The long road to the executive boardroom

By Daphne Woolf
|Canadian HR Reporter|Last Updated: 09/04/2003

What can HR professionals do when they want to do more than push paper and jump from one administrative crisis to another? How can they position themselves as strategic partners within the business? How does one raise the personal profile, and the profile of the HR department, so that HR’s input becomes integral to most business decisions? These are important questions that most HR professionals still grapple with. However there is both a short and a long answer.

The short answer is the CEO. One senior vice-president of HR told me that his role is to coach the CEO — period. For a CEO to not only acknowledge he needs coaching, but to actually have someone with an HR title allocated to that function, is an indication of an enlightened organization. If the chief executive officer has a philosophy that recognizes the importance of people in securing business success, consider yourself lucky because HR is probably already playing a strategic role.

More often than not however, HR is faced with the long road and the tough answers — many CEOs need to be pushed, pulled and prodded into acting on their acknowledgement of the importance of people, and therefore the HR department, in securing business success. In these cases, HR has a lot of work to do to ensure it can do more than put out administrative fires. The key is for HR to focus on developing greater connectivity between the business and people strategies.

Business strategy

What are the goals of the company over the next year, three years, five years and 10 years? How would you describe the core business? How do you compare against competitors from market share and customer service perspectives? Will the company be growing via merger and acquisition or from added headcount? Will growth be local, national or global? Will growth be from the expansion of the business or from an expansion in scope? Instead of growth, will there be downsizing? Why will there be downsizing? What are the revenue objectives over the short and long terms? What are the expectations of stock performance and how will this impact the overall business strategy? For HR people to be truly informed, they should be able to answer most, if not all, of these questions.

Ideally, the HR professional should be in the boardroom to hear what the business strategy is, to understand it, and to then provide input on how to implement it from a “people” perspective. How can you possibly know what the people requirements are if you don’t know the business requirements.

In setting HR priorities and justifying HR budget expenditures — by connecting them to business initiatives — HR starts to look like a leadership function within the organization. This can’t be done, if you don’t know and understand what these business initiatives are. If HR can’t get a seat at the executive boardroom table, find a way of getting the information, and then demonstrate how this information is integral to what HR does and conversely how what HR does affects those issues.

People strategy

People strategy entails so much more than hiring and firing — including succession planning, training and development, motivation, performance measurement, mentoring and talent management — but making the most of the recruitment efforts is key.

Hiring the right people at the right times. Staying connected with talent, making opportunity hires, reducing the integration costs of new people by streamlining the recruitment process and controlling the loss of good people.

A large part of the role for HR is simply getting it done: conducting the interviews with recruiters and potential candidates, putting together employment contracts and offer letters, managing the process of orientation with effective new hire kits, and so on.

But the strategic role is to connect the business strategy with the people strategy. Build a case for why the company has the right or wrong people in the right or wrong roles. Identify the needs of the company in context of the business plan — provide a skills inventory in that context. Where is the organization top heavy (or bottom light) given the direction of the organization? What is the cost of not hiring the talent you need now to meet the goals of the future? What is the cost of not providing competitive total rewards in comparison to the cost of lost talent? Statistics speak volumes and give HR the credibility that other departments of note, such as sales and marketing receive.

Putting together a formal people strategy that parallels the business strategy, with the appropriate quantifiable business case that includes turnover rates, cost of recruitment, cost of lost talent and cost of training and development, will put HR in the executive boardroom if it isn’t there already.

Three important elements of people strategy are of particular importance for those looking to move HR into the executive boardroom: work environment, total rewards and communication.

Work environment

Creating the right work environment will go along way to maximizing employee performance and therefore improving organizational performance. There are two important factors for HR to think about here. The first is, the extent to which employees know what it takes to succeed at what they do. How they can grow their careers and add value to the organization. Also, how does an employee feel about working for the company; does the job satisfy the personal needs of status and accomplishment?

Career pathing, having a sense of self-worth at work, being valued, being appropriately recognized, having the right level of responsibility commensurate with one’s level of experience and ability are all part of an effective work environment. Some companies can offer more in terms of career pathing than others. But certainly all companies can validate individual contribution and get the right people in the right jobs through positive, interactive and effective performance measurement. HR needs to provide the vision for effective performance measurement and then integrate all of the elements of the work environment in context of the people and business strategies.

The second consideration is, is it fun? Studies have shown this is an important factor in employee retention.

Creating a fun place to work doesn’t really come from organizing a bowling night or finding space in the lunchroom for a pool table. Fun comes from creating harmony, trust and mutual respect among colleagues. Nothing destroys fun more than in-fighting, political positioning and a reluctance to share. HR has a leadership role to play here and from the strategic perspective, HR needs to ensure that, top-down, the organization walks the talk.

Total rewards

Here’s a common scenario: a company prides itself on having an entrepreneurial culture that respects employee empowerment and values the contribution of the individual. However, it offers a defined benefit pension plan, no variable pay, bonuses to only the top tier and a traditional benefit package with no choice. There is a very big disconnect here.

Another company promoted flexible hours and an overtime policy. On paper, the corporate policy was very much aligned with the culture of the organization. However this was a labour intensive environment and flexible working arrangements were difficult to arrange. Employee focus groups made it clear there were “haves” and “have nots” in the context of who could record overtime and shift their hours and who could not. The written policy was fine. The implementation of that policy was not.

HR should, from time to time, step back and take a look at the total rewards offering. Are there any mixed messages? Are you rewarding the wrong people? What part of the total rewards package is really valued by employees and what is simply costing the company money without any return on that investment? Is the workplace environment a component of total rewards? If not, why not?

Communication

Do employees know what is going on in the organization before or after they read about it in the newspaper? To what extent do employees feel part of change or do they feel that change is being foisted upon them? Do they adequately understand why there is change — or why there is status quo? Do employees feel like a cog in a wheel or that they personally have an important role to fill? Is communication ad hoc or is it carefully orchestrated to ensure employees are kept in the loop?

Effective employee communication is the most powerful tool a company has to ensure its success. Communication is the primary vehicle by which employees get to know the quality of the leadership team, the essence of the company’s mission statement and the extent to which the future direction of the company is a personal fit or not. Employee communication is the way a company brands itself internally. If as much commitment is spent on internal marketing as on external marketing, employee loyalty, dedication, retention and enthusiasm will increase, again a positive impact on the bottom line.

In many cases, HR is the driver of internal employee communication. HR can therefore be the intermediary between the leadership team (and its business strategy) and the employees. If HR understands the business strategy and has this appropriately connected with the people strategy, workplace environment and total rewards offering, tell people about it, and do it often.

Create a look and feel that reflects the corporate objectives and mission statement. Measuring success is easy via retention statistics, employee surveys, overall “temperature readings” from casual employee feedback, intranet hits and so on.

Some people in HR maintain that the problem with taking care of all the day-to-day functions is it prevents the strategic potential of HR from surfacing. If this is the case, you have two options to consider: outsource or add HR headcount. Both cost money but either or both should be easily justified given the business case implicit in valuing HR as a strategic business partner.

Daphne Woolf is a consultant in the Toronto office of William M. Mercer Limited. She may be contacted at (416) 868-2879 or daphne.woolf@ca.wmmercer.com.

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