Vision and mission
In the broadest terms strategic HRM is concerned with the people implications of top management’s vision of the future of the organization and the mission it is there to fulfil. HR strategies, like those of all the other functions, are there to support the realization of the vision and mission of the organization and the achievement of its goals.
The HR Director at Mercia Systems made the following comment about vision and strategy: ‘The first thing is that the organization has to know where it is going. That is why it needs a vision. It has to know why it exists and who its customers are. This leads to the development of strategies which in turn lead to action plans. The plans follow three lanes: systems, processes and people.’
Two of the other functional directors at Mercia Systems commented on the significance of vision and a sense of purpose or mission:
I would put it in a single word – which is vision. If you can create a vision and communicate it to people you can release a colossal current of energy… Communication and vision means education and training and I am one of the operational guys who believe that whatever you are currently spending on education and training you start by doubling it.
What contributes most to success is a clear sense of purpose and definition of where you are trying to get to. Unless you have a top team with a clear and unified understanding of purpose and direction it can be difficult to cascade it throughout the organization.
The Managing Director of Welland Water commented that: ‘We look at our vision for the company and we say: “how do we maximize the contribution that our people can make to achieving that vision?” ’
HR strategy may address such issues as structure, teamworking, performance or quality and customer care.
The Managing Director of ABC Distribution said: ‘I do not see any difference between the HR strategy and the business strategy on organization because we evolve our organization to reflect where the business is going’.
As the Managing Director of Megastores said: ‘You cannot fully maximize business opportunities unless you have the proper management structure to create them’.
At Mercia Systems the background to the work on teambuilding was the demolition of traditional hierarchies over the last two to three years. In manufacturing and engineering there are never more than three layers between team members and the Director. In 80 per cent of the engineering teams there are now only two layers – the Team Manager and the Engineering Manager. It is believed that these changes have had far-reaching effects on flexibility and performance and have contributed significantly to the achievement of better coordination in manufacturing and engineering.
A performance strategy will be based on an analysis of the critical success factors and the performance levels reached in relation to them. Steps can then be agreed as to what needs to be done to improve performance through training, development, reorganization, the development of performance management processes, some form of business process re-engineering, or simply ‘taking cost out of the business’.
This is how a cost reduction strategy works in one of the key divisions of ABC Distribution as described by the Managing Director:
We know that over the next three years we have to take more than £10 million-worth of cost out of the business. So our HR Director sits down with the business head of the division and they identify the areas we need to focus on. It could be productivity enhancement, it could be changing work practices, it could be making sure that we have no anomalies round the depots in terms of payment, it could even be taking tea breaks out. A three-year strategy is agreed, targets are set and then they get on with it.
The approach at Loamshire Council was described by the Director of HR as follows: ‘We have a general strategy of performance measurement and management from which grew our performance appraisal system, which has worked extremely well… We spent a lot of time ensuring that people understood that this was a development process and it was about not just their competence, but also the ability of the organization to achieve what it wants to achieve.’
The strategy for improving performance at Megastores involves the use of a performance management system, which was introduced, as the Director of HR explained: ‘Because we didn’t have any mechanism through which we could run the business through the people’. He went on to say that: ‘Line management own it totally. It’s not a HR system, it’s a line management system for running the business.’
The Director of HR for Megastores also made the following comments on performance strategies:
We set out to understand the differences between successful and less successful performance within the organization and we call those our competency frameworks… By developing these frameworks we have educated the whole of our line management throughout the organization into how to think about their people in a much wider sense. Our key HR strategy question is: ‘How do we actually get the people to deliver what the business requires?’
The process of performance improvement could mean, as Mercia Systems’ Marketing Director put it: ‘Going through a lot of effort to ensure that we have the correct level of performance in what we do and underpinning this with financial and commercial stability’.
Mercia Systems successfully used a functional analysis process, which, as described by the HR Director, was carried out as shown in Figure 6.1.
At Welland Water, the Head of HR thought that: ‘Performance improvement lies not so much in creating the hard issues at the bottom line but in creating an environment within which people will accept change and cooperate in different methods of working. And I believe our partnership approach does create such an environment, one in which we can manage change successfully and which encourages people to accept new responsibilities and acquire new skills.’
The majority of the organizations covered by the research had installed performance management processes in which the emphasis was on performance improvement and development and not reward. The scheme in Mercia
Systems emphasized the new priorities of involvement, teamwork and selfdevelopment as well as more standard measures.
Quality and customer care
Quality, which in essence means customer satisfaction, is generally recognized today as the key to the achievement of competitive advantage. Innovation and cost reduction are still important but they are to no avail if, ultimately, customers reject the product because it does not meet their expectations. Quality is achieved through people and, in accordance with a basic HRM principle, investment in people is a prerequisite for achieving high quality standards
A strategy for total quality is a true HRM strategy in the sense that it is owned and delivered by management. It should therefore be built into their business strategy as it is, for example, by Mercia Systems.
The Chief Executive of Loamshire Council said that: ‘We have a performance appraisal system and one area that we are particularly keen should be dealt with as part of that process is the contribution of the individual to our customer care standards’.
At Mercia Systems, the HR Director stated that in pursuit of their goal of world-class performance, HR strategy must help to ensure that they are a best-practice company. An important aspect of this strategy ‘is to educate everyone to build quality into every job, aiming to convey to people that if you get it right first time they will be saving a lot of unnecessary work’.