James W. Walker, Ph.D., Editor

This column addresses emerging trends and issues in the development and
•   Is the strategy time frame consistent with the business strategy horizon (e.g., 6, 18, or
    24 months)? Many human r...
•   Does it create barriers or buffers (cost, difficulty of implementation, proprietary
    design) that impede competitor...
Exhibit Two: People and Organization Issues Addressed
                        By Leading Companies

Attracting, Retaining...
Enabling Organizational Learning and Knowledge Management

•   Providing forums for information sharing and learning, buil...
Exhibit One: Business Strategy and Human Resource Strategy
                    Strategic analysis:                       S...
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  1. 1. Perspectives James W. Walker, Ph.D., Editor This column addresses emerging trends and issues in the development and implementation of human resource strategies. Please respond with your views and experiences to What Makes a Great Human Resource Strategy? A great human resource strategy provides a compelling and convincing business case for aligning people and organization with business strategy. It commands the attention of management and builds the necessary commitment for required resources and support for implementation. Great strategies create dissatisfaction with the current state (pain or opportunity) and build an acute sense of urgency and readiness to change. Does your organization have such a human resource strategy (sometimes called a people strategy, an organizational capabilities strategy, or a human capital strategy)? Does it clearly define the objectives and actions required to achieve a position of business competitive advantage through effective management of people? How do your strategies match up to the following characteristics? Integral to Business Strategy Business strategy charts a course of action designed to achieve an advantageous and sustainable market position (market share, margin/profitability, product or technical leadership, etc.). The strategic management process includes strategic analysis, strategy formulation, and strategy implementation. Great human resource strategies are developed within the context of this ongoing strategic management process. Elements of this integration are shown in Exhibit One. People and organization issues are related directly to specific strategic business issues and, in turn, derived from forces driving the business and critical business success factors. Exhibit Two highlights issues currently being addressed through human resource strategies by leading companies, as indicated by the HRPS State of the Art and Practice study and by companies we know. • Is your human resource strategy an integral part of your business strategy? • Are people-related issues clearly defined, based on the data and strategic analysis that support formulation of business strategy? • Does it influence business strategy formulation, not merely respond to it and follow it (e.g., does it identify barriers to effective merger integration, staffing implications of growth scenarios)?
  2. 2. • Is the strategy time frame consistent with the business strategy horizon (e.g., 6, 18, or 24 months)? Many human resource strategies span more than one operating budget year – and should extend as required. • Is it communicated, implemented, and measured along with other normal business performance accountabilities? All the Right Levers for Change People and organization issues are typically complex, requiring attention to multiple levers for strategy implementation, including organization, development, recruiting and staffing, rewards, performance management, and employee relations. Strategies that exclusively concentrate on one area typically are too narrowly defined to address significant challenges effectively. Rather, great human resource strategies apply a systems approach, diagnosing and developing alignment of levers with strategies using an alignment or fit model. Does your human resource strategy address the necessary combination of relevant organizational and human resource management practices? • Does the strategy define the challenge comprehensively, including all of the key levers of strategy implementation? • Does it take a general management viewpoint to ensure that the actions will address the issues effectively? • Does it effectively match specific human resource strategies with types of business strategies and circumstances (e.g., organizational life stages, market positioning, radical change/turnarounds)? • Does it reflect and build on research evidence and experience on how people and organization initiatives make a competitive difference? Creative Value Added Business strategy focuses on delivering superior value to customers, superior relationships with suppliers and distributors, and a superior market position versus competitors. Accordingly, great human resource strategies bring breakthrough ideas and innovations that contribute to this success formula. A great human resource strategy enables the business to differentiate itself in competitive markets. Does your human resource strategy add value to the business success formula that otherwise would not exist? • Does it contribute to the value chain resulting in customer satisfaction and retention? • Does it create solutions that bring the business up to parity -- defining approaches already used by competitors that must be matched? • Does it provide innovation – defining creative breakthroughs beyond parity that create a distinctive capability/advantage over competitors?
  3. 3. • Does it create barriers or buffers (cost, difficulty of implementation, proprietary design) that impede competitors from imitating these capabilities or resources? • Does it help management anticipate and manage increasingly rapid, tumultuous change? Superb Execution Human resource strategies sometimes sound great, with important issues and grand plans and objectives, but lack the crucial attention to implementation. The final and vital phase of strategic management is execution of plans. Many companies have operational plans for the human resource function or department, detailing priorities and planned actions for the year ahead. These help communicate priorities and shape budgets, but they are merely an implementation component of a great human resource strategy. Does your human resource strategy establish an achievable implementation plan? • Does it define required steps for effectively leading planned change across the organization? • Does it define specific actions, timing, responsibility, resources required, and implementation measures? • Does it define changes in behavior required for managers, employees, partners, vendors, and others? • Does it define changes required in the human resource function/staff (organization, roles, processes, activities, capabilities, and technology applications/information systems)? Greatness? Over the years, I have been encouraged by the increasing interest in human resource strategy. However, companies too often set their sights too low, and end up with human resource strategies that are too functional, too operational, too narrow, and too generic. At best, these strategies maintain parity. They fail to make the compelling and convincing case necessary to energize their organizations to take bold actions and changes to achieve a competitive advantage through people. Worse yet, strategies often fade away or are replaced before they are ever implemented and achieve any business impact. There are many great human resource strategies in leading companies today, and they are making a significant business impact. The necessary strategic analysis, strategy formulation, and strategy implementation is led by human resource leaders who are deeply concerned with aligning organization and people with the rapidly changing competitive demands on the business. What is your experience? What are your views?
  4. 4. Exhibit Two: People and Organization Issues Addressed By Leading Companies Attracting, Retaining, and Developing Critical Talent • Recruiting and selecting scarce talent with critical skills (especially in the U.S.) • Developing the required capabilities in the current talent (especially outside the U.S.) • Building loyalty with less company commitment (e.g., job security) and employee commitment • Providing the necessary “value proposition” for critical talent groups • Providing attention to the “whole person” (e.g., desired work environment, development, work-family balance) • Addressing the needs/interests of “generation x” and the “millenium generation” Building High Performance Work Organizations • Building commitment to creating a high performance culture. • Establishing accountability for achieving business results (e.g., balanced scorecard) • Emphasizing the business case that provides a line of sight to business results • Building customer intimacy and an obsession on customer satisfaction • Communicating the direction the business is taking and what it means to each person • Promoting teamwork and collaboration across organizational units and regions • Enabling individuals to update their expertise and skills, be responsible for learning • Accelerating speed/cycles, innovation and creativity • Aligning reward systems with changing priorities (e.g., incentives, profit sharing, stock ownership, team-based compensation) • Building values and principles which will sustain long-term growth of company Aligning People with the Business • Involving employees in the business planning process (top down, bottom up iteration) • Building a business mindset, addressing how employees may contribute and building commitment through understanding • Establishing cross-business activities (e.g., cross-functional teams, assignments, communications) • Building more effective two-way, personal communications with managers, team leaders, or coaches • Evolving from quality management and re-engineering to balanced change integration focusing on growth, market share, new markets, and customer retention
  5. 5. Enabling Organizational Learning and Knowledge Management • Providing forums for information sharing and learning, building learning into all meetings and interactions • Establishing knowledge systems (e.g., data bases, technology for access and inputs) • Leveraging technology for information sharing across units (e.g., e-mail networks) • Providing learning resources beyond classroom education (e.g., action learning, job- related learning, distance learning) • Establishing learning alliances (e.g., universities, consulting firms, experts) Competing Globally • Understanding global economics, market opportunities, and the competitive landscape • Building a flexible global organization, where people are comfortable with partnerships and lack of direct control (e.g., alliances, joint ventures) • Building small organizational units that are aligned both with their business/markets and with the global organization • Building an integrated approach to world markets, while addressing relevant cultural and business differences (e.g., common approaches, global sourcing, shared services) • Building capability for effective strategy implementation across the world • Building global leadership capabilities through education, assignments, succession, and individual development • Leveraging knowledge effectively across the organization (e.g., accelerating development of new operations and emerging markets, leveraging best practices)
  6. 6. Exhibit One: Business Strategy and Human Resource Strategy Strategic analysis: Strategy formulation: Strategy implementation: Establish the strategic context Define a plan to achieve an Execute the plan advantageous market position Business • Assess driving forces shaping the • Formulate mission, vision, values • Develop required organizational Strategy future of the industry (technology, (a shared mindset) capabilities (structure, systems, competitors, markets, customer • Define the required culture, processes, talent, etc.) requirements, etc.) management philosophy, and • Manage performance (establish • Determine key success factors business practices performance expectations and • Assess business and • Set business objectives and accountability for results, manage organizational capabilities priorities performance, evaluate and reward (strengths and weaknesses) • Develop action plans (steps, performance) • Define strategic issues timing, responsibility, resources • Determine future market required, and performance positioning and competitive measures) advantage • Allocate resources Human • Assess people and organizational • Develop people-related strategies • Enable effective change Resource aspects/implications of the to address these issues (communication, involvement, Strategy strategic context (objectives, priorities, action plans, influence, initiatives, etc.) • Assess people-related and measures) • Align core people management organizational capabilities (current processes to enable strategy situation, strengths and implementation weaknesses) • Align the human resource function • Determine future people and with changing requirements organizational requirements (organization, roles, capabilities, (preferred future state) systems, practices, etc.) • Determine people-related • Establish and implement a business issues (gaps between business plan for the HR function current and future state) itself (objectives, resources, priorities, measures, etc.)