Strategic Human Resource Management

Delivering Strategic HR Management:

HR function had two goals:
1) to contain cost.
2) To deliver max value to company’s business units realigning HR leaders as
strategic partners with business leaders.
Organization typically view it as a low-risk, low-return function whose
performance they could measure on quantifiable benchmarks like total
compensation, employee turnover, cost per hire and employee attitudes.
HR practitioners typically reported to line managers and played a limited role. In
mid 50s, GE launched Croton Ville, the first corporate university.
The first wave of SHRM:
Companies made significant investments in customized-executive training
programs. E.g. Toyota’s corporate university where HR practitioners act as
consultants to discuss problems with heads of different departments and meet
business needs.
The Second wave of SHRM:
ERP systems and Balanced Scorecard were introduced. Role of HR expanded to
new managerial roles and leadership practices. New roles reflected new titles
such as relationship manager, solutions consultant and change consultant etc.
Some firms invited head of HR to direct report to the CEO. SHRM called for HR
actions and outcomes that help execute firm’s strategy, demonstrate alignment
with that strategy motivate strategic behavior and directly serve the
implementation of firm strategy.
Outsourcing HR:
Companies should consider three things before outsourcing tactical HR.
1) Transactional: Regular employees rather than outsourced labor
2) Social: Employee of firm entails membership to the company and trustworthy
when compare with outsourced employee.
3) Administrative: whether company should outsource and rely solely on
contractor or not.
The SHRM Challenge:
Few managers were yet capable of translating company strategy and operational
goals into actionable and measurable HR goals. The value of strategic HR is best
realized under a leader with deep knowledge of HR practices. Some companies
demonstrated right strategies, systems, skills and leadership and Help Company
maintain their competitive edge.

21st Century job descriptions:

Jobs are much more fluid, project-oriented and multifaceted. Mergers and
Acquisitions have led to wholesale elimination of job categories. Many people
argued like how well written JD should be.
“If job description is too restrictive and detailed, people can’t think out of the
box.”
“I think you need JD to ground and attach yourself somewhere. Otherwise you are
liable to lose sight of the job you are supposed to do.”
“So, JD is imp to build relationship, to know what each side is expecting.”
JD should describe what results company wants from the employee. Some key
elements to remember when writing a JD:
Consult the entire team: Because each job affects all other relevant parts of the
company.
Distinguish among credentials, skills and traits: Spend some time figuring out
what you need in each area.
Take your time: Make sure you thought through how the position will help fulfill
the company needs and goals.
Make sure you comply with all legal restrictions: Don’t prevent people with
disabilities from getting hired.
Describe your company’s culture: Avoid culture clashes because it can
deteriorate company’s performance.
Write JDs for external not internal audience: Describe JDs in terms that attract
people from outside.
Reveal the salary ranges: It will help attract people and you will know your
company’s worth.
Well written JDs:
1) Shape the beginning of employee relationship
2) Help everyone involved to understand the mission, culture, needs and goals of
the company.
3) Clear performance objectives and measurements.

ABCs of Job interview:

Prepping for the interview:
1) Write out a job profile based on the job description.
2) Your HR dept. can help in determining the most imp characteristics and
otherwise preparing you for an interview.
3) Prepare a written interview guide.
Checklist of items as a basis for an interview guide:
1) Consult resume, application for job, experience, accomplishments that are
most relevant to your job requirements.
2) Plan questions touching on the qualities you are looking for.
3) Prepare a step by step scenario of how to present the position.
4) Do the same for your company, division and department.
It will help you stay focused In your questioning, thus ensuring each applicant a
fair shake and preventing you from putting applicants on the defensive.
Past Performance:
Ask questions that uncover personality characteristics. You are looking for a
particular kind of behavior for every critical requirement you have listed for the
job. What this candidate has done in the past to meet these requirements.
You cannot assess how well candidates have master HR skills but you can test
people-management skills.
Wrong and Right tacks:
Corporations and executives are being dragged into courts with dismaying
frequency and juries are awarding enormous sums. If a question is not directly
related to job description and relevant then don’t ask it.
Choosing the right applicants for important management slots is a key to
achieving exceptional results for you and your company.

The Risky business of hiring stars:

Star performers’ performance plummets by as much as 20% when new company
hire them. 30% performance derive from individual capability and 70% from
organization’s resources and qualities specific to that company. Group’s
performance slips when they see star performer being hired at such lucrative
salary and benefit. It reduces morale and productivity. Recruit bright people
through disciplined hiring strategies. Use training and mentoring to develop them.
Then strive to retain them.
Establish Support:

 Systems and Processes: Establish procedures and routines that fuel

individual’s success. Keep up to date their performance.
  Leadership: Even talented employees needs training and mentoring to
excel. They gather nuts and bolts guidance from their bosses.
 Internal Network: Encourage people to forge relationships across
functions; they will deliver better results.
 Training: Offer programs that accelerate talented employee’s
development.
 Teams: Working with smart colleagues spark ideas that stimulate
productivity.
Use Savvy Retention Strategies:
Understand what motivates your high performers, then take steps to satisfy
their interests.

Getting 360-Degree Feedback Right

Peer appraisals exacerbates bureaucracy, heightens political tensions and
consumes enormous number of hours. PA, when conducted effectively, can
bolster the overall impact of 360-degree feedback.
PA can takes place without negative effects if executives understand and
manage four inherent paradoxes.
1) The paradoxes of Role: You cannot be both a peer and Judge.
2) The Paradox of group performance: Focusing on individual can put entire
group on risk.
3) The Measurement Paradox: The easier feedback is to gather and harder it is
to apply.
4) The Paradox of Rewards: When peer appraisals count the most but help the
least.

The Paradox of Roles: People can only judge performance of others when
they work together or closely associated. Bosses may not have all the information
for appraisals. Feedback gathered from peers can be distorted, overly positive and
unhelpful to managers. To some employees feedback become perplexing and
risky both professionally and personally evaluating peers. They find it comfortable
if isn’t a matter of record. People are torn between supportive colleagues or hard
nose judge.

The Paradox of Group Performance: A focus on individual doesn’t

address how important is work to all group members. Sometimes
people in groups are asked to compare themselves with other peers in
the group. Peer appraisal can harm close-knit and successful groups. An
example of a group in a bank who performed well but dismissive of
bank’s appraisal system even though the program was well designed.
People in that group has already formed cordial relations with each
other so peer appraisal threatens balance of status and responsibility
they have shared within a group.
The Measurement of Paradox: Simple objective and straightforward
rating systems should generate the most useful appraisals especially
letter grades etc. but simple measurements and fewer dimensions will
make evaluation less useful. Simple ratings are just not enough.
Qualitative data is time-consuming and difficult to interpret when pose
personal or highly idiosyncratic comments.
The Paradox of Rewards: People are keenly attuned to PA when it
affects salary reviews and promotions. Ignoring feedbacks and peer
appraisals, people focus more towards rewards. Most people don’t
deliberately ignore peer appraisals feedback, but even the most
confident and successful find it hard to interpret objectively when it is
part of the reward system.
The nature of paradox isn’t easily changed, but the way it is viewed can
be changed easily. The potential benefits may seem obvious at first, but
when the purpose and scope of these peer appraisal aren’t made
explicit, conflict soon takes over.
Purpose: Help individuals improve their performance. Detailed
qualitative feedback from peers accompanied by coaching and
supportive counselling from a manager are essential. If purpose of peer
appraisal is to check if things are going smoothly and to head off major
conflicts, a quick and dirty evaluation using only few members will
suffice. Managers should focus the appraisal effort on the entire group
rather than on particular members. The effects on the paradox of group
performance will be stemmed. It can then folded into reward system
thus decreasing the effects of Reward Paradox.
Scope: Managers need to be selective about using PA and 360-degree
feedback. Giving feedback to all employees isn’t fruitful and company
have to compromise its ability to function. You should keep in mind
that not all jobs are same while evaluating criteria for PA. Keeping
balance between evaluating individuals and acknowledging the
interdependencies and connections within groups will make Group
performance paradox less of an issue. Companies need to develop trust
and confidence to make the most PA without incurring dysfunctional
consequences. Executives should keep themselves open to praise and
criticism from all directions and invite others to do the same. In this
way they can make improvements and change the way employee view
these paradoxes.
Is Your Employee Coachable?
As a Manager you provide some level of coaching to all your direct reports helping some attain
high levels and others improve their performance. When your direct report isn’t improving
despite of your efforts, you should consider two things in a person that you are coaching.

1) She needs to demonstrate a commitment to her development.

2) She needs to exhibit capacity to get to the skill level that you want her to reach.

Check willingness factor in her. Is she punctual? Showing up for meetings? Is she owning the
feedback you are providing her? She may begin the coaching process enthusiastically but later
her motivation can get wane. If there is any set of misunderstanding, clear it up and talk more
about her progress.

If still she don’t seem to be improving or showing incremental progress, find other ways before
calling it quit. Consider alternatives like third-party training or having someone else on your
team who can coach her better.

Sometimes your mentee needs psychological therapy or counselling, especially if it’s a general
behavior not special skills. You can refer her therapists etc. so that she can work on her issues.

This kind of intervention depends on kind of relationship you are having with her. In any case
you should confer with your HR department before bringing up any more sensitive forms of
treatment.

If still she doesn’t make progress then you should think whether she is right person to coach or
not or whether she can take responsibility of her work or not. Only step, then, you can take is to
maintain her status quo and it will save your time as a manager and sometimes it just what
your direct report needs.

Why Mentoring matters in a Hypercompetitive World

PSF= Professional Services Firms

Hyper competition has forced PSF partners to focus so much on satisfying clients that they have
lost the art of developing talent. Associates leave firms taking vital knowledge and leaving
behind empty desk that will be costly to fill. You need to have mentoring strategy tailored to
today’s young professionals.

Don’t just mentor your star performers, include your B players as well because they make up
most of your workforce, and your firm’s success rests on them.

Make Mentoring Personal:

To mentor PSFs, go out of your way to acknowledge appreciation for their contributions and
demonstrate your investment in their success.

Include your B players:

B players bring form of value to your firm. They stay on staff longer, accumulate institutional
knowledge that’s especially value bale during major transitions such as mergers and
acquisitions. They put organizational goals over personal goals because they value stability for
themselves and the company.

Assign projects judiciously:

1) Let Associate shadow you on assignments where you share your insights and expertise
with them.
2) Give them projects that aren’t client related Research projects etc.
3) Let them do worthy, high-profile pro bono work that give your firm good PR and keeps
associate stimulated.

Encourage Associates to find Mentors:

Encourage them to keep an eye out for professionals at all levels who are particularly gifted at
mentoring.

Reinventing Performance Management

Redesigning Performance management system at Deloitte.

A different yet simple design for managing people’s performance. Its hallmarks speed, agility,
one-size-fits-one, and constant learning and a reliable way of collecting data.

The Problem: The HR departments are now questioning the conventional wisdom of
performance management.
The Goal: Some companies have ditched the rankings and review system and have opted even
better systems than that.

The Solution: Deloitte’s new approach separates compensation decisions from day to day
performance management.

An organization was spending 2 million hours yearly on performance management and most of
the hours were eaten up by the leader’s discussions behind closed doors about the outcomes of
the process.

The Science of ratings:

We cannot assess skills like strategic thinking on ratings as it will produce inconsistent data.
Thus rating reveals more about the rater than about the ratee. Individual performance can only
be judge by its team leader but now how can one judge team leader’s own evaluation.

How Deloitte builds a radically simple performance measure:

The criteria:
We looked for measures that met three criteria. To neutralize the idiosyncratic rater effect, we
wanted to raters to rate their own actions. To generate the necessary range, questions had to
be phrased in the extreme. We chose one about pay, one about teamwork, one about poor
performance and one about promotion.

The Rater:
We were looking for someone with vivid experience of the individual’s performance and
subjective judgement. W could have included ratees’ peers but we wanted to start with clarity
and simplicity.

Testing:
We then tested if our question is producing useful data. Validity testing focusses on their
difficulty and the range of responses.

Frequency:
As people work in projects so it makes sense to produce performance snapshots at the end of
every project. Quarterly performance snapshots for long term projects. As we try to keep
balance between tying evaluation as tightly as possible to the experience of the performance.

Transparency:
We want our snapshots to reveal the real time truth of what our team leaders think, but if
employees know that everybody can see data so they will try to sugarcoat the results to avoid
difficult conversations. We want to share aggregate snapshot scores not for only client work but
also for internal projects along with performance metrics so we can provide richest possible
view of where our employee stands.
When Salaries aren’t secret
RightNow hire young energetic employees with hot skills from outside and pay them 25% more
than older, more loyal and longer-standing employees within the same department. A
vindictive employee exposes everyone’s salary that sparked outrage among workers.

1) Stop using pay as a primary weapon.

 Emphasis non-monetary advantages of working for your company – growth fun etc.
 Recruit individuals who are ready for the job but not yet been promoted to an equivalent level in
their own firms.
2) Create a more collegial, open system with some salary transparency
 Create and publish salary ranges for all jobs. Involve employees in developing this system. Set criteria
for merit with them.
 Create enough variations within each range to absorb labor market and individual performance
differences.
 Post job salaries but without attaching individual’s names. It protect employee’s privacy and keep
competitors away from poaching your employees.
3) Create a rigorous performance based pay system
 Define objectives and tie rewards to meeting them. Negotiate employees pay project by project in
order boost productivity.
 Eliminate your HR department and let managers and employees set salaries.

Incentives within Organizations

Incentives are virtually always important since purposeful people care about, and therefore are
motivated by, the things that companies typically must allocate such as promotions, influence,
working conditions and money. All companies have incentive systems, depending on their
design, can drive very desirable or undesirable behavior. The Question is if incentive system
that company have motivates behavior that leads to value creation or value destruction?

Defining and Locating Incentive Strategy

The organization requires two sub strategies:

1) Business Strategy
2) Organizational strategy.
Business Strategy:
A firm’s business strategy involves mission which refers to organization’s broad purpose.
Business leaders give speeches, create mission statements, and build culture that communicate
and reinforce the purpose of the organization. After purpose is defined, a firm’s business
strategy requires managers to analyze both internal capabilities which determines internal
strength and weaknesses and external competitive markets which determines external
opportunities and threats.

Organizational Strategy:
Organizational structure which involves deciding how to organize managers and workers into
work units. Managers must make decision regarding allocation of rights that is, how the
authority to make decisions is allocated among the managers and workers. Decisions are made
on so many dimensions like pricing, hiring, firing, pay etc. Now another key element of
organizational strategy is to determine the performance goals and objectives of various units,
teams or individuals. An Organization strategy also requires performance measurement – the
gathering of information in order to determine whether and to what degree various goals being
met. Managers measure performance in order to motivate the right behavior through
incentives – rewards and punishments.

Managing Incentive Strategy:

Managers and workers always feel underpaid but never felt overpaid. The bonus plan, when it’s
working never seems to drive precisely the right behavior. Subjective performance evaluations,
especially those tied to rewards and punishments, are dreaded task. There can never be a
purely objective and formula based system that has no subjective evaluations. Management of
incentives will always require managers to make difficult trade-offs based on subjective
judgement.

The Principal-Agent Problem:

Unlike owners, Managers and workers do not pay the full consequences of their actions and
decisions. This is the incentive problem, also known as, principal-agent problem. Mitigating the
agency problem within firms requires linking rewards to performance measurement. Solving
this problem completely will require firms to measure precisely the value creation or
destruction of each individual. The incentive problem is largely a performance-measurement
problem.

Human Nature and Monetary Incentive:

A narrow view of human nature is that people care only about money. In fact, people care
about array of things such as food, housing friendship, prestige and justice. Because people
care about more things than money, incentives are necessarily broader than money. Incentives
are created when organizations allocate anything that people value, from promotions to
influence to money. Thus, incentive strategy is about aligning performance with the things that
people value.

Money is widely used form of incentive for two reasons:

1) Money represent very flexible claim on other valuable resources. Indeed, its flexibility
is why money replaced barter as a way to transact.
2) Money can be varied with performance easily. But varying other things that people
value with performance is generally difficult or infeasible.

Objective Performance Measurement:

The Controllability Problem: It is difficult to know whether an outcome was the result of
collectables (effort, wise decisions) or uncollectable (luck, chance)

The Alignment Problem: When a job requires multiple task, it is typically a case that
performance regarding some task is easy to measure (On-time deliveries) relative to other task
(courteous deliveries). Individual performance measures are incomplete and therefore not
perfectly aligned with value creation.

The interdependency Problem: Value is often created by teams of individuals. When the given
outcome is the result of the joint performance of many, it is difficult to determine the individual
contributions of any team members.

Subjective Performance Evaluation:

The problem we are trying to solve is how to measure the total contribution towards value
creation of an individual. This not include tough jobs e.g. “making the numbers” but also other
jobs like mentoring, cooperating, providing leadership and accepting unpleasant task.

The key virtue of subjective performance evaluation, therefore, is that managers can flexibly
measure value creation and do not have to rely on narrow measures. The Achilles heel of
subjective performance evaluation is that most people dislike evaluation others especially when
performance is week hence giving virtually everyone positive evaluations. Some Managers
believe that forced curved are the only dependable way to create disciplined subjective
evaluations. GE’s well known “Vitality Curve” where all managers are asked to rank their people
into one of their three categories: “Top 20”, “the vital 70” and “bottom 10”. It’s the heart of
GE’s organizational strategy and they use this system to compensate, promote and weed out
the worst performers.