The integration of HR and business strategies is seen by some commentators as a main distinguishing feature of strategic HRM. Doubts have been cast by a number of commentators such as Storey (1992) on the extent to which such integration does take place, often on the grounds that integration is not an issue when there are no corporate strategies. This was not the case in any of the organizations referred to earlier. In all but two of them the HR strategies, in Walker’s (1992) terms, were fully integrated, while in the other cases the strategies were ‘aligned’.
As the Managing Director of ABC Distribution pointed out: ‘Our HR strategy has to respond to our business strategy… The challenge for HR is to look at all the areas that they encompass and make sure they are integrated into the main plan.’ But he admitted that: ‘One of the problems this company used to have up to a few years ago was that HR strategy was seen as something completely separate from the corporate strategy. What we have tried to do in the past few years is to make them one and the same thing.’
The Director of HR for ABC Distribution recognized that: ‘The development of HR strategies should be shared more widely with the business controllers. If we don’t do that we run the risk of not developing the consistent themes we need to have.’ But the Director of Finance was positive that: ‘In terms of performance improvement the business and HR strategies are very closely linked. Productivity is a major area and the HR implications of pursuing these policies is critical.’
These, incidentally, were not the only positive contributions from finance directors. It was found that, without exception, the finance directors interviewed were all fully aware of the significance of the HR perspective for their organizations, although they were obviously concerned with financial performance and budgets.
In Loamshire Council, the approach to integration as described by the Director of HR was simply to get the top team together and ask them: ‘What are the real strategies that will help the organization and its functioning?’ And the Director of Planning for the authority commented on the important integrating role of the Director of HR as follows:
In the old days, the HR manager was not a member of the management team, and I got used to a culture where HR advice was not really part of strategic direction. And any debate there may have been at the corporate level came out in the wash. It was not led by someone like our Director of HR. She is now on a par with the rest of us in terms of status and contribution and she brings the whole of the human resource angle into the debate.
Also, in reply to the question: ‘How well are corporate and HR strategies integrated?’ the Director of Technical Services for the authority said: ‘The short answer is that they are inextricably linked… you cannot do anything without having worked through the human resource implications and it’s all about better performance by teams and individuals.’
The approach of Megastores was described by the Director of Stores as follows:
The starting point is the operating plan emerging from and contributing to the business plan. There is only a certain level of change we can cope with and what we have is a funnel of brilliant ideas and strategies, but they all end up in the stores. So we only commit to a plan we can deliver and we identify the levels of change that we can manage and calculate how much time the stores have to implement it. That is fed into the planning process so that it becomes realistic. The human resource strategy is integral to the process, it’s not linked.
At Mercia Systems, integration was not an issue. As explained by the Marketing Director: ‘We do not think of ourselves as having a human resource strategy per se. We just see it as one aspect of the overall business strategy. From what I have observed going on in the business I find it quite difficult to separate a strand of activity which I would call HR strategy because it is so integral to everything which is going on… HR strategy is effectively a part of the overall vision.’
He gave the example of the Technical Director who is developing technical route maps, and the HR function which is working with technical management to produce forecasts as a basis for finding and developing the right people with the right skills. His own role is to explain the nature of the competences required in the business groups, including business management, programme management and sales and marketing: ‘Only by understanding these can we equip ourselves for the future’.
The Director of Finance for Welland Water pointed out that: ‘The HR side is a fundamental part of the business planning process, and it’s not
something you just bolt on somewhere along the way. There’s a lot of interaction, prior to and during the top board discussion, which tends to be concerned with culturally-based issues and the way we manage people.’
On the basis of these comments, integration is most likely to be achieved when:
- there are well-articulated corporate or business strategies operating in the context of a clear mission;
- there is a powerful driving force in the shape of commitment to certain values and overall strategies for change;
- the chief executive or managing director recognizes the contribution that people make to increasing added value and achieving competitive advantage and ensures that people issues are fully taken into account at the time corporate or business strategies are being prepared;
- the other members of the top team generally share the views of their chief executive on the added value that can be created by considering HR and corporate/business issues simultaneously;
- the HR director is capable of making a full contribution to the formulation of corporate/business strategies as well as those relating to people;
- the views of the HR director are listened to, respected and acted upon;
- unions are involved in developing change strategies on a partnership basis;
- HR strategies relate to the critical success factors of the organization and the impact high quality and committed people can make on the delivery of the results the organization is expected to achieve.