Strategic HR Leadership and its Strong Impact on Best Workplaces™’ Bottom-line

Strategic HR Leadership and its Strong Impact on Best Workplaces™ Bottom-line

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From a collaborative paper written by Benjamin Ho and Richard Smith entitled Creating a Great Workplace For All: First Steps for Business Leaders

In a highly competitive business world, the pressure for bottom-line results can be intense – sometimes at the expense of a positive workplace environment. Yet, it seems there are organizations that not only do well, but also have people who trust their leaders, possess deep pride in their work and organizations, and take genuine pleasure in working with their colleagues.

How do these Best Workplaces manage to balance both performance and people goals? A closer observation and analysis demonstrate that these two are not at odds. There is, in fact, a dynamic synergy between both objectives and ignoring either one can be detrimental.

In our collaborative study with SMU entitled ‘Creating a Great Workplace For All: First Steps for Business Leaders’, three key observations were identified amongst several significant areas of differences between Best Workplaces and the other unranked list contenders.

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In this article, we focus on the part Strategic HR leadership plays as a pivotal and binding role in navigating successfully through this oft-cited dilemma.

Be Relentless in Building Strategic Human Resource Capabilities

Each year, The Conference Board asks CEOs around the world to share their top challenges and issues.1 For years now, human capital has repeatedly surfaced as the most pressing of all, yet, when top business leaders are asked about how the HR function is helping them with this challenge, the answers are mixed. In fact, only 27% of CEOs indicate that they have confidence in addressing human capital challenges in their businesses. While HR professionals are in every organization, few are said to play a truly strategic role.
Elevating Strategic Human Resource Leadership

Strategic HR leadership is primarily concerned with the factors that affect an organization’s ability to effectively execute business strategy. Individuals who are empowered in these positions are actively involved in pivotal areas such as aligning organizational culture, structure, leadership, and talent management practices. However, it is impossible to address these macro-level organizational issues, when HR is constantly saddled with administrative functions pertaining to payroll, performance management, and compliance.

Elevating the role of HR from one that is administrative to one that is a strategic and integral part of the top management team can be critical for creating a great workplace. Global research has shown that organizations with a more senior-level HR leader are more likely to be great places to work in.2 For Singapore businesses, this remains an area of challenge.

Armed with a macro perspective and deep understanding of people issues, experienced HR leaders can help inform and guide strategic decisions. They can also acutely identify development priorities for management. To balance the workload, technology may also provide much- needed assistance and enable HR leaders to carry out both functional and strategic work – firstly, by automating time-consuming HR administrations, and secondly, by gathering relevant data and generating insights into the organization’s “realities”.
Staying at the Forefront of Human Resource Management

Operating in a fast-paced economy requires adaptability, constant innovation and, when necessary, rejuvenation. This applies to HR leadership as well. In general, senior executives tend to establish themselves and peak 5 between the 5th to 9th year in the role. Global research also shows that top-level leaders with longer tenures in a single role within an organization, tend to prefer the status quo, may be less inclined to accept strategic change, and 67 show signs of performance decline.

Interestingly, there is some indication that Best Workplaces in Singapore are aware of the importance of senior HR leadership renewal. Across the Singapore sample, Senior HR leaders at the top-ranking Best Workplaces have held that position for an average of 5.75 years, compared to 14.5 years at other organizations.

This might suggest that HR leadership rejuvenation could potentially give rise to a competitive advantage when it comes to being ranked as one of the Best Workplaces.

HR Tenure in Years

It is important to highlight that this does not mean that we should simply retire long-standing HR leaders. To stay relevant and on top of its game, there are various ways to refresh and renew HR leadership. For example, purposeful professional development, internal promotions, lateral movements, and growing the team with external talents.

All these could lead to fresh perspectives, desire to make greater impact, ready embracement of change, and a willingness to try new HR practices to meet organizational needs.

What remains more pertinent is the continuous need to stay abreast of cutting-edge practices in the field and learn from organizational development thought leadership. There is also a need to re-evaluate the alignment between existing HR strategy with the strategic imperatives of the organization. On one hand, HR needs to stay relevant and play a proactive, value-added part in senior leadership conversations. On the other hand, the senior leadership team must allow HR a seat at the table and value its contributions in equal measure. Regular review of HR capabilities and programs could prove to be vital as well.

While adopting best practices may be useful, it is not merely replicating what other organizations do. It is essential, instead, to factor the unique context and challenges of each organization before identifying the most strategic actions within the key areas of culture, structure, leadership, and talent management. By adopting a holistic, open-minded and future-forward approach, it will help drive results while fostering a positive work environment.

Tapping on The Ecosystem to Grow Strategic Human Resource Capabilities

As Singapore transitions to a manpower lean economy, there is an even greater need for organizations to maximize human potential and invest in HR as a strategic asset, rather than a utilitarian function.

Recognizing the importance of building future HR capability at all levels, the Singapore government launched a comprehensive HR industry manpower plan in 2017. This includes the establishment of the Institute for HR Professionals (IHRP), which aims to raise the bar for the profession through a national certification program.

This signals the government’s commitment to address the human capital needs of businesses, while instituting a career and competency framework for HR professionals.

As we all transition to a manpower lean economy, there is an even greater need for organizations to maximize human potential and invest in HR as a strategic asset, rather than a utilitarian function.

Ultimately, building strategic HR capabilities is not only good for the profession, it also makes better business sense. In the longer term, organizations become better equipped to hire right; designing people policies that potentially generate exponential returns in multiple aspects of the business.

SUGGESTED BUSINESS LEADER ACTIONS:
  • Hold the HR function to a higher standard, ensuring they adopt a holistic and strategic view – taking into account the alignment between organization culture, business performance, leadership, structure, and talent management
  • Elevate the status of HR by including HR leadership in strategic business discussions; ensure their professional views are sought and considered before making decisions
  • Encourage HR professionals to get certified, seek new training opportunities, and to be proactive in staying abreast with the latest HR developments and industry trends

 

References
  1. Conference Board CEO Challenge® (2017). Available at: https:// www.conference-board.org/ceo-challenge2017/
  2. Smith, R. (2016). Who Makes a Great Place to Work? Creating the Human Capital Resource of the Firm. Strategic Management Society Annual Conference, Berlin Germany.

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To be eligible for the World’s Best Workplaces list, a company must apply and be named to a minimum of 5 national Best Workplaces lists within our current 58 countries, have 5,000 employees or more worldwide, and at least 40% of the company’s workforce (or 5,000 employees) must be based outside of the home country. Extra points are given based on the number of countries where a company surveys employees with the Great Place to Work Trust Index©, and the percentage of a company’s workforce represented by all Great Place to Work surveys globally. Candidates for the 2017 Worlds Best Workplaces list will have appeared on national workplaces lists published in September 2016 through August 2017.

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