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 Creating an Integrated HR Strategy

This chapter is about defining the changes you want to create through strategic HR and how to use strategic HR processes to create them. The previous four chapters described critical fea- tures to consider when designing each of the 4R strategic HR processes. This chapter discusses how to incorporate these four processes into an integrated HR strategy. The reason this chapter appears toward the end of the book is that it is easier to develop a strategy if you are familiar with the tactical methods, tools, and techniques that will be used to execute it. In application, the topics in this chapter might be addressed before addressing many of the topics discussed earlier in the book. Before building out specific processes for recruiting, goal management, performance manage- ment, and development it is useful to have an picture of what you want to achieve with strategic HR overall. This includes prioritiz- ing whether certain processes should be developed and deployed before others. In sum, it is valuable to know what you want to accomplish with your overall HR strategy before you begin designing specific strategic HR processes.

E I G H T c h a p t e r

Hunt, Steven T.. Common Sense Talent Management : Using Strategic Human Resources to Improve Company Performance, Center for Creative Leadership, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=827115. Created from ashford-ebooks on 2020-04-11 04:04:35.

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The following issues are central to determining how to use strategic HR methods:

• Identifying the change you want to create. Strategic HR methods deliver busi- ness value by changing how the organization manages its people. Change requires effort and resources. Changing too much too fast can create stress, resistance, and confusion. HR strategies should identify the changes that are needed to support the company’s business execution needs. They should also map out how to implement these changes over time in a way that balances the need for business improvement against the risk of overwhelming the com- pany with excessive change.

• Defining what the change will look like. After identifying the general nature of the changes you are seeking to create, the next step is to define exactly what these changes will mean for employees, managers, senior business lead- ers, and HR professionals. This is done by describing the visible events that will result from the change—the sorts of conversations, information, and decisions that will be created as a result of implementing new strategic HR processes.

• Defining how you will create the change. Decide at a high level how strategic HR processes can be used to create the necessary changes. This includes iden- tifying the metrics to evaluate if the changes are successful.

• Operationalizing the change. This is where you dive into the details of design- ing, deploying, and using the 4R strategic HR processes of right people, right things, right way, and right development to create the change. It also includes determining the technology you will use to enable these processes.

This chapter is divided into four sections reflecting these themes. Section 8.1 provides tools for assessing your organization’s current level of strategic HR pro- cess maturity and using the assessment to define what sort of change you want to create. Section 8.2 provides examples of visible events that can be used to define and guide strategic HR efforts. Section 8.3 reviews steps to define how you will create these visible events. It also addresses metrics that can be used to guide and focus integrated strategic HR initiatives. Section 8.4 revisits how to use the 4R strategic HR processes to create change in your company and highlights concepts related to HR technology and data that will help increase the overall impact of integrated strategic HR processes.

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8.1 IDENTIFYING THE CHANGE YOU WANT TO CREATE Creating effective HR strategies requires both defining what you need to change and clarifying what you do not intend to change. Chapter 3 discussed the impor- tance of viewing talent management maturity as a pyramid whose sides reflect the 4R strategic HR processes of right people, right things, right way, and right development. When developing an HR strategy, use this model to define what level of change you need to create to meet your business objectives. This includes recognizing that your company does not necessarily need to be at the highest levels of process maturity to address its business execution needs.

Table 8.1 provides descriptions of the different maturity levels for each of the 4R strategic HR processes. This table can help clarify what changes you wish to create through your strategic HR initiatives. To do this, work through the following steps:

1. Define the business needs. What are the most critical commitments the company must fulfill to meet the expectations of its shareholders? When answering this question, think about what time frame makes the most sense for your company. In larger companies, you may want to look at commitments spanning five years or more. For smaller companies, the focus may be on the next one to three years.

2. Identify workforce impacts. How do you need to change the workforce to meet these commitments? Will you need to add talent to the workforce that you do not currently have? What will people need to do in the future that they are not doing now?

3. Prioritize business execution drivers. Which of the six business execution drivers introduced in chapter 3 are the most important based on these commitments and changes? What business execution drivers are most critical to achieving the company’s strategic objectives? Are the changes focused on increasing alignment, productivity, efficiency, sustainability, scalability, or governance?

4. Determine how you will need to change your strategic HR processes to sup- port these drivers. Review the different maturity levels in table 8.1 and identify which ones are most critical to supporting the business driv- ers, workforce changes, and strategic commitments identified in steps 1 through 3. Use this analysis to clarify the general nature of the changes you need to make to your strategic HR processes.

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Table 8.1

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Table 8.1 Talent Process Maturity Grid for Determining the Actions

Most Critical to Supporting Your Company’s Business Execution Needs

Right People Right Way Right Things Right Development

Level 5 (highest level of maturity)

Maintaining Talent Pipelines: Integrating external staff- ing and internal develop- ment processes to create a steady flow of talent into and across the company

Influencing Strategy: Analyzing data on employee performance to gain insights into overall strengths and weaknesses of the workforce

Operational Use of Goals: Providing leaders with clear insight into the types of goals employ- ees at all levels are pursuing and progress made toward achiev- ing them.

Building Talent Pipelines: Integrating the processes used to create jobs, hire and promote people, and develop employees based on a single strategy focused on building workforce capabilities to meet future talent requirements

Level 4 Forecasting Talent Needs: Forecasting future talent needs to ensure we have the talent to support our business growth and per- formance over the long term

Calibrating Performance: Making sure managers across the company evaluate employee performance using a common, consistent set of standards and expectations

Coordinating Effort: Creating collabora- tion and cooperation between people who share similar or inter- dependent goals

Encouraging Career Growth: Supporting and investing in high-potential employees to encourage them to build long-term careers within the organization

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Ta b

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Talent Process Maturity Grid for Determining the Actions

Most Critical to Supporting Your Company’s Business Execution Needs

Right People Right Way Right Things Right Development

Level 3 Building Talent Pools: Increasing the number of qualified candidates avail- able to meet our current job requirements

Basing Decisions on Performance: Creating alignment between people’s performance and the company’s pay and promotion decisions

Creating Meaningful Goals: Giving employees business goals and job assignments that are meaning- ful and relevant to their personal career objectives

Business-Driven Development: Giving people jobs and work assignments that challenge them to develop new skills and capabilities

Level 2 Selecting High Performers: Accurately evaluating can- didates to ensure we are hiring the best employee and avoiding hiring mistakes

Establishing Well- Defined Expectations: Identifying and clearly communicating well- defined performance expectations for differ- ent job roles

Aligning Goals: Making sure employ- ees understand the link between the goals they are working on and the overall strategic objectives of the company

Targeted Development: Identifying gaps between peo- ple’s current capabilities and the capabilities they need to take on future job assignments

Level 1 (lowest level of maturity)

Filling Positions: Efficiently processing new employees and onboarding them into the organization

Consistently Evaluating Performance: Ensuring the perfor- mance of employees is reviewed on a regular basis using a standard- ized and agreed-on process

Setting Tangible Goals: Ensuring employees have clear goals and know exactly what they are expected to achieve

Individual Development: Providing training and devel- opment resources that help people perform their current jobs

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It is important to have representation from all areas of strategic HR when addressing these questions. This includes leaders who manage staffing, perfor- mance management, compensation, training, and leadership succession and development. Higher levels of HR process maturity require greater levels of HR process integration. Even if the processes overseen by these leaders are not highly integrated now, they will ultimately have to come together to achieve higher levels of HR process maturity.

Also recognize that what you need to change is driven in part by what you are currently doing. For example, imagine a company is launching a new product line and wants to increase alignment around this strategy by increasing the maturity of processes used to focus employees on the right things. If the company cur- rently has no goal-setting process, then simply achieving level 1, “setting tangible goals,” may represent a major step forward. In contrast, if the company has a well- established goal-setting process, then the focus might be on achieving higher lev- els of process maturity such as “coordinating effort” or “operational use of goals.”

It is also important to recognize that achieving higher levels of process matu- rity may not be possible until you establish processes to support lower levels. For example, if a company wants to achieve “maintaining talent pipelines,” the highest level of “right people,” then it has to first create processes to support fill- ing positions, selecting high performers, and building talent pools. Overlooking lower levels of maturity can create significant problems. For example, I worked with a technology company that needed to increase productivity to more quickly respond to market changes. To achieve this goal, it implemented a rigorous cali- bration process to identify top performers and address low performers (level 4 of maturity for the process “Right Way”). But they never clearly defined the cri- teria used to evaluate performance (level 2 of maturity). As a result, the calibra- tion sessions often turned into bitter arguments between managers over whose employees were best, without any consensus around what “best” actually meant.

Defining what level of process maturity you are seeking to achieve allows you to define the sorts of strategic HR processes you need to put in place and how they need to be designed. It also gives you a sense of what level of effort will be required to achieve the necessary changes. It is usually not too difficult to move an orga- nization up one level of process maturity in less than two years. But moving up multiple levels of maturity can take three years or more (see the discussion: “Why Most Strategic HR Initiatives Take Three Years to Reach Full Effectiveness”).

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Creating an Integrated HR Strategy 313

W H Y M O S T S T R A T E G I C H R I N I T I A T I V E S T A K E T H R E E Y E A R S T O R E A C H F U L L E F F E C T I V E N E S S

A common question associated with deployment of HR initiatives is

how long it will take to get the processes up and running. The answer

depends on the process, but in most cases, a good answer is, “It will

take less than a year to get under way, but it will take three years to

become fully effective.”

There are two reasons “three years” is the magic number when it

comes to achieving strategic HR process effectiveness. First, the pur-

pose of these processes is to change how managers and employees act

and think about things like setting goals, making staffing decisions, or

developing potential. This requires overcoming past habits and instill-

ing new patterns of behavior. Such changes will not occur all at once.

They must be ingrained through educating, demonstrating, and rein-

forcing actions over time. Second, many HR processes occur annually.

The first year a new process is rolled out, people have to go up a learn-

ing curve simply to use it. The second year, they start to get comfort-

able with it. It is often not until the third year that they truly begin to

master it. One could argue that managers and employees are not famil-

iar enough with HR processes until this third year to provide educated

evaluations of process effectiveness. In essence, you need to have some

mastery of a process before you can truly say whether it works well.

Because many strategic HR processes have a three-year time line,

be direct with business leaders about the level of sustained commit-

ment needed for these processes to fully deliver value. Business lead-

ers should agree to support the process for three years before making

significant changes to it. Making major changes to HR processes more

often than every three years can create confusion and uncertainty in

the company. This doesn’t mean a process has to stay exactly the same

through all three years. But companies should refrain from making rad-

ical changes in years 1 and 2 unless the process is clearly not working.

In sum, you need to give the process time to work before you can accu-

rately say whether it is working.

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8.2 DEFINING WHAT THE CHANGE WILL LOOK LIKE It is important to define the changes that an integrated HR strategy will cre- ate when the strategy has been successfully deployed. In other words, what will people be doing in the future that they are not doing today? This is especially important if the goal is to create transformational change (see the discussion: “Distinguishing between Process Automation and Business Transformation”). Clearly defining what the change will look like ensures that process design deci- sions emphasize the right features and methods to support it.

D I S T I N G U I S H I N G B E T W E E N P R O C E S S A U T O M A T I O N A N D B U S I N E S S T R A N S F O R M A T I O N

Companies often talk about using strategic HR methods to create busi-

ness transformation. But what does it mean to “transform” a business

through HR? And how is this different from other ways HR processes

might affect the business?

Strategic HR processes, particularly those supported by HR technol-

ogy, provide two types of value. One source of value is through auto-

mating and simplifying HR methods. This is about making it easier for

managers and employees to complete activities they are already doing—

for example, putting existing paper processes online or standardizing

the methods used across the company to conduct performance reviews.

Automation and simplification add value through increasing efficiency.

The second source of value comes through transforming how a com-

pany manages its workforce. This is about improving workforce pro-

ductivity through creating better conversations, decisions, and actions

related to staffing, goal management, performance management, and

development. There are three basic kinds of transformation:

• Tactical—changing the things that employees and managers actu-

ally do. This is the most concrete aspect of transformation. It includes

completing performance rating forms and filling out development

plans. Tactical transformation is associated with aspects of a process

that you can easily measure (e.g., have employees recorded their job

goals in an HR technology system).

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• Interpersonal—changing how employees and managers interact with

each other. This includes coaching sessions by managers with employees;

meetings of employees with managers and coworkers to establish goals

that align with business strategies; and conversations between new and

existing employees to build relationships and facilitate job transitions.

• Conceptual—changing how employees and managers make deci-

sions. This is the most significant form of transformation because it

requires changing how people think. This includes having managers

incorporate data on employee performance into compensation deci-

sions, ensuring all managers use the same criteria when evaluating

employee performance and potential, and providing senior leaders

with data that influence their perceptions of the company’s work-

force strengths and weaknesses.

Achieving tactical transformation tells you a lot about process compli-

ance but does not necessarily indicate whether people are using the pro-

cess effectively. Achieving interpersonal and conceptual transformation is

the primary goal of most transformational strategic HR initiatives.

Table 8.2 highlights differences between process automation and

business transformation. Automation provides fewer benefits but is

much easier to implement. The risk of automation is that it may have

a negative impact on a company if the processes being automated are

ineffective to begin with. Automating a lousy process can be described

as “doing bad things quickly.” Transformation is more difficult to

achieve but provides more significant performance improvements.

Because transformation requires significant effort on the part of man-

agers and employees, there is also less risk of implementing processes

that do not add value as people will simply refuse to do them.

Strategic HR initiatives should clarify whether the end goal is process

automation or business transformation. Both types of change can provide

value, and it is possible to create HR processes that provide both. There is

also risk of creating processes that achieve automation but do not accom-

plish the extra, more difficult step of achieving true transformation. In

order to manage this risk, it is important to clearly define the kinds of

transformational change you are seeking to achieve and then establish

processes and measures that effectively support and assess this change.

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It is also far easier to get people to adopt new HR processes if they under- stand exactly what they are expected to do differently and why. A common myth is that people fear change. In reality, people do not fear change. They do dislike uncertainty and may fear changes they do not fully understand. The more clearly you can paint a picture of what the organization will look like after a new HR process has been implemented, the easier it is to get people in the organization to accept it. Do not just define the outcomes you will create through more effec- tive strategic HR processes; describe the actual things people will have to do in order to create these outcomes.

Table 8.3 provides examples of visible events associated with the use of stra- tegic HR processes. The events in the table correspond to the process maturity levels described table 8.1. These visible events illustrate changes a company can create through implementation of strategic HR methods. The events range from things associated with low levels of HR process maturity such as, “When asked, employees will be able to list the five to eight most important goals they are seek- ing to accomplish this year and explain how they link to the goals of the CEO,” to things associated with high levels of maturity such as, “Senior leaders will be given quarterly reports highlighting where the company is at risk of experienc- ing critical staffing shortages one, three, and five years into the future.” The com- mon characteristic underlying the events in table 8.3 is that they are tangible

Table 8.2 Process Automation versus Business Transformation

Process Automation Business Transformation

Makes existing methods more efficient Fundamentally changes how you do things

Accelerates good and bad performance Creates new experiences while eliminating others

Can lead to doing bad things quickly Enables doing things you could not do before

Does not require a mental mind shift Qualitative changes in perfor- mance or experience

Easily duplicated by others Difficult to copy

Easier to implement Harder to implement

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Table 8.3 Examples of Transformation Events Associated

with HR Processes

Right People Right Way Right Things Right Development

Level 5 (highest level of maturity)

Maintaining Talent Pipelines: Senior leaders will be given quarterly reports showing the rate of internal transfers, external turnover, and new hires associated with specific roles and departments in their organization.

Influencing Strategy: Senior leaders will receive quarterly reports indicating trends in revenue per full- time- equivalent employee for their departments and their relationship to employee skills, com- petency ratings, and

development activities.

Operational Use of Goals: Leaders and manag- ers will update or refine their goals at least once a quarter to reflect changing busi- ness demands.

Building Talent Pipelines: Leaders will meet once a quarter to discuss staffing needs and determine how these can be used to accelerate development of high-potential talent.

Level 4 Forecasting Talent Needs: Senior leaders will be given quar- terly reports highlighting where the company is at risk of experi- encing critical staffing shortages one, three, and five years into the future.

Calibrating Performance: Managers will meet twice a year to agree on which employees are among the top 20 percent most influential contributors to the company.

Coordinating Effort: All employees and leaders will have goals that are public and visible to other employees.

Encouraging Career Growth: Mentorship relationships will be established for at least 50 percent of employees identified as key talent.

(Continued)

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Table 8.3 Examples of Transformation Events Associated

with HR Processes

Right People Right Way Right Things Right Development

Level 3 Building Talent Pools: Recruiters will receive auto- matically generated reports indicating the number of applicants hired from different recruiting sources.

Basing Decisions on Performance: The merit increases of top-performing employees will be at least two times larger than the increase given to average-performing employees.

Creating Meaningful Goals: Every employee will be able to identify at least one goal he or she is working on that is sig- nificantly building that person’s capabilities and requiring him or her to learn new things.

Business-Driven Development: Managers will be evalu- ated based on internal transfer versus external turnover and rewarded for retaining and pro- viding talent to the organization.

Level 2 Selecting High Performers: All candidates will be inter- viewed by at least three people using structured inter- view guides built around key job competencies.

Establishing Well-Defined Expectations: Employees will receive behavioral feedback on their performance based on key competencies at least twice a year.

Aligning Goals: Managers will meet at least once a quarter with employees to review their goals to ensure they align with business priorities.

Targeted Development: All training investments will be clearly linked to specific business needs and job-relevant competencies.

Level 1: (lowest level of maturity)

Filling Positions: Managers will automatically generate job requisition and job postings by selecting from existing job description libraries.

Consistently Evaluating Performance: Performance of employ- ees will be reviewed at least once a year using consistent evaluation process.

Setting Tangible Goals: When asked, employ- ees will be able to list the five to eight goals they want to accomplish this year and explain how they link to the goals of the CEO.

Individual Development: Every employee will have at least one but no more than three specific devel- opment objectives listed in his or her development plans.

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319Creating an Integrated HR Strategy

things that can be seen in a company. The tangible nature of these events helps leaders, managers, and employees fully understand how the organization is going to change and why. It also helps guide the design of strategic HR processes by clarifying exactly what the processes have to create or support.

The events in table 8.3 are a small sample of the kinds of visible events you might create through the use of strategic HR processes. Use this sample as a start- ing point to define the specific changes you need to create in your organization to support your company’s business goals. Some of these events define specific suc- cess metrics (e.g., “Every employee will have at least one development objective in his or her development plan”), while others are more qualitative or conversational in nature (e.g., “Managers will meet twice a year to agree on which employees are among the top 20 percent most influential contributors”). Use the events in table 8.3 to engage with HR and line-of-business stakeholders in your company to define what changes make sense for your company given its business needs. Again, consider this question: When the new HR processes are implemented, what will people in the organization be doing that they are not doing now?

8.3 DEFINING HOW YOU WILL CREATE AND MEASURE THE CHANGE Once you have defined the visible events you are seeking to create, link these events back to the HR processes that will be used to create them and the busi- ness goals they are addressing. This further clarifies exactly what you are trying to accomplish and why. It also provides a useful check to make sure you have not drifted away from the original business objectives. Remember that you have now taken several steps since the original step of defining the company’s busi- ness goals and linking them to business execution drivers.

Defining how you will create the change with these higher-level goals in mind involves working through the following questions:

• What visible events are you going to create? Describe the actual events—for example, “Managers will meet once a quarter with employees to review their goals and sure they align with business priorities.”

• What is the organization trying to accomplish with this event? Tie the event back to the business execution drivers that it addresses—for example, “This will increase alignment in the organization to support our business plans.”

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• Why is this important? This is where you justify why this change is worth the effort by linking the change to specific business objectives—for example, “Our company’s business plan requires increasing revenue in new markets. To do this, we need to ensure employees’ goals effectively support products and regions they have not supported in the past.”

• How is the organization going to make this happen? Explain the HR processes that are going to be used to facilitate and support this change—for example, “We will deploy a goal management process along with manager training on goal- cascading methods to ensure every employee has goals clearly aligned to the new business plan. We will use HR technology to support the goal-cascading process and track whether managers are meeting with their teams to set goals.”

• How will you measure success? Identify metrics you can use to determine whether the change is being successfully implemented—for example, “Goal plans for 90 percent of employees will be updated at least once a quarter. Senior leaders will be provided with quarterly reports showing the number and types of goals that have been set to support the new business plan along with progress against these goals.”

This last question is particularly important to ensuring the success of the ini- tiative. Clearly defining measures of success not only allows you to determine if the HR strategy is ultimately successful, but also helps you to avoid drifting off course when working through the myriad of questions that you have to address during process design.

Table 8.4 lists some of the metrics that can be used to measure the success of different strategic HR processes. These metrics are broken into three categories: workforce data, process usage data, and employee attitude data.

Workforce data provide descriptive information about workforce operations and characteristics. These data, which provide insight into workforce quality, efficiency, and cost, can be used to track the number of people in different roles, employee productivity rates, turnover in different jobs, and the length of staffing vacancies for various positions, for example.

Process use data is used to track adoption and use of strategic HR pro- cesses. Examples include the percentage of people with completed performance appraisals, the frequency with which goal plans are updated, and the number of succession candidates identified for key roles. These data provide insight into how employees are using strategic HR methods.

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(Continued)

Table 8.4 Metrics of Strategic HR Process Impact

Right People Right Things Right Way Right Development

Workforce Data

Number of people hired

Time-to-hire

Time-to-fill

Cost per employee hired

Applicant quality

Applicant-to-hire ratio

Offer-to-acceptance ratio

Productive performance

Counterproductive performance

Tenure

Training performance/time to competence

Turnover costs

Employee demographics, equal employment oppor- tunity statistics

Internal promotions and transfers

Time and attendance

Number of employ- ees assigned to work on different strategic initiatives

Percentage of leaders using goal reports to make talent decisions

Increase in workforce productivity metrics

Greater variance in performance ratings

Percentage of leaders using performance management to make talent decisions

Decrease in fairness complaints, litigation

Correlation between performance ratings and salary increase or bonus

Time to fill for key roles

Number of

cross-

functional moves

Percentage of posi- tions filled with internal promotions

Percentage of key

positions unfilled

High-potential turnover

Employee demographics for key roles

Changes in employee performance and potential ratings over time

Average tenure in current position

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Table 8.4 Metrics of Strategic HR Process Impact

Right People Right Things Right Way Right Development

Process Use Applicant volume

Applicant source

Applicant demographics

Assessment scores

Interview scores

Percentage of employ- ees with completed goal plans

Percentage of employ- ees who regularly update goal progress

Time communicating goals

Time developing goal plans

Percentage of goals completed

Percentage of employ- ees with effective goals (based on auditing goal quality)

Percentage of employ- ees with aligned goals

Percentage of employ- ees with performance reviews

Percentage of manag- ers regularly updating performance manage- ment files

Percentage of execu- tives who regularly access performance reports

Time spent completing performance reviews

Percentage of manag- ers providing effective performance feedback (based on review quality)

Greater variance in performance ratings

Percentage of employees with completed profiles

Percentage of employees with current career devel- opment plans or using training resources

Percentage of key posi- tions with identified candi- date slates

Percentage of “ready=now” candidates for key roles

Employee Attitude

Applicant reactions

Hiring manager Attitudes

Employee attitudes

Turnover reasons

Employee, manager, and executive ratings of goal management process

Employee engagement and alignment ratings

Employee and leader ratings of performance management process

Employee engagement and fairness ratings

Employee engagement

Employee, manager, and executive ratings of career development process

Employee engagement and commitment survey scores

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Employee attitude data measure broad attitudes like employee engagement and job satisfaction, as well as attitudes related to specifics, such as the value of a training course or the efficiency of a staffing process. These data provide insight into the beliefs and perceptions that managers and employees have toward the organization in general, as well as toward specific strategic HR methods.

Although there is value in tracking all the data in table 8.4, it is usually most effective to pick three or four metrics that get at the nature of the change you are seeking to create and use these to focus your change efforts on what matters most. Workforce and employee attitude data tend to provide the most insight into the value and effectiveness of strategic HR process. But it is important to also include some process usage metrics to ensure the process is being adopted. If a process is not adopted, then obviously it is not going to be effective. And methods used to fix problems associated with a lack of process adoption are quite different from those used to fix problems associated with lack of process effectiveness.

8.4 OPERATIONALIZING THE CHANGE After you have defined the change you are seeking to create, clarified how it will have a positive impact on the company’s business objectives, and identified metrics to evaluate project success, it is time to begin designing, building, and deploying strategic HR processes that enable and support the change. Chapters 4 through 7 discussed the major issues to consider when designing these pro- cesses. The following are few additional things to keep in mind when you begin the process design phase:

• Establish a cross-functional steering team. Companies often create differ- ent teams to focus on redesigning specific HR processes such as staffing, performance management, or development. Having small, focused teams is important to efficiently working through the design questions that arise with each of these processes. But these different HR processes must also integrate with each other. To ensure effective integration of HR processes, it is useful to create a cross-functional steering team consisting of representatives from different areas of HR (e.g., staffing, development, compensation). This team is tasked with periodically looking across all the strategic HR processes to make sure they are aligned around common models and are able to share data effectively with one other.

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• Use the right technology to support process integration and process design. It is virtually impossible to implement large-scale strategic HR processes without some use of technology. The technology does not always need to be leading- edge software, but it must provide features that support the kinds of HR pro- cesses needed to support your business execution goals. It is important for this technology to support integration across different HR processes.

• Do not allow yourself to be overly constrained by relying on technology sys- tems that were not designed with integrated, strategic HR in mind. This can be a particularly significant issue for organizations that have historically treated HR as an administrative function. Many of these companies use HR technol- ogy systems that were primarily built to support financial operations. These systems may be called “HR technology,” but they lack the rich set of features and functions needed to support strategic HR methods. Strategic HR is a spe- cialized area, and it requires the use of specialized, highly configurable tech- nology. If you are a small company, you may be better off modifying some general form of technology like Excel rather than trying to get an adminis- tratively focused HR system to perform strategic HR tasks. If you are a large company, you may need to seriously challenge your IT department to provide you with the tools you need to perform your job effectively.

• Achieve perfection through application. Some companies spend months on process design before they move to process deployment. These efforts to cre- ate the perfect process never work. No matter how much time is spent using whiteboards to think through process design, you never really know how well a process will work until you try it. It is usually better to launch a good pro- cess quickly than to spend months trying to design a great process that takes years to go live. Realize that no matter what you implement, you are going to want to make changes. Make sure the technology you are using is flexible enough to allow modifications after the process has been launched.

• Pace the change. Introduce change into the organization at a pace that will challenge but not overwhelm managers, employees, and HR. It can be useful to categorize the different changes you are creating based on business value and ease of adoption. Changes that are both easy to implement and provide considerable value should be given priority. Consider spreading out deploy- ment for changes that provide high value but are also more difficult to imple- ment. See if there is a way to introduce changes at a more gradual pace so you

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Creating an Integrated HR Strategy 325

do not overwhelm the organization. But do not lose sight of the ultimate rea- sons for driving the implementation of new strategic HR methods. If a change is critical to supporting the company’s business execution needs, do not shy away from making it happen. The most difficult changes are often the most beneficial and long lasting.

• Strive to move from a push to a pull. When you start changing your strategic HR methods, be prepared to encounter considerable resistance. This is par- ticularly true if your organization has historically treated HR as an admin- istrative function. People will initially wonder why the company is changing its HR processes and are likely to view these changes with skepticism. But as managers and employees begin to see the value of using more effective HR methods for staffing, talent management, and development, they will start to ask what else HR can do to help them be more successful.

The beauty of strategic HR is that increasing process maturity in one area cre- ates tension to increase maturity in other areas. For example, if a company starts measuring and rewarding employees based on clearly defined competencies, then employees will start asking for resources to develop these competencies. As employ- ees start developing competencies, they will become more valuable as a source for internal hires. This will create interest in tools to support long-term career develop- ment and succession planning, which will lead to more interest in workforce plan- ning, and so on. The more you improve one area of strategic HR, the greater the desire in the company to improve other areas (see the discussion: “Developing Our Own: How One Company Created a Virtuous Cycle of Strategic HR”).

D E V E L O P I N G O U R O W N : H O W O N E C O M P A N Y C R E A T E D A V I R T U O U S C Y C L E O F S T R A T E G I C H R

The interconnected nature of strategic HR processes can be both a chal-

lenge and benefit. It is a challenge because the ability to increase maturity

in one area of strategic HR is constrained by maturity levels in other areas.

For example, a company’s staffing department will struggle to create

strong talent pipelines if the company lacks effective methods for devel-

oping internal talent. Similarly, a performance management process will

never become highly effective if the data from this process are not used

to guide decisions related to compensation, promotion, and development.

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The interconnected nature of strategic HR is a benefit because

increasing maturity in one area of strategic HR creates pressure to

improve other areas. For example, when a company starts using perfor-

mance management data to make internal staffing decisions, it creates

pressure to create methods that ensure performance management data

are accurate and complete. When employees know that performance

management results affect their career opportunities, they will start

asking for development resources that allow them to take action on the

results of their performance assessments. The result is a virtuous cycle

where improvements in one area of strategic HR encourage and sup-

port improvements in others areas.

Over my career I have seen virtuous cycles of strategic HR play out in

many companies. One of the most interesting is a retail company that

early in its growth chose to adopt a policy of filling operational leader-

ship positions only through promoting internal talent. The president of

this company believed that the best way to maintain a strong culture

and build employee engagement was to build leaders internally rather

than hire from outside. This policy created a domino effect in terms of

its impact on strategic HR.

The promote-from-within policy forced the company to develop

effective processes for identifying and selecting internal leaders from

frontline staff. The company could not afford to promote employees

who could not perform these leadership roles, so it established a vari-

ety of methods to develop and measure leadership potential through

on-the-job assignments. The company also had to hire frontline staff

with the capabilities to become future leaders. This led to creating

more rigorous selection methods. As the company’s promotion-from-

within policy became more widely known, it started to attract a higher

caliber of talent for frontline jobs than would normally apply. People

were not just applying to fill a job; they were applying so they could

start a career with the company. As the company began hiring frontline

staff with stronger capabilities, it was able to raise the bar on what was

required to be promoted into leadership roles. This in turn led to creat-

ing even more rigorous methods to develop and assess potential.

This company’s decision to promote from within created pressure to

build stronger development programs, which led to the need to create

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Creating an Integrated HR Strategy 327

better hiring methods to ensure employees could succeed in these pro-

grams. As the quality of the workforce increased, the expectations of

the company toward employees also increased. The result is a work-

force that in many ways is getting stronger and stronger over time.

To be clear, I am not saying that companies should adopt strict pro-

mote-from-within policies. Such policies are neither feasible nor bene-

ficial for many organizations. There are also downsides to overrelying

on internal promotions in terms of innovation and diversity of think-

ing. But for this company, a strong promote-from-within policy worked

extremely well. Much of the reason it worked was not due to the pro-

motions themselves, but due to the pressure the promotions put on

developing better strategic HR methods for staffing, performance

management, and employee development. The key lesson from this

example is that strongly focusing on improving one area of strategic HR

often creates pressure to improve other areas.

8.5 CONCLUSION This chapter walked through concepts related to designing and implementing strategic HR initiatives. This starts with defining the business reasons of why it makes sense to change how your company currently hires, manages, and devel- ops people. Do not change HR processes just because it seems like a good idea; change them because they are critical to supporting key business execution drivers.

The next step is to define what changes are required to meet your business execution needs and articulate the visible events and metrics that will result from these changes. In particular, what will managers and employees do in the future that they may not be doing now? Finally, use these envisioned changes to guide the redesign of your strategic HR processes. This includes think- ing through the role technology will play in enabling and supporting these processes.

The challenge to developing and implementing an integrated HR strategy is that it requires approaching HR at a holistic, interconnected level. Staffing, performance management, goal management, and development cannot be thought of in isolation from each other. But the benefits of this integrated

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approach are multiple. Integrated HR strategies drive more effective and last- ing results by leveraging multiple levers to drive positive workforce change. They create a more coherent experience for the managers and employees who ultimately have to adopt and use HR methods. And they create a virtuous cycle where improvements in one area of HR create pressure to make improve- ments in the other areas.

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