Using Figure 2.1 on page 18 of your textbook, describe how to utilize the model to attract, develop, and retain high-performing employees. Recommendation, target employees that will be used to populate your Capstone firm (See Week 1 Assignment). Support your post with at least one current and relevant article from the Ashford Library database. Present your findings in 200 words or more in your discussion post. Respond to at least two of your classmates’ posts
15
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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
T W O
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 17:12:28.
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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
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 17:12:28.
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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
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.
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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
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.
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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
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 17:12:28.
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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
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 17:12:28.
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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.
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.
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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
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 17:12:28.
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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
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.
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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.
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.
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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.
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.
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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.
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