Opinion: Paul Sparrow on pertinent issues in HR

January 2010: Director of the Centre for Performance-led HR at Lancaster University Management School, Paul Sparrow believes innovation is crucial to business success.

"It's simple really. If people don’t bring their company performance strategies up to date they aren’t going to survive. It will become more and more difficult to survive without actually having some fairly complex and significant business transformations. Some will be driven by retrenchment (downsizing), others based on more fundamental innovation. Either way, complex changes, that will require employee engagement to be put in place.

The problem of employee engagement is all about the challenge of business model change. Universities and businesses must work together to solve these problems. In the Centre here at Lancaster, we look at a number of areas of HR strategy. We take a slightly more critical view of engagement than is seen in some of the business press.

We do core research on HR strategy and write White Papers on key areas of policy (see links below). We bring together the professionals working in those areas. It is an industrial collaboration that is also built up around special interest groups. We use those relationships and data to do more research. For example, in the employee engagement space - we have a database for one company of 36,000 employees, tracking the link between engagement and business performance in a pretty sophisticated way.

This shows that there are very significant business issues to do with engagement.

There has been fundamental shift in industry over the past few years that started even before the credit crunch.

In manufacturing BAE is a classic example. They have moved to a ‘through life’ cost model, slowly shifting from just being a manufacturing/engineering organisation to also being a service: they are looking at the whole life cycle of that manufactured product instead of just the end result.

That has immense people implications: who the key talent is, how to push performance metrics, based on this business model, deep into the organisation, and the extent to which your work force engages with that view of performance.

All sectors are seeing innovations in business models that require a strong link between HR strategy and the business. Engagement becomes important to support performance of a new strategy, and also in redesigning the talent system.

It doesn’t matter who takes on the challenge of engagement. It could be HR or a people-minded business leader. As long as someone in the organisation is aware that they have to solve the people-issues that naturally follow from their strategy. They must take responsibility for that.

As long as somebody knows that advice can be found from different sources, including consulting services, to develop that ability in house.

And that’s only part of the solution; there are many other things you must also do. It comes down to getting people to think more critically. What is the link between your particular strategy process, and whether that operation really becomes dependent on people-related issues, or not?

Some people are more insightful about these links, and some managers already take responsibility for them. There are a lot of very savvy line managers who understand that message. For them it’s a no brainer. Other line managers don’t understand the need until it is too late.

Our research shows that any organisation is going to have to innovate to survive. Some will take the lead in developing an innovative business model, others will be faced with putting in place major business transformations because other firms around them took the lead in innovation, and they are left with major changes just to stay competitive in the game.

We started looking at this challenge in 2006-07 - before credit crunch came. Even then, you could see this was a major issue. The credit crunch just makes the challenge more important.

You know, there are many parallels with what happened in the mid to late 1980s. When organisations fought their way out of the last major recession - that required significant shifts in competitive strategy. Back then the choice was one of three things: innovate new strategies; manage renewed growth post-recession (but growth delivered through very lean resources), or manage a process of retrenchment and survival around the pre-recession strategy. The truth is, whichever future you face, you are going to need employees to engage with the way you intend to do it.

If you want to find out more about Paul’s work then please click here.

Get involved
LMC is now looking for manufacturers to take part in new research. The participating firm would get our analysis on them and a case study that would be used a White Paper in the autumn. It would involve access to all key line directorates - such as Capability Director, Operations Director, Strategy Director etc. The intention is to understand the strategy and performance of the organisation and to unravel how and in what ways these are aided by employee engagement.

Did you know?

The Centre for Performance-led HR was nominated as one of five Outstanding Employer Engagement Initiatives in the 2009 Times Higher Education Awards.

Paul Sparrow has published over 100 journal articles and chapters and several books. He has consulted with major multinationals, public sector organisations and inter-governmental agencies and was formerly an Expert Advisory Panel member to the UK Government's Sector Skills Development Agency, and chaired the US Academy of Management's HR Division International Committee.