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Developing and implementing
HR strategies
There is an ever-present risk that the concept of strategic HRM can become somewhat
nebulous – nice to have but hard to realize. The danger of creating a rhetoric/reality
gap is acute. Broad and often bland statements of strategic intent can be readily
produced. What is much more difficult is to turn them into realistic plans that are
then implemented effectively. Strategic HRM is more about getting things done than
thinking about them. It leads to the formulation of HR strategies that first define what
an organization intends to do in order to attain defined goals in overall human
resource management policy and in particular areas of HR process and practice, and
secondly set out how they will be implemented.
Difficult though it may be, a strategic approach is desirable in order to give a sense
of direction and purpose and as a basis for the development of relevant and coherent
HR policies and practices.
This chapter starts by giving general consideration to the development process,
setting out various propositions and describing the levels of strategic decision
making. Reference is also made to the existence of strategic options and choices. This
provides the background against which the approaches to formulating and imple
menting HR strategies are described.
PROPOSITIONS ABOUT THE DEVELOPMENT
PROCESS
The following propositions about the formulation of HR strategy have been drawn
up by Boxall (1993) from the literature:
●the strategy formation process is complex, and excessively rationalistic models
that advocate formalistic linkages between strategic planning and HR planning
are not particularly helpful to our understanding of it;
●business strategy may be an important influence on HR strategy but it is only one
of several factors;
●implicit (if not explicit) in the mix of factors that influence the shape of HR strate
gies is a set of historical compromises and trade-offs from stakeholders.
It is also necessary to stress that coherent and integrated HR strategies are only likely
to be developed if the top team understands and acts upon the strategic imperatives
associated with the employment, development and motivation of people. This will be
achieved more effectively if there is an HR director who is playing an active and
respected role as a business partner. Afurther consideration is that the effective
implementation of HR strategies depends on the involvement, commitment and
cooperation of line managers and staff generally. Finally, there is too often a wide gap
between the rhetoric of strategic HRM and the reality of its impact, as Gratton et al
(1999) emphasize. Good intentions can too easily be subverted by the harsh realities
of organizational life. For example, strategic objectives such as increasing commit
ment by providing more security and offering training to increase employability may
have to be abandoned or at least modified because of the short-term demands made
on the business to increase shareholder value.
The development process as described below takes place at different levels and
involves analysing options and making choices. Amethodology is required for the
process that can be conducted by means of a strategic review. The methodology can
be applied in three different ways. One of the most important aims in the develop
ment programme will be to align the HR strategy to the organizational culture and
the business strategy by achieving vertical integration or fit.
LEVELS OF STRATEGIC DECISION-MAKING
Ideally, the formulation of HR strategies is conceived as a process, which is closely
aligned to the formulation of business strategies. HR strategy can influence as well as be influenced by business strategy. In reality, however, HR strategies are more likely
to flow from business strategies, which will be dominated by product/market and
financial considerations. But there is still room for HR to make a useful, even essential
contribution at the stage when business strategies are conceived, for example by
focusing on resource issues. This contribution may be more significant if strategy
formulation is an emergent or evolutionary process – HR strategic issues will then be
dealt with as they arise during the course of formulating and implementing the
corporate strategy.
Adistinction is made by Purcell (1989) between:
●‘upstream’first-order decisions, which are concerned with the long-term direction of
the enterprise or the scope of its activities;
●‘downstream’second-order decisions, which are concerned with internal operating
procedures and how the firm is organized to achieve its goals;
●‘downstream’third-order decisions, which are concerned with choices on human
resource structures and approaches and are strategic in the sense that they estab
lish the basic parameters of employee relations management in the firm.
It can indeed be argued that HR strategies, like other functional strategies such as
product development, manufacturing and the introduction of new technology, will
be developed within the context of the overall business strategy, but this need not
imply that HR strategies come third in the pecking order. Observations made by
Armstrong and Long (1994) during research into the strategy formulation processes
of 10 large UK organizations suggested that there were only two levels of strategy
formulation: 1) the corporate strategy relating to the vision and mission of the organi
zation but often expressed in terms of marketing and financial objectives; 2) the
specific strategies within the corporate strategy concerning product-market develop
ment, acquisitions and divestments, human resources, finance, new technology, orga
nization, and such overall aspects of management as quality, flexibility, productivity,
innovation and cost reduction.
STRATEGIC OPTIONS AND CHOICES
The process of developing HR strategies involves generating strategic HRM options
and then making appropriate strategic choices. It has been noted by Cappelli (1999)
that: ‘The choice of practices that an employer pursues is heavily contingent on a
number of factors at the organizational level, including their own business and
production strategies, support of HR policies, and co-operative labour relations.’ The process of developing HR strategies involves the adoption of a contingent approach
in generating strategic HRM options and then making appropriate strategic choices.
There is seldom if ever one right way forward.
Choices should relate to but also anticipate the critical needs of the business. They
should be founded on detailed analysis and study, not just wishful thinking, and
should incorporate the experienced and collective judgement of top management
about the organizational requirements while also taking into account the needs of line
managers and employees generally. 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.
APPROACHES TO HR STRATEGYDEVELOPMENT
The starting point of HR strategy development is the alignment of HR strategy to the
business strategy and the organizational culture – the achievement of vertical inte
gration. This provides the necessary framework for the three approaches to the de
velopment of HR strategies that have been identified by Delery and Doty (1996)
as the ‘universalistic’, the ‘contingency’ and the ‘configurational’. Richardson and
Thompson (1999) redefined the first two approaches as best practice and best fit, and
retained the word ‘configurational’, meaning the use of ‘bundles’, as the third
approach.
Aligning HR strategy
Afundamental requirement in developing HR strategy is that it should be aligned to
the business strategy (vertical integration) and should fit the organizational culture.
Everything else flows from this process of alignment.
Integration with the business strategy
The key business issues that may impact on HR strategies include:
●intentions concerning growth or retrenchment, acquisitions, mergers, divest
ments, diversification, product/market development;
●proposals on increasing competitive advantage through innovation leading to
product/service differentiation, productivity gains, improved quality/customer
service, cost reduction (downsizing); ●the felt need to develop a more positive, performance-oriented culture and any
other culture management imperatives associated with changes in the philoso
phies of the organization in such areas as gaining commitment, mutuality,
communications, involvement, devolution and teamworking.
Business strategies may be influenced by HR factors, although not excessively so. HR
strategies are concerned with making business strategies work. But the business
strategy must take into account key HR opportunities and constraints.
Wright and Snell (1998) suggest that seeking fit requires knowledge of the skills
and behaviour needed to implement the strategy, knowledge of the HRM practices
necessary to elicit those skills and behaviours, and the ability quickly to implement
the desired system of HRM practices.
Aframework for aligning HR and business strategies is provided by a competitive
strategy approach that relates the different HR strategies to the firm’s competitive
strategies, including those listed by Porter (1985). An illustration of how this might be
expressed is given in Table 9.1.
Culture fit
HR strategies need to be congruent with the existing culture of the organization, or
designed to produce cultural change in specified directions. This will be a necessary
factor in the formulation stage but could be a vital factor when it comes to implemen
tation. In effect, if what is proposed is in line with ‘the way we do things around here’,
then it will be more readily accepted. However, in the more likely event that it
changes ‘the way we do things around here’, then careful attention has to be given to
the real problems that may occur in the process of trying to embed the new initiative
in the organization.
The best practice approach
This approach is based on the assumption that there is a set of best HRM practices
and that adopting them will inevitably lead to superior organizational performance.
Four definitions of best practice are given in Table 9.2.
The ‘best practice’ rubric has been attacked by a number of commentators. Cappelli
and Crocker-Hefter (1996) comment that the notion of a single set of best practices has
been overstated: ‘There are examples in virtually every industry of firms that have
very distinctive management practices… Distinctive human resource practices shape
the core competencies that determine how firms compete.’
Purcell (1999) has also criticized the best practice or universalist view by pointing
out the inconsistency between a belief in best practice and the resource-based view .