You Just Don’t Get Any Respect!

Client“When we asked him how he was

involving his HR executive in grappling with this problem, he

dismissed the question with a wave of his hand and said, “My head of

HR is very talented. But this is business, not HR.”

Brian Becker, Mark Huselid, and Dave Ulrich, “The HR Scorecard-LinkingPEOPLE, STRATEGY, and PERFORMANCE, Harvard Business

School Press, 2001

Resulting From:

• Long-reaching global competition• Growing market opportunities

outside of the U.S.• Maturing U.S. markets

CEOs are beginning to recognizethe strategic importance of

Human Resource Management

The New ParadigmThe New Paradigm

How Does HR Become a Strategic Partner?

Three Important Factors

1. Understanding Four Key Elements

2. Creating the Competitive Edge3. How HR Demonstrates Value

1.Understanding the Mind-Set of the CEO

2.Understanding the Strategic Thrust of the

Company

3.Realistic View of Company’s Ability to Implement And Execute Strategy

4. CEOs Must be able to Measure the Value

Contribution of HR

• CEOs understand bottom-line financial metrics--Don’t understanding that a successful workforce is a leading indicator of financial performance.

• CEOs understand the cost of human capital—Struggle to understand it as critical key to competitive advantage.

1.Understanding the Mind-Set of the CEO

• CEOs see HR as important, but for the wrong reasons—Can’t see how HR influences the success of the workforce.

1. Understanding the Mind-Set of the CEO

2. Understanding the Strategic Thrust

Four Key Elements to Four Key Elements to Consider Consider

1.Customer Centric2.Low Cost Provider3.Product Driven

3. Realistic View of Company’s Ability

to Implement And Execute Strategy

Four Key Elements to Four Key Elements to ConsiderConsider

Internal Realities•Strategic Thrust•Organizational. Architecture•Workforce competencies•Right People•Leadership capabilities

Workforce Success

External Realities•Industry Changes•Business Environment•Customer Base•Competitive Environment

StrategyImplementation

& Execution

IterationRepeated iteration produces

tested, actionable model

4. CEOs Must be able to Measure Contribution by HR

Four Key Elements to ConsiderFour Key Elements to Consider

Creating the Competitive EdgeThat No Competitor can Duplicate

“While leaders have far more day-to-day influence on

a workforce than does HR, HR’s primary contribution

is helping line managers to see the “big picture” and

differentiating among present and potential employees. Therefore, both leadership and HR

must be responsible for the delivery of the workforce necessary to successfully execute the firm’s

strategy.”

Adopted from M. Huselid, B. Becker, and R. Beatty, THE WORKFORCE SCORECARD, HBSP 2005

Focus Must be on the Value Creating Employees

Four Key Elements to ConsiderFour Key Elements to Consider

4. CEOs Must be able to Measure Contribution by HR

Having the Right People

In the Right Positions

Four Key Elements to ConsiderFour Key Elements to Consider

•Sears•Nordstrom’s

•Southwest Airlines

How HR Demonstrates Value?

“Developing a world-class performance measurement system hinges on a clear understanding of the firm’s competitive

strategy and operational goals—and a definitive statement of the employee competencies and behaviors required to achieve the

firm’s objectives”

“Measurement systems—for the firm as a whole or for the HRfunction—can create value only when they are carefully matchedwith the firm’s unique competitive strategy and operational goals.”

Adapted from The HR Scorecard-Brian Becker, Mark Huselid, and Dave Ulrich 2001

Questions to Ask Yourself Which strategic objectives are critical?

What are the performance drivers for each objective? How would we measure progress toward these goals?

What are the barriers to the achievement of each objective? How would employees need to behave to ensure that the

company achieves these goals? Is the HR function providing the company with the employee

competencies and behaviors necessary to achieve these objectives?

If not, what needs to change?

CompetenciesNeeded

ServicePartnership

Ongoing AssessmentOf Targeted Employees

Targeted Training& Development

Increase ShareholderValue

RevenueFrom Customers

Identify SkillGaps

Mind-set & Culture?1. Does the workforce understand and embrace

company strategy?2. Do we have a supporting culture for execution?

Behavior?1. Does the leadership and workforce consistently behave

in order to achieve company goals?2. Have the value-creating positions been identified?

Workforce Competencies?1. Does the workforce have the necessary skills to execute?

Success?1. Has the workforce accomplished the critical objectives

of the business?

Performance Measurement Examples Depth of workforce understanding of business strategy Depth of workforce understanding of linkage of incentive

measures to business measures Extent to which values are clear and widely understood Extent of understanding of the firm’s competitive strategy

and operational goals Extent to which culture allows the firm to attract, develop,

and retain a diverse array of “value-creating” groups Extent to which employees are seen primarily by senior

management as a cost to be minimized versus a source of value creation

1) It is absolutely imperative to understand the

Strategic Thrust of the Business and align HR strategy to the company objectives

2) You must be brutally realistic about HR and the company’s ability to implement strategy

3) It is a teamwork effort between leadership, the

workforce and HR—you can’t do it alone!

4)HR and the workforce’s contribution must be measurable

Thank You and I Wish You Great Success

Dave Light

Performance Measurement Examples Gap between current and needed capabilities

in “value-creating positions Internal talent bench strength; availability

ratio per vacancy Percent of employees assessed to be “highly

capable” Percent of employees understanding that

competency growth is essential for job security

Percent retention of core competency workforces

Performance Measurement Examples Consistency and clarity of messages from top

management and for HR Effectiveness in dealing with poor performers Knowledge sharing of best practices Percent of employees who met goals for

customer satisfaction Percent of employees who report they believe

messages delivered through formal channels Percent of positions filled on or before agreed-

upon date Percent of workforce that is promotable Percentage retention of core competency

workforces

Performance Measurement Examples Gap between current and needed capabilities in

“value-creating positions Internal talent bench strength; availability ratio

per vacancy Percent of employees assessed to be “highly

capable” Percent of employees understanding that

competency growth is essential for job security Percent of newly promoted employees performing

satisfactorily after six months Percent retention of core competency workforces

B. Becker, M. Huselid, and D. Ulrich, THE HR SCORECARD-Linking PEOPLE, STRATEGY, and PERFORMANCE (Harvard Business School Press, 2001)

D. Wade, R. Recardo, Corporate Performance Management (Butterworth-Heinemann, 2001)

M. Huselid, B. Becker, and R. Beatty, THE WORKFORCE SCORECARD (Harvard Business School Press, 2005)

P. Niven, Balance Scorecard Diagnostics (John Wiley & Sons, 2005)

R. Kaplan and D. Norton, Strategy MAPS-Converting Intangible Assets into Tangible Outcomes (Harvard Business School Press, 2004)