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 or via email at




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