How the forum works
This week Personnel Today, supported by some of the industry’s most
experienced people (see below), launches a major new initiative to help readers
become more strategic in their day-to-day operations.
Over the coming months, Personnel Today will give a unique, developmental
opportunity to hone your strategic skills using a wide range of HR scenarios
submitted by senior HR professionals.
Each week, our panel of experienced practitioners and consultants will
provide solutions to a typical strategic HR dilemma. You can get involved by
sending in your own problems, marked ‘strategic dilemmas’ to [email protected]
The consultants
Duncan Brown, Assistant director general, CIPD
Paul Kearns, Director, PWL
Jim Mattewman, Mercer, Human Resource Consulting
Andrew Mayo, Director, MLI
Louise Allen, Director, LA Partners
Penny Davis. Head of HR, UK operations, T-Mobile
Marie Gill, HR director, Asda
Neil Roden, HR director, Royal Bank of Scotland
Ralph Tribe, Vice-president of HR, Getty Images
Dilys Winn, HR director Gloucestershire County Council
Margaret Savage, Head of HR strategy, BT
What exactly is HR strategy?
HR strategy is notoriously difficult
to define and pin down. Paul Kearns helps to identify the fundamental elements
What’s the difference between strategy, policy and
practice? Some decisions are truly strategic, while others are merely tactical
or reactive.
Being able to distinguish between them is crucial if you want to develop
into an HR strategist. Why? Because those who formulate genuine HR strategies
will transform their organisations, add an immense amount of value and make
their greatest personal contribution. So can you learn how to tell the
difference?
Here are five pointers to help you sort out the genuine HR strategists from
the policy-makers.
– Have clear, strategic business objectives been identified? Is it market
share, costs, sales, productivity, customer service, product development,
research or innovation capability? Strategic HR has to be linked to such key,
strategic business objectives.
– Are the strategic objectives specific, unequivocal and measurable? What is
their potential value? What is a 1 per cent increase in market share worth in
pounds? What does a two-point improvement in customer satisfaction mean in
terms of sales volumes?
– Strategic timeframes, almost by definition, tend to be long. So, is there
a stated time horizon and is it more like six weeks, six months or six years?
– One of the easiest ways to identify HR strategy is when it sets out to
reconfigure the organisation. So, is this HR strategy setting out to change the
organisational structure, the business processes or both?
– Does HR have a strategic role to play? Is it working at board level? Does
it have the credibility to lead on change management? HR is only truly
strategic when it is leading on some of the issues. If it is taking the lead
from another department (production have decided to set up a new production
facility, for example), then it is just HR planning, not strategy.
This is going to be a steep but rewarding learning curve for those who want
to take up the strategic HR challenge. Use this column to your best advantage.
Paul Kearns is a member of the HR Strategy Forum and author of HR
Strategy: Business Focused, Individually Centred.
The dilemma
I am the HR director of a UK financial services firm. The
business is 10 years old, and has grown rapidly, with annual sales of £850m.
But we are facing increased competition from new entrants and
global players looking to grow their UK market share. Furthermore, growth
predictions are pessimistic for our sector.
The board wants to put plans in place that will enable us to
meet the challenges, with a reduction in cost, increase in efficiency, and the
attraction and retention of high-value customers.
We employ more than 8,000 people across the UK and, as well as
head office functions, we have retail and contact centres, and home-based sales
people.
Rapid growth has meant we have been able to give employees
excellent promotion opportunities and many of our managers are in their first
people management roles.
In the past, we focused on customer acquisition, with little
emphasis on systems, financial control or process improvement. Our planning has
tended to be tactical.
I have a number of senior HR managers supporting different
areas of the business, who are located with their teams in the areas they
support. In addition, there are a number of specialist central groups, who
provide training, organisational design and support on compensation and
benefits. All other HR activity is done locally.
HR has provided a traditional response service for the business
and most of what we do is operational. There has not been a compelling need to
deliver a strategic agenda.
There are 200 people in the HR team. I am concerned that our
current structure and capability will not enable the delivery of the future
strategic agenda.
The chief executive has asked function heads to present how
they will contribute to meeting the challenges. We have also been asked to
assess and review the structure and capability of our teams.
What changes should I be considering?
Solution 1
By Margaret Savage the Director of Corporate HR Strategy and Systems, BT
Step 1
Work closely with the board, key business and influential line managers to
truly understand vision, current/planned business drivers and the impact on
their people. Establish what worries them and what they need from HR to deliver
revenue targets or efficiency results. Explore workforce perceptions and
attitudes. Spot potential barriers to success, including ‘unwritten rules’ and
leadership weaknesses.
Step 2
This results-orientated analysis shapes the people strategy that dictates
the organisational and functional agenda for an integrated HR strategy –
defining the need for transformational change; scoping demand for value-add HR
solutions; prioritising plan deliverables/objectives; scaling total labour
cost, resourcing and skill demands, etc. Scan the external environment for
other influences; impending legislative changes, and shared learning
opportunities from others, including competitors and different industries,
facing similar challenges. Reflect on the relevance of existing HR policies to
the emerging landscape and employment branding going forward.
Step 3
Having aligned business, people and HR strategies, test systems and ideas
with key business leaders for impact, fit and support. Engage the wider HR team
to begin on HR skills gap analysis and discussions on consequences for future
roles and responsibilities. Again, selectively test potential scenarios for
employee reactions. Co-opt selected influential senior HR leaders to cement
collective commitment to the change agenda and demonstrably refine or adjust
plan ideas in line with feedback.
Simultaneously, examine the competitiveness of the present HR
function. Identify systems infrastructure weaknesses; start to map current
processes; use RACI techniques (the matrix tool for assigning job
responsibilities) to establish critical touch points; probe the true cost of
operation; examine HR performance or service reports; study current activities
and transactional volumes; analyse employee measures and people capital
metrics; assess managerial bench strength and responsiveness of the current
structure.
Step 4
With research and diagnostics complete, engage senior HR managers in
determining the transformational change agenda for HR itself. It might not be
easy, but persist.
In the short term, enlist support to deliver the CEO’s
challenge by ensuring HR plans are focused on delivering the company’s new
goals. Reach shared agreement on the prioritised HR workstack with clear
deliverables and output measures; agree prime target activities for elimination
from products and services portfolio; improve operational effectiveness through
the eradication of duplication or exploitation of synergies and collaborative
working.
Check the scope for rapid policy and process simplification and
likely e-enablement opportunities. Benchmark best practice, drilling down on
quick wins for cost reduction. Build functional capability or skills
development plans and secure funding. Finally, adjust HR resources in line with
changes to deliver planned HR efficiency improvements and cost savings. Â
Solution 2
By Ralph Tribe the vice-president of HR at Getty Images
Step 1
With 200 people in HR, it should be possible to specifically select a small
nucleus of your best people to assess the situation, develop a strategy, craft
a plan, present and then implement it. Select this small team on the basis of
business knowledge, analytical ability, project management and relationship
management skills. HR knowledge is clearly important, but these will be the
defining skills in any environment characterised by significant change.
Step 2
If the business strategy revolves around customer retention and loyalty,
then the HR strategy must reflect this. It is critical that the strategy is not
so much based on general best practice, but rather on HR activity that can be
leveraged to differentiate your specific business in the market. As such, you
need to consider what your competitors are doing from an HR perspective, and
prioritise what you can do better or differently.
Step 3
Get out into the business and talk to line managers about their strategies
for driving efficiencies and delivering increased customer loyalty. Sound them
out on your ideas, and get their input on what HR activity would most
positively impact their plans. Their contribution not only helps your HR team
develop a clear strategy, but will broaden ownership prior to any final
decision-making. The most obvious way of winning board-level support is to have
discussed it with board members prior to presentation. Never present a surprise.
Step 4
In response to the CEO’s call for reduced costs, prioritise current and
planned HR activity in terms of its contribution to the organisation’s new
corporate goals, and then cut from the bottom of the list until you hit your
cost reduction target (if you don’t have this target yet, expect it soon).
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Step 5
The structure of the future HR organisation should fall out of the HR
strategy and activity plan developed to this point. Avoid falling into the trap
of defining your organisation structure before you have agreed what it is going
to deliver.
You should obviously engage other business managers in a
similar dialogue to help them design their own organisations using the same
approach.
