HR strategy forum (3): transforming company performance

Our panel of experts offer guidance on the strategic steps HR can take to transform company performance.

The dilemma: I am the new HR director of the European division of a US-owned specialist technology training consultancy. Globally, the business has grown by 70 per cent per annum in the last three years, but growth in the European division has been static. I have been recruited to help turn the business around.

The parent company hopes to float the company on the Nasdaq next year, but cannot do so until the European division, the second largest in the group, has been restored to rapid, profitable growth. There are a number of barriers to success. While the quality of our delivery is exceptional and customers always recommend us, we have no organised sales processes or capability within the business. There is no dedicated sales organisation, and sales efforts are typically reactive, with operational project managers following up leads as and when they surface.

As a result, the organisation struggles to drive sales growth in a consistent pipeline, and finds it difficult to forecast accurately. Although we offer interesting work and good opportunities for global travel, staff turnover among fee-earning consultants is at about 40 per cent. They are being consistently poached by bigger, generalist consultancies. These organisations see technology training as a small but profitable sideline that can be bolted on to their core business of enterprise-wide systems implementation. They are perceived as higher status employers, offering opportunities for training consultants to move into lucrative programming work.

Recruitment is an ongoing problem. It is fully devolved to line managers, and recruitment costs are spiralling out of control as we try to backfill resignations on time-critical projects. We are struggling to maintain promised staffing levels on existing projects, and I am worried that as we move into a growth situation we will not be able to staff new projects. What strategic steps should I be considering?

Solution 1 by Neil Roden, HR director, Royal Bank of Scotland

The European operation has some key strategic HR issues to address to meet its business goals. Particularly the effectiveness of the sales team, retention of good staff, cost control and possibly morale.

Step 1 Board buy-in: Review the business case with the European board to ensure a common understanding of and buy-in to the business goals, priorities and issues for the European operation. Agree the need to quickly develop a transformational people strategy that supports these business goals by addressing key issues such as sales structure, resourcing, retention and employee attraction costs.

Step 2 Address key strategic HR issues: Review the organisational structure in the sales team - consider appointing a head of sales to drive the team forward. There is a need to introduce better sales processes, embed a sales culture and recruit a proactive, qualified team. This is crucial to delivering rapid growth.

Step 3 The organisation is losing significant numbers of staff. Review your internal resourcing and development strategy to address 40 per cent turnover, retain good employees and ensure the appropriate staffing of roles. Establish an attraction strategy that communicates your employee proposition and is underpinned by revised recruitment processes. Consider training managers in conducting structured interviews. Address the spiralling recruitment costs through key supplier relationships and negotiated rates. With 40 per cent turnover and low profitability, there may be a morale dip that needs to be understood and addressed.

Step 4 Agree an implementation plan: Once you have identified the key issues and your proposed actions, you need to review them with the board and agree on how you plan to implement them. It is essential your strategy translates into business performance measures, such as increased income or reduced cost, and not just intangibles.

Step 5 Communicate and mobilise: This is something you need to do with the board's agreement. To succeed, staff will need to be engaged in the transformation of the business. They need to know what it is, have clear goals to strive for, and understand what they need to do to deliver it. Maximise the available communication channels and ensure there is opportunity for two-way communication.

Solution 2 by Louise Allen, director, LA Partners

Step 1 Differentiate between short- and long-term priorities: Because the performance of the European business is an essential part of a wider strategy to float on Nasdaq, there will be tremendous pressure on the HR director and European managing director to make changes very quickly. Therefore, a short-term strategy will be essential. This must be balanced by developing a longer-term strategic response in tandem.

Step 2 Short-term - refocus on sales: This should be your immediate priority. The business has a reputation for good work, so this could become the unique selling point for winning future business. Work with the sales director and sales team to review where and how they have been successful in the past (and where not). Harness this information to create a revitalised sales process. Start with the core client base, targeting the sales force to take advantage of repeat business, expanding from there.

Step 3 Short-term - performance management: Examine the performance management system - how are targets set; are accountabilities clear; who are the good performers; are they recognised and rewarded as such? Overhaul the system to ensure clarity of business goals/sales targets and ensure regular high quality reviews take place. Identify and single out the high achievers for special recognition and reward. Celebrate success.

Step 4 Short-term - leadership issues: The shortage of good consultants is seriously inhibiting business performance. Revisit why so many are leaving. What key issues can be reversed quickly, for example, pay, benefits, bonuses, and so on? Make a strategic decision to invest in those practices that are essential to stem the losses. If there is a lack of morale or motivation, consider the quality of management among the sales team. Is there a leadership issue to be addressed?

Step 5 Longer term - develop strategies for recruiting and growing a talent base: For example, can candidates be sourced and groomed once they have graduated? Other issues appear to centre on the quality of leadership, direction, focus and structure. It will take more time and effort to resolve these issues. It is essential to ensure that these issues are are prioritised in line with business growth targets, so that appropriate investment is made available. It is a people business after all.