Professional Documents
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Taking HR to
the next level
A structured approach to
developing and executing
an effective HR strategy
Table of contents
Executive summary
Define value
2. Define HR strategy
Align HR services
4. Segment stakeholders
5. Prioritize HR investments
6. Design HR services
10
Deliver value
11
12
13
14
15
16
18
Contact information
19
Executive summary
Talent shortages and global
competition have put people issues
at the top of the Chief Executive
Officers (CEO) agenda. Yet many
business leaders arent sure the Human
Resources (HR) function is up to the
challenge. In fact, a recent global
survey by Deloitte Touche Tohmatsu
and the Economist Intelligence Unit
shows that while 72 percent of senior
business executives believe people and
talent are critical to their companys
results, only 8 percent are confident
in the way their company currently
manages talent. Moreover, 46 percent
of the surveyed executives said
their companys HR capabilities are
adequate, but need to improve, while
another 31 percent believe significant
improvement is needed.1
What must HR do to regain the
confidence of its business colleagues?
And how can HR provide the critical
services and capabilities that allow
a company to achieve its aggressive
growth goals? This point of view
describes a 10-step approach to help
HR meet these challenges. The
approach centers on creating and
executing a comprehensive HR strategy
to develop and deliver services that
align with the companys changing
needs. Our discussion includes a
detailed example based on Deloitte
Consulting LLPs (Deloitte Consulting)
experience helping clients around the
world in their efforts to develop and
execute effective HR strategies.
1
Aligned at the Top survey, Deloitte Touche
Tohmatsu and the Economist Intelligence Unit, 2007.
Ali
gn
5. Prioritize HR investments
R
rv
Se
HR
Strategy
6. Design HR services
ices
4. Segment stakeholders
2. Define HR strategy
Define Va
l ue
Deliver Value
Define value
The first step toward an effective
HR strategy is to define
value and to understand how
business value is created. This
requires deep insights into the
overall business environment
including general market forces
and trends as well as a clear
understanding of the companys
overall business strategy. In fact,
HR strategy is most effectively
developed as an integral part of
business strategy taking into
account workforce trends and
how HR can help the company
create value. If this is not done
at the outset, individual business
units are likely to develop their
own HR strategies, leading to
duplication of effort, potential
confusion among managers and
staff, and higher HR costs.
Business Plan
Talent retention
HR Strategy
HR Business Plan
CHRO Perspective
Source: Deloitte Consulting strategic analysis for a telecommunications client.
2. Define HR strategy
Determine the most effective ways to attract, motivate, develop, and retain new
and existing talent given the business environment.
Define a set of key people initiatives to support the overall business strategy.
Develop guidelines and approaches for governance, compliance, and risk mitigation.
An effective HR strategy provides a roadmap for creating value
through the companys workforce. It also includes guidelines that
the company will follow when competing for new talent or trying
to retain existing talent. These guidelines can cover a broad range
of issues, such as which skills and competencies are most critical for
achieving future goals and objectives, how to source talent (grow or
buy), and how to create and maintain a high-performance culture.
The latter might include insights about the types of behaviors to
be rewarded, the appropriate mix of monetary and non-monetary
incentives, and how to handle underperforming employees.
Of course, it is very difficult for a company to be good at everything.
The key to developing an effective strategy is deciding what to focus
on and what to ignore. An effective HR strategy defines a small
set of initiatives that are critical to the overall business strategy. It also
describes the types of products and services associated with these
critical initiatives for example, compensation and training and
provides a broad outline for how these products and services will be
delivered.
SHAREHOLDER VALUE
Revenue
Growth
Price
Volume
Operating
Margin
Direct
Costs
(COGS)
Indirect
Costs
(SG&A)
Asset
Efficiency
Income
Tax
Property,
Plant, &
Equip.
Inventory
Expectations
Receivables
&
Payables
Company
Strength
External
Factor
25%
50%
75%
Today
In 3-5 years
Dont know
100%
Aligned at the Top survey, Deloitte Touche Tohmatsu and the Economist Intelligence Unit, 2007.
Align HR services
Once a strategic direction has been
defined, the company must review
its HR policies, programs, and
practices to confirm that they align
with overall business objectives. This
exercise needs to be data-driven and
generally involves choosing a small
number of HR service offerings from
a vast array of options, and then
determining which stakeholder group
will receive which kinds of services. It
also involves prioritizing investments
to focus on business areas that make
the most significant contribution to
overall performance and results.
4. Segment stakeholders
Define and segment the companys workforce, external talent pools, and
other stakeholders.
Determine which segments are most critical to achieving desired results.
Assess the needs of each segment.
Decide which services to deliver to each segment and how.
Different stakeholder groups make different contributions to the
company and receive different levels of benefit from HRs various
programs and services. Its important to understand each groups
strategic impact and to map that impact against their use of the
rewards, development opportunities, and other services that the
company offers its workforce. This process is analogous to the way
a company segments its customer base. High-impact, high-value
customers are offered the highest level of service; low-impact,
low-value customers are offered a lower level of service.
HR programs typically segment stakeholders or customers along
four general dimensions:
Stakeholder groups e.g., applicants, regular employees,
managers, executives, retirees, third parties
Stakeholder needs e.g., compelling employer brand, strong
talent pipeline, globally mobile workforce, consistent people data,
low transaction costs
Service levels e.g., response time, custom applications vs.
off-the-shelf solutions
Access channels e.g., face-to-face consultation, self-service,
call centers
In addition to the traditional ways of grouping stakeholders by their
role or relationship to the company, there is another element that is
even more important. Critical workforce segments (figure 5) consist
of employees who make an extraordinary contribution to overall
performance and business value and who are extremely difficult to
replace. In some cases, the same service levels and access channels can
be used to serve each segment efficiently and effectively. But in other
cases, a company must make hard choices so that the needs of its
critical workforce segments are properly met.
Specialists
Critical Workforce
Segments
2
Flexible Labor
1
1
Core Workforce
5. Prioritize HR investments
Analyze the cost, benefit, and risk of delivering each offering across the
workforce life cycle from acquisition through development, rewards,
and retirement.
Develop prioritization criteria that align with the companys strategic objectives.
Allocate funding for various parts of the people services portfolio.
Every company attempts to focus its time and money where they
will do the most good. To properly allocate its scarce resources,
HR must identify all new and existing projects, and then understand
the expected costs, benefits, and primary focus. The Human Capital
Value Map for Human Capital, which was described earlier, includes
a tool to assess the value and risk of four types of projects:
Maintenance Keeping basic HR systems and processes up
and running.
Productivity
Innovation
Growth
Onboarding
Talent
Inventory
Quality of Hires
Net Value
Non-Industry
Pipeline Growth
Clinical
Development Programs
3
Cross Selling
Training
2
Staffing
Forecasts
Vendor Cost
Optimization
Annual System
Enhancement
Provider
Contracting Certification
0
1
Back Office
Offshoring
Succession
Planning
Realization Risk
Note: Size of bubbles indicative of relative project effort
Source: Deloitte Consulting Human Capital Value Map
6. Design HR services
Design and implement HR solutions for every phase of the workforce life
cycle, from recruiting to retirement.
Develop advanced capabilities to address strategic challenges, such as mergers,
divestitures, globalization, change management, and regulatory compliance.
Most companies offer a solid set of basic HR services; however,
in our experience many have yet to develop a full set of offerings
specifically designed to address the companys most pressing people
challenges. According to the recent Aligned at the Top survey
by Deloitte Touche Tohmatsu and the Economist Intelligence Unit,
the people-related issues that are most critical to achieving results
are leadership development, talent management, creating a highperformance culture, and training (figure 7). These are the types of
issues HR must address.
Here are some ways HR can increase its contribution to the company
in these vital areas:
Help develop the next generation of leaders by collaborating with
business schools and other third parties to develop and deliver
cutting-edge leadership training.
Manage talent by offering personalized career paths and
development opportunities, while placing less emphasis on
financial incentives.
Foster a high-performance culture by targeting programs at
critical workers who are role models for the rest of the workforce.
Make training and development an ongoing part of everyday
operations, instead of something that happens only once or
twice a year.
76.1%
Talent
management
71.2%
76.1%
82.7%
Creating a highperformance
culture
71.2%
79.4%
70.1%
62.6%
Training/
development
0
25%
50%
75%
HR Leaders
Senior Business Executives
Source: Aligned at the Top survey, Deloitte Touche Tohmatsu and the
Economist Intelligence Unit, 2007.
10
100%
Deliver value
Converting HR strategies and
initiatives into tangible business
value requires the appropriate
delivery approach, as well
as a solid foundation of HR
capabilities and infrastructure.
It also requires business-driven
performance measures to track
whether the expected results are
being delivered.
7
11
VE
NDOR
ER
MANAG
PO
S,
PR LICIES, PROCESSE CE
OC E
N
DURES & COMPLIA
9
12
ANAL
YTICS
G&
EM
DS
ERVIC
ES
APP
LICANTS
RE
PO
RT
IN
ES
SH
AR
E
BUSINESS
&
HR STRATEGIES
N
PL O N OY
EE S
RET
I
RE
E
BU
SI
NE
LOYEES
EMP
SE
LF
CE
VI
ER
-S
TE
G
R
HR P
OR
TA
L&
CENT
S
ER
NER
SO
RT
F
PA
E
TOMERS
S
U
C
HR ROLES
TIS
ER
XP
SS
GIES
TI
CU
EXE
ED
AT
LO
NO
CH
TE
R
CE
UR
OUTSO
VE
LE
E- S
VIC RIC
SER ET
GOVERNANCE, S & M
T
AGREEMEN
The design process begins with business and HR strategies and with the
requirements of the companys internal and external stakeholders e.g.,
employees, managers, executives, recruits, and retirees. It then looks at
HRs various roles and at the technology and business enablers required
to tie everything together.
ENABLERS
ERS
AG
AN
IN
3
3
4
4
5
5
6
6
Business &
Financial Acumen
Project
Management
HR Product
Expertise
Measurement and
Analysis
2
2
Change
Management
Influence and
Collaboration
HR Technical
Knowledge
Orientation to
Results
Note: Dotted line represents current HR state.
Solid line represents business needs.
Source: Deloitte Consulting HR assessment tool
Aligned at the Top, Deloitte Touche Tohmatsu and the Economist Intelligence Unit, 2007
13
Customer
To achieve our
vision, how should
HR appear to
customers?
HR
Service
Center
Performance
People
What does HR
have to do in
order to meet
the expectations
of its employees?
Financial
To succeed
financially,
how should HR
appear to
stakeholders?
Source: Deloitte Consulting HR Performance Management Framework
14
10
Ali
gn
HR
Strategy
rvices
Se
Define Va
lue
Co
& Change M
ation
ana
c
i
n
ge
u
m
m
t
en
Deliver Value
15
11
1. Define Value
2. Align HR Services
In support of the banks strategic priorities, HR identified a variety of new services and operational improvements.
Many of these initiatives centered on critical workforce segments:
Sales people and other customer-facing staff people who are integral to the strategic priorities of
improved customer service and call center effectiveness and who are key to achieving the overall strategic
objectives of improving cross-selling and yield per relationship.
Various technology, operations, and project management roles jobs that relate to the strategic
priority placed on mergers and acquisitions and that are important to achieving the strategic objective of
market share growth.
The new or enhanced HR services fell into three broad categories:
Workforce planning and recruiting
Focus on recruiting top talent in customer-facing roles, such as sales, branches, and call centers.
Focus on recruiting top talent for M&A-related roles in technology, operations, and project management.
Tap new talent pools. Focus on personality rather than technical skills. Improve entry diagnostics and the
on-boarding experience.
Align workforce diversity with the diversity of customers in various market segments.
12
16
16
2. Align HR Services
(continued)
3. Deliver Value
In this case study, the HR function already had a well-defined service delivery model and sufficiently robust IT
architecture. This solid foundation allowed HR to focus on value-added services, rather than infrastructure.
Specific efforts to tie HRs delivery performance back to the value initiatives defined at the beginning of the
initiative include:
HR scorecard Measure impact of development initiatives and incentives on business results. Communicate
value to bank executives and employees.
Expanded perspective Use various sources (e.g., large-scale surveys, feedback from employee portals,
line manager feedback) to understand employee needs, perceived value of rewards, and level of commitment
to the company.
Performance Indicators
Customer
Service
Call
Center
M&A
Increased cross-selling by 5%
Achieved retention targets for key executives and overall staff on all acquisitions
x
x
17
Acknowledgements
We gratefully acknowledge the two main authors of this paper,
Michael Boedewig and Jan Seele. Many thanks also to our team
of additional contributors, including Sarah Gaalswyk, Jennifer
Hand, Allison Tsao, and James Wu. In addition, wed like to
acknowledge the valuable contributions of Omar Douglas to
an earlier version of the paper.
18
18
Brett Walsh
EMEA Regional Practice Leader,
Human Capital
Deloitte MCS Limited, United Kingdom
+44 20 7007 2985
bcwalsh@deloitte.co.uk
Jeff Schwartz
Global Practice Leader,
People and Change
Deloitte Consulting LLP, United States
+1 703 251 1501
jeffschwartz@deloitte.com
Rolf Driesen
National Practice Leader,
Human Capital
Deloitte Consulting, Belgium
+32 2 749 57 21
rodriesen@deloitte.com
Margot Thom
Global Leader HR Transformation,
Human Capital
Deloitte Inc., Canada
+1 416 874 3198
mathom@deloitte.ca
Petr Kymlicka
National Practice Leader,
Human Capital
Deloitte Advisory s.r.o., Central Europe
+420 2 246042260
pkymlicka@deloittece.com
Richard Kleinert
AsiaPac Regional Practice Leader,
Human Capital
Deloitte Consulting LLP, United States
+1 213 688 3368
rkleinert@deloitte.com
North America
Lisa Barry
National Practice Leader,
Human Capital
Deloitte Consulting, Australia
+61 3 9208 7248
lisabarry@deloitte.com.au
Hans Groothuis
National Practice Leader,
Human Capital
Deloitte Consulting B.V., The Netherlands
+31 0 20 4547500
hgroothuis@deloitte.nl
Jungle Wong
National Practice Leader,
Human Capital
Deloitte Touche Tohmatsu CPA Ltd, China
+86 10 8520 7807
junglewong@deloitte.com.cn
Gert De Beer
National Practice Leader,
Human Capital
Deloitte Consulting, South Africa
+27 11 806 5400
gedebeer@deloitte.co.za
Kenji Hamada
National Practice Leader,
Human Capital
Tohmatsu Consulting Co., Ltd., Japan
+81 3 4218 7504
kehamada@tohmatsu.co.jp
Enrique de la Villa
National Practice Leader,
Human Capital
Deloitte SL, Spain
+ 34 9151 45000
edelavilla@deloitte.es
Kate McDonald
National Practice Leader,
Human Capital
Deloitte Consulting, New Zealand
+ 64-9-3030868
kmcdonald@deloitte.co.nz
Margot Thom
National Practice Leader,
Human Capital
Deloitte Inc., Canada
+1 416 874 3198
mathom@deloitte.ca
Michael Fucci
National Managing Director,
Human Capital
Deloitte Consulting LLP, United States
+1 212 618 4708
mfucci@deloitte.com
Beth Thiebault
National HR Transformation Leader
Human Capital
Deloitte Consulting LLP, United States
+1 612 397 4062
bthiebault@deloitte.com
Vronique Subileau
Senior Manager,
Human Capital
Deloitte Conseil SAS, France
+33 1 55 61 65 75
vesubileau@deloitte.com
David Parry
National HR Transformation Leader,
Human Capital
Deloitte MCS Limited, United Kingdom
+44 20 7007 2988
davidparry@deloitte.co.uk
Asia Pacific
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24
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