You Just Don’t Get Any Respect!

Client “When we asked him how he was involving his HR executive in grappling with this problem, he dismissed the question with a wave of his hand and said, “My head of HR is very talented. But this is business, not HR.” Brian Becker, Mark Huselid, and Dave Ulrich, “The HR Scorecard-Linking PEOPLE, STRATEGY, and PERFORMANCE, Harvard Business School Press, 2001

Resulting From: Long-reaching global competition Growing market opportunities outside of the U.S. Maturing U.S. markets

CEOs are beginning to recognize the strategic importance of Human Resource Management The New Paradigm

How Does HR Become a Strategic Partner? Three Important Factors 1.Understanding Four Key Elements 2.Creating the Competitive Edge 3.How HR Demonstrates Value

1.Understanding the Mind-Set of the CEO 2.Understanding the Strategic Thrust of the Company 3.Realistic View of Company’s Ability to Implement And Execute Strategy 4. CEOs Must be able to Measure the Value Contribution of HR

CEOs understand bottom-line financial metrics--Don’t understanding that a successful workforce is a leading indicator of financial performance. CEOs understand the cost of human capital—Struggle to understand it as critical key to competitive advantage. 1.Understanding the Mind-Set of the CEO

CEOs see HR as important, but for the wrong reasons—Can’t see how HR influences the success of the workforce. 1. Understanding the Mind-Set of the CEO

2. Understanding the Strategic Thrust Four Key Elements to Consider

1.Customer Centric 2.Low Cost Provider 3.Product Driven

3. Realistic View of Company’s Ability to Implement And Execute Strategy Four Key Elements to Consider

Internal Realities Strategic Thrust Organizational. Architecture Workforce competencies Right People Leadership capabilities Workforce Success External Realities Industry Changes Business Environment Customer Base Competitive Environment Strategy Implementation & Execution Iteration Repeated iteration produces tested, actionable model

4. CEOs Must be able to Measure Contribution by HR Four Key Elements to Consider

Creating the Competitive Edge That No Competitor can Duplicate

“While leaders have far more day-to-day influence on a workforce than does HR, HR’s primary contribution is helping line managers to see the “big picture” and differentiating among present and potential employees. Therefore, both leadership and HR must be responsible for the delivery of the workforce necessary to successfully execute the firm’s strategy.” Adopted from M. Huselid, B. Becker, and R. Beatty, THE WORKFORCE SCORECARD, HBSP 2005

Focus Must be on the Value Creating Employees Four Key Elements to Consider 4. CEOs Must be able to Measure Contribution by HR

Having the Right People In the Right Positions Four Key Elements to Consider

Sears Nordstrom’s Southwest Airlines

How HR Demonstrates Value?

“Developing a world-class performance measurement system hinges on a clear understanding of the firm’s competitive strategy and operational goals—and a definitive statement of the employee competencies and behaviors required to achieve the firm’s objectives” “Measurement systems—for the firm as a whole or for the HR function—can create value only when they are carefully matched with the firm’s unique competitive strategy and operational goals.” Adapted from The HR Scorecard-Brian Becker, Mark Huselid, and Dave Ulrich 2001

Questions to Ask Yourself Which strategic objectives are critical? What are the performance drivers for each objective? How would we measure progress toward these goals? What are the barriers to the achievement of each objective? How would employees need to behave to ensure that the company achieves these goals? Is the HR function providing the company with the employee competencies and behaviors necessary to achieve these objectives? If not, what needs to change?

Competencies Needed Service Partnership Ongoing Assessment Of Targeted Employees Targeted Training & Development Increase Shareholder Value Revenue From Customers Identify Skill Gaps

Mind-set & Culture? 1.Does the workforce understand and embrace company strategy? 2. Do we have a supporting culture for execution? Behavior? 1.Does the leadership and workforce consistently behave in order to achieve company goals? 2. Have the value-creating positions been identified? Workforce Competencies? 1. Does the workforce have the necessary skills to execute? Success? 1.Has the workforce accomplished the critical objectives of the business?

Performance Measurement Examples  Depth of workforce understanding of business strategy  Depth of workforce understanding of linkage of incentive measures to business measures  Extent to which values are clear and widely understood  Extent of understanding of the firm’s competitive strategy and operational goals  Extent to which culture allows the firm to attract, develop, and retain a diverse array of “value-creating” groups  Extent to which employees are seen primarily by senior management as a cost to be minimized versus a source of value creation

1) It is absolutely imperative to understand the Strategic Thrust of the Business and align HR strategy to the company objectives 2) You must be brutally realistic about HR and the company’s ability to implement strategy 3) It is a teamwork effort between leadership, the workforce and HR—you can’t do it alone! 4)HR and the workforce’s contribution must be measurable

Thank You and I Wish You Great Success Dave Light

Performance Measurement Examples  Gap between current and needed capabilities in “value-creating positions  Internal talent bench strength; availability ratio per vacancy  Percent of employees assessed to be “highly capable”  Percent of employees understanding that competency growth is essential for job security  Percent retention of core competency workforces

Performance Measurement Examples  Consistency and clarity of messages from top management and for HR  Effectiveness in dealing with poor performers  Knowledge sharing of best practices  Percent of employees who met goals for customer satisfaction  Percent of employees who report they believe messages delivered through formal channels  Percent of positions filled on or before agreed-upon date  Percent of workforce that is promotable  Percentage retention of core competency workforces

Performance Measurement Examples  Gap between current and needed capabilities in “value- creating positions  Internal talent bench strength; availability ratio per vacancy  Percent of employees assessed to be “highly capable”  Percent of employees understanding that competency growth is essential for job security  Percent of newly promoted employees performing satisfactorily after six months  Percent retention of core competency workforces

 B. Becker, M. Huselid, and D. Ulrich, THE HR SCORECARD- Linking PEOPLE, STRATEGY, and PERFORMANCE (Harvard Business School Press, 2001)  D. Wade, R. Recardo, Corporate Performance Management (Butterworth-Heinemann, 2001)  M. Huselid, B. Becker, and R. Beatty, THE WORKFORCE SCORECARD (Harvard Business School Press, 2005)  P. Niven, Balance Scorecard Diagnostics (John Wiley & Sons, 2005)  R. Kaplan and D. Norton, Strategy MAPS-Converting Intangible Assets into Tangible Outcomes (Harvard Business School Press, 2004)