Small to medium organisations which are growing fast often suffer from an inability to manage the employee lifecycle. Their issue is not so much that they do not have processes and procedures in place. It is usually that their management of the employee lifecycle is reactive and tactical, rather than proactive and strategic.
Sometimes this because they do not have a strategic Human Resources (HR) function, instead relying on willing people with little HR experience to initiate and complete rudimentary HR processes. Sometimes it is because the HR strategy is created in isolation of the organisational strategy. (Sometimes there is no organisational strategy, but that is another story).
Mapping the Organisational Strategy to the Human Resources Strategy
The key step in developing a HR strategy that supports the organisational strategy is to map the organisational strategy to the HR processes. I find it easiest to map it to the processes that support the employee lifecycle (Figure 1).
Consider an organisation that has a goal of increasing net income after tax from $5 to $10M over a period of three years.
Imagine our organisation has for many years had a strong technical and research and development arm, which concentrated on building new products which are technically excellent, but may not have totally met customer’s needs. Whilst the organisation was the only serious provider of these products, the inability to meet full customer needs did not have a high impact. However, in the last few years, competitors have surfaced with slightly technically inferior products that do, however, better meet customer’s non-technical needs at a cheaper price.
Our fictional organisation reviewed their business and that of the competition and belatedly decided that they should turn their formidable technical advantage to satisfying customer needs and concentrating on operational excellence. They also recognised that they needed different competencies from those they have had to date and needed to focus on profitable segments with high growth.
Imagine, therefore, that their four strategic platforms are:
To map the organisation’s employee lifecycle to the organisational strategy, we create a table of the lifecycle steps in rows against the strategic platforms in columns (Table 1). We analyse the current capability of the organisation against what is required to deliver each strategic platform for the organisation. A simple rating system such as Harvey Balls, round ideograms used for visual communication of qualitative information, is preferred over quanitative numerical scores.
In our example in the table above, the organisation structure puts technical, sales and R&D at a higher level in the organisation than marketing. To effectively build customer led value generation, marketing must have more say and needs to grow in size and in capability. So we rate “Design organisation structure” as half meeting our requirements.
We rate “Recruit” even lower for both “Customer-led Value Generation” and “Operational Excellence” as our fictional organisation does not have a strong history of recruiting marketing or operational people (operational excellence).
Similarly, if we had a good exit process we rate it as 100% (completely blacked out circle). If, on the other hand, we had no means of analysing turnover, we rate it as zero (blank circle) across all strategic platforms and had better design something, as a change of this magnitude may well drive voluntary exits.
We continue on with our ratings until we complete the table (see Table 1 for a completed example).
Creating the strategy
A simple method for creating a strategy from this analysis is to use negative brainstorming. In negative brainstorming, a problem is defined and then instead of brainstorming for possible solutions, the team brainstorms for everything that could make the problem worse. The output from this brainstorm is then taken and explored to see if any new ideas for a solution are suggested by thinking about how to eliminate the things which make the problem worse.
For example, in our fictional organisation, we know that our salaries do not reflect broad competence and attitude, but more a combination of longevity and competence within a narrower technical mindset. We could make things worse obviously by not only changing our job evaluation methods to put more emphasis on a broader range of capabilities, but also by not communicating the changed emphasis to our existing employees, not training our managers in what this means for the employees and how to help their staff cope with the change. The activities required in this example are quite clear:
- Revise the job evaluation weightings to reflect more value to broader competencies
- Communicate the change in emphasis to employees
- Train mangers in what the changes mean
- Train managers to assist employees cope with the change
They will form part of a HR strategy to attract new people and incentivise existing employees to seek to develop the competence we need to execute the organisational strategy.
The benefits of aligning a HR strategy with the organisational strategy are manifold. They include, but are not limited to:
People are not usually frightened by change for any long period of time. What causes them most angst is ambiguity. When HR strategy elements such as salary, incentives and personal development do not match with the vision, mission and formally stated values of the organisation, people are never sure whether the way they are managed or the stated aims of the company take priority. When they become sure and that surety reflects continued incongruence, a large minority of them leave. The corollary of people staying when the HR strategy is congruent with the organisational strategy is also true.
Increased retention rates result in reduced costs of recruitment, training and reduced periods of productivity whilst people learn their new roles. Costs are also reduced by way of better decision making as individuals with greater competency matched to the decisions that need to be made to implement the strategy are hired and promoted.
Alignment of the HR strategy with the organisation strategy ensures that negative risks to reputation are minimised and positive risks are maximised. People with the right competency, the right incentives, the right leadership and the right measures used for the management of performance are more likely to take accountability for their results than those where the HR strategy is developed in isolation of the organisational strategy.