Business of Business is Business

The debate on Corporate Social Responsibility has really highlighted the contribution and impact which organisations can have on common man's life.The CSR concept has got different implications in different countries.Euorpian organisations also include environmental friendly practises as part of CSR activities while Asian organisations see it as part of community develoment process.Ian Davis continues the debate on CSR in Mckinsey Quarterly Review. Milton Freidman's saying "business of business is business" has been extended to include the greater social role which organisation of today have got to play.

The problem with the "business of business is business" mind-set is rather that it can obscure two important realities. The first is that social issues are not so much tangential to the business of business as fundamental to it. From a defensive point of view, companies that ignore public sentiment make themselves vulnerable to attack. Social pressures can also serve as early indicators of factors essential to corporate profitability: for example, the regulations and public-policy environment in which companies must operate, the appetite of consumers for certain goods above others, and the motivation of employees—and their willingness to be hired in the first place.

Highlighting the unhealthy practices of promoting harmful consumption he write's:

In the food and restaurant sector, meanwhile, the long-escalating debate about obesity is now resulting in calls for further controls on the marketing of unhealthy foods. In the case of big financial institutions, concerns about conflicts of interest and the mis-selling of products have recently led to changes in core business practices and industry structure. For some big retailers, public and planning resistance to new stores is constraining growth opportunities. And all this is to say nothing of the way social and political pressures have reshaped and redefined the tobacco and the oil and mining industries, among others, over the decades.

In all such cases, billions of dollars of shareholder value have beenput at stake as a result of social issues that ultimately feed into the fundamental drivers of corporate performance. In many instances, a "business of business is business" outlook has blinded companies to outcomes, or to shifts in the implicit social contract, that often could have been anticipated.

Survey Findings on working Habits

Indian Managers are often heard grumbling about the amount of time their co-workers spend on internet and often waste lot of time and energy on non productive work during office hours.Well Folks....Here's some news which will redeem your soul from the guilt of reading this post on your office network.According to a new Survey from a national poll of 10,044 employees by Needham-based Salary.com and America Online shares this findings.

It contradict prior reports that described American workers as the most productive — and overworked — in the world. The change, said researchers, may stem in part, from the Internet, which allows employees to take additional breaks throughout the day without leaving their desks. Of those polled, for example, the majority — 44.7 percent — said they waste time randomly surfing the Net,

The next big time-waster? Socializing. The survey found that 23.4 percent of those polled spend a considerable amount of time talking to friends and associates. Other top time-wasters: conducting personal business, daydreaming or spacing out, running errands and making personal telephone calls.

Workers say they're not always to blame. In all, 33.2 percent said they didn't have enough work to keep them busy, and more than 23 percent said they waste time because they are underpaid and unappreciated.

I am sure my Indian friends will need this data when they confront their Boss next time.

The Third Place to Work

Third Place to Work

Charlie Grantham and Jim Ware write extensively about the “third place” for work in the latest edition of Future of work Agenda.

In the work design collaborative research program their was a demand for a "THE THIRD PLACE TO WORK" from the Knowledge workers.

“In fact, we wouldn't be surprised if that many people are already working one or more days a week in third places right now. Just think about your own work patterns; how often do you "log on" from a coffee shop, an airport hot spot, a hotel lobby, or some other location well removed from both your corporate office and your home office?

"Third place" is a term first used by author Ray Oldenburg way back in 1989 (The Great Good Place (Paragon House Publishers, 1989). By that he meant places that are not living areas and not "offices" per se. Third Places are typically smaller facilities (10,000 to 14,000 square feet) where people gather for a variety of reasons and to do a variety of different things. "A Starbucks on steroids" is a good image.


Third Places are clearly an adjunct to traditional "corporate" offices and home offices. Our research shows that workers of the future will most likely be spending approximately 40% of their time in corporate facilities, 30% in a home office, and the remainder in a "third place" (actually, that will most likely be a variety of third places over the course of a week or a month).


They believe that organization of the future will have these common working patterns.


*Organizations want to move away from a fixed-cost structure to variable cost models in order to reduce capital requirements and risk, while increasing their agility and responsiveness to changing environments;

*Remote and mobile workers do not have adequate alternative meeting places, office services, or technical support that are either affordable or convenient to their residential locations;

*Home-based independent workers also need and want more support and services because their home-based workspaces are limited and they generally have almost no useful meeting space. And like mobile workers they
also have a need for office services and technical support.

Talent Retention :The Challenge

Talent attraction and retention has become one of the biggest challenges which organizations face today. It’s no more just the HR’s responsibility to attract and retain the best talent. With the ever growing pace of knowledge economy, talent management has become a hot topicfor every organisation.

According to a study conducted by Accenture attracting and retaining skilled staff ranks highest on executive agaenda for 2005. The study, conducted annually, comprised interviews with 425 senior executives at leading organisations in North America, Europe and Asia, to identify and prioritise the issues of greatest concern to senior management, understand how their priorities shift over time, and identify key forces behind the issues.

Mike Berry writes

“Workforce improvement issues dominated the top priorities, accounting for four in 10 of the most commonly cited concerns. The majority of respondents (35%) selected 'attracting and retaining skilled staff' as a top priority, followed by 33% who cited 'changing organisational cultural and employee attitudes'.

“The most powerful theme emerging this year is a strong and consistent focus on people,” said Peter Cheese, global managing partner of Accenture’s Human Performance practice.

“Even though the business conversations have centered on global competition and the need for execution, business leaders are increasingly aware that nothing happens unless 'people talent' is engaged in the right way.”

Customer retention issues also occupy top spots on executive agendas. 'Acquiring new customers' (32%) and 'increasing customer loyalty and retention' (29%) were popular responses across all countries surveyed.

Survey findings

Top 10 current business
issues for senior executives Response%

1. Attracting and retaining skilled staff 35%

2. Changing organizational culture and employee attitudes 33%

3. Acquiring new customers 32%

4. Developing new processes and products to stay ahead of the competition29%

5. Increasing customer loyalty and retention 29%

6. Managing risk 29%

7. Improving workforce performance 28%

8. Increasing shareholder value 27%

8. Using IT to reduce costs and create value 27%

9. Being flexible and adaptable to rapidly changing market conditions 26%

10. Developing employees into capable leaders 26%

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The Power of Diversity

Diversity of group is often seen as a big hinderance to achieve organisational goals.Many leaders are of oppsosite opinion ,they feel that diversity can be used as a powerful tool for harnessing and enriching talent. V.M Cramer in his recent article titled "The Power of Diversity" highlights how great leaders can turn the diversity disadvantage to great advantage.


Improving Leadership in the Age of Diversity

Paramount to a leader’s success is the ability to establish a group’s identity, influence its behavior and build its collective confidence. Employing psychometric methods has facilitated these goals. By having “knowledge” of the types of people that are on a team, the leader’s ability to guide and direct increases. However, in today’s diverse corporations, leaders must also be navigators, seeking unfiltered information and perspective.

Individuals can possess leadership qualities, and then acquire the skills to become effective leaders. However, a leader cannot possibly possess the requisite insight to the dark energy within the members of a diverse team. No one can possibly know each individual’s unique talents and insights. Therefore, leaders must develop progressive leadership skills, specifically designed to maximize the contribution of all team members. As we learned in high school science, energy has two forms: potential and kinetic. Corporations must activate the potential locked within their diverse workforces and release the kinetic energy to improve corporate performance.

An Empowering Operating Environment

To realize the full potential of this energy, we must view diversity as if it were the fuel powering a nuclear reactor. The energy must be released and it must be directed toward an objective. Individuality requires a new workgroup process that maximizes the effects of potential energy in the decision-making and problem-solving process.

Leadership training programs must expand their scope and curriculum. Leaders must focus on the unrealized asset value that lies within diverse organizations. Diversity can then be recognized and leveraged for its tactical and strategic asset value.

Executives must replace the decision-making reactors and bring them on-line before any more dark energy is wasted.

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Thirty Second Pitch Tips

Manny times we are often confronted with situations which requires us to come with our best in just few seconds.Tory jhonson's tips in "10 Simple Secrets Of The World's Greatest Business Communicators" is just what you require to pitch for the very best.I guess we have come across such moments in our life when we really feel we could have done better,but make a mess of presentation.


Tory Johnson's Thirty-Second Pitch Tips

1." First and foremost, state your name! Women, more so than men, have a challenge because we want to err on the friendly side. I'm not Oprah or Madonna. I'm not on a first name basis with the world. Always present yourself in a business situation with your first and last name. Beyond that, I want to tell you who I am and what I offer.

2.Secondly when describing your accomplishments, remember that numbers count. Quantify something. For example, there's a big difference between saying "I'm in Human Resources" or "I'm a Human Resources manager with experience at Fortune 500 companies." That's quantifying. Include impressive details. They get people's attention. Better yet-- "I've worked in Human Resources for Fortune 500 companies for the past ten years and I've hired over one hundred people." Focus on accomplishments, not responsibilities.

3.Finally, rehearse your pitch so it comes off naturally, not like a patented pitch. Don't make it sound like you're reading it. Record it on a videocamera. Look for nuances. Do you avert your eyes? Do you use filler words like "um" and "ah"? You'll find things you cringe at. By taking steps to improve your performance, you'll come across as more confident and as someone others want to get to know.

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Preserving Knowledge in an Uncertain World

Preserving Knowledge in an Uncertain World

When employees walk out the door, they take valuable organizational knowledge with them. But managers who think creatively can keep it in-house.

Eric Lesser and Laurence Prusak

Throughout 2001, headlines have announced job cuts in a number of major corporations: AOL Time Warner, Lucent Technologies, Verizon, DaimlerChrysler and Sara Lee, to name a few. Although the economic downturn has not yet been on the order of magnitude of the early 1980s, indicators point to a substantial slowdown in a variety of sectors. The growth spurt of the late 1990s has clearly wound down.

During that boom, an important trend had appeared: Companies had begun to manage knowledge as a strategic capability. Time and resources went into enhancing the ability to create, share and use both individual and collective know-how so that businesses could improve productivity, organizational effectiveness and innovative capacity. Many public- and private-sector organizations undertook a wide range of knowledge-management initiatives, including identifying and sharing relevant practices, locating and highlighting expertise, fostering communities of practice and installing collaborative technologies.

The Risks to Knowledge Assets

The era of rapid growth and change was conducive to experimenting with and implementing new techniques for managing knowledge. Expanding budgets for new personnel and systems, coupled with a need to disseminate knowledge quickly to an ever growing and increasingly diverse work force, provided steady nourishment for knowledge-management efforts. However, in an era of uncertainty, shrinking budgets and staff reductions have put knowledge at risk: The most knowledgeable employees often leave first, critical social networks are damaged, trust decays and the time necessary for knowledge transfer is compressed and compromised.

The Most Knowledgeable Workers Leave First

Voluntary reductions in the work force may have a negative effect on preserving knowledge. Many organizations, in an attempt to soften the blow of impending layoffs, institute incentives to encourage individuals to leave the organization voluntarily. Unfortunately, voluntary attrition programs often encourage the most marketable and knowledgeable individuals to leave. In addition, early-retirement programs apply to older individuals, so companies often end up losing those who have accumulated the most knowledge — and rapidly deplete the corporate memory, knowledge base and supply of mentors. Rarely do organizations have any way of systematically identifying individuals' specific knowledge or tapping their ability to share that knowledge. Even fewer companies attempt to record and share the knowledge held by outgoing employees. Hence, remaining workers faced with new duties may be frustrated and unproductive.

Damage to Social Networks

Downsizings can hurt the social networks that speed the flow of knowledge across an organization. Our research and experience at the Institute for Knowledge Management has shown that social networks play a critical role in helping people identify, share and work with corporate knowledge. Through such networks, individuals identify experts, provide referrals for those seeking answers and facilitate knowledge transfer among groups. Downsizing disrupts the structures and causes "potholes" that impede and often block the flow of knowledge. Individuals who previously connected disparate groups may leave. Companies may not even be aware of the valuable roles such employees play; the roles are rarely described in formal job descriptions or organization charts. In the absence of what the World Bank has dubbed "bonders and bridgers" to assist in knowledge transfer, organizations find it difficult to locate specific information. Without people proficient at identifying "who knows what," the time needed to search for answers and find appropriate resources may increase dramatically. Knowledge activists oil the wheels that keep information flowing.

Undermining Trust

Cutbacks can erode the trust and sense of mutual obligation that is critical to knowledge transfer. Employee reductions have a powerful effect on how individuals view their relationship with the organization and with their colleagues. Some people may see layoffs as breaking an implicit social contract and may respond by withholding knowledge (overtly or unconsciously) that is critical to organizational success. Moreover, if employees see specific knowledge as pivotal to their ability to keep their jobs, they may be reluctant to share that knowledge. Also, in withholding information, they diminish colleagues' sense of obligation to contribute to company knowledge.

Loss of Thinking Time

Tightened business conditions may remove the slack time needed for sharing knowledge effectively. The survivors of downsizing often are asked to do more work with less assistance. They may feel pressured to be more productive. Given that most employees are overwhelmed with their current tasks, such conditions make it even more difficult for workers to take the time to share knowledge with colleagues. Time that used to be spent improving skills, reviewing projects and sharing experience evaporates. People who are struggling to stay on top of day-to-day routines are less likely to mentor junior employees or share relevant knowledge with a colleague in a videoconference. Both individuals and organizations suffer when staff capabilities are underdeveloped, problem solving is redundant and opportunities for improvement are lost.

Seeking Faster Payback

In a time of belt-tightening, companies scale back projects that are not deemed essential, often eliminating knowledge-management efforts unlikely to produce an immediate, quantifiable payback. For example, a business may reduce the support offered to a community of practice or cut the number of training sessions that employees may attend. However, eliminating such efforts entails costs that compound one another. The organization loses the potential benefits normally associated with such efforts, such as faster customer-response time, improved asset reuse and increased employee productivity. Further, by cutting knowledge-management efforts, organizations send a clear and powerful signal to employees: "Managing our knowledge is something we can live without." That message affects later efforts to regain commitment to any related initiative. By then, employees view knowledge management as "just another corporate program that went by the wayside." And knowledge stagnates.

Solutions That Have Worked

Although there are no magic answers to such challenges, some organizations have used techniques to mitigate knowledge loss in an unstable economy. For example, in April, Agilent Technologies announced its response to slowing customer demand. In a conscious attempt to limit the number of layoffs, the company planned to reduce the pay of all employees by 10%. By spreading the burden across all employees, Agilent could maintain its underlying social networks and build a perception of fairness.

Other organizations, such as the World Bank, have attempted to develop systematic processes for recording the knowledge of employees on the verge of retirement. With a combination of video interviews and hyperlinks to important documents and reports, sen¢or practitioners can impart their experience in a rich multimedia environment that can be shared with others. By capturing such insights, the organization is able to preserve its memory and share it with succeeding generations of employees.

Another technique has been used by Harvard Community Health Plan, a health-maintenance organization in Massachusetts; it involved paying bonuses to departing employees willing to share their working knowledge with their replacements. The process provided an incentive to make outgoing tacit knowledge more visible.

In project-based situations, an effective approach is to have the most knowledgeable employees work alongside newer employees. Because tacit knowledge is more easily reproduced through imitation and adaptation than through traditional documentation, lett_ng workers with varying levels of expertise mingle can facilitate the transfer of experiential knowledge. Although such techniques may not alleviate an organization's knowledge drain completely, they help managers cope with the challenges of an economic downturn. And recognizing the dangers associated with losing organizational knowledge is the first step to preserving a vital asset.

Eric Lesser is an executive consultant at the IBM Institute for Knowledge Management, which is based in Cambridge, Massachusetts. Laurence Prusak is executive director of the institute. Contact the authors at elesser@us.ibm.com and lprusak@us.ibm.com.

Source : http://sloanreview.mit.edu/smr/issue/1998/winter/7/

Ajit

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Balanced Scorecard Approach To Measure Customer Profitability

Happy customers are good, but profitable customers are much better. In this article, professor and Balanced Scorecard guru Robert S. Kaplan introduces BSC Customer Profitability Metrics. From Balanced Scorecard Report.

by Robert S. Kaplan

The Balanced Scorecard introduced customer metrics into performance management systems. Scorecards feature all manner of wonderful objectives relating to the customer value proposition and customer outcome metrics—for example, market share, account share, acquisition, satisfaction, and retention.

Yet amid all these measures of customer success, some companies lose sight of the ultimate objective: to make a profit from selling products and services. In their zeal to delight customers, these companies actually lose money with them. They become customer-obsessed rather than customer-focused. When the customer says "jump," they ask "how high?" They offer additional product features and services to their customers, but fail to receive prices that cover the costs for these additional features and services. How can companies avoid this situation? By adding a metric that summarizes customer profitability.

Consider the situation faced in the 1990s by one of the nation's largest distributors of medical and surgical supplies. In five years, sales had more than tripled to nearly $3 billion, yet selling, general, and administrative (SG&A) expenses, thought by many to be a fixed cost, had increased even faster than sales. Despite the tripling in sales, margins had declined by one percentage point and the company had just incurred its first loss in decades. Rather than SG&A costs being fixed or even variable, these costs had become "super-variable."

The experience of this company is hardly unique. Companies often capture additional business by offering more services. The list is wide-ranging: product or service customization; small order quantities; special packaging; expedited and just-in-time delivery; substantial pre-sales support from marketing, technical, and sales resources; extra post-sales support for installation, training, warranty, and field service; and liberal payment terms. While all of these services create value and loyalty among customers, none of them come for free. For a differentiated customer intimacy strategy to succeed, the value created by the differentiation—measured by higher margins and higher sales volumes—has to exceed the cost of creating and delivering customized features and services.

Unfortunately, many companies cannot accurately decompose their aggregate marketing, distribution, technical, service, and administrative costs into the cost of serving individual customers. Either they treat all such costs as fixed-period costs and don't drive them to the customer level, or they use high-level, inaccurate methods, such as allocating a flat percentage of sales revenue to each customer to cover "below-the-line" indirect expenses.

The remedy to this situation is to apply activity-based costing (ABC) to accurately assign an organization's indirect expenses to customers. Many companies, however, have tried ABC at some time during the past twenty years and abandoned it because it did not capture the complexity of their operations, took too long to implement, and was too expensive to build and maintain. Fortunately, a new approach is now available that is far simpler and much more powerful than traditional ABC.

"Time-driven" ABC, introduced in a recent Harvard Business Review,1 requires obtaining information on only two parameters: the cost per hour of each group of resources performing work, such as a customer support department; and the unit times spent on these resources by specific activities for products, services, and customers. For example, if a customer support department has a cost of $70 per hour, and a particular transaction for a customer takes 24 minutes (0.4 hours), the cost of this transaction for this customer is $28. The approach has been successfully applied in more than 100 organizations and readily scales up even to companies with hundreds of thousands of products and services, dozens of operating departments, and thousands of customers. The end result is the ability to measure individual customer profitability accurately and in a system that is easy to implement and inexpensive to maintain and update.

The payoff: BSC customer profitability metricsThe ability to measure profitability at the individual customer level allows companies to consider new customer profitability metrics such as "percentage of unprofitable customers," or "dollars lost in unprofitable customer relationships." Such customer profitability measures provide a valuable signal that satisfaction, retention, and growth in customer relationships are desirable only if these relationships contribute to higher, not lower, profits.

BSC customer profitability metrics are also highly actionable. If a company finds that an important customer is unprofitable, it should first look internally to see how it can improve its internal processes to lower the cost-to-serve. After all, we can't expect customers to pay for our inefficiencies. For example, if important customers are migrating to smaller order sizes, the company can focus on reducing setup and order handling costs. The company can ask the customer to use electronic channels, such as Electronic Data Interchange (EDI) and the Internet, that greatly lower the cost of processing large quantities of small customer orders.

Customized pricing policies should be at the heart of any strategy to manage customer profitability. The company can set a base price for a standard product or service, with standard packaging, delivery, and payment. The company also provides customers with a menu of options representing variations from the standard order, such as a customized product or service, special packaging, expedited delivery, or extended credit terms. Each menu item has a price that at least cover its cost, as measured by the ABC model, so the company no longer suffers losses from offering customized services. The menu prices also motivate customers to shift their purchasing and delivery patterns in ways that lower total costs to the benefit of both the company and its customers.

Finally, perhaps a customer is unprofitable because it is purchasing only a single service. As an alternative to raising the price for this single service, the company can encourage the customer to purchase a wider range of services, expecting that the margin from a comprehensive set of services will transform the customer into a profitable relationship.

Figure 1 shows how one insurance company managed its customer relationships once it understood its full costs of serving them. It ranked customers on the horizontal axis, from most profitable to least profitable (loss). The vertical axis represents cumulative customer profitability. The shape of the curve in Figure 1 occurs in virtually every customer profitability study ever done, in which 15 percent to 20 percent of the customers generate 100 percent (or more) of the profits. In this case, the most profitable 40 percent of customers generate 130 percent of annual profits; the middle 55 percent of customers break even, and the least profitable 5 percent of customers incur losses equal to 30 percent of annual profits. With its most profitable customers, the company worked harder to ensure their continued loyalty and to generate more business from them. For customers in the middle break-even group, it would improve its processes to lower its cost of serving them. It focused most of its attention on the 5 percent-loss customers, taking actions to reprice services and asking them for more business in higher-margin product lines. If the company could not transform these customers into profitable ones by these actions, it was prepared to drop the accounts.

Customer profitability metrics provide a link, otherwise missing, between customer success and improved financial performance. Many companies have experienced profitless revenue growth. Scorecard measures of the incidence of unprofitable customers and the magnitude of losses from unprofitable relationships focus the organization on managing customers for profits, not just for sales—thus making the customer focus align with financial objectives.

Reprinted with permission from "Add a Customer Profitability Metric to Your Balanced Scorecard," Balanced Scorecard Report, Vol. 7, No. 4, July-August 2005.
Robert S. Kaplan is a professor at Harvard Business School.

Source:http://hbswk.hbs.edu/item.jhtml?id=4938&t=marketing

Thanks,

Ajit Chouhan

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"HR has to fall in Love with the business not HR itself"

'HR has to fall in love with the business not HR itself'


In their new book,The HR Value Proposition, Wayne Brockbank and Dave Ulrich, professors at the University of Michigan School of Business, explore the HR discipline's Holy Grail: making human resources a strategic partner to business. Indrajit Gupta met up with professor Brockbank for a discussion on the new book and other critical HR issues. He was accompanied by Satish Pradhan, HR head of the Tata Group. Professor Ulrich joined the chat through a tele-conference.

IndrajitGupta:What triggered your new book?

Wayne Brockbank: For the last decade or so, we have been thinking about what it means for HR to be a true business partner. That statement itself implies that it should not begin with HR logic, but with business logic. Therefore, the key issue became: what is required for a business to be successful? To succeed, a business has to ensure that its two key constituents (external customers and shareholders) are happy. If HR cannot align with those externally-driven requirements and bring internal stakeholders (management and employees) in line with the external stakeholders,then it isn't a business partner.In 1997, a colleague from Argentina did a dissertation with us and came to a very interesting conclusion using our dataset and human resource competencies at the university. He found that knowledge of HR does not distinguish HR professionals at high-performing firms from those in low-performing firms. And that external knowledge, not internal knowledge of HR, is the key differentiator. Most HR professionals have a low level of external business reality - customers, competitors, shareholders, industry structures, globalisation and all the things that make business what it is. It was a very interesting finding. So we had two starting points for our thinking. First, HR aspires to be a business partner. And second, to be a business partner, it needs to create a line of sight to the outside. Our empirical research here shed additional light. Over the last 18 years, we have gathered the largest dataset of HR professionals. Put together, all that provides a very compelling argument for creating the HR value proposition. And, of course, the title of the book is taken from the concept of business value proposition, which starts from the outside and moves towards the inside. With that in mind, we decided to pool our thoughts, experiences and the best practices - gleaned during our consulting and research work - into creating one powerful package.

IG: Why did HR get marginalised, especially at a time when the traditional sources of competitive advantage were eroding? What did HR need to do to be able to sit at the same table and have the same influence as other departments?

WB: The missing piece was the fundamental appreciation we talked about earlier. Nothing of what happens inside matters, unless it happens to matter to somebody outside. We call that the 'Wallet Test' in the book. Unless HR can create an exact line of sight, not an ambiguous line, between its activities and getting customers to take money out from their wallet and put it in your wallet, instead of the competitor's wallet, it doesn't contribute to the success of a business, and therefore, does not matter.HR needs that line of sight to create the human side of the business - the culture, capabilities, technical knowledge and skills that enable people to create products and services better than the competitors. With this, we are holding HR up to the same standards on which other departments are held. Why does the product development department exist? To create products and services that result in customers taking out money out of their wallets. The same is true for marketing, sales, manufacturing and so on. If HR is to be an essential part of the business, it has to align with the external business realities.Two factors have inhibited HR's ability to function as a business partner: its logic and its language. For example, HR likes to say it has internal customers. When it takes that vocabulary and logic to the strategy table, it automatically condemns itself to a second tier status.At the strategy table, when the business partners say: "How do we make the customer happy?" they are actually asking: "How do we take money out of the customer's wallet into our wallet and make them happier with us than with our competitors?" When HR walks into the room and says that it has internal customers, it is immediately removed from the basic logic and language of the business. The logic and language of the business is the external customer. This is also the logic and language of HR professionals in high performing firms.

IG: But CEOs sometimes don't allow HR to play the role it can...

WB: My experience has been overwhelmingly that the demand for strategic HR far exceeds the supply. It was a conclusion vividly conveyed to me by the senior HR vice-president of one of the five largest companies in North America. I asked her the traditional consulting question: "What keeps you up at night?" She said: "Ten years ago, given the state of strategic HR at the time, our supply exceeded the demand. Today, the demand so far exceeds the supply that it threatens to be a fundamental source of competitive disadvantage of the company." In the University of Michigan, we have seen a huge increase in the number of senior line executives enrolling in our executive programmes on how to create and engage the human side of business - how to conceptualise and create the total human organisation. Furthermore, these issues are increasingly preoccupying the senior thought leaders throughout the strategy community, the best of whom is C.K. Prahalad.

The changes in the world of business require companies to pay more attention to the human side of the business. Many other sources of competitive advantage have gone by the wayside. The shelf life of technological know-how has dropped through the floor. The critical issue now is not what you know, but what you are able to create. Institutionalised creativity is a central cultural issue and is, therefore, an HR issue. Also, how well a company can execute self-standing platforms of technology, products and services is being replaced by the leveraging of common technologies, products and services across business units. This business trend may also be called the culture of cooperation, synergy and convergence. These should be central agendas of HR. The human resource department should be responsible for recruiting, promoting and developing high-quality leaders who will take the company to greater levels of success.Thus, the world is telling HR: 'We need to have you add greater value.' But if you need to have that, you need to start from the business standpoint, and not the HR standpoint. I once had a student ask me for a letter of recommendation for a leading HR graduate programme in the US. This was an extremely gifted young man. He graduated from one of the leading schools with almost a perfect GPA. I told him: "You have the ability to be one of the best in the field, is that your aspiration?" He said: "Yes." Then I said: "If you want to be really good in HR, get an MBA. Work in line management for two or three years and then go into HR, and you will be fabulous." His response was: "I don't want to go into business. I want to go into HR." At one level, there is nothing wrong with that. But at another level, something is centrally wrong with his logic. His identity was first in HR and then in business. If HR is to contribute to business, it has to break out of that way of thinking; it has to fall in love with the business rather than human resource.

IG: Coming back to the notion of what the HR leadership will be all about, what does your research really tell us?

WB: The good news is we don't have to guess anymore. In our most recent research, we have asked two questions. What are the competencies and capabilities of the HR professionals? And what are the competencies of HR that distinguish high performing firms from low performing firms? The latter is the more interesting of the two questions.We have found that there are five categories of HR capabilities and competencies: HR professionals need to make strategic contributions; have personal credibility; deliver the basic HR practices of staffing, training, developing and measuring performance; have business knowledge; and they need to be fluent with the application of information technology to HR. The first of these five categories is strategic contribution. Of HR's total impact on business performance, 43 per cent is accounted for by strategic contribution. That consists of: first, designing and creating the cultural infrastructure that creates sustained competitive advantage. Second, managing rapid change. Third, adding value through contributions to the strategy forums and discussions in the company. Fourth, creating an organisation that is focused on responding to and being unified around external market needs.

We also know how to make each of these happen. Culture management is the most statistically significant of all HR practices that impacts all business practices. Successful HR professionals align their HR practices to create the culture that drives business success. An interesting conclusion can be deduced. Delivery of the HR basic practices accounts for only 18 per cent of differentiating variance between high performers and low performers. That includes the basic HR infrastructure practices. When they are done in a tactical and reactionary manner and when they are done without a definitive business focus, they account for 18 per cent of HR's influence on business results. But when those same practices are designed and implemented in the context of HR's strategic contribution as described above, that 18 per cent jumps to 43 per cent. That's about a 250 per cent increase in HR's impact on business. Doing HR practices with a clearly targeted culture-based business agenda creates great results.

The major inhibitor to HR adding this kind of value is the trap of being internally focused - thinking in terms of internal customers and not focusing on the results that the marketplace requires. In our dataset, we asked senior line executives to evaluate HR professionals in terms of their over-competencies. I consider this to be an indicator of HR's internal popularity. To be internally popular, HR professionals need to have personal credibility; they need to do the basics; do what they say they will do and; have good interpersonal and communication skills. But while these competencies will increase the internal popularity of an HR professional, they have a mediocre impact on business performance. Thus, what an HR professional does to be internally popular is very different from what he must do to push the business ahead.

IG: Any advice for HR professionals?

WB: My first advice: have a great sense of urgency about your own focus on business. Second, HR professionals in India must think in terms of being more effective at their jobs than their counterparts in the US and Europe. US and European companies have the competitive momentum to carry themselves to Indian markets; likewise, Indian companies must be good enough to carry themselves to these markets. Such is the nature of global competition. Indian HR professionals cannot think about benchmarking Indian practices; they must be knowledgeable about best practices outside India. They must also think about next generation practices and be more powerfully competitive than their counterparts. Five or six years ago, the head of staffing at Cisco stated: "Our product life cycle is six to nine months. If we are not changing our HR practices as fast as the product life cycle, then we are not contributing to the competitive advantage of the company. If, we in HR, are doing the same things that we were doing nine months ago, then we are probably doing what everyone else is doing. That just isn't good enough, isn't just adequate."

IG: Professor Ulrich, how does your earlier work on HR roles tie in with your current research with Professor Brockbank?

DU: The roles we talked about in HR Champions (HBS Press, 1997) were defined as deliverables. The deliverable of the employee champion role is employee commitment. The deliverable of the administrative expert role is efficiency. The change agent deliverable is making change happen. The deliverable of the strategic partner role is making strategy happen. Each role had to make something happen. Wayne talked to you about world trends in the economy - India, Europe and North America. Those trends have shifted what those deliverables have to be. So we now believe that those roles have to be tied with the trends in the economy.We see, more than ever before, that the employee advocate role must help employees feel cared for. Through the years, I am convinced that people need to have meaning and relationship in their personal and professional lives. The employee advocate works not just to get people to work harder, but to have meaning, relationships and hope in their professional lives.The human capital role focuses on helping employees prepare for the future. As human capital becomes more central to productivity and improvement, HR professionals functioning in this role become more critical. The functional expert delivers efficient HR processes. Some of these efficiencies come through technology and some through service centres. Whatever the channel, HR must become more efficient and the HR personnel members need to be experts.The strategic partner role is more than just managing change. It also includes knowledge sharing, collaboration and strategy implementation. The strategic partner role also focuses on developing key capabilities that the company needs for success. Finally, as HR professionals function in the leadership role, they serve as role models. Wayne and I aren't sure if these roles are the right five. But we do believe that the human capital developer roles are hugely critical.

IG: Among the high performing organisations you have researched, how much has that shift played out? Do you see them clearly moving away from the administrative kind of roles, and focusing instead on more strategic dimensions?

DU: The answer is yes and no. That is a great academic answer! I think Wayne may have a slightly different view, but I feel that resources have been split into halves. Half of HR work is administrative transaction work - hiring, training, benefits, facilities management. That takes 80 per cent of its time and attention. That will be reduced by outsourcing, technology and service centres.When that is done, the whole second half of HR - transformation, innovative or strategic work will get a lot more attention. That's where HR professionals are coaches, architects, designers, and facilitators who can really begin to transform business strategy into a set of capabilities and actions. In the future, there will be fewer HR people but these few individuals will be much more qualified to do what Wayne has talked about in our research.

Satish Pradhan: You have the insight and foresight of the initiatives that help companies stay ahead in the game. Could you pick one or two of the practices or initiatives that will be the most significant in the next decade?

DU: I am going to be bold and pick free three. Maybe the first two are what matter most. Each one is built on a myth. The first one is that competitiveness is not strategy. The CEO needs to compete. The world is becoming even more competitive. Competing is not just building a strategy, it is having an organisation that will deliver the strategy better than your competitors. We can't compete by just knowing where we are going. We compete by getting there. Two, organisation is not structure. It is a set of capabilities. When I teach, I ask people to pick a company they admire. Assume for a moment that someone picks a Tata company. How many levels of management does a Tata company have? Nobody knows and nobody cares. An organisation is not evaluated by the number of levels. It is deemed successful if it has a successful set of capabilities. A Tata company may be very good at leveraging diversity, collaborating across businesses, or be very good at speed. But it is capabilities that make the Tatas good. I think HR's job is to do an organisational diagnosis that begins with the process of identifying and building key capabilities. The third insight is that HR is not a practice, but an integrated set of practices that join together to create capabilities and allows strategies to happen. HR professionals build capabilities into the organisation when they have integrated HR practices. When this is done, HR benefits not only employees, who feel valued and engaged, but also customers and investors. And when we follow those three premises, HR benefits an entire network of stakeholders.

Source:http://www.businessworldindia.com/AUG1505/indepth03.asp

Ajit Chouhan

Success DA Vinci Style

Success da Vinci Style

Whether you think you can, or think you can't, you're absolutely right. The only time you fail is the last time you try. One of my favorite quotes is:

"Time is the most valuable commodity we can spend." Having said that, to make the best use of our time, I believe that we can learn a great deal from those who have gone before us. Read on to find out how you can accomplish your goals:

Success da Vinci Style

Just like baby ducks learn to survive by following and imitating their mothers, Leonardo da Vinci believed that a key component to being successful is to imitate or model successful people. We humans, unlike any other species, can choose whom to imitate. Da Vinci felt that throughout our lives and all of its stages we should learn to consciously choose models (not the Cindy Crawford type unless you aspire to be a fashion model) and to replace the ones we outgrow. By doing this you will begin a positive adventure toward your worthy goal. For example, if you want to become a better golfer, study Jack Nicklaus.

If you want to become a leader, study Abraham Lincoln (he never quit) or Margaret Thatcher. Should you aspire to become a true renaissance man/woman, you may want to study the great Leonardo da Vinci, the original renaissance man!Michael Gelb who wrote the book "How To Think Like Leonardo da Vinci" writes, "It would take an encyclopedia to begin to do justice to the full scope of Leonardo's accomplishments." I agree! da Vinci had visions. What set him apart is that he acted (took massive action) on his ideas.

His ideas and creations covered art, invention, the military, engineering, and science. What's most fascinating is the fact that da Vinci had a "system" he invented and followed religiously every time he began a new idea. It's a very simple system you can use to help you achieve your goals.

Da Vinci called it the "Smart System",

S M A R T, being an acronym for:

S- Specific: Define exactly what you want.

M - Measurable: Figure out how you're going to measure your goals.

A - Accountability: Commit to being personally responsible for achieving your goals. If part of a team, be sure that accountability is clear.

R - Realistic/Relevant: Set goals that are ambitious but achievable. Make certain your goals are relevant to your purpose.

T - Timeline: Set a clear time line for the achievement of your goals.

Wow, isn't that great!

From a very easy to remember word, "SMART", you now have your very own "ACTION PLAN." I'm sure you know that da Vinci created such timeliness creations such as the paintings, "Mona Lisa" and "The Last Supper". But did you also know that he created the parachute, bicycle, helicopter, folding chair, alarm clock, and the first comprehensive drawings of the human anatomy?!I'm absolutely convinced that when you use this system which still applies today after nearly 500 years, you will achieve your own personal goals. To quote Leonardo da Vinci, "Your brain is much better than you think, just use it""

Ajit Chouhan

Source:http://www.forbetterlife.org/values/story.asp?storyID=84