Aligning people leadership with business strategy:
How an organization should best integrate human capital issues
into strategic planning
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Charlie Coffey, O.C.
Executive Vice President
Government Affairs & Business Development
RBC Financial Group
Executive Breakfast
Co-hosted by the Human Resource Management Association
of Manitoba and Canadian Association of Management Consultants,
Manitoba Chapter
Delta Winnipeg
Winnipeg, Manitoba
Wednesday, November 9, 2005
Keith, there's no way I can top your warm Winnipeg welcome
and introduction - it sure brings back marvelous memories
about our families - the early years - and life in this great
city, not to mention our connection to Shad International,
commitment to community leadership and mutual interest in
the extraordinary value of human capital. But you're not off
the hook yet…I'll have more to say about you in a couple
of minutes!
First of all, it's always a treat to visit Winnipeg - I arrived
on Sunday night for a speaking engagement on Monday and have
been making the familiar rounds since then. The late Carol
Shields once said: "Winnipeg is the optimum size for
a city. Some days I feel like I know everyone I meet downtown."
Well, I feel that way about Winnipeg too. And I particularly
enjoy seeing Winnipeg and Winnipeggers making leadership news
and putting the city on the map - I mean how many of us watched
David Letterman's Late Show, just to see Dr. Gordon Giesbrecht
of the University of Manitoba (becoming widely known as "Professor
Popsicle"), submerge himself in a pool of ice water to
show the effects of cold on the human body?
Speaking of leadership in Winnipeg….I recall a comment
that Christopher Dafoe, columnist with the Winnipeg Free Press,
made - believe it or not - in 1992 (I was working in the city
at the time). He said: "When someone suggested that "the
new Canada" - if it even comes into being - might be
wise to select Winnipeg as its seat of government, a great
hoot of laughter was heard across the nation. Winnipeg! The
very idea had them rolling in the aisles." Christopher
would likely agree that the tables have turned in Winnipeg's
favour thirteen years later. For example, a magnificent meeting
place for human rights leadership - the Canadian Museum for
Human Rights - will be built in the geographic centre of Canada.
Talk about monumental news for WINnipeg, Canada and the world!
This brand of leadership, not only puts Winnipeg on the map
again, it speaks volumes about the importance of investing
in human capital…which brings me to why I'm here.
When Keith invited me to talk about aligning people leadership
with business strategy - and integrating human capital issues,
I remembered saving some good material on this topic - one
of the articles is an interview piece from the web site workplace.ca.
In part, it goes like this:
(Human resources - HR) "people need to understand and
develop an appreciation for the business they are in, to be
able to contribute to that business' strategy. It's not a
matter of whether you can take your HR skills and practice
them anywhere. You need to be able to understand the dynamics
of the business, of the marketplace, the customers, the competitors
and so forth, and contribute in terms that relate to customers'
needs, as opposed to simply a formula for an organizational
structure or system." Now those words likely ring a bell
to someone in this room…little did Keith Sinclair know
that I've kept track of his HR perspectives over the years!
Let's take a closer look at the dynamics of people leadership
and business strategy for a few minutes, with a focus on research
and stories revolving around three critical human capital
issues - leadership, diversity and talent management. Then
we can open up the forum to questions.
Research shows there's a direct link between an effective
people strategy and a company's competitive advantage. According
to Watson Wyatt Worldwide's latest Human Capital Index
study, "a successful people strategy is not merely linked
to market value; it's a leading indicator of increased shareholder
value (and stakeholder value). This study demonstrated that
high-performance HR practices are key to attracting and maintaining
top talent and improving a company's productivity and profitability."
Duncan Brown, assistant director general of the Chartered
Institute of Personnel and Development in the UK says: "Any
business that wants to compete successfully needs to ensure
that its work force has the right mix of people, with all
their skills and experiences, to fit the needs of its business.
"HR is taking on new importance as companies realize
shareholder value is not what gets people out of bed."
Business, it appears, is coming to the HR function. But the
HR function is also going to the business…being found
in two words: business partner." Some recruitment ads
are sounding like this: "As an HR business partner…you'll
be turning business objectives into people plans, driving
changes in organization and working practices and transforming
the way we deliver customer service." It's about aligning
people leadership with business strategy.
Hewlett-Packard's Gerard Brossard, vice president of global
workforce planning and management sums it up well: "The
(executive) team…pushed our business groups to create
a strategic workforce plan that aligned with their business
plan. I had to put my HR hat aside and work to understand
the benefits it would bring to the business groups. That was
the key. I asked them specifically: "How can we help
you understand what the human capital implications of your
business strategy are going to be?" rather than just,
"How can the businesses help HR be more successful in
its work?" My team then defined a workforce-planning
framework for the business groups to complete. The business
groups now recognize that HR contributes significant strategic
value." Again, it's about aligning people leadership
with business strategy.
As you're aware, we're seeing a greater emphasis on the term
human capital, rather than human resources - the key difference
being a much stronger focus on "people leadership, development
programs and initiatives that are linked to business strategy,
improved business performance and greater strength of capability."
In the article from Outlook Journal's October 2004 issue,
Making the Right Investments in People, the Accenture
Institute for High Performance Business analysis indicated
that human capital strategy - aligning people initiatives
with overall business strategy - "drives important business
capabilities like workforce performance and employee engagement;
these capabilities, in turn, have a significant impact on
key drivers of organizational performance such as innovation."
So whether you're Darlene Ball of Ceridian Canada, Cindy
Epp of Ernst & Young, David Leschasin of St. Boniface
General Hospital, Karen Milani of The North West Company or
Dennis Nord of Louis Riel School Division, aligning people
leadership with business/organizational strategy really matters
to clients, employees and stakeholders, to the entire operation
and to ultimate success.
We've all heard about the importance of building a strong
corporate culture, establishing a strategic reward system,
hiring the right people and the right mix, staying armed re
the "war for talent," creating sound policies and
practices and of course, developing a learning and development
plan. The differentiating factor every time is the alignment
and integration of people leadership and business strategy.
Let's look at the importance and value of diversity (a human
capital issue) to illustrate this point by first positioning
the changing face of Canada:
- Approximately 229,000 new immigrants arrive in Canada
each year versus 330,000 Canadian births. Long-term trends
indicate immigrant arrivals will exceed Canada's natural
birth rate.
- Canada's overall population will grow 3.3% from 2001 -
2017. The visible minority population will grow by 76% reaching
7.6MM.
- 13% of Canada's population are visible minorities and
that will reach 21% by 2017.
- Top source countries for new immigrants are China, India,
Pakistan and Korea and top source countries for new business
immigrants are China and Korea. 96% of new immigrants are
destined for metropolitan areas.
What does this mean for people leadership strategies - diversity
priorities - or recruitment approaches? It means that we grow
as individuals and as organizations by respecting and leveraging
our similarities and differences. It means that by drawing
on the resources of our businesses, markets and people, we
generate ideas and solutions that break new ground. And it
means that we create more productive workplaces, build an
environment of inclusion, attract, retain and engage talented
women and men, gain a competitive advantage and provide superior
service to clients. In other words, it means we must work
smarter to align people leadership with business strategy.
Research also shows that investing in work/life leadership
- building and embedding a culture in the organization, through
practices and resources, that helps all employees better meet
the competing demands of work and interests outside of work,
is a significant investment in human capital. And the launching
pad is a commitment to linking diversity and talent management
- as "talent management is about behaviour - the thoughts
and actions that, consistently over time, become organizational
culture."
Today's executives are spending more time than ever before
thinking about the people side of their organizations. Yet
how many of us can provide more than a surface understanding
of the return on human capital investment. Don't worry, you're
not alone. "A survey by CFO Research Services and Mercer
Human Resource Consulting (in 2003) found that companies,
on average, spend 36 per cent of their revenues on human capital
expenses. But only 16 per cent (that's one in six) of financial
officers have more than a moderate understanding of the return
on that investment and 14 per cent said they had NO clue as
to whether that money was spent effectively."
What's the good news? "Senior executives and their teams
are moving quickly (or are being moved quickly) into roles
of greater strategic responsibility. Managing human capital
is no longer the domain of HR professionals alone - it must
be a strategic responsibility for all leaders. All of us need
to be engaged by these (human capital) issues -- first in
our own teams -- then working with senior HR counterparts
as strategic partners for the entire company (or organization).
From customer satisfaction to innovation to service delivery,
the quality and quantity of investment we make in our people
has real consequences for almost every aspect of business
profitability."
RBC's Canadian and North American business strategy is founded
on building strong and lasting relationships with our clients
- "earning the right to be our clients' first choice"
- and human capital is our greatest asset in making this happen.
Our new leadership model focuses on leading with integrity,
building enterprise excellence, working strategically and
driving shareholder value. It's also a model that pushes the
envelope on alignment and integration. The RBC value, "diversity
for growth and innovation" makes good business sense
and is the right thing to do for employees, customers, communities
and shareholders alike. Our focus on work/life leadership
and talent management is about fostering a diverse workplace
that builds employee capability and engagement to help achieve
business goals - more ways to align people leadership with
business strategy.
We know that diversity is a journey. We know that focus makes
a difference. And we know that integration, although challenging,
increases the likelihood of success - so changes in roles,
capabilities and approaches are a constant. Lead people. Manage
things.
Our organization has invested heavily in leadership development
over the years. In the December 2004 Harvard Business Review
article, "How to Grow Great Leaders", Douglas Ready
(author and President of the International Consortium for
Executive Development Research in Lexington, Massachusetts)
chose RBC as a case study. He says: "Despite the hundreds
of millions of dollars invested, the leadership development
programs weren't producing leaders with the capacity to manage
the inherent tensions between unit and enterprise considerations.
That's because, as with most companies, RBC's leadership development
efforts were piecemeal, focused on particular skills and challenges,
and therefore didn't prepare employees to take on broader
roles. Development was confined within the organization's
various silos. Every time a key position became available
in one of the company's platforms or functions, the only candidates
offered up were managers who had already worked in that area.
So rising executives never had a reason to venture outside
their silos." Listen to our President and CEO Gord Nixon's
words, to discover how things are changing:
"You either believe that developing leaders is important
or you don't. There are so many variables that could be
used to either make or break your argument for leadership
development. We are not going to play that game. We firmly
believe it's important to grow leaders who can run their
businesses, their functions, and their regions, yet who
can lead with an enterprise-wide perspective. People make
this business happen, and we will let our performance speak
for the importance of developing leaders."
Ready goes on to make the following observation: "Competition
has changed, as have customers' expectations. Leadership development
has not kept pace. Many companies have created new organizational
structures to accompany the need for a broader perspective
on the business, but the vast majority of leadership development
initiatives still take place in the very silos the organizations
are trying to transform. When people are trapped in business
units, functions, or regions, they're at risk of becoming
prisoners of zero-sum thinking."
I can't stress enough how critical it is to align the human
capital agenda and related issues with business strategy.
Although the "how to do this" will be different
in every organization, I can assure Linda Romsa of RBC, Eileen
Kirton of KWA Partners, Sherri West of Palliser Furniture,
Alora Sinclair of The Harris Consulting Group and John Ferris
of Loewen - if only there was time to mention all your names
- that it starts with leadership at the top and that ongoing
success has a great deal to do with diversity and talent management.
Remember, a leader creates more leaders.
And this is why I'm pleased that Kirk Dudtschak joined us
this morning - as some of you are aware, Kirk is RBC's newly
appointed Regional President for Manitoba, Saskatchewan and
northwestern Ontario, based in the city. He's definitely the
right leadership in Winnipeg!
In closing, special thanks to Keith Sinclair, Rick Klimczak
of Ernst & Young, Lori Fenn of the Human Resource Management
Association of Manitoba (plus a whole host of people I'm sure)
for organizing this breakfast. Stephen Covey has it right.
"Leadership is a choice. Some people have natural gifts,
but all people have the natural potential…the power lies
in the choice." The power lies with human capital!
Thank you…now it's your turn - let's hear from you!
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