by
Rene T. Domingo (email comments to rtd@aim.edu)
As people become the key competitive advantage
in any industry especially banking, the human
resource (HR) development function will and
should play a more strategic role. It should
go beyond its mere administrative support
function to operations and front line departments.
Whether or not company views HR strategically
may decide whether market share, sales, or
profits would increase or not. An effective
HR strategy becomes equally decisive as the
company’s marketing strategy.
Technology too is changing HR roles. As industries,
specifically the banking industry, and the
way they compete become knowledge-based, HR
performance indicators will shift from manpower
and man-hours supplied to brainpower and brain
hours delivered. The key result areas in people
management will also shift from production
and quantity to productivity and quality.
Capability, measured in employee ideas generated
and implemented, and productivity gained,
will be more important than capacity, measured
in man-hours available, man-hours lost, absenteeism,
etc.
What is strategic HR? How different is it
from the conventional administrative HR? The
current HR function is very much configured
like the company’s purchasing department.
People, like parts and supplies, are requisitioned
by user departments based on depletion and
growth rates of their operations. Both resources
are screened for quality control and cost
or budget constraints. The only slight difference
is that unlike purchased parts, people are
trained or prepared before they are sent to
the requisitioning parties which may train
them further before actual deployment or usage.
HR is also involved in the replacement, termination
and retirement process of unusable people
assets, much like the handling of depreciated
equipment. In short, most HR systems exist
only for replenishment and maintenance of
a resource called people.
Strategic HR does not abandon these administrative
responsibilities. Otherwise, no other department
in the company will carry out these “operations-sustaining”
activities. But its main task is to participate
in corporate strategy rather than support
administration. Strategic HR is more proactive
rather than reactive in its relationships
with the other functional areas. It is more
concerned about what its internal customers
need in the future to compete globally. Strategic
HR managers do not wait for instructions,
requisition or complaints. It does its homework,
does research on the future, and offers proactive
solutions and strategic advice.
Strategic HR is preventive rather than corrective
or punitive. It is developmental in orientation.
The conventional HR function is the dispenser
or implementers of justice and protector of
corporate assets. It views employees as resources
not be wasted rather than strategic resources
to be developed. Strategic HR aims to create
a working environment conducive for employees
to do things right the first time. It aims
to prevent mistakes rather than punish them.
Strategic HR is output driven rather than
input oriented. For instance, training results
are measured not in terms of training hours
or number of trainees per year, but in terms
of improvement in the trainee performance
attributable to the training. Performance
improvement can be in terms of productivity,
efficiency, quality of work (defects), customer
satisfaction or conversely, number of customer
complaints received. Strategic HR personnel
are concerned with these results as much as
the operating departments it serves. In spite
of the fact that output results are more difficult
to measure than input deployed, strategic
HR aims to find ways and means to directly
and indirectly measure these more accurate
metrics of its success and effectiveness.
Strategic HR is mainly pre-occupied in molding
the employees of the future today. For organizations
to survive and excel in the future, its needs
to develop or acquire employees who are multi-skilled,
cross-functional, empowered, team players.
In addition, they have to have high emotional
intelligence (EQ) and capable of thinking
“out of the box” about the future.
They should be capable not only of improving
their work, but reengineering or reinventing
it if necessary. Front liners who are engaged
in millions of “moments of truth”
meeting customers, must have superior flexibility,
resourcefulness, and excellent memories especially
if their task requires greeting customers
by their first or last names. Strategic HR
keeps these employee attributes as its goals
while conducting its basic processes of recruitment,
training, job rotation, career pathing, and
performance appraisal.
Strategic HR aligns performance criteria systems
with corporate goals and strategies rather
than traditional functional concerns. It includes
in performance criteria of both rank and file
employees and managers those that will enable
them to contribute to corporate goals. Most
traditional HR performance appraisal systems
basically gauge how well a subordinate satisfied
his boss or superior during the appraisal
period. This degree of satisfaction may or
may not be related to how well the employee
contributed to corporate goals. Most of the
time, it does not. For this reason, conventional
performance appraisal has become a highly
politicized, controversial, wasteful exercise
that creates more disharmony than teamwork
in the organization. Strategic HR appraises
people on the more relevant output performance
like quality, productivity, internal and external
customer satisfaction. If negative criteria
are used, these become defects or rework,
wastes, and internal and external customer
complaints or returns. In banking, performance
appraisal may include lost calls, closed accounts,
queuing time, and clerical errors, ATM downtime,
improvement projects. Strategic HR aims to
change employee behavior and attitude by directly
connecting his appraisal (and eventually his
pay) to what actually matters to corporate
performance and customer satisfaction. It
puts less weight on nebulous criteria like
teamwork, attendance, boss satisfaction, and
neatness.
HR is no longer a backroom or support function.
It is in the forefront of corporate strategy,
much like sales and marketing. It provides
and determines competitiveness to an ever
increasing degree. All other things being
equal – financial, physical, and product
assets – people will make the difference
between two competing companies. Strategic
HR can make this difference happen.
