Competitiveness Equals Strategy × Organization

To win in the marketplace, leaders craft strategies that allocate resources and set direction. Too often, once they have a set of strategies, they believe the game is over—when, in fact, it is only beginning. True competitiveness requires strategy execution, and designing an organization that can deliver strategy is as important as developing the strategies themselves. The equation is a multiplier because failing in strategy or organization will cause you to lose competitiveness. You need to sensitize line managers to the importance of organization as an essential part of any competitiveness equation.

Structure Versus Capability

Once leaders have accepted that organization matters, they need to define what it is. Too many organizations are defined by morphology—number of layers, processes, the roles people play. Important as they are, these structural elements do not represent the identity of the organization, the capabilities it can exercise. It is more productive to rewire line managers’ concepts of organization away from structural solutions (downsizing, removing layers, reengineering) to capability-based solutions (talent management, collaboration, learning, speed of change, and so forth).

Line Managers’ Role and Responsibility for HR

HR professionals are staff. They architect, facilitate, recommend an HR agenda, and coach line managers, but line managers have ultimate responsibility for approving and executing HR—just as they have ultimate responsibility for approving and executing finance, marketing, and R&D. The misfocused tendency to delegate HR to HR allows a line manager to avoid responsibility and gives an HR professional a false sense of being solely responsible. This is an illusion you need to avoid. To make HR practices work, line managers must model what they want others to accomplish—and HR leaders need to ensure that line managers stay aware of and accountable for HR work.

HR as a Body of Knowledge

Line managers often attribute HR recommendations to common sense—which is not the good thing it may seem, even when it promotes easy agreement. Rather than relying on the appeal of maxims like “If you involve people, they will be more committed,” it is more effective to master theory and present evidence showing how HR insights change real-life behavior: “Here are the five best ways to involve people, and three ways to measure the resulting commitment,” for example. The problem with common sense is that everyone has it—or at least claims to have it—so it doesn’t merit anyone a place at the table.

Focus on Outcomes

Beware the lure of the “Do something, anything, just do it” mentality. Even to skeptical line managers, new HR programs may sound interesting, promise much, and engender hope. It’s easy to fall prey to the pleasure of talking about activities and forget about the outcomes of those activities. HR professionals sometimes spend more time deciding who will speak on the third morning of a five-day executive program than on the results that program or module should deliver. Avoid getting so lost in details that you lose sight of what your practices are creating for investors and customers as well as for the organization and its employees.

The Long Haul

It is gratifying to cross things off your to-do list and move on—“We did HR work in February when we ran our training program, or in April when we did the all-employee meeting, or in December when we handed out the bonus.” Unfortunately, most HR practices that add long-term value are not so easily accomplished. Events are important for symbolic value and rallying resources, but they do not create sustained change. You might help managers plan and deliver events, but stay focused on the longer-term process and patterns they create.

Sunk Costs

People find it hard to change what they have created. Often, line managers are pleased with the HR system that led to their promotion—unsurprisingly, since they have been well served by it. Nonetheless, it’s important to look forward rather than backward. It is important to focus equally on what will be while learning from what has been. The goal is to build on a strategy for the future rather than rely on a strategy that worked in the past.

Listen and Learn

Listen to the line managers you work with. Understand and adopt the logic, language, and concepts they use to think about business. Be able to express their thoughts in their words. Recognize their personal styles—via Myers-Briggs or simple observation—so you know who works better in person, by phone, or by e-mail; prefers to hear bad news as problems or solutions; or would rather make decisions quickly or slowly. Rather than trying to change someone’s style, learn to work with it. In addition, learn about their backgrounds: where they went to school, what they enjoy as hobbies, what they did in previous jobs, and so forth. Be interested in them as individuals, not just in their managerial roles. When appropriate, share some of your own experiences. Mutual disclosure builds trust. Make sure that your recommendations align with their goals, not just yours. Delight in their success.

Resolve Concerns

Inevitably, differing points of view arise in any relationship. Trust grows when concerns are resolved openly and honestly. Model ways to resolve concerns and bring unity to decision making with some of the following suggestions:

• Be open and candid in your comments while expressing support and concern.
• Clarify specific issues and points of view as you explore options.
• Identify common threads, and set criteria for selecting among options.
• Figure out what additional information is required to make a decision.
• Discover a way to make a decision while ensuring that all parties feel heard.
• Focus on implementation and the future.

Generally, the biggest barrier to resolving concerns is a reluctance to air differences. When you practice openness, you generally have a chance of finding a way to work things out.

Demonstrate “-Ability”

Trust comes from -ability: adaptability, affability, availability, credibility, dependability, indispensability, predictability, reliability, sociability, stability, workability. With this spectrum of attitudes in place, the parties have a good start on developing confidence in each another. You earn trust by doing small and simple things rather than one big thing. Trust is a cumulative process of learning from shared experiences that build on one another, and it is the foundation for conversations that add value all around.

Talent

Developing talent means going beyond platitudes like “People are our most important asset” to investing time and hard resources in making sure that employees are both competent and committed. Competent employees have the skills they need for today and tomorrow. Committed employees deploy those skills regularly and predictably. Ensuring employee competence is possible when HR helps leaders buy (bring in new talent), build (develop existing talent), borrow (access thought leaders through alliances or partnerships), bounce (remove poor talent), bind (retain the best talent), and boost (promote the right talent). (See chapter 5.)

Employee competence can be tracked by a number of measures:

• Percentage of employees with the skills to do their job today and in the future
• Percentage of employees targeted by search firms
• Output per unit of employee input (a productivity measure)
• Investor or customer ratings of employee service

Sustaining commitment is possible when a firm builds an employee value proposition that rewards outstanding workers with what matters to them most. HR can track commitment by measures such as

• Retention of top employees.
• Response to employee attitude surveys.
• Direct observation.

Building a foundation of competent and committed employees can ensure a flow of talent that will help the organization perform well over time.

Speed

An organization with speed identifies and moves quickly into new markets, new products, new employee contracts, and new business processes. You can help leaders develop this capability by focusing on rigorous decision making, by implementing organizationwide change processes, by breaking down bureaucratic barriers, and by eliminating change viruses. Stepping up the capacity to change helps even large firms—like GM with CEO Rick Wagoner’s “changefast” program—act like small, nimble firms.

Speed may be tracked by the time expended between

• Concept to commercialization of an idea.
• Changeover of an assembly line to new product output.
• Collecting customer data to changes in customer relations.
• Proposing an administrative change to fully implementing it.

Measures like these operate like inventory turnovers, tracking efficient use of time and labor instead of tracking physical assets. They lead to increased labor productivity as well as increased enthusiasm and responsiveness to opportunities.

Shared Mindset

Many firms have moved from individual product brands to firm brands, reflecting a shared mindset among their people inside and customers outside. The Marriott name on a hotel, for example, adds value because it gives travelers confidence in the product. The more real that identity is to both customers and employees, the more it will benefit the firm.

Shared mindset can be measured with a simple exercise: ask senior management, “What are the top three things we want to be known for by our best customers in the future?” Collect the responses and measure the degree of consensus as the percentage of responses that fall into the three most common categories. We have conducted this exercise hundreds of times and often find a shared mindset around 50 to 60 percent—but leading firms tend to score around 80 to 90 percent. The next step in the exercise is to invite key customers to determine their top three priorities. It is then possible to monitor the extent to which the internal and external mindsets are shared and to shape the ultimate value of the culture.

Accountability

For firms with the habit of accountability, it is simply unacceptable to miss goals and delivery deadlines. Their strategies translate into measurable standards of performance, rewards are linked to those standards, and employees recognize that they must meet their targets. Both financial and nonfinancial rewards reinforce these efforts and provide definitive feedback on personal performance.

Accountability is simple to monitor when HR practices support it. By looking at a performance appraisal form, you should be able to identify the strategy of the business, as well as the employee’s own goals and strategies for achieving them. Does the appraisal reflect the business strategy? What percentage of employees receive an appraisal each year? How much does compensation vary based on performance? Some firms claim a pay-for-performance philosophy, but their annual increases range only from 3.5 to 4.5 percent—proving the claim false. Finally, what percentage of employees feel they have received a helpful feedback session in the past year?

Collaboration

Collaboration encourages efficiencies of operation through shared services, technology, and economies of scale as well as leverage from learning and sharing ideas across boundaries, allocating resources as needed, and merging strategies for cross-selling and customer service. It permits an organization to be much more than the sum of its parts. HR professionals can help build collaboration by promoting and highlighting both efficiency and leverage throughout the organization.

HR can track collaboration, monitoring the flow of talent and ideas across boundaries within an organization. Are people moving from one area to another? Are ideas or practices in one part of the firm being replicated elsewhere? Collaboration can also be measured by tracking administrative costs, as shared services have been found to produce a 15–25 percent cost savings. For example, the average large firm spends about $1,600 per employee per year in administration, making it a simple matter to calculate the probable cost savings of shared services.

Learning

Learning means generating and generalizing ideas with impact. New ideas may be generated from four activities:¹

• Benchmarking (seeing what others have done and adapting it)
• Experimentation (trying new things to see if and how they work)
• Acquisition (hiring or developing people with new skills and ideas)
• Continuous improvement (via suggestion systems and process analysis)

For maximum usefulness, ideas also need to be generalized—that is, to move across a boundary of time (from one leader to the next), space (from one geography to another), or division (from one business unit to another). This can be accomplished by creating communities of practice, by moving people, and by encouraging individual and team learning. As HR leaders, you can play a major role in selecting the technology and establishing the practices that make it possible. You can also establish baselines and track results on questions of knowledge turnover, such as “What is the half-life of knowledge in your current job? When will 50 percent of what you know be out-of-date?” By emphasizing the need to generate and generalize new ideas, you can help make learning part of the organizational improvement effort.

Leadership

Organizations that produce leaders generally have a leadership brand—a clear statement of what leaders should know, be, do, and deliver. HR professionals are uniquely well placed to help current leadership produce the next generation of leaders by establishing the leadership brand, assessing the gaps in the present leadership against this brand, and investing in future leaders.

You can track the leadership brand by monitoring the pool of future leaders. How many backups are in place for the top one hundred leaders ? In the middle of an aggressive downsizing initiative, one company discovered that it had dropped from 3 to 0.7 qualified backups for each of the top one hundred workers—seriously impairing its leadership bench strength.

Customer Connection

Often, the target customers mentioned in chapter 3—the ones responsible for 80 percent of the business—amount to no more than 20 percent of the customer population. HR practices can help link those customers more closely to the firm by including them in staffing, training, compensation, and communications. HR can also promote procedures that give employees meaningful exposure to or interaction with external customers. All these efforts produce an information and mindset convergence between employees and customers.

You could encourage the firm to track customer connectivity through share of targeted customers and through regular customer service scores. They can use the resulting numbers to assess the effectiveness of HR practices designed to promote employee attitudes and abilities that generate strong customer connections.

Innovation

Innovation focuses on share of opportunity by creating future success rather than relying on past successes. Innovation matters because it fosters growth. It excites employees, it anticipates customer requests and delights customers by providing pleasures they did not expect, and it builds confidence among investors.

You can encourage top management to track innovation through a vitality index such as revenues (or profits) from products or services created in the last three years. Innovation can also be monitored by tracking the introduction and deployment of new processes in the organization.

Strategic Unity

A firm with strategic unity makes sure that all employees share an understanding of what its strategy is and why it is important. It presents its strategy through simple messages repeated constantly, and it seeks to ensure that the strategy actually shapes how employees behave. It also aligns processes (budgeting, hiring, decision making, and the like) with strategy. HR leaders can advise and assist every step of the way, shaping messages and encouraging procedures by asking employees what they will do given the strategy rather than by simply telling them what to do. When employees define their behaviors relative to the strategy, they are more likely to become committed to it.

Strategic unity can be tracked by measuring the extent to which employees’ answers match when you ask, “What strategy sets this business apart from competitors and helps us win with customers?” You can track the behavioral agenda for strategic unity by asking employees what percentage of their time directly contributes to the business strategy, and whether their suggestions for improvement are heard and acted upon.

Efficiency

In competitive markets, efficiently managing the costs of processes, people, and projects increases flexibility. Of course, a strategy of managing costs and ignoring growth will fail, because no business can save its way to prosperity. However, firms that avoid cost and efficiency improvements will generally not have the opportunity to grow the top line. Tracking efficiency may be the easiest of all. Costs of goods sold, inventories, direct and indirect labor, and capital employed can be measured by the balance sheet and income statement.

One Event

When a manufacturing firm decided it had to close down a plant, the HR professional on the management team explained how many employees would be affected, their demographics (age, years’ service, positions, skills), and their likelihood of finding other employment readily. He also presented options for how to communicate the plant closing and how to move employees to jobs inside or outside the firm. Finally, he presented a specific plan for how to help people work through the grieving process of losing their jobs.

By being visible and active in the management meetings, the HR professional became simultaneously the voice of the employees and the mind of the managers. While the financial status of the facility required that it be closed, the dual role enabled the HR professional to manage this transition with dignity and tact. Here are some specific strategies he sponsored or facilitated.

The HR professional convinced the entire eight-person management team to spend several days at the plant. On the first half day, management shared data with all employees: the erosion of customers, the competitive landscape, the financial performance of the plant, the condition of the plant, and all the other factors that went into the decision to close. Then, for a day and a half, the top team members made themselves available to talk to any employee. The last half day, the management team brought all employees together to explain again why the plant would be closing and what the next steps would be. At the end of this meeting, although unhappy about losing their jobs, the employees gave the management team a standing ovation. They respected the team’s courage in visiting the plant and being available to respond to questions and concerns.

Each employee who was being let go had the opportunity for an individual conference and assistance in developing a personal action plan. In this case, fair treatment did not mean that employees got their way (some who wanted to move to other sites were not qualified to do so), but each person was treated with dignity. HR professionals can be the grantors and guarantors of equity (not equality).

The on-site visit was supported by policies that turned events into patterns (for example, who would get a chance to relocate in the company and who would not). These policies communicated fairness and equity to employees, and the symbolic events communicated care and concern.

The time between the date for closing the plant and the management visit was about two weeks. This speed avoided the paralysis another company faced when it announced in early February that on June 30, 7 percent of the employees would be let go. About half the employees thought they might be the ones to go, so they were too worried about protecting themselves to get their work done. Once a decision is made to close a plant or let people go, HR professionals should make sure that it is executed swiftly—within legal bounds, of course.

The HR professional stayed at the plant to respond to grievances. Employees were able to express their concerns and personal desires, and even those disappointed in the results knew they’d been heard and treated fairly.

Ongoing Interactions

In addition to listening to employee views and voices in demanding situations, HR leaders add value when they set up regular opportunities for workers’ thoughts and feelings to be heard. You can encourage employee feedback in many ways and can take the lead in design, administration, and follow-up for each one—ensuring that the offering is tailored to the organization, that it is efficient and easy to use, and that the results are not only obtained but applied.

Regular employee surveys—now often conducted online—are an increasingly common way to assess employee attitudes and measure managerial effectiveness.⁴ Shorter surveys as pulse checks allow employees to participate quickly and often. The trend is away from satisfaction questions (“Do you like your pay?”) and toward questions about commitment (“Does your pay induce you to contribute in meaningful ways?”).

Suggestion systems range from formal (with standardized idea forms and payout schedules) to informal (where employees share ideas on a continuing basis). The Toyota suggestion system has generated more than 20 million suggestions over forty years, or about one per employee per week. Much of the credit for Toyota’s commitment to continuous improvement comes from employees’ willingness to offer suggestions and management’s to receive them.⁵

Town hall meetings originated in civic affairs, allowing political leaders to speak directly with constituents. These meetings have been adapted to many business settings, where leaders interact with employees on issues of interest to both parties.⁶

Internet technology allows managers to engage with employees online. Company chat rooms make it easy for leaders and employees to communicate at mutually convenient times.

HR professionals can make themselves available to employees to mediate concerns and problems. Maricopa County, Arizona, for example, has formalized the role of an employee ombudsman who “investigates grievances on behalf of the County Administrative Officer, facilitates solutions to workplace conflicts and complaints, provides information, and gives a personal and confidential hearing to employees involved in a dispute.”⁷ Managed through the HR function, this role enables all county employees to resolve disputes fairly and openly.

Personalization

Personalized administrative support promotes flexibility, which helps engage employees. It is the equivalent of mass customization—but for an internal audience, permitting the EVP to be tailored to the specific needs of each employee. Traditional HR systems categorized employees into groups that received similar services, but these days, each employee can be addressed as an individual. For example, a compensation package includes the types of financial rewards (cash today, deferred cash, stock, benefits, services); the way the rewards are delivered (by check mailed home, check delivered in the office, direct deposit to a chosen bank); and how often the rewards are paid (from weekly to annually). Instead of making the selections, the company can let employees choose what best matches their lifestyle and needs. HR professionals are the ones who create systems to offer and respond to those choices.

Rapid Response

In a world of instant news, employees’ expectations of timing for administrative support have increased. No longer will people wait weeks to receive reimbursement for travel expenses, for example. HR needs to build rapid-response systems that grant employee requests on demand.

Ease of Use

Traditional paper forms are cumbersome and often difficult to use. Increasingly, administrative support takes place online, where employees can quickly and easily exchange required information. Online support gives employees nearly unlimited access to important personal information such as retirement portfolios and development opportunities. And the new technical complexity can generate administrative ease, as in one company where the online system applies updates across a range of databases. For example, when an employee transfer is reported, changes cascade across the employee’s workstation, supervisor, job description, insurance coverage, and so forth.

Flawless Execution

Accuracy inspires confidence in the systems and underpins the integrity of the HR function. By contrast, errors rapidly turn into problems, as when a new payroll system overpaid a group of employees for a few weeks. Even though people were well aware that the overpayment was an error, the company’s attempt to recover the money became an issue in the next round of contract negotiations and led to ongoing discontent among the workforce.

Responsiveness

When employees have questions about administrative matters, what they want most are timely answers. This implies a single point of contact so that employees don’t have to seek out the specific HR professional who may be able to answer their questions. HR systems should be designed accordingly.

Talent

We (our firm) are in a war for talent. We compete by having the most talented employees who are both competent (able to do the job) and committed (willing to do what they say they will do). Customers in our industry pay for the output of our talented employees.

Having talented employees occurs when each employee knows what is required for both current and future work and is able to identify specific knowledge, skills, and behaviors required to meet customer demands. When you have instituted a regular and disciplined process of evaluation, you will know what is expected of you and where you stand. You will also be able to inventory your strengths and weaknesses, and craft a plan to guide your ongoing development. Let me help you become an all-star player on an all-star team.

Speed

We compete by being fast, which means first to market and fast to innovate. To be fast, we need each employee to change, experiment, and try new things more quickly than our competitors.

Employees who master the challenges of rapid change let go of outdated knowledge and activities, and discover and develop the knowledge and skills needed for the future. When you try new ventures and accept 80 percent solutions and realize that you don’t have to be perfect in all things, you will learn faster and savor the process of continuous personal improvement. As you develop resilience, you will be able to bounce back from failure, stick with change, and accomplish difficult things quickly. Your confidence will enable you to face an uncertain future while responding positively today. Let me help make you a change master.

Shared Mindset

Our company competes by having an exceptional reputation and brand. Customers go out of their way to buy from us. Each of our employees needs to develop a personal identity consistent with our corporate identity. Employees need to understand how others see them, and compare it to what our organization wants to be known for and how they would like to be seen in a way that is consistent with our company’s reputation.

When you craft your personal mission statement and translate it into behaviors that are consistent with your values, you will get into a “flow” so that you enjoy who you are and what you are doing. You will not be trying to be someone you are not. By avoiding needless comparisons, you will become more aware of your own strengths and limitations, and better able to set expectations that you can meet. This means you may say no to projects outside your limits and yes to projects within an appropriate stretch. Your personal reputation will affect how others treat you, how you treat yourself, and how far you can progress. Let me help make you known for your consistent reputation.

Accountability

We compete by being disciplined at getting things done, by meeting commitments, and by fulfilling promises. Customers trust us to do what we say. Each of our employees needs to master the skill of getting things done.

Getting things done as promised comes from setting priorities, learning that not everything worth doing is worth doing well, and realizing that some things are so important, they are worth doing poorly. To be accountable, you need to make and keep commitments to whatever you deem most important. When you make appropriate public commitments, you give both yourself and others confidence that you will accomplish tasks in a timely way. As you learn how to solicit and interpret feedback, you will constantly improve. Let me coach you so that you can get started now and use your early successes to build longer-term gains. Let me help make you a full contributor.

Collaboration

We compete through alliances, partnerships, joint ventures, and other forms of collaboration. To collaborate as an organization, our employees need to learn how to work with others and build relationships of trust.

Monitoring and improving your interpersonal skills helps others trust you. Your relationships will improve when you identify people who can help you solve problems and get work done. As you learn how to collaborate and delegate to others work that you should not do yourself, you become valuable to the relationship networks within your work unit. Perhaps I can assist you in discerning who is your colleague and friend and who is not, and tutor you in the skills for working through interpersonal difficulties. Let me help you become a team player.

Learning

We compete by learning and by creating knowledge that our customers can use. To learn as an organization, we need employees who demonstrate learning agility by letting go of the past and focusing on the future.

As an employee, you help the organization learn when you master the learning cycle—making choices, assessing consequences, and instituting corrections—and adapt it to yourself and your job. If you can accurately assess your learning styles and open your mind to experimentation, benchmarking, and competence acquisition, you will generate new ideas within your work unit and generalize those ideas across boundaries. My role is to encourage you to discover ideas with impact by mastering the disciplines of learning. Let me help you be a learner.

Leadership

We are known for the quality of our leadership brand. Leaders at each level act responsibly to serve customers and investors. To maintain a firm-wide leadership brand, each leader should possess a personal leadership agenda consistent with our organization’s leadership brand.

When you master the following steps in becoming a more effective leader, you manifest your acceptance of the opportunities and responsibilities of leadership, regardless of your position in your company.

1. Define the strategies and goals of your organization.
2. Turn those strategies into behaviors leaders must demonstrate.
3. Clearly articulate the results that leaders must produce.
4. Create a personal leadership brand that incorporates what you must know and do and what you must deliver.
5. Build a leadership action plan to deliver results.

As a leader, you should be able to craft a vision, set goals, take action, and follow up. Even when you are not in a formal leadership position, you can lead others by asking questions, setting an agenda for getting things done, and influencing upward. Let me help make you a leader.

Customer Connection

We compete by gaining customer share from our targeted customers. To serve these customers, all employees must align their work with the needs of customers.

Serving customers begins by understanding who your real customers are. Then, you need to prioritize the most important customers and learn how to discern what they need and want from you. As you find ways to form alliances and relationships, you will better meet their needs and increase their desire to do business with you. It is important to continuously monitor how well you serve your key customers, so that you can break down the boundaries between you and them to form a lasting partnership. Let me help you become customer-expert.

Innovation

We compete by offering new products or services, defining new markets, or creating new ways to manufacture or distribute products. To innovate, we need employees who are able to create and try new things.

Individual creativity leads to organizational innovation. Creativity comes from identifying and solving problems, looking for alternatives, brainstorming, learning from failures, thinking divergently, and taking risks. Your personal creativity will flourish when you develop an innovation protocol for your work that encourages you to generate ideas, assess their impact, incubate and experiment with them, invest and commercialize them, and integrate new products or services into the existing business. Such creativity will help you ask and find answers to “What’s next?” and “What can be?” Let me help you become an innovator.

Strategic Unity

We compete by having a vision or mission that distinguishes us in the marketplace. Our unique organizational vision should be consistent with an employee’s personal vision or mission.

A personal mission begins with clarity about your criteria for personal success—what you want and what matters most to you—and turns those criteria into a vision of who you are and who you want to become. This vision allows you to accept who you are and who you are not. It helps you eliminate the clutter in your life and focus on relationships and actions that matter most. Your personal vision should be visible in actions and results. Let me help you become personally vision-driven and teach you how to align that vision with your organization’s mission statement.

Efficiency

We compete by maintaining lower costs and using our resources efficiently. Efficient organizations have employees who are wise stewards of time, resources, and energy.

Despite best intentions, you cannot be all things to all people. You can conserve personal resources by determining how much of your time an activity deserves, establishing a return-on-time-invested index to monitor your efficiency, and by conducting personal time audits. Personal efficiency comes when you identify resources that can help you get things done and retain energy so you can be emotionally and intellectually engaged. Let me help you be disciplined.