The Strategic HR leader’s essentials: A crf Toolkit

HR’s Role in Driving Business Performance

CRF has been researching the field of Human Resource Management, and turning research into actionable recommendations implemented by HR functions, for 25 years. Our sister organisation, PARC, has been investigating the factors that drive organisational and individual performance, and the role of reward and governance, for 15 years.

We have a deep understanding of how the role and purpose of HR has evolved, how its reputation has varied and the fads that have come and gone. Underpinned by social science, we have gained insight into what works, what doesn’t, and under what circumstances.

Here we highlight findings from our research, articulating how the HR function can contribute meaningfully to business outcomes, and present a set of core CRF and PARC models we have developed to help HR professionals diagnose, plan and evaluate their activities.

We are living in an era of unprecedented change and uncertainty. Global political upheaval and the rise of populism is putting the capitalist model under question. Technology-driven disruption brings opportunities and challenges, but many established businesses struggle to keep up. Demographic change is signalling a major talent squeeze globally, and climate change is a major risk which we are barely beginning to tackle. Businesses face deep uncertainty.

In this complex business landscape, organisational survival depends upon an excellent understanding of the external environment, complete clarity of organisational purpose, strategy, and values, strong commercial acumen, continual and rapid innovation, and delivery of superb customer experiences – all delivered cost-effectively by creative, capable talent working for resilient, agile, and risk-savvy organisations.

To stay relevant in today’s demanding environment, HR must build and sustain a professional function that’s commercial, close to the business, and has clear alignment between business strategy and HR plans and activities. But we find that HR is often insufficiently engaged in the commercial realities of business, driving an HR rather than a business agenda.

• HR often has an insufficient understanding of, and linkage to, business and strategic issues.

• In seeking to drive effective performance, HR tends to gravitate towards developing and supporting individuals at the expense of developing the organisation.

• HR doesn’t bring enough, or the right bits of, the outside world in.

• HR’s work is often not based on robust theory or evidence.

• HR can be ‘numbers-shy’ and ‘technology-shy’.

To address these issues, HR’s key priorities should be to understand and align itself to the organisation’s strategic direction, to adopt a commercial mindset with which to analyse and solve business problems, and to attain absolute clarity about its purpose within the organisation in order to:

• Provide core operational services at the required level of quality and cost;

• Create a high performance work environment;

• Manage talent; and

• Improve both organisational and individual performance.

Prepared by Carmen von Rohr and Gillian Pillans. For more information, please contact Carmen von Rohr, Content and Digital Manager, at carmen@crforum.co.uk. Alternatively, please visit our website at www.crforum.co.uk.

Aligning HR with Business Strategy We disagree with commentators who argue that there will be no role for HR ten years from now. For most organisations, the enduring business imperative to be competitive in a global marketplace means the quality of human resources will remain a key element of competitive advantage.

The intellectual input and emotional intelligence of HR people will be required to help others find meaning in work and bring energy, imagination and commitment to it. Therefore, we find significant opportunities for strategic and commercially-oriented HR.

CRF’s report High Impact HR – How Do We Create a More Business-relevant Function? sets out a practical framework for increasing HR’s impact through developing strategic and commercial capability.

We argue that HR should be guided by a core set of operational principles that provide the foundation for what HR does and how. The essential elements of an effective operating model for HR include the following.

• Analysis before action – identifying what problem the proposed course of action is designed to fix, and why the proposed solution is the best answer.

• Definition of terms – being clear about what the core terminology of HR, such as performance, talent and engagement, mean within the specific context of an individual organisation.

• A robust underpinning theory – HR initiatives need to be founded on sound principles of social science such as cause and effect and validity.

• A sound business case – although it is difficult to show a monetary return on investment in HR activities, it is important that HR’s plans are given a similar level of scrutiny as other business initiatives.

• Delivery against a clear HR plan – HR should have a written plan that describes what it is committed to doing and how that links to business objectives. This helps HR communicate with stakeholders and assess its performance.

• Evidence – decisions about HR actions and priorities should be based on experience, experimentation, data and learning, not just intuition.

• Evaluation – there needs to be a feedback loop, both quantitative and qualitative, that enables HR to assess its performance and identify how to improve.

We bring all the principles that underpin business-relevant HR together in the CRF Strategic HR Framework. The framework translates the principles into a systematic process for thinking about how to plan, implement and review HR’s activities.

UPCOMING EVENTCRF’s upcoming event, HRBP – Business Catalyst, uses the Strategic HR Framework to develop HRBPs’ commercial and strategic thinking, delivery capability, and influencing skills.

To find out more, contact Rachel Flax at rachel@crforum.co.uk or +44 (0) 20 3457 2640.

THE EXPERT VIEW

PRINCIPLES

• This is a collective activity involving the business, internal customers, the HR team and the employees

• The process is iterative i.e. the results of this year’s endeavours help define next year’s activity

• Strategy is planning and doing (see Mintzberg)

• Clear ‘line of sight’ between inputs, activities and outputs

• Change management capability underpins each element of the framework

IMPLEMENTATION

PLANNING

Strategic HR FrameworkINPUTS

BUSINESS IMPERATIVESTime to market, Costs, Sales,

Customers, Quality, Innovation

INTERNAL CUSTOMERSWho are they? What do they want? What do they get?

What do they get and don’t want?

INTERNAL CLIMATEWhat does it feel like to work here?

High performance or not?

EXTERNAL ENVIRONMENTPolitical, Legal, Sociological, Environmental,

Technological

RESOURCES AVAILABLETime, Money, People

EMPLOYEE CAPABILITYWhat should you be good at? Numbers, Types,

Skills, Demographics, Geographies

REVIEW OF RESULTS

How have we done against what we planned?

Who reviews?What happens to the review?

BUSINESS IMPACTHave we made a difference?

HR PERFORMANCEWhat bits have gone well, less well?

INDIVIDUAL PERFORMANCEWho has, who hasn’t performed?

LEARNING FOR FUTURENext time we will...

WORK IN PROGRESSThis is what we’ll continue...

This is what we can do without...

HR’S ROLE

PURPOSEWhy are we here?

VISIONAn exciting view of the future?

VALUESHow we do things round here?

PLANNING

What are the issues?What needs to be fixed?

N.B. No HR speak – these are business issues!

SHORT TERM

LONGER TERM

BREAKTHROUGH OBJECTIVE

INCREMENTAL IMPROVEMENTS

BIG PROJECTS

PRIORITIES

ACTION

What are the HR Solutions?

PERFORMANCE

TALENT

CHANGE

OPERATIONS

COMMUNICATIONSA written plan and solutions.

To whom?

ORGANISATION CAPABILITY

KEY PROCESS IMPROVEMENT

What are they? How to improve?

ORGANISATION ISSUESSticking pointsSkills shortage

HR FUNCTION CHALLENGESCalibre

CompetenceCapacity

KEY INDIVIDUALS

Team discussion

Review against plan

Input to planning process

Develop HR

Practices

Team planning

Improvement plans

Questions to consider1. 2. 3.

What are the main drivers of competitive advantage for your organisation? What role does human capital play? Where are the ‘weak links’ in your organisation, where improving capability would have greatest impact?

What factors in the external business environment are most likely to impact your organisation’s business strategy in the next two to five years? Where are the biggest opportunities and threats? What are the implications for people strategy?

How well do people throughout your organisation understand and identify with your organisation’s purpose? Do they clearly understand the business strategy and what role they play in achieving it?

RETHINKING TALENT MANAGEMENT Demographic change means organisations face a global talent crunch that will not be resolved by automation or AI. HR’s mission to get the most suitable people into key roles, to keep and motivate them, and to help them to perform to the optimum, is more important than ever.

CRF’s research finds that most organisations are not satisfied with their approach to Talent Management and there is a significant need to improve across the domains of resourcing, development, deployment, leadership and succession. We find that managing talent requires an integrated approach which starts with identifying the organisation’s strategic goals to understand how talent needs to be developed and deployed to meet those objectives. Moreover, all Talent activities need to be addressed as part of an interconnected system.

In our report Rethinking Talent Management, we examine how talent management can be a strategic differentiator, given the right organisation context and culture, talent strategy and processes. The CRF Integrated Talent Management Model sets out a systematic approach for organisations seeking to evolve their talent management practices.

UPCOMING EVENTTake a closer look at Talent Management. Talent on the Move: Time for a Rethink? explores how to design a global talent strategy that effectively supports business strategy.

To find out more, contact Rachel Flax at rachel@crforum.co.uk or +44 (0) 20 3457 2640.

Questions to consider1. 2. 3.

Looking three to five years ahead, what critical capabilities will you need to acquire or develop to execute your business strategy? Where are the gaps between what you have today and what you need? What options do you have for acquiring or building those capabilities?

Do you have a clear picture of the impact of demographic and workforce change on your organisation? What aspects of the changing labour market are critical for your organisation to get to grips with now?

Is your organisation’s culture conducive to attracting, retaining, and optimising the performance of talented people?

THE EXPERT VIEW

CRF integrated talent management modelNEED Business Goals

Critical Future Capabilities

Critical roles

BUSINESS STRATEGY

RESULTS Costs

Business Outcomes

Business Measures

EVALUATION

Talent Pools / Succession

Management

INTEGRATED TALENT

MANAGEMENT PROCESSES

ACTIVITY

Learning and Development

CommunicationResourcing and

Assessment

DeploymentRetention

UNDERPINNING PRINCIPLES• Strategy-led• Talent-oriented culture• Integrated system• Clear definitions• Rooted in social

science• Analysis before action• Clear objectives• Owned by the line• Process simplicity• Excellent execution

Want further insight?Watch our 45 minute webinar ‘Rethinking Talent Management: Connecting Strategy, Performance, and Potential for Tomorrow’s Challenges’.

Organisation and talent review

Demographics: Shortages, Surpluses, Trends

Hire or Develop?

Workforce Risks

Talent Objectives

PLAN STRATEGIC WORKFORCE

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Finding and attracting the talent that will enable a business to thrive in today’s competitive, global, and technology-driven landscape is a key business priority.

CRF’s report Resourcing – How HR’s Core Competence Is Evolving finds that this is an area where HR can make a significant strategic contribution.

The resourcing marketplace has significantly shifted in recent years.

• It is easier than ever for companies to find and engage directly with external talent. However, candidate expectations are also shifting, and organisations must work hard to understand what motivates top talent and build experiences that convince them to join and stay.

• Evidence-based job analysis is essential to successful recruitment outcomes. It enables recruiters to identify the factors that differentiate the highest performers in a role from others, choose accurate selection tools and measures, and demonstrate the fairness of the selection process. However, job analysis is often the weak link in assessment and selection.

• The factors that drive a successful resourcing strategy have not changed. These include being clear about what individual factors drive success and therefore underpin what you are looking for, building a fair and robust selection process that predicts the highest performers and is consistently applied, and evaluating outcomes in order to continuously refine and improve the process.

• Innovative technologies are profoundly changing the selection landscape. New technologies are enabling employers to speed up the decision-making process, standardise assessment techniques at scale, reduce hiring costs, and improve the candidate experience. But many of these technologies are untested and have not been scientifically validated to the same degree as more traditional selection techniques.

HR’s potential contribution to the business will only be realised if the function takes a strategic approach to resourcing. We summarise the key elements in the CRF Strategic Resourcing Model.

Resourcing: a Strategic Business Enabler

UPCOMING EVENTCRF Learning: Integrated Talent Management uses the Integrated Talent Management Framework to guide HR professionals through defining the business’s talent needs, designing effective strategies to address those needs, aligning people activities to deliver talent objectives, and evaluating the impact of these activities against business drivers.

To find out more, contact Rachel Flax at rachel@crforum.co.uk or +44 (0) 20 3457 2640. THE EXPERT VIEW

BUSINESS GOALS

CRF Strategic Resourcing Model

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EXECUTE Employer branding and candidate attraction

Assessment and selection

Job analysis

Technology

Assessor capability

Suppliers and Partners

EVALUATE BUSINESS MEASURES: • Profit• Productivity• Innovation• Duality

RECRUITMENT MEASURES: • Cost• Time to hire• Duality of hire• Validation of selection methods and processes

Want further insight?Watch our 45 minute webinar Data-driven Resourcing: What is the Future of Recruitment?

Questions to consider1. 2. 3.

Are your employer brand and employee value proposition competitively differentiated, so as to give top talent a compelling reason to join your organisation?

Are you experimenting with new HR technologies to see how they can help you improve your selection process and candidate experience?

How confident are you that your selection processes consistently identify the highest performers? What evidence do you have to support your view?

PLAN Strategic workforce plan

Gap analysis

Make or buy

Tactical hiring plans

NEED Strategic goals

Organisational capabilities

Critical roles

LEARNING: The Foundation for Agility and Sustained PerformanceA core objective of a strategic HR function should be to deliver improved organisational and individual performance. One of the key mechanisms for delivering improved performance is learning.

CRF’s report Learning – The Foundation for Agility and Sustained Performance investigates how both at the individual and organisational level, learning can be deployed to support sustained growth and build capacity for rapid change.

Our research finds that there are two types of learning necessary for sustained performance in today’s fast changing business context:

• Productive learning helps people and organisations get better at what we already know how to do with the goal of improving productivity, quality or customer service

• Generative learning is collaborative, growth- and innovation-focused, centred on imagining and building future scenarios, and sharing ideas and knowledge about new capabilities required in order to thrive.

Most formal learning in organisations is focused on improving individual performance. While this is often necessary and worthwhile, we find that the greatest performance improvement occurs when learning is focused at the team or organisational level, where it can help the organisation achieve strategic change.

The CRF Learning Matrix shows how individual, organisational, productive and generative learning interact to drive improved individual and organisational performance.

UPCOMING EVENTCRF’s upcoming event Organisation Development Manifesto: A Road Map for Progress explores how HR professionals might more effectively harness their organisation’s people resource.

To find out more, contact Athena Kitching at athena@crforum.co.uk or +44 (0) 20 3457 2640.

THE EXPERT VIEW

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ORGANISATIONAL / PRODUCTIVE

Working in teams on increasing efficiency or productivity in the existing business.

EXAMPLES INCLUDE:

• after-action reviews

• delivering management training on a social learning platform

• quality circles and application of other team-based continuous improvement methodologies.

ORGANISATIONAL / GENERATIVE

Using the collective wisdom of the team or organisation to come up with new solutions, identify new markets, and challenge existing assumptions.

EXAMPLES INCLUDE:

• convening groups to identify the top ten emerging disruptive innovations in your market and work out how they might affect your business model

• online strategy ‘jams’

• co-creation through action learning.

INDIVIDUAL / PRODUCTIVE

Learning that’s focused on helping an individual improve performance in their role.

EXAMPLES INCLUDE:

• sales training

• watching a video on how to manage a difficult conversation with a team member.

INDIVIDUAL / GENERATIVE

Helping individuals learn key skills to enable them to generate new ideas or strategies.

EXAMPLES INCLUDE:

• teaching people critical thinking or strategic modelling skills

• teaching individuals design thinking methods.

PRODUCTIVE GENERATIVE

CRF Learning Matrix

Want further insight?Watch our 45 minute webinar Transforming the Learning Function

Questions to consider1. 2. 3.

Sorting your organisation’s learning activities into the CRF Learning Matrix, are you investing enough in the Organisational/Generative sector that is most likely to greatly improve performance? If not, what is your strategy for producing more of this type of learning?

In what specific ways could the learning function better contribute to building capability in the organisation to execute strategy? Should you be reallocating resources away from generic ‘training’ to focus on building future capabilities?

Is yours a learning organisation? What would it take to make it one?

Performance exists at both individual and organisational levels. HR has to improve performance at both levels.

At an organisational level, the focus needs to be on measures which:

• genuinely indicate how value is being enhanced as well as how past performance is recorded

• are relevant to the organisation’s circumstances

• are trusted – they meet varied stakeholders’ interests, avoiding over-complexity and obfuscation

• demonstrate the connection between investing in human, organisation and customer capital and how value is created

• are far broader than just financial measures.

This requires clear understanding of the business, its products, its processes and how and where it adds value. Working on HR initiatives before understanding an organisation’s value creation model is futile.

At an individual level, people need to have a clear understanding of the direction of travel of the organisation and ensure that they are aligned and motivated. They need to know what is important. They need help in improving their ability to contribute through training, coaching, discussion and increased levels of motivation and engagement. They need an environment where they flourish.

The way that people are paid and rewarded is important, recognising that there is no simple relationship between increased pay and increased performance. The dangers of excessive or unrealistic targets, mixed messages and gaming should be avoided.

PARC’s report Improving Organisation Performance – A systems approach finds that a holistic, systems-based approach

to performance management is required to manage people and other resources for optimum organisational and individual performance, thus enhancing HR’s contribution to the business.

The system should enable performance improvement, develop capability, provide robust rationales for reward and promotion decisions, and ensure the organisation’s future sustainability.

The PARC Performance Management Framework provides an overview of the components of a systemic approach to improving organisation performance, with particular focus on people-related issues.

Performance Management: Creating the context for individual and organisational performance

UPCOMING EVENTCRF’s 11th International Conference, Speed, Productivity, Agility – Essentials for Tomorrow’s Disruptive Business Environment, will take a multifaceted view of the drivers of organisation performance, challenging HR professionals to be radical and imaginative in developing strategies to execute the personal and organisational transformations essential for business continuity.

To find out more, contact Athena Kitching at athena@crforum.co.uk or +44 (0) 20 3457 2640.

Questions to consider1. 2. 3.

What is your organisation’s value creation model? How do HR activities support it?

What are the key organisational and individual performance objectives in your organisation? How are they communicated? Do Learning and Reward activities support, or undermine, these objectives?

Do performance objectives evolve as the business strategy evolves in your organisation? If not, what is causing the lag and what is your strategy for addressing it?

PARC performance management frameworkPERFORMANCE CULTURE

• Appropriate leadership?

• Can translate strategy to action?

• Good organisation design?

• Silos and bureaucracy minimised?

• Are there clear accountabilities?

• Tone set from the top?

• Positive purpose, values, behaviours?

• What is good performance?

PEOPLE AND CAPABILITY

• Are they of good quality?

• Well trained?

• Well motivated?

• In right jobs?

• Is there a process for reviewing performance, potential and position?

• Sound psychological contracts?

• A reward system that motivates?

• Right resources to be effective?

STRATEGY AND DIRECTION

• What is competitive advantage?

• Is it agreed?

• Is it written?

• Is it communicated?

• Is it understood?

• It is differentiated?

• Does it enable clear line of sight?

• Is it realistic?

• Is it broken into component parts?

• What are the must win battles?

REVIEW AND EVALUATION

• Is there a process for reviewing strategy, culture and people?

• Have group departmental and individual targets been met?

• Are we within budget?

• Are stakeholders involved?

• Is there an improvement orientation?

• Is success recognised?

Workforce analytics offers the potential for HR to become much more business-focused and data- and evidence-driven than has historically been the case in many organisations.

To capitalise on this opportunity, HR must understand workforce analytics and its potential applications, how to deploy analytics to improve strategy execution and business performance, and where to focus effort in order to maximise the return on investments in workforce analytics.

CRF’s report Strategic Workforce Analytics explores how organisations are using workforce analytics and how emerging tools and techniques in this field can be successfully deployed to address the most pressing workforce-related business issues and improve organisational performance.

Strategic workforce analysis

Questions to consider1. 2. 3.

Does the culture in your organisation support data-driven decision-making? Or are decisions made on ‘gut feeling’? If the latter, what is your strategy for culture change?

In your organisation, is there a clear, effective process for narrowing down the potentially thousands of options to identify those analytics projects that are likely to have the greatest impact on business performance?

How do you know if an analytics project has been ‘successful’ in your organisation?

THE EXPERT VIEW

CRF Workforce Analytics Success framework

Want further insight?Watch our 45 minute webinar HR Analytics: Does the Reality Live Up to the Hype?

Action orientation. Be clear at the outset what actions the organisation would be prepared to take as a result of what the data analysis reveals. There’s no point undertaking workforce analytics unless there is appetite in the business to do something with it.

Stakeholder engagement.Engage key stakeholders to increase the chances that analysis is followed through with actions that lead to desired changes in behaviour, systems and processes. Critical stakeholders for workforce analytics include the HR Director, who plays a vital role in creating the context for a commercially-oriented, data-driven HR function, HR business partners, who can act as advocates for analytics in the business, and business leaders, who are ultimately accountable for implementing recommendations.

Get your data strategy right. It’s easy to get so caught up in sorting and cleaning existing data that you lose sight of the bigger picture. The right data strategy may also include generating new data, combining internal and external data sources, or analysing both qualitative and quantitative data.

Drive actionable insights. Focus on generating actionable insights, not just crunching data. This means having an agreed set of business issues to analyse, and clear hypotheses to test.

Combine business and people data. The most successful workforce analytics interventions typically combine business, people and organisational data. Workforce analytics teams rarely have all the data or expertise they need, so they must collaborate with other business analytics teams across the organisation.

Rooted in research. Use existing scientific research to guide the questions to explore in the analysis – relying on previous research can help shortcut the process of developing hypotheses.

Maintain focus on business priorities. It’s necessary to build appropriate governance and prioritisation processes to ensure that decisions about where to focus workforce analytics effort have a clear line of sight to the business strategy.

Start with the business strategy. To identify where analytics interventions are likely to add the greatest value to business outcomes.

SOME KEY CONDITIONS FOR SUCCESS IN DEPLOYING WORKFORCE

ANALYTICS

Will the HR function be extinct in ten years’ time? We don’t think so: with the right responses, the HR function of the future will be enhanced. To achieve this, HR needs good people, better development and a more systematic way of looking at organisations.

First and foremost, HR must understand that it does not stand separately from, or outside, the business. The description of an ‘HR initiative’ is a misnomer. It is a business initiative supported by HR, and should not proceed unless endorsed and owned by the business. HR must therefore be close to, and have the confidence of, the business – CEO, CFO, management team and other functions.

An outward looking function, clear in purpose, rich in commercial acumen and able to build effective relationships, HR should champion the use of the principles of social science as an integral part of a successful organisation, creating an environment in which people can flourish.

Of course, much of this boils down to the experience, development and motivation of the incumbent HR Director. Top performers are thin on the ground and are likely to have earned their roles through a theoretical understanding, practice, networking and sharing, and deep experience in at least two of HR’s major areas of responsibility. An understanding of business, if absent, will continue to be a major barrier to success for individuals and the function.

So what are HR’s ambitions and aspirations for the future and where should it be taking responsibility?

• Be at the heart of strategic thinking and decisions, built upon deep analysis of the external and internal environment, and ensure that all employees understand the organisation’s goals and values.

• Work within executive teams at each level to analyse and drive performance and build organisational capability to adapt to a fast-changing business context.

• Understand how decisions are made and power flows but combine this understanding with deep integrity to become a key trusted influencer.

• Champion the setting of clear objectives and standards, focusing on what is important, and evaluating outcomes.

• Facilitate teamwork and collaboration. Play a central role in designing, orchestrating, project-managing and facilitating changes of culture, structure and processes – built on a foundation of systems thinking.

• Take a lead role in assessing and steering culture – including important facets such as performance orientation, customer-centricity, learning, ethics and balanced risk-taking.

• Shape leadership selection and behaviour at all levels – ensure effective succession through building robust talent pools, recognising the critical few while inspiring contributions from all.

Conclusions

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