4 reasons why hr is lost in translation when it comes to strategy

4 reasons why hr is lost in translation

when it comes to strategy

By Carlos Guevara – Partner - and Fares Hillo – Consulting Manager -

at ShiftIN Partners

August 2014www.shiftINpartners.com

The most common pitfalls when linking Human Capital to strategic goals

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It is a common theme today that HR is neglected as an administrative function rather than considered as a strategic enabler of the organisation.

Why is that?

Many clients come to us asking for help on how to align their HR to the strategy. We define the human capital framework as the set of policies, plans, tools and processes that an organisation uses to manage its most important resource, the people. In this article we present the four most common pitfalls that we find when linking Human Capital to strategy.

4 reasons why HR is lost in translation when it comes to Strategy

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One of the most common mistakes is when organisations have 2 separate frameworks, one for strategy and another for human capital but they don’t talk to each other. Each one has its own speed. They are dancing to different songs.

If you look at any organisation, at some point during the year, it should develop its plans for next year. That’s when it review its objectives and set targets for the coming years, allocating the necessary resources in a budget. In a best practice organisation strategy sets the pace for the planning process, and not the other way around. That means that before it starts developing their manpower plans, initiatives and budgets, it first need to take a step back and ask: “Is this the right strategy?”, “Are these the right objectives and targets for next year?”, “are we going on the right track or do we need to change anything?”

Only once these questions are answered is it the right time to define the plans that are necessary to accomplish the vision.

How do you know that something is not working well?Look for the following symptoms:

•The budget is developed before the strategic plan is updated

•HR asks departments to define their manpower needs for next year before these departments have had the chance to review their departmental strategies

•The strategy department doesn’t involve HR during the strategy update

•Similarly, HR doesn’t involve the strategy department when updating their manpower plans

strategy and hr move at different ‘tempos’

4 reasons why HR is lost in translation when it comes to Strategy4

human capital modelBy ShiftIN Partners


One of the most important enabling points between the human capital strategy and the enterprise strategy is on the competency development, yet many organisations struggle in creating a proper link between these 2 elements, why?

First of all, not all organisations have a proper competency management framework in place. Think of a competency as the ability of an individual to do a job properly. In that sense, a competency framework is a set of defined skills and behaviors that an organisation should have to perform. As a framework it also provides a structured guide on how to identify, evaluate and develop such behaviors in individual employees. Does your organisation have one of those? If yes, the next question is how you ensure it is linked to your strategy?

The whole purpose of a competency framework is to enhance the readiness of an organisation to execute its strategy.

You know that you have this problem if you perceive the following symptoms:

•You have a competency framework but it reflects the competencies needed in the past but not those needed in the future

•You have a competency framework but you lack the tools to measure the proficiency levels and accurately identify the competency gaps

•You are able to measure the competency gaps but your training plan is unable to address them

•Your job descriptions do not reflect the necessary competencies to develop the job

•You do not have a competency framework at all

thereadinessissue

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thetemplate-filling habit

Examples of these contradictions are many:

• Sales managers that are allowed to set high volume targets on products that are easy to sell instead of pushing for those products that have higher margins and are more strategic for the future of the company

• Maintenance managers that aim to increase machine availability at infinite cost

• IT managers that want to implement ‘best of breed’ IT systems when all the organisation needs is to better use power point and excel

How do you know if you have this problem? Look for the following symptoms:

• Your organisation has an individual performance management framework that many refer to as highly ineffective in driving business goals

• Managers are not required to provide justification in the form of strategic contribution (or strategic link) when setting personal objectives

• There is low level of engagement from managers while setting objectives and providing coaching and appraisal. They don’t seem to see the value in doing it…

Our research1 shows that over 90% of managers believe that individual objectives are helpful to determine task importance, yet not every organisation has an effective process to develop individual objectives in line with enterprise goals.

Our message to organisations is to always use their functional strategic objectives as the guide for developing individual objectives, combined with the specific responsibilities of that individual. However this is rarely executed effectively.

Some HR organisations spend money and valuable time developing frameworks for employee performance that ultimately become another bureaucratic template-filling exercise. Many reasons can be atributed to why this happens, however the most common reason, based on our observations, is that there is no clear linkage to business goals during the process of setting employee’s objectives. In other words, managers and employees are allowed to set short-sighted, operational objectives that might be relevant from a functional perspective but that have no significant impact on the business results.

1 State of the Strategy Execution 2014. www.Stateofstrategy.org



thenokiadisease

Last but not least. HC frameworks should foster the right organisational culture to enable the strategy. One of the key aspects of shaping the right culture is the incentives. The way an organisation rewards its employees has a tremendous effect on driving behaviors, and ultimately performance.

Unfortunately it is very common to see that strategy doesn’t drive the culture. In fact, the opposite is much more common. Say that you want to change your sales strategy towards a different product mix, one that drives more margins but is certainly more difficult to sell. Do you think your sales force will happily accept the change and will immediately start selling the new products? The answer is ‘it depends’. If their sales incentives are still connected to the old strategy of selling high volume of low value added products, obviously not, but if they have the right incentives, then yes.

But not everything is about sticks and carrots; we also need to consider the role of leadership in shaping the right culture. It is common the case of the manager who preaches to his team that strategy is the most important thing in the company, and yet fails to spend more than 2 hours a quarter discussing it! Another example is how Nokia knew 5 years before its bankruptcy that they needed to change, and what they had to do, but they failed to

develop the culture to make that change happen.

The HC framework should be able to reward the good behaviors and mitigate the wrong ones. It is not only about paying more or less bonus at the end of the year, but also identifying the best performers, promoting the employees who exhibit the right values and creating an environment that incentivises the desired behaviors.

How do you know you have a misalignment between culture and strategy?1

•Your strategy says one thing but your culture says another (‘Nokia disease’)

•HR doesn’t have a proactive process to incentivise the right behaviors

•Culture is an intangible that nobody actually manages

•The values in my organisation are nice words on the wall but the majority of employees don’t act on them

1 State of the Strategy Execution 2014. www.Stateofstrategy.org

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concluding…So, if you want to have a quick diagnosis about where you organisation stands in terms of linking Human Capital with Strategy, take a look at this checklist. If you can tick 4 out of the 4 points congratulations!, you are among the top 10% of organisations that have mastered the process of linking Human Capital to Strategy:

The calendar My HC plans are developed in close coordination with the strategy of the organisation and once the organisational goals have been defined.

The competenciesMy competency framework is reviewed every year in order to accommodate the necessary changes as per the strategy. Development plans and career paths are updated accordingly.

The personal objectivesI have a clear linkage between personal objectives and enterprise objectives. The process for setting goals is facilitated by HR, executed by the managers and audited by the Strategy Department.

The cultureEmployees are rewarded on the basis of performance, and incentives are in place to reinforce the right behaviors.

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carlos guevara – Partner at ShiftIN Partners.

Carlos is a seasoned consultant and trainer specialized in the field of Strategy Execution. Over the last 15 years, Carlos has trained and coached +500 managers, in +50 organisations, across +12 countries, in the areas of Strategy, Performance Management and Change. Before creating ShiftIN, he worked at Cemex. He is a frequent speaker and writer on strategy and execution. A mechanical engineer, he holds an MBA from IE Business School. You can reach Carlos at [email protected]

fares hillo – Consulting Manager at ShiftIN Partners.

Fares is a skilled consultant with an abundant amount of experience in the field of strategy execution. Since 2009, he has engaged with multiple entities across the GCC in supporting them develop and execute their strategies as well as strengthen their people’s capabilities to do the same. Prior to joining ShiftIN, Fares worked at the National Petroleum Construction Company (NPCC – UAE). A chemical engineer, he has received a MSc from UCL in the UK.You can reach Fares at [email protected] & @FaresHillo

The shift key in your keyboard enables regular characters to be capitalized or transformed into something completely new. Similarly, ShiftIN Partners is a leading management consulting firm focused on helping clients develop and execute strategy programs that enable the organization to achieve the necessary Shift, working from withIN.

With an accumulated experience in consulting of +20 years, our consultants are regularly appointed by the Leadership Teams to provide advice on how to overcome challenges related to Strategy, Execution and Change.

ShiftIN Partners is headquartered in Abu Dhabi, with offices in Dubai, Riyadh and Doha.

For more information visit: www.shiftinpartners.com

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