HR Strategy: From Execution to Influence

To be effective leaders in their organizations, HR executives are going to need to successfully move the function from executing strategy to influencing it before decisions are made. The HR function has evolved over the past few decades, with each decade having a guiding paradigm that was interrupted by periods of economic recession.

The '70s were the decade of compliance, a time when HR's role seemed to focus on being the cop that kept managers from making discriminatory employment decisions. The '80s saw the emergence of strategic HRM, but from a siloed perspective as each aspect of the function (staffing, compensation, training, etc.) attempted to tie its activities to the firm's strategy. The '90s were characterized by the "strategic partner" paradigm, a time when HR's role was focused on aligning all of the function (processes, policies, etc.) in order to execute the strategy.

The present decade has been the decade of talent, with HR focused on creating the processes to attract, develop and retain the talent critical to organizational success. In each decade, the value of human resources increases, but each of these paradigms shares one thing in common: They all view HR's role as the executor of strategy. While HR's role in strategy execution is critical to both its internal credibility and the business' success, the emerging responsibility -- something we hopefully will see a lot more of in the next two or three years -- is to move from executing strategy to influencing it.

How HR leaders do this depends on whether their firm's strategic decision-making is characterized as a rational process or a process plagued by human frailty.

A Rational Process

The "rational" model suggests that strategy is a linear, goal-oriented, decision-making approach that entails gathering all of the relevant information and then making the decision what maximizes the relevant outcomes for the firm. This is usually the subject of the offsite "strategic planning" meetings and are reflected in the "strategic plan."

This approach assumes that all those involved in the decision share the same goals, but maybe not the same perspective or the same information. Thus, by getting them together to discuss their different perspectives and share their different information, consensus around what constitutes the "right" decision can be gained.

It is largely this model that has guided some of the work suggesting that HR can influence strategy by being "at the table" when these decisions are being made. Many decision-makers have functional blinders that limit how they define a problem. In addition, due to the pressures exerted by the financial community, decision-makers are prone to focus on the financial outcomes of a decision while ignoring other potential outcomes (corporate reputation, legal risk, customer reactions, employee engagement, etc.). These limitations to the decision-making process may result in decisions that provide maximum short-term financial payoffs, but simultaneously begin a set of processes that may threaten long-term viability.

In this model, the role of the HR executive is to ensure that these "unintended consequences" are all discussed and addressed before the decision is finalized. HR executives achieve this best not by telling, but rather by asking. Because HR executives may lack a reputation for deep knowledge of all areas of the business, they may not be viewed as a credible source of suggested strategies. However, because HR leaders are at the table, they can ask important questions. For instance, in the case of a downsizing or layoff, they might ask:

a) "If we decide to downsize by 10,000 will we be able to maintain our ability to provide customers with what they want from us?"
b) "What are some of the legal risks that we might incur if we engage in this layoff?"
c) "How will this impact our reputation as a socially responsible company?"
d) "Will this layoff be a negative signal to our talent that encourages them to start looking elsewhere?"

The economics of the business may dictate that laying off 10,000 employees is necessary. However, forcing the discussion may lead to either a different decision (Can we cut back hours and pay across the board instead of a layoff?) or to a better way to implement the same decision (How can we communicate to our talent that we value them so they do not begin looking outside?).

My work in studying HR leaders over the past three years reveals that forms of this process often take place outside of the normal "off-site" meeting. Members of the top management team may disagree with the direction a powerful CEO is pushing, but may be unwilling to express their disagreement openly.In this case, the HR leader's role is to try to surface those areas of disagreement confidentially, and then be the conduit to confront the CEO with these conflicting perspectives. This confrontation may take place in the CEO's office or at the executive leadership team meeting itself. Either way, HR executives are influencing the decision-making process when they take the responsibility for ensuring that all perspectives are recognized before a decision is reached.

Certainly, HR leaders can state a point of view, and, if grounded in a deep knowledge of the business, their opinion is often valued by other decision-makers. So the influence can be gained by persuasion as much as by questioning. In either case, the HR leader does not have the authority to make the better decision, but an effective HR executive will always make the decision better.

Plagued by Human Frailty

One hopes that the rational decision-making process characterizes all, or at least most, of the strategic decisions. However, has anyone ever seen a top management team? Too many "teams" are really made up of a group of individuals with their own ambitions, egos, desires and agendas.

A successful CEO may have become so blinded by his or her own success that dangerous levels of hubris begin to emerge. Or, either overtly or covertly, members of the team who hope to ascend to the CEO position may opportunistically seek to undermine the CEO and/or his or her potential competitors for that role. In essence, members of the top management team, like every other human being, can be subject to human frailties, and those frailties can severely impact the strategic decision-making process.

First, what are human frailties? These are universal characteristics of the human condition that, under the right circumstances, result in individuals making decisions that put self over others. While they are not limited to these, I like to focus on two that encompass most of the dysfunctional activities.

Hubris refers to excessive pride, or a belief that one's self is so good, intelligent, etc., that one can do no wrong. Every decision is the right one, and when others disagree, it is only because they do not possess the same level of capability. For instance, when retail industry novice Bob Nardelli, chairman and CEO of Home Depot, argued with longtime retail industry analysts that same-store sales was not a good metric for judging performance, he was displaying hubris.

Opportunism refers to self-interest seeking with guile, or having such a focus on achieving one's own ambitions or desires that one is willing to do whatever it takes, regardless of the consequences to others. The road of failed strategies is littered with leaders overcome by human frailties such as Ron Allen of Delta Air Lines, Jean-Marie Messier of Vivendi Universal or Phil Condit of Boeing. These are not evil men who sought to do harm to their organizations, but rather leaders blinded by their own weaknesses, which led them to pursue strategies that failed their firms.

In a process plagued by human frailties, HR executives may not find themselves in a position to influence at the table, but rather in the hallways; outside of the normal decision-making process.

Looking ahead, what do HR executives who find themselves in positions to influence decisions need to do? Here are several suggestions:

a) Be vigilant in identifying the first signs of human frailties. Business leaders who become isolated, unwilling to harbor disagreement, abusive or exhibit behavior that suggests they are above the rules are those suffering from frailties. If they are to succeed, the HR leader must step in.

b) Erect the guardrails that prevent human frailties. Executive coaches, 360-degree appraisals, employee-survey feedback and other feedback mechanisms can provide information business leaders will find difficult to ignore. My work with CHROs suggests that one of their major roles is to be the person who provides the hard feedback of how a leader is being perceived by others. Whatever the source, such feedback can keep egos in check and make leaders aware of their unrecognized opportunistic tendencies.

c) Create the controls that minimize the impact of human frailties. Some leaders may be overcome with frailties, yet still be effective decision-makers. For instance, much has been written about Steve Jobs, chairman and CEO of Apple, and his ego, tantrums and abuse of employees.

However, his intuitive grasp of the industry provides him with unique insights that have enabled Apple to emerge from the proverbial dustbin of the information- technology industry to become one of the most admired companies in the world. To the extent that his board and those around him ensure that he cannot make all decisions unilaterally, his frailties can live on while their impact is controlled.

Be ready to put your badge on the table. Most HR leaders can tell at least one story about the time they had to put their job on the line.

Randy MacDonald, senior vice president of HR at IBM, suggests that all good HR people will risk being fired at some point in their careers when they have to stand up for what they believe in. Sometimes it was having that hard conversation with the business leader about his or her weaknesses. Sometimes it was going before the board to report to them the business leader's weaknesses.

Regardless of the situation, the effective HR leader has a fiduciary responsibility to the shareholders to ensure that the most effective leader is in place, and sometimes that means replacing the present one.

Our emerging research on HR leaders suggests that the most effective ones successfully oversee the implementation of business strategies through human capital decisions and HR processes. But it also suggests that those who stand out are the ones who can expertly influence strategic decisions before they are made, be that at the table or in the hallway.


Ref: Patrick M. Wright
[About the Author: Patrick M. Wright is the William J. Conaty GE Professor of Strategic Human Resources and director of the Center for Advanced Human Resource Studies in the School of Industrial and Labor Relations, Cornell University. He has published more than 40 articles in journals such as Academy of Management Journal, Academy of Management Review and Strategic Management Journal, and has co-authored two textbooks: Human Resource Management: Gaining Competitive Advantage and Management of Organization. Wright previously held positions in the College of Business at Texas A&M University and the College of Business at the University of Notre Dame.]

Suggested HR Strategies to Reduce Effects of the Crisis.

Communication.

Dedicate time to positive reasoning. Hold town hall meetings involving staff and management on ways to tackle the challenges of the downturn. Hear the staff out. Take time to listen to the employees for confidence building. During such engagement, declare immunity to cover all staff, in which any staff that offers to critique the organization is insulated from witch-hunting sanctions and victimization. This gives room for sincere invectives and inputs, which may turn the organization around for good. Staff should be encouraged to objectively give their assessment of where the organization was, where it is and where they believe the organization should be and what should be done to survive the recession. After listening to the staff, thank them for valued contributions and promise to work with their inputs. Reiterate the vision and mission statements of the organization. Appeal to staff to do everything possible to actualize the goals and objectives of the organization. They should show more personal and collective commitment, loyalty and dedication to the organization for improved productivity. Seek their support for the strategic action plans. At the same time, strengthen the two ways communication process and dedicate time to feed backs.

Positive team culture.

Stress shared vision, strategies and belief in team culture, improved symbiotic team spirit because of the positive value addition of synergy. HR Managers should at this time radiate and give hope and lift their staff from negativity to positivity. A positive team culture stresses collectivism, and symbiosis. Do well to stress the importance of every team member.

Learning.

Learning is the key that opens the individual employee to knowledge beyond his/her immediate reach. It helps to bring a strong barrier against failures and landmines that may bomb the organization out of existence. It assists the worker to open up to new initiatives, ideas and best practices. Design programmes that put the organization on top of the pack and enable the organization have a competitive edge. Staff may not necessarily be moved from their places of work because of the innovations in as e-learning and intranet services are becoming a way of life. Encourage staff to participate in workshops and conferences to enable them compare notes on experiences and learn from others. Where only a few staff can attend, those who attended should be given an opportunity to share their learning experiences with their colleagues at a forum.

Leadership focus during the downturn.

1. Transparency.

2. Accountability.

3. Courage to effect necessary changes.

4. Training.

5. Proactive strategy.

6. Sacrifice.

7. Incremental changes.

8. Address issues of insecurity.

9. Credible leadership.

10. Mentoring.

11. Coaching.

12. Nurturing.

13. Sifting down process between the effective staff.

14. Walk-the-talk.

Performance incentives..

General Motivation techniques: Positive and negative sanctions.

Performance Incentive Bonus (PIB)

Review of organizational structure and procedures.

1. Reduce complex structure to a simple structure.

2. Increased autonomy to improve decision making process.

3. Concentration on core areas.

4. Elimination of tribal, political and racial considerations in the appointments of chief executives and recruitment processes.

5. Review of recruitment policies. It is a well known fact that in most parastatals of government in Nigeria, there are periods of employment freeze, unfreeze, refreeze and retrenchment at the fiat of the executive arm of government.

6. Review financial management procedures to optimize profitability.

7. Improve cost culture and asset utilization.

Redefinition of business value system.

This is a moment to re-examine the organization’s business value system, goals, roadmaps, strategies and practices to align with the anatomy and physiology of the organization. The vision of the organization should be cascaded down the ladder so that there will be a total buy-in; into the new ways of achieving the vision even at these difficult times. A shared vision sets the tone for the conscious will power to achieve the impossible.

Succession planning.

The chief executives of many parastatals of government are removed and replaced at will. The high turnover of the top management is the bane of poor performance of some organizations. It makes planning difficult, truncates strategic plans processes and kills any organization’s initiatives to achieve a well tailored succession plan, which is a Sequa-non for organizational success. There should be a reversal of this unwholesome process.

Attitudinal change..

Paradigm shift in work culture and values.. Stop the attitudes of being busy doing the wrong things. The aim is to change from busyness to effectiveness as being busy does not connote effectiveness. Being busy and working hard without focus does not translate to results the organization needs to be effective.

Job rotation.

Temporary postings to areas of unsaturated staff.

Equal opportunities.

Redeployment.

Pre-retirement seminars.

Pre retirement workshop.

Incentives for early retirement (discourages swearing affidavits to cheat on age).

Personal income management.

Almost all staff are now very heavily indebted to the banks with slimmer income. It is often said that the “take home pay of workers no longer take them home”. Staff of various organizations have found themselves in this conundrum in Abuja because of the need to purchase personal houses in other to avoid the cut throat high rents in the FCT.Engage external consultants to talk to staff on personal income management and the need to prepare for retirement. HR managers should help enforce the one-third rule of loans over which a staff cannot approach the organization for loans so that staff will be able to maintain and cater for their immediate families at this critical time.

Proactive HRM.

1. Application of emotional intelligence strategies.

2. Fair HR practice in the use of the carrot and stick approach.

3. Assessment of the competencies of employees and productivity level. Do not wait for the end of year.

4. In-plant knowledge sharing forum should be enthroned to encourage staff to share their knowledge in an in plant workshop. This will assist the organization to source for and maintain a knowledge pool in the organization.

5. Change management. Change will be effected in bits and not radically so as not to further stress the staff.

6. Review the organization’s customer management processes.

7. Enthrone an integrated research and development processes.

Performance evaluation.

Enthrone an effective performance management system.Performance evaluation should focus on:

1. The organization.

2. Departments.

3. Customer service.

4. Teams’ performance.

5. Processes.

6. Individuals. .

• Solutions to challenges rather than sanctions, condemnation and the blame trade..
• Seek to be understood before seeking others’ understanding..
• Expectations should be mutually agreed using basic standard benchmarks..
• Consider individual strengths, experience, priorities, inner motivation (is he a loner, extrovert) and confidence in assigning tasks..
• Acquire the skills to align the staff skills and competency to align with the organizational objectives..
• Monitor performance (don’t wait until the end of the year).. Reward top performers and ascertain collateral damage if any.. Investigate and sanction poor performance.. Watch out for the aftershocks of performance evaluation.

Any of the following models could be used to address the performance challenges that organizations may face during the periods of financial crisis:. between short, medium and long-term objectives. The BSC is a tested tool change processes..

Ulrich model.

Ref: http://louisbrownogbeifun.com/?p=55