Add Business Value To HR Through Innovation
01 Aug 2005
It’s widely agreed that day-to-day administrative functions can become a distraction to executives and managers who are trying to focus on strategic business issues. It’s no different in the human resources (HR) arena, where just getting the payroll out every week can monopolize hours that could be spent on developing needed competencies and anticipating business needs. Time- and resource-consuming processes can quickly douse the bonfires of creativity.
Award For Innovation
Towers Perrin's HR Services technical team (now part of ExcellerateHRO) has received an Innovator Award for excellence in applications development from Application Development Trends magazine.
This was one of the topics at a networking and thought leadership event hosted by ExcellerateHRO, the HR outsourcing business of EDS and Towers Perrin. The intimate group of eight senior-level HR executive attendees represented a diverse group of organizations from across the United States and one from the United Kingdom. Industries represented included healthcare, technology, hospitality, automotive and communications.
Outsourcing provides you the potential to focus your and your staff's activities on things that anticipate business needs, particularly innovation going forward – big moves that are going to create high performance.
Rosabeth M. KanterErnest L. Arbuckle Professor of Business Administration
Harvard Business School
“In spite of differences in the size and types of companies our attendees represented, there were many commonalities in the challenges they face,” said Kathryn Kelly, vice president of global sales for ExcellerateHRO. “Workforce culture, demographic, organizational and training issues and other people-focused challenges were fairly universal.
“Our intention with this discussion was to find out how we can refine ExcellerateHRO’s service offerings to address our clients’ needs and challenges, and free them up to focus more on these strategic people-related issues,” Kelly said.
A special guest speaker for the workshop was Dr. Rosabeth Moss Kanter, the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School. She is an author and co-author of 16 books, including her newest, Confidence: How Winning Streaks and Losing Streaks Begin and End. Throughout her career, Kanter has studied the leadership of companies, organizations, countries, educational institutions and even professional sports teams undergoing dramatic change.
In the discussion she led on confidence and business change, Professor Kanter shared case studies and insights on how HR executives can increase their influence as strategic business partners.
“I was part of many discussions starting in the late 1970s about strategic human resources, and how HR executives could become business partners,” Kanter said. “Now more than 25 years later, we’re still saying the same things. And we have to ask ourselves why.”
HR’s Changing Face
The focus of the HR department changed through the years to support various business trends. Its roots were in finance, because the personnel area was primarily about how much you were going to pay people. In some companies there was a slight adjunct to legal, because it had a lot to do with labor relations and contracts.
Moving into the late '80s, many companies became too big and top-heavy. One symptom of this was trying to do everything themselves, even in areas that were not their competence.
“Appropriate focus is important, which is why I am a big fan of outsourcing,” said Kanter. “You have to turn to experts to do what you can’t really do as effectively yourselves. This is particularly true in the HR field. It always seemed crazy for companies to have this large department concerned with processing when the core of the function was to be around people.”
One big business issue that still is critically important is quality. The Total Quality trend of the ‘80s – now Six Sigma – was handled by engineers. In fact, though, much of implementing Total Quality was about getting the right people, helping them work together in teams, arming them with information and listening to their solutions.
Kanter recalls, “I kept wondering why there wasn’t a bigger HR presence anticipating this issue, saying, ‘Let us do it – we know exactly what to do to get our employees to understand and support the quality initiative goals.’” Another business issue on the minds of many top executives is corporate citizenship. “Much of what companies are doing under that umbrella is employee-related,” said Kanter. “It often has much to do with mobilizing employees to do something. Yet that also seems to be some distance from the HR function, handled by other people.”
So why can’t the people who have a broader view of the whole organization and who understand the people issues be the innovators in suggesting proactive stances? Kanter believes it has to do with HR’s having to handle many things that could easily be outsourced.
“Outsourcing provides you the potential to focus your and your staff’s activities on things that anticipate business needs, particularly innovation going forward – big moves that are going to create high performance,” Kanter said.
In Kanter’s opinion, HR departments must retain – or regain – their expertise on people. What motivates them and drives them to high performance. “HR’s unique perspective is an understanding of people – not only the responsibility for people as an asset, but a true understanding of what the likely consequences are going to be if you manage, organize or communicate with people one way versus another,” said Kanter.
“It seems to me that ought to be the core of the HR function, especially now that there are incredible experts who can handle the processing and administrative functions.”
A Better Seat At the Table
Being able to crunch numbers and identify ways to reduce costs is required for HR to “get a seat at the table” and be seen as a valued business partner. But a more valuable and differentiating element HR can contribute is its unique perspective on better managing, motivating and training people. Another is by proposing innovations that can have multiple payoffs to the organization’s image and that can result in external credit and recognition.
Kanter cited examples such as an airline with a 10-year losing streak whose new CEO led a remarkable turnaround largely based on a collective definition of success. In this case, it had much to do with on-time arrivals: customers care about them, employees directly affect them, they have financial implications, and every employee could make a difference. A gain-sharing program became a reward as employees impressively improved on-time arrival statistics.
“The plan was incredibly successful,” Kanter recounted. “The airline managed to mobilize its workforce and shoot up to the top four in performance in only a month. And they continued this program ever since, adding other things to support it and adding higher aspirations.
“It really was so simple. The plan essentially communicated management’s belief that people have something to contribute; they’re not only a cost. And they’ll probably help come up with ways to save the organization money,” said Kanter.
The HR Factor At Xerox
Patricia Nazemetz, vice president of Human Resources for Xerox, was another guest speaker at the ExcellerateHRO event. She agrees with Kanter on HR’s need to focus on its people expertise. Nazemetz shared a case study of HR’s role in the turnaround of Xerox since 2000 and the phases identified for returning Xerox to greatness.
“Beginning the turnaround, we knew we couldn’t keep all of our employees,” Nazemetz said. “HR’s unique contribution was a means of identifying and retaining our key talent. We knew we had to find a way to exit the people we needed to in a respectful, reasonable way that didn’t – in an excessive way – disenfranchise the people who stayed.”
They did this through incentives such as cash retention payments and guaranteed bonus payouts for key employees. Also critical was identifying the organization’s top 100 players and using a high-touch approach to understand their goals and aspirations – and then to match these high performers with available opportunities.
“We created a highly successful discipline and were able to stay completely focused on it,” said Nazemeth. “Our goal was to retain at least 95 percent of the people we wanted to keep. We were able to retain 97 percent.”
Going forward into Xerox’s growth phase, Nazemetz says the issue becomes building the talent base and getting people ready, willing and able to get the job done and lead Xerox to the next level. She said they’re learning that talent is an individual, person-specific thing. But, HR needs to provide an organization-specific focus and build a body of talent that can move the organization forward.
“HR’s job becomes first equipping the company and then the management ranks to be skilled at people management, but also to look at the organizational needs,” said Nazemetz.
“Until recently, the conversation was about individuals – keeping the ones we need to and developing initiatives to retain them. Now our conversation has to be, ‘Let’s look forward. What are the needs of the business as we go forward, and how do we fulfill those needs through talent acquisition?”
Tools That Deliver Business Value
HR executives have long recognized that it’s the people who make a business successful. High performance in an organization is largely dependent on the commitment of its people to the CEO’s business agenda. HR’s role in stimulating that commitment is critical – but no one said it would be a pony ride in the park.
“The role of HR is incredibly complex,” said Sandy Devine, vice president of U.S. sales for EDS. “The forces at play in today’s global market – offshoring, continuous pressure on costs, organizational shifts in employees; attitudes and expectations – means HR professionals must redefine their roles to focus on these highly strategic issues, not administration.
“The time spent with these dedicated HR executives is the beginning of a dialog that will help ExcellerateHRO create a portfolio of offerings that give clients what they need from outsourcing,” Devine said. “The combination of EDS’ global footprint and technology expertise, combined with Towers Perrin’s HR consulting leadership, gives us a powerful and unique capability. And, with this valuable input from HR executives added to the mix, we can better ensure we’ll all be successful together.”