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Strategic Development: delivering superior returns
We have been asked to speak to three companies in three weeks on the subject of strategic development. It may be too early to describe this as a trend, but we do find it both interesting and instructive.
All three organisations stated in their various ways that they have in the past taken a rather shotgun approach to investing in learning and growth, and that, given the current challenging economic climate, they could no longer justify this haphazard spend.
Interestingly, none of these organisations were looking to reduce their investment. Rather, they were calling on us to help in moving towards a strategic development perspective. They insisted that their learning and development spend must become directly linked to achieving the long term goal of the organisation: providing superior returns based on the capital invested.
Strategic development, as we described it to them, is a top down process driven by the mission and strategy of the business unit. It is all about the delivery of long term business results through targeted investment in the organisation’s key resource, its people.
In the current climate, where organisations are increasingly looking to key individuals and teams to navigate them successfully through uncertain times, investment in the capabilities of these people and, indeed, the ability to identify who they are in the first place, can be the difference between business success and failure.
In the first article in this series on strategic development, which was circulated in January (please click the following link if you missed it: http://www.personalbusinesscoach.co.uk/news16.html), we talked about the role of the senior executive team, the emphasis on outcomes and the importance of identifying a number of key populations. This second article describes in practical terms a step by step approach to the introduction of the necessary strategic processes. That is:
o Strategic business review
o Succession planning
o Feedback
The importance of a formal strategic business review process
Some form of strategic review process is essential, and this does need to be owned by the senior executive team. However, long experience has taught us that, in implementing such a process, outputs are much more important that inputs. In other words, it is much better to have a basic process that drives robust action than it is to have an elaborate process that delivers little in the way of action.
Indeed, we would go one step further and say that a robust review process is the last part of the jigsaw that an organisation should put in place. Too often organisations get wrapped up in an elaborate planning process whilst having little or nothing in place to deliver the required and promised follow up. As such, the process is quickly devalued, being seen as nothing more than an activity that fills folders that then sit unopened upon shelves.
It is much better then to start with strategic development activities for key populations and then maximise the strategic benefits of these activities through the implementation of a simple, formal review process.
What should a strategic review process look like?
Depending on the organisation, we have known such a process to be called: Organisation and Management Resource Review (OMRR), People Resource Review (PRR), or People Review (PR), among many other variations. All are broadly similar, although many are needlessly complex. The least effective are one off annual exercises, the best are living processes that inform and are informed by the business strategy.
To be effective, a process needs to kept a simple as possible, but no simpler. Data should be built from the bottom up on the basis of objective evidence and the whole process needs to be owned by the CEO and his / her senior team. At all costs, as we stated earlier, it must not be seen as simply an HR process.
Paperwork should be kept as simple as possible, its purpose being to provide objective data for dialogue and to record decisions and actions. The main value adding activities are meetings and discussions. IT systems can be used to support the process, but must not be allowed to run it.
The process starts with a business review, leading to a succession plan and ending with feedback. This should be given in a one to one development discussion with all those whose futures were discussed during the process.
The business review
In strategic development we start with the needs of the business and then move on to look at the development of key individuals and populations in the light of this. To do otherwise would be to put the development cart before the strategic horse.
In reviewing the business we would typically look at three areas: marketplace trends and issue, required changes to organisational structure and the people implications, and the retention and development of our scarce strategic capabilities.
In looking at key business issues, we should consider:
o What are the economic / political, social, demographic, market, technological, competition or customer trends which will significantly impact the business in the short to medium term?
o What is the potential strength and nature of the impact on our organisation?
o What can HR do, in specific terms, to support the organisation in tackling these issues?
In addressing organisational structure, the following are typical of the sorts of questions that should be raised:
o To what extent does our current organisation possess the resources and capabilities necessary to profitably deliver our agreed business strategy?
What are our key strengths?
What are our most critical weaknesses?
Does the organisation need to be reshaped?
o How well aware are we of the competitive environment in which we are operating?
What opportunities does it present for profitable business?
What threats need to be anticipated and planned for?
o What is the target organisation structure to deliver the agreed strategy?
o What immediate steps and actions need to be taken to reach the target organisation?
Jobs changed created or suppressed
People matching the jobs in the target organisation
People taking lager or lower responsibilities
People requiring additional skills
Vacancies
Moves to be initiated
A final critical element of this part of the process is a review of scarce strategic capabilities. This requires three broad steps:
o Review of trends of demand and supply based on strategy and market trends
o Identification of critical gaps and threats
o Plans to develop and acquire necessary capabilities over short, medium and long time frames
Succession planning
At its most basic, succession planning attempts to answer the question: if one of your key people falls under a bus tomorrow, how are you going to replace them and ensure business continuity? Basic this may be, but it is fundamental.
The next step uses the same organigram based approach to identify people to develop over the short to medium term for key roles. Here we need to consider current performance, potential and readiness. Doing this systematically will show where the organisation is most at risk, especially if this is considered in relation to how soon a successor is likely to be required for a given role. On the other hand, many successors identified for all key roles means that other means than promotion are going to need to be found to develop and motivate many of the organisations most talented individuals.
In addition to this, good practice requires us to look at key populations so as to target our development activities relative to their needs. Typical groupings that we may wish to consider would include: high potentials, those ready for a lateral move, strategic skills, people to be developed in position and blockers who need to be moved.
Most forward looking companies also now identify talent pools by job family, for example: potential Sales and Marketing Directors. This facilitates the sharing of resources and talent across the group. Rather than having an identified successor for a given role, the organisation can resource the role from an identified pool of talent, thereby increasing both choice and mobility. The talent pool approach also allows the organisation to get a better view of its benchstrength for given roles and the extent to which it is possibly vulnerable in some key areas. This is not necessarily as obvious in the traditional succession planning approach where a small number of individuals can figure on many plans, thereby giving a false impression of security.
More important than charts and lists, however, is the quality of discussion and evidence that has gone into identifying suitable successors and the development activity that will be undertaken to ensure that they will perform to the best of their potential from day one. Most organisations do this to some extent, few do it well and robustly.
Equally, in larger organisations, this review process should be triangulated by business, job family and country.
The point of generating succession plans is to engage the senior team in a strategic discussion about them. This dialogue must drive specific action plans owned by specific members of the senior team, the achievement of which is regularly reviewed by the senior team.
Feedback
A vital step that is actually missed out by many organisations is that of feedback to the individual concerned. It is our strong belief that where individuals performance, potential and future career has been discussed as part of the review process, this information must be fed back to the individual concerned. The individual must be engaged directly in a discussion about his or her future career direction and development needs. Equally, this discussion must be a dialogue that takes full account of the organisation’s and the individual’s wishes. The output of this discussion must be and agreed development plan, the deliverables and outputs of which are carefully tracked.
In the next article we will talk about building a portfolio of development actions which allow development to be tailored to the identified needs of key individuals. In our experience, only in a limited number of cases does this mean formal training.
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