HR Strategy - Myth or Reality?

Defining HR Strategy

In many discussions, strategy is synonymous with being senior or important. For most HR Directors, the fact that they work for or alongside the real strategy formers means that they call themselves strategic because, by association, a little bit rubs off.

However, being senior is not the same as being strategic. Nor is it the case that 'good HR makes a difference', as advocated by some academics and the CIPD. It may or may not, it all depends on the business and the circumstances. Being 'strategic' requires much more than that.

So, if strategy involves more than being senior and doing 'good HR', then what exactly does it entail? In his writings, Henry Mintzberg defines strategy as:

• A plan, or some consistently intended course of action;
• A pattern that emerges over time;
• A position that provides for competitive advantage;
  or
• A perspective or abstraction that exists in the minds of people.

Thus, there are some businesses that have developed a particular way of doing things that, by their very nature, creates a competitive advantage.

Costas Markides of the London Business School suggests that strategy is about choice. That is, the decisions a company makes about who to target as customers, what to offer them and how to deliver the product to the customer base. The end result of these who/what/how decisions should be a clear differentiation of the business from the competition. These are weighty issues outside the remit of most HR Directors.

In those few businesses where the HR Director takes part in debating the who, what and how, there is likely to be few, if any, tangible assets. Many businesses without tangible assets do not need much in terms of 'strategic HR', and talented individuals or small teams can deliver great outputs without the need for an HR infrastructure.

There are very few businesses that have managed to differentiate themselves from the competition by the quality of their HR management. The best example I have seen was Hewlett Packard in its halcyon years. Yet even here, human resource management was regarded as far too important to be left to the HR managers. What really made the company stand out was the quality of the people management, not the quality of the HR management. Indeed, there is a view that HR flourishes where there are weak people managers and a strong HR function that acts in an almost executive capacity. This can't be right!

In other cases, the HR Director may facilitate the strategic discussions of the board and occasionally chip in. This is far more common, and there are many excellent HR Directors who operate as facilitators to the board and executive committee.

Translation Skills

In other instances the HR Director will take the strategy and translate it into a strong project plan, with a clear line of sight between business imperatives and the people component. HR activity will support and be linked back to the business strategy. This is the territory most effective HR Directors should occupy, and they should make sure they deliver it well.

The level of involvement in strategy is a complex function based on the sophistication of the executive committee, the HR Director's expertise, the evolutionary stages of the business, and the type of business. For example, it is difficult to see the benefit of real strategic involvement of the HR function in capital intensive businesses such as oil and pharmaceuticals, where the people component is insignificant in relation to other indicators of success. Similarly, in many businesses in the City, it is likely that there is no requirement for strategic involvement. That is not to say that excellent delivery of complex HR services is not important to these businesses - they are, but they do not require HR to be strategic. What they need is a series of well-designed and delivered initiatives to support the strategic direction and enable effective implementation.

There is a further rather large category of HR Directors who are the faddists bent on chasing best practice and the latest quick fix, regardless of the needs of the business. They exist in surprising numbers, and there are far too many of them.

If in doubt, check it out: try to determine which strategic imperative is underpinned by 360-degree feedback, development centres, neuro-linguistic programming or competency frameworks. Most of these initiatives are simply fashion fodder, and if your HR Director has implemeted some of them but cannot link any to a strategic imperative, then your Director belongs in this category. Ask customers to choose between the basic product without the HR fads, and the more expensive one created by managers who've had 360-degree feedback. It will elicit only one response.

So, if most of us are not 'strategic' and are not fashion followers, what is the point? Before joining Hewlett Packard, I worked for a large FMCG business where few outside the board even knew the strategy, let alone understood it. The result was confusion, uncertainty, lack of commitment and good people working against each other. HR has a huge task to help communicate the strategy and set the parameters within which people can operate and implement. It is the creation of a performance-led culture and embedded processes in resourcing, development and motivation, which deliver the superior performance that makes the difference. In this way, it is possible to burst the bubble of the nonsense that people are our greatest asset. They are not.

It is the amalgamation of good methods of operation and delivery, summarised by 'the way we do things round here'. If Sainsbury's recruited Tesco's employees, for example, it would not make it Tesco.

These embedded processes and 'structural capital' are the main reasons why HR is chasing yet another strategic red herring in its vain pursuit to measure human capital.

Published by Personnel Today