Linking HR Strategy To Business Strategy

PEOPLE & CHANGE ADVISORY
Practical Tools for Linking HR

Strategy to Business
January 2008
Strategy
Presented at the 2 HR Forum
nd
Jeddah
May 3, 2010
ADVISORY
2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo
are registered trademarks of KPMG International, a Swiss cooperative.
AGENDA
1. So What is Strategic Planning?
2. Why Align Human Resources with Business
Strategy?
3. Barriers to Alignment
4. Practical Tools
So What is Strategic Planning?
The process of ensuring that todays

activities help to achieve tomorrows goals.
Strategic planning is an organization's process of

defining its strategy, or direction, and making
decisions on allocating its resources to pursue this
strategy, including its capital and people.
Gain
Clarity and
Insight
For What Purpose?
So What is Human Resource

Strategic Planning?
Defines how the organizations goals

will be achieved through people, by
means of HR strategies and integrated
HR policies and practices.
Having the right people in the right

place at the right time, suitably
rewarded and engaged, to meet or
exceed the standards of the job and the
needs of the customer.
The HR Value Proposition

People Management Solutions
Tailored to Fit
The Needs of Your Organization
Why Align HR Strategy

with Business Strategy?
Contribution
Competition
Cost
Contribution
People are our most

important asset.
- Jon Calhoun,
Director, Producer
Get the right

people in the
right jobs it is
more important
than developing
a strategy.
- Jack Welch
CEO
Productivity Drives Profits
+18%
Competition
You Do
Business
in a Global
World
The world of
business is
changing
radically and
fast!
Did You Know?
Bank back office transactions are

being outsourced from Europe to
Saudi Arabia.
- European Bank Executive, 2010
The most important corporate

resource over the next 20
years will be talent. It's also
the resource in the shortest
supply. Are you ready to fight
for your fair share?
- Fast Company
Did You Know?
there are 1,500 people just like

you.
Yet China will

have a severe
labour shortage
by 2020.
Chinese labour shortage

drives up wages
Published: 4 March 2010
Emerging markets with high

population growth are not
immune to the talent shortage.
India, for example, has a
growing population but lacks
skilled professionals.
-
Boston Consulting Group
Malaysia must send out the message

that they want skilled foreigners to come.
-
Hewitt Associates
Did You Know?
The Saudization of the oil and gas, and

transportation industries has reached
roughly 70-100 percent of the
workforce.
50 million
population
by 2050
Saudi hospitals need

100,000 nurses, but there are
currently only 1,000 Saudi
nurses and around 53,000
expatriate nurses recruited
from Asia, Africa, and the
West.
- Migration Policy Institute, 2004
The World Bank anticipates that unmet

demand for nurses will more than triple
[worldwide] during the next 15 years.
Brain Drain
California recruits Filipino nurses
California needs 108,000 new nurses
by 2020
California nursing starting wages in 2008

were $75,000 plus benefits and perks
Cost
Effective people management can

reduce costs
Did You Know?
The Cost of Human Capital

(wages, benefits,
transportation, visas,
subsidies, training)
typically represents 77% of
a typical Saudi
organizations annual
operating budget.
Hiring mistakes can be

costly!
Middle manager = 6 month
wages
Executive = 18 month
wages
Remittances by foreign workers cost

the Saudi Arabian economy more
than 60 billion riyal per year.
Thats 20% of GDP

not spent inside the country!
- Migration Policy Institute, 2004
CFOs admitted to Forbes

that roughly 65% of
restructuring activities
failed to meet their
financial targets during
the past two decades.
The lack of [alignment] between

human resource management and
strategic business planning is
increasingly acknowledged as a
major source of implementation
errors.
It is alleged that companies develop
plans based on extensive marketing
and financial data but neglect the
human resource requirements
necessary to successfully implement
them.
-
K. Golden and V. Ramanujam
The Strategy Disconnect

60% of typical organizations do
not link their strategic priorities to
their budgets
2/3rds of HR operations develop
strategic plans that are not linked
to their organizations strategy.
Prof. Robert
Kaplan
When
employees
are not
engaged
earnings per
share decline
11% on
average.
Barriers to Alignment
Poor Service
Lack of Competence
Lack of Credibility
Human Resources is our

weakest department.
- Saudi Arabian Petrochemical General Manager
Leaders Rely on their Best

60% of U.K. managers
view HR as
administrative
58% believe HR lacks
the capability to
develop talent
management and other
key strategies
- CIPD, 2009
HR is Overhead Cost
What is your ratio of HR staff to
full-time employees?
1:80
1:125
1:200
Capability Assessment
Micro Factors
Transformational
Sponsorship of HR Strong
Supportive
by the business
Perception of HR
by the business
Type of work done
Nature of Work
Transactional
Minimal
Sufficient
Efficient
Support function
Creative
Impediment
Indispensable
Inefficient
Strategic
Back office support
Problem solving
Administrative
Advisory
Enforcement
Integrated
Fragmented
Facilitative
Rule-bound
Four Groups, UK
Developing Capability
Listen to your internal customers
Meet their operational needs
Learn about the business
Grow competence
Faster, Better, Cheaper

If you cant
demonstrate
youre
effective,
youre invisible
Practical Linking Tools
If you are invited to

participate in
strategic planning
Be Prepared
If the only tool you

have is a hammer,
every problem will
look like a nail.
- Abraham Maslow,
Psychologist
Best Practices
Analyze
Understand
Innovate
Alignment Tools
1. Business Context
2. Outcomes
3. HR Redesign
4. Accountability
Please send an email for those techniques discussed but not

shown.
Business Context
Dialectic SWOT Analysis
Business Context
(continued)
SWOT-SF Analysis
This variation adds identification of Successes and Failures
Structured Interview
1. Top objectives for the year?
2. Problems or barriers that may hinder accomplishment?
3. Then determine whether there may be a strategic role HR could
play.
4. Ask if the manager would like assistance.
5. Negotiate performance outcomes, methods, timing and other
details.
Outcomes
Importance-Performance
Analysis Matrix
Outcomes
(continued)
HR Performance Benchmarking
Be prepared to look outside your industry and operational
unit
Outcomes
(continued)
unit
Be aware of current Best Practise concerns and use sound
methodology
Outcomes
(continued)
unit
Be aware of current Best Practise concerns and use sound
methodology
Be conscious of the need to adapt western HR methods to
Middle Eastern culture and business norms
HR Redesign
Linking Vision to Objectives
Accountability
Kirkpatrick 4-Level Evaluation Model
Level
Evaluation Type
Example
Who Conducts
Reaction
Post-session assessment
HR
Learning
Post-session testing of
knowledge gain, skill mastery,
behaviour or process
improvement
HR
Transfer
On-the-job assessment of skills,

knowledge, behaviour or process
improvement
HR and line
management
Impact
Evaluate impact on the firm
HR, line
management,
specialists
Accountability (continued)
Metrics
1.
Show line management where improvements in Human Capital

performance can enhance the bottom line.
2.
Use international benchmark standards and be your own

toughest critic.
&
Questions
Answers
phurly@kpmg.com

Linking HR Strategy To Business Strategy

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PEOPLE & CHANGE ADVISORY

Practical Tools for Linking HR

So What is Strategic Planning?

The process of ensuring that todays

Strategic planning is an organization's process of

For What Purpose?

So What is Strategic Planning?

So What is Strategic Planning?

So What is Human Resource

Defines how the organizations goals

Having the right people in the right

The HR Value Proposition

Why Align HR Strategy

People are our most

Get the right

Productivity Drives Profits

Did You Know?

Bank back office transactions are

The most important corporate

Did You Know?

there are 1,500 people just like

Yet China will

Chinese labour shortage

Emerging markets with high

Boston Consulting Group

Malaysia must send out the message

Did You Know?

The Saudization of the oil and gas, and

Saudi hospitals need

The World Bank anticipates that unmet

California nursing starting wages in 2008

Effective people management can

Did You Know?

The Cost of Human Capital

Hiring mistakes can be

Remittances by foreign workers cost

Thats 20% of GDP

CFOs admitted to Forbes

The lack of [alignment] between

K. Golden and V. Ramanujam

The Strategy Disconnect

Human Resources is our

Leaders Rely on their Best

Back office support

Faster, Better, Cheaper

Practical Linking Tools

If you are invited to

If the only tool you

Please send an email for those techniques discussed but not

Middle Eastern culture and business norms

On-the-job assessment of skills,

Evaluate impact on the firm

Show line management where improvements in Human Capital

Use international benchmark standards and be your own

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