employment).
Addressing the worst-case scenario.
Holding a “town hall” meeting where the president presents the
information and at which employees can ask questions and get
answers.
Providing ongoing daily briefings to share additional pieces of
information as they become available.
Communicating employee assistance program contact
information for employees who may have difficulty in processing
the information.
Communicating what support (financial or other) will be made
available to employees who might be impacted by a layoff,
downsizing, or retrenching, either on a permanent or temporary
basis.

The HR director demonstrates the ability to ensure that the

appropriate forms of communication are used to share important
messages, balancing organizational and employee needs (the
Communication competency). This also demonstrates the influence
the HR director has on upholding organizational values and
demonstrating integrity in business practices (the Ethical Practice
competency).
Feedback in Communication
Feedback is one way to address the “noise” that can occur at
different points in the communication model and that prevent
communication from achieving its purpose. Feedback is part of a
communication loop that helps message receivers confirm their
understanding of the message. It helps align perceptions and reality.

Giving Feedback

Whether feedback is intended for superiors, subordinates, or peers,

it is important that it is timely and specific. The person giving the
feedback should also be careful to prepare—to be clear on the
session’s purpose, to have examples, to apply emotional intelligence
to the situation.

As time passes, the memory on both sides fades, which makes

meeting the criterion of specificity more difficult. It also risks losing
the opportunity for changing potentially negative actions. For
example, a supervisor may be handling disciplinary situations poorly.
While managers withhold feedback, negative risks are unmanaged:
good employees may quit or cease to be productive, lawsuits or
grievances with unions may be filed. Positive outcomes—the
improvement to performance—are not attained.
 Key Content

Effective feedback includes specific examples of

actions that have been observed—statements that
have been made, reports that were late or incomplete,
nonverbals that send contradictory messages, and so
on. Generalizations are ineffective: “You always
interrupt people.” Statements that emphasize that the
feedback is based on your perceptions tends to be
more effective: “I noticed today that you talked over
certain people in our team meeting, and they sounded
frustrated by this.”

Providing Corrective Feedback

Providing corrective feedback is a tricky emotional situation. Even

when another person has asked for feedback, he or she is often
hoping for positive feedback or confirmation. One study found that
when given negative feedback, employees often disregard it and
begin shopping the workplace for sources of positive feedback. This
is more likely to occur when the employer-employee relationship is
weak. The employee’s ability to accept negative feedback must be
seen within the context of the employee’s entire relationship with the
workplace. If employees feel valued, they are more accepting of
negative feedback.

Similarly, if the feedback is framed appropriately, the employee can

see how incorporating corrective feedback can benefit not only
themselves but also the organization. To that end, HR professionals
can employ certain storytelling methods and approaches to paint a
picture for the recipient to locate the feedback in a wider context and
also reinforce the employee’s value to the organization. Drawing on
personal stories and examples can also help increase trust, as it
reminds the recipient that they are not the only or first person to
receive corrective feedback.

Bookending negative feedback between positive remarks does not

improve acceptance. What can help in the delivery of negative
feedback is incorporating into the discussion an opportunity for the
employee (or the person receiving the criticism) to express his or her
own goals or hoped-for results. Then it is possible to state additional
goals and present the negative feedback as “things that are
happening that will prevent us from reaching these goals.” This helps
the receiver of the feedback to understand the premises or criteria
that underlie the criticism. For example, a colleague may ask for
feedback on a presentation. After reviewing the outline and visuals,
you ask the colleague what he or she wants to happen as a result of
the presentation. You can then focus on what the presentation has to
do to accomplish that result and ways the message and delivery can
be changed to increase the chances of success.

Seeking and Receiving Feedback

Seeking feedback is an important way to improve personal

performance and the performance of a team or the entire HR unit. It
can help identify gaps between expectations and performance. It can
correct “blind spots”—misperceptions in how we view others and
how we think we are viewed by others.

Some recommendations for receiving feedback include the following:

Decide what kind of feedback you need and then find the person
most equipped to provide it. The highest-ranking member of
your unit may not be the best coach. Focus on a few specific
issues.

As with giving feedback, the feedback discussion should closely

follow the activity to be discussed. This supports specificity.

Listen actively in the moment, and ask questions to make sure

you understand. Don’t be defensive. After the discussion, reflect
on what has been said.
 Offer thanks. In some cases, you may not accept the feedback.
For example, HR may request feedback from a function it
serves, and the feedback is negative, based on a
misunderstanding of the terms of the service. It is appropriate to
correct the misunderstanding but still acknowledge the
comments and thank the respondent for the feedback.

Follow up with the person giving the feedback about your

experiences in applying ideas and advice.

Group Discussions, Staff Meetings,

and Communication Plans

Facilitating Group Discussions

The purpose of communication in a group discussion is to elicit

information. The facilitator must therefore encourage full discussion
of the topic and participation by the entire group.

Effective facilitators are excellent listeners. They can interpret and

confirm what the group is saying and use this content to drive the
conversation further—for example, through follow-up questions such
as “A number of you have cited this factor. Why do you think this
occurs so often?”
Facilitators must also be good observers of nonverbal messages and
of group dynamics. They can promote better discussion by using a
non-threatening manner to draw in those not participating in
discussion—for example, “Jack, have you seen this issue in your
department?” They can control domineering participants by steering
the conversation to new topics or participants.

Leading More Effective Staff Meetings

Communication in a recurring staff meeting often focuses on

conveying new information, receiving updates, and coordinating
activities. While these are essential communication activities, regular
meetings can become time wasters that are resented by the staff.

Exhibit 23 lists some tips for leading more effective staff meetings.

Exhibit 23: Recommendations for Leading Effective Staff Meetings

Leading More Effective Staff Meetings

Have a valuable purpose for a meeting and ensure that

everyone understands this purpose.

Set a clear agenda with defined items. Circulate the agenda

before the meeting and specify what individuals may need to
prepare.
 Limit meeting time to what is needed to address agenda items.

Start on time. Come early to allow social exchanges that

strengthen relationships, but start covering the agenda at the
published time.

For regularly scheduled meetings, consider ways to “change

things up”—having a guest speaker, a special activity, or a
different location.

Recognize the importance of storytelling to encourage

engagement and focus; employ different storytelling tools and
methods to keep things fresh (for example, skits).

Take time to resolve conflicts, but postpone discussion of

conflicts that may be difficult to resolve until after the meeting.

Review any decisions and next steps at the meeting’s end.

Make sure individuals know their assignments.

Send an e-mail summary if needed for more complex agendas.

Periodically, have a “meeting on meetings” to discuss whether

the current approach is achieving the team’s goals.

Creating Communication Plans

A communication plan can formalize and facilitate the ways in which

communication will be conducted in an organization, department, or
project team. Creating and disseminating such a plan can ensure
that employees and others understand the appropriate and expected
methods and manner of communication in the organization—and,
where relevant, outside of the organization.

There is no one-size-fits-all approach to constructing a

communication plan, and HR might find it necessary to have multiple
plans, each relevant to a different audience. A clear communication
plan should include the following:

Identify purpose. What is it that you’re trying to communicate?

What are your goals?

Identify stakeholders. Who is the audience of your

communication? What are the communication requirements
(method, time, frequency, etc.) of each stakeholder? Are there
different requirements for internal and external audience
members?

Identify communications methods/channels. How are you

going to communicate your message? What methods and which
tools will you use? Will a mixture of formal and informal
communications be used? If the necessary resources are not
available, plan for how you will acquire them or alternatives that
might be available.
Translating Technical Jargon
It’s not uncommon for organizations to develop their own in-house
language and terminology. Employees are likely to pick up jargon
and shorthand used throughout the organization through exposure.
However, not all employees in an organization will have the same
familiarity with technical language and terminology. Therefore, one of
HR’s responsibilities when planning and managing communication is
to ensure that jargon is appropriately translated for relevant
audiences. This process can take place at various stages,
depending on the specific jargon. Sometimes it is more efficient to
explain an unusual or rarely used term as it arises, or one could
preempt any confusion by offering a definition prior to a meeting.

For example, given their proficiency with the technology, a coder

might explain a new software feature in highly technical terms.
However, a publicist might not be as knowledgeable of the specific
terminology. Certain legal concepts or terms might not be familiar to
some people and are therefore often accompanied by a “translation.”
When crafting a message or communication plan, you should be
careful to ensure that all of the content is accessible to the whole
audience—while simultaneously ensuring that you do not talk down
to the recipient.
In addition to facilitating better understanding of the organization’s
work, translating technical jargon can improve feedback (it’s easier
to comment on something you understand), facilitate group
discussions (it’s easier to participate if you understand the topic
under discussion), and improve staff meetings (confusion can be
avoided and time saved as a result).

Anonymous Communications
It is possible that an HR professional will have to plan for anonymous
communications. Anonymous communications can take many forms
—for example, anonymous complaints, online and employee
reviews, or employee and customer surveys—and organizations
should manage and maintain proper structures and policies for
receiving and addressing such communications.

Employees’ ability to provide anonymous feedback is an important

tool for breaking down silos, highlighting issues, protecting the
workforce, and ensuring that valuable and honest feedback is
voiced, received, and acted upon. While it is true that these
mechanisms can be abused or used to vent individuals’ frustrations,
they can also surface valuable insights from across an organization.
For example, if a pet project of an influential senior manager is being
mismanaged, a team member might not feel comfortable openly
providing criticism of it. Similarly, if a member of the organization is
behaving criminally, then an anonymous tip can bring this to the
attention of appropriate organizational members while protecting the
whistle blower.

Not all anonymous communications are negative, of course.

Sometimes, an employee might turn to an anonymous
communication tool in order to offer suggestions for improvements,
perhaps because they do not feel it is their place to do so or for fear
of stepping out of their lane. Research has found that providing
employees with an anonymous platform for communicating their
opinions, concerns, and suggestions freely can increase retention,
encourage engagement, and improve performance.

It might also be worth examining why there is a need for anonymous

communications and feedback. Sometimes this need actually
underscores the fact that employees don’t feel safe speaking openly
(for fear of reprisals) or that there’s no point in doing so (because
nothing will come of it). If this is the case, then a wider examination
of the organization’s culture and levels of trust should be conducted
to establish why this impression exists and what can be done to
address it. The result can be improved employee satisfaction and
valuable feedback.
Global Mindset
Competency
Global Mindset Competency
The Global Mindset Behavioral Competency is an essential part of
the HR practitioner’s responsibility when working among a diverse
employee population and in operations spanning geographic
boundaries. This competency requires a mindset that is built on
awareness of global differences and similarities and on a
commitment to a more global perspective on organizational behavior.

Acquiring a global mindset begins with understanding the concept of

culture and the ways in which people from different cultures process
their experiences. This includes expressed and apparent
preferences and less obvious, innate tendencies. It includes food
and clothing choices and legal institutions.

HR professionals develop their own global mindset—an ability to

see, understand, and accept differences—and use HR processes to
promote awareness of cultural diversity and support understanding
and collaboration across cultures.
 Developing a Global Perspective

Proficiency indicators related to this section include:

Applies knowledge of global trends when implementing or
maintaining HR programs, practices and policies.
Demonstrates an understanding, from a global perspective, of
the organization’s line of business.
Designs, recommends, implements and/or audits HR programs,
practices and policies intended to promote diversity and
inclusion.
Ensures that HR programs, practices and policies are applied
consistently and respectfully to all staff.
Operates with a global mindset while remaining sensitive to
local issues and needs.
Promotes the benefits of a diverse and inclusive workforce.
Supports an organizational culture that values diversity and
promotes inclusion.
Uses the organization’s policies and philosophy toward diversity
and inclusion to inform business decisions and implementation
of HR programs, practices and policies.
Creates an HR strategy that incorporates the organization’s
global competencies and perspectives on organizational
 success.
Demonstrates an understanding of and advocates for the
strategic connection between diversity and inclusion practices
and organizational success.
Develops HR initiatives that will be applied consistently and
fairly to all staff.
Develops HR initiatives, programs and policies that support the
organization’s efforts to be more diverse and inclusive.
Drives a culture that values diversity and inclusion.
Drives an HR strategy that leverages and celebrates diversity,
inclusion and cultural differences for organizational success
Uses expert knowledge about global HR trends, economic
conditions, labor markets and legal environments to evaluate
the impact of diversity and inclusion on the organization’s HR
strategy.
Uses expert knowledge about global HR trends, economic
conditions, labor markets and legal environments to set HR's
strategic direction and to inform development and
implementation of HR initiatives.

Key concepts related to this section include:

Best practices for creating and managing globally diverse
workforces (examples include translating policies and
procedures into local languages; accounting for multiple time
zones when scheduling meetings).
Developing a Global Perspective
A global perspective is necessary for today’s HR professionals, who
may work for businesses with operations, employees, customers,
and supply chain partners around the world. A global perspective
values difference and seeks understanding.

Competency Connection
To support organizational strategy, HR practitioners must strive to
broaden their understanding of culture—even when their
organizations appear to be only national in business scope. To take
advantage of opportunities that arise, organizations may need to
work effectively across borders and cultures. HR practitioners
competent in the Global Mindset Behavioral Competency can help
plan how to bridge these divides, as seen in the following example.

Two technology industry firms, one Japanese and one American, are
entering into a first-time joint venture (JV). The American firm wants
to learn and import a new wireless technology that they hope to
incorporate into an upcoming new range of mobile devices, and the
Japanese firm wants to develop additional markets for its wireless
(and other) technologies.
Although based in the U.S, the JV executive team and senior
management are largely Japanese nationals. Thus the JV involves
two very different workplace cultures: a Japanese white-collar
salaried employee culture and an American entrepreneurial frontier
mindset. The challenge for the head of HR is to ensure that the
transfer of knowledge is not inhibited by these cultural
differences. She knows that developing cultural understanding and
sensitivity in a relatively short time is extremely difficult. Her solution
is an intensive cultural immersion program for the respective JV
project leads, with a personal dimension added: living with a host
family.

Before the JV becomes operational, a JV lead from each company is

sent to his or her counterpart’s home office to live with that lead’s
family for a three-month workplace immersion. Accordingly, JV leads
are selected as one would select candidates for a long-term
international assignment. As part of the program, each lead also
develops, with HR, a one-day cultural awareness workshop to be
used to induct all new JV staff. Lastly, a second lead from each
partner organization will participate in a follow-up six-week intensive
cultural immersion once the first two JV leads return. This reduces
the risk for both organizations of becoming overly dependent upon
any one key person and creates a pipeline of succession.
Benefits of a Global Mindset
A global mindset is the ability to take an international,
multidimensional perspective that is inclusive of other cultures,
perspectives, and views.

Having a global mindset requires being able to see the world from a
perspective inside another person’s culture and using that
awareness to create solutions and bridges. It also requires self-
awareness—understanding one’s own culture and recognizing that it
is just one among many. In the Global HR Practitioner Handbook,
Lisbeth Claus refers to this as the ability to simultaneously follow
both the golden rule (treat others as you yourself would like to be
treated) and the “global rule” (treat those from other cultures as they
would like to be treated).

Key Content

Brad Boyson notes in the Global HR Practitioner

Handbook that HR practitioners who have developed a
global mindset “will actually begin to perceive the
general patterns of commonality first and foremost”
and will “no longer discriminate based upon
citizenship, even if the jurisdiction in which they work
 does.” That is, cultural differences are not ignored—
that would deny the value these differences can bring
to an organization. Rather, cultural differences are
understood and appreciated to a point where
underlying similarities are revealed. This is when real
collaboration can happen.

A global mindset prepares the HR practitioner to complete necessary

due diligence, ask the right questions, and prepare and support the
organization and its employees. Specifically, the presence of a global
mindset brings a number of key operational benefits to the
organization, including:
More effective communication and coordination across the
organization between global divisions and partners.
More efficient and quicker best-practices sharing across the
global organization, including with international partners.
More effective cross-cultural trust building and collaboration
through compliance programs and diversity and sensitivity
policies and practices.
More likely to identify international opportunities in order to take
advantage of the benefits associated with being first to market.
More sophisticated understanding of local and global standards
and preferences, which can lead to faster global rollout of new
 product/service concepts and technologies.

Acquiring a Global Mindset

A global mindset is not quickly acquired. It is the product of
continued understanding, experience, reflection, and evaluation of
existing attitudes and views. It requires in-person, day-to-day
interactions with multiple cultures, experiencing firsthand their real
differences and similarities. Employees will move toward a more
open perspective at their own pace.

That being said, there are ways to prepare for such experiences and
ways in which a company can help its employees develop a global
mindset. Companies can hire people who already possess a global
mindset or put a program in place to assist in developing a global
mindset among existing employees.

To develop a global mindset, or to really achieve any change in

behavior, three elements must be in place:
Appropriate knowledge, skills, and understanding
Desire and motivation on the part of the employee to change
Support from systems and management

Once these requirements are in place, employees can increase their

global business knowledge and enhance development of a global
mindset in different ways.

Exhibit 24 lists steps to take to develop and promote a more global

mindset.

Exhibit 24: Checklist for Developing and Promoting a Global Mindset

Developing and Promoting a Global Mindset

Study and Take courses in world history, culture, economics, politics, or

understand your international affairs.
own culture and
Become aware of stereotypes that people have about your
how it relates to
culture and that you have about theirs.
others.
Join an international organization or a global professional
organization (for example, The Conference Board).
Create opportunities to personally interact with those from other
cultures (for example, host an exchange student).

Study and Read books and periodicals on global business for a larger
understand picture of business models.
global business
Stay current with international business and world events.
trends and
forces. Learn about global legal and social frameworks impacting
business and industry practices.
Create opportunities to personally interact with global customers,
colleagues, and collaborators.

Promote a global Recruit staff with cross-cultural and language skills.

mindset within
Provide opportunities for cross-cultural learning and language
your
building.
organization.
Promote cross-border mentoring
Emphasize long-term relationship building as well as short-term
task accomplishment.

The 4 Ts: Travel, Teams, Training, Transfers

HR has four powerful tools at its disposal that can be valuable
strategies for creating a global mindset and enhancing the
multicultural awareness of leaders and senior managers: the 4 Ts
(travel, teams, training, and transfers).

J. Stewart Black, Allen Morrison, and Hal Gregersen conducted a

survey (described in Global Explorers: The Next Generation of
Leaders) to define the characteristics of global leaders and identify
key factors in acquiring a global perspective. Their research revealed
the importance of the 4 Ts, as described in Exhibit 25.

Exhibit 25: The 4 Ts

4 Ts Characteristics

Travel
Can help managers and employees gain experience
Can help expand awareness and appreciation of different places and
cultures
Can increase managers’ and employees’ visibility within organization
Can result in culture shock
Can be time-consuming

Teams
Can be a highly effective way to help employees develop cross-cultural
management skills when they work on culturally diverse and/or
international teams
 4 Ts Characteristics

Training
Can broaden employees’ global and cultural awareness
Can challenge ethnocentric definitions and cultural norms
Can present challenges: must be relevant, must focus on cultural
congruence and differentiation, must take into consideration participants’
diversity profiles

Transfers
Can have a strong and lasting impact on individuals’ relationship
development and cross-cultural management skills
Can help develop new, transferable skills and competencies through
cultural immersion

HR in a Global Organization
Faced with different workforces, different legal systems, and different
societies, global HR must define the role of human capital
throughout the organization—what it can contribute and what the
business requires. That involves strategic, tactical, and practical
tasks.

From a strategic perspective, HR must be able to balance the

priorities of headquarters and subsidiaries. They must understand
and appreciate their disparate businesses and identify critical
success factors related to talent, which will vary considerably from
Malaysian plant workers to European hospitality employees to highly
trained scientists in a competitive talent environment. How should
they distribute their resources?

From a tactical perspective, the group must develop programs that

can deliver measurable success and work in different cultural and
sociopolitical contexts. Because of the globalization of trade and the
cross-border mobility of workforces, HR professionals are
increasingly involved in issues like visas, different taxation and
pension schemes, workforce quotas, and workforce relations laws
and practices. Some are focused on developing a talent pool of
employees who can be sent on short- and long-term global
assignments. Some are struggling with hiring local employees with
the right qualifications in tight employment markets. Others find that
they are spending a significant amount of time dealing with cultural
issues—for example, blending the organizational culture of the
Malaysian multinational with its new foreign acquisition or trying to
help local managers who are faced with a suddenly diverse
workforce due to an influx of third-country nationals.

From a practical perspective, HR must consider certain day-to-day

aspects of managing a workforce across borders and continents. For
example, certain policies and procedures will have to be translated
into local languages. This will require hiring translators proficient in
technical and business terminology. Translation, production, and
dissemination of documents will need to be included in schedules
and budgets. Another consideration is scheduling. Multiple time
zones will have to be considered when planning and scheduling
meetings and deadlines. Not doing this can leave remote team
members feeling marginalized, out of the loop, or even disrespected.

Skills and Characteristics

These strategic, tactical, and practical tasks require a truly global HR

professional to possess the unique skill set described in Exhibit 26.

Exhibit 26: Skills Needed for Global HR

Key Global HR Skills Description

Develop a strategic view Understand how the entire organization creates value,
of the organization. participate in organizational strategy development, and
develop an HR global strategy.
Determine ways to benefit from globalization.
Understand the external context in which the firm operates.
Constantly scan the environment to identify global and local
trends and identify new skills and tools that the organization
will require.
Identify and take steps to mitigate or manage potential risks.

Develop a global Provide training that improves cultural awareness and

organizational culture. adaptability.
Develop processes to promote communication and the
capturing and sharing of knowledge and experiences.
 Key Global HR Skills Description

Secure and grow a safe Ensure a supply of leaders who are globally competent.
and robust talent supply
Monitor the workforce potential in developing countries.
chain.
Select employees who can best assist in meeting the
organization’s goals.
Be aware of demographic trends that affect talent supply.
Develop a strong employer brand.

Use and adapt HR Use technology to increase the efficiency of HR programs

technology. and integration with the organization’s information systems.
Move HR technology from domestic to global operations,
keeping in mind different input requirements, attitudes toward
and regulation of employee data and privacy, differing
technology platforms, and cultural issues.
Develop meaningful Take a systematic and disciplined approach to measuring
metrics. and operationalizing strategic goals.
Align human capital to achieve strategic goals.
Demonstrate the value HR brings to the global enterprise.
 Key Global HR Skills Description

Develop policies and Provide for the health, safety, and security of employees.
practices to manage
Protect the physical assets of the organization.
risks.
Protect the intellectual property of the company, such as
copyrighted material or patented devices or processes.
Protect intangible assets such as:
Relationships with internal and external stakeholders
(including employees, customers, communities,
governments, institutions).
Reputation of the company.

Audit the organization’s policies and practices to make sure

that they are compliant and effective and are being enforced.
Monitor breaches of compliance:

Financial (violations of law related to corporate

governance)
Ethical (environmental or consumer safety regulations)
Employment-related (discrimination laws, requirements
to inform workforces)

An organization’s mindset indicates how its employees think about

the world and how this view affects their actions. HR professionals
who have a global mindset and who can therefore successfully
navigate a global organization will exhibit the following
characteristics identified by Stephen Rhinesmith:

They drive for the bigger, broader picture. They look for
context and strive to understand the full set of issues. They scan
the horizon to learn more about markets, products,
technologies, and competitors. Leaders have broader business
skills and knowledge of global structures, strategies, and trends.

They accept contradictions. Global managers know how

complex life is. They accept uncertainty and understand how to
use conflict management as opposed to one-sided resolution
through imposition or acceptance. They are not frustrated by
having to localize practices.

They trust the process to solve problems. They look to

process rather than organizational structure to solve problems.
Process includes the systems, procedures, and norms of the
organization that enable people to respond quickly.

They value multicultural teamwork. Teamwork and

interdependence are fundamental tenets of the global mindset.
People with such a mindset are sensitive to cultural contexts
and differences. They are good communicators.

They view change as opportunity. Global minds are

comfortable with change, unpredictability, and ambiguity. They
are confident that they can create order out of seeming chaos.

They are open to new ideas and continual learning. They are
always looking to improve themselves, others, and the
company. They are accepting of others’ views and are open to
new ideas and approaches.

They are inclusive, not exclusive. Excluding people, ideas,

cultures, and viewpoints is contradictory to the world view of the
global mindset.
 Culture

Proficiency indicators related to this section include:

Adapts behavior to navigate different cultural conditions,
situations and people.
Demonstrates a general awareness and understanding of and
respect for cultural differences.
Demonstrates acceptance of colleagues from different cultures.
Manages contradictory or paradoxical practices, policies and
cultural norms to ensure harmony.
Promotes inclusion in daily interactions with others.
Tailors HR initiatives to local needs by applying an
understanding of cultural differences.
Develops HR initiatives that will be applied consistently and
fairly to all staff.
Ensures that learning and development programs or other
interventions about diversity and cultural sensitivity are provided
to employees at all levels of the organization.
Evaluates the organization’s current cultural climate and
identifies areas for improvement.

Key concepts related to this section include:

Cultural norms, values and dimensions (examples include
models from Hall, Hofstede, Schein and Trompenaars).
Techniques for bridging and leveraging individual differences
and perceptions (examples include employee resource groups;
reverse mentorship; sensitivity training; focus groups).
Culture
Culture is a complex set of shared behaviors that distinguish groups.
Approaching culture as an anthropologist—understanding
fundamental differences and universal constants—can help resolve
dilemmas and achieve cultural synergy.

Competency Connection
Developing a global perspective requires an open mind and a
willingness to suspend judgments, ask questions, and listen to
answers. In the following scenario, an HR professional used the
Global Mindset competency—as well as the Ethical Practice and
Communication competencies—to help his organization develop a
global mindset.

Because an HR business partner (HRBP) was bilingual, he was

asked to support a supervisor by interpreting for a Spanish-speaking
employee who was being given a verbal warning by his boss. The
supervisor was frustrated with the employee because of some
performance issues but also because of the employee’s difficulties
speaking English.

To understand if the manager was justified in raising the language

issue in the verbal warning, the HRBP asked some more questions:
 Had the employee’s English language skills deteriorated since
he was hired? The supervisor said that the employee’s
proficiency had not changed.
Was speaking English a job requirement at the time of hiring?
No, it was not.
Was the new employee told that he was expected to improve his
English language skills within a given period of time? No, he
was not.
Were the language difficulties directly related to the performance
issues? No, the performance issue was that he was falling
asleep at his desk and not responding to e-mails. The
supervisor thought the e-mail issue was probably related to the
language issue.

The HRBP explained to the supervisor that it was unfair to punish

the employee for not having a skill now that he wasn’t required to
have when he was hired. The verbal warning could be related only to
actual gaps with expected performance (for example, falling asleep
at his desk and not responding to e-mails). It was also better to ask
the employee why he was not responding to e-mails rather than
assuming it was a language issue. If the employee did say that his
lack of English fluency was preventing him from responding to e-
mails, then HR would either use its outplacement program to help
him find a job elsewhere or allow the employee time and money to
take some English classes.

After speaking to the employee, the HRBP discovered that the cause
for the performance issues was not language. It was the employee’s
unfamiliarity with working in an office environment. That was a
different issue, one that could probably be addressed through
coaching or mentoring.

Defining Culture
A global mindset can accept and appreciate different cultures. But
what, exactly, do we mean by “culture”? Understanding what culture
is can help us move past a belief that one specific culture defines a
norm. There is no universal or best culture; there are only different
cultures.

Culture is a set of beliefs, attitudes, values, and perspectives on

how the world works. Culture is invisible and can be handed down
from one generation to the next.

Cultural models describe groups who share a specific set of beliefs,

attitudes, values, and perspectives. The term “group” can refer to
nations or geographical regions, but it can also refer to organizations
or disciplines or industries, or even smaller divisions of these groups.
A cultural model is like a distinctive genetic code—invisible but
present and exerting a strong influence on what we see.

How and when does culture become tangible—something we can

see and talk about? Culture becomes more observable when we
look at cultural settings. A cultural setting is created whenever two or
more people get together to perform some task. Settings occur at
work, home, school, a house of worship, or a place for recreation. As
people interact within the cultural setting, they exhibit behaviors that
are the result of their culture.

To further complicate the challenge of culture, Geert Hofstede, a

pioneer in intercultural business communication, notes that culture is
only part of an individual’s makeup. It shares space with and can be
affected by:
The individual’s personality, which is a product of inheritance
and experience.
Human nature, which is universal—such as feelings of joy or
loss.

The challenge of culture is captured by Hofstede’s metaphor of

culture as the “software of the mind”—mental programs that
predispose us to patterns of thinking, feeling, and acting. If that is so,
then, like most computers, we simultaneously run multiple software
programs in order to carry out our daily tasks. And—not to stretch
the analogy too far—sometimes all that software running
simultaneously can create conflicts and overloads.

What happens when individuals from multiple cultural models

interact within a single setting, such as a workplace? We have the
potential for misunderstandings and conflict. Consider the following
example:

People from many Western cultures see the wearing of

the hijab, or headcover, by Muslim women to be a sign of
religious or sexist repression. The wearer of the hijab,
however, may see it as a sign of religious commitment or
a group identity that she is proud to share. Wearing the
hijab is not something she has to do but something she
chooses to do. In a culturally diverse workplace, as
people work side by side, these different perceptions of
the meaning of the action of wearing the head cover can
generate tension and suspicion. It may only diminish
teamwork, but the consequences can be far worse. A
valued hijab-wearing employee may be harassed by
coworkers and supervisors, denied opportunities,
disciplined, or terminated. The organization’s reputation
and its brand as an employer may suffer, and it may face
charges of noncompliance with antidiscrimination laws.

Applying an understanding of culture can help resolve these conflicts

and restore productivity and collaboration. Leaders, HR
professionals, and employees can recognize differences that are
rooted in culture and decide to move toward them in curiosity and
not away from them in fear and distrust.

Layers of Culture
The process of identifying culture and developing a strategy to
bridge cultural distances is complex, partly because each culture has
multiple layers. Beneath a culture’s explicit characteristics (such as
language, dress, or manner), which are relatively easy to appreciate,
there are implicit characteristics (such as world views and cognitive
habits), which take time and experience to discover and understand.

Some have compared the process of understanding culture to

viewing an iceberg. We see only the visible tip of the culture—its
language, food, style of dress, and architecture—or, a bit deeper
down, its lifestyle and behaviors. Hidden below are the beliefs and
values that are its foundation. Another image is culture as an onion,
with outer layers that must be peeled away to reach a culture’s core
universal truths.

The sociologist Edgar Schein sought to define culture’s multiple

layers and their interrelationship. He was studying organizational
cultures, but his model applies equally well to national, regional, or
other types of culture. It is important to recognize that the outer
layers derive from the innermost layers and can be fully understood
only in that context.

As shown in Exhibit 27, Schein defines three separate layers:

Exhibit 27: Layers of Culture

Artifacts and products. These include a culture’s obvious

features, such as its food, dress, architecture, humor, and
music. For example, Texas may elicit images of cowboy hats
and boots, barbecue, and country music, while Tuscany
conjures images of cathedrals, pasta, and wine. An organization
may be distinguished by its clothing choices (for example, suits
and ties versus hoodies and jeans) or physical design (for
example, beige cubicles or an “open office” with designated
collaborative spaces). One of the artifacts of an organizational
culture might be its climate.

Norms and values. Less immediately obvious are a culture’s

shared and stated sense of acceptable behaviors—what is right
and wrong. These may be a country’s rules and regulations or a
company’s mission statement and code of conduct.

Basic assumptions. These are the culture’s core beliefs about

how the world is and ought to be. They may be unspoken, and
members may not even be consciously aware of them. Even
cultures with similar norms and values may have significantly
different basic assumptions. Terms such as “success,”
“freedom,” or “doing good” may carry very different meanings for
each culture, and failure to perceive such differences is often at
the root of cross-cultural miscommunication and conflicts.

Key Content

Schein’s layers of culture suggest that cross-cultural

communication depends on negotiating an outer shell
of explicit cultural artifacts and products (such as
costume or food) so that one can appreciate an inner
core of conscious values (what one aspires to) and
norms (what’s usually done) and eventually reach an
 understanding of basic beliefs that unconsciously
shape the culture’s feelings, perceptions, thoughts,
and actions. One cannot assume that simply being
comfortable with the explicit culture—what is usually
taught as cross-cultural business etiquette—conveys
complete cultural understanding.

Culture vs. Climate

It is dangerous to assume that the explicit or observable aspects of

an organization are the totality of its culture. These features are
more accurately referred to as the organization’s climate. Climate is
distinct from culture. Culture is the result of shared beliefs; climate
may result from the actions of a few individuals or external forces.
For example, a handful of managers who are attentive only to their
own goals or a serious downturn in revenue or market competition
can create a poor climate even in an organization with a positive
culture.

Mistaking the climate and culture can result in organizations

undertaking entire cultural changes to correct a disorder that does
not exist. The fundamentals of the organization’s culture may be in
fine shape, but it is the climate—which is generated by the actions of
leaders and other employees—that needs improvement. HR
professionals adept at identifying the difference between culture and
climate can help establish processes and procedures to ensure that
an organization’s climate does not create obstacles to achieving
organizational goals.

Cultural Intelligence
Cultural intelligence is the capacity to recognize, interpret, and
behaviorally adapt to multicultural situations and contexts. As with
the term “global mindset,” the concept of “culture” here needs to be
extended to embrace other diversity dimensions—age, gender, race,
religion, socioeconomic background, and even intelligence and
ideology.

In International Dimensions of Organizational Behavior, Nancy J.

Adler describes three aspects of cultural intelligence:

Cognitive, including thinking, learning, and strategizing. This

involves developing a knowledge of cultural differences and
similarities and being able to use that knowledge to determine
how best to handle a cross-cultural situation.

Motivational, including effectiveness, confidence, persistence,

value congruence, and the level of attraction toward a new
culture. This quality enables one to genuinely enjoy cultural
 differences rather than feeling threatened or intimidated by
them.

Behavioral, including an individual’s range of possible actions

and responses to intercultural encounters. This quality enables
one to be flexible and adapt in multicultural contexts.

Many efforts to develop and enhance cultural intelligence tend to

focus on the cognitive aspect alone. In fact, using a comprehensive
approach that pays equal attention to all three components is more
effective.

Cultural Theories
HR professionals in global organizations or in organizations with
diverse workforces may need to develop their understandings of
specific cultures in order to navigate cultural differences. They can
turn to the work of sociologists and anthropologists who have
researched the differences between cultures in different societies.
The work of organizational and cultural theorists—such as Edward T.
Hall, Geert Hofstede, and Fons Trompenaars and Charles
Hampden-Turner—can be applied to understand the effect of
national cultures on relationships among a global organization’s
internal and external stakeholders.
Exhibit 28 summarizes key points about the theories of Hall,
Hofstede, and Trompenaars and Turner. A detailed discussion
follows the exhibit.

Exhibit 28: Summary of Three Culture Theories

Theorists Key Points

Edward T. Hall— Context level affects communication and relationships:

high- and low-
High-context culture—A statement’s meaning includes the
context cultures
verbal message and the nonverbals and social and historic
content attached to the statement.
Low-context culture—A statement’s meaning is encoded in its
words only.

Geert Hofstede— Six dimensions:

dimensions of
Power distance—Pattern of distribution of power to culture’s
culture
members.
Individualism/collectivism—Degree to which individuals
perceive themselves as members of a group.
Uncertainty avoidance—Level of tolerance of ambiguous,
new, or changed situations.
Masculine/feminine—Degree to which a culture follows
traditional gender characterizations (masculine as rigid and
competitive, feminine as nurturing and sharing).
Long-term/short-term—Long-term cultures focus on traditions
and tend to resist change; short-term cultures are more
pragmatic and see the positive potential of change.
Indulgence/restraint—Gratification of individual desires.
 Theorists Key Points

Fons Trompenaars Seven dilemmas that illustrate points of cultural tension:

and Charles
Universal/particular—Flexibility versus rules.
Hampden-Turner—
cultural dilemmas Individual/communitarian—The good that drives decisions (the
individual or society as a whole).
Neutral/affective—Expression of emotion.
Specific/diffuse—Public and private boundaries.
Achieved/ascribed—Source of merit (personal
accomplishment or connection).
Sequential/synchronic—Sense of time (linear and limited or
cyclical and expansive).
Internal/external—Individual control over one’s destiny.

Key Content

It should be noted that the models discussed here

were created at a time when it was easier to identify a
given nation within a given model; the forces of
globalization have since then caused some blurring of
lines. Increased and more rapid exposure to other
cultures through technology, travel, education, and
economic development has supported some degree of
cultural change. However, despite this, and despite
some conceptual overlap among them, the various
cultural dimension descriptions provide valuable
perspectives on cultural differences today.
Hall’s Theory of High- and Low-Context Cultures

Edward T. Hall’s concept of high- and low-context cultures is often

mentioned in global HR practice.

Hall believed that a culture’s identity as high or low context lay in the
answer to the question “How much context or unspoken background
does someone need to understand a statement or behavior?” Or,
more simply, in a low-context culture, what you say is what you
mean, while in a high-context culture, what you say is not
necessarily what you mean.

High-context cultures require a great deal of background. They are

characterized by complex, usually long-standing networks of
relationships, which are as important as work and often blur the line
between business and social lives. Since members of the culture
share a rich history of common experience, the way they interact and
interpret events is often not apparent to outsiders. There are rules—
sometimes exceedingly complex rules—but they are implicit, and the
rules are often applied flexibly. Countries with high-context cultures
include China, Japan, and France. Most Latin American countries
also have high-context cultures.

Low-context cultures package necessary background in the

communication itself. In a low-context culture, relationships tend to
have less history. Because individuals know each other less well and
don’t share a common database of experience, communication must
be very explicit. Examples of low-context countries are the United
States, the United Kingdom, and Canada.

Another way to consider the difference:

In a low-context culture, the applicable principle is: “It’s not
personal. It’s just business.”
In a high-context culture, the applicable principle is: “No
business until I get to know you personally.”

Key Content

Following are some situations in which different levels

of context create the potential for misunderstanding:
Negotiations—A high-context culture, such as
Japan, may appear to be agreeing but may not
really have fully accepted the terms.
360-degree performance reviews—A manager from
a low-context culture (for example, the U.S.) may
misunderstand comments from high-context
evaluators.
Training meetings—High-context culture members
frequently will not ask questions or challenge the
 authority of the instructor.

Hofstede’s Dimensions of Culture

Geert Hofstede’s dimensions of culture derive from his research

during the 1970s into cultural differences at IBM subsidiaries in 64
countries. They have been subsequently researched in additional
countries and in other occupations and industries. Hofstede originally
defined four dimensions, before adding an additional two later:
power distance, individualism/collectivism, uncertainty avoidance,
masculine/feminine, long-/short-term, and indulgence/restraint.

Not all dimensions may be of the same importance in all cultures.

Each offers a pair of contrasting values, but in reality each pair
provides a continuum; rarely does a given culture exist entirely at
one extreme or another.

Hofstede’s dimensions are illustrated in Exhibit 29. Representative

countries are listed, and examples of the effect of the dimensions on
the practice of global HR are described.

Exhibit 29: Hofstede’s Dimensions and Global HR

Dimension Definition HR Example

 Dimension Definition HR Example

Power distance Extent to which less- Impact on Manager

powerful members of Two headquarters’ managers
organizations and demonstrate the effects of their
institutions accept cultures. A Saudi manager
unequal distribution of remains aloof from
power subordinates, tends to retain
Example Countries significant projects rather than
delegating them, and expects
High: Malaysia, Latin
subordinates to step forward
America, Middle East,
quickly to assume blame when
China, Indonesia, India
things go wrong. A Danish
Low: Austria, Israel, colleague, however, enjoys
Scandinavian countries, sharing assignments and credit
U.K., U.S. with subordinates but always
assumes blame for any
problems.
Impact on Person Managed
A British training specialist
goes to work for a Malaysian
domestic company. He cannot
understand why his attempts to
offer suggestions are coldly
received and why he is
receiving poor performance
reviews.
 Dimension Definition HR Example

Individualism/collectivism Degree to which Impact on Manager

individuals are integrated A U.S. manager in a Latin
into groups American country plans to
Individualism: Ties promote an individual based on
are loose, self- her work on an important
reliance valued project. Other managers
explain that they use a broader
Collectivism: Strong,
range of factors in this
cohesive groups;
decision, including evidence of
protection is
loyalty.
exchanged for loyalty
to group Impact on Person Managed

Example Countries The performance of a South

Korean sales force improves
Individual: U.S., Australia,
dramatically when incentives
U.K., Netherlands, Italy,
are changed from individual
Belgium
rewards to team bonuses.
Collective: Latin America,
Pakistan, Indonesia,
South Korea, China
 Dimension Definition HR Example

Uncertainty avoidance Level of tolerance of Impact on Manager

uncertainty and A compensation specialist
ambiguity; extent to which advises a Singapore company
individuals feel to adopt a different
comfortable in compensation plan for its sales
unstructured, new, or force in Japan. Unlike the
unexpected situations home sales force, which has
Example Countries low base pay and high
commissions, the Japanese
High: Greece, Portugal,
sales representatives will
Latin America, Belgium,
receive high base pay and
Japan, France
lower commissions.
Low: Singapore,
Denmark, Sweden, U.K. Impact on Person Managed
Before beginning a project, a
French employee of a global
nonprofit asks copious
questions to ensure perfect
understanding of the
manager’s expectations.
 Dimension Definition HR Example

Masculine/feminine Masculine traits: Impact on Manager

Ambitious, tendency to A Swedish company promotes
polarize, oriented toward employee development
work and achievement practices such as coaching and
Feminine traits: Nurturing, mentoring that emphasize
empathetic, oriented providing empathy and support.
toward quality of life, A manager in Japan has
striving for consensus, trouble performing this part of
favoring small size and his job.
slow pace
Impact on Person Managed
Note: In masculine An HR department in Austria
societies, gender roles has been instructed by its
are distinct; in feminine Danish headquarters to
societies, roles may implement a new work/life
overlap. balance program. They try, but
Example Countries the program is not well
accepted or implemented
Masculine: Japan,
locally.
Hungary, Austria,
Venezuela, Italy
Feminine: Scandinavian
countries, Netherlands,
Chile, Thailand
 Dimension Definition HR Example

Long-term/short-term Long-term orientation: Impact on Manager

Uses traditional norms A Chinese manager faced with
and customs to guide promoting one of two Nigerian
action. Values thrift, supervisors chooses the one
perseverance; orders with the most tenure and best
relationships by status work attendance.
and values.
Impact on Person Managed
Short-term orientation:
Makes decisions based A Nigerian supervisor can’t
on likely results. Values understand why he’s been
pragmatism. passed over for promotion in
his Chinese-owned company.
Example Countries He is well placed in his
Long-term: China, Japan, community and has given his
South Korea, Brazil, India manager appropriate gifts.
Short-term: West Africa,
Philippines, Norway, U.K.,
U.S.
Indulgence/restraint Indulgence: Enjoyment of Impact on Manager
life and freedom in A manager from a restrained
gratifying desires culture cannot understand why
Restraint: Suppression of a younger worker who is
desires in order to meet unhappy wants to quit a well-
social norms paying job with a future.
Example Countries Impact on Person Managed
Indulgence: Most North A younger worker who always
and South American takes his owed vacation time
countries and is vocal in his enjoyment of
his time off finds it difficult to
Restraint: Russia and
get ahead in an organization
Baltic countries, Italy,
with Indian management.
India, China

Trompenaars’s and Hampden-Turner’s Cultural

Dilemmas
Fons Trompenaars and Charles Hampden-Turner based their work
on interviews with Shell managers around the world. Building on the
work of Talcott Parsons, Edward Hall, and Clyde Kluckhohn and
Frank Strodtbeck, Trompenaars and Hampden-Turner presented in
Riding the Waves of Culture seven “dilemmas” or alternatives that
illustrate the essential tensions between cultures. You will note
consistency in several of these “dilemmas” with Hofstede’s
“dimensions.”

Exhibit 30 summarizes Trompenaars’s and Hampden-Turner’s

cultural dilemmas with representative countries and HR-based
examples of cultural impacts.

Exhibit 30: Trompenaars’s and Hampden-Turner’s Dilemmas and

Global HR

Dilemma Definition HR Example

 Dilemma Definition HR Example

Universal/particular A universal culture Impact on Manager

esteems consistency, A Swiss manager insists that
clarity, and impartiality. an employee be fired for
Rules for each case absenteeism, although the
ensure fairness. employee has been caring for
A particular culture is sick parents and has been
flexible, pragmatic, and making up for absences by
comfortable with working extra hours at home.
ambiguity. It considers the
Impact on Person Managed
case and its context first
and will make exceptions; An HR manager in Venezuela
fairness is achieved by has been interpreting the U.S.
considering many factors parent company’s rules flexibly
and relationships. to accommodate local culture
but now faces a negative
Example Countries performance review by
Universal: Switzerland, headquarters senior managers.
Canada, U.S., Sweden,
U.K.
Particular: Venezuela,
Korea, Russia, China,
Portugal
 Dilemma Definition HR Example

Individual/communitarian To an individualist, a good Impact on Manager

(collectivist) society is one in which A Japanese team leader has
there is freedom and trouble creating harmony within
opportunity to advance a global design team composed
oneself. of Americans and Mexicans.
To a communitarian, a
Impact on Person Managed
good society is achieved
when we all take care of An Indian employee assigned
each other, even if this to a Canadian office is
means loss of personal perplexed by the competition
freedom or opportunity. among project teams that the
office’s managers try to create.
Example Countries
Individual: Israel,
Canada, U.S., Denmark
Communitarian: Egypt,
Mexico, India, Japan,
France
Neutral/affective A neutral society Impact on Manager
disapproves of public A Spanish manager of a
expressions of emotion. Japanese electronics
In affective cultures, subsidiary is corrected gently
individuals express by visiting Japanese managers
emotions freely. for expressing anger at a
violation of clean-room rules.
Example Countries
Neutral: Ethiopia, Japan, Impact on Person Managed
China, India A Russian international
assignee working for an
Affective: Kuwait, Egypt,
Ethiopian real estate firm is
Spain, Russia, Argentina
convinced her manager doesn’t
like her. Her manager never
seems open or relaxed when
meeting with her.
 Dilemma Definition HR Example

Specific/diffuse People in specific Impact on Manager

cultures have open public A manager of a Venezuelan
lives but a strong energy company is cool to a
boundary between public young employee’s requests for
and private lives. mentorship until a common
People in diffuse cultures friend makes the request.
allow access to their
Impact on Person Managed
public lives only through
introduction by a trusted A British manager brought in to
associate, but when work for an organization in
access is granted, it Singapore may have hurt his
includes access to the advancement by repeatedly
person’s private life. evading the boss’s invitations to
social gatherings in favor of
Example Countries spending time with other
Specific: Sweden, expatriates.
Netherlands, U.K.,
Canada
Diffuse: China, Nigeria,
Kuwait, Singapore
 Dilemma Definition HR Example

Achieved/ascribed In an achieved culture, Impact on Manager

individuals are valued A British manager supervising a
according to their own Czech office senses hostility
accomplishments (what among the office employees
they do). after promoting a young worker.
In an ascribed culture, They obviously disagreed with
value may be derived the choice.
from social factors, like
Impact on Person Managed
position, wealth, family, or
gender (who they are). An ambitious young Australian
who has struggled to educate
Example Countries and establish herself is baffled
Achieved: U.S., Australia, by her Egyptian managers, who
Canada, U.K., seem more impressed with the
Netherlands connections of her Egyptian
team members than with her
Ascribed: Egypt,
achievements.
Argentina, Czech
Republic, Korea, Poland
 Dilemma Definition HR Example

Sequential/synchronic Sequential cultures see Impact on Manager

time as linear and an A Japanese project team leader
important part of life. is irritated and doesn’t know
Planning, keeping what to do with a French team
appointments, and member who is continually late
making productive use of to team meetings.
time are important. The
future is more important Impact on Person Managed
than the past. A Belgian work unit thinks it’s
Synchronic cultures see unreasonable and arrogant
time as large enough to when the U.S. headquarters
accommodate multiple cancels a traditional social ritual
activities at the same in order to meet a looming
time. They can also deadline.
accommodate delays if a
change is necessary to
support a relationship.
The past and the present
are just as important or
more important than the
future.
Example Countries
Sequential: U.S., Japan,
Netherlands
Synchronic: France,
Spain, Belgium
 Dilemma Definition HR Example

Internal/external In an internal world, Impact on Manager

individuals can decide A British company has
and follow their own outsourced design of a
paths. One can dominate component to a Russian firm.
nature. The British expect a design that
In an external world, ensures top performance
human beings are part of across the full range of criteria
a larger scheme that and the latest technology. The
directs the course of Russians argue that the British
events. Individuals can should think more about what
only adapt, not create. their end customers really
They must submit to require.
nature. Zeynep Aycan
Impact on Person Managed
(2005) refers to this
dimension as “fatalism.” A Norwegian employee
assumes that if he works hard
Example Countries enough, he will be rewarded
Internal: Israel, Norway, with a promotion.
U.S., U.K., France
External: Venezuela,
China, Russia, Kuwait,
Singapore

Obstacles to Achieving Cross-Cultural

Understanding
The potential for conflict arises whenever an organization or
profession tries to apply practices based on their own values to a
host workplace or market with different cultural norms. For example,
restrictive policies about taking off time for family emergencies may
be the source of conflict in a collectivist culture that values family ties
—even ties to what would be considered extended family—and
prioritizes family obligations. A promotion policy that emphasizes
individual merit may present difficulties for managers used to
rewarding employees with family connections. Conflict can arise
from differences in professional as well as social values. An HR
department that values collaboration and process may have
problems when it tries to provide service to a results-oriented,
hierarchical operations or IT department.

The challenge for HR is to better understand each of the members

and stakeholders of their own multicultural organizations and to
foster interaction, understanding, and appreciation of diverse views
and opinions. Nancy Adler (in International Dimensions of
Organizational Behavior) and other analysts list four obstacles that
HR may face in trying to achieve understanding in multicultural
organizations.

Ethnocentrism and parochialism. Adler characterizes

ethnocentrism as “our way is the best way and we are really not
interested in other ways of reaching a goal.” Parochialism goes
even further, asserting that “there is only one way to solve a
problem or reach a goal.” While both are limited world views, it
is possible to alter ethnocentric views with time, experience, and
training. Parochialism is such a rigid mindset that it may not
easily be malleable.

Cultural stereotypes. While certain words are used to describe

cultural value dimensions and characteristics, these words
should not be judgmental or contain negative connotations. A
particular culture’s approach to time can be described without
degenerating into judgmental phrases such as “lazy” or
“undependable.” It is also valuable to remember that cultural
descriptive terms characterize group behaviors but that not all
individuals within a group necessarily conform to these norms.

Cultural determinism. “The culture made me do it.” This

perspective basically absolves individuals of any responsibility
for their actions. Global HR professionals will often hear from
managers in other countries that something cannot be done
because of the local culture. This may call for further discussion
about the supposed obstacles. In some cases they may not
exist, and in others the obstacles may not really be cultural
resistance to the practice but to how the practice is being
implemented.

Cultural relativism. Cultural relativism holds that because

cultures vary so widely and greatly, everything is relative. There
are no absolutes; everything varies based on the situation and
 the cultural perspective. In fact, while cultural differences are
often considerable, global HR can refer to a reasonable set of
absolutes based on honesty, decency, and personal integrity
that should pertain across cultures.

Exhibit 31 summarizes these obstacles to cross-cultural

understanding.

Exhibit 31: Obstacles to Cross-Cultural Understanding

Obstacle Key Description

Ethnocentrism and The viewer perceives and judges other cultures

parochialism according to the norms of the viewer’s own culture and
rigidly maintains that narrow mindset.
Cultural stereotypes Perceptions of a culture are applied to all of the culture’s
members, often in a negative manner.
Cultural determinism Culture defines behavior and therefore excuses some
actions and makes changes impossible.
Cultural relativism There are no absolutes. Norms and values vary by
situation and cultural perspective.

Key Content

Cultural disconnects within an organization must be

addressed to avoid creating “malicious compliance.”
This can occur when headquarters develops
standardized programs that fail to recognize local
differences and imposes them on their foreign
 subsidiaries. Local managers know the programs will
not succeed in their standardized form but agree to
implement them and then watch them achieve the
inevitable results—failure and increased resistance to
future programs.

Reconciling Cultural Dilemmas

Nancy Adler described different strategies for negotiating cultural
differences:
Cultural domination and cultural accommodation are essentially
about assimilation. I assimilate your beliefs, or you assimilate
mine.
Cultural compromise involves both sides giving up some values
in order to meet in the middle.
Cultural synergy involves creating a third way—finding what
works well in each culture and removing barriers to
communication and collaboration, including language and
policies.

Trompenaars and Hampden believe that organizations that are

synergistic are more flexible, adaptive, and resilient. They are skilled
in the process of charting a course through cultural differences, a
process Trompenaars and Hampden-Turner call dilemma
reconciliation.

Dilemma reconciliation has four steps:

Recognize. (Create awareness of cultural differences.)
Respect. (Appreciate the value of difference.)
Reconcile. (Resolve differences by finding a common path.)
Realize. (Implement solutions and institutionalize them in the
organization.)

In a synergistic solution, managers consider to what degree an

organizational conflict is cultural in nature and identify the
assumptions that may be contributing to the dilemma. Alternatives
are then crafted by leveraging points of cultural similarities.
Feedback from both cultures is collected to check and adjust the
solution as needed.

The path to cultural synergy begins with managers who have a

global mindset. They appreciate that everyone—including
themselves—has a culture that shapes their perceptions and values.
Global managers then seek to understand more fully their own
cultures and, with the same depth, the other cultures in which they
interact. Differences and similarities are identified and appreciated.
They avoid stereotyping.
Cultural differences should not be a barrier to a globalization strategy
but a factor that will contribute to global standards and facilitate
alignment of local practices with these standards. Managing cultural
differences will require global HR professionals who are literate in
cultural theory and differences and who understand what to do when
faced with a cultural dilemma that threatens a global strategy. The
first step in achieving cultural literacy is to internalize the importance
of mutual understanding, learning, and training. Turning to focus
groups, employee resource groups, and reverse mentorship can
help in achieving this goal.

Focus groups. By bringing together team members from

different groups across the organization, you can create a safe
space to air opinions and criticisms and generate diverse ideas
and solutions.

Employee resource groups. Employee resource groups

(ERGs) are centered around certain shared characteristics (for
example, gender, race, or nationality). ERGs can help empower
and support communities within the organization, and they can
be a useful source of information and feedback to help HR
devise plans and proposals to realize benefits from cultural
differences.
 Reverse mentorship. Reverse mentorship redefines the
mentor-mentee relationship into one that goes both ways. Each
individual can teach the other about their own cultures, acting in
the role of cultural intermediary or coach. These relationships
build trust and enhance effective collaboration and can help
instill a global mindset as employees are exposed to more
diverse viewpoints.

Analyzing feedback generated by these practices, HR can develop

and implement appropriate procedures and protocols aimed at
addressing cultural differences. For example, performance appraisal
systems can be chosen to reflect the needs of different cultures and
groups. The organization can also invest in identifying and
developing high-potential employees who can become truly
multicultural—for example, by pairing them with a mentor from a
culture in a growth market or region. Cultural awareness and
sensitivity and diversity training programs can be designed and
carefully implemented across the global organization. These
procedures should be revisited frequently to ensure that they remain
effective.
 Law

Proficiency indicators related to this section include:

Conducts business with an understanding of and respect for
cross-cultural differences in customs and acceptable behaviors.
Conducts business with an understanding of and respect for
differences in rules, laws, regulations, and accepted business
operations and practices.
Demonstrates an understanding, from a global perspective, of
the organization’s line of business.
Uses expert knowledge about global HR trends, economic
conditions, labor markets and legal environments to evaluate
the impact of diversity and inclusion on the organization’s HR
strategy.
Uses expert knowledge about global HR trends, economic
conditions, labor markets and legal environments to set HR's
strategic direction and to inform development and
implementation of HR initiatives.

Key concepts related to this section include:

Best practices for creating and managing globally diverse
workforces (examples include translating policies and
procedures into local languages; accounting for multiple time
zones when scheduling meetings).
Law
The law can be seen as an expression of what a culture values and
how it thinks. Therefore, legal systems vary, just as cultures do. HR
professionals interact with the legal systems in their areas of
operation and should be familiar with basic legal concepts.

Competency Connection
Fostering communication in a diverse workplace requires emotional
intelligence (the Leadership & Navigation competency), committed
listening (the Communication competency), and openness to new
and different workplace practices (the Global Mindset competency).
The following example focuses on global diversity, but most of us
could describe incidents involving cross-generational, ethnically
diverse, or differently skilled teams.

Through a strategic U.S. partnership, a large hospital in Qatar had

U.S. staff on temporary assignments. One such U.S. transferee had
recently arrived in Doha to become the hospital’s head of recruiting.
She had heard of Qatar’s laws giving preferential employment
treatment (such as promotions and non-termination rights) to Qatari
citizens. While concerned about potential discrimination issues,
experience had taught her to reserve judgment.
Upon starting work in Doha, she learned that the nationalization
program (Qatarization) was effectively a quota system that seemed
to disregard a person’s capabilities for a job. Given the imperative of
hiring highly qualified hospital staff, she planned to propose to senior
management that they adopt and follow U.S. hiring standards and
practices.

Reporting directly to her was a local recruiter. Upon learning of her

supervisor’s plan to change the recruiting policy, the recruiter
respectfully and delicately informed her that Qatar’s nationalization
programs are similar to U.K. positive action policies and U.S.
affirmative action programs. She further explained that Qatari
citizens are actually a minority in their country due to a
disproportionately large number of foreign temporary workers. Thus,
the laws in effect support a minority group, much like U.K. and U.S.
laws.

By explaining a core HR concept using examples and terms familiar

to her supervisor, the recruiter helped her new boss better
understand the history and rationale of the country’s laws. While the
new head of recruiting still had concerns about the law, she could
now at least make more-informed business decisions.

Legal Systems
Just as HR professionals must learn to interact effectively with a
multitude of cultures, they must also learn to work within a complex
framework of different legal systems across the countries and
regions in which their organization operates.

And, like every other aspect of globalization, the legal landscape is

constantly redefining itself. Sometimes a wave of legislative change
may sweep across several countries, often in response to global
changes, as with recent environmental regulations, technology-
related privacy laws, or laws regarding same-sex marriage. Other
legal changes may be country-specific, such as the United States
Supreme Court’s rulings that assign rights of personhood to
corporations.

At the heart of any legal system is a set of core beliefs about what
constitutes right and wrong. To comply with—and anticipate the
requirements of—a system of laws, it helps to have a basic
understanding of the core beliefs and values on which it is based.
HR professionals managing global workforces must be aware of the
different legal systems and their requirements, but all HR
professionals should be able to recognize the effect of different legal
systems on their work.

There are three major types of world legal systems: civil law,
common law, and religious law.
Civil law is based on written codes approved by legislative
bodies. In some instances, governments implement regulations
to enforce laws. These regulations have the force of law. The
law is applied deductively in each case, starting from the
abstract rule that has been stated in the nation’s civil law code.
Each judicial action is bound by the letter of the law; the laws
are not affected by judicial decisions.

Common law is based on legal precedent. Each case is

considered in terms of how it relates to judicial decisions that
have already been made. Common law evolves through judicial
decisions over time. Some common laws have been codified, as
in the Uniform Commercial Code in the United States, which is
applied to commercial transactions. Because legal precedents
are not always considered binding and because legal positions
evolve over time through a series of cases in which analyses
may differ, common law can change gradually.

Religious law is based on religious beliefs and conventions: a

mixture of written codes and interpretations by religious
scholars. Most world religions have their own bodies of laws and
legal processes—for example, Sharia (Islam), canon law
(Christianity), and the Halakha (Judaism). HR professionals
must be aware of the relationship between civil and religious
 laws in the countries in which their organizations operate and
potential conflicts between their employees’ religions and the
employers’ policies.

These legal systems must be viewed with a critical caveat in mind: In

the real world, the types defined here often appear in mixed forms.

The HR professional need not be an expert in all the laws that will
affect his or her work. In fact, we strongly recommend the use of
expert legal advice, both in specific disciplines, such as taxation, and
in the laws of specific countries.

Fundamental Legal Concepts

There are some basic legal concepts that help explain and describe
how (or, in some cases, whether) legal systems work and how an
organization can expect to be treated in a given location. Exhibit 32
describes these key legal concepts and terms.

Exhibit 32: Key Legal Concepts/Terms

Concept/Term Key Points

 Concept/Term Key Points

Rule of law No individual is beyond the reach of the law; authority is

exercised in accordance with written and publicly disclosed laws.
This creates order and predictability for citizens and foreign
entities/individuals who may become litigants.
A country with a strong rule of law will present lower risks for
organizations but also require greater accountability for
compliance. A country with a weaker rule of law can still present
opportunities but will also present higher risks and lower control.
Due process Laws are enforced only through accepted, codified procedures,
thus avoiding arbitrary treatment and abuse of power.
Jurisdiction Jurisdiction is the right of a legal body to exert judicial authority
over a region, subject matter, or individual.
Because global organizations operate across jurisdictions, they
must be aware of applicable laws and who has legal authority
over their operations in any given country, region, or municipality.
Some jurisdictions may overlap, and it is important to recognize
when or if there are potential conflicts—for example, cases when
federal law supersedes local or provincial laws and when
jurisdiction resides with the host country and not the home
country.
Conflict of laws Conflict of laws is a situation in which the laws of two or more
jurisdictions differ and may exert a different result on a legal case
depending on which system is deemed to have jurisdiction.
Forum or Jurisdiction shopping (or forum shopping) is the practice of taking
jurisdiction complaints to jurisdictions sympathetic to the complainants’ case.
shopping
It is rarely effective where employment contracts are concerned,
since residency laws favoring the jurisdiction in which the work is
actually done tend to prevail.
 Concept/Term Key Points

Levels of law Laws can be described by their areas of control:

National—federal laws applicable across the nation

Subnational/regional—laws that apply to states, provinces,
municipalities, or regions (Their relationship to federal laws
can be complex.)
Extraterritorial—laws that extend beyond a nation’s borders
and protect or apply to the nation’s citizens traveling or
working abroad
Supranational—binding agreements between nations; may
supersede national laws
International—laws between nations that also apply to
individuals within national borders (for example, human
rights laws); usually ratified by participating countries but can
also be accepted without ratification
Business Acumen
Competency
Business Acumen Competency
Business Acumen is defined in the SHRM Body of Applied Skills and
Knowledge as:

The KSAOs [knowledge, skills, and abilities] needed to

understand the organization’s operations, functions and
external environment, and to apply business tools and
analyses that inform HR initiatives and operations
consistent with the overall strategic direction of the
organization.

Applying Business Acumen may take HR professionals outside their

traditional comfort zone because it goes beyond transactional
knowledge of HR laws, systems, and practices. It requires
understanding the internal and external forces that shape an
organization’s strategy to create value for its stakeholders. HR
professionals also need to become familiar with the analytic tools
and metrics used by decision makers to develop and assess
strategy. They must see their own HR budget as a strategic tool that
allocates resources to activities aligned with goals.
 Business and Competitive
Awareness

Proficiency indicators related to this section include:

Aligns decisions with HR's and the organization's strategic
direction and goals.
Applies knowledge of the organization’s business operations,
functions, products and services to implement HR solutions and
inform business decisions.
Applies knowledge of the organization’s industry and PESTLE
trends to implement HR solutions and inform HR decisions.
Applies principles of finance, marketing, economics, sales,
technology, law and business systems to internal HR programs,
practices and policies.
Demonstrates an understanding of the relationship between
effective HR and effective core business functions.
Uses organizational and external resources to learn about the
organization’s business operations, functions, products and
services.
Uses organizational and external resources to learn about the
political, economic, social, technological, legal and
environmental (PESTLE) trends that influence the organization
(examples include automation, unemployment trends, economic
boom or recession, talent shortages).
Aligns HR's strategic direction and long-term goals with the
organization’s overall business strategy and objectives.
Applies an understanding of the labor market when developing a
strategy to manage and compete for talent.
Applies expert knowledge of the organization’s business
operations, functions, products and services when setting HR’s
strategic direction and long-term goals.
Applies the perspective of systems thinking to make HR and
business decisions.
Designs, implements and evaluates HR initiatives with
consideration of value-added, ROI, utility, revenue, profit and
loss statements and other business indicators.
Drives key business results by developing strategies and long-
term goals that account for senior leaders' input.
Gathers and applies business intelligence about PESTLE trends
to define HR’s strategic direction and long-term goals.
Participates in advocacy activities involving government policy
and proposed regulations related to the organization’s HR
strategies and long-term goals.
Serves as a strategic contributor to organizational decision-
making on fiscal issues, product/service lines, operations,
human capital and technology.
 Uses risk assessment to inform HR's and the organization's
strategic direction and long-term goals.

Key concepts related to this section include:

Business terms and concepts (examples include competitive
advantage; profit and loss; revenue; financial projections;
quality; service level agreements; strategic plans; fixed and
variable costs; supply and demand; net income; key
performance indicators [KPIs]).
Business and Competitive Awareness
HR professionals should develop greater awareness of how their
organization creates value and how the organization’s performance
is affected by various internal and external factors.

Competency Connection
The Business Acumen competency allows HR professionals to apply
knowledge of an organization’s business model and competitive
situation when solving workforce problems. It can be combined with
other competencies, such as Analytical Aptitude, Consultation, and
Communication, to deliver strategic support to HR’s organization.
Consider the following situation.

A division of an organization was experiencing a turnover rate higher

than that seen in other divisions. The problem had persisted for 12
months. Before developing a response, the HR leader and staff were
determined to understand the root causes of the turnover. A
knowledge of the business—acquired through the Business Acumen
competency— would help them ask the right questions and
understand the answers they received.

One HR staff member was assigned to research the targeted

division’s products/services, key competitors, language and
acronyms, and key labor market trends, such as unemployment and
other HR benchmarks. This staff member then presented findings to
the HR team.

Another staff member was assigned to review exit interview notes

and to analyze them for major themes.

The HR manager conducted one-on-one interviews with selected

current employees from the division.

The team then analyzed the data, agreed on likely causes, and
developed possible solutions. Each solution was assessed in terms
of its alignment with the organization’s strategy and its expectation of
return on investment.

The HR director reviewed the team’s report and added ideas of her
own: rebranding the employer message and developing more
effective onboarding programs. The director applied all this
information and analysis to argue effectively for senior management
support of the proposed changes.

Value Creation
Value can be defined and measured differently. In a general sense, it
refers to an organization’s success in meeting its strategic goals.
(Note that “value” is not the same as “values.” Organizational values
relate to guiding principles and beliefs.) A critical aim for all
organizations and their business units and functions is to protect and
enhance the value of the organization’s assets (financial, people,
technological, and physical) and to add new value where possible.
The assumption behind strategic planning and management is that
purposeful activity will yield greater value. Before strategic planning
can begin, an organization must consider this question of value: how
it creates value and what activities are critical to the creation,
retention, and increase of value.

The definition of value can be influenced by mission. For example, a

for-profit corporation will see value as bound up in its assets and its
ability to generate value above the costs of production (added
value). A military organization, on the other hand, will measure value
by its effectiveness in fulfilling its mission to safeguard and protect.

The definition of value will also be influenced by culture at an

organizational, global, and workplace level. A common conflict after
mergers, for example, is a lack of agreement about what constitutes
value. One set of management may see value as shareholder
returns, while the other may be more concerned about employee
well-being and security. Conflicts over value can be driven by
differences in ethnic cultures in different workplaces within a global
organization or in a single ethnically diverse workplace. Or value
may be defined by functional culture. Operations may see the
organization’s core value as output, while sales may see it as
satisfied customers.

HR must understand these varying perceptions of value because

they will drive strategic goals throughout the organization and affect
the ways in which HR can support the organization in its entirety.
When perceptions conflict within the organization—perhaps as a
result of a change in strategic direction, a global organization that
comprises multiple national cultures, an acquisition or merger, or
restructuring—HR can provide critical guidance about
acknowledging and resolving these cultural conflicts.

Value Chains

The value chain represents the process by which an organization

creates the product or service it offers to the customer. This may
also be referred to as the organization’s business model, every
activity required to make a good or service and then sell or deliver it.
The process is described as a chain because it represents the
sequential and simultaneous contributions of a number of internal
and external participants. Each participant adds an element of value,
and the total value is more than the sum of its parts.
 Key Content

A global value chain consists of multiple organizations

producing parts of a good or service across
geographical regions, with each link on the chain
adding value. It is more integrated than a business
model that simply outsources production or supply
from other countries. In a global value chain,
participants share expertise. Although maintaining
good governance of all chain participants is difficult,
global value chains are important agents of economic
development.

An enterprise can achieve competitive advantage by being superior

in one functional area in the value chain—for example, in innovative
research and design, effective marketing, or efficient production. An
organization can also achieve advantage by more effective
coordination among various functions.

Key Content

The key value that HR contributes to the value chain is

the quality and availability of “pivotal talent pools,”
 those employees whose skills are critical to the
organization’s strategy (John Boudreau and Peter
Ramstad, “Talentship and the New Paradigm for
Human Resource Management”). HR protects value
when it manages labor supply to support optimal
productivity. It enhances value through its leader and
performance development processes. It can add value
when it acquires strategically important new areas of
talent.

To deliver better service to the organization and increase value, HR

may implement a process of meeting periodically with internal
customers to understand their current needs accurately and
completely. As a result of these meetings, HR may establish service-
level agreements with customers. A service-level agreement (SLA)
defines the output customers can expect—for example, the services
HR will provide a function (self-service portals, dispute resolution),
the normal time frames for results (filling job openings in a certain
amount of time), or HR responsiveness to customer queries and
complaints (quickly correcting errors in pay or benefits).
Organizational and Product Life
Cycles
Industries, organizations, brands, and products have a characteristic
life cycle. The stages may have different names, but they describe a
gradual increase in success (usually measured as revenue) over
time, a peak, and then a gradual decline and possible demise. HR
professionals, especially HR leaders, must be aware of the life cycle
concept, because the organization’s and HR’s priorities will shift as
the life cycle (of the organization itself, its industry, or its products
and brands) progresses. HR must be ready to shift the HR strategic
plan accordingly.

The organizational or product life cycle is different from the

employee life cycle, which describes the stages in an employee’s
experience from hiring to exit.

Exhibit 33 shows an organizational/product life cycle with three

possible outcomes: continued success through renewal, a no-growth
existence, or decline.
 Exhibit 33: Life Cycle Concept

Introduction. Revenue (the vertical axis) is low because there

is little market awareness (of the new industry, organization,
products, services, or processes) and because of the market’s
resistance to change. Entrants (new industries, organizations, or
products) must create an identity with customers and develop a
value proposition. This takes imagination, business acumen,
and leadership.

Growth. As time proceeds (the horizontal axis), revenue begins

to increase. The rate of growth (or the steepness of the curve)
will vary by industry, enterprise, or product. The focus shifts to
creating processes that will increase efficiency without stifling
innovation.

Maturity. The market is saturated with competitors, and growth

occurs only through introduction of new products or customer
 groups (which starts new cycles for those entrants) or through
acquisitions. Profit margins become narrower, and efficiency
becomes more important. This means greater formalization and
perhaps bureaucracy.

Renewal/no growth/decline. Eventually demand will decrease,

either because the need no longer exists or it is satisfied more
effectively by something or someone new. Organizations can:
Renew themselves by completely changing their offerings,
where they compete, or how they compete. If they succeed,
revenues rise. Organizations must return to their innovative
roots.
Take no action and accept continued low revenue. As time
goes on, organizations and products have few resources to
take advantage of opportunities that might deliver growth.
Take no action and experience a decline in revenue that will
make it impossible to compete or operate.

Think of the industry that produced landline telephone sets (not the
service, but the phone itself). The initial market was very small, but it
expanded with a growing infrastructure of telephone lines and
switches and with a growing understanding of the telephone’s
business and social usefulness. Sales of landline telephones slowed,
despite the best efforts of marketers who would tempt the consumer
with new shapes and colors. The introduction of cell phone
technology sent the industry into a decline. Much of the world’s
population survives quite well today without landlines. Manufacturers
of telephone sets had to adapt to wireless and Internet voice
communication or be mired in a small, low-profit business sector.

HR and Organizational/Product Life Cycle

Exhibit 34 lists the characteristic organizational needs in each stage

of the organizational/product life cycle and the ways in which those
needs affect HR activities.

Exhibit 34: Impact of Life Cycle on HR Strategy

Characteristics Impact on HR Strategy

Introduction

Vision, innovation, and energy are Talent acquisition, finding the resources
critical. needed to build a foundation for the
There is little structure and no formal enterprise.
policies. Helping to define and create a culture in
There may not be a dedicated HR keeping with the founders’ values.
function; it may be outsourced to a Controlling risks associated with human
consultant or performed by a top resources (for example, compliance
manager. with laws, stress management).

Growth
 Characteristics Impact on HR Strategy

Keen awareness of markets and Tactical buildup of talent. The right

customers make the difference. talent must be acquired and/or built in-
Managers must be strategically house.
disciplined and maintain focus. Tactical increase in complexity of
There are competing demands for structure and policies. Changes must
innovation and efficiency. This requires weigh improvements in efficiency
some degree of formalization of against impact on culture.
structure and processes without Helping leaders redefine their roles and
affecting the vibrant culture that brought share leadership with others.
the organization out of the start-up Formalization of job descriptions.
phase.
Managing changes caused by the
organization’s growth and increased
formalization.

Maturity
 Characteristics Impact on HR Strategy

Need for greater control emerges. Building and retaining a productive

This often results in more formalization workforce to meet a high level of
and complex reporting and decision- demand.
making structures. Top management Establishing stable leadership through
plans; lower-level management succession planning.
implements. Implementing policies.
There can be a loss of connection with Communicating and reinforcing
the organization’s strategy. organizational culture in policies and
practices.
Improving channels of communication
so that strategy can be understood and
aligned at all levels and in all areas.
Making sure that formalization does not
make the organization less agile and
innovative.
Consulting to other parts of the
organization to solve problems that
affect productivity (for example,
conflicts, poor performance, ineffective
processes or teams, toxic cultures).
Modeling awareness of external
influences. HR can be a champion of
environmental scanning.

Renewal

The organization attempts to reconnect Reductions in workforce to right-size the

with or find new customers or missions. organization as it rebuilds.
If the organization has become slowed A change in leadership and workforce
by its size and held back by complex requirements.
structures and too many policies, it will A streamlining of structures and
need to restructure. policies.
Vision and innovation, strong Added responsibilities to job
leadership, motivation, and descriptions and remaining staff.
communication are vital.
 Characteristics Impact on HR Strategy

No Growth

Revenue and workforce remain static or Maintaining engaged workforce with

decline. fewer resources.
Fewer opportunities for employee Dealing with increased turnover rate.
advancement arise. Delivering HR services with shrinking
Compensation is static. budget.

Decline

The organization shrinks in size and Reducing the workforce size.

assets. Helping the organization’s members
In-fighting increases. manage constant stress and workplace
There may be a swing back to more changes necessary to survive.
autocratic control by leaders. Attracting necessary talent. Reduced
assets and prospects demand greater
creativity in talent acquisition.

Macroenvironmental Forces
Influencing Strategic Decisions
The macroenvironment refers to all the factors that exist outside the
organization that could influence an organization’s strategic
decisions. HR leaders are expected to be familiar with and informed
on areas that affect the management of an organization’s human
capital. As a result, one of their responsibilities is to analyze the
environment in which the organization and its employees operate.
Conducting a PESTLE analysis can help in acquiring information
about the factors that might affect strategic decisions and therefore
help to improve an organization’s competitive market position. A
PESTLE analysis looks at the following:

Political. Governmental and other political forces that can exert

influence on the economy or a specific industry and therefore
affect the capabilities of an organization, for example, new or
changed taxes, employment laws, and trade tariffs, barriers, and
restrictions.

Economic. Market and other economic conditions that can

affect an organization, for example, interest and exchange rates,
wages, cost of living, and working hours.

Social. Events and trends in society that can affect the present
and future availability of talent, compliance requirements, and
employee needs, for example, health and safety consciousness,
population demographics, and growth rates.

Technological. Changes in technological capabilities and

availability that can affect an organization’s ability to produce
and provide goods and services. These factors also include
technological literacy levels and research.

Legal. Laws and regulations that can affect an organization’s

operations. Global organizations have to navigate different
 countries’ legal systems in addition to those in their home
country, which may require extra care.

Environmental. Geographic and climate changes that might

affect an organization’s operations, for example, extreme
weather that may disrupt operations or transportation of goods
for a specific area or an entire region.

Understanding how these factors can affect the core competencies

of the organization will help HR in fulfilling its responsibility to provide
the organization with the right number of workers with the right kinds
of skills. It is therefore important for an HR professional to make time
to scan and research external factors that might affect their
organization.

Improving Environmental Awareness

HR professionals can develop their awareness of their organization

and the environment in which it operates by:
Regularly reading the business press—including more
international publications such as The Economist—and following
key social networking sites to monitor the latest business
philosophies and trends.
Staying current with the latest academic HR research. Use
relationships with local academics and visit the websites of
 institutions known for their HR research publications.
Analyzing the organization’s performance. Review the
organization’s financial reports and strategic goals and
understand the stories they are telling—for example, patterns of
performance across a corporation’s divisions or products, trends
in indebtedness, and levels of available cash.
Monitoring the performance of other organizations, including
competitors and major employers in your communities of
operation. This can affect employer branding, compensation,
engagement, and diversity strategies.
Becoming regular users of third-party information from
government agencies (for example, labor and trade
departments), international bodies like the World Bank and
United Nations agencies, nonprofits, and professional
associations, such as the Society for Human Resource
Management.
Scanning annual reports from businesses or groups with
comparable markets and workforces. Annual reports can
provide insight into the issues other organizations are wrestling
with and the solutions they have tried.

Information gathering is a skill that must be used regularly and

constantly updated and expanded as new sources and information
channels develop.
 Key Content

HR professionals must also focus on expanding and

deepening their channels of information—inside and
outside the organization. Networking within the
organization can provide a sense of developing
management philosophies, preferences, and attitudes.
It may be useful to develop relationships with
individuals in the organization’s finance function who
can explain the significance of financial performance
metrics. Developing contacts within the stakeholder
communities in which the organization operates can
uncover emergent issues. An HR manager can
become more aware of educational challenges facing
local school districts, challenges that may affect the
future pool of workers. Networking can also serve to
build allies for later actions.

HR Advocacy

HR professionals can keep track of current events and trends that

affect the workplace by belonging to professional associations such
as the Society for Human Resource Management. Members receive
regular and special mailings and can meet peers from other
organizations at chapter meetings.

One of the services professional associations provide is being an

advocate for workplace issues before national and local
governments and regulatory bodies. HR advocacy can focus on
issues that affect the business decisions of major employers and on
wage and benefit issues. HR advocacy can help shape developing
policies on issues such as the impact of recreational marijuana on
the workplace or the burden of education debt on employees.

Useful Business Terminology

There are certain key business terms that all HR professionals
should become familiar with in addition to those already explained in
this section. These terms are explained in Exhibit 35.

Exhibit 35: Useful Business Terminology and Concepts for HR

Professionals

Term Definition

Supply and The fundamental concepts of economics.

demand
Demand refers to customers’ desire to purchase goods and services
and their willingness to accept the price at which the goods/services
are offered. Demand typically drops as price rises.
Supply refers to the availability of the good or service. When prices
are high, supply will typically increase as organizations try to
maximize profits. Falling prices typically result in less supply.
 Term Definition

Strategic plan Plan that defines an organization’s purpose and direction and can
provide guidance to HR on the organization’s core values and
objectives. Typically, a strategic plan contains the following
components:
Vision and mission statements
Core values
Goals and objectives (both long- and short-term)
SWOT analysis
Action plans

Competitive The factors that enable an organization to outperform its rivals—that

advantage is, produce goods or services better and more cheaply.
Factors can include but are not limited to branding, product quality,
customer service, distribution network, geographic location, access to
superior human and natural resources, and intellectual property.
Financial An estimate of an organization’s future financial performance.
projections Typically, projections address a specific 12-month period, broken up
monthly and by department and/or function.
Projections are a valuable tool for translating goals into targets and
serve as a feedback and control tool. Deviation from projections can
be used to assess potential changes to strategic plans.
Quality A measure of comparison for products and services—for example, is
the product or service offered by the organization of superior or
inferior quality when compared to that offered or produced by rivals?
This assessment is based on characteristics of the product and
service and how well they achieve the intended function.
Key Specific measures of an organization’s critical business areas that are
performance quantifiable or qualitative. KPIs can vary depending on how, when,
indicators and where they are used—for example, by department or different
(KPIs) projects. KPIs can be used to analyze an organization's long-term
goals or critical success factors.
 Term Definition

Fixed and Fixed costs are recurring costs, regardless of an organization’s

variable costs output, for example, interest payments, lease/rent payments, utilities,
and insurance.
Variable costs depend on the organization’s output, and they can
increase or decrease depending on how many goods or services the
organization produces. They include, for example, labor costs and
costs for resources/materials.
It is possible that an organization will have semi-variable costs, which
can be a mixture of both fixed and variable, for example, volume
discounts, employee compensation made up of both salary and
commissions.
Revenue The money generated through the sale of goods and services.
Revenue is calculated by multiplying the average sales price by the
number of units sold. It is also referred to as gross income.
Net income Revenues minus costs. This is also known as net earnings and can
refer to both organizations and individuals.
The subtracted costs can include expenses (operating,
administrative, and so on), taxes, interest, and depreciation.
Profit and loss A calculation based on total income minus total expenses. If the
result is positive (revenue exceeds expenses), the organization has
generated a profit; if the result is negative (expenses exceed
revenue), then the organization has posted a loss.
 Business Analysis

Proficiency indicators related to this section include:

Uses HR information systems (HRIS) and business technology
to solve problems and address needs.
Examines organizational problems and opportunities in terms of
integrating HR solutions that maximize ROI and strategic
effectiveness.
Uses risk assessment to inform HR's and the organization's
strategic direction and long-term goals.

Key concepts related to this section include:

Business intelligence techniques and tools (examples include
analytical processing; business intelligence portals; predictive
analytics; advanced analytics; trend analysis; scenario planning;
balanced scorecard).
Business Analysis
Information is growing in importance in today’s organizations. To
make better decisions now and to develop better solutions in the
future, HR professionals must understand how their organizations
collect, access, and analyze data.

Competency Connection
An HR professional was visiting the SHRM website and saw an
article about a recent lawsuit filed by temporary workers at a major
software firm. The temporary workers claimed that they fulfilled the
definition of regular employees and should be reclassified
accordingly and receive compensation and benefits retroactive to
their date of engagement.

This set off alarms in the HR professional’s mind, whose own

organization used temporary workers in a similar manner and could
be affected by an unfavorable ruling. The HR professional took this
issue to the HR director. The director asked the HR professional to
mine the organization’s data to identify how many temporary workers
were being used, in what areas, at what times of year, at what job
levels and salaries, and for what duration. The HR professional was
able to extract this data from the organization’s database and
present it to the director.

They consulted with the firm’s legal counsel, who told them that they
should prepare alternative staffing strategies. Using advanced
analytics, the HR director and staff were able to present the
economic ramifications of several different approaches to the staffing
issue.

As this story shows, the Business Acumen competency changes the

way HR practitioners interact with their environments. These
practitioners were proactive in seeking information that helped them
understand their organization’s business. They applied their
Analytical Aptitude, Consultation, and Communication competencies
to propose well-reasoned and well-supported recommendations to
leadership.

Business Intelligence
Business intelligence can be described as the ability to use
information to gain a deeper understanding of an organization and its
parts, to see how the whole organization and its parts are performing
(through business metrics) and to make sound business decisions
that are grounded in relevant and accurate facts rather than
assumptions or “gut feelings.” A commitment to good governance
requires more informed, transparent, and accountable decisions, and
better business intelligence makes those decisions possible.

An organization’s business intelligence system has three basic

components:

Data gathering. Data is routinely gathered through different

computer systems in all parts of the organization (for example,
point-of-sale performance, purchasing and sales transactions,
employee and customer records, security terminals).

Data warehousing. Data gathered from different systems is

translated into a standard format, cleaned (or “scrubbed”) of
errors and duplications, and then stored in databases related to
specific uses (for example, operations, finance, sales, HR).
Organizations that have invested in an enterprise resource
planning (ERP) system are able to integrate these distinct
databases. This allows everyone in the organization access to
the same current data and improves communication and
coordination. ERP products are “suites” of integrated
applications for special purposes, such as those shown in
Exhibit 36. The data warehouse is integrated but divided into
separate sections or data marts that share reporting and
analytical needs or interests. For example, the human resources
information system (HRIS) captures data related to managing
tasks such as payroll, workforce planning, performance
appraisal, training and development, and succession planning.
Some ERPs actually extend outside the organization by
supporting electronic data interchange (EDI). Among other
purposes, EDI is often used to automate outsourcing and
vendor payments.

Exhibit 36: Enterprise Resource Planning (ERP) System

Go to long description.

Query and reporting capabilities. Users can access the data

they need and use stand-alone or integrated (ERP) business
application software to sort, describe, and analyze data in
 myriad ways and to create report graphics, such as bar or pie
charts.

Business Intelligence Portals

A business intelligence portal is a user’s point of access to the data

and applications stored on an information system. An effective
business intelligence portal:
Can be customized to the needs of specific users so that they
view only the data and applications they commonly use. This
simplifies navigation and avoids overwhelming users with visual
options and requiring layers of actions. This is an important
factor for HR when selecting or designing self-service portals for
managers and employees.
Presents information logically. A well-designed screen uses
visual cues (for example, color, size, screen location, adjacency)
to denote logical relationships.
Supports easy navigation from the home page to and within
desired files.
Uses automated tools such as “click to open” and “drag and
drop.”
Can be scaled to different media. Screens and information
should be readable on monitors, handheld devices, and mobile
phones.
 Provides security by restricting access to authorized users and
limiting actions according to users’ privileges.

Balanced Scorecard

A useful tool for gathering business intelligence is the balanced

scorecard. A balanced scorecard can provide a concise impression
of an organization’s overall performance. It can be used to focus the
organization and its functions on key strategic activities, to craft
responses to goals, and to create metrics to assess the
effectiveness of these responses. Balanced scorecards help support
a clear line of sight from strategic goals to strategic performance. An
organization can have multiple balanced scorecards, as the
organization-level scorecard can be deconstructed to a departmental
level, incorporating departmental-level metrics.

The creators of the balanced scorecard, Robert S. Kaplan and David

P. Norton, identified four ways that the scorecard can be used in
strategic management by linking short-term activities to long-term
objectives. From the perspective of HR, a balanced scorecard can
help achieve this objective in the following ways:

Translating the vision. All balanced scorecards must include

accountability and measurable results that are agreed upon with
management. HR can use this information to tailor its efforts to
best serve achieving these results.

Communicating and linking. Using a balanced scorecard

gives the entire organization a clear idea of what the overall
objectives are and allows departments to ensure that their
objectives are aligned with the overall long-term strategy. HR
can look to the balanced scorecard in order to ensure that talent
acquisition strategies will serve the overall strategy.

Business planning. Balanced scorecards make it clear what

goals have been set by the organization and therefore enable
departments to better integrate their own plans. In this way, HR
can ensure not only that the organization allocates the correct
resources to workforce management but also that resources are
allocated in the right way and place—for example, through hiring
more or specific talent, offering skills development, or adjusting
travel budgets.

Feedback and learning. A balanced scorecard provides

organizations with more opportunities to learn from ongoing
performance. This allows HR to adjust its strategies based on
real-time feedback and modify activities accordingly.
Analytical Processing
Business analysis has been greatly enhanced through the use of
analytical processing. As the computer processing power and
Internet accessibility available to organizations has improved, online
analytical processing (OLAP) has become more common,
embedded into many of the available HRIS products. Because of the
way the data is stored, analytical processing applications can
analyze the data faster and in more ways than traditional relational
databases, offering a multidimensional analysis of business data.

A relational database stores data in separate tables (for example,

employee training records, training products). Each table is
composed of rows and columns. Each row is a data record (for
example, an employee name); each column is an attribute (for
example, a training course). The database is queried to find the
relationships between the data—for example, all the employees who
have completed a particular training program.

An analytical processing application uses a server sited between the

user and the organization’s database. The OLAP server takes the
data from the database and stores it in a compact, multidimensional
“cube.” Each dimension (for example, employees) contains all the
attributes in the database (for example, gender, age, function, pay
grade, promotions, education, source of recruitment). These tools
can quickly find all the varied intersections of the dimensions.

This means that, with the right analytical processing application, a

user can analyze the same data and produce different types of
analysis—for example, a times series that shows trends in hiring
certain demographic groups or a regression analysis that compares
retention with the date of the employee’s last promotion.

Data can also be organized hierarchically, which allows the user to

“drill down” for a more granular look at the situation or “drill up” for a
bird’s-eye view. HR analysts can, for example, drill down from all
employees to managers, to female managers, to female managers
with a college education, and so on.

Advanced Business Analytics

Business intelligence analytics can be distinguished in terms of the
analyses’ temporal focus: backward, current, or forward.

Some reporting analyzes historical data. For example, an analysis of

recruiting statistics might compare the effectiveness of various
recruitment channels in meeting different criteria (such as cost,
numbers of responses, time to fill, long-term retention). This is often
referred to as trend analysis. One way this can be used by HR is to
extrapolate future labor demands.

Dashboard analytics focus on current data that measures

performance in key areas. For example, an HR dashboard might
report employee retention rates in comparison to current objectives.
It could present the data in different ways: geographically,
functionally, by age or gender.

Predictive analytics use historical and current data to get a better

sense of the future and even to shape the future. These analytic
approaches apply formulas and algorithms to data warehouses in
order to predict outcomes. For example, a dashboard application
may have the ability to extrapolate from historical and current data to
forecast a problematic or beneficial trend—perhaps a decline in
hiring due to noncompetitive wages. Simulations can be run to see
outcomes based on different wage scenarios.

Advanced analytics can also take advantage of machine learning,

the ability of an information system to make its own decisions based
on the data it is receiving. For HR professionals, this type of
capability can improve the self-service experience for managers and
employees. It can predict certain interests based on the
accumulating interactions. It can, for example, review a bank of
résumés on file, select the applicants most likely to be interested in a
new opening, and send e-mails or texts to advertise job
opportunities.

Predictive analytics and trend analysis offer some valuable

applications to HR professionals:
Identifying objective performance and engagement metrics,
used to identify top-performing employees, and culture fit
Facilitating retention and succession planning, by tracking
success indicators and factors that might point to potential flight
risks (The latter should be approached cautiously.)
Enhancing talent acquisition processes by identifying the best
hiring sources and potential future high-performing employees
and helping to determine the effectiveness of diversification
efforts
Improving the chances of fraud detection through pattern
recognition

The ability to create strong forecasts can help organizations improve

their decision-making processes, their responsiveness to changes in
the business environment, and the effectiveness of their long-term
planning. However, it is important to remember that prediction is by
no means flawless, because one can never truly know what is going
to happen in the future. Crises, for example, tend not to be
predictable. Similarly, it is possible that technological developments
could offer up a new process or tool that could have an impact on an
organization’s workforce growth—for example, new automation
technology that might mean retiring employees don’t need to be
replaced, which could reverse an upward trend in workforce growth.

Scenario Planning

Another approach to looking ahead is scenario planning.

Organizations are often subject to events beyond their control—from
political disruption, to natural disasters, to pandemics. While it is
impossible to predict every potential scenario that might affect an
organization, being able to engage in some “what if” planning can
help organizations mitigate the severity of potential risks in the
future. HR can take information gathered from past experiences and
events and use them to devise plans to confront possible challenges
in the future. For example, information gathered about the response
to a pandemic can inform plans to manage a potential future
pandemic or other public health crisis. To approach the exercise,
team members can pose such questions as:
Did the organization have appropriate employee supports in
place (technological, health)?
What preparations are in place to make adjustments to remote
or hybrid work conditions?
 Was the organization able to locate and repatriate employees
who were overseas?
After the crisis ended, was the organization able to meet any
new staffing needs?

Any plans generated by this exercise will have to be revisited on

occasion to ensure that they are based on the best, most up-to-date
information. Engaging in scenario planning can ensure that an
organization has some plans in place to help navigate potential
future crises or challenges.
 Strategic Alignment and
Assessment of Resources

Proficiency indicators related to this section include:

Creates and communicates the business case, or provides the
data to build the case, for HR initiatives and their influence on
efficient and effective organizational functioning (such as ROI for
HR initiatives).
Uses cost-benefit analysis, organizational metrics, key
performance indicators (KPIs) and critical data insights to inform
business decisions.
Defines and communicates HR's and the organization's
strategy, goals and challenges in terms of business results.
Determines the budget and resource requirements of HR
initiatives.
Evaluates all proposed business cases for HR initiatives.
Examines organizational problems and opportunities in terms of
integrating HR solutions that maximize ROI and strategic
effectiveness.

Key concepts related to this section include:

Analyzing and interpreting business documents (examples
include strategic plans; contracts; grants; standard operating
procedures; business plans; organizational charts; business
continuity plans).
Elements of a business case (examples include executive
summary; benefits; alignment with organization’s strategic
goals).
Financial analysis terms and methods for assessing business
health (examples include balance sheets; budgets; cash flow
statements; profit and loss statements; overhead; cash flow;
cash reserves; return on investment [ROI]; strengths,
weaknesses, opportunities and threats [SWOT] analysis; sales
pipeline; market position).
Strategic Alignment and Assessment
of Resources
In a strategically managed organization, resources are allocated to
business functions through annual and project budgets that support
strategic objectives. The effectiveness of the strategy and its
implementation may be seen in the organization’s financial
statements and key financial and nonfinancial measures.

Competency Connection
An HR director (HRD) in a nonprofit organization believed that a
strong argument could be made for implementing a full-service
HRIS. It would have to be a strong argument; in nonprofits, budget
drives every decision.

The current system handled payroll and benefits. Manual systems

were being used for talent acquisition, talent management, and
performance management, and a paper system was being used for
onboarding. In informal discussions with leadership, the HRD
learned about their most likely objections—primarily cost and fear of
the impact of changes on employees. They were, however, open to a
proposal from HR.
After leading a rigorous selection process that included a cross-
functional team, demonstration meetings with four vendors,
conversations with vendors’ users, and pricing negotiation, the HRD
built a business case for the acquisition. It included:
Current costs, including time spent (and estimated annual salary
spend) on manual transactions and the percentage of the loss of
information due to having to send pieces of paper around the
organization.
Projected costs of a new system, including HR time spent on
interaction with the vendor on a weekly basis.
Benefits aligned with the organization’s strategy (improved
efficiency, value, and service to managers and employees).

Leadership was interested but still concerned about implementation

of a new system. So HRD held one-on-one meetings with each vice
president to discuss how the change would specifically impact their
employees and the processes HR would be implementing to ease
the burden. For example, one group of employees would be asked to
clock in and out. That vice president and HRD discussed how to
make the change as easy as possible by providing kiosks, bolstering
Internet resources, and providing job aids. They also discussed the
salary savings that would be realized by more accurate accounting
of employee work time.
The HRD used:
Business Acumen to see an opportunity and influence the
organization to make the investment.
Analytical Aptitude to select the HRIS that best fit the
organization’s needs based on the type of work as well as the
needs of senior leaders and the HR team.
Communication skills to present to leadership the
recommendation to change, the implementation plan, and the
plan for multiple training sessions.
Leadership and Navigation to steer the organization in the
direction of progress by opening up managers and HR to be
more focused on employees.

Budgets as Strategy Tools

An organization’s budgets support strategic decisions by allocating
limited resources to programs and activities that improve the
organization’s ability to achieve its strategic goals. Strategic budget
alignment occurs at both the organizational and functional levels.

Resources are primarily allocated through budgets for planning

periods and for specific projects. There are many types of budgets,
but a budget is essentially a planning and measurement tool. It
anticipates the amount and timing of income and disbursement of
funds, and it identifies how much and what type of work or results
will be produced.

The budget provides control over assets and transparency over the
use of those assets. Functions and projects receive regular budget
reports, and their performance is in part assessed by their ability to
meet budget projections about anticipated results and use of
resources.

HR professionals understand their organization’s budgeting process

and the way it affects HR activities. HR will be competing with other
functions for the organization’s limited resources. Whether a request
is for ongoing operational expenses or a one-time project, HR
professionals are able to justify the budget request by demonstrating
how the use of resources will advance HR’s strategy and ultimately
the organization’s strategy.

Budgeting Process

The budgeting process varies in different organizations. Some use a

collaborative, top-down/bottom-up process in which organizational
and functional leaders present budget goals and guidelines and
departments respond with proposed budgets. The final budget is
usually the result of negotiation. This approach helps ensure that
budgets reflect leadership’s larger strategic needs as well as
department managers’ more granular knowledge of activity
requirements and risks.

Various budgeting methods can be used. An organization may use

multiple methods to account for different conditions in programs and
functions. These methods are listed in Exhibit 37.

Exhibit 37: Budgeting Methods

Type Characteristics Example

Incremental Traditional form of budgeting; also Installing new computer

known as line-item budgeting. equipment or providing
The prior budget is the basis for the next training requires a separate
budget. The prior budget is simply budget request, on top of
increased (or decreased) by a set the usual budget.
percentage. Additional funds must be
requested based on need and
objectives.
Less time-consuming than other
methods but does not recognize
changes in business circumstances or
practices that could affect spending.
 Type Characteristics Example

Zero-based All objectives and operations are given a A department would need
priority ranking. to justify its entire budget
Each unit or goal is ranked, and then and show how its funding
available funds are given in order. helps the organization meet
its goals.
All expenditures must be justified for
each new period, and budgets start at
zero. No funding commitments for the
coming year are assumed.
Process can be time-intensive at first but
becomes more efficient with experience.
Tends to reduce wasteful spending
practices that can go unchallenged in
traditional budgets.
Activity-based This type of budget recognizes the An organization asks
interrelationships among the various functions what resources
activities required to create value in an they will need to produce
organization. specific outputs or levels.
The basis for budgeting is not how to More resources are
divide a set amount of money but how transferred from lower-
much it costs to perform different priority areas or areas with
enterprise activities. excess capacity.

Funding may be allocated based on the

strategic significance of the activities.
Once the function has accumulated
historical information about cost factors,
estimates can be more precise. This
gives leaders more control over
spending decisions.
Formula- Different units or operations receive A government agency
based varying percentages of the budget. could experience a system-
General funding is changed by a specific wide 5% budget decrease,
amount, and the unit budgets are which would be spread
adjusted accordingly. among its units according
to different percentages.
Capital costs—one-time investments in physical assets, such as
buildings, land, or equipment—are not common in HR but can occur.
For example, HR may seek funding to replace an aging information
system. Capital costs are budgeted separately from operating costs.
It is also possible that some HR activities may be included in the
budgets of other functions (for example, a consulting or special
training project).

The budgeting process requires understanding the organization’s

practices, strategy, and environment:
How does the organization allocate costs? What HR-related
costs are assigned to the various functions, or are they all
assigned to HR?
Which costs are variable (dependent on the number of
employees and use of a service or asset) and which are fixed
for the budget year?
When do costs occur? For example, are temporary workers
hired at particular seasons?
What organizational and functional strategic plans will affect
HR? For example, how will a planned reorganization affect HR
work?
What risk factors affect the budget? Should contingency funds
be included to manage unexpected threats and opportunities?
Because human resources spans the entire organization and
because functional strategies and plans will inevitably affect HR
operations, one of the challenges of developing a strategic HR
budget is being aware of the human resource needs of internal
business partners.

HR Budget

The HR budget includes:

Ongoing operational costs related to HR’s essential services,
such as recruitment and selection, employee relations activities,
and talent management.
Overhead costs that do not directly contribute to HR function
and service provision, such as utilities, maintenance, and other
costs related to occupancy.
One-time project costs planned to support HR strategy and
objectives (for example, an executive salary review).

The operational side of the HR budget includes resources that are

directly related to staffing and expenses required to provide HR
services to internal customers. This budget ordinarily includes
resources related to:
Talent acquisition.
Training and development.
 Compensation and benefits.
Employee and labor relations.
Health, safety, and security.
Information technology.
Planning.
Philanthropy.

Many of these expenses are variable and will be affected by the

organization’s and HR’s strategies. For example, growth and
retraction strategies will affect employee head count and may involve
additional expenses for recruiting or outplacement services. A
strategy that requires a change in organizational structure or culture
will probably require funding for consultants and development
activities.

Therefore, the first thing HR leaders must do in the process of

allocating resources to strategic activities is to compare
previous/current activities and budget allocations with what will be
needed to support the proposed organizational strategy. Having
several years of HR data to establish rules of thumb and trends in
expenses will be helpful in defining a new budget.

Creating a Business Case to Secure

Resources
Some strategic activities may be budgeted and managed as projects
outside HR’s operational budget. These projects must compete for
available organizational resources, since proposals will be funded
according to strategic priority. Success depends on establishing a
clear and strong alignment between the specific project and the
organization’s strategic goals. This relationship is set forth in a
business case.

A business case is a presentation to management that establishes

that a specific problem exists and argues that the proposed solution
is the best way to solve the problem in terms of time, cost efficiency,
and probability of success. The form and level of formality of the
business case will vary by organization. Some are written proposals
with supporting financial analyses, while others may be slide-
supported oral presentations.

Whether they are written or oral, business cases generally have the
same components. These components are described below and
illustrated with a description of a possible HR business case.

Executive summary. This summarizes and establishes the

purpose of the project. It supplies the condition or change
impelling the function’s action.

Example: HR is aware that the organization’s strategy

includes growing its South American businesses. Until
 now, these businesses have operated independently from
headquarters and from each other. The lack of common
policies and processes for compensation and rewards
and talent management and the lack of a shared
organizational culture would inhibit the strategy.

Recommended solution. The objectives for an ideal solution

are defined (the desirable outcomes of such an initiative), and
the proposed action is described in sufficient detail to show how
it meets these objectives. In some cases, alternatives may be
described as well, and the reasons why they are not being
recommended may be discussed.

Example: HR proposes conducting a customized salary

and benefits survey for the targeted growth areas and the
current countries in the portfolio and building a policy and
practice “culture” for the existing individually run countries
that would make acquiring a partner or growing
organically more feasible.

Risks and opportunities. Risks should include outcomes that

could decrease the project’s chance for success, outcomes that
could present new opportunities that would require action, and
the risks of doing nothing at all.

Example: HR foresees the difficulty of obtaining this

information in some businesses with poor data records
but has included extra time and resources in its reserves
 for this. There is a currently unresolved legal issue about
obtaining access to data in one country. The opportunity
is that this information can come at an opportune time for
the company’s acquisition strategy and make integration
much smoother.

Estimated costs and time frame. The project budget should

include all foreseeable elements (labor, equipment, fees, travel,
and so on) plus a reserve for the unforeseeable based on the
project’s risk. The time frame should keep in mind not only the
project requirements but also the organization’s needs. Longer
or more complex projects may be structured in phases, with
gates or review milestones at which management can decide
whether to proceed or not.

Example: HR provides a cost estimate but also

estimates this amount in terms of the benefits this
information could provide in the event of an acquisition or
merger.

Once approved and implemented, projects should be revisited

periodically to make sure that the business case is still sound—that
no risks have emerged to change the cost-benefit or risk profile, that
no changes in the external environment have eliminated the need for
the action or changed the characteristics of an effective solution.
Exhibit 38 lists useful tips to remember when creating a business
case.

Exhibit 38: Tips for Creating Effective Business Cases

To create an effective case for investment:

Research your proposal carefully: Put your proposal in writing:

Gather facts. Explain the issue and needs.

Investigate alternatives. Describe the solution using facts, not
Consider risks. emotion.

Align your proposal with organizational Include specific metrics to evaluate its
strategy. effectiveness.

Get early buy-in from key decision makers

and influencers.

Financial Statements as Measure of

Business Performance and Health
HR professionals should become familiar with key financial
statements that the organization and its stakeholders use to
measure the organization’s health and to plan actions—the balance
sheet, the income statement, and the cash flow statement. These
statements are integrated. Information from one is used in creating
the other statements.

Understanding the financial statements helps the HR professional:

 Understand the perspectives of internal and external
stakeholders. HR professionals can better understand the
economic issues driving management decisions (for example,
poor profit margins relative to industry, inadequate cash flow to
cover wages, large deductions from gross sales caused by
returns). Investors analyze financial statements to gauge growth
opportunities and identify risks, such as too much debt.
Identify opportunities for HR to improve the organization’s
financial performance (for example, developing new
competencies aligned with financial goals). The HR function can
better fulfill its consultation role to organizational leadership.
Understand factors that may affect HR strategies. For example,
weak revenue may affect executive compensation. Poor cash
flow or ability to incur debt may limit internal investments in a
new HR information system.

A good way to gain financial perspective and understanding is to

consult with colleagues in finance. Meeting regularly with a financial
officer will increase an HR professional’s understanding of the
financial values driving strategy and operations. It is also an
opportunity to learn about the challenges facing the financial
managers and consider ways HR activities might help. These
discussions may create an influential ally and advisor when crafting
HR initiatives.
Balance Sheet

The balance sheet is one indicator of the organization’s financial

health. It is a statement of the organization’s financial position—its
assets, liabilities, and equity—at a particular time. Exhibit 39 displays
the balance sheets of a fictional company on December 31 of two
consecutive years. We will refer to this sample throughout the
following description of the balance sheet.

Exhibit 39: Balance Sheet for a Small Manufacturing Company

ABC Manufacturing Company

Balance Sheets In thousands (000)
December 31, Year Year 1 Year 2
Cash and cash equivalents $ 133,900 $ 128,600
Raw materials inventory 10,800 13,000
Work-in-process inventory 5,400 16,600
Finished goods inventory 25,000 23,700
Total inventory $ 41,200 $ 53,300
Accounts and notes receivable 46,200 50,300
Doubtful accounts <500> <400>
Total current assets $ 220,800 $ 231,800
Gross plant, property, and equipment 60,000 70,000
Accumulated depreciation <6,400> <10,400>
Net plant, property, and equipment $ 53,600 $ 59,600
Total assets $ 274,400 $ 291,400
Accounts payable 59,700 65,200
Short-term notes payable 12,000 16,000
Total current liabilities $ 71,700 $ 81,200
Long-term debt 80,000 80,000
Stockholders’ equity (includes retained earnings) 122,700 130,200
Total long-term debt and stockholders’ equity $ 202,700 $ 210,200
 Total liabilities and stockholders’ equity $ 274,400 $ 291,400

The key word in the term “balance sheet” is “balance.” In accounting,

all transactions should be balanced: Any money entered as an asset
is balanced by offsetting liabilities. To illustrate this, consider that, in
our example, ABC’s factory buildings and land are valued in year 2
at $59,600,000. This asset is balanced by a note to a bank for, let’s
say, 60% of its value, or $35,760,000. The remainder of the asset’s
value, $23,840,000, is considered equity—value held by ABC’s
owners and shareholders.

This relationship between assets, liabilities, and equity is

represented by the balance sheet equation, which may be shown as:

In our example, the top part of the balance sheet lists assets, which
are balanced by the items in the bottom half of the sheet, liabilities.

Assets are what an organization owns. They can be tangible (for

example, cash or cash equivalents, inventory of finished product or
materials, property, and equipment) or intangible (for example,
copyrights and patents, proprietary knowledge). (Although human
capital is an important asset for organizations, finance and
accounting do not list it as an asset because it cannot be monetized
with absolute agreement.)
Assets also include investments the company has made (for
example, purchase of income-bearing instruments) and what is owed
to the organization (for example, as-yet unpaid invoices). In
accounting terms, these are accounts receivable, the money an
organization’s customers owe the organization. It is in the financial
interest of the organization to collect all of its accounts receivable. If
a balance sheet regularly shows a high level of doubtful accounts,
this might indicate that customers’ financial strength should be
considered when making sales. Doubtful accounts—probably long
overdue and uncollectible—are deducted from accounts receivable.

In this example of a balance sheet for a small manufacturer, current

assets include items that can be easily liquidated or converted into
cash, such as cash deposits, inventory of finished and in-process
products, and accounts receivable. Fixed assets (for example,
buildings, land, factory and office equipment, furnishings) have
tangible value but are long-term investments not intended for quick
liquidation.

Liabilities are what an organization owes. Liabilities can include

items such as rent, loans or notes, wages and benefits that have
been earned but not paid, reserves set aside to cover potential
liabilities, unpaid fines or legal judgments, tax debts, and accounts
payable. Accounts payable is the money an organization owes its
vendors and suppliers.

In our example, ABC Manufacturing has rather simple liabilities:

Accounts payable (probably for items such as materials, utilities,
servicing of equipment, and advertising)
Short-term notes (perhaps for equipment purchases)
Long-term debt (perhaps for factory construction)
Shareholder equity

Equity is combined with liabilities in the balance sheet because it

represents what a company owes to either its owner(s) or its
shareholders. Equity is what is left of a company’s assets after its
liabilities have been discharged. Stockholder equity is the value of all
stock held by investors. In this case, it also includes profits that have
not been distributed to investors as dividends but have been retained
by the company, probably for reinvestment to grow the company, for
example, the purchase of robotic equipment to increase productivity.

Key Content

Important points to remember concerning balance

sheets are:
The basic form of the sheet is Assets = Liabilities +
Equity.
 Balance sheets provide a snapshot of the
company’s financial position at a given moment in
time. Balance sheets change as new transactions
are recorded.
Every financial transaction is an exchange, and
both sides of the transaction are entered on the
balance sheet to reflect assets, liabilities, or equity.
Only transactions measurable in money are
recorded. Transactions without a definite monetary
amount are not placed on a balance sheet.

Income Statement

Unlike the balance sheet, the income statement compares

revenues, expenses, and profits over a specified period of time—
usually a year or a quarter. The income statement is also known as
the profit and loss statement or P&L.

The income statement indicates an organization’s net income, which

is often referred to as the “bottom line” and provides key information
about the organization’s performance. The equation for net income
is:
Exhibit 40 shows a sample income statement for ABC
Manufacturing. This is a consolidated statement, which means that it
includes multiple reporting periods (FY [Fiscal Year] 1 and FY 2 in
this case). A consolidated statement enables comparisons of key
financial data over time and thus can show trends in growth or
decline.

Exhibit 40: Sample Income Statement

ABC Manufacturing Company

Income Statements In thousands (000)
FY 1 FY 2
Sales, gross 285,500 312,000
Sales discounts, returns, and allowances <14,300> <15,600>
Revenue (net sales) 271,200 296,400
Cost of goods sold (COGS) <167,400> <182,200>
Gross profit 103,800 114,200
Selling expenses <29,800> <32,600>
Salaries <19,000> <20,700>
Lease expense <10,800> <11,900>
Total operating expenses <59,600> <65,200>
Depreciation <3,400> <4,000>
Earnings before interest and taxes (EBIT) 40,800 45,000
Interest expense <4,300> <4,400>
Pretax income 36,500 40,600
Taxes <12,000> <21,100>
Net income 24,500 19,500
In the example, ABC’s revenue or net sales for FY 1 and FY 2—
$271,200 and $296,400—consist of its total sales minus items such
as repayments to customers for faulty products or discounts granted
for buying products in larger quantities. The cost of goods sold (for
example, raw materials, purchased equipment and supplies, direct
labor) is subtracted from revenue to show ABC’s gross profit
($103,800 for FY 1 and $114,200 for FY 2).

To arrive at net income, we have to make a series of deductions.

First, total operating expenses (also referred to as total expenses or
total costs) must be deducted from gross profit. Total operating
expenses include items such as selling expenses (for example,
advertising), salaries that are not directly related to producing goods
(for example, administrative salaries), and continuing lease
payments (for example, for large equipment or facilities). The total
operating expenses are $59,600 for FY 1 and $65,200 for FY 2. We
should note that the increase in total operating expenses from FY 1
to FY 2 makes sense, since total sales have increased as well.

If we also subtract depreciation (loss in value of assets as they are

held over time) from gross profit, we arrive at earnings before
interest and taxes, or EBIT.

If we subtract interest and taxes, we finally arrive at net income: for

FY 1 $24,500 and for FY 2 $19,500. The drop in net income, despite
increased gross income, probably derives from the sharp increase in
taxes that ABC paid in FY 2.

Financial data in the income statement is used to create metrics for

an organization’s financial health. Two key metrics from the income
statement, for example, are gross and net profit margin.

Remember that gross profit is net sales minus the costs of

producing what is sold. The gross profit margin compares
gross profit with sales. It is calculated in the following way:

For FY 1, gross profit margin will be $103,800 ÷ $271,200, or

38%.
For FY 2, gross profit margin will be $114,200 ÷ $296,400, or
39% (rounding up).

Net income is what is available for reinvestment or for

distribution to owners and stockholders. The net profit margin
is calculated in the following manner.

For FY 1, net profit margin will be $24,500 ÷ $271,200, or 9%.

 For FY 2, net profit margin will be $19,500 ÷ $296,400, or 7%
(rounding up).

The downward direction of net profit margin could be a problem for

ABC if it continues to decline or if it is unique to ABC (if its
competitors are not experiencing a similar decline). These metrics
are important because an organization with a healthy profit margin
(for its industry) can obtain financing and reinvest for growth.

Key Content

The following are important points to remember

concerning income statements:
The basic form is Revenues – Expenses = Net
income.
Income statements reflect performance over a
specific time period, usually a quarter or a year.
Some expenses are never cash outflows
(depreciation, for example) but are only accounting
items, and some expenses may be paid in cash
partly in this period and partly in the next period
(cost of goods sold, for example).
Owner withdrawals are not an operating expense
but are a distribution out of net income.
Cash Flow Statement

The cash flow statement illustrates the effect of all organizational

activities—activities that both consume value (for example,
production, administration) and produce value (for example, sales,
investments)—on how much cash or cash equivalents the
organization has on hand.

Key Content

In other words, the cash flow statement shows how

money is flowing into and out of the organization—
through operations, investing, and financing—over a
defined period of time.

Financial data for the cash flow statement comes from

the income statement and the balance sheet.

A cash flow statement for ABC Manufacturing is shown in Exhibit 41.

Exhibit 41: Sample Cash Flow Statement

ABC Manufacturing Company

Statements of Cash Flow In thousands (000)
Year Year 1 Year 2
After-tax income $ 25,500 $ 19,500
Depreciation add-back 3,400 4,000
(Increase)/decrease in inventory (7,900) (12,100)
(Increase)/decrease in accounts receivable (7,700) (4,100)
Increase/(decrease) in accounts payable 10,100 5,500
Net cash flow from operating activities 23,400 12,800
Capital expenditures (10,000) (10,000)
Net cash flow from investments (10,000) (10,000)
Cash flow from operations and investment 13,400 2,800
Additional equity capital – –
Less dividends paid (10,000) (12,000)
Increase/(decrease) in long-term debt – –
Increase/(decrease) in short-term notes 2,000 4,000
Net cash flow from financing activities (8,000) (8,000)
Cash flow from operations, investments, and
financing activities 5,400 (5,200)
Beginning cash balance 128,500 133,900
Ending cash balance $ 133,900 $ 128,700

As shown in Exhibit 41, there are three areas in a cash flow

statement:

Operations. For ABC in year 2, positive cash flow includes

income from sales, depreciation of buildings and equipment,
and an increase in accounts payable from year 1. (Since these
bills have not been paid, the corresponding cash has stayed in
ABC’s account.) Negative cash flow occurs when inventory and
accounts receivable increase from year 1 levels.

Investing. In year 2, ABC has invested $10,000,000 in capital

expenditures, such as a new manufacturing line. This outlay
 represents negative cash flow.

Financing. In year 2, ABC expended cash in paying dividends

to shareholders, but cash flowed into the company through
short-term borrowing activities.

The combined cash flow from these three areas is subtracted from
the cash balance available to ABC at the beginning of year 2. This is
the same as the ending balance for year 1, which was carried over
into year 2. For year 2, ABC showed a negative cash flow. This could
be problematic if the trend continues.

The balance, trends, and relationships in the areas of the cash flow
statement are often interpreted by outside financial experts (such as
banks or investors) as signs of sound or weak management. A
negative cash flow in operations could indicate that sales are too low
and/or the cost of production is too high for the organization to
sustain existence. Positive cash flow indicates the ability to repay
debt and meet expenses. Negative cash flow in investing could
suggest that the organization is not continuing to invest in itself to
develop new skills and products. The cash flow in financing,
compared to operations and investing, could show when an
organization is relying too heavily on borrowing.
For an HR professional, poor cash flow may mean that fewer
resources will be available for HR programs, but there may also be
opportunities for HR to use its expertise to improve the cash flow
situation, which will make the company more attractive to investors.
HR might, for example, work with operations to introduce a leaner
manufacturing process (which will decrease inventory) or with sales
and marketing to create an incentive system (which will increase net
income).

Financial and Nonfinancial Ratios as

Indicators of Business Health
Financial ratios are another important tool that can be used to
analyze an organization’s performance. A financial ratio compares
two values; the result is a useful measure that can be compared to
benchmarks of financial performance.

One argument against excessive use of financial measures is that

they can overemphasize the importance of short-term results.
Viewing financial results as trends can help lessen this effect.

In addition, financial measures must always be used within the

context of a specific industry. Profit margins, for example, are very
different in financial services than they are in manufacturing
consumer goods. Part of the discussion with colleagues from finance
should include understanding industry metrics and how the
organization compares with similar enterprises.

Exhibit 42 lists some common financial ratios and describes their

significance and how they are calculated. We have already
mentioned some of these ratios in our discussion of the income
statement.

Exhibit 42: Sample Financial Ratios

Description Formula

Current ratio
Liquidity ratio that indicates level of
working capital. Creditors prefer a higher
current ratio.

Debt to asset ratio

Leverage ratio reflecting the amount of
exposure to risk from debt that an
organization has assumed. A number
greater than 1 indicates that an
organization has more debt than assets.

Debt to equity ratio

Leverage ratio reflecting how an
organization is funding its growth. This
varies by industry and strategy type.
 Description Formula

Accounts receivable turnover

Activity ratio that measures the efficiency
of debt collection. A higher ratio is
preferable, but a ratio that is too high
could indicate excessively tight credit
policies that could hurt sales.
Gross margin
Profitability ratio showing the percentage
of total sales revenue after incurring the
direct costs of producing goods and
services sold. The higher the percentage,
the more the company retains on each
dollar of sales to service its other costs
and obligations.
Earnings before interest, taxes,
depreciation, and amortization (EBITDA)
margin
Profitability ratio often used as measure of
management performance.
Profit margin
Profitability after all expenses have been
deducted, expressed as a percentage of
revenue (sales).

Return on investment (ROI)

Profitability ratio for a specific investment,
such as a capital expense project. It is
usually used to compare the economic
costs and gains of options. A good
investment generally has an ROI above 1.
Analyses showing negative ROIs may
then proceed to consider factors whose
economic impact is more difficult to
measure (for example, improved
employee motivation).
 Description Formula

Earnings per share (EPS)

Profitability ratio used by equity holders
as a standard expression of earnings.

Price to earnings (P/E)

Market value ratio that indicates market
confidence in the organization’s ability to
maintain or increase earnings.

Nonfinancial Performance Measures

Nonfinancial measures examine changes in areas that are not

measured in terms of currency but whose effects can be monetized
to show their financial effect. Such measures might include:
Share of market, which may signify competitive strength.
Achievements in social responsibility.
Efficiency (or use of most current and efficient technology and
processes).
Activity ratios, which measure the efficiency with which
resources are used to generate profit (examples include number
of inventory turns in a period, average age of inventory, average
collection and payment period, and asset turnover).
Employee retention and job satisfaction ratings.
Employee engagement.
 Market position, which might include the following factors:
Reputation among investors, consumers, governments, and
political groups.
Level of brand awareness among consumers.
Recognizable employer brand (useful in recruiting and hiring).
Reputation for quality, customer relations, and innovation.

Conducting a SWOT (strengths, weaknesses, opportunities, threats)

analysis can help identify which of these measures (or others not
listed) are most relevant to the organization’s strategy or which areas
could benefit from more resources in order to achieve certain goals
and objectives or exploit identified opportunities.

Such an analysis could have repercussions for HR strategy. For

example, if it is decided that the organization’s brand is not
sufficiently well-known to justify an expansion, a decision might be
made to hire more brand ambassadors. This will require adjustments
to hiring practices and perhaps also changes to business travel
policies and budgets. Similarly, if a decision is made to expand the
organization’s market or processes abroad, then HR will have to
incorporate new legal and regulatory considerations into its
workforce management plans.

Sales Pipeline
The sales pipeline is a visual representation of an organization’s
sales process. By translating the sales process into a visual pipeline
of smaller components, the process can be more easily managed
and tracked. The information included in the pipeline can help
managers forecast revenue, project cash flow, and identify
bottlenecks in the sales process.

There is no single way to create or present a sales pipeline.

Depending on an organization’s preferences and standard operating
procedures, pipelines can have varying levels of detail. However,
there are a number of common components that all pipelines should
include. An example of a sales pipeline can be seen in Exhibit 43.

Exhibit 43: Sales Pipeline

1. Identify leads. Through campaigns, public relations, and other

promotional activities, customers are exposed to the
organization and the products or services it offers. This stage is
sometimes referred to as prospecting.

2. Gather information. Investigate prospective customers to

ensure that they are viable leads. In other words, can you meet
their needs, can they afford it, are they a legitimate
organization?
 3. Create proposal. After it is determined that a lead is legitimate,
a proposal is drawn up detailing why and how the product or
service meets their needs or requirements (for example, costs,
benefits, process, pricing).

4. Negotiate. After receipt of the proposal, a prospective buyer

might come back with a counterproposal. Sometimes, they may
ask for a demonstration to ensure that the product or service
does indeed meet their needs. Any counteroffer should be
examined closely to ensure that it makes financial sense.

5. Close sale. After the terms have been agreed upon, final details
are ironed out, and questions are answered. A contract is sent
out and signed by both parties, and payment is received.

6. Monitor. After a sale is completed, the customer should be

monitored regularly in order to provide high levels of service.
Depending on how the account is performing, opportunities to
cross- or up-sell other products and services might arise.

An organization’s sales pipeline, as with many internal processes,

should be revisited and refined whenever new information is
gathered and applied.

A benefit of using a sales pipeline is the opportunity to measure

sales team performance. The pipeline can provide information about
the different levels of success and performance within the sales
team—for example, if they are meeting targets or underperforming.
This information can be used to identify gaps in skills or suggest
training that might be offered in order to lift up struggling or
underperforming sales representatives.

Business Documents
HR professionals should familiarize themselves with a variety of
nonfinancial business documents, including the following, as a
source of information that can help to inform and refine strategies
and plans.

Business plan. A business plan is the founding document for

an organization and an organizational-level equivalent of a
business case. It establishes the organization’s purpose for
existing—what it was created to do or achieve. The business
plan includes details of the organization’s structure, its
marketing plan, and financial projections.

Strategic plan. This document outlines how an organization

intends to fulfill its purpose. It includes details of the mission and
vision; strategic objectives, goals, and initiatives; and relevant
budgetary information. It is a more detailed version of a
business plan, offering a greater level of detail and specifics.
Strategic plans can also include details of key performance
indicators (KPIs).

Organizational chart. This is a diagram that illustrates the

hierarchy within an organization. It includes information
regarding reporting and other relationships between individuals,
functions, and departments. These charts are useful to HR
because they can be used to assess whether the organization
has the right number of appropriately skilled employees in the
correct roles. For dispersed organizations, the chart is an
excellent tool for keeping track of where employees are located
and how they fit into the structure and hierarchy.

Standard operating procedures (SOPs). These are formal

guides, typically presented step by step, that outline how a work
process or activity should be completed. SOPs are common for
activities and processes that are repetitive or low in variance,
and they can enhance efficiency. Many of HR’s functions might
have SOPs: hiring, employee onboarding, training, exit
interviews, annual reviews, and so on. Familiarity with other
organizational SOPs can help HR professionals navigate
interdepartmental activities more effectively.
Grants. A grant is a form of financial assistance provided by a
government to help fund an idea or project that is understood to
provide a public service or stimulate the economy. Examples of
the intended outcome of grant-funded projects may include
environmental or educational benefits, promotion of culture and
the arts, job creation, or disaster recovery efforts.

Contracts. A contract is a legally binding agreement between

two or more parties, typically related to the exchange of goods,
services, or cash. It defines and governs the rights and
responsibilities of each participant.

Business continuity plans. A business continuity plan is a

document that outlines how an organization will maintain
operations during an unplanned disruption. HR will have its own
plans for disruptions (as part of risk management), but a
business continuity plan takes into consideration every aspect of
an organization that might be affected. These plans will contain
information about supplies, equipment, employee disposition,
data backups, and backup locations; they are sometimes
presented as a simple checklist. HR can play a pivotal role in
developing these plans, as well as during any crises, and
leaders should ensure that they are familiar with these
documents.
Consultation Competency
Consultation Competency
Consultation is defined as:

The KSAOs [knowledge, skills, abilities] needed to work

with organizational stakeholders in evaluating business
challenges and identifying opportunities for the design,
implementation and evaluation of change initiatives, and
to build ongoing support for HR solutions that meet the
changing needs of customers and the business.

The solutions HR may propose to increase organizational

effectiveness are described throughout the HR Expertise
competency, for example, coaching, career development, talent
management, skill development, diversity and cultural awareness,
changes in structure or culture, employer branding, employee
engagement, and so on. This discussion focuses on the process of
consultation (of gathering information and building support for
solutions), managing the changes that come with performance-
focused initiatives, and developing a customer-centric perspective in
the HR team.
 Consulting Process

Proficiency indicators related to this section include:

Advises stakeholders on existing HR programs, practices and
policies that impede or support business success.
Defines clear goals and outcomes for HR solutions, and uses
them to drive solution design.
Identifies, defines and clarifies needs and requirements of
stakeholders (examples include employees, candidates,
vendors), and reports on the status of HR services provided and
results achieved.
Informs stakeholders about current and future HR-related
threats and liabilities.
Partners with stakeholders to suggest HR solutions that are
creative, innovative, effective and based on best practices
and/or research.
Partners with stakeholders to understand the organization’s
current and future HR challenges, and identify HR needs and
opportunities for improvement.
Provides guidance to non-HR managers regarding HR
practices, compliance, laws, regulations and ethics.
 Recommends ways to improve HR programs, practices and
policies.
Determines the strategic approach to remediation of HR-related
threats and liabilities.
Develops and promotes an organizational culture that excels at
meeting stakeholder needs.
Encourages staff and leaders to provide input on strategic HR
and business decisions.
Identifies larger system needs and issues influencing market
requirements, and engages outside stakeholders to help meet
requirements that go beyond HR’s functional assignment.
Works with key internal stakeholders to identify initiatives that
minimize threats and liabilities.
Works with leaders to overcome strategic obstacles to
implementation of HR initiatives.
Works with leadership to identify how HR can improve business
outcomes and support the organization's strategic direction and
long-term goals.

Key concepts related to this section include:

Consulting processes and models, including the contributions of
consulting to organizational systems and processes (examples
include discovery; analysis and solution; recommendation;
implementation).
Effective consulting techniques (examples include
understanding organizational culture; understanding areas and
limits of one's own expertise; setting reasonable expectations;
avoiding overpromising).
Key components of successful client interactions (examples
include listening; empathy; communication; follow-up).
Methods for design and delivery of HR service functions and
processes (examples include issue tracking; client service).
Consulting Process
Consultation involves providing guidance to organizational
stakeholders. It requires the ability to diagnose problems or identify
opportunities, develop effective solutions, win support for the
solutions, and then implement them effectively. For HR, guidance
often involves using HR expertise to improve the organization’s
performance so that it can take advantage of opportunities and
achieve strategic objectives.

Competency Connection
The Consultation and Analytical Aptitude competencies combine to
equip HR professionals to be organizational problem solvers,
presenting sound, evidence-based proposals to leaders to improve
performance, as shown in this case.

HR identifies a turnover trend in a particular business segment—

specifically, a higher rate of turnover than should be expected. The
head of the segment wants to know why this is happening and
suggests that the fault might be in the candidates who are put
forward for the roles.

Drawing on her analytical skills, an HR professional gathers pertinent

data and information about the segment’s workforce: which roles are
most affected, the demands placed on workers in the high-turnover
roles, and other aspects of the segment’s work, including
comparisons with other roles within the segment and in similar areas
elsewhere in the organization. HR finds that the employees were all
identified as potentially solid hires, with appropriate skills and
competencies, that there were no red flags raised related to
employee satisfaction or performance, nor were the employees
involved in any disciplinary processes. This suggests that the fault
does not lie with the hiring process. HR engages the functional
managers in further discussion and uncovers the fact that the
turnover positions are all very high-stress and that the segment has
a tendency to treat all work as urgent and time-sensitive. There are
strict deadlines, and many unexpected activities often arise and
force the individuals to work quickly and without breaks.

Analyzing their findings, HR identifies the causes that contributed to

the high turnover. Using this data, HR then works with the managers
and the employees to identify new ways to approach the work that
will relieve some of the tension, increase breathing space, and also
provide time for breaks—that is, to make the employees feel like
they are not in a constant, never-ending sprint.

The new methodologies take time to implement, but HR continues to

consult and work with the managers and the employees to assess
the effectiveness of the changes and to overcome any obstacles that
might impede progress until the new approaches become routine
practice.

Consulting Model
The consulting model is shown in Exhibit 44.

Exhibit 44: Consulting Model

Throughout the four steps that make up the consulting model, one of
HR’s key responsibilities is communication with and management of
stakeholders. A stakeholder is anyone whose work or experience is
affected by the potential outcome of a change initiative—including
employees, managers, vendors, and customers.
The four steps in the consulting model unfold within the change
management process. From beginning to end, HR professionals
should be aware of the organization’s (or individual’s or group’s)
readiness to change and the members’ ongoing emotional
responses to changes. They should plan and then implement ways
to increase acceptance and assimilation (sometimes called buy-in) of
new values and practices.

Define the Problem

During a discovery phase, HR collects data to define the gap

between desired and actual performance and identify possible
causes for the gap (for example, misalignment of competencies,
leadership models, structures, or cultures) as well as to identify
potential threats, challenges, and liabilities that could be addressed
by a change initiative. Information that will affect the eventual plan is
also gathered.

Data should be collected from all relevant internal and external

stakeholders—decision makers, managers, staff, partners, and
perhaps even customers. Information gathered at this point will help
in the design of an effective and efficient initiative. Stakeholder
involvement in designing the solution will improve the eventual
implementation, since people support what they help create.
Involvement can also provide information that will help identify
specific requirements of certain stakeholders as well as manage
expectations and fears of change.

Data is sorted and analyzed so that results can be reported to

stakeholders in a way that helps them understand the observations
and decide an appropriate action. This involves many of the skills
associated with the Analytical Aptitude competency.

It is important that consultation findings:

Focus on conditions that can realistically be changed, given the
organization’s environment and resources and given the
attitudes of the organization and the receptiveness of its
members to change.
Are based on sufficient and specific evidence and are presented
neutrally.
Select a few areas for attention, prioritizing data findings by
frequency and impact on strategic performance. Too many
points of action may lead to client paralysis.

Design and Implement the Solution

Criteria for an effective solution are defined and an appropriate tactic

for development is chosen—for example, job assignments or a
mentoring program. The implementation may be managed as a
separate project, using traditional project management skills to direct
and control the initiative and make sure that it meets the defined
objectives within the allocated budget and resources.

Successful implementation may depend on the ability to motivate

employees to move through the sometimes difficult period of
adjusting to new conditions and practices. This may include
providing necessary support (for example, more time to adapt to new
expectations, new tools, training in new skills). Communication skills
are critical—being alert to verbal and nonverbal messages, providing
appropriate information at the right times, reporting results when
required, and giving and seeking feedback.

Key Content

When teams/stakeholders are involved in a decision,

apply a typical problem-solving approach:
Explore the decision to be made fully, so that all
influences are understood.
Generate multiple options, define criteria for an
effective choice, and analyze each.
Select the best solution and implement it.
Evaluate the decision and the decision-making
process when the decision’s outcomes are clear.
 Were there enough quality options? Were the right
criteria used? Were key individuals actively
engaged in reaching consensus?

Measure Effectiveness

The solution’s effects are measured to determine if the objectives of

the consultation have been met and if the consultation has had the
desired strategic impact (for example, faster decision making, better
teamwork, better output). HR’s effectiveness as a consultant is
reviewed as well, and plans for improvement are made. Experiences
are monitored and documented for later study. Problems in
implementation are identified and addressed.

Sustain the Improvement

The new process is monitored to encourage continued effort. HR

provides guidance to leaders about ways in which new values,
attitudes, or practices can become institutionalized or applied in
different areas. Ensuring that stakeholder management is promoted
within HR is essential to sustaining an organizational culture that is
receptive to change.
Tools for Group Decision Making
One of the challenges in consultation is creating group commitment
to the chosen course of action. The group decision-making tools
described in Exhibit 45 are effective in engaging all participants and
creating a logical path toward consensus.
Exhibit 45: Group Decision-Making Tools

Tools Descriptions

SWOT analysis The group can brainstorm strengths, weaknesses,

opportunities, and threats and agree on a numerical value for
each.
SOAR analysis Similar to the SWOT analysis (above), the group identifies
strengths, opportunities, aspirations, and results. This is a
framework that combines fact finding with an organization’s
goals and desires, presenting an analysis of the organization’s
actual state and how it will measure achievement.

Multi-criteria decision The team determines critical characteristics of a successful

analysis (MCDA) decision (for example, ability to meet project requirements,
likelihood of success, least chance of causing secondary
risks). A matrix is used to score each alternative and compare
results.

Cost-benefit analysis Group discussion is critical to identifying all relevant costs and
(CBA) benefits.

Force-field analysis This tool was designed to analyze the forces favoring and
opposing a particular change. The group identifies and weights
factors that could influence an outcome in either a negative or
positive manner according to their possible impact. The group
then uses these factors to score different opportunities. They
agree to pursue those showing favorability for change and
avoid initiatives that face very strong resistance.
 Change Management

Proficiency indicators related to this section include:

Aligns and deploys HR programs to support change initiatives.
Builds buy-in among staff for organizational change.
Ensures that the implementation of HR solutions adheres to
defined goals and outcomes.
Identifies and resolves risks and early-stage problems in
meeting stakeholder needs.
Manages interactions with vendors and suppliers to maintain
service quality.
Promotes buy-in among organizational stakeholders when
implementing change initiatives.
Provides follow-up to and ongoing support for implementation of
HR solutions to ensure their continued effectiveness.
Provides guidance to other HR professionals, non-HR managers
and business unit teams on implementation of HR-related
solutions.
Responds promptly, courteously and openly to stakeholder
requests, and takes ownership of stakeholder needs.
Works with business partners to overcome obstacles to
implementation of HR solutions.
Builds buy-in among leadership and staff at all levels for
organizational change.
Defines change objectives and goals.
Designs and oversees HR programs, practices and policies that
ensure a strong, high-quality stakeholder service culture in the
HR function.
Designs and oversees evidence-based long-term strategic HR
and business solutions.
Integrates HR solutions with related organizational processes,
systems, and other business or management initiatives.
Oversees HR’s stakeholder service objectives and outcomes.
Oversees implementation of change initiatives across business
units and throughout the organization.
Partners with business leaders to achieve change objectives
and goals.
Provides ongoing support and HR solutions to business unit
leaders on the organization's strategic direction.
Provides support to HR staff at all levels during change
initiatives.
Works with business leaders to create innovative, evidence-
based talent management strategies that align with and drive
the organization’s strategy.
Works with executives to identify when and where change is or
is not needed.
Key concepts related to this section include:
Organizational change management processes (examples
include obtaining leadership buy-in; building a case for change;
engaging employees; communicating change; removing
barriers).
Organizational change management theories and models
(examples include Lewin’s change management model;
McKinsey 7S model; Kotter’s 8-step change model; Kubler-Ross
change curve).
Change Management
HR consultation often results in structural, process, or cultural
changes. These changes must be implemented in a timely manner,
but organizational and individual resistance can block changes
designed to support organizational strategies. HR professionals
should understand reactions to change and tactics to introduce
changes more effectively.

Competency Connection
The Leadership and Navigation, Business Acumen, and Consultation
competencies can help HR professionals to identify obstacles that
are holding the organization back and support the change process.
In this case, a chief human resources officer (CHRO) points out the
larger implications of a single problem and helps a chief executive
officer (CEO) see the need for action.

A firm has implemented a change in its strategic direction, but one

divisional head of sales is resisting the shift in focus and is persisting
in following the old sales and marketing strategy. The CEO has
tolerated this small rebellion.

The CHRO comes to the CEO and points out that this focus of
resistance is problematic. The divisional head is hurting the change
initiative and damaging the perception that the rest of the firm has of
the CEO. As long as he tolerates this behavior, the CEO appears
weak and not fully committed to the change. The new strategy will
create some emotional turmoil as it changes many people’s jobs and
relationships, and the employees need to see their leader’s
commitment to this direction.

The CEO accepts this perspective of the situation and meets with
the divisional head to restate expectations and possible
consequences for not meeting them.

Managing Change Initiatives

Organizational change can have a broad impact. For example, a
reorganization that follows a merger can require new departments
with different leaders, revised job titles and functions, new pay
structures, and new policies and processes. Organizational change
can also be very focused, such as reengineering one process and
providing necessary information and training to affected employees.

Large or small, these changes trigger complex responses in the

organization and in individual employees. HR’s role as consultant
requires that HR professionals know about more than just how to
design a new solution to an organization’s challenges. They must
understand and be able to manage responses to change so that
these initiatives achieve their intended goals. During a change
initiative, stakeholder management becomes a key responsibility of
HR. Being a leader amidst change requires clarity of vision, creative
problem solving, tactful communication, and courage.

Role of HR in Managing Change

HR should try to be involved early in the planning of change

initiatives. HR understands the organization’s policies and business
requirements, employees’ perspectives, and channels of
communication. Given their responsibilities and purview within an
organization, HR is also well situated to manage interactions
between relevant stakeholders—that is, any employee, manager,
vendor, or customer whose work or experience might be affected by
the change initiative—by coordinating communications and
managing the relationships between various stakeholders.
Contributing this organizational knowledge and expertise can
improve the initiative’s chance for success.

Specifically, HR can:

Identify programs, practices, and policies that might benefit from

change.
Identify the impact of the change on people and departments,
which may include gaps in skills, lines of communication to be
opened, and new policies that may be required.

Assess the impact of changes across the organization and also

on outside stakeholders—the ripple effect of change.

Consult with the organization’s leaders on ways to support the

change initiative, including changes in organizational culture (for
example, different approaches to decision making), new
processes (for example, reward systems aligned with the new
behaviors), and investment in learning and development to
support employees as they develop new competencies to
perform their changed roles.

Use communication skills and channels to contact all affected

stakeholders quickly and uniformly, communicate the details of
the change initiative, and keep them apprised of developments
and progress. Effective communication during periods of change
can produce:
Identification and mitigation of potential risks.
Increased management and employee buy-in and
satisfaction.
Increased trust between management and nonmanagerial
employees.
 Identification of needed change-related training initiatives to
improve employee skills and proficiency throughout the
change process.
Increased leadership cohesiveness.

Measure the effectiveness of the change initiative.

Track issues that arise at any point and follow up to deliver

superior service to HR’s internal customers.

Managing change may require making leaders more aware of how

they themselves need to change. For example, if they want more
agile decision making that arises from self-directed teams, then they
must relinquish some degree of control (manifested, for example, in
increased limits for expenditures without management approval). If
they want greater workforce stability, then they must be willing to
engage in frank discussions with unions and respectful contract
negotiations. It often falls to HR to show how what leaders want and
what employees need can be aligned.

The Impact of Change on Productivity

Employee productivity and engagement can be affected by both
large shifts in culture, structure, and strategic goals and small
changes in roles and processes. This effect is often referred to as
the “dreaded J curve,” shown in Exhibit 46. When change is
introduced, there is typically a decline in performance and then a
slow return to previous levels and—if the change is effective and if it
is managed effectively—a more rapid growth to a new level of
performance. A poorly chosen intervention or poor management of
the change process can result in a more permanent flattening of the
curve at a low plateau, as indicated by the dotted line.

Exhibit 46: J Curve

It is HR’s responsibility to work with stakeholders to help them

understand the benefits of a change initiative—not only in broad,
organizational strokes but also in how a successful initiative will
benefit the individual (for example, by improving the efficiency of
their assigned work processes).

Managing the J Curve

To manage the negative effects of change on productivity, HR
professionals can use the fact that individual employees react to
change differently.
Some may resist change, driven perhaps by fear of the
unknown or a lack of confidence in their ability to perform new
tasks. They may prefer inertia and the comfort of the familiar to
the challenge of learning new roles and skills.
Some employees will welcome the change because they can
immediately see its benefits (for example, improved
communication, more individual control).
Others may simply be waiting for more information to decide
how they feel.

Understanding and being able to manage these individual

differences can affect the speed of the organization’s recovery to full
productivity. Exhibit 47 shows tactics for influencing employees with
these different perceptions of change.
 Exhibit 47: Managing the Change Spectrum

Go to long description.

The key to managing change is to recognize these reactions

promptly and respond appropriately. Resistant employees, for
example, can derail a change initiative quickly if their attitudes are
allowed to affect other team members.
For employees resisting changes, managers must make a
special effort to listen to their fears and doubts, to check in
frequently, and to offer additional resources to help them adapt
to new processes or structures. Managers can also emphasize
the benefits that outweigh the costs of change. If an individual’s
attitude becomes harmful to the group, the manager may have
 to emphasize new expectations and the employee’s obligation
to meet them.
Managers can use more receptive employees as champions of
the changes, communicating their reasons and their enthusiasm
to their peers.
For employees who have not committed to or have rejected the
change, managers may have to sell the potential benefits—both
organizational and personal—of the change. Managers can also
assign them tasks or roles to increase the level of their
involvement in the process.

Key Content

Leaders should explain the change and why it is

needed, be truthful about its benefits and challenges,
listen and respond to employees’ reactions, and then
ask and work for individuals’ commitment.

Change in Global and Diverse Organizations

These reactions apply across all national cultures, although

individual reactions may vary depending on the individual’s
competencies and personal situation. Differences in national
cultures, however, may make managing change in a diverse or
global organization more challenging.

Leaders have to be able to gather reliable feedback about how

employees feel about the change. In some cultures, employees will
be reluctant to share personal feelings or to display any doubts or
discontent to someone higher in stature. Managers from outside
cultures should turn to a trusted insider, someone from that culture or
someone who understands both the management and the local
cultures, for advice on how to “read” and communicate with these
employee groups.

Organizational culture may affect successful implementation of

change as well. In “Resistance to Organisational Change: A Case
Study of Oti Yeboah Complex Limited,” Rosemond Boohene and
Asamoah Appiah Williams relate the experience of a Ghanaian wood
product firm that, because of depletion of raw materials, decided to
change from a sawmilling operation to a plywood producer. The
authors reported that:

This kind of change affected the strategy, the structure,

the culture, the technology, and the work processes of
the organization, which eventually brought about
employees resisting the change because of certain new
roles, redundancy, and responsibilities. This led to a
series of strikes, boycott, and lockouts because of fear of
 the unknown and possible loss of job. The consequence
was production stoppages and paying labour for no job
done.

Boohene and Williams tracked a large share of employee resistance

to the organization’s culture. The predominantly young workforce
was very disaffected: uninvolved in decision making, receiving little
communication about changes or the reasons for them, distrustful of
management. Management was inflexible and autocratic, responding
to resistance to change by threatening loss of jobs. Implementing
this type of strategic change would require far-reaching changes in
business processes, required competencies, and roles. The failure of
the proposed change could be predicted once the limitations of the
organization’s culture were understood.

Assessing Change Readiness

Before developing recommendations, HR must consider and assess
the organization’s, group’s, or individual’s readiness to change.
Change is difficult for most individuals, so proactively preparing for
possible issues will assist the change process. Exhibit 48 outlines
some things that should be considered in assessing the readiness
for change.

Exhibit 48: Assessing Readiness for Change

 Assessing Readiness for Change

What is the nature of the change? What fears might people have about the
What is the expected duration? change?

What key milestones are associated How much resistance is anticipated?

with the change? From whom?

Where is the organization in the change How will the organization deal with the

process? temporary drop in productivity that may

result from the change?
Who will have primary responsibility for
What benchmarks will be established?
implementing the change?
What language and cultural factors will How will local interests and needs be

impact the change? gathered and considered during change

planning and implementation?
What role will HR play in implementing
the change?

Conditions That Make Change Possible

McKinsey & Company consultants Emily Lawson and Colin Price

identify several conditions that make it easier for people to get to the
point where they will consider or try a new way of doing things:

Shared purpose. If people believe in the overall purpose of and

reason for the change, or buy in to the objectives of the change
initiative, they will make a legitimate effort to change
themselves. Those leading a change initiative should
communicate how proposed changes are necessary to achieve
the organization’s strategic goals and/or values.
 Reinforcement systems. Structures, management processes
and encouragement, measurement, communication, and other
critical support factors must be present and congruent with the
desired change initiative.

Skills required for change. While this need may seem

obvious, it is often overlooked. Training is a much more efficient
and effective method than trial and error for equipping people
with the knowledge and skills to be successful.

Consistent role models. The presence of a role model within

an individual employee’s sphere of influence makes change real
and demonstrates, in real time, that change is possible. Many
role models (in addition to managers and executives) need to be
present throughout the organization to keep the message of
change alive until it becomes part of the way the organization
operates.

Change Process Models

The Kurt Lewin model of change is often used to explain the
dynamics through which organizational change takes place. By
understanding these dynamics, HR professionals can offer the
proper initiative for change. Exhibit 49 illustrates the three general
stages of the Lewin change process.

Exhibit 49: Lewin’s Model of the Change Process

Go to long description.

There are many valid models for change. While some are more
detailed than others, most incorporate some aspects of Lewin’s
model by describing activities that prepare for change, activities
essential to facilitating the actual change, and activities or steps that
focus on acceptance and adoption of the change.

A model developed by John Kotter (Leading Change), for example,

provides insight into the “how” of the change management process
by specifying eight contributors to successful implementation of the
change:
 1. Create a sense of urgency.
2. Assemble a strong guiding team.
3. Provide a clear vision.
4. Over-communicate.
5. Empower action.
6. Ensure short-term successes.
7. Sustain progress and build on achievements.
8. Institutionalize.

Human resource practitioners may find an integrated view of the two

models, as described by Cesar Aguirre (“Managing Across Borders
in Latin America”) and shown in Exhibit 50 most helpful in describing
the total process of change.
 Exhibit 50: An Integrated View of Change Strategy

Go to long description.

This integrated change strategy effectively illustrates both the

theoretical and practical aspects of the change process.

Another model to help analyze internal changes in an organization is

the McKinsey 7-S Framework. This model is based on the theory
that for an organization to perform well, seven elements need to be
aligned and mutually reinforce one another:

Style. The organization’s culture and the informal rules of the

organization.
 Skills. The institutional and individual skills the organization can
call on and how they interact with each other. A change in
recent years has been to consider what skills the organization
should have and what customers and suppliers can provide to
the organization.

Systems. The processes of the company, including HR

systems.

Structure. The relationships between different levels of

authority and decision making within the organization.

Staff. The people who make up the organization, workforce

composition, and the people who might be needed by the
organization.

Strategy. What the organization is trying to do to gain a

competitive advantage.

Shared values. What the organization is trying to achieve,

sometimes referred to as superordinate goals. These values
should be reinforced throughout the organization.

The design of the model is intended to reflect the fact that all of
these elements are important and interconnected and, as a result,
change in one area will result in reassessments and adjustments in
the other six in order to maintain a balance.

Facilitating Change
Whether working on a large organizational project or one on one with
an employee or manager, HR professionals must determine the
organizational interventions necessary not only to support
organizational objectives but also to address the current day’s
challenge. Although employees of an organization, human resource
professionals can be considered in-house consultants, ready to
analyze and diagnose problems and recommend creative solutions
that support both organizational and individual needs.

The ability to facilitate change is enhanced if HR develops an

internal “service culture.” Just as organizations must be mindful of
the external customers who use their products and services, HR
must be mindful of how its activities contribute to the organization’s
overall ability to function and deliver quality. HR is part of the overall
organizational system, and the quality of service that HR delivers to
its internal customers (other departments, leaders, employees)
enables the organization to better serve its external customers.

Key Content
When planning and implementing a change,
organizations often rely on one of the following
approaches.

Cascade. This approach relies on a top-down

sequence with complete change at each level.
Change at one level or unit high up in the
organization eventually transforms the units and
levels beneath it.

Progressive. In this model, the change originates

at the top and is broadcast to the entire
organization. Individuals slowly change with added
information, and the change becomes uniform
across business units.

Organic. This method relies on independent

centers and multiple origins of the change within
the organization. Points of origin can be at any
level. Organic change radiates out unevenly but
accelerates when top leadership supports local
change and local leaders.
Analytical Aptitude
Competency
Analytical Aptitude Competency
While HR professionals tend to think of themselves as working with
people and not data, the reality is that what we know about people is
data. HR professionals are faced everyday with troubling mysteries
that data can help solve: low levels of retention, failure to recruit
diverse or qualified candidates, disparate levels of effectiveness of
performance management systems across the organization, or
employee disputes or accidents. HR professionals use their
Analytical Aptitude competency to resolve these mysteries—to
develop an instinct to be curious and to commit to finding sound
evidence.

It is important to remember, however, that the purpose of gathering

performance data is to use that information to support action. Data
gains significance when HR professionals see the story that lies
behind the data—the patterns and trends, the causal relationships—
and can present this story compellingly to the organization’s leaders.
 Toward Better Business Decisions

Proficiency indicators related to this section include:

Applies data-driven knowledge and best practices from one
situation to the next.
Conducts analyses to identify evidence-based best practices,
evaluate HR initiatives and determine critical findings.
Demonstrates an understanding of the importance of using data
to inform business decisions and recommendations.
Ensures HR programs, practices and policies reflect research
findings and best practices.
Identifies decision points that can be informed by data and
evidence.
Promotes the importance of evidence-based decision-making.
Promotes the importance of validating HR programs, practices
and policies to ensure that they achieve desired outcomes.
Reports key findings to business and HR leaders.
Uses data to explain and support business decisions to
employees and leaders.
Uses research findings to evaluate different courses of action
and their impacts on the organization.
Ensures that resources and processes are in place to facilitate
systematic collection of data to inform HR's strategic direction
and long-term goals.
Ensures that the HR function uses data to inform decision-
making and the development and evaluation of HR initiatives.
Oversees comprehensive and systematic evaluations of the
organization’s HR programs, practices and policies.
Promotes the use of HR metrics for understanding
organizational performance.
Sponsors evidence-based initiatives for process improvement.
Supports an organizational culture that promotes the collection
and incorporation of data (examples include risks, economic and
environmental factors) into decision-making, and supports the
organizational processes, policies and procedures to do so.
Uses research findings to inform HR's strategic direction and
long-term goals.
Promotes the role of evidence in setting and validating HR's
strategic direction and long-term goals.
Toward Better Business Decisions
For HR professionals, the fundamental challenge of the Analytical
Aptitude competency is to change the basic way they interpret or
assess events. Rather than relying on “gut reactions” and
experience, HR professionals must develop a natural curiosity about
what may lie behind appearances and easy explanations. They must
learn to seek proof and logical relationships and to base their
assessments and actions on data.

Competency Connection
The Leadership and Navigation and Analytical Aptitude
competencies allow HR professionals to use their knowledge of the
workforce and HR expertise to help the organization resolve
obstacles to its strategic success. Consider the following example.

An organization has identified performance issues in a particular

division that are depressing the organization’s overall performance.
At a strategic management meeting, the vice president of global HR
presents HR’s capabilities and secures the CEO’s commitment to a
project aimed at finding causes of and solutions to the division’s
performance issues. The VP HR assembles a team to design the
complex work required for the project.
An experienced manager who knows the division’s business and
some of the individuals there assumes the role of project manager.
She establishes contact within the division to secure the cooperation
and involvement that will be needed. With three staff, she conducts
research to identify possible root causes for the division’s poor
performance. The research includes analysis of data from the human
resource information system (HRIS) and interviews with key
managers.

The analysis of data from the HRIS shows quickly that employee
turnover before three years of employment is significantly higher in
this division than in others. The HR group meets with division
leaders to discuss its research and this possible cause. They agree
to research this further through more interviews, review of exit
interview notes from the last 12 months, research into comparable
organizations, focus groups with groups of employees with different
levels of tenure, and an employee questionnaire.

The team drafts a report presenting the data and possible solutions,
which include the following:
Creating more in-depth, effective onboarding experiences for
new hires to better facilitate their orientation and induction into
the new organization
 Providing coaching to divisional leadership and management on
effective career mentoring and development of employees
Exploring alternative sources for recruiting candidates that
appear to offer a higher potential return on sourcing investments
Managing the performance of a key divisional leader whose
management style is a primary source of turnover and a
potential legal liability for the organization

The Business Acumen and Communication competencies are

valuable in preparing and presenting this report. The report is
reviewed with division leaders, solutions are prioritized, and the final
report and a business case for implementing several changes are
presented to senior management by the VP of HR and the division’s
director.

What Are Analytical Aptitude and

Evidence-Based Decision Making?
Analytical Aptitude refers to examining an idea, a process, or an
event with an open, objective, and inquiring mind. It is a critical skill
in evidence-based decision making (EBDM), using sound data to
hypothesize, assess, and select solutions.
The SHRM Body of Applied Skills and Knowledge includes the
following in the Analytical Aptitude competency:

Data advocacy. Developing an inquiring mindset, learning what

data drives the business and where it can be found, developing
partnerships across the organization to promote EBDM, and
modeling the skill of EBDM to the entire organization through
the decisions HR makes and the plans of action it undertakes

Data gathering. Knowing what constitutes sufficient, credible,

and objective evidence and being able to find it

Data analysis. Being able to organize data so that it reveals

patterns and to analyze it to detect logical relationships

EBDM. Being able to apply the results of data gathering and

analysis to make better business decisions

All members of modern organizations are being asked to be

accountable for their use of the organization’s limited resources and
to identify and manage threats and opportunities in their lines of
business and across the organization. For example, HR
professionals must be able to demonstrate the soundness of
investments in tactics designed to increase engagement and
retention by measuring the results of ongoing activities and by using
evidence to support effective tactics.
 Key Content

Effective data advocates show that analysis does not

exist for the sake of analysis; it is focused on making
more informed decisions that minimize risk and
maximize opportunities. They also assist in building a
data-driven culture, encouraging EBDM throughout the
organization, from the bottom up.

Steps in Evidence-Based Decision

Making
HR professionals should consider following six steps described by
Ben Eubanks, a human resource management specialist. Eubanks’s
recommendations are based on research.

Ask. When faced with a problem, translate the situation into a

question that can then be answered through information
gathering. For example, an HR manager notes that the
discipline system the organization uses is not effective in
preventing eventual terminations or resignations. The HR
manager asks, “What are we doing now? Does our disciplinary
approach reflect what we know about adult behavior and
motivation to change?”

Acquire. Gather information from varied sources. For example,

the HR manager reviews the organization’s policies and
processes concerning discipline and retrieves from HR’s records
data about disciplinary actions and subsequent employee
history. The HR manager develops some case studies on
specific incidents, gathering information from the supervisors
involved. The manager also begins to gather information about
current research into these areas and assessments of current
practices from journals and HR professional societies and
networks.

Appraise. Determine whether the evidence gathered is

relevant, valid, reliable, accurate, complete, and unbiased.

Aggregate. Combine and organize the data to prepare it for

analysis. Determine the priority to be given to different types of
information.

Apply. See the logical connections within the data and with the
issue. Use the data to draw conclusions, develop possible
solutions, win sponsor support for a decision, and take action.
 Assess. Monitor the solution that has been implemented and
objectively measure the extent to which the objectives have
been attained.

How to Become an HR Data Advocate

HR academics Denise Rousseau and Eric Barends mention several
ways to become a better data-based HR practitioner and to improve
the competence of the HR function in evidence-based decision
making:

Develop a questioning mind. Make it a habit to ask questions

such as “Why do we do it this way?” or “Why is X happening?”
and “What is the evidence for thinking that?” Questioning minds
try not to accept the status quo. They are naturally curious about
everything.

Build fluency in the scientific literature for HR. This can

include regularly scanning resources to identify new and reliable
sources of data and monitoring the topics that are being
discussed. Rousseau and Barends recommend undertaking
focused research projects to practice analytical skills. For
example, an HR practitioner could systematically study available
evidence and practitioner opinions on the use of formal
performance management review meetings.

Gather data on a continuous basis about the efficacy and

efficiency of legacy systems (for example, recruiting) and
stakeholder interests (for example, the perceptions of other
functional managers about their current needs and the forces
affecting their performance).

Use evidence when communicating with stakeholders.

When responding to questions from organizational customers,
HR practitioners can recommend solutions and include the data
supporting their analysis and recommendations.

Institutionalize the competency in the HR function.

Rousseau and Barends refer to establishing journal study
groups in the HR function. At regular meetings, designated
members research and report on new or important classic
articles. HR leaders can also establish task groups to gather
evidence whenever significant decisions are planned.
 Data Sources

Proficiency indicators related to this section include:

Benchmarks HR initiatives and outcomes against the
organization’s competition and other relevant comparison
groups.
Gathers data using appropriate methods to inform and monitor
organizational solutions.
Identifies sources of the most relevant data for solving
organizational problems and answering questions.
Maintains working knowledge of data collection, research
methods, benchmarks and HR metrics.
Scans external sources for data relevant to the organization
(examples include risks, economic and environmental factors).
Develops best practices based on evidence from industry
literature, peer-reviewed research, experience and other
sources.
Ensures that resources and processes are in place to facilitate
systematic collection of data to inform HR's strategic direction
and long-term goals.
Identifies new sources of data or new methods of data collection
to inform and evaluate HR initiatives.
 Interacts with leaders outside the organization to collect data
relevant to HR.

Key concepts related to this section include:

Sources of data (examples include interviews; focus groups;
employee surveys; customer surveys; marketing data; analytical
reports).
Survey and assessment processes (examples include
development; administration; validation).
Data Sources
Data sources comprise quantifiable data and qualitative data. HR
professionals use different techniques to obtain the data they need:
interviews, focus groups, surveys/questionnaires, and observation.
Existing data can also be used.

Competency Connection
Workforce planning requires gathering and analyzing data. HR
practitioners who are competent in Analytical Aptitude can apply
creativity to find the information they need and develop objective
analytical approaches and fulfill their leadership and consultation
roles in the organization. Consider this example.

An HR manager is working on updating the organization’s staffing

plan for the coming year. The manager reviews past years’ data on
hiring and turnover and then considers the probable impact on
staffing requirements created by strategic plan goals, objectives, and
deliverables and sales targets for the coming year.

The HR manager is concerned about the higher turnover rate in the

previous two years. Is this just an odd occurrence without specific
causes? Is it related to the economy and the job market? Is it related
to some internal engagement issues?
The manager decides to interview managers for their perspectives
on turnover. For the most part, the managers see the employee
departures as related to young employees’ inexperience in the world
of work: “They really don’t know what they’re looking for and what
they want yet. So they move on.”

An analysis of the exit interview data tells a different story, however.

The HR manager finds accounts of frustration with managers’
leadership styles and work/life balance issues. As a result, the HR
manager sees the retention gap as the biggest issue in the coming
year’s staffing plan and develops tactical objectives to address it.

Quantitative and Qualitative Data and

Assessing Validity of Sources

Quantitative and Qualitative Data

Quantitative data consists of objective measurements that can be

verified and used in statistical analysis—for example, the number of
employees in an organization, the number of female employees in
the organization, or the average number of hires each quarter.

Qualitative data involves a subjective evaluation of actions,

feelings, or behaviors. Measurements can be made by a third-party
observer (for example, an audit of HR’s compliance with
compensation laws that rates performance as excellent, acceptable,
or poor). They can also be self-assessments, such as employee
evaluations of satisfaction with job conditions on regularly
administered employee surveys. The data can be assigned
numerical values, but these values don’t carry significance.
Qualitative data can include observations of steps in a process or of
traits that are present in people who are rated as successful in a job.
It may be assessments of value or significance.

Both types of data are important to HR professionals. The purpose of

the research usually determines the type of data collected. For
example, a research project that aims to compare recruiting costs for
different approaches will collect quantitative data related to costs and
numbers of respondents, candidates, and hires. A project that seeks
more evidence about successful teamwork may collect qualitative
data about behaviors seen in effective teams and assessments from
team members.

Assessing Validity of Data Sources

Supplementing in-house data can be done easily online, but these

secondary sources of data must be evaluated for their overall
accuracy. There are several questions you should consider before
accepting data in a print or online publication:
Does the source have authority? A government agency, such as
a labor department or ministry, or an academic institution is
more credible than a blogger.
What are the source’s possible biases? Bias can lead to “cherry
picking” data—including only the facts that support a certain
position.
Are the sources for data used in a publication clearly cited? And
are those sources reliable and accurate?
Are the facts relevant? For example, data about trends in one
industry may not apply to all industries.
Is the data current? Some concepts are classic, but data is
subject to variables that can weaken its relevance over time. For
example, data from a recessionary period can be highly
inaccurate in describing conditions in an expanding economy.
If the data is being offered as proof of an argument, is the
argument itself sound? Are its deductions from the data logical?

Interviews as Data Source

Interviews may be used for different purposes:
 Sometimes they are useful in identifying topics that can be
explored in focus groups or surveys.
They may focus on specific, high-value employees and uncover
targeted retention information—or, in the case of exit interviews,
engagement failures.
Organizational “heroes,” people who are recognized and
respected throughout the organization, may add a cultural
perspective.

Individual interviews offer the opportunity for follow-up questions that

may not be possible in a survey or may be discouraged by the size,
composition, or timing of a focus group.

Interviews are rarely the sole form of gathering data from those
involved because of the amount of time and labor required to
conduct them. If multiple interviewers are used, they must be
carefully trained and prepared so that all interviews are conducted in
the same manner and without bias.

Exhibit 51 lists some of the advantages and disadvantages of the

interview technique for gathering data.

Exhibit 51: Advantages and Challenges of Interviews

Interview Advantages Interview Challenges

 Interview Advantages Interview Challenges

Safer, confidential environment may Can be time-intensive.

generate significant information. Requires strong relationship-building
Comments can suggest direction for skills.
further group research (focus groups Requires vigilance to avoid bias from
and surveys). influencing questions and interpretation
of answers.

Toward More Effective Interviewing

Individual interviews are more effective if areas of discussion and

specific questions are planned. Therefore a key interview tool is the
interview guide or instrument. It should be drafted and reviewed by
other team members and perhaps by the client. Some limited
straying from the planned questions may be appropriate, but having
consistent information from subjects will result in data that is more
valid and more easily combined and reported.

All means should be taken to establish a positive and trusting

relationship with the interviewees. The time and location should be
convenient for them. The planned length of the interview should be
reasonable, and the actual length should not exceed what the
interviewees have been told. Confidences should be respected.
Reactions to comments should be neutral and not judgmental. Notes
should be taken to avoid having to rely on memory, but writing too
much can interfere with making eye contact and providing supportive
nonverbal signals. Effective interviewers develop a technique for
making quick notes that can be used to reconstruct the interviewees’
points later, after the interview.

Interviews should start with safe questions to build rapport; they

should end by inviting the subjects to offer information that may not
have been included in the interview guide. Interviews may yield
richer data if the interviewer gently urges the subject to provide
examples that illustrate points.

Focus Groups as Data Source

A focus group is a small group (normally six to twelve) invited to
actively participate in a structured discussion with a facilitator. Focus
groups typically last from one to three hours, depending on the topic
and the purpose. Focus groups serve a variety of purposes. They
are often used to follow up on a survey, providing a more in-depth
look at specific issues raised during the survey. In this respect, focus
groups collect qualitative data that enriches quantitative survey
results.

Key Content
 The following are some important considerations
regarding focus groups:
A focus group is intended to provide a microcosm
of the population being studied. Participants must,
therefore, adequately represent that population to
ensure representative information. Ideally, random
selection should be used so that every employee
has an equal chance of being selected and the
diversity of the employee population is represented.
Along with random selection, voluntary participation
is another important consideration. Voluntary
participation can help to ensure that the focus
group will be a productive session with employees
who are willing to share their views and opinions.

Focus groups can be an effective technique for gathering feedback.

Yet, they also have some distinct pitfalls. Exhibit 52 lists several
general advantages and challenges of focus groups.

Exhibit 52: Advantages and Challenges of Employee Focus Groups

Focus Group Advantages Focus Group Challenges

 Focus Group Advantages Focus Group Challenges

Provides a format that is flexible and Tends to foster “group think” conformity
relatively comfortable for discussion May be difficult to control; can become
Allows for group brainstorming, decision a forum where participants go off on
making, and prioritization tangents
Can provide group consensus Generally don’t allow for deep
Enables HR to learn about employee discussions, depending on time
needs, attitudes, and opinions in a direct constraints and the number of
format participants

Gives employees direct input Can provide skewed or biased results if

participants are not representative

Conducting More Effective Focus Groups

Focus groups should be conducted in a private room where

participants are free from distractions and interruptions (for example,
a conference room, not the break room). Provisions should be made
for refreshments and a planned break as appropriate.

When planning a focus group, HR professionals should consider the

following.

The importance of planning. Effective planning is critical.

Focus group objectives must be clearly defined, as they
influence all subsequent focus group questions and the
structure and flow of the discussion. Any stimulus materials
should be designed and debugged in advance.
The context in which a focus group might occur. Cultural
effects, both organizational and national, could affect
participation, and legal environments could affect the
information gathered.

The importance of the facilitator. Similar to planning, having a

good facilitator (or moderator) contributes to a successful focus
group. A focus group facilitator should:
Know the topics reasonably well.
Be a good listener.
Possess a good understanding of group dynamics and skill at
conflict resolution (should differences in opinions arise).
Allow group perspectives to emerge without interjecting any
bias or allowing any one individual to dominate.
Have enthusiasm for the session (which can be contagious in
a group setting).
Possess competent facilitation skills for any focus group
activities and exercises.
Be conscious of time allocation and usage.

If the organization does not have qualified staff to act as

facilitators, it could consider hiring an outside facilitator who
possesses the characteristics listed above.
 The importance of the recorder. A focus group should have a
person designated as a note taker to record comments on flip
charts, etc. A designated note taker allows the facilitator to
remain focused on group dynamics that enrich the focus group
experience.

Focus Group Tools

Focus group facilitators can use different techniques to generate

discussion, spur thought, and organize and prioritize ideas.

Mind mapping and affinity diagramming. Mind mapping

begins the discussion with core ideas. The group members add
related ideas and indicate logical connections, eventually
grouping similar ideas. This can be done on paper or a
whiteboard or with sticky notes. Affinity diagramming is a way of
sorting a large amount of data that has already been collected.
The group categorizes and subcategorizes data until
relationships are clearly drawn.

Nominal group technique (NGT). This technique proceeds

through rounds in which participants each suggest ideas. The
rounds continue until no further ideas are proposed. Then the
group discusses the items, eliminates redundancies and items
considered irrelevant, and agrees on the importance of the
 remaining items. NGT can be practiced with idea generation by
individuals, subgroups, or the entire group. Similarly the initial
sorting of ideas can be done in subgroups before returning to
the main group to reach consensus.

Delphi technique. This technique progressively collects

information from a group on a preselected issue. The first
respondent proposes information, the next respondent adds
something different, and so on, until a list can be compiled. The
respondents are anonymous. In the second round, the
researcher circulates the list and asks each respondent in turn
to refine previous ideas, to comment on each idea’s strengths
and weaknesses for addressing the issue, and to identify new
ideas. This technique is designed to facilitate group
involvement, problem solving, and individual thinking while
avoiding “group think,” where participants can be influenced by
what others say.

Surveys and Questionnaires as Data

Source
Surveys and questionnaires are relatively inexpensive ways to
gather a large amount of data from a large and dispersed group of
subjects, such as employees or customers. Dispersed can mean
physical location as well as time or work shift.

There is a benefit to surveying employees and customers. Often, the

executive group or sales department will initiate client or customer
surveys to determine what is going well or what are areas for
improvement or to understand in what direction the client may be
focusing. Just as with employee surveys, a key requirement is to
provide updates on actions that come from the results.

Technology—the Internet, mobile devices and networks, survey

creation tools—has made these tools even easier to create and
administer. Serious challenges remain, however:

Obtaining a valid sample. Researchers must make sure that

survey results are truly representative—that the number of
returned surveys is sufficiently large to be representative and
that the group responding accurately reflects the attributes of
the entire group. Explaining the purpose and importance of the
survey may improve the response rate, as will making it easier
to complete—shorter and easier to understand. Researchers
should be aware of survey approaches that affect who can
respond—for example, using an online survey in a workplace
where not all workers have equal online access. This affects the
sample size and the ethical impact of the survey.
 Designing the survey with analysis in mind. Questions
should be asked in a way that makes compiling and comparing
responses easier. This usually means relying heavily on
quantifiable responses (for example, the Likert scale, which
asks respondents to choose ratings, usually from 1 to 5 points).
Freeform feedback (narrative comments, examples,
suggestions) can be included as well and will enrich the
research report.

Asking the right questions. To understand an entire

organization, experts often turn to questions based on
organizational models that map various internal and external
environmental factors that can affect attitudes and work. Internal
factors generally include strategy and purpose, leadership,
rewards, and relationships; external factors include opportunities
and threats as in SWOT and PESTLE analyses. In global or
diverse organizations, researchers must also be mindful of
language and cultural differences that could complicate the
communication task.

Exhibit 53 summarizes the advantages and challenges of using

surveys and questionnaires.

Exhibit 53: Advantages and Challenges of Surveys/Questionnaires

Survey/Questionnaire Advantages Survey/Questionnaire Challenges

 Survey/Questionnaire Advantages Survey/Questionnaire Challenges

Efficient way to gather a lot of data from Can be difficult to obtain an acceptable
a large and dispersed group response rate
Easier to quantify data for analysis and Difficult to follow up on data from
reporting anonymous sources
Relies on self-reporting, which can be
biased
Requires time and statistical expertise
to assess sample and compile and
analyze data

Some of these challenges and advantages will be greater or lesser

depending on the makeup of the surveyed group. For example, it
might be easier to conduct follow-up with employees, as they can be
more easily located. Customers may not be willing to spend more
time answering questions about their experiences or opinions.

Observation as Data Source

HR professionals can also gather data by observing the workplace
and work processes. This removes the self-reporting filter that is
present in interviews, surveys, and focus groups. Observers can
note factors that participants are unaware of or have become
accustomed to as well as any that participants are reluctant to
mention for personal reasons. Observation can also strengthen the
HR professional’s understanding of the work at hand and the culture
of the workplace. For example, an HR professional could observe a
meeting of a dysfunctional team and note obstacles not mentioned in
interviews, such as negative behavior by certain team members or
weak leadership skills.

Exhibit 54 lists some advantages and challenges of using

observation to gather data.

Exhibit 54: Advantages and Challenges of Observation to Gather

Information

Observation Advantages Observation Challenges

Provides firsthand and immediate data Requires skill to be unseen. When the
rather than self-reported data, which group is very aware of the observer, the
can be affected by memory and data becomes less reliable.
selectivity. Requires vigilance to remove personal
Is time-efficient for subjects. bias from observations.
Requires experience to note significant
behaviors.
Observations may not be representative
of the entire body of data (i.e., the
totality of every meeting, every work
process, every transaction).

Existing Data and Documents as Data

Source
Existing data and documents can include information from the
organization itself, from public information sources (for example,
government agencies), or from industry/professional associations.

Organizations may produce many different reports, with different

purposes for each. Different departments, functions, teams, and
branches can generate reports containing valuable insight that can
be used by HR professionals to perform their function. An HR
professional with the Analytical Aptitude competency will have the
skills to analyze these reports and tease out and synthesize valuable
insights about the organization, its work, its employees, and more.

Sources of data include:

Official documents, such as organization histories and vision
and strategy statements, which can help the team understand
the organization’s business and culture.
Performance data over multiple periods from the organization’s
financial records as well as data from other organizational
databases.
Performance data from the organization’s HR information
system (for example, turnover rates, employee complaints,
incident reports).
Correspondence and analytical reports.
Industry data that can provide information about external
environments and performance benchmarks.
Exhibit 55 lists some advantages and challenges in using existing
data.

Exhibit 55: Advantages and Challenges of Using Existing Data

Advantages of Using Existing Data Challenges of Using Existing Data

Eliminates the effects of observation Can be time-intensive

and involvement and possible bias of Requires experience to extract key data
facilitator/interviewer/observer
May require ingenuity to find data
Rich, multi-perspective source of data

Artifacts as Data Source

Artifacts are objects created by members of a culture that convey a
sense of that culture’s values and priorities, beliefs, habits and
rituals, or perspectives. They can provide insight into aspects of an
organization’s culture that its members may not be able to or may
not want to articulate to an outsider.

Artifacts could include:

Physical workplaces that can suggest characteristics of
organizational culture (for example, the presence of personal
artifacts, an emphasis on diplomas and certificates,
environments that convey key values such as accessibility of top
leaders to all employees).
 Virtual environments, for example, social media providing clues
about how the organization is perceived by outsiders and by
employees.

Key Content

Artifacts may be best used when they confirm or

conflict with findings gathered by other means. Without
enough context—if the researcher is unfamiliar with the
organization and its culture—a researcher can
misinterpret the meaning and importance of artifacts.
For example, interviews with team members might
suggest that the team environment has become
autocratic and nonparticipative. The researcher notes
that there are few personal decorations in team
members’ desk areas. Does this environment suggest
a corporate culture that devalues individual
personalities? Or are the individuals not particularly
interested in conveying personal information about
their lives and interests?

Exhibit 56 summarizes the advantages and disadvantages of using

artifacts in research.
 Exhibit 56: Advantages and Disadvantages of Using Artifacts

Advantages Disadvantages

Provides additional insight into cultural Requires researcher to understand the

issues principles of culture
Can be examined without the help of Can create misunderstandings if the
those being observed researcher is not familiar with the
culture

Marketing Data as Data Source

HR professionals may need marketing data to aid in workforce
planning or establishing a business case. This data can be gathered
from a variety of sources, both internal and external to the
organization.

Turning to the organization’s own marketing department is a good

first step. Marketing technology (sometimes referred to as “martech”)
has become ubiquitous in most organizations, and it facilitates
sourcing, archiving, and integrating marketing data in order to
enhance efficiency and understanding of those who interact with the
organization. Given the wealth of data that can now be collected, an
HR professional who is competent in the Analytical Aptitude
competency will be able to analyze, unpack, and parse the data they
receive from the marketing department. An additional source of
internal marketing data might be web analytics.
Market Data

In addition to industry and business marketing data, more

generalized market data could also be used. The market research
industry is dynamic and well populated by both public and private
organizations dedicated to collecting and disseminating research
and information about consumers, customers, populations,
industries, and more. The data can be used to better understand
target audiences or certain segments of society and/or business.

Some of the organizations offer their research freely (in whole or in

part), such as the Pew Research Center, Google Trends, and Gallup.
Governments are another source of free and searchable market
data; examples of these include the following.
United States: [Link], Bureau of Economic Analysis, Small
Business Administration
United Kingdom: [Link]
Canada: Statistics Canada (“StatCan”)
Global: UNdata (United Nations), World Bank Open Data, World
Trade Organization

In addition to these publicly available sources of data, there are

many respected private market research companies who gather data
that can be syndicated by other organizations. Some examples
include Ipsos, Nielsen, and Gartner.
 Statistical Principles

Proficiency indicators related to this section include:

Identifies potentially misleading or flawed data.
Maintains working knowledge of statistics and measurement
concepts.
Promotes the importance of validating HR programs, practices
and policies to ensure that they achieve desired outcomes.
Maintains advanced knowledge of statistics and measurement
concepts.

Key concepts related to this section include:

Basic concepts in statistics and measurement (examples
include descriptive statistics; correlation; reliability; validity).
Data analysis techniques and methods (examples include data
cleansing; data mining; visualization; big data analysis;
statistical analysis; predictive analysis).
Statistical Principles
Statistics refers to the collection, organization, and analysis of large
amounts of numerical data. The value of analysis and evidence-
based decision making is in direct relationship to the quality of the
statistics used in the analysis. When data is wrong or insufficient, the
analysis is likely to be wrong or weak. Here we’ll look at the
characteristics of quality data and common sources of error and bias
in statistical analysis.

Competency Connection
Effective communication is based on understanding the audience
and knowing what an individual or group of individuals truly wants. In
the following case, an HR practitioner knows that the business
owners’ ultimate objective is protecting employees from harm. The
best way to communicate that the current path is not working is to
give the leaders more information and let them discover the truth
themselves.

A medium-sized, family-owned electrical and IT engineering firm

lives and breathes its company values, which include “Safety Before
Profit.” To sustain this value, the firm has made a composite
measure of safety one of its enterprise-level key performance
indicators (KPIs).

This composite includes four submeasures: potential risks, hazards,

near-miss accidents, and actual accidents. To reinforce the
importance of safety, employees’ annual bonuses are linked to the
aggregate safety KPI.

By directly linking employee bonuses to a composite safety KPI, the

organization has inadvertently created an incentive to underreport
potential risks and near-miss incidents, which are easy to conceal.
By avoiding opportunities for analyzing risks and debriefing near
misses, the policy has increased the overall number of actual
accidents.

Given the company’s dedication to its value of “Safety Before Profit,”

the head of HR realizes that it will be difficult to convince the owners
to accept any changes to the safety KPI metric. HR decides that the
best way to make changes is to construct a fair test of two
alternatives and let the owners make the decision themselves.

In a six-month test, the bonus is retained for all regions. However, in

three regions the bonus is based on all five KPIs (including safety),
while in the fourth region the safety KPI is not included in the bonus
calculation. After six months, the fourth region reports a 39%
increase year to year of documented “potential risks,” an increase of
18% in documented “near misses,” and a phenomenal decrease of
73% in actual accidents. The owners can see for themselves how
the aggregated safety KPI has been incentivizing the wrong
behavior. They change the overall safety bonus KPI to focus on
preventive safety metrics—potential risks, hazards, and near misses
—and to exclude any bonus linked to actual accidents.

HR demonstrates the Communication competency by finding the

most appropriate way to show the owners how to make measuring
their safety efforts more effective and the Analytical Aptitude
competency in gathering and analyzing the data to support the
proposal. The owners are able to contrast the effects of the
alternative measurement methods and make a decision consistent
with their essential goal—promoting the safety of their employees.

Reliability and Validity of Data,

Statistical Sampling

Reliability of Data

Reliability reflects the ability of a data-gathering instrument or tool,

such as a survey or a rater’s observation or a physical
measurement, to provide results that are consistent.
 Examples:

If an applicant takes a motor skills test on consecutive

days, the scores should be similar (allowing for the effect
of practice). If all conditions are the same and the scores
differ significantly, the test may not be reliable.

If an interviewer uses different questionnaires in each

interview, the interview approach will also not be
considered reliable. To gather reliable information from a
series of individuals, each interview should produce the
same categories of responses (data). If information is
present in some interview reports but not in others, then
this approach is probably not reliable.

Perfect reliability is rarely achieved. A variety of errors can occur that

may create inconsistent results, including:
A failure to maintain the same conditions or correct for
differences. For example, giving a cognitive skills test at different
times of the day may produce different results. The impact of
these differences can show up by retesting the subject(s).
Cultural differences that create different interpretations of
questions. For example, the same tool used to gather employee
engagement data in different countries may produce different
results. Tools require thorough review and testing.
Bias in using the tool to gather data. Rater reliability can be
checked by testing a tool with different raters. Bias is discussed
 further elsewhere.

Validity of Data

Validity is the ability of an instrument to measure what it is intended

to measure. Validation answers two questions:
What does the instrument measure?
How well does the instrument measure it?

Validity reflects the degree to which a tool measures attributes that

are relevant to the measurement’s intention.

Examples:

Skill tests administered to job applicants must produce

valid performance data, which means that they must
measure skills that are necessary requirements for the
job.

A data-gathering tool designed to select information from

an HRIS for an analysis about workplace-related injuries
should contain only cases related to that type of injury,
not injuries that occur away from the workplace.

A tool’s validity may be damaged by using irrelevant criteria to

develop measures. For example, a tool used to select high-talent
individuals for fast-track career development could focus on
characteristics that do not correlate to competencies leaders need in
the organization. A follow-up survey may reveal that success rates
do not correlate with the tool’s predictions. Similarly, a performance
analysis of a customer call center intended to measure customer
satisfaction will not be valid if it focuses on the frequency of call
handling.

Statistical Sampling

Sampling is often used when the population to be analyzed is very

large or when data cannot be obtained from the entire population.
The sample must be representative; it must accurately reflect the key
characteristics of the entire population being studied. For example,
the sample used in a wage survey of employees in a certain job
should include the same ratio of genders and years of experience as
for all employees in that job. Samples of data must also be
sufficiently large to include all the possible variations within the
population being sampled. The smaller a sample is, the more likely
analysis results will be affected by statistical outliers, values that
differ greatly from the average. This is a common problem with
surveys with low response rates.

Errors and Bias in Statistical Analysis

Errors may be introduced into a statistical study when:
 Incorrect data is used. A measurement may be taken incorrectly,
or a number may be entered incorrectly.
A study’s design includes, intentionally or unintentionally,
different types of biases that affect outcomes.

These biases could involve:

Sampling. A sample may not represent the general population.

For example, HR is studying the effects of an engagement
strategy on retention. The sample, however, contains a higher
proportion of older workers than are in the organization’s
workforce.

Selection. Selection bias can occur in a controlled study when

participants are not randomly assigned to control and
experimental groups. (Controlled studies assign participants to a
control group that does not experience the intervention or
condition being tested and one or more experimental groups
that do experience the intervention or condition.) Bias can also
occur when researchers choose to enroll only certain types of
participants. In a study testing the effects of a remote working
policy, for example, the researchers enroll only employees who
have been rated highly by their supervisors.
Response. This is the inverse of selection bias. The
researchers invite a representative sample to join a study, but
the group that accepts or responds is not representative. For
example, HR invites all employees to participate in a survey to
determine new benefits. The group that responds is composed
disproportionately of young parents.

Performance. Participants in a controlled study behave

differently because they are being studied. A famous example of
this is the Hawthorne Works experiment. The experiment was
designed to measure the effect of improvement in various
factory conditions on worker productivity, but the increases in
productivity were only temporary and appeared to be related
primarily to the experiment’s design. The workers appreciated
the increased attention to their welfare.

Measurement. Raters are measuring incorrectly, either

unintentionally (because of lack of training or difficult
measurement procedures) or intentionally (the result of some
type of personal bias).

Key Content

When using study results, HR professionals should be

mindful of the information-gathering and analysis
 approaches used in the study, which are described in
the study’s methodology section. These methods may
reveal errors or the potential for error. If they are
creating their own studies, HR professionals may want
to consult with statistical experts and have them review
their studies’ methodology.

Data Cleansing
With the proliferation of technological and analytical tools,
organizations are now generating more data than ever—in both
volume and diversity. Different parts of an organization will collect
different sets of data, depending on their focus and mission. It is
therefore important to be able to compile and share this data in a
usable format. This will often require the data to be cleansed—which
may also be referred to as “data wrangling”—a process by which
incomplete sets, anomalies, errors, and gaps in the data are
identified and addressed. Incorrect, inconsistent data can lead to
incorrect conclusions, poor decision making, and misdirected efforts
and resources.

Cleansing data is connected to validation and identifying bias, as

these processes assess how useful and correct the data is. By
cleansing the data collected, you can ensure that decisions are
made based on better-quality data.

Data cleansing is not an ad hoc process. Rather, HR should try to

embed certain practices into the culture of the organization. For
example, developing a common terminology can help streamline the
dissemination of data. Pushing for standardized data collection is
another valuable step to take—and one that should be taken early—
despite the perceived hurdles and potential disruption. The cost (in
time, errors, and so forth) of not doing this will likely grow over time.

For example, when conducting a compensation analysis, there may

be several surveys that include similar pay ranges. However, one
survey may show a 200% increase in the high range. As a
compensation analyst, the HR professional will determine if this data
point is an outlier, and, if it is, the data point would be removed from
the data used.
 Data Measurement Tools

Proficiency indicators related to this section include:

Identifies sources of the most relevant data for solving
organizational problems and answering questions.
Maintains advanced knowledge of statistics and measurement
concepts.

Key concepts related to this section include:

Basic concepts in statistics and measurement (examples
include descriptive statistics; correlation; reliability; validity).
Data Measurement Tools
Descriptive statistics is the process of sorting data in different ways
to provide a more accurate and in-depth understanding of what the
data is showing. Descriptive statistics enables analytical statistics,
the process of inferring the meanings behind data descriptions—for
example, why something is occurring now or what is likely to occur in
the future. Data measurement tools are used in descriptive statistics
to understand the distribution patterns and characteristics of the
dataset.

Competency Connection
The Analytical Aptitude competency allows HR professionals to see
the realities that lie behind the numbers. As the following example
shows, Analytical Aptitude can identify obstacles to strategy that
must be overcome.

An HR manager is reviewing the transfer of existing employee data

from the previous HRIS into a new enterprise resource management
system with an HR module. Her goal is primarily to validate the
transfer, but she wants to learn the analytic tools in the new software
as well. So she starts looking at employee data in different ways,
analyzing employees by pay level, tenure, function, and so on.
When she analyzes the workforce by age, a disturbing fact leaps
from the analysis. Half of the workforce is over the age of 50. This
analysis has clear implications for the organization and HR. Further
analysis must be done to clarify the age of key employees and
assess succession plans. Plans must be made to capture
institutional knowledge held by older employees before they retire.
Impending employee shortages must be identified by function and
job type. Backup plans to retain key talent beyond retirement—
perhaps through part-time work—must be developed.

This HR professional has demonstrated the Analytical Aptitude

competency by appreciating the potential of data analysis for the
organization, translating data results into organizational impacts, and
using that data as a platform for consultation-driven problem solving.

Measures of Central Tendency

Common measures of central tendency are median, mode, and
mean (or average).

Median and Mode

The median, or 50th percentile, is the middle value in a range of

values. The median is the preferred measure of central tendency
when the distribution in a dataset is skewed—when it contains a few
excessively high or low values. It is also used in frequency
distributions, which are described elsewhere.

The mode is the most frequently occurring value in a set of data.

In Exhibit 57, on the left side where there are an odd number of data
points, $70,000 is the median salary, because five are less than that
point and five are greater. In the right side of the table, where there
are an even number of data points, there are two middle numbers.
These are averaged to obtain a median salary of $67,500. In both
columns of data, the mode is $70,000 because that salary appears
most often—five times.

Exhibit 57: Median and Mode

Salaries Salaries

$55,000 $55,000

$55,000 $55,000
$60,000 $60,000
$65,000 $60,000
$65,000 $65,000
$70,000 Median and mode are $65,000 Median is ($65,000 +
$70,000. $70,000) ÷ 2 = $67,500.
$70,000 $70,000 Mode is $70,000.
$70,000 $70,000
$70,000 $70,000
$70,000 $70,000
 Salaries Salaries

$75,000 $70,000

$75,000

Mean

The arithmetic average, or mean, is the average score or value. It is

typically calculated in one of two ways: unweighted (or raw) and
weighted.

Unweighted Mean

The unweighted mean, or raw average, is the sum of all the values
in the sample divided by the number of values. This is useful when
all the values are relatively close together and when they represent
volume as opposed to numerical order or numerical preference. For
example, a group of ten employees in a particular position are
surveyed to see how much time they spend on job tasks. The
employees’ answers are only slightly different for one task: the
largest number is 60 minutes a day and the smallest is 50 minutes.
The unweighted average provides a useful gauge in answering a job
seeker’s question, “How many hours a day would I be doing X?”

Exhibit 58 shows the unweighted average salary for a job description

in five divisions that comprise an entire organization. To calculate
this, the salaries for each division are summed and divided by five,
the number of the divisions. The unweighted average salary is
$65,000.

Exhibit 58: Unweighted Mean Salary for Same Job Description

Division Number of Employees Salary

A 2 $55,000
B 1 $60,000
C 2 $65,000
D 5 $70,000
E 1 $75,000
Total 11 $325,000
Unweighted average salary = $325,000/5 = $65,000

Weighted Mean or Average

The weighted mean, or weighted average, is used when some data

in the dataset have more significance or effect than other data. In the
salary example, there are two challenges in relying on an
unweighted average for a better picture of salaries across the
organization. First, there is a relatively large spread between the
highest and lowest values—$20,000, or almost 40% of the salary in
Division A. Second, there are significant differences among the
divisions. Only two employees receive $55,000 in Division A, but five
employees receive $70,000 in Division D.
Weighted means are useful in situations like this, where there are
significant outliers in the spread of data—points that are relatively
much higher or lower than the other data points—or when the values
are not considered equally impactful. Calculating the weighted mean
in the salaries will reflect the fact that the median salary skews
toward the higher end of the range.

The weighted mean is determined by multiplying individual values by

a factor that adjusts the value. The results are then summed. In the
salary example, each salary group (for example, $55,000 or
$75,000) is multiplied by a weighting factor that represents the
proportion of data points at that level (the number of employees in
that division). The factor is obtained by dividing the number of
employees at each level by the total number of employees (for
example, 2 divided by 11, or 0.18).

Exhibit 59: Weighted Average Salary for Same Job Description

Number of Employees Weighting Factor Salary Salary Multiplied

in Divisions at Salary (Employees at Level/Total by Weighting
Level Number of Employees Factor

A=2 0.18 (or 2/11) $55,000 $9,900

B=1 0.09 (or 1/11) $60,000 $5,400
C=2 0.18 (or 2/11) $65,000 $11,700
D=5 0.46 (or 5/11) $70,000 $32,200
E=1 0.09 (or 1/11) $75,000 $6,750
Total number of
employees = 11
 Number of Employees Weighting Factor Salary Salary Multiplied
in Divisions at Salary (Employees at Level/Total by Weighting
Level Number of Employees Factor

Weighted mean salary = $9,900 + $5,400 + $11,700 + $32,200 + $6,750 = $65,950

Key Content

Weighting is often used in creating scales for

evaluation. For example, HR could use weighting in
assessing job candidates when some of the
requirements—like certain degrees or credentials—are
considered to be more important than others. Similarly,
when selecting a recruiter, HR may consider previous
successful experience with the recruiting firm to be
more important than the cost of the service.

Frequency Distributions
Frequency distributions are used to sort data into groups according
to some factor, such as years of employment. This allows analysts to
understand the distribution of the data they are working with—
whether the data is focused in a normal pattern around a central
value or is more broadly or narrowly dispersed over the data range.
Frequency tables help locate peaks within the data range. An HR
professional using a frequency table focusing on employee age
might note that the workforce is unevenly distributed, with a larger
proportion of workers approaching retirement age. This may affect
workforce planning management activities.

The frequency distribution in Exhibit 60 is simply a listing of ranked

data, from lowest to highest. It shows the number of employees in
the same job description at a particular salary level—that is, how
frequently each salary level occurs.

Exhibit 60: Frequency

Distribution for Salary Levels
in Same Position

Salary Number of
Employees

$55,000 2
$60,000 1
$65,000 2
$70,000 5
$75,000 1

Quartiles and Percentiles

Quartiles and percentiles describe dispersion across a group of

ranked data. Quartiles divide a data set into quarters. A percentile
indicates the proportion of the dataset at a certain percentage. For
example, a value in the 90th percentile is greater than 90% of the
values in the dataset.

A quartile ends at a certain percentile. The first quartile, or Q1,

contains all the data at or below the 25th percentile. The second
quartile, or Q2, ends at the value in the center of the distribution, or
the 50th percentile—half of the values lie above and half below. The
fourth quartile, or Q4, ends with the last value in the set at the 100th
percentile.

Exhibit 61 shows the range for the job grade in Exhibit 60 in quartiles
and percentiles.

Exhibit 61: Distribution by Quartile and Percentile

Go to long description.

Quartiles and percentiles are frequently used in benchmarking. For

example, an organization can place its mean salary for a job
description in a range of values for that job description in a survey of
other organizations. It can then determine if its compensation leads
(Q3 or Q4), lags (Q1 and Q2), or matches (50th percentile) the
external market.
Standard Deviation
Standard deviation represents the distance of any data point from
the center of a distribution when data is distributed in a “normal” or
expected pattern. This is often shown as a bell curve. In a normal
distribution, 68% of data lies within one standard deviation
(expressed often as SD or the Greek letter sigma [σ]), 95% of data
lies within two SDs, and 99% lies within three SDs.

Exhibit 62: Normal Distribution

Go to long description.

Calculating standard deviation is difficult to explain, but it can be

easily calculated using spreadsheet programs or statistical analysis
software. It is important to appreciate its significance, however. The
resulting patterns of high and low standards of deviation are shown
in Exhibit 63.

Exhibit 63: Data Curve Shape in Datasets with High or Low

Standard Deviation

When the standard deviation in a dataset is low, the data curve

is high and narrow, with data points tightly grouped around a
center value. For example, HR has surveyed the frequency of
salary levels and finds that the SD is very low across the
organization. That suggests consistency in following
headquarters guidelines on pay levels.

When the standard deviation is high, the data curve is flatter and
longer and is more spread out. There are more outliers in the
dataset—measures that are significantly greater than the central
value. If HR’s survey shows a high standard deviation, there is
less consistency in applying pay levels. HR may want to
investigate this further. It may simply be a matter of widely
different experience levels or, in an organization with multiple
geographic sites, widely different pay standards, costs of living,
or costs of labor.
 Data Analysis Tools

Proficiency indicators related to this section include:

Applies data-driven knowledge and best practices from one
situation to the next.
Conducts analyses to identify evidence-based best practices,
evaluate HR initiatives and determine critical findings.
Demonstrates an understanding of the importance of using data
to inform business decisions and recommendations.
Identifies gaps in data based on analysis and seeks missing
data.
Maintains objectivity when interpreting data.
Objectively examines HR programs, practices and policies in
light of data.
Reports key findings to business and HR leaders.
Uses data to explain and support business decisions to
employees and leaders.
Uses research findings to evaluate different courses of action
and their impacts on the organization.
Communicates critical data analysis findings and their
implications for HR’s strategic direction and goals to senior
leaders.
 Critically reviews and interprets the results of analyses to
identify evidence-based best practices, evaluate HR initiatives
and determine critical findings.
Develops best practices based on evidence from industry
literature, peer-reviewed research, experience and other
sources.
Oversees comprehensive and systematic evaluations of the
organization’s HR programs, practices and policies.
Sponsors evidence-based initiatives for process improvement.
Uses data to support business cases.
Uses research findings to inform HR's strategic direction and
long-term goals.

Key concepts related to this section include:

Data analysis techniques and methods (examples include data
cleansing; data mining; visualization; big data analysis;
statistical analysis; predictive analysis).
Interpretation of graphs and charts (examples include bar
charts; line graphs; scatterplots; histograms).
Using data to support a business case (examples include
interpretation; visualization; graphical representation;
storytelling).
Data Analysis Tools
Data is subjected to different types of analysis to sort it into
categories, compare the categories, compare the relationships
between variables, see patterns and trends in the data, and make
more reliable predictions.

Competency Connection
The Analytical Aptitude competency allows HR professionals to see
the meaning behind the data they collect, to provide sound advice to
management, and to make better function decisions.

An HR team has been assigned to investigate high turnover rates

and poor performance in a particular division.

One of the analytical exercises used in examining the turnover

problem is to examine exit interview notes from the previous year to
determine if certain problems have been mentioned repeatedly and if
any patterns exist. To do this, the HR specialist:
Creates a spreadsheet to capture significant data from the
reviewed notes.
Condenses the wide volume of responses down into the
essential elements, using metrics such as mean, median, mode,
and percentiles.
 Uses graphic elements to summarize key areas.

The specialist and the manager study the data and consider its
quality from a number of perspectives, trying to control for different
interviewers, types of positions, types of reasons given, and so on.
They look for commonalities and trends.

They report to the HR leader a list of possible causes for turnover,

with supporting data. In their presentation, the factors in question are
compared with parallel data from other, better-performing divisions.

Data Analysis Approaches

Metrics measure single data points in relative comparisons and
provide tabular outputs of counts and rates. In that regard, metrics
provide information that guides tactics and operations through
quantitative analysis. What metrics do not provide are insights
regarding the “why” behind the data. Assessing the “why” is what
allows HR and organizational leaders to make important,
competitively differentiating business decisions. This is where HR
professionals have a genuine opportunity to use analytics and
impact the organization’s strategy.

Analytics can expose the important connections and patterns in data

to make better workforce decisions because they:
 Consider the past and present and forecast the future.
Connect multiple data items.
Provide computational analysis of data or statistics.
Provide visual outputs of patterns and trends.
Provide insights that can drive strategy.

Different analytical methods can be used to uncover the implications

of a dataset.

Variance Analysis

Variance analysis identifies the degree of difference between

planned and actual performance. The term is usually applied to
analysis against objective baselines, such as schedules and
budgets. Once identified, different analytical tools, such as those
described below, can be applied to understand the variance.

Ratio Analysis

Ratio analysis compares the relative size of two variables and

yields a percentage. Net profit margin, for example, is a ratio that
compares net revenue with costs. Many commonly used HR metrics
are ratios, such as the turnover rate (comparing the number of
terminations or resignations in a time period with the average
number of employees in that period).
Trend Analysis

While a variance report provides a picture of one point in time, a

trend analysis examines data from different points in time to
determine if a variance is an isolated event or if it is part of a longer
trend. By establishing the direction and degree of change over time,
the trend analysis can also be used to forecast future conditions,
such as the ability of an initiative to meet its objectives. Both trend
analysis and forecasting can be performed within software
applications. Trend analyses are important tools in discovering
recurring peaks or troughs in an activity. For example, HR can use
trend analysis to identify the most appropriate times to conduct
campus job fairs by tracking the results from events held at different
times over multiple years.

Here is an example of a workforce trend analysis. Using the six

years of performance data in Exhibit 64, the HR manager of ABC
Medical wants to project the demand for employees in years seven
and eight.

Exhibit 64: Performance at ABC Medical

Year Business Factor Labor Productivity HR Demand

(sales in millions) (annual sales per employee) (number of employees)

1 $3.613 $11,120 325

2 $3.748 $11,120 337

3 $3.880 $12,520 310

 Year Business Factor Labor Productivity HR Demand
(sales in millions) (annual sales per employee) (number of employees)

4 $4.095 $12,520 327

5 $4.283 $12,520 342
6 $4.446 $12,520 355

To accomplish this, a simple trend analysis (as shown in Exhibit 65)

can be used that plots the number of employees each year for the
last six years and then simply projects this trend out for two more
years to predict the number of employees needed.

Exhibit 65: Trend Analysis for ABC Medical

Go to long description.

A statistical formula can be used to calculate the slope of this trend

line.
The HR manager for ABC Medical could also use a ratio analysis.
The data from Exhibit 64 shows that labor productivity (sales divided
by number of employees) has remained at $12,520 for the past four
years. If the management of ABC Medical assumes that labor
productivity will stay at $12,520 and sales are predicted to increase
to $5 million in year seven, the calculation is as follows:

$5,000,000 ÷ $12,520 = 399 employees

Based on this ratio analysis, the HR manager will need to hire 44

new employees (399 – 355) to achieve the increase in sales.

However, if management believes that new efficiencies created by

better training and equipment will increase labor productivity to
$13,000 for year seven, the following ratio applies:

$5,000,000 ÷ $13,000 = 384 employees

In this case, the HR manager will need to hire 29 new employees

(384 – 355) to achieve the increase in sales.

The ability to predict variables such as level of sales, production, or

service within workable limits or ranges most often becomes the
foundation for making the HR forecast. Therefore, in trend and ratio
analyses, when figures are projected into the future, the key
determinant is whether relationships will remain the same. In this
case, the clear identification of assumptions underlying the forecast
is critical to interpretation and acceptance of the information.

Regression Analysis

Regression analysis refers to a statistical method used to

determine whether a relationship exists between variables and the
strength of the relationship. Data points can be plotted on a diagram
called a scattergram. The shape of the line formed by the data
suggests if there is a likely correlation, whether that correlation is
positive or negative, and how strong or weak the correlation is.
Analyses can use multiple variables.

A regression analysis might help determine the most significant

indicators of success in a given job, testing variables such as
recruitment source, education, job experience, personality type, and
so on against job performance ratings.

Root-Cause Analysis

Root-cause analysis starts with a result and then works backward.

Each cause is queried to identify a preceding cause—conditions or
actions that might have led to this effect. This questioning may
proceed backward in rounds until the fundamental or root cause is
identified—the point at which no further causes can be identified.
This method is sometimes referred to as the “five whys method,”
which was developed as part of the Toyota Industries quality
initiatives.

For example, an HR professional is trying to determine why

employees are not using employee self-service portals at the
expected level. In the first round, the HR professional may identify a
number of “whys”—employees don’t have sufficient access,
employees are unaware of the portal’s existence, or the employees
don’t like using the portal. Each cause can be further queried. For
example, employees may not like the portal because it is too slow or
too hard to navigate or because the processes are too complicated
or unreliable. These causes can be further queried until fundamental
issues are identified. For example, the development process may not
have included user input and pilot testing because the launch
schedule was unrealistic.

Scenario Analysis

For the purpose of evaluation, a scenario/what-if analysis can be

used to test the possible effects of altering the details of a situation
to see how the outcomes will vary under different conditions. The
outcome of a particular situation is projected, using different inputs to
see what changes have the most profound effects. This analysis is
greatly aided with software applications and models. Monte Carlo
analyses, for example, use computing capabilities to change
scenario variables randomly and thereby generate up to thousands
of possible outcomes. This can be helpful when analysts fear that
historical patterns may not hold in the future.

Using Data to Support a Business

Case
A business case that successfully establishes how a specific
problem or issue is to be resolved or addressed must include data.
This allows you to make decisions based on reality and evidence,
which in turn can help articulate and support proposals when
explaining them to employees and leaders. Drawing upon the
various components that comprise the Analytical Aptitude
competency, an HR professional can present a compelling,
convincing case, backed by facts that support the proposed business
decisions and show how they align with organizational strategy.

The ability to tell a fact-based story is data’s greatest contribution to

a business case. Understanding the priorities of the organization will
guide you toward compiling relevant data to tell the correct story to
the correct audience.
The disposition of report-generating groups within an organization
can be a challenge. Sometimes reports are generated but aren’t
immediately or obviously available to other members of the
organization. HR professionals should make it a practice to reach out
across their organization to request information and reports that
might be relevant to their work. This can help break down
information silos and bring datasets out of isolation.

For example, to make the case for providing employees with

opportunities for personal professional development, an HR
professional can draw on data that shows how personnel who have
received a certain professional certification have higher success
rates and tend to deliver results more efficiently.

Data on its own is not the route to a more successful business case.
An HR professional needs to know what to do with it and how to turn
it into a narrative, and that’s where interpretation, visualization, and
graphical representation come in. Presenting management or a team
of employees with reams of data in a spreadsheet might appear
impressive, but it will not necessarily generate support for the
proposal. Creating graphical representations of the data can present
your findings in a clearer, more efficient and accessible manner. This
can also put you in a position to counter firmly held, but incorrect,
organizational or leadership beliefs.
Graphic Data Analysis Tools
Graphic data analysis tools are often used to support analysis and
visualize results. The most common data analysis tool is probably a
spreadsheet program that allows the analyst to sort data and view it
in different ways. Most of these programs include the capability to
create graphic representations that help to analyze the data in
different ways. These tools also allow for the results to be
communicated more easily and accessibly to other people.

Exhibit 66 shows some common graphic analytical tools.

Exhibit 66: Graphic Presentation of Data Analysis

Pie Chart
Description: Graphically depicts as portions or
slices of a circle the constituents that comprise
100% of a data group. Textual data information
can be included in callouts or in an attached table
for more precise communication.
Application: To present a high-level impression of
the data distribution as a percentage of a whole—
for example, the workforce. This information may
be helpful context for a deeper discussion.
Example: HR uses a pie chart to describe the age
breakdown of the workforce. Go to long description.

Histogram
Description: Graphically depicts the sorting of
data into groups arranged in the shape of a
statistical distribution, showing a central tendency
and dispersion around that tendency. This
appears as columns of varying heights or lengths.
Histograms can include a comparative referent,
such as a target or range of values. They can also
be designed to show comparisons over time
(usually through multiple columns for each
category).
Application: To sort data and to support rapid Go to long description.
comparison of categories of data.
Example: HR uses a histogram to analyze
recruiting methods in terms of employee
performance ratings.

Trend Diagram
Description: Plots data points on two axes. The
horizontal axis usually represents time, while the
vertical axis represents volume.
Application: Can be used to test for presence of
cycles or developing trends.
Example: The HR group analyzes workforce
demand to identify overall trends in demand as
well as high and low points in the calendar year.

Go to long description.

Pareto Chart

Description: Applies the Pareto principle (that

80% of effects come from 20% of causes) in the
form of a histogram. Categories of data are
ranked, usually from left to right along the x axis,
according to size. The y axis shows reference
ranges (for example, number or percentage of
occurrences). A cumulative percentage line plots
the category contributions to the whole, making it
easier to identify the 80/20 cut—the 20% of
factors that are creating 80% of the problems.
Application: Distinguishes between the “vital few”
categories that contribute most of the issues and
the “trivial many” categories of infrequent Go to long description.
occurrence to support more-focused quality
improvement activities.
Example: An HR professional uses a Pareto chart
to analyze and illustrate causes of voluntary and
involuntary employee separation from the
organization.
Scatter Diagram
Description: Plots data points against two
variables that form the chart’s x and y axes. Each
axis is scaled. The pattern formed by the plotted
data describes the correlation between the two
variables:

The tightness of clustering indicates the

probable strength of the correlation.
A line rising from the lower left to the upper
right quadrant indicates a positive correlation.
(As x increases, y increases.)
A line falling from the upper left to the lower
right quadrant indicates a negative correlation. Go to long description.
(As x increases, y decreases.)

Application: Can be used to test possible causal

relationships and narrow focus on subsequent
tests.
Example: An HR professional maps the
correlation of workplace accidents with a series of
factors, such as access to safety training.
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Glossary
Accounts payable
Money an organization owes its vendors and suppliers.

Accounts receivable
Money an organization’s customers owe the organization.

Active listening
Communication technique to increase the engagement between
communicators and their audiences. It involves two-way
communication and attention to nonverbal signs that indicate
interest and reactions to the message and speaker.

Affinity diagramming
Data-sorting technique in which a group categorizes and
subcategorizes data until relationships are clearly drawn.

Analytical processing
Applications that can analyze data faster and in more ways than
traditional relational databases, offering a multidimensional
analysis of business data.

Assets
Financial, physical, and sometimes intangible properties an
organization owns.

Balance sheet
Statement of an organization’s financial position at a specific point
in time, showing assets, liabilities, and shareholder equity.

Balanced scorecard
Performance management tool that depicts an organization’s
overall performance, as measured against goals, lagging
 indicators, and leading indicators.

Bribery
Exchange of anything of value to gain greater influence or
preference.

Business case
Presentation to management that establishes that a specific
problem exists and argues for a proposed solution.

Business intelligence
Ability to use information to gain a deeper understanding of an
organization and make sound business decisions.

Cash flow statement

Statement of an organization’s ability to meet its current and short-
term obligations, showing incoming and outgoing cash and cash
reserves in operations, investments, and financing.

Civil law
Legal system based on written codes (laws, rules, or regulations).

Code of conduct
Principles that guide decision making and behavior in an
organization.

Common law
Legal system in which each case is considered in terms of how it
relates to legal decisions that have already been made; evolves
through judicial decisions over time.

Confidentiality
Treatment of personal information that has been disclosed to
another person or organization.
Conflict of interest
Situation in which a person or organization may benefit from
undue influence due to involvement in outside activities,
relationships, or investments that conflict with or have an impact
on the employment relationship or its outcomes.

Covering
Defensive behavior that occurs when an organization recruits a
diverse workforce but, consciously or otherwise, promotes
assimilation rather than inclusion.

Cultural intelligence
Capacity to recognize, interpret, and behaviorally adapt to
multicultural situations and contexts.

Cultural taxation
Additional workload that is generated for members of an
underrepresented group due to their requested participation in
DE&I efforts.

Culture
Basic beliefs, attitudes, values, behaviors, and customs shared
and followed by members of a group, which give rise to the
group’s sense of identity.

Delphi technique
Technique that progressively collects information from a group of
anonymous respondents.

Diversity
The similarities and differences between individuals, accounting
for all aspects of one’s personality and individual identity.

Due process
 Concept that laws are enforced only through accepted, codified
procedures.

Emotional intelligence (EI)

Ability to be sensitive to and understand one’s own and others’
emotions and impulses.

Employee resource group (ERG)

Voluntary group for employees who share a particular diversity
dimension (race, religion, ethnicity, sexual orientation, etc.); also
known as affinity group or network group.

Enterprise resource planning (ERP)

Business management software, usually a suite of integrated
applications, that a company can use to collect, store, manage,
and interpret data from many business activities.

Equity
Amount of owners’ or shareholders’ portion of a business.

Extraterritoriality
Extension of the power of a country’s laws over its citizens outside
that country’s sovereign national boundaries.

Focus group
Small group of invited persons (typically six to twelve) who actively
participate in a structured discussion, led by a facilitator, for the
purpose of eliciting their input.

Framing
Process of constructing a message so that an audience sees
communicated facts in a certain way and is persuaded to take a
certain action.
Global mindset
Ability to take an international perspective, inclusive of other
cultures’ views.

Gross profit margin

Ratio of gross profit to net sales.

High-context cultures
Societies or groups characterized by complex, usually long-
standing networks of relationships; members share a rich history
of common experience, so the way they interact and interpret
events is often not apparent to outsiders.

Impostor syndrome
A feeling that one’s success is due to luck, not hard work or skill;
can lead individuals to feeling unfit for their current role.

Inclusion
Extent to which each person in an organization feels welcomed,
respected, supported, and valued as a team member.

Income statement
Statement that reports revenues, expenses, and profits for a
specified period of time, for example, quarterly or annually.

J curve
Visualization of the impact of change on productivity. When
change is introduced, there is typically a decrease in productivity
and then a gradual return to or, ideally, a surpassing of previous
levels of productivity.

Jurisdiction
Right of a legal body to exert authority over a given geographical
territory, subject matter, or persons or institutions.
Liabilities
Organization’s debts and other financial obligations.

Low-context cultures
Societies in which relationships have less history; individuals know
each other less well and don’t share a common database of
experience, so communication must be very explicit.

Mean
Average score or value.

Median
Middle value in a range of values.

Mind mapping
Data-sorting technique in which group members add related ideas
and indicate logical connections, eventually grouping similar ideas.

Mode
Value that occurs most frequently in a set of data.

Motivation
Factors that initiate, direct, and sustain human behavior over time.

Negotiation
Process by which two or more parties work together to reach
agreement on a matter.

Net profit margin

Ratio of net income (gross sales minus expenses and taxes) to net
sales.

Networking
Process of developing mutually beneficial contacts through the
exchange of information.
Neurodiversity
Refers to a workforce that approaches problems using different
conceptual thought approaches that may stem from atypical brain
structure, for example, attention deficit disorder (ADD), attention-
deficit/hyperactivity disorder (ADHD), and anything categorized as
existing on the autism spectrum (autism spectrum disorder, or
ASD).

Noise
In communication, any factor that can disrupt the sending and
receipt of a message—for example, physical factors such as loud
environments, cultural factors such as a distinctive accent, or
cognitive factors such as the use of unfamiliar jargon.

Nominal group technique (NGT)

Technique in which participants each suggest ideas through a
series of rounds and then discuss the items, eliminate
redundancies and irrelevancies, and agree on the importance of
the remaining items.

Nonverbals
Components of a message apart from its words. This could
include physical gestures and posture and vocal tones, volume,
and speed.

Principled negotiation
Process in which negotiators aim for mutual gain, emphasizing the
need to focus on the problem instead of personal differences and
on mutually beneficial outcomes.

Qualitative data
Subjective evaluation of actions, feelings, or behaviors.
Quantitative data
Objective measurements that can be verified and used in
statistical analysis.

Ratio analysis
Comparing the sizes of two variables to produce an index or
percentage; commonly used to analyze financial statements.

Regression analysis
Statistical method used to determine whether a relationship exists
between variables and the strength of the relationship.

Reliability
Extent to which a measurement instrument provides consistent
results.

Root-cause analysis
Type of analysis that starts with a result and then works backward
to identify fundamental cause.

Rule of law
Concept that stipulates that no individual is beyond the reach of
the law and that authority is exercised only in accordance with
written and publicly disclosed laws.

Scenario/what-if analysis
Statistical method used to test the possible effects of altering the
details of a strategy to see if the likely outcome can be improved.

Service-level agreement
Document that defines the output customers can expect.

Stakeholder concept
 Concept that proposes that any organization operates within a
complex environment in which it affects and is affected by a variety
of forces or stakeholders who all share in the value of the
organization and its activities.

Standard deviation
Distance of any data point from the center of a distribution when
data is distributed in a “normal” or expected pattern.

Transparency
Extent to which an organization’s agreements, dealings,
information, practices, and transactions are open to disclosure and
review by relevant persons.

Trend analysis
Statistical method that examines data from different points in time
to determine if a variance is an isolated event or if it is part of a
longer trend.

Unweighted mean
Raw average of data that gives equal weight to all values, with no
regard for other factors.

Validity
Extent to which a measurement instrument measures what it is
intended to measure.

Value
The benefit created when an organization meets its strategic
goals; measure of usefulness, worth, or importance.

Value chain
The process by which an organization creates the product or
service it offers to the customer.
Variance analysis
Statistical method for identifying the degree of difference between
planned and actual performance or outcomes.

Weighted mean
Average of data that adds factors to reflect the importance of
different values.
Long Description Appendix
This appendix provides more detailed descriptions for some of the
images found in the text. Return to the image location in the text by
clicking the link at the end of each description.
Exhibit 36: Enterprise Resource Planning (ERP) System

An enterprise resource planning (ERP) system is represented by a

circle at the center, and bidirectional arrows show the
interrelationship of the ERP system with other systems:

Finance resource management (FRM)

Supply chain management (SCM)

Human resource management (HRM)

Customer relationship management (CRM) and

Manufacturing resource planning (MRP)

Go to image in text.
Exhibit 47: Managing the Change Spectrum

The breakdown between those who are resistant to change (20%–

30%), those who are neutral (40%–60%), and those who welcome it
(20%–30%) is shown.

Resistant individuals are afraid of the unknown and find comfort

in the status quo. They may be shifted from resistance by
empathy, communication, and support.

Neutral individuals can be shifted toward change by selling the

benefits of the change and creating opportunities for
involvement.

Welcoming individuals perceive benefits and welcome increased

challenge. This can be maintained through recognition,
delegation, and support.
Go to image in text.
Exhibit 49: Lewin’s Model of the Change Process

Lewin’s three stages of change (unfreezing, moving, refreezing) are

shown:

Unfreeze the current state: The purpose of this step is to get

people to accept that the change will occur. Reducing factors
that work against change is critical at this stage.

Move toward the new state: During the second step, the focus is
on getting people to accept the new, desired state.

Refreeze the new state: Once the change has been

implemented and generally accepted, the focus should be on
making the new idea a regular part of the organization.

Go to image in text.
Exhibit 50: An Integrated View of Change Strategy

Kotter’s change model can be combined with Lewin’s steps in an

integrated view of change strategy:

Lewin’s steps (the “what”) are shown across the top:

The Current State (Unfreeze)

The Transition State (Move) and

The New State (Refreeze)

Kotter’s techniques (the “how”) are shown below Lewin’s steps:

The unfreeze step is accomplished by creating a sense of

urgency, assembling a strong guiding team, and providing a
 clear vision.

Transition is accomplished by over-communicating, empowering

action, and ensuring short-term successes.

The new state is accomplished by consolidating progress and

institutionalizing.

Go to image in text.
Exhibit 61: Distribution by Quartile and Percentile

Quartiles are shown by a wide line that is divided into four even
sections, marked “first quartile,” “second quartile,” “third quartile,”
and fourth quartile.” “0%” is shown above the far left end of the line;
“50%” is shown above the middle of line; and “100%” is shown
above the far right. Sample pay amounts are shown below the line:

The entry wage, $55,000, is at the far left, and the maximum
wage, $75,000, is at the far right.

The first quartile ends at $60,000, the midpoint is $65,000, and

the third quartile ends at $70,000.

Go to image in text.
Exhibit 62: Normal Distribution

The normal distribution curve (a bell-shaped curve) is shown, divided

into 8 vertical segments. The segments are labeled, from left to right,
.5%, 2%, 13.5%, 34%, 34%, 13.5%, 2%, and .5%. The lines
separating the segments are labeled, again left to right, –3, –2, –1, 0,
1, 2, and 3. SD at the far right indicates standard deviation.

68% falls between the –1 and 1 standard deviations. An additional

13.5% falls between the –2 and –1 standard deviations and between
the 1 and 2 standard deviations, totaling 95%. Another 2% falls
between –3 and –2 and between 2 and 3, totaling 99%. The
remaining 1% of values, split into .5% at either end of the graph, falls
beyond the –3 and 3 standard deviations.

Go to image in text.
Exhibit 65: Trend Analysis for ABC Medical

The y axis shows the number of employees (310, 320, 330, 340,
350, 360, 370, 380), and the x axis shows the years (1, 2, 3, 4, 5, 6,
7, 8). Growth is plotted with a line from year to year for years 1-6,
with two additional years showing growth projection. Growth
increases from year 1 to year 2, drops in year 3, and then increases
fairly steadily in years 4 through 6. The projection shows continued
growth in years 7 and 8 but at a slightly slower pace than that in
years 4 through 6.

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Exhibit 66: Graphic Presentation of Data Analysis: Pie Chart

A pie chart shows workforce age split into four categories:

< 25 (17% of the chart)

25-35 (22%)

36-50 (25%) and

> 50 (36%)

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Exhibit 66: Graphic Presentation of Data Analysis: Histogram

A histogram shows employee performance scores by hiring source.

The left axis runs from 0 to 100 in intervals of 20. The bottom axis
includes categories: referrals, agency A, agency B, job fairs, social
media, ads. Above each category is a bar that represents the score
for the category.

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Exhibit 66: Graphic Presentation of Data Analysis: Trend
Diagram

A trend diagram shows the monthly averages of the unemployment

rate. The left axis is the workforce (0, 10, 20, 30, 40, and 50, in
thousands), and the bottom axis increases in three-month intervals
(Jan 2013, Mar 2013, May 2013, Jul 2013, Sep 2013, Nov 2013, Jan
2014, Mar 2014, May 2014, Jul 2014). A line is then plotted showing
the employment rate for those time intervals.

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Exhibit 66: Graphic Presentation of Data Analysis: Pareto Chart

A Pareto chart shows causes of voluntary separation.

The left axis has numbers from 0% to 100% at intervals of 25.

The bottom axis is labeled with a variety of causes:

Seek Other Opportunities

Conflict with Supervisor

Dissatisfaction with Compensation

Work Hours

Employer Brand and

Others
Above each cause is a bar showing the percentage for that cause,
and a line sums them (as added from left to right), showing how they
combine to reach 100%.

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Exhibit 66: Graphic Presentation of Data Analysis: Scatter
Diagram

A scatter diagram shows the number of accidents compared to hours

of safety training for the categories of walking and biking. Each data
point (either walking or bicycling) is plotted using a left axis (number
of accidents—0, 20, 40, 60, 80, 100) and a bottom axis (hours of
safety training—0, 10, 20, 30, 40). A line showing the trend of the
data runs through the chart.

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