Insights Into Results-Oriented Human Resources Solutions

Feature Article

Employee Life Cycle: A Roadmap for Aligning HR Strategy to

Organizational Imperatives
Over the past ten years, organizations have taken an increasing interest in more
closely aligning HR practices and services with the needs of their businesses.
However, integrating workforce issues into the total business picture still seems to lag
behind in practice regardless of the much-publicized theories about why organizations
should do so.

Managing a highly diverse, discerning, mobile, and independent workforce has created new challenges and
raised important questions about how people systems fit into overall corporate strategy, questions like:

• How can the organization measure and manage its growing investment in hiring and retaining key talent?
• What are the direct and indirect costs of turnover?
• What type of cost/benefit analysis should the organization use to quantify the effect of people on business
performance?
• What payoff should an organization expect from its people investments, i.e., how does an organization
calculate its HR return on investment?
• How does an organization prioritize, adjust, increase, or reduce HR programs and practices based upon
their effect on business performance?

Questions such as these continue to redefine the value-added services and processes HR organizations are
providing. Most recently, Aon has introduced a framework based on the “employee life cycle” that can give
HR professionals a means by which to better align their programs and practices to the short- and long-term
goals of their organizations.

4 + 2 Formula for Business Success

In a recent groundbreaking five-year study (Joyce, W.; Norhia, N.; Roberson, B.: What Really Works, Harper
Collins, Inc., 2003), consultants and business school professors at top universities analyzed ten years of data on
160 companies and more than 200 best practices and discovered that all successful companies simultaneously
master eight specific management practices. The eight practices were divided into four primary and four
secondary categories that directly correlated with superior corporate performance as measured by total return
to shareholders. Further, the study revealed that winning companies achieved excellence in all four primary
practices plus two of the secondary practices. Losing companies failed to do so.

These practices are as follows:

Primary Practices Secondary Practices

- Strategy - Execution - Talent - Leadership
- Culture - Structure - Innovation - Mergers and Partnerships

They also report that companies that consistently follow this formula have better than a 90% chance of
sustaining superior business performance. The authors called the winning combination the 4 + 2 Formula for
Business Success.

Aon Consulting FORUM February 2004


Implications for HR
The implications emerging from this study are many,
and for HR the message seems abundantly clear: in
order for HR to enhance its impact on company
success, it should focus its priorities, service delivery
channels, and capabilities to support the organization’s
business strategy. Or, in essence, it should be the
definitive resource that enables the company to
harness its human capital––the sum of skills,
experience, and knowledge––and leverage it for
maximum competitive advantage.
The Employee Life Cycle Framework
The framework Aon developed (illustrated below)
links five strategic HR employee life cycle functions–
–sourcing and selecting, rewarding and retaining,
developing and coaching, managing communication,
redeploying and retiring––to the four primary
practices that emerged from the research study. At the
core of the framework is talent––those skills,
knowledge, and personal attributes that account for
exemplary performance in a job role, organization, or
culture. By adopting this integrated framework as a
roadmap, HR can begin addressing the critical
questions outlined in the adjacent column to more
closely align its contributions to the organization’s
imperatives.
As mentioned earlier, the core of the process
represents an organization’s talent base. The intent of
this approach is to help organizations introduce and
strengthen those practices and approaches that will
have the greatest impact on attracting, motivating,
developing, retaining, and redeploying this talent base.
The Road Ahead
Certainly formidable challenges lie ahead.
Operational practices still define HR as primarily
administrative. Tremendous gaps exist between where
HR spends its time versus where it can add the
greatest value, and people are still regarded as a cost
on the balance sheet versus an investment that should
be appropriately applied and developed. Yet,
organizations seeking to align their people strategies
with business strategies must remain committed to a
sound strategy for achieving this end. An HR function
that stays focused by aligning its services, programs,
and practices with the organization’s business strategy
will begin to distinguish itself as a business partner:
the only viable alternative in today’s competitive environment. „
Aon Consulting FORUM
Page 2
Life Cycle Questions for Aligning HR
Strategies to Organizational Imperatives
Below are critical questions in each employee life
cycle category that HR must answer as they align
people strategies to organizational imperatives.
Sourcing and Selecting:
• To what degree is the organization attracting the
talent necessary to align with the organization’s
strategic direction?
• To what degree is the recruitment process defined
as an HR activity versus a strategic priority where
HR and senior management collaborate on
important talent investments?
• How is talent introduced and integrated into the
organization? To what degree do people
experience excitement and a positive work climate
from day one?
Rewarding and Retaining:
• To what degree do employees understand how
their jobs contribute to the organization’s
success?
• To what degree are career development/
succession planning processes drawn upon to
maximize the contributions of top performers?
• What is the difference in total compensation
between low-performing and high-performing
employees?
Developing and Coaching:
• What percentage of jobs are filled from within
compared to sourcing from the outside?
• To what degree are training and development
programs linked to the strategic direction of the
organization?
• What percentage of employees participate in
formal performance planning and appraisal
sessions?
Managing Communication:
• How effectively is information communicated to
employees to help them in their job performance?
• What steps has the organization taken to ensure
employees can describe the organization’s HR
strategy?
• What is the commitment to knowledge-sharing
issues across the organization?
Redeploying and Retiring:
• To what degree is a talent management process
drawn upon to identify key talent for critical
jobs/roles?
• What programs are in place to help employees
successfully transition out of the workplace as
retirement nears?
• How is the experience and knowledge
represented by long-term employees being drawn
upon to mentor and coach others?
February 2004
 Page 3

For more information about this topic,

contact Aon Consulting at
800.438.6487.
####

Aon Consulting FORUM February 2004