Frank M. Horwitz is Professor of Global HRM specialising in emerging markets. He is Director of the Cranfield School of Management’s Executive MSc Programme in International Human Resource Management. He has lived and worked on four continents.
Human Resource Readiness - what is it?
How ready are our people to create customer value in a unique and differentiating way that is very difficult for our competitors to copy? How agile and flexible are our HR practices and processes in helping the organisation outcompete its competitors?
Robert Kaplan and David Norton who pioneered the balanced scorecard also have researched the proposition of measuring the ‘strategic readiness’ of intangible assets in such a way as to realise strategic advantage. Less tangible or intangible factors like organisational culture, teamwork, and employee engagement are key to aligning people with strategic goals and key performance indicators to optimise ‘people readiness’ to compete. The 2014 Deloitte Global Human Capital Trends survey also refers to HR readiness and HR capability gaps.
Where do we start?
The starting point for strategic readiness is externally – with the customer; and aligning the organisation, its people, systems and process to delivering a unique customer experience at a competitive price. As Peter Drucker once said the core purpose of business is to attract and retain customers. A key facet of strategic HR is how does it help to do this? One answer is strategic differentiation by creating and retaining a talent pool that competitors simply can’t compete with.
This unique people value proposition and employer brand makes it both different and more competitive than other firms in its industry. How the organisation attracts, motivates, and retains its talent – especially the best talent in the core competence of its business.
Aligning market driven HR initiatives
Though internal targets might be attained, if the culture is not customer driven, external competitiveness won’t occur. To readily compete in the market place having an engaged flexible workforce willing to cooperate in going the extra mile, is vital. So aligning what we do internally to ensure that a customer will buy and keep buying our products or services is therefore key.
Having customer focussed people in intrinsically rewarding work is in part a function of customer demand for what firms do. There’s often an over-emphasis on procedure and rule adherence in a formalised employment relationship. This is a barrier to spontaneity, innovation and creativity and authentic employee engagement.
Here are four key features of ‘HR readiness’ to achieve this external focus:
- Customer alignment – deploying management practices that work best to attract, motivate and retain talent to achieve excellent customer service.
- Senior leadership and talent management alignment – HR practices aimed at identifying and developing potential leaders.
- Strategic alignment - explicitly aligning performance management and reward systems with strategic priorities and core values.
- Culture alignment – inclusive leadership and change management practices which engage people in defining and implementing the organisation’s priorities.
These are the five key ‘HR ‘readiness’ challenges for practitioners:
- Have a fundamental knowledge of your business – financial, strategic and technological capability
- Ensure your ‘organisational readiness’ with value creating state-of-the- art HR practices
- Be capable of going beyond change management to change leadership – creating a new culture
- Have problem solving capability and political skills
- Be willing to embrace the challenges of individual, team and organisational transformation
Innovation and the catch-up dilemma
Innovative HR people constantly investigate and adapt leading practices that achieve competitive advantage. They work on how to reinvent and apply these in their own context. Like Cisco systems, they look for new and creative ways to attract, motivate, and retain people. Be good at benchmarking – it helps to catch up with what the leaders are doing. But HR readiness to anticipate change is essential. As soon as one has caught up, the market leaders are already in a new innovation cycle. That’s why HR innovation and strategic differentiation of value creating talent is so vital.
Develop a unique global and local talent value proposition – just as companies have a product brand – the real strategic challenge is to create an employer brand where prospective recruits will perceive the organisation as an employer of choice. It is seen to be offering something different that can’t easily be replicated by competitors.
Knowledge and talent readiness
Knowledge management is far more than the use of technology – it’s about finding ways to attract, deploy and retain talent. The era of “re” words is still with us - restructuring, re-engineering, re-organising, and redeployment and unfortunately, retrenchments. HR must be ready to proactively ensure that the organisation doesn’t lose the key talent it needs to retain. High value talent is globally marketable and mobile. There are ‘push’ and pull’ factors in the global talent market - a key factor is the increased portability of skills in global demand. There is a price for talent and people will follow demand and price.
Global and local talent abilities
HR policies and practices for deploying expatriate staff are vital; for example how to select, culturally integrate, remunerate and organisationally integrate expatriate employees into the host country, and then reintegrate them back into the home country and organisation.
From my experience I can certainly recommend the benefits of work opportunities and international assignments for HR practitioners themselves. These are more readily available in global markets today. This first-hand experience of working and living in different cultures in different business contexts is invaluable for enhancing HR practitioner readiness to effectively handle both our local and global talent management challenges. These include developing criteria and effective practices for identifying, recruiting and deploying professional and managerial expatriate employees. There is a range of new HR issues around international HRM that more organisations have to work with today.
Take international remuneration strategy for example, with much variation in remuneration systems and policies, tax regimes and employee relations issues in emerging markets like China, India, Brazil and African countries. Strategic HRD questions like does one use an expatriate assignment policy or rather develop local talent for key positions? If there’s a mixed model what is the basis for this? By developing local expertise - Johnson and Johnson is regarded as a most progressive company in emerging markets. New HR practices or headquarters ones will have to be adapted and re-contexualised.
Ultimately it's about creating value through people...
To be ‘HR ready’ for real strategy engagement there are three key questions to be answered:
- What is HR’s unique value proposition - going beyond so-called best practice to building strategic capability and organisational readiness for local and global markets and deploying management practices which mobilise people for high performance and service excellence?
- What capabilities do we need to develop to fully understand the business and its changing context ? Do we have the know-how to align people, processes and practices with the organisation’s strategy and core objectives?.
- How do we become ‘HR ready’ to be business people with HR expertise?
And a fourth set of ‘strategic readiness’ questions:
- What is our organisation’s strategic intent?
- What should the key value creating HR levers be?
- What deliverables and performance outcomes are needed?
- What metrics to use to assess performance improvement and build value?
Business schools should offer strategic HRM programmes with a strong emphasis on international dimensions of HRM, global talent management and HR analytics. Developing HR leaders with business acumen, know-how and board level readiness is vital. The profession needs to have people with purpose and passion - not just visionaries but missionaries - it is the missionaries who make things happen!
Kaplan, R.S & Norton, D.P. (2004). ‘Measuring the strategic readiness of intangible assets’. Harvard Business Review, (February), pp. 243-260.