Transforming HR into a Business Partner ITU Regional Workshop on “Strategic HR Management” Cairo 13-17 April 2008 Lecture 1

Presentation Outline Market analysis and its impact on HR Business plan – Structure-HR considerations Case study Transformation Statistics The Transformation Wave The Changing Role of HR The Business Partner Role Key Roles of HR as a Business Partner Conclusion

National Advantage in HR Firm Strategy Structure and Rivalry Chance Domestic Demand Conditions Factor Conditions Related and Supporting Industries Government

HR issues Competition in the labour market Rivalry between competitors Demographics (customers) Age structure, lifelong employment? Rokkies, who will be accepted? Staff from related industries Domestic-versus regional –global demand

Industry Competition; The Five Forces Pressure determine prices, cost, investments ,Hr capital etc. Threat of new Entrants Rivalry among Existing Competititors Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products

New Entrants-Incumbent Offer better salary-promotion- trend New technology-support (capacity building) High responsibility – deliver-promotion Competence gap Outsourcing of training-to whom The role of education systems

Generic Strategies and impact on HR strategies Competitive Advantage Lower Cost Differentiation Broad Target Narrow Cost Leadership Differentiation Competitive Scope Focused Differentiation Cost Focus

Statistics of HR Transformation 50% of organisations are in the middle of transforming their HR functions; 12% completed their HR transformations in the past year; Another 10% intend to begin the process in the next year. (Global HR Transformation Study, 2006, Mercer Human Resource Consulting)

HR Transformation Process of Recreating the HR function so as to enhance HR contribution to the business It involves a shift from the internal operations (transactional, inward) activities to a more market perspective related performance. Over the years role has been evolving, but within its HR (Personnel) box. Current transformation is breaking outside the box Now HR transformation deals with issues of Organisational Renewal, Change Management, Business Success, Business intellegence, Culture, Behavioral Change.

Transformation Wave 5-10 years ago: focused on improving technology and service delivery, technology shift gives new aspects Competition, Time to market, Intranet, Restructuring/Rightsizing, Outsourcing This was the role of HR as a Consultant. Role did not transform the HR function into a business partner Now HR is being called up to deliver

Transformation Wave HR Business Partnering model often started off as a Cost Saving initiative, responding to a Business Directive. This was the Driving force of the model in the 90’s. Led to the introduction of IT Driven HR Services, Self- service forms processes etc. What started as a Cost Reduction/Competition Program ended up as a Revitalisation of the whole HR Activity Now HR is the driving the vision-strategy targets Closer follow up related to market changes

Changing Role of HR HR ROLE/CONTRIBUTION LOW VALUE HIGH VALUE BUSINESS PARTNER CONSULTANT TRANSACTIONAL LOW VALUE HIGH VALUE

Changing Role of HR TRANSACTIONAL Inform Police Control Reactive CONSULTANT Advise Solutions Inward Reactive BUSINESS PARTNER Integrate Strategy Outward Proactive

Transactional example of HR Delivering a Service to a client or end user. Recruit an Engineer Investigate a discipline Case Book Training for the participants to the Cairo Workshop Provide Consulting Plus all the other Record keeping Functions

CONSULTANT Provide HR to a Business Unit in order to solve a specific problem. Define competence requirements Giving advice in dealing with specific issues eg.: How to stop a Competitor from poaching your staff; How to create a Customer Care Culture.

PARTNER Working with the top Management Team as a partner in: Participating in defining Business Strategy. Actively live up to Vision and mission statement Influencing change in Strategy in view of the organizations Talent Base, or ability to build one in the short Term. Develop capacity building Implementing the HR component of the Business Strategy.

Strategist and Steward Deloitte Report (2007) on the Evolving Role of the Chief Human Resources Officer (CHRO). Today’s CHRO is a leader who not only manages the HR function, but also collaborates with the CEO and Board of Directors on a range of Strategic issues. They play a role in building and shaping –not just staffing- enterprise Strategy.

The Deloitte Framework for The Roles of the CHRO 1. Workforce Strategist 2. Organisational and Performance Conductor 3. HR Service Delivery Owner 4. Compliance and Governance Regulator

Discuss priorities What priorities in you county ? Depending on situation Process –job design Define future workforce size-competence Capacity building Define redundancy

1. WORKFORCE STRATEGIST Crafting workforce Strategies with an eye on global trends Conscious of the Challenge of Attraction and Nurturing Capacity building Next Generation Perspective including technology shift Understanding of the Needs of Today’s Workforce

2. Organisational and Performance Conductor Making choices among options of maximizing performance of workforce CHRO must be a Rewards Program Structuring the job design, a change Master

3. HR Service Delivery Owner Still Delivering HR Admin and operations in a Cost Effective way. A mix of Self Service operations, use of Vendors (outsource) and integrating these into one whole.

4. Compliance and Governance Regulator Work directly with the Board on HR Issues relating to Risk Mgt, Business intelligence, Ethics, Integrity Assist Board with Member Selection, Executive Compensation, Succession Planning, etc. Interpretation of regulatory issues

Strategist and Coach Help CEO leverage global talent trends as viable opportunities (fast changes). They lead the change towards new working methods with more individual responsibility. They identify the kind of culture the company should have, then define that culture, and supports the environment that emerges.

What is HR as a business partner?? Must manage people (Talent Management) Identify skills required within people in the organisation (Competency Profiling) Develop and supply quality executives (Leadership Development)

What is HR as a business partner?? Motivate and retain key players (Human Capital) so that they perform at their best Maintaining and improving company’s image and being an attractive employer Exemplify Be involved at the sharp end of the business, (time to market etc)

Understanding the business Being concerned with the bottom line and impact of any decision on profitability. The business environment (SWOT, competitor moves, market share, etc.) Understanding customers, customer profiles (segments) and their needs. Why ?

Four Key Roles of HR as a Business Partner HR as Capacity building force HR as Change Manager (Opportunities-Steering) HR as Relationship Builder HR maintaining Human Capital

HR as Capacity builder Participate in formulation of list of organisational and individual competencies linked to the corporate goals or strategies and support systems Develop access to information and has key role in information dissemination (analyze shifts in market and draw conclusions on HR need Identifying, nurturing, developing and untapping human talent.

HR as Knowledge Facilitator This assumes HR is involved in the formulation of the Organisation’s Vision, Mission and Business Strategy; Must be part of the Management to advise on what is possible given the stock of talent and capacities available in the oganisation; Propose Strategies that best attracts and retains the talent that will deliver on the Business Objectives.

HR as Relationship builder Both internal and external customers (follow market demand Supply Chain Management (in telecoms this is important for maintenance of brand image and brand integrity… Branding ? is a powerful tool for promoting Culture. A growing school of thought is that Branding is as much an HR responsibility as it is a PR function because of its power to attract and retain employees. Managing diversity

HR as Relationship Builder: Managing Diversity Many organisations now operating in different cultural environments and markets and different owners requirements; MTN is in Africa, the Middle East. Vodafone is in UK, Europe, South Africa, Kenya. France Telecom has just won the bid for Telkom Kenya, and will bring their own management styles and culture.

HR as Human Capacity builder Career Management Facilitate progression of staff based on their competencies, desires and contribution to organisational goals Capcity Building (job design) in anticipation of future needs

So What is Strategic Human Resources Mnagement?? It is about getting the Human Resources FUNCTION INTEGRATED within the Business. It is about INVOLVEMENT in the Business Strategy Formulation Process. It is about being listened to and heard, because Human Capital is the only Sustainable source of Competitive Advantage at the Disposal of the Organisation.

So What is Strategic Human Resources managing?? But it is up to the HR Function to rise to this Challenge. In fact, it is up to the HR professionals to rise to the new challenge of the HR function. After all, this is what we have been asking for.

CONCLUSION As Human Capital Related Issues Continue to Challenge on Organisations overall Strategy, The Human Resources manager must become a familiar face in the Management Team and a potent force in the boardroom.

CONCLUSION Findings however reveal a troubling gulf between the needs of the business and the ability of HR to respond. This is forcing companies to rethink their approach to the recruitment, training and development of HR