Friday, 3 July 2009

HCM strategy: Building Human Resources from the Inside Out

 

After commenting on the need to have a clear process as well as templates in developing people management strategy, I thought I should share my HCM strategy development process with you.  Although I’ve been blogging about HCM for a couple of years (yes really – it’s this blog’s 2nd anniversary this month), and of course, although I have written a (/ the definitive) book on HCM, I don’t think I’ve ever actually shared this process before.  (Although I have posted on one for developing HR 2.0 strategy which I guess is basically the same.)

The key point for me is that HCM strategy starts with organisational capability / human capital, not the business strategy.  If this strategy is going to create as well as add value to the business, then the business strategy needs to be informed by, as well as supported by the HCM strategy.  So the first question is something about what are we trying to do; what type of organisation are we, or do we want to become; or more specifically, what is it about our people, or our people management strategy, that can help us achieve competitive advantage through our people?

The HCM strategy then come from a diagnosis against this desired future state and it leads onto the development of an HCM scorecard, identifying the measures that will support the implementation of the strategy.  Note that in my view, the measures come here, not earlier on.  Strategy development should be a creative, artful process in which visions and stories are likely to have more impact than metrics and measurements.  I know I disagree with lots of people on this point.

Also disagreeing with Dave Ulrich in his new book, I also think the focus is inside-out not outside-in.  It comes from looking at what make people different within a particular organisation and what this might mean in terms of the capability, engagement etc that might be leveraged better in order to produce significantly more developed capabilities than the organisation’s competitors (or in the public and voluntary sectors, will enable significant transformation in the level of services that are provided).  Outside-in perspectives lead to added not created value strategies, and therefore less impact on the business.

Finally, the strategy needs to be implemented through a combined focus on people, the organisation, and HR and management processes.  And these often / usually need to be supported by further development of the HR and leadership / management teams.

I’m going to be posting quite a few blogs about this during July, so watch this space, or subscribe to my RSS feed in your reader at http://feeds.feedburner.com/JonIngham or via email at http://feedburner.google.com/fb/a/mailverify?uri=JonIngham.

 

 

 

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  • 3 comments:

    1. Hi Jon,

      I got to hand it to you for going against the conventional wisdom.

      I am afraid I am one of them who feels HC strategy should evolve from and allign to serve the business strategy.

      Having said so, I am just as much at loss in defending my case because my own 5 year experience in rolling HC transformational plan had failed to bring in the desired outcomes. But, in fairness to the "outside-in" model, I am a rare exception working for a monopoly.

      I see your step of diagnosing gap as part of the SWOT analysis. This is where the organisation's internal capabilities (strengths and weaknesses)are matched against the external market's opportunities and potential. After reading Blue Ocean, I have shifted the focus of "Threat" from the equation.

      I wonder if we are splitting hairs, here. Is the "approach" as important as the "allignment".

      What I would like to see in HCM, from an allignment perspective (whichever way it works),is gaining centrestage in strategic value and occupying a dynamic, value innovative, proactive, accountable role in extending beyond the business "partnership" level. How about reporting accountability for corporate governance on operational performance and leadership development.

      Are the outcome measures mentioned by Ulrich accounted for and discussed at the Board and shareholders meeting?. Do lead indicators have significance in impacting business performance. I prefer to use Balance Scorecard to articulate the integration and relationship of HCM to the business strategy.

      ReplyDelete
    2. Hi Jon,

      I got to hand it to you for going against the conventional wisdom.

      I am afraid I am one of them who feels HC strategy should evolve from and allign to serve the business strategy.

      Having said so, I am just as much at loss in defending my case because my own 5 year experience in rolling HC transformational plan had failed to bring in the desired outcomes. But, in fairness to the "outside-in" model, I am a rare exception working for a monopoly.

      I see your step of diagnosing gap as part of the SWOT analysis. This is where the organisation's internal capabilities (strengths and weaknesses)are matched against the external market's opportunities and potential. After reading Blue Ocean, I have shifted the focus of "Threat" from the equation.

      I wonder if we are splitting hairs, here. Is the "approach" as important as the "allignment".

      What I would like to see in HCM, from an allignment perspective (whichever way it works),is gaining centrestage in strategic value and occupying a dynamic, value innovative, proactive, accountable role in extending beyond the business "partnership" level. How about reporting accountability for corporate governance on operational performance and leadership development.

      Are the outcome measures mentioned by Ulrich accounted for and discussed at the Board and shareholders meeting?. Do lead indicators have significance in impacting business performance. I prefer to use Balance Scorecard to articulate the integration and relationship of HCM to the business strategy.

      ReplyDelete
    3. Hi Yuvarajah,

      I do try!

      But I'm not just being deliberately provocative - I do personally believe the inside-out route is the way to go.

      I do like your suggestions on reporting accountability though.

      And yes, I agree the Balanced Scorecard is a good fit - although the HCM value chain provides a useful extension of the L&G perspective. See:

      http://strategic-hcm.blogspot.com/2008/12/hcm-in-balanced-business-scorecard.html

      http://strategic-hcm.blogspot.com/2008/12/hcm-and-business-success.html

      ReplyDelete

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