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HR needs to be strategic to survive

Being strategic is not an optional extra

Any organisation on any continent will be facing different challenges and opportunities now than they did 5 years ago.  In 2011 the marketplace will have changed again and yet the chances are high that the type of people being employed in your organisation will remain the same. 

Will your HR strategy have evolved in anticipation of these changes?

Recent research* highlighted that globally most CEOs recognise that the volatility and unpredictability of the marketplace is here to stay and in fact will probably increase.  The implications for organisations is significant because the old reliable and predictable products, services, processes and structures can no longer be relied upon to generate new profits, lead to new products and services, provide guaranteed employment or career opportunities. 

So, why is strategic HR even more important now than ever before if the world of work is seemingly becoming so haphazard?  Simply put, it is because it is people who adapt and not organisations; and HR has the opportunity to influence, inform, guide and champion the people agenda and strategy of organisations. 

It’s important to always understand that business is about people. It’s about good will, and that good will depends on integrity. Deputy President, Kgalema Motlanthe#

Strategy is all about opportunities and risks

Opportunities and risks are the ‘name of the game’ for business leaders when devising and planning their business strategies.  Organisations (and therefore its People) have choices to make in respect of how they respond to such changes as: developing new markets; creating new products / services; responding to regional instabilities; dealing with natural resources constraints; greater pricing transparency; increased competition; using technology to improve their competitive advantage etc...

All of these market forces impact how and what HR should be doing to strategically support the business.  However, more often than not HR is not meeting the needs of the business as it tends to lack real power, meaningful success measures and status.  More often than not HR has a reputation for rushing into solutions, focusing on tactical issues and emphasising the quantity of its work rather than its quality.

Therefore, if HR chooses to become strategically aligned to the business it needs to recognise that there are opportunities and risks in following this route as it will need to change its mindset, update its skill set, alter how it works internally and with the business as well as being very patient (results take time)!

Being Strategic: How Human Resources can deliver business value

Strategy is the second most popular management topic after Leadership.  However one of the greatest failings of organisations is not the lack of a business strategy but the failure to implement the one they have got.  As People (employees) implement strategies, the organisational secret HR needs to uncover is how to translate the business strategy into personal objectives.  By demonstrating this strategic and systematic link, HR will have the opportunity to rapidly increase its credibility, status and power. 

Based on CourageousHR’s experience of working with clients and training many HR Leaders on creating HR Strategies, it has identified four key phases to HR becoming strategic:

  • Understanding the key drivers for change and knowing what are the main HR implications of these changes and challenges
  • Creating a business aligned HR Function which can effectively and strategically partner the business
  • Work with business leaders to create a People Strategy which supports the Business Strategy and informs the HR Strategy
  • Ensure the capability and credibility of the HR Function is sufficient to support the business to deliver the People Strategy and implement the HR Strategy

How well does HR know the business?

HR is a service provider to the business and everything it does has to be centred on the actual or anticipated business need.  The fundamental questions HR Leaders need to ask are:

  • What are the implications of the key drivers for change for our organisation’s services, products and structure? How could these affect our HR Strategy and core HR Deliverables?
  • What are the core business challenges, what are the implications for our People Strategy and how do these impact on our HR priorities?

HR does not need to understand the business as well as the line managers but it does need to know enough to gain insight into the people implications of the changes and challenges which are shaping and informing the business. 

How business aligned is the HR Function?

Many HR Transformations fail to deliver on ‘hoped for’ strategic gains because they tend to primarily focus on structural and process changes.  However, recent research points to the overwhelming importance of two other factors in delivering HR value – that of the quality of the HR professional and the role that they are tasked with. 

To be ‘strategically’ successful, HR Transformation programmes need to ensure that more resources are focused on the quality of the HR people being sufficient to develop effective relationships with business leaders and deliver a strategic service to the business, as well as ensuring they have the role clarity and time to know where to focus their energies. 

The final failing of many HR transformations is to take a silo approach to different parts of HR.  Unless a business aligned HR Function is flexible, adaptable and working together for the common good, it will fall back into territorial fights, parochialism and will be unable to deliver the promised benefits.

Creating the Business – People – HR Strategic Chain

The purpose of a strategy is to provide a roadmap to the future, articulate an organisation’s direction, create a benchmark to assess alternatives and prioritise resources, provide a measure of success as well as create a psychological sense of purpose for employees.

As a strategy is so important and it has so many uses it is strange that in most cases the people implications are rarely thought through - the emphasis is on capital investments, resource implications, marketing, sales, lead times etc......

Where the business comes unstuck is not putting sufficient emphasis, thought and investment into the people implications of the business strategy, in other words the People Strategy.  The People Strategy is the ‘meeting place’ between the business vision and employee actions and where HR can really demonstrate how it can add and create value.

In essence, the People Strategy is where HR can work with business leaders to explore, understand and plan what set of programmes and activities are needed to ensure the organisation’s people know what they need to do to achieve the business strategy.  While the People Strategy is owned by the business, HR can play a key role in managing the process and implement (though the HR Strategy) crucial components of it. 

Creating this Business – People – HR Strategic Chain forces the business and HR to work together to think through the people implications, develop joint responsibility and ensures the practical implications of implementing it are considered and action plans agreed. 

The HR Strategy is therefore an outcome and output from the People Strategy – it is not a separate activity divorced from the business reality.  Its focus, priorities and the core HR Deliverables are clearly linked to the business strategy, reflects the emerging market conditions, has involved business leaders and its success can be linked to business measures.  This is what true business partnership looks like.

Developing capable and credible strategic HR Professionals

For HR to be strategic it needs a good scattering of strategic expertise amongst its mid and senior ranking HR Professionals.  Strategic competence does not automatically go hand in hand with seniority, for many it has to be worked at and developed.  From our experience at CourageousHR we have identified a number of strategic orientation traits which are the core ingredients for strategic success:

  • Inquisitiveness: Genuine interest in what’s going on in their business, organisation, industry and wider business environment.
  • Flexibility: The ability to adapt approaches and shift ideas when new information suggests they need to do so.
  • Future focus: Constantly considering how the conditions in which their business and organisation operates may change in the coming months and years. They look for opportunities that may prove valuable in the future—as well as emerging /potential threats that may be on the horizon.
  • Positive outlook: Challenges are viewed as opportunities and they have a belief that success is possible.
  • Openness: Welcome new ideas from their managers, peers, employees, and outside stakeholders such as customers, suppliers, and business partners. They take criticism well and do not react in a defensive manner.
  • Breadth: Continually work to broaden their knowledge and experience in able to see connections and patterns across seemingly unrelated fields of knowledge.

In addition, HR Professionals also need to demonstrate specific behaviors and attitudes, which we have call the strategic orientation competency.

  • The ability to think beyond their own area. Strategic thinking can be applied to a function or process, a product and market, a business unit or a corporate entity involving various businesses. This competency requires complex thinking abilities, incorporating both analytical and conceptual abilities.

Therefore, ‘being strategic’ requires HR Professionals to have and develop a set of personal characteristics that drives them to look beyond their immediate role / objectives and seek to understand and apply their knowledge in a proactive manner for the good of the organisation.

Being strategic is not an option for HR - it is a must

The business world is more unpredictable now than at any other time. It is because of this volatility that increasingly organisations’ success will be determined by how engaged, productive and innovative their people (employees) are. Therefore, as people are increasingly being recognised as the only true competitive advantage for all organisations the quality and robustness of the Business – People – HR Strategy Chain is becoming more and more critical.

HR has the opportunity to develop its strategic capability and become a strategic partner to the business. However, HR has to work at it, be patient, take risks and believe that it has a legitimate right for its voice to be heard and actioned.

* Five forces reshaping the global economy, McKinsey & Company, March 2010
# ’South Africa in the spotlight: An interview with Deputy President Kgalema Motlanthe’ McKinsey Quarterly June 2010