Source: theHRDIRECTOR
Date: April 2007 
Author: Nick Read (CEO of Vodafone)

HR – is anyone listening?

DO YOU VIEW THE HR FUNCTION IN YOUR ORGANISATION AS A COST CENTRE OR ONE THAT ACTUALLY DRIVES VALUE FOR THE BUSINESS?

The HR function plays a fundamental role in establishing the employee engagement framework that allows a company to define how it will differentiate and define itself in the market place through its people. The HR function is at the centre of value creation for the business.

DO YOU THINK HR SHOULD PLAY A ROLE IN DEVELOPING OVERALL BUSINESS STRATEGY OR IS ITS EXPERTISE BEST SUITED TO IMPLEMENTING THE PEOPLE ISSUES WITHIN STRATEGY THAT IS DECIDED BY OTHER SENIOR EXECUTIVES?

I have seen the HR function deployed as a pure support function in some companies, and a strategic driver in others. Essentially, if you get the ‘people’ component of your company correct, outstanding service, customer loyalty, growth and profit will follow. I feel many companies lose their way by focusing on short term quarterly profit maximisation; it takes brave leadership not to be drawn into that trap. In deciding your strategy to attack a market opportunity, you must also design in the customer experience you want to deliver and the people agenda which enables it.

The culture, recruitment process, training, remuneration, recognition, communication – all must be totally aligned to ensure consistency of delivery of the customer experience. The HR function has to be in at the very start of shaping strategy because, ultimately, the people agenda will define success or failure. It’s that simple and, in my opinion, it’s the difference between good and great.

WHAT DO YOU THINK IS THE KEY CONTRIBUTION THAT HR MAKES TO YOUR BUSINESS?

The first key contribution is driving the employee engagement framework across the business. Ensuring every manager has the right training, tools, policies and commitment to providing an environment that allows our employees to be successful with the service they deliver, whilst developing and progressing their own careers. The second key contribution is talent management. It is a business priority for me that we find and nurture top talent. As we expand into new business areas we need a pipeline of talent to exploit and shape those opportunities. I am a firm believer that the best business ideas do not always come from the ‘upper management’ but from the employees closest to the customer. Therefore HR must harness this innovation and ensure that the talent pool is developed, encouraged and constantly increasing.

HOW DO YOU MEASURE THE ROI OF HR WITHIN YOUR COMPANY?

I measure the ROI of HR through a balanced scorecard of measures. They have primary responsibility for the employee engagement index (EEI). There is a high correlation between strong employee engagement and customer delight (we have a customer delight index – CDI). At Vodafone UK, we came 13th in the 2007 Sunday Times best 100 companies to work for, and this month came fifth in the UK as a brand you would recommend, with a very high net promoter score. This is evidence that the two go hand in hand. After EEI & CDI, I also expect to achieve improvements in these indices, in an increasingly cost effective way. The HR team are set productivity targets for the company and their own function. This has led to developments like “Ask HR”, which is a blend of online & help desk, providing advice, guidance and support across the business, in an efficient and effective way. Another specific example of a programme in which HR was central, was the “next best activity” real time marketing tool, for our team to cross sell products and services where relevant for the customer. This was a significant I.T. programme but the greater challenge was the cultural shift from pure service to ‘sales through service’ and the training demand this created. HR played an instrumental part in delivering the programme of change and signing up to the product penetration and revenue targets associated with it. Such programmes illustrate how HR should have customer, employee, targeted revenue and targeted cost contributions.

IS YOUR HR DIRECTOR ON THE BOARD?

Yes Matthew Brearley, our HR director for Vodafone UK, is on the Board. What does it say about your commitment to your people agenda, if your head of HR is reporting to the CFO or admin director? How can they shape the strategy of the company unless they are sitting around the board table making the resource allocation decisions?

WHAT VALUE DO YOU THINK THEY BRING?

I expect all my Board directors to be spending 60% of their time working as a team to drive our strategy forward and lead by example both internally and externally. Then 40% of their time is devoted to ensuring their function is delivering their agreed business objectives & KPIs. The HR director should have an opinion on all aspects of our strategy, leading key cross functional programmes (for example the integration of an acquisition) and then finally delivering the HR objectives agreed in our plan. I also expect all leaders in our business to spend 40% of their time on the people agenda, 40% of their time on the customer/market agenda, and 20% on results. Too many managers focus on short term results, rather than on building a long term sustainable differentiated people and customer platform, from which the results will be derived. We are in a dynamic market, facing good competitors. Vodafone has to be great in everything it does. It starts with our people. HR is mission critical to our future; it must stand up to its full responsibilities with total passion, and drive us to success, and it does so, which is why I believe we have one of the best HR teams in the country.