HR Strategy: Aligning with the Business to Create Value
Strategy is a set of interrelated choices, actions and moves that gives one company an edge over the other. It is a clear, blueprint of a company’s future direction but also includes tactics aimed at delivering on the bigger picture. Strategy is central to success and long term sustainability. For years, the crafters of strategy didn’t include HR. HR was limited to dispensing administrative and utility services: hiring, firing, paying salaries and pensions, managing leave schedules, and so on. The new HR leader is a strategic business leader, aligning talent, capabilities and culture with corporate strategy to deliver business value. Professor David Ulrich of the Ross Business School of University of Michigan argues that, “HR should not be measured by what it does, but by what it delivers – real value that improves the bottom line.”
This significant evolution from administrative service provider to strategic business leader requires that HR leaders think and do things differently. More importantly, as leaders, HR professionals are expected to shape strategy in the boardroom by advising on how best to attract, develop, reward and retain high potential employees to affect the bottom line. By asking for a seat at the strategic table and earning it, HR leaders are compelled to deliver value for the business. In other words, they must do HR for the business. This will require an Outside-In approach: internalizing HR practices based on external factors. Like Dr. Ulrich says, the real business is external. HR leaders will have to maximize value by focusing on the following three: Talent, Competition and Growth and Sustainability. These three factors are core on any Chief Executive’s checklist and a strategic HR leader is one that designs and executes an HR Business Plan aligned with this strategy.
McKinsey in 1997 reported that, the business world would witness a talent war. That war is perhaps keener now than ever. The volatility and uncertainty characteristic of the marketplace demands a new breed of workforce: agile, innovative, ethical and entrepreneurial. Whilst the expectation is that, our schools, colleges and universities would produce these kinds of graduates, the reality is that, they rarely do. A few universities, however, have designed a curriculum that engages the full potential of students and instils in them critical thinking skills, exceptional leadership and team playing skills, and communication skills to help them stand out in the world of work. A recent IBM poll revealed that, three indicators will shape their hiring process: integrity, innovation and leadership.
This is where the relevance of strategy is most felt. There isn’t any industry that is alienated from the fierce competition of the modern digital age. A progressive HR leader must understand the external ecosystem in which their business thrives and design an HR Strategic Plan that maps out a game plan to edge the competition. How? One of the tools is to hire right. IBM has discovered innovation will be crucial to the next level of their growth. Hence, HR leaders can learn a lot from the IBM model. They must understand what imperatives will drive the company’s business strategy and how to factor them into their hiring processes. I call it Hiring from Outside-In. In other words, a strategic HR leader’s hiring strategy must be driven by the external competitive factors and the critical competencies that are required to deliver an edge to the company. Remember, a company’s most important asset is not just its people but the right people.
Growth & Sustainability:
The fall of once dominant businesses yields credence to the fact that, sustainability is not guaranteed. Growth is a product of clear vision, inspired leadership and timely execution. Companies need a plan in order to grow and stay relevant in business for perhaps a lifetime. The examples of Enron and WorldCom, perhaps two of the world’s biggest corporate scandals teach a lot about business sustainability. The fact that Enron fell primarily because of the unethical practices of its Directors, offers a useful template on how to build a sustainable business. There is a direct relationship between an ethical culture and employee behaviour and performance and by extension, corporate sustainability.
Not long, leading automobile firm, Volkswagen was cited in an ethical scandal. The car makers admitted to installing a software program that momentarily allowed about eleven million of its Volkswagen and Audi diesel vehicles to pass the emissions test but would later be controlled by a separate software installation that increased the car’s release of nitrogen oxide emissions. Actions as that of Enron and Volkswagen call to question a gap in leadership development; a gap of ethical and moral development in nurturing leaders. The relative importance of moral development to the impact of leadership on organisational performance cannot be downplayed. Dr. John C. Maxwell argues that the ultimate responsibility of leadership is to reproduce other leaders and that, leaders invariably reproduce their kind. In effect, when the integrity of leaders is in doubt, it stands to reason that they repeat a legacy of unethical practices within their organisations. Over a while, this legacy of unethical leadership practices evolves into a corporate culture that haunts the organisation’s prospects as the cases of Enron and Volkswagen reveal.
Corporate values and personal values must be aligned if an organisation is to perform at its best. Such alignment sparks high sales. To drive optimal sales, some companies even print their mission statement and values of integrity and unrelenting service to customers on its business cards as a selling strategy. The modern customer, in my opinion buys for more than the need for a product or even its features but also for the integrity of the brand. It just makes sense that, in life, nobody likes to be associated with a cheat. It is the strategic HR leader’s job to design an ethical-driven workplace culture that promotes openness, transparency and integrity.