Chapter 8
Linking Individual Performance to
Business Strategy: the
People Process Model
Lynda Gratton,
Veronica Hope-Hailey, Philip Stiles
and Catherine Truss
Introduction
• A key challenge facing organizations is how they
continue to deliver sustained competitive
advantage in the short term while preparing for
longer-term success.
• Sources of sustained competitive advantage lie not
only in access to finance or capital, but within the
organization, in people and processes capable of
delivering business strategies.
Introduction
• Purpose:
– Build on existing models by mapping, through a case-based
methodology, that particular aspect of model which focuses on how the
link between strategy and individual performance is played out.
• Assumption:
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–
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Focus on collecting exploratory data
Case methodology
In-depth data collected from many people
Link between business strategy, human resource strategy and realized
human resource management operates in a dynamic manner and within a
particular context
– Table 8.1 p. 143
• Create a map of processes which link business strategy to the performance
of individuals and the organization
• Use this map to increase our understanding of the elements and leverage
points of successful linkage
The Emerging Map
• Proposition 1
– Vertical linkage expresses linking a business goal to
individual objective setting, to the measurement and
rewarding of the business goal; internal people policies
and processes and external product market/strategy.
– Horizontal linkage created within and between the
people processes; cohesion, coherence, synergy.
– Temporal linkage is the linkage between the capabilities
of the present and the aspirations of the future
Proposition 2 Relationship between
the Core People Process
• Four key people processes
• Set objectives which are clearly and consistently
linked to the business strategy
• Create performance metrics
• Reward performance in line with the business goals
• Provide short-term training
• Set of processes for the future
• Creating a leadership cadre
• Transforming the basic skills and aspirations
• Creating an organizational structure and value set
Proposition 2
• Three elements of vestiges
– Scan and diagnose people capability
– Create an understanding of the gap between
capability and business requirements
– Create a people strategy for design and delivery
of people processes
Proposition 3 The Strength of the
Processes
• Create linkage between the business
strategy and individual performance
– Some very strongly linked
– Others weak
• Table 8.3 p. 150
The Findings
(table 8.4 p. 151)
• Strongly linked: objective setting
– Processes for setting annual objectives and
agreeing targets were a feature of all the
companies
– Processes were well documented, systematically
rolled out, supported by managers
– Employees were aware of the business strategy
and how it linked to their performance
– Part of the fabric of the culture and an important
management discipline
The Findings
• Strongly linked: short-term training
– Training was a key aspect of their ability to create the
flexible and multi-skilled workforce crucial to
delivering both short- and longer-term business
performance
– Key lever was the ability to maximize the performance
of knowledge workers in pursuit of a learning
organization
– Majority believed they had the skills needed to deliver
the performance objectives
– Challenging jobs played the most significant role
developing employees’ work performance
The Findings
• Strongly linked: leadership development
– Complex succession processes supported by
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•
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Early identification of high-potential people
Accelerated development of this group
Succession lists
‘Backstopping’ arrangements
The Findings
• Weakly linked: long-term people strategy
– Processes are opaque
– Most were operating with a relatively weak
strategic linkage
– Debates about people followed the
development of strategy
The Findings
• Weakly linked: scanning long-term people trends
– Elements can provide a vehicle to scan the external
environment
•
•
•
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Probable competitive pressures
Legal trends
Demographic changes
Contractual trends
– Understanding trends can prepare for potential skill
shortages and help to plan for the impact of work
or lifestyle changes
– None engaged in frequent scanning of these longterm people trends
The Findings
• Weakly linked: workforce development
– Lack of strategic linkage results from:
• Profound downsizing and restructuring (destroyed
career paths and psychological contracts)
• Accelerating changes in the technological and
competency base of the organization require new
skills
– Process required to predict future skill needs
were underdeveloped
Differences across the processes
• Stronger linkage for short-term people
processes
• Weaker linkage for longer-term orientated
processes
• Creating alignment is highly complex
• Short-termism causes focus on the
‘numbers’ and little incentive to invest in
HR because of its inherent long-term return
of investment
Differences across the companies
• Multinational Companies
– More strongly linked people processes
– More strongly embedded and linked to the strategy
– Less ad hoc and unmonitored
• Scale of Transformation
– Weakest where company had recently experienced major
catastrophic transformation and change
– Severe weakening of HR processes associated with
transformation
• Administrative Heritage
– Where processes had been in place for many years, they were
better embedded and supported
Differences across the companies
• Administrative Heritage
– Where processes had been in place for years
they were better embedded and supported
– Less apparent where recently introduced
– Strongly linked processes are built over time in
a consistent manner
– Not unusual for a significant gap between
rhetoric and reality