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.
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