Positioning Strategic HR As Your Organizational Competitive Advantage

The Real Value of HR in Your Business

George Taylor, MBA(ISM), SPHR

(Original Presentation in 2009 – No Significant Updates)

Vision Achieved Strategies (VA Strat)

Agenda

– Introduction

– Why HR Matters: The Link to Business Growth, Innovation, and Sustainability

– From Strategic Planning to Strategic Execution

– Initial Steps in Creating an HR Architecture/Framework

– How the absence of an HR architecture is costing you money, customers, and growth

– Real-World Examples

– Summarize

Courtesies

– Engagement is encouraged and welcomed – please refrain from

soapboxes

– Please turn off cell phones, pagers, etc. Take calls outside of room

– If you have any questions not related to presentation, please save

them for break and/or after presentations

– No recording devices are allowed/permitted

– Respect differences of opinion

– Have fun

Define-Refine-Deploy

Process Review

Strategy Map

Business Case

Feasibility Study

Business Processes/Workflow Analysis Review

Program Management/Project Planning

Process Design/Pilot Testing

Measurement Refinement

Deployment

VA STRAT Partner-

Champion-Advisor

Why HR Matters

“If I was starting a company today and I was

asked ‘What is the most important position

that needs to be hired?’ . . .It’s not

manufacturing; it’s not marketing, it’s not IT.

The most important person to hire is the

Head of Human Resources.”

-Howard Schultz, Chairman, President, CEO

Starbucks

Why HR Matters

• The average financial analysts base 35% of his or her investment decision

on non-financial information – Harvard Business Review

• Companies with an effective and well executed strategic HR function have

half the turnover, four times the sales per employee, and a market to book

value of more than three times as large as those that do not – Academy of

Management Journal

• Companies that follow HR best [strategic] practices have more than 50%

higher market value than those who do not – Workforce Management

Strategic Human Resources is a Key Business Differentiator

What is Strategic HR

• Systematic implementation and employment of management processes

and systems that contributes to organizational key goals and objectives

through the effective employment of human capital

• A key business differentiator that links internal and external human capital

objectives to business objectives, organizational culture , and financial

environment

• Effectively implemented by organizations that view human capital and

talent as a core competency

• Assessed on basis of workforce development and talent that contributes

to profitability, readiness, and organizational social responsibility

Why HR – Strategic Overview

Strategic Human

Resources

Business Strategy

Business Partner

Financial Performance/Market Value

CSR

Planning to Execution

Practices and Policies

Recruiting/Staffing Education, Training-

Development Compensation/Incentives

Employee Buy-in/Engagement

HR Framework and Architecture

HR Systems HR Processes Workforce HR Measurements

Business Strategy

Business Case Business Requirements Functional Goals

Strategic HR – Why it Matters for Your Business!

Strategic Human Resources

Product- Service

Innovation

Productivity

Customer Service

In-Demand Skill Set

Market Value- Profitability

Readiness Long-Term Growth Mission-Value Structure

Strategic HR Key Components

• Organizational Culture

• Organizational Structure

• Work Design

• Workforce Development

• HR Transactional Management

• Change Management Leadership

• Business Knowledge

• Deep-Broad HR Expertise

• Strategic Partner

• Financial Acumen

Competencies Deliverables-Outcomes

Real Value of Strategic HR

Effective development and implementation

of key performance measures, drivers,

enablers, and or key performance

indicators that are continuously measured

within the context of the business strategy

goals and objectives

Misalignment-No HR Structure

• Lost connection with organizational strategy– wrong person in wrong

place at wrong time – Employees have no connection to end-game or

goals

• High-rate of turnover – Accession-Recruitment can run from .5 to 2.5 (on

average) of incumbent’s salary

• Lost customer engagement – Customers/Clients rarely forgive bad

experiences

• Competencies mismatched – Undesirable and Desirable turnover increase

in frequency and employees lose engagement

Missed Opportunities, Clients, and Growth

Misalignment –No HR Structure

• Lower Sales per Full Time Equivalent (FTE) – Training (if existent) will often be mismatched to the outcome/goals formulated in the strategic planning phase

• Decreased market and book value – costs of overhead, employee turnover, training, and compensation and benefits eats into development, innovation, marketing, and sales growth

• Missed collaboration with senior-line management resulting in a unending cycle of human resources not aligning with strategic goals causing a vicious cycle that can continue to result in lost business and at worst business failure

FTE: Full Time Equivalent: Ratio of total number of paid hours during a

period (usually refers to full time/contracted employee) by the

number of working hours in that period Mondays through Fridays.

Missed Opportunities, Clients, and Growth

Case Study #1

Faced with increased competitive pressures, this Fortune 500 company was struggling to stay afloat due to decreasing market position, lack of product-service innovation, inability to develop patents, and increasing pressures from foreign competitors. New CEO was named in early 2001 who immediately consolidated products/services and the workforce by 30%. In addition, she consolidated key processes and systems and discontinued product lines that were proving to be unprofitable and/or showed no long-term growth or viable profit-center for the company. Some of the initiatives she pursued included HR consolidation in which administrative transactions were housed centrally and employees views of the organization were tracked with results addressed by senior leadership.

1. Is this an example of strategic HR?

2. What do you think the results of her business strategies and initiatives were/are?

3. What decisions would you have made from a strategic HR standpoint if faced with

similar challenges?

Case Study #2

This poplar home improvement and construction retailer was the recognized leader with no viable threats in its industry. To continue the momentum and reach the upper limits in its industry, a Jack Welch protégé was brought in. This CEO immediately implemented six sigma and advanced supply chain management to this company to reduce costs and improve availability of product. During his tenure growth slowed, employee morale significantly decreased with high rates of undesirable turnover serving as evidence, and he earned the “ire” of investors/shareholders. In the area of human resources, he directed significant labor cuts and reduced staffing levels in all stores (to ensure this, all stores were brought within a centralized management structure).

1. From a strategic HR perspective, what did this CEO do wrong in your opinion?

2. Give specific examples of how you as a business leader, entrepreneur, or

manager would have approached this issue from a strategic level and/or how

would you have advised senior leadership within your organization.

3. Could this CEO have pulled his corporate initiatives off without reducing staff and

calling for labor cuts?

Case Study #3

This medium size privately-held company specializes in providing clean air, air filtering, and gas turbine filtering services for business (business-to-business). Currently, this 90-year old plus company is undergoing tremendous challenges that include training gaps to what is needed/required to what the incumbents actually possess, stagnated growth, and below market wages. In addition, this company has an under trained headquarters staff despite senior leadership “desire” to bring in human resources at the strategic planning levels. Currently morale can be described as low and turnover high with belief that the turnover rate is desired. You are brought in as a senior level VP of Operations and have been provided a mandate to partner with HR to bring in needed talent, develop in partnership the needed environment to impact change, and develop key metrics/measurements that will provide the indicators/drivers critical to the organization’s survival.

1. What are the initial steps you take in working with HR (for non-HR personnel)?

2. Is it possible to have a continuous improvement and a top line growth strategy at the

same time?

3. As the client of HR what are some key information and/or action you want to see take

place in the areas of compensation, employee training, and turnover that will have a

direct impact on profitability and the ability to remain in business?

Summary

– A strategic HR framework/architecture is critical to you business success

– In order to make your HR structure effective it must align with your business goals and objectives

– If you primary HR need and/or belief is in transactional functions than you consider outsourcing those functions while finding a role for a Strategic role for HR

– Companies with effective HR architecture and frameworks have greater market value, more engaged employees, and exhibit a higher rate of customer satisfaction, time to market, and innovation

– Without an effective HR architecture or framework, you may be loosing customers-clients, money, and missed opportunities

– Maintaining a competitive advantage will involve your workforce and how you structure your HR processes, systems, and policies

Contact

Vision Achieved Strategies

1779 Kirby Parkway

Suite 1-79

Germantown, TN 38138

http://www.vastrat.com

Vision Achieved Strategies

3058 Saint Dunstans Road

Lithonia, GA 30058

George Taylor

901-240-2058

http://www.oneminutehrconsultant.com

Thank You

Introductions

Planning

Execution

Result