Strategic Step 1 - The Three Questions

Many people seem to take it for granted that HR should “be strategic.” So let’s start the series with the big three questions:

1 – What is “strategic”?

2 – How do you know if you’re strategic?

3 – Should HR really be strategic?

First question…. I define strategy as follows: the plans that, when executed properly, will increase investor return to a greater extent than if any other set of plans had been followed. Most McKinsey types take this to mean “Plans that increase shareholder return.” But that is too limiting. It is part of the old “capital is more valuable than talent” orthodoxy. Shareholders are just one form of investor. As long as capital was the only value worth measuring, shareholders were the only investor worth having. But as I have talked about here, an investor in the creative age is described by any person, group or institution that provides value to the enterprise and expects consummate or greater value in return. So “strategy” could be plans that increase return to employees. This assumes of course that the employee investor is actually providing something of value to the enterprise, which is not always the case. But that is a separate post. Or “strategy” could be plans that increase returns to vendors.

Second, the way you know you’re strategic is really pretty simple. You know you are strategic when the people who make decisions that affect customers ask you for your advice before they make big decisions and then follow your advice. Being strategic doesn’t mean that you have a seat at the table, because anybody who has ever been in an important meeting knows that lots of people get asked their opinion and then are quickly ignored. I always get a laugh out of the “seat at the table” objective, because it’s the way most CEOs placate their VP of HR – they let them come to critical meetings, ask them for their opinion, and then do follow someone else's advice. Or, even more common, they ask the VP of HR to the meeting and then only ask their opinions about things that have no net effect on customers. Questions like “How can we do a RIFF without getting a bunch of lawsuits?” should be translated as “Take care of those assh@#$e employees while the big boys go and make important decisions about products, sales, marketing and finance.” So, to repeat, you know you are really thought of as strategic when the people inside your company that make the big decisions that affect your customers (sales, marketing, product development, manufacturing and finance are the usual suspects) ask for your opinion on matters that affect customers and then, more often than not, follow your advice.

Third…. No. HR as it is presently practiced should not be strategic. It just doesn’t deserve to be. Payroll, benefits, employee bitch-fest management and snappy newsletters don’t have anything to do with strategy or why most investors chose to provide value to companies. And while nobody likes being yelled at, getting pushed around by an angry engineer is a heck of a lot easier than figuring out the complex quality calculation that tells his manager whether he is worth the complaint in the first place. HR is comfortable being the well-liked glad-handers, and they are willing to serve as the CFO’s hatchet man periodically as the price of all the good will generated by hosting all those Friday afternoon keggers. Too often they just don’t feel the need to make the changes necessary to become a strategic asset to the company.

But that doesn’t mean that there is nothing of strategic value buried in today's HR department. The purpose of the future posts here is to define the task that HR (or, as a future post will show, the Talent Operations group) can do to transform itself from corporate laughing stock into the primary driver of plans and decisions that directly affect customers and result in increased returns to investors.

Comments

[nancygs]

Jeff,
Nice comments on strategy, like your definitions. Typically I've found in business that strategic plans or strategy has a time frame associated with it that is anywhere from 1 - 5 years. Less that 1 year generally not being long enough to show any real ROI. In the past, I've worked in HR organizations where blood, sweat and tears (not really, but it sounds good) went into the creation of a 2 year strategic plan only to find that 6 months into the plan, the business underwent a significant shift that moved resources away from strategy work and into reactive panic fire drill mode. What are your thoughts, in today's fast paced corporate environment on timing / length of time for HR strategic plans? Should we be removing time as a parameter when we're discussing strategy?
Nancy

[Heather]

Well said! I get so sick of the mis-use of the word "strategic" as it relates to recruiting in general. And the general sense that if you aren't "strategic" then you aren't important. People in staffing need to get comfortable with the fact that most of what they do is tactical and that there's real value there. You can be "creative" and "productive" and still be tactical and that is OK! I just get so tired of the "strategic" whiff! It's a little like the "world class" thing...if you have to say it, you probably aren't. Love your definition. Next time someone refers to themselves as "strategic", I've got some questions to ask them ; )

[Colin Kingsbury]

Jeff,

I've always defined "strategic" in terms of things which create sustainable competitive advantage. This makes it easier to broaden the field of contributors without scaring the green-eyeshade crowd too much. When you refer to "the old 'capital is more valuable than talent' orthodoxy" I think a lot of management types (like me?) hear echoes of the "new metrics" era of the late 90s.

Saying that talent has financial value to the company won't raise any eyebrows, and I don't think it's particularly heterodox these days to suggest that the financial value of talent is increasing. The reason is that ideas move from peoples' heads into the marketplace faster every day. It used to be a company could launch a new product and ride it for a few years- in many industries now you get just six months. This means that the "innovation pump" needs to be running at all times.

To me the importance of framing this in terms of competitive advantage is that it makes results more quantifiable, which leads to credibility, which leads to support for execution. In my mind the single most consistent reason why companies systematically under-value people relative to theory is that actually measuring the contribution of a specific person is so difficult.

Best,
-cwk.

[Gonzalo]

Let me share my opinion on HR being strategic. I share that as today, HR is not strategic. But HR has a lot to say in terms of the company being able to execute the strategy or facilitating the strategy execution. HR should know better than no one else the current situation of talent and its capability to deliver against the strategy and the key drivers to "touch" to enable the talent to deliver against the strategy.
I used to have a seat at the table, but it was intended to understand the strategy rather than creating strategy, after the discussion i used to be asked if the company could deliver and how. I was part of the execution: who should do what, how the organization should be organized to allow processes, what areas of development, how to set targets and rewards to push desired behaviors and results, what....
(this was my first post, hope you liked it)

[Pablo]

In my opinion HR is the key to execute the strategic. We are the responsible to animate, coordinate and communicate internally the strategic of the company. That is because our talent is focus on who to deal with people, teams and groups.

But also I am agree that if we consider the key people as an investors (or even if we do not consider that) a strategic function is select, keep, motivate and develop those employees that propose add value to the company.

Also a strategic function is to create and maintain a company culture where the added value is one of the key values.

Those are strategic functions in my opinion, and those have to be performance by people professionals.

more info: liderarpersonas.blogspot.com/