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Michael Armstrong - Armstrong's Handbook of Strategic Human Resource Management - Improve Business Performance Through Strategic People
Michael Armstrong - Armstrong's Handbook of Strategic Human Resource Management - Improve Business Performance Through Strategic People
Handbook of
Strategic Human
Resource
Management
ALSO AVAILABLE BY
MICHAEL ARMSTRONG
www.koganpage.com
Seventh edition
Armstrong’s
Handbook of
Strategic Human
Resource
Management
Improve business performance through
strategic people management
Michael Armstrong
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ISBNs
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Introduction 1
02 Strategic management 24
Introduction 24
Strategic management dened 24
The meaning of strategy 25
Strategy in action 27
Developing strategy 28
References 32
A revised approach
However, a case can be made for adopting a revised approach to SHRM.
This could be described under the heading of ‘people management’.
Increasingly, we have People Directors or Heads of People Management
rather than HR Directors or Heads of HR. This change to ‘people manage-
ment’ could be justied simply on the grounds that ‘human resources’ conveys
the wrong message – that employees are factors of production who exist to
be exploited by the business. It is interesting to note that the extensive New
Profession Map produced by the Chartered Institute of Personnel and
Development (CIPD) in 2018 refers throughout to ‘the people profession’
and mentions HR only once in passing. There is no reference at all to strate-
gic HRM. The conclusion reached by the Institute for Employment Studies
based on their case study research into SHRM (Brown, Hirsh and Reilly,
2019: 43) was that: ‘We hope the term People Management leads to the
wider use of the term People Strategy to cover the big picture of employment
and workforce management.’
2 Introduction
But there is more to this than simply a name change. There are decien-
cies in the ways in which HRM is practised which need to be corrected.
They have been pointed out by a number of commentators, including British
writers such as Armstrong and Brown (2018), Delbridge and Keenoy (2010),
Dundon, Cullinane and Wilkinson (2017), Dundon and Rafferty (2018),
Guest (2017), Marchington (2008, 2015), Paauwe, Wright and Guest
(2013), Sparrow (2017) and Thompson and Harley (2007). Doubts have
also been expressed by American academics on how SHRM has evolved –
Beer (2015), Beer, Boselie and Brewster (2015), Cascio (2015), Delery and
Roumpi (2017) and Kaufman (2015). The thrust of all these criticisms has
been that HRM as originally conceived has lost its way. Instead of adopting
a multi-stakeholder approach as advocated by Michael Beer and his col-
leagues in 1984 in their seminal book on HRM, businesses are preoccupied
with the interests of only one of the stakeholders – the owners or sharehold-
ers, what Marchington refers to as a ‘vertical approach’.
However, this proposal is for a new approach not a radical change. The
fundamental notion of SHRM – the focus on the achievement of strategic
t – is still relevant. The underpinning concepts of SHRM – the resource-
based view, the behavioural perspective and AMO (Abilities, Motivation
and Opportunities) theory – are still important. The elements of a people
management system are still those present in an HR system. It is the way in
which these elements are applied that needs to be amended, not the elements
themselves. The proposed change is to build on the foundation provided by
the SHRM concept, not to replace it.
References
Allen, M R and Wright, P (2007) Strategic management and HRM, in The Oxford
Handbook of Human Resource Management, ed P Boxall, J Purcell and P
Wright, pp 88–107, Oxford University Press, Oxford
Armstrong, M and Brown, D (2018) Strategic Human Resource Management:
Back to the Future? A Literature Review, Report 517, Institute for Employment
Studies, Brighton
Beer, M (2015) HRM at a crossroads: comments on ‘evolution of strategic HRM
through two founding books: a 30th anniversary perspective on development of
the eld’, Human Resource Management, 54 (3), pp 417–21
Beer, M, Boselie, P and Brewster, C (2015) Back to the future: implications for the
eld of HRM of the multi-stakeholder perspective proposed 30 years ago,
Human Resource Management, 54 (3), pp 427–38
Beer, M, Spector, B, Lawrence, P, Quinn Mills, D and Walton, R (1984) Managing
Human Assets, The Free Press, New York
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People
Management, https://www.employment-studies.co.uk/resource/strategic-human-
resource-management-practice-case-studies-and-conclusions (archived at https://
perma.cc/L9R9-YQ9P)
Cascio, W F (2015) Strategic HRM: too important for an insular approach,
Human Resource Management, 54 (3), pp 423–26
Chartered Institute of Personnel and Development (2018) New Profession Map,
https://peopleprofession.cipd.org/profession-map (archived at https://perma.
cc/9PV9-HKML)
Delbridge, R and Keenoy, T (2010) Beyond managerialism? International Journal
of Human Resource Management, 21 (6), pp 799–817
4 Introduction
HRM philosophy
HRM philosophy is based on ‘the guiding principles that identify and char-
acterize the value and treatment of employees covered within a particular
HRM system’ (Kepes and Delery, 2007: 390). The following explanation of
the original HRM philosophy was made by Legge (1989: 25), whose analy-
sis of a number of HRM models identied the following common themes:
Storey (2001: 7) noted that the beliefs of HRM included the assumptions
that it is the human resource that gives competitive edge, that the aim should
be to enhance employee commitment, that HR decisions are of strategic
importance and that therefore HR policies should be integrated into the
business strategy.
The HRM philosophy has been heavily criticized by some academics as
being managerialist and manipulative. But as noted by Storey (2007: 6): ‘In
its generic broad and popular sense it [HRM] simply refers to any system of
people management.’ HRM practice today is no longer governed by the
original philosophy, if it ever was.
Models of HRM
Over the years a number of models have dened the philosophy of HRM.
Of these, the ‘Harvard framework’ and the ‘matching model’ have been the
most inuential.
Stakeholder
interests
• Shareholders
• Management
• Employees
• Government
• Unions
HRM policy choices HR outcomes Long-term
consequences
• Employee • Commitment
influence • Congruence • Individual wellbeing
• Human resource • Cost effectiveness • Organizational
flow effectiveness
Situational factors • Reward systems • Societal wellbeing
• Work systems
• Workforce
characteristics
• Business strategy
and conditions
• Management
philosophy
• Labour market
• Unions
• Task technology
• Laws and social
values
The HR system
HRM in organizations is delivered by the HR system. A system is a set of
practices or activities that t together and interact to achieve a purpose. In
a properly functioning HR system, its different parts are interrelated and
jointly supportive in order to enable HR goals to be achieved. The HR sys-
tem operates within the framework provided by the HR architecture.
HR architecture
The HR architecture is a comprehensive representation of all that is in-
volved in HR, not simply the structure of the HR function. As explained by
Becker, Huselid and Ulrich (2001: 12): ‘We use the term HR architecture to
broadly describe the continuum from the HR professionals within the HR
function, to the system of HR related policies and practices, through the
competencies, motivation and associated behaviours of the rm’s employ-
ees.’ It was noted by Hird et al (2010: 25) that: ‘this architecture is seen as a
unique combination of the HR function’s structure and delivery model, the
HR practices and system, and the strategic employee behaviours that these
create’.
Purcell (1999: 38) suggested that the focus should be on ‘appropriate HR
architecture and the processes that contribute to organizational perfor-
mance’. Becker and Huselid (2006: 899) stated that: ‘It is the t between the
HR architecture and the strategic capabilities and business processes that
implement strategy that is the basis of HR’s contribution to competitive
advantage.’
Activities such as organization development, selection interviewing and
testing, talent management, learning and development, performance man-
agement and total reward play an important part in the delivery of HR. But
there is the danger that new and seemingly different techniques become
‘avours of the month’, only to be quickly forgotten when they fail to per-
form. The effectiveness of HR depends on using techniques that are tried,
tested and appropriate, not those that have been promoted vigorously as
‘best practice’ without sufcient supporting evidence.
12 Strategic Human Resource Management (SHRM)
A strong HR system
Bowen and Ostroff (2004) advocated a ‘strong’ HR system to ensure the
more effective implementation of HRM practices. Their model of HRM
viewed HR practices as communications from the employer to employee
and they suggested that ‘when the HRM system is perceived as high in
distinctiveness, consistency, and consensus, it will create a strong situa-
tion’ (Bowen and Ostroff, 2004: 208). They argued that a strong HRM
system can signicantly affect rm performance by creating powerful,
Human Resource Management 13
Human resource
management
Employee Knowledge
wellbeing management
HR services
of their employment from its beginning and onwards). This involves analys-
ing the nature of the experience and taking action to deal with any issues.
The AMO model as described below provides further guidance on the
factors affecting the impact of HRM.
Despite the lack of consensus regarding the HRM practices that are or
should be included under the umbrella term high performance work practices
(HPWPs), there is a common thread across the different proposed sets of
practices: they address the aspects of the AMO model. In other words, HRM
practices that combine as HPWPs can be viewed as ability-enhancing or skill-
enhancing, motivation-enhancing and opportunity-enhancing or empowerment-
enhancing.
Ability
• Sophisticated recruitment
and selection procedures
• Extensive learning and
development processes
• Talent management
programmes
Motivation
• Performance management Individual and
HRM initiatives • Performance pay organizational
• Leadership development performance
Opportunity
• Job design
• Work design
• Career management
programmes
The practice of HRM can be diverse. Dyer and Holder (1988) concluded that
HRM goals vary according to competitive choices, technologies, characteristics
of employees (eg could be different for managers) and the state of the labour
market. Boxall (2007: 48) observed that: ‘Human resource management covers
a vast array of activities and shows a huge range of variations across occupa-
tions, organizational levels, business units, rms, industries and societies.’
Emphasis is placed on the need for HR to be strategic and business-like
and to add value, that is, to generate extra value (benet to the business) by
the expenditure of effort, time and money on HRM activities. The problem
with this approach is that the needs and rights of employees as key stake-
holders in the business can be neglected, even ignored.
HRM has always been located at the interface of potentially conicting forces
within organizations. However, in its quest for legitimacy, HRM has tended
primarily to look up the hierarchy and focus on narrow performance goals, so
neglecting other long-standing values and stakeholders. Unless HRM reasserts
its independence, it is likely to wither both in academic and practitioner circles.
Human Resource Management 19
The mutual gains model suggests that HRM should benet both individuals and
organizations. However, the dominant models within HRM theory and research
continue to focus largely on ways to improve performance, with employee
concerns very much a secondary consideration.
Dundon et al (2017: 100) declared that many employers ‘simply view work-
ers as a disposable means to a protable end’. And Dundon and Rafferty
(2018: 377) argued that:
References
Becker, B E and Huselid, M A (1998) High performance work systems and rm
performance: a synthesis of research and managerial implications, Research on
Personnel and Human Resource Management, 16, pp 53–101, JAI Press,
Stamford, CT
Becker, B E and Huselid, M A (2006) Strategic human resource management:
where do we go from here? Journal of Management, 32 (6), pp 898–925
Becker, B E, Huselid, M A and Ulrich, D (2001) The HR Score Card: Linking
people, strategy, and performance, Harvard Business School Press, Boston, MA
Beer, M, Spector, B, Lawrence, P, Quinn Mills, D and Walton, R (1984) Managing
Human Assets, The Free Press, New York
Boselie, P, Dietz, G and Boon, C (2005) Commonalities and contradictions in HRM
and performance research, Human Resource Management Journal, 15 (3), pp 67–94
Human Resource Management 21
Characteristics of strategy
Strategy has three fundamental characteristics. First, it is forward looking. It
is about deciding where you want to go and how you mean to get there. In
this sense, a strategy is a declaration of intent: ‘This is what we want to do
and this is how we intend to do it.’ Strategies dene longer-term goals but
26 Strategic Human Resource Management (SHRM)
they also cover how those goals will be attained. They guide purposeful ac-
tion to deliver the required result. A good strategy is one that works, one
that in Abell’s (1993: 1) phrase, ensures that organizations adapt to chang-
ing demands and circumstances by ‘mastering the present and pre-empting
the future’. As Boxall (1996: 70) explained: ‘Strategy should be understood
as a framework of critical ends and means.’
The second characteristic of strategy is the recognition that the organiza-
tional capability of a rm (its capacity to function effectively) depends on its
resource capability (the quality and quantity of its resources and their po-
tential to deliver results). This is the resource-based view.
The third characteristic of strategy is that it aims to achieve strategic t –
the need when developing functional strategies such as HR to achieve con-
gruence between them and the organization’s business strategies within the
context of its external and internal environment.
1 Where the organization will be active – what type of products and services
it will offer, what markets it will serve.
2 How it will operate – where it will operate or get its products and services.
3 How it will win – what its competitive advantage will be.
4 What its moves will be – how it will change and grow.
5 How it will be protable – what business model it will follow, as discussed
below.
Strategy in action
Examples of corporate strategies
The following are three examples of how strategies can be expressed formally.
The rst two were set out in the recent reports of the companies and, typi-
cally, are expressed in very broad terms. The third is an internal document
developed by a charity. This expresses the strategy in the form of a balanced
scorecard, a technique conceived by Kaplan and Norton (2001) for provid-
ing a balanced description of what an organization is intending to do, that is,
its strategy, and for measuring its performance. A balanced scorecard, as in
this example, consists of four related perspectives (see Figure 2.1).
GKN delivers innovative technologies that help our customers stay ahead in their
markets and enable us to maintain our competitive edge, ensuring we remain in
higher-value markets. We work with our customers to develop new technologies,
driven by global trends such as fuel efciency, the low-carbon agenda,
electrication, urbanization and population growth, exceptional quality and
customer service. At the same time, we aim to be an employer of choice with a
high-performance culture, motivated people and outstanding leaders, always
ensuring that safety is paramount in all our locations.
Organizational effectiveness
perspective
• Programme development
• Programme delivery
• Process development and
management
• Cost-effectiveness
People perspective
• Leadership behaviour
• Talent management
• Learning and development
• Employee engagement
Developing strategy
Developing strategy is a matter of creating a sense of direction and purpose
and ensuring strategic t. It used to be regarded as a logical, step-by-step affair.
This was described by Whittington (1993) as the classical approach – strategy
formulation as a rational process of deliberate calculation. Conceptually this
involves the following:
1 Dene the mission and the business model that will be used to achieve
that mission.
2 Set objectives.
3 Conduct internal and external scans to assess internal strengths and
weaknesses and external opportunities and threats (a SWOT analysis)
and to understand the political, economic, social, technological, legal
and environmental factors affecting the organization (a PESTLE analysis).
4 Analyse existing strategies and the business model to determine their
relevance in the light of the internal and external appraisal. This may
include gap analysis, which will establish the extent to which environmental
factors might lead to gaps between what could be achieved if no changes
were made and what needs to be achieved. The analysis would also cover
Strategic Management 29
But this model assumes that the development of corporate strategy is a logi-
cal, step-by-step affair, the outcome of which is a formal written statement
that provides a denitive guide to the organization’s intentions. Many peo-
ple still believe and act as if this were the case, but it is a misrepresentation
of reality. In practice the formulation of strategy may not be as rational and
linear a process as some writers describe it or as some managers attempt to
make it. There are limitations to the totally logical model of management
that underpins the concept of strategic human resource management. In the
words of Mabey et al (1998: 74): ‘The reality is… that strategies may not
always be easy to discern, that the processes of decision making may be
implicit, incremental, negotiated and compromised.’
Sparrow et al (2010: 4) asserted succinctly that: ‘Strategy is not rational
and never has been.’ Strategy formulation can best be described as ‘problem
30 Strategic Human Resource Management (SHRM)
It was inclined to take a denitive view of the future, and to extrapolate trend
lines for the key business variables in order to arrive at this view. Economic
turbulence was insufciently considered, and the reality that much strategy is
formulated and implemented in the act of managing the enterprise was ignored.
Precise forecasts ending with derived nancials were constructed, the only
weakness of which was that the future almost invariably turned out differently.
Implementation of strategy
‘Implementation entails converting the strategic plan into action and then
into results’ (Thompson and Strickland, 1996: 20). Dreaming up a strategy
is fairly easy; getting it to work is hard. Kanter (1984: 305) noted that:
‘Many companies, even very sophisticated ones, are much better at generat-
ing impressive plans on paper than they are at getting “ownership” of the
plans so that they actually guide operational decisions.’
The changes taking place through strategy implementation impact on
people. They involve employees in planning and putting them into effect.
They are therefore the concern of the HR function as well as operational
management. HR has a major role in ensuring that innovation or change is
carried out effectively through people. HR needs to be involved in planning
the change and in implementing it by developing and facilitating the intro-
duction of appropriate HR strategies.
ARM is involved in designing chips for mobile phones and a growing number of
other small, low-powered devices, ranging from digital cameras to tablet
computers. But it does not actually make any of the six billion or so chips based
on its designs that are produced each year. Instead, its business model is to earn
revenues from licensing its design technology to semiconductor manufacturers
and from royalties paid each time an ARM-based chip is sold. This model means
that ARM has never had to bear the costs of building and operating its own
factories. At the same time, its customers are able to avoid having to design
chips for their own products from scratch by outsourcing much of their research
and development work to ARM. The business strategy is essentially about
building a partnership of many hundreds of customers.
The continued success of the business depends on people working effectively
together to produce innovative designs. HR activity in ARM is largely about
connecting employees – spread across 30 far-ung sites – with each other, with
their customers and with other external partners across different time zones,
national boundaries and cultures. That means delivering effective communications
and learning and development programmes, and acting with agility.
32 Strategic Human Resource Management (SHRM)
References
Abell, D F (1993) Managing with Dual Strategies: Mastering the present, pre-
empting the future, Free Press, New York
Boxall, P F (1996) The strategic HRM debate and the resource-based view of the
rm, Human Resource Management Journal, 6 (3), pp 59–75
Boxall, P F and Purcell, J (2003) Strategy and Human Resource Management,
Palgrave Macmillan, Basingstoke
Strategic Management 33
Introduction
Strategic human resource management (SHRM) was described by Boxall
(1996) as the interface between strategic management and HRM. From the
former, SHRM derives its focus on providing a sense of purpose and long-
term direction and, in the words of Truss et al (2012: 49), turning ‘strategic
intent into action’. From the latter, SHRM absorbs the HRM belief as ex-
pressed by Boxall and Purcell (2016: 28) that: ‘Human resources belong to
people but they are critical for the basic survival and relative success of or-
ganizations.’
The purpose of this chapter is to dene the concept of SHRM, its charac-
teristics and aims and the processes involved. The next chapter traces the
evolution of SHRM in terms of its underpinning concepts and theories from
its beginnings in the late 1970s to the present day. In Chapter 5, considera-
tion is given to the realities of SHRM and the case for changing the ap-
proach to a revised version of HRM – people management.
Characteristics of SHRM
One of the earlier descriptions of SHRM was made by Hendry and Pettigrew
(1986: 4) who suggested that it had four meanings:
Institutional/
Firm
political
strategy
forces
Resource- Resource
based view of HRM practices dependence,
the firm institutional
Cybernetic Behavioural
agency/ approach
transaction costs
Firm-level outcomes
HR capital pool (performance,
HR behaviours
(skills, abilities) satisfaction,
absenteeism, etc)
Aims of SHRM
The fundamental purpose of strategic HRM is to generate strategic capabil-
ity by ensuring that the organization has the skilled, committed and well-
motivated employees it needs to achieve sustained competitive advantage. It
has two further aims: rst, to achieve t or integration – tting or aligning
HR strategies vertically with business strategies and integrating HR strate-
gies with one another – and second, to provide a sense of direction in an
often turbulent environment so that the business needs of the organization
and the individual and collective needs of its employees can be met by the
development and implementation of coherent and practical HR policies and
programmes.
When considering the aims of SHRM, account ought to be taken but too
often isn’t of ethical considerations – the interests of all the stakeholders in
the organization, employees in general as well as owners and management,
The Concept of SHRM 39
Strategic HRM
Strategic choice
Strategic analysis
● SHRM dened
● Strategic human resource management (SHRM) is an approach to
managing people that deals with how the organization’s goals will be
achieved through its human resources by means of integrated HR
strategies, policies and practices. It is based on the fundamental
proposition that the human resources of an organization play a
strategic role in its success.
● Strategic HRM is the interface between HRM and strategic
management.
● SHRM described
● In essence, SHRM is conceptual. It is underpinned by a number of
well-established theories. But it also deals with the practice of HRM
by emphasizing the importance of ‘strategic t’ – the achievement of
integration or ‘t’ between HR and business strategies and between
individual HR strategies, and by stressing the benets of taking a
longer-term view of where HR should be going and how it should get
there.
The Concept of SHRM 41
● Aim of SHRM
● The aim of strategic HRM is to generate organizational capability by
ensuring that the organization has the skilled, engaged, committed
and well-motivated employees it needs to achieve sustained
competitive advantage.
● SHRM as a mind-set
● SHRM is a mind-set which only becomes real when it produces
actions and reactions that can be regarded as strategic, either in the
form of overall or specic people strategies or strategic behaviour on
the part of HR professionals working alongside line managers.
References
Becker, B E et al (1997) HR as a source of shareholder value: research and
recommendations, Human Resource Management, 36 (1), pp 39–47
Boxall, P F (1996) The strategic HRM debate and the resource-based view of the
rm, Human Resource Management Journal, 6 (3), pp 59–75
Boxall, P F (2007) The goals of HRM, in Oxford Handbook of Human Resource
Management, ed P Boxall, J Purcell and P Wright, pp 48–67, Oxford University
Press, Oxford
Boxall, P F and Purcell, J (2016) Strategy and Human Resource Management, 4th
edn, Palgrave Macmillan, Basingstoke
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People
Management, https://www.employment-studies.co.uk/resource/strategic-human-
resource-management-practice-case-studies-and-conclusions (archived at https://
perma.cc/9R62-3KT8)
Fombrun, C J, Tichy, N M and Devanna, M A (1984) Strategic Human Resource
Management, Wiley, New York
Hendry, C and Pettigrew, A (1986) The practice of strategic human resource
management, Personnel Review, 15 (5), pp 2–8
Kaufman, B E (2015) The evolution of strategic HRM as seen through two
founding books: a 30th anniversary perspective on development of the eld,
Human Resource Management, 54 (3), pp 389–407
McWilliams, A, Siegel, D S and Wright, P M (2006) Corporate social responsibility:
strategic implications, Journal of Management Studies, 43 (1), pp 1–12
Quinn Mills, D (1985) Planning with people in mind, Harvard Business Review,
July–August, pp 97–105
42 Strategic Human Resource Management (SHRM)
Schuler, R S (1992) Strategic human resource management: linking people with the
strategic needs of the business, Organizational Dynamics, 21 (1), pp 18–32
Schuler, R S and Jackson, S E (1987) Linking competitive strategies with human
resource management practices, Academy of Management Executive, 1 (3),
pp 207–19
Storey, J (1989) From personnel management to human resource management, in
New Perspectives on Human Resource Management, ed J Storey, pp 1–18,
Routledge, London
Truss, C and Gratton, L (1994) Strategic human resource management: a conceptual
approach, International Journal of Human Resource Management, 5 (3),
pp 663–86
Truss, C, Mankin, D and Kelliher, C (2012) Strategic Human Resource
Management, Oxford University Press, Oxford
Wright, P and McMahan, G (1992) Theoretical perspectives for human resource
management, Journal of Management, 18 (2), pp 295–320
The evolution 04
of SHRM
Introduction
This chapter deals with how the notion of strategic HRM (SHRM) emerged
in the 1980s and what has happened to it since. Initially, it covers the devel-
opment of the important concept of strategic t (vertical and horizontal in-
tegration). As Wright and McMahan (1992: 52) observed, strategic t refers
to the two dimensions that distinguish SHRM: ‘First, vertically, it entails the
linking of human resource management practices with the strategic manage-
ment processes of the organization. Second, horizontally, it emphasizes the
coordination or congruence among the various human resource manage-
ment practices.’ This idea is fundamental to SHRM. Schuler (1992:18)
stated that:
Initially SHRM theorists focused on vertical t, but the importance of hori-
zontal t (a ‘congurational’ approach involving both vertical and horizon-
tal t) was quickly recognized.
The idea of strategic t is associated with the issue of what should be
done about formulating HR strategies where the basic choice is between the
principles of ‘best t’ or ‘best practice’. The development of views on this
issue is covered in the second section of the chapter.
SHRM is inuenced by a number of theories that support the principle of
adopting a strategic approach to managing people (the resource-based view)
or explain the factors that affect strategy and should be taken into account
44 Strategic Human Resource Management (SHRM)
Perspectives on HRM
Delery and Doty (1996: 802–03) led the debate by identifying three HRM
perspectives:
1 Employment security.
2 Selective hiring.
3 Self-managed teams.
4 High compensation contingent on performance.
5 Training to provide a skilled and motivated workforce.
6 Reduction of status differentials.
7 Sharing information.
It was contended by Schuler and Jackson (1987) that to achieve the maxi-
mum effect it is necessary to match the role characteristics of people in an
organization with the preferred one of these.
Strategic conguration
Another approach to best t is the proposition that organizations will be
more effective if they match one of the ideal types dened by theories such
as those produced by Mintzberg (1979) and Miles and Snow (1978). This
increased effectiveness is attributed to the internal consistency or t between
the patterns of relevant contextual, structural and strategic factors.
The typology of organizations produced by Mintzberg classied them
into ve categories: simple structure, machine bureaucracy, professional bu-
reaucracy, divisionalized form, and adhocracy. Miles and Snow identied
three types of what they called ‘ideal’ organizations:
There may be merit in both approaches where the debate is between general
principles/bundles (training and development, stafng, compensation and benets,
communication and participation, and planning) and the manner in which they
are carried out… It seems that the ‘best t’ and ‘best practice’ approaches of the
HR–performance relationship are not necessarily mutually exclusive. On the
contrary, they may be combined to provide a more holistic picture of the subject.
50 Strategic Human Resource Management (SHRM)
Resource-based SHRM can produce what Boxall and Purcell (2016) refer to
as ‘human resource advantage’. The aim is to develop strategic capability.
This means strategic t between resources and opportunities, obtaining
added value from the effective deployment of resources, and developing
managers who can think and plan strategically in the sense that they under-
stand the key strategic issues and ensure that what they do enables the stra-
tegic goals of the business to be achieved. In line with human capital theory,
the resource-based view emphasizes that investment in people increases
their value to the rm. It proposes that sustainable competitive advantage is
attained when the rm has a human resource pool that cannot be imitated
or substituted by its rivals.
Boxall (1996: 66) observed that the strategic goal emerging from the
resource-based view was to ‘create rms which are more intelligent and ex-
ible than their competitors by hiring and developing more talented staff and
by extending their skills base’. Resource-based strategy is therefore concerned
with the enhancement of the human or intellectual capital of the rm.
● the ability (A) to perform (they can do the job because they have the necessary
knowledge, skills and aptitudes);
the motivation (M) to perform (they will do the job because they want to do
it or feel they must do it); and
● the opportunity (O) to perform (their work structure and environment provide
the necessary support and avenues for expression).
They also noted that someone’s ability, motivation and opportunity to per-
form would depend on two groups of factors: 1) the individual’s experience,
intelligence, health, personality etc; 2) the situational factors of HR policies
and practices orientated to creating ‘AMO’ and related variables in the pro-
duction system and the organizational context.
Stakeholder theory
Stakeholder theory as developed by Freeman (1984) states that a number of
different groups are stakeholders in organizations, including shareholders,
managers, employees, customers, government and the public at large. He
quoted (Freeman, 1984: 31) the Stanford Research Institute’s 1963 deni-
tion of stakeholders as ‘those groups without whose support the organiza-
tion would cease to exist’. Organizations must take account of these various
interests when formulating and implementing HR strategy and policies.
54 Strategic Human Resource Management (SHRM)
Focus on implementation
SHRM commentators began in the 2000s to focus more on implementation
issues (Barney, 2001, Bos-Nehles et al, 2006, Guest and Bos-Nehles, 2013).
As Lengnick-Hall et al (2009: 79) observed:
There is a growing recognition that intended SHRM practices may be different from
realized SHRM practices and to simply rely upon what is stated rather than what is
actually in place may lead to ineffective implementation as well as ambiguous results
in studies of the relationship between HR practices and organizational performance.
The construct of employee line-of-sight to strategic objectives provides more insight
into the implementation process. If employees don’t understand or know how to
contribute to strategic objectives, they are unlikely to be effective in doing so.
A multi-stakeholder approach
Early researchers such as Schuler and Jackson (1987) and Becker et al (1997)
concentrated largely on the business perspective, implying that the only stake-
holders who matter are the shareholders. Delery (1998) commented on the
The Evolution of SHRM 55
SHRM’s basic conceptualization has remained the same over the three decades.
The central elements are: HRM as the people management component of
organizations, a holistic systems view of individual HRM structures and
practices, a strategic perspective on how the HRM system can best promote
organizational objectives, HRM system alignment with organizational strategy
and integration of practices within the system, and emphasis on the long-run
benets of a human capital/high-commitment HRM system.
56 Strategic Human Resource Management (SHRM)
But a literature review of SHRM by Delery and Roumpi (2017) led to the con-
clusion that the eld is going in circles as it is evolving. They suggested that
attempts to explain the ‘black box’ between HRM practices and rm perfor-
mance have shown that human capital resources are at least partially the link
between HRM practices and rm performance. But there is nothing new in this.
SHRM researchers such as Barney and Wright (1998) noted this relationship
from the very beginning. Delery and Roumpi argued that this brings the eld
full circle to the basic quest of specifying the HRM practices and their combina-
tions that are associated with higher levels of organizational effectiveness.
A model of the evolution of SHRM is shown in Figure 4.1.
Origins
Strategic
HRM • The Harvard framework
management
• The Michigan framework
Behavioural
Best fit vs best AMO
perspective
practice
Stakeholder
Implementation Performance
theory
The Evolution of SHRM 57
The evolution of SHRM has not been linear. Different concepts have often
emerged concurrently and to a certain extent the process has been
circular. The main concepts are:
References
Ahmad, S and Schroeder, R (2003) The impact of human resource management
practices on operational performance: recognizing country and industry
differences, Journal of Operations Management, 21 (1), pp 19−43
58 Strategic Human Resource Management (SHRM)
Introduction
The reality of strategic HRM (SHRM) as it has evolved over the years is that
it has remained over-concerned with the interests of the business and its
shareholders. But it is also an academic construct that seems to leave practi-
tioners cold. In this chapter the reality and limitations of the SHRM concept
are discussed and a case is made for modifying the approach.
In his 2015 article ‘HRM at a crossroads’, Michael Beer looked at what had
happened to SHRM in the 30 years since he and his colleagues wrote
Managing Human Assets. He commented on the pluralistic view expressed
in that book, with its emphasis on the need to adopt a multi-stakeholder
64 Strategic Human Resource Management (SHRM)
As often described, SHRM focuses on the rst of these assumptions, pays lip
service to the second and to a large extent ignores the third. A different
approach is required and this can be described under the heading ‘people
management’.
Reecting on the case study interviews the IES team was struck by the absence
in current HR language of the term Strategic Human Resource Management.
Indeed, although the function commonly calls itself HR, and often wants to be
more strategic in its orientation, it tends not even to talk much about Human
The Reality of SHRM 65
Resource Management. While the somewhat confusing mix of terms may not be
helping academics to dene and study the concept and HR functions to attract
the recognition they seek, the perhaps less jargon-ridden and less alienating term
‘People Management’ does seem to be coming to the fore again and can apply
both at strategic level and to management practice. We hope the term People
Management leads to the wider use of the term People Strategy to cover the big
picture of employment and workforce management as we have found it a useful
term in reecting on this research. Maybe the proponents of strategic HRM
had some very pertinent ideas but used jargon which got in the way of people
management becoming genuinely more strategic.
The idea of people strategy provides a broader view of the ways in which
people should be managed in organizations than that of strategic HRM.
A denition is required of the difference between people management
and human resource management (it should not just be a name change).
This is done in the next chapter.
● People management
● ‘People management’ is increasingly being used as an alternative to
‘human resource management’ but it should mean more than just a
change to a more acceptable name.
● The fundamental aim of people management is to ensure that the
organization has the knowledgeable, skilled, engaged and productive
people it needs. This is, of course, the same as the basic aim of
human resource management. But the ways in which it is achieved
are different.
● People management aims to achieve a balance between the needs of
employees and those of the other stakeholders. It pursues
employment policies that are socially legitimate and produce benets
for both employees and employers.
● Strategic people management is concerned with the ways in which
people in an organization should be managed in order to satisfy the
interests and needs of its stakeholders now and in the future.
● The idea of strategic people management provides a much broader
view of the ways in which people should be managed in organizations
than that of strategic HRM.
References
Armstrong, M and Brown, D (2018) Strategic Human Resource Management: Back
to the Future? A Literature Review, Institute for Employment Studies, https://
www.employment-studies.co.uk/system/les/resources/les/519.pdf (archived at
https://perma.cc/586S-NBFY)
Beer, M (2015) HRM at a crossroads: comments on ‘evolution of strategic HRM
through two founding books: a 30th anniversary perspective on development of
the eld’, Human Resource Management, 54 (3), pp 417–21
Beer, M, Boselie, P and Brewster, C (2015) Back to the future: implications for the
eld of HRM of the multi-stakeholder perspective proposed 30 years ago,
Human Resource Management, 54 (3), pp 427–38
Beer, M et al (1984) Managing Human Assets, The Free Press, New York
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People
Management, https://www.employment-studies.co.uk/resource/strategic-human-
resource-management-practice-case-studies-and-conclusions (archived at https://
perma.cc/L9R9-YQ9P)
The Reality of SHRM 67
Table 6.2 Comparison between strategic HRM and strategic people management
(continued )
The Concept of People Management 75
Conclusion
The concept of strategic people management is built on the ideas contained
in the concept of strategic HRM. But it provides a broader view of the ways
in which employees should be treated. The differences between these ap-
proaches were outlined in Table 6.1.
The main precepts of strategic people management are the needs for stra-
tegic t, a multi-stakeholder approach and, as Walton (1974) proposed
some time ago (although just as relevant today), the development of human
capacities, growth and security, social integration, rights and representation,
the social relevance of work, a safe and healthy working environment,
work–life balance and adequate and fair rewards. But a fundamental char-
acteristic of strategic people management is that it is about adopting a prag-
matic approach to both the development and implementation of people
strategies.
76
Underpinning capabilities
Senior leaders and HR work together on strategic people issues
Professional and business capabilities of HR
People management capability in the line
HR metrics and information systems
References
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People Management,
Institute for Employment Studies, London, https://www.employment-studies.co.
uk/resource/strategic-human-resource-management-practice-case-studies-and-
conclusions (archived at https://perma.cc/DA5N-FJP6)
Krekel, C, Ward, G and DeNeve, J-E (2019) Employee Wellbeing, Productivity, and
Firm Performance, Saïd Business School, Oxford
78 People Strategy in General
Peccei, R (2004) Human Resource Management and the Search for a Happy
Workplace, Erasmus Research Institute of Management (ERIM), Rotterdam
PricewaterhouseCoopers (2008) The Business Case for Wellness Programmes,
PWC, London
Rawls, J (1973) A Theory of Justice, Oxford University Press, Oxford
Walton, R E (1974) Improving the quality of working life, Harvard Business
Review, May/June, pp 12–16
The nature and 07
practice of
people strategy
Introduction
People strategy species what the organization intends to do about people
management. The differences between strategic people management and
strategic HRM were set out in Chapter 6. The differences between people
strategy and the traditional approach to HR strategy broadly correspond
with these. In essence, people strategy adopts the two guiding principles of
strategic people management: 1) that a multi-stakeholder approach is
needed which aims to balance the interests and needs of the two major
stakeholders, owners (shareholders) and employees, as well as catering for
the requirements of other stakeholders – customers, suppliers and the com-
munity; 2) that employees should be regarded as people rather than as
disposable means to achieve protable ends. In contrast, the traditional ap-
proach to HR strategy tended to focus more on meeting the needs of the
business and supporting its aim to increase shareholder value (or in not-for-
prot and government organizations, fullling their purpose).
People strategy as described in this chapter covers broadly the same areas
of people management as HR strategy. Traditionally, commentators, including
those quoted in this chapter, referred mainly to HR strategy. The shift to peo-
ple strategy has taken place more recently, led by the Institute for Employment
Studies as cited in Chapter 5. But the question may be posed: ‘What’s in a
name?’ Many strategies described as HR strategies, such as those in the case
study organizations described later in this chapter, will adopt a people man-
agement approach. Strategies called people strategies will have characteristics
that resemble traditional HR strategies. The answer to the question is that
there is a difference, although this is one of perspective and emphasis rather
than of content. People management recognizes that high levels of economic
or operational performance need to be sustained. It was argued by Boxall
80 People Strategy in General
(2013: 59) that: ‘HR strategy is part and parcel of a larger business model, and
it fails if it does not serve the economic imperatives that are essential to that
model.’ But it is also recognized that organizations have obligations to all
their stakeholders. The standards produced by the CIPD (2018) state that:
‘Stakeholders and their interests are integral to the best interests of the or-
ganization and stakeholders include both employees and owners… Every or-
ganization is part of wider society and has a responsibility to respect its social
contract as a corporate citizen and operate in a manner that is sustainable.’
These concerns are the fundamental tenets of people strategy.
This chapter covers the nature and features of people strategy and ap-
proaches to its evaluation. It also includes four case studies produced by the
Institute for Employment Studies.
EXAMPLE
UK examples of broad strategic statements of intent
AEGON
Boots
GlaxoSmithKline
We want GSK to be a place where the best people do their best work.
Lands’ End
The overall HR strategy is based on the principle that staff who are enjoying
themselves, are being supported and developed, and who feel fullled and
respected at work, will provide the best service to customers.
High-performance management
High-performance management aims to make an impact on the perfor-
mance of the organization through its people in such areas as productivity,
quality, levels of customer service, growth, prots and, ultimately, the deliv-
ery of increased shareholder value. The objective is to achieve this by rigor-
ous recruitment and selection procedures, extensive and relevant training
and management development activities, incentive pay systems and perfor-
mance management processes. As a bundle, these practices are often called
high-performance work systems (HPWS).
High-involvement management
High-involvement management practices were described by Wood (2010:
410) as follows:
84 People Strategy in General
High-commitment management
One of the characteristics of the concept of HRM is the notion of mutuality,
the belief expressed by Walton (1985) that organizations consist of people
with shared interests – management and employees are interdependent and
both benet from this interdependency. According to Walton, this meant
that organizations had to abandon their traditional emphasis on control and
replace it with a commitment strategy, which involved giving employees
broader responsibilities, encouraging them to contribute and helping them
to achieve satisfaction from their work. This was the basis for the approach
known as high-commitment management, described by Wood (1996: 41) as:
‘A form of management which is aimed at eliciting a commitment so that
behaviour is primarily self-regulated rather than controlled by sanctions and
pressures external to the individual, and relations within the organization
are based on high levels of trust.’
The three broad strands to the Organization and People Strategy at Diageo are:
Strategic aim
The overall strategic aim of the MHCLG people strategy is ‘to help create
great places to live and work right across the community and to back com-
munities to come together and thrive’.
Our goal is to have skilled, talented, diverse and high-performing people, who are proud to work for
MHCLG and are supported and trusted by empowering and inclusive leaders.
Regional resourcing ‘Agile Resourcing’ Early careers offer Health and Performance
plans strategy including ‘Advance’ wellbeing offer management review
Supporting the MHCLG Success profiles, Core curriculum, Employee assistance, SCS leadership offer,
Group improved job design, developing professions, specialist training inclusive
attraction strategy accelerating talent and support leadership for G6/7
The Nature and Practice of People Strategy 89
Conclusions
The people management team at MHCLG remarked that what they had
learned in developing and implementing the plan was more than the impor-
tance of the vertical alignment of HR priorities with the business strategy. In
addition, they had learned that the plan had to be exible and emerge from
discussions with members of the department and their leaders. That exibil-
ity and involvement had to operate around a core of continuing key areas
and priorities.
The team noted that the People Plan had been invaluable because it helped
them to focus activity and not respond to every short-term ‘bright idea’.
The HR strategy
Each department and function in LSE is subject to a review by the School’s
Senior Management Committee every ve years of its purpose, activities and
effectiveness. The last review led to the HR Division’s 5–10-year strategic
plan. This plan has six pillars, as illustrated in Figure 7.2, to coordinate and
focus the division’s activities. Each pillar is split further into two themes and
subsidiary work streams which are specied and planned. Shorter-term pri-
orities are set out in a rolling three-year Strategic Priorities paper which is
an aggregated series of annual operational plans and current priorities that
are reviewed and updated each year. This duality of approach, with long-
term strategy and shorter-term annual plans, is critical to being able to de-
liver on their longer-term growth and development aims, while also being
exible and responsive and being seen to deliver on HR’s key functions.
It is noteworthy that the rst pillar in the Strategic Plan is ‘Delivering
operational effectiveness and infrastructure’. As observed by the Head of
HR Policy and Employee Relations, unless routine HR systems and work-
ows are effective and efcient and the measures are in place to demonstrate
this, and unless HR staff have the capability to support managers and staff
effectively, then HR will not have the time nor the credibility to address a
more strategic and inuential agenda.
90
Delivering
operational Enhancing Strengthening Providing Developing
effectiveness Building an reward, employee grounded HR leadership and
and excellent benefits and engagement policy, advice management
infrastructure workforce recognition and wellbeing and support capability
Contribute towards
Continue to Conduct a
Improving the a development
develop reward structured
quality of culture where all Proactively pursue
and benefit series of
information and staff are both operational Provision of
strategies that internally and
data that is encouraged to and policy proactive and
enable LSE to externally run
available to the become the best opportunities to pragmatic HR
differentiate itself programmes
school to support they can be in their improve equity, advice and support
from its immediate designed to
greater evidence- roles, and to be in diversity and through the HR
peers and that are significantly
based decision a position to inclusion across partner model
reflective of LSE’s enhance senior
making on staffing pursue the career the school
unique character leadership
matters opportunities
and position capability
available to them
The Nature and Practice of People Strategy 91
Conclusions
Indi Seehra, Director of Human Resources, and Louise Handley, Head of
Policy and Employee Relations, point out that the challenges of an increas-
ingly complex and unpredictable Higher Education environment, in which
multiple performance goals and stakeholder agendas are having to be ad-
dressed, make the requirements for an HR Strategy even more essential and
relevant now than in the past.
But they emphasize the need for strategy to be a process rather than just
a plan, a process which links the macro and the micro, the longer-term
human capital development objectives with shorter-term HR operational
activity and service delivery needs, and which engages people to deliver on
the plans – senior managers to shape and fund the activity, and staff to re-
spond with higher levels of engagement and performance.
Anchor Homes
Anchor Homes, the care home division of Anchor Trust, is England’s largest
provider of residential care for older people. Anchor’s workforce was over
9,000 people in 2018. Anchor Trust has recently merged with Hanover
Housing Association to form Anchor Hanover.
Revolution Bars
Revolution Bars currently manage an estate of 79 bars under two brands,
Revolution and Revolución de Cuba. Retailers have been facing a difcult
climate of rising costs and falling footfall on the high street and Revolution
Bars is no exception; there are nancial problems. But the company is sur-
viving and as the chairman has put it: ‘Revolution’s 3,200 people, most of
whom work in the bars, provide the outstanding customer experience that
is at the heart of our strategy.’
The existence of the plan means that there is a much clearer overall direc-
tion for all people management initiatives aligned to the business strategy
and the culture and values supporting its delivery. Increasingly, the people
development strategy and HR initiatives are being adapted and used to shift
the culture and behaviours in the company so as to better t the current and
future environment on the high street. The planning process has changed
from a ‘maintain’ people plan focused on solving immediate problems to
something much more transformational.
(continued )
The Nature and Practice of People Strategy 95
London ● Get an HRM strategy but keep it close ‘Never make your
School of to immediate operational needs. HR strategy too
Economics ● Recognize the need for the strategy to strategic –
be a process rather than just a plan: a operations need to
process which links the macro with the be closely linked to
micro, the longer-term capital strategy.’
development objectives with the Indi Seehra
shorter-term HRM operational activity Director of Human
and service delivery needs. Resources
● Engage people to deliver the plans:
senior managers to shape and fund the
activity and staff to respond with higher
levels of engagement and performance.
● Shape and tailor your strategy to suit
your own specic setting.
● Recognize that how you develop and
deliver the strategy is at least as
important as the content.
● Keep it within the ‘sphere of the
possible’ and ensure that your
strategies are realistic and grounded.
Anchor ● Make sure that the HR agenda is not a ‘Have a Board that
Homes specialist agenda worked on in a understands the
darkened room by HR professionals. people agenda as
Make sure business strategies and well as nance.
policies fully incorporate HR issues. Make sure the
● Focus on the priorities from both a Board scrutinizes
customer and a workforce perspective. progress, not just
● Ensure that the HR function stays close setting direction
to the business and listens to what and agreeing
managers say they want from HR. procedures.’
Jane Ashcroft
● Adopt a transparent management style
CEO Anchor
and communicate with, listen to and
Hanover
involve staff.
● Balance necessary control with giving
people the chance to feel like
individuals, use initiative and take
responsibility for their work.
(continued )
96 People Strategy in General
References
Armstrong, M and Baron, A (2002) Strategic HRM: The route to improved
business performance, CIPD, London
Armstrong, M and Long, P (1994) The Reality of Strategic HRM, Institute of
Personnel and Development, London
Benson, G S, Young, S M and Lawler, E E (2006) High involvement work practices
and analysts’ forecasts of corporate performance, Human Resource
Management, 45 (4), pp 519–27
Boxall, P F (1996) The strategic HRM debate and the resource-based view of the
rm, Human Resource Management Journal, 6 (3), pp 59–75
Boxall, P F (2013) Mutuality in the management of human resources: assessing the
quality of alignment in employment relationships, Human Resource
Management Journal, 23 (1), pp 3–17
Boxall, P F and Purcell, J (2003) Strategy and Human Resource Management, 1st
edn, Palgrave Macmillan, Basingstoke
Boxall, P F and Purcell, J (2016) Strategy and Human Resource Management, 4th
edn, Palgrave Macmillan, Basingstoke
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management :
Case Studies and Conclusions: from HR Strategy to Strategic People
Management, https://www.employment-studies.co.uk/resource/strategic-human-
resource-management-practice-case-studies-and-conclusions (archived at https://
perma.cc/569M-RFQQ)
98 People Strategy in General
Introduction
This chapter starts with a denition of the principles governing the develop-
ment of people strategy. It is then suggested that an evidence-based approach
is desirable but that there are limits to an entirely rationalistic one. A de-
scription of the process of formulating people strategy follows and the chap-
ter concludes with recommendations from practitioners on how this should
be done.
Development principles
There are three principles governing the development of people strategy:
An analysis of possible people analytics and their use is given in Table 12.2.
In each area the analysis would investigate trends and, whenever possi-
ble, the interrelationships between different types of data and between the
data and performance. This evidence could be used to reach conclusions
about any action required or to evaluate the effectiveness of action already
taken. Predictive analytics uses data to predict trends and therefore provide
guidance on people strategy, and it is the most advanced form of people
analytics.
102 People Strategy in General
Anyone who, like the writer of this book, has sat for a number of years on
an executive board and played a full part in business decisions knows that
this is the way in which strategic decisions are typically made at the top level
in an organization.
When considering approaches to the formulation of people strategy it is
therefore necessary to emphasize the interactive (not unilinear) relationship
between business strategy and people strategy. Boxall (1993) stressed that
the strategy formation process is complex, and excessively rationalistic
models that advocate formalistic linkages between strategic planning and
people planning are not particularly helpful to our understanding of it.
Process is important. Following their research in 30 well-known UK com-
panies, Tyson and Witcher (1994: 22) concluded that:
The preferred ‘outside-in’ starts with the customer, competitor and other is-
sues the business faces. The HR strategy then derives directly from these chal-
lenges to ‘create real solutions and add real value’ (Wright et al, 2004: 37). They
made the point that ‘the most advanced linkage was the “integrative” linkage
in which the senior HR executive was part of the top management team, and
was able to sit at the table and contribute during development of the business
strategy’ (p 37). Their recommendations on adopting an outside-in approach
were (pp 45–46):
I start with the top line, the four or ve things which are the strategic
platform for the company. I get my managers together to look at the
implications. We then pull it together so that it is all derived from the
original strategic platforms and then work top-down and bottom-up to get
the amalgam of what we can achieve. This then feeds into the nal
operating plan so we can agree budgets.
Developing People Strategy 105
1 Who are the people who are likely to have legitimate interests in or
concerns about what we are proposing to do?
2 What are those interests and concerns?
3 To what extent does our proposed course of action meet or conict with
these interests and concerns?
4 In the light of the answer to question 3, do we need to modify the proposal?
5 How should we take account of these interests and concerns in our plans
for implementing the proposal?
Developing People Strategy 107
Recognition
Great choice Reward
Fun Development
Good value Membership
Service excellence Communication
Customers Employees
Selfridges plc
Suppliers Community
Financial stability Social responsibility
Growth opportunities Employment opportunities
Partnership Improved quality of local life
Quality presentation
Shareholders
Return on investment
Accountability and credibility
Stability
Market leadership
108 People Strategy in General
If partly or not at
Not all, what needs to
To what extent does HR strategy: Wholly Partly at all be done about it?
1 Support the achievement of
business goals?
2 Promote the wellbeing of all
employees?
3 Contribute to enhancing the levels
of employee engagement?
4 Enable the organization to recruit
and retain the talented people it
needs?
5 Enable the organization to develop
the talented people it needs?
6 Focus on improving organizational
performance?
7 Focus on improving individual
performance?
8 Ensure that people are rewarded
according to their contribution?
9 Contribute to the creation of a
positive employee-relations climate?
Actions required
Issues identied Reasons for Proposals to
to implement
by analysis issues deal with issues
the proposals
exist at a point in time, but circumstances will change and t no longer ex-
ists. An excessive pursuit of ‘t’ with the status quo will inhibit the exibility
of approach, which is essential in turbulent conditions. This is the ‘temporal’
factor in achieving t identied by Gratton et al (1999). An additional factor
which will make the achievement of good vertical t difcult is that the busi-
ness strategy may not be clearly dened – it could be in an emergent or
evolutionary state. This would mean that there could be little or nothing
with which to t the people strategy.
The process of integration should start with an analysis of the business
model. As dened by Magretta (2002: 87), business models ‘are at heart
stories – stories that explain how enterprises work… They answer the fun-
damental questions every manager needs to ask: How do we make money in
this business? What is the underlying economic logic that explains how we
can deliver value to customers at an appropriate cost?’ She explained that a
business model ‘focuses attention on how all the elements in a system t into
a working whole’ (Magretta, 2002: 90). It is essential for those responsible
for formulating people strategy to understand the business model and how
it affects people management.
It is also essential to remember that business models develop and change –
the process of ‘business model innovation’. The role of the people manage-
ment function in dealing with business model change was spelt out by
Sparrow et al (2010: 14–15) as follows:
A central task for HR directors is to identify how they as a leader, and how their
function’s own delivery model, structure, and the people processes it manages,
add value during periods of business model change. In order for organizations
110 People Strategy in General
to make their models work, they have to understand the potentially deep
implications they have for people management. People management experts
have to make sure that those engineering the new business models are working
on assumptions that can reasonably be executed.
Within the context of the business model analysis, a more detailed analysis
of the business strategy should be conducted, using a framework such as that
illustrated in Table 8.6 to identify any specic people management areas that
need to be developed to support the achievement of the business strategy.
What needs
Possible HR to be done
Content supporting activities about it?
● Innovation management
● Maximize added value Reward
● Productivity management
● Customer service High-performance
● Quality working*
● Satisfy stakeholders – Smart working*
investors, shareholders, Agile working*
employees, elected Other
representatives
*Described in Chapter 15
Developing People Strategy 111
they will meet the needs of both the business and the people it employs.
The costs and the benets should be spelt out.
An implementation plan – how, when and by whom the people strategy
initiatives will be implemented. The plan should indicate what steps will
need to be taken and should take account of resource constraints and
the need for communications, involvement and training. The priorities
attached to each element of the strategy should be indicated and a
timetable for implementation drawn up. The plan should state who will
be responsible for the development and implementation of the strategy.
Be really strong on consultation and involvement, not just with leaders, but
also right across staff levels and functions and locations.
● Be strongly evidence based, with progress particularly on the HR
operational side demonstrated through regular reporting and discussion
of appropriate HR metrics.
● Shape and tailor your strategy to suit your own specic setting.
● Keep it within the ‘sphere of the possible’ and ensure that your strategies
are realistic and grounded.
● Focus on the priorities from both a customer and a workforce perspective.
● Ensure that the HR function stays close to the business and listens to
what managers say they want from HR.
● Get a good understanding of the environment and the industry so that
you can show how people development programmes will address the key
challenges facing the business and how you are meeting them.
● Be curious, get into and understand every aspect of the organization’s culture –
this is essential if you want to inuence and change it.
Developing People Strategy 113
UNICEF’s total staff complement is 8,594, drawn from 178 nationalities located at
Headquarters (New York and Geneva) and in eight Regional Ofces.
Purpose of the strategic review
‘How well is UNICEF managing and enhancing its human resource capacity to
reach its strategic objectives?’
Key questions
References
Angrave, D et al (2016) HR and analytics: why HR is set to fail the big data
challenge, Human Resource Management Journal, 26 (1), pp 1–11
Boxall, P F (1993) The signicance of human resource management: a reconsidera-
tion of the evidence, International Journal of Human Resource Management,
4 (3), pp 645–65
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People
Management, https://www.employment-studies.co.uk/resource/strategic-human-
resource-management-practice-case-studies-and-conclusions (archived at https://
perma.cc/JVX5-J6DY)
116 People Strategy in General
Introduction
The challenge of people strategy is putting it into effect: what counts is what
works. As Gratton (2000: 30) commented: ‘There is no great strategy, only great
execution.’ Strategies cannot be left as generalized aspirations or abstractions.
But implementation is not always easy: intent does not necessarily lead to
action.
Too often, strategists act like Charles Dickens’ character Mr Pecksmith,
who was compared by Dickens (Martin Chuzzlewit, 1843, 2004: 23) to ‘a
direction-post which is always telling the way to a place and never goes
there’. It is necessary to avoid saying, in effect: ‘We need to get from here to
there but we don’t know or care how.’
This chapter starts with an examination of the problems raised by imple-
mentation and continues with descriptions of the approach to implementa-
tion and the processes involved. It concludes with analyses of the role of line
managers and people management specialists.
Wright and Nishii (2013) commented that HR strategies are not always
implemented and if they are, may be implemented in ways that differ from
the original intention. As pointed out by Khilji and Wang (2006), it is neces-
sary to distinguish between ‘intended HRM’ which refers to HR practices
formulated by policy makers, and ‘implemented HRM’, which refers to HR
practices as operationalized in organizations.
Research by Guest and Conway (2011: 1700) led to the conclusion that:
‘There are three elements in a logical model of HR effectiveness. HR prac-
tices must be present, they must be effective and they must be effectively
implemented.’
Gratton (1999: 202) noted ‘the disjunction between rhetoric and reality
in the area of human resource management, between HRM theory and
HRM practice, between what the HR function says it is doing and how that
practice is perceived by employees, and between what senior management
believes to be the role of the HR function, and the role it actually plays’. The
factors identied by Gratton which contribute to creating this gap were:
To which could be added failure to take account of the strategic needs of the
business (which may be difcult because they are changing too rapidly or no
Implementing People Strategy 119
Performance
management
Rewards
Approach
Corporate HR HR Organizational
strategy strategy Design HR practice ? outcomes performance
Recruitment
The gap
2 Involve
Involve as many line managers and other employees as possible in formulat-
ing the strategy – people support what they help to create. Everyone can be
involved by conducting an employee survey asking for reactions to a pro-
posed policy or practice. The survey should be followed up by discussions on
its implications for HR strategy and practice. This can be done through for-
mal consultation processes or through workshops and focus groups whose
members are representative of the different constituencies in the organization
and who can be encouraged to pass on what they have been doing to their
colleagues. Involvement can make use of the analytical tools described in
Chapter 8. The questions can be answered individually and then discussed by
a group to gain greater understanding and as much consensus as possible.
3 Communicate
It is essential to communicate details of the strategy to line managers and
employees. The communication should explain what is proposed, why it has
been proposed (indicating the benets both to the organization and employ-
ees), how it will work, who will be affected and the timetable for introduc-
tion. As far as possible it should be by word of mouth to individuals or
through team brieng or brieng group arrangements involving everyone in
an organization, level by level, in face-to-face meetings to present, receive
and discuss information.
4 Build skills
New strategies may require the use of new skills or the development of exist-
ing ones. This applies to employees generally as well as line managers, who
should be trained in what they have to do to implement the strategy. Skills
can be built through formal off-the-job training courses, but there is much
to be said for coaching and mentoring.
Implementing People Strategy 123
Manage change
The implementation of people strategy involves change, which can be hard
to introduce and may be resisted. The problems of implementing strategic
change were summed up by Lawler and Mohrman (2003: 24) as follows:
Most strategies, like most mergers, fail not because of poor thinking, but
because of poor implementation. Implementation failures usually involve
the failure to acknowledge and build the needed skills and organizational
capabilities, to gain support of the workforce, and to support the organizational
changes and learning required to behave in new ways. In short, execution
failures are often the result of poor human capital management. This opens the
door for HR to add important value if it can deliver change strategies, plans and
thinking that aid in the development and execution of business strategy.
The following suggestions on how to minimize such problems were put for-
ward by Nadler and Tushman (1980):
● The issue needs to be on the strategic business agenda and managers must
see how action will improve business results: that is, there needs to be a
sound business case for the initiative. HR managers need to be able to
demonstrate the return on the planned investment.
● The change needs to have the active backing of those at the top of the
organization, so it is for the HR Director to gain the commitment of the
top team and engage them in a practical way in taking the work forward.
● HR needs to engage managers in the design of change from the outset (or,
if this is a business-driven change, HR needs to be involved at the outset).
The programme needs to be framed in the language of the business to
have real meaning and achieve ‘buy in’ for all parties; if there is too much
HR jargon, this will be a turn-off.
● Project and people management skills are crucial to ensure the programme
is well planned and resourced and risks are assessed and managed.
● As in all change programmes, the importance of communication is
paramount, to explain, engage and commit people to the programme.
● In this respect the crucial role that HR can play is to ensure that
employees are fully engaged in the design and implementation of the
change.
● HR needs to draw on others’ experience and learning.
Implementing People Strategy 125
A few years ago the Children’s Trust was facing a chronic skills shortage, high
staff turnover and loss of morale. There was a culture of avoidance when it came
to tackling difcult HR issues such as poor performance or sickness absence.
There was also a ‘can’t do’ attitude, because people were constantly under
pressure as a result of staff shortages. Following the change programme
summarized below, which was planned and managed by the new head of HR, the
Trust has won awards from both Charity Times and Nursing Times for being a great
place to work, based on the views of its staff. The change programme consisted of
a series of sensible, well-planned HR interventions, spearheaded by the head of
HR and implemented gradually over 18 months with the full backing of the board.
126 People Strategy in General
● HR issues were put on the senior team’s agenda which met more often and
considered issues such as recruitment and retention.
● A development programme for senior managers was delivered by an external
consultancy to help them improve their skills and condence; it included a
training needs analysis, psychometric testing and 360-degree appraisal.
● Everything was done in a low-key, non-threatening way that emphasized
development opportunities rather than the need for change.
● Nurses and carers were asked what they liked about working for the Trust and
said that they had time to build relationships and really care for the children, that
there was high-quality training on offer – and that ‘everyone smiles around here’.
● These personal testimonials were used to devise new recruitment campaigns
for nurses and, as a result, the number of job applications soon increased,
helped by a recruitment video lmed at the Trust.
● Pay scales for carers were reviewed and the time it would take them to reach
higher rates shortened.
● The Trust’s NVQ course in health and social care was developed and it
became an accredited centre, able to issue its own awards.
● New job descriptions were produced with ve to seven headings detailing
their accountabilities, plus a series of behavioural competencies.
● A new performance management system was implemented.
● Better sick pay was provided, combined with tools to help managers handle
absence more effectively, with the result that it fell 10% in the rst year and
12% in the next year.
● A fast-track nursing training programme was developed to build a cavalry of
cross-trained nurses that would allow the Trust to react quickly to changing
circumstances.
References
Carnall, C (1991) Managing Change, Routledge, London
Dickens, C (1843) Martin Chuzzlewit, Chapman & Hall (Penguin Classics, 2004),
London
Fombrun, C J, Tichy, N M and Devanna, M A (1984) Strategic Human Resource
Management, Wiley, New York
Gratton, L A (1999) People processes as a source of competitive advantage, in
Strategic Human Resource Management, ed L A Gratton et al, Oxford
University Press, Oxford
Gratton, L A (2000) Real step change, People Management, 16 March, pp 27–30
Guest, D E (1999) Human resource management: the workers’ verdict, Human
Resource Management Journal, 9 (2), pp 5–25
Guest, D E and Bos-Nehles, A (2013) HRM and performance: the role of effective
implementation, in HRM and Performance, ed J Paauwe, D E Guest and P M
Wright, pp 79–96, Wiley, Chichester
Guest, D E and Conway, N (2011) The impact of HR practices, HR effectiveness
and a ‘strong HR system’ on organizational outcomes: a stakeholder
perspective, International Journal of Human Resource Management, 22 (8),
pp 1686–702
Implementing People Strategy 129
Khilji, E and Wang, X (2006) ‘Intended’ and ‘implemented’ HRM: the missing
linchpin in strategic human resource management research, International
Journal of Human Resource Management, 17 (7), pp 1171–89
Lawler, E E and Mohrman, S A (2003) HR as a strategic partner: what does it take
to make it happen?, Human Resource Planning, 26 (3), pp 15–29
Lengnick-Hall, M L et al (2009) Strategic human resource management: the
evolution of the eld, Human Resource Management Review, 19 (2), pp 64–85
López-Cotarelo, J (2018) Line managers and HRM: a managerial discretion
perspective, Human Resource Management Journal, 28 (2), pp 255–71
Nadler, D A and Tushman, M L (1980) A congruence model for diagnosing
organizational behaviour, in Resource Book in Macro-organizational Behaviour,
ed R H Miles, Goodyear Publishing, Santa Monica, CA
Nishii, L H, Lepak, D P and Schneider, B (2008) Employee attributions of the ‘why’
of HR practices: their effects on employee attitudes and behaviours, and
customer satisfaction, Cornell University Working Paper, Ithaca, NY, pp 1–53
Purcell, J et al (2003) People and Performance: How people management impacts
on organizational performance, CIPD, London
Quinn, J B (1980) Managing strategic change, Sloane Management Review, 11
(4/5), pp 3–30
Surowiecki, J (2013) The turnaround trap, The New Yorker, 25 March, p 44
Trevor, J (2011) Can Pay Be Strategic? Palgrave Macmillan, Basingstoke
Vere, D and Butler, L (2007) Fit for Business: Transforming HR in the public
service, CIPD, London
Wright, P M and Nishii, L H (2013) Strategic HRM and organizational behaviour:
integrating multiple levels of analysis, in HRM and Performance: Achievements
and challenges, ed J Paauwe, D Guest and P Wright, pp 97–110, Wiley,
Chichester
Woodrow, C and Guest, D E (2014) When ‘good’ HR gets bad results: a case of
failure to implement policies to prevent bullying and harassment, Human
Resource Management Journal, 24 (1), pp 38–56
The strategic 10
role of people
professionals
Introduction
People strategy is put into effect through the strategic behaviour of people
management specialists working with their line management colleagues
to ensure that the business or operational goals of the organization are
achieved and its values are put into practice. This chapter starts with an
examination of the strategic and partnership roles of people professionals.
It continues with a review of the strategic business partner model. It con-
cludes with analyses of the strategic roles of people directors, heads of peo-
ple management functions, people business partners and people advisers or
assistants.
a real understanding of the business and ability to work closely with senior
leaders; the ability to identify and prioritize people issues; understand the time-
frames on which they need to be addressed; and help managers to see practical
The Strategic Role of People Professionals 131
solutions. This sometimes means challenging the views of senior people and
reminding them of the importance of taking a customer and employee perspec-
tive, not just seeing the business from their own point of view.
The work of people professionals can be divided into two main activity
areas: transactional, and transformational or strategic. Transactional activi-
ties consist of the service delivery aspects of people management – recruit-
ment, training and dealing with people issues, legal compliance and employee
services. People management strategic activities involve the development
and implementation of forward-looking people strategies such as talent
management and performance management that are integrated with one
another and aligned to business objectives. Importantly, strategic people
professionals work with their line management colleagues in the continuous
formulation and execution of the business strategy. But people professionals
must not pursue business objectives at the expense of ethical considerations.
It is necessary to get the correct balance between strategic and transac-
tional activities. In its anxiety to enhance the standing of the people profes-
sion, the Chartered Institute of Personnel and Development (the CIPD)
sometimes gives the impression that the only thing that counts is ‘being
strategic’. Forget about the boring transactional stuff. Rosabeth Moss
Kanter (1984: 294) thought that ‘“strategic” is clearly an overused word’.
Alvesson (2009: 57) noted that ‘HR people are redening themselves “from
being administrators and managers to becoming “strategists”’. He felt that:
‘Sometimes one gets the impression that there is very little “non-strategic”
HRM going on.’
People management must get its transactional service delivery activities
right – that’s what it’s there to do, day-by-day, and its reputation with line
managers largely depends on this. As an HR specialist commented to
Caldwell (2004: 203): ‘My credibility depends on running an extremely ef-
cient and cost effective administrative machine…. If I don’t get that right,
and consistently, then you can forget about any big ideas.’ Another person
interviewed during Caldwell’s research referred to HR people as ‘reactive
pragmatists’, a realistic view in many organizations. Syrett (2006: 63) com-
mented that: ‘Whatever strategic aspirations senior HR practitioners have,
they will amount to nothing if the function they represent cannot deliver the
essential transactional services their internal line clients require.’
But the credibility of people professionals, especially at the highest level,
also depends on their ability to make a strategic contribution which ensures
that the organization has the quality of skilled and engaged people it needs.
Sparrow et al (2010: 88) observed that: ‘HR must be fully responsive to the
132 People Strategy in General
I think the way you change their [the business clients’] behaviours in the longer
term is by getting to be a trusted advisor, and the way to become a trusted advi-
sor is to know your individual, to know your client and to know how to hook
the individual, right?
Ulrich and Lake (1990: 95–96) popularized the idea of the HR strategic
business partner. They argued that:
To ensure that management practices become a means for gaining a sustained com-
petitive advantage, human resource professionals need to become strategic business
134 People Strategy in General
Ulrich (1997: 5) made an important addition to this list when he wrote that
HR professionals should ‘represent both employee needs and implement
management agendas’. In other words, they should adopt a multi-stakeholder
approach.
Schuler and Jackson (2007: xiv) commented later that: ‘Today, human
resource professionals are being challenged to learn more about the busi-
ness, its strategy, its environment, its customers, and its competitors.’
The notion of strategic business partner was taken up enthusiastically
within the HR profession and its professional body in the UK – the CIPD –
which explained in 2007 that the task of strategic business partners was to
work closely with business leaders, inuencing strategy and steering its
implementation.
The term ‘strategic business partner’ has been shortened in common par-
lance to ‘business partner’. Conceptually, business partners work closely
with line managers and are often embedded in a business unit or a line func-
tion. They are there to gain understanding of the strategies and activities of
their unit or function and appreciate the role they can play as partners to the
line managers with whom they work in ensuring that business goals are
achieved. Business partners help those line managers to achieve their objec-
tives through their people.
However, the concept does not always work, especially when it is installed
as a fashionable approach without considering how well it will match the
way in which the business operates. Another problem is that the qualities
required by HR business partners are demanding and people with those
qualities may be hard to nd. As quoted by Stephens (2015: 36), Stuart
Woollard, Director of King’s College London’s HRM learning centre, claimed
that: ‘The implicit promise of an HR business partner role is to contribute to
The Strategic Role of People Professionals 135
I do not believe that you can have stand-alone HR strategies. You have to
develop strategies that are an integral part of the business objectives. I
don’t see HR standing alone in an ivory tower. Everything we do has to
have a value-added benet for the business. If it doesn’t have a positive
benet for the business, we don’t do it. If you can make a business case,
then it will be supported.
There are issues where it is appropriate for the HR director to lead, but
in the main we try to go for an integrated approach. If we are reorganizing
a business to respond to a particular market situation, then we would be
developing strategies to help the managing director of that business to get
to where he or she needs to be.
References
Alvesson, M (2009) Critical perspectives on strategic HRM, in The Routledge
Companion to Strategic Human Resource Management, ed J Storey, P M Wright
and D Ulrich, pp 52–67, Routledge, Abingdon
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People
Management, https://www.employment-studies.co.uk/resource/strategic-human-
resource-management-practice-case-studies-and-conclusions (archived at
https://perma.cc/2F25-N4HH)
Caldwell, R (2004) Rhetoric, facts and self-fullling prophesies: exploring
practitioners’ perceptions of progress in implementing HRM, Industrial
Relations Journal, 35 (3), pp 196–215
140 People Strategy in General
Organization
development
activity Brief description Objective
Organization
development
activity Brief description Objective
Organization
development
activity Brief description Objective
Culture change
The implementation of organization development strategy can involve a cul-
tural change programme. The aim of such a programme is to ensure that
people are aware of what the change involves for them and will act accord-
ingly. The change programme may be wide-ranging, aimed at the develop-
ment of a strong and pervasive culture that will keep organization members
pulling in the same direction. This could take the form of transformational
change involving fundamental and comprehensive alterations in structures,
processes and behaviours which have a dramatic effect on the ways in which
148 Specifc People Strategies
4 Plan the action required – this could include communicating the details of
the change, covering how people will be affected and the part they are
expected to play in implementing it, and brieng and educational
programmes.
5 Implement – this is where HR can play a major part.
6 Monitor – review how well the change has been or is being implemented
and take corrective action if it is not going according to plan.
Organization Development Strategy 149
The management of Cisco, the global technology giant, with over 12,000
employees working in 62 countries, wanted to steer the company towards a
more collaborative leadership culture, fully embracing the company’s own virtual
communications technology. The strategic aim was to ensure that leaders
exhibited the essential behaviours for a globally connected business. This
heralded a move away from autocratic leadership towards collaborative
leadership, from functions and silos in isolated country branches to cross-
departmental, global team working.
Leaders who once ran a small team in a single ofce could now nd
themselves leading a team of remote workers dispersed around the globe. It was
necessary to ensure that leaders could still lead in this new kind of environment.
Leaders were given the freedom to translate organizational change as they
saw t within their regions, but they had to demonstrate that they were viable
and in touch.
HR’s role in this development was to guide and support business leaders, but
the process is continually evolving.
150 Specifc People Strategies
References
Aguilar, E and Bhambri, A (1983) Johnson & Johnson, HBS Case Services, Boston,
MA
Alfes, K et al (2010) Creating an Engaged Workforce, CIPD, London
Beer, M (1980) Organization Change and Development: A systems view, Goodyear,
Santa Monica, CA
Caldwell, R (2001) Champions, adapters, consultants and synergists: the new
change agents in HRM, Human Resource Management Journal, 11 (3),
pp 39–52
Chartered Institute of Personnel and Development (2010) Organization
Development Fact Sheet, CIPD, London
Cooke, R and Lafferty, J (1989) Organizational Culture Inventory, Human
Synergistics, Douglas, Isle of Man
Ulrich, D (1997) Judge be my future not my past, Human Resource Management,
36 (1), pp 5–8
Ulrich, D (1998) A new mandate for human resources, Harvard Business Review,
January–February, pp 124–34
Worley, C, Hitchin, D and Ross, W (1996) Integrated Strategic Change: How
organization development builds competitive advantage, Addison-Wesley,
Reading, MA
Human capital 12
management
strategy
Introduction
Human capital management (HCM) is concerned with obtaining, analysing
and reporting on data which inform the direction of people management
strategy. An HCM strategy is closely associated with strategic HRM.
Manocha (2005: 29) suggested that it can also provide ‘evidence of a robust
people strategy mapped to the business strategy’.
The dening characteristic of HCM is the use of people analytics (metrics)
to guide an approach to managing people who are regarded as assets rather
than costs. It emphasizes that competitive advantage is achieved by strategic
investments in those assets through employee engagement and retention, talent
management, and learning and development programmes. HCM is a bridge
between people and business strategy. It provides the basis for ‘evidence-based
people management’, that is, the process of ensuring that decisions and propos-
als on the development and application of people strategies and practices are
backed up with hard data derived from research, benchmarking, and the anal-
ysis and evaluation of the organizational context and management activities.
The Accounting for People Task Force Report (DTI, 2003: 3) stated that
HCM involves ‘the systematic analysis, measurement and evaluation of how
people policies and practices create value’. HCM was dened as ‘an ap-
proach to people management that treats it as a high level strategic issue
rather than an operational matter “to be left to the HR people”’ (DTI,
2003: 7). The Task Force Report expressed the view that HCM had been
under-exploited as a way of gaining competitive edge.
Scarborough and Elias (2002: 3) dened human capital as ‘something
that employees bring to the organization but is also developed through
training and experience within the organization’. Nalbantian et al (2004;
75) described human capital as ‘the accumulated stock of skills, experience
and knowledge that resides in an organization’s workforce and drives
152 Specifc People Strategies
practices that inuence the workforce should be consistent with one another
and mutually reinforcing’. The whole area of human capital management pre-
sents both an opportunity and a challenge – an opportunity to recognize
people as assets that contribute directly to organizational performance, and a
challenge to develop the skills needed to identify, analyse and communicate
that contribution and ensure it is recognized in business decision making. By
developing strategies to generate better and more accurate information in the
form of HR analytics and communicating this information both internally and
externally, organizations will not only improve their business decision making
but also enable stakeholders to make more accurate assessments about the
long-term future performance of the organization. There is evidence of a
growing demand, from the investment community in particular, for better in-
formation to explain intangible value. Many organizations are beginning to
understand that in an increasingly knowledge-intensive environment, the key
to good management lies in understanding the levers that can be manipulated
to change employee behaviour and develop commitment and engagement.
This, in turn, encourages individuals to deliver discretionary behaviour or will-
ingly share their knowledge and skills to achieve organizational goals.
Human capital management strategy involves planning the use of people
metrics which help management and people professionals to understand
factors that will have a direct impact on employees. It can also help execu-
tives to understand and identify areas in which there are issues regarding the
effective management of staff and to design management development
programmes to address these.
The issue is to determine what this link is and how to make it work. A
proposition that HCM informs people strategy, which in turn informs busi-
ness strategy, tells us nothing about what is involved in practice. If we are
not careful we are saying no more than that all business strategic plans for
innovation, growth and price/cost leadership depend on people for their
implementation. This is not a particularly profound or revealing statement
and is in the same category as the discredited cliché ‘Our people are our
greatest asset’. We must try to be more specic, otherwise we are only doing
things – more training, succession planning, performance management,
performance-related pay and so on – in the hope rather than the expectation
that they will improve business results.
One way of being more specic is to use HCM assessments of the impact
of people management practices on performance to justify these practices
and improve the likelihood that they will work. The future of HCM as a
strategic management process largely depends on getting this done.
A second way of specifying the link is to explore in more detail the people
implications of business strategy and, conversely, the business implications
of people strategy. This can be done by analysing the elements of the busi-
ness strategy and the business drivers and deciding on the people manage-
ment supporting activities and supporting data required in the form of
people analytics, as illustrated in Table 12.1.
A third, and potentially the most productive, way of linking people and
business strategy is to relate business results to people management prac-
tices to determine how they can best contribute to improving performance.
(continued )
156 Specifc People Strategies
Aims
The development programme starts with a denition of the aims of the
HCM strategy, for example, to:
● obtain, analyse and report on data which inform the direction of people
strategies and processes;
● inform the development of business strategy;
● use measurements to prove that superior people strategies and processes
deliver superior results;
● reinforce the belief that people strategies and processes create value
through people;
● determine the impact of people on business results;
● assess the value of the organization’s human capital;
● improve the effectiveness of the PM function;
● provide data on the performance of the organization’s human capital for
the Operating and Financial Report;
● demonstrate that people processes provide value for money.
(continued )
160 Specifc People Strategies
Standard Chartered Bank began at the strategic level when it came to designing
HCM measures. Their starting point for the development of metrics was the
identication of people levers for the achievement of business strategy. Next, the
Bank set out a series of questions designed to inform progress against these
people levers. The Bank has avoided reporting on data that are readily available
but do not address the strategic business questions that had been identied.
References
DTI (2003) Accounting for People Task Force Report, DTI, London
Chatzkel, J L (2004) Human capital: the rules of engagement are changing,
Lifelong Learning in Europe, 9 (3), pp 139–45
Donkin, R (2005) Human Capital Management: A management report, Croner,
London
Kearns, P (2004) Human Capital Management, Personnel Today, London
Manocha, R (2005) Grand totals, People Management, 7 April, pp 27–31
Nalbantian, R et al (2004) Play to Your Strengths: Managing your internal labour
markets for lasting competitive advantage, McGraw-Hill, New York
Scarborough, H and Elias, J (2002) Evaluating Human Capital, CIPD, London
Knowledge 13
management
strategy
Introduction
The purpose of knowledge management strategy is to capture an organiza-
tion’s collective expertise and distribute it to where it can be best used. It
ensures that knowledge is shared by linking people with people and by link-
ing them to information so that they learn from experiences. This is in ac-
cordance with the resource-based view of the rm which, as argued by
Grant (1991), suggests that the source of competitive advantage lies within
the rm (ie in its people and their knowledge), not in how it positions itself
in the market. A successful company is a knowledge-creating company.
This chapter covers the process of knowledge management, the sources
of knowledge, approaches to developing knowledge management strategy,
the issues involved in developing a strategy, and its components.
Components of a knowledge
management strategy
A knowledge management strategy could be concerned with organizational
people management processes that help to develop an open culture. This will
be one in which the values and norms emphasize the importance of sharing
knowledge and facilitate knowledge sharing through networks. It might aim
to encourage the development of communities of practice, dened by Wenger
and Snyder (2000: 139) as ‘groups of people informally bound together by
shared expertise and a passion for joint enterprise’. The strategy could refer
to methods of motivating people to share knowledge and rewarding those
who do so. The development of processes of organizational and individual
learning, including the use of seminars and symposia that will generate and
assist in disseminating knowledge, could also be part of the strategy.
The engineers then made a number of proposals, which were accepted. They
minimized the reporting requirements so that a one-line e-mail would be
acceptable; they elected the coordinator of each community from their own
number; the agenda of meetings was driven much more by the needs of the
engineers themselves; and the coordinators of the three groups met regularly to
share experiences and ideas.
Ke y learning points
References
Blackler, F (1995) Knowledge, knowledge work and experience, Organization
Studies, 16 (6), pp 16–36
Davenport, T H (1996) Why re-engineering failed: the fad that forgot people, Fast
Company, Premier Issue, pp 70–74
Grant, R M (1991) The resource-based theory of competitive advantage:
implications for strategy formation, California Management Review, 33 (3),
pp 14–35
Hansen, M T, Nohria, N and Tierney, T (1999) What’s your strategy for managing
knowledge? Harvard Business Review, March–April, pp 106–16
Nahpiet, J and Ghoshal, S (1998) Social capital, intellectual capital and the
organizational advantage, Academy of Management Review, 23 (2), pp 242–66
Nonaka, I (1991) The knowledge creating company, Harvard Business Review,
November–December, pp 96–104
Nonaka, I and Takeuchi, H (1995) The Knowledge Creating Company, Oxford
University Press, New York
Scarborough, H, Swan, J and Preston, J (1999) Knowledge Management: A
literature review, Institute of Personnel and Development, London
Wenger, E and Snyder, W M (2000) Communities of practice: the organizational
frontier, Harvard Business Review, January–February, pp 139–45
Corporate social 14
responsibility
strategy
Introduction
Corporate social responsibility (CSR) strategy is concerned with planning
how to ensure that the organization conducts its business in an ethical way,
taking account of the social, environmental and economic impact of its op-
erations and going beyond compliance. As Windsor (2006: 99) commented:
‘Ethical managers engage in impartial moral reection beyond the law.’
Wood (1991: 695) reected that: ‘The basic idea of corporate social re-
sponsibility is that business and society are interwoven rather than distinct
entities; therefore, society has certain expectations for appropriate business
behaviour and outcomes.’ CSR is largely a strategic matter that impinges
strongly on the behaviour of organizations as it affects their stakeholders.
Strategic people management has an important contribution to make. This
chapter covers:
Husted and Salazar (2006) as being concerned with ‘the impact of business
behaviour on society’. Porter and Kramer (2006: 83) argued that to advance
CSR: ‘we must root it in a broad understanding of the interrelationship be-
tween a corporation and society while at the same time anchoring it in the
strategies and activities of specic companies’. They see CSR as a process of
integrating business and society.
Much research has been conducted on the impact of CSR. Russo and Fouts
(1997) found that there was a positive relationship between environmental
performance and that CSR results in an improvement in rm performance.
Waddock and Graves (1997) established that CSR results in an improve-
ment in rm performance. But McWilliams and Siegel (2000) discovered
only a neutral relationship between CSR and protability.
The opposing view was expressed forcibly by marketing expert Theodore
Levitt. In a Harvard Business Review article, ‘The dangers of social respon-
sibility’ (Levitt, 1958: 44), he contended that: ‘The essence of free market
enterprise is to go after prot in any way that is consistent with its own
survival as an economic system.’ Milton Friedman (1970), the Chicago
monetarist, expressed the same sentiment. His view was that the social
responsibility of business is to maximize prots within the bounds of the
law. He argued that the mere existence of CSR was an agency problem
within the rm in that it was a misuse of the resources entrusted to manag-
ers by owners which could be better used on value-added internal projects
or returned to the shareholders.
But it can be argued, as do Moran and Ghoshal (1996), that what is good
for society does not necessarily have to be bad for the rm, and what is good
for the rm does not necessarily have to come at a cost to society. This
notion may support a slightly cynical view that there is room for enlightened
self-interest – doing well by doing good.
Strategic CSR is about deciding initially on the extent to which the rm
should be involved in social issues and then creating a corporate social
agenda – deciding what social issues to focus on. Porter and Kramer (2006:
85) thought that: ‘It is through strategic CSR that the company will make
the greatest social impact and reap the greatest business benets.’ They also
stressed that: ‘Strategy is always about making choices, and success in cor-
porate social responsibility is no different. It is about choosing which social
issues to focus on… organizations that make the right choices and build
focused, proactive and integrated social initiatives in concert with their core
strategies will increasingly distance themselves from the pack’ (Porter and
Kramer, 2006: 91). McWilliams and Siegel (2001) suggested that CSR ac-
tivities should be included in strategy formulation and that the level of
resources devoted to CSR be determined through cost/benet analysis.
CSR strategy needs to be integrated with the business strategy but it is
also closely associated with people strategy. This is because it is concerned
with ethical behaviour both outside and within the rm – with society
generally and with the internal community. In the latter case, this means
creating a working environment where personal and employment rights are
upheld and HR policies and practices provide for the fair and ethical
treatment of employees.
CSR activities
CSR activities as listed by McWilliams et al (2006) include incorporating
social characteristics or features into products and manufacturing processes,
adopting progressive human resource management practices, achieving
higher levels of environmental performance through recycling and pollution
abatement, and advancing the goals of community organizations.
Business in the Community (2007) surveyed the CSR activities of 120
leading British companies and summarized them under four headings:
● draw up the strategy and make the case for it to top management and the
stakeholders;
● obtain approval for the CSR strategy from top management and key
stakeholders;
● communicate information on the whys and wherefores of the strategy
comprehensively and regularly;
● provide training to employees on the skills they need to use in implementing
the CSR strategy;
● measure and evaluate the effectiveness of CSR.
References
Baron, D (2001) Private policies, corporate policies and integrated strategy, Journal
of Economics and Management Strategy, 10 (1), pp 7–45
Business in the Community (2007) Benchmarking Responsible Business Practice,
www.bitc.org.uk (archived at https://perma.cc/G7JX-T7V6)
Chartered Institute of Personnel and Development (2003) Corporate Social
Responsibility and HR’s Role, CIPD, London
Chartered Institute of Personnel and Development (2009) Corporate Social
Responsibility, CIPD, London
CSR Academy (2006) The CSR Competency Framework, Stationery Ofce, Norwich
Freeman, R E (1984) Strategic Management: A stakeholder perspective, Prentice
Hall, Englewood Cliffs, NJ
Friedman, M (1970) The social responsibility of business is to increase its prots,
New York Times Magazine, September, p 13
Hillman, A and Keim, G (2001) Shareholder value, stakeholder management and social
issues: what’s the bottom line? Strategic Management Journal, 22 (2), pp 125–39
Husted, B W and Salazar, J (2006) Taking Friedman seriously: maximizing prots
and social performance, Journal of Management Studies, 43 (1), pp 75–91
Levitt, T (1958) The dangers of social responsibility, Harvard Business Review,
September–October, pp 41–50
McWilliams, A and Siegel, D (2001) Corporate social responsibility: a theory of the
rm perspective, Academy of Management Review, 26 (1), pp 117–27
McWilliams, A and Siegel, D S (2000) Corporate social responsibility and nancial
performance: correlation or misspecication? Strategic Management Journal, 21 (5),
pp 603–09
McWilliams, A, Siegel, D S and Wright, P M (2006) Corporate social responsibility:
strategic implications, Journal of Management Studies, 43 (1), pp 1–12
Moran, P and Ghoshal, S (1996) Value creation by rms, Best Paper Proceedings,
Academy of Management Annual Meeting, Cincinnati, OH
Porter, M E and Kramer, M R (2006) Strategy and society: the link between
competitive advantage and corporate social responsibility, Harvard Business
Review, December, pp 78–92
Russo, M V and Fouts, P A (1997) A resource-based perspective on corporate
environmental performance and protability, Academy of Management Review,
40 (3), pp 534–59
Waddock, S A and Graves, S B (1997) The corporate social performance–nancial
performance link, Strategic Management Journal, 18 (4), pp 303–19
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of Management Studies, 43 (1), pp 93–114
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Management Review, 16 (4), pp 691–718
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Opportunity: The role of business in tomorrow’s society, WBCSSD, Geneva
Organizational 15
performance
strategy
Introduction
Developing and implementing a strategy for the management of organiza-
tional performance is the continuing responsibility of top management who
plan, organize, monitor and control activities and provide leadership to
achieve strategic goals and satisfy the needs and requirements of stakehold-
ers. Individual performance management systems as covered in Chapter 16
play an important part. But they function within the context of what is done
to manage organizational performance.
Top management will devise and implement the corporate strategy for
improving organizational performance. But the people management (PM)
function in its strategic role has an important part to play by being involved
in both the formulation and implementation of the strategy. It is people who
implement the corporate plan. To carry out this role it is necessary for mem-
bers of the PM function, especially the more senior ones, to understand
what is involved. This is strategic people management in action – people
strategies affecting performance (and they all do) must be integrated with
the business strategy.
Any strategy for improving organizational performance inevitably fo-
cuses on individual performance through practices like high-performance
work systems as described in this chapter. But it is also necessary to consider
more specically how people management strategies and practices, includ-
ing performance management systems, can impact on individual performance
either separately or, better, when ‘bundled’ together through the process of
horizontal integration. This is dealt with in Chapter 16.
180 Specifc People Strategies
give employees a clear line of sight into how their jobs are linked to the
overall objectives of the organization and provide a visual representation of
a company’s critical goals and the relationships between them that drive
organizational performance. Bourne et al (2003) call them ‘success maps’
that act as diagrams showing the logic of how the goals of the organization
interact to deliver overall performance. An example of a strategy map is
given in Figure 15.1.
This map shows an overall objective to improve protability as meas-
ured by return on capital employed. In the next line the map indicates that
the main contributors to increased protability are increases to the gross
margin (the difference between the value of sales and the cost of sales),
improvements to operational capability and better cost management. At
the next level down, the objective is to increase sales turnover in order to
increase the gross margin. How this is to be achieved is set out in the next
group of goals and their interconnections, comprising increases in cus-
tomer satisfaction and sales force effectiveness, innovations in product/
Profitability
(return on capital
employed)
Sales turnover
Customer
service
Product/market Customer
development satisfaction/loyalty
Quality
Sales force
Marketing
effectiveness
High-
Human performance/lean
capital working
contribution
In each of these areas, strategic goals are set to which individual goals can
be aligned as described in Chapter 16. Alignment is a key aspect of a perfor-
mance management system for individuals.
Organizational capability
Organizational capability is the capacity of an organization to function ef-
fectively. It is about the ability of an organization to identify its critical suc-
cess factors, guarantee high levels of performance for each of these factors,
achieve its purpose, deliver results and meet the needs of its stakeholders.
The development of organizational capability is concerned with the organi-
zation as a system, in line with the belief expressed by Coens and Jenkins
(2002) that to ‘focus on the overall “system” of the organization yields bet-
ter results than [simply] trying to get individual employees to improve their
performance’.
The aim is to improve organizational processes such as the formulation
and implementation of strategy and the achievement of high quality and
levels of customer service, facilitating the management of change, and ob-
taining better performance from people, getting them to work well together.
Organizational Performance Strategy 185
● enhancing engagement;
● talent management;
● learning and development, with special consideration being given to
leadership development;
● nancial and non-nancial rewards;
● the development and use of individual performance management systems.
(continued)
Organizational Performance Strategy 187
2 Dene the desired performance culture of the business and the objectives
of the exercise – refer to the characteristics of an effective performance
culture set out earlier (p 185) and produce a list of desirable character-
istics that is aligned to the culture and context of the business, and a
statement of the objectives of developing an HPWS.
3 Analyse the existing arrangements – start from the headings dened at
stage 2 and analyse against each heading:
{● what is happening now in the form of practices, attitudes and behav-
iours (what do you want people to do differently?);
{● what should be happening;
{● what people feel about it (the more involvement in this analysis from
all stakeholders, the better).
4 Identify the gaps between what is and what should be – clarify specic
practices where there is considerable room for improvement.
5 Draw up a list of practices that need to be introduced or improved – at
this stage only a broad denition should be produced of what ideally
needs to be done.
6 Establish links – identify the practices that can be linked together in
‘bundles’ in order to complement and support one another.
7 Assess practicality – the ideal list of practices, or preferably, bundles of
practices, should be subjected to a reality check:
{● Is it worth doing? – what’s the business case in terms of added value?
What contribution will it make to supporting the achievement of the
organization’s strategic goals?
{● Can it be done?
{● Who does it?
{● Have we the resources to do it?
{● How do we manage the change?
8 Prioritize – in the light of the assessment of practicalities, decide on the
priorities that should be given to introducing new or improved practices.
Adopt a realistic approach. There will be a limit on how much can be done
at once or at any future time. Priorities should be established by assessing:
{● the added value the practice will create;
{● the availability of the resources required;
Organizational Performance Strategy 189
Smart working
As dened by the CIPD (2008: 4), smart working is ‘An approach to organ-
izing work that aims to drive greater efciency and effectiveness in achieving
job outcomes through a combination of exibility, autonomy and collabora-
tion, in parallel with optimizing tools and working environments for em-
ployees’. The characteristics of smart working are:
Agile working
Agile working is an approach to running a business that enables it to re-
spond rapidly to change, new demands and increasing complexity. A report
by the Economist Intelligence Unit (2009) stated that the characteristics of
an ‘agile’ business were a high-performance culture, exibility of manage-
ment practices and resources, and organizational structures that support
collaboration, rapid decision making and execution. Nearly 90 per cent of
senior executives surveyed across the world by the Economist Intelligence
Unit believe that organizational agility (ability to anticipate and address the
forces affecting the business) is critical for business success.
1 Outcomes, not inputs, matter: the focus had to be shifted from the visibility of
an individual in the ofce to the actual outputs of their work.
2 Mutual trust: an underlying assumption that the majority of employees are
motivated, ambitious and there to do a good job.
3 Two-way open communication between the manager, other team members
and the individual.
Organizational Performance Strategy 191
Research conducted by the CIPD (2014) found that the main methods or-
ganizations use to achieve agility are:
● exible working;
● providing the skills required to meet new demands through the use of
multiskilling and rapid retraining;
● workforce planning to ensure that the supply of people matches
requirements;
● improving leadership and management capability; and
● organization restructuring.
Lean manufacturing
Lean manufacturing or lean production, often known simply as ‘Lean’, is a pro-
cess improvement methodology developed by Toyota in Japan. Lean focuses on
reducing waste and ensuring the ow of production in order to deliver value to
customers. It concentrates initially on the design of the process so that waste can
be minimized during manufacture. It then examines operations to identify op-
portunities to improve the ow of production, remove wasteful practices and
engage in continuous improvement. Various tools are available, such as ‘Five Ss’,
a workplace methodology involving sorting, straightening, systematic cleaning,
standardizing and sustaining. Reference to these enables a dialogue to take place
with employees on how work should be done.
But as noted by the CIPD (2008: 11), the success of lean depends not so
much on the tools as on its approach to work. Lean is implemented by com-
munities of people who carry out and supervise the work and may include
stakeholders such as customers. Lean team members are encouraged to think
exibly and be adaptable to change. They have a sense of ownership of what
they do and achieve.
Organization restructuring
Organization restructuring is about enabling people to work effectively to-
gether. It means deciding how the responsibility for carrying out the overall
task is allocated to individuals and groups of people, how the relationships
between them take place, and job design. There is no ideal structure, but in
any organization that depends on innovation and the ability to cope with
change and turbulence, the best outcomes are likely to be achieved when the
192 Specifc People Strategies
structure is informal, with at, lean and exible horizontal processes. Roles
are exible and enriched with more autonomy, and teams are self-managed.
References
Bourne, M, Franco, M and Wilkes, J (2003) Corporate performance management,
Measuring Business Excellence, 7 (3), pp 15–21
Boxall, P F (1996) The strategic HRM debate and the resource-based view of the
rm, Human Resource Management Journal, 6 (3), pp 59–75
CIPD (2008) Smart Working: The impact of work organisation and job design,
CIPD, London
CIPD (2014) HR: Getting smart about agile working, CIPD, London
Coens, T and Jenkins, M (2002) Abolishing Performance Appraisals: Why they
backre and what to do instead, Berrett-Koehler, San Francisco
Dundon, T and Rafferty, A (2018) The (potential) demise of HRM? Human
Resource Management Journal, 28, (3), pp 377–91
Economist Intelligence Unit (2009) Organisational Agility: How business can
survive and thrive in turbulent times, EIU, London
Flaherty, J (1999) Coaching: Evoking excellence in others, Butterworth-Heinemann,
Burlington, MA
Gheorghe, C and Hack, J (2007) Unied performance management: how one
company can tame its many processes, Business Performance Management,
November, pp 17–19
194 Specifc People Strategies
Kaplan, R S and Norton, D P (2000) Having trouble with your strategy? Then map
it, Harvard Business Review, September–October, pp 167–76
Marsh, C, Sparrow, P and Hird, M (2010) Improving organization design: the new
priority for HR directors, in Leading HR, ed P Sparrow et al, pp 136–61,
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organization of the future, Industrial Management, 32 (1), pp 4–12
Individual 16
performance
strategy
Introduction
A strategy is required to indicate what an organization wants to do about
managing individual performance. The strategy has rst to take account of
the meaning of performance and the factors that affect it, and next decide
on how a new performance management system can be designed and imple-
mented or an existing one improved. As explained in the rst section of the
chapter, in doing this, systems factors (how the organization functions) and
a number of factors related to other aspects of people strategy such as en-
gagement, resourcing, and learning and development have to be considered.
But in practice, a performance management system as described in the sec-
ond section of this chapter often has limitations, and in the nal section of
the chapter the consequential need for a typical system to be reinvented to a
greater or lesser degree is discussed.
Performance as outputs
Kane (1996) argued that performance ‘is something that the person leaves
behind and that exists apart from the purpose’. Bernadin et al (1995) were
concerned that: ‘Performance should be dened as the outcomes of work
because they provide the strongest linkage to the strategic goals of the or-
ganization, customer satisfaction, and economic contributions.’
Performance as behaviour
Campbell (1990) explained that: ‘Performance is behaviour and should be
distinguished from the outcomes because they can be contaminated by sys-
tems factors.’ Aguinis (2005) was positive that: ‘performance is about be-
haviour or what employees do, and not about what employees produce or
the outcomes of their work’.
Campbell et al (1993) focused on the measurement of performance,
which they dened as behaviour or action relevant to the attainment of the
organization’s goals that can be scaled, that is, measured. They suggested
that performance is multidimensional and that each dimension is character-
ized by a category of similar behaviour or actions. The components consist
of: 1) job-specic task prociency; 2) non-job-specic prociency (eg or-
ganizational citizenship behaviour); 3) written and oral communication
prociency; 4) demonstration of effort; 5) maintenance of personal disci-
pline; 6) facilitation of peer and team performance; 7) supervision/leader-
ship; and (8) management/administration.
Borman and Motowidlo (1993) suggested the notion of contextual perfor-
mance, which covers non-job-specic behaviours such as cooperation, dedica-
tion, enthusiasm and persistence and is differentiated from task performance
covering job-specic behaviours. As Fletcher (2001) mentioned, contextual per-
formance deals with attributes that go beyond task competence and which fos-
ter behaviours that enhance the climate and effectiveness of the organization.
right – the product of mental and physical effort applied to tasks – and can be
judged apart from results.
Dening performance like this leads to the conclusion that when managing
the performance of individuals and teams, both outputs (results) and inputs
(behaviour) need to be considered. This is the generally accepted ‘mixed
model’ of performance management, which is concerned with both the
‘what’ and the ‘how’.
Levels of individual performance are affected by a number of inuences
and factors as discussed below.
1 The individual, who needs the right levels of knowledge and skills,
motivation, and engagement to perform effectively.
2 The individual’s job, which has to be designed to provide the opportunity
to use and develop skills and give an appropriate degree of autonomy in
carrying out the work.
3 The individual’s manager, who has to provide leadership and support
and act as a coach and mentor as required.
4 The individual’s work group, whose members will exercise a strong
positive or negative inuence on the attitudes, behaviour and performance
of the individual.
5 The organization, which has to provide a powerful, cohering vision and
operate a work system that facilitates high performance.
Most employees want direction, freedom to get their work done, and
encouragement not control. The performance management system should be
a control system only by exception. The solution is to make it a collaborative
development system in two ways. First, the entire performance management
process – coaching, counselling, feedback, tracking, recognition, and so forth –
should encourage development. Ideally, team members grow and develop through
these interactions. Second, when managers and team members ask what they need
to be able to do to do bigger and better things, they move to strategic development.
Plan
Performance planning –
performance agreement
Monitor
Manage performance
throughout the year
• Monitor performance
• Provide regular feedback
Individual Performance Strategy 199
DHL is a global market leader in the international express and logistics industry,
with 45,000 staff in Europe.
DHL’s annual performance management process begins in August when the
core elements of the scheme are designed at the top level. Following this, in
mid-November, based on the aims decided upon in August, targets are set for the
year by a panel of senior staff. Once devised, these targets are cascaded down
the organization into individual personal objectives following discussions
between line managers and HR.
Individual Performance Strategy 201
The cascading process is designed to ensure that targets are rened and
altered to align with each individual’s actual job. Further discussions then take
place to decide what each target means for employees in practice and their
implications for competencies. Around the same time, attainment levels and
scoring based on the previous year’s performance take place to determine bonus
levels and salary rises. Following this, with targets already set, around the middle
of January, an outline for recording performance targets for personal and
nancial performance for the coming year is designed, and in mid-February the
company’s nancial results become known. This makes it possible to determine
the pot available for bonus payments and salary increases relating to the
previous year. Bonuses are paid in either March or April while salary reviews
takes place in April.
The initial stage of establishing overall objectives and the target-setting
framework sets the tone for the year. From year to year, conditions change, with
the priorities of senior management reecting the current state of affairs. As a
result, each year there are a number of overarching themes, such as serving
customers, for example, or health and safety. These core individual key
objectives (IKOs) are strictly adhered to, although local managers can determine
how to manage their attainment. In contrast, more exibility exists for other
objectives, with managers at lower levels able to alter them to align with their
particular needs. There is further exibility in the system with regard to its timing.
are considerable and it is all too easy for managers to go through the mo-
tions without really believing that what they are doing is worthwhile. This
is why attention must be given to involving them in developing the scheme,
brieng them thoroughly on the nature and importance of performance
management, emphasizing that managing performance is an important part
of their job and that they will be judged on how well they do it, providing
them with training and individual coaching, and monitoring how well they
carry out their performance management duties.
● ‘So, the key for me is just one-to-one time, and they know what they’re
aiming for, and we talk about it regularly. So it never really gets to the
situation where there’s like a really great big formal sit-down to say let’s
review everything you’ve done.’
204 Specifc People Strategies
Perhaps the best strategy to deal with the annual performance review issue,
indeed the whole problem of making performance management work, is to
appoint and develop managers who can act like this, rather than compel
them to conform to the bureaucratic requirements of a typical performance
management system. These managers are managing performance, not oper-
ating a system. They are constantly communicating with their team mem-
bers, they clarify what has to be done and take swift action to deal with
under-performance, they praise when praise is due and they coach their
staff. To get this sort of manager is a matter of selection, development
through coaching and mentoring, and constant encouragement. It would
take a lot of time and effort but it would be time well spent.
References
Aguinis, H (2005) Performance Management, Pearson Education, Upper Saddle
River, NJ
Bernadin, H K, Kane, J S, Ross, S, Spina, J D and Johnson, D L (1995)
Performance appraisal design, development and implementation, in G R Ferris,
S D Rosen, and D J Barnum (eds), Handbook of Human Resource
Management, Blackwell, Cambridge, MA
Borman, W C and Motowidlo, S J (1993) Expanding the criterion domain to
include elements of contextual performance, in Personnel Selection in
Organizations, ed N Schmitt and W C Borman, Jossey-Bass, San Francisco
206 Specifc People Strategies
Introduction
Digital strategy (sometimes called e-HRM strategy) is concerned with devel-
oping the use of digital technologies in the form of computer hardware and
software and such web-based applications as cloud technologies, social
media, chatbots and smart phones to help deliver people management ser-
vices for management and employees. It also involves strategies for the use
of articial intelligence (AI).
References
Marler, J H and Fisher, S L (2013) An evidence-based review of e-HRM and
strategic human resource management, Human Resource Management Review,
23 (1), pp 18–36
Ulrich, D (2019) Foreword and forward thinking on digital HR, in e-HRM: Digital
Approaches, Directions & Applications, ed M Thite, pp xvi–xix, Routledge,
Abingdon
Employee 18
engagement
strategy
Introduction
Employee engagement takes place when people are committed to their work
and the organization and are motivated to achieve high levels of perfor-
mance. According to the CIPD (2012: 13): ‘Engagement has become for
practitioners an umbrella concept for capturing the various means by which
employers can elicit additional or discretionary effort from employees – a
willingness on the part of staff to work beyond contract. It has become a
new management mantra.’ As David Guest (2014: 231) remarked: ‘One of
the attractions of engagement is that it is clearly a good thing. Managers are
attracted to the concept because they like the idea of having engaged em-
ployees and dislike the prospect of having disengaged employees.’
A strategic approach to enhancing employee engagement is required be-
cause organizations need to be clear about what they are proposing to do to
deal with this important factor affecting the behaviour of their employees,
taking account of information about employee engagement levels and trends.
Before examining the nature and contents of an engagement strategy, it is
necessary to answer three questions: 1) What is engagement? 2) Why is en-
gagement important? 3) What are the factors affecting engagement?
(2002: 269) stated that engagement was ‘the individual’s involvement and satis-
faction with as well as enthusiasm for work’. A later denition was produced by
Macey et al (2009: 7) who dened engagement as ‘an individual’s purpose and
focused energy, evident to others in the display of personal initiative, adaptabil-
ity, effort and persistence directed towards organizational goals’.
The term ‘engagement’ can be used in a specic job-related way to describe
what takes place when people are interested in and positive, even excited, about
their jobs, exercise discretionary behaviour in choosing to do more than is ex-
pected of them – ‘going the extra mile’ – and are motivated to achieve high
levels of performance. It is sometimes described as job or work engagement.
Truss et al (2006: ix) stated that: ‘Put simply, engagement means feeling positive
about your job.’ They went on to explain that: ‘The engaged employee is the
passionate employee, the employee who is totally immersed in his or her work,
energetic, committed and completely dedicated’ (Truss et al, 2006: 1).
Engagement can also be described as attachment to or identication with
the organization. The Conference Board (2006) dened employee engage-
ment as the heightened connection that employees feel for their organization.
Robinson et al (2004: 9) emphasized the organizational aspect of engagement
when they referred to it as ‘a positive attitude held by the employee towards
the organization and its values’. This concept of organizational engagement
resembles the traditional notion of commitment.
Perhaps the most illuminating approach to the denition of engagement
is to recognize that it involves both job and organizational engagement, as
suggested by Saks (2006) and Balain and Sparrow (2009).
● Those with engagement scores in the bottom quartile averaged 31–51 per
cent more employee turnover, 51 per cent more inventory shrinkage and
62 per cent more accidents.
● Those with engagement scores in the top quartile averaged 12 per cent
higher customer advocacy, 18 per cent higher productivity and 12 per
cent higher protability.
212 Specifc People Strategies
Other studies have also indicated that higher levels of engagement produce
a range of organizational benets, for example:
● Job challenge – this takes place when the scope of jobs is broad and job
responsibility is high. It enhances engagement because it creates potential
for accomplishment and personal growth.
● Autonomy – the freedom, independence and discretion allowed to
employees in scheduling their work and determining the procedures for
carrying it out. It provides a sense of ownership and control over work
outcomes.
● Variety – jobs which allow individuals to perform many different activities
or use many different skills.
● Feedback – providing employees with direct and clear information about
the effectiveness of their performance.
● Fit – the existence of compatibility between an individual and a work
environment (eg job, organization, manager, co-workers) that allows
individuals to behave in a manner consistent with how they see or want
to see themselves.
Employee Engagement Strategy 213
Leadership
A leadership strategy is required that focuses on how line managers can take
the lead in increasing levels of engagement. The competencies they need to
do so are set out in Table 18.1.
214 Specifc People Strategies
equipment and facilities, and the physical conditions in which people work.
A supportive environment will be one in which proper attention is paid to
achieving a satisfactory work–life balance, emotional demands are not exces-
sive, care is taken to provide healthy and safe working conditions, job secu-
rity is a major consideration and personal needs are taken into consideration.
An inspirational environment is one in which effective leadership is provided
by managers, the work is challenging, feedback to employees ensures that
their contribution is recognized and rewarded, and there is plenty of scope
for career development.
Job design
The strategy should be to encourage, guide and as necessary train line man-
agers on how to increase job engagement by designing or modifying jobs
which meet the requirement to provide, as far as possible, challenge, au-
tonomy and variety.
Performance management
The performance management activities of role denition, performance and
personal development planning, joint involvement in monitoring perfor-
mance, and feedback can all enhance engagement.
The seven-point People Promise outlines O2’s commitment to creating the best
possible employee experience.
It promises its people a warm welcome, providing a full induction programme
and welcome day for all new starters.
216 Specifc People Strategies
People are given the opportunity to get on. Everyone forms a personal
development plan with their manager and talks through their career goals at
least twice a year. People can learn new skills by applying for a matched
contribution Learning Scheme or by using the online academies which offer
training on a broad range of subjects.
O2 wants to create a workplace where people trust their senior managers and
their line manager. It invests heavily in the leadership skills of its managers,
afrming your manager will be there for you.
O2 people are trusted to do a great job. They’re encouraged to suggest new
ways of doing things in adviser forums, manager forums, skip-level meetings and
Ignite, an online system enabling advisers to capture customer insights and
share their own.
O2 wants to be a great place to work. In the current economic climate, it is
focusing even harder on looking after its people and improving its total reward
offering by introducing new exible benets and a broad range of discounts with
high street retailers. Vielife, an online health and wellbeing programme, helps
people manage their sleep, nutrition, stress and physical activity. And O2
Condential offers free 24-hour advice on issues including benets, debt,
housing, and other nancial matters.
O2 people should feel part of something special. For example, people are
encouraged to volunteer for charities and may be afforded time out for their
chosen projects. And they can apply for awards or refer friends and family under
the It’s Your Community programme, which gives grants of up to £1,000 to
community projects all over the UK.
O2 says thanks for a job well done, praising its people and giving them
recognition for their work. A new scheme will highlight outstanding individual
and team contributions to strategic goals, offering people high street vouchers
and the chance to attend a glittering annual ceremony.
References
Balain, S and Sparrow, P (2009) Engaged to Perform: A new perspective on
employee engagement, Lancaster University Management School, Lancaster
Chartered Institute of Personnel and Development (2007) Working Life: Employee
attitudes and engagement, CIPD, London
Chartered Institute of Personnel and Development (2012) Where Has All the Trust
Gone? London, CIPD
Conference Board (2006) Employee Engagement: A review of current research and
its implications, Conference Board, New York
Corporate Leadership Council (2004) Driving performance and retention through
employee engagement, Corporate Executive Board, Washington, DC
Crawford, E R et al (2014) The antecedents and drivers of employee engagement,
in Employee Engagement in Theory and Practice, pp 57–81, Routledge, London
Gallup (2006) Feeling Good Matters in the Workplace, Gallup Inc., Washington, DC
Guest, D E (2014) Employee engagement: fashionable fad or long-term xture? in
Employee Engagement in Theory and Practice, ed C Truss et al, pp 221–35,
Routledge, London
Harter, J K, Schmidt, F L and Hayes, T L (2002) Business-unit-level relationship
between employee satisfaction, employee engagement, and business outcomes: a
meta-analysis, Journal of Applied Psychology, 87, pp 268–79
IDS (2007) Building an engaged workforce, HR Studies Update, IDS, London
Kahn, W A (1990) Psychological conditions of personal engagement and disengage-
ment at work, Academy of Management Journal, 33 (4), pp 692–724
Lewis, R, Donaldson-Feilder, E and Tharani, T (2012) Management Competencies
for Enhancing Employee Engagement, CIPD, London
218 Specifc People Strategies
rationale for resourcing strategy. The aim of this strategy is therefore to en-
sure that a rm achieves competitive advantage by employing more capable
people than its rivals. These people will have a wider and deeper range of
skills and will behave in ways that will maximize their contribution. The
organization attracts such people by being ‘the employer of choice’. It retains
them by providing better opportunities and rewards than others and by de-
veloping a positive employment relationship that increases commitment and
creates mutual trust. Furthermore, the organization deploys its people in
ways that maximize the added value they supply.
The resourcing strategy complements and reinforces the people strategy, which
has ve targets:
A people strategy dashboard has been created to ensure that human resources
are managed more effectively. This extends the people strategy targets and is
used to monitor progress in achieving them.
This involved:
Retaining talent
A total reward approach is adopted, including the use of total reward statements.
Talent management
References
Keep, E (1989) Corporate training strategies: the vital component? in New
Perspectives on Human Resource Management, ed J Storey, pp 109–25,
Routledge, London
Miles, R E and Snow, C C (1978) Organizational Strategy: Structure and process,
McGraw-Hill, New York
Pascale, R (1990) Managing on the Edge, Viking, London
Quinn Mills, D (1985) Planning with people in mind, Harvard Business Review,
July–August, pp 139–45
Townley, B (1989) Selection and appraisal: reconstructing social relations? in New
Perspectives on Human Resource Management, ed J Storey, pp 92–108,
Routledge, London
Talent 20
management
strategy
Introduction
Talent management is a comprehensive and integrated set of activities which
ensure that the organization attracts, retains, motivates and develops the
talented people it needs now and in the future. The term talent management
may refer simply to management succession planning and management de-
velopment activities, although this notion does not really add anything to
these familiar processes except a new (but admittedly quite evocative) name.
It is better to regard talent management as a more comprehensive and inte-
grated bundle of activities, the aim of which is to secure the ow of talent in
an organization, bearing in mind that talent is a major corporate resource.
The following somewhat elitist denition of talent management was pro-
duced by Collings and Mellahi (2009: 304):
need to act on if they are going to win the war for managerial talent. These
are:
The McKinsey prescription has often been misinterpreted to mean that tal-
ent management is only about obtaining, identifying and nurturing high
yers. But this ignores the fth point made in the above list.
Pfeffer (2001: 252) had the following doubts about the notion of the
war for talent, which he thinks is the wrong metaphor for organizational
success:
Fighting the war for talent itself can cause problems. Companies that adopt a
talent war mind-set often wind up venerating outsiders and downplaying the
talent already in the company. They frequently set up competitive zero-sum
dynamics that make internal learning and knowledge transfer difcult, activate
the self-fullling prophesy in the wrong direction (those labelled as less able
become less able), and create an attitude of arrogance instead of an attitude of
wisdom. For all these reasons, ghting the war for talent may be hazardous to
an organization’s health and detrimental to doing the things that will make it
successful.
There are many versions of talent management but in one way or another
its components can cover such traditional people management activities as
workforce planning, recruitment, managing employee retention, performance
management, potential assessment, leadership and management develop-
ment, succession planning and career planning. The difference is that talent
management is a wider-reaching approach which ‘joins up’ these practices.
If you are going to manage talent you have to understand what is meant
by talent, that is, who the talented people you are going to manage are.
Before considering talent management strategy in detail, it is therefore nec-
essary to examine the meaning of talent.
What is talent?
Talented people could be described broadly as those who have the skills and
ability to do something well. But it is necessary to be more specic about
which talented people will be the concern of talent management. An elitist
denition states that talent is a quality possessed by people with exceptional
ability who are going to go far.
A less elitist and more embracing denition would be that talent is what
any able person has who does well in their role and has growth potential.
This is broadly in line with the view expressed by the CIPD (2007: 8): ‘Talent
consists of those individuals who can make a difference to organizational
performance, either through their immediate contribution or in the longer
term by demonstrating the highest levels of potential.’
These two approaches could be described as exclusive or inclusive. The
CIPD (2007: 8) established from their research that: ‘On the one hand there
was an exclusive approach, in which talent is viewed on the basis of those
destined for the top positions. On the other hand there was an inclusive ap-
proach, in which talent is dened as all the employees who work for the
organization. The reality is that most organizations had a hybrid approach
to talent, in which both exclusivity and inclusivity are accommodated and
indeed driven by the changing needs of the workforce’ (and, they could have
added, the organization).
In the light of this, three views about talent management strategy have
emerged. The rst is based on the belief that everyone has talent and it is not
just about the favoured few. It is necessary to maximize the performance of
the workforce as a whole in order to maximize the performance of the
organization. Thorne and Pellant (2007: 9) wrote that: ‘No organization
228 Specifc People Strategies
should focus all its attention on development of only part of its human
capital. What is important is recognizing the needs of different individuals
within its community.’
The second view is that organizations should focus on the best. The argu-
ment is that it is not helpful to confuse talent management with overall
employee development – both are important, but talent management should
be concerned with those who are particularly talented and have considera-
ble potential.
The third view is that while talent management may concentrate on ob-
taining, identifying and developing people with high potential, this should
not be at the expense of the development needs of people generally. This
pragmatic approach has much to commend it.
Attraction and
retention
policies
Continuing
talent audit
Talent
relationship
management
229
230 Specifc People Strategies
At BAE Systems there are ve mandated core business management processes
to support the delivery of corporate strategy and foster high performance. Talent
management is seen within a business performance context. An annual
Integrated Business Review Planning process is used by individual businesses to
establish and plan for the delivery of objectives in line with corporate strategy,
supported by quarterly business reviews, customer reviews and data from
employee surveys. Project performance is assessed by Contract Reviews.
Performance is reviewed throughout the year by the Performance Management
System. A Performance Centred leadership framework is used to integrate
management, resourcing and people development, focusing on the traditional
outcomes of performance (nancial, project and behavioural), reward and
development. There is behavioural performance feedback and a performance
potential rating (called Spectrum). Line leaders and functional directors ensure
the framework is implemented. HR’s role is one of assisting in development
interventions and providing some oversight and governance of the processes.
SOURCE Sparrow et al (2015)
References
Cappelli, P (2008) Talent on Demand: Managing talent in an uncertain age,
Harvard Business School Press, Boston, MA
Chartered Institute of Personnel and Development (2007) Talent: Strategy,
management, measurement, CIPD, London
Collings, D G and Mellahi, K (2009) Strategic talent management: a review and
research agenda, Human Resource Management Review, 19, pp 304–13
Johnson, G, Scholes, K and Whittington, R (2005) Explaining Corporate Strategy,
7th edn, FT Prentice Hall, Harlow
Michaels, E G, Handeld-Jones, H and Axelrod, B (2001) The War for Talent,
Harvard Business School Press, Boston, MA
Pfeffer, J (2001) Fighting the war for talent is hazardous to your organization’s
health, Organizational Dynamics, 29 (4), pp 248–59
Sparrow, P, Hird, M and Cooper C L (2015) Do We Need HR?, Palgrave
Macmillan, Basingstoke
Thorne, K and Pellant, A (2007) The Essential Guide to Managing Talent, Kogan
Page, London
Younger, J, Smallwood, N and Ulrich, D (2007) Developing your organization’s
brand as a talent developer, Human Resource Planning, 30 (2), pp 21–29
Diversity 21
and inclusion
strategy
Introduction
Diversity and inclusion strategy is about improving the ways in which an
organization handles the management of people from BAME (black, Asian
and minority ethnic) and LGBT (lesbian, gay, bi-sexual and transgender)
groups. Diversity refers to the differences between people – ‘the mix’.
Inclusion is the deliberate act of welcoming diversity and creating an envi-
ronment where different kinds of people can thrive and succeed. Diversity is
what you have. Inclusion is what you do about it. But you need to pay
attention to both diversity and inclusion.
Managing diversity involves ensuring, through recruitment, talent man-
agement, and learning and development policies and practices, that the right
sort of mix exists in the organization and that the skills and abilities of
typically underrepresented or marginalized groups are actively appreciated.
Managing inclusion means ensuring that members of each part of that mix
feel that they are treated the same in such terms as the work they do, the
rewards they get for doing that work and the opportunity to learn and
develop.
The following are the denitions produced by the CIPD (2019: 2):
The purpose of the strategy should be to ensure that cultural and individual
differences in the workplace are acknowledged, the different qualities which
people bring to their jobs are valued and people with different backgrounds
are included as part of the organization on the same terms as everyone else.
It should:
● Managing diversity involves ensuring that the right sort of mix exists in
the organization and that the skills and abilities of typically
underrepresented or marginalized groups are actively valued. Managing
inclusion means ensuring that members of each part of that mix feel that
they are treated the same in terms of the work they do, the rewards they
get for doing that work and the opportunity to learn and develop.
● The purpose of the strategy should be to ensure that cultural and
individual differences in the workplace are acknowledged, the different
qualities which people bring to their jobs are valued and people with
different backgrounds are included as part of the organization on the
same terms as everyone else.
Reference
Chartered Institute of Personnel and Development (2019) Building Inclusive
Workplaces: Assessing the Evidence, www.cipd.co.uk/Images/building-inclusive-
workplaces-report-sept-2019_tcm18-64154.pdf (archived at https://perma.cc/
F7FR-R68B)
Learning and 22
development
strategy
Introduction
Strategic learning and development takes a broad and longer-term view
about how to ensure that the organization has the knowledgeable, skilled
and engaged workforce it needs. Learning and development strategy sup-
ports the achievement of the strategic aims of the organization. It does this
by creating a learning culture and through strategies for organizational and
individual learning, as described later in this chapter. But it also denes how
the organization intends to provide employees with the opportunity to grow
and develop, thus enhancing their engagement with their jobs and the
organization. The chapter covers:
to meet present and future needs. The main thrust of strategic learning and
development is to provide an environment in which people are encouraged
to learn and develop. Strategic learning and development is business-led but
it also takes into account individual aspirations and needs.
Strategic learning and development is associated with strategic people
management. Both are concerned with investing in people and developing
the organization’s human capital. Keep (1989: 112) observed that:
● its plans and programmes should be integrated with and support the
achievement of business and people management strategies;
● it is performance-related – designed to achieve specied improvements in
corporate, functional, team and individual performance;
● everyone in the organization should be encouraged and given the
opportunity to learn – to develop their skills and knowledge to the
maximum of their capacity;
● the framework for individual learning is provided by personal development
plans that focus on self-managed learning and are supported by coaching,
mentoring and formal training;
● the organization needs to invest in learning and development by providing
appropriate learning opportunities and facilities, but the prime respon-
sibility for learning and development rests with individuals, who should
be given the guidance and support of their managers and, as necessary,
members of the learning and development or people management
department.
Learning and Development Strategy 237
● Develop and share the vision – belief in a desired and emerging future.
● Empower employees – provide ‘supported autonomy’; freedom for
employees to manage their work within certain boundaries (policies and
expected behaviours) but with support available as required. Adopt a
facilitative style of management in which responsibility for decision
making is ceded as far as possible to employees.
● Provide employees with a supportive learning environment where
learning capabilities can be discovered and applied, eg peer networks,
supportive policies and systems, and protected time for learning.
Learning and Development Strategy 239
performance and productivity metrics include costs per line, abandoned call
rate, average call time and average wait time. Monthly performance results in all
areas are scrutinized to identify areas for attention, and the learning and
development team run learning sessions and activities aimed at helping people
to improve their performance. When sales margin was identied as an area for
attention, over 150 people attended focused workshops and subsequent
performance results were tracked to measure improvements. Similarly,
warehouse supervisors with the highest staff turnover attended learning
programmes and, as a consequence, staff turnover was at lowest-ever levels.
References
Harrison, R (1997) Employee Development, IPM, London
Keep, E (1989) Corporate training strategies: the vital component? in New
Perspectives on Human Resource Management, ed J Storey, pp 109–25,
Routledge, London
Marsick, V J (1994) Trends in managerial invention: creating a learning map,
Management Learning, 25 (1), pp 11–33
Reynolds, J (2004) Helping People Learn, CIPD, London
Sloman, M (1999) Seize the day, People Management, 20 May, p 31
Reward strategy 23
Introduction
Reward strategy is concerned with the policies and practices required to
ensure that the value of people and the contribution they make to achieving
organizational, departmental and team goals is recognized and rewarded. It
is about planning and executing the design and implementation of reward
systems (interrelated reward processes, practices and procedures) that aim
to satisfy the needs of both the organization and its stakeholders and to
operate fairly, equitably and consistently. These systems will include
arrangements for assessing the value of jobs through job evaluation and
market pricing, the design and management of grade and pay structures,
performance management processes, schemes for rewarding and reorganiz-
ing people according to their individual performance or contribution and/or
team or organizational performance, and the provision of employee benets.
This chapter covers:
policies, practices and processes that will further the achievement of its busi-
ness goals and meet the needs of its stakeholders. It starts from where the
reward practices of the business are now and goes on to describe what they
should become.
Reward strategy provides a sense of purpose and direction, a pathway
that links the needs of the business and its people with the reward policies
and practices of the organization and thereby communicates and explains
these practices. It constitutes a framework for developing and putting into
effect reward policies, practices and processes that ensure that people are
rewarded for doing the things that increase the likelihood of the organiza-
tion’s business goals being achieved.
Reward strategy is underpinned by a reward philosophy. It is concerned
not only with what should be done but how it should be done; with imple-
mentation as well as planning. It is based on an understanding of the culture
of the organization and an appreciation of its needs and those of its people
within the context in which the organization operates. This provides the
basis upon which cultural t is achieved and needs are satised.
1 You must have some idea where you are going, or how do you know how
to get there, and how do you know that you have arrived (if you ever do)?
2 Pay costs in most organizations are by far the largest item of expense –
they can be 60% and often much more in labour-intensive organizations –
so doesn’t it make sense to think about how they should be managed and
invested in for the longer term?
3 There can be a positive relationship between rewards, in the broadest
sense, and performance, so shouldn’t we think about how we can strength-
en that link?
4 As Cox and Purcell (1998: 65) wrote: ‘The real benet in reward strategies
lies in complex linkages with other human resource management policies
244 Specifc People Strategies
(continued )
Reward Strategy 247
C A S E S T U DY Reward Strategy at BT
● business linkage;
● clarity and transparency;
● market competitiveness;
● performance differentiation;
● choice and exibility;
● equal pay.
1 The individual’s performance and contribution in the role – what does it mean
to have high individual performance?
2 The competitiveness of the individual’s existing salary, together with the
actual (and anticipated) salary movement in relevant local markets – how
does salary align to the external market?
3 The company’s business results and ability to pay – can the company afford to
invest money in terms of additional reward?
4 Underpinning these pillars are the principles of clarity (a ‘focus on roles’),
equal pay and choice.
1 The diagnosis phase, when reward goals are agreed, current policies and
practices assessed against them, options for improvement considered and
any changes agreed.
2 The detailed design phase, when improvements and changes are detailed
and any changes tested (pilot testing is important).
3 The nal testing and preparation phase.
4 The implementation phase, followed by ongoing review and modication.
A step-by-step model for doing this is illustrated in Figure 23.1. This incor-
porates ample provision for consultation, involvement and communication
with stakeholders, who include senior managers as the ultimate decision
makers as well as employees and line managers.
Analyse business
strategy and
business needs
Develop HR strategy
Analyse present Assess needs of
HR and reward stakeholders – line
policies and managers and
practices other employees
Develop and justify
reward strategy and
Consult and define guiding Consult, involve
involve senior principles and communicate
management with employees
1 They have to have clearly dened goals and a well-dened link to business
objectives.
2 There have to be well-designed pay and reward programmes, tailored to
the needs of the organization and its people, and consistent and integrated
with one another.
252 Specifc People Strategies
When mostly North American concepts of strategic HRM and reward rst
entered into management thinking and practice in the UK we were both some of
their most ardent advocates, writing and advising individual employers on the
benets of aligning their reward systems so as to drive business performance.
We helped to articulate strategic plans and visions, and to design the pay and
reward changes that would secure better alignment and performance.
Some twenty years later, we are a little older and a little wiser as a result of
these experiences. We remain passionate proponents of a strategic approach to
reward management. But in conducting and observing this work we have seen
some of the risks as well as the opportunities in pursuing the reward strategy
path: of an over-focus on planning at the expense of process and practice; on
design rather than delivery; on the boardroom and the HR function rather than
on rst and front-line managers and employees; and on concept rather than
communications.
At times there has been a tendency to over-ambition and optimism in
terms of what could and couldn’t be achieved by changing pay and reward
arrangements, and how quickly real change could be delivered and business
results secured. At times the focus on internal business t led to narrow-minded
reward determinism, and a lack of attention to the increasingly important
external inuences and constraints on reward, from the shifting tax and wider
legislative, economic and social environment. And sometimes the focus on
designs and desires meant that the requirements and skills of line and reward
managers were insufciently diagnosed and developed.
254 Specifc People Strategies
References
Armstrong, M and Brown, D (2006) Strategic Reward: Making it happen, Kogan
Page, London
Armstrong, M and Murlis, H (2004) Reward Management, 5th edn, Kogan Page,
London
Brown, D (2001) Reward Strategies: From intent to impact, CIPD, London
Cox, A and Purcell, J (1998) Searching for leverage: pay systems, trust, motivation
and commitment in SMEs, in Trust, Motivation and Commitment: A reader, ed
S Perkins, pp 60–65, SRRC, Faringdon
Trevor, J (2009) Can pay be strategic? in Rethinking Reward, pp 21–46, ed S
Corby, S Palmer and E Lindop, Palgrave Macmillan, Basingstoke
Wright, P M and Nishii, L H (2006) Strategic HRM and Organizational Behaviour:
Integrating Multiple Levels of Analysis, Working Paper 06-05, Cornell
University, Ithaca, NY
Employment 24
relationships
strategy
Introduction
Employment relationships strategy denes the intentions of the organization
about what needs to be done and what needs to be changed in the ways in
which the organization handles relationships with employees and their trade
unions, if any. This is an area of people management where a strategic ap-
proach is particularly appropriate. Organizations need to have a clear idea
of the route they want to follow in developing a cooperative and productive
employment relations climate.
The foundation for the strategy is provided by the employment relation-
ship, which describes how employers and employees work together and
relate to one another. Because it is a fundamental aspect of employee rela-
tions, the nature of the employment relationship is examined in the rst
section of this chapter. Against this background, the next section deals with
the characteristics and concerns of employment relations. The next sections
cover two of the main aspects of employee relations: partnership and giving
employees a voice. Finally the chapter deals with trade union recognition
strategy.
Parties
• Managers
• Employees
• Employees’ representatives
Operation Substance
• Level Individual:
• Process • Job
• Style • Reward
The employment • Career
relationship • Communications
• Culture
Collective:
• Joint agreements
Structure
• Joint machinery
• Formal rules /procedures
• Informal understandings,
expectations and
assumptions
258 Specifc People Strategies
A strategy for improving the climate may involve developing fair employ-
ment relations policies and procedures and making plans to implement them
consistently. Line managers and team leaders, who are largely responsible
for the day-to-day conduct of employment relations, need to be educated
and trained on the approaches they should adopt. Transparency can be
achieved by communicating policies to employees, and commitment in-
creased by involvement and participation processes. Importantly, as dis-
cussed below, the organization can address its obligations to the employees
as stakeholders and formulate strategies for mutual gains and building trust.
Employment Relationships Strategy 259
France. Local forums have been established covering individual business areas;
the UK National Works Council (NWC) is made up of nominated representatives
from each of the local forums and an international works council operates from
the global company headquarters in Paris.
References
Boxall, P F (2013) Mutuality in the management of human resources: assessing the
quality of alignment in employment relationships, Human Resource
Management Journal, 23 (1), pp 3–17
Employment Relationships Strategy 265
Building and integrating a health and wellbeing strategy for the organization
that is contingent on its specic requirements is how employers can avoid the
pitfall of developing a ‘menu’ of initiatives that are not joined up or closely
linked to the needs of employees.
The strategy should be evidence based. Pulse surveys (ie ones taking
place on a quarterly, monthly or even weekly basis rather than the more
typical annual survey) should be conducted, possibly through an enter-
prise social network (a social network operated within an organization
that functions in the same way as social networks such as Facebook).
The surveys would measure the reactions of employees to key aspects of
Employee Wellbeing Strategy 269
Wellbeing
factor Description Possible actions
Relationships The quality of social Provide facilities for socializing at
with relationships and the extent to work. Introduce robust bullying and
colleagues which negative behaviour such harassment policies and ensure that
as bullying and harassment they function effectively.
exist.
Work–life The achievement of a satisfying Introduce family-friendly policies
balance equilibrium between work and providing for a reasonable degree of
non-work (eg family) activities. A exibility. Minimize excessive job
survey by Eurofound (2013) demands.
established that poor ratings of
work–life balance were the
strongest predictor of stress.
Financial Financial wellbeing is dened by Pay people fairly. Provide counselling
wellbeing the CIPD (2017) as ‘a state of for employees with nancial
both emotional and physical worries.
wellbeing, produced by a set of
conditions and abilities. It
includes making the most of an
adequate income to enjoy a
reasonable quality of life and
having the skills and capabilities
to manage money well, both on
a daily basis and for the future’.
Stress Stress at work is a major factor. Take action as required in any of the
It can be caused by problems in areas set out above. Introduce an
any of the areas set out above. Employee Assistance programme
(EAP) to provide counselling and
advice.
References
Alfes, K, Shantz, A and Truss, C (2012) The link between perceived HRM prac-
tices, performance and wellbeing: the moderating effect of trust in the employer,
Human Resource Management Journal, 22 (4), pp 409–27
Brown, D, Hirsh, W and Reilly, P (2019) Strategic Human Resource Management:
Case Studies and Conclusions: from HR Strategy to Strategic People
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Wellbeing, CIPD, London
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Work, CIPD, London
Employee Wellbeing Strategy 273
Resourcing strategy
International resourcing strategy is based on workforce planning processes
which assess how many people are needed throughout the MNC (demand
forecasting), set out the sources of people available (supply forecasting) and,
in the light of these forecasts, prepare action plans for recruitment, selection
or assignment.
Workforce planning may be carried out by the parent company PM func-
tion, although it will focus mainly on managers, professional and technical staff
throughout the global organization and is linked to talent management.
Workforce planning for junior staff and operatives is more likely to be carried
out by subsidiaries, although the centre may require information on their plans.
By reference to workforce plans, resourcing in an international organiza-
tion means making policy decisions on how the stafng requirements of
headquarters and the foreign subsidiaries can be met, especially for manag-
ers, professionals and technical staff. Sparrow, Scullion and Farndale (2011:
42) emphasized that MNCs ‘increasingly demand highly-skilled, highly ex-
ible, mobile employees who can deliver the required results, sometimes in
difcult circumstances’.
Additionally or alternatively, a decision may be made to employ third
country nationals (TCNs) in certain posts. These might be easier to obtain
than home country nationals and could cost less. But as pointed out by
Dowling, Festing and Engle (2008), they might not want to return to their
own countries after assignment, the host government may resent the hiring
of TCNs and national animosities would have to be considered.
● talent planning;
● talent pool denition;
● identifying talent;
● recruiting talent;
● performance management;
● management development and career planning;
● assignment or promotion.
HSBC has created a system of talent pools that track and manage the careers of
high potentials within the international rm. After those employees have been
identied, they are assigned to regional or business unit talent pools, which are
managed by local human resources and business unit leaders. They are then
selected initially for new assignments within their region or business and may
later be given positions that cross boundaries. Managers of the pools single out
people to recommend for the group talent pool, which represents the most senior
cadre of general managers and is administered centrally.
Performance coaching
(throughout the year)
• Regular open dialogue
• Integrates performance,
learning and development,
reward and individual
engagement
• Addresses performance
issues
• Underperformance not
tolerated
The factors that are likely to impact on international reward strategy are the
corporate culture of the multinational enterprise, expatriate and local la-
bour markets, local cultural sensitivities, and legal and institutional factors.
A choice has to be made between on the one hand seeking internal consist-
ency by developing common reward policies in order to facilitate the move-
ment of employees across borders and preserve internal equity, and on the
other hand, responding to pressures to conform to local practices.
Briscoe et al (2012: 297) identied the following options for establishing
a worldwide reward system:
Managing expatriates
The management of expatriates on international assignments is a major fac-
tor determining success or failure in a global business. Expatriates are ex-
pensive. They can be difcult to manage because of the problems associated
282 Specifc People Strategies
References
Baeten, X and Leuven, V (2010) Global compensation and benets management:
the need for communication and coordination, Compensation & Benets
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HRM, International Journal of Human Resource Management, 16 (6),
pp 949–70
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Budhwar and A DeNisi, pp 15–39, Routledge, Abingdon
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Management, 4th edn, Routledge, New York
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Management, 5th edn, Cengage Learning EMEA, Andover
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management: the example of corporate elites in MNEs, Journal of World
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Human Resource Management, ed R S Schuler and S E Jackson, pp 200–13,
Blackwell, Malden, MA
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context, in Strategic Human Resource Management, ed R S Schuler and S E
Jackson, pp 162–99, Blackwell, Malden, MA
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Management, Routledge, London
Sparrow, P, Scullion, H and Farndale, E (2011) Global talent management: new
roles for the corporate HR function? in Global Talent Management, ed H
Scullion and D G Collings, pp 40–55, Routledge, London
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pp 36–41
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January/February, pp 124–34
AUTHOR INDEX
Abell, D F 26 Chandler, A D 25
Aguinas, H 196 Chatzkel, J L 152
Ahmad, S 49 Claus, L M
Alfes, K 149, 269 Coens, T 184, 202
Allen, M R 2 Collings, D G 225, 277–78
Alvesson, M 131 Combs, J 54
Angrave, D 101 Conway, N 118
Armstrong, M 2, 62, 63, 82, 244, 253 Cooke, R 148
Arthur, J 54 Cooper, C 266, 267–68
Coster, C 7
Baeten, X 281 Cox, A 243–44
Baird, L 45 Crawford, E R 212
Balain, S 211 Crocker-Heffer, A 46
Barends, E G 100 Cullinane, N 259
Barney, J B 50, 54, 56
Baron, A 82 Delery, J E 2, 8, 15, 45, 50, 51, 54–55, 56
Baron, D 172 Doty, H D 45
Becker, B E 11, 12, 37, 54 Dundon, T 2, 19, 186
Beer, M 2, 8, 9, 10, 16, 19, 44, 55, Dyer, L 18, 44, 45, 48, 52, 62, 80, 133
63–64, 143
Benson, G S 83 Egan, G 198
Bernadin, H K 196 Elias, J 151
Birdi, K 54 Ericksen, J 52
Blackler, F 166
Bonache, J 52 Festing, M
Borman, W C 196 Fisher, S L 207
Bos-Nehles, A C 54, 120 Flaherty, J 185
Bourne, M 182 Fletcher, C 196
Bowen, D E 12, 13, 52 Fombrun, C J 8, 35, 44, 55, 80
Boxall, P F 7, 15, 17, 24, 25, 30, 35, 48, 51, Fredrickson, J W 26
53, 79–80, 86, 102, 183, 256, 259 Freeman, R E 53, 171
Brawn W 275 Friedman, M 17, 172
Brewster, C 275, 276
Briscoe, D R 279, 281 Gheorghe, C 180
Brown, D 2, 62, 63, 64, 87, 130, 201, 243, Ghoshal, S 166
251, 253, 266 Goodhall, A 203
Brumbach, G B 196–97 Grant, D 17
Buckingham, M 203 Grant, R M 51, 81
Butler, L 124 Gratton, L A 38, 103, 118
Graves, S B 172
Cabrera, E F 52 Guest, D E 2, 8–9, 14, 19, 46, 54, 71, 118,
Caldwell, R 131, 149 119, 120, 208, 259, 268
Campbell, J P 196 Guzzo, R A 14
Cappelli, P 46, 226
Carlson, D S 54 Hack, J 180
Cascio W F 2, 63, 201–02 Hambrisk, D C 26
286 Author Index
diversity t
dened 232 best t 47
management of 232 as best practice 46
diversity and inclusion as bundles 46
dened 85 as contingency (best t) 46
strategy 233 horizontal t 43
temporal factor in achieving 108
e-HRM 17 see also digital strategy vertical t 43, 44, 45
emergent strategy 81 exibility strategy 222
employee engagement
dened 85, 210–11 grade structures 111
enhancement 144
factors inuencing 212–13 Harvard model of HRM 9, 10
importance of 211–12 high-commitment management 84
strategy 210, 213–15 high-involvement management 83–84
employee experience high performance culture, development
dened 14–15 of 185–86
and employee value proposition 222 high-performance management 83
management of 72 high-performance work systems
and people management 72 and bundling 111
employment relations strategy components of 186
approaches to 260–61 dened 15, 186
concerns of 261 development of 187–89
dened 256 high performance working 144
nature of 260 horizontal integration or t 43, 64
employee resourcing, see resourcing horizontal integration 43
employee value proposition 222 HR, see people management
employee voice strategy 262 HR analytics, see people analytics
employees as people not disposable ends 79 HR architecture 11
employee wellbeing HR policies 12
case for 266–67 HR practices 12
dened 85, 266 HR role in managing change 124
and the ethical dimension of HR 16 HR strategy
factors affecting 269–71 and economic imperatives 80
features of an employee wellbeing and people strategy 79
strategy 267–69 and strategic HRM 38
and HR 14 see also people strategy
and performance 71 HR system
and strategic HRM 55 and the HR architecture 11
employer brand 222 components of 12
employment relations climate strategy 258 dened 11
employment relationship 85, 256–58 features of 12
engagement, see employee engagement a ‘strong’ system 12–13
ethical behaviour and corporate social HRM, see human resource management
responsibility 173 human capital dened 151–52
ethical considerations 131 human capital management
ethical dimension of HRM 16–17 aims 152
evidence-based management 100 dened 85, 151
evidence-based people management 100, dening characteristic 151
151 development of human capital
evidence-based approach to developing management strategy 154, 157
people strategy 99–01 link with business strategy
151, 153–54
factors of production, people as 75 metrics 153
nancial wellbeing 271 strategy 152–53
Subject Index 291