Strategic HR – How to promote growth
I’ve spent around 20 years now working in the space termed “Strategic HR” – from a practitioner, academic and consulting perspective. In this time, and through these different lenses, I have come to realise three things:
- The degree to which organisations desperately need a more strategic view of people and organisational capability, but for whatever reason, are failing to leverage it.
- The relationship between HR and the wider business it supports has become trapped in a historical legacy that both are struggling to break through.
- HR has contributed to these issues itself, through a combination of positioning of its role and under-delivery in the strategic arena.
Central to this is the term “Strategic HR”. Over the past two decades, I have been lucky enough to have worked with both senior HR teams, CEOs, and their boards in reasonably equal measure. As a result, I can see and feel the need that C-suite teams have for the skills HR possesses, but I can also see how both are missing a trick. We have the positioning inside-out, the wrong way around. Having more strategic capability within HR is not the end goal, just the minimum qualifying threshold we should expect from any function in business. The goal is ensuring that business strategy development and execution itself gives as much emphasis to people and organisational capability as it does to customer demand and product/service fulfilment capability.
The contribution of HR to strategy
We need to stop talking about the strategic capability of HR, and start talking about the HR contribution to strategy. Too many business strategies are 2-dimensional, focusing heavily on translating customer demand into product and service offers, and on the fulfilment of these needs through supply chain and development functions to deliver against financial goals. These “strategies” are only then passed across to HR, who are left to try to work out what this means in terms of people capability and deliver it in time. But as we know, 60% of failures in strategy execution end up being in this area. The implications of business strategy on people and organisational needs are not considered early enough or at a sufficiently high level.
The goal is to move business strategy from 2-D to 3-D, by including a higher degree of people and organisational thinking in the same space as the existing customer and fulfilment thinking. Then to identify the key opportunities and risks, and put in place strategies to address them in an integrated and proactive way, not after the fact. This is NOT “strategic HR”, this is simply how good businesses develop the capability to execute strategy. By making this “about HR” we have distracted organisations and placed the issue at the wrong level. It isn’t just about making HR better, it’s about changing the way that businesses develop strategy and plan for the longer term.
Nowhere is this mis-positioning clearer than in the efforts to implement strategic workforce planning, or SWP. Rather than positioning SWP as the third leg of business strategy (which it is in reality) it has too often been positioned at the HR rather than business level. This has created confusion with headcount planning, recruitment forecasting and operational effectiveness. CEOs don’t use the term SWP, only HR does. CEOs use terms like “organisational capability” and “integrated business planning”. HR talks of workforce planning “initiatives”, spreadsheets, headcount and resourcing profiles. Almost every organisation has attempted to articulate strategic HR contribution in these terms, and ended up leaving a legacy of over-complexity, confusion and failure to translate effort into value. So, what needs to happen?
HR as the “co-creator” of strategy
The first thing is that we need to start talking about the contribution of HR differently, turning it inside out. The goal is to develop better strategies, better risk-based execution planning and more aligned and efficient execution; with HR playing the same kind of role as sales, marketing, finance and supply chain. This means re-positioning the conversation, the effort and the expertise to draw out the critical capability needs and risks relating to future business success.
Secondly, the way in which we think about addressing these critical needs must have more of a “whole system” feel in order to drive integrated solutions across the various organisational dimensions of structure, process, system, skills, behaviour, leadership and engagement. We must move away from structural change happening in isolation, focus our efforts toward aligning around the key risks to strategy execution, critical talent segmentation and optimise people processes to deliver against these needs.
Thirdly, and linked with the second need, is that we have to modernise the way in which people functions do this through the operational engine room of people processes such as reward, recruitment, development and career planning. Most of these processes are still rooted in obsolete assumptions around career models that are no longer dominant, workforce models which have changed enormously and attraction and engagement models which fail to recognise that talent are now consumers. Tying demand and supply together into Employer Value Propositions based around sound marketing thinking is going to be essential.
Lastly, we need to ensure that our function and the individuals within it are developing their own capability in line with these needs, in order to make good on these promises. This means having a better sense of business strategy and drivers for value. It means developing the skills needed to deduce people and organisational needs from strategy and working with ambiguity, not waiting for clarity. It means having a better awareness of external and internal supply and being able to apply a marketing mind-set to developing strategies to attract and retain the critical talent needed. It means having a more current, integrated and agile approach to people process development and operation.
In my keynote speech at HRx 2019 on 26 November 2019 in Messukeskus Siipi, I will talk in more detail about these needs and how HR can address them. We need to break the cycle we have created, where HR is the “receiver” of strategy not the “co-creator”, and above all realise that some of the things we have done to try to rectify this, have inadvertently reinforced it.