This article addresses contemporary organisational thinking on issues of people strategy. Where appropriate linkages are drawn with remuneration management.
Most ‘People Strategies’ focus on human resource processes rather than business results. They traditionally follow functional applications such as recruitment, training and development, and remuneration (for instance). Whilst not diminishing the importance of these processes they are significant only in that they contribute to positive business outcomes. (NB: They are also significant in that getting them wrong can lead to significant organisational business problems.)
Our approach to People Strategy emphasises four key themes:
As shareholders and Boards carefully scrutinise return on investment figures there is pressure on management to place all but the most essential of human resource activities low on the priority list. This may be compounded by performance and reward systems which emphasise short term financial results.
One of the difficulties with people processes is that it is not always possible to demonstrate a direct relationship between investment and return. It is however, possible to suggest that organisations that are successful in the long term use their people strategy as an integral part of their business planning process.
In the next four sections we discuss how each of these people strategy objectives translates into action plans.
Creating the potential for future growthThis means ensuring that the organisation develops the people
capacity necessary to sustain and manage growth.
In this context we need to take a broad view of growth. It does not simply mean improved short term financial results. It may also mean:
- Increased production or service capacity;
- Growth in scope for innovation;
- Maintaining market position;
- Improving environmental standards.
Ultimately the capacity for growth, in any form, is reliant on people. The challenge for organisations is to ensure they have access to the right set of competencies to meet growth and development targets. A number of people strategy applications support this:
- Targeted recruitment and selection.
- Strategic performance management.
- Focused competency profiling.
- Executive and management development.
- Technical and professional development.
- Integrated reward strategies.
Organisations need to see people processes as integral to their growth and development.
Maximising productivityAll organisations need to ensure they derive the best return for their expenditure on people. Limited margins and increased competition underscore the importance of this business strategy.
Productivity is a complex concept. In some instances it eludes quantitative analysis. Many organisations make the mistake of focusing solely on overhead value analysis and ignore feedback which suggests their product quality client service standards are declining. The key issue is finding the right balance.
Consider some of the human resource processes which support organisational productivity:
- Results based variable reward systems.
- Focused competency development.
- Effective (HR) information systems.
- Performance management processes.
- Clear role definition.
Minimising riskRisk is present in all organisational processes. One key argument put forward for the use of technology based solutions is that they reduce dependence on ‘unreliable’ human resources. Technology is, however, ultimately reliant on people for installation, programming and servicing.
In his recent book ‘The Corrosion of Character’ Richard Sennett (1999) describes how the bread making process in a small suburban bakery in Boston has become totally automated. All mixing and baking processes are undertaken by computer controlled equipment. When the inevitable breakdown occurs the once skilled staff no longer know how to bake bread.
Technology merely transfers risk.
A number of core people management processes underscore risk minimisation:
- Focused competency development.
- Well developed health & safety procedures.
- A clearly understood code of conduct.
- A balanced reward system.
- Performance management processes.
- Clear role definition.
A well articulated and implemented ‘People Strategy’ is a critical ingredient in minimising the risks associated with employing people.
Becoming an employer of choiceThe terminology of ‘being an employer of first choice’ has been with us for some time. It implies that the employing organisation is able to offer a working environment and conditions so favourable and challenging that the individual need look no further.
In the real world such organisational utopias are rare and individual expectations usually more balanced. If you manage a chemical company operating in the western suburbs this necessitates certain operating conditions.
This means you need to ensure that you select and develop employees whose values and outlook are congruent with that of the organisation. The cost of employee turnover is very high and must be balanced with the need for new blood.
Consider some of the ‘People Strategy’ process which support becoming an employer of choice:
- Rigorous selection procedures.
- Effective group development processes.
- A balanced reward system.
- An inclusive organisational culture.
- Opportunities for development.
People Strategy SummaryA well developed ‘People Strategy’ can add real value to any business or organisation. But it is not an ‘off the shelf’ product or a technology driven solution.
Its an integral part of the business planning process. After all, it is people who are going to deliver on the strategies and objectives articulated in the business plan.