HR as Strategic Partner

8/7/2019 HR as Strategic Partner

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HR as Strategic Partner

Business Performance & Human Resource

For a long time, organization development pundits have maintained that improvement inbusiness performance is directly tied to good human resources planning and closely linking thisplan to strategic objectives. Most organizations strive to improve--some subtly and some with

aggressive strategic plans designed to take the organization to the next level. The process toimprove in specific areas is ever present within most organizations, although not always

recognized as affecting overall business performance.

There are many theories, books, planning techniques, and motivational programs designed toimprove performance. Executives continue to look lot the ideal solution--that sure fire, easy

approach to improving performance. What most do not realize, however, is that the answer is notnecessarily the latest management fad but instead comprehensive human resources planning

linked to strategic objectives.

Based on decades of surveying countless businesses in all sectors of all sizes over many years.

The Gallup Organization identified those factors that determine the most successfulorganizations from the rest. What they describe is a clear value chain that links sustainable

growth and profits to engaged customers who are linked to engaged employees. Inside thoseorganizations that have a record of sustained growth and profitability are employees who are

committed to their work. It is this commitment and involvement that drives customer loyalty andengagement. In addition, Gallup found that successful organizations had great managers who

were very good at selecting employees with the right strengths for the role to be filled,establishing clear performance expectations, developing employees with those strengths in mind,

and creating the right motivational environment.

How do these findings relate to HR planning? The answer to this question, in large part, isdetermined by how the role of HR is defined by the organization. The organization must see the

HR role as linked to its business strategy and that HR helps foster the culture necessary toimplement that strategy effectively.

Effective human resources planning has become even more important in the highly competitive,

global business environment of the 21st century. Organizations are evolving into more complexbut nontraditional structures in order to be competitive and attract and retain the key individuals

upon which success depends. Yet there does not seem to be a rush or increased interest in humanresources planning. Often misunderstood and relegated to a task-driven, bureaucratic role, human

resources is not always able to be the strategic business partner it needs to be.

What is human resources planning?

Human resources planning is a process intended to help guide the organization plan in any of the

following general areas:



* Staffing

* Growth and development

* Leveling off and disengagement

* Replacement and re-staffing

* Job rotation and cross-functional training

* The design, implementation, and management of supporting programs such as benefits and

compensation

To ensure you are developing the most effective human resources plan, your organization should

review the need for having the following plans:

*Strategic business plan

* job or role competency planning

* Manpower planning

* Training and development planning

* Career development planning and process

* Planning for and managing terminations, downsizing, and attrition

Human resources planning is not something the HR department should do on its own. So wheredoes the responsibility for effective human resources really lie? In high performing

organizations, good human resources practices are most effectively performed by linemanagement with the human resources department providing the tools, guidance, and counseling

needed for the line managers to be successful.

While there may be any number of ways to conduct human resources planning, we find that thetwo most frequently used methods are standard planning and strategy-based planning.

Standard planning

Probably the most common planning approach uses the staff size and configuration at the end of the year to project staffing levels and costs into subsequent years. Scenarios are then developed

for incremental staffing and cost for new programs and projects. There are, however, drawbacksto this approach:

* It implies that all existing business activities will be continued and are as important as new

strategies and plans.



* It assumes that the current business activities are the foundation for reaching the company'sbusiness goals and are being performed effectively.

* It can unnecessarily increase staff levels and not consider the specific competencies that are

needed to achieve the strategic objectives.

* It will not uncover, within the organization, those who continue to want to increase the level of employees to preserve power and compensation without looking at productivity.

* It tends to institutionalize the existing planning process and systems beyond their usefulness.

* It shortcuts important communications from line and staff managers on their goals and supportrequirements

* It supports an outdated concept tying compensation and recognition programs to rewarding

those with the largest staffs.

* It supports the nonproductive concept that one must have sufficient staff to respond

immediately to any request regardless of its importance.

Strategy-based planning

To support the strategic business objectives of an organization, a strategy-based human resourcesplanning process is a more effective approach. This approach is part analytical process and part

creating the staffing and services based on the strategic goals, eliminating anything that does notsupport those goals. Here are some things to think about:

*Start by understanding the specific business priorities by department and business unit basedon the overall strategic objectives.

* Understand the internal and external factors that may affect the achievement of the objectives

that will ultimately impact the programs and services you will provide.

* Understand who has the responsibility and accountability for achieving each of the objectives,where they are shared, and who is to absorb the associated costs. (This will identify who your

internal customers will be and what they expect.)

* Determine if alternatives for the achievement of each business objective have been developed

and what impact that will have on services.

* Translate these business objectives into specific human resources programs and services.

* Determine the trade-offs in terms of resources needed and tinting.

* Analyze the impact if each business objective is not achieved in terms of HR services.



* Test each priority starting with the lowest one in terms of the return versus the expenditure of time and money.

* Determine where efficiencies can be achieved.

*Determine the staffing requirements to meet the business objectives, including level of staffingrequired and timing; type of employees and specific competencies required; current complement

versus your zero-based staffing requirements; where surpluses and gaps exist.

Every organization provides some standard human resources programs and services; someorganizations offer different programs based on culture, size, and competitive needs. It is a good

idea to start with a checklist of your human resources programs and initiatives. Then do someresearch and prepare a list of the types of human resources programs and services that are found

throughout the business community. These lists will be a helpful guide during your humanresources planning process.

HR as strategic partner

In a recent survey by the Conference Board, 252 CEOs were asked to name the critical threats to

their businesses and industries. The results vary by company size but "shortage of key skills,""changing technology," "regulatory compliance issues," "environment, health and safety," and

"changes in competition" were among five of the lop 15 concerns, with "shortage of key skills"ranked as the top concern. All of the aforementioned CEO concerns will be affected by the

strategic human resources initiatives of the company.

Because the business community is moving to a knowledge-based culture, understanding the key

competencies needed for your organization to be successful is critical. This should be the

primary focus of human resources. An HR department must assume the role of strategic partner with the CEO and other top executives in a proactive way to ensure there is effective alignmentof the overall business goals with the human resources initiatives. Human resources, in the past,

has been viewed as a tactical or transactional function and often was not invited to sit at thebusiness table. For an organization to be successful, that perception and role must change.

Human resources, as a strategic partner, will need to be involved in the business planning

process, thoroughly understand the plan and be able to translate these plans into actions. Thiswill ensure the organization has the right people with the right strengths in the right roles at the

right time. It should challenge the business assumptions and plans and bring to the business tableinnovative ideas for how the organization can compete in the future. Thinking outside the box,

an HR department must take a leadership role, linking the business objectives to the requiredculture and staffing of the organization. In addition, an HR department must be asking and

pressing for answers to the following questions:

What does success look like in our organization and how can we identify and measure it? Whatis considered a high performing team in our company?



* Have we developed a business plan in which everyone understands their respective roles inachieving the results and buys into it?

* What do we need to deliver for the company to achieve its strategic objectives? Consider the

areas of culture, recruitment, compensation, benefits, training and organizational development,

and outside competition. Consider the audiences of senior management, middle management,employees, and regulatory agencies.

* What specific actions do we need to take in each area?

* What resources will be required? Are they available?

* What specific competencies are required to deliver these results? Are they currently available?

How can they be developed? Are we effectively competing for knowledge-based talent? Whatare the competency strengths of our competitors and how can we better compete against those

strengths?

* How will we address the identified competency gaps in the organization?

* To what level should we have a developed succession plan?

* How well do the team members understand the strategy and what it means to them? What can

we do to enhance their understanding?

* What performance objectives do we need to establish to drive results on a group level as wellas an individual level?

*How will we measure those results and how often?

* What external benchmarking will we use to measure your results against other firms?

* How will we reward employees for achieving those results?

* How will we communicate your progress and success?

In high performing organizations, the human resources department works in partnership with

both line and staff managers. In these organizations, human resources professionals evolve into astrategic role and business partner, leaving the tactical responsibilities to others, whether they are

within the HR department or outsourced. They challenge the status quo; they are facilitators of change and are visionaries who find alternative choices to give business partners.

Barriers and misconceptions

Planning? Many people ask, "Do I have to?" Yet it has been demonstrated that human resourcesplanning is an essential element of running an organization effectively and efficiently. So why

are human resources planning and budgeting given so little attention compared to other elements



of business planning? Considerable time is spent developing comprehensive sales, marketing,technical, financial, and other plans with often only superficial attention to the human resources

implications of the business plan. There is no question that human resources planning should beclosely aligned with the strategic objectives of the organization. Most human resources and

business professionals understand this concept, but it is alarming how few are able to implement

it. Why is this? Some possible reasons include:

* Human resources is considered a task-driven, primarily tactical function and does not have an

equal seat at the business planning table.

* Human resources does not have the expertise, is unable to drive the process, and is not viewedas a strategic partner with management.

* Human resources is more focused on trying the latest management or human resources fad as away to look good and add perceived values rather than meeting the businesses' strategic needs.

*It is assumed that human resources will take care of planning (like finance will take care of thenumbers), so discussions about HR planning are limited.

* Executives feel they have always been able to get by without detailed human resourcesplanning and it is essentially a waste of time.

* Management believes that human resources planning limits its flexibility and ability to makedecisions on a case-by-case basis during the planning year and unnecessarily ties their hands.

* The organization has always been flexible and adaptable to new situations and it is too difficult

to predict what might happen and then plan for it.

* Management has never required and properly trained line managers to participate in soundhuman resources planning activities.

In addition to the previously mentioned potential barriers, there is a common misconception thathuman resources planning is the same as manpower or staffing planning. Not so! The human

resources planning process must consider not only specific staff needs, but also areas such as:

* Services to be provided in support of the specific strategic objectives and the cost and timingfor these services.

*Prioritization of the strategic objectives and identification of the specific services to supportthose objectives with cost/benefit analysis.

* Internally versus externally purchased services and costs/benefit analysts.

* The services that will be centrally provided, as well as those that will be decentralized or

shared with other functions.



* Competency gaps between existing staffing and those required by the strategic plan and howthose gaps will he filled.

* Training and development needs that support the strategic plan and address the competency

gaps

* Communications needs in support of specific business activities

* Upgrades of programs, services, and equipment that will be required.

* New human resources technology introductions to the organization needed to support the

business objectives.

* Where efficiencies in programs, services, and productivity could be achieved in areas that maybe nice to have but do not support the strategic objectives.

*Acquisition integration issues and impact on existing resources and achievement of thestrategic objectives.

* Downsizing or re-engineering issues and impact on resources.

* Succession planning and where need can be filled internally and those that will have to be

filled externally

* Compensation and benefits budget projections.

* Types of metrics to be used to evaluate performance and the costs to provide them.

* The unexpected.

To avoid the pitfalls often encountered when doing human resources planning, it is best to baseyour planning on the strategic objectives as opposed to the traditional projection of year-end

results into the future. Yes, it takes more work, but it is an essential role that human resourcesmust play to help the organization ensure it will achieve its objectives.

Linking planning to performance

Several years ago, Edgar H. Schein, a social psychologist, Sloan Fellows Professor Emeritus, and

senior lecturer at the Massachusetts Institute of Technology Sloan School of Management,conducted detailed research on this topic and published his findings. Schein pointed out that

certain changing dynamics in the workplace increase the importance of effective humanresources planning. Our own research and experience bear out his conclusions:

Changing managerial role. Because organizations are becoming more complex in structure andtechnologies and are operating in more complex economic, political, and diverse cultural

environments, managers cannot safely make decisions alone. They cannot get enough



information within their own head to be the integrator and decision maker. Instead, they becomethe managers of the decision-making process.

Changing social values. Managing people has become increasingly complicated: There is a lot of

emphasis on climbing the corporate ladder; people entering the workforce do not place the same

value on their careers as those who went before them; and the ubiquity of dual-career familieshas changed work dynamics. In addition, we now recognize that growth is a lifelong process:Many issues are predictable when they appearance during employees' life stages.

Schein further points out that a major problem with human resources planning and development

systems is they are fragmented, incomplete, and often built on poor assumptions about bothhuman and organizational growth. Instead, we should build upon what we know:

Human growth occurs through continued exposure to one's environment. To grow, individualsneed both new challenges that are within the range of their abilities and knowledge about the

results of their responses to the challenges.

Organizational growth takes place through exposure to and coping with internal and externalenvironments. Since an organization is a complex system of individuals, knowledge, financial

and informational resources, and materials, management must consider how each of those areasshould be handled to achieve improved organizational effectiveness.

Why are these human resources components and plans important for improving business

performance? They are intrinsically linked to each other and organizationally are one system.Many executives do not understand or treat it as one system and will make changes to parts of it

without understanding the impact on the rest. A primary reason organizations fail to achievebusiness objectives is that the strategic goals are not fully implemented through the organization

with the plans in place to ensure achievement of those goals. As often happens, employeescontinue to do what they have been doing with the belief that it is what the job requires. They

may not understand that certain activities have become obsolete in light of the strategic goals of the organization.

Whether a start-up, emerging growth, or mature business culture, understanding the dynamicsthat impact the performance of your business is critical to organizations' success.

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HR as Strategic Partner