Strategic human resource management

Proactive management of the employees of an organization. Strategic HRM includes typical human resource components such as hiring, discipline, and payroll, and also involves working with employees in a collaborative manner to boost retention, improve the uality of the work e!perience, and ma!imize the mutual benefit of employment for both the employee and the employer. STRATEGY The determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Alfred Chandler, Strategy and Structure, (MIT Press, 1962), P 1!

STRATEGIC HRM DEFINED Strategic "#M defines the organi$ation%s intentions and &lans on ho' its (usiness goals should (e achie)ed through &eo&le It is (ased on three &ro&ositions* first, that human ca&ital is a ma+or source of com&etiti)e ad)antage, second, that it is &eo&le 'ho im&lement the strategic &lan, and, third, that a s-stematic a&&roach should (e ada&ted to defining 'here the organi$ation 'ants to go and ho' it should get there

Strategic "#M is a &rocess that in)ol)es the use of o)erarching a&&roaches to the de)elo&ment of "# strategies, 'hich are integrated )erticall- 'ith the (usiness strateg- and hori$ontall- 'ith one another These strategies define intentions and &lans related to o)erall organi$ational considerations, such as organi$ational effecti)eness, and to more s&ecific as&ects of &eo&le management, such as resourcing, learning and de)elo&ment, re'ard and em&lo-ee relations

T". M.A/I/0 12 ST#AT.0IC "#M Strategic "#M focuses on actions that differentiate the firm from its com&etitors (Purcell, 1999) It is suggested (- "endr- and Pettigre' (1936) that it has four meanings* 4 4 4 4 4 4 4 the use of &lanning, a coherent a&&roach to the design and management of &ersonnel s-stems (ased on an em&lo-ment &olic- and 'or5force strateg- and often under&inned (- a 6&hiloso&h-%, matching "#M acti)ities and &olicies to some e7&licit (usiness strateg-, seeing the &eo&le of the organi$ation as a 6strategic resource% for the achie)ement of 6com&etiti)e ad)antage%

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Strategic "#M addresses (road organi$ational issues relating to changes in structure and culture, organi$ational effecti)eness and &erformance, matching resources to future re8uirements, the de)elo&ment of distincti)e ca&a(ilities, 5no'ledge management, and the management of change It is concerned 'ith (oth human ca&ital re8uirements and the de)elo&ment of &rocess ca&a(ilities, that is, the a(ilit- to get things done effecti)el- 1)erall, it deals 'ith an- ma+or &eo&le issues that affect or are affected (- the strategic &lans of the organi$ation As 9o7all (1996) remar5s* 6The critical concerns of "#M, such as choice of e7ecuti)e leadershi& and formation of &ositi)e &atterns of la(our relations, are strategic in an- firm %

AIMS 12 ST#AT.0IC "#M The rationale for strategic "#M is the &ercei)ed ad)antage of ha)ing an agreed and understood (asis for de)elo&ing a&&roaches to &eo&le management in the longer term It has (een suggested (:engnic54"all and :engnic54"all (199;) that underl-ing this rationale in a (usiness is the conce&t of achie)ing com&etiti)e ad)antage through "#M Strategic "#M su&&lies a &ers&ecti)e on the 'a- in 'hich critical issues or success factors related to &eo&le can (e addressed, and strategic decisions are made that ha)e a ma+or and long4term im&act on the (eha)iour and success of the organi$ation The fundamental aim of strategic "#M is to generate strategic ca&a(ilit- (- ensuring that the organi$ation has the s5illed, committed and 'ell4moti)ated em&lo-ees it needs to achie)e sustained com&etiti)e ad)antage Its o(+ecti)e is to &ro)ide a sense of direction in an often tur(ulent en)ironment so that the (usiness needs of the organi$ation, and the indi)idual and collecti)e needs of its em&lo-ees can (e met (- the de)elo&ment and im&lementation of coherent and &ractical "# &olicies and &rogrammes As <-er and "older (1933) remar5, strategic "#M should &ro)ide 6unif-ing frame'or5s 'hich are at once (road, contingenc- (ased and integrati)e% =hen considering the aims of strategic "#M it is necessar- to consider ho' "# strategies 'ill ta5e into account the interests of all the sta5eholders in the organi$ation* em&lo-ees in general as 'ell as o'ners and management In Store-%s (1939) terms, 6soft strategic "#M% 'ill &lace greater em&hasis on the human relations as&ect of &eo&le management, stressing continuous de)elo&ment, communication, in)ol)ement, securit- of em&lo-ment, the 8ualit- of 'or5ing life and 'or5>life (alance .thical considerations 'ill (e im&ortant 6"ard strategic "#M% on the other hand 'ill em&hasi$e the -ield to (e o(tained (- in)esting in human resources in the interests of the (usiness Strategic "#M should attem&t to achie)e a &ro&er (alance (et'een the hard and soft elements All organi$ations e7ist to achie)e a &ur&ose and the- must ensure that the- ha)e the resources re8uired to do so and that the- use them effecti)el- 9ut the- should also ta5e into account the human considerations contained in the conce&t of soft strategic "#M In the 'ords of ?uinn Mills (193!), the- should &lan 'ith &eo&le in mind, ta5ing into account the needs and as&irations of all the mem(ers of the organi$ation The &ro(lem is that hard considerations in man- (usinesses 'ill come first, lea)ing soft ones some 'a- (ehind

APP#1AC".S T1 ST#AT.0IC "#M There are fi)e a&&roaches to strategic "#M These consist of resource4(ased strateg-, achie)ing strategic fit, high4&erformance management, high4 commitment management and high4in)ol)ement management, as descri(ed (elo' The resource4(ased a&&roach

A fundamental aim of resource4(ased "# strateg-, as 9arne- (1991) indicates, is to de)elo& strategic ca&a(ilit- > achie)ing strategic fit (et'een resources and o&&ortunities and o(taining added )alue from the effecti)e de&lo-ment of resources A resource4(ased a&&roach 'ill address methods of increasing the firm%s strategic ca&a(ilit- (- the de)elo&ment of managers and other staff 'ho can thin5 and &lan strategicall- and 'ho understand the 5e- strategic issues The resource4(ased a&&roach is founded on the (elief that com&etiti)e ad)antage is o(tained if a firm can o(tain and de)elo& human resources that ena(le it to learn faster and a&&l- its learning more effecti)el- than its ri)als ("amel and Prahalad, 1939) "uman resources are defined (- 9arne- (199@) as follo's* 6"uman resources include all the e7&erience, 5no'ledge, +udgement, ris54ta5ing &ro&ensitand 'isdom of indi)iduals associated 'ith the firm % Aamoche (1996) suggests that* 6In the resource4 (ased )ie', the firm is seen as a (undle of tangi(le and intangi(le resources and ca&a(ilities re8uired for &roductBmar5et com&etition % In line 'ith human ca&ital theor-, resource4(ased theor- em&hasi$es that in)estment in &eo&le adds to their )alue in the firm The strategic goal 'ill (e to 6create firms 'hich are more intelligent and fle7i(le than their com&etitors% (9o7all, 1996) (- hiring and de)elo&ing more talented staff and (e7tending their s5ills (ase #esource4(ased strateg- is therefore concerned 'ith the enhancement of the human or intellectual ca&ital of the firm As Clrich (1993) comments* 6Ano'ledge has (ecome a direct com&etiti)e ad)antage for com&anies selling ideas and relationshi&s The challenge to organi$ations is to ensure that the- ha)e the ca&a(ilit- to find, assimilate, com&ensate and retain the talented indi)iduals the- need % Acon)incing rationale for resource4(ased strateg- has (een &roduced (- 0rant (1991)* When the external environment is in a state of flux, the firm s o!n resources and capabilities may be a much more stable basis on !hich to define its identity. "ence, a definition of a business in terms of !hat it is capable of doing may offer a more durable basis for strategy than a definition based upon the needs #eg mar$ets% !hich the business see$s to satisfy. Cni8ue talents among em&lo-ees, including su&erior &erformance, &roducti)it-, fle7i(ilit-, inno)ation, and the a(ilit- to deli)er high le)els of &ersonal customer ser)ice, are 'a-s in 'hich &eo&le &ro)ide a critical ingredient in de)elo&ing an organi$ation%s com&etiti)e &osition Peo&le also &ro)ide the 5e- to managing the &i)otal interde&endencies across functional acti)ities and the im&ortant e7ternal relationshi&s It can (e argued that one of the clear (enefits arising from com&etiti)e ad)antage (ased on the effecti)e management of &eo&le is that such an ad)antage is hard to imitate An organi$ation%s "# strategies, &olicies and &ractices are a uni8ue (lend of &rocesses, &rocedures, &ersonalities, st-les, ca&a(ilities and organi$ational culture 1ne of the 5e-s to com&etiti)e ad)antage is the a(ilit- to differentiate 'hat the (usiness su&&lies to its customers from 'hat is su&&lied (- its com&etitors Such differentiation can (e achie)ed (- ha)ing "# strategies that ensure that the firm has higher48ualit&eo&le than its com&etitors, (- de)elo&ing and nurturing the intellectual ca&ital &ossessed (- the (usiness and (- functioning as a 6learning organi$ation% Strategic fit The "# strateg- should (e aligned to the (usiness strateg- ()ertical fit) 9etter still, "# strategshould (e an integral &art of the (usiness strateg-, contri(uting to the (usiness &lanning &rocess as it ha&&ens Dertical integration is necessar- to &ro)ide congruence (et'een (usiness and human resource strateg- so that the latter su&&orts the accom&lishment of the former and, indeed, hel&s to define it "ori$ontal integration 'ith other as&ects of the "# strateg- is re8uired so that its different elements fit together The aim is to achie)e a coherent a&&roach to managing &eo&le in 'hich the )arious &ractices are mutuall- su&&orti)e

"igh4&erformance management "igh4&erformance management (called in the Cnited States high&erformance 'or5 s-stems or &ractices) aims to ma5e an im&act on the &erformance of the firm through its &eo&le in such areas as &roducti)it-, 8ualit-, le)els of customer ser)ice, gro'th, &rofits and, ultimatel-, the deli)er- of increased shareholder )alue "igh4&erformance management &ractices include rigorous recruitment and selection &rocedures, e7tensi)e and rele)ant training and management de)elo&ment acti)ities, incenti)e &a- s-stems and &erformance management &rocesses

A 'ell45no'n definition of a high4&erformance 'or5 s-stem 'as &roduced (- the CS <e&artment of :a(or (199!) The characteristics listed 'ere* 4 careful and e7tensi)e s-stems for recruitment, selection and training, 4 formal s-stems for sharing information 'ith the indi)iduals 'ho 'or5 in the organi$ation, 4 clear +o( design, 4 high4le)el &artici&ation &rocesses, 4 monitoring of attitudes, 4 &erformance a&&raisals, 4 &ro&erl- functioning grie)ance &rocedures, 4 &romotion and com&ensation schemes that &ro)ide for the recognition and financial re'arding of the high4&erforming mem(ers of the 'or5force

"igh4commitment management 1ne of the defining characteristics of "#M is its em&hasis on the im&ortance of enhancing mutual commitment (=alton, 193@) "igh4commitment management has (een descri(ed (- =ood (1996) as* 6A form of management 'hich is aimed at eliciting a commitment so that (eha)iour is &rimaril- self4 regulated rather than controlled (- sanctions and &ressures e7ternal to the indi)idual, and relations 'ithin the organi$ation are (ased on high le)els of trust % The a&&roaches to achie)ing high commitment as descri(ed (- 9eer et al (193E) and =alton (193@) are* 4 the de)elo&ment of career ladders and em&hasis on traina(ilit- and commitment as highl- )alued characteristics of em&lo-ees at all le)els in the organi$ation, 4 a high le)el of functional fle7i(ilit- 'ith the a(andonment of &otentiall- rigid +o( descri&tions, 4 the reduction of hierarchies and the ending of status differentials,

4 a hea)- reliance on team structure for disseminating information (team (riefing), structuring 'or5 (team 'or5ing) and &ro(lem sol)ing (im&ro)ement grou&s or 8ualit- circles)

=ood and Al(anese (199@) added to this list* 4 +o( design as something management consciousl- does in order to &ro)ide +o(s that ha)e a considera(le le)el of intrinsic satisfaction, 4 a &olic- of no com&ulsor- la-4offs or redundancies and &ermanent em&lo-ment guarantees 'ith the &ossi(le use of tem&orar- 'or5ers to cushion fluctuations in the demand for la(our, 4 ne' forms of assessment and &a-ment s-stems and, more s&ecificall-, merit &a- and &rofit sharing, 4 a high in)ol)ement of em&lo-ees in the management of 8ualit-

"igh4in)ol)ement management This a&&roach in)ol)es treating em&lo-ees as &artners in the enter&rise 'hose interests are res&ected and 'ho ha)e a )oice on matters that concern them It is concerned 'ith communication and in)ol)ement The aim is to create a climate in 'hich a continuing dialogue (et'een managers and the mem(ers of their teams ta5es &lace in order to define e7&ectations and share information on the organi$ation%s mission, )alues and o(+ecti)es This esta(lishes mutual understanding of 'hat is to (e achie)ed and a frame'or5 for managing and de)elo&ing &eo&le to ensure that it 'ill (e achie)ed

:IMITATI1/S T1 T". C1/C.PT 12 ST#AT.0IC "#M The conce&t of strategic "#M a&&ears to (e (ased on the (elief that the formulation of strateg- is a rational and linear &rocess, as modelled in 2igure ! 1 This indicates that the o)erall "# strateg- flo's from the (usiness strateg- and generates s&ecific "# strategies in 5e- areas The &rocess ta5es &lace (- reference to s-stematic re)ie's of the internal and e7ternal en)ironment of the organi$ation, 'hich identif- the (usiness, organi$ational and "# issues that need to (e dealt 'ith 9ut strategic "#M in real life does not usuall- ta5e the form of a formal, 'ellarticulated and linear &rocess that flo's logicall- from the (usiness strateg-, as Mint$(erg (193F) and others ha)e em&hasi$ed The research conducted (- 0ratton et al (1999) in eight 9ritish organi$ations esta(lished that 6In no case 'as there a clearl- de)elo&ed and articulated strateg- that 'as translated into a mutuall- su&&orti)e set of human resource initiati)es or &ractices % Strategic fit is a good idea (ut one that is difficult to attain C1/C:CSI1/ Strategic "#M is in some 'a-s an attitude of mind that e7&resses a 'a- of doing things It is reali$ed in the form of "# strategies, as descri(ed in the ne7t cha&ter Some strategic HR Choices

=or5 2lo's .fficienc-

Inno)ation

&

Control .7&licit +o( descri&tion <etailed 'or5 &lanning Staffing Internal recruitment Su&er)isor ma5es hiring 2it in 'ith firm%s culture Informal hiring

2le7i(ilit9road +o( classes :oose 'or5 &lanning

.7ternal recruitment "# ma5es hiring S5ill and 8ualification 2ormal hiring

Se&arations Inducing )oluntar- retirement :a-offs "iring free$e #ecruitment as needed Continuing su&&ort after termination :etting them fend for themsel)es Preferential rehiring /o &reference

Performance a&&raisal Customi$ed a&&raisals Cniform a&&raisal &rocedures Multi&le4&ur&ose a&&raisals Control4oriented a&&raisals Multi&le in&uts (&eers, su(ordinate) Su&er)isor- in&ut onlTraining and de)elo&ment Indi)idual training Go(4s&ecific training 9u- s5ills 'ith higher 'ages Com&ensation 2i7 &aGo(4(ased &aSeniorit-4(ased &aCentrali$ed &a- decisions

Team training 0eneric training Ma5e s5ills at lo'er 'ages

Daria(le &aIndi)idual4(ased &aPerformance4(ased &a<ecentrali$ed one

International management Create glo(al com&an- culture Ada&t to local culture #el- on e7&atriates #el- on o'n countr- nationals #e&atriation agreement /o formal re&atriation Cni)ersal com&an- &olicies Countr-4s&ecific com&an- &olices Choices of HR strategies

/o "# strateg- is HgoodI or H(adI in and of itself <e&end on situation conte7t

2it (et'een the strategies and organi$ations Outline 9usiness StrategStrateg- and "#M Strategic "# Choices

'

Im&ortance of strategic "# Planning Im ortance of strategic HR lanning .ncourage &roacti)e (eha)ior Dision, acti)e, antici&ation Translating the strategic &lans into actions

A good "# &lanning ma5es strategic "# choices that fit the o)erall organi$ational strategies A goo! HR lanning 2its organi$ational strategies 2its en)ironments

Conclusions

"#M is at a strategic le)el Managers can formulate "# functions in a 'a- that facilitate (usiness strategies It is a matter of fit (et'een the "# choices and (1) (usiness strategies, and (2) en)ironments

HR strategies
Strategic "#M is the &rocess that results in the formulation of "# strategies The terms 6strategic "#M% and 6"# strateg-% are often used interchangea(l-, (ut a distinction can (e made (et'een them Strategic "#M can (e regarded as a general a&&roach to the strategic management of human resources in accordance 'ith the intentions of the organi$ation on the future direction it 'ants to ta5e =hat emerges from this &rocess is a stream of decisions o)er time, 'hich form the &attern ado&ted (- the organi$ation for managing its human resources and define the areas in 'hich s&ecific "# strategies need to (e de)elo&ed "# strategies 'ill focus on the s&ecific intentions of the organi$ation on 'hat needs to (e done and 'hat needs to (e changed "# ST#AT.0I.S <.2I/.< "# strategies set out 'hat the organi$ation intends to do a(out its human resource management &olicies and &ractices, and ho' the- should (e integrated 'ith the (usiness strateg- and each other The- are descri(ed (- <-er and #ee)es (199@) as 6internall- consistent (undles of human resource &ractices%, and in the 'ords of Peter 9o7all (1996) the- &ro)ide 6a frame'or5 of critical ends and means% The &ur&ose of "# strategies is to guide de)elo&ment and im&lementation &rogrammes The- &ro)ide a means of communicating to all concerned the intentions of the organi$ation a(out ho' its human resources 'ill (e managed The- ena(le the organi$ation to measure &rogress and e)aluate outcomes against o(+ecti)es

TJP.S 12 "# ST#AT.0I.S 9ecause all organi$ations are different, all "# strategies are different There is no such thing as a set of standard characteristics #esearch into "# strateg- conducted (- Armstrong and :ong (199E) and Armstrong and 9aron (2;;2) re)ealed man)ariations Some strategies are sim&l- )er- general declarations of intent 1thers go into much more detail 9ut t'o (asic t-&es of "# strategies can (e identified These are* 1) o)erarching strategies, and 2) s&ecific strategies relating to the different as&ects of human resource management 1)erarching "# strategies 1)erarching strategies descri(e the general intentions of the organi$ation a(out ho' &eo&le should (e managed and de)elo&ed and 'hat ste&s should (e ta5en to ensure that the organi$ation can attract and retain the &eo&le it needs and ensure so far as &ossi(le that em&lo-ees are committed, moti)ated and engaged The- are li5el- to (e e7&ressed as (road4(rush statements of aims and &ur&ose, 'hich set the scene for more s&ecific strategies The- are concerned 'ith o)erall organi$ational effecti)eness > achie)ing human resource ad)antage (-, as 9o7all and Purcell (2;;!) &oint out, em&lo-ing 6(etter &eo&le in organi$ations 'ith (etter &rocess%, de)elo&ing high4 &erformance 'or5 &rocesses and generall- creating 6a great &lace to 'or5% The follo'ing are some e7am&les of o)erarching "# strateg- statements* A.01/* The "uman #esources Integrated A&&roach aims to ensure that from 'hate)er angle staff no' loo5 at the elements of &a- management, &erformance, career de)elo&ment and re'ard, the- are consistent and lin5ed 9K?* L .nhance em&lo-ee commitment and minimi$e the loss of 9K?%s (est &eo&le L Position 9K? as one of the (est em&lo-ers in the CA .gg* The ma+or factor influencing "# strateg- 'as the need to attract, maintain and retain the right &eo&le to deli)er it The aim 'as to introduce a s-stem that com&lemented the (usiness, that reflected the 'a- 'e 'anted to treat our customers > treating our &eo&le the same =hat 'e 'ould do for our customers 'e 'ould also do for our &eo&le =e 'anted to ma5e an im&act on the culture > the 'a- &eo&le do (usiness ("# <irector) 0la7oSmithAline* =e 'ant 0SA to (e a &lace 'here the (est &eo&le do their (est 'or5 An insurance com&an-* =ithout the &eo&le in this (usiness 'e don%t ha)e an-thing to deli)er =e are dri)en to getting the &eo&le issues right in order to deli)er the strateg- To a great e7tent )

it%s the &eo&le that create and im&lement the strateg- on (ehalf of the organi$ation =e &ut &eo&le )er- much at the front of our strategic thought &rocess If 'e ha)e the right &eo&le, the right training, the right 8ualifications and the right sort of culture then 'e can deli)er our strateg- =e cannot do it other'ise (Chief .7ecuti)e) :ands% .nd* 9ased on the &rinci&le that staff 'ho are en+o-ing themsel)es, are (eing su&&orted and de)elo&ed, and 'ho feel fulfilled and res&ected at 'or5, 'ill &ro)ide the (est ser)ice to customers Pil5ington 1&tronics* The (usiness strateg- defines 'hat has to (e done to achie)e success and that "# strateg- must com&lement it, (earing in mind that one of the critical success factors for the com&an- is its a(ilit- to attract and retain the (est &eo&le "# strateg- must (e in line 'ith 'hat is (est in industrA &u(lic utilit-* The onl- "# strateg- -ou reall- need is the tangi(le e7&ression of )alues and the im&lementation of )aluesM unless -ou get the human resource )alues right -ou can forget all the rest (Managing <irector) A manufacturing com&an-* The "# strateg- is to stimulate changes on a (road front aimed ultimatel- at achie)ing com&etiti)e ad)antage through the efforts of our &eo&le In an industr- of fast follo'ers, those 'ho learn 8uic5est 'ill (e the 'inners ("# <irector) A retail stores grou&* The (iggest challenge 'ill (e to maintain NourO com&etiti)e ad)antage and to do that 'e need to maintain and continue to attract )er- high cali(re &eo&le The 5edifferentiator on an-thing an- com&an- does is fundamentall- the &eo&le, and I thin5 that &eo&le tend to forget that the- are the most im&ortant asset Mone- is eas- to get hold of, good &eo&le are not All 'e do in terms of training and man&o'er &lanning is directl- lin5ed to (usiness im&ro)ement (Managing <irector) S&ecific "# strategies S&ecific "# strategies set out 'hat the organi$ation intends to do in areassuch as* 4 talent management > ho' the organi$ation intends to 6'in the 'ar for talent%, 4continuous im&ro)ement > &ro)iding for focused and continuous incrementalinno)ation sustained o)er a &eriod of time, 4 5no'ledge management > creating, ac8uiring, ca&turing, sharing and using 5no'ledge to enhance learning and &erformance, *

4 resourcing > attracting and retaining high48ualit- &eo&le, 4 learning and de)elo&ing > &ro)iding an en)ironment in 'hich em&lo-ees are encouraged to learn and de)elo&, 4re'ard > defining 'hat the organi$ation 'ants to do in the longer term to de)elo& and im&lement re'ard &olicies, &ractices and &rocesses that 'ill further the achie)ement of its (usiness goals and meet the needs of its sta5eholders, 4 em&lo-ee relations > defining the intentions of the organi$ation a(out 'hat needs to (e done and 'hat needs to (e changed in the 'a-s in 'hich the organi$ation manages its relationshi&s 'ith em&lo-ees and their trade unions The follo'ing are some e7am&les of s&ecific "# strategies* The Children%s Societ-* 4 Im&lement the re'ards strateg- of the Societ- to su&&ort the cor&orate &lan and secure the recruitment, retention and moti)ation of staff to deli)er its (usiness o(+ecti)es 4 Manage the de)elo&ment of the human resources information s-stem to secure &roducti)it- im&ro)ements in administrati)e &rocesses 4 Introduce im&ro)ed &erformance management &rocesses for managers and staff of the Societ4 Im&lement training and de)elo&ment 'hich su&&orts the (usiness o(+ecti)es of the Societ- and im&ro)es the 8ualit- of 'or5 'ith children and -oung &eo&le <iageo* These are the three (road strands to the 1rgani$ation and Peo&le Strateg-* 1 #e'ard and recognition* use recognition and re'ard &rogrammes to stimulate outstanding team and indi)idual &erformance contri(utions 2 Talent management* dri)e the attraction, retention and &rofessional gro'thof a dee& &ool of di)erse, talented em&lo-ees ! 1rgani$ational effecti)eness* ensure that the (usiness ada&ts its organi$ation to ma7imi$e em&lo-ee contri(ution and deli)er &erformance goals It &ro)ides direction to the com&an-%s talent, o&erational effecti)eness and &erformance and re'ard agendas The com&an-%s underl-ing thin5ing is that the &eo&le strateg- is not for the human resource function to o'n (ut is the res&onsi(ilitof the 'hole organi$ation, hence the title 61rgani$ation and Peo&le Strateg-% Ago)ernment agenc-* The 5e- com&onents of the "# strateg- are* 4 In)esting in &eo&le > im&ro)ing the le)el of intellectual ca&ital 4 Performance management > integrating the )alues contained in the "# strateg- into &erformance management &rocesses and ensuring that re)ie's concentrate on ho' 'ell &eo&le are &erforming those )alues "+

4 Go( design > a 5e- com&onent concerned 'ith ho' +o(s are designed and ho' therelate to the 'hole (usiness 4 The re'ard s-stem > in de)elo&ing re'ards strategies, ta5ing into account that this is a )er- hard dri)en (usiness "# strategies for higher education institutions (The "igher .ducation 2unding Council)* 1 Address recruitment costeffecti)emanner and retention difficulties in a targeted and

2 Meet s&ecific staff de)elo&ment and training o(+ecti)es that not onl- e8ui& staff to meet their current needs (ut also &re&are them for future changes, such as using ne' technologies for learning and teaching This 'ould include management de)elo&ment ! <e)elo& e8ual o&&ortunit- targets 'ith &rogrammes to im&lement good &ractice throughout an institution This 'ould include ensuring e8ual &a- for 'or5 of e8ual )alue, using institution4'ide s-stems of +o( e)aluation This could in)ol)e institutions 'or5ing collecti)el> regionallor nationallE Carr- out regular re)ie's of staffing needs, reflecting changes in mar5et demands and technolog- The re)ie's 'ould consider o)erall num(ers and the (alance of different categories of staff @ Conduct annual &erformance re)ie's of all staff, (ased on o&en and o(+ecti)e criteria, 'ith re'ard connected to the &erformance of indi)iduals including, 'here a&&ro&riate, their contri(ution to teams 6 Ta5e action to tac5le &oor &erformance A local authorit-* The focus is on the organi$ation of e7cellence The strateg- is (ro5en do'n into eight sections* em&lo-ee relations, recruitment and retention, training, &erformance management, &a- and (enefits, health and safet-, a(sence management and e8ual o&&ortunities C#IT.#IA 21# A/ .22.CTID. "# ST#AT.0J An effecti)e "# strateg- is one that 'or5s in the sense that it achie)es 'hat it sets out to achie)e In &articular, it* 4 'ill 4 4 4 satisf- (usiness needs, (e founded on detailed anal-sis and stud-, not +ust 'ishful thin5ing, 4 can (e turned into actiona(le &rogrammes that antici&ate im&lementationre8uirements and &ro(lems, ""

4 4

4 is coherent and integrated, (eing com&osed of com&onents that fit 'ith and su&&ort each other, 4 ta5es account of the needs of line managers and em&lo-ees generall- as 'ell as those of the organi$ation and its other sta5eholders As 9o7all and Purcell (2;;!) em&hasi$e* 6"# &lanning should aim to meet the needs of the 5e- sta5eholder grou&s in)ol)ed in &eo&le management in the firm %

"ere is a comment on 'hat ma5es a good "# strateg-* A good strateg- is one 'hich actuall- ma5es &eo&le feel )alued It ma5es them 5no'ledgea(le a(out the organi$ation and ma5es them feel clear a(out 'here thesit as a grou&, or team, or indi)idual It must sho' them ho' 'hat the- do either together or indi)iduall- fits into that strateg- Im&ortantl-, it should indicate ho' &eo&le are going to (e re'arded for their contri(ution and ho' the- might (e de)elo&ed and gro' in the organi$ation (Chief .7ecuti)e, Pea(od- Trust)

Formulating and implementing HR strategies

There is an e)er4&resent ris5 that the conce&t of strategic "#M can (ecome some'hat ne(ulous > nice to ha)e (ut hard to reali$e The danger of creating a rhetoricBrealit- ga& is acute 9road and often (land statements of strategic intent can (e readil- &roduced =hat is much more difficult is to turn them into realistic &lans, 'hich are then im&lemented effecti)el- Strategic "#M is more a(out getting things done than thin5ing a(out them It leads to the formulation of "# strategies, 'hich first define 'hat an organi$ation intends to do in order to attain defined goals in o)erall human resource management &olic- and in &articular areas of "# &rocess and &ractice, and second set out ho' the- 'ill (e im&lemented <ifficult though it ma- (e, a strategic a&&roach is desira(le in order to gi)e a sense of direction and &ur&ose and as a (asis for the de)elo&ment of rele)ant and coherent "# &olicies and &ractices 0uidance on formulating and im&lementing "# strategies is gi)en in this cha&ter under the follo'ing headings* 4 4 4 4 4 4 fundamental &rocess considerations, characteristics of the &rocess, de)elo&ing "# strategies, setting out "# strategies, conducting a strategic re)ie', im&lementing "# strategies 2C/<AM./TA: P#1C.SS C1/SI<.#ATI1/S =hen considering a&&roaches to the formulation of "# strateg- it is necessar- to underline the interacti)e (not unilinear) relationshi& (et'een (usiness strateg- and "#

"#M, as ha)e "endr- and Pettigre' (199;) The- em&hasi$e the limits of e7cessi)elrationalistic models of strategic and "# &lanning The &oint that "# strategies are not necessaril- de)elo&ed formall- and s-stematicall- (ut ma- instead e)ol)e and emerge has (een made (- T-son (199F)* 6The &rocess (- 'hich strategies come to (e reali$ed is not onl- through formal "# &olicies or 'ritten directions* strategreali$ation can also come from actions (- managers and others Since actions &ro)o5e reactions (acce&tance, confrontation, negotiation etc) these reactions are also &art of the strateg- &rocess % Perha&s the (est 'a- to loo5 at the realit- of "# strateg- formulation is to remem(er Mint$(erg, ?uinn and Games%s (1933) statement that strateg- formulation is a(out 6&references, choices, and matches% rather than an e7ercise 6in a&&lied logic% It is also desira(le to follo' Mint$(erg%s anal-sis and treat "# strateg- as a &ers&ecti)e rather than a rigorous &rocedure for ma&&ing the future Moore (1992) has suggested that Mint$(erg has loo5ed inside the organi$ation, indeed inside the heads of the collecti)e strategists, and come to the conclusion that, relati)e to the organi$ation, strateg- is analogous to the &ersonalit- of an indi)idual As Mint$(erg sees them, all strategies e7ist in the minds of those &eo&le the- ma5e an im&act u&on =hat is im&ortant is that &eo&le in the organi$ation share the same &ers&ecti)e 6through their intentions andBor (- their actions% This is 'hat Mint$(erg calls the collecti)e mind, and reading that mind is essential if 'e are 6to understand ho' intentionsM (ecome shared, and ho' action comes to (e e7ercised on a collecti)e -et consistent (asis% /o one else has made this &oint so 'ell as Mint$(erg, and 'hat the research conducted (- Armstrong and :ong (199E) re)ealed is that strategic "#M is (eing &ractised in the organi$ations the- )isited in the Mint$(ergian sense In other 'ords, intentions are shared amongst the to& team and this leads to actions (eing e7ercised on a collecti)e -et consistent (asis In each case the shared intentions emerged as a result of strong leadershi& from the chief e7ecuti)e 'ith the other mem(ers of the to& team acting +ointl- in &ursuit of E3 l Strategic "#M in action 'ell4defined goals These goals indicated 8uite clearl- the critical success factors of com&etence, commitment, &erformance, contri(ution and 8ualit- that dri)e the "# strategC"A#ACT.#ISTICS 12 T". P#1C.SS Pro&ositions 9o7all (199!) has dra'n u& the follo'ing &ro&ositions a(out the formulation of "# strateg- from the literature* 4 The strateg- formation &rocess is com&le7, and e7cessi)el- rationalistic models that ad)ocate formalistic lin5ages (et'een strategic &lanning and "# &lanning are not &articularlhel&ful to our understanding of it 4 9usiness strateg- ma- (e an im&ortant influence on "# strateg- (ut it is onl- one of se)eral factors 4 Im&licit (if not e7&licit) in the mi7 of factors that influence the sha&e of "# strategies is a set of historical com&romises and trade4offs from sta5eholders "$

It is also necessar- to stress that coherent and integrated "# strategies are onlli5el- to (e de)elo&ed if the to& team understands and acts u&on the strategic im&erati)es associated 'ith the em&lo-ment, de)elo&ment and moti)ation of &eo&le This 'ill (e achie)ed more effecti)el- if there is an "# director 'ho is &la-ing an acti)e and res&ected role as a (usiness &artner A further consideration is that the effecti)e im&lementation of "# strategies de&ends on the in)ol)ement, commitment and coo&eration of line managers and staff generall- 2inall-, there is too often a 'ide ga& (et'een the rhetoric of strategic "#M and the realit- of its im&act, as 0ratton et al (1999) em&hasi$e 0ood intentions can too easil- (e su()erted (- the harsh realities of organi$ational life 2or e7am&le, strategic o(+ecti)es such as increasing commitment (- &ro)iding more securit- and offering training to increase em&lo-a(ilit- ma- ha)e to (e a(andoned or at least modified (ecause of the short4 term demands made on the (usiness to increase shareholder )alue Schools of strateg- de)elo&ment Purcell (2;;1) has identified three main schools of strateg- de)elo&ment* the design school, the &rocess school and the configuration school The design rationalit-% 2ormulating and threats school is deli(erate and is 6(ased on the assum&tion of economic It uses 8uantitati)e rather than 8ualitati)e tools of anal-sis and and im&lementing "# strategies l E9 focuses on mar5et o&&ortunities =hat ha&&ens inside the com&an- is 6mere administration or o&erations%

The &rocess school ado&ts a )ariet- of a&&roaches and is concerned 'ith ho' strategies are made and 'hat influences strateg- formulation* 6It is much more a stud- of 'hat actuall- ha&&ens 'ith e7&lanations coming from e7&erience rather than deducti)e theor- % As Purcell suggests, the im&lication of the design conce&t is that 6e)er-thing is &ossi(le%, 'hile that of the &rocess school is that 6little can (e done e7ce&t s'im 'ith the tide of e)ents% The rationalist a&&roach ado&ted (- Purcell%s design school (roadl- corres&onds 'ith the classical a&&roach to strateg-, and Poeter (193@) is a t-&ical re&resentati)e of it Purcell%s &rocess school is the &ostmodern )ersion of strateg- of 'hich Mint$(erg is the most nota(le e7&onent 9ut as 0rant (1991), cited (- Purcell (2;;1), has indicated, the rationalist a&&roach ma- indeed (e o)er4formali$ed and rel- too much on 8uantitati)e data, (ut the Mint$(erg a&&roach, 'hich do'n&la-s the role of s-stematic anal-sis and em&hasi$es the role of intuition and )ision, fails to &ro)ide a clear (asis for reasoned choices The configuration school dra's attention to the (eliefs that, first, strategies )araccording to the life c-cle of the organi$ation, second, the- 'ill (e contingent to the sector of the organi$ation and, third, the- 'ill (e a(out change and transformation The focus is on im&lementation strategies, 'hich is 'here Purcell thin5s "# can &laa ma+or role :e)els of strategic decision ma5ing Ideall-, the formulation of "# strategies is concei)ed as a &rocess that is closelaligned to the formulation of (usiness strategies "# strateg- can influence as 'ell as (e influenced (- (usiness strateg- In realit-, ho'e)er, "# strategies are more li5el"%

to flo' from (usiness strategies, 'hich 'ill (e dominated (- &roductBmar5et and financial considerations 9ut there is still room for "# to ma5e a useful, e)en essential, contri(ution at the stage 'hen (usiness strategies are concei)ed, for e7am&le (- focusing on resource issues This contri(ution ma- (e more significant if strateg- formulation is an emergent or e)olutionar- &rocess > "# strategic issues 'ill then (e dealt 'ith as the- arise during the course of formulating and im&lementing the cor&orate strategA distinction is made (- Purcell (1939) and Purcell and Ahlstrand (199E) (et'een* 4 6u&stream% first4order decisions, 'hich are concerned 'ith the long4term direction of the enter&rise or the sco&e of its acti)ities, 4 6do'nstream% second4order decisions, 'hich are concerned 'ith internal o&erating &rocedures and ho' the firm is organi$ed to achie)e its goals, 46do'nstream% third4order decisions, 'hich are concerned 'ith choices on human resource structures and a&&roaches and are strategic in the sense that the- esta(lish the (asic &arameters of em&lo-ee relations management in the firm It can indeed (e argued that "# strategies, li5e other functional strategies such as &roduct de)elo&ment, manufacturing and the introduction of ne' technolog-, 'ill (e de)elo&ed 'ithin the conte7t of the o)erall (usiness strateg-, (ut this need not im&lthat "# strategies come third in the &ec5ing order 1(ser)ations made (- Armstrong and :ong (199E) during research into the strateg- formulation &rocesses of 1; large CA organi$ations suggested that there 'ere onl- t'o le)els of strateg- formulation* 1) the cor&orate strateg- relating to the )ision and mission of the organi$ation (ut often e7&ressed in terms of mar5eting and financial o(+ecti)es, and 2) the s&ecific strategies 'ithin the cor&orate strategconcerning &roductmar5et de)elo&ment, ac8uisitions and di)estments, human resources, finance, ne' technolog-, organi$ation and such o)erall as&ects of management as 8ualit-, fle7i(ilit-, &roducti)it-, inno)ation and cost reduction Strategic o&tions and choices The &rocess of de)elo&ing "# strategies in)ol)es generating strategic "#M o&tions and then ma5ing a&&ro&riate strategic choices It has (een noted (- Ca&&elli (1999) that* 6The choice of &ractices that an em&lo-er &ursues is hea)il- contingent on a num(er of factors at the organi$ational le)el, including their o'n (usiness and &roduction strategies, su&&ort of "# &olicies, and coo&erati)e la(our relations % The &rocess of de)elo&ing "# strategies in)ol)es the ado&tion of a contingent a&&roach in generating strategic "#M o&tions and then ma5ing a&&ro&riate strategic choices There is seldom if e)er one right 'a- for'ard Choices should relate to (ut also antici&ate the critical needs of the (usiness Theshould (e founded on detailed anal-sis and stud-, not +ust 'ishful thin5ing, and should incor&orate the e7&erienced and collecti)e +udgement of to& management a(out the organi$ational re8uirements, 'hile also ta5ing into account the needs of line managers and em&lo-ees generall- The emerging strategies should antici&ate the &ro(lems of im&lementation that ma- arise if line managers are not committed to "&

the strateg- andBor lac5 the s5ills and time to &la- their &art, and the strategies should (e ca&a(le of (eing turned into actiona(le &rogrammes <.D.:1PI/0 "# ST#AT.0I.S An o)erall a&&roach The follo'ing si74ste& a&&roach is &ro&osed (- 0ratton (2;;;)* 1 9uild the guiding coalition > in)ol)e &eo&le from all &arts of the (usiness 2 Image the future > create a shared )ision of areas of strategic im&ortance ! Cnderstand current ca&a(ilities and identif- the ga& > esta(lish 6'here the organi$ation is no' and the ga& (et'een as&irations for the future and the realit- of the &resent% E Create a ma& of the s-stem > 6ensure that the &arts can (e (uilt into a meaningful 'hole% @ Model the d-namics of the s-stem > ensure that the d-namic nature of the future is ta5en into account 6 9ridge into action > agree the (road themes for action and the s&ecific issues related to those themes, de)elo& guiding &rinci&les, in)ol)e line managers and create cross4functional teams to identif- goals and &erformance indicators 9ut man- different routes ma- (e follo'ed 'hen formulating "# strategies > there is no one right 'a- 1n the (asis of their research in !; 'ell45no'n com&anies, T-son and =itcher (199E) commented that* 6The different a&&roaches to strateg- formation reflect different 'a-s to manage change and different 'a-s to (ring the &eo&le &art of the (usiness into line 'ith (usiness goals % In de)elo&ing "# strategies, &rocess ma- (e as im&ortant as content T-son and =itcher (199E) also noted from their research that* 6The &rocess of formulating "# strateg- 'as often as im&ortant as the content of the strateg- ultimatel- agreed It 'as argued that, (- 'or5ing through strategic issues and highlighting &oints of tension, ne' ideas emerged and a consensus o)er goals 'as found % A methodolog- for formulating "# strategies A methodolog- for formulating "# strategies 'as de)elo&ed (- <-er and"older (1933) as follo's* 1 Assess feasi(ilit- > from num(ers and t-&es of 5eo(tained on a timel- (asis e7&ectations assumed (&roducti)itan "# &oint of )ie', feasi(ilit- de&ends on 'hether the &eo&le re8uired to ma5e the &ro&osal succeed can (e and at a reasona(le cost, and 'hether the (eha)ioural the strateg- are realistic (eg retention rates and le)els)

2 <etermine desira(ilit- > e7amine the im&lications of strateg- in terms of sacrosanct "# &olicies (eg a strateg- of ra&id retrenchment 'ould ha)e to (e called into 8uestion (- a com&an- 'ith a full em&lo-ment &olic-) "'

! <etermine goals > these indicate the main issues to (e 'or5ed on and the- deri)e &rimaril- from the content of the (usiness strateg- 2or e7am&le, a strateg- to (ecome a lo'er4cost &roducer 'ould re8uire the reduction of la(our costs This in turn translates into t'o t-&es of "# goals* higher &erformance standards (contri(ution) and reduced headcounts (com&osition) E <ecide means of achie)ing goals > the general rule is that the closer the e7ternal and internal fit, the (etter the strateg-, consistent 'ith the need to ada&t fle7i(l- to change .7ternal fit refers to the degree of consistenc- (et'een "# goals on the one hand and the e7igencies of the underl-ing (usiness strateg- and rele)ant en)ironmental conditions on the other Internal fit measures the e7tent to 'hich "# means follo' from the "# goals and other rele)ant en)ironmental conditions, as 'ell as the degree of coherenc- or s-nerg- among the )arious "# means S&ecific a&&roaches to strateg- de)elo&ment Three s&ecific a&&roaches to the de)elo&ment of "# strategies 'ere defined (<eler- and <ot- (1996) as the 6uni)ersalistic%, the 6contingenc-% and the 6configurational% #ichardson and Thom&son (1999) redefined the first t'o a&&roaches as (est &ractice and (est fit, and retained the 'ord 6configurational%, meaning the use of 6(undles%, as the third a&&roach 0uest (199F) refers to fit as an ideal set of &ractices, fit as contingenc-, and fit as 6(undles% These a&&roaches are discussed (elo' The (est &ractice a&&roach This a&&roach is (ased on the assum&tion that there is a set of (est "#M &ractices and that ado&ting them 'ill ine)ita(l- lead to su&erior organi$ational &erformance 2our definitions of (est &ractice are gi)en in Ta(le @ 1 The 6(est &ractice% ru(ric has (een attac5ed (- a num(er of commentators Ca&&elli and Croc5er4"efter (1996) comment that the notion of a single set of (est &ractices has (een o)erstated* 6There are e7am&les in )irtuall- e)er- industr- of firms that ha)e )er- distincti)e management &ractices <istincti)e human resource &ractices sha&e the core com&etencies that determine ho' firms com&ete % Purcell (1999) has also critici$ed the (est &ractice or uni)ersalist )ie' (- &ointing out the inconsistenc(et'een a (elief in (est &ractice and the resource4(ased )ie' that focuses on the intangi(le assets, including "#, that allo' the firm to do (etter than its com&etitors "e as5s ho' can 6the uni)ersalism of (est &ractice (e s8uared 'ith the )ie' that onlsome resources and routines are im&ortant and )alua(le (- (eing rare and im&erfectl- imita(leP% The danger, as :egge (199@) &oints out, is that of 6mechanisticallmatching strateg'ith "#M &olicies and &ractices% In accordance 'ith contingenc- theor-, 'hich em&hasi$es the im&ortance of interactions (et'een organi$ations and their en)ironments so that 'hat organi$ations do is de&endent on the conte7t in 'hich the- o&erate, it is difficult to acce&t that "(

there is an- such thing as uni)ersal (est &ractice =hat 'or5s 'ell in one organi$ation 'ill not necessaril- 'or5 'ell in another (ecause it ma- not fit its strateg-, culture, management st-le, technolog- or 'or5ing &ractices As 9ec5er et al (199F) remar5* 61rgani$ational high4&erformance 'or5 s-stems are highlidios-ncratic and must (e tailored carefull- to each firm%s indi)idual situation to achie)e o&timum results % 9ut a 5no'ledge of (est &ractice as long as it is understood 'h- it is (est &ractice can inform decisions on 'hat &ractices are most li5el- to fit the needs of the organi$ation And 9ec5er and 0erhart (1996) argue that the idea of (est &ractice might (e more a&&ro&riate for identif-ing the &rinci&les underl-ing the choice of &ractices, as o&&osed to the &ractices themsel)es 9est fit The (est fit a&&roach em&hasi$es the im&ortance of ensuring that "# strategies are a&&ro&riate to the circumstances of the organi$ation, including its culture, o&erational &rocesses and e7ternal en)ironment "# strategies ha)e to ta5e account of the &articular needs of (oth the organi$ation and its &eo&le 2or the reasons gi)en a(o)e, it is acce&ted (- most commentators that 6(est fit% is more im&ortant than 6(est &ractice% There can (e no uni)ersal &rescri&tions for "#M &olicies and &ractices It all de&ends This is not to sa- that 6good &ractice%, or 6leading edge &ractice%, ie &ractice that does 'ell in one successful en)ironment, should (e ignored 69enchmar5ing% (com&aring 'hat the organi$ation does 'ith 'hat is done else'here) is a )alua(le 'a- of identif-ing areas for inno)ation or de)elo&ment that are &ractised to good effect else'here (- leading com&anies 9ut ha)ing learnt a(out 'hat 'or5s and, ideall-, 'hat does not 'or5 in com&ara(le organi$ations, it is u& to the firm to decide 'hat ma- (e rele)ant in general terms and 'hat lessons can (e learnt that can (e ada&ted to fit its &articular strategic and o&erational re8uirements The starting &oint should (e an anal-sis of the (usiness needs of the firm 'ithin its conte7t (culture, structure, technolog- and &rocesses) This ma- indicate clearl- 'hat has to (e done Thereafter, it ma- (e useful to &ic5 and mi7 )arious 6(est &ractice% ingredients, and de)elo& an a&&roach that a&&lies 2ormulating and im&lementing "# strategies l @@ those that are a&&ro&riate in a 'a- that is aligned to the identified (usiness needs 9ut there are &ro(lems 'ith the (est fit a&&roach, as stated (- Purcell (1999) 'ho 'rote* 6Mean'hile, the search for a contingenc- or matching model of "#M is also limited (- the im&ossi(ilit- of modeling all the contingent )aria(les, the difficult- of sho'ing their interconnection, and the 'a- in 'hich changes in one )aria(le ha)e an im&act on others % In Purcell%s )ie', organi$ations should (e less concerned 'ith (est fit and (est &ractice and much more sensiti)e to &rocesses of organi$ational change so that the- can 6a)oid (eing tra&&ed in the logic of rational choice% The configurational a&&roach ((undling) As #ichardson and Thom&son (1999) comment* 6A strateg-%s success turns on com(ining H)erticalI or e7ternal fit and Hhori$ontalI or internal fit % The- conclude that a firm 'ith (undles of "# &ractices should ha)e a higher le)el of &erformance, &ro)iding it also achie)es high le)els of fit 'ith its com&etiti)e strateg- .m&hasis is ")

gi)en to the im&ortance of 6(undling% > the de)elo&ment and im&lementation of se)eral "# &ractices together so that the- are interrelated and therefore com&lement and reinforce each other This is the &rocess of hori$ontal integration, 'hich is also referred to as the use of 6com&lementarities% (Mac<uffie, 199@) or as the ado&tion of a 6configurational mode% (<eler- and <ot-, 1996) Mac<uffie (199@) e7&lained the conce&t of (undling as follo's* 6Im&licit in the notion of a H(undleI is the idea that &ractices 'ithin (undles are interrelated and internall- consistent, and that Hmore is (etterI 'ith res&ect to the im&act on &erformance, (ecause of the o)erla&&ing and mutuallreinforcing effect of multi&le &ractices % <-er and #ee)es (199@) note that* 6The logic in fa)our of (undling is straightfor'ardM Since em&lo-ee &erformance is a function of (oth a(ilit- and moti)ation, it ma5es sense to ha)e &ractices aimed at enhancing (oth % Thus there are se)eral 'a-s in 'hich em&lo-ees can ac8uire needed s5ills (such as careful selection and training) and multi&le incenti)es to enhance moti)ation (different forms of financial and non4financial re'ards) Astud- (- <-er and #ee)es (199@) of )arious models listing "# &ractices that create a lin5 (et'een "#M and (usiness &erformance found that the acti)ities a&&earing in most of the models 'ere in)ol)ement, careful selection, e7tensi)e training and contingent com&ensation 1n the (asis of his research in fle7i(le &roduction manufacturing &lants in the Cnited States, Mac<uffie (199@) noted that fle7i(le &roduction gi)es em&lo-ees a much more central role in the &roduction s-stem The- ha)e to resol)e &ro(lems as thea&&ear on the line and this means that the- @6 l Strategic "#M in action ha)e to &ossess (oth a conce&tual gras& of the &roduction &rocess and the anal-tical s5ills to identif- the root cause of &ro(lems 9ut the multi&le s5ills and conce&tual 5no'ledge de)elo&ed (- the 'or5force in fle7i(le &roduction firms are of little use unless 'or5ers are moti)ated to contri(ute mental as 'ell as &h-sical effort Such discretionar- effort on &ro(lem sol)ing 'ill onl- (e contri(uted if 'or5ers 6(elie)e that their indi)idual interests are aligned 'ith those of the com&an-, and that the com&an- 'ill ma5e a reci&rocal in)estment in their 'ell4(eing% This means that fle7i(le &roduction techni8ues ha)e to (e su&&orted (- (undles of high4commitment human resource &ractices such as em&lo-ment securit-, &a- that is &artl- contingent on &erformance, and a reduction of status (arriers (et'een managers and 'or5ers Com&an- in)estment in (uilding 'or5er s5ills also contri(utes to this 6&s-chological contract of reci&rocal commitment% The research indicated that &lants using fle7i(le &roduction s-stems that (undle human resource &ractices into a s-stem that is integrated 'ith &roductionB(usiness strateg- out&erform &lants using more traditional mass &roduction s-stems in (oth &roducti)it- and 8ualit2ollo'ing research in E! automo(ile &rocessing &lants in the Cnited States, Pil and Mac<uffie (1996) esta(lished that, 'hen a high4in)ol)ement 'or5 &ractice is introduced in the &resence of com&lementar- "# &ractices, not onl- does the ne' 'or5 &ractice &roduce an incremental im&ro)ement in &erformance (ut so do the com&lementar- &ractices "*

The aim of (undling is to achie)e coherence, 'hich is one of the four 6meanings% of strategic "#M defined (- "endr- and Pettigre' (1936) Coherence e7ists 'hen a mutuall- reinforcing set of "# &olicies and &ractices ha)e (een de)elo&ed that +ointlcontri(ute to the attainment of the organi$ation%s strategies for matching resources to organi$ational needs, im&ro)ing &erformance and 8ualit- and, in commercial enter&rises, achie)ing com&etiti)e ad)antage The &rocess of (undling "# strategies is an im&ortant as&ect of the conce&t of strategic "#M In a sense, strategic "#M is holistic, it is concerned 'ith the organi$ation as a total entit- and addresses 'hat needs to (e done across the organi$ation as a 'hole in order to ena(le it to achie)e its cor&orate strategic o(+ecti)es It is not interested in isolated &rogrammes and techni8ues, or in the ad hoc de)elo&ment of "# &ractices In their discussion of the four &olic- areas of "#M (em&lo-ee influence, human resource management flo', re'ard s-stems and 'or5 s-stems) 9eer et al (193E) suggested that this frame'or5 can stimulate managers to &lan ho' to accom&lish the ma+or "#M tas5s 6in a unified, coherent manner rather than in a dis+ointed a&&roach (ased on some com(ination of &ast &ractice, accident and ad hoc res&onse to outside &ressures% <a)id 0uest (1939() includes in his set of &ro&ositions a(out "#M the &oint that strategic integration is a(out, inter alia, the a(ilit- of the organi$ation to ensure that the )arious as&ects of "#M cohere 1ne 'a- of loo5ing at the conce&t is to sa- that some measure of coherence 'ill (e achie)ed if there is an o)erriding strategic im&erati)e or dri)ing force such as customer ser)ice, 8ualit-, &erformance or the need to de)elo& s5ills and com&etences, and this initiates )arious &rocesses and &olicies that are designed to lin5 together and o&erate in concert to deli)er certain defined results 2or e7am&le, if the dri)ing force 'ere to im&ro)e &erformance, com&etence &rofiling techni8ues could (e used to s&ecif- recruitment standards, identif- learning and de)elo&ment needs, and indicate the standards of (eha)iour or &erformance re8uired The com&etence frame'or5s could (e used as the (asis for human resource &lanning and in de)elo&ment centres The- could also (e incor&orated into &erformance management &rocesses in 'hich the aims are &rimaril- de)elo&mental and com&etencies are used as criteria for re)ie'ing (eha)iour and assessing learning and de)elo&ment needs Go( e)aluation could (e (ased on le)els of com&etence, and com&etence4(ased &a- s-stems could (e introduced This ideal 'ill (e difficult to achie)e as a 6grand design% that can (e &ut into immediate effect, and ma- ha)e to (e de)elo&ed &rogressi)el-

The &ro(lem 'ith the (undling a&&roach is that of deciding 'hich is the (est 'a- to relate different &ractices together There is no e)idence that one (undle is generall(etter than another, although the use of &erformance management &ractices and com&etence frame'or5s are t'o 'a-s that are t-&icall- ado&ted to &ro)ide for #+

coherence across a range of "# acti)ities Pace the findings of Mac<uffie, there is no conclusi)e &roof that in the CA (undling has actuall- im&ro)ed &erformance Culture integration "# strategies need to (e congruent 'ith the e7isting culture of the organi$ation or designed to &roduce cultural change in s&ecified directions This 'ill (e a necessarfactor in the formulation stage (ut could (e a )ital factor 'hen it comes to im&lementation In effect, if 'hat is &ro&osed is in line 'ith 6the 'a- 'e do things around here%, then it 'ill (e more readil- acce&ted "o'e)er, in the more li5el- e)ent that it changes 6the 'a- 'e do things around here%, then careful attention has to (e gi)en to the real &ro(lems that ma- occur in the &rocess of tr-ing to em(ed the ne' initiati)e in the organi$ation 2it 'ith the (usiness strategThe 5e(usiness issues that maim&act on "# strategies include*

4 intentions concerning gro'th or retrenchment, ac8uisitions, mergers, di)estments, di)ersification, &roductBmar5et de)elo&ment, 4 &ro&osals on increasing com&etiti)e ad)antage through inno)ation leading to &roductBser)ice differentiation, &roducti)it- gains, im&ro)ed 8ualit-Bcustomer ser)ice, cost reduction (do'nsi$ing), 4 the felt need to de)elo& a more &ositi)e, &erformance4orientated culture and other culture management im&erati)es associated 'ith changes in the &hiloso&hies of the organi$ation in such areas as gaining commitment, mutualit-, communications, in)ol)ement, de)olution and team'or5 9usiness strategies in these areas ma- (e influenced (- "# factors, although not e7cessi)el- so "# strategies are concerned 'ith ma5ing (usiness strategies 'or5 9ut the (usiness strateg- must ta5e into account 5e- "# o&&ortunities and constraints It is therefore necessar- to anal-se the e7isting culture to &ro)ide information on ho' "# strategies 'ill need to (e sha&ed The anal-sis ma- co)er the follo'ing 12 &oints listed (- Coo5e and :affert- (1939) in their organi$ational culture in)entor-* 1 humanistic4hel&ful > organi$ations managed in a &artici&ati)e and &erson4centred 'a-, 2 affiliati)e > organi$ations that &lace a high &riorit- on constructi)e relationshi&s, ! a&&ro)al > organi$ations in 'hich conflicts are a)oided and inter&ersonal relationshi&s are &leasant > at least su&erficiall-, E con)entional > conser)ati)e, traditional and (ureaucraticallcontrolled #"

organi$ations, @ de&endent > hierarchicallcontrolled and non4&artici&ati)e organi$ations,

6 a)oidance > organi$ations that fail to re'ard success (ut &unish mista5es, F o&&ositional > organi$ations in 'hich confrontation &re)ails and negati)ism is re'arded, 3 &o'er > organi$ations structured on the (asis of the authorit- inherent in mem(ers% &ositions, 9 com&etiti)e > a culture in 'hich 'inning is )alued and mem(ers are re'arded for out&erforming one another, 1; com&etenceB&erfectionist > organi$ations in 'hich &erfectionism, &ersistence and hard 'or5 are )alued, 11 achie)ement > organi$ations that do things 'ell and )alue mem(ers 'ho set and accom&lish challenging (ut realistic goals, 12 self4actuali$ation > organi$ations that )alue creati)it-, 8ualit- o)er 8uantit-, and (oth tas5 accom&lishment and indi)idual gro'th Achie)ing )ertical fit > integrating (usiness and "# strategies =right and Snell (1993) suggest that see5ing fit re8uires 5no'ledge of the s5ills and (eha)iour necessar- to im&lement the strateg-, 5no'ledge of the "#M &ractices necessar- to elicit those s5ills and (eha)iours, and the a(ilit- to im&lement the desired s-stem of "#M &ractices 8uic5l=hen considering ho' to integrate (usiness and "# strategies it should (e remem(ered that (usiness and "# issues influence each other and in turn influence cor&orate and (usiness unit strategies It is also necessar- to note that, in esta(lishing these lin5s, account must (e ta5en of the fact that strategies for change ha)e also to (e integrated 'ith changes in the e7ternal and internal en)ironments 2it ma- e7ist at a &oint in time (ut circumstances 'ill change and fit no longer e7ists An e7cessi)e &ursuit of 6fit% 'ith the status 8uo 'ill inhi(it the fle7i(ilit- of a&&roach that is essential in tur(ulent conditions This is the 6tem&oral% factor in achie)ing fit identified (- 0ratton et al (1999) An additional factor that 'ill ma5e the achie)ement of good )ertical fit difficult is that the (usiness strateg- ma- not (e clearl- defined > it could (e in an emergent or e)olutionar- state This 'ould mean that there could (e nothing 'ith 'hich to fit the "# strategMa5ing the lin5 9ut an attem&t can (e made to understand the direction in 'hich the organi$ation is going, e)en if this is not e7&ressed in a formal strategic &lan All (usinesses ha)e strategies in the form of intentions although these ma- (e ill formed and su(+ect to ##

change The ideal of achie)ing a lin5 in rigorous terms ma- (e difficult to attain Coo5e and Armstrong (199;) suggested that one a&&roach might (e to find a means of 8uantif-ing the additional resources re8uired (- "# o)erall and at the le)el of each element of "# strateg-, and measuring and com&aring the marginal return on in)esting in each element 9ut it is highl- unli5el- that this a&&roach 'ould (e &ractica(le The lin5 must therefore (e +udgemental, (ut it could still (e fairl- rigorous Conce&tuall-, the a&&roach 'ould (e to de)elo& a matri7, as illus4 6; l Strategic "#M in action trated in Ta(le @ 2, 'hich for each of the 5e- elements of (usiness strategidentifies the associated 5e- elements of "# strateg.)en if the a&&roach cannot (e as rigorous as this, the &rinci&le of considering each 5e- area of (usiness strateg- and, reci&rocall-, the "# im&lications &ro)ides a (asis for integration An alternati)e frame'or5 for lin5ing (usiness and "# strategies is a com&etiti)e strateg- a&&roach, 'hich identifies the different "# strategies that can relate to the firm%s com&etiti)e strategies, including those listed (- Porter (193@) An illustration of ho' this might (e e7&ressed is gi)en in Ta(le @ ! Achie)ing hori$ontal integration "ori$ontal integration or fit is achie)ed 'hen the )arious "# strategies cohere and are mutuall- su&&orting This can (e attained (- the &rocess of 6(undling% as descri(ed earlier 9undling is carried out (-, first, identif-ing a&&ro&riate "# &ractices, second, assessing ho' the items in the (undle can (e lin5ed together so that the- (ecome mutuall- reinforcing and therefore coherent, 'hich ma- mean identif-ing integrating &ractices such as the use of com&etence4(ased &rocesses and &erformance management, and, finall-, dra'ing u& &rogrammes for the de)elo&ment of these &ractices, &a-ing &articular attention to the lin5s (et'een them Integrati)e &rocesses T'o fre8uentl- used integrating &rocesses are &erformance management and the use of com&etencies The 'a-s in 'hich the- can &ro)ide the 6glue% (et'een different "# &ractices are illustrated in 2igures @ 1 and @ 2 "ori$ontal integration can also (e achie)ed (- the de)elo&ment of career familgrading structures, 'hich define the com&etencies re8uired at each le)el, thus indicating career &aths, and also ser)e as the frame'or5 for &a- structures :in5ing "# &ractices 9undling is not +ust a &ic54and4mi7 &rocess The aim should (e, first, to esta(lish #$

o)erriding areas of "# &ractice that need to (e a&&lied generall- and, second, to e7amine &articular &ractices to esta(lish lin5s or common ground (et'een them so that the- do &ro)ide mutual su&&ort The o)erarching areas of "# &ractice 'ill (e concerned 'ith organi$ation de)elo&ment, the management of change, creating a &ositi)e em&lo-ment relationshi&, de)elo&ing mutual commitment &olicies, communicating 'ith em&lo-ees and gi)ing em&lo-ees a )oice (in)ol)ement and &artici&ation) These should (e ta5en into account generall- and their rele)ance should (e considered 'hen introducing ans&ecific &ractices concerned 'ith resourcing, human resource de)elo&ment and re'ard management It is necessar- to ta5e deli(erate ste&s in the latter areas to achie)e coherence S.TTI/0 1CT T". ST#AT.0J The follo'ing are the headings under 'hich a strateg- and the &lans for im&lementing it could (e set out* 1 9asis > (usiness needs in terms of the 5e- elements of the (usiness strateg-, > en)ironmental factors and anal-sis (S=1TBP.ST:.), > cultural factors > &ossi(le hel&s or hindrances to im&lementation 2 Content > details of the &ro&osed "# strateg-

! #ationale > the (usiness case for the strateg- against the (ac5ground of (usiness needs and en)ironmentalBcultural factors E Im&lementation &lan > action &rogramme, > res&onsi(ilitfor each stage, > resources re8uired, > &ro&osed arrangements for communication, consultation, in)ol)ement and training, > &ro+ect management arrangements @ Costs and (enefits anal-sis > an assessment of the resource im&lications of the &lan (costs, &eo&le and facilities) and the (enefits that 'ill accrue, for the organi$ation as a 'hole, for line managers and for indi)idual em&lo-ees (so far as &ossi(le these (enefits should (e 8uantified in terms of )alue added) 9ut there is no standard model, it all de&ends on the circumstances of the organi$ation

C1/<CCTI/0 A ST#AT.0IC #.DI.= Although "# strategies can emerge and e)ol)e under the influence of e)ents, there is #%

much to (e said for ado&ting a s-stematic a&&roach to their formulation This can ta5e the form of a strategic re)ie', 'hich assesses strateg- re8uirements in the light of an anal-sis of &resent and future (usiness and &eo&le needs Such a re)ie' &ro)ides ans'ers to three (asic 8uestions* 1 2 ! =here do "o' =here 'e 'ant are to (e 'e are in one, going t'o or to 'e no'P three -ears% timeP get thereP

The stages of a strategic re)ie' are illustrated in 2igure @! The follo'ing is an e7am&le of a strategic re)ie' as carried out in a large not4for4 &rofit organi$ation "# "ac#groun! A ma+or strategic re)ie' of the (usiness has ta5en &lace and a ne' Chief .7ecuti)e and other mem(ers of the senior management team ha)e (een a&&ointed 'ithin the last t'o -ears In essence, the re)ie' led to a (usiness strateg- that* 4 redefined the &ur&ose of the organi$ation, 4 em&hasi$ed that the core &ur&ose 'ill continue to (e gi)en a(solute &riorit-, 4 set out the need to secure the future of acti)ities outside its core &ur&ose, and im&ortantl4 made &ro&osals designed to sha&e and secure the financial future "# The 4 4 it 5eissues "# emerging issues emerging from from the the strategic strategic re)ie' are re)ie' that* strategic re)ie'

'ill lead to the transformation of the organi$ation, this in)ol)es ma+or cultural changes, for e7am&le* L some change in the focus to acti)ities other than the core acti)it-, L a mo)e a'a- from a &aternalistic, command4and4control organi$ation, L introducing &rocesses that ena(le the organi$ation to o&erate more fle7i(l-, L clarif-ing e7&ectations (ut simultaneousl- gaining commitment to managing and carr-ing out acti)ities on the (asis of increased selfregulation and decision ma5ing at an o&erational le)el rather than &ressures or instructions from a(o)e, L more em&hasis on managerial as distinct from technical s5ills for managers, L greater concentration on the financial re8uirement to (alance income and e7&enditure 'hile continuing to de)elo& and im&ro)e ser)ice deli)er-, 4 a significant change in the regional organi$ation and the roles of the management team and regional controllersBmanagers is ta5ing &lace, this means that ne' s5ills 'ill ha)e to (e used that some e7isting managers ma- not &ossess, 4 from a human resource &lanning )ie'&oint, decisions 'ill ha)e to (e made on the #&

ca&a(ilities re8uired in the future at managerial and other le)els, and these main)ol)e esta(lishing &olicies for recruiting ne' managerial talent from outside the organi$ation rather than rel-ing on &romotion from 'ithin, l difficult decisions maha)e to (e made on retaining some e7isting managers in their &osts 'ho lac5 the re8uired s5ills, and there ma- (e a re8uirement to reduce staff num(ers in the future, 4 more &ositi)el-, management de)elo&ment and career &lanning acti)ities 'ill need to (e introduced that reflect the changing culture and structure of the organi$ation and the different roles managers and others 'ill (e e7&ected to &laThe &ro)ision of the core "# ser)ices such as recruitment and training is not an issue Ste&s Ste&s ha)e to alread(een ta5en address to address these the issues, for issues e7am&le*

4 ma+or communication initiati)es introduced (- the Chief .7ecuti)e, 4 a re)ie' of the &a- s-stem, 'hich 'ill no dou(t (ear in mind the unsatisfactore7&erience of the organi$ation in a&&l-ing &erformance managementB&a- &rocedures a fe' -ears ago, 4 decisions on the sha&e of the regional organi$ation, 4 an anal-sis and diagnosis on cultural issues, ie 'hat the &resent culture is and 'hat it should (ecome 2uture strateg-

Against this (ac5ground, it is necessar- to (uild on the ste&s alread- ta5en (-* 4 ado&ting a s-stematic a&&roach to the achie)ement of culture change, (earing in mind that this can (e a long haul (ecause it in)ol)es changing (eha)iour and attitudes at all le)els and is difficult if not im&ossi(le to attain sim&l- (- managerial dictation, 4 de)elo&ing an "# strateg- that, as a declaration of intent, 'ill &ro)ide a frame'or5 for the de)elo&ment of "# &rocesses and &rocedures that address the issues referred to a(o)e, this in)ol)es* Q strategic integration, matching "# &olicies and &ractices to the (usiness strateg-, Q a coherent a&&roach to the de)elo&ment of these &rocesses so that "# acti)ities are interrelated and mutuallreinforcing, Q a &lanned a&&roach, (ut one that is not (ureaucratic, Q an em&hasis on the need to achie)e fle7i(ilit-, 8ualit- and cost4effecti)eness in the deli)erof "# ser)ices, #'

4 focusing on the acti)ities that 'ill not onl- deal 'ith the "# issues, (ut also hel& to achie)e culture change, namel-*The "# strateg- 'ill ha)e to esta(lish &riorities 9ecause the thrust of the strategic re)ie' initiall- ma5es most im&act on managers, the &riorit- ma- 'ell (e gi)en to &eo&le at this le)el (ut 'ithout neglecting the needs of the rest of the staff The &ro(lem 'ith strategic "#M as noted (- 0ratton et al (1999) is that, too often, there is a ga& (et'een 'hat the strateg- states 'ill (e achie)ed and 'hat actuallha&&ens to it As the&ut it* 1ne &rinci&al strand that has run through this entire (oo5 is the dis+unction (et'een rhetoric and realit- in the area of human resource management, (et'een "#M theorand "#M &ractice, (et'een 'hat the "# function sa-s it is doing and ho' that &ractice is &ercei)ed (- em&lo-ees, and (et'een 'hat senior management (elie)es to (e the role of the "# function, and the role it actuall- &la-s The factors identified (- 0ratton et al that contri(ute to creating this ga& included*
4 the tendenc- of em&lo-ees in di)erse organi$ations onl- to acce&t initiati)es the- &ercei)e to (e rele)ant to their o'n areas, 4 the tendencof long4ser)ing em&lo-ees to cling to the status 8uo,

4 com&le7 or am(iguous initiati)es ma- not (e understood (- em&lo-ees or 'ill (e &ercei)ed differentl(them, es&eciallin large, di)erse organi$ations, 4 it is more difficult to gain acce&tance of non4routine initiati)es,

4 em&lo-ees 'ill (e hostile to initiati)es if the- are (elie)ed to (e in conflict 'ith the organi$ation%s identit-, eg do'nsi$ing in a culture of 6+o(4for4life%, 4 the initiati)e is seen as a threat, inconsistencies (et'een cor&orate strategies and )alues, 4 the 4 the 4 the 4a 9arriers e7tent e7tent to 'hich fairness e7isting &rocesses could that im&lementation senior of hel& to management the em(ed to "# the is trusted, initiati)e, initiati)e, inertia strategies

&ercei)ed to 'hich

(ureaucratic to the

culture

leads of

.ach of the factors listed (- 0ratton et al can create (arriers to the successful im&lementation of "# strategies 1ther ma+or (arriers include failure to understand the strategic needs of the (usiness, inade8uate assessment of the en)ironmental and cultural factors that affect the content of the strategies, and the de)elo&ment of ill4concei)ed and irrele)ant initiati)es, &ossi(l- (ecause the- are current fads or (ecause there has (een an illdigested anal-sis of (est &ractice that does not fit the organi$ation%s re8uirements These &ro(lems are com&ounded 'hen insufficient attention is &aid to &ractical im&lementation &ro(lems, the im&ortant role of line managers in im&lementing strategies and the need to ha)e esta(lished su&&orting &rocesses for the initiati)e (eg &erformance management to su&&ort &erformance &a-) 1)ercoming the (arriers

#(

To o)ercome these (arriers it is necessar- to* 1) conduct a rigorous &reliminar- anal-sis of needs and re8uirements, 2) formulate the strateg-, !) enlist su&&ort for the strateg-, E) assess (arriers, @) &re&are action &lans, 6) &ro+ect4manage im&lementation, and F) follo' u& and e)aluate &rogress so that remedial action can (e ta5en as necessar> resourcing* deciding 'hat sort of &eo&le are re8uired and ensuring that the- are a)aila(le, > human resource de)elo&ment* identif-ing the s5ills re8uired, auditing the s5ills a)aila(le, ta5ing ste&s to match s5ills to &resent and future (usiness re8uirements and initiating &rocesses for enhancing organi$ational and indi)idual learning related to (usiness needs, > re'ard* using re'ard &rocesses to ensure that &eo&le are )alued according to their contri(ution and to con)e- messages a(out the (eha)iour, ca&a(ilities and results e7&ected of them, > em&lo-ee relations* (uilding on the ste&s alread- ta5en to communicate to em&lo-ees and to in)ol)e them in decision4ma5ing &rocesses on matters that concern them

IMP:.M./TI/0 "# ST#AT.0I.S 9ecause strategies tend to (e e7&ressed as a(stractions, the- must (e translated into &rogrammes 'ith clearl- stated o(+ecti)es and deli)era(les 9ut getting strategies into action is not eas- The term 6strategic "#M% has (een de)alued in some 8uarters, sometimes to mean no more than a fe' generali$ed ideas a(out "# &olicies and at other times to descri(e a short4term &lan, for e7am&le to increase the retention rate of graduates It must (e em&hasi$ed that "# strategies are not +ust &rogrammes, &olicies, or &lans concerning "# issues that the "# de&artment ha&&ens to feel are im&ortant Piecemeal initiati)es do not constitute strateg-

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