Strategic HR

Case Study: HR as a Vital Catalyst for Company Success

Organizations that deliver extraordinary results typically embrace an absolute clarity of purpose and then align essential internal systems, incentives, goals, activities, and functions to achieve it. Many notable businesses that exemplified such absolute clarity described their purpose with a short phrase such as Apple’s: “Insanely great products;” General Electric’s: “Number 1 or 2 in any business;” and Stryker Corporation’s: “20 percent growth.”

Throughout former Stryker CEO John Brown’s 28 years of 20 percent growth, the phrase came to define an ethos of excellence that permeated nearly every activity in the company. Human Resources (HR) was instrumental in supercharging this ethos.

HR effectively redefined the recruiting and selection process to hire people who would embrace the 20 percent, aided in creating incentives aligned with the 20 percent purpose, and built a performance review process designed to reward and recognize efforts and contributions focused on achieving the it. In doing so, HR was a vital catalyst in the company’s unprecedented success.

Reinvent Recruiting and Select those Who Will Thrive

Clarity of purpose can act like a beacon to attract achievement-oriented, competitive employees who are naturally motivated to join organizations with well-defined goals. For example, the Marine Corps recruiting slogan, “The Few, The Proud,” sets it apart from the other services. The Marines attract a slightly different “cut” of American youth that want to serve.

Early in its 28-year growth trajectory, medical device maker Stryker developed a reputation for hard work and delivering results. Stryker leaders valued candidates inspired, rather than intimidated, by this reputation. For Stryker, however, hiring ideal employees took more than a slogan.

When forward-thinking HR teams reformed the recruiting and selection process, the impact was transformational. These HR teams spearheaded programs that demonstrably improved Stryker’s ability to identify and attract candidates who would thrive in the company’s aggressive, high autonomy, high responsibility environment. They introduced statistically-based methods to assess a candidate’s innate talents and better discern their psychological “fit” for the organization.

The transformation had its origins when one division started using profiling interviews that unveiled a prospective sales candidate’s strengths and weaknesses. As the sales managers began hiring candidates whose strength profiles were congruent with those of other top performers, it was a game changer. The highly-congruent candidates more often than not became top performers.

This positive experience led to a rapid expansion. Teams that developed and applied the profile-based approach to engineers, accountants, buyer/planners, and other roles saw an immediate impact. Managers who wholeheartedly embraced this new approach saw their teams become stronger with every new hire.

These new hires quickly bought into the company’s aggressive 20 percent mantra, partly because they were wired to be achievement-oriented, goal-focused people. The level of talent throughout the organization dramatically increased.

Align Incentives with the Purpose

Stryker’s HR teams added more fuel to the passion for 20 percent growth by steering the construction of incentives that rewarded achievements in concert with the overarching goal. The best HR teams worked closely with senior leaders and managers to ensure annual bonus objectives throughout the organization were SMART: Simple, Measurable, Appropriate, Realistic, and Time-bound. Ties to a divisional 20 percent earnings growth objective became a mandatory part of the plan for all participants in the annual incentive program.

HR was also pivotal in building an ethos around the idea of 20 percent growth. They advised leaders to set objectives that intensified the commitment to 20 percent for initiatives throughout the company.

In propagating the mantra, Operations managers would set 20 percent as the goal for inventory reduction programs. Sales managers all knew their quota for the next year would be a 20 percent increase over the prior year. Facility managers who wanted to cut a particular cost would target a 20 percent reduction. Customer satisfaction surveys would target 20 percent improvement goals. Assembly team leaders would target a 20 percent improvement in throughput from a line redesign.

The effect was powerful; infusing every department with a tie to 20 percent growth.

Redesign Performance Reviews

Stryker’s top HR teams also realized that purposefully-structured performance reviews could serve as powerful tools to reinforce the 20 percent ethos. Seemingly innocuous items such as the section headings, the questions asked, and the presentation of future objectives could be tuned to emphasize the 20 percent purpose. Those activities that were shown to have a high correlation with 20 percent growth became emphasized and those with little correlation were modified or eliminated from reviews.

These leading teams specifically tuned the review process to emphasize the overriding importance of orders growth, revenue growth, profitability, and cost reductions all of which were prime influencers of the 20 percent purpose. As HR groups throughout the company followed suit, the review process constantly improved adding greater visibility to results and measurable contributions that impacted earnings in the short, intermediate, and long term.

When particular measurements became recognized as highly correlated with earnings growth, their importance in performance reviews became systematized. All of these efforts heightened employee’s commitment to the purpose.

Human Resources Fuels the Engines of Growth

 In Stryker’s decentralized structure, divisional HR teams that executed these efforts significantly reinforced the importance of the 20 percent mantra within their divisions. Because of the readily apparent impact from their work, these teams earned considerable respect. Other divisions sought to emulate those most successful with recruiting and selection. Leading HR teams also spread best practices in designing incentives and developing performance reviews.

All of this led HR to assume a strong seat in the leadership of many divisions. HR leaders became change agents, and a career path that went through HR was looked upon favorably by those seeking to grow in their executive careers.

As Stryker’s story illustrates, an HR team can be a vital catalyst in aligning processes around an absolutely clear purpose. By adapting key operating procedures, HR can help focus the organization on achieving it.

As a vital member of a business leadership team, HR is in the enviable position of being able to pull levers that steer the organizational atmosphere over the long-term. When they pull the crucial levers that help clearly define what is important, what is most important, and what is unimportant; the resulting impact is profound.

Gary Morton Gary Morton was the senior co-founder of Stryker Corporation’s EMS equipment business. He led that business to astounding growth while pioneering breakthrough technologies that revolutionized patient handling for ambulance services around the globe. He is also a West Point distinguished graduate and the author of the highly-acclaimed book Commanding Excellence: Inspiring Purpose, Passion, and Ingenuity through Leadership That Matters.

See:  iGarymorton.com  Follow: @garymorton6.