HR HAS BEEN CHASING THE WRONG PRIZE. WHY CAPABILITY—NOT PERFORMANCE—IS THE REAL STRATEGIC MANDATE

For more than three decades, the world has been trying to prove that it “adds value” by linking HR practices to organizational performance. We already know it adds value! But the challenge is, how do we know empirically? And how can we demonstrate this both academically and in practice?

We know that better hiring leads to higher productivity. Better engagement leads to better results. Better leadership development leads to better outcomes. The logic sounds reasonable. The evidence (hardcore!), however, has always been fragile.

Despite thousands of studies, increasingly sophisticated analytics, and endless variations of “best practice,” the HR–performance link remains stubbornly elusive. Correlations appear, disappear, and reappear depending on context, measurement choices, and modelling assumptions. The so-called “black box” between HR activities and performance has never really been opened. It’s just not fair!

What if the problem is not the data?

What if the problem is not the methods?

What if the problem is the question HR (and the rest) has been asking all along?

THE WRONG QUESTION

The prevailing strategic human resource management (SHRM) paradigm asks, "How does HR drive organizational performance?"

That question contains a quiet but profound assumption: that HR, as a function, can plausibly claim performance as its outcome. In reality, performance is an emergent system-level result. It arises from strategy, market conditions, leadership decisions, organization structure, technology, coordination, execution, and timing. It may even be affected by the weather! HR is part of that system, but it does not, and cannot, “own” performance.

Trying to prove otherwise has created a legitimacy trap. HR has been forced into ever more elaborate causal claims, often based on proxy measures and inferential leaps that few senior leaders truly believe. The result is a profession that's very busy, well-intentioned, and more analytical nowadays and still struggling to secure durable strategic influence.

A DIFFERENT STARTING POINT: ORGANIZATION CAPABILITY

There’s a more credible route to influence, and it begins by changing the object of attention. Instead of asking how HR drives performance, we should ask a more foundational question:

IS THE ORGANIZATION CAPABLE OF DOING WHAT ITS STRATEGY REQUIRES?

Organization capability is not about effort, intention, or aspiration. It’s about whether the organization, as designed, can reliably produce a required effect to an acceptable standard under real operating conditions. This shifts the conversation away from abstract outcomes and toward the concrete conditions that make coordinated action possible.

Seen this way, capability isn't a slogan or a maturity level. It’s a property of the organization itself, shaped by people and structure, enabled by design choices, and exposed most clearly when things are stressed.

WHY WE STRUGGLED TO ENGAGE WITH CAPABILITY

Ironically, HR (and Strategy) has always been close to the capability problem. But maybe not in the right way. Most HR work focuses on what we call static organizational hygiene:

• Competency frameworks

• Training programmes

• Leadership models

• Engagement surveys

• Culture initiatives

• Org charts and job architecture

• Reward strategies

These are not wrong. But they’re often treated as endpoints, rather than as preconditions. An organization can be perfectly compliant on paper—fully trained, fully staffed, culturally aligned—and still fall short when it actually needs to perform. So, what happened?

It’s because capability doesn’t reside in people alone. It emerges only when human readiness and structural readiness come together in practice. Roles must be clear. Processes must work. Decision rights must be real. Technology must support, not obstruct. Information must flow. Authority must be usable, not theoretical.

When focusing only on people variables (particularly in HR and OD), it unintentionally inherits responsibility for failures that are fundamentally organizational.

HR AS CAPABILITY ARCHITECT

This is where HR’s most legitimate strategic role emerges.

HR could consider itself less of a performance engine and more of a Capability Architect. A Capability Architect doesn’t claim ownership of results. Instead, they focus on designing, testing, and governing the conditions under which results become possible. This role sits at the intersection of people, structure, and execution, and it’s far more credible at the board and executive level.

As a Capability Architect, HR asks different questions:

• What capabilities does our strategy actually require?

• Have those capabilities been explicitly specified or merely assumed?

• Are people ready to act, not just qualified?

• Does the organization give them the latitude to act when it really matters?

• Have we ever tested these capabilities under real conditions and scenarios?

• Where are we relying on heroic effort or inefficiency to compensate for weak design?

These are not “soft” questions. They’re operational, structural, and deeply strategic.

CAPABILITY EXPOSES DEEPER TRUTHS

One reason capability has been avoided is that it’s hard to evade. Organizations can always explain away performance. Markets changed. Competitors reacted. Conditions were unusual. Technology dated. But Capability is less forgiving. Either the organization can do the thing it claims it can do. Or it can’t.

This is why the most rigorous thinking about capability historically comes not from management consulting or HR textbooks, but from domains like defense and emergency services, where failure is existential. Capability is mission critical. In those settings, capability must be specified, tested, and verified long before outcomes are visible.

Civilian organizations increasingly face similar levels of complexity and risk (although thankfully less existential!). Yet many still govern themselves as if capability were implicit, rather than something that must be continuously demonstrated.

A NEW BASIS FOR LEGITIMACY AND INFLUENCE

Repositioning HR around organizational capability changes the legitimacy equation. Instead of saying, “HR drives performance,” HR can credibly say:

• We ensure the organization is capable of executing its strategy.

• We surface where human effort is compensating for structural weakness.

• We make readiness and execution visible before failure occurs.

• We govern capability as a portfolio, not as isolated initiatives.

This is a much stronger claim. It aligns HR with strategy, organization design, and governance, without inflating its remit or over-claiming causality. It also creates a more honest partnership with line leaders. Capability is not HR’s responsibility alone. But HR is uniquely positioned to architect, integrate, and steward the conditions that make capability real.

A CALL TO ACTION

For HR, OD, leaders, consultants, and academics, the challenge is clear. We need to stop refining ever more sophisticated arguments about how HR might influence performance and instead confront a more fundamental question: Is the organization actually capable?

This requires new conversations and a willingness to move beyond familiar activity-based comfort zones. It also requires courage. Capability work exposes gaps that dashboards and surveys often hide.

But it also offers something far more valuable in return: a legitimate, durable role as a ‘capability driver’ at the center of organizational effectiveness. Not as a supporting corporate function, but as a Capability Architect.

The future of HR influence won’t be won through better correlations out of SHRM research. It’ll be won by helping organizations understand, design, and govern what they’re truly capable of doing. We can’t get any more legitimate than that.