An effective HR strategy aligns with business needs, is based on thorough analysis, and is actionable, coherent, and integrated. It should value employees, clarify their roles, and include mechanisms for their development and recognition. The strategy formulation process involves interaction with business strategy, consideration of various influencing factors, and the application of models that span from control-based to resource-based approaches.

1. SHRM - TOPIC 2
FORMULATING AND IMPLIMENTING
HR STRATEGIES
By
JANET MITU - MIRITI

2. CRITERIA FOR AN EFFECTIVE HR STRATEGY
An effective HR strategy is one that
works in the sense that it achieves
what it sets out to achieve.
In particular, it:
• Will satisfy business needs;
• Will be founded on detailed
analysis and study, not just
wishful thinking;

3. EFFECTIVE HR STRATEGY ....
• Can be turned into actionable programs
that anticipate implementation
requirements and problems;
• Is coherent and integrated, being
composed of components that fit with
and support each other;
• Takes account of the needs of line
managers and employees generally as
well as those of the organization and its
other stakeholders.

4. EFFECTIVE HR STRATEGY.....
 A good strategy is one which actually makes
people feel valued. It makes them
knowledgeable about the organization and
makes them feel clear about where they sit as a
group, or team, or individual.
 It must show them how what they do either
together or individually fits into that strategy.
 More 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.

5. HR STRATEGIES.....
 When considering approaches to the formulation
of HR strategy it is necessary to underline the
interactive relationship between business strategy
and HRM.
 The process by which strategies come to be
realized is not only through formal HR policies or
written directions: strategy realization can also
come from actions by managers and others.
 Since actions provoke reactions (acceptance,
confrontation, negotiation etc) these reactions are
also part of the strategy process.

6. HR STRATEGIES ....
 According to Mintzberg et al’s (1988), strategy
formulation is about ‘preferences, choices, and
matches’ rather than an exercise ‘in applied logic’.
 It is also desirable to follow Mintzberg’s analysis
and treat HR strategy as a perspective rather than
a rigorous procedure for mapping the future.
 According to Mintzberg all strategies exist in the
minds of those people they make an impact upon
and what is important is that people in the
organization share the same perspective ‘through
their intentions and/or by their actions

7. HR STRATEGIES CONSIDERATION
 Business strategy is an important influence on HR
strategy but it is only one of several factors.
 The mix of factors that influence the shape of HR
strategies is a set of historical compromises and
trade-offs from stakeholders.
 Coherent and integrated HR strategies are only
likely to be developed if the top management
understands and acts upon the strategic
imperatives associated with the employment,
development and engagement of people.
 The effective implementation of HR strategies
generally depends on the involvement, commitment
and cooperation of line managers.

8. APPROACHES TO HR STRATEGY FORMULATION
Research conducted by Wright et al (2004)
identified two approaches that can be adopted
by HR to strategy formulation:
i) The inside-out approach
This begins by looking at the HR in terms of
skills, processes, technologies etc) and then
attempts (with varying degrees of success) to
identify linkages to the business (usually
through focusing on ‘people issues’) and making
minor adjustments to HR activities along the
way.

9. ii) The outside-in approach
Building HR strategies from the starting
point of the business. Within these
‘outside-in’ HR functions, the starting
point is the business, including the
customer, competitor and business
issues they face.
The HR strategy then derives directly
from these challenges to create real
solutions and add real value.

10. Becker and Huselid (1998) expresses five
fundamental questions that need to be asked
in formulating HR strategies:
i. What are the firm’s strategic objectives?
ii. How are these translated into unit
objectives?
iii. What do unit managers consider are the
‘performance drivers’ of those objectives?
iv. How do the skills, motivation and structure
of the firm’s workforce influence these
performance drivers?
v. How does the HR system influence the
skills, motivation and structure of the
workforce?

11. Gratton (2000) proposes six-step
process of developing HR strategies:
i. Build the guiding coalition – involve
people from all parts of the business.
ii. Image the future – create a shared
vision of areas of strategic
importance.
iii. Understand current capabilities and
identify the gap – establish ‘where
the organization is now and the gap
between aspirations for the future
and the reality of the present’.

12. iv. Create a map of the system ‘ensure
that the parts can be built into a
meaningful whole’.
v. Model the dynamics of the system –
ensure that the dynamic nature of the
future is taken into account.
vi. 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.

13. STRATEGIC OPTIONS AND CHOICES
 The process of developing HR strategies
involves generating strategic HRM options and
then making appropriate strategic choices.
 Strategic choices should relate to but also
anticipate the critical needs of the business
 The strategies should be founded on detailed
analysis and study, 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 in
general.

14.  The emerging strategies should anticipate the
problems of implementation that may arise if line
managers are not committed to the strategy and/or
lack the skills and time to play their part, and the
strategies should be capable of being turned into
actionable programmes.
 Consideration should also be given to the impact of:
1. The external environment (social, political, legal
and economic);
2. The workforce;
3. The organization’s culture;
4. The organization’s strategy;
5. The technology

15. MODELS OF STRATEGIC HUMAN
RESOURCE MANAGEMENT
1. The Matching Model
HR systems and organizational
structure should be managed
in a way that is congruent with
organizational strategy’

16. 2. The Control-Based Model
The first approach to modelling different
types of HR strategy is based on the
nature of workplace control and more
specifically on managerial behaviour to
direct and monitor employee role
performance. According to this
perspective, management structures and
HR strategy are instruments and
techniques to control all aspects of work to
secure a high level of labour productivity
and a corresponding level of profitability

17. 3. The Resource-Based Model
• This model is grounded in the nature of
the reward–effort exchange and, more
specifically, the degree to which
managers view their human resources as
an asset as opposed to a variable cost.
• The sum of people’s knowledge and
expertise, and social relationships, has
the potential to provide non-substitutable
capabilities that serve as a source of
competitive advantage

18. 4. The Integrative Model
• This model integrates two main models of HR
strategy, one focusing on the strategy’s underlying
logic of managerial control, and the other focusing
on the reward–effort exchange. model that
characterizes the two main dimensions of HR
strategy as involving ‘acquisition and development’
and the ‘locus of control’.
• Acquisition and development are concerned with
the extent to which the HR strategy develops
internal human capital as opposed to the external
recruitment of human capital. In other words,
organizations can lean more towards ‘making’ their
workers (high investment in training)