Sunday, 2 December 2007

The value triangle / creating value

The model I use to describe the potential role of people management is called the Value Triangle. And it suggests that HR can provide value to the business in three different ways:

At the base of the triangle, HR provides value for money when it increases the efficiency of HR activities. This may not improve customer satisfaction or help deliver business results, but it is still useful value to have. An example would be improving a recruitment process by automating relationships between suppliers, HR and line management to reduce the time to fill vacant positions.

The next level is adding value. This is about helping the business to implement its strategies by translating business objectives into people management activities. Another recruitment example at this level might be helping a business achieve its growth objectives by launching a campaign to fill a number of new positions.

And then creating value. Here, HR generates value for the business through its own activity, rather than by how its activities support the business as a whole. So, adding value at level 2 provides an organisation with the ability to implement business objectives. Creating value at level 3 develops new capability that enables the organisation to set different or more stretching business goals. A recruitment example would be developing an employer brand to position an organisation as an employer of choice, and by doing so, significantly increasing its potential to grow.

Creating, rather than simply, adding value through people informs the organisation’s business objectives, it doesn’t just help the organisation to meet them.
So the importance of people is much greater than thinking about their role purely in terms of implementation would suggest.