#04 How to build a powerful Human Resources Strategy

[Music] hello and the warm welcome I'm arming toast professor at the football and university in Germany and this is my series on human resources strategies a real master course for advanced HR students professionals and executives this series is available on YouTube and on all putt catchers like iTunes or Spotify all slides that support this series are available on my website for more information please read the description to this youtube or podcast I'd also like to refer to my book human resources strategies available at most online bookstores so again thanks for listening have fun and gain valuable insights into the fascinating world of a chart strategies [Music] so welcome everybody this episode will be a key episode I would say because this one will provide you with an overview on the required steps on how to build a powerful HR strategy so let's start with a simple and difficult question yeah just imagine you are the newly appointed HR executive in a company right or the CH or o or CP o chief people officer however you name it you know you are the top HR executives and you are supposed to build an HR strategy I mean because that's what executives do right they build an HR strategy all the build strategies in general so that's the situation and and the situation is real it's not fake this is not this is not textbook now this is this is real so how will you start and proceed what will you do which questions will you ask what steps will you undertake what will you consider what will you actually do right we could also put it differently let's assume in let's say 100 at least 60 days from now you have a meeting with the entire Executive Board and you have a slot of one hour and your task will be to present the new HR strategy you will present something probably you will have a presentation prepared on PowerPoint maybe and this presentation might consist of 30 slides while what will you right on the very first 10 slides and also on the remaining slides of course but how will you start it just think of this how will you start and the first thing you can do now is just to try to compile a list of activities that you somehow like or you are familiar with it could be that you you love the topic of diversity so you put diversity on top of the strategy or you think mmm in terms of talent shortage so let's put that on top or because you you are an industrial organizational psychologist and you dealt intensively with diagnosing skills and competencies you put this on top because you are so good at it of course this is wrong and and and and also wrong is just to take the HR strategy that you had from your previous company so well I don't want to repeat all the pitfalls that we were talking about in the last episode I would like to share with you a structured stepwise approach so how to start everything starts with a business now that's an important sentence everything starts with the business and I would put it that way we start with the company strategy or to put it differently with everything that is related to the strategy of the company and I would like to focus on three things here and as a newly appointed HR executive if you should be aware of these three things what are the three things first you must be clear about the purpose of the company we'll talk about this in a minute the purpose of the company the second thing is you have to understand the competitive advantage of your company where is your company better than all the others and third what are the strategic challenges of your company so first come first let's start talking about the purpose of the company the question is why is your company there why does it exist it is a serious question in in any do yourself a favor and just talk to a colleague and ask him or her this simple question ask him or her hey our company why does it exist it will be funny to hear what you get so some will say why do we exist I mean because we exist because you have we always existed it existed it's good that it exists because I work here I earned some money yeah okay why does it really exist why does the world need you as a company so let's think about the following okay now let's assume you are a student okay you got enrolled in a university at a place you have never lived okay let's say you are enrolled here in my in my home area here in the plac forest for twang and university so luckily you found a nice flat one and a half room and and this flat is empty there's nothing in it it's just a little kitchen but but nothing else so you don't have much money because you're a student and you you want to buy all the things that you need all the furniture and all the stuff that you need for living and you want to do kind of one-stop shop well you don't want you to serve around hundreds of online platforms unto two into two to order various things I mean he don't want to do this and also I mean you don't want to spend a couple of weeks to to to to buy all the stuff you need because you have rented our transporter car a big car for one weekend sorry you have to buy all the things on a one-stop shop you don't have much money the things you want to buy are supposed to look good and they should they should be well let's say for the next four years okay yeah that's that's what you wanted to you so the longer I talk and the more I describe the situation the more of you will think of one particular brand which is probably depending on your country IKEA right IKEA IKEA IKEA IKEA Germany we say IKEA yeah yeah that's why Akira is there yeah and if you ask an executive at IKEA hey you mrs. executive mr. executive why does he care I exist they will never ever say something like yeah we produce and sell furniture and stuff no that's not the purpose the purpose of akia is something different to provide a good living right with good design at a good price and that's the thing right so we can also look not only at IKEA we can also look at McDonald's if you ask in an executive at McDonald's hey why does McDonald's exist they will really say yeah we sell food no McDonald's not about food yeah it's also bad food but I mean a lot of a lot of shops a lot of restaurants are odd about food but it's not about food right it's about something special and you might think about this or or let's think of Apple I mean when you when you when you hear when you carefully listen to Steve Jobs Steve Jobs never said Apple is about producing and selling computer devices no not at all he said something different he said well look at all the crazy people that really changed the world who really made difference in the world all the rule breakers crazy guys think of Hitchcock think of Gandhi think of Bob Dylan think of think of Maria Callas think of Albert Einstein think of all these crazy people if they would have used the computer they probably would have used the Macintosh let what he said more or less so he said Apple is not about computers of course they sell computer but that's not the purpose then it's not about computers it's about enabling people to translate their crazy ideas into fantastic reality now I mean this is in my own words Steve Jobs put it better of course now I think different that was the claim so that's the purpose of Apple so as a newly appointed HR executive you should be clear about the purpose of the company first yeah because I mean that gonna affect a lot of things not only the motivation of the people but but also the priorities we're gonna talk about and everything you do in HR everything you do in HR must relate to the purpose ultimately yeah if something does not relate to the purpose it it might be useless right and when you think about a purpose the interesting thing is that purpose has always an eye towards the customer so that's why it's so important to start with the purpose the business purpose because when you think about the business purpose you necessarily think about the customer and the customer is the first thing you consider when building an HR strategy right that's absolutely essential there is no purpose that goes just inside the organization okay so that's the first thing purpose the second thing is what are the critical business challenges and in here's a good a good question to to be answered address to the CEO maybe and the question goes like this so mrs.

C or mr. CEO tell me why can't you sleep at night you know most CEOs if even though they don't talk about it but very often see you always wake up in the night it three o'clock in the night in the silence of the night scary and then the demons show up the demons all their worries the things they really fear about their company and they have reasons why they don't sleep at night I mean if you ask a CEO especially a male CEO ask him any why can't you sleep at night he will tell you I can't sleep at night I'm solid you know no no no they very often can't sleep at night and they have reasons and you know there are many reasons one is for instance disruptive technologies you know there are players in the world I'm going to talk about this in different episode in more detail but there are players in the world that make your life hard play is that that you've never heard about never never heard of a year ago little startups that gonna turn the markets and the business upside down just think about digitization digitization is so massive changes everything think about the new business models that go along with digitization so as a company can you keep up with these fast changes that go along with digitization I mean we have sometimes political uncertainties I mean these days while I produce this podcast we have to think about the practice that the Praxis sorry the proxied this is political uncertainty so if you have a subsidiary in in Great Britain that that might worry you or while I produce this episode we are in the midst of the corona crisis well that's the reason why you can't sleep at night yeah but there is much more like like shifting consumer behaviors the consumers behavior is changing I mean we have experienced this in the last few years and decades moving from from real stores to online stores right so Public Regulation if you are in the financial industry you're worried about the growing Public Regulation as a consequence of the financial crisis so there are challenges that make your life hard and and you better capable to to cope with those challenges and this an HR executive you have to understand those challenges right it's incredibly important the third thing you have to understand in general is the competitive advantage of your companies so you have a purpose but you're not alone with that purpose there are other companies as well who follow up on a similar purpose maybe you are not the only car manufacturer you are not the only only chemical company in your industry you are not the only store in your in your town you have competitors all around of course you have so the question is where are you better than the others in serving the customers where are you better to deliver on your purpose so is it because you're more innovative than the others is it that you are technologically more advanced or is it that you can offer your products at a lower price or is it because you can offer your products and services with a higher quality is it that or with a better design do you do you have a better brand yeah do you have better access to markets do you have a bigger mark Jill what is it what makes you better than the others and you know I don't want to talk about strategy too much because this is a series about human resource strategies not about strategy per se but but in my eyes when we think about strategy just for a few minutes that's that's one of the most important questions to be answered where is our company better than all the others and our competitors and and you cannot be better in everything you cannot be more innovative be higher-quality with a lower price that's simply not possible so you have to make a decision that's a strategic decision that's a purely strategic decision everything makes sense but you have to make a choice and that's that's interesting that's interesting yeah so purpose business challenges and competitive advantage so that's the business side just talking about this for a few minutes but I think that's essentially that's the starting point yeah so as an HR executive when you present your HR strategy you better start with these three things so that you can prove that you understand what we were talking about that HR is not about HR purely it's about it's about affecting the business ok what business what needs to be affected what challenges need to be overcome which purpose need to be on which purpose do you need to deliver and so ok but now comes the next step if this is all true what are the people related to challenges that's the first question you need to answer and that goes along also with what are the critical functions I will share with you our specific episode about the critical functions the critical function roles it's it's the next episode I that that one needs more time yeah and so I will not talk about the critical functions now in this moment I just want to focus on the people related to challenges and when you when you think about the people related challenges I mean a good question is okay if we want to deliver on our purpose if we want to overcome the business challenges and we want to strengthen our competitive advantage what is required on the people's side so what does that mean to the people in the organization the employees and the managers and and why is it so hard from a people perspective too to deliver on purpose to overcome business challenges and to strengthen competitive advantage and you know that's a first question you might ask yourself and it's not so easy it's not so easy but if you do it carefully you come up with you you might come up with a few things from from a huge list of potential things I just would like to give you an idea about about some some some things like well people related challenge might be that you do hard and feeling key and expert positions okay it could be a challenge you say okay we want to be innovative so we need good scientists but we don't get them we want to keep up with digitization so we need a lot of software developers but we don't get them and we need many of them and we talked about bottleneck functions as you will learn in the next episode so filling bottleneck functions might be a real challenge or a challenge might be the valid selection of the right candidates you might think that it's really difficult for you to to to select the right people being fair and compensation that's a big one as you will see or something like well we have to share relevant knowledge across the firm really that's essential for the future of the business or something like we have to shape working conditions which are productive all right something like this so there are a lot of things you might need to do to cope with retaining best and high potential employees that might be another one right so what are the biggest people related challenges so as an HR executive you better have a list of let's say three five seven points here and when you point out these key challenges you better use numbers you better have a solid ground it's not just guessing and it's not just saying we don't have enough money now be clear on what the real people related challenges are so once you have the challenges the next thing is to understand okay what are the topics that we have to deal with the topics and the approaches so that we can overcome those challenges so the challenges as such are the why but now it comes to the how how will you overcome the challenge are filling key positions that's part of the strategy and this is something the Executive Board wants to hear they they're not happy with just understanding the challenges they will ask you okay mrs. mr.