DANCING WITH THE BUSINESS How HR Creates Value

NORM SMALLWOOD Norm is a recognized authority in developing businesses and their leaders to deliver results and increase value. His current work relates to increasing business value by building organization, leadership, and people capabilities that measurably impact market value.

Ashly DelGrosso: Dancing with the Stars

GOALS FOR THIS WORKSHOP THINK: About how HR dances with business (contributes to business value and the HR competencies required to do that) BEHAVE: Be able to do things that make a difference HAVE FUN: Enjoy the experience together by learning together

HR value is achieved by starting from the Not from the Inside-Out.

Value is in eyes of the receiver of the gift, not the provider of the gift. HR value is not from within HR but in eyes of our stakeholders

(Employees) HR Actions (outside)(inside) Benefits Training & Development Compensation Org. Design & Development (External Stakeholders) Business Environment Customers Community Investors Analysts

(Customers & Investors) Business Environment HR Actions In order for HR to be Outside-In, we need a roadmap to fill in the gap

Strategy answers the question: Why do our customers buy from us instead of our competitors? (Target Customers) Business Environment Speed Price Quality Innovation Service

Match the business to its dominant customer value proposition. Speed Price Quality Innovation Service

Firm Brand Identity: The identity of our firm in the eyes of our target customers. HR Actions (Customers & Investors) Business Environment Quick Review Strategy: Why our customers buy from us instead of our competitors.

Speed Price Quality Innovation Service Customers & Investors Business Environment Firm Brand Identity describes the identity of our firm in the eyes of our target customers. What are three words we want these target customers to say about us? One of the three words is the customer value proposition, then add two words or phrases to describe the desired customer experience. CHEAPFUNON-TIME Price

Sales and marketing efforts promote the firm brand identity to customers. A high performing culture exists when this identity is made real to customers through employee actions. CHEAPFUNON-TIME Make identity real to CustomersEmployees Service HIGH PERFORMANCE CULTURE Employee actions Customer experience

Firm Brand Identity: The identity of our firm in the eyes of our target customers. Capabilities: Now we need strong technical and organizational capabilities to deliver the promised customer experience. HR Actions (Customers & Investors) Business Environment A Quick Review Strategy: Why our customers buy from us instead of our competitors.

Innovation Quality Mindset Customer Connectivity SpeedEfficiency There are 12 common organization capabilities. These capabilities are the bridge between what the business needs and HR actions. HR collaborates with business leaders to target and build capabilities with highest impact on business success. TalentLeadership Social Responsibility Strategic Alignment LearningCollaborationAccountability People Capabilities Integrating Capabilities Customer Capabilities Needed by all businesses

Leadership brand is outside-in. It increases customer and investor confidence in future results. It moves the stock price. LEADERLEADERSHIP INSIDE OUTSIDE Leadership Brand Celebrity LeaderCompetent LeadersLeadership Systems

Leadership Brand capability makes the firm brand identity real to customers. Leaders at every level ensure that customers receive the desired brand identity experience because of employees who live the high performance culture. CHEAPFUNON-TIME Make Identity real to Service HIGH PERFORMANCE CULTURE Employee actions Customer experience Leadership Brand

HR must also build talent capability throughout entire organization. Talent COMPETENCE The right person, in the right place, at the right time, with the right skills Buy Build Bounce Borrow Boost BInd COMMITMENT Enact an employee value proposition What do I get? What do I give? CONTRIBUTION Create meaning at work Identity Purpose Relationships Work environment Work itself Learning/resilience Civility CompetenceCommitmentContribution

Innovation Quality Mindset Customer Connectivity SpeedEfficiency TalentLeadership Social Responsibility Strategic Alignment LearningCollaborationAccountability People Capabilities Integrating Capabilities Customer Capabilities 1 Integrating Capability 1 Customer Capability High performing HR goes beyond talent and leadership to build two additional organization capabilities aimed at building a unique culture targeted to the business.

TalentLeadership Social Responsibility Strategic Alignment LearningCollaborationAccountability People Capabilities Integrating Capabilities Innovation Quality Mindset Customer Connectivity SpeedEfficiency Customer Capabilities Speed Quality Innovation Service Price Customer Value Proposition (why our customers buy from us) Target and build the customer capability that corresponds to your customer value proposition. First: Customer Value Proposition Price Efficiency 1 Customer Capability

TalentLeadership People Capabilities Innovation Quality Mindset Customer Connectivity SpeedEfficiency Customer Capabilities Social Responsibility Strategic Alignment LearningCollaborationAccountability Integrating Capabilities 1 Integrating Capability Choose an organization capability from the Integrating Capabilities. Second: Collaboration

Innovation Quality Mindset Customer Connectivity SpeedEfficiency TalentLeadership Social Responsibility Strategic Alignment LearningCollaborationAccountability One Integrating Capability One Customer Capability Hypothetical Example: Southwest Airlines Both People Capabilities Speed Quality Innovation Service Price

Accountability Quality Mindset Customer Connectivity SpeedInnovation Social Responsibility Strategic Alignment Learning Speed Quality Service Innovation TalentLeadership One Integrating Capability One Customer Capability Both People Capabilities Hypothetical Example: Southwest Airlines Customer Value Proposition Southwest Airlines: Build a high-performing culture of efficiency and collaboration supported by strong talent and leadership. Collaboration Efficiency Price

High performance culture at SWA: collaborating with customers to ensure “fun” experience around firm brand identity

Roadmap Business Environment: Business traveler is dominant logic High competition Low margin Regulated Strategy: Customer Value Proposition: Low Price CHEAPFUNON-TIME Firm Brand Identity: Service Capabilities: Leadership Brand HIGH PERFORMANCE CULTURE TalentCollaborationEfficiency What HR actions are needed to build these capabilities?

From: HR Activities To: Organization Capabilities (Deliverables) HR actions must shift from internally focused HR activities to building and implementing targeted organization capabilities. Recruiting Performance Management Compensation Training & Development OD Benefits LeadershipTalentEfficiencyCollaboration Internally Focused HR Activities Targeted Organization Capabilities

Recruiting Performance Management Compensation Training & Development OD Benefits To: Organization Capabilities (Deliverables) From: HR Activities LeadershipTalentEfficiencyCollaboration HR Actions Give the most frequent flyers a coupon to give out to employees when experience a great flight. Have flight crew candidates tell a joke, sing a song, demonstrate their ability to lead a fun experience with others. Semi-annual workout sessions to identify ways to increase simplicity and take out costs. Pay on-time takeoff bonus to flight crew and mechanics team. With a clear view to targeted capabilities, HR must redefine each HR activity and then integrate them to build each targeted organization capability

High-performing HR is more than talent and leadership. HR Action Challenge: Three 3s for each of the 12 capabilities. 3 hours:3 months:3 outcomes: What are three specific outcomes we will deliver in 3 months? What specific things will we accomplish in 3 months (who will do what, when, where)? What can I help my management team do in 3 hours to make progress? TalentLeadership Innovation Quality Mindset Customer Connectivity SpeedEfficiency Social Responsibility Strategic Alignment LearningCollaborationAccountability

HR Actions HR Competencies: It’s not enough to know that we should build targeted capabilities; HR must invest in itself to dance better with the business.

Every four years for the last 25 years, we have worked with regional HR associations across the world to identify what these competencies are.

High-performing HR professionals must have proficiency in Six Competency Domains to dance with their business.

Credible Activist: has personal credibility with the business and initiates action. High-performing HR professionals must have proficiency in Six Competency Domains to dance with their business. Strategic Positioner: knows the market context (customers, investors, community) and interprets to frame HR impact. Capability Builder: collaborates with business to audit, target, and build organization capabilities. Change Champion: knows how to manage and sustain individual, project, and enterprise change efforts. HR Innovator & Integrator: takes a systemic approach to integrate and align HR practices. Technology Proponent: utilizes technology to increase efficiency, build communities, and influence stakeholders.

Roadmap Business Environment: Business traveler is dominant logic Strategy: Low Price CHEAPFUNON-TIME Firm Brand Identity: Service Capabilities: Leadership Brand HIGH PERFORMANCE CULTURE TalentCollaborationEfficiency HR Actions: HR Competencies:

For more information about any of the material covered in this session, please contact Norm Smallwood by or visit the web:

LEADERSHIP We’ve talked to senior executives all over the world in a variety of industries and heard four themes about how to develop great leaders: 1.Focus on your core business strategy. 2.Ensure execution at every level. 3.Strengthen your performance culture. 4.Invest in and engage your workforce. These messages align with our work about what effective leaders must do in any market— focus attention, deliver results, build capabilities for the future, and connect employees to customers to deliver the right experience. When leaders get these things done well, organizations will emerge stronger than competitors. The RBL Group has taken an outside-in, value-oriented business approach for over ten years about how leaders can deliver the right results the right way. STRATEGIC HR In 1989, we asked the question, “How does HR add value to the businesses they support?” After twenty years of research, developing a global database of over 40,000 professionals, and practical implementation with companies from around the globe, we’ve identified, tried, and tested principles HR leaders should follow to adapt their organizations to deliver value in any economy. Our approach to transforming HR produces the following benefits: 1.Increased HR effectiveness AND decreased costs. 2.Improved HR competence AND contribution. 3.Delivery of strategic organizational capabilities AND leveraged talent. What We Do