Week 5: 29th May - 4th June (Video: 3.1 & Audio 3.2)
As with broader debates about the importance of human resources (HR) within organisations, there is much emphasis placed on the need for HRD practitioners to participate in the development of organisational strategy. The CIPD (2015, p. 3) suggests that this is essential since ‘organisations should manage people within a planned and coherent framework that reflects the business strategy. This helps ensure that the various aspects of people management work together to develop the performance and behaviours necessary for the delivery of organisational value’.
Watch Video 3.1 - HRD strategy - which features interviews in which a range of expert HRD practitioners, consultants, coaches and academics discuss how HRD strategy and being strategic is important to them.
In the video, you heard about some of the challenges and opportunities for HRD to be connected to business strategy. Now let’s consider what developing business strategy entails.
In order to develop a robust business strategy, organisations need to agree on the answers to important questions. These answers can both be influenced by, and influence, understandings of human resources.
- What business or businesses should we be in? Which products or services should we be selling, and in which markets?
- How can this organisation achieve necessary levels of economies of scale, or organisational learning, or technical innovation, which will enable us to match or exceed the performance levels of rival organisations?
- Which of the organisation’s resources and capabilities are likely to need to adapt over time in line with changes in the marketplace or in technology?
- How are we to build and manage complex resource clusters?
- How do we monitor and revise our strategies so as to identify and respond to environmental turbulence?
- How do we determine the shape, size and purpose of our organisation over time? What changes in organisational structure and processes might be necessary?
- Which activities should our organisation continue to perform internally, and which should we acquire from other organisations, via outsourcing or cooperative alliances?
What do all of the answers to these questions have in common? According to Grant (2010, p. 14);
- they are all important
- they all involve significant resource commitments
- they are not easily reversible.
HR strategy and its relationship to business strategy was examined in some detail previously in the MSc programme (in B864 Human resource management in context). The characteristics of an overall HR strategy can also be used to describe a more specific, focused HRD strategy. That is to say, both would normally be expected to:
- build a big picture
- provide a sense of direction of travel
- be coherent and consistent
- have mutually reinforcing elements.
The CIPD suggests that the key question an HRD strategy needs to answer is: ‘How can we enable our people to help us in achieving sustainable growth, and how do we know it’s working?’ (CIPD, 2014a).
Developing HRD strategy
HR strategy is about choices and the skill of the HR practitioner is in making appropriate choices (as the discussion in B864 highlighted). This also involves the essential processes of collecting and analysing information in order to inform these choices and their subsequent implementation. Neilson et al. (2008) highlight that this stage of implementation is too often forgotten. Their analysis highlights critical success factors that can be applied to any type of strategic undertaking. They emphasise the importance of the following factors:
- Everyone knows what they are responsible for.
- Important information gets to leaders quickly.
- Once made, decisions are not second-guessed.
- Information flows freely across boundaries.
- Employees usually have the information they need to understand the bottom-line impact of their day-to-day choices.
In this unit you will work through the different factors, both internal and external to the organisation, that impact the notion of ‘choice’ in relation to HRD strategy. This is premised on the basis that HRD strategy is a specific and identifiable element of overall HR strategy within an organisation. The issues of the relationships between business strategy and the overall HR strategy (which you explored in previous modules) can therefore be replicated at this more detailed level. For example, it is necessary to consider the question of whether HRD practitioners are reactive and respond to the decisions and directions encompassed within an organisation’s overall HR strategy, or are proactive in providing the data and solutions that drives the HR strategy from a HRD perspective.
In answer to this question, Mayo (2004) outlines four types of approaches or modes for HRD practitioners and their involvement in HRD strategy:
- Reactive, operational: This is about responding to managers’ requests for training of various kinds, both for their departments and as a result of appraisals for individuals. HRD sources solutions and suppliers and meets the requests.
- Reactive, strategic: In this mode, HRD helps managers with their longer-term needs, responds to their business plans with appropriate supporting programmes, and develops customised learning solutions for them.
- Proactive, operational: The difference here is that regular meetings occur with management, keeping in touch with progress on their business goals, suggesting ideas, challenging practices and working jointly on people-capability issues.
- Proactive, strategic: In this mode, the level of involvement is broader and longer term. It includes contributing to and challenging business strategies, working together with the management team on HRD and talent initiatives, and building long-term capabilities.
The inclusion of a reactive, operational approach reflects that, historically, HRD activity within an organisation may have been primarily focused on issues of training needs and training delivery. Exceptions might have included aspects of HRD practice that were focused on management or leadership development, for example. Indeed, while ‘training’ might now seem a rather unfashionable term compared to an emerging emphasis on, for example, ‘talent’ or ‘human capital’, it is important to ensure that all different aspects of HRD practice are considered within strategy development.
However, this list also highlights the potential of a proactive strategic approach with a focus on ‘building long-term capabilities’. This draws on a particular perspective and approach to strategy which is important for HRD professionals: the ‘resource-based view’ (RBV). This perspective emphasises the need to understand the unique capabilities of an organisation when deciding on strategic direction. These capabilities include those at an individual, team and organisational level. Audio 3.1 provides a useful overview of RBV:
HRD professionals can therefore play a critical role in both identifying and facilitating the development of these capabilities:
The resources and capabilities of a firm are the central considerations in formulating its strategy: they are the primary constants upon which a firm can establish its identity and frame its strategy, and they are the primary sources of the firm’s profitability
These issues will be developed as this unit progresses. Unit 4 provides a detailed consideration of the relationship between training and learning, how to identify particular needs and how to design interventions in response to these needs.
First, however, we return to the notions of internal and external context as a means of considering the key issues that will impact the development of HRD strategy.
