The debate
arises out of serious and widespread doubts about HR's contribution to
organizational performance. Ulrich agrees that there is a good reason for HR's
struggling reputation. It is often ineffective, incompetent, and costly; in a
phase, it is value sapping. But the truth is that HR has never been more
necessary.
·
The competitive forces that managers
face today and will continue to confront in the future demand organizational
excellence. To state it plainly: achieving organizational excellence must be
the work of HR.
·
The question for managers, then, is:
What should we do with HR?
The answer is:
create an entirely new role and agenda for the field that focuses it not on
traditional HR activities, but on
outcomes. HR should be defined by what it delivers – resultsthat enrich the
organization's value to customers, investors, and employees.
·
HR can help deliver organizational
excellence in the following four ways:
1. HR should
become a partner with senior and line
managers in strategy execution.
2. It should
become an expert in the way work is
organized and executed, delivering administrative efficiency while quality is
maintained.
3.It should
become a champion for employees,
representing their concerns to senior management and at the same time working
to increase employee contribution.
4. HR should
become an agent of continuous transformation,
shaping processes and a culture that together improve an organization's
capacity for change.
But the fact
remains: the activities of HR appear to be - and often are - disconnected from
the real work of the organization. In fact, the primary responsibility for
transforming the role of HR belongs to the CEO and to every line manager who
must achieve business goals.--> The reason?
Line managers have ultimate responsibility for both the processes and the
outcomes of the company. It follows that they should lead the way in fully
integrating HR into the company's real work. Indeed, to do so, they must become
HR champions themselves. More important, they must hold HR accountable for
delivering it.
WHY HR MATTERS
NOW MORE THAN EVER
Companies today
face five critical business challenges. These challenges require organizations
to build new capabilities. It is HR's opportunity to play a leadership role in
enabling organizations to meet the following competitive challenges:
Globalization
-
With the rapid expansion of global markets, managers are struggling to balance
the paradoxical demand to think globally and act locally. That imperative requires
them to move people, ideas, products, and information around the world to meet
local demands. Globalization requires that organizations increase their ability
to learn and collaborate and to manage diversity, complexity, and ambiguity.
Profitability
through Growth - The drive for revenue growth puts unique demands on
an organization. Companies seeking to acquire new customers and develop new products
must be creative and innovative, and must encourage the free flow of information
and shared learning among employees. They must also become more
market focused -
more in touch with the fast changing and disparate needs of their customers.
And companies seeking growth through mergers, acquisitions, or joint ventures
require other capabilities.
Technology
-
Ideas and massive amounts of information are in constant movement. The
challenge for managers is to make sense and good use of what technology offers.
Managers will need to figure out how to make technology a viable, productive part
of the work setting.
Intellectual
Capital -
Knowledge has become a direct competitive advantage for companies selling ideas
and relationships and an indirect competitive advantage for all companies
attempting to differentiate themselves by how they serve customers. From now
on, successful companies will be the ones that are the most adept at attracting,
developing, and retaining individuals who can drive a global organization that
is responsible to both it customers and the growing opportunities of technology.
Change, Change, and More Change – Constant change means
organizations must create healthy discomfort
with the status quo, an ability to detect emerging trends quicker than the competition,
and the agility to seek new ways of doing business. In other words, companies
will need to be in a never-ending state of transformation, perpetually creating
fundamental, enduringchange.
HR'S NEW ROLE
The five
challenges described above have one overarching implication for business: the
only competitive weapon left is organization. In the new economy, winning will
spring from organizational capabilities such as speed, responsiveness, agility,
learning capacity, and employee competence. Successful organizations will be
those that are able to quickly turn strategy into action; to manage processes
intelligently and efficiently; to maximize employee contribution and
commitment; and to create the conditions for seamless change. The need to
develop those capabilities brings us back to the mandate for HR. Let's take a
closer look at each HR imperative in turn:
-->
Becoming a Partner in Strategy Execution
Strategy is the responsibility of a company's
executive team - of which HR is a member. However, HR executives should impel
and guide serious discussion of how the company should be organized to carry
out its strategy. Creating the conditions for this discussion involves four steps:
1.HR should be
held responsible for defining an organizational architecture. Jay Galbraith's
star model identifies five essential organizational components: strategy, structure,
rewards, processes, and people. The well-known 7-S framework by McKinsey &
Company distinguishes seven components in a company's architecture: strategy,
structure,
systems, staff, style, skills, and shared values. It's relatively unimportant
which framework the HR staff uses to define the company's architecture, as long
as it's robust. What matters more is that an architecture be articulated
explicitly.
2.HR must be
accountable for conducting an organizational audit. Organizational-architecture
plans are critical in helping mangers identify which components of the company
must change in order to facilitate strategy execution.
3. HR must
identify methods for renovating the parts of the organizational architecture
that need it. HR managers should be assigned to take the lead in proposing,
creating, and debating best practices in culture change programs.
4.HR must take
stock of its own work and set clear priorities. HR needs to join forces with
operating managers to systematically assess the impact and importance of each
one of these initiatives.
This is a new role for HR and therefore it may have to acquire new skills and
capabilities. In time, the concept of HR as a strategic partner will make
business sense.
-->Becoming an Administrative Expert - In their new role as administrative
experts,
however, they
will need to shed their traditional image of rule-making policy police,while
still making sure that all the required routine work in companies is done well.
In order to move from their old role as administrators into their new role, HR
staffwill have to improve the efficiency of both their own function and the
entire organization. But decreased costs aren't the only benefit of HR's
becoming the organization's administrative expert. Improving efficiency will
build HR's credibility, which, in turn, will open the door for it to become a
partner in executing strategy.
àBecoming an Employee Champion -
Companies cannot thrive unless their employees are engaged fully. Engaged
employees - that is, employees who believe they are valued - share ideas, work
harder than the necessary minimum, and relate better to customers, to name just
three benefits. In their new role, HR professionals must be
held accountable
for ensuring that employees are engaged - that they feel committed to the
organization and contribute fully. HR must now take responsibility for
orienting and training line management about the importance of high employee morale
and how to achieve it. In addition, the new HR should be the employees' voice
in management discussions.
àBecoming a Change Agent - The
new HR has as its fourth responsibility the job of building the organization's
to embrace and capitalize on change. HR's role as a change agent is to replace
resistance with resolve, planning with results, and fear of change with excitement
about its responsibilities.
Perhaps the hardest and most important challenge facing many companies in this
era of flux
is changing
their culture. In helping to bring about
a new culture, HR must follow a four-step process:
-First, it must
define and clarify the concept of culture change.
-Second, it must
articulate why culture change is central to business success.
- Third, it must
define a process for assessing the current culture and the desired new
culture, as well
as for measuring the gap between the two.
-Fourth, it must
identify alternative approaches to creating culture change.
FOUR CHANGES FOR
THE LINE
Perhaps more
important, than the new mandate for HR, it also requires that senior executives
change what they expect from HR and how they behave toward the HR staff. The following
are four ways senior operating managers can create an era in which HR is
focused on outcomes instead of activities:
• Communicate to the organization that the
"soft stuff" matters - For instance, CEO Jack Welch of General
Electric claims he spends 40% of his time on people issues. For HR to be taken
seriously, senior managers must demonstrate that they believe typical HR issues
- the soft stuff like culture change and intellectual capital – are critical to
business success. Operating managers can signal this belief in several ways.
They can talk seriously about how organizational capabilities create value for investors,
customers, and employees. They can invest the time needed to make sure organizational
changes are debated and implemented. They can include HR professionals in
strategy discussions and state explicitly that without the collaboration of HR,
strategies are more hopes than realities, promises than acts,
and concepts
than results.
• Explicitly define the deliverables from HR,
and hold HR accountable for results– A company has a much better chance of
achieving its goals if senior managers state specifically what they expect from
HR and then track, measure, and reward performance.
•
Invest in innovative HR practices - Investing in new HR practices
is another way to signal to the organization that HR is worthy of the company's
money and attention. It is also a way to make sure that HR has the tools, information,
and processes that it needs to execute its new mandate. As new practices are identified,
line managerspractices should focus on learning not only what works elsewhere
but also how a new practice should work in the company's unique competitive
situation.
• Upgrade HR professionals - Finally, the
hardest but perhaps most important thing senior managers can do to drive
forward the new mandate for HR is to improve the quality of the HR staff
itself. Companies need people who know the business, understand the theory and
practice of HR, can manage culture and make change happen, and have personal
credibility. Regardless, HR cannot expand its role in an organization without
the requisite expertise.
Becoming a
strategic partner demands a degree of knowledge about strategy, markets, andthe
economy. Becoming an administrative expert demands some knowledge of re-engineering,
as well as the intricacies of what the line actually does. If HR is to effect
real change, it must be made up of people who have the skills they need to work
from a base of
confidence and
earn what too often it lacks - respect.
HARD WORK AHEAD
Senior
executives who recognize the economic value and the benefit to their customers
of intellectual capital and organizational capability need to demand more of
the HR function. They need to invest in HR as if it were a business. And they
must get beyond the stereotype of HR professionals as incompetent value-sapping
support staff. It's time to destroy that stereotype and unleash HR's full
potential.