What’s shaping your business – Results Driven #3

Understanding what makes your company tick

Nowadays, it is no longer acceptable for anyone in HR not to have a good grasp of the business they are working for. Business leaders expect, quite rightly, HR to demonstrate enough business acumen, while being customer focused and results driven. Research shows that when HR consistently meets these organisational needs, they develop a successful reputation based on a track record of delivering real organisational value.

So, if your CEO was the quiz master and you were the contestant would you be able to list the top five factors that are shaping and driving the changes going on in your business. Could you then explain how they impact on and inform HR’s purpose?

We ask these questions as the link between business acumen and results driven is very close. Without understanding what the main business drivers are how will HR know what are the right and wrong results to go for?

What are the people implications of these changes?

It doesn’t take an Einstein to realise that the world of work is anything but predictable, stable and certain. We all know that there are many factors at play in shaping the world of work and they are forever changing. BUT are these changes reflected in the results HR is driving for or is this year’s goals and measures identical to last years, with a few minor adjustments?

Let’s look at some of the main factors that are probably shaping and driving the changes going on in your business. McKinsey’s did some great research in 2010 which identified the main factors of change: Geography, demographics, state of the economy, the role of the government, the products and services on offer and the ever changing regulatory framework. All of these factors play a part in influencing and informing your business to a lesser or greater extent – in fact depending upon the type, size and geography of your organisation the chances are these factors will impact different parts in different ways (in other words, ‘one size fits all’ HR solutions does not work!).

Each of these factors have people implications which in turn informs HR’s strategic and tactical priorities. Therefore, when reading through these factors think about how relevant they are to your organisation and how they may affect your HR Strategy.

Regulatory / Government

The increasing complexity of the political / legal / regulatory framework e.g. Sarbanes Oxley etc...
The degree to which national governments actively get involved in the home markets e.g. the Chinese Government is perceived by Global Business Leaders as the significant player in the China market
Geopolitical instability – just look at the ‘Arab Spring’. Who could have foreseen that however there are clearly some significant people implications if you have offices, factories, customers, agents etc... in those countries affected
Corporate Social Responsibility (CSR) – is HR a champion or a blocker?
Different safety and quality standards
High levels of public debt which will have negative impacts on countries GDP – will this affect consumer confidence and therefore impact on sales, the slowdown in opening new markets etc...?

Society

Demographics – growth in the number of consumers in emerging markets but aging populations in Europe
Low birth rates and greying workforces in most developed economies will make it hard to achieve steady growth unless sizeable gains in labour productivity are gained
Emerging markets with populations that are young and growing will increasingly become not only the focus of rising consumption and production but also major providers of capital, talent and innovation.
Greater pricing transparency and new networks of engaged consumers
Greater consumer awareness and demand for increased product and service customisation

Business

Economic uncertainty – increased overall volatility is becoming a permanent feature of the global economy
Volatility of currency exchange rates
Development of the global business model (US – Europe – Japan)
Building local presence, developing partnerships or joint ventures with local companies and developing new business models
Shift in global economic activity from developed to developing economies.
Increased complexity has led to a need for greater flexibility
Natural resources constraints – need to find ways to conserve energy to reduce the need for natural resources

Competitors

Increased choice and rapid communication has reduced the impact of traditional competitive advantages e.g. distribution, innovation, process
The exceptions are people and brand
“Best practice” sharing
Increasingly global labour markets – particularly for talented professionals
People can be quicker to spot and respond to changing situations
Technologies that enable a free flow of information worldwide
Concerns about breach of intellectual property

Looking ahead

The list of change factors affecting your organisation is almost endless. The important thing to realise is that for each change factor there are both opportunities and risks - that is the ‘name of the game’.

Organisations (and therefore its People) have choices to make in respect of how they respond to these changes:

Capturing the opportunities offered by growth in emerging markets – the trend Business Leaders say is the most important – will require redesigning existing business models and reconfiguring companies’ price / value equations
Managing the risks of that trend will also be crucial: concern about geopolitical instability and market volatility in emerging markets, so strategies to assess the likelihood of these conditions and manage their risk will be vital
Technology will continue to materially reshape consumer awareness, choice, and interactivity models and companies should be striving to tap into the power of technology to improve their competitive advantage

What next? Our suggestion would be to look at what results HR is presently striving for and checking whether they are still relevant. If they are not, go back to the business and chat through what you believe HR’s results should be and then make it happen!

To find out how CourageousHR can support the development of your HR Function please email [email protected] to arrange a call to discuss your specific development needs.