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Human Resource Management International Digest
HR wins a strategic role at QBE insurance: Transformation takes place in partnership with business leaders
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(2010) “HR wins a strategic role at QBE insurance: Transformation takes place in partnership with business leaders”, Human Resource
Management International Digest, Vol. 18 Issue: 5, pp.19-21, https://doi.org/10.1108/09670731011060234
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(2011),”Mapping a strategic approach to HR leadership”, Strategic HR Review, Vol. 11 Iss 1 pp. 31-36 https://doi.org/10.1108/14754391211186296
(2009),”The balanced scorecard: a new challenge”, Journal of Management Development, Vol. 28 Iss 5 pp. 393-406 https://doi.org/10.1108/02621710910955930
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HR wins a strategic role at QBE insurance
Transformation takes place in partnership with business leaders
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H
uman-resource management at one of the world’s top insurance companies has
been transformed from an administrative, back-office function delivering
value-for-money services, to one strategically aligned to business needs.
The group HR team at 13,000 employee QBE has engaged business and divisional HR
teams across the firm’s international operation to bring about this transformation.
QBE operates in 45 countries, organized into four largely autonomous divisions, each with
their own divisional HR teams. A small group-HR team, led by the group general manager,
HR, Jenni Smith, works with the group executive at head office.
Jenni Smith joined the company in 2003 to develop a clear vision for HR across the whole
organization. She identified four core processes – performance management,
personal-development planning, succession planning and talent management – that she
wished her team to lead and control, working in partnership with the divisional HR teams.
She explained to the divisional HR heads that a ‘‘One HR’’ approach would not only help HR
to become more strategic, but also help the divisional HR directors to be more successful in
their own divisions since they would no longer have to fight their own local battles with their
own chief executives.
Jenni Smith also explained to members of the group executive team – who include the
divisional chief executives – how they could help to implement the One HR approach
successfully, to benefit their own businesses as well as the company as a whole.
Performance management
QBE used to operate a number of performance-management processes, which were neither
consistent with each other nor integrated with other HR processes.
In 2005, group HR introduced a single performance-management process that uses a single
form with a common rating scale and descriptors to provide a consistent language for
measuring and maximizing performance against business objectives. The process also
incorporates ‘‘essential behaviors’’ as part of determining how objectives should be
achieved, and a personal-development plan to document personal and professional
development to support the achievement of business objectives.
The new performance-management process was designed to be simple, time efficient and
aligned with divisional planning schedules. Its introduction was supported with training in
how to give and receive feedback, manage poor performance and raise the standards of
achievement. New guidelines and reference materials were also produced.
The performance-management process continues to be refined and improved.
DOI 10.1108/09670731011060234
VOL. 18 NO. 5 2010, pp. 19-21, Q Emerald Group Publishing Limited, ISSN 0967-0734
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HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST
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PAGE 19
Personal-development planning
Group HR recognized that the organization had no clear overall view of the talent it had, and
that there was duplication of names for a number of key roles. It therefore needed to find a
way of gathering information on potential successors in conjunction with a
succession-planning process that would also position the group HR team as a facilitator
to support better decision making at the group executive level. An obvious vehicle was the
series of ‘‘personal-development planning days’’ that the group chief executive held with his
direct reports. This process resulted in a personal-development plan with key objectives for
each of these executives, but group HR felt they were fairly informal, with progress against
plans not always monitored.
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In 2005, group HR introduced a more detailed, facilitated program to address succession
planning, which incorporated performance management for QBE’s most senior managers.
Group HR presented this new approach to the group executive as a more structured version
of the same process, building on its success but helping to involve more people. The team
felt that, given the company’s growth, the group chief executive would not be able to spend
time one-to-one with all of the key people in the business or those who might be identified as
successors for group-executive positions. This process therefore offered him, the group
executive and group HR an opportunity to gain more information on people and provide the
business with options for succession decisions in the future.
Succession planning
Alongside personal-development planning, work continued on developing a robust
succession-planning process across the group, which now allows regular reporting to
both the group board and external regulators on succession plans for all group-executive
roles.
This succession-planning process is slowly being cascaded down the organization to
incorporate the top 100 roles, using personal-development planning as the communication
tool. Personal-development planning enables QBE to consider the risks associated with
each key position and current incumbent, along with development planning for identified
successors.
Further improvements have been made to the succession-planning process, particularly to
ensure regular monitoring of progress against agreed development plans. The goal is not
simply to develop replacements for key roles, but people with the potential to develop the
roles in future.
Talent management
Group HR has been working to introduce a single talent-management approach that can be
implemented consistently. The team has engaged the divisions in developing a new
framework and has also begun piloting its approach through several group-led talent
initiatives. The success of these pilots is starting to bring the business and divisional HR
teams together around group HR’s approach. However, QBE still has a long way to go to
develop an effective approach to talent management.
HR established as a business partner
HR has been able to support major restructuring at QBE that it would not have been in a
position to help with previously. Divisional HR directors, in consultation with Jenni Smith, now
work well together to achieve common objectives. Employee turnover in the group has fallen
significantly. Group HR’s focus has become more strategic, while divisional HR teams deliver
most of the day-to-day, operational services.
The group HR team spends considerable time with business leaders individually, talking
about what it is advocating and explaining the benefits for the business. It considers this
‘‘lobbying’’ vital to team sponsorship at the group executive level.
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PAGE 20 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST VOL. 18 NO. 5 2010
The most critical factors underpinning this success include:
B
having a group chief executive who fully supports the HR vision;
B
developing a clear One HR approach, aligned to the needs of the business;
B
building on existing developments, attempting to deliver only what the business is ready
for and prioritizing the group HR team’s time to ensure that it is able to do a relatively small
number of things really well;
B
resisting the temptation to change things unnecessarily; and
B
focusing strongly on engaging the business.
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Comment
Keywords:
Human resource strategies,
Influence,
Organizational change
This review is based on ‘‘Transforming HR in partnership with the business at QBE
Insurance’’, by Jenni Smith, group general manager, HR, at QBE Insurance Group, and
Claire Davies, the group’s HR manager, executive talent. The article describes
transformation of HR at QBE Insurance, focusing on how the group HR team has
engaged both the business and divisional HR teams across an international operation to
enable this transformation. The authors explain how changes in culture, executive
development, performance management, personal-development planning, succession
planning and talent management have been introduced by influencing business leaders
and divisional HR teams, underpinned by a clear and consistent HR vision that is aligned to
business needs. According to the authors, the group general manager, HR’s approach to
implementing QBE’s ‘‘One HR’’ plan has transformed group HR’s relationship with the
company’s business leaders, supported the transformation of the HR operating models in
each of the divisions and helped to improve QBE’s overall business results. The
experiences, presented in a straightforward and accessible way, may be useful to other HR
teams developing their role in an international business, wanting to become more strategic
or setting out to increase their credibility and influence with business leaders.
Reference
Smith, J. and Davies, C. (2009), ‘‘Transforming HR in partnership with the business at QBE Insurance’’,
Strategic HR Review, Vol. 8 No. 5, pp. 11-17, ISSN: 1475-4398.
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints
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VOL. 18 NO. 5 2010 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST PAGE 21
Human Resource Planning
As a Competitive Edge
Dave Ulrich
Human resource plans often match strategies with the goal of being more strategic.
When human resource plans are a means to an end of building more competitive
organizations, human resource plans become more relevant, useful, and critical
for organizational success. This article reviews the transitions necessary; to achieve
this success. Dave Ulrich is with the Graduate School of Business at the Universit^;
of Michigan.
Human resource planning practices have undergone dramatic transitions
over the last decade. Scholars and practitioners have called for tighter linkages
between human resource practices and organization strategies (Tichy, et. al.,
1982; Dyer, 1984). Research and practice have indicated that matching managerial
characteristics (Gupta and Govindarajan, 1984), reward systems (Lawler, 1984;
Kerr, 1985), and development programs (Tichy, Dotlich, and Lake, 1985) with
strategies increases the probability that strategies will happen. The increased
attention to human resource practices in general has increased awareness and
development of human resource planning concepts and techniques.
Unfortunately, some of this increased interest may yield a means/end
inversion. With increased interest in linking human resource and strategic planning,
numerous projects have been initiated to integrate, bridge, and connect human
resource and strategic plans. Often the end or goal of these projects has been the
linkage between human resource and strategic plans. More appropriately, linking
human resource and strategic plans serves as a means to the end of building more
competitive organizations. Integrating human resource and strategic plans should
enhance organizational competitiveness, not be an end in itself.
Some of the current approaches to human resource planning derive, in part,
from an overemphasis on the goal of integrating human resource and strategic
plans, rather than on using human resource planning to build a competitive edge.
This does not imply that the integration should not occur, merely that the integration alone is not sufficient to provide organizations the competitive edge which
follows effective human resource plans.
Transitions in Human Resource Planning
Using human resource planning systems and processes to build a competitive
edge requires a shift in thinking about and managing human resource planning. As
indicated in Table 1, five transitions occur when the integration between human
resource and strategic planning serves as a means to increase competitiveness in
lieu of an end in itself.
HUMAN RESOURCE PLANNING AS A COMPETITIVE EDGE
41
TABLE 1
Transitions Between Human Resource Plans
As Ends Versus Means
HUMAN RESOURCE PLANS AS
ENDS
Develops complex models
Leads to rhetoric
Emphasizes and measures success with forms
Directed by human resource department
Provides answers
MEANS
Uses simple, straightforward models
Leads to action
Emphasizes and measures success
with business performance
Directed by line managers
Asks questions
First, the goal of integrating human resource and strategic planning often
encourages complex models. These complex models assume one of two forms.
Either they reflect a complex decision path with boxes and arrows that identify
choices and paths between environmental conditions and human resource
practices, or they establish multi-dimensional matrices of how human resource
practices match strategic goals. While the development of such complex models
informs our view of human resource planning, it may not lead to organizations
being competitive. Generally, complex decision charts and matrices become
fodder for intellectual discussions, not action plans. When considering human
resource planning as a means to building competitive organizations, human
resource plans need to be framed in simple, straightforward business language.
The challenge for human resource planners becomes maintaining simplicity with
the complex and subtle issues which must be considered in effective human
resource plans.
Second, a goal of integrating human resource and strategic plans often
encourages rhetoric to explain the complex models and matrices. Such rhetoric
leads to interesting, but endless discussions of ways in which human resources
correspond with strategies. When human resource planning becomes a means to
building competitive organizations, action replaces rhetoric. In a simplistic way,
organizations compete by making decisions which better allocate financial and
human resources. Human resource linkages with strategies should focus more on
the actual resource allocation and action processes than on rhetoric of what
should be.
Third, when a goal is to integrate human resource and strategic plans, forms
often become the center of attention. Complex models and rhetoric may translate
into a set of decision rules, then forms are generated to reflect this distillation. Too
often, administering, completing, and coordinating the forms become the goal of
integrating human resource and strategic planning. Successes may be measured
by timely submission of forms rather than by business results. When human
resource plans are thought of as a means to develop a competitive edge, successful
human resource plans equate with business performance, not forms.
Fourth, the goal of linking human resource and strategic plans often becomes a
tacit agenda for human resource planners trying to gain entry to business decisions.
Representatives from the human resource function create the human resource
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HUMAN RESOURCE PLANNING
VOLUME 9. NUMBER 2 CHAPTER 1
planning process, then submit it to line operations where it may be received with
mixed reviews. When line executives fail to see how business results stem from
linking human resource and strategic plans, the integrations advocated by a
human resource function may fall short of expectations. Alternatively, when
human resource planning is conceived and understood as a means of building a
competitive edge, responsibility for the process resides with line managers. When
line managers perceive human resource practices helping their business reach its
goals, they initiate and support human resource planning efforts.
Finally, with a goal of integrating human resource and strategic plans,
complex and difficult human resource issues may come across as easily solved. An
emphasis on responding to forms may equate to straightforward answers to
difficult questions. When human resource planning is a means with no expectation
of “right” answers, questions can be raised which probe alternatives. While these
probing questions often do not have right answers, the process of discussing
insightful questions leads to human resource plans making significant contributions
to building a competitive edge.
This critique of popular linkages between strategy and human resource
planning becoming ends in themselves does not universally apply. Many human
resource planners have learned, often through experience, that complex models,
rhetoric, and form-driven processes which imply answers, fall short. Accomplishing
the longer term goal of building a more competitive organization with human
resource plans requires rethinking traditional human resource planning models
and identifying specific ways that human resource planning systems and processes
build a competitive edge.
Human Resource Plans Which Pmvide a Competitive Edge
When human resource plans serve as a means of organizations increasing
their competitive edge, the content of the plans and the planning process must be
managed with the explicit goal of organizational competitiveness.
Content of Competitive Human Resource Plans
To enhance organizational competitiveness through human resource plans,
five practices underlie the content of the plan. A competitive human resource
plan:
1. Encompasses all the human resource activities. Generally, human resource plans
translate into succession plans, career development plans, Markov chain or
forecasting plans, or skill inventories (Butensky and Harari, 1984). Competitive
human resource plans include more than these conventional definitions. Competitive human resource plans frame a wider array of human resource activities.
Most frameworks which categorize human resource management practices
report similar sets of activities (e.g. Walker, 1980; Tichy, Fombrun, and Devanna,
1982; Tsui and Milkovich, 1985). Using these typologies, six subsets of human
resource activity may be identified as indicated in Figure 1. Each of these subsets
merits inclusion in competitive human resource plans.
• Organization Planning. Organization planning deals with establishing and
maintaining organizational structures. Traditionally, organization structure studies
examine alternative organization designs, e.g. functional, division, matrix, and
match those designs with environmental contingencies (Galbraith, 1977). Organization planning goes beyond organization designs to address: modification,
addition, or deletion of key jobs; reporting relationships (who reports to whom);
HUMAN RESOURCE PLANNING AS A COMPETITIVE EDGE
43
FIGURE 1
Subsets of Human Resource Activities
ORGANIZATION
PLANNING
SELECnoN/
STAFl~ING
COMMUN CATIONS
<
REW/RDS
^
^

.
APPR/ISAL
DEVELOPMENT
* Based on work by Tichy, Fombrun, & Devanna (1982) and Tsui and Milkovich (1985)
work policies and rules to coordinate work; assignment and delegation of
responsibility; division of labor; and deciding where work is done (at a business or
corporate level). Organization plans match strategic plans for strategies to be
enacted and organizations to be competitive. Competitive human resource plans
recognize organizing alternatives and direct attention to alternatives which increase
competitiveness.
• Selection/Staffing. Selection and staffing systems focus attention on skill
inventories of available and needed skills; on who is hired to meet present and
future needs; and on who is promoted through career development and succession
plans. Many frameworks suggest matches between managerial characteristics and
organization strategies (Gupta, 1984; Olian, 1984; Szilagyi and Schweiger, 1984).
Much attention has been spent on designing and administering replacement and
succession planning systems to ensure the proper match of strategy and people
(Mahler and Gaines, 1984). Competitive human resource plans consider an
organization’s strategic needs; assess needed managerial characteristics that
respond to those needs; identify existing managerial talent; and propose plans
and procedures for attracting internal or external job candidates to fill positions.
• Reward Systems. Reward systems significantly affect employee behavior
(Lawler, 1984). When reward systems focus employee behavior on strategic goals,
employees are more likely to commit time and energy to accomplish those goals.
Rewards include financial and non-financial systems. Financial rewards such as
base salary, incentive compensation, and profit-sharing alternatives should be
considered part of the competitive human resource plan to ensure that employees
44
HUMAN RESOURCE PLANNING
VOLUME 9, NUMBER 2 CHAPTER 1
work towards strategic objectives. Non-financial rewards of office space, titles,
autonomy, and challenging work should be considered in competitive human
resource plans.
• Development Programs. When, to become more competitive, organizations
require additional or new skills and decisions are made to build skills internally
rather than hiring new employees, development programs can be designed to
reach strategic goals and build competitiveness. Alternative designs for formal
training programs for first line supervisors, middle managers, and executives
should be considered in competitive human resource plans. Training programs
are not designed in the abstract, however. They are shaped specifically for helping
employees acquire skills to build a competitive organization. In 1985, International
Business Machines (IBM) spent approximately $500 million on training programs.
This expense was not to make employees feel good about their jobs, but to ensure
that employees at all levels of IBM possessed the technical, conceptual, managerial,
and executive skills to keep IBM ahead of domestic and foreign competition.
Development programs also include activities such as individual counseling and
coaching, job rotation, job enlargement, task force assignments, or cross-functional
moves where employees receive development opportunities and experiences
which build competitive organizations. Competitive human resource plans identify
development needs and offer alternatives which effectively and efficiently meet
those needs.
• Appraisal Systems. Performance review systems also serve to build competitive organizations. Standards set and agreed to in a performance review
translate organizational strategies into individual actions. Continual feedback on
attaining those standards encourages continual commitment to strategic plans. In
addition, explicit links between appraisal systems and rewards ensures clarity in
how important it is to meet standards for allocating rewards. Links between
appraisal and development encourage individuals to seek personal development
opportunities to attain their potential in the organization. Competitive human
resource plans identify standards which may have to be added, deleted, or modified
to an existing performance appraisal process so that the appraisal system also
builds competitiveness.
• Communication Programs. As organization and human resource plans are
established, employees throughout an organization deserve continual access to,
and understanding of, these programs. Communication programs deal with how
information is disseminated throughout an organization, including who presents
the information; how it is presented; timing; and upward, lateral, and downward
communication flows. Competitive human resource plans specify communication
programs which disseminate information to ensure that employees know not only
what changes are occurring, but why.
As noted earlier, human resource planning often equates with only the
selection/staffing subset through efforts made to hire, promote, and match the
right person to the right job. Relying on only one subset of the total range of
human resource activities limits the human resource contribution to competitive
success. A competitive human resource plan assesses and upgrades practices
within each of the six subsets so that organizations manage their human resources
to attain the maximum competitive edge.
HUMAN RESOURCE PLANNING AS A COMPETITIVE EDGE
45
2. Remains simple. One company’s human resource plan was over 70 pages long,
leather bound, and professionally typeset. This plan, while thorough and comprehensive, resulted in few organizational changes. Few line managers were involved
in preparing the plan and even fewer read it. Thus, few of the suggestions became
inputs for managerial decision making. One of the most successful human resource
plans comes from a company where the plan must be kept to two pages. This
constraint forces the human resource planners to identify.in simple terms the
critical elements of the plan and present them in a crisp, direct fashion so that
action follows the plan.
3. Identifies specific human resource activities which can be used to accomplish strategic
goals. Competitive human resource plans provide decision makers with a clear
focus of what human resource management practices are needed or can be
modified, the alternatives for doing so, and the impact of doing so on business
performance. In establishing People Express, options for human resource practices
were reviewed, assessed against the goals of the firm (a low-cost airline with high
growth), and implemented if the options met the firm’s goals. As a result. People
Express has a flat organization structure (three levels), a low base salary with
employees committed to stock options, cross training, and peer appraisals. These
human resource practices coincided with People Express’s goal of reducing cost.
They allowed the organization to reach and maintain cost reduction goals which
lead to lower air fares and rapid growth in an otherwise declining industry.
Competitive human resource plans systematically provide decision makers
information about what human resource practices can be added, deleted, or
modified to reach strategic goals. Explicitly stating these human resource options
and assessing the implications of the human resource activity for business success
allows the human resource plan to build a competitive organization.
4. Relies on bu^ness rationale and language. Justifications for human resource activities
are made based on business logic. Generally, such business logic requires a
dependence on financial data. Competitive human resource plans explicitly state
the costs of adding to or detracting from the workforce, of designing and delivering a
training program, of modifying benefit packages, of changing compensation
programs, or of modifying corporate personnel policies (e.g. relocation). While
cost estimates of these activities may be based on assumptions rather than hard
facts, these assumptions are stated and costs calculated. With financial information,
decision makers make cost/benefit analyses to decide which human resource
activities best increase the competitive edge.
At a Honeywell division in Florida, the human resource planners identified
cost savings which could accrue through revised benefit programs. After performing
the financial analyses, they presented their recommendations to the executive
committee. Each recommendation was assessed and approved based on its financial
viability. By relying on business logic and language to communicate human resource
plans, the planners helped Honeywell cut their benefit costs, resulting in significant
cost savings. Human resource planners at Upjohn help managers diagnose the
one, three, and five-year cost of hiring new employees. These costs must then be
offset by potential financial gains from a new hire. By relying on business logic and
language, human resource planners have helped Upjohn executives monitor their
employee expenses.
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HUMAN RESOURCE PLANNING
VOLUME 9, NUMBER 2 CHAPTER 1
5. Raises more questions than answers. Competitive human resource plans depend
heavily on discussion of important questions. Ensuring that the right questions are
posed and dealt with allows answers to be generated which build competitive
organizations. By creating human resource plans which raise critical questions
instead of providing answers, the responsibility for the plans shifts from the human
resource planner to the line manager. As responsibility shifts, commitment to
implementing the plan follows.
Based on these five practices, the content of competitive human resource
plans may vary dramatically from traditional leather bound books. Competitive
human resource plans tend to cover more than staffing and replacement issues, be
shorter, tie directly to strategic plans, be grounded in business rationale and logic,
and focus more on raising the right questions than providing the only right answer.
The Process of Developing Competitive Human Resource Plans
Competitive human resource plans require a different process than traditional
HR plans where a human resource planning staff assesses environmental and
organizational strengths, weaknesses, opportunities, and threats, then plots future
directions. Managing the process of creating and using the human resource plan is
the primary predictor of how likely the plan is to be implemented. Managing the
human resource planning process to build competitiveness requires that human
resource planners carefully manage behaviors, control the flow of information,
and design rewards consistent with the plan for those involved in designing and
implementing the plan (Brockbank and Ulrich, 1986). Competitive human resource
planning processes require revised roles for human resource planners and users
of the plan.
i?o/e o/Human Resource P/anners. Human resource planners assume new roles
as process managers of competitive human resource plans. Rather than being a
part of the strategic planning processes, they become strategic partners. As
strategic partners, they spend time learning and understanding technical, organizational, and strategic plans. As they come to understand these plans, they begin
to behave as strategic partners by spending more time with line and other staff
executives, by assessing critical human resource issues as they relate to strategy,
and by collecting and disseminating human resource information which may affect
organizational competitiveness (Parker and Ulrich, 1986).
As strategic partners, human resource planners also play a more proactive
role by ensuring that meetings to develop human resource plans include key
decision makers from throughout the organization; by orchestrating meetings to
ensure that agendas force discussion and resolution of key issues; by facilitating
involvement in the planning process to generate political commitment to plans;
and by clarifying and communicating specifically how human resource plans
influence competitiveness. Human resource planners assuming this role spend
equal time managing the process