It makes them knowledgeable about the organization and makes them feel clear about where they sit as a group, or team, or individual. Importantly, it should indicate how people are going to be rewarded for their contribution and how they might be developed and grow in the organization.
When considering approaches to the formulation of HR strategy it is necessary to underline the interactive not unilinear relationship between business strategy and HRM, as have Hendry and Pettigrew They emphasize the limits of excessively rationalistic models of strategic and HR planning. Since actions provoke reactions acceptance, confrontation, negotiation etc these reactions are also part of the strategy process.
Moore has suggested that Mintzberg has looked inside the organization, indeed inside the heads of the collective strategists, and come to the conclusion that, relative to the organization, strategy is anal- ogous to the personality of an individual. As Mintzberg sees them, all strategies exist in the minds of those people they make an impact upon.
Propositions on formulating HR strategy Boxall has drawn up the following propositions about the formulation of HR strategy from the literature: l The strategy formation process is complex, and excessively rationalistic models that advocate formalistic linkages between strategic planning and HR planning are not particularly helpful to our understanding of it. HR strategies l 63 l Business strategy may be an important influence on HR strategy but it is only one of several factors.
It is also necessary to stress that coherent and integrated HR strategies are only likely to be developed if the top team understands and acts upon the strategic imperatives associated with the employment, development and engagement of people.
This will be achieved more effectively if there is an HR director who is playing an active and respected role as a member of the top management team. A further consideration is that the effective implementation of HR strategies depends on the involvement, commitment and cooperation of line managers and staff generally. Finally, there is too often a wide gap between the rhetoric of strategic HRM and the reality of its impact, as Gratton et al emphasize.
Good intentions can too easily be subverted by the harsh realities of organizational life. For example, strategic objectives such as increasing commitment by providing more security and offering training to increase employability may have to be abandoned or at least modified because of the short-term demands made on the business to increase shareholder value. Schools of strategy development Purcell has identified three main schools of strategy development: the design school, the process school and the configuration school.
It uses quantitative rather than qualitative tools of analysis and focuses on market opportunities and threats. But, as Grant has indicated, the rationalist approach may indeed be over-formalized and rely too much on quantitative data, but the Mintzberg approach, which down- plays the role of systematic analysis and emphasizes the role of intuition and vision, fails to provide a clear basis for reasoned choices.
The focus is on implementation strategies, which is where Purcell thinks HR can play a major role. Levels of strategic decision making Ideally, the formulation of HR strategies is conceived as a process that is closely aligned to the formulation of business strategies. HR strategy can influence as well as be influenced by business strategy. Research conducted by Wright et al identified two approaches that can be adopted by HR to strategy formulation: the inside-out approach and the outside-in approach.
The HR strategy then derives directly from these challenges to create real solutions and add real value. But there is still room for HR to make a useful, even essential, contribution at the stage when business strategies are conceived, for example by focusing on resource issues. This contribution may be more significant if strategy formulation is an emergent or evolutionary process — HR strategic issues will then be dealt with as they arise during the course of formulating and implementing the corporate strategy.
It can indeed be argued that HR strategies, like other functional strategies such as product development, manufacturing and the introduction of new technology, will be developed within the context of the overall business strategy, but this need not imply that HR strategies come third in the pecking order.
Strategic options and choices The process of developing HR strategies involves generating strategic HRM options and then making appropriate strategic choices.
There is seldom if ever one right way forward. Choices should relate to but also anticipate the critical needs of the business.
They should be founded on detailed analysis and study, not just wishful thinking, and should incorporate the experienced and collective judgement of top management about the organizational requirements while also taking into account the needs of line managers and employees generally. Consideration needs to be given to the impact of the five forces on HR policy choice identified by Baron and Kreps : 1.
How are these translated into unit objectives? How does the HR system influence the skills, motivation and structure of the workforce? The following six-step approach is proposed by Gratton : 1. Build the guiding coalition — involve people from all parts of the business. Image the future — create a shared vision of areas of strategic importance.
Model the dynamics of the system — ensure that the dynamic nature of the future is taken into account. Bridge into action — agree the broad themes for action and the specific issues related to those themes, develop guiding principles, involve line managers and create cross-functional teams to identify goals and performance indicators. But many different routes may be followed when formulating HR strategies — there is no one right way. It was argued that by working through strategic issues and highlighting points of tension, new ideas emerged and a consensus over goals was found.
Assess feasibility. From an HR point of view, feasibility depends on whether the numbers and types of key people required to make the proposal succeed can be obtained on a timely basis and at a reasonable cost, and whether the behavioural expectations assumed by the strategy are realistic eg retention rates and productivity levels.
Determine desirability. Examine the implications of strategy in terms of sacrosanct HR policies eg a strategy of rapid retrenchment would have to be called into question by a company with a full employment policy. Determine goals. These indicate the main issues to be worked on and they derive primarily from the content of the business strategy. For example, a strategy to become a lower-cost producer would require the reduction of labour costs. This in turn translates into two types of HR goals: higher performance standards contribution and reduced head- counts composition.
Decide means of achieving goals. The general rule is that the closer the external and internal fit, the better the strategy, consistent with the need to adapt flexibly to change. External fit refers to the degree of consistency between HR goals on the one hand and the exigencies of the underlying business strategy and relevant environmental conditions on the other.
Internal fit measures the extent to which HR means follow from the HR goals and other relevant environmental conditions, as well as the degree of coherency or synergy among the various HR means.
Achieving vertical fit — integrating business and HR strategies Wright and Snell suggest that seeking fit requires knowledge of the skills and behaviour necessary to implement the strategy, knowledge of the HRM practices necessary to elicit those skills and behaviours and the ability to quickly implement the desired system of HRM practices. When considering how to integrate business and HR strategies it should be remembered that business and HR issues influence each other and in turn influence corporate and business unit strategies.
It is also necessary to note that, in establishing these links, account must be taken of the fact that strategies for change have also to be integrated with changes in the external and internal environments.
Fit may exist at a point in time, but circumstances will change and fit no longer exists. This would mean that there could be nothing with which to fit the HR strategy. Achieving horizontal integration bundling Horizontal integration or fit is achieved when the various HR strategies cohere and are mutually supporting. Bundling is carried out by first identi- fying appropriate HR practices, second, assessing how the items in the bundle can be linked together so that they become mutually reinforcing and therefore coherent, which may mean identifying integrating processes, and finally drawing up programmes for the development of these practices, paying particular attention to the links between them.
Integrative processes The use of high-performance, high-involvement or high-commitment systems as described earlier in this chapter is an integrating process. The essence of these systems is that they each consist of a set of complementary work practices that are developed and maintained as a whole.
Another inte- grating activity is talent management as described in Chapter Within these systems or as distinct approaches, two frequently used inte- grating processes are performance management and the use of compe- tencies.
The ways in which they link different HR practices are illustrated in Figures 4. Horizontal integration can also be achieved by the development of career family grading structures, which define the competencies required at each level, thus indicating career paths, and also serve as the framework for pay structures. Setting out the strategy There is no standard model of how an HR strategy should be set out.
It all depends on the circumstances of the organization. But the following are the typical areas that may be covered in a written strategy: 1. Content: details of the proposed HR strategy. Implementation plan: — action programme; — responsibility for each stage; — resources required; — proposed arrangements for communication, consultation, involvement and training; — project management arrangements.
Costs and benefits analysis: an assessment of the resource implications of the plan costs, people and facilities and the benefits that will accrue, for the organization as a whole, for line managers and for individual employees so far as possible these benefits should be quantified in terms of return on investment or value added. It must be emphasized that HR strategies are not just programmes, policies or plans concerning HR issues that the HR department happens to feel are important.
Piecemeal initiatives do not constitute strategy. The problem with strategic HRM as noted by Gratton et al is that too often there is a gap between what the strategy states will be achieved and what actually happens to it. As they put it: One principal strand that has run through this entire book is the disjunction between rhetoric and reality in the area of human resource management, between HRM theory and HRM practice, between what the HR function says it is doing and how that practice is perceived by employees, and between what senior management believes to be the role of the HR function, and the role it actually plays.
Barriers to the implementation of HR strategies Each of the factors listed by Gratton et al can create barriers to the successful implementation of HR strategies. These problems are compounded when insufficient attention is paid to prac- tical implementation problems, the important role of line managers in imple- menting strategies and the need to have established supporting processes for the initiative eg performance management to support performance pay. Overcoming the barriers To overcome these barriers it is necessary to: 1 conduct a rigorous prelim- inary analysis of needs and requirements; 2 formulate the strategy; 3 enlist support for the strategy; 4 assess barriers; 5 prepare action plans; 6 project- manage implementation; and 7 follow up and evaluate progress so that remedial action can be taken as necessary.
It is equally, if not more, concerned with the implementation of strategy and the strategic behaviour of HR specialists working with their line management colleagues on an everyday basis to ensure that the business goals of the organization are achieved and its values are put into practice. Transactional activities consist of the service delivery aspects of HR — recruitment, training, dealing with people issues, legal compliance and employee services.
But in accordance with the resource-based view, which emphasizes the importance of human capital in achieving competitive advantage, the credibility of HR also depends on its ability to make a strategic contribution that ensures that the organization has the quality of skilled, moti- vated and engaged people it needs.
The strategic nature of HR has been expressed in the strategic partner model as described below. They integrate their activities closely with top management and ensure that they serve a long-term strategic purpose. They anticipate needs, act flexibly and are proactive. The David Ulrich model David Ulrich argued that HR professionals carry out the following proactive roles as champions of competitiveness in creating and delivering value: 1.
Some are delivered through administrative efficiency such as technology or process design , and others through policies, menus and interventions. Necessary to distinguish between the foundation HR prac- tices — recruitment, learning and development, rewards, etc — and the emerging HR practices such as communications, work process and organization design, and executive leadership development.
Business partnering The concept of business partnering has been enthusiastically adopted by the Chartered Institute of Personnel and Development a. It involves the restructuring of HR into three specialist functions: shared services, centres of excellence and strategic partners.
The latter consists of a few HR professionals working closely with business leaders, influencing strategy and steering its implementation. The task of strategic partners is to ensure the business makes the best use of its people and its people opportu- nities. It also aims to inform and shape HR strategy, so that, as business partners, HR practitioners work closely with their line management colleagues.
They are aware of business strategies and the opportunities and threats facing the organization. They are capable of analysing organizational strengths and weaknesses and diagnosing the issues facing the enterprise and their human resource implications. They know about the critical success factors that will create competitive advantage, and they can draw up a convincing business case for innovations that will add value. It is often used rhetorically. In accounting language, where the phrase originated, added value is defined as the value added to the cost of raw materials and bought-out parts by the process of production and distri- bution.
Perhaps it is preferable to emphasize that the role of HR professionals is to be part of the business rather than merely being partners. How many people in marketing or finance have to say they are a partner in the business? He says: The term worries me to death. HR has to be an integral and fundamental part of developing the strategy of the business. It sounds good but what do HR people actually do when they are acting strate- gically?
And is the process of being strategic reserved for those at the top or is it something that everyone in HR does? That is, their central task is to be knowledgeable and competent in their various fields and to be able to move beyond compliance to provide a critique of organizational policies and procedures and to advise on how organizations should develop in the future.
A more realistic assessment of what being strategic means can be produced by analysing what is involved at different levels: HR directors, heads of major HR functions learning and development, reward, etc who may be in centres of expertise, business partners embedded in operational departments, and HR advisers or assistants who may be working in shared service centres.
To carry out this role they should: l understand the business and its competitive environment; l understand the goals of their part of the business and its plans to attain them; l ensure that their activities provide added value for the unit or function; l build relationships founded on trust with their line management clients; l provide support to the strategic activities of their colleagues; l align their activities with business requirements; l believe in and practise evidence-based management; l be proactive, anticipating requirements, identifying problems and producing innovative and evidence-based solutions to them; l see the broad picture and rise above the day-to-day detail.
While they will not be responsible for the formulation of HR strategies they may contribute to them within their own speciality. They will need to under- stand the business goals of the departments or managers for whom they provide services in order to ensure that these services support the achievement of those goals. Employee well-being is or should be a major concern, but organizations in all sectors private, public or voluntary have to be businesslike in the sense that they are in the business of effectively and efficiently achieving their purpose whether this is to make profits, deliver a public service or undertake charitable functions.
A consid- erable amount of research has been conducted recently on how HRM impacts on organizational performance, and this is summarized in the next section of this chapter. The chapter then explores the general lessons that can be learnt from this research and other relevant research projects. Finally, consideration is given to how, in the light of the research, strategic HRM can make a contribution to improving business performance.
If, therefore, an appropriate range of HR policies and processes is developed and implemented effectively, then HR will make a substantial impact on firm performance. There has been much research, as summarized in Table 6.
It is not enough to justify HRM by proving that it is a good thing. What counts is what can be done to ensure that it is a good thing. Direct relationships between investment and attention to HR practices are often fuzzy, however, and vary according to the population sampled and the measures used.
Huselid Analysis of the responses of Productivity is influenced by employee US firms to a questionnaire motivation; financial performance is exploring the use of high- influenced by employee skills, performance work practices, motivation and organizational the development of synergies structures.
Huselid and An index of HR systems in Firms with high values on the index had Becker firms was created to indicate economically and statistically higher the degree to which each firm levels of performance. Becker et al Outcomes of a number of High-performance systems make an research projects were analysed impact as long as they are embedded in to assess the strategic impact on the management infrastructure.
The impact of strategic HRM l 81 Researcher s Methodology Outcomes Patterson et al The research examined the link HR practices explained significant between business performance variations in profitability and and organization culture and productivity 19 per cent and 1 per cent the use of a number of HR respectively.
Two HR practices were practices. The An analysis of the survey, which A strong association exists between Workplace sampled some 2, HRM and both employee attitudes and Employee workplaces and obtained the workplace performance.
Relations views of about 28, Survey as employees. Thompson A study of the impact of high- The number of HR practices and the performance work practices proportion of the workforce covered such as teamworking, appraisal, appeared to be the key differentiating job rotation, broad-banded factor between more and less successful grade structures and sharing of firms. West et al Research conducted in 61 UK An association between certain HR hospitals obtaining information practices and lower mortality rates was on HR strategy, policy and identified.
The companies had a clear vision people management impacts and a set of integrated values that were on organizational performance. They were concerned with sustaining performance and flexibility. Clear evidence existed between positive attitudes towards HR policies and practices, levels of satisfaction, motivation and commitment, and operational performance.
Policy and practice implementation not the number of HR practices adopted is the vital ingredient in linking people management to business performance, and this is primarily the task of line managers. HR practices can never be sufficient to understand the link between HR prac- tices and business performance. As we have discussed it is misleading to assume that simply because HR policies are present that they will be imple- mented as intended.
The Bath people and performance model developed by Purcell et al is shown in Figure 6. Talent management Ensures that the talented and well-motivated people required by the organization to meet present and future needs are available. Enhances job satisfaction and flexibility, which encourages greater performance and productivity. Learning and Enlarges the skill base and develops the levels of competence required development in the workforce.
Develops a climate of learning — a growth medium in which self-managed learning as well as coaching, mentoring and training flourish.
Managing Focuses on both organizational and individual learning and provides knowledge and learning opportunities and opportunities to share knowledge in a intellectual capital systematic way.
Ensures vital stocks of knowledge are retained and improves the flow of knowledge, information and learning within the organization. Increasing Encourages people to identify themselves with and act upon the core engagement, values of the organization and willingly to contribute to the commitment and achievement of organizational goals.
Develops a climate of motivation cooperation and trust; clarifies the psychological contract. High-performance Develops a performance culture that encourages high performance in management such areas as productivity, quality, levels of customer service, growth, profits and, ultimately, the delivery of increased shareholder value. Empowers employees to exhibit the discretionary behaviours most closely associated with higher business performance, such as risk taking, innovation and sharing of knowledge, and establishes trust between managers and subordinates.
Reward Develops motivation, commitment and job engagement by valuing management them in accordance with their contribution. On the outside ring 11 policy or practice areas are identified to feed into and give meaning to AMO.
The second crucial feature of the model is the central box — front-line management — which draws attention to the fact that nearly all HR policies are applied through and by line managers. It is these managers who bring policies to life. Organizational commitment, motivation and job satisfaction all lead to discretionary behaviour, which in turn generates performance outcomes, which in themselves contribute to commitment, motivation and job satisfaction.
The company has doubled in size in the last four years. Underpinning the development of the company are the needs to grow the infrastructure, to develop management and leadership and to extend quality and safety programmes. It can be put down in a few sentences. However, that process has become less naive, more detailed and more structured as the business grows.
I see planning as a process that goes on and on and on and becomes more complex and more refined. You can have a strategy to stay as you are. The update is driven by the board. We have to make sure that we continue to refresh the strategy. We also share that plan with the senior management team.
We know we are going to grow at a certain rate. Then we do a skills audit and predict how many managers we are going to need. Out of this comes our HR development policy on skills training, leadership training and recruitment. Then if we have a new initiative we put it to the board for discussion. Strategies are developed by a top-down, bottom-up process. The members of the council, the policy makers, debate the strategic issues from which firm strategic proposals would develop. Individual members of staff are then given opportunities to contribute.
A distinguishing feature of all our corporate strategy work has been the opportunity for widespread involvement in the process. It is incredibly important that within an organization there is somebody who has the personal responsibility for monitoring, evaluating and reviewing the effectiveness of that organization.
Strategy is rooted in the vision and the culture. You pick up a very complex jigsaw and you work through it. But the vision helps. The fact that we have a spectrum of personalities strengthens the team. Everything flows from the corporate strategies we have set down. There is commitment to, and belief in, and respect for, individuals, and I think that these are very important factors in an organization. If so, do you want the same, or more, or less?
Are we doing it well? Could we do it better? What are the things we are not doing that you think we ought to be doing? And this confirmed our eagerness to get rid of duplication and delays in personnel matters. We were fast getting in the way and holding the whole process up. In business you have to look at the options available, make a decision and then drive that way.
There is a base strategy and we continue to question whether that is the right thing to be going forward with. We have a strategic planning framework throughout the group. One is at business level, where we identify issues that we deal with as a company, the second level is product-market planning, and the third level is local market planning. This in itself required the involvement of all the directors in a more formal business planning process. Three or four years ago we worked more individually and now we work more as a team.
There are elements of our business that are incredibly value creating. There are others that are incredibly value destroying. The trick is to identify the ones that are value creating and funnel resources to them.
There are a number of blocks that make up our business strategy. The first is our overall objective. Against this we spin off a number of elements we call major initiatives. These are coordinated by our director of corporate planning, but it is the functional directors who are really charged with taking ownership of these objectives.
HR strategy The comments made by the managing director and a number of other directors on the formulation of HR strategy are given below: The biggest challenge will be to maintain our competitive advantage and to do what we need to maintain and continue to attract very high-calibre people.
Managing director All we do in terms of training and human resource planning is directly linked to business improvement. Managing director The key differentiator on anything any company does is fundamentally the people, and I think that people tend to forget that they are the most important asset. Director of finance We have to help the business achieve its objectives, and the HR strategy has to be very much tailored towards those objectives. Director of personnel When questioned on his approach to the development of personnel strategies the director of personnel replied: I start with the top line, the four or five things that are the strategic platform for the company.
I get my managers together to look at the implications. We then pull it together so that it is all derived from the original strategic platforms and then work top down and bottom up to get the amalgam of what we can achieve. This then feeds into the final operating plan so we can agree budgets. Mercia Systems Background Mercia Systems is engaged in the business of precision engineering, including the development and manufacture of specialized optical, mechanical, electrical and electronic equipment primarily for defence purposes.
Two major factors have affected the company: first, the contraction in the defence industry and, second, the change in government policy from cost- plus contracting to competitive tendering. This compelled the company to develop an entirely new business strategy and to carry out a comprehensive re-engineering process.
They are the common denominator throughout the organi- zation. This means we offer solu- tions, not products. That is really what we have to sell and it depends on people strength. CIM [computer integrated manufacture] is at the heart of it. We have tackled MRPII [manufacturing requirements planning] as the first phase of CIM, and this means that we are faster than our competitors and are more likely to deliver on time than them.
General manager We are characterized in the marketplace as a high-tech company with specific expertise in the field of optics and particularly electro-optics. We are known for the excellence of our technical solutions and the quality of our products. In the past we have been criticized for asking a premium price for high-technology products. Part of the message we are now getting across is that we can battle it out on value for money as well. So our basic competences are high technical quality and people with the skills needed to forge good relationships with customers.
Marketing director Business strategy Business strategy is stimulated and reviewed centrally by a business strategy group. The business is split into a number of sectors three in Glasgow , and each sector submits its business plan to the strategy group. This is a simple three-page summary that describes the broad objectives of their business sector, discusses the key competitive factors affecting it and sets out specific short- to medium-term objectives, which are then translated into an oper- ating plan.
The plans look at a horizon of 10 years, but for practical purposes there is a rolling three-year budget. What are you doing now to get better? The marketing director explained the approach as follows: The key to the business planning process is that it has to be a linked story from the top to the bottom of the company, and MRPII [manufacturing requirements planning] is part of the vehicle for doing that.
Our director of strategic planning works with the technical director to involve and guide the board on the overall strategic direction of the company. This is communicated as the strategic vision. Working from that, my role is to work with the group directors to evolve strategies for each of the businesses we have chosen to be in.
These are then reviewed and agreed by the executive and a strategic development group. One of the roles of that group is to check that our activities relate to and support the strategy established by the executive. If they do not, this may not be because they are wrong, and we may have to go back and review the strategy.
The broad thrust of the strategy as a means of realizing the vision is quite clear, but it is in a constant state of evolution, reacting as necessary in response to changing situations but also proactively anticipating new opportunities. We have the long-term view of the type of organization we believe we need as a technology company and we have evolutionary plans of how we are going to get there. In the early stages we had a very strong func- tional organization; our evolution process now involves the development of problem-solving teams, which are set up at a high standard to encourage getting it right first time.
In manufacturing we have mixed-discipline teams with a team leader and a much flatter structure than we used to have. We have two pilot projects where research and development engineers are part of the team on the shop floor, with a common team leader. The eventual aim is for all engi- neering and manufacturing to be organized in this way. The next step is to develop product families in which business generation and sales are brought into the team as well.
So the team leaders almost become general managers. The personnel director explained that business strategy defines what has to be done to achieve success and that personnel strategy must complement it, bearing in mind that one of the critical success factors for the company is its ability to attract and retain the best people. Personnel strategy must help to ensure that Mercia Systems is a best-practice company. He went on to say: We can demonstrate that the services we are giving our customers are improving dramatically, year on year.
We have an ongoing commitment to involve our customers — we were the first water company to actually prepare an annual report for them. You have successfully signed out and will be required to sign back in should you need to download more resources.
This title is out of print. Strategic Management In Action, 3rd Edition. Availability This title is out of print. Overview Features Contents Order Overview. Description For courses in Strategic Management. Strategic Management in Action, 3 rd Edition is clearly differentiated from other texts by its conversational writing style, brief paperback format, increased use of pedagogy, and emphasis on students doing strategy. The volume effectively integrates strategy theory and strategy action in an exciting and engaging way.
Ethics dilemmas The Grey Zones —Includes suggestions for further student research or discussion questions that can be assigned. New to This Edition. How to Do a Case Analysis appendix. Look no further! Learn about these grammar topics and many, many more in our thorough and easy to understand reference guides! Stay up to date!
Get research tips and citation information or just enjoy some fun posts from our student blog. Strategic Management Journal Citation Generator. Choose your source: Website Book Journal More. Keep all of your citations in one safe place Create an account to save all of your citations. Consider your source's credibility. Can you contact them? Do they have social media profiles? Have other credible individuals referenced this source or author?
Book: What have reviews said about it? Are they well-respected?
0コメント