Strategy Study: Human Capital Agility

In a Post-Brexit Great Britain organisations will have challenges leveraging human capital. Their strategic planning will have to encorpoate a level of agility into the processes and practises relating to their workfore.

Definitions

Let’s firstly define the term agile. We’ll use McKinsey’s definition: Agile organisations are ones where they have “the ability of an organisation to renew itself, adapt, change quickly and succeed in a rapidly changing, ambiguous, turbulent environment… Agility requires stability for most companies”.

While we’re in definition mode, let’s also define sustainable human resource management as the “adoption of human resource management strategies and practices that enable the achievement of financial, social and ecological goals, with an impact inside and outside of the organisation and over a long-term time horizon while controlling for unintended side effects and negative feedback” (Ehnert).

Finally, let’s explain employee engagement using Kahn’s definition as “the harnessing of an organisation members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively and emotionally during role performances”.

So Brexit Happened…

Following Brexit, it is likely Great Britain will no longer enjoy the free movement of European Union migrants and the exclusive trading agreements. Many industries currently face skill shortages, 81% manufacturing organisations report recruitment difficulties.

Post-Brexit recruitment will be further impacted by the shortage of both skilled and low skilled workers, creating significant pressures in constructions, agriculture, healthcare, education and seasonal employment.

In addition to recruitment, businesses will face pressures on existing migrant employees. New Immigration rules enforced as of March 2019 require migrants to apply for a Visa, which will be subject to a minimum salary threshold and organisation sponsorship, small businesses in particular may not be able to offer the minimum salary thresholds and thus will be limited to domestic workers.

Strategic Objective – Become Agile

One option strategically is to adopt agile practises. Using these, organisations can better cope with change and over time mitigate some of the issues brought by a reduce skill pool and immigration restrictions. Research conducted at the Massachusetts Institute of Technology (MIT) by the Economist Intelligence Unit (2009) indicates that agility may also be linked to profitability; the research suggests agile firms achieve 30% higher profits and their revenue grows at a rate much faster than non-agile companies, this long term growth will help the organisation to become sustainable.

According to a report by the Economist Intelligence Unit ‘Agile’ organisations frequently exhibit the following traits; high-performance culture, flexibility of management practices and resources and organisations structures that support collaboration, rapid decision-making and execution. One such way of encouraging a high-performance culture is to ensure you have the ‘right’ people working for the organisation, the recruitment and selection stage is key to achieving this.

The Fit Concept

One of the most emphasised parts of recruitment and selection is considering the Fit concept; to find the candidate best suited to the role, whether they must possess traits associated with the organisation, the job or flexibility. A mixture of flexible and organisation fit is needed for agile working, to adapt to change and take on different roles within the team. Person–organisation fit is usually described as how well a candidates perceptions of the values held by a company match their personal values. Person–job fit is the match between the job’s demands requirements and what it offers and a person’s skill-set and personality.

The Fit concept is a two way process, from the employers perspective it helps to focus hiring on applicants with the relevant personal or job skills. For the applicants, it helps them to find organisations they are attracted to and wish develop a career with. For Deloitte the expectations of employees stem from their 3 agile working principles: outcomes, not inputs, matter: mutual trust and two-way opening communication. Whilst these principles are not specifically stated within the contracts, Stevan Rolls, a HR partner for Deloitte believes that “Individuals and the firm should be able to have a reasonable level of flexibility above and beyond what’s in the contract.

The trick is not to legislate for every eventuality but to enable productive conversations around needs and what’s working, what’s not working, what’s reasonable and what’s unreasonable”, in other words the importance of the psychological contract. The psychological contract is a set of unwritten expectations between an employee and their employer/manager, it includes security of employment, career expectations, involvement and the trust in management. The psychological contract is an important aspect when creating an agile organisation, as both employees and employers are willing to be more flexible if they feel the contract is being upheld.

Delta airlines, is well-known for having a bureaucratic structure, with very formal operating processes due the specialised nature of the work. In an interview with the Business Insider, a spokesperson said “…We have to make sure those we hire can not only serve to keep our customers safe and comfortable on board but also fit well within our organisation,”

Whilst Delta have an element of person-organisation fit, the focus is on person-job fit, every employee has their specific role and they are not encouraged to deviate from that, which means the recruitment process is stringent. Through having such high standards, Delta limit their candidate pool, thus are unable to act quickly to changes in the industry for example, if they operated in the UK they would be extremely disadvantaged by post-Brexit skill shortages as aforementioned.

In contrast, Zappos, an online shoe company, have embraced the use of the organisation fit concept. Roles within the company are defined around the work, not people. Employees fulfil several roles, encouraging freedom, collaborations and adaptability. Zappos use culture as its strategy, when recruiting they turn to their 10 core values to assess people for cultural fit in the early stages of the application process. Through building a rapport and getting to know candidate the candidates well, Zappos can accurately assess fit and maintain high levels of engagement which are vital for success.

The Bias Barrier

A barrier to achieving agile working is that employers hire with a bias, which comes in many forms, whether it is those who are similar to them (similarity attraction bias), or those who are simply good looking (beauty bias). Herring states that this bias negatively impacts long-term business needs such as innovation and organisation responsiveness to market changes.

Bias can also be in the form of discrimination, research conducted by Bersin for Deloitte found that 71% of organisations try to foster diversity and inclusion, however only 11% are successful. Using the fit concept helps to limit bias by clearly stating the desired qualities of the individuals and thus providing a benchmark for hiring managers. Studies also show that a diverse workplace can attract people from a wider sample, perhaps a solution to the post-Brexit issue of fewer workers.

Recruitment and selection processes present the opportunity to change the composition of the workforce. An organisation could become less dependent on the skills of migrant workers by increasing work opportunities to otherwise restricted workers through the flexibility of agile working, for example parents with young children or caring responsibilities.

Get Fit & Motivated

Once the fit has been decided upon, organisations can conduct strategic job analysis and use realistic job previews to ensure the fit between employers and potential employees is established, all part of the job design process.

We can look to Armstrong and Taylor for a job design definition – “Job design specifies the contents of job in order to satisfy work requirements and meet the personal needs of the job holder, thus increasing levels of employee engagement”.

When creating a job design it is important to consider what motivates the employee, by taking a motivational approach you ensure the job fulfils the external and intrinsic needs of employees. The CIPD identifies that the trade-off between intrinsic and extrinsic motivation often creates an issue when deciding how to attract the right people.

Matt Black Systems (MBS), a leading provider of man machine interfaces, is an excellent example of how consideration of motivational factors can lead to employee satisfaction and company success. In 2004, the management team chose to adopt a people-centric approach, to empower their staff and to in turn ensure a better service for their clients.

To start, the MBS management team outlined their core targets for the business which include: quality, delivery, profit, innovation, growth and client-relationship. Through consideration of Psychologists Dan Pink’s research MBS were able to design the organisation and jobs in such a way that stimulated employee motivation to deliver the core targets through incorporating Pink’s three motivational elements: autonomy mastery and purpose. As MBS’ employees rewards are reflected by their own personal results , they realise that their success is instrumental in the success of the business.

According the Herzberg the motivating (Satisfiers) factors relate to the job content and consist of the intrinsic need for:

• Achievement
• Recognition
• Responsibility
• Opportunities for promotion.

In contrast, there are Hygiene factors, which do not satisfy or motivate, the only prevent job dissatisfaction. Hygiene factors relate to the job context and consist of company policy, relations with the manager, salary and work conditions. By designing a job that incorporates characteristics that meet the employee’s needs or goals, the organisation can achieve a motivated workforce and effective management, which fulfils the aforementioned Economist Intelligence Unit’s agile organisation trait of a high performance culture.

The most important factor in the success of agile working is organisational stability. Agile working requires alignment of management objectives, the CIPD found that those who have cost management and risk-aversion priorities are less willing to experiment with agile working practices.

Research also suggests that the typical interview is a poor predictor of the best candidate for the job, yet it is still the most commonly used selection technique, further supporting the notion that managers will ‘stick to what they know’ and are not willing to try new practices.

The CIPD conclude that the overall effect of this apprehension can impact the small scale practice changes, which in turn make the entire rollout more risky, especially when there is a history of failed interventions. By adopting a systematic approach and ensuring objective alignment at each stage of the process the organisation will be successful in achieving agile working.

Summary

To conclude, agile working can be incorporated to different processes and practices within the organisation to create high-performance cultures, flexibility of management practices and resources and organisations structures that support collaboration, rapid decision-making and execution. Zappos demonstrate that by aligning cultural fit and recruitment, a collaborative culture can be achieved and MBS have been successful in incorporating motivation techniques to achieve a high-performance culture.

Ultimately, having the strategic objective to embrace agile working allows organisations to adapt to changes and control the challenges initiated by a post-Brexit Britain, helping them to survive and achieve sustainability.