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WHEN HR MAKES THE DIFFERENCE: How to secure an invitation to the executive table – and stay there

 Follow these success stories and tips to make your HR department the instrumental difference in strategic leadership.

BY SHARON BOGLARI

When the BC Automobile Association (BCAA) decided to invest several million dollars in a customer relationship management (CRM) system three years ago, the executive team knew that if they didn't plan and manage how they introduced the system to frontline staff, they could kiss those millions goodbye. So it's not surprising that John Evans, vice-president of human resources, was front and centre at the executive table when the initiative was under development.

Using sophisticated database management, the CRM system provides frontline staff with relational information about customers. This helps them to cross-sell BCAA products, from auto services to home insurance to travel services. "We realized at an early stage that people, process and technology were going to lead to the success of the initiative," says Evans. "We had built the technological infrastructure to support the new system, but it was critical that we managed the expectations of the frontline staff who were actually going to use the system."

Evans appointed an HR change management advisor who worked in partnership with the implementation team and the executive group. The advisor's role: to ensure that employees not only accepted the new technology, but felt enthusiastic about how it would transform their jobs.

 "More than half of these kinds of projects don't deliver what organizations expect them to because the human factor is missing," says Evans. "We saw the human element as integral to the success of the program." The association’s approach paid off. In fact, in 2002, the US-based Gartner

Evolving business world demands new role for HR
Evans is not alone in his thinking and experiences. In board rooms across North America, and here in B.C., CEOs are setting an extra place at the executive table for a new strategic business partner: human resources.
It’s about time, says Eileen Stewart, program head of the human resources management program at BC Institute of Technology. “This was always HR’s rightful role,” she says. When Stewart started in the profession more than 25 years ago, HR was seen as the gatekeeper or police, charged with making personnel decisions for the line manager. Their role was mainly transactional and clerical, and they tended to operate in a silo, separate from other lines of business.

 Today, she says, HR professionals work as strategic business partners and internal consultants to help managers identify and resolve the people side of their business issues. “We give line managers the tools to make those decisions themselves and help them do their jobs.”

Why the change? Chalk it up to an increasingly demanding and competitive business environment. Daniel Skarlicki, associate professor in organizational behaviour and HR at University of B.C.’s Sauder School of Business, explains that advances in technology, changes in legislation and global expansion have left organizations with fewer ways to compete. “CEOs are realizing that the human resource component is the only competitive advantage left.”

As organizations begin to realize that their people are the key differentiating factor in a competitive world, they also recognize the importance of managing organizational culture. However, just changing the company name on the side of the building doesn’t change people’s attitudes. Hiring practices need to weed out those employees whose mindset doesn’t mesh with the vision and goals of the company. Reward systems and performance evaluations must emphasize activities that promote organizational goals.

These are all areas where HR can add value. Therefore, to help organizations transform themselves, a growing number of CEOs are asking senior HR professionals to the proverbial executive table, and charging them with helping to sustain their competitive advantage.
Skarlicki uses WestJet Airlines and Air Canada Jazz as an example of two companies with identical business strategies where one is making money and the other is losing it. Why? “The difference is the people, the management team, the culture. At WestJet, employees are willing to go the extra mile, and it’s because of HR.” (See sidebar.)

Evans agrees. He says that organizations today are looking to empower employees – a far cry from the old “command and control” model of organizational management. “Managers must be more people focused.  They need to be more effective in managing human skills -- which is HR’s area of expertise.”

HR links management and employees
HR representatives hold a unique position at the executive table: they advise management, yet also serve as employee advocates.
HR is the link between the CEO’s vision and the people who must implement it, says Skarlicki. “Sometimes senior management gets so wrapped up in formulating visions and missions that define their competitive strategy, that they fail to consider how to communicate the strategy. HR must participate in the visioning process so that they are able to carry the torch to the people who have to implement the vision.”

In a way, HR professionals champion the vision; to guarantee its success, they must motivate employees to buy into it. They need to frame changes that employees will experience, as a result of implementing that vision, in terms that will minimize dissatisfaction and secure employee commitment.
If HR is sitting at the table when business initiatives are designed, they can

As a strategic business partner, HR can more appropriately align human resource activities -- such as hiring, reward programs, performance evaluation, succession planning, design of work positions, and change management -- to support the accomplishment of the organizational goals.
Skarlicki cautions, however, that the best human resource practices will not prevent an organization from failing if it doesn’t have an effective business strategy to start. “We tend to lose sight of the fact that HR is part of a bigger wheel. That’s why it’s important that they are at the table when strategy is discussed, so that they can understand where they fit in and how they can contribute.”

How to become a strategic business partner
Stewart notes a disturbing trend: Many top strategic HR jobs in North America are going to people with backgrounds in marketing, manufacturing, finance and other operational areas. The dilemma in B.C. is that many senior HR professionals no longer work in the corporate environment, but operate as consultants. This leaves a large number of mid-level HR practitioners operating in the corporate environment – many of whom are still mired in old practices.

Why the gap in skill levels and attitudes? Stewart claims it’s because HR hasn’t paid attention to the growing demands of businesses. However, she encourages HR professionals to turn this situation into an opportunity. Want to get invited to the executive table? First, you’ll have to prove that you belong there. Consider implementing some of the following strategies.

1. Get out of your office.
“I know HR people who work in 24/7 operations, and they’ve never gone to a Saturday-night shift,” says Stewart. “You cannot effectively help an organization with their people issues if you’re not actively out and about finding out what’s going on.”

Start by building relationships. Spend time talking with sales, production, marketing, and IT and understanding their issues. Stewart says, “If I could do nothing else, I would take away all offices from HR people. It’s too easy to get caught up in paperwork, and you begin to forget why you’re there.”

2. Learn the business vernacular.
If you want to contribute to your organization’s success, know its business objectives and what constraints threaten it from reaching its goals. Forge relationships with key players in your organization or business division. If you understand what makes their division tick, whether it’s spreadsheets or marketing plans or technology, you can better help them with their people issues.
Stewart tells her students to read at least two business newspapers a day so that they know what’s going on in the business world and with the economy. “Human resources is a business discipline. It requires rigorous analysis and we need to talk the language of key decision-makers.”

3. Operate like a business.
Twenty years ago, HR departments in large organizations had 20 or more staff. Today, departments are leaner, but are expected to do more.
HR departments should be run like a business, says Skarlicki. The departmental goals should contribute to the accomplishment of the overall business goals. This means prioritizing activities according to their impact on the business strategy.

For example, start by simplifying your organization’s selection processes. Figure out just one or two predictors and build your selection processes around those. Or, determine what performance issues will explain the most with the least cost. Then focus on measuring those when developing performance plans. “HR tends to build its own complex systems when they probably should be thinking about how to reduce the systems so they can become more effective,” says Skarlicki.

Many HR departments have already figured out how to leverage technology to make administrative functions more efficient or they are starting to outsource those functions. New software systems empower line managers and employees to take on administrative functions, such as time keeping and performance planning, which leaves the HR department free to focus on being a strategic internal consultant.

4. Demonstrate strategic thinking.
To earn your place at the executive table, Evans suggests starting small. “If you’re not at the executive level, look at how you can facilitate a mini strategic planning role in the realm over which you do have power. It doesn’t have to be the whole enchilada.”

In most large organizations, HR professionals are consultants operating in an advisory role in a particular area of business. “Define your area of influence and think about it in a proactive, anticipatory way. Ask: What can I do to help my customers run their business more strategically?”
As you develop confidence and hone your strategic skills, people will notice. If you’re really good at it, you may be asked to do it as part of your suite of skills.

5. Learn to lead.
Skarlicki maintains that for HR professionals to act as strategic business partners, they need to learn the skills of leadership, not just management. “Good management means doing things right. Most HR professionals are good managers. They execute strategy. They meet deadlines. They coordinate people so that they’re effective in what they do. Leadership, on the other hand, means doing the right thing, thinking long term and recognizing how what you do affects a larger constituent of people.”
Many executive education programs at local colleges and universities offer courses to help professionals make the leap from management to leadership.

6. Learn to self-promote.
Human resources professionals can learn a lot from other areas of business about enhancing their profile. Ever notice how marketing frames products and services in ways that customers value? Take a page out of their book and start focusing on HR initiatives that the organization values.
Some internal managers may not be familiar or comfortable with HR’s role as a strategic business partner. Demonstrate your value through your actions – and then communicate these successes to the board, managers and employees.

Consider developing a mission statement for your HR department, and make sure your internal clients see you living it. At BCAA, the HR department’s internal clients are called customers. In fact, HR practitioners there have adopted the same customer service guidelines that guide frontline staff, ensuring that they are motivated to provide the same level of service to their internal clients.

7. Make the business case.
One of the best ways to get senior executives to take notice is to quantify the strategic impact of a recent HR program or decision. You need to demonstrate the connection between people and profits.

In their new book, Why the Bottom Line Isn’t: How to build value through people and organization (Wiley, 2003), Dave Ulrich and Norm Smallwood suggest that this is best done by focusing on deliverables, as opposed to activities. Traditionally, HR has quantified outcomes in terms of activities, such as how many people were hired or how many hours of training were given to managers in a year. By shifting to deliverables, they would instead ask: Were the people hired last year the right people? Do we now have better talent? After receiving training this year, are our managers better than last year?

A good CEO wants to know how the investment in HR has affected the organization. But the answer may not always be expressed in tangibles such as earnings. The authors claim that intangible factors, such as reputation, brand and quality of leadership, make up 45 to 50 per cent of the market value of many of today’s large organizations. These intangible factors represent future earnings.

As a strategic business partner, HR can help build or protect market value. In fact, the authors point to research that links innovative HR practices to shareholder value. For example, providing management training not only gives managers more skills, but also builds confidence in the organization among customers and investors. Building a collaborative organizational culture means that the organization is able to attract a higher calibre of employees.

Have you got what it takes?
Each year, hundreds of people apply to the BCIT human resources management program. Half the applicants are screened out at the document review stage. Then, Stewart narrows the field to 24 students by assessing their personal skills in a one-on-one interview. These are some of the personal qualities she deems essential for getting ahead in strategic HR today: 
• Teamwork: the ability to work effectively in groups and teams. To be a consultative business partner, you need good influencing and communication skills. In fact, Ulrich and Smallwood say that the HR professional “should be able to lead a group of executives in a rigorous and action-oriented discussion of the organization capabilities required to deliver business results.”
• Broad vision: the ability to connect the dots and see the big picture. To think strategically, you must be able to discern patterns and connections, think critically and creatively and understand key issues in complex situations.
• Credibility. Try seeing yourself through the eyes of the executive members

Where can HR have the most strategic impact?
When human labour is an integral part of the business, organizations often pay more attention to human resources issues than when they depend on machinery or natural resources or have high levels of capital. In Canada’s service-based economy, where the bulk of what impacts an organization’s success flows from what the people in the organization do, HR can stand as a valuable business partner.

It is very clear which companies recognize the value of human resources, says Skarlicki. “They function very differently and are most often those companies who will make the top ten list of best companies to work for in Canada or the Fortune 500.” Organizations that define their success by short-term bottom line results, however, will place less emphasis on human resources management than those looking to the long term.
CEOs often turn to HR when the organization goes through a significant cultural change. In today’s mercurial business world, this happens almost constantly, says Evans. “The world is redefining itself much more rapidly than it was ten years ago, so there is typically a greater need for strategic thinking and planning.”

In such environments, HR can form a valuable strategic resource and help organizations sustain their competitive edge. HR professionals can, in fact, drive change, encourage innovation and help organizations develop a high-performing workforce.

Sharon Boglari is a communications specialist in North Vancouver. Contact: boglari@telus.net.

Sidebar
 WestJet CEO says: “We let them loose”

 Besides profit sharing and stock options, WestJet’s “bottom-up” philosophy and inspirational executive leadership have proven instrumental in its success.

 “If you look at the relationship between employer and employee in the airline business,” says Clive Beddoe, WestJet’s chair, president and CEO, “we think the relationship is good where you don’t have a top-down, dictatorial, arrogant leadership.”

 He adds: “We push decision-making down as far as we can. We are a bottom-up organization. My role is to make sure our people have the resources to do the job, where we are going, how to get there, and then we let them loose to get that result.”

 WestJet has 3,900 employees. Last year, it received 50,000 job applications, from which it hired 900. It has been a profitable airline every year since it started in 1996.
(Source: The Vancouver Sun)

Photo caption #1
A strategic partnership at BCAA, which integrated human resources at the executive level under HR vice-president John Evans, resulted in an award-winning customer relationship management system.
Phot  D'Arcy Drachenberg

Photo caption #2
Eileen Stewart, program head of the human resources management program at BCIT, says that executive-level strategic involvement was always HR’s rightful role.
Phot Scott McAlpine

Photo caption #3
Even top-notch human resources practices won’t save an organization if it doesn’t start with an effective business strategy, says Daniel Skarlicki, associate professor in organizational behaviour and HR at University of B.C.’s Sauder School of Business.
Phot Heather Conn

Reprinted from PeopleTalk Magazine Winter 2003

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