Question:
HR strategy must align with Corporate Strategy if a Company is to succeed and stand any chance of achieving Competitive advantage. Critically evaluate this statement, and illustrate your answer with examples.
The following essay is based on the statement that Human Resource strategy should be aligned with the corporate strategy of the company to perform well and achieve competitive edge. Most firms have been observed to be viewing the department of HR as administrative functions and avoid the requirement and opportunity to align it with the corporate strategic plans. Many studies have been conducted to identify the link and importance between HR strategy and corporate strategy of the firms. The purpose of the essay is to analyze the fact that HR strategy needs to be aligned with the corporate strategy.
It is observed that human resource departments are sometimes left to deal with only administrative functions like selection, performance management, compensation and training. However, these functions have no significance to the action of how an organization plans for the appropriate level of human resource to provide on its plans and objectives. Thus, Buller and McEvoy (2012) mentioned that empowering the HR department to increase value to the business strategy helps to ensure that it undertakes its functional activities in a manner that sustains growth and success. In order to conduct a detail analysis, 8 journals articles have been used in the essay as the supporting evidences. Moreover, the analysis has been performed linking with the findings provided in the previous studies. Some statements are established in the content with the real-world facts and scenarios.
Strategy alignment is treated as the integration of visions, mission, goals and objectives with the regular organizational operation. As put forward by Sharma, Sharma and Devi (2011) strategy alignment facilitates persistent monitoring, evaluating and updating of strategy in accordance with changes in the business environment. In this context, Jackson, Schuler and Jiang (2014) also commented that, to have a successful strategic alignment, a requirement exists to create a strategic culture that consists of the behavior, beliefs, values and norms with the way the firm performs the operation. Moreover, Kalyani and Sahoo (2011) in their experimental study, mentioned that Human Resource Management and the corporate strategy should be aligned with each other. In the form of action, the senior human resource manager should take part with organization’s top management in the strategic decision-making techniques.
It is identified that that link between the HR strategy and corporate strategy is found when the HR professionals are seen to be spending more time as well as effort in understanding the business environment and the potential strategic issues. Huselid and Becker (2011) mentioned that human resource strategy should be linked to the corporate strategy because when the organization intends to implement a strategic plan it needs to ensure that it has the required the strength and capability. Understanding the external business environment, the organization makes strategic plans but when it comes to the implementation of the plans, the firm certainly needs the internal resource including the financial and human resources. For example, the large retail firm Coles in Australia has started selling the products online, which is a significant strategic initiative in the field of technological development (Coles.com.au 2017). However, to implement this strategy, the firm required to hire more employees for the distribution and technological supervision.
On the other side, the large sports products retailer Sportsdirect located in UK is an internal sports products provider running its operation in all European nations but in the recent time, the first wanted to enter the Asian market (Au.sportsdirect 2017). However, due to poor reputation of the organization in terms of work culture, employee reward and recognitions, the organization suffered an unexpected employee turnover (Au.sportsdirect 2017). This means the human resource strategy of SportDirect is not supportive toward its corporate strategy. Therefore, it can be mentioned that corporate strategy should be aligned with the human resource strategy.
According to Jackson et al. (2011), organizational success in terms of the corporate strategy achievement depends on the internal strength and the resources. Untrained and unskilled labors might not able to contribute to the achievement of organizational and corporate goals. The organizations might want to achieve its corporate goals in six months but due to lack of human resource or unskilled labor, the project might be delayed. For example, the furniture company IKEA is known to have the competitive advantages due to their low cost business model, which helps them to reduce the cost of operation and sell the products at low price (IKEA 2017). This is possible because IKEA has large and lasting supply chain network. Among organizational resources, the suppliers and manufacturers are the key resource of IKEA and the company develops a strong relationship with the suppliers and manufacturers, which creates deficiency of resource in terms of suppliers and manufacturers for other organization in the sector.
Moreover, the organizational culture of IKEA is also liked to its business strategy. For example, IKEA sells disjointed furniture items that customers need to assemble and in the outlet these are placed in a way that customers could easily find an understand which product they need to buy, without borrowing knowledge from sales person (IKEA 2017). Due to this reason, IKEA does not hire a mass number of employees. IKEA’s stores do not need sales person to accompany and guide the customers in purchasing. HR strategies are linked to the organizational operation and corporate strategies.
As put forward by Guest (2011), an emphasis on human resource might help to gain a positive concept about the role of HR generally observed in tactically gaining competitive edge. A significant relation between human resource and corporate strategy exists because the larger similarity between the strategy and HR, the more effective and stable the organization could be and the skills of those strategies could be different. Thereby, the firm following the strategies could require different skills and because of this fact, HR strategy need to be aligned with the corporate strategy. In this context, Van Buren, Greenwood and Sheehan (2011) commented that the competiveness of an organization could be derived in a more easiest way, when its HR is appropriately associated with its business or corporate strategy. With a different perspective, it can be mentioned that it can be ascertained that when human resource is strategic as well as engaged to relate to firm’s performance, it plays a great role in the growth and development of operation (Ployhart and Moliterno 2011). It can also be added that by measuring the potential HR elements to strategy, the implementation of HR activities is transformed to the base of value generation of the organization. The measurement of the HR issues could provide the association between the business operation and HR.
Conclusion
It can be mentioned that alignment and strategic plans remains as the significant endeavor for every firm. The previous studies strongly are in the favor of a positive relation between HR, and performance. Moreover, the real-world examples demonstrated that HR plays a strong role in implementing strategy and gaining competitive advantages. The above-mentioned discussion helps to ascertain that HR should expand beyond administrative functions and insist more on how it could support the organization in strategic planning as well as implementation. Moreover, when the organization measures HR from a business perspective and by the value it brings to the firm, the top management might avoid HR in the strategic process. Rather, the senior management could welcome HR input, as they know how they could gain a clear understanding of how HR affect the bottom line from a business.
References
Au.sportsdirect 2017. [online] Au.sportsdirect. Available at: https://au.sportsdirect.com/ [Accessed 21 Oct. 2017].
Buller, P.F. and McEvoy, G.M., 2012. Strategy, human resource management and performance: Sharpening line of sight. Human resource management review, 22(1), pp.43-56.
Coles.com.au. 2017. Operations. [online] Available at: https://www.coles.com.au/corporate-responsibility/environment/operations [Accessed 21 Oct. 2017].
Guest, D.E., 2011. Human resource management and performance: still searching for some answers. Human resource management journal, 21(1), pp.3-13.
Huselid, M.A. and Becker, B.E., 2011. Bridging micro and macro domains: Workforce differentiation and strategic human resource management.
IKEA. 2017. IKEA.com – International homepage. [online] Available at: https://www.ikea.com/ [Accessed 21 Oct. 2017].
Jackson, S.E., Renwick, D.W., Jabbour, C.J. and Muller-Camen, M., 2011. State-of-the-art and future directions for green human resource management: Introduction to the special issue. German Journal of Human Resource Management, 25(2), pp.99-116.
Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human resource management. Academy of Management Annals, 8(1), pp.1-56.
Kalyani, M. and Sahoo, M.P., 2011. Human resource strategy: A tool of managing change for organizational excellence. International Journal of Business and Management, 6(8), p.280.
Marler, J.H. and Fisher, S.L., 2013. An evidence-based review of e-HRM and strategic human resource management. Human Resource Management Review, 23(1), pp.18-36.
Ployhart, R.E. and Moliterno, T.P., 2011. Emergence of the human capital resource: A multilevel model. Academy of Management Review, 36(1), pp.127-150.
Sharma, S., Sharma, J. and Devi, A., 2011. Corporate social responsibility: The key role of human resources management. Human Resource Management: Issues, Challenges and Opportunities, 9.
Van Buren, H.J., Greenwood, M. and Sheehan, C., 2011. Strategic human resource management and the decline of employee focus. Human Resource Management Review, 21(3), pp.209-219.
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