Episode 96: Examines the critical role of HR in developing business partnerships, focusing on the different models and issues HR should consider when developing their role.
Date: 03/2/2015 Duration: 00:16:40
Business partnerships are on the rise, with 25% more organisations setting one up in 2014 than in 2013. This episode follows on from the December episode which looked at the key considerations that should be made when approaching business partnerships. In this episode we speak to representatives from Shell and Rolls Royce about their experiences of business partnerships. Sofiah Umar, VP for HR Strategy and Planning for Shell tells us about using business partnerships as a way to collaborate with competitors and the challenges HR face in accepting the change of mindset required for success, while Charlotte Dearnley, Head of HR for Controls and Data Services at Rolls Royce, speaks about her role in building an individual culture and identity for her business unit, while remaining part of Rolls Royce, and the importance of fostering communication. Philippa Stokes, Head of Global Employment Relations at Rolls Royce echoes this point by describing why it is crucial to foster common understanding. We also hear from Paul Sparrow, Director of the Centre for Performance-led HR and Professor of International Human Resource Management at Lancaster University Management School on the role of HR in launching and sustaining successful business partnerships.
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Correction: The number of Shell employees is around 93,000 not 30,000 as stated in the podcast.
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Philippa Lamb: Back in December we brought you the first part of our series on business partnerships and here is the second and final part.
Now business partnerships are on the rise in a whole variety of forms. 25% more organisations set one up last year than the year before but failure is still by far the likeliest outcome. For every ten that start out with high hopes as many as seven end up dead in the water.
In the last podcast we heard from Paul Sparrow who is professor of performance led HR at Lancaster University and he outlined the most common problems for us.
Paul Sparrow: So we know from previous research that there are high failure rates. We’re now looking at very, very complex arrangements and in much more politically difficult situations. And the challenge of integration is just even more complex. We have to learn how to get this right and we haven’t got the time I think to experiment too much.
PL: Later we’ll hear from HRs involved with the partnerships on the ground at Rolls Royce and Shell and Paul will be joining us again to shed light on how to avoid the common pitfalls. Shell of course is a giant: a global oil, gas and petrochemical company, spread across 70 countries employing nearly 93,000 people and they have half a million contractor staff. Now they have a multitude of business partnerships on the go at any one time, of various types and lengths, many lasting for decades. Their partners include governments, the owners of the gas and resources, but also other oil and gas companies, in other words their direct competitors. Sofiah Umar is Vice President of HR Strategy and Planning at Shell.
Sofiah Umar: It is ironic because at one spectrum we’re actually competitors, in another spectrum to actually survive and be competitive in this industry you do need to partner with people who you would normally think of as your competitor. So it needs to be a collaborative type of relationship and you need to work as a team.
PL: Business partnerships are considered such a fundamental important part of the organisation that five years ago they established a permanent and specialist HR function just to help them operate smoothly.
SU: In 2009 we decided to create a dedicated organisation to provide strategic oversight to joint ventures all together. So it has the strategic oversight of around eight countries that we would consider as major joint venture partnerships. This helps us to also see okay there may be common themes across those countries that may be popping up that we ourselves in Shell need to have a specific interest in and that's quite important for us as well.
PL: Sofiah, working from central HR, understands all about the challenges for HRs who work in house with their business partners. As she explains doing that involves a complete change of mindset.
SU: I know people find it difficult going from a Shell organisation to a joint venture organisation because previously their governance structure was reporting to the Shell headquarters. In a joint venture governance structure it might be quite separate from the Shell organisation, which is perfectly fine but it does mean you have to think, okay what is the benefit of what I'm doing for that joint venture in the first place that also wouldn’t hurt Shell in the long run.
PL: Yeah that's quite a tricky thing to do isn’t it?
SU: Yeah and those who have been successful in that role, for example, if they were a HR adviser, HR business partner or manager in the joint venture partnership while it’s a continuous conversation of okay what would be most beneficial for all partners which that joint venture organisation and is there any conversation I need to have with Shell in the head office that I need to flag or raise with, if there is any flexibility that I need to make for certain Shell tools and processes that I'm responsible for implementing?
PL: Here’s Paul summing up the role of HR in launching and sustaining successful business partnerships.
PS: The first set of activities are to do with the integrity of the strategy. So the things that you have to do to ensure that those people who are collaborating, the management teams, actually have understood the whole consequence of this collaboration. Second challenge is to then say how do you actually ensure that once operations are in process that you actually maintain alignment with the strategy, because those who execute the collaboration often may forget...
PS: ...what they’re supposed to be doing. So there are things you have to do to ensure continued alignment. The third phase we really would call operational integrity. Often you find that within the operations of partnered organisations there are different ways of thinking. There are ways that will again mean that the execution of the collaboration be knocked off course unless you understand and you address what you have to do to align at an operational level. And the fourth issue we would call operational optimisation. You are now operating and you have learnt how to work in a collaborative environment but as the collaboration evolves it also has new needs, you have to optimise your operations. Now that's when the questions about the HR structures often come in because many HR functions it is only once they get to this stage of we’ve now been working this for several years when they then think maybe we need to design our HR delivery system, which I think is a little bit after the fact and what we’re really saying is you actually should think about the HR design at a much earlier stage.
PL: Charlotte Dearnley is Senior Business Partner Controls and Data Services at Rolls Royce, or at least she has been for the last six months, before that she was part of Aero Engine Controls which was subsequently bought by Rolls Royce and then last year amalgamated with another part of the business to become Controls and Data Services. It has been a convoluted journey where the tension between assimilation and independence has on occasion been tight but despite this Charlotte and her colleagues are absolutely clear about their vision and mission.
Charlotte Dearnley: I think the aspiration for the business is to really be a continuing evolving and growing business unit. So having merged with this other wholly owned subsidiary there's a lot of focus on Controls and Data Services in terms of futureproofing elements of Rolls Royce, adding value to Rolls Royce, using the data part of our business to really capture and analyse data to help our customer, namely Rolls Royce, really think about things differently and add value to the overall business.
PL: Though owned by Rolls Royce and with Rolls Royce as their main customer Controls and Data Services is very consciously a separate organisation.
CD: We’re branded differently than the rest of Rolls Royce. You can go to any of our sites and it’s not branded Rolls Royce, it’s branded Controls and Data Services. Our colour palette is bright green and grey versus the blue and white of Rolls Royce.
PL: So as an organisation where’s the benefit to you in doing that?
CD: Rolls Royce is our main customer but we do have external customers who aren’t Rolls Royce so we have the opportunity to be able to flex our business to external customers when we’re not dealing directly with Rolls Royce.
PL: On the other hand whilst Charlotte is clear on their differences from Rolls Royce the two organisations which merged to become Controls and Data Services had different cultures from one another and they’ve had to find a way to combine these.
CD: Even such things as dress code, you know, so much more relaxed from one part of the business, just the way that things get done round here is different.
PL: So how do you resolve that then as you say because it sounds like a small thing but it’s actually quite a big thing isn’t it?
CD: It’s huge. It’s absolutely huge. So part of the journey that we’ve been on this year, part of the journey that I've led from a HR perspective is about how do we create a culture which is now for the new business Controls and Data Services whilst remaining true to the overall Rolls Royce culture as well.
PL: And what’s happening on the clothes front?
CD: So our clothes are still an issue that we need to resolve at some point but actually the cultural piece in terms of how do we want to be seen? How do we want people to recognise Control and Data Services? How do we want it to be seen versus the wider Rolls Royce group? Do we want a distinct, unique entity? And that basically is where we’ve got to.
PL: For Paul Sparrow it’s the people and how they relate to one another that really determines success or failure in any partnership.
PS: I know these collaborations are incredibly complex. In some senses actually they often come down to simple relationships and everyone will say this: it is the quality of the relationships at senior management level and it is the quality of the relationships between the key players and knowing their opposites inside the organisation.
PL: At the interface points we talked about.
PS: At the interface points absolutely. So every HR partner will know they have opposites in the other organisations, who they can work with and who beforehand they can actually identify the high level ways in which they will respond to various challenges in this collaboration.
PL: Meanwhile Charlotte has set up transformational teams made up of employees from across both businesses and at all levels to find common purpose and culture across their sites in Belfast, Bristol and Indianapolis.
CD: Again it’s opportunities to really drive some upwards and downwards communication through the business. The downwards communication is always easy to do but upwards is not an easy feat. And actually this is an opportunity for us within Control and Data Services to really lead the way in terms of creating a cultural cycle that Rolls could potentially benefit from in the longer term.
PL: In his research Paul pinpointed six areas of people-related risks – coordination, communication, control, culture, capability and finally conflict. Philippa Stokes is Head of Global Employment Relations at Rolls Royce and she's thought long and hard about how they manage their many business partnerships. Like Paul she believes that sitting down and trying to make sense of each other is the foundation of success.
Philippa Stokes: I think often it’s about actually there being common understanding of what the organisation, or that part of the organisation is trying to achieve, what are its goals and objectives, what are the particular challenges that it faces? And therefore you reach some conclusions about what’s the best way of operating? So one of the most important things I think is to have common understanding of that. I mean one of the six Cs is control. Maybe that for me I would translate as governance and how you get that bit right. If you don’t get it right then I think it can create a lot of confusion and perhaps a bit of chaos, that's another C.
PL: Perhaps in terms of responsibility and accountability?
PhS: I think that's right having clarity of accountability is really important to getting organisation working effectively whether that's Rolls Royce or anybody else I think.
PL: As research into business partnerships deepens the issue of accountability grows.
PS: There’s a double-edged sword to this research. On the one hand it says, “We can fairly reasonably say what you’re going to have to do if you work in a collaboration.” That’s the good news you can identify what you have to go and do. The slightly more disconcerting news is that we can say exactly what you have to go and do so if you don’t do it you will be held to account. And that is the challenge now, people will understand and they will look at functions in organisations and they will say many of these issues are foreseeable, they are known and what were your strategies that you put in place to actually manage this? So the accountability is going to increase on many functions and most certainly on HR.
PL: As we know the great majority of these collaborations do fail but why exactly?
PS: It is the early part of the thinking, organisations they make assumptions about their own needs and their own motives and they make assumptions about their partners, and they make assumptions about their partners’ capabilities. And in many cases where things end up going wrong is either because they had not understood the design challenges. So the collaboration was not designed in the way that would enable it to respond to more difficult times. So it’s designed for happy times...
PL: Yes but not designed to be sufficiently robust?
PS: But not more difficult times. Or it is essentially false assumptions about the capability of partners. Or what actually is happening inside your partner organisation, how good or bad they may be about certain things. So the due diligence is important.
PL: Sofiah says her biggest challenge is listening.
SU: Continuously trying to communicate without harm, having prejudgement or making assumptions where we’re coming from I think that's a thing that we need to hold back on is to accept that there are differences between the partners and essentially that is the reason why you became a partner in the first place because those differences were the considered benefits in that relationship and just sustaining that level of interest and communication with each other is probably time-consuming and I think it’s the more behavioural aspect of that relationship that is more challenging rather than anything else.
PL: As a multinational because you’re dealing with an extraordinary breadth of cultures and approaches?
SU: It’s not so much the national cultural differences, it’s more to do with organisational cultural differences, corporate cultural differences.
PL: At Rolls Royce like Shell the focus is on letting business partnerships find an identity which cultivates a sense of pride amongst everyone there.
CD: It’s getting the balance right between the uniqueness and differences within each part of the organisation and the benefits that come with scale, being a large organisation a FTSE 100 that obviously gives you some significant opportunities and benefits but at the same time you've got to kind of what is it that people align themselves to when they come to work in the morning is it the whole Rolls Royce brand? And in many cases absolutely it is but there's something more immediate than that as well. So what is it that connects me to my workplace every day? So I think it’s a combination of those things.
PL: It’s a fascinating challenge and one that more and more HRs are going to face in our evermore networked world. If you’d like to dig deeper into business partnerships and how they work go to CIPD.co.uk before you do anything else.
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