HR needs to be aligned to business and de-linked from much of the administrative roles it is assigned today.

1. HR’ s Value
Addition Role
A strategic View of HR
Sandeep K. Puthal

2. Contents: at a glance
1. HR as a Business Partner
2. The Strategic View of Human Resources
3. Role Requirements
4. Essentials of SHRM
5. Conclusions
2

3. 1
HR as a business partner?
- The human side of the business
- Factors inhibiting HR' s ability to function as a
business partner
- Business standpoint, and not the HR standpoint
3

4. At the strategy table…
At the strategy table, when the business partners
say: "How do we make the customer happy?"
They are actually asking:
"How do we take money out of the customer's wallet into our
wallet and make them happier with us than with our
competitors?“
 The 'Wallet Test‘
To create products and services that result in
customers taking out money out of their wallets.
4

5. HR as a business partner
Erosion of Traditional sources of competitive
advantage
eg. technological know-how
Focus: HR to be a true business partner
 how to create and engage the human side
of business –
 how to conceptualize and create the total
human organization
5

6. the human side of the business
 A business to be successful has to ensure
that its 2 key constituents are happy:
 External customers
 Shareholders
 HR to align with the externally-driven
requirements & bring internal stakeholders
 Management
 Employees
in line with the external stakeholder
If HR is to be an essential part of the business,
it has to align with the external business realities.
6

7. The critical issue now is not what
you know, but what you are able
to create
 HR to create an exact line of sight,
between its activities and getting
customers to take money out from their
wallet and put it in your wallet, instead of
the competitor's wallet,
 If it doesn't contribute to the success of a
business, it would be of no
consequence.
7

8. Factors inhibiting HR's ability to
function as a business partner:
its logic and its language.
 HR likes to say it has internal customers. When
it takes that vocabulary and logic to the
strategy table, it automatically condemns itself
to a second tier status.
 When HR walks into the room and says that it
has internal customers, it is immediately
removed from the basic logic and language of
the business. The logic and language of the
business is the external customer. This is also
the logic and language of HR professionals in
high performing firms.
8

9. Factors inhibiting HR's ability to
function as a business partner:
 being internally focused - thinking in terms of
internal customers and not focusing on the results
that the marketplace requires.
 personal credibility- do what they say they will do
and; have good interpersonal & communication
skills.
• Knowledge of HR does not distinguish HR
professionals at high-performing firms from those
in low-performing firms
9

10. business standpoint, and
not the HR standpoint
 Key differentiator
External knowledge, not internal knowledge of HR,
 Most HR professionals have a low level of external
business reality –
• customers,
• competitors,
• shareholders,
• industry structures,
• globalization &
all the things that make business what it is
two starting points for our thinking.
10

11. business standpoint, and
not the HR standpoint
 HR aspires to be a business partner.
 Create the HR value proposition, which starts from
the outside and moves towards the inside.
“ If HR were to add greater value.' then it needs
to start from the business standpoint, and not
the HR standpoint. If HR is to contribute to
business, it has to break out of that way of
thinking; it has to fall in love with the business
rather than human resource.
11

12. business standpoint…
HR needs that line of sight to create the human
side of the business
 the culture,
 capabilities,
 technical knowledge and
 skills that enable people to create products and
services
better than the competitors.
12

13. Changing our HR practices as
fast as the product life cycle
The head of staffing at Cisco stated:
"Our product life cycle is six to nine months. If we are not
changing our HR practices as fast as the product life
cycle, then we are not contributing to the competitive
advantage of the company. If, we in HR, are doing the
same things that we were doing nine months ago, then
we are probably doing what everyone else is doing. That
just isn't good enough, isn't just adequate."
The head of HR at Hutch stated:
“If we are not re-looking at the organizational charts every
six months we are not working!”
13

14. 2
The Strategic View of
Human Resources
- Sources of Employee Value
- HR Professionals:
capabilities & competencies
14

15. Strategic Human Resources
Management
“SHRM is linking HR with Strategic
Goals and Objectives in Order to
Improve Business Performance and
Developing Organizational Culture that
Foster Innovation and Flexibility.”
15

16. Strategic View of HRM
16

17. HRM as a competitive
advantage involves Strategic HRM.
 Link HRM activities to the firm's business strategy.
 HR managers to assume a broader role in the overall
organizational strategy.
 HR function be "planned, organized, and evaluated
on the basis of its contribution to the business.“
 SHRM is based on the recognition that HRM
activities are organizational in scope.
17

18. The Strategic View of
Human Resources
 Employees are human assets that increase in
value to the organization and the marketplace
when investments of appropriate policies and
programs are applied.
 Effective organizations recognize that their
employees do have value, much as same as the
organization’s physical and capital assets have
value.
 Employees : valuable source of sustainable
competitive advantage.
18

19. Sources of Employee Value
 Technical Knowledge
 Markets, Processes, Customers, Environment
 Ability to Learn and Grow
 Openness to new ideas
 Acquisition of knowledge and skills
 Decision Making Capabilities
 Motivation
 Commitment
 Teamwork
 Interpersonal skills, Leadership ability
19

20. HR Professionals:
capabilities & competencies
 HR need to make strategic contributions (43%);
Adding value through contributions to the strategy forums
and discussions in the company. have business knowledge;
Designing & creating the cultural infrastructure that creates
sustained competitive advantage.
 Culture management impacts all business
practices. Successful HR professionals align their HR
practices to create the culture that drives business success
 Managing rapid change.
creating an organisation that is focused on responding to &
being unified around external market needs.
20

21. HR Pros…
capabilities & competencies…
 Deliver the basic HR practices of
staffing,
training,
developing & measuring performance;
 Proficiency in application of information
technology to HR.
 Have personal credibility;
21

22. HR’ s strategic contribution
Delivery of the HR basic practices accounts for
18% of differentiating variance between high performers &
low performers. (includes the basic HR infrastructure
practices).
When done in a tactical and reactionary manner (without a
definitive business focus), they account for 18 % of HR‘ s
influence on business results.
The same practices are designed and implemented in the
context of HR‘ s strategic contribution that 18 % jumps to 43
%.
That's about a 250% increase in HR's impact on business.
Doing HR practices with a clearly targeted culture-based
business agenda creates great results.
22

23. central agendas of HR
 Institutionalized creativity is a central cultural
issue and is, therefore, an HR issue.
 How well a company can execute self-standing
platforms of technology, products and services is
being replaced by the leveraging of common
technologies, products and services across
business units.
 This business trend may also be called the culture
of cooperation, synergy and convergence.
 The HR department should be responsible for
recruiting, promoting and developing high-
quality leaders who will take the company to
greater levels of success 23

24. 3
Role requirements
- Deliverables
- Role Requirements
- Administrative Vs Strategic work
24

25. Role requirements
 Have a great sense of urgency about your own
focus on business.
 Think in terms of being more effective at their jobs
than those in the US /Europe.
 US and European companies have the competitive
momentum to carry themselves to Indian markets;
likewise, Indian companies must be good enough to
carry themselves to these markets. Such is the nature
of global competition.
 Indian HR professionals cannot think about
benchmarking Indian practices; they must be
knowledgeable about best practices outside India.
They must also think about next generation practices
and be more powerfully competitive than their 25
counterparts.

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26

27. Deliverables
The roles we talked about in HR Champions
(HBS Press, 1997) were defined as deliverables.
 The functional expert delivers efficient HR processes. Some of
these efficiencies come through technology and some through
service centers. Whatever the channel, HR must become more
efficient and the HR personnel members need to be experts.
 administrative expert role: efficiency
 employee champion role : employee commitment.
the employee advocate role must help employees feel cared for.
not just to get people to work harder, but to have meaning,
relationships and hope in their professional lives.
 Change manager: human capital role focuses on helping
employees prepare for the future.
central to productivity and improvement
27

28. Roles
 The strategic partner role is includes knowledge
sharing, collaboration and strategy implementation.
The strategic partner role also focuses on
developing key capabilities that the company needs
for success. making strategy happen
 change agent role :making change happen
 leadership role, they serve as role models.
People need to have meaning and relationship in their
personal and professional lives.
28

29. Shift from Administrative to
Strategic dimensions
Administrative transaction work - Half of HR work
 hiring, training, benefits, facilities management.
 That takes 80 per cent of its time and attention. That
will be reduced by outsourcing, technology and
service centres.
transformation, innovative/ strategic work Other half
 HR professionals are coaches, architects, designers,
and facilitators who can really begin to transform
business strategy into a set of capabilities and actions.
29

30. 4
Essentials of SHRM
- The SHRM Cycle
- HR Strategy: Context of HR System
- Linking HR Practices
to Business Strategy
- Paradigm shift
- Transforming the people
30

31. Essentials of SHRM
• Internally transforming HR staff and structure
• Enhancing administrative efficiency
• Integrating HR into the strategic planning
process
• Linking HR practices to business strategy
and one another.
• Developing a partnership with line management
• Focusing on the bottom-line impact of HR
and measuring that impact.
31

32. The SHRM Cycle
Clarify the business
strategy
Realign the HR
functions and key
people practices
Create needed competencies
and behaviors
Realization of business
strategies and results
32
Evaluate and refine

33. HR Strategy: Context of HR System
Corporate Strategy
Business Strategy
HR Strategy
HR System
(Performance Mgmt.) Training Rewards
33

34. Linking HR Practices
to Business Strategy
Three Aspects of HR Fit VERTICAL FIT
Concerns match between
HR practices &
Overall business strategy
HORIZONTAL FIT
Relates to the interrelationship among HR
Activities ; extent to which they are consistent
EXTERNAL FIT
Concerns how well HR activities match the
demands of external environment . 34

35. Paradigm shift
Two Aspects of Transformation
 Transforming The People
 Transforming The Structure
35

36. Transforming the people
TRADITIONAL HRM SKILLS STRATEGIC HRM SKILLS
Specialist Generalist
Policy & Procedure Writer Good Communicator
Current Focus Current & Future Focus
Monolingual (Speaks HR-ess) Language of Business
Mgt- Hierarchy Focused Customer - Focused
Few Financial/ Mktg Skills Understanding of all Aspects
Stays “Within the Box” Thinks “Outside the Box”
Focus - Internal Organization Focus – Internal Org. & Broader
Society
Factual Communicator Persuader
36
A Nationalist An Internationalist

37. 5
Conclusions
37

38. Conclusions
 Competitiveness is not building a strategy;
it is having an organization that will deliver the strategy better
than your competitors.
 Organization is not structure. It is a set of capabilities.
HR is not a practice, but an integrated set of practices that
join together to create capabilities and allows strategies
to happen.
38

39. Conclusions
 HR builds capabilities into the organisation when it has
integrated HR practices. Which benefits not only the
employees, who feel valued and engaged, but also customers
and investors. And when we follow those three premises, HR
benefits an entire network of stakeholders.
A Tata company may be very good at leveraging diversity,
collaborating across businesses, or be very good at speed.
But it is capabilities that make the Tatas good.
 HR' s job is to do an organizational diagnosis that begins
with the process of identifying and building key
capabilities.
39

40. Acknowledgements
 The HR Value Proposition
By Wayne Brockbank & Dave Ulrich (HBS Press)2005
 Strategic Human Resources Management
By Jeffrey A. Mello (South –western) 2002
 Human Resources Management
By John Ivancevich (Prentice-hall) 2004
40

41. 41

42. e-mail: sandeepputhal@rediffmail.com 42