HR825 CH1 Lesson 1 Part 2 Human Resources Decision Evaluation Paper Write an essay of at least 750 words explaining your answer to the following:Based on the commentary, readings, and your professional experience:Identify at least three examples of decisions that an HR professional should make which will likely harm a company’s bottom line and/or will block a efficiency enhancing or cost savings idea proposed by others.Give reasons for each example.How can you reconcile taking these positions while still maintaining your status as a strategic partner with the rest of senior management? BOOK CHAPTERS
The RBL White Paper Series
Next Generation HR
HR from the Outside-In
DAVE ULRICH, JON YOUNGER, WAYNE BROCKBANK, AND MIKE ULRICH
Chapter 1: Next Generation HR
Dave Ulrich, Jon Younger, Wayne Brockbank, and Mike Ulrich
ell us about your business.
Thats how we like to start when we sit down to work
with senior HR professionals. We find that it is a good
litmus test for assessing the current state of HR in a company.
Most replies start with discussing the latest challenges or
innovations in HR practices (hiring people, training leaders,
building incentive compensation, doing HR analytics, and
so forth), relating to business leaders (having a voice at the
table, getting buy-in), or managing the increased personal
demands of the HR job (allocating time, staying upbeat in
the face of overwhelming demands). That is, HR professionals almost invariably define business as HR business and
are inclined to talk about their current initiatives in leadership training, recruiting, engagement, or rewardsthe areas
where they focus their attention on the job.
These efforts are important, but they are not the business.
They are in support of the business.
The real business is external: the context and setting in
which the business operates, the expectations of key stakeholders (customers, investors, communities, partners, employees, and so forth), and the strategies that give a company a
unique competitive advantage. If HR professionals are truly
to contribute to business performance, then their mindset
must center on the goals of the business. They must take that
outside reality and bring it into everything they do, practicing
their craft with an eye to the business as a whole and not just
their own department.
Focusing on the business of the business enables HR professionals to add meaningful and sustainable value. When they
start and ground their work with the business, HR professionals think and behave from the outside in.
Training from the outside in: When experts teach, delegates learn; when line managers teach, delegates act;
when external stakeholders teach, delegates act on the
right things. So customers, suppliers, investors, and regulators are invited to help design the content of training to
make sure that what is taught meets external expectations.
They also participate in training sessions as delegates who
are co-learning with organization employees, and they present materials either as a live case study or as visiting faculty.
Rewards from the outside in: Customers help determine
which employees are rewarded for their efforts. For example, an airline we often travel with allocates a portion of
its bonus pool to its most frequent fliers, inviting them to
distribute bonus coupons worth varying degrees of value
to deserving employees. By essentially allowing customers
to control 2 percent of the airlines bonus pool, company
leaders remind employees that the outside matters.
Performance management from the outside in: Rather than
setting standards by HR doctrine, the department gives
key customers the opportunity to assess its performance
review standards and tell the company if those standards
are consistent with their expectations. When external
stakeholders participate in assessing performance review
standards, leadership 360-degree reviews may be shifted
to 720-degree reviews that include customers and other
Leadership from the outside in: HR helps the company
focus on developing a leadership brand, where external
customer expectations translate to internal leadership behaviors. We found that a large portion of the top companies
for leadership involved customers in defining competencies for their leaders.
Communication from the outside in: HR makes sure that
Working from the outside in shifts the emphasis in a number
messages presented to employees are also shared with
of subtle but important ways:
customers and investors, and vice versa.
Placement and promotion from the outside in: Customer
expectations set the standards for bringing new hires into
the organization and for promoting people into higher
ranks. The new maxim is: Rather than be the employer of
choice, we want to be the employer of choice of employees
our customers want to work with.
Chapter 1: Next Generation HR | © The RBL Group
Culture from the outside in: We like to define culture as the
identity of the
organization in the mind of key customers, made real to every
employee every day. This is a far cry from the inside-out approach that focuses on how a company thinks and acts, as
embedded in norms, values, expectations, and behaviors.
Our message of HR from the outside in is simple to say but
million monthly users of Facebook, or the 3 billion searches a
not easy to do. Outside-in HR is based on the premise that
day on Google show that technology now enables ubiquitous
the business of HR is the business. This logic goes beyond the
information and global relationships.
current state of the HR profession, where the focus is on connecting strategy to HR.
Omnipresent information outside a company changes behavior inside a company. After a disappointing experience at a
We have been active participants in helping HR professionals
well-respected restaurant, for instance, we wrote a negative
turn strategy into results. We now believe that rather than a
review and posted it on one of the many blog sites. Within
mirror in which HR practices are reflected, business strategy
hours, the owner and manager of the restaurant contacted us
should be regarded as a window through which HR profes-
to apologize and invite us to revisit the restaurant so we could
sionals observe, interpret, and translate external conditions
update our public review.
and stakeholder expectations into internal actions.
When informed HR professionals tell us about their busi-
So in this book, as in our conversations, we reply to, Tell us
ness, they often have a relatively long list of general trends
about the business with a quick synopsis of business condi-
that affect them. Unfortunately, such lists may be skewed by
tions followed by implications for HR.
A word to the wise: If you are not creating, making, or selling our
products, you had better have a good reason for being here.
Senior executive of PepsiCos Frito-Lay unit
THE BUSINESS OF BUSINESS
personal experience, overemphasizing some points and missing others. We have found it helpful to organize and prioritize
these contextual trends into six categories:
1. Society: Personal lifestyles are changing with respect to
families, urbanization, ethics, religion, and expectations of
2. Technology: New devices and concepts enable access
The bar has been raised for HR; HR must create and deliver
and transparency not only through information but also in
value in real business terms.
relationships, and they can destroy whole industries while
If people are asked to name a business, most could quickly
name a famous company (such as Google) or a local establishment (such as a restaurant). But naming and understanding a
business are different things. The appreciation of how a business operates requires a three-tiered approach. First, understand the context in which the business functions, including
general societal pressures that encourage or discourage it
(such as the increased interest in and access to knowledge
enabled by rapid technology change that drives Googles phenomenal growth). Second, understand the specific stakeholders who shape and sustain the business, including customers,
investors, regulators, competitors, partners, and employees.
Third, understand the business strategy to uniquely position
bringing new ones to life.
3. Economics: Economic cycles shape consumer and government confidence; freer flow of capital across economic
boundaries leads to more granular, or precise, thinking about
investments and risk taking and gives rise to some industries.
4. Politics: Regulatory shifts change the expectations of government in corporate and personal lives; political unrest often
signals a loss of confidence in government institutions.
5. Environment: The earths resources that provide energy for
growth are limited and need to be managed responsibly; in
addition, social responsibility shapes how people behave.
6. Demographics: Changing birthrates, education, and income
levels affect employee and consumer behavior.
the business to serve stakeholders, respond to general condi-
Each of these trends is magnified as it interacts with the oth-
tions, and build a unique competitive advantage.
ers on the global stage. For example, Chinas one-child policy
Everyone experiences the changing context or general drivers
of business, sometimes without being consciously aware of
those changes. The abstract concept of globally connected
economies becomes fiercely concrete when Greece, for
example, has an economic crisis, and the distress reverberates around the world, increasing the cost of fuel in London,
Sydney, and New York. The Arab Spring of 2011,1 where
led to more males than females in the population. Decades
later, as these males move into their twenties, many without
prospects for marriage, they are primed for political and social
unrest. So the Chinese government invests in and invites
Western companies to do business in China to maintain full
employment and distract these otherwise volatile citizens.
This leads to an imbalance of trade and political implications
in Western countries.
citizens began redefining political institutions, indicates a
Effective HR professionals are aware of and sensitive to these
concern with the status quo and a reform mentality. The 30
external conditions, which determine how their organizations
million people online at Skype at any given moment, the 900
position themselves for the future. When HR professionals
Chapter 1: Next Generation HR | © The RBL Group
have a way to organize and address external business condi-
specific stakeholders. Written or implicit contracts with these
tions, their fear of an uncertain future turns to confidence be-
stakeholders establish expectations of what the organiza-
cause they can define, anticipate, and manage their responses
tion gives to and gets from each stakeholder. Mapping key
stakeholders and their expectations turns general business
conditions into specific expectations that the business can
choose to respond to.
Within the general business context, organizations have
Figure 1.1 Key Stakeholders and the Value They Expect
Creating organization traction
In Figure 1.1 we identify six types of stakeholders common to
most businesses and the expectations that an organization
will contract for.
Spelled out in more detail, these expectations can be sum-
Line managers expect to be able to both set and deliver on
Employees expect fair treatment and working conditions in
return for their contribution to their company.
marized as follows:
A stakeholder map (similar to Figure 1.1, but spelled out in
Customers expect products or services that meet or ex-
terms specific to the organization) enables an HR professional
ceed their expectations, and they in return provide stable
to translate general and generic business conditions into
revenue as measured in customer share. Investors expect
expectations for specific targets. It also helps the HR profes-
present and future financial performance in return for in-
sional recognize the interplay among and between the various
vestment capital, which shows up in market value.
stakeholders. As a result of specific stakeholder expectations,
Communities, including regulators, expect socially responsible and law-abiding companies that treat the earth and their
employees with respect in return for a favorable reputation.
Partners collaborate along the supply chain to find ways
to leverage scarce resources for overall success for the company and its partners.
Chapter 1: Next Generation HR | © The RBL Group
the HR professional can allocate resources to deliver measurable value to each stakeholder.
Effective HR professionals tell us about their business by
articulating specific stakeholder expectations, anticipating the
value of working with each stakeholder, and assessing stakeholder progress. For example, we like to ask HR professionals
to name the companys top five customers, investors, or part-
Focusing on simplifying: The ability to turn complexity into
ners and then explain why these stakeholders choose to deal
an elegant and well-coordinated process that concentrates
with their company. Too often HR professionals shy away from
attention on the critical few priorities.
such questions because they see their business exclusively as
traditional, administrative, and transactional HR work.
Effective strategies focus attention on these sources of
competitive uniqueness, as well as on any others that may be
identified. Once strategic choices are made, plans can become
Strategy characterizes how leaders make choices designed to
more specific about actions, talent, and budgets. Through
enable a company to succeed in a changing business context
strategic choices, leaders invest time and money that make
with specific stakeholders. Some strategic choices define an
it possible to differentiate their company from competitors in
organizations aspirations and lay out where the organization
the minds of targeted stakeholders.
is headed and its unique identity (mission, vision, values). Other
strategic choices focus on specific stakeholders. This may mean
targeting some customers more than others and developing
channels to gain customer or market share. Strategic choices
for investors may also segment investor types (such as value as
opposed to growth) and manage investor relations.
HR Is Not Alone
Because of context, stakeholder, and strategic shifts, many
business support functions have been undergoing transformation. Finance, operations, information technology (IT), and
marketing are experiencing pressures that parallel those bearing on HR. Each of these functions is becoming more outside
Strategic choices give businesses unique sources of competi-
in by focusing more and adapting to contexts, stakeholders,
tive differentiation. Traditionally, strategic differentiators may
and strategies. Managers in these areas are being asked to
include operational efficiency, product leadership, and customer
manage traditional duties and respond to future expectations.
intimacy.2 More recently, strategic choices define unique ways
The HR profession is shifting in similar ways, so it is useful to
that companies meet customer expectations. In recent years,
take a look at other support functions.
competitive differentiation choices have come to include:
Managing risk: The ability to identify and manage compliance, strategic, operational, and financial risks.3
Global positioning: The ability to enter emerging markets
beyond the relatively well-established BRIC countries (Brazil, Russia, India, and China), a group that Goldman Sachs
identifies as N11, including Turkey, Indonesia, Vietnam, the
For example, the traditional role of finance as financial gatekeeper remains but has been expanded to shape and challenge organizational strategies. McKinsey, the consulting firm,
points out the increased expectations on finance functions
sketched in Table 1.1.4
Table 1.1. Views of the Finance Function
Philippines, Nigeria, Iran, Mexico, and Egypt.
Leveraging information: The ability to use information as a
way to anticipate customer expectations and to do predic-
tive analytics to figure out how to prioritize leading indica-
Active member of the
tors of business success.
Managing a globally diverse workforce: The ability to attract
employees from around the world and to enable global
Contributes to company
mobility in moving employees to the places where they will
Ensures efficiency of
be able to contribute most effectively.
Adapting or changing: The ability to respond quickly to
emerging business opportunities and threats.
Building corporate social responsibility: The ability to build
Improves quality of
a reputation as a green organization that supports respon-
sibility for the planet, employees, and customers.
Brings in a capital
Collaborating or partnering across boundaries: The ability to
form alliances or partnerships both across functions inside
CEO View of
the organization and with customers, competitors, and
partners outside the organization.
Chapter 1: Next Generation HR | © The RBL Group
Likewise, over the past decade, a number of significant changes
have challenged the role and competencies required of operations. As a result, the new competencies of operations leaders
and professionals include the ones outlined in Table 1.2.5
Table 1.2. The Changing Role of the Operations Leader
Set aggressive aspirations for operations;
explore, develop and implement breakaway
Develop outstanding operations
Develop broader, transformative talent both for
professionals and leaders
operations and for the larger organization; operations as a talent incubator and accelerator
Focus on growth
Manage production costs; drive
Facilitate growth and innovation; learn from
and adapt best practices and across industries
Ensure quality; anticipate potential
Manage risk systematically, proactively, and
risks and take preventive action
cost-effectively; ensure organizational agility
and flexibility in response to changing market
and competitive dynamics
Breaking down the silos
Ensure excellent operational perfor-
Contribute significantly to the alignment of
mance; communicate and coordi-
operations, R&D, and commercial functions to
nate with other functional groups
common goals and strategy
The role of information technology leaders and professionals
Last, consider the role of marketer and chief marketing of-
has also undergone significant changes to focus more em-
ficer. As David Court, a managing partner at McKinsey, puts
phatically on the key shifts outlined in Table 1.3.6
it, Many chief marketers still have narrowly defined roles
Table 1.3. The Shifting IT Role
that emphasize advertising, brand management and market
Keeping the engine running cost-efficiently and
Shaping IT demand through
participation in business
Technical project management and execution
Accountability for IT
helping the leadership team
develop an informed view of
research. They will have to spread their wings.7
According to Court, marketers need to develop competence in
Taking greater initiative as a strategy activist
Developing the skills to lead company-wide change in
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