WENDY TAN and LEE KANG YAM share that customer intimacy is where HR stands the best chance. However, this requires conversations with clients about core issues. In this process, HR acts an ‘authentic consultant’, which is not an oxymoron but a powerful competitive advantage. The term ‘HR transformation’ is in vogue these days. Broadly speaking, HR transformation is shifting the focus on transactional HR activities to leveraging on human capital to deliver business results. Often this involves the segregation of roles—HR shared services (administrative function), centre of excellence (specialist roles) and HR business partners. Some organisations have completed this transformation process, with many others in the process, while some organisations remained status quo.
In their book, Discipline of Market Leaders, authors Treacy and Wiersema talked about three fundamental business disciplines—operational excellence, product/service leadership and customer intimacy. ‘Operational excellence’ calls for companies to deliver products and services at the lowest cost to customers. An example of this approach would be Walmart. ‘Product/service leadership’ directs organisations to provide the best possible products and service in terms of the features and benefits to the customers. An example of this approach would be Apple with its iPad and iPhones. Companies such as Ritz Carlton excel in ‘customer intimacy’. These companies select their customer niches, followed by an obsessive effort at getting to know these customers in detail. We can apply this strategic framework to HR and reflect what HR is doing to help their organisations leverage on its human capital to achieve results.
Let’s reflect on your HR organisation for a moment:
- Does HR provide convenient, hassle-free services at low cost to the organisation? (Operational excellence)
- Does HR provide effective, innovative and leading edge services that fits business requirements? (Service leadership)
- Does HR know the business? Do your customers feel that HR knows their perspectives, challenges, goals and concerns? (Customer intimacy)
In our work with HR organisations in Singapore, Australia, China, Hong Kong, India and Taiwan, we notice that there is a natural progression in this HR transformation process from ensuring that operational excellence takes root to building customer intimacy and finally providing service leadership. As a regional HR director said, “Administrative activities are typically invisible to others; but when they are not done well, all hell breaks loose.” Operational excellence is a basic business requirement. Ensuring operational excellence in itself is no easy feat. Administrative functions are typically in/outsourced to cheaper and more efficient locations. A leading MNC IT company we worked with uses employment agencies to recruit staff and these employees are clearly demarcated by the name of the recruitment agency in their email addresses. Another MNC banking client talked about the challenges in having a HR back office located in another country such as India and The Philippines to take care of all the administrative matters. These service centres need to understand the diverse requirements in different countries or business entities and respond quickly to employees often without any face-to-face interaction. Employees also need to be educated to self-help. These are all challenges in the operational excellence aspect of the HR transformation process. While cost leadership is achieved, the satisfaction level from the internal clients is still a question mark.
In the area of ‘service leadership’, how innovative is your HR in providing the best products and services to the business? How are the HR initiatives in your organisation differentiated and adding more value compared to another organisation? To what extent is your HR department creating an enduring value proposition for your organisation? Take the example of talent sourcing—while some organisations have started to use more far reaching and cost effective social media tools such as company blogs, Facebook and LinkedIn, the majority of companies still rely on traditional advertising in the various medium (newspapers, Internet and professional magazines), encouraging referrals from existing employees, recruiting from universities and engaging the services of employment agencies and head hunters.
Let’s take a look at another traditional HR activity; the selection and onboarding process. Most companies employ a combination of interviews (they call it behavioural-based interviews if they are sophisticated), personality and ability profiling and assessment centres for the critical roles. Once the talent is selected, the on-boarding process begins. Zappos (the world’s largest online shoe company with over US$1 billion in sales) pays new hires US$1,000 to leave the company within 30 days if they do not find a fit with the company. This is because their business strategy is high quality customer service that can only be delivered by people who genuinely care for customers and take their own initiative to help customers. Despite all the systems, processes and training, this level of customer attention cannot be delivered by people who stay on just to have a job.
Traditionally, we use the probation process to weed out misfits. However, let’s face it, unless the misfit is jarring, people generally do not leave on their own quickly nor do managers want to be so harsh. The consequence is halfcommitted people continue to linger around; and during this time, all parties, including the customers, suffer. So, the US$1,000 is a way to get committed people who really feel ‘this is the company I want to work for!’ What a way to lower overall staff retention costs.
However, service leadership is typically left to the initiative and willingness of HR practitioners to take risks or centres of excellence whose job is to create and roll out best practices. Typically, multi-national companies have these centres of excellence; however, many other organisations do not. Therefore, it is challenging to create innovative HR practices that anticipates and meets business requirements. Another HR manager exclaimed, “We simply do not have time or energy to do anything additional. We can only focus on doing what is required and it’s basic.” Sadly, unless the HR organisation is well resourced and has the capability and vision for best-in-class offerings, service leadership by HR is rarely a reality in organisations.
So, where else can HR have a salient niche to add value and be recognised for its contribution? We suggest that customer intimacy provides the best chance. Customer intimacy is to really know your customers, their business, challenges, concerns and goals. Customer intimacy also goes the extra mile to create structures and programmes to support customers’ aspirations and needs. The key element we want to emphasise is ‘going beyond’ or, in customer service speak, ‘go the extra mile’. Customers need to see that for them to believe that there is true customer intimacy. For example, we are currently working on a Development Centre project for key talents in an MNC. The care, dedication and rigour exhibited by the HR department in organising the centres, assigning their top business leaders as co-assessors and the depth of discussion about these talents really impress us.
When asked about how customer intimacy is built, one HR business partner talked about the solid reporting line to the business leader and a dotted line to his functional HR boss. He also talked about being in the same physical space as his major stakeholders. Similarly, another HR business partner referenced regular meetings with his regional business leaders. However, little attention is placed on the relationships with customers. Customer intimacy is built by the type of conversations we have with our customers.
Referring to the diagram above, ‘weather talk’ is about the matters in general— politics, news, weather and children—basically what you would talk about with a taxi driver. This can be useful, but it does not build intimacy. ‘Business talk’ is about the work—targets, goals, challenges, problems. These are the typical conversations in work meetings. ‘Core talk’ is not about mushy or touch-feely stuff. It is about hopes, aspirations, concerns and reservations. It is more emotional in nature, but these emotions either propel or hold back actions.
Most HR professionals are definitely skilled in ‘weather’ and ‘business’ talk, but ‘core’ talk requires the highest level of skill. Peter Block, in his Flawless Consulting book, said that “an authentic consultant is not an oxymoron, but a competitive advantage”. Authenticity is being honest and saying what you think and feel. The required skill is ‘personal acknowledgement’, which is simply articulating how you think and feel about a situation or a person. This is not wearing your heart on your sleeves. Instead, it is having the courage to have difficult conversations, calling out the ‘white elephant’ in the room or discussing the ‘undiscussables’. Such conversations need to be done skilfully and sensitively, with the intention to serve our business leaders, resolve issues and stop the vicious cycle of blame, mistrust and political speak. So, in summary, where would you place your HR organisation—operational excellence, service leadership and/or customer intimacy? What more is needed for HR to deliver its full value to the organisation?
Wendy Tan and Lee Kang Yam are founding partners of Flame Centre, an organisation development consulting and training practice. Flame Centre works with organisations to build partnership and collaboration to achieve sustainable results. They are accredited trainers in Peter Block’s Flawless Consulting workshops and work with organisations to develop consulting and partnership capabilities.