Linking HR to business strategy

The recently concluded MTI HR Forum organized by MTI Consulting focused on linking HR to business strategy. The forum, in addition to the presentations by an eminent group of HR and Industry leaders was supplemented by MTI's research and presentation of CxO Survey findings conducted in Sri Lanka.

The main elements that contribute towards Human Performance based on MTIs HR Strategy Model were covered at the forum. Setting the context for the Forum was the presentation on Business Challenges and Human Performance ROI. MTI Consulting CEO Hilmy Cader said that the Global Financial Crisis was man-made and is, therefore, an HR issue. The crisis has also unmasked inefficiencies in the way we have managed our Economies, Enterprises and Employees.

The major Challenges faced by businesses include shrunken markets, high fixed costs and bleeding bottom-lines. Corporates have responded to these business challenges in adverse ways, with giant corporate entities on life support, a number of business closures, record redundancies and indiscriminate cost cutting which have negatively impacted employee value propositions. Business challenges transpires into HR challenges and at times levels HR challenges.

It is within this context of Business Challenges the demand for Human Performance is to be achieved, and the belief that Human Performance in turn would enable businesses to overcome some of these challenges. There is an upside to the downturn and businesses can benefit from those opportunities. "It is time for HR to think like an investment banker, but one that is still in business", said Hilmy Cader.

The Configuration of Organizations creates the foundation for the execution of strategy and achievement of business goals. MTI's HR Survey revealed that 90 percent of organizations used the descriptors of 'Hierarchical' and 'Functional' to describe their current structures. The survey also highlighted that organization structures are rarely audited, with 57 percent surveyed only making minor changes within the past 12 months. It is apparent that Knowledge workers are being managed within the organization as an extension of the industrial era.

Strategy

Effective Organization Structures begin with Strategy and needs to be flexible and agile. Incremental changes will not produce the quantum results expected and a regular process to relook at organization structure is essential. Organizations should also think beyond hierarchical and functional structures which result in building functional empires, and consider multi-disciplinary process based structures.

LOLC COO, Kithsiri Gunawardena shared the LOLC experience on the group's decision to develop strategy, whilst some were concerned that it was not necessary when the company was performing well. However, the structure developed based on strategy with the top management's involvement and total commitment saw the company reaching higher performance and a sharp increase in profits.

Business models and practices have become complex and dynamic, so have jobs. The ability to perform a complex task leading to desired outcomes is what employers are looking for in people. Competency has become a powerful tool in defining the blend of Attitude, Knowledge and Skills needed in the job.

MTI's HR Survey revealed that while 73 percent claimed to have a Competency Framework in place, in most cases it is only confined to Job Descriptions or an extension of annual performance evaluation criteria. There is also inconsistency in using competencies across the HR value chain, with only 58 percent admitting that this is done. 52 percent said that there are significant gaps in current competency levels of staff. For competencies to be a successful tool it needs to be integrated across the HR value chain, in recruitment, performance evaluations, rewards, training and development. Competencies should also avoid big picture tendencies and be simple and detailed down to the level of micro applicability. The Toyota Lanka competency mapping process is based on this and is integrated across all HR functions.

Motivation

Group Director HR at MAS Holdings, Deepthi de Silva stressed the need for competencies in organizations and how these competencies can be kept alive quoting examples of how this is done at MAS.

Poor employee performance is often attributed to motivation and the lack of it. Employees often are aware of the base performance line and will strive to maintain a current performance level that is higher than the firing-line. Organizations want employees to demonstrate their optimum performance levels. While competencies and culture will play a part in employee performance, motivation is key in helping employees reach these levels of performance. 55 percent of HR Managers surveyed cited low motivational levels of their staff to be an important challenge.

This challenge arises from the fact that HR Managers have a ring-side seat. Inability to link low motivation to performance impact and building a business case which is not convincing contribute to the unsuccessful attempts to fix it.

Organizations should look at developing an Employee Value Proposition (our internal customer), like we do for our customers, as opposed to a blanket approach of providing a number of benefits. There is also a need for experimentation with value propositions and motivational initiatives with the goal of constantly looking for improved Return on Investments and Human Resource Satisfaction.

Driving human performance in good times in itself is a challenge and businesses today are forced to ponder upon what drives human performance in bad times.

Sharing from their extensive experience in the industry the panellists presented diverse views on the topic. "The ideal good time is when we are able to predict the future and for these times we need managers. In times when predictability is low what we need is leadership across the organization to keep driving human performance", said Eagle Insurance, Managing Director Deepal Sooriyaarachchi. Hayleys, Head of Group HR, Sunil Dissanayake shared eight areas that can be leveraged to increase human performance and practical steps to achieve this. He said, "Consistency is the key whether in good times and bad times, to keep it simple and concentrate on getting the basics right". Lasantha Salgado outlined on the need to know what motivates individuals on the job and stressed the differences between expectations of the young workforce and older employees.

MTI Business Analyst, Niyanthini Kadirgamar shared research findings on the challenge of managing employees in the recession who have adopted a lifestyle centered around lucrative executive packages, which may not be linked to performance.

To find accurate business impact, HR performance measures are essential. It is not sufficient to measure only business results, productivity and processes must also be included in performance measurements. Organizations soon find out that only what gets measured, recognized and rewarded gets done. Corrective action must be included as part of performance measurements setting the goal for continuous improvement.

The survey showed that 33 percent or organizations conduct a bi-annual evaluation and 60 percent do an annual evaluation. However, HR managers voiced doubts on the extent to which these evaluations are a reflection of accurate performances. Evaluations are done mostly as compliance drive and rarely with the intent of genuine performance enhancement. Non-value adding Middle Management supervision masked by distance to line of impact creates inefficiencies within the organization that reflects on the overall performance levels.

Higher human performance

Measuring management capacity utilization and not just end results is essential for organizations to achieve higher human performance. Creating transparent linking of all KPIs helps eliminate overlaps and pressures performance.

To avoid the nightmare of a futile year end performance management exercise it is essential to promote Performance Management throughout the year said, Fonterra Brands Human Resource Director, Roshan Kulasiriya. Kulasuriya recommended leadership involvement in goal setting process and guidelines on weightages set based on business priorities. Quarterly reviews will help in tracking progress on the goals, providing support and manage expectations. The annual performance reviews will have no surprises for employees and will be a reflection of results embedded to capability process.

Culture, the underlying element in driving performance is important as we 'live' our careers in our organizations and professions. Cultivating a conducive working environment to harness individual performance and HR satisfaction remains a challenge for HR managers. While 70 percent claimed that they have well articulated corporate values only 33 percent feel that the employees live these values.

On an energized quick-fire round MAS Intimates Director HR, Shanaaz Preena and Hemas Holdings, HR Director, Isuru Thillakawardana shared their opinions and experience with Organization Culture.

Preena said, "Organization politics is everywhere and cannot be easily avoided. As human beings it is inherent in us to indulge in politics". Thillakawardana said that politics within organizations can only have a negative impact and should be minimized. They shared their experiences in working within a range of multi-national organizations to family-owned businesses and the diverse cultures of these organizations.

What is your Human Performance ROI? though there are no easy answers, as businesses begin to ponder on this question they will discover the magnitude of not paying closer attention to the ROI it can leverage from its most potent asset - people, he said.