5 Elements of an Engaged Culture & Integrated Human Resource Strategy

"Companies have a hard time distinguishing between the cost of paying people and the value of investing in them" -Thomas A Stewart 1997

I think this quote from Thomas Stewart captures one of the most significant issues that organizations still face almost 200 years after the Industrial Revolution, the idea that the acquisition and deployment of talent typically determines the long-term success and sustainability of organizations.

A recent poll of CEO’s regarding what they perceived as the key value provided by their human resource function resulted in a pretty disappointing number indicating they weren’t really sure, with another significant group responding the primary value was in compliance and protecting the organization from litigation. 

The result of this, as you might suspect, is that very few organizations have a clear, articulated human resources philosophy and strategy that is refined and driven by the top levels of the organization and then disseminated throughout the organization.

This lack of top-down human resource strategy generates some significant consequences for businesses and our overall economy:

• The U.S Department of Labor estimates that employee turnover costs our economy $5 trillion every year.

• Another study concluded that although we spend over $100 billion annually on training, the retention or skills transfer rate measured out 18 months is less than 10%. 

My point is this; if we were losing $5.1 trillion annually due to international trade or quality issues, there would be a concerted effort to define and address the issues associated with those losses.

So why isn’t there a greater proliferation of a human resources strategy within organizations and societally in order to correct this problem?

In my experience there are a number of reasons:

• Even with evidence to the contrary, the management of relationships is still in many organizations considered to be a soft skill.

• As noted earlier, C level executives in many organizations don’t have clear expectations of their human resources team and human resources professionals themselves are focused on tactical and hygiene factors rather than integrating human resources strategy with organizational strategy.

• Many organizations still see employees as collateral rather than stakeholders. Focus is on the customer and shareholder at the expense of the employee.

• For many years the solution to increased employee expectations and regulations expanding the responsibility of employers to provide safer environments and societal considerations like health care, time off for parenting and family issues was to move operations off shore to take advantage of lower labor costs and less restrictive labor laws.

The U.S. culture has also put entrepreneurship and the creation of wealth at the top of our pyramid. I want to be clear here that I am a capitalist; I think growing the economy is absolutely the best and most sustainable way to create a robust social infrastructure.

There are some caveats.

• Many entrepreneurs I have worked with are great innovators, but poor managers and lacking the leadership skills necessary to create sustained enterprises.

• When the development of wealth is the primary objective, balancing those objectives with other broad based societal goals goes out the window.

   

Now let’s examine an alternative; a business strategy that incorporates alignment of individual employee goals and objectives with organizational goals and objectives.

• Hay Group studies show that high employee engagement can improve revenue growth by 250% and reduce turnover by as much as 40%.

• 70% of organizations with high engagement exited the downtown with higher levels of employee motivation than pre-recession.

• 90% of the Fortune Magazine Worlds’ Most Admired Companies have developed and maintained an explicit employment brand.

• The World’s most admired companies incorporate building human capacity, teamwork, and customer loyalty into their performance rewards and management programs.

   

You will probably notice some familiar vernacular in these statistics, words like employee engagement and employment branding. The reason you see that language is because those are code words for organizations that embed human resources strategy within their larger, business strategy. It is not buried within the Human Resources departmental plan.

Assuming that you have read this far and are at least curious about how to go about creating this kind of a strategy and culture, let’s shift gears and talk about some how to’s-

5 Elements of an Engaged Culture & Integrated Human Resource Strategy

1. A management team that is competent and skilled in fundamental human relations skills

2. Recruiting and hiring staff that fit your culture

3. Satisfying work content.

4. Association with an organization that they respect and that respects them.

5. Mutual commitment to them and their careers.

    

You might notice that I put the management team competencies first, that is deliberate. As I’ve mentioned in previous articles, people join cultures and leave managers. Creating a culture where management and leadership standards aren’t optional is an essential first step.

The next step is equally important. Too many times I see organizations recruit people exclusively on the basis of their technical competency, usually illustrated by success in a prior role and/or organization.

Technical competency remains important, but my recommendation is look to the track record of performing tasks and completing projects as indicative of those abilities rather than certifications, education, and experience. I emphasize experience because I find it typically pretty unreliable. Most people and organizations equate tenure with experience, they are quite different.

Bluntly, if you execute on the first two elements, the other three will be largely embedded in your process.

So I want to describe my best practice model for you-

• Define your organizational culture

• Ensure your leadership team understands and models your values

• Define candidate position requirements (technical skills) 

• Delineating appropriate candidate attributes (cultural fit) 

• Recruit the candidate pool, assess and onboard appropriate staff

   

Organizations with clearly defined employment brands and high levels of employee engagement always outperform the competition. Why give up a competitive advantage?

If you don’t want to believe me at face value take a look at organizations like Google, Starbuck’s, Amazon, Zappo’s, and Virgin. They build their culture from the ground up and commitment, not compliance is the expectation.

The enclosed video clip from the U.K. also reinforces the fundamental premise of this article- we hire, manage, and work with people; not human capital!

Every organization has a choice relative to their human resources strategy. They can build it in or bolt it on. I advocate for the former…..

Written by Mark Herbert, Principle Mark F. Herbert & Associates, Inc. and New Paradigms LLC  With over 30 years of managerial, executive, and consulting experience, Mark has authored four books including Managing Whole People-One Man’s Journey; C2C-Compliace to Commitment, A Foundation for Employee Engagement &Building a Culture.  He is a consultant, speaker and facilitator on executive development, strategic human resources, employee engagement, and employment branding on a regional, national, and international basis. 

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