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Aug 11

Truly Strategic HR: Toby Flenderson and Porter’s Five Forces Analysis

 

Truly Strategic HR: Toby Flenderson and Porter’s Five Forces Analysis

I am often reminded of the man who, I’d argue, is one of the most famous Human Resource Managers in the history of television – The Office’s Toby Flenderson. If you’re familiar with Toby, you recognize his sound judgment and good intentions On one instance Michael Scott, his Branch Manager and self-declared nemesis of Toby, invites a Boy Scouts troop to the company’s Casino Night party. Toby justifiably says,

“Actually, I didn’t think it was appropriate to invite children since it’s, uh, you know…there’s gambling and alcohol…and it’s in our dangerous warehouse…it’s a school night, and you know, uh… Hooters is catering. You know, is that not—is that enough? Should I keep going?”

As a result of this and many other instances of Toby enforcing company policies (and commonsense) thereby thwarting pandemonium, Michael finds no value in anything Toby says or does. Michael’s frequent inappropriate behaviors may seem farfetched, but if you’ve worked in HR, they are tame. Michael represents a collection of leaders who lack sound judgment, the ability to read basic social cues, and appreciation for the value HR can bring to an organization. So how do HR professionals earn respect and avoid being treated like Toby?

“Here’s how things work here: My job is to make the office fun. [HR’s] job is to make the office lame, and we have an eternal struggle, you and I, and only one of us can be the winner. Spoiler alert, I’m going to win.” – Michael Scott

In the HR world, we incessantly preach the need to “be strategic,” “get a seat at the table,” and “be part of the C-Suite.” These catchphrases, while important, don’t have the same impact they once did. We should really be assessing the threats that affect our organizations and HR departments. If we did, we would be in a position to create preemptive plans that both overcome the hazards and demonstrate the competitive advantages HR provides.

To identify these potential threats, prioritize their impact, and develop a game plan to compete, I rely on the classic book Competitive Strategy: Techniques for Analyzing Industries and Competitors. In it, economist Michael Porter presents a framework to determine the competitive intensity and profitability of a market. Called the Five Forces Analysis, this strategy model is widely utilized amongst business leaders. It is time for HR to use it, as well.

“I believe that the HR department is a breeding ground for monsters.” – Michael Scott

To implement the Five Forces, let’s begin by defining them:

The threat of substitute products. When an alternative product or service is available, there is a greater chance of people switching.

The threat of the entry of new competitors. This involves entities who have not previously competed with you.  It can be brand new competition or an existing one that begins to compete through a shift in business strategy.

The intensity of competitive rivalry. Different opponets use differnet tactics. Aggressiveness, available resources, the number of competitors, and economies of scale should all be considered.

The bargaining power of customers. Such factors as the degree of dependency on you and your services, the uniqueness of your offerings, and the availability of substitute products determine customers’ ability to haggle.

The bargaining power of suppliers. Like customers, suppliers and vendors can affect the intensity of competition through their ability to control prices and the quality of services they supply.

One you understand each Force, it is time to identify the threats and bargaining powers that surround you. For HR, we tend not to think in terms of competing outside forces, but not acknowledging them does not mean they do not exist. The chart below shows many of the parties that are actively competing with you whether you like it or not.

Now that you are familiar with the outside forces affecting your department, your staff, and your organization, it is up to you to decide how to handle it. Do you want to compete with enhanced/additional services, increased quality, profit building, and/or cost reductions, or are you going to concede without a fight? Your answer will determine whether you deserve that coveted “seat at the table.”

Our HR idol Toby accepted his low-level role; he took the abuse and reciprocated with minimal effort. I, however, prefer to think of Toby as a cautionary tale, a symbol of what not to be. Let’s win over the Michael Scotts and truly be strategic.

 

BIO: David Kahn, Ph.D. is a Leadership Strategist and author of “Case, Spandex, Briefcase: Leadership Lessons from Superheroes.” Additional writings can be found on leadersayswhat.com.

 

 

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