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Maximizing HR Contributions To Company Success

By Paul Kirincich and Paul Minton
Contributed by Pinnacle Strategy Group




If a member of the Board of Directors of your company asks the CEO what contributions Human Resources makes directly to the long-term success of the business, what would the CEO say?

Regardless of what he/she would say, the reality can be several different things:

  • HR is a basic service organization that meets the requirements of the business, but makes no meaningful contribution to company strategies.  “They just help us hire, fire and administer benefits.”  In this scenario, HR is not strategic.

  • HR perceives itself to be strategic but is not perceived that way by internal customers.  Despite the best efforts of HR management, the perception is that HR is perceived as a basic service organization.

  • Management uses parts of HR strategic capabilities, and has loosely formed perceptions of HR as more than a service organization.

  • HR is “best in class”.  It is a strategic partner to the CEO and the rest of the executive team, and is a key contributor to the success of the business.

In all cases, what will your department need to look like tomorrow, and does it resemble that today?

Which statement applies to your HR department? 

The scenarios described prevail in the best business environments.  As a result of the weakness and uncertainty in today’s economy, the ground is soft and shifting.  Even best in class HR departments may find their activities falling out of alignment with corporate goals.  The solution in all cases is to:

  • Line up tightly with what the company is trying to accomplish.

  • Pursue activities most highly valued by your internal customers in pursuit of their own goals.

  • Describe your contributions in the language of the company’s core business and convince your internal customers and the CEO that HR is a strategic contributor.

  • Link your contributions to the firm’s strategies, goals and measurable financial results.

As a result, HR will become a more strategic contributor, and make recognizable contributions to overcoming competition.  How is this accomplished?  Through a simple internal strategic planning process at the departmental level that borrows techniques from corporate strategic planning.

What Strategic Planning Will Do For HR

Let’s reexamine the scenarios we described above.

Basic Service Organization

If HR is a basic service organization within your company, is that all it needs to be?  If that is the case, strategic planning can make it a more lean and efficient organization by focusing on activities valued most highly by internal customers.  However, if HR is not strategic, it’s probably not doing all it can to advance the company’s prospects.  Understanding corporate goals and internal customers, HR can become strategic by emphasizing activities that allow the business to be more competitive and successful, and communicating its plan to executives and other internal customers in terms that are consistent with the overall corporate plan.

Perception Issues

When HR perceives itself to be strategic but is not seen that way by its customers, one of two conditions can prevail:

  • HR is not doing the right things.

  • Customers do not appreciate HR contributions to company success and underutilize its services.

In both cases, HR must understand its customers better.  Either it does not understand and as a result is not delivering the right mix and quality of services, or it is not marketing its services properly.  As do corporations and marketing departments, HR must analyze their customers in a systematic way and incorporate the analysis into changes to what they do.  All that is often required is crisp communication of HR’s role in the company as expressed in the language of its core business.

More Than A Service Organization

Where HR is perceived as more than a service organization but not as truly strategic, it’s likely that planning efforts are going in the right direction but partially missing the mark.  This can happen in the best of times, but is more likely to occur during today’s downturn when corporate priorities have changed, and budgets are reduced. 

Planning is required to realign activities and allocate reduced resources.  A fresh look at customer priorities that strategic planning brings is necessary.

Best in Class

HR departments that are best in class usually get that way through a thoughtful understanding of corporate strategies and well-planned activities.  Unfortunately, a lot has changed in the last 18 months and it is likely that corporate strategies have changed.  Has your HR department adapted beyond reducing its budget?  Given that fundamental changes have taken place at a corporate level, HR has to reexamine its competitive position as well.

Most clients that we work with now have gone through workforce reductions.  Formerly very competent HR departments struggle to adapt to the change in environment where the primary concern before was keeping the organization fully staffed, and now are reducing headcount and maintaining morale.  In addition, HR is under pressure to make cost saving changes by doing things like altering employee benefits while maintaining morale.  Taking a short break from day-to-day responsibilities with your team to plan your activities will reap immense rewards.

The Process of Departmental Strategic Planning

How do you conduct a planning process that minimizes the burden on your staff, while making the best use of their knowledge and experience, and securing their strongest commitment to execution?

The answer is through a simple, well-conceived process involving your managers with two to three days of commitment to group activities, and “homework” that they take away and can complete with the assistance of their staffs.  While large HR consultants will come in and promise to deliver results, the cost you bear for their services goes well beyond their fees.  They include the risks that they don’t properly understand your business, and that your people will not “buy-in” to their recommendations and thus fail to successfully implement a new plan.  The road behind big consulting firms is littered with unexecuted strategies.

We recommend a simple process that consists of team meetings that should yield a completed plan within 60 days.  The steps are:

  1. Business Role Determination

  2. Services Scope

  3. Customer Profiling

  4. Evaluation

  5. Strategy Formulation

  6. Budget and Action Plan Development

  7. Monitoring

Developing The Plan

Process Leadership Designation and Team Selection

To succeed with a planning process similar to what follows, you have to designate leadership.  The most obvious choice is the head of HR.  An alternative, which allows the head of the group to participate more completely in the thinking needed the go through the planning process, is to designate someone from outside to lead the process.  Two candidates are the overall head of the company’s strategic planning effort, if such a person exists, or an outsider who has familiarity with leading planning teams.

The team you choose should consist of no more than four managers of the HR organizations and, if possible, participation from the company’s head of strategic planning or some equivalent who can represent the overall company strategy.  Absent such a person, the head of HR should represent the company’s point-of-view. 

Building the right team requires balancing inclusiveness and thus commitment to execution and adequate input, with the risk of bureaucratizing the process.  If you include too many participants you will slow proceedings down to a point where participants get frustrated, and work is not completed on a timely basis or at all.  No matter whom you choose to include, make sure they are:

  • Prepared to make a commitment in time and effort to complete the process

  • Are both knowledgeable and constructive contributors

  • Act responsibly and maturely when dealing with sensitive and confidential matters

I. Business Role Determination

The first planning activity requires that the leader of HR determine answers to the following questions to set the direction for the process:

  • Is HR’s role in the business known?

  • Is that role strategic?

  • Does HR seek to become or perpetuate itself as a strategic contributor?

If HR’s role is not perceived as strategic, does HR seek to become strategic through this process?  The alternative is to maintain the current role as a service organization but to become more lean and effective.  Alternatively, if HR is current seen as strategic, the objective is to perpetuate this role.  The outcome of role determination sets the course for the planning process.

II.  Services Scope

What services do you provide?  The first step, which can be accomplished in a first team meeting, is to list all the services you provide to the organization, either directly or indirectly through third parties.  Take that list and determine for each item the extent to which they are:

  • Unique, Customized or Generic where unique activities are exclusive to your organization and not provided in similar form elsewhere.  Generic activities are provided in exactly the same form from one company to another.

  • Low, Moderate or High value to your company where high value is associated with strong contributions to your company’s success.

After you have listed and rated each service, you may find it useful to place them in a two axis matrix similar to the one used above for examples.

III. Customer Profiling

Who are your internal customers?  Just as the business has to understand its customers, you must understand yours.  The first step is to categorize them so that they can be properly analyzed.

Here, the classic concept of market segmentation can be simplified and applied.  The ideal outcome of this exercise is a two-axis matrix that yields 4 to 8 truly unique customer groups.  We suggest the process of listing all the different ways that your internal customers can be differentiated which can include the following:

  • Functional category (manufacturing, finance, marketing, sales, etc.)

  • Title (executive, middle management, individual contributors, etc.)

  • Geographic location

  • Business unit

After you have a list, test them against each other in matrices until you identify one or two categories that yield the best differentiation.  What you are looking for are identifiable groups of customers with different requirements.  If with such criteria you have segments that appear very similar or identical, you can either collapse together the similar categories or choose other criteria.

Once you have identified your categories, describe each in terms of the following characteristics:

  • Products or services you provide to each category and the portion of your resources they receive

  • Needs (requirements) and preferences (what they desire but don’t require) particularly dictated by company strategies.

  • Size in terms of employees and/or historical budgets for HR services

  • Significant issues and strategies for the category such as concerns about growth, quality, cost savings, etc.

  • Past or coming events that might affect the service they require

IV. Evaluation

In addition to defining each category of internal customers, perform an evaluation of the quality and importance of services.  For each service, using short surveys and/or interviews, determine:

  • Benefits provided by the services

  • Satisfaction among customers by category 

  • Key strengths and weaknesses of the services

  • Importance of each service

  • Significant recent events

How you perform this evaluation depends on the creativity and resources within your organization.  We have developed and used email, web and paper forms to gather such information.

V. Strategy Formulation

Here you put to use, in what we recommend be a second team session 3-4 weeks from the first session, all the information and analysis done in the first 3 phases of the process.  We strongly recommend that the work done in those phases be circulated and thoroughly digested by the team prior to the next planning session.

A series of steps should be employed to determine what initiatives should underlie your strategies:

  1. How does your initial assessment of value compare with customer feedback?  Do they value things differently than you did?  Are you over-emphasizing services they do not think matter or are you under-serving their priorities?  Consider initiatives to adjust services accordingly.

  2. Does internal customer satisfaction line up with your priorities?  You need to match their satisfaction level with the value of the service.  Your customers should be very happy with high value services.  Conversely, while low satisfaction is never acceptable, make sure that you are not over-investing in low value areas. 

  3. To what extent can you outsource low value/generic services to reduce costs and improve efficiency?

  4. What can you stop doing?

Define from these and other questions that come up a series of initiatives to be evaluated which include:

  • Outsourcing

  • New programs and improvements to existing programs

  • Changes and reductions to existing services that are low value

Evaluations of initiatives may require analysis of costs and benefits prior to making commitments.

VI. Budget and Action Plan Development

When new strategies and initiatives are developed, define a goal and assign ownership to each new service or initiative.  Have the owner develop an action plan that spells out each step in successful fulfillment of the goal associated with at least the following information for each step:

  • Owner

  • Start and completion dates

  • Budget

  • Dependencies and Contingencies

A separate review of action plans is essential to assure that your teams are aligned on what your overall plan will entail.  You may need to cycle back to the Strategies section and reevaluate new projects in the event that unforeseen complications, effort or investment requirements or other issues arise during the action plan development process.

From the action plans develop a budget for new activities and tabulate savings associated with outsourcing and changes to existing services.  You should find that you can do more, and be more strategic, with the same investment that you were making before.

VII. Monitoring

We have seen some of the best strategic plans fail as a result inadequate implementation, and key to successful implementation is proper monitoring of action plans.  If your HR department sees plan implementation as a high priority and knows it will be held accountable, it will have the best chance of success.

We recommend monthly or quarterly sessions at which members of your team review the progress of their action plans, with reporting of status against date commitments.  Delegate to someone in your organization the task of keeping the “master plan” and periodically updating it with a progress report.  Meetings to review action plans should be devoted to helping the action plan owners resolve issues.


When you have completed the process we have laid out, you should have a more efficient, better-focused HR organization that understands its customer needs and thus is in better alignment with corporate strategies.  How you communicate the outcome of your plan depends on the dynamics of your organization but we suggest some means of informing them of what you are committing to do for them.  You should be able to communicate that you understand their priorities, and what you are doing to meet those priorities.

Through our process HR will become a more strategic contributor, and will chart a course that is viable in troubled or still waters.  While crisis and change make planning imperative, HR is served in all environments by a planning process that looks at what is done, what should be done and for whom on a regular basis.  As markets and businesses change today at rapid rates, priorities change.  HR must adapt to those changes to optimize their contribution to company success.  We suggest reopening your plan to new initiatives and services on an annual basis.

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