APPROACHES TO HR STRATEGY DEVELOPMENT

The starting point of HR strategy development is the alignment of HR strategy to the business strategy and the organizational culture – the achievement of vertical integration. This provides the necessary framework for the three approaches to the development of HR strategies that have been identified by Delery and Doty (1996) as the ‘universalistic’, the ‘contingency’ and the ‘configurational’. Richardson and Thompson (1999) redefined the first two approaches as best practice and best fit, and retained the word ‘configurational’, meaning the use of ‘bundles’, as the third approach.

Aligning HR strategy 

Afundamental requirement in developing HR strategy is that it should be aligned to the business strategy (vertical integration) and should fit the organizational culture. Everything else flows from this process of alignment.

Integration with the business strategy 

The key business issues that may impact on HR strategies include:

● intentions concerning growth or retrenchment, acquisitions, mergers, divestments, diversification, product/market development; 

● proposals on increasing competitive advantage through innovation leading to product/service differentiation, productivity gains, improved quality/customer service, cost reduction (downsizing);

● the felt need to develop a more positive, performance-oriented culture and any other culture management imperatives associated with changes in the philosophies of the organization in such areas as gaining commitment, mutuality, communications, involvement, devolution and teamworking.

Business strategies may be influenced by HR factors, although not excessively so. HR strategies are concerned with making business strategies work. But the business strategy must take into account key HR opportunities and constraints. 

Wright and Snell (1998) suggest that seeking fit requires knowledge of the skills and behaviour needed to implement the strategy, knowledge of the HRM practices necessary to elicit those skills and behaviours, and the ability quickly to implement the desired system of HRM practices.

Aframework for aligning HR and business strategies is provided by a competitive strategy approach that relates the different HR strategies to the firm’s competitive strategies, including those listed by Porter (1985). An illustration of how this might be expressed is given in Table 9.1.