Unit 1 - Developing your HR strategy

Step 1 - Who needs to be involved?

Before an organisation seeks to develop an HRM strategy there is a need to determine who should be involved. The following questions, suggested by the CIPD, represent a useful starting point:

•        Is this the first time strategy is to be formulated or is it an updating of an existing strategy?

•        Does a well-defined business strategy or plan already exist? If not, what information can be obtained about business intentions?

•        What is the initial assessment of the key issues with which the HR strategy should be concerned?

•        What is the initial view of the strategic intent – how are the key issues to be addressed?

•        Are the resources available to develop and implement the strategy?

•        To what extent is top management sympathetic to the idea of an HR strategy?

•        What do top management hope to get out of it and do they recognise the link to business outcomes?

•        Will line managers support strategy initiatives and do they have the skills to implement them?

•        How are staff generally likely to react to the strategy? Can any difficulties be anticipated and, if so, how can they be dealt with?

•        Who should be involved in developing the strategy

Step 2 - Define the business strategy

This is concerned with defining the business aims and objectives. You need to focus on such issues as:
•        Are the business aims clear?

•        Are the aims shared?

•        Who is involved in the establishment of the aims?

•        Are the aims consistent?

Step 3 - Analyse the context

In developing the strategy, the CIPD (2004) state ‘… it is important that not only the provision of the business strategy is considered but also the context in which it is prepared and implemented. This means appreciating the organisation’s strengths and weakness and understanding the threats and opportunities it faces. It also means assessing the core competences of the organisation and identifying critical success factors, especially those associated with people.’

You will need to determine the information you already have available to make an assessment of the strength of the organisation and areas for development. You will also need to consider the competencies of the employees. This can be achieved from:

•        training needs analysis

•        development plans

•        performance management data

•        job descriptions

•        management feedback.

Step 4 - Identify business needs

This is the crucial stage concerned with identifying the business issues that should be addressed by the HR strategy. For example, the agreed business strategy might include plans for an approach to selling, adding quality to the level of service offered, reducing the number of offices or enhancing the role of the current support staff.
In this situation, an HR strategy would need to determine the resourcing implications in terms of:

•        job roles

•        staff numbers and skills

•        training needs

•        devise plans to satisfy them.

Step 5 - Identify key HRM issues

The key HR issues are those that directly affect the achievement of business goals. Reflect on the following issues and identify which are important to your organisation at present:

•        Communication strategies

•        Competence development

•        Corporate vision

•        Demographics

•        Diversity management

•        Downsizing

•        Employee commitment

•        Employee control

•        Employee relations

•        Empowerment

•        Ethics

•        Globalisation

•        Government and other forms of political regulation

•        Leadership development

•        Management development

•        Mergers, acquisitions and demergers

•        Mission statement

•        Organisational culture

•        Organisational development

•        Organisational entry

•        Organisational structure

•        Performance appraisal

•        Performance management

•        Political climate

•        Quality assurance

•        Recognition

•        Recruitment and selection

•        Reporting relationships

•        Resources

•        Reward management

•        Stakeholders

•         Succession planning

•        Team working

•        Training needs analysis and delivery

•         Values

Step 6 - Develop the strategic HRM framework

The strategic framework will define the main strategic goals, their interconnections and their priorities. The links between them will need to be identified so that mutually supporting processes can be developed, for example, performance management processes or human resource development programmes. This will enable priorities to be established. In some cases the strategies will be bundled together. In other cases they might be implemented in sequence on the grounds that there is only so much innovation and change that an organisation can cope with at any one time. However, the evidence suggests that a piecemeal approach to change is not as effective. It is important that interrelationships and sequencing are considered with care and nothing should be done without assessing its consequences for other aspects of the business or HR strategy.

Step 7 - Diagnosing HRM priorities

When formulating HR strategies, the key questions are:

•        What are the key components of the business strategy?

•        How can HR strategies support the achievement of the business strategy?

•        What are the strengths and weaknesses of the organisation and the opportunities and threats it faces?

•        What are the implications of the political, economic, social, technological, legal and environmental contexts in which the organisation operates?

•        To what extent is the organisation in a stable or dynamic (turbulent) environment and how will this affect our strategies?

•        What is the nature of the corporate culture? Does it help or hinder the achievement of the organisation’s goals?

•        What needs to be done to define or redefine our values in such areas as quality, customer service, innovation, team working and the responsibility of the organisation to its employees?

•        What do we need to do to increase commitment? How do we communicate our intentions and achievements to employees and what steps do we take to give them a voice (i.e. obtaining feedback from them and involving them in the affairs of the organisation)?

•        To what extent do we need to pursue a strategy of high performance or high-commitment management; what would be the main requirements of such a strategy?

•        How can we increase the resource capability of the organisation?

•        To what extent do existing HR practices meet future business needs? What needs to be done about any gaps or inadequacies?

Step 8 - Change management

The implementation of any HR strategy requires effective change management. There is often a gap between the rhetoric of HR strategies and the reality of what happens subsequently. This is essentially a change management issue. Everyone concerned with implementation needs to be included in a change management programme.
The main features of change management are:

•        hard evidence and data on the need for change

•        strong commitment and visionary leadership from the top

•        clear communication of a vision of a preferable future

•        clear understanding of the levers for change in the organisation

•        appropriate temperament and leadership from those concerned with managing change

•        a learning organisation that creates a climate for change and learns from failures

•        participation in the planning and implementation of change by those most affected by it (the aim should be to get them to ‘own’ the change)

•        a reward system that encourages innovation and recognises success in achieving change

•        strategies for change that are adaptable (the ability to respond swiftly to new situations and demands, which will inevitably arise, is essential)

•        an emphasis on change in behaviour, not enforcing values

•        processes, structure and systems designed and aligned to deliver the required changes

•        anticipation of implementation problems

•        active and visible champions of change

•        ongoing communication on why change is essential and how it will affect everyone

Step 9 - Evaluation

The final stage is to evaluate the effectiveness of HR strategies. Is it possible to demonstrate a business case for SHRM?