Connecting HR to the Credit Union’s Strategy

By Karla Norwood, Cardwell Group
March 3, 2005

In the past, credit union executives wanted HR managers to primarily be administrator/risk managers.

But many credit unions are in a state of organizational crisis. For example, they are transitioning from cultures of “operational efficiency” to “relationship selling” – a huge shift for many organizations.

So where does this leave HR? Frankly, this requires more of HR than being an administrator/risk manager. It requires that HR become a “strategic partner” in the credit union. How can HR do this? By helping line managers execute their strategy.

According to Ram Charan in his article “Why CEOs Fail” (Fortune, 1999), “The problem [with strategy] is that our age’s fascination with strategy and vision feeds the mistaken belief that developing exactly the right strategy will enable a company to rocket past competitors. In reality, that’s less than half the battle.”

What is the other critical ingredient? To compete, you also need to execute the plan.

Toyota, Dell, Wal-Mart, GE, Southwest and other successful companies execute strategy better than their competitors. In fact, Toyota even offers anyone (including competitors) free in-depth tours of its main U.S. operations. Toyota knows that its competitive advantage is the execution of its strategies and best practices. The CEOs of America’s 10 most-admired companies (as determined by a recent Fortune survey) were all masters at execution (the least-admired companies were not).

Is there a fast way to effectively execute an organization’s strategy? Is there a better way to impact values and behaviors to produce performance numbers an organization expects? Yes—and it starts with leadership.

What It Takes to Lead

The following eight leadership qualities are identified in the Fortune article as characterizing the successful Chief “Execution” Officer (CEO):

1. Integrity, maturity, and energy

2. Business acumen

3. People acumen

4. Organizational acumen

5. Curiosity, intellectual capacity

6. Superior judgment

7. An insatiable appetite for accomplishment and results

8. Powerful motivation to grow and convert learning into practice

HR has a tremendous opportunity to assume a key role in strategy execution. However, line managers must first see HR as capable of demonstrating the eight leadership qualities that characterize a strategy “execution” leader. Note the balance between the eight factors. To build a high-performance organization, line managers need more than just one or two “hard side” competencies, and HR managers need competencies beyond just organizational and people skills.

To gain credibility as a strategy partner, HR must move from staff to line “thoughts and actions.” HR must achieve results that clearly align with the organization’s overall strategy. That means modeling the implementation of a proven strategy execution framework. It is critical that HR proves it can successfully execute its own strategy.

Connecting HR to the Strategy

The first element is to clearly understand what the organization is trying to accomplish – and within that context, what HR is trying to accomplish.

Best-practice HR functions are able to capture the essence in a way so that everyone understands what the function is trying to achieve. In less effective HR functions, some members of the HR team can recite the strategy, but others are left in the dark. HR leadership may have serious disconnects with its team, as well as with the rest of the organization. This lack of clear connections will lead to HR and organizational inefficiency and ineffectiveness. A multi-page planning report may seem impressive, but if it can’t be explained in a few words, what good is it in the trenches?

HR function can be improved by thinking in terms of three main "connections": the organization connection, the team connection, and the individual connection.

Organization Connection

The organization connection reinforces “big picture” best practices. The “big picture” needs to be a clear, simple, highly focused summary of HR’s strategy. This summary needs to reflect the elements used by best-practice business leaders.

Excellent business leaders use the following information to provide a clear outline for the organization’s strategy. In this case, it is HR’s strategy. It has three key imperatives that effective business leaders discuss at least monthly, challenge and adjust instantly:

Focus. A summary outline of HR’s primary business goal, such as increasing company productivity by 20%, core values, strategy, and how it aligns with the company’s focus.

Critical measures. A balanced list of the “critical few” performance measure targets that align to the organization’s overall performance targets and HR’s primary business goal. These targets need to be achieved for short- and long-term success.

Business priorities. An agreed-upon, yet dynamic priority listing of the “critical few” projects/goals that merit immediate HR resource allocation of cross-discipline participation of time, talent, and money—initiated to achieve the goals of the HR function.

Team Connection

This provides a framework for efficiently managing cross-discipline teams in the efficient achievement of HR priorities. It has two key imperatives:

A team contract . A clear charter of the team and focus of the team’s work. This includes the team scope and evaluation criteria outlining the return expected on resources allocated and team members.

The deliverables . A chronological listing of the specific outcomes, or deliverables, the team will produce as it completes each milestone of the project.

Individual Connection

The individual connection clarifies how each individual contributes to the success of the HR function. It clarifies what is on everyone’s plate. It is an important guide for prioritizing the individual allocation of resources, recognizing individual performance, providing individual coaching and for updating individual targeted outcomes throughout the year. Everyone needs to understand how his or her role impacts strategy execution, making him or her feel like they make a difference.

This part of the process has four key imperatives:

Basic role. Critical measures developed at the HR organization connection level align to the individual’s basic role. This clearly links individual focus with desired HR function outcomes. It contains clear, agreed upon personal performance goals, appropriate indicators and competencies.

Current business priorities. A personal alignment with HR strategic business priorities and cross-discipline team accountabilities.

Departmental/function projects. Accountabilities and resources allocated to HR sub-department/function projects.

Level and job-specific authorities. Authority is defined as the ability to make a decision at a “moment of truth.” The development, agreement, and communication of level authorities are critical for rapid decision-making for teams and individuals. Specific personal decision-making authority is also clarified.

Sustaining HR Strategy Execution

High-performance organizations and functions build a shared understanding of focus and accountability and they give their people the authority to perform the job they were hired to do.

Being a successful strategy execution leader starts with a best practice framework where meaningful dialog happens between the senior executive team, the top HR executive, and HR managers and their subordinates.

For strategy execution to be sustained, the HR manager needs to coach, and subordinates need to take responsibility for their contribution to the organization. HR managers also need to reinforce desired outcomes through intrinsic and extrinsic rewards.

The key to the success of any organization is to be able to “turn on a dime.” To achieve this, the additional critical building blocks to connections are communication, feedback, and corresponding adjustments to the content. These building blocks are realized “just in time” through on-going organization, team, and individual dialogs of the connections’ key imperatives. These dialogs are used for pre-connections planning “agendas” and post-connections “meeting minutes.”

Adopting this framework for strategy execution provides the standard for balancing the eight leadership qualities that characterize a strategy execution leader. Using this methodology will build a high-performance organization because business goals are achieved—as the HR function, its teams, and its individual employees decide what to focus on and how to allocate resources they control.

Karla Norwood is president of the Cardwell Group. Contact her at knorwood@cardwellgroup.com, call 800-395-1410, or visit www.connectionsonline.net.