Linking HR Strategies to Organizational Business Objectives

Lesson 13: Linking HR Strategies to Organizational Business Objectives &The HR Dashboard

E-Reserve Readings:

Gibbons, John; Woock, Christopher. Evidence Based Human Resources. The Conference Board, 2009, Research Report R-1427-09-RR p. 1-18.
Burkholder, Nicholas (2007) Chapter 15: A Practical Guide to Building Your Ultimate Dashboard, from Ultimate Performance: Measuring Human resources at Work. John Wiley& Sons, pp. 235-251
Boudreau and Jesuthasen (2011), Introduction: The Promise of Evidence-Based Change, in Transformative HR, Jossey- Boss, pp. xi-xxvii.

Other Readings: Boudreau, John W. (1997), HR Metrics and Strategy. Cornell Univ. ILR School, 1997, pp. 1-23.

Learning Objectives: After successfully completing this lesson, you should be able to:

Formulate HR strategies that will support business objectives through enhanced employee performance;
Choose appropriate HR metrics that provide valid and reliable measures of the degree to which HR strategies support organizational business objectives; and,
Create an HR Dashboard that graphically displays the degree to which HR strategies support organizational business objectives

Making the Connection

Up to this point, we’ve discussed the need for HR to complete foundational steps, fully establishing its competence and credibility, with senior management confident that HR can do what it is tasked to do effectively and efficiently. Another foundational step we’ve discussed is the need for the HR management team to fully understand the organization’s vision and mission and the business plans in support of that mission. HR can analyze the various business goals and the action plans to achieve those goals. Underlying these foundational steps, the HR department needs to be fully conversant with the organization’s financial reports and the key metrics they contain.

Connecting HR Initiatives with Organizational Strategy

Now let’s pull together the HR strategies that will tie HR initiatives with organizational business plan objectives. What can HR do to help the organization achieve its business goals? We will illustrate the connection by working through an example.

Part 1:Create a Business Strategy and Metric to Determine Success

Buy More is a department store chain located in major urban centers throughout the United States and Canada. Its corporate offices are located in Pittsburgh, where there are also 3 retail outlets. There are an additional 47 stores throughout North America.

After careful study of its sales over the past year, Buy More decided to adopt a new business strategy, one it believes will result in a sustainable competitive advantage over competing companies. It reduced its strategy to the following: Buy More will become a retail shopping destination.

In order to measure success, the organization created the following tool: A monthly survey of shoppers that among other questions asked: “In addition to visiting Buy More today, I expect to visit at least _____ stores before returning home.” The logic behind the tool is that over time, if the strategy is successful, customers will identify fewer stores they will visit.

Within the context of an organization’s strategy, one designed to achieve a competitive advantage, the general statement of the strategy must be reduced to one or more business objectives that represent what needs to be implemented in order to achieve success. Simply to intone that, “Buy More will become a retail shopping destination” is not sufficient. The company must also articulate objectives and quantifiable goals designed to focus organizational resources on the destination.

Part 2: Create Business Objectives Designed to Achieve the Strategy

In deciding to promote this strategy decision makers were mindful of the most recent customer satisfaction survey that tended to provide very low ratings on certain key indices.

On a scale of 1 to 10 with 10 being the highest score, score the following:	Average 2015
1. Overall, I generally have a rewarding experience shopping at Buy More.	4.8
2. The physical condition of the store is inviting to the point I enjoy being in the building.	3.8
3. Sales employees are courteous and helpful.	4.3
4. Prices are fair compared with competitors.	5.5

These scores were comparable to scores that had been recorded since the survey process was initiated in 2012. Therefore, one of the objectives the company included in its implementation plan was to increase all customer satisfaction ratings by at least 10% each year for 3 years.

At this point Buy More has created a strategy and at least one objective in its implementation plan to help achieve the strategy. There are certainly means the company can use to achieve this objective independent of the various ways HR might become involved. For example, the company might redesign the physical space of its stores, and/or include amenities that do not presently exist (e.g., modernized restrooms, a coffee shop, sitting areas where spouses might wait). Or it might develop more aggressive purchasing tactics to reduce product cost and therefore prices.

On the other hand, what can HR do to contribute to the strategy’s success? The survey score average related to sales staff was lower than two of the other three scores, a 4.3 out of 10. Clearly HR will not have a direct responsibility for remodeling the store, or creating different purchasing methods; however, there are a variety of areas related to the quality of the sales staff which HR might use to improve staff scores in the survey: Selection; Training; Staffing; Supervision; Work Environment; Pay; Benefits; Employee Relations; Promotional/Developmental Opportunities. These are all areas of study that students confront throughout the course of this program. Which of these might be most relevant to our present case will vary depending on the strategy and objectives developed to this point?

Part 3: Create an Initiative to Support Strategy and Objective(s)

In each of three stores in Pittsburgh, one of which was unionized, the corporate HR staff met with stakeholders to discuss how to improve customer ratings of sales employees. In addition to meetings, HR conducted other types of research. One statistic that emerged was that there was a 27% turnover rate of new employees within one year of hire. The data also showed the majority of those leaving during that period were actually fired for poor performance. In the majority of cases the reason for the terminations was customer complaints. Evidently these cases involved what customers believed to be rude behaviors on the selling floor. During the 2015 calendar year there were 233 complaints filed in the three stores related to rude staff behaviors.

Based on the research and conversations with stakeholders, HR determined that one way in which it could support the need to improve the customer survey scores related to sales staff would be to more carefully train staff during the on-boarding process with respect to communications, particularly responding to challenging customer behaviors. As a consequence, a group of HR staff and sales associates developed a two-day training program as an addition to the existing on-boarding process.

Keep in mind that HR is not limited to identifying only one way it might support the corporate initiative (increase customer survey scores by 10 per cent a year for three years). It can create as many initiatives as necessary to accomplish corporate objectives. It may be that some alternatives will be less feasible than others; however, it is rare that only one option will resolve serious performance deficiencies.

For the moment let’s go back to issues related to the new two-day training program that has already been adopted.

Part 4: Creating HR Metrics to Determine Training Outcomes

The committee that created the training program decided that it could not rely solely on the yearly customer survey scores regarding sales staff personnel to assess the quality of its new training effort. In a series of meetings the committee developed three discrete measures of the program’s impact on employee’s performance supporting the company initiative regarding improvement in customer satisfaction scores.

A pre- and post-test of training content;
A skills-based assessment of each graduate’s ability to interact with an angry customer; and,
An anonymous self-report survey (conducted 30 days after the end of the program) by graduates regarding the degree to which they used skills developed in the course when interacting with customers.

Each one of the measuring tools creates data that can help the organization assess the quality of the effort it is making to use HR resources to support the newly created Buy More strategy to become a retail shopping destination.

Still, in connecting HR initiatives with overall company strategy, there needs to be developed a clear tool that illustrates measurement of the various initiatives it has fostered. Many high-performance companies have created balanced scorecards as a means of systematically identifying the relationship among a variety of key elements supporting company strategy. HR commonly creates “dashboards” to represent the data that it collects over time as it seeks to make improvements based on the manner in which it supports company strategy and objectives.

What is a Dashboard?

An information dashboard, just like a dashboard in a car, creates a visual display of key information, something that conveys essential information very clearly. While many commentators think information dashboards are useful, their opinions on the specifics of exactly how they should be laid out and exactly what they should contain vary widely.

Our dashboard should contain whatever information is most important to our organization. Certain metrics mean more to some organizations than others, and that emphasis can shift over time. Generally, we want to lay out key strategies and the progress we are making on implementing these strategies, in an easily read format. At this point, let’s assume these are goals that we’ve already presented to senior management and they have an appreciation of their importance. As a result of this executive review process, senior management understands the impact that the successful pursuit of the goals outlined on the dashboard will have on the overall success of the organization.

If at all possible, getting the highest priorities “on one page” is advisable, but realistically, we may need more than one page to adequately tell our story. Perhaps less crucial goals can be displayed on another page or some of the key aspects of a particular strategy (key performance indicators or KPI’s) need to be broken down further to convey the complete situation. Remember that the more pages we produce, the farther away we get from the basic concept of the dashboard: to quickly convey status and progress on a handful of key initiatives. It’s good to have supporting details available, but we should be judicious in what we choose to graphically display.

Lesson 13 Linking HR to Strategy Assignment – Part 1

You are the Vice President of Human Resources for Nittany Fone, a manufacturer of “smart” cellular telephones. Nittany survived a recent financial crisis and business has stabilized. In fact, the future looks bright and now the CEO wants to plot a path of growth.

Some background: Nittany Fone competes primarily in the eastern half of the U.S. with the more well-known international producers of smartphones and you market your phones primarily through the major cell phone carriers, although you also sell your phones directly to consumers on your website. You are able to compete with much better-known competitors because you have added some unique apps to your phones that enable them to broadcast exclusive showings of college sports for alumni and fans. Your phones also come in the colors of the purchaser’s favorite college team. Nittany Fone has exclusive contracts with the Big East, the ACC, the Big 10 and the SEC college athletic conferences to broadcast all of their athletic events. Its business plan for next year involves:

Increase sales by 10% by:
1. increasing our penetration among Big East, ACC, and Big 10 and SEC fans;
1. adding new teams and conferences to our menu; and,
1. adding new exclusive offerings (e.g., Broadway plays and rock concerts) to attract new customers and to broaden our customer base.
Reduce our overall cost structure by 8% while maintaining our proud “made in the USA” manufacturing base.
Upgrading our product offerings (both phones and apps) to meet the ever-improving product line and new apps continually introduced by our competitors.
Continue to maintain our excellent reputation for customer service and support, which we consider to be one of our competitive edges.

One additional piece of information is that employees have been disheartened by the ups and downs of our business and it is tough to get them to buy in to making more changes. The result has been lower morale and excessive turnover.

Your task is to come up with strategies for HR to execute that will contribute to Nittany Fone achieving its four business goals listed above. More specifically, what HR programs, policies, procedures, functions, etc., should we look at that might better position our organization to meet these goals? For example, how do we encourage positive change in our employees and our supervisors? What do we look at in terms of hiring, training, designing pay plans, and creating and maintaining a corporate culture that encourages and rewards the behaviors Nittany Fone needs to grow and prosper?

There are undoubtedly a number of additional facts that you may need to completely analyze the situation. Please make whatever reasonable assumptions you need to fill in any factual “blanks,” but please identify what assumptions you are making.