As management starts planning for 2012, instead of waiting for the business plan to be handed over to the HR department to append the manpower section, its time to proactively get engaged in the conversation as the plan evolves. There are few potential entry points into the dialogue that can be exploited to be there!
Question the assumptions behind productivity gains and cost take-out programs: Enterprises will continue to focus on becoming more cost efficient in 2012, by targeting aggregate level savings from various cost heads such as procurement, process refinements and staff costs. Given the uncertainty and volatility of demand in market place, expectations may be to have a more linear relation between staff costs and scale of business, even when the business contracts. However, it is easier to gain scale efficiencies as business volumes go up than to take out costs as business contracts or stagnates. Also, with the last few years of belt tightening, easier options for cost take-outs may be hard to find. It is the responsibility of CHRO to ensure that unrealistic assumptions around staff cost maneuverability are not made at this stage.
Articulate people level dependencies as prerequisites for effective business program roll-outs: Various business unit programs are often conceived assuming the people enablement will be taken care of by the HR department, which is a legitimate view, provided HR is informed and cost of providing the program related additional interventions are accounted for. CHROs need to seek details about the programs envisaged by other departments early-on, conduct impact analysis and seek wherewithal to deliver their part of the deal. This is crucial, since examining aggregate impact of multiple programs on employees help HR point out any conflicting expectations from the employees across programs, besides warning against any change overload. HR can help in prioritizing and sequencing employee level interventions across the programs for effective roll-out and execution efficiency.
Gain specific commitments to proposed employee mix changes: Given the uncertainty in demand, management is likely to support any proposal that brings in labor cost flexibility. Changes in employee mix (by hiring more part-time workers, contract employees, retirees, low skilled workers, etc.) will require the business unit head’s support in managing resistance from managers within their units who are used to working with permanent employees with certain skill levels. This is the time to break aggregate level commitments to specific business unit levels so that execution does not encounter reluctance in the form of “this is too critical and can we have an exception, this time!”.
Capitalize on uncertain business environment to push for most compelling HR function transformational initiatives: Businesses are looking for greater operational flexibility, more variable cost structure, directed investments and speedier benefits realization from transformational initiatives to sustain in the prevailing complex and uncertain environment. Organization redesign for tighter strategy-structure alignment supported by effective performance management system, HR service delivery transformation (moving towards shared service set-ups), HR process standardization and application portfolio rationalization, Workforce strategy and optimization are some of the transformational programs that are likely to get management support. Success lies in choosing the right program, developing robust use case (including potential cost of not doing anything) and garnering requisite stakeholder support.
Offcourse, HR effectiveness in engaging in business plan exercise depends on how informed it is about business, how evidence based and data driven the arguments are and how much credibility HR has built with fellow stakeholders over the years.
The environment demands HR contribution in business planning more than ever before.
Are we ready? What are we doing differently this year as part of business plan exercise?
Do share.
Question the assumptions behind productivity gains and cost take-out programs: Enterprises will continue to focus on becoming more cost efficient in 2012, by targeting aggregate level savings from various cost heads such as procurement, process refinements and staff costs. Given the uncertainty and volatility of demand in market place, expectations may be to have a more linear relation between staff costs and scale of business, even when the business contracts. However, it is easier to gain scale efficiencies as business volumes go up than to take out costs as business contracts or stagnates. Also, with the last few years of belt tightening, easier options for cost take-outs may be hard to find. It is the responsibility of CHRO to ensure that unrealistic assumptions around staff cost maneuverability are not made at this stage.
Articulate people level dependencies as prerequisites for effective business program roll-outs: Various business unit programs are often conceived assuming the people enablement will be taken care of by the HR department, which is a legitimate view, provided HR is informed and cost of providing the program related additional interventions are accounted for. CHROs need to seek details about the programs envisaged by other departments early-on, conduct impact analysis and seek wherewithal to deliver their part of the deal. This is crucial, since examining aggregate impact of multiple programs on employees help HR point out any conflicting expectations from the employees across programs, besides warning against any change overload. HR can help in prioritizing and sequencing employee level interventions across the programs for effective roll-out and execution efficiency.
Gain specific commitments to proposed employee mix changes: Given the uncertainty in demand, management is likely to support any proposal that brings in labor cost flexibility. Changes in employee mix (by hiring more part-time workers, contract employees, retirees, low skilled workers, etc.) will require the business unit head’s support in managing resistance from managers within their units who are used to working with permanent employees with certain skill levels. This is the time to break aggregate level commitments to specific business unit levels so that execution does not encounter reluctance in the form of “this is too critical and can we have an exception, this time!”.
Capitalize on uncertain business environment to push for most compelling HR function transformational initiatives: Businesses are looking for greater operational flexibility, more variable cost structure, directed investments and speedier benefits realization from transformational initiatives to sustain in the prevailing complex and uncertain environment. Organization redesign for tighter strategy-structure alignment supported by effective performance management system, HR service delivery transformation (moving towards shared service set-ups), HR process standardization and application portfolio rationalization, Workforce strategy and optimization are some of the transformational programs that are likely to get management support. Success lies in choosing the right program, developing robust use case (including potential cost of not doing anything) and garnering requisite stakeholder support.
Offcourse, HR effectiveness in engaging in business plan exercise depends on how informed it is about business, how evidence based and data driven the arguments are and how much credibility HR has built with fellow stakeholders over the years.
The environment demands HR contribution in business planning more than ever before.
Are we ready? What are we doing differently this year as part of business plan exercise?
Do share.
Posts
All very valid points stated above! One of the most important activities that companies shd plan for is to ensure involvement of the HR function. I have noticed in most companies this business plan is a stand alone document with a few garnishes of HR pieces in it. But never really a plan that ties in all aspects that make the plan successful, not even appending the HR piece in it.
ReplyDeleteFor HR to be in line with the biz strategy, the HR function shd aim for factual data, one data set for the entire organization, build a robust HR dashboard that helps make the right assessment of supply and demand for workforce planning based on the biz plan.
Agree with the above mentioned points, particularly the need for HR to be equipped with a single source of data to force a strategic dialogue around people.
ReplyDeleteA word of caution that I would like to highlight here - while it is imperative for the HR Department to be opportunistic in taking advantage of the business environment and articulate its value to the business - it is equally imperative that it's internal policy framework and processes are robust enough to respond to the commitments made by it to the business. I am essentially stressing the need for HR to be able to walk the talk.
We often see HR Policies and Processes not being aligned with business requirements / realities and by the time efforts are made to align, the realities / demands of the business change. There is an evident and arguably a costly lag between what business demands and what HR delivers. HR Leaders need to regularly evaluate the maturity of their frameworks / processes and if necessary overhaul them to suit the ever evolving requirements of the business.
I believe the Article is a very relevant piece considering the continued global recession. We see the same drivers around cost and flexibility playing out in markets around the world and it is high time that HR stood upto the responsibility of plying its part in managing the cost. AS HR Proffessionals we no longer need to ask the CEO for a seat at the table there is a vacant seat we just need to occupy and take our rigtful place to bring in perspectives about the workforce - internal and external. It is no longer enough to have an internal view of cost but it is time for the HR to look at labor costs of competitors and complementors
ReplyDeleteJoseph Philip - Organisation Change Consultant IBM
Thanks Tushar for sharing your thoughts
ReplyDeleteVery valid thoughts all the more because both HR and business need HR to be playing a more active role in enabling success.
A lot of times HR has been in complying mode to heads that business needs and running an show to attain, retain, train, and evaluate the talent as per directions from business. It is both the traditional role played by HR colleagues and the opportunity provided to them.
It is time for business to invite HR to the discussions about future business plans and having people power to deliver them by better buy-in and delivering business outcome than mere compliance to direction.
At the same time, HR needs to earn a seat for themselves in future discussions by understanding business needs and delivering the outcomes with the right skills and people mix.
Enable HR to Enable People to Enable success