Strategy as plan?

Another issue that has been central to debates in business strategy and also has much relevance to HR strategy, is whether a ‘strategic approach’ requires a formal plan. There is often a tendency to think about strategy as requiring the compilation of information and as a formal process of decision making that culminates in a series of plans. But there is another view; the view that suggests strategy can be inferred from a pattern that emerges from a long series of decisions, even in the absence of a formal written plan or strategy document. This could be termed a ‘de facto strategy’. This idea of an ‘emergent strategy’ is normally associated with Henry Mintzberg (1978).

So, an enterprise may have no formal strategy document and yet still have a de facto emergent strategy. Or it may even be that an enterprise has a formal and lengthy strategy document which is largely ignored in practice while a different de facto strategy is pursued.

A de facto strategy which has been built up incrementally and found to ‘work’ (in the sense that the organisation has proved to be sustainable and no major chronic problems are occurring) may add up to a coherent strategy But not all ad hoc approaches have such optimal outcomes. ‘Ad hocery’ may result in a lack of forethought, inconsistencies, short-term thinking, and waste and can be very costly and lead to an uncompetitive position (e.g., paying redundancies as a reaction to the economic downturn and then facing recruitment difficulties and training costs when the upturn occurs). The word ‘rudderless’ is sometimes used to describe this kind of drift and lack of direction. Hence, this particular approach would be considered as non-strategic.

So, what would an approach to HR look like if it was not ad hoc, rudderless and reactive? The implied alternative is some kind of strategic approach – that is, one which:

• tries to build a big picture 
• has a sense of direction of travel 
• has some coherence and consistency 
• has mutually reinforcing elements 

Coherence is about fit and integration. In other words, it suggests that the parts or elements fit together smoothly rather than contradict each other or lean in different directions. A classic example of HR decisions which tend towards contradiction is where ‘team focus’ is urged and policies are put in place to promote that, but where the remuneration system is based on individual performance-related pay.

But, in addition to alignment and coherence, HR strategy design requires attention to contexts – that is, the inner and outer contexts as outlined in the previous unit.

The nature of the design, and the range of factors to be taken into account when attempting this design is a matter of some debate. The skill involved in making these decisions may be a matter of good judgement – an essential quality for a competent strategist in HR. Some analysts recommend an approach which amounts to a ‘design’ or ‘decision science’ (Boudreau and Ramstad 2009) with an associated emphasis on systematic concepts, frameworks and measurement, while others lean more towards an approach based on aspects of leadership and social intelligence.

Carter Cleaning Company

Carter Cleaning Centers 
Jennifer Carter graduated from State University in June 2008 and, after considering several job offers, decided to do what she always planned to do—go into business with her father, Jack Carter.

Jack Carter opened his first laundromat in 1998 and his second in 2001. The main attraction of these coin laundry businesses for him was that they were capital- rather than labour-intensive. Thus, once the investment in machinery was made, the stores could be run with just one unskilled attendant and none of the labour problems one normally expects from being in the retail service business.

The attractiveness of operating with virtually no skilled labour notwithstanding, Jack had decided by 2004 to expand the services in each of his stores to include the dry cleaning and pressing of clothes. He embarked, in other words, on a strategy of “related diversification” by adding new services that were related to and consistent with his existing coin laundry activities. He added these for several reasons. He wanted to better utilize the unused space in the rather large stores he currently had under the lease. Furthermore, he was, as he put it, “tired of sending out the dry cleaning and pressing work that came in from our coin laundry clients to a dry cleaner 5 miles away, who then took most of what should have been our profits.” To reflect the new, expanded line of services, he renamed each of his two stores Carter Cleaning Centers and was sufficiently satisfied with their performance to open four more of the same type of stores over the next 5 years. Each store had its own on-site manager and, on average, about seven employees and annual revenues of about $500,000. It was this six-store chain that Jennifer joined after graduating.

Her understanding with her father was that she would serve as a troubleshooter/consultant to the elder Carter with the aim of both learning the business and bringing to it modern management concepts and techniques for solving the business’s problems and facilitating its growth.

Questions 
1. Make a list of five specific HR problems you think Carter Cleaning will have to grapple with.
2. What would you do first if you were Jennifer?

Strategic Human Resource Management

Strategic Human Resource Management

 A.  What Is Strategic Human Resource Management?

1. Strategic HRM means formulating and executing human resource policies and practices that produce the employee competencies and behaviors that companies need to achieve their strategic aims.

       B.  Improving Performance: The Strategic Context

       C.  Improving Performance: HR As a Profit Center

       D.  Sustainability and Strategic Human Resource Management – today’s emphasis on sustainability has important consequences for human resource management.  HR policies and practices can support a firm’s sustainability strategy and goals.

       E. Strategic Human Management Tools

1.  Strategy Map – summarizes how each department's performance contributes to achieving the company’s overall strategic goal.

2.  HR scorecard – a process for assigning financial and nonfinancial goals or metrics to human resource management-related strategy map chain of activities required for achieving the company’s strategic aims.

3.  Digital Dashboards – presents the manager with the desktop graphics and charts, showing a computerized picture of how the company is doing on all metrics from the HR scorecard process.

HR Metrics, Benchmarking, and Data Analytics

A.    Improving Performance: Through HRIS: Tracking Applicant Metrics for Improved Talent Management

B.     Benchmarking – occurs when an organization compares the practices of high performing companies’ results to your own, to understand what makes them better. 

C.     Strategy and Strategy-Based Metrics – benchmarking is only part of the process. To reveal the extent to which your firm’s HR practices are supporting its strategic goals, strategy-based metrics are used to measure the activities that contribute to achieving the company’s strategic aims.

D.   What Are HR Audits? – these audits are a way for an organization to measure where it currently stands and determines what it has to accomplish to improve its HR functions.

E.   Evidence-Based HR and the Scientific Way of Doing Things – evidence-based HR is the use of data, facts, etc. to support HR proposals, decisions, practices, and conclusions. This requires managers to be more scientific in making organizational decisions. This approach requires objectivity, experimentation, quantification, explanation, prediction, and replication.

F.  Trends Shaping HR: Digital and Social Media

1. Talent Analytics – tools that enable employers to analyze, in new ways, employee data both on obvious things (like employee demographics, training, and performance ratings), but also data from new sources (like company internal social media sites, GPS tracking, and email activity).

G. Trends Shaping HR: Science In Talent Management  

V.        High-Performance Work Systems –a set of human resource management policies

            and practices that together produce superior employee performance.

VI.       Employee Engagement Guide for Managers: Employee Engagement and Performance

A.      The Employee Engagement Problem – Gallup distinguishes among engaged employees “who work with passion and feel a profound connection to their company,” and not engaged employees who are essentially “checked out,” and actively disengaged employees.

B.       What Can Managers Do to Improve Employee Engagement? – managers improve employee engagement by taking concrete steps to do so, such as: providing supportive supervision, making sure employees understand how their departments contribute to the company’s success, see how their efforts contribute to achieving the company’s goals, get a sense of accomplishment from working at the firm, and are highly involved – as when working in self-managing teams.

C.       How to Measure Employee Engagement – firms like Gallup (www.gallup.com) and Tower Watson (www.towerswatson.com/en-US) offer comprehensive employee engagement survey services.