Increasing The Strategic Value Of Human Resources
By Alan C. Lindsay, M.A.
Alan Lindsay is the President and CEO of PLS Consulting. Alanís 30+ years in human capital management has helped clients throughout North America acquire, assess, develop, and retain critical talent. Following are some of his lessons learned while leading talent management initiatives.
Whether you’re an HR professional in a company of 100 employees or 5,000, recent studies show that three critical challenges will likely impact your ability to stay strategically relevant in your organization:
- Identifying and hiring the best skilled workers for each of your most valuable positions.
- Retaining valued employees in key positions throughout your organization.
- Retaining critical knowledge associated with your legacy business and ensuring the skills and knowledge are available to addresses anticipated changes within the business.
As an organization that specializes in enhancing the internal processes of HR, PLS Consulting has seen HR’s value increase dramatically by developing an approach that prioritizes its efforts – devoting a disproportionate amount of effort to those jobs that are most key to business performance. Of course, this assumes that not all jobs are equally critical to the business, and that some positions - while definitely needed - are not critical.
The goal is to create a narrowed focus for HR – to ensure that HR’s deliverables target the positions that are key to the core competencies of the business both today and as forecasted in the near future. Once identified, HR can focus its attention on creating systems to attract, fill, and retain specific positions with the best candidates in the industry.
The PLS approach aligns a very focused and somewhat different workforce analysis, a powerful employee engagement program aimed at retaining the best workers, and a knowledge management system to achieve the organization’s strategic business objectives. It’s a targeted approach to attracting the right people, in the right jobs, that add the most value to maximizing organizational performance.
Placing the highest-skilled professionals in the most critical position will help your organization more than just filling all positions with the “best available” candidate. That’s why the war for talent is competitive regardless of whether you are in private industry or the government sector.
Narrowing The Focus Of HR
One of the most common comments we hear from HR is, “there just isn’t enough time.” The steps that follow are aimed at increasing HR's value proposition to your department managers and decreasing time spent on addressing positions that are not as critical to the organization’s success.
So let’s start with the center of the universe for every business – the strategic plan. It is usually a fair assumption that the business has a defined set of strategic objectives for the immediate two to five years. In private industry these objectives target such areas as releasing new products or services, growing market share, increasing return-on-investments of all types, and usually include increasing profitability. In government settings these objectives often include implementing additional needed services, wringing out duplicative work, and improving operational efficiencies.
It can also be assumed that the business unit managers have aligned their performance objectives to those of the business. (If this isn’t true, then you may have even more work to do.) The challenge for HR is to continue to provide needed services and contribute to organizational strategy and department or business unit goals.
Link the Workforce Analysis to Strategy
The value of a strong workforce analysis is identifying – across business units, departments, and the organization as a whole – the jobs in which replacements or additions are likely to be needed, forecasted changes to jobs requirements, by when, and where these “skilled workers” will come from.
The power of the process isn’t just in understanding the availability gap that exists; it comes from knowing which competencies are required during a period of time and how these positions will change as the business unit requirements change. New technology changes jobs; new business processes or equipment changes the required job competencies mix. Next year’s jobs may vary from this year’s jobs significantly.
Business unit management can identify the position-specific skills, knowledge, experience and other attributes required for each position. New growth strategies also change the functional expertise needed to achieve them. This is where HR and the business unit manager can partner to very specifically define the needed make-up of the department’s workforce, both in numbers and in skills. And, this is where HR becomes an even greater strategic partner in meeting the needs of the organization.
The next step that will significantly increase HR’s value to the company is identifying which of the positions have the highest value to the business unit and contribute the most to achieving a competitive advantage and organizational performance.
Many jobs are important and are necessary to get the work done. But certain jobs in every department (and certain employees, too) are just more valuable to accomplishing the strategic success of the business. This is the process of workforce differentiation – putting the best talent in the market, in the positions, that will contribute the most to achieving the organization’s strategy.
While it may seem like heresy, we suggest that one approach is to stop treating all positions as equally valuable. When it comes to organization performance, we suggest an approach brought forth by Pareto that suggests that some 80% of an organization’s strategic success and competitive superiority comes from 20% of the organizations most critical jobs.
Taken a step further, it suggests that 20% of the talent (people) contribute up to 80% of the organization’s achievements, inventions, technical approaches, sales, process improvements, etc. This suggests that certain jobs are of disproportionately more value to the core business performance.
Which are the most critical jobs? Which are the people we cannot afford to lose, based on their superior knowledge and performance? Are all departments even of equal value? These are hard question for HR because we are schooled in equitable treatment and serving all requests. Department heads and business unit managers know the answers, but haven’t had to address the questions. The time to address these questions is during the Workforce Analysis.
While the workforce differentiation process requires considerable experience and a sound methodology, the simplified view of the process lies in carefully answering three questions accurately:
- Which positions are the most crucial to the strategic plan for the organization? (Align them with the key core objectives and competencies of the business – is it logistics, business acquisition, or major account sales?) Hint: Always validate against where the organization is headed, too. Think carefully about anticipated changes and the impact on how critical work will be done.
- Which people can you least afford to lose? (The highest performing sales person? The most knowledgeable operations person? The most experienced plant chemist?) Hint: It isn’t usually the highest-ranking person such as a manager.
- Which competencies separate out the highest performer from the lower performer in those most-critical positions? Part of the answer lies in the core skills associated with the company’s legacy business and the strategic changes anticipated during the next 24 to 36 months. Hint: Finding the right talent takes time and may require enhanced retention strategies and new talent acquisition strategies. HR may find changes needed to the compensation philosophy and system to attract the best talent in each critical position.
Armed with the results of both the workforce analysis and the results of each department’s workforce differentiation priorities, HR can:
- Prioritize its efforts to build talent pipelines.
- Modify compensation strategies.
- Hire people with the right experience, skills and knowledge needed to fill the losses of key people.
- Meet the strategic changes of the business.
Implementing Workforce Differentiation
Implementing workforce differentiation can be tricky. It’s key that the information be accurate and vetted by senior management. As a philosophy it must be clear that it is a) critical to long-term business success, b) the manager’s responsibility, and 3) not about promoting or getting rid of people. These three points are key. Here are five steps to installing a differentiation process:
- Ensure support at the senior level - Once management understands how this narrowed focus will help both strategic performance and business unit goals, they are typically in support.
- Carefully define it to managers - There can be surprising fears associated with an assumption that priorities may imply reductions in staff or someone not being promoted or kept. Handle this step carefully with a formal manager meeting and training.
- Imbed differentiation into the workforce analysis process - Workforce analysis already requires a formal commitment of time to be accomplished effectively. While it may add a little time to the analysis process, if taken as a separate step it can take much longer. Managers don’t have extra time and that can generate push-back that isn’t needed.
- Sell managers on the value – The end result of this process will ensure greater attention to finding the best people in the market and an emphasis on ensuring that their critical jobs get the added focus they need.
- Consider trying a pilot – Executives know where the business creates competitive superiority and where strategies will be hamstrung if the best result isn’t achieved. Partner with an early adopter to test the process. Document everything you do to make sure you can make subsequent initiatives as easy and rewarding as possible.
Increasing the Value of HR
We’ve seen that the war for talent today is not one of simply finding someone to fill a position. Rather, it’s finding someone with the right level of skill and experience to fill the most valuable position openings when needed. This focus on critical positions and appropriate expertise allows HR to focus more clearly on the most valuable positions and people and accordingly increases the value proposition of HR.
Let’s face it: there just isn’t enough time to devote equal energy to filling all positions and replacing all people as if they were all of equal value to organizational performance. HR talent acquisition processes are already set up to address all vacancies, but if we can identify the most critical positions and people we can increase HR’s value by:
- Enhancing our focus to find and hire the very best talent.
- Modifying the compensation structure to get them into the organization.
- Developing systems to retain those known to be the most productive and valuable to the business.
Not all jobs are of equal value. Not all people are equally key to the organization’s performance. So it’s critical to know where we can prioritize our efforts and increase our relevance!
Watch for our February 2015 conference in Getting Talent Management Right: Match Your HR Strategy To The Strategy Of Your Organization and receive 14 strategic HRCI credit hours. Conferences are being planned for Portland, Oregon and Phoenix, Arizona.
For more information about PLS Consultingís talent management services, please contact us.
Alan Lindsay can be reached at firstname.lastname@example.org.