4 reasons why HR is lost in translation when it comes to Strategy
1. 4 reasons why HR is
lost in translation
when it comes to
Strategy
The most common pitfalls when linking
Human Capital to strategic goals
By Carlos Guevara – Partner -
and Fares Hillo – Consulting Manager -
at ShiftIN Partners
August 2014
www.shiftINpartners.com
2. 2
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. Human Capital Model
By ShiftIN Partners
4 4 reasons why HR is lost in translation when it comes to Strategy
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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
The
readiness
issue
6. 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.
6
The
template-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…
1 State of the Strategy Execution 2014. www.Stateofstrategy.org
4 reasons why HR is lost in translation when it comes to Strategy
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The
Nokia
disease
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
8. 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:
8
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 competencies
My 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 objectives
I 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 culture
Employees are rewarded on the basis of
performance, and incentives are in place to
reinforce the right behaviors.
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4 reasons why HR is lost in translation when it comes to Strategy
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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 cguevara@shiftinpartners.com
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 fhillo@shiftinpartners.com & @FaresHillo
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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
About
The Authors
About
ShiftIN Partners
