Author Archives: P. Santangelo

Dynamic Balance and HR Strategy – Should they be linked?

We constantly talk about the dynamic changes in the business environment and how we need to adapt in order to survive, but how much do we look into the dynamics of our own organizations to make sure we achieve a balance that will allow us to thrive?

I we take Fritjof Capra‘s definition of dynamic balance, we find a different way of looking at our organization which can help us in better defining our HR Strategy.

“An ecosystem is a flexible, responsive, ever-fluctuating network. Its flexibility is a consequence of multiple dynamic sense-and-respond feedback loops that keep the system in a state of dynamic balance. No single variable is maximized: all variables fluctuate in concert around a collective optimum.”

Lets clarify this definition by looking at how Giles Hutchins talks about feedback loops in his book “The Nature of Business“:

“Nature is interconnected and interdependent, with every part of the ecosystem functioning as part of myriad seamless endless cycles. These beautifully coordinated cycles of nutrients, energy, water, materials and information are possible because of the feedback loops. Feedback loops are nature’s way of ‘staying in sync’ with ever-changing conditions.”

So the question is, do we really pay attention to the messages the organization is providing? Do we create an environment where there is a constant flow of feedback that enables the organization to continuously adapt to the constant change?

I fear the answer is no. One of the most important components of the definitions above is that every single part of an ecosystem is important. What I tend to see in organizations is that when there are conditions changing in the market, it is mostly upper management and the marketing and sometimes strategy specialists who define what the company will do in order to weather the storm. What we tend to forget is that there might be other things we can do to adapt that we don’t know of because we are not listening to the organization.

I have had the fortune (and also the stress) of living and working in Argentina during the hyperinflation. When I say hyperinflation I mean it: 4,923% inflation in 1989 followed by 1,343% in 1990! It is difficult to convey the type of environment this creates. You need to make decisions and make them fast. You need to decide if you are going to sell your products or not because between when you send them to the customer and when you receive their payment the money you receive is not enough to pay for the costs of producing it. In essence, you need to figure out how to survive.

I was working at a B2B company at the time and witnessed one of the best examples of how to listen and use the feedback to make it through the difficult times and be prepared for when things got better. We could not send the sales force out to get orders so, what could we do? They came up with impressive ideas of how to build customer loyalty by helping them find ways to move through this crisis and survive themselves. Sometimes it was simply helping them figure out a solution to a problem that normally would require a big investment but that with a little ingenuity could be resolved with much simpler means. It had nothing to do with our specific business, we were only helping out by listening and providing ideas.

By Opensourceway

What we were able to do with this approach of listening to employee ideas, keeping them informed of how things were evolving, involving all in thinking how we could reduce expenses so we could keep everyone employed, how to help our customers while we could not even provide them with our products, was to have extremely committed employees and customers. As soon as things started to improve a little and we were able to see the light at the end of the tunnel, we started selling at levels that were significantly higher than before the crisis. We became the number one provider for our products and services in the market.

What would have happened if we had not listened? I don’t know if I would be where I am today, because I don’t know if the company would have survived and maybe my career would have taken me to other shores.

My point is, if we want to maintain a dynamic balance that allows us to thrive despite difficult or normal ever changing conditions, we need to ensure that we have open communication channels that allow us to benefit from the knowledge and ideas of employees at all levels. Maybe looking deeply at some of the examples of companies that have failed can provide us with insight as to how much the employees knew about the mistakes their upper management was making and that they felt they had no power to influence or make their voices heard.

We don’t need to take this to the extreme. If we fail to listen and take advantage of the knowledge of our employees, we might still succeed but we will probably not achieve as much. Our role, when defining our HR Strategy, is to make sure we understand the dynamics of our organization and enable the feedback loops that will take advantage of our employee’s insights and ultimately achieve dynamic balance.

Applying Nature’s Principles to our HR Strategy: Partnerships

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The organizations we work in are like living organisms, after all, they are composed of human beings clustered together with a certain objective in mind. If we look at nature and its principles we can use this knowledge to better understand our organizations and make sure our HR Strategy is well defined. In continuing with this analysis, we look today at the fourth principle: Partnerships.

According to Fritjof Capra in his book “The Hidden Connections: A Science of Sustainable Living”

“The exchange of energy and resources within an ecosystem is sustained by pervasive cooperation. Life did not take over the planet by combat but by cooperation, partnership and networking.”

I like how this definition of partnership stresses the fact that if we are combating one another we can not evolve. How many times do we witness battles for who gets the budget, who can keep the talented high flyer within his/her group, who can subtly undermine a peer in order to be able to get the promotion instead? The list of examples of “combat” within an organization can be limitless. What we do not realize is the damage that these behaviors occasion. Have you not witnessed a situation where one VP was able to win the battle and keep the high potential employee only to have the person leave the company because they felt trapped and not able to continue growing? What about the group that got the budget for an idea that went nowhere while the opportunity for launching a new technology that would put us ahead of the competition was missed because it was not funded?

From an HR perspective, we need to identify if there are structural or process induced “combat” situations. Although there are organizations that consider that a highly competitive environment should lead to the survival of the best and therefore the best results, I personally think that this is not a healthy environment, that not necessarily the best are the ones who get ahead and that the organization can miss out on being great.

In his book “The Nature of Business“, Giles Hutchins says that some of the characteristics of the “Firm of the future” are:

Interdependent
Collaborative
Open source
Dynamic
Leverages diversity
Networked
System-focused
Synergistic
Fosters resilience

If that is where we should be headed in order to survive, we need to look at these characteristics and analyze the processes and systems we have in place to see if they support this transformation. For example, we might discover that what we thought was a great performance management system rewards employees for individual achievements and does not take into consideration how they handle relationships or seek synergies with other teams or business units. Hutchins says that we should ensure that

“individual and collective potential is encouraged through empowerment, local ownership and shared responsibility”

By Roy Blumenthal

It will definitely take time for organizations to transition from traditional processes to those that foster the type of environment required for the future. We also have to bear in mind that the newer generations joining our workforce are used to sharing, exchanging, seeking and expressing themselves through social media. They want to work in organizations that allow them to establish relationships beyond their work groups and they will start pushing for change.

If we want our HR Strategy to be successful, we need to analyze all our processes and programs from the perspective of the business results we seek and of the cultural and relationship based attributes that will help drive those results.

Applying Nature’s Principles to our HR Strategy: Energy = Engagement

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Continuing with our exploration of how we can apply nature’s principles to our HR Strategy, we look at the third of Nature’s Principles proposed by Fritjof Capra in his book “The Hidden Connections: A Science for Sustainable Living“: Solar Energy

As I briefly mentioned in Human Resources, How can we add value?, we can draw a parallel between solar energy and employee engagement. Solar energy is the fuel used by most ecosystems; employee engagement is the fuel for the functioning of organizations.

Taking this a bit further, Henry Morris, PhD in “The Tri-Universe” provides us with another way to look at the dynamics within an organization when he defines the universe as follows:

“The created universe is actually a tri-universe of Space, Matter, and Time, each permeating and representing the whole. However, the universe is not partly composed of space, partly of matter, and partly of time (like, for example, the three sides of a triangle). A trinity is not a trio or a triad, but a tri-unity, with each part comprising the whole, yet all three required to make the whole. Thus, the universe is all Space, all Time, and all Matter (including energy as a form of matter); in fact, many scientists speak of it as a Space-Matter-Time continuum.”

Space can be considered from the perspective not only of where we operate, where we have offices, manufacturing plants, etc; but also from the perspective of what markets we serve, the niche for our products, etc.

Time is easy, there is past that we can learn from, present that we need to be fully aware of, and future that provides us with our vision.

Matter is what I want to focus on because it takes us back again to engagement. We can summarize the trinity of Matter as:

Matter = mass + energy + motion

Apart from our physical assets, the energy we use for our operations and the movement required to produce our output,

mass is our employees, energy is the effort they put into what they do, and motion is the flux of inputs and outputs through the processes we have defined within our operations.

So, no matter how we look at it, employee engagement is the true motor of the results our company achieves. Let us look at a definition of employee engagement I particularly like, given by the Human Capital Institute (HCI):

“The extent to which employees believe in what they do, feel valued for it, and are willing to spend their intellectual effort to make the organization successful.”

The reason why I like this definition is because it provides us with three (again “tri”) areas we need to focus on when developing our HR Strategy.

Employees believe in what they do: There is no way employees will believe in what they do if they do not have a very clear view of how their work fits within the organization as a whole. This applies to every single employee, no matter where they work or what they do. The operator of a machine in one of our manufacturing plants needs to understand how what he is doing impacts the organization: what happens if quality is not met, what are our customers producing with the components we manufacture, how scrap is money going down the drain, etc. The list can go on quite a bit but you get the idea. It doesn’t matter if the employee is the Director of Marketing, the Receptionist, a Call Center Agent, a Software Developer or a Production Operator, everyone needs to know how what they do helps the organization achieve its goals.
By Opensourceway
Employees feel valued for what they do: How do you show employees that you value them? There are hundreds of books on this topic. You need the basics first, competitive pay and benefits. But that is not what truly shows you value them. True value comes when you show appreciation for their efforts, when you keep them communicated of what is going on in the rest of the organization, when you provide an environment where they not only have what they need to do their work but, more importantly, they know that they can express their opinions and their ideas are considered. We show we value our employees when we make sure that the leader of each group has the skills to be able to create an environment of trust and enthusiasm, where employees feel they are part of a “we” and would never refer to the company as “they”.
Employees spend their intellectual effort to make the organization successful: If employees believe in what they do and they feel valued for what they do, the probability of them really placing their effort in what will make the organization successful will follow. We need to make sure that the organization does not present barriers, too much bureaucracy that prevents employees from doing their best, too many restrictive processes or having to request authorization for things that should be within their area of responsibility. All these things can quickly kill employee engagement because it restricts their ability to do what they know would be best.

So when you are looking at the Business Strategy to start defining your HR Strategy, remember: Energy = Engagement, the ingredient that will make things happen. And don’t forget that, as with the Tri-Universe, to have employee engagement you need to make sure the three components of the definition are present.

Nature’s Principles: Cycles and how their understanding aids our HR efforts

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As mentioned in “Human Resources, How can we add Value?” we can apply the knowledge of nature’s principles to an organization and learn about its dynamics and how they can impact our HR Strategy and programs.

Let’s look at the second principle: Cycles.

Organizations, like nature, have their own cycles. As Giles Hutchins mentions in “The Nature of Business: Redesigning for Resilience“:

Small, medium or large systems of all shapes and sizes dynamically adapt in the same way. For example, cycles within an economy – boom to bust to boom again. Also, cycles at a product level: a new product release following a new, innovative breakthrough, leading to growth in market share, followed by a period of slower growth, eventual stagnation and decline in market share, then to product expiration and new innovation.”

From a Human Resources perspective, cycles can provide knowledge we can use in different aspects of our strategy. Lets look at some in more detail:

Talent

From the perspective of our talent, looking at what has happened during past cycles can help us identify actions that have been successful and those where we have lost talent we would have preferred to retain. During the last economic crisis, when we had to downsize or restructure, did we lose any talented or high potential employees? Were we able to retain the expertise we needed for when the economy rebounded? Did we panic and laid off employees or closed plants only to find that we needed to hire new ones very soon because the dire predictions ended up not being so bad?

If we analyze how we answered the questions above, we might decide to do things differently. We might want to carefully identify the experts and high potential employees and redeploy them to different areas or assign them to special projects. In our factories, we might decide to go to a reduced hours workweek instead of laying off employees that know the job well. This has many benefits: employees will tend to be grateful because they still have income and benefits and as soon as we need to start producing again all we need to do is to let people know and get the production plan running. In addition, we forego the loss of time and the expense of having to hire new employees and train them.

By Opensourceway

Workforce Planning

Analyzing past cycles can also help with our workforce planning. Although no two cycles will necessarily impact the organizational needs in the exact same way, we can have better projections based on how things worked out in the past. For example, if we look at the workforce requirements when we introduced a new technology, it might provide us with important insight as to which questions to ask and how to plan for the next technology development.

If during the past economic crisis we reduced the workforce and then found that we had to scramble to find the right people to hire because we had gone too far, this is important information to bear in mind and challenge the organization on how to tackle the crisis. The short term savings of reducing our organization might be overshadowed by the cost of rehiring and loss of productivity.

An analysis of how employees nearing retirement age reacted during an upward cycle in the past might raise a red flag if they tended to retire early. If we are again in an upward trend and have a significant number of key employees that could take early retirement, we need to start planning what to do.

Organizational Design

How did we redesign the organization to tackle a downward trend? Did it work? If it did, then we want to pay attention to why and see if this time there are similar factors in play. If it didn’t, we need to figure out what went wrong and learn from it.

What did we do when we were in a growth cycle? Are we sure we were able to achieve the most out of the opportunity or did the design of the organization somehow create roadblocks to the innovation or cross business unit potential?

I guess you can see what I mean with these examples. Although we need to look towards the future and make sure that our HR Strategy is aligned with the Business Strategy, looking back and reviewing how the organization reacted during each cycle can provide us with valuable information that we can use to make sure our efforts will help the business achieve the best results possible.

Nature’s Principles: Networks and their influence on HR Strategy

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We are familiar with the fact that organizations are made of networks of relationships. What we rarely try to identify is what Fritjof Capra in his book The Hidden Connection: A Science for Sustainable Living calls “boundaries of identity and interaction” and how these can influence the success or failure of our HR initiatives.

So, what are these boundaries and how can we seek to unveil them within our organizations? Lets try to analyze them from the perspective of their effects. Have you ever been in a situation in which you had to reorganize, followed all the customary procedures to define who adds more value, who less, what positions you actually need and which seem superfluous? You then implement and suddenly find that the organization has lost some key component that had not been identified and things don’t quite work as expected. Giles Hutchins, in his book “The Nature of Business” says that:

“(…) in business, it is not always obvious which parts of the organization that are not overtly adding value are merely there for the ride, or are providing a subtle benefit unmeasured by the normal performance assessment process. Cutting dead wood from an organization in challenging times may be prudent, yet damaging a useful web of stakeholder relations in times when greater resilience is needed is not prudent.”

Understanding the subtle networks of relationships that exist within an organization can be an art. We also need to understand that these relationships are not static. Like Hutchins mentions in his book, “two organisms can have many different types of relationship over time, or even at the same time.” Therefore our observation of the organization cannot be a one-time-only occurrence.

Social production as a new source of economic value creation

by Opensourceway

We need to establish our own networks and take every opportunity we have to observe and interact with as many people in the organization as possible and keep track of what we find. This will enable us to develop a map that overlays the organizational chart creating a picture that combines the formal and informal networks that exist. If someone moves from one position to another, that does not mean that the relationship they have with their former group ends, their influence is probably still there if there was a strong bond within the team.

Who are the people that employees mention when they are discussing examples of leadership? Who do they look to when they want to see what it takes to be successful? Who do they go to when they seek coaching? It is more frequent than not that these are not their direct managers unless they report into one of those great leaders that tend to be so few.

Who do employees identify with? Are there teams that have a strong sense of identity? What drives this cohesiveness? Is it the formal leader of the team or is there a team member that seems to be the driving force behind it? When there is a team that is viewed as a positive example, what we do to that team will also have an impact on the rest of the organization. If we eliminate it because the work they specifically do is not needed any more, what we are saying is that we do not value the principles on which this team operated. If, on the other hand, we figure out how to deploy the team to other work, we are reinforcing that this is the model we want people to immitate.

From the opposite perspective, are there teams that we have identified as being dysfunctional? What are the characteristics of the leader? What is the driver of the lack of identity? Can we identify a specific person that seems to be the disrupting factor? It has been my experience that most of dysfunctional teams lack good leaders. When I have been able to identify a team whose dynamics are negative, it normally correlates with managers that are “old school”, not on board with what the organization is now asking them to do, and frequently boycotting initiatives through sarcastic comments, or they are weak and unwilling to take charge and address the negative behavior of a team member.

A thorough knowledge of these networks, and the understanding of the organization dynamics that it provides, will provide us with vital information we need when we are developing our HR Strategy and programs. As I mentioned in “Why do HR Strategies Fail?”, we definitely also need to have a thorough understanding of the business strategy. Through our work to learn the business we can gain much of the knowledge we need and this will enable us to be attune to the subtle networks that influence what the organization can achieve.

Great Leadership in times of Crisis

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What does it take to be a great leader in times of crisis? Can Alan Mulally be the leader we should look at to see if there is a particular characteristic or set of attributes that separates him from most? Can we learn from the story of how he turned around Ford?

I attended the Michigan HR Day on Wednesday April 24 and had the opportunity to hear Bryce G. Hoffman present his new book “American Icon: Alan Mulally and the Fight to Save Ford Motor Company“. I have not finished reading the book yet, but Hoffman included a quote from Mulally in his presentation that made me think about the topic of Leadership and which might be the key attributes a leader needs to have to succeed in turning around a company.

“You’ve got to trust the process. You need to trust and nurture your emotional resilience,” he said. “Do you have a point of view about the future? Check. Is it still the right vision today? Check. Do you have a comprehensive plan to deliver that? Check. If you get skilled and motivated people working together through this process, you’re going to figure it out. But you’ve got to trust it.” The leader’s job is to remind people of that vision, make sure they stick to the process, and keep them working together. “Working together always works. It always works,” Mulally stressed. “Everybody has to be on the team. They have to be interdependent with each other.”

The bold type is mine and it is to stress the importance of interdependence and really “being” a team.

Alan Mulally became CEO of Ford in 2006, when “it was about to post a loss of nearly $6 billion for the third quarter alone – the company’s worst quarterly result in more than fourteen years”. What a challenge! And not only was he able to do it but, “In less than three years, (…) Ford would wow Wall Street with quarter after quarter of profits at a time when most companies were still reeling from the worst economic crisis since the Great Depression.”

What I like about the quote is the emphasis in the need for interdependence. You cannot succeed if you work in silos or if each person has their own agenda. It just doesn’t work unless you are able to develop an environment in which every single employee understands what is going on, where we are headed, and what we need to do to get there. Just as Mulally says in his quote, you need a team of people with the right skills working together towards a common goal.

From what I have read so far, American Icon provides multiple examples of great and not so good leadership. Power struggles, individual agendas, etc. are present in the book as well. I believe that one way of learning to identify what we need to look for when hiring for leadership positions or assessing our leaders’ development needs is to read case studies like this one, where we will be able to see if we can apply the learnings to our own organizations. We need to remember though the uniqueness of our own organizations and that what works in one might be the worst option for another.

American Icon is fascinating. It’s one of those books that you can just not stop reading.

Human Resources, How can we add value?

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HR is frequently viewed as a function that is needed but in very few occasions are we considered as really adding value to the organization. By looking at the organization from the perspective of nature, can we become a motor for change to help it prepare for the future? Can we use this to demonstrate the value we bring?

It is unfortunately true that HR is viewed as a necessary evil in many organizations. It is also true that many times, as HR professionals, we fail in being able to articulate how we can deliver value and impact the bottom line. We are viewed, and in many cases we consider ourselves, as a function that is there to make sure there is adherence to laws and regulations and to hire or fire people when needed. We are frequently considered overhead or even a burden.

One way we can change this perception is by driving change and helping the organization prepare for future challenges. We need to understand first what changes the organization will face and the only way to do this is by knowing the business intimately and understanding the strategic direction the organization is seeking. But this is not enough.

Lets look at the organization from a different perspective. Giles Hutchins in his book “The Nature of Business” shares the view that if we look at nature to understand its patterns it might

“provide insight into how best to future-proof business for the unpredictability ahead”.

Wouldn’t it be wonderful if we could use this understanding of nature and apply it to the organizations we work in and show how we can add value by developing our HR programs and strategies in accordance to these principles?

What Hutchins proposes is for us to look at the organization based on the Principles of Nature he quotes from Fritjof Capra‘s book “The Hidden Connections: A Science for Sustainable Living“. These principles are:

Networks
Cycles
Solar Energy
Partnership
Diversity
Dynamic Balance

Lets look at each one of these principles from the perspective of understanding an organization. We know there are networks of relationships and many times we refer to them as the formal and informal relationships that occur within the organization. But what about really understanding where the “boundaries of identity and interaction” are? A thorough understanding of these networks will enable us to develop more effective ways to communicate within the organization as well as determining where there are barriers to collaboration.

Cycles are also present within organizations. If we take the time to look at the past and correlate the ups and downs, the expansions and contractions, with the impact on employee morale, retention or loss of talent, etc. we can anticipate what the impact can be if we know we are headed in a certain direction. We can learn from the way the organization moves through these cycles and then decide how we can support it to avoid past pitfalls.

Solar energy is a little more tricky, although if we draw a parallel between how it is the fuel that allows life of all living organisms, we can say that employee engagement is the fuel that enables companies to succeed. It is proven that increased levels of engagement have a considerable impact on the bottom line and we need to make sure we focus on this if we want to add value.

Partnership is the principle of cooperation. Is this a way of life within our organization or do we work in silos, worried about the results of our individual objectives? Are the programs and systems we have in place for measuring performance, establishing goals, etc. fostering collaboration and cooperation? We need to understand the impact of the programs we put in place so that we can re-design them to enable an environment that is conducive to cooperation.

by Jurgen Appelo

Nature clearly shows us that the greater the biodiversity the more resilient the ecosystems are. The same is true within organizations. When we talk about diversity we sometimes fail to grasp the true meaning. We need to foster an organization that is diverse, not only in race or origin, but diversity of thought. Do we let managers hire people that are like them, because they are easier to understand, or do we promote positive change by creating an environment where different is great?

Finally we have dynamic balance. Nature shows us that “no single variable is maximized, all variables fluctuate in concert around a collective optimum”. Do we really take the time to understand each piece of the network, each part of the organization? Do we take them all into account when we are thinking of our HR strategy? We normally focus only on the things that are deemed the most important (our high potential employees, our executives and leaders) and we forget that, if we truly want to drive results we need to maintain the dynamic balance that allows everyone to flourish.

So we need to devote time to understand our organization and what the reality is based on the principles of nature. That will enable us to drive positive change as it will provide an intimate knowledge of the key areas we need to focus on. By driving change from the perspective of the organization as a living organism we will prepare it for the future that lies ahead and the value HR brings will be clear.

Why do HR Strategies Fail?

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We put a lot of effort in designing what is supposed to be a great HR Strategy. A couple of years later we look back and have not achieved what we envisioned. What went wrong?

It is very frequent that we find ourselves implementing a great program (a new Talent Management process, a better Leadership Development program, an on-line Performance Appraisal system, etc.), we invest time and effort, and frequently a lot of money, and a few years later we find that we need to change it because it doesn’t work. Then we start looking for the next best program, we convince the organization that it is the perfect solution, we roll it out and a couple of years later we are again thinking of the next best thing. Where are we failing?

If we want to prove to the business that Human Resources can add value to the bottom line, we need to define a robust strategy that will strengthen the organization and help develop the engagement and talent that we will need to deliver the business strategy. Easy to say … but not so easy to do!

Gary Hamel: Open source is one of the greatest management innovations of the 21st century

By opensourceway

In my post “We need an HR Strategy – What about the Business Strategy?” I touched on the point that it was necessary to have all functions represented when defining the business strategy, including HR. If we are at the table with the business, we understand where the company is headed, what the challenges are and what will be required in order to achieve the business strategy, then we can start to work on our own strategy.

Are we growing? If so, how? Is it through mergers or acquisitions or is it through the introduction of new products or technologies? Is there a change in the business that will require different skill sets than what we have today? Are there economic threats that we need to prepare for? There is no specific set of questions, the only way to know what the gaps are is to be immersed in the business, know it in detail and work with your leaders to figure out the human aspects of what will be needed to sustain it.

We have to be careful not to fall into the trap of stating the HR Strategy as what it should not be. James W. Walker in his book Human Resource Strategy states the following:

“Some company statements of human resource issues are so broad that they could apply to any company and imply directional plans, challenges, or goals rather than the business-related issues. For example:

More effective utilization of our human resources

A more risk-oriented, high-performance organization

Managing a more diverse work force

Skills obsolescence”

He goes on to say that many times we define our “strategy” more like assumptions, and therefore miss the point which is to focus clearly on the issues that matter the most, the ones that will help drive the business strategy.

In his book “The Nature of Business“, Giles Hutchins looks at the business of the future in the following terms:

“What could a firm of the future’s business vision look like? It could consist of the following aspects:

Strategic objectives where value and values are understood and interrelated.

Organizational culture rooted in well-being, diversity and clarity of purpose. One where individual and collective potential is encouraged through empowerment, local ownership and shared responsibility.

A business ecosystem where there is a sense of belonging to a community of stakeholders, each having clearly understood win-win synergistic relations within the diverse ecosystem.

Nature-inspired people, processes, products and places (infrastructure).

Reaching to attain positive holistic value (social, environmental and economic) for all stakeholders.”

I am not saying that all companies can relate to these, although more and more many organizations are including some of these aspects into their business strategy. If Human Resources is an active participant in the design of the business strategy, then we will be able to not only influence our leaders to think about these issues, but certainly it will be much easier to identify the components of our HR Strategy that will drive business results.

If you look at the list proposed by Hutchins, you can see that all of those are things that will help drive employee engagement. If we can develop the organization to think and act in those terms the only natural result will be a motivated and engaged workforce that will strive to achieve. And this can only deliver positive bottom line results.

So the key factor in ensuring that we develop a great HR Strategy is to carefully analyze the business strategy and extrapolate all the people aspects that we can influence. Then we need to assess where we are today and figure out the gaps. Only then are we in a good position to start defining what we will do to help drive the business.

We need an HR Strategy – What about the Business Strategy?

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We all know that in order for the HR Strategy to be successful it is key that it is aligned with the Business Strategy. Now, what about the Business Strategy … How can we, from Human Resources, help in the process of defining the business strategy to make sure it is successful as well?

Have you found yourself in a situation where the Business Strategy was defined in a vacuum? A group of very senior leaders get together and decide “this is what our Company should look like by 2020 or 2025, or whatever. It might also be that they contract some very expensive consultants to help them with the process and bring in a key note speaker to talk about trends and predictions, how the industry is changing and what to expect regarding economic indicators, etc.

I am not saying that this is not a good process, it is … but it is not enough. The issue is that these leaders tend to be far removed from the people who are actually in close contact with customers, the people who know what is required in order to close a sale, in order to remain competitive. Their views tend to be tainted with the input received from a few of the people that surround them. The problem here, I might add, is that these people normally say what they think the leader wants to hear so, in many cases, leaders are oblivious to what is really going on.

What do we need to develop a great Strategy?

For me it is when you combine a good view of what trends and market dynamics are showing, with the values and vision of the company and you mix it with what the customer facing employees, your R&D team and operations people know about what is going on and what might be possible. I know, you will probably say that I forgot about “Shareholder Value”, we can’t forget our Shareholders. Although I agree that the people that invest in our company are very important, I find that when you give them prevalence you end up missing the opportunity to deliver even more value. I find that cutting costs and showing better short-term profits is a short-sighted way of defining your future. The value will come, if you work on your Strategy well.

As Giles Hutchins‘ states in The Nature of Business:

“The firm of the past is resolute in its goal – ‘to maximize shareholder return’. Over the last few decades, shareholders (and the investment market) have in the main become more interested in short-term returns. The goal of the firm of the past has thus increasingly become one of short-term profit, utilizing two main levers: cost reduction (bottom-line management) and value enhancement (top line growth).”

This is definitely not the way to define a long-term strategy and unless we want to be a “firm of the past” we need to change our approach.

My preferred method for working on the Business Strategy is to involve an eclectic group of people, from all geographies, functions and levels (yes … HR as well!). Get a group of people from Senior Leadership levels, Mid Level Management and Individual Contributors from every functional area in the same room and create the right environment for open interaction.

According to Steven Johnson in his TED video “Where ideas come from“, you get the most out of people when the environment is like a fluid network or a coffee house.

Everyone has the right to talk and express their ideas and the open and unstructured exchange will enable a better understanding of where we are, what we can do, and where we can go. Although we need to provide structure to achieve the goal of defining the strategy, ensuring that there are many opportunities for participants to interact fluidly is essential.

Giles Hutchins included the following quote in his book:

“Popular wisdom holds that the fittest survive, the strongest, leanest, largest, perhaps meanest – whatever beats the competition. But in healthy, thriving natural systems it is actually the ‘fitting-est’ who thrive. Fitting-est implies an energetic and material engagement with place, and an interdependent relationship to it.’ – Cradle to Cradle : Re-making the Way We Make Things, Michael Braungart and William McDonough.

It brings to the forefront the issues of engagement and interdependence, which are essential to developing a successful strategy. We need to ensure we engage employees from all over our organization and truly consider their opinions, and embrace the fact that to be sustainable we need to be interdependent. By involving all areas and levels of the organization in this process, we not only ensure that we have all the information we need. If we handle the process well, the participants will help drive the strategy because they own it and they will be able to translate the strategy into their everyday work helping the organization understand where “we” are headed and why.

This is also a way to nurture the organization or, as my husband Herminio puts it, “pastoral leadership”. If you take care of each employee, you provide them with an environment that fosters their growth and encourages empowerment and engagement, the result can only be one … success.

Why is Employee Engagement and Accountability Dying?

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Employee engagement seems to be in decline and along with it employees do not want to be accountable for what goes on in the companies they work in. Is this influenced by size? If so, are there HR strategies we can use to drive change?

Is there a correlation between employee engagement levels and the willingness to accept accountability for what goes on in the company? If this is so, then the engagement levels are declining drastically. Reality is that I rarely hear anyone refer to the company they work for as “we”. It never is “we” do this or “we” decided that … it always is “they” offer, “they” did, “they” want.

This becomes especially intriguing when you are talking with a senior level executive. It is very rare that s/he will say “we” decided to do this or “we” have a policy that defines that this is how “we” handle this type of situations. Normally the statements will be more like “they” or “the board” or “the leadership team” decided … as if it were an intangible entity. What do you mean “they”? You are an executive of the company, shouldn’t it be “we”?

This phenomenon is becoming the norm. Why do people want to distance themselves from the company? I personally think that it has to do with not wanting to be accountable for what happens. No one wants to be the one to blame. And this is probably the result of an environment in which employees do not feel included, they do not belong to a community with a shared objective and therefore there is no need to feel accountable for what goes on.

Now, if a company is made of the people that work for it, and no one seems to want to take responsibility for what is done, what is the outcome? I can think of countless examples of news events that showcase this lack of accountability. There is no need to mention them here.

There are exceptions though and it tends to be in smaller companies, where leaders and employees work together to make things happen. This type of environment seems to be conducive to innovation, risk taking and consequently pride. Remember “Small is Beautiful” by E. F. Schumacher? Although it was written in 1973 we should all read it again. The full title is revealing: “Small is Beautiful: Economics as if People Mattered”. Schumacher warned against the trend of mergers and takeovers creating ever-larger organizations. He stated that while economists supported this trend, sociologists and psychologists warned against the “dangers to the integrity of the individual when he feels as nothing more than a small cog in a vast machine and when the human relationships of his daily working life become increasingly dehumanized; dangers also to efficiency and productivity, stemming from ever-growing Parkinsonian bureaucracies.”

Is this the key? Do companies forget that people truly matter? Do executives have such a narrow view of things that they forget to consider their companies as the living organisms they are? Is this why employees are not engaged? Is this why no one wants to be accountable?

If the problem is due in part to an order of magnitude, is there a way large corporations can create an environment where they can work so as to benefit from the interactions that happen in smaller organizations? This is an interesting question. Most large corporations spend copious amounts of money and time developing their leaders. They state that managers should lead their employees by creating an environment of trust, where innovation in encouraged, where employees are empowered to make decisions, etc. etc. etc. but my impression is that they fail in providing the managers the latitude and freedom to be able to make things happen. Or is it that they are providing tools that are so cutting edge that only few are able to benefit from them? Would it not be better to use what Schumacher called “intermediate or appropriate technologies” in order to breach the gaps?

Now, don’t get me wrong. I am not saying that all small companies have engaged employees or that they all have great business and leadership models that make employees feel empowered and proud of what they do. Far from it. It seems that there are very few examples of organizations that are successful in really engaging all employees to a level that they all are proud of working for “our” company.

Giles Hutchins in his book “The Nature of Business“, states that organizations of all sizes and types will need to redesign in order to become resilient and face the challenges the next decades will pose. He also talks about how the companies that mimic nature outperform the ones that maintain the approach taught at business schools. Should business schools focus more on the decentralized development models proposed by Schumacher? Might that be the type of approach that can help organizations transform and become more successful, not only in profits but, more importantly in their social responsibilities?

My intention is to analyze in future blogs what Human Resources professionals can do to help transform their organizations. I will explore Schumacher and Hutchins’ theories and see how we can utilize them to strategically drive positive change.

My HR Post

A Holistic View of Strategic HR

Author Archives: P. Santangelo

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What do we need to develop a great Strategy?

Why is Employee Engagement and Accountability Dying?

Employee engagement seems to be in decline and along with it employees do not want to be accountable for what goes on in the companies they work in. Is this influenced by size? If so, are there HR strategies we can use to drive change?