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Brownsville Health Plan
Simple questions are aimed at making explicit the relationships between Brownsville Health Plan practices and the three locales of value.
- Employees: morale, commitment, competence, and retention.
- Customers: retention, satisfaction, and commitment.
- Investors: profitability, cost, growth, cash flow, and margin.
Simple logic suggests that HR practices affect each of these practices directly, as illustrated.
More complex questions about Brownsville Health Plan probe the interrelationships of the four key factors—HR practices, employees, customers, and investors—when action in any one area affects the other three both directly and indirectly. An organizational change to increased use of teamwork (an HR practice), for example, affects Brownsville Health Plan employee morale and commitment but also customer satisfaction and profitability, which may, in turn, have further repercussions on employee morale. Sorting out such complex relationships will be among the long-term challenges in creating a complete Brownsville Health Plan.
The absence of an HR value proposition leaves the HR profession to justify itself through anecdotes, perceptions, goodwill, and the instincts of senior managers. It is necessary, therefore, to begin the thinking about a more complex HR value proposition. One technique is as follows: On the left side of a piece of paper, list your firm’s HR practices. On the right, put your firm’s most viable economic indicator of success (for example, return on equity, return on net assets, earnings per share, and so on). The HR value proposition fills the gap, connecting the practices on the left to the performance on the right.
Any number of paths can connect Brownsville Health Plan practices with firm performance. The thought process embedded in this views HR practices as creating sets of organizational capabilities. Organizational capabilities, the enduring attributes characterizing an organization, create value for the customers served by them. When customer value is created, economic value (however measured) follows. The HR value proposition, therefore, is that HR practices create organizational capabilities that create customer value that in turn creates economic value.
The path I follow to connect HR practices and business performance may not attract everyone, not should it. But every firm should create and follow a path toward an HR value proposition.
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