HR\'s Value Addition Role


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HR needs to be aligned to business and de-linked from much of the administrative roles it is assigned today.

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HR\'s Value Addition Role

  1. 1. HR’ s Value Addition RoleA strategic View of HR Sandeep K. Puthal
  2. 2. Contents: at a glance1. HR as a Business Partner2. The Strategic View of Human Resources3. Role Requirements4. Essentials of SHRM5. Conclusions 2
  3. 3. 1HR 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 3
  4. 4. At the strategy table… At the strategy table, when the business partners say: "How do we make the customer happy?" They are actually asking: "How do we take money out of the customers wallet into our wallet and make them happier with us than with our competitors?“ The Wallet Test‘ To create products and services that result in customers taking out money out of their wallets. 4
  5. 5. HR as a business partner Erosion of Traditional sources of competitive advantage eg. technological know-how Focus: HR to be a true business partner how to create and engage the human side of business – how to conceptualize and create the total human organization 5
  6. 6. the human side of the business A business to be successful has to ensure that its 2 key constituents are happy:  External customers  Shareholders HR to align with the externally-driven requirements & bring internal stakeholders  Management  Employees in line with the external stakeholderIf HR is to be an essential part of the business,it has to align with the external business realities. 6
  7. 7. The critical issue now is not whatyou know, but what you are ableto create HR to create an exact line of sight, between its activities and getting customers to take money out from their wallet and put it in your wallet, instead of the competitors wallet, If it doesnt contribute to the success of a business, it would be of no consequence. 7
  8. 8. Factors inhibiting HRs ability to function as a business partner:its logic and its language. HR likes to say it has internal customers. When it takes that vocabulary and logic to the strategy table, it automatically condemns itself to a second tier status. When HR walks into the room and says that it has internal customers, it is immediately removed from the basic logic and language of the business. The logic and language of the business is the external customer. This is also the logic and language of HR professionals in high performing firms. 8
  9. 9. Factors inhibiting HRs ability tofunction as a business partner: being internally focused - thinking in terms of internal customers and not focusing on the results that the marketplace requires. personal credibility- do what they say they will do and; have good interpersonal & communication skills.• Knowledge of HR does not distinguish HR professionals at high-performing firms from those in low-performing firms 9
  10. 10. 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 is two starting points for our thinking. 10
  11. 11. 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 needs to start from the business standpoint, and not the HR standpoint. If HR is to contribute to business, it has to break out of that way of thinking; it has to fall in love with the business rather than human resource. 11
  12. 12. 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 services better than the competitors. 12
  13. 13. Changing our HR practices as fast as the product life cycleThe head of staffing at Cisco stated: "Our product life cycle is six to nine months. If we are not changing our HR practices as fast as the product life cycle, then we are not contributing to the competitive advantage of the company. If, we in HR, are doing the same things that we were doing nine months ago, then we are probably doing what everyone else is doing. That just isnt good enough, isnt just adequate."The head of HR at Hutch stated:“If we are not re-looking at the organizational charts every six months we are not working!” 13
  14. 14. 2 The Strategic View of Human Resources - Sources of Employee Value - HR Professionals: capabilities & competencies 14
  15. 15. 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.” 15
  16. 16. Strategic View of HRM 16
  17. 17. HRM as a competitiveadvantage involves Strategic HRM. Link HRM activities to the firms business strategy. HR managers to assume a broader role in the overall organizational strategy. HR function be "planned, organized, and evaluated on the basis of its contribution to the business.“ SHRM is based on the recognition that HRM activities are organizational in scope. 17
  18. 18. The Strategic View ofHuman Resources Employees are human assets that increase in value to the organization and the marketplace when investments of appropriate policies and programs are applied. Effective organizations recognize that their employees do have value, much as same as the organization’s physical and capital assets have value. Employees : valuable source of sustainable competitive advantage. 18
  19. 19. Sources of Employee Value 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 19
  20. 20. 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. 20
  21. 21. HR Pros… capabilities & competencies… Deliver the basic HR practices of staffing, training, developing & measuring performance; Proficiency in application of information technology to HR. Have personal credibility; 21
  22. 22. HR’ s strategic contributionDelivery 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‘ sinfluence on business results.The same practices are designed and implemented in thecontext of HR‘ s strategic contribution that 18 % jumps to 43%.Thats about a 250% increase in HRs impact on business.Doing HR practices with a clearly targeted culture-basedbusiness agenda creates great results. 22
  23. 23. central agendas of HR Institutionalized creativity is a central cultural issue and is, therefore, an HR issue. How well a company can execute self-standing platforms of technology, products and services is being replaced by the leveraging of common technologies, products and services across business 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 23
  24. 24. 3Role requirements- Deliverables- Role Requirements- Administrative Vs Strategic work 24
  25. 25. Role requirements Have a great sense of urgency about your own focus on business. Think in terms of being more effective at their jobs than those in the US /Europe. US and European companies have the competitive momentum to carry themselves to Indian markets; likewise, Indian companies must be good enough to carry themselves to these markets. Such is the nature of global competition. Indian HR professionals cannot think about benchmarking Indian practices; they must be knowledgeable about best practices outside India. They must also think about next generation practices and be more powerfully competitive than their 25 counterparts.
  26. 26. Ad mEx in yee per lo t Emp pion ChamStrategicPartner Integrator r vato Ch I nno Ma ang na e ge r 26
  27. 27. DeliverablesThe roles we talked about in HR Champions(HBS Press, 1997) were defined as deliverables. The functional expert delivers efficient HR processes. Some of these efficiencies come through technology and some through service centers. Whatever the channel, HR must become more efficient 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 27
  28. 28. Roles The strategic partner role is includes knowledge sharing, collaboration and strategy implementation. The strategic partner role also focuses on developing key capabilities that the company needs for 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 their personal and professional lives. 28
  29. 29. Shift from Administrative to Strategic dimensionsAdministrative 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 and service centres.transformation, innovative/ strategic work Other half HR professionals are coaches, architects, designers, and facilitators who can really begin to transform business strategy into a set of capabilities and actions. 29
  30. 30. 4 Essentials of SHRM - The SHRM Cycle - HR Strategy: Context of HR System - Linking HR Practices to Business Strategy - Paradigm shift - Transforming the people 30
  31. 31. Essentials of SHRM• Internally transforming HR staff and structure• Enhancing administrative efficiency• Integrating HR into the strategic planningprocess• Linking HR practices to business strategy and one another.• Developing a partnership with line management• Focusing on the bottom-line impact of HR and measuring that impact. 31
  32. 32. The SHRM Cycle Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results 32Evaluate and refine
  33. 33. HR Strategy: Context of HR System Corporate Strategy Business Strategy HR Strategy HR System(Performance Mgmt.) Training Rewards 33
  34. 34. Linking HR Practicesto Business Strategy Three Aspects of HR Fit VERTICAL FIT Concerns match between HR practices & Overall business strategy HORIZONTAL FIT Relates to the interrelationship among HR Activities ; extent to which they are consistent EXTERNAL FIT Concerns how well HR activities match the demands of external environment . 34
  35. 35. Paradigm shiftTwo Aspects of Transformation  Transforming The People  Transforming The Structure 35
  36. 36. Transforming the peopleTRADITIONAL HRM SKILLS STRATEGIC HRM SKILLSSpecialist GeneralistPolicy & Procedure Writer Good CommunicatorCurrent Focus Current & Future FocusMonolingual (Speaks HR-ess) Language of BusinessMgt- Hierarchy Focused Customer - FocusedFew Financial/ Mktg Skills Understanding of all AspectsStays “Within the Box” Thinks “Outside the Box”Focus - Internal Organization Focus – Internal Org. & Broader SocietyFactual Communicator Persuader 36A Nationalist An Internationalist
  37. 37. 5 Conclusions 37
  38. 38. Conclusions Competitiveness is not building a strategy; it is having an organization that will deliver the strategy better than your competitors. Organization is not structure. It is a set of capabilities. HR is not a practice, but an integrated set of practices that join together to create capabilities and allows strategies to happen. 38
  39. 39. Conclusions HR builds capabilities into the organisation when it has integrated HR practices. Which benefits not only the employees, who feel valued and engaged, but also customers and investors. And when we follow those three premises, HR benefits an entire network of stakeholders. A Tata company may be very good at leveraging diversity, collaborating across businesses, or be very good at speed. But it is capabilities that make the Tatas good. HR s job is to do an organizational diagnosis that begins with the process of identifying and building key capabilities. 39
  40. 40. Acknowledgements The HR Value Proposition By Wayne Brockbank & Dave Ulrich (HBS Press)2005 Strategic Human Resources Management By Jeffrey A. Mello (South –western) 2002 Human Resources Management By John Ivancevich (Prentice-hall) 2004 40
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  42. 42. e-mail: 42