This is to differentiate the organization from its competitors, adding value through carrying out a different mix of activities.
Benjamin Tregoe and John Zimmerman defined strategy as "the framework which guides those choices that determine the nature and direction of an organization."
This is about selecting the products and the markets for such products.
To Henry Mintzberg, strategy is a plan, a pattern in action over time, a position, and a perspective.
Strategy, to Treacy and Wiersema, is about narrowing the business focus.
These writers are explaining the same thing, "strategy" as applied to the situation they were describing.
Having the End in Mind
A strategy cannot exist by itself. It is intended to attain a certain defined "end".
Keep in view the purpose, the outcome at all times.
Stephen Covey puts this as one of the "Seven Habits of Successful People" as "Begin with the End in Mind. "
In the preparation of strategy, always keep in view the company-wide set of "ends". In the context of HR management, always keep in view the reason why the human resource function exists. Human Resource strategy is the means by which people contribute to the success of the organizational overall plan.
There is less chance of going wrong while focusing on the overall objectives all the time.
Those in positions of authority cannot avoid learning the components of strategy preparation. This has dire consequences
on organization and employees alike if neglected.
Lionel Urwick states:
"There is nothing which rots morale more quickly and more completely than...the feeling that those in authority do not know their own minds".
He was referring to the competence of corporate leaders.
It is important for HR Managers and HR professionals to understand their organization well enough in order to formulate a meaningful organizational Human Resource strategy.
What happens when Strategy is Applied to Human Resource?
The organization's "ends" is its financial success if it is profit-oriented or "to break even" or "ability to deliver the relevant services" if it is a charitable organization.
Human Resource strategy is one of the means to attain this.
Organizations have always tried to comply with legal obligations in the course of carrying out their business activities. The question is to what extent are they complying.
In addition, finance and technology are important assets. But people are required to make effective and efficient use of them.
In non-profit organizations, the end is to provide the specified services to the intended group or groups in the most cost-effective way, in the most satisfactory manner, while serving the majority of the target groups.
Effective development and implementation of an HR strategy requires HR professionals who are conversant in finance, negotiation, change management, and the overall operations of the organization.
An HR strategic plan aligns the HR function to the corporate plan. Good knowledge about the organization, its objectives, systems and processes, can assist HR people in doing this task well.
HR Core Competencies
Developing HR core competencies forms an important part of human resource strategy.
Competencies include the following.
Leadership skill, especially HR senior management
People management skill. A 360-degree feedback system can show the quality of skill development programs
Skill in strategic planning
Competence in knowledge management
Effective staff recruitment, motivation and retention skill
Some organizations, including government agencies, consider recruitment, employee motivation and development, and employee retention skills as core competencies.
Focusing on the HR core competencies can enhance the competitive advantage of your organization. This increases the market value of organizations.
Strategic training and development plays a crucial role in improving human resources skill in the core competencies.
Aligning Human Resource Strategy to Corporate Strategy
A crucial part of planning how people will contribute to the success of organization is to integrate the Human Resource strategy to the overall strategy.
The Need for Mindset Change
There is an enormous amount of literature on human resource strategy and related topics.
Some organizations have implemented their respective Human Resource strategy, having been convinced that people are their most important asset.
However, many corporate entities mistakenly labeled what they are doing in HR as being strategic.
Linda Holbeche notes that the question of "how 'HR' issues can contribute to business success has not been aligned in managers' minds."
She argues that HR and the line management must work together to design and implement people strategies.
Mindset must change if the HR function is to truly play its important role in the development and implementation of the organizational human resource strategy.
Choices in Human Resource Strategy
The choice is between functional strategy, capability
strategy and results strategy in the preparation of human
Organization can adopt functional strategy in the performance of traditional HR administrative tasks. Here, the strategy focuses on fulfilling what the respective HR activity is supposed to achieve. No more, no less.
Capability strategy is still relevant. Many organizations remain at this stage of strategy development.
This strategy focuses on developing employees' competencies in order to perform their jobs well.
Many organizations have proceeded beyond capability strategy. They use "results strategy" which is necessary to meet new challenges and pressures on business entities.
Government agencies, such as those in the United States, have started to focus on results strategy and to implement measures that can show how well HR activities are contributing to the bottom-line.
The development of results strategy stem from a number of reasons, some of which may sound familiar.
Onset of increased competition due to globalization,
resulting in competition for skilled workers being one
An increasingly complex business competition in a
New labor laws or amendments to existing ones affecting
Higher expectation from customers and stakeholders
Aims of HRM Strategy
Writers state the following as the aims of human resource strategy, among many others.
to ensure that business planning recognizes that the ultimate source of value is 'people'
to make sure that all those involved in strategic planning understand the HR implication of their proposals
and the HR constraints if they fail to take action
to match the objectives of the HR function to the corporate business objectives
to help bring about corporate culture and processes that enable people to do their jobs better
to align the organization's competencies needs with the people who can satisfy those needs
to ensure organizational resources contribute to the development of people's competencies
to determine performance requirements to achieve the organization's objectives and how employees can satisfy those requirements
to determine levels of employee commitment and ways for improving them
Is Outsourcing HR a Strategy?
Human resource outsourcing is one of the strategies organization may want to adopt. This approach is increasing among organizations. But it is advisable to be cautious what part of HR to outsource.
For example, outsourcing recruitment activities is one. But always arrange for a final interview by internal HR people before hiring the recommended candidate.
Some organizations outsource the payroll system. This is a very sensitive area of people management. Consider the consequences before a final decision is made.
Where To Go From Here?
We can expect that more organizations will implement strategies in managing their human resource well. This movement forward will not slow down!
Some writers are even convinced that someone somewhere will formulate a more effective Human Resource strategy, probably before the decade is over. (Ten years had already passed by.)
This appears as the natural progression in the search for better ways of transforming human resource, and the way HR is
managed in order to transform organizations and make them more successful and profitable.
Where do organizations want to go?
Be there with those organizations that have already arrived at the results-strategy-implementation position.
Otherwise, join those actively pursuing initiatives to
implement results-oriented human resource strategy to change the role of their human resources.
Whatever it is, take some form of decision to implement HR strategy.
These strategies are important considerations in the implementation of strategic human resources management.