Wednesday 8 April 2009

3 key questions for HR


    Day 3’s task is to promote day 2’s list post.  One way of doing this is by commenting on other blogs and forums, and I’ve added a short review on  Another is to add a follow-up post on this same blog.  So at the risk of completely overdoing this subject, here’s why - as I say in my Amazon review, and on the Talking HR show – I moderate my criticisms of Becker’s, Huselid’s and Beatty’s book, the Differentiated Workforce, by noting that the authors have asked some important questions that I think all HR practitioners should consider and formulate their own responses to.

These questions include:

1.   How is your company going to differentiate your people management strategy from your competitors?

As I posted previously:

“I agree that "most firms don't really have a workforce strategy" and clearly, this is a bit of a problem!  I agree that "Despite the tremendous attention in recent years to measuring the financial contribution of HR and talent, there is much less attention to getting the underlying workforce strategy right".  I've made this case several times - measures are important, but it's what you do with them that counts.

I also agree with the need to differentiate workforce (or people management) strategy.  I like the authors' point: "Just as any good business strategy involves making the right choices and the right investments, the same is true of a workforce strategy", and also Lucien Alziari's comment in the endorsements: "If you read your company's HR strategy, would you be able to tell which company it was written for?".  I'm a firm believer that you should be able to do so.”


If ‘people are our most important asset’, it’s not enough to treat this asset just like every other organisation.  You need to develop some kind of approach that differentiates you through your people (Becker’s, Huselid’s and Beatty’s Differentiated Workforce is an example of one of these approaches).



2.   What do you mean by talent?

In my view, you don’t need to follow any sort of talent management strategy to differentiate your people management strategy.  But if you do, and for it to be successful, you need to have a very clear view of what talent in your organisation means, and how if contributes to competitive advantage (Becker’s, Huselid’s and Beatty’s ‘A’ roles, based largely on Boudreau and Ramstad’s pivotal talent, are just one example of such a group).



3.   How are you going to navigate through the long value chain that culminates in improved firm performance?

The authors are correct in noting there is a long and indirect causal chain between HR activities, HC outcomes and business results.  However, I believe they reach the wrong conclusion from this realisation.  As I posted previously:

“The authors seem to disregard the opportunities for creating value by competing on intangibles by explaining that "the line line of sight between workforce strategy and strategic success is typically so indirect that figuring out how to get from here to there is difficult... There are few instances where a selection system, a performance management system, or leadership development has a direct impact on the firm's bottom line, making it hard to see how these decisions translate into strategic success."  I agree with the authors here - it is hard.  But this doesn't mean that we shouldn't try to do it.”

The right conclusions, in my opinion, are that:

  • HR needs to concentrate on human capital outcomes rather than just HR activities
  • These outcomes should be as important to HR as are business results, since these are not directly attributable to HR.
  • Agreeing with Becker, Huselid and Beatty, strategy maps and scorecards are the best way to understand the relationships between elements in the value chain.





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  1. Definitely in agreement on many points. The key piece in the value chain is the understanding that HR impacts business outcomes in one - and only one - way... through people and their performance. There are, of course, many levers HR can pull in this equation, but if you're not measuring human capital and perforamnce effectively, you simply can't understand how HR affects the business.

  2. Thanks Mike. Exactly my point. And it sounds simple, but I still come across a lot of organisations that try to link HR activities and business results without the intermediary step.


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