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Human resources activities can be the unifying force in helping an organization

master strategic change. Here is a model for forging the links between
business needs and HR practices.

Strategic
Human
ResourcesManagement:
Linking the,People with the
Strategic Needs of the Business
RANDALL S. SCHULER

here really shouldn’t be any mystery Strategic human resources management is


T about the word strutegic in the phrase largely about integration and adaptation. Its
strategichuman resources management. concern is to ensure that: (1) human resources
According to Horace Parker, director of (HR) management is fully integrated with the
strategic education at the Forest Products strategy and the strategic needs of the firm;
Company, a 17,000-person division of Weyer- (2) HR policies cohere both across policy areas
haeuser in Seattle, Washington, strategic hu- and across hierarchies; and (3) HR practices
man resources management is about “getting are adjusted, accepted, and used by line man-
the strategy of the business implemented ef- agers and employees as part of their everyday
fectively.”For Bill Reffett, senior vice president work.
of personnel at the Grand Union, a 20,000-per- Together, these viewpoints suggest that
son supermarket operation on the East Coast, strategic HR management has many different
strategic human resources management components, including policies, culture, val-
means “getting everybody from the top of the ues, and practices. The various statements
human organization to the bottom doing also imply what strategic human resources
things that make the business successful.” management does, i.e., it links, it integrates,
The viewpoints of the academics, al- and it coheres across levels in organizations.
though stated in slightly different terms, echo Implicitly or explicitly, its purpose is to more
the same themes. A composite definition from effectively utilize human resources vis-n-vis
this source might include the following: the strategic needs of the organization.

The author wishes to thank Bill Reffett, Bill Maki, Horace Parker, Peter Wickens, John Fulkerson, John
Slocum, Susan Jackson, and Elmer Burackfor sharing their insights and experiences.

18
While all of this helps us identify the gen-
eral purview of the subject, it does not pro-
vide a framework for melding together the
separate components as defined by the prac-
titioners and academics. The purpose of this
article is to provide a model for just such an
integration, forming a basis for further re-
search as well as more effective practice.

THE 5-P MODEL


The 5-P Model of strategic human resources
management, shown in E7xhibit1, melds various
HR activities with strategic needs. Viewed this Randall S. Schuler is research
way, many activities within the five “Irs” (HX at the Stern School of Business,
Philosophy, Policies, Programs, Practices, and University. His interests include inter~a-
Processes) can be strategic. Thus, categorizing tional human resources management,
these activitiesas strategic or not depends upon human resources strategy, entrepreneur-
whether they are systmticdy linked to the strate- ship, and the interface of competitive strate
gic needs of the business, not on whether they are and human resources issues. He has
done in the long term rather than short term or authored or edited more than tweets-five
whether they focus on senior managers rather books, including international ~~~e~~i~~~
than nonmanagerial employees. of Human Resource Management, Pwson-
One benefit of the 5-P Model is that it nel and Human Resource ~ana~ame~t,
shows the interrelatedness of activities that Case Problems in Management and
are often treated separately in the literature. Organizational Behavior, Human ~~s~~r~~
This separate focus, perhaps necessary for re- Management in the information Age,
search purposes, tends to understate the com- Managing Human Resources, and
plexity of how HR activities influence indi- Job Stress. In addition, he has co
vidual and group behavior. Thus, by using more than twenty chapters to books of
the 5-P Model, we may gain greater under- collected readings and published more
standing of this complex interaction. Another than eighty articles in professional ~o~r~~~s
benefit of the 5-P Model is that it highlights
just how significant the strategy-activity link
can be, as the case histories included in this ar-
ticle Illustrate. editorial boards of Human R
Before we discuss the individual compo- Planning, Human Resource
nents of the 5-P Model, however, we need to
consider the element that sets it all in motion.
Asia Pacific Human Resource Ma
and Journal of High Tech~oiogy ~~~a~e-
DEFINING STRATEGIC NEEDS ment Research. He is a fellow of the
American Psychological Association”
Typically, organizations define (or redefine)
their strategic business needs during times of
turbulence. As such, these needs reflect man-
agement’s overall plan for survival, growth,
adaptability, and profitability. Internal char-
acteristics (e.g., culture, the nature of the busi-
EXHIBIT 1
THE 5-P MODEL: LINKING STRATEGIC BUSINESS NEEDS & STRATEGIC HR MANAGEMENT ACTIVITIES

Initiates the process of identifying

provides specific qualities to them

INTERNAL CHARACTERISTICS - clll EXTERNAL CHARACTERISTICS


1

Expressed in mission statements or


vtsron statements and translated into
strategic business objectives

STRATEGIC HUMAN RESOURCESMANAGEMENTACTIVITIES


HumanResourcesPhilosophy
Expresseshow to treat and
Expressed in statements defin-
value people
ing business values and culture >

Human Resources Policies Establishesguidelines for


Expressed as shared values action on people-related business
(guidelines) issues and HR programs
>

Human ResourcesPrograms Coordinateseffortsto facilitate


Articulated as Human Resources change to address major people-
strategies related business issues
>

Human Resources Practices


For leadership, managerial, and Motivatesneeded role behaviors
operational roles
1

HumanResourcesProcesses
Defineshow these activities are
For the formulation and
carried out
tation of other activities

ness) as well as external characteristics (e.g., to meld human resources activities with
the state of the economy, critical success fac- strategic needs will find that the process takes
tors in the industry) may well influence the time, persistence, and a detailed understand-
definition of needs. But the biggest factor af- ing of the needs that have been defined. In
fecting strategic HR management is not a par- fact, linkages between human resources ac-
ticular characteristic so much as it is experi- tivities and business needs tend to be the ex-
ence with this mode of planning. HR ception even during non-turbulent times.
managers who have never before been asked When such linkages do occur, they are usual-

20
ly driven by the organization’s efforts to for- Instead of using the terms HR ~~i~~s~p~y
mulate and implement a particular strategy. or HR values to describe how human re-
To trigger specific actions, the business sources are regarded, treated, and managed,
needs are generally translated into more ac- some organizations use the term culture. That
tionable statements, which might be called is, “We will create a culture that reco
strategic business objectives. For example, at the importance we place on people, and that
Pepsi-Cola International, the strategic busi- builds trust and cooperation.” The difference,
ness objectives are: however, may be more semantic than real,
0 Committed bottling organization For comparison, here is a statement of the cul-
0 Uncompromising dedication to quality ture at Pepsi-Cola International (XI):
??Development of talented people
LEADERSHIP IN PEOPLE
0 Focus on growth
We will develop an excellent organi-
0 Quality business plans zation focused on building the busi-
For other organizations, these might be ness by:
called business vision statements. By calling ??Empowering people to drive t
them strategic business objectives, Pepsi-Cola business from the closest point to the
believes that the statement conveys a more market
specific action element, starting with an influ- e Developing the right skills to be th.e
ence on HR philosophy. best in the business
o Building career opport~~~es
Human Resources Philosophy 0 Building teamwork
o With bottlers to ensure
This is a statement of how the organization re- maintain strong partner
gards its human resources, what role the re- o Among area, division,
sources play in the overall success of the busi- quarters staff to ensure that we co-
ness, and how they are to be treated and ordinate functional stre
managed. This statement is typically very gen- produce the best possible r
eral, thus allowing interpretation at more spe- o Across markets to ensure
cific levels of action within an organization. A share the best practices ~~ro~g~o~~
firm’s HR philosophy can be found in its stute- the enterprise
ment of business values. For example, one of the * Helping people succeed by build-
four value statements used at the Forest Prod- ing an environment with:
ucts Company (FPC) describes the company’s o High integrity
philosophy of what employees mean to the o Strong and consistent values
company and how they are to be managed: 0 Continuous improvement
a People are mature, responsible individ-
uals who want to contribute. For both PCI and FPC, these descr~~~5~s
QJPeople hold themselves to high stan- of HR philosophy are part of a larger state-
dards of integrity and business ethics; they ment of business (couporate) culture m btosiness
are responsible stewards of the land and en- values. These statements describe the im
vironment. tance to the firm of other, broader aspects of
* Our work environment is based on mu- the organization: customers, operations, mar-
tual respect, personal satisfaction, and growth keting, products, and general ~a~e~~§ of or-
opportunities for everyone. ganization. These generally follow from a
0 People recognize that teamwork, coop- statement of the firm’s vision or stra
eration, and a clean, safe, well-maintained ness objectives, and vision and obj
work place are essential to fulfilling our cus- low from its strategy. For exa
tomer commitments. egy is “Being Rio.1 by Creating
0 Continuing education is an ongoing Leadership and Excellence.”
commitment that involves everyone. eludes beingThe fastest growing
??The most committed to customer Human Resources Policies
service and attuned to customer
needs All of these statements provide guidelines for
??The best operators action on people-related business issues and
??The best selling and marketing for the development of HR programs and
company practices based on strategic needs. The term
??The best people-oriented company HR Policy, as used here, does not mean HR
P&y Manual. While a policy manual may
And PCl’s business values include: contain statements of general guidelines, em-
ployees often perceive the manual as a “rule
LEADERSHIP IN OUR BRANDS book” prescribing very specific actions per-
We will achieve brand superiority by: mitted in very specific situations.
??Delivering the best products in the
People-related business issues are those
marketplace:
that affect the immediate and future success
o The highest quality of the business and involve people. Flowing
o The best tasting from the strategic business needs, they may
o The most consistent include the need to hire skilled workers, the
o Communicating these benefits in need to improve worker productivity, or the
a high-impact, persuasive and con- need to reduce health care costs. Other peo-
sistent manner ple-related business issues include the need to
LEADERSHIP IN MARKETING develop a top cadre of international man-
We will build on our brand platforms agers, the need to have an adaptable and
by: skilled workforce under changing environ-
??Creating new brand, channel, and
mental conditions, and the need to reduce ex-
package segments that build the busi- cessive turnover of younger, talented individ-
ness: uals who are blocked by the limited number
o Faster off the mark of traditional promotion opportunities.
o Better ideas One example, drawn from PCI, illustrates
o Quicker to create and take ad- how an HR policy can link values with a par-
vantage of opportunities ticular people-related business need. The val-
ue, in this case, is stated in corporate literature
LEADERSHIP IN OPERATIONS as “high standards of personal performance,”
We will build excellence in our own and the need was to develop communication
and bottler operations by: skills that would foster such performance in a
??Being the low-cost producer decentralized international environment.
??Establishing and maintaining a HR Policy at PCI. Communication in an
strong focus on customer services international environment is difficult even
and sales management: under the best of circumstances, as any
o These cornerstones will make us diplomat knows. For PCI, the overlay of 150
the best sales company potentially different national cultures makes
??Standardizing operating systems to: it likely that some level of misunderstanding
o Enhance our ability to provide on almost any topic will occur on a regular
the highest level of customer basis.
service In the early 198Os, it was clear to almost
o Develop an ability to measure every manager in Pepsi-Cola International
and manage key parameters of the that expectations for individual performance
business in a consistent fashion standards varied from country to country. For
o Provide a common set of prac- example, in Eastern Europe it was acceptable
tices and disciplines for the orga- for a manager to meet his quota and take the
nization rest of the day off. In Germany, however,

22
managers expected continuous improve- rect and some Europeans will say that Ameri-
ment, a more demanding standard. Thus, the cans are too demanding and critical.
company needed a simple yet direct and cul- Instant feedback works amid cultural
turally flexible tool to develop more consis- versity because the focus is always on how to
tency in managing performance. The answer improve business performance, not on cultur-
turned out to be something called “instant al-specific behavior. Some would a
feedback-a device that any sophisticated this method is nothing more than
human resources executive would have communication. This is only partially correct
called too simple and unstructured to work It is communication directed at soIving per-
globally. Stated simply, the principle of in- formance problems, and while total ~1t~raI
stant feedback says that if you have a problem neutrality is not possible, instant feedback
or an idea about any aspect of the business, or says, in effect, “It doesn’t really matter
about an individual’s performance, then the you do it, as long as you do it.”
organization demands that you raise the issue This instant feedback example also illus-
appropriately and discuss it maturely. A trates the impact of organization structure on
twenty-minute video tape was used to dra- strategic HR management. PCI refers to its
matize and explain how instant feedback globally dispersed organization structure as
could be applied in an international environ- “mature decentralization” and considers this
ment. Over time, instant feedbackbecame the structure as a key to success in global mar-
connecting link in a chain of feedback systems kets. Essentially, mature decentralization
designed to improve and maintain high lev- means that as many decisions as possible be
els of personal performance. made in the field, as close to the consumer as
Pepsi-Cola International is fundamental- possible.
ly a “feedback driven” organization. This Despite the emphasis on ~ece~~rali~a-
feedback is now mirrored in every tool used tion, PCI recognizes the need fo
to measure and improve performance, and units to be globally integrated a
the language of feedback has become part of tive. The human resources challeng
the everyday vocabulary. It is heard when sure that a level of trust and open c
someone with an issue or problem says to an- cation prevails so that needed resources,
other individual, “Let me give you some in- regardless of their source, can be brought to
stant feedback.” With travel schedules, fre- bear on a given problem. Common business
quent phone contact, and constant time-zone objectives and human resources practices are
pressures, instant feedback has become a certainly critical in this. But in the face of
shorthand for getting to the point and com- versity, global cooperation is also acco
municating clearly. plished by:
But perhaps the most fascinating aspect of 0 Identifying values that support the ob-
the concept is that it has worked in every na- jectives of the business, the
tion, although with some cultural modifica- structure, and the needs of the
tions Americans use it because it fits the fast- ployee, and
paced way we do business. In most Asian *Developing a set of s
cultures, feedback may be tough and direct, standings concerning individu
but it should never be given in public. Also in that flow from the values th
Asian cultures, there may be a lot of head nod- man resources practices.
ding during instant feedback, as if signifying Thus, at PCI shared val
agreement. In reality, the nods mean only that HR policies) result in pa
the message has been heard. Some Latins will tion’s structure that in
argue very strongly if they do not agree with from the firm’s strategic di
the feedback, and some nationalities (e.g., In- policies serve to integrat
dian) will insist on a great deal of specificity. global operation by providing a basis for the
Canadians will say that Americans are too di- development of HR practices and programs.
HR Pmgrams mental strategic issues related to human re-
sources management. For this reason alone,
Shaped by HR policies, HR programs repre- HR strategies and HR programs are used in-
sent coordinated HR efforts specifically in- terchangeably in the framework here. Again,
tended to initiate, disseminate, and sustain an example from the Forest Products Compa-
strategic organizational change efforts neces- ny illustrates this concept.
sitated by the strategic business needs. These In the early 198Os,FPC became aware of a
efforts may begin at the top of the organiza- decline in large-volume, commodity lumber
tion and filter down, or they may begin else- businesses and growth among small mills that
where. They may even begin in two places at tailor-made products to meet customers’ de-
the same time. For example, Fords early- mands. The small, nonunion, owner-operat-
1980s strategic decision to emphasize quality ed, entrepreneurial mills were more market-
evolved at the top-management level and the oriented and operated at lower cost.
plant level simultaneously, a serendipitous Deciding that going out of business was
development. not an alternative, Charles gingham, Forest
HR programs can be initiated, dissemi- Product’s CEO, suggested that something
nated, and sustained for many types of strate- needed to be done, preferably sooner than
gic organizational change efforts. These ef- later. Together, the top dozen managers de-
forts, however, have several elements in cided that a massive reorganization was
common. First, they receive their impetus called for, accompanied by a radical change in
from the firm’s strategic intentions and direc- strategy. According to gingham, the change
tions. Second, they involve human resources in strategy went something like this:
management issues, i.e., they represent major
Approximately 80 percent of our sales
people-related business issues that require a
dollars in 1982 represented products
major organizational change effort to address,
sold as commodities. By 1995. . .we
They also share the reality of having strutegfc must reverse the proportions.
goals against which program effectiveness can
be measured. The result was a decision to dramatically
A number of generic questions help to decentralize. The three operating units, of
identify the fundamental issues for these which FPC was one, were given free reign on
types of programs: how to conduct their businesses. In addition,
??What is the nature of the corporate cul- gingham and his top team split operations
ture? Is it supportive of the business? into 200 profit centers, each center largely re-
??Will the organization be able to cope sponsible for its own bottom line.
with future challenges in its current form? This restructuring proved to be only one
??What kind of people and how many step in the right direction. The top team soon
will be required? realized that there would have to be a total
??Are performance levels high enough to transformation-the corporate culture,
meet demands for increased profitability, in- knowledge base, skill levels, style of leader-
novation, higher productivity, better quality, ship, and team orientation would all have to
and improved customer service? change. And this change would have to im-
??What is the level of commitment to the pact everything, from the way business was
company? conducted at headquarters to how a salesper-
??Are there any potential constraints such son dealt with customers. To meet this mas-
as skill shortages or HR problems? sive challenge, top management established a
Programs formulated in answer to such Leadership Institute. This institute, they felt,
questions are typically associated with the could become a powerful catalyst to acceler-
term HR strategies. This makes sense because, ate the normal process of change.
after all, HR strategies are essentially plans The institute’s first major objective was to
and programs to address and solve funda- develop and implement a four-week HR pro-

24
gram for top executives, followed by a similar e Give appropriate orientation to
program for middle managers. A key element on new assignments
in both programs was attention to new HR 0 Deal effectively with performance
practices, the fourth component of the Five-P problems
Model. * Give people the information they nee
to be successful
0 Give developmental performance feed-
Human Resources Practices
back in a timely manner
One useful way to approach this component e Give people the freedom t
of HR strategy is from the framework of roles. do their jobs
Generally speaking, the roles that individuals 4 Give co-workers the opport~~~t~ to try
assume in organizations fall into three cate- out their new ideas
gories: leadership, managerial, and opera- 0 Encourage appropriate ~oIla~~ra~~~~
tional. In each case, behaviors associated with on work assignments
a given roPe sh ould support strategic needs. ??Encourage people to
The following examples illustrate this concept. appropriate
Leadership Roles. These include establish- Again, managers use self-assessment and
ing direction, aligning people, motivating and assessment from employees and
inspiring individuals, and causing dramatic gauge how well they are playing th
and useful change. Within the FPC, leadership Opet-ational Roles. These are the roles
roles are defined and measured with state- needed to deliver services or make products.
ments like these: In essence, they are “doing” roles, and as
??Live by the basic values of the Forest such their content is far more specific than
Products Company for the other roles. In a service setting, a role
0 Demonstrate honesty and ethical be- statement might be “greets customers as
havior in business transactions they enter the sales area.” In a rna~u~ac~~~-
* Show a high degree of personal in- ing organization, a role might be ’
tegrity in dealing with others blueprints accurately” or “performs s
0 Avoid wasting time or resources ing operations consistent with quality stan
0 Strive for continuous improvement in dards.”
all you do Roles Can Move. Althoug ese three
0 Demonstrate confidence in yourself as roles are labeled leadership, managerial, and
a leader operational, this doesn’
By the way, these statements are taken that only nonmanagers
from a more extensive questionnaire used in tional roles or only ma
the campany’s leadership program. Man- managerial and leaders
agers complete the questionnaire (i.e., rate cess of formulating and implem
themselves on each point) and ask their em- strategic objectives, organizations t
ployees and customers to provide similar as- evaluate the “who does what” que
sessments some cases, this results in a shift of role re-
MuazageritiE Roles. Another part of the sponsibilities. For example, at the Nissan
questionnaire contains statements on man- tor Manufacturing klant in the United King-
agerial roles. Basically, these are the tradition- dom and the Honda IvIanufacturing Plant in
al roles of planning, directing, delegating, or- Marysville, Ohio, an analysis of roles and re-
ganizing and coordinating. Here are some sponsibilities performed by first-revel super-
examples: visors led to a more effective ~1Io~ati~~ of
0 Make sure that objectives are clearly work. The main activities associated with
understood first-line supervision are identified in ~~~~~~
0 Level with people on what is not nego- 2. Many of these activities, it turned out, could
tiable be distributed to nonmanagerial em
EXHIBIT 2
MOST COMMON ROLES AND RESPONSIBILITIESOF SUPERVISORS

??Absence control Keeping personnel


?? records
??Employee appraisal Keeping production
?? records
Bonus calculations
?? Leading quality circles
??

Deployment
?? of staff Planning/allocating
?? work
Discipline
?? Quality control
??

Drawing up shift rotations


?? Recruitment
??

??Employee welfare Team briefing


??

Handling
?? grievances Team building
??

Health and safety


?? Communicating
??

Induction
?? training

Matching Practices and Roles. Once the This process of~involvement at the FPC
role behaviors, whether leadership, manage- was not aimed solely at helping executives
rial, or operational, are identified, HR prac- and HR people understand the organization-
tices can be developed to cue and reinforce al change strategy. It also provided opportu-
role performance. While many HR practices nity for others to “buy into” the change pro-
are used in organizations without regard to cess. Moreover, involvement is in itself
organizational strategy, some practices tie consistent with the aims of the programs and
role behavior directly to strategic needs. Con- the strategic business needs. That is, the ex-
sider, for example, a company that has de- ecutives’ participation in change helps orient
fined a need to improve quality. HR practices these individuals toward giving their em-
might provide cues for group participation in ployees more participation and involvement
problem solving, training in statistical mea- in devising tactics to meet strategic business
sures of quality control, and the like. needs. (Most quality improvement programs,
for example, rely heavily on employee partic-
ipation.) On the other hand, to the extent that
suggestions, commitment, and executive
HR Processes willingness to change are not necessary, the
need for a participatory HR process dimin-
This area deals with “how” all the other HR ishes. These situations are increasingly rare,
activities are identified, formulated, and im- however, as employees at all levels continue
plemented. Thus, it is a significant strategic to call for empowerment, ownership, and
human resources management activity. In the participation.
FPC situation, the process for establishing the Thus, HR processes seem to vary along a
Leadership Institute and the HR programs continuum of extensive participation by all
was accomplished through a great deal of in- employees to no participation by any em-
teraction among the director of strategic edu- ployees. Two continuua could be used to dif-
cation and the line managers. According to ferentiate between the formulation and
Horace Parker, implementation stages: e.g., high participa-
The trump card in closing the deal [to tion/involvement during formulation, but
establish the Leadership Institute and low involvement at implementation. But it
the HR programs] was to involve the appears that there is a need for consistency
executives at various levels of the or- across these two process dimensions.
ganization in the planning stages. This need for consistency becomes evi-

26
dent across all the strategic human resources with the need to redefine what it meant for
management activities. This need arises be- Grand Union to be a grocery store. Taking into
cause all such activities influence individual account both competitive pressures and new
behavior. If they are not consistent with each customer habits and preferences, the team saw
other, i.e., if they are not sending the same the need for a basic change in direction--fro
messages about what is expected and re- a commodity, undifferentiated business to a
warded, the organization is likely to be an ag- high-quality, customer-driven business.
gregation of people pulling in different direc- From an individual store perspective, this
tions. This is hardly a situation for the meant eliminating many of the current items
successful implementation of strategic busi- to make room for more national brands
ness needs. merchandise with higher margins. A m
Recognizing this need for consistency, objective was to sell the best qu
then, is an important component. This need, which meant having a deli secti
along with an awareness of the other aspects smells of barbecued chicken), an expa
of strategic human resources management, fresh fruit section (more tropical fruits), a va-
translates into a greater need to be systemat- riety of small, ethnic food booths (for eating in
ic. Strategic human resources management or taking home), and a pastry shop.
requires consistency and a systematic orien- The culture of the firm changed to em-
tation. An example might illustrate how phasize listening to and serving c~st~rneK§.
these two needs actually get played out. Store managers and top management sta
to provide the leadership John Kotter
about, i.e., articulating and providing e
ment, showing confidence in the firm’s
PUTTING IT ALL TOGETHER:
ty to successfully change in the new, more
THE CASE OF GRAND UNION
uncertain environment, and setting obj
The Grand Union is a large retail grocery op- that would relate to the new way of
eration with the majority of stores located in business.
well-established neighborhoods. In the mid-
198Os, a new phenomenon appeared in the
Linking HR with
traditional retail grocery business: the advent
the Strategic Business Nee
of the super store, the smallest of which was
about twice the size of Grand Union’s largest Under the guidance of Senior Vice
store. Human Resources Bill Reffett, t
The Grand Union had always defined it- oped an HR philosophy that said the
self as a grocery store-a traditional high-vol- ee was a valuable, long-term source
ume, low-margin, limited-selection, discount- petit&e advantage, and that all efforts would
driven, 40,000 square foot grocery store. Five be made to provide exciting jobs, promo
years ago, the top management team decided opportunities, and retraining as needed
that competing with the new 100,000 square firm described this philosophy as deve
foot stores (Wal-Mart’s largest Hypermart is mental It was apparent that role
260,000 square feet) was not a viable mer- all employees would need to cha
chandising strategy. A directly competitive the needs of the new business.
strategy would have called for moving stores While the physical size of the stores re-
from their current space-bound locations and mained the same, employees were added to
uprooting relationships with customers, sup- staff the new sections. It was im
pliers, and communities.

New Strategic Business Needs


tional command-and-control
The top managers found themselves faced

27
EXIIIBIT 3
ORGANIZATIONAL CHARACTERISTICSOF A CUSTOMER-DRIVEN SERVICE ORGANIZATION

??Just-in-time inventory ??Responsibility for customers


??Just-in-time working commitment ??Standard operating procedures
??Team-oriented ??Continuous improvement
??Multi-skilled-technical, process, interpersonal ??No-fault policies
??Flexibility ??Job grade reduction
??Trust, harmonious employee relations ??Rewards for small improvements/suggestions
??Communications ??Supplier and customer involvement
??Egalitarianism ??Site visits, comparisons, benchmarks
??Distributed leadership ??Customer knowledge

date a more self-directed, self-managed ap- ??We have traditional departments, low
proach. Similarly, an individual orientation margins, high turnover rates
gave way to a team orientation. ??We feel no ownership of service
Major effort was directed toward identi- ??We lack management skills
fying new role behaviors for supervisors and In contrast, the employees felt that the
other staff. This required the intense involve- new direction would require management to
ment of the employees, with guidance pro- initiate new practices:
vided by the senior vice president of human ??Holding focus groups with customers
resources. Together, they identified needed ??Being customer-driven

supervisory (first-level managerial) and staff ??Including service as part of the product
role behaviors based upon what they saw as ??Adding high-margin departments
characterizing a customer-driven grocery ??Having stores coordinate efforts;- ex-
store. Then they compared these with current changing best practices
role behavior. ??Expanding management skills
This resulted in a critical redistribution of In addition, these employees asked,
supervisory role behaviors. By recognizing “From the broader, store viewpoint, what are
the distinction between supervisors as un em- the characteristics that reflect a solutions-ori-
ployee group and supervisory activities (respon- ented, customer-driven service operation?”
sibilities associated with the supervisory role) This question resulted in the list of charaeter-
it became easier to define role activities in istics for the store shown in Exhibit 3.
ways that would enhance the level of cus- Based upon these characteristics, the staff
tomer service. analyzed the needed role behaviors, vis-a-vis
The nonsupervisory employees also ad- the customer, and concluded that substantial
dressed the question, “What does this new changes were in order. The before-and-after
business orientation mean for us at the store?” role behaviors for the major job categories are
Because the focus was on the customer, they listed in Exhibit 4.
first asked, “How do we currently interact In the final stage, the employees identi-
with customers?” This resulted in a before- fied the HR practices that had to be formulat-
and-after analysis of customer relationships. ed to match the business, based upon the role
The “before” analysis produced in the follow- behaviors needed from the employees, espe-
ing list: cially those in direct contact with the cus-
??We do not know customer desires tomers. The analysis and formulation resulted
??We make limited use of customers in several HR practices that represented sig-
??We are space-driven, not customer- nificant change (see Exhibit 5). While these
driven changes in HR practices were prompted by

28
EXHIBIT 4
CUSTOMER-DRIVENEMPLOYEEBEHAVIORSAT GRANDUNION

Employees BehaviorsBefore the Charge Behaviors After the C


BAG PACKERS Ignore customers Greet customers
Lack of packing standards Respond to customers
Ask for customers’
preference

CASHIERS Ignore customers Greet customers


Lack of eye contact Respond to customers
Assist customers
Speak clearly
Call customers by name

SHELF STOCKERS Ignore customers Respond to customers


Don’t know store Help customers with
correct productionflocation
information
Knowledgeable about
product location

DEPARTMENTWORKERS Ignore customers Respond to customers


Limited Knowledge Know products
Know store

DEPARTMENTMANAGERS Ignore customers Respond to customers


Ignore workers Reward employees for
responding to customers

STORE MANAGERS Ignore customers Respond to customers


Stay in booth Reward employees for
service
Appraise employees on
customer service

what the employees thought was necessary * Develop and implement


for the business, they were driven, in large programs, and practices consist
part, by what employees thought would en- HR culture
able them to perform as needed by the cus- e Ensure that the HR process is consis-
tomer. tent with the other HR activities
If, as in the case of the Gr Union or
the Forest Products Company, organiza-
tion must change in response to strategic
F THE DEPARTMENT
needs, the HR department can play a critical
As the Grand Union example suggests, the role as change agent. In this processp the HI.3
HR department is in an ideal position to take department can establish an HR initiative, i.e.,
charge of the 5-P’s of strategic human re- a specific HR program to serve as catalyst for
sources management. In general it can: change. The initiative can involve:
0 Assist in the formulation of the firm’s * Establishing a senior HR council an
strategic direction and needs executive operating committee
* Identify the HR philosophies or culture 6 Mounting major activities to rally all
consistent with the business needs employees to the change
EXHIBIT 5
HUMANRESOURCESMANAGEMENTPRACTICESAFFECTEDBYTHECHANGEATGRANDUNION

??Human Resource Planning ??Performance Appraisal

Longer term focus Customer service measures


Tie to the needs of the business Feedback

??Staffing 0 Compensation
More socialization Relate to performance appraisal
More opportunities Awards and celebration

??Training and Development

More skill training


Customer service training

?? Developing a leadership program to cates to the divisions, or where the divisions


ensure that the change clearly includes top simply seize the initiative, they can essential-
management ly perform the roles just ascribed to the cor-
In the development of the senior man- porate HR department, The Grand Union
agement program (and further programs that and FPC case studies offer a flavor of both of
facilitate the change throughout the organi- these situations.
zation), the director of executive develop- The fact is that while there may be varia-
ment or strategic education can often take the tions in how the roles are shared between cor-
lead. This individual knows the top team per- porate and divisional HR staffs, there should
haps better than any other HR person. This be little variation in whether these roles are
being the case, this person can then be in a po- performed. Indeed, in the extreme case, many
sition to orchestrate the entire change pro- of these roles could be performed by the line
cess-and thus the entire strategic human re- managers with or without the assistance of
sources management function. others.
Within the HR department there can be
further division of roles and responsibilities.
This can be done by distinguishing between
IMPLICATIONS AND SUMMARY
the corporate HR department and the busi-
ness-unit or division HR departments. Taking The concept presented here proposes that the
a very proactive stance, the corporate HR de- framework of strategic human resources
partment can: management is made up of all activities af-
??Assist senior managers in formulating fecting the behavior of individuals in their ef-
change forts to formulate and implement the strate-
Become a model of change
?? gic needs of the business. This rather broad
Develop and guide divisional HR
?? concept carries several significant implica-
??Change organizational structure tions.
??Serve as clearing house First, successful efforts at strategic HR
??Serve as trainer for other HR personnel management begin with the identification of
??Do benchmark analysis strategic business needs. If these needs are
??Develop HRIS capability important to the success of the business, and
??Audit competencies if strategic human resources management can
HR activities at the divisional level can be instrumental in meeting these needs, then
then reflect corporate activities. In situations these needs should be systematically anal-
where the corporate HR department abdi- ysed for their impact on human resources

30
management activities, including HR philoso- efforts to successfully launc
phy, HR policies, HR programs, HR practices, initiatives. This argues strongly
and HR processes. ticipation in the formulation o
Another implication is that, because all for no other reason than to get a head start on
employees are affected by strategic human re- the systematic analysis o
sources management, participatory processes needs of the business are
may help cement the link between strategy A final implication relates to
and HR practices. At both Grand Union and study of strategic human resources
FPC, employees helped to analyze and define ment. As practitioners do their w
the new roles they would play vis-a-vis the demics have a significant oppo
strategic business needs. HR management serve organizations in transition, a rea
then developed practices to cue and reinforce laboratory for learning. This
role behaviors While a participatory process of the type of insight such
may not always be necessary, there is mount- vide. Hopefully it will also
ing evidence that employees respond favor- search, particularly in the
ably to it when it is an option. employee role behaviors a
A third implication is that strategic hu- tices to them, and in mappmg t
man resources management depends upon a consistency within and across the s
systematic and analytical mindset. At Grand man resources management activities.
Union, Forest Products, and Pepsi-Cola Inter-
national, the executives formulated and im-
plemented HR activities in a systematic and
analytical manner, first identifying strategic
needs and then designing HR activities with
consistent cues and reinforcements. While the
If you wish to ~akep~otoco~~es or
effectiveness of this approach has yet to be
obtain reprints of this
formally measured, indicators such as market
articles in ORGANIzAnONM
share, profitability, and productivity suggest
please refer to the specia
a fair amount of success. A fourth implication
service instructions on p
is that HR departments have a significant
opportunity to impact their organizations’

SELECTED BIBLIOGRAPHY

Several individuals have written articles rele- “The Search for Strategic HRM,” Personnel A&M-
vant to this topic and their ideas have been in- ugement, December 1990, pp. 30-33.
corporated here. They include: F. K. Foulkes, For an insightful discussion of the impact
Strategic Human Resource Management (Engle- of strategic intent and its implications for
wood Cliffs, NJ: Prentice-Hall, 1986); J. Butter, G. strategic human resource management, see G.
R. Ferris, and N. K. Napier, Strategy and Human Hamel and C. K. Prahalad, “Strategic Intent,”
Resource Management (Cincinnati: South-West- Harvard Business Review, May-June 1989, pp. 63-
ern, 1990); and R. Cooke and M. Armstrong, 76; and C. K. Prahalad and G. Hamel, “The
Core Competence of the Corporation,” Harvard tion, and Bill Maki, director of human resources,
Business Review, May-June 1990, pp. 79-91. Weyerhaeuser Company, July 1990; and from J.
For how strategy and strategic directions F. Bolt, Executive Development: A Strategyfor Com-
determine various aspects of human resource petitiveness (New York: Harper & Row, 1989),
management, see D. C. Hambrick and C. C. pp. 139-158. Descriptions of leadership and
Snow, “Strategic Reward Systems” in C. C. managerial roles are also in J. Kotter, A Forcefor
Snow, ed., Strategy, Organization Design and Hu- Change: How Leadership Differs from Management
man Resource Management (Greenwich, CT: JAI (New York: The Free Press, 1990). Comments on
Press, 1989); E. E. Lawler III, “The Strategic De- Nissan and Honda from interviews with Peter
sign of Reward Systems,” in R. S. Schuler and S. Wickens, director of personnel and information
A. Youngblood, eds., Readings in Personnel and systems, Nissan UK, February 1991; and from
Human Resource Management, 2d ed. (St. Paul, interviews reported in R. S. Schuler and S. E.
MN: West Publishing, 1984); and J. J. Sherwood, Jackson, “Linking Competitive Strategies and
“Creating Work Cultures with Competitive Ad- Human Resource Management Practices,”
vantage,” Organizational Dynamics, Winter 1988, Academy of Management Executive, August 1987,
pp. 5-27. pp. 207-219.
Comments about Pepsi-Cola International The material describing the Grand Union is
are based upon numerous discussions with J. based on interviews with Bill Reffett, senior
Fulkerson, vice president of HR for PCI. Some of vice-president of human resources, during
these comments are expanded upon in J. Fulk- March 1989 and July 1991. The material here
erson and R. S. Schuler, “Managing Worldwide refers only to HR management-related changes;
Diversity at Pepsi-Cola International,” in S. E. changes, of course, were also made in purchas-
Jackson, ed., Working Through Diversity: Human ing, merchandising, and operations. For more
Resources Initiatives (New York: Guilford Publi- detail on using human resource management
cations, 1992). For further descriptions of inter- service organizations, see D.. E. Bowen, R. B.
national HR issues, see D. Lei and J. W. Slocum, Chase, and T. G. Cummings & Associates, Ser-
Jr., “Global Strategic Alliances: Payoffs and Pit- vice Management Effectiveness (San Francisco, CA:
falls,” Organizational Dynamics, Winter 1991, pp. Jossey-Bass, 1990); and S. W. Brown, E.
44-62. Gummesson, B. Edvardsson, and B. Gustavsson,
For further examples of people-related busi- Service Quality (Lexington, MA: Lexington
ness issues, see R. S. Schuler and J. W. Walker, Books, 1991).
“Human Resources Strategy: Focusing on Issues A final, but important note: As times change
and Actions,” Organizational Dynamics, Summer so do companies and individuals. The Forest
1990, pp. 5-19. Products Company was recently divided into
Descriptions of the HR activities at the For- two equal-sized groups, Wood Products and
est Products Company are from conversations Timberland. Bill Reffett is now with Korn Ferry
with Horace Parker, director of strategic educa- International.

32

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