Many organizations that operate in the global market contend that strategic initiatives are important in ensuring that they gain success both in the short-term and long-term. The HR department within any organization is established to handle issues that relate to employees, including enhancing motivation and conflict resolutions. The noble functions of HR are inspired by the perceptions that people who work for any organization act as the source of competitive advantage, especially by noting that they cannot be optimized using economic theories in the same manner as other factors of production such as capital and land (Ollapally & Bhatnagar, 2009). Therefore, the human resource professionals have an obligation to develop strategies for ensuring organizational success through people. Modern organizations increasingly seek unique human resource strategies and business approaches to ensure sustained competitive advantage. Issues such as the witnessed change in technologies, workforce demographics, intellectual capital, and the growing concern of the need for effective management of human resource assets prompt this move. Since these essential aspects define the organizational business environment, HR professionals control every decision for organizational growth. Hence, they play critical roles in strategy formulation and planning processes. This paper discusses the role that HR professionals play in strategy formulation using the cases of Google Company and Westpac Corporation.
HR Professionals and formulation of human resource strategy: their role
Human resource professionals have a key role to play in the development of the two-way vertical approach for organizational strategies. This claim implies that they not only play the role of aligning HRM systems with business strategies, but also participate in the formulation of strategies. Consequently, HR personnel participate in the formulation of strategies by playing the role of good strategic partners. Jerjawi (2011) confirms that the HR department participates not only in strategy formulation, but also in its implementation and development of other functional strategies. Hence, HR professionals play proactive roles in strategy formulation by establishing long-term growth by laying various strategic alternatives. Such alternatives include, “fostering a change of cultures, identification of mergers, identification of acquisition possibilities, and tracking changes in the market in the context of future human resource needs” (Krishnan & Singh, 2003, p. 5).
Considering that organizations operate in a dynamic environment, formulation of successful strategies involves change. Unfortunately, employees, who the HR department has the mandate of managing, fear organizational change. For instance, during mergers, they respond to organizational changes by developing fear concerning the uncertainties of their jobs (Jerjawi, 2011). In the formulation of merger strategies between Westpac Corporation and St. George Bank to overcome employee fears, the HR played the role of smoothening worker transition to embrace change. During the formulation phase of the merger strategy, this goal was accomplished through addressing questions that emanated from employees concerning the implications of the merger at personal levels.
The fear of the implication of a merger with reference to job security creates survival syndrome. Such fear leads to reduced employee performance levels since their worries shift from maintaining their set organizational performance standards to worries about the capacity to remain employed by an organization (Conner & Ulrich, 2006). Jerjawi (2011) amplifies this position by claiming, “If employees of two companies do not have as much fear of the change in the event of a merger, productivity is more likely to stay at previous levels” (p.68). Fear among employees is propagated through rumors. Thus, during the strategy formulation phase, HR professionals play the role of establishing a plan for detecting and effectively addressing rumors concerning the merging organizations’ decision to lay off employees where work functions are redundant. This role also applies where an organization considers laying off employees as a strategy to rejuvenate business success by cutting costs.
In strategic partnerships, the HR section ensures that all risk factors that are associated with HR mandates are mitigated to ensure the success of an organization. For example, during the formulation of the merger strategy between Westpac Corporation and St. George Bank, this function included the evaluation and making of decisions on the impact of the structures and cultural characteristics of different organizations, which could influence employee performance. Based on this information, the HR department offers advice to the respective managers of the two organizations that form the merger concerning the appropriate decisions that are required while paying attention to the concerns of maintaining employee morale and commitment to the business of the merger (Leopold & Harris 2009). Contribution of the HR department in influencing the decision of changing the merger structures and cultures is meant to enhance organizational efficiency.
Operation of HR as a strategic partner is tied to the concerns of enhancing the effectiveness of employees through strategies such as motivation and the setting of reward systems. Trust concerning the capability of an organization to meet its personnel needs is important, especially where they are in the lowest rank of Maslow’s hierarchy of needs.
Brockbank (2010) says that organizations have different cultures that shape employee perception and commitment to the aims, goals, objectives, and missions of an organization. These goals are communicated from the top-most level of management to the subordinate employees. This claim means that perceptions that employees are no longer under control of leadership that satisfies their needs attract incidences of low motivation. This situation occurs until the new leader inculcates trust in employees of the merging partner organization whose top leadership takes command from the top management of the other organization. In such a situation, the HR department encounters challenges of maintaining high productivity while enhancing employee motivation. Consequently, during the formulation of any business change strategy, HR professionals must be involved in the development of motivational plans to ensure that any change does not interfere with productivity, effectiveness, and efficiency.
In its development of organizational strategies, Google Company incorporated all corporate leaders, including the human resource professionals to enhance proper coordination of the plan during the implementation process. The company recognized that HR professionals’ support is pivotal during the integration of all organizational functions. Such experts come in handy while linking the human resource side functions with the established business plan. In fact, during the business plan formulation process, it is not only essential to identify various organizational competences in enhancing business strategies, but also to evaluate plans for the performance of strategy implementers (employees) in the achievement of various strategic goals. At Google Company, this step required the input of the HR professionals.
Any plan formulation process introduces specific goals and objectives. When these goals are not achieved upon the implementation of a formulated plan, the plan is deemed to have failed. Hence, the input of HR professionals is essential in the strategy formulation phase since they supply strategy developers with the appropriate information on human resource capability available for the strategy implementation in a manner that ensures the achievement of the desired goals and objectives. For instance, in the successful implementation of a new strategy, Leopold and Harris (2009) confirm that it is important for organizations to develop a strategically linked plan for compensating people who are in charge of the plan implementation to ensure that the organization attracts the best expertise in the implementation and evaluation process. Upon the formulation of any strategic plan, human resource professionals play the role of designing a reward system that is necessary for attracting the requisite people as a way of ensuring that they remain motivated.
Strategy formulation process is influenced by different internal and external elements. Such elements include economic, social, technological, cultural, and political factors. Changes of these factors are manifested in the form of information changes, variation of employee demographic structures, and political influences, which also lead to variations in organizational strategic directions. Since people are involved in responding to these changes, the HR plays the role of strategy formulation by ensuring effective alignment of HR management with internal and external influencers of an organization’s business.
External factors that influence organizations may fall into two classes, namely factors that affect the human resource strategy and those that affect the sustained competitive advantage strategy. From the context of factors that affect the human resource strategy, HR handles all issues that influence employees within an organization. For instance, the Google Company recognizes workforce diversity management as critical in the endeavor to increase the ability to address various needs of the diverse Google customer base. Particularly, Google gains from the varied viewpoints of its workforce in the effect that such a labor force provides increased problem-solving capacities and creativity levels. This situation is critical for the success of the organization in the future unknown dynamic business environment. Thus, HR professionals are incorporated in strategy formulation to ensure the articulation of concerns of the diverse employee base of the organization with the developed strategy of ensuring future competitive advantage.
Proper management of Google workforce makes the organization gain immensely in the sense that it ends up establishing a central position in the competitive market. This market comprises the strategic imitative that the company deploys to maintain its continued growth in the competitive market. In fact, establishing a match between strategic initiatives and the HR approaches during policy or strategy formulation phase has made the company acquire competitive advantage and hence a magnificent market share. Consequently, the diverse labor force is not only appealing to the enhancement of the top organizational talent, but also attracts a wide range of customer patronage stemming from persons who are interested in buying goods and services from an organization. While playing the role of ensuring future competitive advantage in the policy formulation process, HR professionals ensure that human resources that impair the productivity of the employees do not arise during the strategy implementation process.
Benefits of having a Well-thought out Human Resource Plan
Many organizations that ensure that they are successful in the long-term through the strategic initiative of focusing on employees as their most important resources for gaining competitive advantage endeavor to reduce occupational hazards. They also minimize labor costs. Pfeiffer and Gellar (2003) support this line of argument by further noting, “today, because of the recognition of the crucial importance of people, HRM in an increasing number of organizations, has become a major player in developing strategic plans and facilitating changes within the organization” (p.8). One of such plans is looking for mechanisms of enhancing employee motivation such as enhancing safety in the working environment within an organization. On the contrary, meeting the needs of employees with respect to improving their working environments involves establishing a compromise between the funding of activities that generate wealth for an organization and the operational surroundings. Hence, the human resource may fail to establish a match between the strategic initiatives and its mandates within an organization. To overcome this challenge, it is beneficial to develop a well thought out human resource plan.
Modern organizations are now shifting to service delivery as the foundation of their competitive advantage. This step requires the development of an effective plan for labor planning. Indeed, the human resource plan is beneficial for an organization since HR managers have the noble responsibility of ensuring that they bring people who possess the appropriate skills and knowledge base in an organization. They then provide various job descriptions whilst selecting people to fit in the positions depending on their talent potentials (Leopold & Harris, 2009). They are also required to conduct employee induction coupled with training to ensure that the overall developed customer-focused goals are realized. These tasks are impossible without the availability of a well-developed human resource plan.
The human resource arm of an organization requires a good planning in the execution of performance management systems. Ensuring motivation is the key to better employee performance (Leopold & Harris, 2009). Thus, planning for motivation strategies together with how they can be implemented is of central relevance to any human resource department. HRM defines various roles of different people who are involved in running the business of an organization. During the process of executing these responsibilities, feedback loop aids in the improvement of employee skills. It also facilitates the alignment of institutions’ objectives and goals with those of the individuals. Successful performance management system also aids in establishing reward programs (Leopold & Harris, 2009). Considering that the HR performance management process involves the execution of various responsibilities, a well-thought HR plan is inevitable in any organization that seeks to utilize people as its main source of long-term success. The HR department participates in building the culture and values of any organization. Developing a mechanism for ensuring a favorable work environment is the responsibility of the HR arm. A safe and clean environment that integrates all cultures helps in improving employee job satisfaction. These benefits are impossible or even hard to achieve without a clear and well-thought HRM plan.
Steps to Follow to Execute the HR Plan
Determining goals encompasses the first step in any effective human resource management process. For the existing workforce, determining goals helps in the establishment of a direction that ensures continued organizational growth. It also forms the means of determining and evaluating progress and effectiveness of utilizing people to achieve organizational growth. For new employees, determining goals occurs after a decision is made to make new hires.
While determining HRM goals, four types of goals (task-performance, organizational-conformance, personal-performance, and emulation) may be defined. Task-performance goal means the expected performance levels in different works or responsibilities that are to be allocated to employees. Precision in determining these goals is important upon noting that successful performance in the first task helps in building courage and confidence in the next job (Singh, 2003). Personal-performance goals entail the desired human resource achievements. While determining the goals, HR professionals decide what they want to be achieved through employees. They determine the necessary resources that can be used to achieve them (goals).
Organizational–conformance goals encompass short-term goals, which new employees need to familiarize themselves with once they join an organization. They include strategies for ensuring their familiarization with organizational culture, procedures, and policies (Singh, 2003). Imitation goals involve individual-performance objectives, which are incalculable and unspoken in nature. These goals entail establishing things that HR professionals need the employees to emulate to ensure that the goals of an organization are realized. Hence, they comprise HR leadership goals.
Scanning the Environment
Development of human resource plan needs to be founded on the existing environmental needs and demands. This situation underlines the significance of conducting environmental scanning while developing human resource strategies. Environmental scanning refers to systematic surveys to identify and interpret external threats, and more importantly, the opportunities. An organization gathers information concerning the manner in which other organizations manage their human resources. It then uses this information in developing new strategies that do not conform to those of the competitors or its bad practices. The case of how the Google Company conducts its environmental scanning describes the process well.
The Google Company’s environmental scanning process during the development of new human resources strategies involves various processes. Firstly, it acquires information concerning the current business dynamics from its industry of operation. This information relates to demographics, the economy, governments, and the existing human resource regulations across all nations where it has established its operations. It then progresses to analyze what its competitors are doing to resolve human resource-related problems as identified in the first step. This step also entails the identification of threats and opportunities for different competitors. The objective is to look for mechanisms of establishing strategies that can help it to benefit from opportunities that are available for its competitors while avoiding the existing and potential human resource-related threats.
The third step involves conducting internal scanning. This step includes examining the organization’s weaknesses and strengths. Particular focus is on the manner in which Google Company’s human resource department seeks to address its weakness and threats while managing its human resources in the long-term, typically 5 to 10 years. The goal here is to ensure that any human resource plan is consistent with this long-term plan. Sometimes, it is also important for the organization to interview leaders of other organizations, which are not in the same industry, when developing its strategic initiatives. This plan helps in determining whether Google can engage in joint activities with other organizations. For instance, the human resource can use such information to make decisions on whether to make requests or even encourage its staff to participate in community activities jointly with other organizations.
It is impractical to conduct any human resource planning without workforce analysis. This stage involves the identification of the existing and future supply of the requisite labor skills, knowledge bases, and competences. Workforce analysis is broken down into supply and demand analysis. Supply of labor may be internal or external. Internal supply means that employees are sourced within the organization when new job openings are advertised. In such situations, advertisement of any openings is only made within an organization. This case depends on the demographics of the current organizational workforce and trends. Trends imply eligibility for promotion, retirement, and separation rates among other issues.
Demand analysis involves determining whether the available people have the requisite skills that match the new job openings. While executing this task, Google Company conducts a critical study of occupations and competences that are necessary to achieve the projected needs. This step is accompanied by an analysis of the expected alterations of key schemes and services with reference to delivery paths, capacities, time, location, and quality of the given services. Demand analysis also incorporates analysis of issues such as turnover rates, separation rates, and vacancy rates within an organization that is developing a human resource plan. Where an organization cannot get requisite people for a successful execution of the newly created organizational tasks, it must plan to source from outside. In this process, the HR must plan to recruit and train where necessary.
When determining goals in any human resource plan, probability exists that the supply and demand may experience some differences. For instance, the human resource demand may not match the supply requirements. Gap analysis becomes important during strategy formulation. This breakdown involves making comparisons of supply and demand analysis in the effort to determine the expected shortages, any excess in the number of the required employees, their nature and occupation, and more importantly, their competences (Leopold & Harris, 2009). The results of the gap analysis may help in developing the appropriate strategy for ensuring that an organization has the appropriate human resource both presently and in the future. For instance, gap analysis may reveal that an organization does not have access to people who have certain competences in the market due to lack of such people or their shortage. This situation attracts the need to establish of plans for worker education.
Adjusting HR Roles to help in Realizing departmental Objectives
Departmental goals are best achieved if the HR has its priorities right because various HR department tasks compete with one another. Setting HR priorities often involves a dilemma (Leopold & Harris, 2009). For instance, it becomes difficult to determine what should come first between improvement of the HR management capability to handle departmental needs, employee engagement, training and development, effective management of overall organizational change through employees, and improvement of the effectiveness, performance, and planning strategies.
No exact or unique list of priority order is applicable to all organizations. The order of executing priorities depends on the unique needs of the HR department as indicated by the analysis of the desired goals in the context of organizational strengths and weakness after conducting environmental scanning. For instance, when Google identified the need to develop new product lines to enhance its competitive advantage, the priority of the HR was on strategies for improving employee performance and encouraging innovation and creativity.
Monitoring, evaluating, and reporting on progress
Monitoring and evaluation are crucial aspects that ensure that the formulated plan remains on the right implementation path. Consequently, while developing the human resource plan, strategy formulators need to develop a plan on how to not only monitor, but also evaluate and report on the progress of the strategy implementation. Monitoring involves supervision of various activities with the objective of ensuring that they remain on track in relation to the formulated schedule. It correlates directly with the desired goals and objectives of a human resource plan.
Evaluating entails determining the extent to which a formulated plan measures the anticipated actual plan. It provides the mechanism through which the HR determines and corrects any departures from the formulated plan during the implementation process (Armstrong, 2006). Since the evaluation process entails making comparisons to determine the degree of departure from the agreed theoretical plan and the actual implementation, progress reports are prepared. They provide data on the actual measures of the implemented plan at any time during the execution process. During the plan formulation phase, the HR determines the time during the implementation process when the progress report should be prepared to facilitate the evaluation and monitoring processes.
An organization that relies on people to build its competitive advantage such as Google or Westpac Corporation, human resource professionals have a noble responsibility of ensuring that it attracts and retains employees who have the highest aptitude levels. This goal calls for the professionals to devise a plan for effective human resource management. While developing a well-thought human resource plan, HR professionals develop goals, scan the environment, conduct workforce investigation and gap analysis, and set HR priorities to help in achieving departmental goals. They also monitor, evaluate, and report on progress. Hence, the HR department contributes in building strategic partnerships.
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