Perspectives

By Walker, James W. | Human Resource Planning, December 1999 | Go to article overview

Perspectives


Walker, James W., Human Resource Planning


This column addresses emerging trends and issues in the development and implementation of human resource strategies. Please respond with your views and experiences to bpinzon@hrps.org or walker@walkergroup.com.

Are We Business Leaders?

While many HR leaders today envision themselves as strategic business partners, sitting at the table and building organizational capabilities, many are finding it difficult to fulfill this role. Managers value HR's functional expertise, quick response to their problems and crises, and personal rapport and relationships; however, they do not always see HR leaders as fully contributing members of a management team. Further, they do not perceive people-related business issues and initiatives to be as important as financial, sales, and other business concerns.

HR leaders often accept a supporting role and concentrate on HR initiatives aligned with vaguely defined organizational capabilities, e.g., becoming an employer of choice (best place to work), improving employee retention, building a more collaborative and knowledge-sharing culture, becoming a more adaptive and flexible organization. Strengthening leadership, building and valuing diversity, improving productivity, increasing employee satisfaction, or building high performance work organizations are also common priorities.

Such initiatives may be important, but do we position them as critical actions for implementing specific business strategies? As business leaders we make a specific, clear, and convincing business case for sustained business attention to each people-related business issue. To do this, we address HR initiatives from a business point of view, instead of continually trying to add value to the business from an HR functional point of view. We set priorities for investing time and resources according to business requirements and measure effectiveness in terms of results achieved and business impact.

A Business Point of View

Major forces drive business strategies, and establish people as a critical factor in business success. A flood of studies, books, and articles describe how the competitive environment is changing. Customers are more demanding (e.g., service quality, product innovation, lower cost, brand loyalty); technological advances are driving rapid innovation (e.g., quantum business speed, e-business, information access, knowledge sharing); markets are global (e.g., products, brands, distribution, sourcing); industries are consolidating (e.g., mergers, acquisitions, joint ventures).

Effective business leaders anticipate these forces (or at least react to them) by making investment choices that address threats and seize opportunities. The time frame for implementing strategies has shrunk from three to five years to 11 to 18 months. Strategies focus on product or service innovations, market share growth (building customer loyalty, segmenting markets), penetration of new markets (e.g., global markets, untapped market segments), or business restructuring (organizational alignment, cost reduction, process and system changes). Every strategic choice is a commitment to action and of resources. Today's strategies are less about future vision and long-range plans and more about the future impact of today's decisions and actions.

Putting People into Strategy

How did Dell make its business profitable in China in only one year? How were the many mergers resulting in today's Chase Manhattan or Tyco so effectively achieved? How have Microsoft, Sun Microsystems, and Qualcomm sustained their entrepreneurial, innovative, high-performance cultures as they grew and changed rapidly? How have IBM, Texas Instruments, Hewlett-Packard, and many other leading companies re-invented themselves when it became necessary? Conversely, why have so many companies failed in their charted directions--losing the potential value of acquisitions, withdrawing from targeted markets, or losing market share to more innovative competitors?

Leading companies succeed largely because they develop and execute strategies superbly. They determine the talent and management practices required to succeed and successfully implement radical changes. Their capacity for profitable growth lies in their ability to identify (early) and address (effectively) the people-related business issues inherent in specific business actions. Business leaders (including HR leaders) identify, assess, and address the opportunities and challenges of executing change.

Some great strategies are simply not executed; others were ill-conceived because the enterprise could not execute them. For example, a defense contractor sought to expand its commercial business, but was ill-equipped to develop viable products, engage in marketing, build new customer relationships, and establish the price-profit mindset required; even worse, management distraction put some existing defense contracts at risk. AT&T is betting its future on a range of strategies, each with significant execution challenges and risks.

Although current strategic thinking stresses that an organization's capabilities are a primary source of competitive advantage, executives often do not effectively address changing people and organizational requirements relating to new technologies, markets, manufacturing, or distribution processes. For example, many companies are initiating or acquiring e-business ventures. How should these be organized? Should they be integrated with the parent business, or given high autonomy? How should they be managed to attract and retain the talent that is so critical? How can knowledge and learning be leveraged across organizational lines? How much order and control is tolerable in an organization when speed, flexibility, and agility are vital to being competitive?

As HR leaders and business leaders, we raise questions, provide information, and provoke deeper thinking about strategic choices and implementation. To implement new strategies, our businesses must manage people differently. And to do so we must formulate and implement business strategies differently-- ensuring consideration of important people-related issues as business issues. As long as business strategies overwhelmingly emphasize financial and market considerations, people considerations (however crucial) will be addressed later--and later may be too late.

Opportunities to Lead

Executives typically do not invite HR leaders to add input to discussions of strategic choices. Accordingly, as leaders, we must seize opportunities to lead by identifying people-related business issues. We need to become actively engaged in the studies, projects, meetings, and informal discussions that result in strategic choices. In the process, we will learn about business strategies and implementation requirements. The formal strategic planning process is one forum, but informal discussions of people-related issues and solutions usually provide the most important opportunities.

Whenever we discuss an HR initiative or action, we need to explain why it is important. What business strategy, and, in turn, what business issues and external driving forces does it address? For example, it's not enough to say a work-family initiative will improve employee retention; we must establish that retention is critical to contain costs of recruiting and retraining, develop the talent needed to grow the business, and maintain customer service continuity. In even a short conversation (e.g., an elevator ride), we should be able to articulate the business case for an initiative. We also should raise questions when we believe a given strategy is not viable--and force consideration of new implementation actions or even changes in the business strategy.

Opportunities for HR leadership are greatest for senior-level HR directors in business units or functionally specialized HR consultants working with business units as clients. They are already at the table, with access to information and opportunities to speak up and ask pertinent questions. Informed and thoughtful HR leaders will be welcomed and valued.

Time and Capability to Lead

Acting as business leaders is different from saying we are business leaders. Studies have found that HR leaders are not fulfilling the role, even while they acknowledge it is important. As business leaders we set priorities according to the potential business impact of activities. The HR leader role is a primarily a front office role--with a majority of time devoted to interaction with others on the management team. HR leaders are moving away from the back office role, reducing time spent as operational problem solvers. Effective HR leaders rely on colleagues across the HR community to handle more of the operational HR work. And to maintain functional excellence with scarce resources, we outsource services, leverage technology, and enable employees and managers to meet their own needs with minimal help.

Finally, we need to become effective business and HR leaders. Most capability models point to the same key requirements. As business leaders, we need the capacity to:

1. Stay informed about business dynamics. We need to keep abreast of changes in our business and our competitive environment. With the extensive business information available today, we can be well-informed as business leaders. Our challenge is to select, distill, interpret, and apply the most relevant information.

2. Identify and address people-related business issues and lead change effectively. Build and apply functional expertise as we assess strategy implementation requirements and take the lead in shaping necessary action plans, just as other business leaders apply their functional expertise in this manner.

3. Align HR processes with business strategies and achieve results. We determine the practices that best meet the requirements of the business. Because we are seeking strategic fit, not one best answer, innovation and creativity are important.

As HR and business leaders, we strive for superb execution of strategies that provide business advantage by matching internal capabilities with external market opportunities far more effectively than our competitors do. We are obsessed with doing the right things, achieving results, and thereby helping to achieve targeted business objectives. To become effective in this role, we must create opportunities to lead, find the time to lead, and develop our capability to lead. What has been your experience? What are your views?

References

Aspesi, C. and vardhan, D. (1999). "Brilliant Strategy, But Can You Execute?" McKinsey Quarterly 1: 88-99.

Hamel, G. (1996). "Strategy as Revolution," Harvard Business Review, July-August: 69-82.

Swiercz, P. (1999). "Comment: Contributors versus Leaders?" Human Resource Planning 22(4): 30-31.

Walker, J.W. and Reif, W.E. (1999). "Today's HR Leaders: Capability Strengths and Gaps," Human Resource Planning 22(4): 21-30.

Ulrich. D., Brockbank, W., Yeung, A., and Lake, D. (1995). "Human Resource Competencies: An Empirical Assessment," Human Resource Management 34(4): 473-496.

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