What I like about Ulrich is his high level very structured view on the HR function. I want to dedicate one more entry to his approach how to define HR deliverables.

Organizations should be more defined through their capabilities than through any sort of hierarchy. Managers are generally responsible for creating capabilities to respond to business challenges. They build a business strategy and HR implements that strategy putting in place appropriate HR practices which would build these capabilities. The capabilities become the culture that drives sustainable business success and are the measurable deliverables for HR. Many of them drive the intangible company value (taken from The Journey of HR, Excerpt from HR Competencies by Ulrich et al.).

As Ulrich points out in this video or more in depth together with Creelman in this article “only” 50% of a companies' stock price or market value is determined by earnings, the other 50% are the confidence in future earnings, you could also call “intangibles”. He lists 4 areas these intangibles consist of: doing what has been promised, having a solid strategy for growth in place and communicating it well to “the street”, having the core (technical) competencies on board and finally the right organizational capabilities to execute. So you could look at this as if HR is accountable for half of the intangibles, meaning overall 25% of the total company value. Clearly for building competencies and capabilities HR is the driver!

Technical competencies might be marketing's ability to manage it's distribution channels or manufacturing's ability to process excellence according to SixSigma. Capabilities are those things that make a company stand out in the minds of customers: a shared mind-set, like a company wide commitment to service, speed to market, leveraging learning of global teams, accountability for instant overnight product delivery or change resiliency while being in a very fast moving market.

The HR practices to build capabilities are put into 4 categories by Ulrich: People (everything dealing with the flow of people within an organization), Performance (ensuring accountability through managing performance from individuals and teams including compensation/benefits and rewards), Work (everything related to the work flow, how work in teams, administrative policies, design of physical facilities and space, how structure company to align with strategy; these practices directly influence talent) and 4. Information which I find particularly important as it looks like HR's role in communication gets more and more important nowadays. Internal communication can influence employee engagement, external communication builds the employer brand. Communication can even be seen like an element of success for all other HR practices being deployed.

Wayne Brockbank explains how the entire process of “Drafting a Powerful HR Strategy” is coming together in a video on the hrtransformationbook.com site under 4.2. He first defines what “strategic” means (sustainable, long term, adding substantial value...) and then leads us through 8 steps. The essence is that you need to define the key desired organizational and cultural capabilities needed to strengthen your key sources of competitive advantage which you have identified before. Important is to translate these into people behavior, what behavior from employees do we want to see in the future state, what will people be doing more of/less of. Based on this “vision” the appropriate HR practices will be identified and implemented and finally success will be measured.



HR, HR Strategy

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