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This paper describes the crucial impact of linking human resource processes to business strategy. It argues that without this connection we are in danger of failing to move beyond corporate rhetoric, of creating statements of strategic intent that bear little relationship to the behaviours and everyday lives of employees.
The rhetoric of many corporate mission statements currently contains exhortations from senior executives to "move closer to the customer", "become more international", or "solve problems through teams". These are crucial strategic decisions which in the minds of senior executives may well constitute the means by which their organisation achieves and sustains competitive success.
Is this nothing but rhetoric or is it an embedded part of the shared mind set (Ulrich, 1990)? Would, for example, the strategic intent or mission statement be apparent to an individual in the organisation from the way they are selected, inducted, appraised or rewarded? Is it apparent in their job content and objectives, in their task opportunities and career paths? From the perspective of individual behaviour, it is these human resource systems and processes which serve to focus, enable and sustain the levels of performance to which the mission statements aspire. Unhappily, for many companies the rhetoric remains simply that (Devanna et al. 1982; Stace and Dunphy, 1990; Storey, 1992). Exhortations to "move closer to the customer" are accompanied by task objectives which limit the amount of time individuals spend with the customer; those to "become more international" are juxtaposed with career development systems which reduce opportunities for cross-country posting and create senior executive cadres dominated by home country nationals. Mission statements to "solve problems through teams" are undermined by appraisal and reward systems which remain resolutely individualistic, and tournament-based promotions which encourage competition between team members.
Without the re-engineering of fundamental human resource systems, mission statements are destined to remain rhetorical. Vision building, communication workshops, cascaded objectives all have a role to play in re-focusing attention on the strategic intent. But when an individual has returned to work after watching the video or attending the workshop, their long-term behaviour is influenced by the way they see others appraised and rewarded, by the type of people who are selected, by who gets development and promotion. It is these unwritten "rules of the game" (Scott-Morgan, 1993) which will continue to influence behaviour long after the video screen has darkened and the workshop schedule been completed.
The examples described earlier will be familiar to many managers, who will have their own store of anecdotes to illustrate the size of the schism between rhetoric and reality. Why does this schism continue to exist in many organisations where the systems to select, induct, appraise, reward and develop simply conspire to focus, enable and sustain behaviours which run counter to the very core of the strategic intent?
In part the schism is a reflection of the relationship between those who devise strategy and those (particularly in the human resource function) destined to implement it. In many organisations the business strategy is created in isolation and "handed down" to the human resource professionals for implementation. This one-way process occurs because there is no human resource representation at board level to create initial integration; members of the HR function have limited business awareness, or they operate in a "Clerk of works" rather than an "Architect" role (Tyson and Fell, 1986). This lack of functional synergy in the creation of strategic imperatives and implementation processes can leave the human resource function developing HR systems in isolation from the business. Without a grounded frame of reference they can become overly influenced by the "flavour of the month", participating in initiatives which quickly lose momentum and commitment. They never achieve, create or sustain the continuity by which initiatives build upon each other -- the "stairway" described by Hay and Williamson (Hay and Williamson, 1991). Instead these initiatives simply "bump along" the bottom, losing momentum from one to another.
It could be argued that even for those executives determined to create synergy between business strategy and human resource systems, the means by which the systems could be achieved are poorly understood. The literature on developing a strategic approach to human resources (Truss and Gratton, 1993) reveals a preponderance of case material -- for example, how General Electric managers appraise and reward (Frombrun, Tichy and Devanna, 1984), or how Disney manages selection (Schuler 1992) -- and alternatively, complex models portraying the hypothetical linkages between business strategy and the human resource process (Lundberg, 1985). The issue this literature generally side-steps is how executives build alignment between strategic intent and human resource systems and processes. This article in part addresses this issue by proposing and describing a process by which alignment can be discussed and appropriate actions established.
This process has been developed over several years with a number of American and European companies. It provides managers with a way of debating and responding to a number of imperatives for achieving synergy between human resources and business strategy. Four major imperatives are considered. Firstly, how to take a long-term, future-oriented perspective on human resource systems when the pressures are to solve tactical, short-term problems. Secondly, faced with the potential for action on many fronts, how to identify those aspects of human resource systems and processes which create greatest leverage, or which are potentially of greatest risk to the …