hr\'s value addition role
DESCRIPTION
HR needs to be aligned to business and de-linked from much of the administrative roles it is assigned today.TRANSCRIPT
HR’ s Value HR’ s Value Addition RoleAddition Role
A strategic View of HRA strategic View of HR
Sandeep K. Puthal
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Contents: at a glance
1. HR as a Business Partner
2. The Strategic View of Human Resources
3. Role Requirements
4. Essentials of SHRM
5. Conclusions
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HR as a business partner? - The human side of the business- Factors inhibiting HR' s ability to function as a business partner - Business standpoint, and not the HR standpoint
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At the strategy table…
At the strategy table, when the business partners say: "How do we make the customer happy?"
They are actually asking: "How do we take money out of the customer's wallet into our
wallet and make them happier with us than with our competitors?“
The 'Wallet Test‘ To create products and services that result in
customers taking out money out of their wallets.
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HR as a business partner
Erosion of Traditional sources of competitive advantage
eg. technological know-how
Focus: HR to be a true business partner how to create and engage the human side
of business – how to conceptualize and create the total
human organization
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A business to be successful has to ensure that its 2 key constituents are happy:
External customers Shareholders
HR to align with the externally-driven requirements & bring internal stakeholders
Management
Employees
in line with the external stakeholderIf HR is to be an essential part of the business,
it has to align with the external business realities.
the human side of the business
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The critical issue now is not what you know, but what you are able to create
HR to create an exact line of sight, between its activities and getting customers to take money out from their wallet and put it in your wallet, instead of the competitor's wallet,
If it doesn't contribute to the success of a business, it would be of no consequence.
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its logic and its language. HR likes to say it has internal customers. When it takes
that vocabulary and logic to the strategy table, it automatically condemns itself to a second tier status.
When HR walks into the room and says that it has internal customers, it is immediately removed from the basic logic and language of the business. The logic and language of the business is the external customer. This is also the logic and language of HR professionals in high performing firms.
Factors inhibiting HR's ability to function as a business partner:
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being internally focused - thinking in terms of internal customers and not focusing on the results that the marketplace requires.
personal credibility- do what they say they will do and; have good interpersonal & communication skills.
• Knowledge of HR does not distinguish HR professionals at high-performing firms from those in low-performing firms
Factors inhibiting HR's ability to function as a business partner:
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business standpoint, and not the HR standpoint
Key differentiator External knowledge, not internal knowledge of HR,
Most HR professionals have a low level of external business reality –
• customers, • competitors, • shareholders, • industry structures, • globalization & all the things that make business what it is two starting points for our thinking.
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business standpoint, and not the HR standpoint
HR aspires to be a business partner. Create the HR value proposition, which starts from
the outside and moves towards the inside. “ If HR were to add greater value.' then it needs
to start from the business standpoint, and not the HR standpoint. If HR is to contribute to business, it has to break out of that way of thinking; it has to fall in love with the business rather than human resource.
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business standpoint…
HR needs that line of sight to create the human side of the business
the culture, capabilities, technical knowledge and skills that enable people to create products and
services
better than the competitors.
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The head of staffing at Cisco stated:
"Our product life cycle is six to nine months. If we are not changing our HR practices as fast as the product life cycle, then we are not contributing to the competitive advantage of the company. If, we in HR, are doing the same things that we were doing nine months ago, then we are probably doing what everyone else is doing. That just isn't good enough, isn't just adequate."
The head of HR at Hutch stated:
“If we are not re-looking at the organizational charts every six months we are not working!”
Changing our HR practices as fast as the product life cycle
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The Strategic View of Human Resources - Sources of Employee Value - HR Professionals: capabilities & competencies
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Strategic Human ResourcesManagement
“SHRM is linking HR with Strategic Goals and Objectives in Order to Improve Business Performance and Developing Organizational Culture that Foster Innovation and Flexibility.”
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Strategic View of HRM
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Link HRM activities to the firm's business strategy. HR managers to assume a broader role in the overall
organizational strategy. HR function be "planned, organized, and evaluated
on the basis of its contribution to the business.“ SHRM is based on the recognition that HRM
activities are organizational in scope.
HRM as a competitive advantage involves Strategic HRM.
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Employees are human assets that increase in value to the organization and the marketplace when investments of appropriate policies and programs are applied.
Effective organizations recognize that their employees do have value, much as same as the organization’s physical and capital assets have value.
Employees : valuable source of sustainable competitive advantage.
The Strategic View of Human Resources
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Technical Knowledge Markets, Processes, Customers, Environment
Ability to Learn and Grow Openness to new ideas Acquisition of knowledge and skills
Decision Making Capabilities Motivation Commitment Teamwork
Interpersonal skills, Leadership ability
Sources of Employee Value
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HR Professionals: capabilities & competencies
HR need to make strategic contributions (43%);
Adding value through contributions to the strategy forums and
discussions in the company. have business knowledge;
Designing & creating the cultural infrastructure that creates
sustained competitive advantage. Culture management impacts all business practices.
Successful HR professionals align their HR practices to create the culture that drives business success
Managing rapid change. creating an organisation that is focused on responding to & being unified around external market needs.
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Deliver the basic HR practices of
staffing,
training,
developing & measuring performance; Proficiency in application of information
technology to HR.
Have personal credibility;
HR Pros…capabilities & competencies…
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Delivery of the HR basic practices accounts for 18% of differentiating variance between high performers & low performers. (includes the basic HR infrastructure practices). When done in a tactical and reactionary manner (without a definitive business focus), they account for 18 % of HR‘ s influence on business results. The same practices are designed and implemented in the context of HR‘ s strategic contribution that 18 % jumps to 43 %. That's about a 250% increase in HR's impact on business. Doing HR practices with a clearly targeted culture-based business agenda creates great results.
HR’ s strategic contribution
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Institutionalized creativity is a central cultural issue and is, therefore, an HR issue.
How well a company can execute self-standing platforms of technology, products and services is being replaced by the leveraging of common technologies, products and services across business units.
This business trend may also be called the culture of cooperation, synergy and convergence.
The HR department should be responsible for recruiting, promoting and developing high-quality leaders who will take the company to greater levels of success
central agendas of HR
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Role requirements - Deliverables - Role Requirements - Administrative Vs Strategic work
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Role requirements
Have a great sense of urgency about your own focus on business.
Think in terms of being more effective at their jobs than those in the US /Europe.
US and European companies have the competitive momentum to carry themselves to Indian markets; likewise, Indian companies must be good enough to carry themselves to these markets. Such is the nature of global competition.
Indian HR professionals cannot think about benchmarking Indian practices; they must be knowledgeable about best practices outside India. They must also think about next generation practices and be more powerfully competitive than their counterparts.
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AdminExpert
Strategic Partner
Change Manager
Innovator
Employee
Champion
Integrator
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Deliverables The roles we talked about in HR Champions
(HBS Press, 1997) were defined as deliverables.
The functional expert delivers efficient HR processes. Some of these efficiencies come through technology and some through service centers. Whatever the channel, HR must become more efficient and the HR personnel members need to be experts.
administrative expert role: efficiency employee champion role : employee commitment.
the employee advocate role must help employees feel cared for. not just to get people to work harder, but to have meaning, relationships and
hope in their professional lives. Change manager: human capital role focuses on helping employees prepare
for the future.central to productivity and improvement
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Roles
The strategic partner role is includes knowledge sharing, collaboration and strategy implementation. The strategic partner role also focuses on developing key capabilities that the company needs for success. making strategy happen
change agent role :making change happen leadership role, they serve as role models.
People need to have meaning and relationship in their personal and professional lives.
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Shift from Administrative to Strategic dimensions
Administrative transaction work - Half of HR work hiring, training, benefits, facilities management. That takes 80 per cent of its time and attention. That
will be reduced by outsourcing, technology and service centres.
transformation, innovative/ strategic work Other half HR professionals are coaches, architects, designers,
and facilitators who can really begin to transform business strategy into a set of capabilities and actions.
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Essentials of SHRM - The SHRM Cycle - HR Strategy: Context of HR System - Linking HR Practices to Business Strategy - Paradigm shift - Transforming the people
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Essentials of SHRM
• Internally transforming HR staff and structure• Enhancing administrative efficiency• Integrating HR into the strategic planning process• Linking HR practices to business strategy and one another.• Developing a partnership with line management• Focusing on the bottom-line impact of HR and measuring that impact.
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The SHRM Cycle
Create needed competenciesand behaviors
Realign the HR functions and keypeople practices
Realization of businessstrategies and results
Evaluate and refine
Clarify the businessstrategy
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HR Strategy: Context of HR System
Training Rewards
Corporate Strategy
Business Strategy
HR Strategy
HR System
(Performance Mgmt.)
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VERTICAL FIT
HORIZONTAL FIT
Linking HR Practices to Business Strategy Three Aspects of HR Fit
Concerns match between HR practices &Overall business strategy
Relates to the interrelationship among HRActivities ; extent to which they are consistent
Concerns how well HR activities match the demands of external environment .
EXTERNAL FIT
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Paradigm shift
Two Aspects of Transformation
Transforming The People
Transforming The Structure
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Transforming the peopleTRADITIONAL HRM SKILLS STRATEGIC HRM SKILLS
Specialist Generalist
Policy & Procedure Writer Good Communicator
Current Focus Current & Future Focus
Monolingual (Speaks HR-ess) Language of Business
Mgt- Hierarchy Focused Customer - Focused
Few Financial/ Mktg Skills Understanding of all Aspects
Stays “Within the Box” Thinks “Outside the Box”
Focus - Internal Organization Focus – Internal Org. & Broader Society
Factual Communicator Persuader
A Nationalist An Internationalist
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Conclusions
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Competitiveness is not building a strategy;
it is having an organization that will deliver the strategy better than your competitors.
Organization is not structure. It is a set of capabilities.
HR is not a practice, but an integrated set of practices that join together to create capabilities and allows strategies to happen.
Conclusions
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HR builds capabilities into the organisation when it has integrated HR practices. Which benefits not only the employees, who feel valued and engaged, but also customers and investors. And when we follow those three premises, HR benefits an entire network of stakeholders.
A Tata company may be very good at leveraging diversity, collaborating across businesses, or be very good at speed. But it is capabilities that make the Tatas good.
HR' s job is to do an organizational diagnosis that begins with the process of identifying and building key capabilities.
Conclusions
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Acknowledgements
The HR Value Proposition
By Wayne Brockbank & Dave Ulrich (HBS Press)2005
Strategic Human Resources Management
By Jeffrey A. Mello (South –western) 2002
Human Resources Management
By John Ivancevich (Prentice-hall) 2004
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42e-mail: [email protected]