Strategy, as described in most text books, concerns value creation for a firm — defined as the creation of customer and economic value. Customer value must be achieved in order to capture economic value which enables the sustainability of the enterprise and the rewarding of investors. HR has aspired to be a “strategic” partner with an often changing definition of what the role is to do and less clarity about what the role is to deliver. This requires an examination of what is meant by Strategic Partner.
To understand how HR may become a Strategic Partner in today’s world, we must recognize many firms compete with “brainware” — the talent that creates customer value as contrasted with how and where value is created in extractive industries such as copper, iron ore, etc. Thus in talent driven-industries firms should be viewed much more like professional sports teams, which often employ several hundred people, but only a few actually create value by attracting customers, primarily those on the field and especially the “stars”, as well as the talent decision makers (e.g., general managers, coaches, etc.). These are roles that attract fans, who pay expensive fees to the stadium to view their favorite sport. These roles thus bring customers to the event and if the team is successful over time creates “customer security” which enables job security for the balance of the workforce.
Thus the workforce can have a strategic impact on the scorecard of the business if HR focuses first and foremost on the roles which enable it to not only become a strategic partner, but also a strategic player — on the field, in the game, and with ability to score on the company’s scorecard — which has long been the ambition of HR professionals.
HR therefore must recognize that it is to deliver what best enables the firm to create customer value and enterprise sustainability. In doing so, HR is indeed delivering strategic value and has become a strategic player. The challenge is how can HR make the strategic player role a reality.
Strategic Workforce Planning: The Approach
Strategic workforce planning is the process that makes HR a strategic asset for the company. Look at the words! Strategic means delivering customer and subsequently economic value through talent, work implies identifying the content of jobs that creates customer and economic value, and workforce describes the talent to do the work.
The Strategic Workforce Planning: The Process
The strategic workforce planning has six basic steps:
1. At what must the firm be great? These are strategic capabilities such as a discount retailer’s expertise in logistics and distribution (e.g., Wal-Mart, Tesco, Carrefour, Aldi’s) or vehicle design for BMW. Once these have been identified firms need to assess their effectiveness — how good do they need to be? This enables the development of a destination metric — which identifies the “gap” between where the firm is and where it needs to be. Once a gap has been identified, the firm should identify the work (not the position) needed to close the gap and how well this work should be performed to close the gap.
2. Where is this work done? It may reside in a single job or spread throughout the organization or not currently performed at all. Ideally strategic work needs to be housed in a single position.
3. What position (or positions) contain the work content that is strategic? These are the jobs, existing or newly created, that if very well performed enable strategic capability gaps to be closed.
4. How effective are incumbents? Can they deliver the work at the level needed to close the capability gaps? These individuals may be identified as top talent, emerging talent, career level, or not fit the requirements of the work now required in strategic positions.
5. What is the inventory of strategic talent? What capabilities, positions and talent does the organization presently possess, what is needed to create value at the levels required, and what talent decisions are needed to assure that all talent gaps are closed.
6. What new rules are required for the management of strategic talent? The rules (overt or covert) by which the organization was operating have created previous talent gaps and must be changed to create and sustain the strategic capability targets necessary.
To get different levels of performance firms must do different! If you can design your HR function to deliver the talent that significantly impacts the creation of customer and economic value, you have become a strategic player!