HRÆ s Value Addition Role

8/2/2019 HR s Value Addition Role

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HR s ValueAddition Role

A 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

1


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At the strategy table

At the strategy table, when the business partnerssay: "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 ourcompetitors?

The 'Wallet Test

To create products and services that result incustomers taking out money out of their wallets.


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HR as a business partner

Erosion of Traditional sources of competitiveadvantage

eg. technological know-how

Focus: HR to be a true business partner

how to create and engage the human sideof business

how to conceptualize and create the totalhuman organization


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A business to be successful has to ensurethat its 2 key constituents are happy:

External customers

Shareholders

HR to align with the externally-drivenrequirements & bring internal stakeholders

Management

Employees

in line with the external stakeholder

If 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 whatyou know, but what you are able

to create

HR to create an exact line of sight,

between its activities and gettingcustomers to take money out from theirwallet and put it in your wallet, instead ofthe competitor's wallet,

If it doesn't contribute to the success ofa business, it would be of noconsequence.


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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 thestrategy table, it automatically condemns itself

to a second tier status.

When HR walks into the room and says that ithas internal customers, it is immediately

removed from the basic logic and language ofthe business. The logic and language of thebusiness is the external customer. This is alsothe logic and language of HR professionals inhigh performing firms.

Factors inhibiting HR's ability tofunction 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 istwo 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 needsto start from the business standpoint, and notthe HR standpoint. If HR is to contribute tobusiness, it has to break out of that way ofthinking; it has to fall in love with the businessrather than human resource.


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business standpoint

HR needs that line of sight to create the humanside of the business

the culture,

capabilities,

technical knowledge and

skills that enable people to create products and

servicesbetter 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 notchanging our HR practices as fast as the product life

cycle, then we are not contributing to the competitiveadvantage of the company. If, we in HR, are doing thesame things that we were doing nine months ago, thenwe 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 everysix months we are not working!

Changing our HR practices asfast as the product life cycle


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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 evaluatedon the basis of its contribution to the business.

SHRM is based on the recognition that HRMactivities are organizational in scope.

HRM as a competitive

advantage involves Strategic HRM.


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Employees are human assets that increase invalue to the organization and the marketplacewhen investments of appropriate policies and

programs are applied. Effective organizations recognize that their

employees do have value, much as same as theorganizations physical and capital assets have

value. Employees : valuable source of sustainable

competitive advantage.

The Strategic View ofHuman 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

HR P f i l


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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 informationtechnology to HR.

Have personal credibility;

HR Proscapabilities & competencies


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Delivery of the HR basic practices accounts for18% of differentiating variance between high performers &low performers. (includes the basic HR infrastructurepractices).

When done in a tactical and reactionary manner (without adefinitive business focus), they account for 18 % of HR s

influence on business results.The same practices are designed and implemented in thecontext 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-basedbusiness agenda creates great results.

HR s strategic contribution


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Institutionalized creativity is a central culturalissue and is, therefore, an HR issue.

How well a company can execute self-standingplatforms of technology, products and services is

being replaced by the leveraging of commontechnologies, products and services acrossbusiness 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

3


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Role requirements

Have a great sense of urgency about your ownfocus on business.

Think in terms of being more effective at their jobsthan those in the US /Europe.

US and European companies have the competitivemomentum to carry themselves to Indian markets;likewise, Indian companies must be good enough tocarry themselves to these markets. Such is the natureof global competition.

Indian HR professionals cannot think aboutbenchmarking Indian practices; they must beknowledgeable about best practices outside India.They must also think about next generation practices

and be more powerfully competitive than theircounter arts.


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StrategicPartner Integrator


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DeliverablesThe roles we talked about in HR Champions

(HBS Press, 1997) were defined as deliverables.

The functional expert delivers efficient HR processes. Some ofthese efficiencies come through technology and some throughservice centers. Whatever the channel, HR must become moreefficient 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 roleis includes knowledgesharing, collaboration and strategy implementation.The strategic partner role also focuses ondeveloping key capabilities that the company needsfor 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 theirpersonal and professional lives.


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Shift from Administrative toStrategic 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 andservice centres.

transformation, innovative/ strategic work Other half

HR professionals are coaches, architects, designers,and facilitators who can really begin to transformbusiness 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 Practicesto Business Strategy

- Paradigm shift- Transforming the people

4


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Essentials of SHRM

Internally transforming HR staff and structure Enhancing administrative efficiency

Integrating HR into the strategic planningprocess Linking HR practices to business strategyand one another.

Developing a partnership with line management Focusing on the bottom-line impact of HRand measuring that impact.


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The SHRM Cycle

Create needed competenciesand behaviors

Realign the HRfunctions and key

people practices

Realization of businessstrategies and results

Evaluate and refine

Clarify the business

strategy


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HR Strategy: Context of HR System

Training Rewards

Corporate Strategy

Business Strategy

HR Strategy

HR System

(Performance Mgmt.)

Li ki HR P ti


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VERTICAL FIT

HORIZONTAL FIT

Linking HR Practicesto Business Strategy

Three Aspects of HR Fit

Concerns match betweenHR practices &Overall business strategy

Relates to the interrelationship among HRActivities ; extent to which they are consistent

Concerns how well HR activities match thedemands of external environment .

EXTERNAL FIT


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T f i h l


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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. & BroaderSociety

Factual Communicator Persuader

A Nationalist An Internationalist


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Conclusions

5


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Competitiveness is not building a strategy;

it is having an organization that will deliver the strategy betterthan your competitors.

Organization is not structure. It is a set of capabilities.

HRis not a practice, but an integrated set of practices thatjoin together to create capabilities and allows strategiesto happen.

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 (Southwestern) 2002

Human Resources ManagementBy John Ivancevich (Prentice-hall) 2004


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HRÆ s Value Addition Role