This document discusses HR's role in strategy and managing human frailties that can impact strategic decision making. It examines a case study of Delta Airlines in the 1990s that faced financial challenges and adopted a cost-cutting strategy called "Leadership 7.5" which focused on lowering costs but had unintended consequences. The document discusses how human traits like ego, pride, opportunism and hubris can negatively influence strategy if not properly managed by HR. It provides suggestions for guardrails HR can implement to minimize the impact of these human frailties on strategic decisions.

1. HR Leadership and Strategy Formation: Walking the Tightrope PATRICK M. WRIGHT William J. Conaty/GE Professor of Strategic Human Resources School of Industrial and Labor Relations

4. Core Competence Profits Costs Revenues Outstanding Customer Service Valued Customer Outcome Skilled, Experienced, Committed Employees Delivered by? Internal Promotion Extensive Training High Pay Non-Union Flexible work rules Family Culture Driven by? Pre 1994 Business Model:

7. Profits Costs Revenues Competitive (Low) Cost Travel Valued Customer Outcome Commodity Workforce: Contingent Temporary Low Tenure Delivered by? Layoffs Low Wage Low Training Contractors Driven by? Post 1994 Business Model (Leadership 7.5):

12. Profits Costs Revenues Competitive (Low) Cost Travel Valued Customer Outcome Commodity Workforce: Contingent Temporary Low Tenure Delivered by? Layoffs Low Wage Low Training Contractors Driven by? Post 1994 Business Model (Leadership 7.5): Unintended Consequences : Unions Customer Service Baggage Handling Safety

43. Ego “ Concerned or Overly Concerned with the Self” Pride “ Justifiable Self Respect” Opportunism “ Self Interest Seeking with Guile”

44. Opportunism and Tyco The oddest aspect of Kozlowski ’s conduct, for those of us naïve enough to think that people take money because they somehow need it, is that he began availing himself of what became hundreds of millions of dollars in company loans…precisely at the moment that his pay was exploding… Kozlowski began regularly taking loans in 1996 and 1997 – just as his board-approved compensation leaped from $8.8 million to $52.8. It wasn ’t until ’98 and ’99 though, that he really went hog-wild on the borrowing. Apparently his approved compensation of $136.1 million in 1999 left him in a cash squeeze. ~ “The Big Kozlowski”, Fortune , Nov. 18, 2002

45. Ego “ Concerned or Overly Concerned with the Self” Pride “ Justifiable Self Respect” Opportunism “ Self Interest Seeking with Guile” Hubris “ Excessive Pride or Arrogance”

52. Ego “ Concerned or Overly Concerned with the Self” Pride “ Justifiable Self Respect” Opportunism “ Self Interest Seeking with Guile” Hubris “ Excessive Pride or Arrogance”

55. Executive Pay and Opportunism “ The strange part is, the more I made, the more I got preoccupied with money. When suddenly I didn’t have to think about money as much, I found myself starting to think increasingly about it. Money corrupts the mind” ~ Daniel Vasella, CEO, Novartis For the love of money is the root of all kinds of evil. ~ I Timothy, 5:24

56. So, What do we do about it?

57. Ego “ Concerned or Overly Concerned with the Self” Pride “ Justifiable Self Respect” Opportunism “ Self Interest Seeking with Guile” Hubris “ Excessive Pride or Arrogance”

59. Two Models of Leadership

60. Ego “ Concerned or Overly Concerned with the Self” Pride “ Justifiable Self Respect” Opportunism “ Self Interest Seeking with Guile” Hubris “ Excessive Pride or Arrogance” Altruism “ Placing Others’ Interests above one’s own” Humility “ Thinking More of Others” “ Go toward the light…”