My Good News and a Pause for HHHR

AdobeStock_75926072It’s been a month since my last post and I indicated on my podcast that week that I had some exciting news to share. I meant to post and podcast about this news much earlier but was simply unable to find the time because of the news.

Things have been a whirlwind since that week!  I accepted a job with Merrill Gardens and their sister company Pillar Properties in Seattle as their HR Director where I will be in charge of the HR function for both companies.  It’s something I’m very excited about as the HR department services both company’s 2000+ employees in seven states.

Since that week in February, I had a lot of work wrapping things up with several of my clients in Denver that I would no longer be able to continue working with due to my leaving the Denver area. In addition, I had to pack a few things and get up to Seattle to find a place for my wife and I to live until we find a place to buy.  I also got stuck in Casper, WY for a few days due to the winter storm that passed through the western states mid month. Not a big deal because I grew up there and we stayed with my in-laws but it delayed my house-hunting plans by a few days!

I eventually made it to Seattle and was able to find a place and as a bonus, am temporarily staying with my daughter and her family and am spending some wonderful quality time with my granddaughter!

So, I’ve had a lot going on the past month and it will be a while before I start posting and podcasting again because I need to devote my full attention on my new job and getting acclimated to the company and all I need to learn and accomplish.

There won’t be a podcast this week since my podcasting equipment is packed up and in storage.

Once I get to a certain place at my new job, I expect to start posting and podcasting again on a monthly schedule.  I love blogging and podcasting but I need to focus 100% on my new job and company!

 

The HR Expert-Generalist

AdobeStock_91768118In one of my regular recent blog reads, The HR Capitalist Kris Dunn, recently wrote about how Warren Buffet’s most trusted business partner, Charlie Munger, attributes his success managing Berkshire Hatheway’s stock market portfolio by “knowing a little about everything.”  Basically, being a generalist.

Here is the article about Munger from The Hustle.

Dunn, being an HR Blogger, of course related Munger’s successful philosophy to the HR Generalist function compared to the HR Specialist.

Dunn’s definition of an HR Generalist is the following:

HR Generalist – a HR pro at any level who is in charge of a client group of employees -meaning they provide HR services to a location, a business unit, a functional area or geographical area.  As part of this role, they provide counsel, service and insight across the HR Body of Knowledge – comp, benefits, recruiting, employee relations, legal, etc.

An HR Generalist can exist at the individual contributor level or manage people, as well as exist at the HR Rep, HR Manager, Director, VP and CHRO level.

As Dunn noted in his post, many attribute HR Generalists as more of an entry level HR position. It’s not. As he defines it, it exists at the individual contributor, Manager, Director, VP, and CHRO levels.

Back to Munger, his work-ethic theory is known as expert-generalism which is the opposite of the Gladwell’s famous 10,000 hour rule.  What Munger does is to focus “on studying widely and deeply in many fields, including microeconomics, psychology, law, mathematics, biology, and engineering, and applied insights from them to investing.” rather than just focusing all of his time on investment theory.

The originator of the term expert-generalist, Orit Gandish, chairman of Bain & Co defines the term the following way:

Someone who has the ability and curiosity to master and collect expertise in many different disciplines, industries, skills, capabilities, countries, and topics., etc. He or she can then, without necessarily even realizing it, but often by design:

  1. Draw on that palette of diverse knowledge to recognize patterns and connect the dots across multiple areas.
  2. Drill deep to focus and perfect the thinking.

In addition,

Research shows EG’s have:

Hmm, sounds like the world could use a few more EG’s.

I enjoyed both Dunn’s and The Hustle’s articles because I’ve had the most success in my career as a Generalist. First as an award-winning General Manager for Macy’s (The Bon Marche’) and as an HR Director and HR Consultant.

As a matter of fact, at Macy’s (The Bon Marche’), I regularly told my Department Managers that I expect them to be the experts/specialists in their area of responsibility because I joked told them that there was no way that I could know as much as they did – I was the General Manager.

I literally said the same thing as Munger,  “I have to know a little bit about everything” in the store. This meant knowing a little (but enough) about each department’s assortment, staffing, employee capabilities, and merchandising; customer service performance; current and upcoming sales events; sales and profit performance; local and national economy; store operations; capital improvements; customer, community, regional & corporate relationships; etc.

The philosophy worked (*self promotion alert!*) because my store earned the Store of the Year award twice during my 13 year stint as a General Manager.

Dang! I just remembered how hard (but rewarding) it was to be a General Manager!

I’ve also always proudly worn the moniker “HR Generalist” when I transitioned from running a Department Store to doing HR. But I often felt a little uncertainty reading articles and blogs touting how the future of HR is specialization.

After researching and writing this post, I now officially call myself an HR Expert-Generalist. I like it.

Dunn closed his post with the following wise and comforting words:

If you’re an HR generalist at any level, be proud.  You’re a trusted adviser that understands that the world is gray, and you also know how important you are in helping those in your client group navigate all the complexity and chaos that comes with managing a workforce.

Simply put, HR Generalists are the most important cog in the HR world.  Be proud, because you are irreplaceable.  

As always, it’s nice having a little confirmation bias every once and a while!

Oh, and just I added “HR Expert-Generalist” to my LinkedIn profile headline.

Step Two of Developing an HR Strategic Plan: Conduct an Internal and External Environmental Scan

AdobeStock_92951733This week, I’m introducing the second step of developing an HR Strategic Plan. This is the step where both internal and external environmental scans must be conducted in order to identify and interpret the data that pertains to opportunities and threats in the organization’s business environment.

Being able to identify and understand these threats is essential in developing an effective strategic plan. The two types of scans are defined below:

The first is the internal scan which identifies internal organizational trends as well as the physical, financial, and human assets and determines whether these trends and assets are strengths or weaknesses.

Examples of what to examine in an internal scan include employee interaction with each other, employee interaction with management, manager interaction with each other, management interaction with shareholders/owners, access to resources, brand awareness, organizational structure, individual and core competencies, innovation capabilities, operational potential, etc.

The second is the external scan which identifies and analyzes the external environment in order to anticipate and identify trends, opportunities and threats to the organization.

I recommend three environments that should be scanned and analyzed.

  1. The organization’s industry environment. Examine the competitive structure of the organization’s industry. Take a good look at the competitive position of the organization as it relates to its top competitors. The industry’s history, life cycle stage, and dynamics must be carefully assessed including how globalization is affecting the competitive environment.
  2. The national environment. Examine the whether the organization’s national/local framework is capable of being competitive in the national and global environment.
  3. The broader socio-economic environment. Explore the macro-economic, social, government, legal, technological and global factors that may influence the organization’s competitive environment.

Understanding what we are scanning and gathering data on, next we’ll take a look on how go about collecting that data.

Internal Sources:

  • Annual Reports
  • Business Unit strategic plans
  • Marketing materials
  • Employee surveys
  • Staffing Plans
  • HR and training staff
  • Employee exit interviews
  • Conversations with leadership team
  • Org charts

External Sources:

As I alluded to earlier, the main purpose of the scans is to identify and evaluate the organization’s strengths and weaknesses.

The first element to assessing the organization’s strengths and weaknesses are the competencies that are necessary for the organization to be successful in executing its strategy. The people of the organization are the critical link between the business strategy and the results.

There are specific competencies and behaviors that are needed to successfully implement a strategy within its environment. For example, significantly different competencies are needed for a cost strategy vs a service strategy.

The next element to consider when evaluating the strengths and weaknesses is to analyze the organization’s various management practices. Determine whether the management practices are logically related to each other and capable of producing the critical competencies needed to effectively implement the strategy.

A thorough HR Department assessment must also be conducted. Take a cold hard look at the organizational structure of the HR department and the skill levels of the staff. In addition, analyze and evaluate whether the right processes and systems are in place.

The HR Department needs to know how it will make a contribution to the organization’s business, have the right org structure, have the right systems and processes in place, understand the department’s strengths and weaknesses, how the department is perceived by leadership and employees, and have a plan in place to capitalize on staff strengths and address staff weaknesses.

Strategic HR is all about the relationship between HR leadership and the organization’s business unit leadership. It’s about delivering real business value to all functions of the organization. HR has to be thoroughly involved with all aspects of the business in order to fully understand and appreciate the opportunities and problems the organization and business units deal with every day.

To be taken seriously by the organization’s leadership, strategic HR professionals need to be great business professionals. They should have actual business leadership experience outside of HR, in my opinion. In addition, they should put themselves in positions where they regularly work with key influencers, identify opportunities and provide solutions to business problems, facilitate key meetings, be members of leadership teams, etc.

Introducing the Steps on How to Develop an HR Strategic Plan

AdobeStock_103199139The HR function in any organization has a great opportunity to connect to and add measurable value to the bottom line of the business. Developing an HR Strategic Plan is a difficult and complex undertaking but one that will be well worth the effort in establishing HR as an important and valuable function of the organization.

Since the ability of an organization to establish and maintain a competitive edge depends almost entirely on the quality of their workforce and the people management processes, being able to develop an effective HR Strategic Plan is crucial to the financial success of the organization.

There are six steps involved in developing an HR Strategic Plan that I’m listing below and will review much more in-depth in the following several weeks/months.

The six steps are:

  1. Determine and communicate a Vision, Mission Statement, and Value Statement for the HR function. These three things will assist the HR function in identifying and distinguishing itself to the organization’s leadership and employees.
  2. Conduct an external and internal environmental scan of the organization in order to identify opportunities and threats that might affect the organization in the future. Understanding how these opportunities and threats might affect the organization in the future is critical to creating an effective strategic plan.
  3. Establish and align HR strategies and goals in order to provide the direction that will guide the organization towards achieving its long term objectives.
  4. Develop action plans and assign accountabilities designed towards moving the planning process from the long term to the shorter term goals necessary to achieve the strategic goals.
  5. Execute the plan and monitor its progress in order to ensure that the plan stays on track. HR is responsible for developing, communicating and supporting the HR strategy implementation with the responsibility of actually implementing it residing with the line managers. Changes may be necessary with shifts in the business environment.
  6. Evaluate the plan’s results by measuring the success of the HR initiatives and identify things that worked or didn’t work. The evaluation establishes the foundation for additional HR strategic and business plans.

An organization’s HR strategy should never be separate from its overall business strategy. It should always be an integral part of all the organization’s strategies that require people to implement them, obviously. It requires HR’s thorough understanding of the organization’s business. With that understanding, HR programs and practices can be identified that will help the organization successfully execute its strategy.

The HR strategy must be externally aligned with the business plan in addition to being internally aligned for the HR programs and practices to support and complement one another. And in order for any HR strategy to be successful, HR must build relationships with, and gain the support of, the line managers who will ultimately be responsible for carrying out the HR practices and ensuring the success of the HR strategy.

That’s this week’s brief introduction of the steps on how to develop an HR strategic plan. In the coming weeks, I am excited to explore each of these steps much more in depth.

Speaking the Language of Business for Strategic HR Professionals

AdobeStock_101865782This week I’m returning to discussing strategic HR and am going to define some important business terminology Strategic HR Professionals must know in order to be taken seriously by their organization’s leadership.

This is not a comprehensive list but simply some basic business terms that relate to developing an effective HR strategic plan.

The first term is Business Strategy.  Business strategy as defined by Michael Watkins of the Harvard Business Review is the following:

A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making. A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals.

The definition implies that a business strategy can be looked at from the perspective of creating shareholder value, competitive market position, and creating a strategic advantage within the constantly changing business environment.  

This constantly changing business environment is influenced by things such as national and local politics, regulatory agencies, the economy, customers, suppliers, competitors, technology, economic trends and current and potential markets.

The second term is Strategic Intent. The business strategy, described above, is built upon the strategic intent and is defined by the website Simply Strategic Planning as the following:

Strategic intent is a statement of the course that the management of an organization plans to take the enterprise in the future. As many people as possible should understand these intentions. Then everyone can work consistently to achieve the corporate purpose.

Statements of intent aim to be more explicit than the usual directional statements. Most mission and vision statements point the way forward only in general terms. Sharp statements of intent can provide more clarity about what to do in the near future to achieve the vision and/or mission. Such statements convey the flavor of the strategic decisions taken through the planning process

In order to determine an organization’s strategic intent, the following questions must be answered: who we are and what we are trying to accomplish, what business are we in, what is our mission, what is our vision, what are our core values, how do we compete, and how do we add value to the marketplace.

The third term is Strategic Focus. A good description of strategic focus comes from Ann Latham at Forbes where she writes the following:

A good strategic framework provides focus by limiting the number of directions the organization runs. You’d be foolish to try to extend all your products while simultaneously expanding all your markets while also ramping up capacity or shifting your business model to include new types of production, sourcing, sales, delivery, and partnerships. This isn’t just an issue of capacity. It is also an issue of risk, learning, complexity, and credibility.

A great way to identify an organization’s strategic focus is to take a close look to the classic Generic Strategies by Michael Porter where he identified three strategies that address the question of how value is added by an organization.

These three approaches are cost leadership, differentiation, and focus as described in this article by the Institute for Manufacturing:

Cost Leadership

In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.

Differentiation
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser’s target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments

In order for an organization to be successful and grow, it must have a business strategy that excels in all three of these strategies, not just one or two.  All of the organization’s operating and management systems, which include HR, must support all three of these approaches.

Bottom line, for an HR pro to be seen as an effective business partner, they must fully understand such important basic business elements such as the operations of the organization, its sales/revenue LY and YTD, its profit margin, how those margins compare with competitors and industry, its cash flow, its growth rate, the metrics leadership tracks, and the top initiatives of each of the members of the leadership team.