Strategic Human Resources can be a major force in fight against unemployment

Reproduced with permission of Professor Frank Horwitz and the GSB UCT 
Author: Professor Frank Horwitz, GSB UCT
Copyright © GSB UCT 2007
Graduate School of Business, University of Cape Town (GSB UCT)
23 November 2007

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On Friday, President Thabo Mbeki ended his May Day commentary on unemployment in South Africa by urging business and labour to put their heads together and come up with new ways of thinking about the problem.

Mbeki rightly points out that the solution to unemployment is not a simple one and that to move forward, business and labour may have to “drop their blinkered view”  and  “achieve the correct balance between their partisan and collective interests” to deal with the problem.

Unemployment in South Africa is clearly linked to economic growth, but it is also compounded by the challenges of globalisation. South African companies are faced with a global onslaught of cheap imports and variable exchange rates that are threatening their very survival. A fact that has been illustrated recently by the difficulties faced by Cape Town company Rex Truform.

So what role can South African companies play in thinking differently about these challenges? One core aspect of every business that has for the most part been excluded from the equation of possible solutions is human resources management.

In South Africa, human resources (HR) have tended to be more concerned with procedural and maintenance issues and not with aligning HR strategy with organisational strategy.

The focus in the past has also been more on industrial relations (IR) and fair labour practices than on competitiveness through human capital. Understandably there is a historical context in which the field of HR and IR emerged. They have been at the forefront of workplace change, and industrial relations were paramount in achieving human rights at work. The next phase was the institutionalisation of these rights and practices in law and in public policy.

Now, in the face of mounting global competition, the next step is for South African companies to be more strategic in linking HR initiatives with business strategy. But what exactly is strategic HR? And what can businesses do to transform their HR practices?

Firstly, a key facet of strategic HR is differentiation - the unique HR value proposition and employee brand which makes it both different and more competitive than other firms in its industry. How an organisation attracts, motivates and retains human capital - especially intellectual capital - is a key component of the competitiveness solution. Rewards, employment equity, and BEE are just some of the ways that local companies can begin to develop a unique value proposition or employee brand.

Secondly, strategic HR starts with the external market - this means that HR must go far beyond the traditional two-way relationship between management and employees.

An external market approach demands that HR people align whatever they do inside the company and how they do it to ensure that a customer will buy and keep buying the company's products or services.

This "customer alignment" can be seen in leading retail firms like Pick 'n Pay. Their employee development is key and plays an integral part of the organisation's good customer service.

Similarly, an external market approach means aligning other key activities with the business strategy. These include HR playing a bigger role in identifying potential leaders and in developing them, and ensuring that performance management and rewards systems are aligned explicitly to the values of the business objectives and priorities.

Thirdly, strategic HR makes it essential to measure key factors in the value chain - it is important to know where value is created in the organisation, and this includes the measuring of human capital.

In essence, strategic HR calls for a new type of HR professional - one that has a fundamental knowledge of business and is in possession of financial, strategic and technological capability. HR professionals are needed that are more than change managers, but change leaders. They need to have problem-solving capabilities and must be willing to embrace the challenge of transformation.

For this to happen HR people need to ask themselves some fundamental questions about their contributions to the business.

Ideally, they should constantly investigate and adapt leading practices that may help their company achieve that competitive advantage. They then should work on refining these to reap the best rewards in their particular business context.

If this means introducing flexible work practices, rotating shifts or variable pay schemes linked to the company's profitability in order to keep costs down and doors open, then so be it.

An example of a South African company responding innovately to the challenges of competitiveness is Axiz, an IT firm that has restructured to empower its 300 strong workforce as owners. Employees have been given the opportunity to become stakeholders in the business, and this is a powerful incentive to boost competitiveness. 

To promote this level of innovation, business schools have a role to play and need to offer more strategic HR programmes. Universities and technikons are doing a relatively sound job of the maintenance, systems and consulting roles in professional HR development, but business schools need to step up in developing strategic thinking capabilities.

Examples such as Rex Truform serve to highlight the need to tighten up strategic HR management in South Africa to help in the competitiveness battle. The profession urgently needs people who are passionate - not just visionaries, but missionaries. It is the missionaries who will make things happen.

Frank M Horwitz is Professor of Business Administration and Director of the Graduate School of Business (GSB) University of Cape Town. He specialises in human resources management, organisation change and industrial relations. The areas of his expertise include high-performance work practices; Industrial Relations; employment discrimination and diversity; mergers and acquisitions; strategic human resource management; workplace flexibility and organisational restructuring. He has been visiting Professor at the Rotterdam School of Management (RSM) Erasmus University in Holland, Nanyang Business School in Singapore (2001-2002), the Faculty of Management, at the University of Calgary, Canada, and research associate of the Industrial Relations Centre, Griffith University, Brisbane, Australia. He is a former Faculty member of Wits Business School, University of the Witwatersrand. He has some ten years executive experience in these fields with ICI in England and AECI. He has acted as a consultant in organisational change and human capital strategies for companies in Canada, Namibia and South Africa. He has consulted to the governments of Namibia,  Singapore and South Africa. Frank Horwitz was in 2000, Chair of the Commission investigating the effects of sub-contracting on the collective bargaining system in the building industry. He was on the national Council of the Industrial Relations Association (IRASA). He was a (part-time) commissioner on the Commission for Conciliation, Mediation and Arbitration (CCMA), and on Clothing Industry Bargaining Council Dispute Resolution Panel. He is active in community service organisations. Among these, he has served on the executive committee of the South African Institute of Race Relations. He is a past executive committee member and national treasurer of the South African Association for Conflict Intervention (SAACI). He is a regular contributor on radio including Cape Talk radio and SAFM has written for business newspapers such as Business Day and the Financial Times and has appeared on television. He can be contacted at fhorwitz@gsb.uct.ac.za and 021 406 1418 / 9 and runs the short course Building Strategic Readiness through People. Email abrahams@gsb.uct.ac.za for details.

Short summary
HR practitioners would see themselves as missionaries to align HR strategic thought to business strategic thought.

Keywords and relevant phrases
alignment, BEE, business objectives, capability, change leaders, change management, competitiveness, customer, differentiation, economy, employee brand, employee development, employment equity, flexible work practices, globalisation, HR development, HR strategy, human capital, human resources management, human rights, industrial relations, innovation, intellectual capital, labour practices, leadership, missionary, organisational strategy, performance management, problem-solving, profitability, restructuring, rewards, rewards systems, stakeholders, strategic HR management, transformation, unemployment, variable pay schemes, 

Back to ... Workinfo.com Human Resources Magazine Volume 1 Issue 12, 2007