Easy Ways to Make HR Strategic

A long-running debate within Human Resources has been “how can we make HR strategic?”. Often this is linked with another navel-gazing debate within the function, “how can HR get represented at Board level?”.

Many HR practitioners claim they have succeeded on the strategy issue. They claim they have an HR strategy, and it has been approved by the Board, so they are now “strategic HR”.  Casting my jaded cynical eye of some of the approaches used, it seems there are several easy ways to get strategic.

Motherhood and Apple Pie.

Undoubtedly the most popular approach is to put out a document describing your HR philosophy and policies, and call it your People Strategy or Human Resource Strategy. A quick internet search will give you examples; universities seem particularly keen on this approach. This is a good way to reassure current and potential employees that you are nice guys, recruiting the best people for your organisation, allowing them to achieve their potential by providing career development and training, promoting equality and fairness.  

This approach does no harm, and is very useful promotion for the work of the HR Department. Unfortunately, even if it has been approved at Board level and has a nice introduction from the CEO, it isn’t strategic.

Provide enablers.

 At one level, this route to strategic HR status does appear to link HR initiatives to the business strategy. You get senior management to agree that they can’t achieve their business strategy without this vital latest thing from HR. For example, they cannot achieve their business strategy if employees are not performing, so our new performance management system must be strategic. After all, it’s now Part Of The Strategy.

You might be satisfied with that, but I am not. The enabler you have provided is a bolt-on extra to any business strategy of any organisation. It is as useful as your Facilities Department’s contribution to the IT strategy; computers need electricity, so we will ensure the supply of electricity. The IT strategy would be rendered useless without electricity, but consider an IT Director wrestling with the intellectual challenge of what systems to choose to support the business plan. He or she is not greatly helped by hearing that the electricity bill is paid, and there’s a back-up generator in the car park.   

Everything is strategic now. 

Particularly if you have a motherhood- and- apple- pie HR strategy and you have attached it to whatever business strategy they have gone with, there’s still one more easy thing to do; call everything strategic. Label things strategic and people will be impressed, just like in the Marks and Spencer adverts.  “This isn’t just a Management Development Course; it’s a Strategic Management Development Course.” ( for non-UK readers who haven’t seen these adverts http://www.tellyads.com/show_movie.php?filename=TA3444 )

Most strategies can be summarised in a few points. Some can even be summed up in a phrase, such as “pile them high and sell them cheap”, “shoot and scoot”, etc. A mass of HR people referring to their 110-point, 27-page strategy document is not strategic: it is an exercise in mis-naming the tactical, operational and possibly trivial. 

So, what is Strategic HR?

The only real HR strategy is the plan to manage the employment aspects of the business strategy, and some of those are not for public, or wide internal, consumption.  What changes to the workforce are integral to this organisation’s specific business strategy? For example, if the business is going to change its core technology, will it be better to retrain the existing workforce, or replace them with recruits who already have the new skills?   Or perhaps the business strategy calls for significant cost reductions, and one of the “people” options is significant off-shoring to cheaper labour markets.   

Many HR leaders would shy away from options that will be seen as a threat to the current workforce. HR people try to position themselves as the moderates who soften the blow, by providing retraining, or a caring redundancy / re-employment / outplacement service. The negative impact on the current workforce was caused by the decision made by “the Board” or “Senior management” or “line management” – but not us.

For HR to be strategic, (and to get a seat on the Board, if that’s important to you) HR people have to join in with the rough stuff, if necessary. That does not mean just understanding other business functions such as finance and marketing. Senior management don’t want you to be an amateur accountant or marketer, they need you to generate the options on the people side of the business. The effective options might include the tough ones.  Do most HR practitioners really want to play with the big boys?   

(If your sensibilities can cope with more of this stuff, read the companion article "Another way to make Human Resources strategic".) 

Employment marketing in the recession

It is over four years since the Lehman Brother’s collapse kicked off the global financial crisis, with its variants including credit crunch, double-dip recession, fiscal cliff and Eurozone crisis.   HR’s strategic response to the changed labour market has parallels to how a marketing director might react to a slump in the market for the company’s products.

Faced with declining consumer spend,  a major marketing decision is whether to keep the selling price high, and accept a lower volume of sales, or to reduce the price to defend volume of sales and market share. The most urgent task at the beginning of the recession was to reduce costs, including labour costs. Some organisations took the option chosen in previous recessions of making some employees redundant. That is the equivalent of the “defend the margin, but lose market share” option.  A distinct trend in this recession is that many companies have opted for spreading the agony wide and thin, and tried to find ways of retaining skills. That might have been by requiring full-time staff to accept part-time contracts to avoid redundancy and freezing the pay of all staff.

Bearing in mind how the power in the recruitment market has swung from jobseekers to employers in this recession, many organisations are finding ways of hiring lower cost labour. The growth of internships, either low-paid or unpaid, is an effect of the continuing recession. “Modern apprenticeships” offer 18 year old entrants an hourly rate that is half of the National Minimum Wage. A distinct “prospects cliff” has emerged between those who entered the labour market before September 2008 and their younger brothers and sisters. With almost a million 16-24 year olds unemployed in the UK, advertising an unpaid internship attracts a big response of over-qualified candidates desperate for work experience.

It is not a straightforward choice to exploit market conditions to obtain cheaper labour. As with a marketing director being mindful of the company’s reputation in the long term, the HR director needs to consider the impact on other stakeholders.  The introduction of internships and apprenticeships into a workforce might be seen as a positive contribution in tackling youth unemployment or as exploitation of the young as cheap labour. What decides the issue is how the permanent workforce is being treated. If they feel relatively secure, they are more likely to see it as a positive move. If they are not secure, they will see it as a threat of being replaced by someone cheaper.  There are limits to what internal PR can achieve here – you employ intelligent people, and they know when they are being shafted.

In the UK, whilst recorded unemployment is high employment numbers are also high. The headline figure showing high employment levels hide a large element of underemployment. Individuals are employed, but often working fewer hours than they would like to.

John Philpott, director of thejobseconomist consultancy and an expert on unemployment, said that of the 212,000 jobs created in the latest quarter, one in three were mini-jobs of fewer than 15 hours work a week and more than half (54%) provided fewer than 30 hours (The Guardian, 18/10/2012)

In a similar vein, let me give you some good news, and some bad news.

“Britain is heading for a fifth year of falling living standards, with official figures showing a decline in average earnings growth last year from 1.7% to 1.4%.

Unemployment fell and the number of people in work reached a record level in the three months to last November, but employers kept a lid on pay rises.”

They were adjacent paragraphs in the same article -  www.guardian.co.uk/business/2013/jan/23/unemployment-rate-fell

This phenomenon is a combination of organisations opting to spread the agony wide and thin, and individuals desperately trying to keep employed, even if underemployed.  Ironically, the villain of the story, the finance sector, is taking the other approach – dump some, but still pay big money to the survivors! 

Inevitably, coping with the continuing recession has forced many employers to take tough decisions with painful consequences.  Using marketing as a model for HR can generate strategies for changing the workforce to meet new and difficult market circumstances. For many HR practitioners, they do not want to initiate changes that might adversely affect the current workforce. It is easier to say that the bad news was caused by “a line management decision” or “a senior management decision” rather than an idea generated in HR. Despite all the talk of HR being strategic and deserving a seat on the Board, that cannot be achieved by shrinking away from the business decision. If you want to be strategic, take the lead in the hard stuff, not just the easy stuff.

    

Employment Marketing Review of the Year

I have had this blog for a year, and this is an overview showing how my blogs build up a model of employment marketing. It’s also the season when everyone else is doing a Review of the Year.

The earliest articles, “What is Employment Marketing?” (Dec 2011) and “How marketing can sell your personnel product” (Jan) are blog versions of articles I had published in the mid-1990’s. These outline the idea that in HR we are marketing employment, and so marketing provides a model for everything we do.

The next January blog, “We have already got Employer Branding – isn’t that enough?” explored the difference between employment marketing and employer branding. Most HR people seem to see branding and marketing as synonymous, which is incorrect. The final January blog “What role does branding play in Employment Marketing?” explores the difference further, and analyses the different kinds of purchasing decision a consumer makes.

The early blogs had all been fairly theoretical, so February’s blog, “Solving HR problems using Employment Marketing” illustrated how employment marketing can be used on a practical tactical level.

March’s blog “What is the product behind the Employer brand?” examined the issue of the size of the employment product. For those of you who have only encountered employer branding so far, the concept of an employment product might be unfamiliar. The idea that such products could be of different sizes will probably be alien. Essentially, it comes down to whether you are selling careers within an organisation, or jobs that will form an episode in someone’s career. 

The May blog, “Was that HR ad sexist?” picked up on a job advertisement that had provoked considerable debate in the CIPD Member LinkedIn discussion group. As my blog article had a wider scope than the just sexist adverts, I republished the blog in October under the title “Targeting a segment, or indirect discrimination?”

Many articles about employer branding assume every HR person is working in a large corporation, and is aspiring to build a brand as well-known as Google. June’s blog “Too small for an employer brand?” shows how employment marketing can be used in any size of organisation.

July’s blog “”Internal recruitment” or Internal recruitment” is a little diversion away from employment marketing, trying to restore the correct use of the term. Agency recruiters will be offended, but most of them deserve to be.

For years HR people have been bleating that they are not taken seriously by organisations, and that HR must become strategic. September’s ironically- entitled “Easy ways to make HR strategic” pops a few balloons in describing some of the vacuous ways some HR people try to appear strategic. In November, I realised I had missed a favourite route to instant strategy, hence “Another way to make Human Resources strategic”.

For 2013, I plan to do more blogs on the practical application of marketing techniques to HR problems, employment marketing in a recession, and the irrelevance of brand management to the employer brand. I will continue to throw sticks into the spokes of any HR bandwagons that come too close, and will enjoy doing so.

Another way to make Human Resources strategic.

In my recent blog “Easy ways to make HR strategic” I forgot about another popular route to instant strategic Nirvana.

Get rid of the low-level activity.

This one has been a best seller with HR since the 1990’s. It’s ineffective, and irritates our colleagues intensely, but it will impress other HR people.  You look at the time-consuming routine activities of the HR department, and push them onto line managers. This move is often accompanied by earnest declarations that the task is line management’s responsibility anyway, and HR should never have taken it on in the first place.

Having dumped it on the line managers, you can now declare that you have freed up your time to concentrate on the strategic issues. It’s that simple!

In practice, it is not that simple. Let’s take sickness records as an example. You transfer that over to the line, give them some training in how to do return-to-work interviews, show them the forms, and retreat to HR to be Strategic. Six months later, some managers complain to you that they have some employees with high absence levels, and ask you to help them with a review meeting. As a first step, you ask to see the sickness record and surprise, surprise, they have stopped recording sickness absence.  You can’t help them. A year after the change, the CEO asks whether sickness absence has risen or fallen since transfer of responsibility to the line. You have no evidence to base your answer on, which will make you look incompetent, rather than strategic.

The low-level routine activity is the base of a pyramid. On top of the routine transaction of recording sickness absences ( or doing first round interviews in recruitment, or advice on employment conditions, etc) is a level of reporting and professional service. That might be advising managers on trends and employment costs, or helping managers with difficult cases. Above the level of those advising and reporting services, you can look at the bigger picture, and advise on policy. Taking away the base of the pyramid does not make the apex any higher.

If this strategy was a useful way to get strategic, what have other professional disciplines in the organisation done? They might constantly find ways of doing the low level routine more efficiently, but there always seems to be a hierarchy from strategic, through tactical, down to transactional. In Finance, the strategic issues might be about securing long-term finance, and measuring return on capital. So has the Finance Director got rid of most of his department, and pushed responsibility for cash collection, audit and treasury out to the line managers? Probably not! There is still a hierarchy of activity, with the strategic thinking at the top, supported advisory levels of management accounts, Sarbanes-Oxley compliance, audit, etc in the middle, and a lot of invoice-processing and expense claim checking at the bottom.

You will find a similar hierarchy in Marketing, with the Marketing Director occasionally thinking about “what business should we be in”, but with a department doing a lot of running small promotions and drafting press releases underneath.

This is not the road to instant strategy, but could make it easy to replace in-house HR with an occasional visit from an external HR consultant. I suggest you look at “Easy ways to make HR strategic” to find an alternative.       

Targeting a segment or indirect discrimination?

(This article appeared as my blog of 20 May 2012 under the title “Was that HR ad sexist?” The scope is much wider than sexism in advertising, so I have decided to republish under a different title. Apologies if you read the original posting, and are feeling a bit short-changed.)

 A long-running debate on the “CIPD member” Linked In form was prompted by a recruitment ad for  HR jobs that showed the above image of a man ripping his shirt open to reveal a super-hero costume underneath, with “HR” instead of a Superman logo. The text had jokey references to super- hero powers and wearing your underpants over your normal clothes.  (See the original advertisement at http://www.woodgroup-psn.com/careers/hr-hero.aspx. )

Overall opinion seemed to favour seeing the ad as an innocent use of humour, rather than intentionally sexist. The whole debate prompted another question to me; “Is targeting a sector of the labour market legitimate marketing, or indirect discrimination?”

In the UK, the law allows employers to advertise jobs in media that might be read by minority groups, if these are under-represented in your workforce. But with that limited exception, the law assumes that all other aspects of recruitment, and more importantly, employment will be on a non-discriminatory basis. Leading on from that, is there any scope for legitimate targeting of certain demographic groups that could not be viewed as discrimination?

If you have read any other of my blogs on employment marketing, you will know that the marketing of employment is a much wider topic that employer branding in recruitment.  We will use benefits policy as a starting point. Let’s assume I am in the lucky position of being able to improve the benefits package for the employees. I’ve considered the available budget, and have a choice of two initiatives to propose to senior management:-

a)      We offer free gym membership, and a “pick your own device” policy on business mobiles, allowing them to choose i-Phones, android phones, Blackberrys, etc.  OR

b)      We increase the employer contribution to the pension scheme by 1.5% of salary.

Whichever option we go for will be available to the whole workforce, but which demographic group is going to favour which? The first option is targeted to appeal to a younger age group, the pension improvement targets the older worker. If my company was operating a flexible benefits scheme there would be no problem, but assume we do not have that means of avoiding the problem.

It seems logical to choose the benefits to suit the workforce you have got. Look at the age profile, and if you have lots of young employees, go for the gym-and-phone package. If you have lots of middle-aged and older employees, the pension improvement would be welcomed. But does that approach then become a self-fulfilling prophecy? If you have a benefits policy geared to the needs of one age group, it becomes easier to recruit and retain that age group, and makes your employment product less appealing to the other.

There is probably a similar dichotomy on maternity and childcare provision between sectors that traditionally employ a high proportion of women, such as publishing and healthcare, and those that traditionally employ a low proportion of women, such as engineering. Organisations in the former sectors are likely to offer enhanced childcare and maternity benefits, whilst those in the latter are more likely to offer only the statutory minima.

Whilst most organisations will claim that they are keen to attract applicants from all sectors of the population, it will take a bigger commitment of resources to offer employment policies and benefits that would appeal to the groups that an organisation has not historically catered for. You might feel that the factors determining which demographic groups are attracted to you industry is beyond your control, and so just gear your policies to the existing workforce. ( “ Nursing will always appeal to women more than men” “Web design is a young person’s game”). It is possible to break out of the self-fulfilling prophecy, but you can’t tinker around at the edges. For example, Ford (UK) and Jaguar / Land Rover both offer a year on full pay to women taking maternity leave, a generous improvement on the UK’s statutory 6 weeks at 90% earnings, then 33 weeks on the statutory £135.45.    

Another example of targeting a sector of the workforce that has made recent news is the nationality of who serves your coffee. The Mayor of London, Boris Johnson recently complained that British workers were not getting jobs in coffee shops and those companies should do more to attract local workers ( http://www.telegraph.co.uk/news/politics/9249748/Why-do-foreigners-get-all-the-jobs-asks-Boris-Johnson.html ).

At about the same time, Pret a Manger, the coffee and sandwiches chain were publicising their recruitment and selection procedures. (http://www.peoplemanagement.co.uk/pm/articles/2002/05/6749.htm ) Most of these were sound robust and fair; competency-based interviews, and an on-the-job experience day, but the final selection process is a ballot by the existing team members. The branch manager cannot over-ride that decision. I think there might be a possibility that teams might be tempted to base “compatibility” on similarity of national or ethnic background.

I am not advocating that organisations should use targeting to exclude any particular demographic group, nor accusing any particular companies of doing so. Targeting your employment product to meet the needs of certain groups is essential to maximise your success in recruiting and retaining them. I think the principled way to use it is to define the target group initially and fundamentally by the skills that they have which your organisation needs.  If that group would prefer gym membership to a higher pension contribution from the company, then you need to respond to their priorities

“Internal recruitment” or internal recruitment?

Recently I had an (relatively) interesting ‘ phone conversation with an agency recruiter who was offering his services for one of our vacancies.

Me: “I am not using agencies on this one. I’m sure we will get a good response to our ad.”

Agency recruiter: “Oh, so you are filling it internally then.”

Me: “No, not internally. We will be appointing an external candidate, but one we have found ourselves.”

Agency recruiter: “That’s what I mean. You are recruiting internally.”

 I explained to him that internal recruitment is when we only advertise a job to our own employees, and appoint one of them. Despite the explanation, I am sure he will persist in referring to an organisation’s direct recruitment as “internal recruitment”.

Why does this matter?

The recruitment industry’s misuse of the term “internal recruitment” is harming the brand of all employers, in the eyes of some jobseekers. If you look on internet forums used by candidates, you will frequently find them complaining about employers who they believe have falsely advertised vacancies that were always intended to be given to an internal candidate. Invariably, “role filled internally” is an explanation given to them by an agency recruiter. Agency recruiters will not give the real explanation “role filled by the company’s HR department appointing an external candidate directly. You should have applied via their website, instead of through this agency”

 Why do recruitment agencies want to muddy the water by describing direct recruitment as internal recruitment?

Agencies want to keep candidates who have registered them as their ”stock”. To do this, they want to give those people the impression that they are the only recruitment channel into the organisation with a vacancy.  They will say they have been retained by the client company, even if they are one of a number of agencies that the company is using, or even if they are just submitting c.v.’s speculatively. There are agencies that will put details of positions on their websites that they have ripped off the employing company’s website without permission. They then hope to sell one of these “kidnapped” candidates to the employing company.

 How do companies see it?

As a company recruiter, what is my order of preference of the various recruitment channels? If there is a plentiful supply of candidates, my preference is to advertise directly, whether through the company website, job boards, LinkedIn or press advertising. I am then dealing directly with candidates, and finding them at lowest cost. If suitable candidates are harder to find, I will use agencies on a contingency basis, alongside direct advertising. I only do that to widen our access to  suitable candidates. Only in the case of a very specialist and/or very senior position would I put it with an executive search company, and not advertise direct.

As that is the choice of recruitment channels, where does internal recruitment fit in? In most companies I have worked for, where we had just one employee who is being promoted to a particular role, we would just appoint. Admittedly, some organisations advertise all roles as a matter of policy. Personally, if the organisation was advertising purely to technically comply with a policy, I would not contact a recruitment agency. Why not just put it on your website for a few days?

 Where we are genuinely recruiting internally, that is to say restricting applications to existing employees, there would be no external advertising and no agencies contacted. The most frequent situation is that current employees can apply to vacancies that are being advertised externally, and compete against external candidates on their own merits. If the internal candidate is successful, it is wrong to conclude that it was a bogus exercise, and the result a foregone conclusion.  

What should candidates do?

If you meet an organisation’s advertised requirements, and you want to work for them, apply direct. If you rely on an agency to submit your details to the organisation, that puts a price tag on your resume equivalent to 20% of the starting salary. Remember that the agency recruiters are not working to find you a job, neither are they working to fill my vacancies – they are working to get a fee.

Recruiting recruiters.

I think employers should reclaim the job title “internal recruiter”, which should only be used for roles that primarily involve genuine internal recruitment. There would be a very small number of those, found only in large organisations.

Many job boards and agencies specialising in HR staff refer to company recruiters as “internal recruiters”.  If you are recruiting an recruitment specialist, do not encourage them by using the phrase “internal recruiter”. Company recruiters are the real recruiters, as we actually offer the employment. Agency recruiters are just intermediaries. (And that's probably a kinder description than they usually get).   

Too small for an employer brand?

“Get an employer brand, and become the employer of first choice” That’s what everyone in HR is being told, either by the academics, or by the consultancies who specialise in employer branding. But how much resource should your organisation put into building a brand?

Is every organisation trying to be the first choice employer of the whole working population? If you are Smalltown Widget Co. are you going to get an employer brand that rivals Google? Obviously not. You need to keep a good reputation in your particular labour market, and you need to attract an adequate source of good candidates to fill your vacancies.

Most consultancies that claim to be employer branding experts focus on the visual aspects of what applicants to your company might see; logos, strap-lines, job ads and the look and feel of your website’s recruitment page.  As explained in my January blog “What role does branding play in Employment Marketing? ”, these are peripheral issues in the marketing of employment.

The most important part of getting marketing right is to have a clear definition of your target market. You can then work on getting the right marketing mix of product, price, place and promotion that will appeal to that market. For most employers, and particularly if you are a small organisation, the most important of those is the product – the job. What will they be doing in the job? What aspects of that will provide your target market with job satisfaction?  If you have not got that right, it is difficult to attract and retain employees purely through price (remuneration), place or promotion (recruitment channels and employer brand.)

Little and Large.

Big organisations often want to put less emphasis on particular jobs in their marketing, preferring to stress the wide range of career possibilities that the organisation can provide. An employer brand approach suits such organisations, and they have considerable resource to put into the brand. Often the employer branding effort will piggy-back on the strength of the company’s product/service brand.

But if you are an SME, how much effort can you usefully put into branding? I currently work for a company whose total headcount is just over 200 people. With turnover and some modest expansion, in the last two years we have needed to recruit 30 people a year. Most of those positions were in London, but some were in China, India and the US. Most of the positions were for market analysts.  We need to recruit very smart graduates, usually in economics, with excellent writing skills. This means our employment marketing objectives are to secure a reliable source of good recruits, maintain a good reputation in our specialist field, and to stay competitive in a market with about half a dozen direct competitors.  I do not need to get the company name known by the general public. I do not need to make our company the first choice for every profession from actuaries to zookeepers. I do not need a brand as recognisable as Google or Nike.  

The Corner Shop.

I think any theoretical framework for Human Resources should be universally applicable to all organisations that employ people. And for me, a marketing framework for HR meets that criterion.   I can illustrate that with my Corner Shop Exercise. (For American readers, the Neighbourhood Convenience Store Exercise).

Imagine you run a small neighbourhood general shop. Profit margins are tight, but you decide you really must hire some extra help for a few hours mid-week, whilst you go to the warehouse to buy stock, and then unload, and sort stock in your storeroom.  The employment product will therefore be “taking payment for goods, bagging the purchases, making sure the local kids don’t steal stuff”.  This job could be done late afternoon / early evening, a 3 hour shift on two mid-week days. Who is your target market? Most people I have tried this exercise on will at this stage be favouring senior school students as the target market; cheap, available, need the pocket money, but sensible enough to be left in charge of the shop. How and where will you advertise? Your target market will be very local – will it need any more than a home-made poster in your shop window?  And how much do you think you will pay?

On a small scale, you have just constructed a marketing mix; product, place, price and promotion to suit the segment of the labour market that you need for your business. Then you remember that you sell alcohol, and that licensing laws require that anyone selling alcohol should be over 18 years old. Perhaps you need to consider other segments of the (very) local labour market as the potential source of your assistant, such as stay-at-home mums, and people who have retired from full-time work. You will have to pay them more than a 16-year old.

Now we have demonstrated that a change in the employment product caused you to change your target market, and adjust your pricing to suit. The principles of marketing applied even to this scale of operation: branding did not.  

Update: On Tuesday I attended a presentation on employee engagement and retention. The speaker had lots of useful information on what employees' priorities are, how employers could retain staff, etc. The audience were mostly SME's from media and publishing sectors. When the speaker came to the topic of employer brand, she suggested that we should try to compete with Google, Apple and Virgin. If only it were that simple!