Aligning HR strategy with business strategy

Sounds like a plan doesn't it? Trouble is, in a lot of companies HR has its plans and they don't dovetail with the strategic plan - well not much of it. Indeed, a study by the Industrial Relations Service (IRS) says that ˜at first line level of management, where good HR is paramount, the majority of managers do not have goals aligned to HR strategy.' IRS' managing editor, Mark Crail commented, ˜one of the most bizarre findings of the survey was that most firms had separate HR and organisational strategies, but bringing these together is a huge task and there is a practical limit on how long you can keep upsetting the work people do.' He added, ˜Overall, the number of firms actively engaged with human capital management was very low. We have a long way to go.'

On the basis of that evidence, organisations most certainly have. But it is vital if we are to engage with these new-age employees that management (and that must include HR) aligns its plans and actions throughout the business. The danger here (and one of the permanent criticisms of a lot of HR activity) is that it isn't focused on the practical needs of the business. HR must support the business strategy with practical action. In this case action translates into ensuring top management understand the need to address these lifestyle employees in the right way, and setting up policies and procedures to recruit and retain them.

There simply cannot be an HR strategy that is different from that of the business strategy. It makes absolutely no sense at all. HR's role is as a supporting member of the organisational cast. Its job is to help other managers across the organisation understand the importance of developing skills and understanding of the life-work equation that is the bedrock of most employees' behaviours and beliefs. As the life-work champion, they have a duty to speak for the employees, to reveal clearly what the human resources of the business expect.

Getting the succession planning and recruitment things right

This is closely linked to the alignment of business and HR strategy. HR cannot fulfil its mission to support the other functions with the required human resources if it doesn't know which people are required. Therefore, it is vital that HR's people-procurement strategy is part of the overall business strategy. Senior managers I talked to in the last 12 months say that this is still an area where companies stall in their ability to perform effectively. ˜In recession , no one worries about keeping the pipeline for new people pumping. Then things get better and we scramble to hire people again.' However, HR has a duty to know what the long- term strategy is in terms of future manpower requirements, so they can at least be ready to spring into action. Equally, within the firm, high potentials need to be identified ready for redeployment.

Getting the outsourcing thing right

If HR - or large parts of it - are to concentrate of the real, emerging people issues and are going to be dedicated to building an engagement culture, then they don't need to be involved with mounds of administrative detail. Having said that, a great deal of what HR can outsource cannot just be pushed out of the door and forgotten. It needs professional attention and management and someone on staff to ensure that things happen as they should. There is little point in outsourcing services, in order to free up time to devote to an employee engagement strategy, when your chosen outsourcer is destroying your employees' commitment through their actions. While I don't want to turn this into an outsourcing advice centre , I have detailed some advice on good practice in outsourcing in the box on p142,

Getting the reward strategy right

Today, reward is more than just salary and bonus, especially for the individuals who make up the vast majority of our knowledge workers. Personal and professional development are seen by our new-age lifestyle employee as a critical part of their reward package. Assessments (see below) to aid them in refocusing their personal and professional lives are also a key element of the reward process. Coaching and mentoring (again see below) are also part of the non-cash reward process. Additionally, as we have already mentioned in a previous chapter, time off, sabbaticals and the opportunity for new experiences are all up there with traditional perks. But again, this has to be offered on the individual level to meet each employee's unique expectations and demands, and with the understanding that these expectations and demands will change with time. With our employees living their continuously changing lifestyle, we who seek to employ them need to continue to assess those needs.

I think these ˜time off' demands are going to be one of the most interesting to see companies deal with. Whenever I meet people to discuss perks this comes up, but it is the strangest phenomenon , coming as it does when there seems to be a huge trend to move jobs to other countries where labour costs less. It seems that the disconnects in our society are very much with us. The old managers - probably more used to a six-day, sixty- hour week than four days' work and three days off - just don't get this stuff. And yet I am hearing this from the new-age workers in the US, in the UK and right across Europe. As I said in the opening chapter, people seem to be trying to un-complicate their lives and find simpler ways of life-work balance. So when you come to assess rewards, think carefully about what constitutes a reward today. Knowledge workers in particular don't see nine to five as a way to fulfil their lives. They'll work for us, but they also want to ˜play' and their play is very different from previous generations.

As to ˜real' rewards, they are set to do two, seemingly opposite , things. Get simpler and more complex at the same time. What I mean by that is that most companies are looking to create common compensation platforms where - except for the impact of local taxation and possibly very weird cost-of-living hikes - everyone is rewarded in much the same fashion. That's the simple part. The other part is that everyone wants to be able to access what they want, when they want it, at a time that suits their lifestyle. We can readily outsource a lot of this, but we have to keep hold internally of the individual assessment process.

Finally, several of my work colleagues, who know a lot more about compensation than I do, have suggested that long-term compensation (that's the stuff that makes you long-term rich) is set to go underground . By that I mean that experts I talk to say that a company's long- term compensation programme for its top executives (say top 250 for example), will be viewed as a competitive advantage and senior managers will have to sign-up never to disclose how it works. It will do two things. Make top performers seriously rich and lock them into the organisation. But few people will get to know the ingredients . This is a very interesting idea, because as most companies cut final salary pensions and the like, it is likely to lead to an ˜us' and ˜them' compensation model. Fine if you are invited into the gilded cage yourself, of course.

Getting the assessment thing right

Assessment (together with the twins coaching and mentoring, of which more later) has been a 2004 management fad. The supposed need to assess people's needs is a great idea if it is done correctly. But although HR's responsibility, it is important to do some assessment before you begin the assessment, so to speak. If you are operating in a climate where there is fear and resentment, guard against making it worse . Assessment is intended as the first building block in creating training, development, coaching and mentoring plans. As such it needs careful handling.

One global company boldly introduced an assessment process that went badly wrong. Employees assumed the assessment process was a preparation for a major redundancy programme. Such was the level of demotivation and fear that the unions were called in and the company had to close the whole process down.

At others, where it has been introduced with the right level of preassessment communication and explanation, it has worked well. Companies are even using the process as part of the non-cash reward programme. By giving people in-depth assessment they are not only able to get a good picture of their professional development needs but have been able to extend it to cover their employees' personal lives as well. This plays particularly well with our new-age life-work balance group , who are very open to the idea of knowing your strengths, weaknesses and opportunities for further development in both business and private lives.

Assessment is the perfect example of how to engage positively with our lifestyle-driven employees. They want to know more about themselves and they want to be able to learn and grow and challenge themselves . Any organisation that isn't doing professional and personal assessment of its people as part of an ongoing programme is missing out on a huge opportunity to engage them more fully and thus earn their respect and commitment.

Getting the coaching (and mentoring) thing right

As I have already said, coaching (and mentoring) are not perks. If you want to engage with lifestyle-driven employees (and you don't have much choice) this is not an option but an intrinsic component of what they consider their reward package. As they would say, coaching rocks. They need and expect to improve, both in professional and in personal ways. Due to the recession, and consequent lack of finance, we have denied this benefit to employees for quite some time, so we had better get good at it providing it now. When I talk to people about this, I find that it is difficult to pin down any kind of norms in the way companies approach coaching and mentoring. Suffice to say, you must know, pretty well, what people expect in your business. Let them get the best that you can afford. Do it soon and you might just begin to halt the exodus of talent.

However, before you leap into the great coaching and mentoring action plan, there are some things to consider very carefully.

Check out the coaches

Who is going to be a coach? There are a lot of people around who are, frankly, just not good enough. Check out your coaches as you would any other employee or supplier. Where have they worked; who recommends them; what are their results?

And make sure the service is on your terms not theirs. Remember who is paying the bill here. It is for your employees you are doing this.

On the other hand, when you are hiring externally, please don't be too parsimonious - it isn't a good idea. If you try and negotiate fees downwards too much, you'll get a coach who either doesn't care enough or feels resentful. And it will manifest itself to the people he or she is there to work with.

Here's a negative for you: if you get it wrong the response will be ˜They love us so much, they hired this guy to coach us?' Not the reaction you want - ever.

It is exactly the same with mentors. Although most of them are drawn from your own staff, you still need to know how good they are. A great mentoring relationship can really build huge opportunities inside organisations. And, as I said earlier, help everyone to learn a lot more about the business. The other thing it can do is free up ageing top managers - who may be blocking the way for others - to play a very real role in your business.

Getting the golden hand-cuffs on star talent

This isn't going to be an optional task either. HR will have to assume responsibility for developing new ways to lock in the talent you need to make the business succeed. Obviously, line managers and top managers will help in identifying and sourcing these people. But the creation and execution of programmes to chain-down business talent are going to be the responsibility of HR. Long-term incentives will obviously dominate, with those based on personal or organisational performance expected to be the strategy of choice. However, increasingly in world-class firms, rewarding HR professionals for their ability to ˜hold' key players is increasing.

Measure !, Measure!, Measure!

Quantifying, measuring, having a real set of numbers to explain your achievements in HR are going to become common practice. Don't ever say, ˜we're too small for this stuff.' You're not. At least not in the newage economy. As HR consultants , Towers Perrin, explain, ˜The HR function has been among the slowest to quantify its impact on an organisation, in part because much of its work relating to employee performance and engagement has been impossible to measure.' They add, ˜While HR has long looked at things like turnover , headcount, recruitment costs and training costs, the notion of determining a true return on investment in people has remained elusive .'

Towers Perrin go on to suggest that, ˜This is changing fast. Partly because of cost pressures and management's need to better understand the relative value of investments in various employee programmes.' And so emerging new tools, ˜now allow employers to quantify the relationship between employee and customer behaviours and financial outcomes and drive behaviours in ways that lead directly to the right outcomes .'

Certainly in the future demographic and staffing models will help to identify the changing profiles of workforces. What I hope they also do, is begin to identify the changing lifestyle/workstyle needs and expectations of every individual you employ. Without that, you will never anticipate what is going to happen next . And CEOs do not like surprises !

Norman Walker, until recently the global head of HR at pharmaceutical giant Novartis, says that, ˜Of course we need to be able to measure human resource outcomes. If HR processes aren't business processes, then we can never be able to really take part in the strategic debate.' He adds, ˜Our biggest issue as professional HR people is to make sure that the technology can give us fact-based credibility.' He ends, ˜ Fact-based credibility is the language of business. Right now only finance has this, we need to have it too.'

Most definitely. Being able to put a price on everyone's head, in terms of wants, needs, expectations and how much they cost to employ; as well as how much they'll cost you if they leave, is the only way to go. If you cannot quantify the impact of your people, you won't be able to compete with the rest of the business.

Just a thought

A lot of these initiatives are not only difficult to kick-off, they are equally challenging to implement and sustain. Depending where you and your colleagues are in the corporate food chain, it could well pay to have a sponsor from top management lead the fight. My view - and the view of many savvy professionals - is, ˜Don't try and go it alone', use a top management champion to make it work, and, if necessary, let them take the credit. You'll get your reward later in a smooth operating, recruitment, retention and reward system.