Strategic visions
If you were at the peak of delivering an
effective HR strategy in your organisation what would you be doing? We asked
three experts to describe how it should happen in an ideal world.
The consultant's view
Mike Haffenden, founding partner of strategic dimensions
If ever there were a topic that evoked confusion and misunderstanding, it is that of 'HR strategy' and the related job titles of 'strategic business partner' and 'strategic HR director'. In many discussions, strategy is synonymous with being senior or important. For most HR directors, the fact that they work for or alongside the real strategy formers means that they call themselves strategic because, by association, a little bit rubs off.
However, being senior is not the same as being strategic. Nor is it the case that 'good HR makes a difference,' as advocated by some academics and the CIPD. It may or it may not - it all depends on the business and the circumstances. Being 'strategic' requires much more than that.
So, if strategy involves more than being senior and doing 'good HR', then what exactly does it entail? In his writings, Henry Mintzberg defines strategy as:
- A plan, or some consistently intended course of action
- A pattern that emerges over time
- A position that provides for competitive advantage; or
- A perspective or abstraction that exists in the minds of people
Thus, there are some businesses that have developed a particular way of doing things that, by their very nature, creates a competitive advantage.
Costas Markides of the London Business School suggests that strategy is about choice. That is, the decisions a company makes about who to target as customers, what to offer them and how to deliver the product to the customer base. The end result of these who/what/how decisions should be a clear differentiation of the business from the competition. These are weighty issues outside the remit of most HR directors.
In those few businesses where the HR director takes part in debating the who, what and how, there is likely to be few, if any, tangible assets. Many businesses without tangible assets do not need much in terms of 'strategic HR', and talented individuals or small teams can deliver great outputs without the need for an HR infrastructure.
There are very few businesses that have managed to differentiate themselves from the competition by the quality of their HR management. The best example I have seen was Hewlett Packard in its halcyon years. Yet even here, human resource management was regarded as far too important to be left to the HR managers. What really made the company stand out was the quality of the people management, not the quality of the HR management. Indeed, there is a view that HR flourishes where there are weak people-managers and a strong HR function that acts in an almost executive capacity. This can't be right.
In other cases, the HR director may facilitate the strategic discussions of the board and occasionally chip in. This is far more common, and there are many excellent HR directors who operate as facilitators to the board and executive committee.
Translation skills
In other instances the HR director will take the strategy and translate it into a strong project plan, with a clear line of sight between business imperatives and the people component. HR activity will support and be linked back to the business strategy. This is the territory most effective HR directors should occupy, and they should make sure they deliver it well.
The level of involvement in strategy is a complex function based on the sophistication of the executive committee, the HR director's expertise, the evolutionary stages of the business, and the type of business. For example, it is difficult to see the benefit of real strategic involvement of the HR function in capital intensive businesses such as oil and pharmaceuticals, where the people component is insignificant in relation to other indicators of success. Similarly, in many businesses in the City, it is likely that there is no requirement for strategic involvement. That is not to say the excellent delivery of complex HR services is not important to these businesses - they are, but they do not require HR to be strategic. What they need is a series of well-designed and delivered initiatives to support the strategic direction and enable effective implementation.
There is a further rather large category of HR directors who are faddists bent on chasing best practice and the latest quick fix, regardless of the needs of the business. They exist in surprising numbers, and there are far too many of them.
If in doubt, check it out: try to determine which strategic imperative is underpinned by 360-degree feedback, development centres, neuro-linguistic programming or competency frameworks. Most of these initiatives are simply fashion fodder, and if your HR director has implemented some of them but cannot link any to a strategic imperative, then your director belongs in this category. Ask customers to choose between the basic product without the HR fads, and the more expensive one created by managers who've had 360-degree feedback. It will elicit only one response.
So, if most of us are not 'strategic' and are not fashion followers, what is the point? Before joining Hewlett Packard, I worked for a large FMCG business where few outside the board even knew the strategy, let alone understood it. The result was confusion, uncertainty, lack of commitment and good people working against each other. HR has a huge task to help communicate the strategy and set the parameters within which people can operate and implement it. It is the creation of a performance-led culture and embedded processes in resourcing, development and motivation, which deliver the superior performance that makes the difference. In this way, it is possible to burst the bubble of the nonsense proclaiming that people are our greatest asset. They are not.
It is the amalgamation of good methods of operation and delivery, summarised by 'the way we do things round here'. If Sainsbury's recruited Tesco's employees, for example, it would not make it Tesco.
These embedded processes and 'structural capital' are the main reasons why HR is chasing yet another strategic red herring in its vain pursuit to measure human capital.
The academic's view
Linda Holbeche, director at Roffey Park and author of Aligning Human Resource
and Business Strategy
HR director's potentially have one of the most significant roles in any business - provided what they are doing is geared towards building a winning organisation, instead of delivering a short-term, crisis-driven agenda in 'headless chicken' mode.
The classic challenges of recent years, such as recruitment and retention and change management, are still with us, and employee relations issues and other developments will add to the workload. Getting out of reactive mode means becoming skilled at solving problems in the short-term in a way that supports where the organisation wants to go in the long-term.
Operating philosophy
Any real strategic HR director recognises that aligning HR with business strategy is not only about obeying bottom-line imperatives, such as designing the most cost-effective structure, or integrating cultures as fast as possible following a merger. It is also about building an organisation where people want to work and give their best, to produce the enhanced revenues that so frequently do not materialise when change processes are badly handled.
While HR can add value through service alone, I believe consultancy skills and relationships, however fundamental, are not enough to add lasting value. A more strategic contribution involves leadership. This means that the HR director's role will inevitably be challenging to some extent, since the typical business decision taken at senior level focuses on projected costs, risks and revenues, leaving the detail of implementation to others. The people implications tend to be an afterthought.
An effective HR director is in there when the business decisions are taken to influence thinking with reasoned, data-backed arguments, so that the people implications become integral to the business decision-making process.
Sustainable high performance
The strategic HR director has a clear, shared vision about how the organisation can be built over time to achieve sustainable high performance. A typical vision of a high-performing organisation is one that attracts and retains the best people, is a great place to work and is highly committed to work practices and strong corporate values, which its people are attuned to.
This vision defines some of the key areas of longer-term focus, while the short-term realities become some of the immediate priorities within it. In a merger scenario, for instance, the short-term decisions about people and cultural integration can help create or undermine the basis of future profitability. People do not warm to cultural initiatives months after they feel they were badly handled during a change process. The culture becomes a reflection of what has previously happened. So the whole HR team, regardless of their roles and responsibilities, need to see how what they are doing contributes to the whole. Together, the vision and short-term needs will drive decisions about how HR should be structured, the calibre and experience needed in the team, and the implications for line managers of any shift in HR roles.
A high-performing HR team
A really high-performing HR director has a high-calibre team to match. The team roles will have been carefully chosen and staged over time so line managers are ready for their devolved responsibilities and have the HR information systems, helpdesks and training to prepare them to take on these responsibilities.
HR roles - typically business partner and shared services - will have been worked through, so that rather than colleagues competing with each other for the 'client', they see greater credibility in ensuring the client receives exactly what is needed from the best people.
The HR director will be a catalyst for change, supporting the HR team in making the transition to new roles by clarifying what they mean in practice, and actively coaching the team during the early stages of transition, rather than leaving them to muddle through. The team will rapidly acquire basic consultancy, facilitation, project management and change management skills, together with the business acumen they need for their new roles.
The HR team itself will be modelling high-performance work practices, especially when learning from each other and working as members of integrated project teams with other functional specialists, such as IT and finance, to deliver effective solutions. HR professionals should be developing key specialist areas such as merger and acquisitions experience, organisation design and employee relations. The team will import and export staff members with other backgrounds, so that collectively, the language and delivery modes used are seen to be integral to the way the business operates.
Relationships and credibility
The HR director will set great store by developing a range of working relationships across the business, especially with key decision-makers and staff representatives. These relationships, and those developed by the HR team, will form the basis of business partnerships. The HR director will set great store on getting the fundamentals right, since credibility will be based on high-quality short-term delivery, and the ability to create a bigger win for the organisation by driving through a longer-term agenda.
A strategic agenda
Beyond the short-term, the strategic HR director, the team and key clients will be working together to shape an HR strategy that focuses on the key elements involved in building a successful organisation. Even when a company is in steady state, there are so many areas where an HR team could add value that the important thing is to focus on some key deliverables that would make a measurable difference to the whole.
In times of change, the ability to maintain focus is what separates the sheep from the goats. It is not a case of either working on the short-term issues or the long-term goals: it is important to do both.
Business plans convert these goals into actionable areas. Many can be achieved simultaneously while others may have to be staged over time. The first year, for example, may include developing the vision for HR, consolidating new HR roles, empowering the line, delivering the short-term agenda. The second year could include succession planning processes, revising performance management and appraisal processes, designing the organisation to support new business process and implementing the changes. The third year could involve revisiting the organisation's values and introducing leadership development to ensure that managers walk the talk.
The practitioner's view
Paul Turner, general manager of people development at West Bromwich Building
Society
Independent financial analysis clearly shows that companies which invest wisely in their people consistently outperform their competitors. At the West Bromwich Building Society, we know that our biggest asset is our people. We have a key focus on aligning what we do in terms of behaviours and results with the visions and values of the society.
The society's vision relates to our three categories of stakeholders - our customers, communities and people - and our leadership, education and development activities promote our company values, encouraging everyone to be 'proud to wear the shirt' (West Bromwich Building Society is the major sponsor of the West Bromwich Albion football team that won promotion to the Premiership in 2001).
We are passionate about creating a culture that supports great customer service, with high levels of recognition and reward, along with learning opportunities. Our people values support this and focus on valuing people, continuous improvement and personal responsibility.
To achieve this, we recently refreshed our people strategies, developing new frameworks for reward, recruitment, retention, leadership development, performance management, cultural values and critical success factor measurements. We also introduced a new coaching culture to support our new customer relationship management processes and systems.
There has really never been a better time to work at West Bromwich Building Society. There has never been a better time to work in HR either. People potential really is the new competitive advantage. Leading companies have moved away from the obligatory message in the annual report that 'people are our most important asset', towards embracing the concept of people as a precious value - hence the debates on ways to measure the value of human capital.
People have the power to take us to greater heights. However, words without substance are meaningless in today's competitive market places. Practical delivery and hard measurement is necessary to fund the on-going development of people strategies to maximise and nurture the pool of potential.
Justifying HR costs
In the future, HR directors will increasingly be asked to justify their spend. This will require us to divest as well as invest. A key aspect being the ability to maximise the value of HR by focusing on critical business areas. Although these will vary from business to business, the constant theme will inevitably be based on the need to switch on the people-talent within every company towards those areas of maximum payback. For HR directors, a comprehensive set of people performance indicators is, a 'must take' document for every board meeting.
At the West Brom we have set out to build a people strategy and key people measures around our vision and core values. These drive our people values, which in turn ensure that we are able to identify the existing cultures within our business, and to monitor the movement of our culture in terms of management behaviour.
Our approach is based on identifying the key areas of focus for cultural change, measuring these and working on influencing management behaviour towards them. Key cultural performance indicators on which managers are appraised support our 'influencing' role. By making our cultural behaviours visible to all within the organisation, cultural change is easier to implement and those managers within the business who are unable to promote a vision of values are identified very quickly.
To achieve an open culture requires a high level of trust. However, saying 'trust me, I am your boss' is not going to get managers far in today's workplace. The media isn't particularly favourable to bosses - can you remember the last time you saw a nice boss portrayed on TV? So at the West Brom, we constantly work on providing managers with information on their style, including perception ratings on trust and many other 'soft' issues, through one-to-ones or via staff feedback.
We found that despite tremendous pressures within our business from developing and implementing new technologies, such as customer relationship management systems; that motivation and morale has stayed at a high level, and is well above the average of Investors in People companies that also participate in our survey pool.
To identify and monitor such behaviours without support would not achieve results. Therefore we have developed a leadership development strategy that is linked to promoting a 'coaching culture' throughout the organisation. We have taken the view that coaching is for everyone and not just the favoured few. Many organisations adopt a view that only senior managers should have the services of a coach. We believe that all managers should have coaching services, along with training and education in key coaching principles, so that they can help their own staff on an individual basis.
Rewarding high performers
Our performance management process links vision and values to everyone's individual objectives. High performers within the organisation are rewarded in line with such performance, and this is differentiated in terms of the annual bonus scheme. A culture of recognition and achievement runs throughout the organisation with incentives, bonuses and regular recognition ceremonies, which help create a strong sense of pride and achievement.
Recruitment is a key area for us. The need for professionally qualified staff has also driven our recruitment process in terms of ensuring that we have a much better fit at the beginning of the people process. Our advertisements and selection processes are geared to attracting energetic, customer-focused people. Advertisement wording is strategically linked to our value statements to appeal to culturally compatible people. Our targeted selection recruitment process is competency driven to ensure we attract the right calibre of people.
In the West Midlands we are recognised as an 'employer of choice'. This is backed by the fact that around 40 per cent of last year's new recruits were recommended to the society by existing employees.
Our competency framework is a critical component of our people strategy, and we have worked hard to implement a framework that is flexible, allowing competencies to be changed as the business needs. Along with our recruitment processes, our competency framework also supports our leadership programme, development and training activities and performance management system. We are currently developing links to our reward mechanisms, to ensure an integrated approach to all areas of our business.
If a person was asked what constituted their last great experience as a customer, the answer would surely be that it was the people, not the technology or administration. To achieve a consistently high level of customer service requires organisations to make a cultural shift to an open style of management, encouraging positivity and feedback.
An open style of management discourages negative attitudes. Negativity kills creative ideas in organisations and destroys team spirit. Managers at the building society are encouraged to praise far more than they criticise. My rule of thumb is that if you are not praising your people 10 times more than you are criticising them, you are not doing your job properly. Today's organisations are rapidly realising that they must regard their people as thinking, aware individuals, rather than just numbers. Simply wanting something to happen is not enough. Threatening someone with a reward or penalty is useless, unless you provide education and training. Without the relevant knowledge and skills they can do nothing to achieve the goal, despite their motivation to succeed.
Diversity is a key feature of our people strategy and is led by the society's chief executive, Andrew Messenger, who is also chairman of West Midlands' Race for Opportunity campaign. Diversity features in the key people performance indicators. HR is active not just in measuring but also in supporting the business in many activities, including setting up a database of ethnic language skills. Such an approach has helped to increase our ethnic minority employee population from 9 per cent just three years ago, to 17 per cent today. Leadership from the top is a key reason behind the success of our people strategies during recent years.
The EFQM (European Foundation for Quality Model) provides us with a ready-made framework for ensuring that our people strategy is comprehensive and focused on achieving business need. Indeed, the management team has taken to this benchmark so much that last year the society won the top Midland's Business Excellence award in the larger company category.
Our end game is to recruit and retain a high calibre, multi-skilled, empowered and motivated workforce to ensure we remain competitive in the modern financial services market. Achieving the people vision at the West Brom is not about concepts, it is about being pragmatic. We work toward building team spirit, recognising our strengths, understanding our area of expertise and clearly setting out what we want to be within that area, building our strategy around that vision.
West Bromwich Building Society was a finalist in Personnel Today's Awards
for HR Strategy 2000.
Company factfile
