When it comes to change, most HR organizations seem to be stuck in neutral while the world around them speeds up. This is reflected by the fact that six of the top 10 issues revealed in i4cp's 2013 Critical Human Capital Issues study (download the complimentary report), conducted annually since 1986, have remained the same the past four years. Year-to-year comparisons of the study show that the urgency of these issues is growing but the ability of HR organizations to effectively deal with them has stalled or deteriorated. This is particularly true for low-performing organizations (LPOs). But the opposite is the case with high-performing organizations (HPOs), which make steady progress in dealing with perennial challenges such as aligning human capital with business strategy while at the same time responding effectively to new or increasing challenges wherever they encounter them.
Why are HPOs so much better than LPOs in meeting the change challenge?
Agility and preparedness are key to managing change effectively
i4cp defines agility as the ability to move quickly, decisively, and effectively in anticipating, initiating, and taking advantage of change. When it comes to change, CEOs want to know how to get their organizations to be proactive - and anticipate change - instead of being purely reactive. In short, they want to know how to instill agility into the organization.
The answer to this question can be boiled down to a single word: preparedness. To be agile, organizations must be prepared. HPOs prepare for change better by approaching it both strategically and tactically. They take a longer-term view of their business, including the forces that affect it and the capabilities necessary to deal with it.
HPOs work simultaneously from the inside-out (applying knowledge of readiness in terms of current supply of human capital versus anticipated demand) and from the outside-in (using knowledge of external factors, including what the market demands). This level of preparedness is also a reflection of the strength of its leaders.
What are HPOs doing differently to increase their preparedness for change?
i4cp research has identified four agility-enhancing strategies employed by HPOs:
1. Purposefully developing agile leaders and workers
HPOs develop agility in their leaders making it an expectation of all leaders and modeling it from the top. It is an explicit selection and promotion criteria and is built into learning and development programs as well as recognition and reward systems.
Agility can be instilled into the broader workforce by promoting "talent mobility," which refers to the ability to move workers within an organization across functions and roles, across businesses or business units, and/or across countries in order to address critical business needs. This commitment to talent mobility builds not only the organization's capacity to take advantage of change through growing its talent, but individual agility and resilience by encouraging staff to take on new roles and challenging developmental experiences. For example, a leading global food retailer emphasizes movement across jobs and business units as its prime development path.
2. Emphasizing managing talent over talent management
The level of agility in an organization is greatly affected by how talent is managed. There is a subtle but important distinction between talent management and managing talent. Talent management, while necessary, will be far from sufficient unless it fully enables the management of talent by the business. In contrast, with their focus on the management of talent, HPOs are vastly more effective at equipping the business to anticipate and deal with change.
For example, they demonstrate a 2.5X advantage in performance management, fusing strategic and tactical approaches to managing organizational performance. This ensures that the day-to-day execution of strategies is tied to overall objectives and goals.
More than 3.5X of HPOs indicate effectiveness in succession planning by driving it further down in the organization, thus ensuring better ability to quickly fill leadership gaps when they arise with qualified candidates.
And HPOs are nearly 3X more effective than LPOs in leadership development, which - given the increasing focus on line manager accountability (as discussed in i4cp's Talent Management in the Trenches report) - results in an organization that is better equipped to not only align the workforce with where the business is headed, but to anticipate and respond more proactively to change.
3. Building strategic workforce planning capabilities
High-performance organizations are rigorous in their approach to workforce planning. These organizations define their business needs over the next three to five years; the products/services to be added or retired, the markets they will enter or leave, and the skills/competencies required.
HPOs seek a deeper understanding of talent segments and risks by conducting talent reviews to identify high-potential employees, as well as understand the organization's critical and pivotal talent segments. Critical roles are ones essential to the organization's success and require skills or competencies that are difficult to find or develop.
Electronics manufacturer Flextronics identified 10 critical roles in the organization and the necessary skills and competencies need to perform them. It then engaged frontline management in helping to determine how to apply those skills on the job as well as the best ways to develop those skills - whether through online learning, classroom learning, or projects and assignments.
Pivotal roles are those that are not prohibitive by skills or competencies, but can make incremental impact on key business measures such as customer satisfaction. The goal of talent segmentation is to identify roles first, then skills, then individuals.
4. Developing wider and deeper capabilities to manage talent
i4cp's research on the performance management practices most strongly correlated to market performance shows that several are also important contributors to organizational agility. For example, conducting ongoing goal review and feedback provides opportunities to recognize new realities and shifting priorities and to make necessary adjustments in goals and methods.
Developmental plans for each period ensures focus and progress on acquiring new skills and experiences. It creates a mindset of continuous learning and ongoing development, which are both critical enablers of individual agility and resilience. Goal-setting for the upcoming timeframe ensures that individual goals change and adapt to major shifts in the business environment.
HPOs perform better because they are better prepared for change
Creating a resilient, change-ready organization is a feat that even HPOs struggle to achieve. But they succeed far more than other organizations by preparing more purposefully, investing in planning capabilities, instilling agility throughout their leadership and employee ranks, and building and deploying capabilities that make business leaders better people managers.