Four Steps to Building an HR Agenda for Growth: HR Strategy Revisited
Kesler, Gregory, Human Resource Planning
Today's business growth strategies provide a new window of opportunity to shape a more meaningful HR agenda. A practical but thoughtful approach for tying HR strategy to the growth plans of the company should be pursued jointly by corporate HR teams and their divisional counterparts, with the close involvement of line leaders. A four-step process for creating a strategic HR agenda is outlined and the experiences of various companies are compared. The paper focuses especially on effective practices for working a single HR agenda across multiple divisions of large, diversified companies.
Innovations in business strategy, especially in the race to find new sources of growth, have created new pressures to refocus HR work, roles, and priorities. In smaller, entrepreneurial firms the CEO/founder fights a war to attract, retain, and motivate bright, young, and technically able people. In large multinational companies, the impact of people on the competitiveness of businesses has become increasingly clear, and HR professionals are being asked to help create strategic clarity across the organization.
Human resources strategy has evolved through various forms over the past 20 years. Twenty years ago respected companies like IBM, Digital Equipment, and Merck & Co. pioneered early efforts to create HR strategies, which aimed to tie HR functional strategies to business priorities. Huselid and Becker (1998) identified a positive relationship between shareholder value and the extent of strategic HR work performed in 740 firms studied. Ulrich (1997) has written at length about the need to redefine HR roles into strategic partnerships that provide more value to external customers. Brockbank (1999) has presented a four-stage lifecycle model for characterizing the extent to which the HR function is strategic, arguing that firms move logically from being operationally reactive, to operationally proactive, to strategically reactive, and, finally, in a few cases, to becoming strategically proactive.
But HR strategic planning has not necessarily become commonplace. In one sense an increasing gap has formed between the most "sophisticated HR companies" and everyone else, with regard to strategic human resources. In the late 1990s companies once known for sophisticated HR strategy evolved away from arcane planning exercises and toward reengineering or transforming the function. Like business strategy, HR planning may have reached the peak of its popularity in the late 1980s and early 1990s. Focus shifted to excellence in execution, fixing processes and shrinking bloated organizations. HR strategy evolved, as HR leaders focused themselves more on redesigning their own processes, deploying information systems, reorganizing themselves and building new partnering-oriented competencies (Kesler and Law, 1997; Yeung and Brockbank, 1995).
Today another transition is underway as companies seek new ways to define pragmatic but innovative people strategies that will directly support the business agendas that drive stock prices and expectations for growing shareholder value.
As Brockbank (1999) argues, the challenge continues to be how to link HR plans to business strategy. After more than two decades of discussion, there is surprisingly little agreement about what an effective HR plan looks like, and how one is built. But effective practices have evolved and are being utilized by a number of competitive companies. The objective of this article is to focus readers on a set of action steps that typify approaches that have proven to be most effective for creating a human resources agenda to support growth--particularly in large, divisionalized multinationals that must create a weave of overlapping but separate HR agendas.
GROWTH STRATEGY: MAKING THE RIGHT CHOICES
Growth dominates the business agenda in this first year of the new millennium. For many large, diversified companies the path to growth demands clearer focus. …