Companies need to harness all their intellectual capital to find ways to remain sustainable and competitive. One source of innovation and strategy development that is mostly overlooked by company leadership is the human resources (HR) department, says internationally acclaimed management educator Professor Dave Ulrich.
At The Progress Conference on HR Value Creation hosted by the Business Results Group in Midrand last month, Ulrich said HR practitioners played a critical role in developing and implementing effective plans for business growth.
This principle was only fully applied by some 20 percent of companies worldwide, said Ulrich, and their success demonstrated that companies could derive huge benefits from bringing their HR people to the drawing board.
Partnerships between company executives and HR personnel were fast becoming critical for sustainability, he said.
The Business Results Group has identified eight strategies for business growth that should be integrated with HR implementation to deliver the desired results.
l Mergers and acquisitions. A good HR leader is able to connect the behaviours of employees, management and leadership with business outcomes. For instance, a strategic merger between two companies will present unique challenges in marrying their cultures and business processes. HR can play a critical role in adapting the perceptions and actions of the combined work force to fit the new work environment.
Many mergers have failed to work because this aspect was not properly addressed.
l Entering new markets. When a business enters a new market, it has to understand the local business environment. HR’s task is to mobilise plans of action for moving people, leadership and systems to serve the new market well.
Competing in a new market has talent implications and HR should play a strategic role in sourcing and developing appropriate local talent.
l Building innovative capacity. A culture of innovation within an organisation requires HR to source individuals with innovative ability.
With a strong pool of creative thinkers, the collective capacity for innovation within an organisation will strengthen exponentially.
Ulrich advises companies to seek new talent from across the globe.
There is great innovation coming out of Asia and the Middle East, for instance, which has the potential to breathe new life into the think- ing of traditionally Western-based organisations.
l Building a talent pool. Most emerging markets have to find solutions to skills shortages in certain sectors, none more so than SA.
Companies that are not yet using their HR departments to drive the growth of their own skills pool are at a grave disadvantage.
Developing skills doesn’t only mean implementing skills training programmes.
Far-sighted companies are identifying talent at an early stage and supporting individuals through a long-term process of education.
For instance, a multinational accounting enterprise that needs actuaries to serve its clients has to ensure that competent actuaries are available in its target markets, particularly where there is a scarcity of actuaries. This is strategic business problem HR can help to solve by implementing bursary schemes for actuaries in emerging economies.
l Containing costs. Cost cutting is the most ubiquitous challenge faced by businesses during lean times, particularly for companies that supply low-cost products. HR can be involved in cost reduction strategies by implementing more efficient and cost-effective systems that eliminate wastage.
The cost-effective performance of a company’s employees also depends to a large extent on correctly screening for and employing employees who align with the company’s culture of lean production.
l Operational and ergonomic structures. HR professionals need to understand the limitations of employees. This is especially important in businesses where employees do shift work, such as in mines, where it is common for operators of big machinery to fall asleep at the wheel during long shifts.
In this instance, HR can help to reduce accidents and corporate liabilities by properly structuring operators’ working hours, rest periods and rotation with other operators.
l Finding the right people, not the “best” people. Ulrich cites the classic example of the US Federal Aviation Authority which experienced high resignations of its air traffic controllers. It emerged that the FAA had initially sourced the wrong people for the position.
They had given preference to candidates with a university education, while the actual requirement for a successful air traffic controller is an ability to follow rules and procedures without mistakes. Military and law enforcement personnel proved much more successful.
l Improving customer satisfaction. When implementing changes in business processes, this could also mean that the “rules of the game” may be changed for the customers.
For instance, introducing an online payment system may be good for business, but it also requires proficient IT personnel to manage and support it.
People are typically uncomfortable with change and the new system may upset both clients and employees. Ulrich advises that one should always ask how the customer is experiencing the changes.
Will an online payment system best serve customer needs or is this something that only the managers think should be implemented? If the change is implemented, HR should support it by hiring the right people, designing their jobs with appropriate motivators and measuring the success of the process.
Is HR taking on a more strategic role in SA businesses? It seems this is a concept that the majority of senior executives still have to buy into, but resistance to strategic HR is folly in today’s market, says Ulrich.