Canadian HR Reporter

Dave Crisp Strategic Capability CANADIAN HR REPORTER CANADIAN HR REPORTER June 16, 2014 June 16, 2014 10 10 EXECUTIVE SERIES/NEWS EXECUTIVE SERIES/NEWS needs… and if they can do that, you know what, they will enjoy competitive advantage and likely great business results. If they don't do it, they're going to be behind the eight ball." It's becoming harder to fi nd re- ally key talent and competition is becoming quite fi erce, said Paula Lewis, senior HR consultant and owner of Strategic HR in Toronto. "For the years to come, I think that's just going to get worse and worse. Obviously the aging popu- lation will also have an eff ect on it, but everybody coming out of the downturning economy is going to have a huge impact because a lot of companies did downsize a lot, lost a lot of that talent — and to try to rebuild it is going to be really interesting and a big challenge." While more sophisticated tech- nologies mean HR can focus on building workforce capacity that aligns with business needs and drives the execution of business objectives, many employers con- tinue to focus on traditional HR management and core HR pro- gram activity, found the report, which was based on two separate surveys by the Conference Board and the University of Southern California's Center for Eff ective Organizations, with a total of 239 Canadian respondents. Fifty-one per cent of the re- spondents described their ap- proach as "traditional HR man- agement" while 48 per cent said strategic. However, large orga- nizations with more than 10,000 employees are more likely to say strategic (63 per cent) than tradi- tional (37 per cent). One-third of Canadian organi- zations reported their HR func- tion is a full partner in developing and implementing business strat- egy, compared to 21 per cent in the United States. However, more American organizations (54 per cent) than Canadian (43 per cent) said, "HR provides input into busi- ness strategy and helps implement it once developed." One-third is OK but we should strive for much higher, said Lewis. " e whole profession... is sort of in that infancy stage and we have a long way to go in order to prove our strategic value," she said. "You have to really be sitting at the table, be part of the strategic devel- opment, strategic planning, bud- geting, all those key elements — HR needs to be part of and almost be a driver in some elements." Part of the challenge could be skills. When employers were asked to rate their HR team's abilities with specifi c competencies, "tra- ditional knowledge and delivery of HR services" was rated highest, followed by consultation skills and contract administration. Lower on the list were business acumen, the ability to drive organizational change, project management skills and statistical analysis and analytic skills. When it comes to investments in enabling systems and infra- structure, the U.S. is leading Can- ada in terms of information man- agement and workforce analytics, said Cullwick. "Once those systems and prac- tices are leverageable and usable and mature, those organizations that are making those investments now will then be able to, I would suggest, materially advance in terms of becoming more strategic and truly being business-driven," he said. " ey will then have an advantage over us in terms of their analytical capability, which you would think would then en- able a more strategic, value-added HR function." And American companies are a lot more sophisticated when it comes to collecting metrics and measuring the business impacts of HR programs and processes, said Martin. "Really, when you're able to have that capability, that's when you can really start proving the value of your HR function." Statistical analysis is important in that it contributes to determin- ing strategic direction, said Guy Nasmyth, associate faculty mem- ber at Royal Roads University in Victoria. "I don't know that HR is going to be taking over a lot of business processes, but certainly in that they are becoming a full partner in establishing strategic direction, then they're going to have to un- derstand business." HR has to start focusing on and speaking numbers, said Lewis. "We really have to get that mindset changed, really have to start utilizing the data, mining the data, the analytical skills in order to really start building, driving the success of the company through eff ective HR programs — that's really the only way we're going to be seen as true strategic partners." When it comes to evaluating work performance, the skills and knowledge gap, retention, work- force reductions or succession planning, all of that requires having a good understanding of what the business looks like and how it will impact the business — and that's done through analytics, she said. "Obviously, (it's about) fore- casting future changes and really allowing HR to become more pro- active and managing the change, versus just dealing with it as it comes and being more reaction- ary. Without that data, we can't re- ally do any kind of forecasting — it really ties our hands." The HR function can be a trusted partner and help boards provide appropriate oversight re- lating to areas such as compensa- tion, succession planning and risk management, said the Conference Board. But while boards typically seek assistance on compensa- tion and reward practices (81 per cent), executive compensation (78 per cent) and HR policy (76 per cent), few seek help from HR on board compensation (27 per cent), change management (24 per cent) or workforce condition and capa- bility assessments (23 per cent). More education needs to hap- pen, said Lewis. "A lot of the individuals within the board are traditionalists and they are used to seeing HR as that admin function, so we just have to make sure that we are educating them in exactly the value that HR can bring, and that's really… go- ing back to analytics to prove our cases, to be able to speak the same language and really kind of make sure we are producing that busi- ness plan, factual-based, and just really acting much more like your CFO of the company." And it's happening, slowly, with senior HR leaders becoming more involved with the boards. But any change of this nature is going to be slow because people are com- fortable with the old ways of do- ing things and enjoy their turf and status, said Nasmyth. Boards of directors are starting to understand that human capital is and will be the competitive dif- ferentiator, said Cullwick, citing HR committees of the board. "As the HR function evolves, and as it must evolve in the talent decade, we will see more of those higher value-add activities and ar- eas be a part of what the board of directors are looking for help on." U.S. leading in HR analytics U.S. leading in HR analytics TALENT DECADE < pg. 1 As hard as quantum physics? As hard as quantum physics? A NUMBER of observations about what helps — or prevents — organizations from building eff ective strategic capabilities have been con- verging for the last 20 years or so. What ties them together are the ideas Jamie Gruman outlined. Are these as hard to grasp as the quantum physics theories from which they sprung? No, but they aren't totally easy to implement. We often fi ght our own inclinations. What quantum physics revealed is the unpredictability of events. While we tend to believe every ac- tion has a logical result — eat too much, get fat — we are beginning to realize that even in simple things the obvious is not as clear as we think. Science shows dieters may be the ones getting fat most often. Could we have predicted rebound eating would wipe out the benefi ts of diet- ing? Perhaps. And it gives us a nice, logical explanation to reinforce our basic belief that all things can be studied and rules applied to make them work. In the same way, command-and- control organizations believe they can make employees carry out the strategies the senior team dreams up. None of us has to look far to see this isn't true. At one company, we found it took more than fi ve years to get even 80 per cent of staff to do one simple thing when thanking customers. 100 per cent? Never. Two recent books put these issues in practical perspective from two very diff erent points of view. One is Chris Hadfi eld's book on his NASA career: An Astronaut's Guide to Life on Earth. e other details Ed Catmull's lessons from his CEO role (under owner Steve Jobs) at Pixar, titled Creativity, Inc. Two more dif- ferent environments can hardly be imagined — the "no mistakes ever" world of NASA versus the "every- thing to free innovation by trial and error" world of Pixar. Together, they frame the ultimate puzzle — not just how much freedom you ought to give employees, but what kind. With too tight control, they may not innovate; too little and they are lost. e formula is clearly diff erent in the two environments, yet one can pick out similarities and problems that are common to both. Ultimately, both end at a similar spot — you want employees to bring all they have to work, especially all their ideas, thoughts and refl ections. e key is to have a leader who recog- nizes and encourages that primarily by demonstrating it. Strategic capa- bility in organizations develops one step at a time. It takes steady work at analyzing, refl ecting, rethinking and trying out new approaches continu- ously — even though we can't know for certain what the outcomes will be. We move forward by moving — and then watching what happens, rethinking, adjusting and retrying. e great thing about thinking strategically, which is to say, way out in the future, is it allows for time for course-corrections, for mistakes that we ideally make in small pilots and recover from, but mistakes nonetheless. What we know doesn't work — not even at NASA — is rigid, command-and-control driving for perfection once and for all, because of today's even more changeable and unpredictable situations. As we speak, Target Canada is be- ing blamed for losses some say result from rigidly implementing Ameri- can practices in a new environment. We can see such stories playing out almost everywhere we look. Dave Crisp is a Toronto-based writer and thought leader for Strategic Capabil- ity Network with a wealth of experience, including 14 years leading HR at Hudson Bay Co. where he took the 70,000-employ- ee retailer to "best company to work for" status. For more information, visit www. balance-and-results.com.

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