Join Wayne Cascio for an in-depth discussion in this video Strategic HR, part of Human Resources Foundations.
- Imagine this, you're the coach of a basketball team, and you're preparing to play your archrival. Would you rather have your team play the game by taking the floor and simply reacting to whatever your opponent does? If you were playing chess, would you simply react to whatever moves your opponent makes? The answer in both of these situations is an emphatic "no". Rather, you would most likely have a well developed "game plan". That game plan is known more formally as a strategy.
In business settings, firms make decisions and choices about how to position themselves for sustainable competitive advantage. Those decisions and choices define each firm's competitive position. Every firm makes decisions about issues such as: Customers. Who will it serve? Processes. How will it create value? Leaders. Their priorities, focus, and dedication. Staff. Who it hires, develops, and retains? Vision.
Its reason and purpose for existence. Those decisions define each company's genetic code. That code should be clear, simple, and understandable, for it provides lifelong direction to an organization. Here are some examples of strategic visions. Southwest Airlines - Fun; low fares. Coca-Cola - A Coke within an arm's reach. General Electric - #1 or #2 in what we do.
CNN - 24-hour news. Disneyland - The happiest place on earth. At a broader level, strategy answers questions such as: Why should customers buy from your company? What do you do better than anyone else? Do you offer products or services that no other competitor can match? Do you offer the cheapest products or services? Are your products or services the highest-quality ones available? Do you deliver your products or services faster than any competitor can? Does your company provide the very best customer service? Competitive strategy is about choices and trade-offs the firms the firms make.
It's about being different. It means deliberately choosing a different set of activities in order to deliver a unique mix of value to the customer. Human Resource Strategy refers to the decisions, processes, and choices that firms make about how they will manage their people. It parallels and supports the strategic business plan. To do that well, however, it requires a focus on planned, major changes in the organization, and on critical issues such as: What are the HR implications of your proposed strategy? What constraints might you face in implementing that strategy? What are the implications for how you'll manage your people, how you'll develop them, and the leadership succession issue? What can you do in the short term to prepare for longer-term needs? In this approach to the strategic management of human resources, a firm's business strategy, and it's HR strategy, are interdependent.
To illustrate, consider that you're in a start-up business in a completely new market space. Think eBook readers versus traditional print media. Think 3D printing. Think advanced batteries and fuel cells to replace gasoline engines. You're trying to appeal to customers who want a break from the present, and also to those who want to invest in a product that will see the future industry. To survive, you need a critical mass of early users.
What does all this mean for the people you hire? Well, they should be smart, technically savvy, and totally committed to your vision. How will you judge their performance? The key consideration will be their ability to generate and execute breakthrough ideas. How will you reward them? Because early stage companies don't have the cash flow to pay high salaries. Major emphasis would be on stock options or stock grants. What would you emphasize in training and development? Because the major emphasis at this stage is on research and development, training will focus primarily on developing technical competencies.
Can you see how HR strategy parallels and facilitates the more general business strategy? This is what HR strategy is all about.
- Administrative vs. strategic HR
- Managing talent
- Developing employees through training and career development
- Managing performance
- Managing international employees