“This time next year we’ll be millionaires!”
One of the best known and loved quotes from one of the least organised, most chaotic business ‘entrepreneurs’ in UK comedy – the wonderful DelBoy Trotter, head of Trotters Independent Trading Co. (think about it!).
Of course Del was a chancer, a one-off who lost as often as he won and when the Trotter brothers became millionaires it was by random chance, which even those amongst us who buy the occasional lottery ticket know has far greater odds than a one-in-a-million. It’s a dream and one over which we have no control or any ability to input to improve our chance of success.
Many small business owners in the UK who start with a dream go on to be successful and wealthy. I couldn’t find any statistics to show to what extent planning was the key to their success, rather than random chance, but I suspect that it would be a lofty percentage.
Why Plan and Strategize? Does It Kill the Dream?
A dream is the single picture of a steady state at some point in the future. It might be sitting on a beach watching the sunset and sipping cocktails whilst your immensely successful business carries on with your fantastic team. It might be having that big London HQ on the top floor with a view of the river. Or it might just be a picture of you as your own boss with no-one up there raining down their storm on your chances of progress. Whether you are a small business owner or an ambitious employee, the dream is what gets you up, keeps you motivated and keeps you going when frustration sets in.
Unlike DelBoy, who took each day as it came and wouldn’t have known a business strategy if it came up to him in the street and shook his hand, turning the dream into reality needs a pathway. Not always an instantly definable and detailed one, sometimes just the knowledge that it is there is enough to keep trying to define it. But knowing that it’s there, even on the days you can’t see it, is the motivator. Finding and defining it is the plan. If it’s done well and clearly, the dream will never die.
According to Small Business: “Planning is essential to the success of any business. When a company has a plan to follow, leaders are better equipped to prepare for the future. A business plan creates a focus for the company, uniting employees toward common goals. When everyone works together, it’s easier to manage time and resources, to position the company for growth.”
In the most basic of headline terms, planning allows the business to set goals, manage time efficiently, allocate resources, prepare for uncertainty and grow existing business.
The strategy digs down into the detail of the plan.
What Does a Successful Business Plan and Strategy Involve?
Every business has three bases of resource:
Whatever the product or service that the business aims to provide, every business owner knows that nothing can happen without having sufficient funds to get it going and having the equipment and technology to keep it going. For some time it might be a one-man band, perhaps with the help of voluntary and willing family members who pitch in to keep the business’ head above water. But eventually the ‘people’ element will outstrip the capacity of the volunteers and the time that the entrepreneur has available to do everything themself. That’s when the time has come to start employing staff and as HR professionals, we believe that this is an equally important resource with the equipment/technology and the finance. Whilst these are critically important, they need people to organise and manage them.
The Business Plan will, or should, include its vision and mission, described by the high level objectives and goals of the business, consideration of its ethics and values as incorporated in its culture, and a knowledge, whether or not quantifiable at an early stage, of how many people may be needed in what area of expertise, to allow the business to grow successfully.
The successful strategy defines in dynamic terms the individual plans for each of these areas of requirement, but also understands that they have to be symbiotic in order to succeed.
How far ahead should a strategic plan look? One year? Three years? Five years? Probably all three. The one year may be based on survival, the three-year plan on expansion and the five-year plan, probably just the high level BHAGs (big hairy audacious goals) for future growth. The purpose of HR planning is to look into that future with the business to decide what skills, knowledge and experience will be needed to meet the business goals and accordingly plan the recruiting, retention and training needs of the potential staff. And HR can help the business define the systems it will use to ensure that, once it has the right people, they are encouraged to stay with the business because the business cares about them and is the right place for them to succeed and grow as individuals.
The Chicken and the Egg
Which plan should come first? Above we described the relationship as symbiotic and this means that it doesn’t matter which comes first, probably neither. If the plan is the blue-print for running the business and it can’t run without people, then ensuring that each arm is developed inter-dependently will ensure that the ‘people’ element is an integral element and both supports and represents the business’ goals and ambitions.
Where Does the HR Strategy Start?
At Petaurum we have developed this diagrammatic description of the elements of an HR strategy and how they form the virtuous circle of business support.
This particular strategy is for an established business, but the parts that go to make it up can be added in as the business becomes ready for further sophistication. But what is clear is that the starting elements are the business planning with reference to values and behaviours that help to clarify the workforce planning.
The diagram also describes the application to a workforce. But where does that workforce come from?
As the famous Mrs Beeton said when writing her recipe for Jugged Hare: “first, catch your hare.”
When I was a fresh-faced young HR Officer undertaking my first CIPD qualification, a tutor gave our class the following piece of information: HR people strategy can be summed up in six words: “Get ‘em, Keep ‘em, Use ‘em”. And it has worked for me throughout my career when I have been involved in creating a people strategy.
Each section of this strategy is, of course, multi-layered, as can be seen in the above diagram.
Get the right people for the business. Ensure that they have sufficient skills. But, we at Petaurum believe more importantly, get people whose values and behaviours will fit seamlessly into the culture. This isn’t as simple as it may sound. The culture of a business is like a personality. The characteristics were already in place when the business was set up. They may develop as the business grows but the base culture is very hard to change. In order to get the right people, a business needs to be able to define its culture as simply as possible. And once it knows itself, the HR strategy can work with it in getting the people who are the best fit.
Here’s a cautionary tale of what can happen when this isn’t taken into account: A small business we have worked with in the past twelve months – a dozen employees, financial services – took on a young person, whom we’ll call ‘Tom’. He seemed to be a perfect fit. He was bright, enthusiastic, had experience confirmed by an excellent reference. How he got that reference was never questioned. His keenness to get on in his career was welcomed and the business owner, a decent, open-hearted, trusting chap, agreed to pay for Tom’s qualification, with the usual caveat that he would remain with the business for a period of time in return for the investment. But as soon as he got his qualification Tom handed in his notice, claimed that the documentation to confirm the pay-back agreement had never been signed and walked out of the door, claiming he was being bullied; with a list of the company’s client details in his hand.
You may wonder how this could have been avoided, short of strapping Tom to a lie detector machine. If Tom was able to talk a such good talk at the interview, how could anyone know what were his real character and intentions? The answer is less complicated than you might think.
Throughout my career in HR I tried to learn aspects from the specialists with whom I was lucky enough to co-operate. First of all the specialist recruiters taught me about ‘haloes’ and ‘horns’. This is about unconsciously ‘liking’ people who are like you and disliking people who aren’t. Being able to detach oneself and be objective is the first step. The next, and most important thing I learned was about competency-based interviewing. This is based on the principle that the best predictor of future behaviour is past behaviour. So instead of asking questions where anyone can just make up the answers (strengths and weakness, etc) the interview focusses on situations that have occurred in the past, how they were viewed and how they were dealt with.
An example of how to develop questioning around behaviours, is to first have a definition of what the behavioural principles are that are integral to the organisation’s values and culture. A sample of these could be the following, which were developed for a client whose culture was one of mutual respect, openness and support.
Driven to Achieve
- Being individually, and as a team member, committed to achieving goals and maintaining the guiding principles
- Taking ownership and getting things done
- Being rigorous and always looking to innovate and improve
- Being always customer focussed
- Helping other members of the team
- Making things happen
- Making the most of every opportunity
- Creating a sense of community
- Treating everyone with respect
- Treating everyone as you would be wanted to be treated
- Good communication
- Adhering to high standards of personal and professional conduct
Once these are in place a set of interview questions based around experience of former situations where the interviewee has had to make choices and decisions based on such behavioural values will, with the right questioning, be enlightening as how each individual will behave and perform in the organisation.
Of course, no company has ever had the perfect fault-free interview but these two above are the best two building blocks.
What happened to ‘Tom’? We were able to help the business, which got its money back, but left the business owner with a headache and a sore heart. Fortunately, he was a sufficiently sensible man to see where he had gone wrong and willing to learn how to avoid it in future.
This element is about reward. According to AZ Central: “organisations with a positive reputation in the jobs market for taking care of its workforce face fewer barriers to effective recruitment.” A reward strategy isn’t just about pay. How the business chooses to place itself with regard to pay in the local and national market will play some part in attracting the right candidates, but a business that offers not just pay related benefits, but care for health and wellbeing will see less turnover. It is estimated that the cost of turnover is anything from 30% to 150% of the salary of the role holder. Inevitably some people will leave for non-business-related reasons but gaining a reputation as a caring employer means that people will stay and is good for the bottom line.
For a business whose culture is fast and furious, is open and honest about how it operates and recruits staff with offers of high reward for quick success, a lack of welfare concern can be made up for by top range salaries, bonuses and other financial inducements. And if staff joining such an organisation know that this is what they are facing, then they will not be too interested in non-financial issues. If such an organisation is happy with the high turnover that comes with this particular brand of culture, then it will thrive. But even so, given our growing understanding and appreciation of stress and mental health in the workplace, there should still be a caveat about lack of care in these areas and issues and incidents can still come back to bite these employers in a place where it hurts.
To ensure that all staff recruited can benefit from a successful and growing career with the organisation they will need to know not only what to do to succeed in their current job, but what additional skills, knowledge and experience they will need to grow. In today’s market there is fierce competition for exceptional and rare skills, so effective on-boarding, training and development will be an essential inclusion in the budget and strategy for staff retention. Again from AZ Central:
“Organisations are affected by a huge range of external and internal factors that together can change the nature of individual job roles or place new demands on individual skill sets. An HR strategy lined to the organisation strategy is better placed to anticipate any such changes and therefore can put in place a targeted training and development plan to help the organisation more quickly adapt to new circumstances”.
As the business gets into its stride and starts to take on board the right people, the need to ensure the above three facets of its people strategy become more sophisticated.
In terms of the right salary to pay, the business must decide where it will set itself in relation to the market, which can be determined by taking a look at salary surveys locally and nationally. These surveys can be done on the internet or can be bought in from specialist organisations. These latter can also deliver information on what benefits are the best to offer for the roles and for the organisation. As the staff numbers increase, there may also be the issue of ‘job families’, where roles will need to be compared to see which jobs fit into similar categories that will fit into a job ‘family’ and thus define correct levels of salary.
For individual roles, too, these will at an early stage need to be defined. A well written role profile helps both the role holder and the organisation to understand how the role fits into the business plan and what is required for the holder to be successful. When the organisation has a good set of profiles, it makes designing a fair and effective review system a relatively easy task.
Delivering the Strategy and Strategic Outcomes
In order to align the HR strategy to the business strategy, strategic HR aims could be defined in this example:
- Recognised (internally and externally) as a great place to work.
- An adaptable multi skilled workforce that continually improves business performance through the effective use of staff resources.
- An engaged and high performing organisation where results are recognised and rewarded.
- A workforce that is skilled and resourced to meet the current and future needs of the business.
- A workforce that identifies and is able to adapt to change.
- The wellbeing of the workforce is core to the approach.
- An employee offering that sets the organisation apart from its competitors to ensure they continue to attract key talent.
Against each one of these key strategic objectives a target can be set for each level of the business plan (e.g. 1 year, 3 years, 5 years) to take the organisation from the ‘now’ state to the desired state over a period of time and the strategic HR plan can then be designed in terms of budget/finance and people in how and when these aims can be delivered.
And an important follow-up aspect of the HR strategic plan will be how to assess its impact, so the plan must be based on SMART objectives so that it can be appropriate, affordable and sustainable. The ability of HR professionals to work at an equal level with the business leaders will give the People Plan a far greater chance of effectiveness than HR having to play catch-up.
The fact that the majority of mature businesses have an HR input at a high level is evidence that recognition of the role that HR can play in defining how best to find and use the right people within the business is paying off. For a small business, it may seem like a significant and unnecessary investment, but anyone who has started a business and found the ‘dream’ to be going south due to having to spend too much time with ‘people problems’ would be well advised to start to think about the importance of Human Resources expertise and experience, if only in the smallest of ways to start with.
We will leave the final words to AZ Central who sum it up as:
“A mature approach to HR strategy places it at the centre of understanding an organisation’s overall capacity and capability. Having a clear concept of your employees and their different skills can help you see where your organisation has potential for development and growth and help you structure your organisation to take advantage of emerging opportunities. Organisations that have reached this point in their development see HR as a key driver of strategy and integral to their future success, rather than as a simple administrative function that ensure everyone gets paid on time.”
And to go back to where this article started, recognition of the importance of an integrated HR strategy will not only maintain the dream, but will push the business towards being the “crème de la Menthe”, as DelBoy Trotter so succinctly put it.
 AZ Central.com 2018
 Mrs Beeton’s Book of Household Management pub. 1861