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This note is in response to Running Lean and Follow the Leaders.

Wednesday, December 21, 2011
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The fact that current HR Leaders are "running lean" highlights another fact that prioritizing your HR projects is far more important today than ever before. And, if the HR leaders REALLY desire to have HR connect with the company's business strategies (as compared to simply continuing their current role of providing an administrative service), there is a way they can clearly demonstrate their "added value" to the business, which follows the example set by the "Follow the Leaders" companies.

As has been the case for many years, the question has always been, HOW do they do it? Believe it or not, it is possible but it will probably require some reorganization of HR resources and skills. To do so, you must temporarily throw away your HR hat and put on your business person's hat which, in my view, should always take precedence.

The first step is to have a lengthy meeting with your CFO to understand (a) the key numbers in the company's latest income statement, cash flow and balance sheet and (b) the key numbers in the company's financial budget and priorities for the upcoming year.

Next, have a lengthy meeting with the COO to understand the key operating priorities of each major division or group in engineering, operations, manufacturing, sales, service, etc., for the upcoming year or so. 

Third, meet with the CEO to understand the business strategy of the company as a whole and each of its major divisions or groups over the next few years as agreed upon by the board of directors.

Armed with the information and direction you have acquired from above, you can now attempt to connect the company's business strategy (gleaned from the results of the above three meetings) to your HR resources and priorities. 

To help illustrate this connection, below is a list of several board/top management priorities and some appropriate HR responses that are designed to show that HR is a true business partner.

BOARD/TOP MANAGEMENT PRIORITY

To improve earnings per share from "X" to "Y" $/share and increase cash flow by "X" percent.

HR RESPONSE

1. With financial management, implement a cost control/productivity-improvement workshop to identify potential profit-improvement opportunities while quantifying the dollar value of each one.

2. With inventory and manufacturing management, implement an inventory-reduction workshop to identify inventory items that can be eliminated, reduced or replaced by less expensive items while quantifying the dollar value of each one.

* * * * *

BOARD/TOP MANAGEMENT PRIORITY

To improve the market share of the company's main product line from "X" to "Y" percent over the next two years by acquiring a business that utilizes a new technology that currently does not exist in the company.

HR RESPONSE

1. Develop an overall plan to support the new business regarding recruitment, salary and management incentive compensation, sales incentive compensation, technical skills development, performance appraisal, innovation recognition, etc.

2. Develop the knowledge data base to direct and assess the due diligence data uncovered on each potential acquisition candidate from an HR perspective.

* * * * *

BOARD/TOP MANAGEMENT PRIORITY

To develop a cadre of at least 100 strong business-unit executives who possess sound general management skills and have the potential to operate larger business units in the future.

HR RESPONSE

1. With a top-tier business school, develop an executive-management education seminar that covers strategic market/product planning, financial management, product innovation and development, customer retention and leadership development.

2. With the CEO, enhance the company's succession-planning program to ensure that all identified succession candidates have an annual personalized-development plan that is reviewed and approved by their immediate supervisors, and the CEO and COO. Review progress semi-annually.

3. Review and update the company's executive-compensation strategy for stock, incentive compensation and salary based on a pay-for-performance principle.

* * * * *

BOARD/TOP MANAGEMENT PRIORITY

To improve the product quality image of the company in the marketplace.

HR RESPONSE

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1. Work with engineering and manufacturing management to re-engineer the product design cycle and all appropriate quality-related processes in an effort to institute upgraded quality procedures and controls while reducing cycle times.

2. Help install a quantitative set of quality metrics to accurately measure quality against a set of key industry metrics. Train all management and technical personnel on the operation of the new metrics.

* * * * *

BOARD/TOP MANAGEMENT PRIORITY

To improve the sales revenue for product "X" by 15 percent through the introduction of new technology.

HR RESPONSE

1. Review and update the product's sales-incentive plan. Provide for the input of appropriate sales and sales management personnel beforehand.

2. Assess the competency level of all sales personnel in the new technology and retrain as needed.

3. Assess existing recruiting sources and identify new ones to ensure a sufficient supply of qualified applicants in advance of the product launch.

* * * * *

BOARD/TOP MANAGEMENT PRIORITY

To reduce the time-to-market of product "Y" by at least 25 percent to effectively meet, and then exceed, current industry standards.

HR RESPONSE

1. With engineering and marketing management, implement several task forces to re-engineer the entire design and launch cycle in an effort to streamline the process, while synchronizing with various key quality and manufacturing checkpoints and standards.

2. Retrain all appropriate management personnel on the key changes before implementation.

In my view, the above HR responses clearly demonstrate the "added value" that human resources can bring to the company.

An HR leader can use this information to positively influence his/her CEO, COO and peer executives who typically think of HR as an administrative function and cost burden, especially during tough economic times. To do so will likely require a realignment of HR skills and resources.

Each HR leader will have to determine if he/she wants to accept the difficult challenge of connecting with the company's business strategy and thereby bringing HR into its operational mainstream or remaining as an administrative afterthought.

Jack P. Bucalo

Retired CHRO

Fiserv Inc.

Washington, Ill.

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