HR’s contribution to business strategy

Understanding strategic formulation Not 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 HR and business strategies 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 permitted Legitimate areas for HR input Extent of HR’s alignment with business - broad objectives and current imperatives

Understanding the decision making process If 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 HR A philosophy underpinning people management Seeing people as a competitive resource

Making the case: what Human Capital HR can deliver Improved utilisation of talent Higher productivity Reduced costs Better service delivery Organisational integration Aligned culture & organisational values Greater employee engagement Stronger employee proposition etc

Line Management Company Culture Employee Commitment Customer satisfaction with service Customer spending intention Change in sales Employee Absence Service-Profit-Chain Model

Characteristics of strategic HR A 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 HR Integrated – 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 HR Integrated – 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 HR Integrated – 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 Business strategy HR strategy Business plans Imple- mentation Monitor Internal drivers External drivers

How is people & business alignment achieved What is the organisation’s big idea? What are the business priorities? What are the people priorities? How do they link? Big idea Business priorities People priorities

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: engagement involvement application: OD product market strategy access: resourcing recruitment succession DeploymentDevelopment Individual capability Organisational action

What are external influences? Conduct environmental scanning: what is the legal context how tight/loose is the labour market are the right skills available at what price what 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 leadership Poor teamworking across organisation Business strategy poorly defined There is little forward planning People 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 BU business partner consultancy pool centres of expertise shared services 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 tasks HR policies are disjoined & inconsistent They serve functional not organisational needs Weak functional leadership Poor internal reputation Human capital not exploited, developed

What should HR do? Review your retention model ■ right level of wastage? ■ numbers, types, quality Why do they leave? Why do they join? Construct a workforce plan Establish 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 Organisational impact H L HL Outsource Commoditise Attract & retain

Different propositions for different groups HireExploitFire AttractRetain 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 example Critical success factors/areas Key performance indicators Service level reviews Customer surveys Employee attitude surveys Process mapping/activity analysis Audits/reviews (incl... quality) Scorecards Benchmarking

Improve measurement HR efficiency People Management effectiveness People management efficiency HR effectiveness

Examples of measures in multi dimensional measurement Process metrics Ratios Human Capital Cost/Income against headcount Strategic alignment Functional positioning Customer views

internal external business performance managing people business goals HR policies & practices HCM measuring reporting acting Human capital measuring & doing

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