Wednesday, 17 September 2008

Strategic HCM in the Czech Republic


    I'm in Prague next week, chairing and presenting at CEE HR Solutions, so I've been researching what's been happening in HR there over the last few years (I spent quite a bit of time in the Czech Republic when I worked as an HR Director, and was based in Moscow, but haven't been back in the last 6 or 7 years).

My best reference has been AmCham's recent overview.  This suggests that although the presence of qualified, available people has been the driver for Czech economic growth over the last 15 years, there is now a lack of such people.  This is confirmed by Manpower who find that 37% of Czech employers report difficulty in filling positions (compared to just 12% in the UK and 22% in the US - and that was before the current difficulties).

So the Czech Republic and other Central & Eastern European countries are starting to experience the same talent based constraints as China and the UAE.  In fact, AmCham believes that HRM will become the primary factor in determining how successful a Czech company is.

The key elements of HRM strategies are therefore mostly going to include:

Executive development

AmCham note "Managers will need to develop highly sophisticated 'soft' skills to motivate the workforce, and developing such managers will become a key competence of good companies."

HR also needs to encourage line managers to take responsibility for their own people.  And management development is also growing in importance as a tool to develop consistent organisational cultures.

A focus on retention

AmCham: "Better career development and clear systems of rewards will need to be developed to ensure that talent, once obtained, is retained."

Although, in some ways at least, reward strategy already seems quite well developed and performance based - so, for example, PwC note that "companies in Czech Republic use performance-related salary more widely that companies in other European countries.  While in the Czech Republic the median value of the performance part is 15%, in Europe it is about 12%.  In companies with purely Czech capital, this value is higher - 27%."

HR strategy and capability

The above changes are also putting more pressure on HR teams to positively impact their businesses, and this is leading to more focus on the transformation and development of HR, including better information systems and outsourcing (currently only training and development, and occupational health and safety and heavily outsourced).

In addition, although many companies' HR strategies are already linked to organisational strategy, this can be improved, and the linkage is heavily top down.  This may need to change if HRM is going to have the impact that AmCham expects.

PwC also suggests that HR's development needs to include more measurement, and I'd agree as long as this is done in an appropriate way.  A rather dated report from Deloitte suggests HR may not know how to do this - I'd suggest my book would help.


I'm talking at the conference about the role of HR as business partner in dealing with these challenges and optimising their organisation's response.  I'll be meeting with a few HR Directors before the conference to check out my understanding of the issues, but if any readers have a view on this, please do add your comments here.