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How well do you understand your business? What makes it “work”? Fresh perspectives on HR!

The market and world are changing and so is the way that organisations need to position and manoeuvre in this landscape. Organisations need to be agile and responsive, requiring quick decision-making.

What aspects of their business need to be focused on (what work needs doing) and how to get it done in the best and most cost-effective manner, are some of the key considerations that executives are struggling with increasingly due to globalisation and the associated competition this brings. Additionally, the political and economic climate the world is experiencing poses more challenges that impact on this decision making and organisational design process.

Being operationally competitive (faster and more effective processes; bringing better types of products and services to market etc.) is not enough for a sustainable business strategy nor market leadership – this can be replicated or improved by the competition! Having the latest and best technology is also short lived for similar reasons.

The only real differentiating factor is then the people we employ to do the work – unlike processes and technology, people have potential, creativity, innovation, judgment, flexibility and decision-making power. The catch here is that these very technologies, especially in the HC space, are designed to provide wisdom around people and work, provided they are configured correctly! Caveat emptor!!

Given the right circumstances, people have the ability to exponentially grow the business and outsmart the competition. Most organisations have a few key individuals on who rests the entire well-being of the business. Take them out of the equation and the organisation suffers, even though it survives. Transpose these individuals into the competition’s environment and you can cripple the original employer. Thus, people become strategic and competitive enablers if ‘applied’ and understood correctly.

So how does an organisation “apply” people correctly i.e. manage this expensive and increasingly scarce business resource? What are the vital signs to track and understand this “application”?

  1. Firstly, an organisation needs to understand what it is that they should be doing i.e. what is the right workto be done in context of the business value-chain. The interdependency between the work-elements of the value-chain needs to be carefully considered to avoid duplication and ensure tactical and strategic alignment. This includes an understanding of where in the organisation these pieces of work are being carried-out (areas of similar capability).

Example:

Let’s say that in an organisation there are sales and call-centre functions. The former focuses on creating the business relationship while the latter focuses on maintaining and extending the foundation that was originally established. The differentiator here is the typeof work being carried out in the respective operational areas.

Inherent to both these operational environments is the need to manage the different levels of work – whether that be work effected by individuals themselves (self-management) or the need for the “management” of teams of people collaboratively to deliver on the complexities of client interaction/need fulfilment. This levelling is typically referred to as accountability; whether that is accountability for one’s own actions or for teams, business functions and enterprise structures. The underlying premise upon which accountability is based is the fact that increased complexity and time-frames occur as one moves up the organisational structure to the executive levels.

  1. The next thing is to understand what the expected outcomeshould be when the work is complete (how much, error rate etc.) – i.e. targets and measures; these will change over time to ensure that the focus of the work is directed in a specific manner for a period of time e.g. sales work may be directed at a new market segment.
  2. The organisation needs to understand the skillsrequired to do the work in an expected way to ensure maximum performance in the most efficient and effective manner. This is in essence a “build or buy decision” i.e. develop internal capacity or source it externally.
  3. Then, and only then, should the consideration of how much to payfor that work to be done be factored into the equation i.e. the most cost-effective way to have a sustainable, consistent outcome.
  4. And lastly, what will be the context and guiding principlesfor the manner in which work will be carried out i.e. what does the company ‘stand for’; values and ethos (think ‘performance at all cost’ vs. ‘sustainable internal and external relationships’ etc.). Culture is a result of the first four items!

The integration of the above 5 Strategic People Levers is embodied in the statement “work-centric thinking” i.e. define what the organisation needs done and then marry the correct people to that work to grow an organisation exponentially.  Only then can people be said to be the heart of the business!

The above 5 points may be seen as tools and mechanism to steer an organisation. It makes sense then to look at the vital signs of managing work (and by implication people). As per the above, we can summarize this as follows:

Vital Signs Description Tools and mechanisms
1.     Work and structure Definitions of all the work required Roles (Role name and purpose) –  in the context of other work – i.e. differentiated by type of work and accountability (role grid)
Context of the work in relation to other work i.e. differentiated by type of work and accountability Role grid
Where in the organisation is this work being done Organisation Hierarchy;

Position Hierarchy;

Position with associated Role

2.     Output / Performance The outcome expected from doing this work Outputs describing the outcomes and linked to the Role;

Performance contracts with targets, weighting, measures, success criteria;

Performance Reviews

Type of accountability expected from this role Outputs that are aligned with Levels of Accountability (Levels of Work)
3.     Skills and competencies The required skills to achieve the expected outcomes in the shortest period possible (ideal; 100% fit) Competencies linked to the Role; Competency library to ensure consistency of definition and application;

Assessment tests

Skills and competencies required in the organisation to carry out its value chain Role Families
Develop/buy the required skills Skills development plan;

Skills programmes and intervention libraries linked to competencies;

Personal Development Plans;

Competency/Development Review (part of Performance review)

4.     Remuneration and reward What is the appropriate cost (pay) to get this work done Grade linked to Role; Grading methodology;

Benchmarking –min/max/mid;

Pay model(s)

Where in the organisation is this cost occurring Organisation Hierarchy; Cost Centre Hierarchy;

Position Hierarchy;

Positions and associated Role

How much of this cost is occurring Positions and associated Role;

Headcount per Position

5.     Culture, climate and values Context and guiding principles describing the manner in which work should be done.  Healthy employee relationships within the context of legislative requirements and good governance Agreed and communicated organisation values;

Survey tool – the same tool should be used to create a baseline and follow-up surveys e.g. Barrett (personal vs. current vs. desired values)

 

These levers mentioned above need to be contextualised for the different levels within an organisation (not fully addressed here). This is embodied in the Data Centric and Business Architecture Models.


These vital signs can therefore be ‘set-up’ to represent the ideal state in which the organisation wants to manage itself (work). Once the ‘set-up’ of these vital signs is agreed and in place, the organisation can then plot the actual against this desired state, by linking people to these structures and comparing them.

The “gap” between these desired and actual states then becomes the “people management strategy” as it relates to the business strategy. This gap can and should be quantified and costedto facilitate the understanding of the effectiveness and efficiency by different work categories – type; location; person etc. If enabled correctly, analysis could be done with relative ease and speed, with very little manual intervention required. These vital signs can also be used to do future and scenario planning.

The next questions will be around:

  • Who should be providing these tools and mechanisms to Line?
  • How should this be done to ensure the consistency of application and utilization by business?

This is where HR should reposition themselves. In old-economy companies, HR was merely a ‘personnel management’ function where employees obtained assistance on issues such as pay, leave, grievances, biographical information, personal and family related issues. Basically, it was a support function for people – an admin hub!

With the change in the economic landscape, organisations require a “new” kind of HR that responds rapidly to the changing needs of business and enables decision-making about people. Because “people” issues are typical seen as soft and intangible, it is important to empower these discussions with views based on measures of efficiency and effectiveness of each of these “vital signs”, as well as the integrated picture they present.  Sure, HR needs to understand the business and the market, but it crucially needs to understand, structureand enablethe work that needs to happen in the organisation.

But most HR functions do not view this as their role. Many of them are still stuck in the admin intensive and operational activities of the old economy thinking.  This is largely the result of HR being a very new disciple (±30 years old) unlike Finance with more than 300 years of formalizing and streamlining. The challenge within HR is that to date no accepted ‘industry standard’ (such as GAAP/IFRS for Finance) has been agreed to define and manage work.

Most organisations think that it is ‘their HR function’ that is not delivering; does not understand business and does not add any business value, when in fact, the same is experienced in most organisations across the world in all types of industries.

For an organisation to obtain the benefits that they expect from HR, it needs to take a holistic approach and review the way work and people management is carried-out across the enterprise. It needs to initiate the transformation of HR into the new work-centric way of thinking.   If people truly are the competitive advantage, business needs to invest time and effort in learning the language and principles of the “vital signs” to manage their business, in much the same way as most managers understand the basis of a credit, debit, balance sheet and ledger.

Technology – as enabler of the correct functional architecture, ERP and HCM software solutions are now positioned to integrate the business value chain elements to offer seamless reporting on all elements of the business. The HCM components do however require particular configuration for both work and people information to ensure integration of the transactional elements of HR i.e. the life-cycle of employee engagement as well as the value-add elements as shown below. Too much time however has been wasted (and huge money spent) without applying the correct HR functional design and therefore entrenching past views on HR not adding the value required by business as a true partner. Pretty user interfaces and reports require informed planning and decision making by business and HR. Don’t let vendor demonstrations and snappy presentations misguide the true effort required but massive ROI may be achieved. It is not an IT problem but “garbage in, garbage out”. One must factor in the review of the complete HR Operating Model – don’t technologically enable that which is just getting by! Understand the impact on current HR structures, policy and procedure, processes and transactions.

 

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