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The Role of HR in Developing Organisational Effectiveness

May 15, 2009 - In Strategic Change and Organisational Effectiveness - No comments yet

Organisational Effectiveness is an organisation’s ability to maximise results in the competitive external environment.

In this article, we look at how the Human Resources function can help an organisation be effective.  We argue that once cost cutting and efficiency improvements have been made to increase profitability, the organisation needs to focus on the further generation of improved revenues and profitability through peoples’ innovation and the development of new ideas.

This focus on people, their performance, innovation and creativity is the professional concern of the Human Resources function.  Of course, it is the business concern of line managers and especially the concern of the leading executives. Business managers seeking profitable growth now need to engage their people in a new quest for creativity in all aspects of provision for customers and potential customers.  The accomplishment of this quest depends on three essentials:

  1. Effective leadership
  2. A knowledgeable, skilled and motivated people
  3. An organisation designed to enable to people achieve to be engaged and achieve success

This is why the responsibility for the transformation of Human Resources from what has been traditionally, a relatively passive administrative function into a business and organisation enabling activity is jointly shared between line managers and HR professionals.  Line managers need help in gaining the levels of creativity and performance that are required to achieve the excellent results that will differentiate their businesses from competitors.  It is critical to the success of the enterprise that organisations appoint business-focused people into their HR functions.

Much has been written on this topic, especially by Dave Ulrich.  In the Harvard Business Review article, ‘A new Mandate for Human Resources’ he has crystallised some of the most critical points.  Research in the United States by some of Ulrich’s collaborators and research in the UK, has done much to advance understanding of the value-adding benefits of good people management practices.

The focus on maximising results is increasingly about meeting customers’ expectations.  But the goal posts are continually shifting.  Delivering static levels of service will mean that competitors will overtake and could provide not only product and service, but that hybrid which goes beyond ‘exceeds’ and provides all the intangibles in the customer experience.  It is the experience that registers in customers’ memories.  If further successful experiences can be delivered a relationship may develop and the competitor will gain a customer.  Clever competitors will manage and develop the relationship by fronting bright, enthusiastic, committed professionals who deliver customer success through a series of mutually reinforcing experiences, the new basis of life-time customer value.

The first priority of the leader is to shape the business’s purpose and direction to deliver excellent customer experiences.  Following this, the leader’s main concern is to ensure that the organisation’s people are fully committed to the business’s purpose and direction.  Beyond this they need to ensure that the structures, processes and culture are aligned to the business purpose and direction.  Alignment is essential to enable the organisation to attain real ‘traction’ and produce the high levels of creativity, energy and effort needed to generate winning customer experiences. Non-alignment in the organisation causes blocks to progress, friction, frustration and poor focus on the customer experience.

But what of HR’s role in developing organisational effectiveness?

Dave Ulrich says HR people must become:

A partner in strategy execution – to work with senior managers in designing the organisation to realise its purpose and direction and achieve its goals

Administrative experts – be effective and efficient in HR processes, measure achievement and deliver results, or ’get the offer letters out on time before trying to change the world’

An employee champion – the psychological contract has changed, people need to be fully engaged in realising business purpose and direction, and as Jack Welch said years ago, ‘we need 100% of the people thinking, not just 5% of our managers’.

A change agent – the rate of change is not only accelerating, it is encompassing new characteristics such the emotional and memorable dimensions involved with the customer experience. HR needs to anticipate change but most importantly enable the organisation to build the capability to change into its core competencies.

These elements of HR’s role are important.  However, we emphasise that the focus of HR’s endeavours must be on the three essentials:

To develop an organisation which can maximise results in the competitive external environment by delivering excellent customer experiences, effective leadership is the top priority.  HR executives can support the development of leaders who use their power and authority for the benefit of the whole organisation.  This is an issue of integrity.  Help is also needed in providing the right balance of inspiration and reasoned strategy.  HR can help executives build the robust frameworks that will link strategic goals with guiding principles in support of business purpose and direction.

HR can also support the thorough development of performance measures that cover the factors critical for business success and the competency frameworks that will drive the development and application of the right knowledge and skills.

To help the business’s leaders have a fit organisation designed to facilitate superior people performance, HR needs to adopt an organisational model which will enable redesign and re-alignment speedily in pursuit of necessary change.  We recommend our Model For Organisational Integration which supports the alignment of structure, processes and systems, people and culture with business purpose and direction.

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