People-centric vs Strategic HR

The world has changed. The shift started with a new focus on employee experience vs engagement about 10 years ago (see newsletter edition 2), developed through an increasing emphasis on wellbeing during the pandemic, and has been maintained and extended, in some organisations at least, since then. (Yes, the shift is also being challenged currently, but I hope and believe that this is a short-term set-back, not a reversal from what I see as the longer-term trajectory.)

The purpose of this newsletter is to point towards how I think our new people-centric approaches can be extended even further (eg moving from experience to transformation - see edition 8), and combined effectively with truly strategic perspectives too.

Strategic and people-centric HR

In some ways, strategic and people-centric HR are not vastly different, at least when strategic HR is performed properly. As I’ve already described (in edition 3), strategic HR isn’t really about closer alignment to a business, but instead requires a greater leaning towards employees, and how their capability can be enhanced, meaning that people and HR can create and offer even more value to the business. Truly strategic HR is therefore already very people-centred.

However, there’s still a difference between truly strategic, people-centred HR and a lot of what we’ve been doing over the last 5 years, as well as what I’m recommending now. This might be illustrated best by using an example.

How about retention? This is something many organisations are focusing on at the moment, especially given the "great resignation / renewal" (with one survey suggesting that 80% of those who left during this period regret having done so); the need to build skills; and even "quiet / conscious quitting" if you think about it in terms of retaining the people who are going to make the difference in the future…

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Traditional approach

Our traditional approach to retention has focused on trying to hang on to key people for as long as we can. We might try promising them a future promotion; paying them a retention bonus; or we might just try to keep them so busy that they don’t have time to look at the job ads! More recently, we’ve also thrown in retention analytics to ensure we’re taking action with the right people. So, we’ll conduct exit interviews to try to learn about why people are leaving, probably also hoping to change their minds about doing so. And if they do leave, we’ll look to stay in touch with them, hoping they’ll come back to us if their new organisation doesn’t turn out to be everything they thought it would be. We might even create an alumni network to stay in touch with them longer-term. But even using all of these options, we’ll probably only manage to keep people for a few more months or an extra year at most.

I present this approach like this, which shows the extra value we’re aiming for by keeping someone a bit longer is actually really small.

A more strategic option

In my first book on Strategic HCM written back in 2006, I suggested a more strategic approach I called career partnership. In this approach, we would recognise that however much we hope key people won’t leave, and whatever the actions that we take, people will generally move between employers fairly frequently. Rather than try to fight against this, we should focus on the bigger picture, and be more people-centred too.

People will often want to move, so instead of trying to hinder this, let’s help them to do this. We can help plan their development, within our organisation, or outside. And if they can develop and progress better elsewhere, we should then help them to move on. That will be the best thing for them, and can work out better for us too. Because we can be much more proactive and strategic in the way we try to keep in touch with people and look to re-recruit them back into our organisation at a later point. This is by focusing on being a longer-term career partner, not just a short-term employer.

To do this, we would build in expectations that we would support and develop individuals throughout their career, including some periods as an employee, but providing coaching, development and other support during other, non-employed periods as well.

The traditional exit interview is replaced, not just by a stay interview, but by a more open discussion about what might be best for an individual’s career:

·??????Where do they want to go?

·??????How could they achieve or work towards that within the organisation?

·??????What other opportunities might there be?

·??????How can we help them with these?

This obviously isn’t an approach that would work for all employees, but if we’re clear enough about our strategic differentiation, we should be able to identify a small group of people who are linked to that differentiation (eg have the relevant skills and motivation etc) and who would also value a career partner that has this differentiation too. So why wouldn’t both partners value a long-term, if non-exclusive, relationship?

The approach won’t work for all organisations either, even those that really want to compete through their people, but there are a couple of companies that have set up something similar to this since my book, mainly within a small ecosystem of other employers, enabling them to share people between themselves.

As you can see from the following graph, organisations focused on this sort of partnership and on their employee’s lifetime value, rather than the single transaction of an employment contract, should be able to generate a lot more value from each partnership. This is therefore a much more strategic and people-centred approach, one that creates value for a business by increasing the capability provided by its people.

It should even be possible to link the approach directly to competitive advantage, in that if we're successful in partnering with the right people, it should stop competitors having so much access to these people, which could then stop them from progressing the same opportunities as us.

Making this more people-centric

However, the above approach is not yet fully people centric. Career partner organisations are trying to do the best they can for their employees, but only when this results in clear, direct benefit for them. What would happen if it wouldn’t actually be in an employee’s interest to return?

A fully people-centric approach develops the evolution I’ve described above a stage further, looking to help employees in their broader careers, but doing this without any intent to achieve a direct benefit for the business.

We'd still talk to employees about what they see as important, and we'd still try to help them achieve this, either inside or outside our organisation. If they leave our organisation, they may still want to come back, but that becomes a less formal part of the approach. Therefore, the approach means that for each individual employee, we can just focus on what will be best for them. And the organisation becomes more of a career accelerator rather than an ongoing partner.

Unilever's My Future Fit planning and Flex Experiences opportunities are perhaps the best examples of something like this.

There’s still an assumption that there will be a benefit. People-centric organisations aren’t (generally) charities. But the benefits are now more indirect. There’s an assumption that by helping employees progress based on their own agenda, rather than on that of the organisation, that the employer partner (or accelerator) can develop much better relationships with its people, based on higher levels of trust. This will help the organisation attract more and better people, and maybe even, rather paradoxically, retain them for longer too.

Therefore, creating value for employees leads indirectly to creating value for a business too. I’ve tried to illustrate this below.

Note that I'm very well aware that this fully people-centric approach won't work for all individuals or employers either. I can probably imagine the response of many CEOs (or FDs!) to it just as well as you!

However, if we want to be fully people-centric, I think this is something we may need to do. We're still spending a lot of time and effort on employee engagement, which isn't ever going to produce much of a result as it isn't people-centric at all. Employee experience is better, but is only going to result in value for money for employees. (Radical) autonomy is definitely part of where we need to go, but does come with some significant challenges too. If we want to be fully people-centric, we need to create value for our people, and this means being on their agenda, not worrying about the direct impacts for us.

Being a career accelerator is just one (and perhaps not a very good) example of what this could involve. But I hope it has demonstrated the type of potential similarities and differences that truly strategic HR and fully people-centric HR may involve.

Multi-sided HR

Multi-sided HR aims to combine the benefits of strategic and people-centric HR. We will still need both. Businesses need to be strategically successful so they can afford to invest in their employees. And they're probably going to want to see direct links between these approaches and their results before they're willing to consider the indirect ones.

So, how would you suggest a multi-sided approach to retention might work? (I'll share my thoughts on this later in the comments.)

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As always, I’d love to hear your own views on the points I've made above.?Please leave your comments below.

I look forward to discussing these and broader points around multi-sided HR with you! So, pease subscribe for future insights on this new and important approach, combining both people-centric and strategic HR.

Look out in particular for the next newsletter edition in which I'll be explaining the link between people-centric HR and people's core motivations.

I also invite you to check out my broader insights on both strategic and people-centric HR in the Strategic HR Academy. Learn about the latest thinking and opportunities in on-demand courses on HR and Competitive Advantage; Performance Management Re-engineering and Reward Innovation ; Organisation, Process, Work and Job Design; Strategic Partnering and HR Transformation. Then discuss application within your own organisation with me and other HR practitioners in regularly scheduled study groups, including:

• Organisation Design starting 27 February (join by 10 March at the latest)
• Strategic HR Partnering starting 6 March
• Performance Management Re-engineering starting 13 March

Kind regards - Jon