HR practitioners sometimes report being conflicted about whether to align with the business to be more strategic or to better support their people. However, it is actually much more useful to see these poles as a paradox rather than a dilemma.
That is, we need to do both – to focus on the business and support its people. And it is only when we do both that we act in a truly strategic way.
The problem with solely focusing on the business is that the rest of the business already does this, and when HR takes this approach we offer no additional or unique value.
HR’s unique focus
Our unique focus should be on the people working for the business. When we address ourselves to these people, we offer something new in an area that is now the centre of competitive success, yet remains sorely missing in too many businesses.
This is not about returning to the old days of personnel. Instead, this is about understanding the potential inherent in our people, and communicating with the rest of the business what new value we can provide through helping people take advantage of their own potential.
For example, if we believe that engagement is the main aspect of people’s attention that can be enhanced, we should talk to our business colleagues about the level of engagement we believe can be achieved, and ask about the business benefits this would provide.
If our colleagues agree these benefits will be useful, we can then identify the best way to provide the people attributes that are required.
The consequence of people being the most important asset is that we should not just treat this asset like any other resource in the business.
HR creating value
I call this approach ‘creating value’ – putting people at the centre of the business and creating people-based business strategy.
The need for doing this is not new. In fact, all we are doing here is acting on the commonly repeated phrase, ‘people are our most important asset’.
The difference is understanding that this phrase has to have consequences if it is to have any real meaning at all. And the consequence of people being the most important asset is that we should not just treat this asset like any other resource in the business. Instead, we should build the business around this asset.
The growing need for creating value
When I first started talking and writing about creating value, around twenty years ago, I found it a difficult point to explain. These days, I frequently find people catch on to the idea quickly.
Perhaps I have just got better at explaining it? Or perhaps, more importantly, it has become an increasingly common way of doing business and HR. Quite often, when I speak about creating value, someone will refer to what they are doing, and ask whether this is what I mean. And usually it is.
HR needs to be able to not only talk the language of business, but also get the business speaking the language of people.
Business requirements for creating value
I also ran a workshop a few years back to help develop a new people strategy. The CEO joined us to explain what the business needed from HR to support the existing business strategy. However, he also noted that if he added up all the separate strategic business activities this would only provide about half of the increase in revenue and profit that was required.
The CEO then turned to HR and said that he hoped the workshop and therefore the new people strategy could identify what HR could do to provide the other half. This was the first time I have seen a business leader basically come to HR and say, come on, create some value for me.
So creating value is not just an idea some HR functions have, it is increasingly something businesses require from HR.
Talking the language of people
Focusing on the business provides the table stakes, it gets us into the game. But in order to make a difference we need to focus on people and the additional value people can provide.
To do this, HR needs to be able to not only talk the language of business, but also get the business speaking the language of people.
Furthermore, while we also need to understand the business, we ideally require more of our business colleagues to understand key insights from psychology, sociology, anthropology, behavioural economics, cognitive neuroscience and other people-related arts and sciences.
We need to be deeply interested in how we can help people become more motivated, how they can be helped to learn and how we can ensure their propensity to collaborate is improved.
It is from these people-related insights that the basis for creating value lies.
Replies (4)
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This is highly insightful article Jon, and a great read for all. We totally agree that people should play into any business strategy. At ENGAGE we break this down into one of two ways:
1. People are themselves a strategic pillar of business: in many businesses, talent is a vital part of the ability to create shareholder value. This applies across almost any industry, whether people contribute directly to the service experienced by customers (e.g. in a retail or service environment like hospitality) or to innovation (such as in a manufacturing or engineering environment).
2. People add value to other strategic pillars: Where talent is not a strategic pillar explicitly, HR needs to ask one simple question: how can people add value to the other strategic pillars for the business? For example, how can attracting new talent help to drive innovation in the firm? How can engaging people with customer needs help to improve service delivery? How can aligning employees with the business strategy help to drive growth?
All of our own data suggests that, where HR functions take this approach, ensuring they align their activities with adding strategic value, people activities can have an additive impact on KPIs (retaining talent, raising NPI ratings, enhancing customer loyalty and driving revenue growth).
We’d add a big proviso here though: for HR to be part of a fully integrated business strategy, the tools used to make strategic business decisions (namely data) must also be fully integrated. As HR becomes increasingly data led, we can only reap maximum value if we’re able to look at data and insight holistically.
Thanks for opening up a great discussion!
Hi Sarah, thanks for your support, but no, that's not what I mean. Both of your points are what I call Adding Value. In point 1, "people contribute directly to the service" indicates the business really thinks it's the service which is important, not the people. In point 2, "how can... help..." again puts people in a secondary, supporting role. They're both good points, but they're not Creating Value. Stick with the rest of the series for more explanation (next piece on Friday).
Thanks for your response Jon. I think the differentiation between ADDING value and CREATING value is an important one. But it still concerns me that as long as HR is being asked to develop a people strategy with reference to a wider business strategy, rather than playing a central role in developing THE strategy to support business goals, the value of people will always be considered additive rather than fundamental.
Thanks Sarah. It's a build. Adding value ("is being asked") comes first - what do we do to help the business do what it needs to do. Then it's about looking for additional creating value opportunities on top. These come from understanding the people, in the context of the business, but mainly about the people. But my experience is that it's the creating value part that both provides the difference that makes the difference, and gets people in the rest of the business sitting up and taking notice of HR.