One of my favourite types of project is when I can work on the ‘People Strategy’ for a company.
Probably in part because of my mixed business/HR background – as a People Strategy goes hand-in-glove with the Business and Financial Strategy of an organisation – and because the best exist in a continuum from strategic though tactical to operational & practical actions and make a real business difference, rather than staying at a high level of strategic abstraction.
I did my first one many years ago whilst still at Shell (for the Shell Chemicals Technology organisation) when I used it both to inform the Technology Strategy and also to help explain how our eventual HR actions which followed from the People Strategy helped deliver the overall business results (rather than being separate, ad hoc ideas which took up people’s valuable time!)
Since then I’ve had the luck to work on a number of these with different companies.
It is important to begin though explaining what a People Strategy actually is. And what it is not.
What is a People Strategy (and what it is not)?
+ At its core, a People Strategy is designed to inspire and achieve company-wide alignment on goals that concern its people.
+ It therefore provides direction, principles & a framework for the development & application of people management policies, practices & activities in the organisation
+ In particular it will often describe the way to think about and set into motion ways to attract, develop, retain, and generally inspire the workforce to best accomplish the company’s targets, so leadership and culture often play a key role
+ A People Strategy outlines what changes might be necessary to deliver the Business Strategy. It should both result from, and influence, the Business Strategy (and the Finance Strategy that is part of it) in a two-way process.
+ It should be owned by Business Leaders, carried out by Line Management, with HR business partner support
+ Although the effects of the People Strategy should be part of every employee’s daily experience, it will be invaluable for all supervisors of people, outlining the Company approach to employee relationships, so that they are aware of the strategic context
– It is not a policy manual
– It is not an organisational capability development plan (although that could be part of the People Strategy)
– It is not just HR Policies nor an ‘HR Strategy’ nor an HR Action Plan, nor an Employee Value Proposition.
It is not an HR Strategy under a different name
This last point is important. A People Strategy differs fundamentally from an HR Strategy. People Strategies and HR Strategies are different tools.
A People Strategy refers to an organisation’s philosophy about its relationship with employees. As explained above, it should determine the organisation’s values about the treatment of employees to ensure they feel engaged, motivated, developed and aligned to further the company’s goals.
An HR Strategy is far more focused on the ways HR teams work, the things they do and the actions they take: building the systems and developing the processes to attract recruit, onboard, retain, assess, develop and reward.
Do you need a People Strategy (or is an HR Strategy enough?)
Obviously I believe you do! Because it is the extension of the Business Strategy and it is the definition of where the company wants to be as an employer, displaying its commitment to employees and enabling the Business to connect with its workforce at a deeper level. It is a virtual roadmap to grow the business, based on the talent a company already has, will need to have in the future and will want to attract and retain. It should enable companies to identify problems before they occur, to handle them in a proactive and holistic fashion and allow a better response to uncertainly, sudden changes and the external environment. It is not just ‘what HR does’ or has decided to do.
Without one you run the risk of a fragmented company culture, misalignment of initiatives and the pursuit of the wrong priorities. It therefore ensures your eventual HR Strategy and HR action plans are wedded to the Business Strategy and supported by the wider organisation.
Process for building a People Strategy
- Review current positions – both external realities and internal standpoints – on strategic people themes, including people portfolio management and the employee value proposition; build on your strengths and heritage
- Create a vision and collect the data; identify problems, outcomes and gaps; gather feedback and create excitement
- Strategic means holistic – so the input needs to come from many different sources. The People Strategy needs to be informed by all sorts of people (definitely not just the top leaders and certainly not just the HR team!)
- Frame the main strategic people issues in delivery of the Business Strategy
- Visualise, communicate, share and get feedback
- Define projects and activities to tackle these main strategic people issues and focus on execution (which is when the HR Strategy or Action Plans may start to take shape, but it is not only HR that ‘has to do things’ but the leadership of the organisation at all levels)
- Ensure all leaders understand the Strategy
- Be ready to update and adapt in the future
People Strategy case studies
Two examples where I have developed People Strategies for companies illustrate a number of the points above.
- Major oil company
A major oil company had never had a People Strategy before, in part because the only decisions they had needed to make for a number of years depended on having enough money (which they did), having enough raw material (which they did) and if they already had, or could buy, the technology required.
However the latest three-year plan and the twenty-year ‘shape’ of the company following a ‘conservative base case’ made this approach less clear. The strategic challenges arising from both included: the financial stability of the company in the next three years; the organisation’s technology bet and the replacement of reserves; the role of the gas business in the company’s future portfolio; the degree of international diversification they should pursue; and the future Upstream vs. Downstream balance and Downstream’s portfolio sustainability.
The expectations of the final product, the People Strategy, explained to me beforehand were: alignment with the Business Strategy; that is should indicate a coherent & consistent approach across individual HR policy areas; and that actions & implementation arising from the strategy should be experienced by employees and reflected in the behaviour of line managers.
A summary of the People Strategy conclusions was:
- A number of the People Processes and main People initiatives introduced in the last 2-3 years remained valid to deliver the Business Strategy, provided the emphasis was on thorough, rigorous and extended application of those processes
- The red thread running throughout the People Strategy was an increasing emphasis on resourcing, talent development, leadership, technical competence development and culture, and the increased communication both internally and externally with all stakeholders including current and future employees
Or to put it in ‘words of one syllable’, we did not have the people with the skills we would need in the future to deliver the business strategy as it was now envisaged and we did not know where we would find them!
I will not take any credit but the People Strategy indicated that the Business Strategy as planned would be very difficult to achieve, both in the short- and the long-term. And although the company could have remained a ‘cash-cow’ for the foreseeable future, within a year the shareholders had sold the company for an excellent price. The new owners had not asked to see the People Strategy!
- Downstream function of a national oil company
A second example was for the Downstream (Marketing & Refining) function of KMG, the Kazakh national oil company. The CEO faced a number of strategic business challenges and changes he needed to make for the success of the company, as he and his management team explained to me in a series of structured interviews.
The market was changing and hence the company had to be more competitive and innovative in an open market with real competition. Its plants needed technical modernization. Business processes needed to be simplified. They would have more co-operation agreements with partners (especially Chinese companies) that would need different skills to manage them. The CEO in particular referred to his managers lower in the organisation as a ‘lost generation’. Talent development and a future talent pool were needed, with a new culture of results-orientation and motivation.
The expectations expressed to me in this case were that the involvement and development of people in the company and the HR role and support would have change radically to deliver the transformed Business Strategy, and that an important input to the People Strategy would also be international best practice from multinational oil & gas companies.
So in addition to talking with and getting input from different stakeholders, we looked at the people elements that would be needed to deliver the business changes; sought alignment with any strategies that were already in place with the national companies (in practice very few); looked at current and international best practice and did a gap analysis with the current people practices and processes.
Part of the result was the identification of areas requiring immediate development, others with the opportunity to improve and a third group which at the time met requirements. In particular it was agreed to start work on resourcing (internal recruitment, assessment & adaptation); leadership development (values, leadership competences & assessment, identification of a talent pool); corporate culture and a change management capability.
Again I claim no credit, but the CEO was still in place on the national company Board many years later, which is very rare for Kazakh national companies, where leaders are often changed out every couple of years.
If a company wants to ensure its Business Strategy has the best chance of succeeding then a strong People Strategy will provide direction, principles and alignment, positively influencing every employee’s daily experience.