People plans need to relate to business strategy

Last year I was asked to judge Personnel Today’s HR strategy award. It was an intriguing experience, especially an employee from one of the short-listed companies said: “The last thing we need is an HR strategy.” Not exactly what you’d expect to hear in the context of an HR strategy award.

The thinking behind this defined why it had made the short list. Its point was that what organisations need is a people plan to support the business strategy. My worry is that many organisations have an HR strategy that bears no relationship to the challenges their business is facing, or an operational plan for the HR function that they call a strategy.

I was recently working with a major FTSE company. It showed me its HR strategy, but as I read it I realised that if I took its logo off each beautifully presented PowerPoint slide I couldn’t tell what industry it was operating in, let alone what company it was. Don’t get me wrong, it had all the good stuff you’d expect to see – talent management, employee engagement, leadership development etc – but it didn’t articulate how these were contributing to the business. They were solutions looking for problems.

Core business

This is what I found in judging the awards. The majority of companies that entered had a list of HR activities that bore no relationship to their core business, or, at best, their submission was more post-event rationalisation than a true response to the challenges the business was facing. In comparison, the short-listed companies and the winner had a number of key characteristics.

Their strategies were business-led, clearly at the centre of the business strategy, not just an add-on. They started with a clear articulation of the business challenges and the strategy to address them (“It’s about getting the business to where it needs to be”) and were regularly refreshed as the business changed.

As with any good strategy, it didn’t finish there but focused on implementation. The organisations had a clear operational plan that translated the strategy into detailed deliverables, accountabilities and timescales. They had measures that directly related to business outcomes such as sales, profit or customer retention. Delivery of the HR strategy was reviewed regularly by the board because it was seen as a business issue, not just an HR one. Indeed, accountability for delivery didn’t sit only with HR but also with leadership and line management.

Prioritisation and realism

There had been rigorous prioritisation and realism about what could be achieved. They had avoided ‘initiative-itis’, not always looking at new programmes but also at simpler and better implementation of existing initiatives.

The strategies had not been developed in isolation but in many cases in workshops with the business. They had consulted at every level of the organisation and in some cases involved customers and unions. It had been communicated to everyone in the business in every-day language, not jargon, to ensure it was a living document known by everyone, not just HR.

Finally, the good HR leaders realised that the biggest constraint on delivering the people plan was their own capability. One HR director told me that vital to his strategy was building HR’s capability to talk the language of the business and focus on making a difference, aligning HR activities to key business initiatives.

His company designed its HR organisation around the business’s needs and priorities, not a model. It looked closely at its core HR beliefs, operating model, culture and capability framework. It had a clear vision of what effective HR looked like – simple, straightforward, helpful, commercial, aligned, respected and credible. It rigorously assessed its current against its desired HR capability, looking at critical areas such as commercial acumen, values and integrity, delivery and focus, self confidence and courage and HR expertise. It then ran programmes to enhance its capability, not only academic but also practical ideas such as monthly master classes run by the HR leadership team.

So don’t be confused – HR does need a strategy but not for itself alone more to ensure the key people issues that impact on the business are being addressed.

Nick Holley is director, HR Centre of Excellence, Henley Management College

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