Palle Ellemann Consulting

NEW! Five questions about Business Strategy and HR
September 2010, by Palle Ellemann

A growing number of companies are setting themselves a goal of becoming a great workplace. This is a goal that can gain support internally in the organization and improve the image externally. Additionally, studies show that there is a link between the employees’ perception of the workplace – is it good or bad – and the company’s ability to grow and make profits. Studies based on the list of Best Workplaces published by the Great Place to Work® Institute show this link. In this way you can consider it a win-win situation, where the leader of the company can please all stakeholders at the same time.

Many companies, however, make a big mistake when the ambition of becoming a great workplace is supposed to find a place in the strategy and the organization. Too often “the project” is delegated to the HR-department, where it becomes the department’s own operational goal. If it is only the HR-department taking ownership of the goal of becoming a great workplace, the people practices developed by the HR-department may not be fully aligned with the business strategy and goals, which means that the organization is moving in different directions.

You can only make the second division with HR

The point is that the business strategy and the people practices must be aligned in order to achieve the synergy that makes the link between the great workplace and the business performance of the organization. Based on solid and consistent HR-practices you can create an employee-oriented corporate culture with a good collaboration between management and employees. This is the kind of workplace that most employees would be fairly satisfied with. But you are not getting into the Champions League of Best Workplaces unless the employees feel a strong sense of commitment to the business strategy and the employees take ownership of the results and success of the company.

Many employees don’t know the business goals

If the financial success of an organization should have a positive impact on motivation and the employee experience in the workplace, it is necessary that the employees feel they have a share in the success. They need to know exactly how their work contributes to the success of the company. It is a paradox that many employees don’t know the business goals of the organization where they work nor do they know how they can contribute to achieving the goals. The synergy between the HR and business strategy is created when each employee’s performance and development goals are aligned with the business goals and it is made clear what role each individual plays.

At Microsoft, who has been recognized as the Best Workplace in Europe for the past three years, the alignment of the business goals for the organization and the individual goals for each employee is organized in a software program that systematically maps out the goals and the performance and how it all fits together. There is full transparency, so all employees can see the goals of the company, each department as well as for the individual employees. As an example it is open for all employees to see what the personal goals are for Bill Gates for the year. The system is constantly updated with the results that the individual and the organization create.

Five questions

A company should ask themselves five questions to obtain a stronger synergy between business strategy and HR:

  1. Is HR an integrated part of the process to define the business goals and develop the strategy?
  2. Do the employees know the goals and the strategy and do they truly understand their own role in the organization?
  3. Do recruitment, training and development at all levels of the organization support the business strategy in the short and long term?
  4. Are each employee’s personal development goals aligned with the overall business goals and strategy?
  5. Is each employee part of the company’s success? Are the employees kept up-to-date with the results? Do you celebrate successes? Do the employees receive a share of the profit, when the results are good?

It may seem as an extensive challenge to address all these questions, but the potential is not only to make sure that the organization moves in one direction, but also to increase employee motivation, when employees are taking more ownership of the company’s strategy and results. This is when you get into the vicious circle of success leading to more success.