Last October, Hammer refined and expanded his views in a new work, “The Agenda”, a nine-step program for building a business strategy. Starting from the assumption that the customer is now the focal point for all business activities, he argues once again for far-reaching change within organisations to handle the fluid dynamics of the twenty-first century. While process remains a fundamental plank of business improvement in this new environment, he argues that the human resource function has a major role to play.

A large number of business re-engineering projects went wrong in the 1990s. How much of that was a failure of execution rather than theory, and how have your views altered over the last decade?
More companies that I’ve met with succeeded in re-engineering than failed – and many that failed did so because their “re-engineering” was little more than downsizing or introducing new technology. The re-engineering movement was all about making fundamental change in how companies conducted business, about rethinking everything from the ground up. I felt that “radical” was the key word: radical change in business processes for dramatic improvement in business performance. I still believe that major changes in the business environment require radical responses, but I no longer view “radical” as the core of my definition. I have become a process person. Process is the way in which the abstract goal of putting customers first gets turned into its practical consequences.

But many HR departments have only a partial understanding of how their own processes really work – that becomes apparent, for example, when companies look to outsource parts of the HR function and struggle to define the parameters of the service contract. How should HR directors go about this learning process?
HR organisations need to be deeply involved in a company's shift to a process focus, since working in process terms has major implications for job definitions, skill requirements, and career paths. A good way for HR to begin appreciating the implications of process work is to apply this perspective to its own activities. HR needs to see itself not as a functional unit, but as a group of people with specific skills who are deeply involved in key enterprise processes. These include hiring, development, retention, and the like. Thinking of these in process terms means identifying the customers of these processes, specifying desired outcomes, creating precise designs and metrics, and recognising that achieving process goals entails the work of teams of people across the organisation. HR processes are not confined to the HR department. By addressing and improving these processes, HR positions itself to support the company in doing the same for all other processes.

You argue in “The Agenda” that organisations need to reassess their performance management techniques and priorities. It practice, most organisations that go through change management address process issues first, and see strategic performance management as a "nice-to-have" second phase. How can HR build a business case for investing in the necessary analytical tools?
Companies that get serious about processes quickly learn that people management becomes a more, not less, important theme for the company. One chemicals manufacturer, for instance, instituted high performance operational processes, but soon recognised that they were not getting the desired results because they had neglected the people dimension. They then had to institute a new human performance management process, which entailed careful goal setting, performance assessment, and development planning for its people -- and the business results soon followed. In a process enterprise, people in fact become the kind of organisational asset that HR organisations have long argued for. This in turn means that companies must invest in managing this resource, with the same care, processes, and analytics that they use in managing the customer resource. Employee retention is as strategic an issue as customer retention, and indeed, the two are closely linked.

In the new “collaborative” business environment, organisations are looking at how they can interact more efficiently and effectively with other companies. How will this affect HR -- can you see HR moving from its traditional inward-focus to working with senior managers in other organisations?
There is an inexorable trend, driven by phenomena ranging from outsourcing to supply chain integration, that is forcing different companies (typically, but not exclusively, customers and suppliers) to work together as smoothly as though they were one. Up until now, the emphasis has been on integrating the processes that cross enterprise boundaries. But if processes are to work smoothly together, people must do so as well. There is an important role for HR organisations to play in enabling inter-company collaboration. HR units will have to work with their counterparts in collaborating companies to ensure that job responsibilities mesh, that metrics are congruent, and that HR policies are consistent, so that people can easily work together across boundaries. They will also have to work on aligning corporate cultures to create the needed sense of trust between people in different companies.

Can you explain the “20/60/20” formula that you apply to managing people during change initiatives?
When a major corporate initiative is announced, 20 per cent or so of the population typically receives it enthusiastically. This ardour should be harnessed. Another 20 per cent or so will be adamantly against this change and, indeed, almost any change. This 20 per cent is often concentrated in the management ranks, and is so deeply opposed to new ways of doing things that they cannot be brought around. The 60 per cent in the middle is, of course, where the battle is won or lost. Many executives concentrate their efforts on the other two segments because they feel that’s where the most effort is needed or will be most successful. They are wrong. The top 20 per cent does not need to be convinced, and the bottom 20 per cent cannot be. Save your energies for where they matter. The full range of change management tools need to be brought to bear on the critical 60 per cent: communications, incentives, participation, support, and leadership. Too many companies merely go through the motions in these areas. They need to budget adequately for them, both in terms of financial resource and in terms of executive time and attention.

Finally, do you think the vision of strategic HR, freed from administrative restraints and focusing on building value, will ever be realised in practice?
Whether or not the vision is fully realised, we are definitely moving in the right direction. In this sense, HR is following in the footsteps of finance, which is making significant progress in transforming its role from transaction processor to business value adder. Although the road may be long, major results can be realised along the way.