Evidence shows that the companies that are best at delivering customer value, and have the best long-term relationships, are the ones with the most well-managed HR processes. Here’s how businesses can make HR a best practice.
HR represents something of a paradox. Various studies, including the 2016 ISS Study: Linking Employee and Customer Engagement, show that the behaviour and satisfaction of employees is directly linked to the quality of service, customer experience and profits. Likewise it is almost impossible to open a business magazine without reading that HR should be the most important department in any service company.
However, in many instances the reality is different. Most people, including the C-suite, often perceive HR to be an administrative function whose purpose is to make sure that people are paid on time, that employment contracts are signed and relations with unions are good. In these cases, HR is not perceived to add much strategic value.
The shift from operational to strategic HR
Reviewing existing research on HR’s role in Service Management, it is clear that the focus until now primarily has been on the operational aspects of HR. However, this is about to change. Increasingly HR will begin to see itself as a business driver rather than an administrative function. Hence, more efforts will be put into tasks such as talent management, HR strategy alignment, succession planning, performance management, ROI measures of HR, people investment analysis and many more. These activities will become critical to create long-term value and growth for customers and shareholders alike.
In this context, best practice strategic HR suggests a strategic framework with five core strategic HR disciplines as visualized in the below graphic:
The ISS strategic HR framework explained
The strategic framework outlined above is a set of principles and guidelines to which all strategic HR activities should adhere. They should be implemented in such a manner that they are aligned with the company’s mission and overall operations.
The three core strategic HR top components
All HR activities must be strategically aligned with the company’s overall strategy. The purpose of the HR department is to create and deliver the right set of competencies to support the overall strategy and create value in the eyes of its customers. As mentioned before, this value is a perception that the customer forms on the back of the encounters she has with the service provider’s service and employees. For these encounters to be successful, the service provider must serve the front-line employees as well as possible.
While all companies have some kind of culture, not all manage to create a high performance and superior customer service culture. It is up to HR to design and implement activities so they promote such a culture. This is also supported by studies showing that where HR is integrating the concept of performance culture into its activities, companies perform better in the long run.
Measure & Evaluate
HR must measure and evaluate its initiatives constantly in an objective and tangible way. By using tools such as HR analytics, HR can make better strategic and people investment decisions and make the HR practice more efficient.
The five core strategic HR sub-components
Leadership development is a must-win battle for service companies in order to deliver excellence in service offerings. Leadership development must involve top management participation to underline its significance and leaders at all levels must be able to guide and motivate based upon human understanding, respect and responsibility. The focus of such a programme is not only focused on the individual person (the leader) but also on developing leadership as a process in the company.
Performance Management is one of the most effective Strategic HR activities. Research shows that it is directly linked with:
- higher profits, and employees clearly understanding and meeting their individual goals
- quicker execution of company strategy
- reduced employee turnover through higher employee engagement
Through a strong performance management culture, business performance and employee contribution to service excellence can truly accelerate.
The war for talent has never been as intense as it is today. In this context, talent management is a range of continuous processes and development programmes that aim to identify, attract, retain, engage and intelligently deploy the best employees.
For the service provider, an effective talent management programme will develop the most gifted talent and increase the quality of people responsible for managing the customer business.
It is widely recognized that employee engagement is a major driving force behind many business outcomes. To improve engagement, constant focus on changing behaviours, processes and systems is required. From the leadership to the front-line employees, all levels within an organisation must be dedicated to be a part of these changes.
To make sense of employee engagement, a company-wide engagement survey should link directly with the customer experience survey. In this way, the engagement survey will give a clear picture of exactly by which parameters the engagement level is affecting the customer experience and which exact actions should be performed to restore potential issues.
Succession Planning has two main purposes: one is to mitigate risk by having emergency successors identified and to step in when needed; the other is to have a longer-term development view of how positions are filled. Succession Planning involves several steps:
- identify key roles and positions which for risk mitigation purposes require someone to step in if needed
- identify and/or recruit a successor for each identified key position
- assess gaps for each position between desired level of competence of each successor and current level
- make individual development plans for each successor
- develop each successor to the required level of competence
If the service provider excels in these five core strategic HR disciplines within the core strategic HR framework, the business will be well on its way towards a best practice.
Would you like to know more about Strategic HR and Service Management? Download our White Paper: The Value of Strategic HR processes in Service Management.
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