24 Lessons from World Greatest CEO – Jack Welch -10

Pounce everyday vs Move cautiously

Pouncing everyday means moving faster than competitors to win business, please customers and snap up opportunities.

· Live urgency – don’t waste time
· Make decision faster – don’t sit on decisions. Empty that in-basket so that you are free to
search out new opportunities.
· Work harder – When you are ready to go home after long day of work, stay a few minutes
more and get a jump on the next day’s work
· “Don’t sit still. Anybody sitting still, you can guarantee they’re going to get their legs knocked
out from under them.”

24 Lessons from World Greatest CEO – Jack Welch -9

Make intellect rule vs Let hierarchy rule

· Spend an hour per week learning what competitors are doing
· Offer a reward for the best idea
· Work for organizations committed to training and learning

- “…the desire, and the ability, of an organization to continuously learn from any source, anywhere-and to rapidly convert this learning into action – is its ultimate competitive advantage.”

24 Lessons from World Greatest CEO – Jack Welch 8

Defy tradition vs Respect tradition

· Hold a”why do we do that way?” meeting
· Invite colleagues from your department to contribute one idea on changing something
important at the company
· Do not be afraid to buck conventional wisdom
· “Shun the incremental and go for the leap”

24 Lessons from World Greatest CEO: Jack Welch -7

Lead by energizing others vs Manage Others

From “Command and Control” (The stripes on your shoulder) to “Boundaryless”

· Never lead by intimidation
· Let others know exactly how their efforts are helping the organizationSend handwritten thank you notes to colleagues and customers

24 Lessons from World Greatest CEO: Jack Welch -6

See change as an opportunity

· Know that change is here to stay
· Expect the least expected, but move quickly to stay a step aheadPrepare those around you for the inevitable change that will affect their lives – talk about change in a positive light so people do not fear it. Speak of it as an opportunity, not threat.

24 Lessons from World Greatest CEO: Jack Welch -4

Face Reality


Look at things with a fresh eye
Do not fall into the ‘false scenarios’ trap
Leave yourself with several options – the best time to change is when you want to, not when you have to.

24 Lessons from World Greatest CEO: Jack Welch -5

Simplify


Simplify the workplace – eliminate or improve complicated forms, processes and ways of doing things.
Make meetings simplerEliminate complicated memos and letters

24 Lessons from World Greatest CEO: Jack Welch -3

Blow up bureaucracy


Drop unnecessary work – workout to determine current which can be either eliminated or improve
Work with colleagues to streamline decision making
Make your workplace more informal – Send handwritten notes instead of memos, keep meetings conversational and encourage dialogue up and down the corporate ladder.

24 Lessons from World Greatest CEO: Jack Welch - 2

Get Less Formal


Brainstorm with colleagues and bosses
Hold more informal meetings
Consider a once-in-a-while informal get together

4 Lessons from World Greatest CEO: Jack Welch -1

LEAD

It is all about leadership, not management.
Leader – someone who could express a vision and then get people to carry it out.
The hero is the person with a new idea
New ideas as a lifeblood of the organization


Articulate a vision, and spark others to execute it
Do not manage every excruciating detail
Involve everyone and welcome great ideas from everywhere

Don Kirkpatrick's 4 Level of Evaluation

I took this article from frwded email in MHRO and originally produced by CLO Magazine. It's a great stuff to read and useful for those who are in Learning and Development...

Have a reading pleasure!

Don Kirkpatrick: The Father of the Four Levelsby Daniel Margolis Don Kirkpatrick wrote the book on evaluation in learning and development, literally. Developed in the 1950s, the Kirkpatrick Model, often referred to as the Four Levels of Evaluation, is the standard for training evaluation and is still being taught and read today.
Kirkpatrick himself is now an elder statesman of corporate training. Asked his age, he said "I'm 80," before pausing and adding "five." But the octogenarian is still active in the field. This year, he taught two sessions at the American Society for Training & Development (ASTD)'s annual conference, as he has every year since 1960. "I've been in training all my life," Kirkpatrick said. "My feeling is that training is absolutely necessary for companies to keep up to date, to meet competition. As far as the curriculum is concerned, it must be practical.

Many programs have been just enjoyable; the teacher is out to get good ratings on the reaction sheets." That type of complacency is just what Kirkpatrick's four levels set out to address.

The levels measure:
1. Reaction: what students thought of the training.
2. Learning: the resulting increase in knowledge or capability.
3. Behavior: the extent of behavior and capability improvement and implementation.
4. Results: the effect on the business resulting from change in students' performance. "It used to be that trainers would feel, 'If we get a good reaction and teach people the skills and knowledge they need, that's all we can do.

We have no control over them when they go back to their job,'" Kirkpatrick said. "My philosophy is, yes, you have no control over them, but you must have influence on them, because unless that training gets used on the job, it's really worthless." Kirkpatrick believes that conception is the biggest challenge for learning and development in the corporate arena, and one that organizations across the board still grapple with in evaluation. "Many companies still are doing just Levels 1 and 2, but the trend is certainly for people to get up to Levels 3 and 4, because otherwise the training is really not worth it," he said. "Top management, we call it the jury, is not going to approve the budget unless you can prove that when people go back to the job they're using what they learn, and that's going to accomplish the results that they look for.
" A Life in Learning Begins Kirkpatrick began his college education in the wake of World War II. He received a bachelor's degree in business followed by an MBA from the University of Wisconsin in 1948 and '49, respectively.

Upon receiving his master's degree, Kirkpatrick was given a choice of paths.
"A professor said to me, 'Don, we have two opportunities. One is for you to go to a training program at a company and move up the ladder and become a manager of some kind,'" Kirkpatrick said. "'Two is to go with the Management Institute at the University of Wisconsin to teach and train supervisors and managers to do their job better.' I chose the second one because I had a desire to teach, and this was not only a teaching job, but it was a practical job.
I wanted to teach supervisors and managers to be more effective. I felt in a university you teach one course, and who knows what happens to [the students] - how does that apply to their whole life?" Kirkpatrick immediately began teaching seminars at the school's Management Institute, then decided to get his Ph.D. "I was one of the fortunate ones who picked a dissertation that would pay off in the future; [it] was on evaluating training programs," he said. "I felt as long as I was teaching, why not evaluate it?" Kirkpatrick remained there until 1960, when he took a job as a training manager at the International Minerals & Chemical Corp. in Chicago. In 1963, he became personnel manager at manufacturing and engineering company Bendix Corp. in South Bend, Ind., before returning to the University of Wisconsin at Milwaukee.
He remained there for two decades, eventually becoming professor emeritus, before retiring. In the meantime, Kirkpatrick's status in learning and development grew via his published work. In 1959, he received a call from Robert Craig, then editor of ASTD's journal. Craig knew Kirkpatrick had done research on evaluation and asked if he'd contribute an article. Kirkpatrick shot back that he'd write four articles. "So I wrote one on reaction; one on learning; one on behavior; and one on results; and it took off like wildfire," he said. "I never called it the four levels, I never called it the Kirkpatrick Model, all I did was teach it in certain places where I had the opportunity. "[As] soon as that article came out, I was on national conferences and invited into many companies to do the program. A guy at Ford Motor Co. said to me, 'Don, what you've done is taken that elusive term 'evaluation,' which we all talk about in training, but we were all talking in a different language, and now you've given us a language of four simple practical terms that everybody can understand,'" This new notoriety gave Kirkpatrick's career as a business consultant so much momentum that his published work faded from view. "I didn't even write my first book until 1993 - 33 years later," he said. "Someone said to me 'Don, people can't find your articles anymore.

They keep quoting from [them] and people talk about the levels, but where can they find from the horse's mouth what you really came up with?

'" That book, Evaluating Training Programs: The Four Levels, is now in its third edition and has been translated into multiple languages. More books have followed, some co-authored by Kirkpatrick's son Jim, vice president of global training and consulting for SMR USA. A New Piece of Equipment Kirkpatrick is still a big believer in classroom-based, instructor-led training. "As a matter of fact, I'm so old-fashioned I still use the overhead projector instead of PowerPoint, which ASTD and others don't like too well, but [that's] the way I teach best," he said. "I tell people, 'Here's a new piece of equipment. You call it the overhead projector,' and they get a kick out of that." He said e-learning, while convenient, is limited by the learners' willingness to teach themselves: a fatal flaw.
"There are limitations in what you can do on the computer, and unless people are really motivated, it's not going to work very well, and you don't get the interaction either," he said. "That's one of the problems with e-learning, is to try to get metrics. When you do it on the computer, you've got a lot more problems in trying to get people to reply to surveys because they're so busy. It's much easier to do it when you've got instructor-led programs."

According to Kirkpatrick, the state of measurement when he started in learning and development was limited to measuring reaction of students and what they had learned. "To some extent they were using pre-tests and post-tests to try to measure learning, but there was very little of Level 3 and Level 4 - going out on the job and working with managers to get them on board so they can help you evaluate programs and also help you implement them," he said. Kirkpatrick relayed a story from early in his career when he asked a group of supervisors he was training what their boss was likely to say to them when they returned to work.

Kirkpatrick was told: "Well, he's probably going to say, 'Boy, the work piled up while you were gone. Hope you had a good time; now, let's get to work.'" "And I thought to myself, 'What a mistake,' because many of those people were sent to programs because the personnel department had signed them up," he said. "And their manager didn't even know the content; the supervisor was forced to let them go and was not too happy." Thereafter, Kirkpatrick began advocating for management to speak with people before they're sent to training, encouraging them to enjoy the experience but letting them know when they returned they would be expected to report what they learned and apply it on the job. "And then we've got to measure that," he said. "We've got to determine to what extent have they applied it on the job, and we do it by going out or doing surveys, asking them to what extent they've applied [training] and getting their managers to say to what extent they've applied it. Unless those people change their behavior, the program really is of no benefit to the company." Kirkpatrick believes that senior management should take a similar approach and get out in front of the development of training. He said any training program should begin by asking executives what they expect to accomplish with the learning intervention, what success will look like and what results they hope to achieve. "We try to start with the people who are going to judge it, and then back up," Kirkpatrick said. "We don't just sit in our office and have curriculum design people design the content of the program." The Next Generation Asked what young learning and development professionals - people coming into the industry this year - should think about in terms of their job role and their approach to measurement, Kirkpatrick said they should learn the four levels. As fundamental as they are, some companies still struggle in their application. In particular, end users often think they can skip levels, but this will blur measurement or render it useless.

"I had a lady from Microsoft one time call me and say, 'Don, we've measured Level 1 and Level 2, is it OK to go to Level 4 and measure results?'" Kirkpatrick said. "I said, 'No, it is not OK because you don't know where the results came from.'" "We call it the chain of evidence. You get evidence on Level 1 that they liked the program - they thought it was practical; Level 2 that they learned the knowledge, skills and attitudes; Level 3 that they changed their behavior; and Level 4 that you're going to get the results from it." Kirkpatrick acknowledged that when learning and development professionals have mastered the four levels, they may choose to depart from them or further the methodology, citing research published by Jack J. Phillips in 1996 titled "How Much Is the Training Worth?" Phillips suggested a fifth level: ROI. Here, the results of training are converted to monetary values and compared with the cost of the program itself, thus quantifying the true contribution of training. "Now if you want to get to Jack Phillips' ROI, that's up to you, but that's a very complicated process, and it isn't that easy to do," Kirkpatrick said. "Anybody in training, you better start with the four levels, and then you can take off from there any way you want to." What should young learning and development professionals think about in terms of their job role and their approach to measurement? Kirkpatrick said they better learn the four levels before choosing to further the methodology.


[About the Author: Daniel Margolis is a managing editor for Chief Learning Officer magazine.]

Premise of HR Value

All,

Another input on HR Value Proposition

Value is defined by the receiver, not the giver, any value proposition begins with a focus on receivers, not givers.

HR needs to be open to what others want!, then defines beliefs, goals and actions on others
Question to ask in developing HR Value Proposition
Who are the key stakeholders I must serve?
What are the goals and values of the receiving stakeholders?
What is important to them?
What do they want?

HR

- With Employees: …Should demonstrate that being more productive will help the employee stay employed
- With Line Managers:…Need to show to line managers how investment in HR work will help deliver business results
- With Customers:…need to remember that their interest in customers must create value to their product or services customer receive.
- For Shareholders:…Must create an organizations that deliver results today and intangibles that give owners confidence that results will be delivered in the future.

Starting HR Transformation with value proposition has six (6) important implications:

First: Human Resources work does not begin with HR-it begin with the business “We do not need to aspire to be partners in the business. We are the business”

Second: The ultimate receivers of business reside in marketplaces that company serve.
HR must begin with the line of sight to the marketplace.
HR must create a line of sight to the multiple and frequently conflicting demands of stakeholders ranging from internal clients such as managers and employees to external clients such as customers and investors.
HR professionals must have knowledge of external business realities before they can frame, execute, and create substantive value through even the most basic of HR agendas.

Third: Framing HR as a form of competitive advantage.
Competitive advantage exists when a firm is able to do something unique that competitors cannot easily copy; and what it does better than what competitors can do. This is called a “Wallet Test”
“Wallet Test” e.g. An internal operation passes the wallet test if it inspires customers or shareholders to take money out of their wallets and put it into the firm’s wallet instead of into the wallet of competitors.
If HR is to create competitive advantage, it must create substantial value with similar concrete results.
HR passes the ‘wallet test’ when it creates human abilities and organizational capabilities that are substantial better than those of the firm’s competitors-and thus move customers and shareholders to reach for their wallets.

Fourth: HR professionals must align practices with the requirements of internal and external stakeholders.

Fifth: It directs HR professionals to acquire the personal knowledge and skills necessary to link HR activity to stakeholder value.
When HR fails to make this linkage, it allows “noise” to occur between HR practices and stakeholders demand
Noise may be a lack of knowledge of external customers and shareholders, business strategy, or new HR processes.

Sixth: It leads HR professionals to view a company’s key stakeholders from a unique and powerful perspective.
Unique- implies that other functions or members of the leadership team do not share this same perspective and do not realize they need it.
Powerful – implies that this perspective adds a substantial value in helping the organization succeed.
HR professionals must be able to understand and value the finance and sales perspectives, but they must also add their own point of view.
E.g. HR perspective that are both unique and powerful is one that establishes the linkages between employee commitment, customer attitudes, and investment returns.
With a unique and powerful perspective of their own, HR professionals will see aspects of the business environment that go beyond what other business disciplines bring and that add substantially to business success.

Source: Dave Ulrich, etc, etc.

HR Transformation

Having read through one of the Book by Dave Ulrich and coupled with my knowledge and exposure in HRM/OD, I am now sharing with you the following key points on HR Transformation:

• Many attempts at HR effectiveness start without defining value
  E.g. some companies invest in e-HR services such as portals and online employee services and believe that they have transformed HR, but they have not.
  
• While e-HR may be part of an overall transformation, it is merely a way to deliver HR administrative services.
  
• HR transformation must change the way to think about HR’s roles in delivering value to customers, shareholders, managers, and employees and not just about HR how services are delivered and administered.
  
• Moving toward service centers, centers of expertise, or outsourcing does not mean that HR has been transformed.
  
• HR transformation changes both behavior and outputs. The changes must improve life for key stakeholders in ways that they are willing to pay for.
  
• Changing any single HR practice (staffing, training, appraisal, teamwork, upward communication) does not create a transformation. Unless the entire array of HR practices collectively adds value for key stakeholders, transformation has not occurred
  
• Transformation requires integrating the various HR practices and focusing them jointly on value-added agendas such as:
  - Intangibles
  - Customer connection
  - Organization capabilities and
  - Individual abilities
  
• Questions to ask when developing HR strategy
  - Our goal is to be a……
  - We will do this by leveraging…..
  - And we will ensure that we anticipate…..
  - And we will invest in…..
  - And we will be known for…..
  - And we will work with unyielding….
  
• Transformation requires whole new agendas, thoughts, and processes across the entire department, not just on the part of a few individuals.
  

A fundamental transformation of HR starts with a definition of HR value: Who the receivers are and a clear statement of what they will receive from HR services.

Cheers.

AMT

Defining & Measuring Human Capital

Another good article/essay from CIPD

Definition of Human Capital

In our research work at CIPD, we have found it helpful to describe human capital as one of three elements to make up intellectual capital. Intellectual capital describes the knowledge assets that are available to the organisations and is a large part of intangible value. It can be described as:

Human capital – the knowledge, skills, abilities and capacity to develop and innovate possessed by people in an organisation

Social capital – the structures, networks and procedures that enable those people to acquire and develop intellectual capital represented by the stocks and flows of knowledge derived from relationships within and outside the organisation

Organisational capital –the institutionalised knowledge possessed by an organisation which is stored in databases, manuals etc. This would also include HR policies and processes used to manage people.

In order to be effective, organisations must be able to understand the relationships between these different forms of capital. Human capital alone will not create value. People have to be motivated and managed by the use of good HR practice and given the opportunity to develop and use their skills to create goods and services which can be sold. If the knowledge they are creating cannot be embedded in goods and services that are in demand, then this human capital will have no value to the business.

Measuring human capital

Once people have been recognised as assets, it then becomes important to be able to quantify the value of this asset. This is vital for informed decision making about how to manage, and maximise the return on investment. Most human capital measurement has been designed with the aims of proving the value of people - assessing the impact of human resource management practices and the contribution of people to bottom-line performance.

However, the methods of measurement differ from company to company. Research carried out for CIPD in 2001 concluded that there was no single measure or set of measures that would provide a value for human capital.

Defining Human Capital Management

Source: CIPD



In our research work at CIPD, we have found it helpful to describe human capital as one of three elements to make up intellectual capital. Intellectual capital describes the knowledge assets that are available to the organisations and is a large part of intangible value. It can be described as:
Human capital – the knowledge, skills, abilities and capacity to develop and innovate possessed by people in an organisation
Social capital – the structures, networks and procedures that enable those people to acquire and develop intellectual capital represented by the stocks and flows of knowledge derived from relationships within and outside the organisation
Organisational capital –the institutionalised knowledge possessed by an organisation which is stored in databases, manuals etc. This would also include HR policies and processes used to manage people.
In order to be effective, organisations must be able to understand the relationships between these different forms of capital. Human capital alone will not create value. People have to be motivated and managed by the use of good HR practice and given the opportunity to develop and use their skills to create goods and services which can be sold. If the knowledge they are creating cannot be embedded in goods and services that are in demand, then this human capital will have no value to the business.
Measuring human capital



Once people have been recognised as assets, it then becomes important to be able to quantify the value of this asset. This is vital for informed decision making about how to manage, and maximise the return on investment. Most human capital measurement has been designed with the aims of proving the value of people - assessing the impact of human resource management practices and the contribution of people to bottom-line performance. However, the methods of measurement differ from company to company. Research carried out for CIPD in 2001 concluded that there was no single measure or set of measures that would provide a value for human capital.

History of OD

OD developed primarily in the USA out of a number of different schools of thought and practice that have included social psychology, systems thinking, and psychotherapy. More recently, this has also included newer developments such as business process re-engineering, story-telling and large group interventions.

This, in part, explains some of the confusions about OD. The term ‘OD’ is sometimes used interchangeably with other disciplines, such as organisational design, learning and development, and organisation effectiveness.

As a result of this, two people may share the job title ‘OD consultant’, yet come from very different disciplines and do some very different things in their work.

Academic beginnings

American psychologists and behaviourists working in the late 1940s and 1950s found that the application of participative methods to small groups led to attitude change, higher performance and greater commitment.

Abraham Maslow argued for the inherent potential of individuals to pursue ‘self actualisation’, which was more likely to be achieved under conditions of openness and personal recognition. Organisation theorists like Chris Argyris and Rensis Likert advocated organisation-wide participation as a means of motivating individuals and hence achieving greater performance.

New theories of leadership and change also developed: for example, I. Some of the early founders were heavily involved in the T-group movement, a movement resembling group therapy and focusing on group dynamics (although the ‘T’ was said to stand for ‘training’ rather than ‘therapy’). T-groups operated on the underlying premise that causality for behavioural problems lay in an individual’s perceptions, assumptions and feelings concerning events and people around the individual. The solution could be found by altering these elements with feedback in a sensitivity group led by a nondirective trainer.

OD spreads

In the 1960s, the term ‘organisation development’ came into being as an overarching umbrella to include and embrace all of the previous thinking about the behavioural aspects of people involved in changing and developing organisations’2.

OD then spread rapidly within American organisations, which were looking for help in changing the styles of their managers to improve organisational performance. T-group exercises, run by consultants, often on a large scale and designed to move managers towards more open and trusting behaviour, were frequently the vehicle for this.

In the UK, group-based methods of learning and change were being used in coalmines with the involvement of the Tavistock Institute.

OD at this stage could be ‘categorised as primarily focusing on individuals and interpersonal relations. [It] was established as a social philosophy that emphasised a long-term orientation, the applied behavioural sciences, external and process-oriented consultation, change managed from the top, a strong emphasis on action research and a focus on creating change in collaboration with managers’3. However, ‘like the growth of many management techniques, OD gradually took on characteristics of a fad’2 and then began to be criticised for not achieving the desired outcomes.

It was seen to be too ‘touchy-feely’, and in particular to put the individual before the organisation and the informal organisation before the formal organisation. Not all consultants practising OD were well trained, and OD’s emphasis on openness and change was seen as threatening by managers. It was questioned whether OD’s emphasis on training programmes was in itself sufficient to produce lasting changes.
Putting OD into practice

One of the challenges in delivering OD work is that it not just what you do, but also the mindset that is brought to bear on the work. So what does this mean in practice?

Anything that an OD practitioner does in the organisation can be described as an ‘intervention’.

Two examples of OD interventions are:

- The HR team working with the Business Planning team to develop a performance management system that properly aligns individual and organisational goals

- HR Business Partners working with their IT and Finance colleagues to provide a consistent approach to support management teams in delivering strategy.

So what makes these distinctively OD?

An HR practitioner may design and implement a new performance management system without it being an OD intervention. What is distinctive is the creating of alignment with the work of other parts of the organisation in a planned way – what can be described as a ‘systemic and systematic mindset’.

The idea of OD as a ‘scavenger discipline’ is helpful in understanding that it borrows tools and techniques from a wide range of professions and functions in the organisation.

Successful OD practitioners are often very effective at working with colleagues in different departments or organisational disciplines.

Characteristics of OD

It is the underlying characteristics of OD work that help us to see the commonality across the different areas of OD and the link to HR.

- OD work contributes to the sustained health and effectiveness of the organisation

- OD work is based upon robust diagnosis that uses real data from organisational, behavioural

and psychological sources

- OD work is planned and systemic in its focus, that is taking account of the whole organisation

- OD practitioners help to create alignment between different activities, projects and initiatives

- OD work involves groups of people in the organisation to maximise engagement, ownership and

contribution.

Source: CIPD

What is Organisation Development - OD?

Definitions of OD:

In the context of this factsheet, we define OD as ‘planned and systematic approach to enabling sustained organisation performance through the involvement of its people’. Behind this definition lies a depth of research and practice, but also confusion.

Others have described OD in the following ways1:

- A planned process of change in an organisation’s culture through the utilisation of behavioural science technology, research and theory. (Warner Burke)
- A long-range effort to improve an organisation’s problem-solving capabilities and its ability to cope with changes in its external environment with the help of external or internal behavioural-scientist consultants, or change agents as they are sometimes called. (Wendell French)
- An effort (1) planned, (2) organisation-wide, and (3) managed from the top, to (4) increase organisation effectiveness and health through (5) planned interventions in the organisation’s ‘processes’, using behavioural science knowledge. (Richard Beckhard)
- A system-wide process of data collection, diagnosis, action planning, intervention, and evaluation aimed at (1) enhancing congruence among organisational structure, process, strategy, people and culture; (2) developing new and creative organisational solutions; and (3) developing the organisation’s self-renewing capacity. It occurs through the collaboration of organisational members working with a change agent using behavioural science theory, research and technology. (Michael Beer)

These definitions may vary in emphasis, but there are common features:
OD applies to changes in the strategy, structure, and/or processes of an entire system, such as an organisation, a single plant of a multi-plant firm, a department or work group, or individual role or job.

OD is based on the application and transfer of behavioural science knowledge and practice (such as leadership, group dynamics and work design), and is distinguished by its ability to transfer such knowledge and skill so that the system is capable of carrying out more planned change in the future.

OD is concerned with managing planned change, in a flexible manner that can be revised as new information is gathered.

OD involves both the creation and the subsequent reinforcement of change by institutionalising change.

OD is orientated to improving organisational effectiveness by:

- helping members of the organisation to gain the skills and knowledge necessary to solve problems by involving them in the change process, and
- by promoting high performance including;

- financial returns,

- high quality products and services,

- high productivity,

- continuous improvement and

- a high quality of working life.

The challenge with many of the definitions of OD is that they may be technically correct, but do they actually help people to understand and practice in the field of OD?

This factsheet explores the history of OD to increase the understanding and looks at the characteristics and examples of OD in practice.

Source: CIPD

Strategic HRM and Business Performance

Articles from CIPD:

Since the mid 1990s, CIPD and others have been generating evidence for the impact of people management practices on business performance. Much emphasis has been put on the importance of ‘fit’. In other words it is argued that HR strategies much fit both with each other and with other organisational strategies for maximum impact.

The main areas of practice which all the researchers agreed have an impact on performance are around job design and skills development.

However, CIPD work found that practices alone do not create business performance.

They can create ‘human capital’ or a set of individuals who are highly skilled, highly motivated and have the opportunity to participate in organisational life by being given jobs to do. However, this will only feed through into higher levels of business performance if these individuals have positive management relationships with their superiors in a supportive environment with strong values.

All these factors will promote ‘discretionary behaviour’, the willingness of the individual to perform above the minimum or give extra effort. It is this discretionary behaviour that makes the difference to organisational performance. The ‘people and performance model’ generated from CIPD-sponsored work at Bath University6 emphasised the importance of individual HR strategies which must fit with each other operating in a strategic framework which incorporates both people and business issues.

Strategic HRM and Human Capital Management

A number of writers have argued that strategic HRM and human capital management (HCM) are one and the same thing, and indeed the concept of strategic HRM matches that of the broader definition of HCM quite well as the following definition of the main features of strategic HRM by Dyer and Holder shows5:

Organisational level - because strategies involve decisions about key goals, major policies and the allocation of resources they tend to be formulated at the top.

Focus - strategies are business-driven and focus on organisational effectiveness; thus in this perspective people are viewed primarily as resources to be managed toward the achievement of strategic business goals.

Framework - strategies by their very nature provide unifying frameworks which are at once broad, contingency-based and integrative. They incorporate a full complement of HR goals and activities designed specifically to fit extant environments and to be mutually reinforcing or synergistic.

This argument has been based on the fact that both HRM in its proper sense and HCM rest on the assumption that people are treated as assets rather than costs and both focus on the importance of adopting an integrated and strategic approach to managing people which is the concern of all the stakeholders in an organization not just the people management function.

However, the concept of human capital management complements and strengthens the concept of strategic HRM rather than replaces it1.

It does this by:
drawing attention to the significance of ‘management through measurement’, the aim being to establish a clear line of sight between HR interventions and organizational success
providing guidance on what to measure, how to measure and how to report on the outcomes of measurement underlining the importance of using the measurements to prove that superior people management is delivering superior results and to indicate the direction in which HR strategy needs to go reinforcing attention on the need to base HRM strategies and processes on the requirement to create value through people and thus further the achievement of organizational goals defining the link between between HRM and business strategy
strengthening the HRM belief that people are assets rather than costs emphasising role of HR specialists as business partners.

Hence both HCM and HRM can be regarded as vital components in the process of people management and both form the basis for achieving human capital advantage through a resource-based strategy. An alternative way of looking at the relationship between strategic HRM and human capital is in terms of the conversion of human capital into organisational value. Human capital evaluation is useful in that it provides information about the current and potential capabilities of human capital to inform the development of strategy. Business success will be achieve if the organisation is successful at managing this human capital to achieve this potential and embed it in products and services which have a market value. Strategic HRM could therefore be viewed as the defining framework within which these evaluation, reporting and management process take place and ensure that they are iterative and mutually reinforcing. Human capital therefore informs and in turn is shaped by strategic HRM but it does not replace it.

Strategic HRM and Business Strategy

A good business strategy, one which is likely to succeed, is informed by people factors. One of the driving factors behind the evaluation and reporting of human capital data is the need for better information to feed into the business strategy formulation process.

In the majority of organisations people are now the biggest asset. The knowledge, skills and abilities have to be deployed and used to the maximum effect if the organisation is to create value. The intangible value of an organisation which lies in the people it employs is gaining recognition by accountants and investors, and it is generally now accepted that this has implications for long term sustained performance.

It is therefore too simplistic to say that strategic human resource management stems from the business strategy. The two must be mutually informative.

a) The way in which people are managed, motivated and deployed, and,

b) the availability of skills and knowledge will all shape the business strategy.

It is now more common to find business strategies which are inextricably linked with and incorporated into strategic HRM, defining the management of all resources within the organisation. Individual HR strategies may then be shaped by the business strategy.

So if the business strategy is about improving customer service this may be translated into training plans or performance improvement plans.