HR’s contribution to business strategy

Understanding strategic formulationNot always as per textbook:

■ intended strategies■ emergent strategies■ political strategies

How does HR contribute:■ operationalises business strategy■ provides separate people thrust:

• connected with organisational aims• disconnected: HR best practice model

■ is an integral part of business strategy

Types of linkage between business & HR strategy

two way linkage:mutual influence

passing ships:independent HRand businessstrategies

integrative business strategy informs HR actions

Linking business & HR strategy Factors that affect this linkage:Planning process

■ formal or informal■ deliberative or emergent

Degree and timing of HR involvement

Extent of challenge permittedLegitimate areas for HR inputExtent of HR’s alignment with business - broad objectives and current imperatives

Understanding the decision making processIf decided by formal processes

If matters are settled beforehand

If real action happens at operational level

Get a seat at the decision making table

Build coalitions, work to influence outside meetings

Ensure you have business partners effective at BU level

Stakeholder management board executive committee

senior managers line managers team leaders/supervisors

employees employee representatives

external suppliers government bodies other agencies

what is their stake?

what are their goals?

what are their expectations?

how will change affect them?

what do they know already?

what influence do they have?

what power do they have?

Characteristics of strategic HRA philosophy underpinning people management

Seeing people as a competitive resource

Making the case: what Human Capital HR can deliverImproved utilisation of talentHigher productivityReduced costsBetter service deliveryOrganisational integrationAligned culture & organisational values

Greater employee engagement Stronger employee proposition etc

Line Managemen

t

Company Culture

Employee Commitmen

t

Customer satisfaction with service

Customer spending intention

Change in sales

Employee Absence

Service-Profit-Chain Model

Characteristics of strategic HRA philosophy underpinning people management

Seeing people as a competitive resource

A planning approach to resources■ numbers■ skills■ potential

Adds long-term rather than short term value

in line with business

need

Characteristics of strategic HRIntegrated – brings together multifaceted activities

horizontal integration

vertical

integration

People management integration

business strategy

reward

employee

relations

training

& devt

work

orgn

culture

leadership style

Characteristics of strategic HRIntegrated – brings together multifaceted activities

Comprehensive – covers the entire operation (at BU or corporate level)

High value added – focuses on business critical issues

Builds social capital – helps sharing, networking and relationships

Characteristics of strategic HRIntegrated – brings together multifaceted activities

Comprehensive –covers the entire operation (at BU or corporate level)

High value-added –focuses business critical issues

Builds social capital – helps knowledge sharing, networking and relationships

Anticipates change – through horizon scanning and internal sensing

Connecting business & HR strategies

Businessstrategy

HRstrategy

Businessplans

Imple-mentation

Monitor

Internaldrivers

Externaldrivers

How is people & business alignment achievedWhat is the organisation’s big idea?

What are the business priorities?

What are the people priorities?

How do they link?

Bigidea

Businesspriorities

Peoplepriorities

Establishing people priorities

What causes people to come to work, be motivated and perform?

What stops them from being effective?

A model of capability

ability:skills, training

education

motivation:engagementinvolvement

application:ODproductmarket strategy

access:resourcing

recruitmentsuccession

DeploymentDevelopment

Individual capability

Organisational action

What are external influences?Conduct environmental scanning:what is the legal contexthow tight/loose is the labour market

are the right skills availableat what pricewhat is the output from schools, universities, etc

what are the political priorities

What is the state of the current workforce?What proportion is skilled for their current and for future jobs?

What is its demographic shape?How committed are employees?

■ attendance■ productivity■ staying or leaving

What are collective relationships like?

To what extent is employee potential being harnessed?

What stops HR succeeding?Human capital not recognised as a source of advantage

Weak organisational leadershipPoor teamworking across organisation

Business strategy poorly definedThere is little forward planningPeople resources assumed to be unlimited, free or fully trained

Resources are hoarded & not shared

HR’s own problem areas

Obstacles to success:■ time■ capacity ■ focus■ capability■ positioning

■ organisation

The ‘default’ operating model

BUbusiness partner

BUbusiness partner

BUbusiness partner

BUbusiness partner

BUbusiness partner

consultancypool

centresof expertise

sharedservices

Corporate HR

HR’s own problem areas

Obstacles to success:■ time■ capacity ■ focus■ capability■ positioning■ organisation

Relationships with management not working.The villains:■ HR – not letting go

■ the line – not taking it up

■ senior mgt – sending wrong signals

Results

Inadequate HR service performance Concentrating on low value tasksHR policies are disjoined & inconsistent

They serve functional not organisational needs

Weak functional leadershipPoor internal reputationHuman capital not exploited, developed

What should HR do?

Review your retention model■ right level of wastage?■ numbers, types, quality

Why dothey

leave?

Why dothey join?

Construct a workforce planEstablish the supply/demand balance

Are the right people, in right jobs?

Review your recruitment model■ able to attract - all types?■ brand■ proposition

A strategic review of recruitment and retention

Market availability

Organisationalimpact

H

L

H L

OutsourceCommoditise

Attract &retain

Different propositions for different groups

Hire Exploit Fire

Attract Retain Nurture

What should HR do? (2)

How well are employees aware of■ the bigger picture?■ their job?■ what success looks like?

How do you

know?

Are you able to motivate staff?■ degree of engagement■ what motivates them?■ what demotivates them?■ what impact does pay and performance management have?

What should HR do? (3)

How skilled are line managers in■ Appraising performance?■ Giving feedback?■ Developing skills?

How effectively are ■ Employees allocated to jobs?■ How well are jobs/the organisation structured?

■ Employees moved to meet business needs?

What should HR do? (4)

What is the organisation’s ■ Ability to change/innovate

How good is the organisation’s governance structure?

How strong (and respected) are the organisational values, eg■ On diversity?■ Whistleblowing?■ Meritocratic progression?

Measure people and HR functional performance Through for exampleCritical success factors/areasKey performance indicatorsService level reviewsCustomer surveysEmployee attitude surveysProcess mapping/activity analysisAudits/reviews (incl... quality)ScorecardsBenchmarking

Improve measurement

HRefficiency

PeopleManagement

effectiveness

People management efficiency

HReffectiveness

Examples of measures in multi dimensional measurement

Process metricsRatios

Human Capital

Cost/Incomeagainstheadcount

Strategic alignmentFunctional positioning

Customer views

internal external

businessperformance

managingpeople

business goals

HR policies& practices

HCMmeasuring

reporting acting

Human capital measuring & doing

… thank you