Strategic HR is often something HR professionals struggle to understand let alone practice. Craig Donaldson speaks with Microsoft’s Steve Vamos and Mark Newton about the realities of strategic HR, establishing credibility and the future of the HR profession
Strategic HR is often something HR professionals struggle to understand let alone practice. Craig Donaldson speaks with Microsoft’s Steve Vamos and Mark Newton about the realities of strategic HR, establishing credibility and the future of the HR profession
The HR profession often talks about strategic HR, but when it comes to putting theory into practice many practitioners struggle to crystallise the concept. The trend towards truly strategic HR functions has gathered momentum in the US and Europe for a number of years, however, many Australian organisations are behind the eight ball in this area.
Steve Vamos, managing director of Microsoft Australia, says that the shift towards strategic HR has taken a number of steps forward in Microsoft over the past year. “I think HR has always been a strategic function here, but it probably hasn’t been treated that way and it should be. From my perspective the HR role is a partner to the CEO or general manager and partners in everything from strategic planning through to the way the organisation is goaled and aligned, and how the organisation defines standards of behaviour and drive its values.”
Microsoft’s overall strategic plan has three objectives, the first of which is aligning and empowering its people and teams to deliver. This objective is broken down into a number of goals:
• Develop a three to five year strategic plan that defines priorities and aligns all staff, delivers a framework for cross-team goals focused on strategic outcomes and integrated into performance management and compensation.
• Drive programs that encourage and show all staff how to live the Microsoft values.
• Ensure staff vitality through strong recruitment and performance management processes.
• Skill and develop staff, ensuring adequate tenure and clear career path.
• Develop a strong management team that puts people first.
The above objectives feed into the operational goals of Microsoft’s HR department, which forms the basis for its strategic alignment and subsequently the goals of employees. Vamos says about 200 staff recently attended a staff meeting, and about 80 per cent of employees indicated that their goals were aligned strategically with the company’s as a result of HR driving strategy and working with managers to ensure integration across the company.
Microsoft is also looking to initiate a culture shift in line with other strategic objectives around becoming a more customer oriented company rather than product oriented company, Vamos says. As a result, Microsoft’s HR team has driven a program across the business which enables departments and individuals to understand expectations around behavioural standards, values and customer focus.
Mark Newton, regional human resources director A&NZ with Microsoft, believes that this focus is ultimately more beneficial in the long run. “It’s no good whipping people into going out to get the revenue. I think the old ‘build it and they will come’ scenario says a lot – build this kind of organisation and the revenue will come because people are focused on customers and delivering value. That’s a really powerful recipe for an organisation.”
Line managers and people skills
With the focus on equipping line managers with the necessary people management skills, Newton says that Microsoft establishes verbal contracts with managers in order to establish their commitment.
“We’ve said to them, ‘OK, here’s what we expect of you.’ We’ve clearly articulated our expectations of people managers and then told them what we’ll actually deliver to help manage their people – both systemically in the organisation with processes and systems, and also in terms of their place in building the management development framework,” says Newton.
Vamos says accountability is an essential part of equipping managers with the necessary skills. If managers aren’t able to spend the time needed in improving their people management skills, they are encouraged to speak up. “We’ll look at how we can take some of that work away. Do we need to look at a different structure to allow you to do your job well? So we’re not giving people excuses, we’re saying, well if there are issues, tell us and we’ll help you.”
He says that managers receive ratings for not only overall performance, but people management abilities as part of Microsoft’s performance appraisal process. “In the old days you might’ve rated low for people management and higher for overall because of your individual contribution. But now we’re saying people management is key, and you have to do what’s required there. We don’t care about the fact that you might have done a million other wonderful things as an individual. Your job as a manager is to manage people well,” he says.
Vamos believes that line managers must have a passion for managing people, otherwise they will be constantly swimming against the tide. “I always say to them: If you don’t love being a people manager, think about getting out of it because why do it if you don’t love it?”
Establishing CEO buy in
HR professionals often struggle to establish senior management and CEO buy-in for their initiatives for any number of reasons. Even if a business case can stand on its own two feet and forecast a solid ROI, dubious stakeholders can make it challenging for HR to get backing.
“At the end of the day it’s actually about whether the CEO is what I call a believer or not,” Newton asserts. “Does the CEO really believe that people are the most important thing and do they really believe that HR is the vehicle by which they can partner with and facilitate change in their organisation?” I think that if CEOs don’t see that HR needs to be strategic and shouldn’t be anything else – because you can outsource the rest – then that’s a shame. They will never get the best out of their people – I fundamentally believe that.”
Newton says a misconception commonly held by CEOs is that HR can’t add any value to a business. “If they believed HR could add value, then they would probably re-think who’ve they got in their HR group and make sure they get some really good strategic thinkers in HR to help them run the business.”
A tightly integrated HR/CEO relationship can also produce the value of more than one CEO for an organisation, Vamos says. “That way you get more than one CEO is because you’ve got someone else out there that’s looking at the people and knows what’s going on. They can extend your sphere of influence and also give you a sense of what’s going on well beyond what you’re going to get normally as a CEO. So it’s that partnership that gives the company the benefit of having more than one CEO.”
However, Newton has seen a trend in the wider HR industry whereby HR professionals believe that they’re incapable of anything outside of their traditional administrative function. “That’s a worrying trend, because if they don’t believe they can break through that barrier and actually provide anything of strategic value to their organisation, then that’s a real shame. That will keep HR in the dark ages, so I get concerned about the willingness of HR to step up to that role.”
Another big misconception held by many HR practitioners, according to Vamos, is that HR is responsible for managing people. “HR is not responsible for that. HR is responsible for a connective strategy between HR and the organisation and executing on that.”
Stepping into the CEO’s shoes
It’s a rare thing for HR professionals to step into the shoes of the CEO. While there are exceptions, HR professionals still lack credibility in senior management ranks in order to be considered a senior contender for the top job. Vamos says CFOs have a number of obvious advantages in a world where boards and shareholders focus on results, in that they can readily tap into business operations from a revenue generation and cost viewpoint.
If HR professionals are to have a shot at the top job, Vamos says that they must acquire experience across other parts of the business and have the opportunity to broaden their experience. Despite its current failings, he says that HR is a worthwhile profession with an enormous amount of challenges ahead of it, and instead queries the role of CEOs in the future. “It’s not so much about HR executives becoming CEOs, but it’s about CEOs not getting to be CEOs unless they are proven managers of people and masters of the HR processes. The way you get there is by having great partnerships with HR through your career,” he says.
Newton agrees that the role of CEO is often overrated in the eyes of HR professionals. “For me, and this going to sound a little trite, but CEO’s a title. OK, Steve is the CEO of Microsoft here – that’s what his business card says and that’s what we refer to him as. But as I was saying earlier, I think both of us help run things jointly because we have to. There’s a total reliance on each other to bring about change, so if you take the title of CEO out and ask the question of who actually runs the business, that becomes a different discussion,” he explains.
The future of HR
Vamos draws a comparison between business and sport in his future vision of people management. Sport has an obsession with human performance and teamwork, he says, whereby coaches might say, “‘This is our strategy – we’ll do what we need to do and hopefully the result will come.’ Business hasn’t got to this point yet, for whatever reason. In business we’re obsessed with results. What we focus on is the end rather than the means, the effect rather than the cause, the hard rather than soft – and the results are financial.”
He says that annual reports are virtually useless in the sense of providing insights into future performance of organisations. “It’s an historic view of finance, probably with some narrative around how fantastic the company is, photos of staff and customers and whatever. But there’s no metrics or no real insights into the drivers of that company – its people. We accept that in business, whereas I don’t think that’s acceptable.”
Next to the financial data, he says results around an industry standard employee opinion survey should be published, which provide insights into half a dozen basic questions about the leadership, culture and confidence that staff have in the company’s future. “I would love to see that in every annual report because that would tell me a lot more about where that company’s going to be in a year or two, rather than looking at financial data.”
