HR Strategy Revisited
Human Resource Planning, 2000
Today’s business growth strategies provide a new window of opportunity to shape a more meaningful HR agenda. A practical but thoughtful approach for tying HR strategy to the growth plans of the company should be pursued jointly by corporate HR teams and their divisional coutnerparts, with the close involvement of line leaders. A four-step process for creating a strategic HR agenda is outlined and the experiences of various companies are compared. The paper focuses especially on effective practices for working a single HR agenda across multiple divisions of large, diversified companies.
Innovations in business strategy, especially in the race to find new sources of growth, have created new pressures to refocus HR work, roles, and priorities. In smaller, entrepreneurial firms, the CEL/founder fights a war to attract, retain and motivate bright, young and technically able people. In large multi-national companies, the impact of people on the competitiveness of businesses has become increaseingly clear, and HR professional are being asked to help create strategic clarity across the organization.
Human resources strategy has evolved through various forms over the past 20 years. Twenty years ago respected companies like IBM, Digital Equipment and Merch & Co. pioneered early efforts to create HR strategies, which aimed to tie HR functional strategies to business priorities. Huselid and Becker (1998) identified a positive relationship between shareholder value and the extent of strategic HR work performed in 740 firms studied. Ulrich (1997) has written at length about the need to redefine HRR roles into strategic partnerships that provide more value to external customers. Brockbank (1999) has presented a four-stage lifecycle model for characterizing the extent to which the HR function is strategic, arguing that firms move logically from being operationally reactive, to operationally proactive, to strategically reactive and, finally, in a few cases, to becoming strategically proactive.
But HR strategic planning has not necessarily become commonplace. In one sense an increasing gap has formed between the most “sophisiticated HR companies” and everyone else, with regard to strategic human resoures. In the late 1990s, companies once known for sophisticated HR strategy evolved away from arcane planning exercises and toward re-engineering or transforming the function. Like business strategy, HR planning may have reached the peak of its popularity in the late 1980s and early 1900s. Focus shifted to excellence in execution, fixing processes and shrinking bloated organization. HR strategy evolved, as HR leaders focused themselves more on redisigning their own processes, deploying information systems, reorganizing themselves and building new partnering-oriented competencies (Kesler and Law, 1997, Yeung and Brockbank, 1995).