week 1 d1

A common theme observed in modern organizations today is the poor alignment of business strategy and HRM strategy. Find an article(s) through ProQuest which discusses the benefits of aligning HRM activities with key business initiatives and discuss the challenges and the opportunities of doing so. Support your post with at least one current and relevant article from the ProQuest database. Present your findings in 200 words or more in your discussion post. Use at least one recent, scholarly source in your reply.Respond to at least two of your classmates’ posts.

pls read these chapters. and cite this book

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
Why Read This Book?
The Good, the Great, and the
Stupidus Maximus Award

In 2001 a book called Good to Great was published that profiled com-panies that were considered to have exemplary business practices

1
One of those companies was the electronics retail company Circuit
City. Less than ten years after Good to Great was published, Circuit
City was bankrupt, and its stock was delisted. How did such a high-
performing company go so quickly from good to great to gone?

Many things contributed to the demise of Circuit City, but one action that
stands out was the decision in 2007 to fire their most experienced employees
and replace them with less-expensive newly hired staff. This move provided
immediate financial benefits but created lasting and permanent damage to
Circuit City’s performance. It even led to the creation of an award to recognize
colossally bad management actions: the Stupidus Maximus Award. The award
observed, “It doesn’t take a genius to know that getting rid of your most expe-
rienced and productive workers is not only a terribly shortsighted strategy, but
incredibly dumb.”2

It would be nice if stories such as this one from Circuit City were rare. They
are not. We all have stories of apparently stupid things we have seen manag-
ers do. Bad management seems to be something we simply expect and accept
as something we just have to live with, much like bad weather. What leads to

O N E
c h a p t e r

Hunt, Steven T.. Common Sense Talent Management : Using Strategic Human Resources to Improve Company Performance, Center for Creative
Leadership, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=827115.
Created from ashford-ebooks on 2020-03-24 17:12:09.

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Commonsense Talent Management2

all these bad management decisions? Most people who get promoted to man-
agement positions have had to demonstrate that they possess at least a reason-
able level of intelligence and have shown that they can be trusted at some basic
level to support and help others. Very few managers are particularly unintelli-
gent, cruel, or unethical. Circuit City’s decisions were almost certainly done by
extremely bright and highly successful executives. These executives may have
earned the Stupidus Maximus award, but they were not stupid people. The real-
ity is that all of us are capable of making stupid management decisions. Many
of us, although it may be painful to admit, have already done so. The challenge
is that companies do not learn that their management decisions were stupid or
ineffective until after they have been made.

The reason companies make bad workforce management decisions is usu-
ally the same reason people make other bad decisions: they fail to think through
the consequences of their actions or overlook crucial pieces of information.
Poor management decisions are often the result of not appreciating what actu-
ally drives employee performance. More often than not, this comes from look-
ing at decisions from the perspective of the organization without thinking about
these decisions from the perspective of employees. A decision that makes sense
in terms of a company’s financial models may not make sense if you look beyond
these numbers at the psychological factors that underlie employee actions that
drive company profits. Employees do not do things because their company
wants them to. They do things because they want to do them, have the capabili-
ties to do them, and have confidence that solely they can succeed.

Successful companies are not built solely on the things leader and managers
do themselves. Successful companies result from what leaders and managers are
able to get their employees to do. This requires understanding work from the
perspective of others and knowing how to predict and change employee behav-
ior to align with business needs. That’s ultimately what this book is about.

This book is a guide to using strategic human resources (HR) to increase
business performance. Strategic HR encompasses a variety of processes, includ-
ing staffing, talent management, performance management, compensation, suc-
cession, development, and training. The term strategic HR is used to distinguish
these processes from other HR processes that are more administrative in nature.

Strategic HR focuses on processes used to align the workforce to deliver busi-
ness results. It is often described as getting the right people in the right jobs
doing the right things and doing it in a way that supports the right development

Why Read This Book? 3

for what we want people to do tomorrow. Administrative HR focuses on admin-
istrative and legal processes associated with the employment of people: manag-
ing payroll, providing health care benefits, and handling the administrative and
legal details associated with establishing and terminating employment contracts,
for example.

Strategic HR is critical to achieving business objectives consistently and
effectively. It has a major impact on the profit, growth, and long-term sustain-
ability of organizations. Administrative HR is critical to organizational function-
ing but is not a strong source of business advantage. For example, although it is
difficult to motivate employees if their paychecks don’t show up, paying people
on time is not going to give a company competitive advantage. In this sense,
administrative HR is similar to other crucial support services such as processing
expense reports, maintaining e-mail systems, and managing building facilities.
Administrative HR gets little attention from most business leaders unless it fails
to work. Business leaders rarely ask administrative HR questions such as, “How
do I ensure people get paid on time?” But they often ask strategic HR questions
such as, “How can I get the employees I need to support this project?” or, “How
do I get people aligned around the company’s strategic goals?”

There is a symbiotic relationship between strategic HR processes and admin-
istrative HR processes. Although there is a tendency to discuss these two sides
of HR as though one were more important than the other, the reality is that we
need both. Administrative HR is needed to employ people. Strategic HR is nec-
essary for ensuring that people are doing what we have employed them to do.
Strategic HR is where companies gain the most competitive advantage because
it is about increasing workforce productivity and not just maintaining standard
corporate infrastructure. If HR professionals want to increase the impact they
have on their company’s strategic initiatives and business operations, then being
good at strategic HR is how they will get it (see the discussion: “Strategic HR:
Leadership: What It Does and Does Not Look Like”).

S T R A T E G I C H R L E A D E R S H I P : W H A T I T D O E S
A N D D O E S N O T L O O K L I K E

If HR is going to influence business strategies, then its leaders must

show how HR methods can improve business results. These lead-

ers must be willing to advance bold recommendations on how HR

Commonsense Talent Management4

processes can support business operations and back up these claims

with decisive action. People in HR often speak about “getting a seat at

the leadership table,” but HR leaders must also play a vocal role in the

conversation at this table if they wish to keep this seat. My experience

is that not all HR leaders are comfortable taking such a highly visible

role. The following two stories illustrate the difference between strate-

gic HR leaders and HR leaders who may be at the leadership table but

seem reluctant to speak up.

The first story illustrates what strategic HR leadership looks like. A

major manufacturing company suffered a severe downturn in business

due to the 2008 recession. It hired a new CEO who realized the com-

pany would go bankrupt unless it radically changed its strategic focus.

This meant getting a tradition-bound company to adopt difficult and

highly challenging goals quickly. HR leaders in the organization spoke

up and said that improving the HR processes used to manage employee

goals could play a central role in this turnaround. They then commit-

ted to implementing HR technology that allowed the organization to

set and track goals across more than twenty thousand employees in

over fifteen countries. They agreed to do it in less than four months.

This was an extremely ambitious HR initiative, and it played a central

role in the company’s turnaround strategy. Rather than shy away from

this high-profile and risky engagement, the HR leaders committed to

making it happen. Two years later, this company had completed an

extremely successful business turnaround, and the HR organization had

played a highly visible role in making it happen.

Compare the previous story of strategic HR leadership to the

following one illustrating a different type of HR leader. A product mar-

keting company was about to launch a new technology-enabled process

to set and track employee goals. Two weeks before the goal manage-

ment process was to be launched, the HR leadership team learned that

the company had made a massive acquisition. Business leaders wanted

to align the two workforces as quickly as possible around a common

set of strategic objectives. The immediate reaction among some mem-

bers of the team overseeing the goal management process was, “This is

perfect timing because goal management is central to workforce align-

ment.” Yet the HR leadership team did not appear to see it this way.

Why Read This Book? 5

This book explains the major design questions that underlie effective strate-
gic HR processes. It does not prescribe using certain specific strategic HR pro-
cesses or give advice that assumes there is one best way to manage people. There
isn’t one best way to manage people in general. However, there is a best way to
manage the people in your organization, taking into account your company’s
particular workforce characteristics, business needs, and resource constraints.
This book helps you think about strategic HR process design and deployment
so you can uncover the practices that are truly best for your company. It will also
help you recognize and avoid particularly bad practices, such as firing your most
skilled and experienced employees to save short-term costs!

This book is based on psychological research studying factors important to
workforce productivity, combined with my experience working with compa-
nies of all sizes around the globe.3 The more than twenty years I have worked
with companies seeking to improve workforce productivity that have hammered
three fundamental beliefs into my brain. First, there are very few true best prac-
tices. What works in one company may not work in another (see the discussion:
“The Problem with HR Case Studies”). In fact, what works in one company may
actually hurt performance in another. Second, although there are no true best
practices, there are necessary practices that influence the design of many HR

Traditionally at this company, goals had mainly been used as a way to

justify compensation decisions. They thought of goals only as a tool for

personnel administration, not as a means to support strategic commu-

nication and alignment. Rather than seize this opportunity to demon-

strate how this HR process could support a critical business need, the HR

department chose to delay the goal management process launch until

the acquisition settled down.

The difference between these two stories was the difference in the

willingness of HR leaders to play a central, high-profile role in support-

ing a mission-critical business need. If HR leaders want to have strategic

impact, they need to be willing to take on projects that put HR in the

spotlight. Such projects are likely to be high stress and high risk, but

such things are necessary to becoming highly relevant to business strat-

egies. It is not enough to have a seat at the leadership table; you need

to influence the conversation.

Commonsense Talent Management6

processes. These practices may not provide competitive advantage, but HR pro-
cesses will not work if you do not address them. Third, the reason HR often fails
to be effective is that companies did not fully think through key design questions
when building and deploying HR processes. In particular, they did not con-
sider how these processes must interact with employee psychology to create the
behavioral changes they are intended to achieve.

T H E P R O B L E M W I T H H R C A S E S T U D I E S

This book contains many stories of effective and ineffective HR practices

drawn from work I have done with hundreds of organizations. I inten-

tionally do not share the names of these companies for several rea-

sons. Foremost, which companies these are is not the point. The point is

what we can learn from their experiences. Furthermore, not all of these

stories portray companies in a positive light. Finally, I do not want to

perpetuate a tendency in the HR field to copy other organizations’ HR

practices based on the name of the company instead of the nature of

the practice.

The field of HR has a history of idolizing companies based more on

their current financial performance than on the quality of their work-

force management methods. It is common to see books or case stud-

ies written about HR methods used by companies that have achieved

financial success. These usually include an explicit or implicit admoni-

tion that other companies should use the same HR methods. There are

two problems with this approach. First, HR processes that work in other

organizations may not work or even be feasible in your own. Second,

just because a practice worked for a company in the past does not

mean it will continue to work in the future. Companies need to adjust

their HR methods to meet the shifting nature of labor markets, techno-

logical resources, business models, and economies.

The value of strategic HR methods depends on your company’s busi-

ness needs, its culture, characteristics of its employees, its resources, and

a range of other variables. This point was succinctly made by a colleague

of mine in the 1990s when General Electric (GE) was doing exceptionally

well under the leadership of its famous CEO, Jack Welch. Many books

were written about HR methods at GE under Welch as examples of HR

Why Read This Book? 7

This book takes a comprehensive look across all of the major strategic HR
processes used to hire, motivate, develop, and retain employees throughout the
employment life cycle. It addresses design issues affecting specific strategic HR
processes and explains issues related to integrating multiple processes to address
different types of business needs. Unlike many other HR books, this book does
not prescribe how HR processes should be designed. Instead it walks through
the major considerations to ensure the processes you create are the right ones
for your business. This book is not an instructional manual that presumes to tell
you how to manage your workforce. It is a guide through the major questions,
concepts, and issues to consider when building and deploying strategic HR pro-
cesses to support the unique business needs and culture of your company.

best practices. During that time, an HR professional asked my friend,

“What does our company need to copy the HR practices used at GE?” to

which he replied, “100 years of history, 100,000 global employees, and

hundreds of millions of dollars’ worth of financial capital.” His response

was somewhat flippant, but the point is valid. GE’s practices worked

extremely well for GE at that time in history. But that does not mean

they will work equally well for another company or at another time.

This book contains dozens of examples of HR methods drawn from

scores of different companies. Only three of these companies are men-

tioned by name: GE, Circuit City, and Enron (in chapter 6). GE is an

example of a company whose HR practices have significantly changed

over the years to adapt to shifting business needs. Many HR practices

that GE was famous for in the 1990s such as forced ranking are no lon-

ger used by GE today. Circuit City and Enron are examples of companies

that were once extremely successful and were lauded for having highly

effective strategic HR practices. Both also experienced colossal business

failures that were caused in part by flaws in their approaches to stra-

tegic HR and a failure to effectively change their HR methods to meet

changing business demands. The lesson to be learned is to never imple-

ment a strategic HR practice just because someone else is doing it. Study

what other companies are doing as a source of ideas and insight, but

do not implement an HR practice until you critically examine whether it

makes sense for your company’s unique situation.

Commonsense Talent Management8

The book summarizes years of experience and knowledge into a set of frame-
works, key questions, and diagnostic tools that will help you create a healthier,
more productive work environment for employees, managers, and customers
alike. I do not pretend that this book has all the answers. But it does provide
solutions and concepts that have been effectively leveraged across a huge variety
of companies. Some of the topics discussed are a bit complex as a result of the
topic area. As is commonly said, if this problem was easy to fix, someone would
have figured out the solution long ago and we’d all be using it. Nevertheless,
many of the concepts in this book can be effectively learned and applied to your
company’s strategic HR processes in a matter of weeks. If you want to under-
stand how to think through HR at a more strategic level, how to articulate its
value to others, and how to design processes that positively change employee
behavior, this book is for you.

1.1 HOW THIS BOOK IS STRUCTURED
Chapter 2 provides clarity on what strategic HR is, why it is important, and why
it is often difficult. The chapter also explains the four fundamental strategic HR
processes of right people, right things, right way, and right development.

Chapter 3 introduces the concept of business execution, explains why under-
standing a company’s business execution drivers is fundamental to the design of
effective strategic HR processes, and describes the link between the six key busi-
ness execution drivers and the four fundamental strategic HR processes.

Chapters 4 through 7 discuss critical design questions underlying each of the
four fundamental strategic HR processes: right people, right things, right way,
and right development. These chapters discuss how to build and deploy pro-
cesses associated with staffing, goal management, performance management,
succession management, development, and other forms of strategic HR.

Chapter 8 looks at methods for integrating and aligning different areas of
strategic HR to create an overall strategic HR road map. This chapter could be
read either before or after chapters 4 through 7. I placed it later in the book
because I believe it is often easier to develop strategies if you have a solid under-
standing of the methods that will be used to execute them.

Chapter 9 discusses methods for deploying integrated strategic HR initiatives.
This includes techniques to get employees, managers, and leaders to adopt and
effectively use HR processes.

Why Read This Book? 9

Appendix 1 contains a detailed competency library and associated struc-
tured interview questions that can be used to implement many of the concepts
discussed in the book. Appendix 2 discusses how many of the principles in the
book can be applied to build out a comprehensive succession management pro-
gram. This provides an example of what is involved in building a truly integrated
strategic HR process.

This book can be read as a complete document or as a reference guide
where you read individual sections by themselves. The Contents provides a
fairly detailed guide to the topics covered in the chapters, and the index can
be consulted for looking up specific topics. Each chapter also includes discus-
sions that address particular concepts and methods related to strategic HR.
A glossary at the end of the book defines common strategic HR words and
phrases.

1.2 THE ROLE OF HR TECHNOLOGY IN STRATEGIC HR
The term HR technology refers to specialized computer systems designed to sup-
port HR processes. This is not a book about HR technology. The concepts dis-
cussed in this book can be applied independent of using any particular type of
technology. Nevertheless, many of the processes discussed in this book are dif-
ficult, if not impossible, to implement in large organizations without the use of
effective HR technology (see “How Technology Is Transforming HR: The Death
of the Paper Binder”).

H O W T E C H N O L O G Y I S T R A N S F O R M I N G H R :
T H E D E A T H O F T H E P A P E R B I N D E R

Until recently, strategic HR processes such as performance manage-

ment, career development, goal setting, compensation, and suc-

cession management were conducted using paper forms, slide

presentations, and spreadsheets often filled with half-completed,

manually entered employee reviews and profiles. HR departments

spent months pulling together data needed to support compensa-

tion decisions and succession planning, for example. Much of this

information was obsolete by the time it was assembled. This left HR

in the unenviable position of trying to engage leaders in strategic

Commonsense Talent Management10

talent conversations using clumsy paper binders full of questionable

information.

Thanks to advances in technology systems, we are finally seeing

the death of the HR paper binder. HR is shifting from manually cre-

ated spreadsheets and documents to dynamic online, web-based sys-

tems that make clumsy processes much more efficient and easy to use.

One company I worked with set coordinated goals across more than

ten thousand employees worldwide in less than sixty days. Another

global company achieved the following in one year across over thirty

countries:

• Set 1,787,465 performance objectives aligned to the company’s over-

all business strategy

• Completed 253,465 performance reviews using a single consistent

process

• Conducted close to 6,000 talent review and calibration meetings

With a single mouse click, this company can instantaneously gener-

ate online reports providing immediate visibility into what people are

doing across the company and how well they are doing it. These sorts

of processes would be impossible to implement or support without the

use of specialized strategic HR technology.

Advances in HR technology have provided companies with many

new capabilities they did not previously have, such as the ability to

quickly record and post training videos on company intranet sites or

the ability to instantaneously search across the entire workforce to find

employees who possess specialized skills. But much of the value of HR

technology also comes from enabling managers to take advantage of

strategic HR data and processes that have long been available but were

historically difficult to use. In this sense, the impact that technology has

on HR can be likened to the impact that GPS technology has had on the

use of street maps. These technological systems take existing informa-

tion and knowledge out of documents where it was rarely accessed and

put it in the hands of decision makers when they need it in a format

they can readily use.

Why Read This Book? 11

Major advances have been made over the past twenty years in the develop-
ment of HR technology to support strategic HR processes—for example:

• Staffing systems used to post job openings on the Internet, find qualified can-
didates through searching through Internet sites, automatically screen and
select candidates using online assessments, and transition new employees
into the organization

• Management systems used to communicate and set employee goals, measure
and track employee performance, and develop and measure employee skills

• Reporting systems that integrate data on employee accomplishments, quali-
fications, and pay levels to guide compensation and internal staffing and pro-
motion decisions

• Learning systems that provide employees with online access to training and
knowledge resources necessary to perform their jobs

• Social communication tools that allow employees to share ideas, feedback,
and suggestions with each other through online forums

HR technology enables companies to achieve results that would be impos-
sible to achieve without the use of technology. An example is tracking the per-
formance, potential, and career goals of employees across a company and then
conducting real-time searches to match existing employees to new job opportu-
nities in the organization. Another is providing tools so employees in one part of
an organization can record and share instructional videos with employees else-
where in the company.

Using HR technology does not lead to positive results unless the technology
is used correctly. But failing to leverage advances in technology limits a compa-
ny’s ability to use strategic HR methods. Many examples of poorly designed stra-
tegic HR processes are based in part on reliance on inadequate HR technology.
Consider the example of the performance review. The traditional performance
reviews that many companies use ask managers to fill out a form once a year rat-
ing employee performance.4 Managers are supposed to share these forms with
employees in a way that inspires the employees to increase their performance.
These annual performance reviews rarely work as intended, however. Many
managers do not think about the review until a few weeks before it is due, and
as a result they often do not know what to write on the reviews. Their reviews

Commonsense Talent Management12

frequently contain vague notes based on what they can remember from the few
months immediately prior to the review and may ignore the first half of the year
entirely. Not surprisingly, employees often find the review process to be demean-
ing and generally unpleasant. And many companies never use the results of the
reviews for anything at all. The forms go into a file, never to be seen again. Yet
these types of reviews were (and still are) used by lots and lots of companies.
How did we ever get to this point?

Technology constraints provide one explanation for the creation of ineffective
annual performance review processes. At some point in the past, business lead-
ers decided they wanted to consistently measure performance of employees so
they could reward high performers and address problems caused by underper-
formers. Paper forms were the best technology available at that time. The only
performance management process that could be effectively implemented using
paper was the annual review form. If companies had access to the online tools
that currently exist for measuring employee performance, it seems unlikely any-
one would have created the traditional paper-based annual performance review
process. For example, technology now provides tools that capture customer and
coworker comments about employee performance on an ongoing basis, allow
managers to go back and review employee performance against goals and proj-
ects assigned to them over the course of the year, and provide databases of con-
tent to help managers provide effective behaviorally based feedback. If these
tools were around fifty years ago the traditional paper-based performance review
would probably not exist today.

An analogy can be made to traditional HR methods such as the annual per-
formance review form and the QWERTY keyboard (QWERTY refers to how the
keys are ordered, starting with the upper left of the keyboard). The QWERTY
keyboard was created because of a technology constraint. It was designed to slow
down typing speed because early typewriters jammed if people typed too fast.
If computers had been available when keyboards were invented, the QWERTY
keyboard would never have been created. We use QWERTY keyboards not
because they work well with modern technology but because they worked well
with technology available 120 years ago. We continue to use them because they
are familiar even though other keyboard designs would significantly increase
our typing speed and accuracy.

The same is true for many traditional strategic HR processes. These processes
were not adopted because they were highly effective. They were adopted because

Why Read This Book? 13

they worked with the technology available at the time they were created. There
are many examples of this, such as using labor-intensive and inaccurate manual
reviews of résumés as the main process for screening candidates, trying to align
employee goals with corporate strategies using PowerPoint presentations and
Excel spreadsheets, and attempting to develop complex capabilities like global
team leadership primarily using classroom training. We finally have the technol-
ogy needed to replace or augment these obsolete practices with methods that are
far more effective. It is time to make this change.

Most of the strategic HR methods discussed in this book are based on well-
established and rigorously tested theories of employee psychology that are not
particularly new. But until we had better HR technology, we couldn’t effectively
use them on a widespread basis. HR technology has radically improved and gets
more powerful every year. This technology makes it possible to apply knowledge
gained from decades of scientific research on employee performance to radically
improve business results. It is just a matter of using this knowledge and technol-
ogy correctly.

HR technology also decreases administrative burdens associated with man-
aging talent, which frees HR professionals to focus on addressing business-rele-
vant issues. Instead of spending time asking people to “please fill out their talent
forms,” HR can use technology to gain insights and drive strategic discussions
around information contained in those forms. Technology systems enable HR
departments to shift their focus from administering processes to working with
business leaders to ensure these processes are supporting business needs.

Technology also allows HR to provide data and job aids to managers that
help them make better decisions about people. These tools help managers more
accurately evaluate employee performance and provide constructive, behavior-
ally based feedback to assist with employee development. Another benefit of HR
technology is the visibility it provides into whether managers are carrying out
basic management tasks such as setting employee goals and providing employee
feedback. One client told me that until her company implemented strategic HR
technology, it had no way to effectively measure whether managers were talking
to employees about performance at all, let alone whether they were doing it well.
The implementation of technology-based strategic HR processes made it possi-
ble to measure whether managers were practicing the most basic tasks associated
with managing employees: setting expectations, evaluating performance against
expectations, and providing feedback.

Commonsense Talent Management14

Strategic HR technology allows organizations to create processes that pro-
foundly improve how line managers run their businesses. This technology
enables HR leaders to change the role they play within companies. Thanks to
innovations in talent management technology, HR has now, perhaps for the first
time in its history, both the knowledge and the tools needed to play a true lead-
ership role in driving the execution of business strategies. The next step is for
HR leaders to take ownership of this role. We have the tools and knowledge; we
just need the courage and conviction to use them.

1.3 WHY THIS BOOK MATTERS
Work matters a lot. Where we work, our success at work, whom we work with,
how we work with them, whom we manage, and how we are managed by oth-
ers all have major impacts on our health, happiness, and financial success. When
used appropriately, HR processes improve both business performance and
employee satisfaction. This benefits everyone: employees, managers, leaders,
HR professionals, customers, and shareholders. Strategic HR processes can and
should play a central role in building better workplaces and, through this, creat-
ing a better world overall. But it is up to us to use these processes in a way that
matters.

NOTES
1. Collins, J. (2001). Good to great. New York: HarperBusiness.

2. Workforce Management (2008, April 7), p. 34.

3. Citations are included for passages where readers may wish more informa-
tion or research evidence beyond what is provided in the book itself.

4. Garr, S. S. (2013). The state of performance management: Performance
appraisal process benchmarks. Deloitte Development LLC.


Strategic HR
What It Is, Why It Is Important, and Why It
Is Often Difficult

T he War for Talent was an influential book published in 2001 that emphasized the growing impact that workforce quality
has on business performance

The book noted that “in 1900 only
17 percent of jobs required knowledge workers, now over 60 percent
do. . . As the economy becomes more knowledge based, the differ-
ential value of highly talented people continues to mount.”1 Since
that book appeared, the importance of attracting, hiring, develop-
ing, using, and retaining high-quality talent has steadily grown.
Business success is becoming less about having better business strat-
egies and more about having the talent to execute these strategies
effectively. Winning does not just come from knowing what to do; it
comes from doing it faster and better than everyone else.

A company that does not have employees who can support its strategies will
fail, no matter how good its strategies are. This realization that people are very
often the most important competitive differentiator is forcing organizations to
excel in three ways:

• Increasing employee performance. As skilled labor becomes scarcer, the
cost of qualified employees increases. Labor now accounts for more than

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Commonsense Talent Management16

60 percent of the operating cost in most companies.2 Companies must realize
a high level of return on the sizable investment that they make in people. This
means maximizing employee performance.

• Attracting, developing, and retaining high-performing employees. It is often
said that employees are a company’s most valuable asset. This is true if you
are talking about high-performing employees. These employees typically
generate three times or more revenue than average employees.3 But the
things that make employees high performers also make them a retention risk
(e.g., achievement orientation, marketable skills). Companies must be able to
both hire and keep high-performing talent to compete in the labor market.

• Identifying and addressing low-performing employees. High-performing
employees may be a company’s most valuable asset, but low-performing
employees can be a company’s most expensive liability. Low performers dam-
age the revenue stream, decrease the productivity of coworkers, and drive
away high-performing employees. Tolerating low performance drags down
company profitability, business growth, and employee morale.

The only way to meet these challenges is to ensure managers are:

1. Employing the right people: They hire employees who can effectively per-
form their jobs and will stay with the company long enough to justify the
cost of hiring them.

2. Focusing people on the right things: They make sure that employees are
working on things that support strategic business priorities and do not
spend time on activities that do not align with company needs.

3. Ensuring people do things the right way: They take steps so that high per-
formance is recognized and encouraged and poor performance is identi-
fied and addressed.

4. Giving people the right development: They provide employees with develop-
ment opportunities that enable them to perform their current roles more
effectively and progress into future roles that support the company’s long-
term business needs.

The purpose of strategic HR is to provide organizations with tools, knowl-
edge, and guidance that ensure these four things are being done in an effective
and consistent manner. I refer to these as the 4Rs of strategic HR: hire the right

Strategic HR 17

people, focus them on the right things, ensure they are doing things the right
way, and foster the right development.

2.1 THE FUNDAMENTAL PROCESSES OF STRATEGIC HR
Strategic HR is ultimately about maximizing workforce productivity. Workforce
productivity requires making sure a company has the employees it needs to sup-
port its business strategies and that these employees are performing their jobs
in a manner that supports the business needs of the organization. Strategic HR
increases workforce productivity by providing methods that help companies
find and place people in jobs where they will be effective (e.g., staffing, succes-
sion management), improve employees’ current job performance (e.g., by per-
formance management or training), and retain and develop employees over
time (e.g., through compensation and career development). The one thing that
links all strategic HR methods is a focus on predicting and increasing job per-
formance to ensure people are placed in roles where they will succeed, improve
productivity in current roles, and build capabilities needed for future roles.

Figure 2.1 illustrates the basic components of job performance and the fun-
damental strategic HR processes used to influence them. Increasing job perfor-
mance ultimately depends on managing three things:

• Goals that define the business outcomes associated with an employee’s job
(e.g., achieving sales quotas, minimizing accidents, maintaining productivity
levels, processing documents). Goals define the reason that a job exists. People
are employed to do something; goals clarify what they are employed to do.

• Competencies that describe behaviors that employees are expected to display
on the job—building relationships, planning and organizing, solving prob-
lems, and other activities that influence success or reflect important cultural
values of the company. People often distinguish goals from competencies
using the concept of “what versus how.” Goals define what a person is sup-
posed to do in the job, and competencies describe how they are expected
to do it.

• Attributes are characteristics of employees that are associated with job suc-
cess. They include qualifications (e.g., job experience, education, certifica-
tions), aptitudes (e.g., personality and ability traits), and interests (e.g., career
aspirations, salary preferences, work schedule expectations). Attributes define

Commonsense Talent Management18

who employees are in terms of their knowledge, skills, and abilities. The
attributes employees possess influence the competencies they display, which
determine the goals they can achieve.

The relationship of attributes, competencies, and goals can be summed up
as, “Who you are (attributes) influences how you act (competencies), which
determines what you achieve (goals).” Any effort to increase workforce pro-
ductivity must ultimately influence employee attributes, competencies, or goals
to be successful. All processes that increase employee performance, engage-
ment, retention, or any other variable associated with the productivity of indi-
vidual employees will at some point focus on aligning, clarifying, or developing
employee attributes, competencies, and goals.

There are four basic ways to influence employee attributes, competencies, and
goals, and they correspond to the 4Rs of strategic HR:

1. Hire the right people. Staff positions with employees whose personal attri-
butes match the competencies and goals associated with their jobs. This is

Competencies
Attributes

(Skills, Aptitudes,
Interests)

Right Development
Succession, Career
Planning, Training

Right People
Staffing, Promotions, and

Workforce Planning

Right Way
Performance Management
and Merit Compensation

Right Things
Goal Management and
Variable Compensation

How you act

Create learning through experience

Who you are

Goals

What you achieve

Figure 2.1
How Fundamental Strategic HR Processes Influence

Components of Job Performance and Examples of HR Methods
Associated with Each Process

Strategic HR 19

the primary focus of recruiting, workforce planning, and certain aspects of
succession management and compensation.

2. Focus employees on the right things. Clearly identify and communicate the
goals you want employees to achieve, and measure and reward employees
against these goals. This is the focus of goal management, goal-based com-
pensation, and variable pay.

3. Make sure people are doing their job the right way. Define the compe-
tencies employees must display to achieve their job goals or support the
desired company culture, and provide feedback and other resources that
encourage them to demonstrate these competencies. This is the primary
focus of performance management and merit-based compensation.

4. Provide job experiences and resources that drive the right development.
Create a work environment that helps employees develop the attributes
that influence competency performance and goal accomplishment. Put
people in jobs, assign them goals, and provide them with training and
learning resources that build their capabilities to more effectively per-
form their current role and progress into future job roles. This is the pri-
mary focus of career development and certain aspects of succession
management.

Right people, right things, right way, and right development: these are the
fundamental processes that define strategic HR. They roughly correspond with
the traditional talent management processes of staffing, goal management, per-
formance management, and succession management and career development.4
However, the 4R model is not based on human resources. It is based on the psy-
chology of employee behavior. These four processes reflect basic psychological
mechanisms that influence human performance: matching individual differences
to task demands (right people), focusing motivation and attention (right things),
providing feedback on behavior (right way), and enabling learning through
experience (right development). These mechanisms reflect elemental methods
for predicting and changing people’s behavior.

Because the 4R model is based on well-established psychological princi-
ples, it can be used to define strategic HR methods for any company as long as
it employs people (and I’ve yet to encounter a company that does not employ
at least one or two humans). The relative importance of the four factors will
change depending on a company’s business needs, but the basic structure of

Commonsense Talent Management20

the 4R model remains consistent across industries, cultures, and workforces.
Furthermore, the 4R model will be just as relevant for defining strategic HR fifty
years from now as it is today. Even if the concept of strategic HR disappears,
these four fundamental processes will continue to represent the basic mecha-
nisms for improving workforce productivity. This is because the 4R model is
rooted in basic human psychology. As I like to say, “People don’t evolve at the
same pace that business fads come and go.”

2.2 WHY DO WE NEED STRATEGIC HR DEPARTMENTS?
The 4R processes are given the label of “strategic HR” because they are typically
managed by HR departments. However, these processes must be used by line
managers and employees to be effective. The role of strategic HR departments
is to provide tools and methods that help leaders, managers, and employees
increase their productivity. The reason we need strategic HR departments is that
many managers struggle to manage people. Ideally, managers would excel at hir-
ing the right people, focusing them on the right things, and giving them the right
development without any help from a centralized HR function. But the world
is not ideal. Strategic HR departments play an important role in business per-
formance by designing and deploying processes to help managers do an effec-
tive job hiring, evaluating, rewarding, motivating, and developing the people
they manage.

The reasons we need strategic HR departments are similar to the reasons
we need financial departments. One could ask, “Why do we need finance and
accounting?” or “Why do companies force managers to keep track of budgets
and money under the guidance of a centralized finance department?” People are
likely to respond to these questions with two observations:

• Finance is a specialized area of expertise, and it is unrealistic to expect man-
agers to create effective accounting and budgeting processes on their own.

• Financial resources aren’t owned by managers; they are owned by the com-
pany, and managers are allowed to use them. As such, the organization
needs to create processes to ensure managers are allocating and using these
resources appropriately.

These are the same reasons that companies need strategic HR departments.
Strategic HR is a specialized area of expertise. Most managers do not fully

Strategic HR 21

understand how to effectively hire, evaluate, motivate, and develop employees.
Nor do managers “own” the talent in their departments. Employees are far too
costly a resource to risk being mishandled by managers who lack knowledge and
expertise in strategic HR methods.

2.3 WHAT MAKES STRATEGIC HR DIFFICULT
The goal of strategic HR is to help leaders and managers get the right people
in the right jobs doing the right things to make a business succeed. This goal
may sound straightforward, but it is often difficult to achieve. This is because it
involves helping managers master the often subtle art and science of predicting
and improving job performance. It also requires building processes that have a
powerful but often complex and indirect relationship to business outcomes.

One of the things that makes strategic HR challenging is that it requires fore-
casting and changing the day-to-day behavior of individual employees—for
example, predicting what someone is likely to do if she is put in a new job or
helping employees change their focus in order to support a new business strat-
egy. Predicting and influencing human behavior is difficult.5 The divorce rate
and weight-loss industries provide some sense of how hard it is for people to
predict and change their own behavior even when their personal health and
happiness are clearly at stake.

Being effective at strategic HR requires helping managers understand how
employees’ motives, abilities, and behaviors interact to influence business results.
Managers often ask themselves, “Why is that employee acting that way?” A man-
ager’s success is tied to the performance of his or her employees, so managers want
their employees to be productive. Even extremely incompetent managers usually
think that what they are doing is going to help increase employee performance.
The abusive manager who insults employees often thinks that this will make peo-
ple work harder.6 A major part of strategic HR is helping managers learn how to
effectively influence employee behavior and avoid practices that decrease produc-
tivity, and make sure that people who lack the talent needed to effectively manage
employees are not allowed to hold managerial positions. To achieve this goal, com-
panies need to evaluate managers based on how their actions affect the employees
they manage. This involves doing things like rewarding managers who attract and
promote high-performing employees into the organization and confronting man-
agers whose behavior causes employees to quit the company.

Commonsense Talent Management22

Another challenge to strategic HR is its often indirect relationship to business
results. Strategic HR practices, whether focused on staffing, compensation, per-
formance management, or career development, all share the same goal of getting
managers and employees to do things that support the company’s business strat-
egies and objectives. But HR practices do not affect employee behavior directly.
Employee behaviors are directly determined by attributes of the employees
themselves—their knowledge, attitudes, motives, and so on. These attributes are
a result of employees’ personalities, abilities, and values, combined with aspects
of their work environment such as incentives, resources, and their coworkers.
This is where strategic HR processes come into play. Strategic HR processes sup-
port the hiring of certain kinds of employees and the creation of certain kinds
of work environments. This increases the probability that employees will dis-
play behaviors that support the company’s strategic direction. Over time, these
behaviors lead to improved business results.

Aligning employee behaviors with a company’s business needs is where the
rubber meets the road in terms of strategic HR. But the indirect relationship
between strategic HR practices and business results increases the risk of creat-
ing strategic HR programs that sound good in principle but fail to effectively
influence employee behaviors. For example, a 360-degree survey feedback pro-
cess that works well in a company with a historically supportive and open cul-
ture might have negative consequences if used in a company with a less-trusting,
more cynical workforce.7 Or consider the example of pay for performance, a phi-
losophy that employees should receive different amounts of compensation based
on their level of job performance. It is rooted in a belief the people will be more
productive if they are paid for their results. But implementing a pay-for-per-
formance compensation structure does not directly lead to improved business
results.8 What it does is provide managers with tools to reward employees based
on goals that support the company’s strategy. This is done with the assumption
that employees will be motivated to display behaviors associated with achiev-
ing these goals. But this assumption may not be true. Pay for performance
will work only if (1) employees understand their goals, (2) employees see the
rewards as adequate incentive for pursuing these goals, (3) employees feel they
are capable of achieving the goals, and (4) the methods employees use to achieve
these goals support the needs of the business. If these conditions are not met,
then pay-for-performance programs may actually decrease workforce produc-
tivity by demotivating employees or encouraging counterproductive behaviors

Strategic HR 23

(see the discussion: “Why Paying Employees to Be Safe Can Be Unhealthy”). A
well-designed pay-for-performance process must take these factors into account
to ensure it motivates rather than alienates employees.

W H Y P A Y I N G E M P L O Y E E S T O B E S A F E C A N
B E U N H E A L T H Y

Pay-for-performance programs motivate employees by providing finan-

cial rewards based on achieving specific goals or outcomes. If used

correctly, these programs have been shown to significantly increase

employee productivity.a However, they can create significant problems

for organizations if they are not carefully thought through. One exam-

ple comes from efforts to use pay for performance to reduce workplace

accidents and injuries.

To encourage safe behavior, some manufacturing plants have given

employees bonuses if there were no accidents or injuries during a cer-

tain period of time—for example, paying a bonus to employees for

every week that passed without any accidents. When companies used

this approach, they discovered that accident rates did not necessarily

go down; what did decrease was employees’ willingness to report acci-

dents. Rather than reporting accidents, employees would hide them so

they could achieve their bonuses. Plant managers have told me about

employees who continued to work with severe injuries, even a broken

leg, because they did not want to file an accident report. The employ-

ees did not feel they could effectively control accident rates, so they

found another way to achieve the rewards.

The lesson to be learned is you often get what you pay for, but what

you pay for may not actually be what you want.

aPeterson, S. J., & Luthan, F. (2006). The impact of financial and nonfinancial incentives on business-
unit outcomes over time. Journal of Applied Psychology, 91, 156–165.

The ability to influence employee behavior makes strategic HR a highly effec-
tive method for driving business results. Small changes in employee behavior can
have massive impacts on business performance.9 But the behavior of employees
can be difficult to understand, and the factors that underlie employee behavior

Commonsense Talent Management24

are rarely simple. As a result, it can be difficult to determine exactly how well a
strategic HR process is likely to work. Care is needed to ensure that strategic HR
processes are designed and deployed in a manner that will have the desired effect
on employee behavior.

2.4 CONCLUSION
Being effective at strategic HR processes requires understanding the basic fac-
tors that influence employee performance, designing HR processes based on
how employees truly behave, and recognizing and accepting that this may be
quite different from how we might wish they would behave. It requires looking
at strategic HR methods from the combined perspective of the business, the HR
field, and the field of employee psychology. Strategic HR demands an apprecia-
tion of employee psychology beyond what it is reasonable to expect most manag-
ers to have. At the same time, it requires creating processes that enable managers
to effectively predict and change employee behavior within their work environ-
ment, reward managers who do this well, and address managers whose actions
have a negative impact on overall workforce productivity.

What makes strategic HR difficult is the need to think through all of these
factors when designing and deploying strategic HR methods. This may seem like
a lot. But as we will see, it is not overly complicated provided you understand
and work through some basic steps and concepts before implementing new stra-
tegic HR methods in your organization.

NOTES
1. Michaels, E., Hanfield-Jones, H., & Axelrod, B. (2001). The war for talent.

Boston: Harvard Business School Press, p. 1.

2. Huselid, M. A., Becker, B. E., & Beatty, R. W. (2005). The workforce score-
card: Managing human capital to execute strategy. Boston: Harvard
Business School Press.

3. Boudreau, J. W. (1991). Utility analysis in human resource management
decisions. In M. D. Dunnette & L. M. Hough (Eds.), Handbook of indus-
trial and organizational psychology (2nd ed., Vol. 2, pp. 621–745). Palo
Alto, CA: Consulting Psychologists Press. Fitz-Enz, J. (2000). The ROI of
human capital: Measuring the economic value of employee performance.
New York: AMACOM.

Strategic HR 25

4. You might wonder where processes focused on increasing performance
of teams or changing organizational cultures fit into these four processes.
Each of these four processes can be implemented with a focus on groups
instead of individuals. For example, team-building exercises can be con-
sidered group-oriented approaches associated with “doing things the
right way” and “giving employees the right development.” There are cer-
tainly differences in how processes are designed when they are focused
on groups. But since groups are made up of individuals, most things that
influence individual behavior have parallels to things that influence group
behavior (e.g., member goals, member attributes, behavioral feedback).

5. Ackerman, P. L., & Humphreys, L. G. (1990). Individual differences theory in
industrial and organizational psychology. In M. D. Dunnette & L. M. Hough
(Eds.), Handbook of industrial and organizational psychology (pp. 223–
282). Palo Alto, CA: Consulting Psychologists Press. Hunt, S. T. (2007).
Hiring success: The art and science of staffing assessment and employee selec-
tion. San Francisco: Jossey-Bass.

6. Sutton, R. I. (2007). The no asshole rule: Building a civilized workplace and
surviving one that isn’t. New York: Business Plus.

7. Morgeson, F. P., Mumford, T. V., & Campion, M. A. (2005). Coming
full circle: Using research and practice to address 27 questions about
360-degree feedback programs. Consulting Psychology Journal: Practice
and Research, 57(3), 196–209.

8. Schaubroeck, J., Shaw, J. D., Duffy, M. K., & Mitra, A. (2008). An under-
met and over-met expectations model of employee reactions to merit
raises. Journal of Applied Psychology, 93(2), 424–434.

9. Hunt, S. T. (2007). Hiring success: The art and science of staffing assessment
and employee selection. San Francisco: Pfeiffer.

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