| The link between HR Practices and business performance. |
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However stunning the launch of any product or business activity, it is what happens afterwards that drives its success. This was the opening message from Marcel van de Pol, Hewitt European HR Effectiveness leader on the subject of ‘Making People Strategies Drive Business Results’.
To quote Hewitt CEO Russ Fradin: “We need to be relentless about what we are trying to achieve. Too often, the expression ‘when all is said and done, more is said than done’ turns out to be true.”
Execution is the missing link between aspiration and results and is done well with leaders with the right behaviours, a culture that rewards execution and people in the right jobs. Strong execution takes commitment and motivation from every employee and one of the key HR practices to support this is engagement.
A definition of engagement
Hewitt research into more than 1,500 companies continues to find strong links between engagement and business performance and shareholder value. These exceptional employers outperform their peers on financial measures, including revenue, profit growth and total shareholder return.
But what other HR practices have these Best Employers implemented to improve execution?
First of all they are relentless about understanding their people value drivers (engagement, capabilities, utilization and bandwidth of leaders) and using them as business drivers.
Secondly they reinforce the right behaviours, hold people accountable and help people grow by putting them in the right jobs.
Thirdly they also measure the impact of it and have indicators on their pipeline strengths. In other words, they nailed the principles of execution.
Click here to view Marcel's four key principles of execution
Four principles of execution
Focus – includes buy-in from all levels of the hierarchy
Simplicity – avoid over-engineering to ensure full stakeholder understanding
Measurement – accept the results and act on them
Communication – people must be informed about plans, progress, successes and lessons learned
Marcel was joined by Christian Birck, Head of Branding for Holcim Group. He brought a different perspective to the discussion, sharing experiences from the marketing function that provide useful example to HR and Finance.
Christian told delegates that, from a marketing perspective, success is not about a single campaign but about sustaining and growing a base of loyal customers – and achieving this is down to the behaviour of the people working for the company. This is no sprint. It is a marathon.
Corporate transactions: the ultimate test for execution. |
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Piotr Bednarczuk, Global Corporate Transactions and Transformation leader at Hewitt, pointed out that human capital and workforce issues account for a significant part of the value creation of a deal but they are often overlooked.
“A corporate transaction is always related to a business outcome that needs to be achieved within a given timeframe to produce value,” he said. “As most of the value of a transaction is captured after the deal closes, during integration, it is not surprising that execution is the most critical factor that determines M&A success.”
As a result, CEOs require an integrated M&A process and disciplined methodology - and Human Capital has a significant role to play.
Click here for a list of key Human Capital questions that need to be addressed
Piotr continued: “Nevertheless our research shows that while human capital and workforce issues account for a significant part of the value creation, they are often overlooked. Many companies’ managers devote less than 10% of their time to Human Capital issues during due diligence. In addition, 56% of companies reported that Human Capital issues seldom or never get integrated into the financial models.”
It is therefore not a surprise that research, including Hewitt's own survey, shows a high percentage of companies reporting that their integration objectives were delayed or not met.
The areas that contributed most to the delay were not the hard issues, like integrating HRIS systems, organisational design and staffing related to the new organisation, but insufficient execution capabilities and insufficient attention to cultural and workforce issues.
Hewitt's experience and findings have led to the conclusion that there are 5 keys to successful execution in corporate transactions.
Click here for the 5 keys to success in corporate transactions
Human capital due diligence - assess all potential liabilities, costs and risks related to the transactions (beyond compensation and benefits, like talent, culture, leadership).
Business outcomes - focus on value-creating initiatives first and pace the execution plan accordingly.
Integrated process - develop an integrated, transaction process, with a clear methodology, tools and accountabilities, that will lead to a discipline within the organisation (like six sigma) and increase the efficiency of the process.
Proactive execution capability - build capabilities to execute by developing critical leaders and competencies and increasing the readiness for change in the organisation.
Measurement - capture knowledge in the organisation from transactions and transformations, learn from it and act on it. Build dashboards reflecting financial and human capital metrics.
Preliminary findings from Hewitt’s autumn 2008 research: M&A Transactions and the Human Capital Key to Success can be downloaded from the link on the right. |
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