Alignment and strategic change: a challenge for marketing and human resources.

Introduction

Increasing alignment with customers and alignment of employees with the strategy is a goal of many change efforts. Two functional areas that can make contributions to change programs are marketing and human resources (HR). Within a company, these two functions are uniquely positioned to deal with issues of market alignment. But we believe this potential has been underutilized. Creating the leadership to understand and proactively build this relationship can make an important contribution to company success. We suggest that our model and tools can help forge the bridge.

The role for strategic marketing is to gather, integrate and design winning marketing strategies for products and services in the marketplace and even to provide "intelligence development" (Deschamps and Nayak, 1995). A central and strategic function of a company's people (HRM) systems is to ensure alignment. As Becker et al. (1997) state, the "tangible evidence of an HR manager's focus on the human capital elements of important business problems (e.g. those problems likely to impede growth, lower profitability, and diminish shareholder value) is an internally coherent, externally aligned, and effectively implemented HRM system" (emphasis added).

Not all HR practitioners are prepared for their emerging strategic role. Retooling HR to become a strategic business partner "at the table" is receiving considerable current attention (Ulrich, 1997). Growing evidence suggests that people systems, or human resource management systems, play a significant role in creating success for companies. Data that supports the business case for HR as a competitive advantage is receiving intense attention (Becker et al., 1997; Huselid et al., 1997). Paradoxically, many observers have been noting that the HR function is in crisis. One reason is that the traditional role of HR is not equipped to be in the position of strategic business partner. At the same time, more traditional HR functions are being automated and/or outsourced. The role is being eroded with less clarity about how to replace it. While there are numerous exhortations for HR practitioners to transform themselves into strategic business partners, the ways to change this role and attendant tools are not well defined.

We believe that one way to accelerate organization change is for both marketing and HR functions to relinquish some parochial turf-based perspectives, join in collaborative effort, cross functional boundaries and seek common ground to focus on market (customer-employee) alignment. While Schneider and colleagues have been urging this for a number of years (Schneider and Bowen, 1985), it is only recently that they have been able to cite a clear success story. Schneider reports that their work in a large insurance company exploring the relationship between employee attitudes and customer satisfaction led to the formation of cross-functional (marketing and human resources) corrective action work groups to focus on region-specific improvements (Schneider et al., 1996). They also noted an overall "cross functional integration of marketing and human resources management which these findings have stimulated" (p. 704).

Developing the partnership for alignment assessment between HR and marketing will not be easy. In many instances with which we are familiar, the two functions directly concerned are not only not integrated but in fact rarely talk to each other. They might even claim to not understand each other. There are significant barriers which keep the two functions apart. Nevertheless, both functions deal with customers - internal ones as well as external ones - and both functions share some overlapping technologies, e.g. focus groups, surveys, interviews.

In this paper, we offer a rationale as well as some tools with case examples that we believe can help the marketing and HR functions migrate to a collaborative business partnership role by becoming champions of market alignment. As part of this effort, we think that HR can reap additional benefits by learning more about the marketing of services including the marketing of their own services to their internal customers. HR skills and knowledge should flow to marketing as well.

In our experience, four interlocking elements must be considered to successfully build HRM systems that are internally coherent and externally aligned. These are:

1 tools to measure and map both customers and employees on common dimensions to make customer-employee alignment part of a balanced scorecard;

2 a conceptual understanding of the process of building alignment with the market - a model of the dynamics and the total system;

3 cross-functional integration, especially between marketing and HR; and

4 leadership that is capable of leading cross-functionally through all the steps of the alignment process.

Here, we suggest a model that can be used to think through alignment issues to make them actionable; and we describe some powerful tools to measure, map and make visible the degrees of alignment. Several company examples illustrate the benefits and challenges.

The alignment challenge: an illustration

Although the following case may seem somewhat dated, we believe that it represents a good illustration of the overlap between marketing strategy and HR, as well as conflicts that continue to recur.

By early 1991, Pepsi-Cola had a new strategy firmly in place and had a clearly articulated vision to accompany it. Franchise bottlers, formerly Pepsi's customers (numbering 600 in the early 1980s) had been acquired. Pepsi's new customers now were the former customers of the bottlers - supermarkets, restaurants, theaters (numbering 600,000 by 1990). The cornerstone of the vision was "the right side up" company. Pepsi used an inverted triangle (now "right side up") as a symbol for its new customer focus. The concept was similar in design and intent to Nordstrom's. Executives were still at the apex, but now that was rotated 180 degrees. The pinnacle of the traditional organizational pyramid moved to the bottom of the page - supporting both middle management and the pyramid's base - the front line workers at the top. In the Pepsi design, the largest number of the organization's people were positioned at the base, directly interfacing with customers at the top of the page. Pepsi-Cola's slogan became "the customer is why." The goal was alignment with new customers in the market. A different and greatly expanded customer base required new employee behaviors throughout the organization.

Vigilant attention to alignment is a leadership process absolutely essential for major cultural change of an organization. Craig Weatherup, Pepsi-Cola's president, said he was the "chief aligner." He set out to align the company's culture and the behavior of its employees with the strategy. Weatherup's goal, as quoted in Fortune, was "to fill every employee with his vision of a new, customer-driven organization and the tools they would …