Lynda Gratton, Veronica Hope-Hailey, Philip Stiles and Catherine Truss Chapter 8 Linking Individual Performance to Business Strategy: the People Process Model Lynda Gratton, Veronica Hope-Hailey, Philip Stiles and Catherine Truss

Introduction A key challenge facing organizations is how they continue to deliver sustained competitive advantage in the short term while preparing for longer-term success. Sources of sustained competitive advantage lie not only in access to finance or capital, but within the organization, in people and processes capable of delivering business strategies.

Introduction Purpose: Assumption: Build on existing models by mapping, through a case-based methodology, that particular aspect of model which focuses on how the link between strategy and individual performance is played out. Assumption: Focus on collecting exploratory data Case methodology In-depth data collected from many people Link between business strategy, human resource strategy and realized human resource management operates in a dynamic manner and within a particular context Table 8.1 p. 143 Create a map of processes which link business strategy to the performance of individuals and the organization Use this map to increase our understanding of the elements and leverage points of successful linkage

The Emerging Map Proposition 1 Vertical linkage expresses linking a business goal to individual objective setting, to the measurement and rewarding of the business goal; internal people policies and processes and external product market/strategy. Horizontal linkage created within and between the people processes; cohesion, coherence, synergy. Temporal linkage is the linkage between the capabilities of the present and the aspirations of the future

Proposition 2 Relationship between the Core People Process Four key people processes Set objectives which are clearly and consistently linked to the business strategy Create performance metrics Reward performance in line with the business goals Provide short-term training Set of processes for the future Creating a leadership cadre Transforming the basic skills and aspirations Creating an organizational structure and value set

Proposition 2 Three elements of vestiges Scan and diagnose people capability Create an understanding of the gap between capability and business requirements Create a people strategy for design and delivery of people processes

Proposition 3 The Strength of the Processes Create linkage between the business strategy and individual performance Some very strongly linked Others weak Table 8.3 p. 150

The Findings (table 8.4 p. 151) Strongly linked: objective setting Processes for setting annual objectives and agreeing targets were a feature of all the companies Processes were well documented, systematically rolled out, supported by managers Employees were aware of the business strategy and how it linked to their performance Part of the fabric of the culture and an important management discipline

The Findings Strongly linked: short-term training Training was a key aspect of their ability to create the flexible and multi-skilled workforce crucial to delivering both short- and longer-term business performance Key lever was the ability to maximize the performance of knowledge workers in pursuit of a learning organization Majority believed they had the skills needed to deliver the performance objectives Challenging jobs played the most significant role developing employees’ work performance

The Findings Strongly linked: leadership development Complex succession processes supported by Early identification of high-potential people Accelerated development of this group Succession lists ‘Backstopping’ arrangements

The Findings Weakly linked: long-term people strategy Processes are opaque Most were operating with a relatively weak strategic linkage Debates about people followed the development of strategy

The Findings Weakly linked: scanning long-term people trends Elements can provide a vehicle to scan the external environment Probable competitive pressures Legal trends Demographic changes Contractual trends Understanding trends can prepare for potential skill shortages and help to plan for the impact of work or lifestyle changes None engaged in frequent scanning of these long-term people trends

The Findings Weakly linked: workforce development Lack of strategic linkage results from: Profound downsizing and restructuring (destroyed career paths and psychological contracts) Accelerating changes in the technological and competency base of the organization require new skills Process required to predict future skill needs were underdeveloped

Differences across the processes Stronger linkage for short-term people processes Weaker linkage for longer-term orientated processes Creating alignment is highly complex Short-termism causes focus on the ‘numbers’ and little incentive to invest in HR because of its inherent long-term return of investment

Differences across the companies Multinational Companies More strongly linked people processes More strongly embedded and linked to the strategy Less ad hoc and unmonitored Scale of Transformation Weakest where company had recently experienced major catastrophic transformation and change Severe weakening of HR processes associated with transformation Administrative Heritage Where processes had been in place for many years, they were better embedded and supported

Differences across the companies Administrative Heritage Where processes had been in place for years they were better embedded and supported Less apparent where recently introduced Strongly linked processes are built over time in a consistent manner Not unusual for a significant gap between rhetoric and reality