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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

business strategy
integrative
informs HR actions

passing ships:
independent HR two way linkage:
and business mutual influence
strategies
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  Get a seat at the
formal processes decision making
table
 If matters are  Build coalitions,
settled beforehand work to influence
outside meetings
 If real action  Ensure you have
happens at business partners
operational level effective at BU
level
Stakeholder management
 board  what is their stake?
 executive committee  what are their goals?
 senior managers  what are their
 line managers expectations?
 how will change affect
 team
them?
leaders/supervisors
 what do they know
 employees
already?
 employee  what influence do they
representatives have?
 external suppliers  what power do they
 government bodies have?
 other agencies
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
Service-Profit-Chain Model

Customer
Line Employee Customer
Company satisfactio Change in
Manageme Commitme spending
Culture n with sales
nt nt intention
service

Employee
Absence
Characteristics of strategic HR
A philosophy underpinning people
management
Seeing people as a competitive
resource
A planning approach to resources
■ numbers
in line with
■ skills business need
■ potential
Adds long-term rather than short term
value
Characteristics of strategic HR
 Integrated – brings together
multifaceted activities
People management
integration
vertical
integration business
strategy

reward employee training work culture leadership


relations & devt orgn style

horizontal integration
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
Internal
drivers

Business HR Business Imple-


Monitor
strategy strategy plans mentation

External
drivers
How is people & business
alignment achieved
 What is the Big
organisation’s big idea
idea?
 What are the
business priorities? Business
priorities
 What are the
people priorities?
 How do they link?
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
Individual capability

ability: motivation:
skills, training engagement
education involvement
Development Deployment
access: application:
resourcing OD
recruitment product
succession market
strategy

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

Corporate HR

centres shared consultanc


of expertise services y
pool

BU BU BU BU BU
business partner business partner business partner business partner business partner
HR’s own problem areas
Obstacles to  Relationships with
success: management not
■ time working.
■ capacity The villains:
■ focus ■HR – not letting go
■ capability ■the line – not taking
it up
■ positioning
■senior mgt – sending
■ organisation
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?
 Construct a workforce plan
 Establish the supply/demand balance
 Are the right people, in right jobs?
 Review your recruitment model
Why do
■ able to attract - all types? they
join?
■ brand
■ proposition
 Review your retention model Why do
they
■ right level of wastage? leave?
■ numbers, types, quality
A strategic review of
recruitment and retention
H

Attract &
retain
Organisational
impact

Outsource
Commoditise
L

H Market availability L
Different propositions for
different groups
Hire Exploit Fire

Attract Nurture Retain


What should HR do? (2)
 Are you able to motivate staff?
How do
■ degree of engagement you
know?
■ what motivates them?
■ what demotivates them?
■ what impact does pay and performance
management have?
 How well are employees aware of
■ the bigger picture?
■ their job?
■ what success looks like?
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

People
HR
management
efficiency
efficiency

People
HR
Management
effectiveness
effectiveness
Examples of measures in multi
dimensional measurement

Cost/Income
Process metrics
against
Ratios
headcount
Customer
views

Strategic alignment
Human Capital
Functional positioning
Human capital measuring & doing

business goals
HR policies
& practices

HCM
measuring
reporting acting
managing
internal external people

business
performance
… thank you