Shaking Hands With Strategic Business Goals

'Shaking Hands With Strategic Business Goals' :

By THF Team , June 4, 2012

?

DR. JOHN SULLIVAN

DR. JOHN SULLIVAN (PROFESSOR, SAN FRANCISCO STATE UNIVERSITY & CEO DJS CONSULTING) SAYS IF THE HR WANTS TO KNOW ITS RELATIVE IMPORTANCE, IT SHOULD MEASURE HOW OFTEN IT IS MENTIONED IN THE ANNUAL REPORT?

An internationally acclaimed HR thought leader, Dr. John Sullivan specialises in providing bold and high business impact strategic solutions. He is a prolific author with over 900 articles and 8 books on talent management in his name. At present, he is a professor of management at San Francisco State University and CEO of DJS consulting.?

Q. How would you evaluate HR?s role through the CEO?s eyes??

A. CEOs usually like and respect their senior HR person, but consider HR to be a second-tier function. Reason ? most HR and other ?overhead or back-office? functions do not directly and measurably impact strategic business goals.?

CEOs are relatively easy to understand. By reviewing their senior executive team?s meeting agenda, you can identify issues that matter the most to them. Almost universally, CEOs care about meeting the strategic business goals that usually include increasing revenue, market share, profit, innovation, brand value, and customer satisfaction scores. Moreover, CEOs also care about meeting the criteria for their personal bonus package. These bonus criteria often include raising the stock price, making successful acquisitions and raising profit margins.?

It is not a subtle relationship; if they do not make you money you are not very important in the eyes of a CEO. Since labour costs often exceed 60 per ?cent of variable expenses, CEOs have to be concerned with labour costs and productivity of the workforce (cost versus output value). Being considered as a cost centre versus a profit centre by CEOs essentially dooms any function to continuous budget cuts. Incidentally, if you want to unambiguously know your relative importance, measure how often you are mentioned in the annual report compared to finance and sales.

Q. How can HR keep itself abreast of business understanding?

A. Get a copy of the strategic business goals. Next, if you can get access, regularly read the minutes of the executive committee meetings because this group only talks about strategic direction and strategic problems and opportunities. Executive speeches, the annual report and even executive blogs can give an idea of what they expect.?

If everything fails, focus on what executives measure and reward. If they do not measure, recognise and reward it, it is probably of lesser importance. HR should also work with the CEO?s secretary to identify the business and industry publications and internet sources that the CEO reads so that they can also read them.

Q. What are some strategic talent management barriers before HR and how can a CEO participate in new proactive activities??

A. CEOs need to learn to demand more but they do not have the time to push HR along. At present, HR professionals are conservative defenders of the status quo and too risk adverse. Because most CEOs want their firms to be the next ?Apple? (with its superior market value and extraordinary employee productivity) CEOs are the exact opposite. An HR shift towards impacting business goals, increasing innovation and providing a competitive advantage would be welcomed by most CEOs.?

Q. How prepared is HR to meet these expectations? Also, how should it communicate with CEO?

A. At most firms, HR is not prepared to be businesslike. HR functions improve at a rate below five per cent where the company?s products and services may be improving at twice that rate. What is needed is a transition from traditional process and transaction-oriented HR to a new strategic approach that I call business impact HR (BIHR). Only by demonstrating to CEOs how great hiring, retention, development can directly impact revenues and profit can HR begin to meet the higher expectations.?

HR should ?speak? through its business results. It should show, for example, how a great hiring process of salespeople increased sales by 18 per cent. It should show how internally developed leaders increase their team?s productivity by 22 per cent. Finally, it should show that the profit generated per employee (compared to total labour costs) increases dramatically each year as a result of the new BIHR approach.?

Q. Who should HR report to?

A. The most effective VPs of HR report directly to the CEO. However ?getting a seat at the executive table? is a shallow victory if all you have to report are soft results like engagement, morale and work-life balance. The greater your measurable impact on business goals, the greater the opportunity to report directly to the CEO, as opposed to the less desirable CFO or COO.

Q. What can be a CEO?s concern ?in terms of improving the?employment brand?

A. Branding is almost always a strategic corporate goal. CEOs are certainly aware of the sub-brand ? what we call employer branding ? but they do not always understand its value.?

It is the HR?s role to quantify the economic impact it has on recruiting and workforce productivity. The CEO should also be made aware that if the employer brand (being viewed as a great place to work) is negative, it will eventually hurt the product brand.

Q. How can a CEO help HR look at business priorities?

A. CEOs do not have time to hand hold HR. HR?s lack of self-confidence keeps it focused inwardly at functional priorities. It takes a bold HR leader to break out of the ?we are just overhead mentality?, but it certainly can be done. It simply requires the courage to adopt the business impact model. Google leads all firms in proving to the CEO how people management practices can directly increase innovation and profit.

florida state meghan mccain wilson chandler bristol motor speedway puerto rico prometheus grand canyon skywalk