CHAPTER 1

The Challenge

1.1   Getting HR into Shape

The concept of redesigning the shape of New HR was an idea first expounded by Dave Ulrich. Before explaining this, it is necessary to cut through some of the myths in HR about who your customer is. Once that is understood a move to the new shape of HR becomes more comfortable and easier to explain.

I am fortunate in that I meet literally thousands of HR people every year. Ask them the question “who is your customer” and the reply is always the same (99 percent of the time)—the employees. But is this statement true?

It can’t be—the HR function is a function that is funded at corporate level, the employees don’t pay for the function, don’t have any say about your salary, and they often use HR to undermine their managers. The employees have supervisors, team leaders, and managers to recruit, develop, and help them produce higher levels of competence and performance. It’s also the line manager’s responsibility to enforce discipline and deal with day-to-day grievance issues.

So what is HR’s new role? It’s a function to provide the tools, systems, and processes to enable managers to enhance and get the best from their staff. Using innovation and skill, HR can; if its focus is right, help an organization to significantly improve its performance. This is the essence of HR. The Business Partner.

To enable this to happen, HR will need to get into a streamlined shape so that it is in a position to take on more strategic and value-producing roles.

The concept is very uncluttered, put all of the terms and conditions, holidays, training requests on the intranet. Managers, staff, and employees’ first point of information on any of these topics will be on your local intranet, cloud site, or system. The second line of contact will be by phone—these calls will be fielded by the HR call manager. This is not setting up a call center in the true sense but having a phone that is answered to deal with enquiries or for clarification about where to get information from. Invariably 90 percent of these calls will merely be directing people to the appropriate place on the intranet.

The third point or level of contact will be the HR professional—You.

This is where expert advice will be available and where you will be dealing with the senior personnel of the organization.

This design offers you many advantages. It will stop that endless stream of people wandering into the HR department and allow you the time to focus on what’s important—creating value. It also sends a strong message to everyone—that you are a professional department and are running the function in a professional way.

I would also suggest, and this won’t be popular, keeping the HR department door locked. This is necessary for a number of reasons. It’s showing others that you deal with very confidential information and that you take personal security of employees’ information very seriously. On this point alone you will get approval for doing this. Likewise as you will be working more on strategic plans you don’t want anyone just walking in during a meeting or when you are producing organizational efficiency charts. It’s a sobering thought that every one of your employees carries with them the perfect espionage tool—the mobile phone. A device that can record meetings, photograph sensitive employee pay details, and, with the right software, download corporate data in a trice.

So there it is; a performance-based layout for HR for starting to get into the right shape for the Business Partners’ role. I’m not suggesting for one moment that HR specialists sit like gods in locked offices all day. They are best employed working more with the management team and senior managers on things like efficiency projects.

Work toward Being a Specialist

The second issue of what should HR be doing in the future is that of mastery. Although many of these areas of mastery will be discussed later in the book this will give you and the rest of the business a quick overview of the key areas of HR—the Business Partner.

1.2   The Strategic Focus and Process

CROs and top management have repeatedly complained about the inability of HR to contribute to the formation of organizational strategy. This process map is an attempt to help HR to be more strategically focused using a proven template of what needs to be done. This process map also provides the vital link to lock strategic decisions into operation by using Strategic Actions Plans, also known as SAPs.

Strategic involvement for HR seems the inevitable development of this important function if it is to be a true business partner.

To date many HR professionals have found increased difficulty in trying to get to grips with current HR strategic models.

Most of their design, although well meaning, is oversimplistic and in the main does not provide the amount of critical information needed to collect and produce high-level strategic information.

This chapter is specifically focused on providing you with a complete map for not only putting together the HR strategy but also ensuring full integration with the business requirements.

Before getting to grips with the map, let’s just spend a moment looking at timelines for the formulation of HR strategy.

There are three timelines we need to be aware of.

First, what we can learn from previous experience looking retrospectively at what we have done.

The second strategic timeline relates to current issues and information, which needs to be resolved in the future. The third and most important timeline is that of the future. It is only the future that we really have control of; from a strategic viewpoint it is the most important.

Often this timeline comprises both retrospective and current issues.

Most of the current strategic models that are being put forward for HR use are oversimplistic, particularly for those of us who are only involved in strategic planning occasionally.

Most businesses today use a model of some sort to ensure continuity and for putting strategic plans together.

The majority of these models consist of a combination of best practice in strategic planning and therefore use established strategic models such as PEST and FIVE FORCES.

In addition to those two models, there is the MILLER model, which looks specifically at productivity over time.

This model is essentially an HR model but tends to be reviewed by the majority of the other strategic partners.

The MILLER model, although being a strategic HR model, is specifically aimed at detecting when organizations need to change or reinvent themselves. Therefore, it has added importance for use in HR departments as it is HR’s responsibility to point out strategically when change in the organization needs to be triggered.

The additional information not covered in the aforementioned three models is that of the strategic partners’ specific area of expertise.

As well as using these strategic models, each partner will have a checklist of what to look at and report on for the future in their next strategic plan.

From what I’ve been told by hundreds of HR professionals internationally, this is the area that current HR professionals are having most difficulty with.

The map included here gives you a checklist of some of the most important HR areas to examine and use to see if there needs to be a specific inclusion in your strategic plan for those items. We tend to split our future focused plans into three timelines—each one has a very different type of approach.

Ferrari strategies: normally 1 to 2 years ahead, these are fun and most people can do them, often they are coupled to one specific financial year. This issue is with such strategies they do not have sufficient future focus; therefore, be cautious if all your strategies start to look like Ferrari strategies.

Oil tanker strategies: less exciting but when you start strategic planning for the first time—try to put forward more oil tanker strategies than Ferrari. The timeline for these is 2 to 5 years. You do need more effort and skill to use this.

Finally, Space Shuttle strategies 6 to 15 years. You really have to be a master of what’s going on with the ability to grasp the big picture and to have the commitment to identify and see through such strategies. Longer-term strategies require a lot of very careful project management if they are to be delivered on time and within budget.

Having worked through the checklist and drawn up your strategic plan you can see from the map that there is then the strategic mix; HR strategy does not stand on its own.

It is part of a far more complicated strategy, as it has to integrate with the corporate strategy of all of the other business partners.

It is therefore extremely likely and from my experience inevitable that HR strategy will need to be reworked a number of times before it is ready for full integration into the overall business strategy.

Our HR strategic map may at first sight seem very complicated.

It is in three parts, Strategic Input, Strategic Output, and Business Plans for Action.

You will see that all of the business partners input their strategic requirements in the form of PEST, 5 FORCES, and their individual strategic requirements into the strategic mix. The latter are extremely specific to the strategic partners’ own function.

On the map you will notice that we have highlighted the areas that are the specific function of the HR professional.

We hope that this will help you with the requirements needed to formulate your HR strategic plan.

The specific input for HR into the strategic plan takes the form of the 10 indicators.

HR input—10 steps: how many of these are specific to workforce management?

1. Strategic input—this consists of all three strategic models: PEST, 5 FORCES, and MILLER.

The PEST analysis is a long-range tool. It is used to identify

Political/legal issues

Economic

Social trends and changes

Technology—innovations and change

5 FORCES

Competition among existing firms

The threat of new entrants

The threat of substitute products or services

Bargaining power of customers

Bargaining power of suppliers

MILLER

The MILLER model simply looks at organizational maturity over time.

Because organizations grow and productivity increases with time, this happens up to a point, after which the organization goes into decline. At that point the organization typically employs too many people, is too procedure bound, and does not produce enough output.

The position of the organization or department is found by using a questionnaire, which gives a plot on the MILLER curve. This model is the number one predictive tool for organization change prediction, and a copy of the questionnaire to be used by the managers is included for your use in the book.

2. Reengineering

What HR processes need to be changed—what will be necessary and what will the impact be? What HR actions in the strategic plan might require process change, what are they and, what is their impact?

Will the reengineering impact on any of the following?

People—will we need to change the number of people we employ in the organization to fit the new process? What is the value of the saving?

Process—the physical process. How will we implement the process change and how will it be carried out? What is its value?

Structure—organizational structure needed to support reengineering and people, process, or changes brought about by the indicators in the MILLER model.

3. Future Requirements

Pay—what pay levels are likely to be in the marketplace? What do we need to do? What are the financial projections?

Rewards—is the allowance and benefits scheme competitive, what actions are needed to change? What is the cost and the real value to the individual and organization? Would rewards be better consolidated into either higher pay or bigger bonus schemes?

Bonus—projected cost. Is the scheme right for our business—are we getting the productivity we need? If the bonus scheme is to be changed then what is the cost, projected productivity improvement, and an indication of our position against our direct competitors?

4. Workforce and Trends—These need to be predictive trends that will cover things such as sickness, inclusion, productivity, demographic, skills shortages, turnover, longevity in employment, speed to competency, organizational shape, etc.

5. Planning

Succession—key personnel succession plans, desirable succession plans

Development—trend/cost—speed competence, speed to performance, training needs

Emergency—contingency plans for people in an organizational emergency, involvement of retired people, universities, other resources.

6. Trends

Home working—what are the current trends and how will they impact on organizational structure, pay and conditions, and productivity?

Outsourcing—identification of areas of the business, activities, and processes that could be outsourced. Return On Investment (ROI) and organizational implications

Budgets—forecasting for HR budgetary requirements to meet strategic objectives for manpower. To include salary, training, allowances, and bonus payments

Ageing workforce—what plans for the future—greater life expectancy and increasing retirement ages being imposed in Labor Law.

7. Performance/Competence

Task—business performance trends via a Monte Carlo simulation, staff turnover, project approach impact on productivity, initiatives to improve productivity, competent trends projected, competency strengths and weaknesses by department

Individual—competency/performance trends

Team—introduction/expansion of teams/team types and productivity projected gains.

8. Alignment

Culture—progress with the alignment of the corporate culture template will stop suggested actions/amendments needed depending on the suggested strategic objectives and the final strategic requirements

Job retention—effects of job retention in the future, market trends, change in organizational shape, use of talented development techniques

Job security—techniques needed to give employees security and connectivity with the organization. May include share options, development programs, long-term contracts.

9. Actions

Training—training budget required for future, ROI on training, training efficiency relating to productivity. Training efficiency relating to competencies. External and internal trends on training

Education—educational standards required for the future, need to invest in education and second degrees. Link between educational standards and performance at work

Development—career development needed for the company. Internal and external trends in development. Development strategies for succession planning within the company

ROI figures for development effectiveness.

10. Surveys

Employee—satisfaction surveys relating to be linked between current state and future state of the corporate culture

Managers—surveys with the managers of the company to check cultural alignment and satisfaction with the working environment in the company

Any actions, which may be necessary to take for the future.

External—any evidence where external surveys have been conducted may show an impact on HR strategy, for example, type 2 diabetes, smoking, longevity of employment, etc. What actions are necessary for the future?

These 10 subject headings provide a sound basis for the organization input needed from HR. The 10 subject headings provide the initial HR input for the first part of the strategic input.

The Strategic Mix

The next stage is where the business provides its requirements (Business Partners Input) and during consultative meetings the HR strategic plan needs to be put into alignment with the overall business requirements and needs to reflect a total picture of what is required.

This approach avoids the embarrassment of HR going to the strategic table with no ideas and nothing to offer. It also clearly shows the business that HR is being a clear strategic thinker and able to devise and propose strategies that are truly strategic.

This map has only been in existence for a few years and already HR managers are reporting that other areas of the business are keen to draw up identical maps showing their specific strategic inputs.

Strategic Approval

Once the strategic blend has been completed final plans can be made and submitted for approval. Once approved the task of turning strategy into action commences.

Strategy into Action

There are a number of ways this can be done. Using the six S method seems to work best for HR strategic plans. This is shown on the strategic map.

Each HR strategic action (should be written as either a SMART objective or use the WWW model) will need to be translated into a strategic action plan with its resource and cost.

These plans can all be integrated into a comprehensive HR business plan for the short, medium, and long term.

Constructing HR strategic action plans gives you the perfect tool to upload all of the plans into one integrated process using something like Microsoft Project Manager.

The entire strategic plan of the business can then be run and operated as a major project with all the discipline of a major project.

The Role of Creativity

Specifically referred to twice on the strategic map, creativity needs to excel during strategic planning. This is a key skill for the HR Business Partner to master. The whole process of the strategy gives us a unique opportunity to be creative in the way that we would write and carry out our strategic plans. Creativity is an essential requirement of the HR Business partner.

Competitive advantage certainly will not be achieved by blandness or copying or following what we have done in the past.

In such a fast-changing world we should focus our attention very much on improvement or, what is more exciting, doing things completely differently.

A very simple idea to follow is the FACE approach not only to internal customers but also external customers.

The face principle requires us to deliver processes and concepts that meet its requirements. These are:

In addition, I am again reminded of Peter Drucker’s advice to always ask the question “Would the roof cave in if we stopped doing this altogether?” The Virgin group completely scrapped their holiday process, deeming that employees could work this out for themselves.

We must make sure as a strategic partner that we do not create processes or activities, which significantly take energy away from the business.

That means radically reexamining lot of processes and trying to either abolish them or modify them so as not to take up valuable human capital time and effort. Our quest as HR professionals must be to energize and focus the Human Capital to maximize its potential and therefore achieve significant competitive advantage. Effective and creative strategic processes are a major step in the right direction.

Conclusion

This strategic map has been produced following many requests from HR professionals around the world.

It’s not intended to be a map that you follow doggedly, but as guidance to you if you have difficulty in pulling all of the necessary strings together for strategic planning. It is unique as it provides a complete end-to-end process from strategy to action. In companies that have used this map (worldwide) the HR function has been seen to be a leader and other areas of the business have quickly adopted this process with great success and at the same time providing a companywide universal process.

1.3   The Roles within HR Have Formed into Three Areas

HRM (human resource management) is the strategic arm of HR, which encompasses budgeting, strategy, legal, compliance, and HR policy. A recent add-on is human capital management, sometimes referred to as human asset management and of course pay and rewards. You will notice no mention is made of the legal part of the model. HR law is now so complex and specialist it should be completely handled by a qualified legal specialist—regardless of cost.

The second function of HR is HRD (human resource development). This covers training and education as well as the necessary actions for development and succession planning. In this function of HR all of the activities should be measurable and must provide measurable added value to the business. HRD is one of the easiest functions to turn into a profit center and has the potential for developing masses of added value. A simple challenging question to ask yourself about training is, “is this training added value to our business—if so can it be imperially measured?” If the answer is no, or if you are not sure—what’s the business basis for doing the training?

The third and without doubt the fastest growing area of HR is HRP (human resource planning). No, this is not a new name for the old manpower planning. HRP encompasses:

This map of what the HR does looks spectacular when produced as PVC-covered large wall chart. It is a great aid in explaining to others just what HR does—believe me, many managers and an alarming number of CEOs seem to have very little idea.

1.4   New Skills Needed—HR as the Business Partner and Consultant

As a business partner, while you will apply your technical expertise, whether it be in HR, project management, systems design, training, or financial planning, be aware of the constant and potential dangers of assuming that as the expert you know all the answers, thus forcing your solution onto a client regardless of their own views. HR process consulting demands that you focus not only on the problem but also on your client, and you will need to be able to judge the right time to be at either end of this continuum. The reality of most organizational problems is that there is never one right answer to solve a problem. There are always several options that might be applied. Consequently success in the consulting process involves getting to one of those solutions. More importantly it involves getting your client to the solution that they feel most committed and comfortable with. Achieve this and you are likely to gain immense credibility with your client. Recognizing when you need to challenge your clients and when you need to step back are key skills that have to be developed. So learn to balance the expert and process role.

What Is the Difference between the Internal and External Consultant?

The classic story of the external consultant who borrows your watch to tell you the time, charges you for it, and then keeps the watch is perhaps a little exaggerated, but reality seems to suggest a lot of evidence for the caricature. We are all familiar with the problems associated with external consultants who enter organizations displaying huge amounts of arrogance, who all too frequently believe they know what the problem is before even asking any questions.

This form of behavior characterizes the worst form of consulting and frequently results in an enormous waste of time, effort, and resource. Of course, there will always be good and bad external consultants. It also seems likely that there will always be opportunities for good external consultants to thrive. But too often the solution to a problem already exists in an organization way before the arrival of any external consultant.

We have probably all had experience of organizations that are too dysfunctional in the way they are managed to listen to their own people when it comes to diagnosing problems and developing solutions. Despite the prevailing wisdom of some leaders, people who work in organizations do generally know what the problems are. They also understand the underlying issues and have the ideas to fix them. Regretfully, their views and ideas are all too often ignored or dismissed. One of the central themes of this book is to challenge this depressing convention. Indeed it might be argued that it is too often with the leadership of an organization where the problem really lies when it comes to encompassing new ideas and processes.

Internal consultancy provides an exciting and alternative option to these classic but highly frustrating situations. Consultancy is an operating style that aligns itself to the demands of flatter organizational structures and highly skilled knowledge workers.

But in exploring the nature of internal consultancy it is perhaps useful to begin with a comparison with external consultancy as this can help to highlight critical aspects of the role. In examining differences between the two it is not our intention to set one group against another but to simply recognize that there are key differences. As an internal consultant these differences should influence how you ultimately market your services. You will see from the list below that some of the differences can be used to aggressively promote a case for using internal consultancy as opposed to adopting the external route. At the same time there are some issues that will require you to examine and question your own skill set.

This question of objectivity is often a major reason why clients may seek external consultancy assistance. In some situations you may well find yourself competing with external consultants for a project. You, therefore, need to have a clear view of the relative advantages and disadvantages of either approach in order to shape your business case and proposals.

High-Performance Business Partner Skills—External Consultant:

Internal HR consultants are:

1.5   Your Audit of Your Consultant Skills

There are 11 key skills needed to be a good internal consultant. Rate yourself against these skills on the following pages and devise for each (if necessary) a plan to develop and improve yourself:

1.6   Being in Touch with Your Organization—Critical for Success

The development of HR is interesting to chart.

In the beginning were Administration departments. The big change was the introduction of Personnel Departments, where functions primarily carried out were administrative activities, mainly payroll. Then as time moved on they got involved in other matters, mainly of an administrative nature. Despite what Personnel functions say they are mainly told what to do—told when and how many to recruit, told when and how much to pay people, so communications to this department tended to be very one way.

The better qualified, capable, and more enlightened Personnel people decided that they should now be called Human Resources and this is the work that they should be doing. The problem was that at least 80 percent of the old Personnel function merely stuck a label on the door and declared they were now HR. Most of the real HR people did and have contributed to the business, but seemed unwilling or unable to produce strategic planes or to convert themselves into a value creation department. New skills, new software, and new attitudes were needed.

The current development of HR is HR—The Business Partner.

This is a brave and bold move requiring new skills and more importantly the ability to add monetary value to the organization by its activities and advice. This is real HR at the sharp end of the organizational arrow.

Regretfully the people who were Personnel people called themselves HR and jumped on the bandwagon convincing themselves that they are Business Partners. In addition, particularly in the Middle East, the awful title of expert has crept in: Recruitment expert, Training Expert, and Business Partner Expert. Most of the “Experts” I have met in the last year are seemingly average, which of course gets the real HR professional a bad name.

Chapter 7 gives a more detailed view of the work and skill set needed.