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Analysing the Role of the Human Resource Department in the Implementation of a Business Strategy

This paper analyses the role of the Human Resource Department (HRD) in the implementation of a business strategy. It provides key areas of focus that enable a systematic, coherent, and deliberate intervention that is aimed at achieving the strategic objectives and outcomes of the strategic plan.  The paper focuses on the Government Employee Medical Scheme (GEMS), which is the second largest healthcare company in South Africa. GEMS caters specifically for public sector employees. The paper includes the proposed key human resources priorities that are categorized as key work-streams that need to be implemented in order to support the strategic goals of the organization. The strategic work-streams form part of the many transitional interventions that should be planned and implemented before the strategy execution phase. The researcher is of the view that the human resources department should be transformational, rather than transactional, in its approach to the organization’s needs, in order for it to effectively support the implementation of the strategic plan. The interventions considered for strategy implementation should be outcomes-based.

In analyzing the key role of the Human Resource Department (HRD) in an organization, Cosa (2009) argued that Human Resource Management (HRM) has been introducing significant changes over the last twenty-five years (Gubman, 2004). An evolution can be seen since the time when thinking was non-strategic (before the nineteen-eighties, when the HRM area was merely the Personnel Department), to the era of functional strategies arising (in the nineteen-eighties), and then the period when strategic capacity development was proposed (in the early nineteen-nineties), to the current vision, in which the effort to align with the company's strategic goals prevails.

In turbulent-environment facing organizations, the human resource department is looked upon as the savior to the strategy implementation. Human Resource or human capital is recognized as a major factor for an organization’s success (Armstrong, 2008). An organization with all the other resources minus effective human resource can accomplish very little of its objectives if any. From O’Regan and Ghobadian (2004), strategic planning is necessary for organizational purposes, realistic goals and objectives, consistency with organization’s mission, communication, priorities, productivity corrective actions, consensus, efficiency, effectiveness, and teamwork.

The strategic management role of the HRD encompasses the following: analysis of factors such as organizational culture, alignment between organizational core competencies and human essential competencies and employee commitment dimensions. All of these focus on the organization's future.

According to Ritson (2017), a business strategy is a future-oriented plan for creating and maximizing competitive advantages for the organization to enable it to accomplish its mission. 

 “Many organizations fail when they don’t have practical, tactical implementation plans that take into account the changes that must occur to align the organization around the strategy. HRD can be an important partner in determining what aspects of the organization will need to be addressed going forward, who will be impacted and how, and what actions will be required to ensure success” (Lawler III, 2001).

A project management approach was adopted by GEMS in managing the transition period after its strategic plan was approved by its Board of Directors. The transitional plans serve as a forerunner to the strategy implementation phase. The transition period was driven largely by the three work streams that were prioritized and established as follows:

  • Change and Communication Enablement (CCE), which aims at creating an environment conducive to the successful implementation of the strategy. Stanner (2015) emphasized the importance of building plans that align the organizational levers to support the strategy. Some of the building plans include change and communication management. Many organizations fail when they don’t have practical and tactical implementation plans that take into account the changes that must occur to align the organization around the strategy. GEMS have taken a deliberate decision to transition the strategy implementation by developing and implementing the practical and tactical plans. The practical and tactical plans include the organizational structuring design, leadership enablement, and change and communications plans.
  • Organizational Structure Design Enablement (OSDE) will create an optimal organizational structure to enable the organization to align and execute the strategy in delivering the strategy with the right skills, resources, and organizational fit. Senyucel (2009) states that the organizational structure does not refer only to the physical building and layout but also to the rules and resources drawn upon and enacted by employees. The structure is not a constraining force but enabling resources that GEMS has embarked into as part of its organizational restructuring.
  • Leadership Development Enablement (LDE), which is aimed at aligning GEMS’ leadership competencies, capabilities and core values to the organization’s strategic direction. The process of strategy implementation will be aligned when the change of cultural values is enhanced and it is guided by leadership who then assume the role of change agents (Cameron and Quinn, 2011). Leadership in the organization plays a pivotal role in the strategy implementation and in bringing about organizational change through communication and living the values of the business as this allay the fears and concerns of employees during the strategy implementation, as pointed by Maurer (2010).

Human Resource Department’s role is to ensure that it develops strategies, approaches, and programs/interventions that support the Executive team including employees during the process of strategy implementation.

The HRD acts as the change architect in driving and embedding the communication around the new strategy. Work-stream projects will be implemented and feedback from employees on strategy implementation will be solicited, as espoused by Starner (2015). Communication and change strategies and the necessary tools to drive implementation will be crafted jointly in the organization and will be driven by the executive members of the various departments.

In the view of Edwin (2010), the HRD should play a critical role in any organization, because it is being called upon to serve as a partner in strategic planning and decision making that is designed to facilitate strategy formulation and implementation. This new role is critical in terms of how people are managed, as it will have a significant impact on the success or failure of the business strategies. 

The criticism leveled against HRDs includes a lack of a robust theory to back the functions of the area, which is concerned with internal processes rather than with business strategy; that the area is poorly linked to the goals, needs, and measures related to business success. In other words, the HR department is not regarded as a competitive advantage for organizations.

A survey carried out by Accenture (Ashton et. al 2004) confirms these findings: among the 1,000 leaders interviewed, only 34% evaluated the performance of the area as good, although 83% stated it was critical to the success of the business.

In contrast to the above view, Collins (1987) argues that the new role of human resources management in strategy implementation is that it ought to make a contribution in the new economy so that winning will spring from organizational capabilities such as speed, responsiveness, agility, learning capacity, and the employee competence that the human resources department creates. Successful organizations will be those that are able to: quickly turn strategy into action; manage processes intelligently and efficiently; maximize employee contribution and commitment; create the conditions for seamless change. The need to develop these capabilities brings us back to the mandate for the HRD that was laid out at the beginning of this article.

Recent studies developed in the area of HRM show that the HRD has already become aware that people are part of the rare and hardly imitable capital. People are value generators. They are invaluable resources in the quest for competitiveness. Searching for, preparing, and motivating them to grant their capital to the company is a major strategic challenge of the HRD. “Strategic planning implementation is an uphill task for many organizations (Gomez- Mejia and Balkin, 2002). Many well-conceived plans which cost organizations a fortune are never implemented and lie in the library accumulating dust. This is a result of poor implementation strategies based on resources and capabilities of the firms” (Wheelen and Hunger, 2010).

Burton and Gold (2013) pointed out that HRM is a strategic approach to leveraging people’s capabilities so as to allow an organization to gain a competitive advantage. In integrating and ensuring a systematic and strategic thread, strategic human resources plans were developed by the HRD and approved by the organization for implementation. These were designed to anchor and drive the broad human resources initiatives that include the three mentioned work-streams.

To enable the leveraging of capabilities, including policies, practices, and programs, these could only be achieved through a formulated human resources strategy (Purcell, 1999).

Taking into account the global trends and the organizational SWOT analysis, the key emerging issues and HR gaps that need special attention were found to relate to change management and communication; strong and visionary leadership; human resources development to meet future business needs; a scalable and flexible organizational structure; as well as systems enhancement and performance management.

Ulrich and others (2009) provided a clearer transformational role that the HRD should play in understanding and linking HR with the contextual constituents not just to implement the strategy but to play a role in defining and implementing it. By focusing on the business context, HRD can avoid the common mistake of seeking to implement internally focused ideas and concepts that come across as solution-to-business problems.

METHODOLOGY

To guarantee the credibility of this paper, the researcher had to ensure bona fide research methodologies in collecting the data were used. First, the researcher established that only secondary data was needed for this paper. Thereafter, the paper explains the research process and methodology, the data sources, and finally how the data was treated. The graphic below illustrates the approach and methodology adopted by the researcher for this paper. “Data is like ore - it contains desirable aspects of truth, but to extract from the facts its meaning, one must employ approaches that are broadly termed professional research methodologies” (Leedy, 1993).

For this paper, the researcher limited the areas of investigation to the pivotal role of the HR function in implementing a strategy, and the importance of change management and communication processes in the whole process.

Figure 1: Desk Research Approach

Source: Adapted from Samuel Lewatle (2018)

Secondary data is “information that has been collected for another project and published. Sources can be in-house or external” (Dillon et. al (1994). Secondary information on the pivotal role of the HR function that was gathered from various credible sources, including journals, online financial reports, and articles from electronic libraries, such as EBSCO and textbooks.

The data collection process involved an extensive review of theoretical and empirical literature, and published reports on the areas covered in this paper. These were then summarized to ensure compliance with the requirements of the university. Content analysis techniques were used to establish the trends, similarities, and differences in the data. The University of Georgia’s Terry College of Business (2012) describes content analysis as a technique used to make replicable and valid inferences by interpreting and coding textual material.

The final process was the abridgment of the data collection process into elements that can be effectively interpreted. The researcher adopted this approach in order to establish the relationships between different aspects of the investigation, in order to propagate accurate and relevant meaning and the importance thereof.

NEW INSIGHT

The HRD ought to be at the heart of the process of re-designing and creating work environments that are conducive to maximum output from the workforce, as well as environments that would mean that employees want to go the extra mile in their duties. Unlike any other part of an organization, the human resource function is extensive, inter-departmental and involved throughout the entire organization. Additionally, the nature of human resources is to comprehend the processes and system of the organization as a whole.

In a complementary study, Jacobs (2004) proposed five questions to analyse how the HRD is evolving towards strategy implementation:

1) Is the HR manager effectively involved with or does he/she provide solid contributions to business strategy-related decisions?

2) Do managers from other departments regard the HRD as an effective contributor to changing management within the organization?

3) Is the department agenda aligned with the general business strategies?

4) Does the department participate in meetings with the Chief Executive Officer, in order to provide advisory support in relation to the company’s general strategies and not only in terms of HR-related issues?

5) Is the HR department implementing any change in its focus to help the company reach its critical success points? 

In addressing the above questions, the HRD at GEMS is afforded the platform, authority, and resources to implement and drive the implementation of the strategy within the organization. The area that needs to be improved and enhanced is for the departments in the company to understand their role as implementers of the change process that drives strategy implementation, and not to see this as the role of the HRD only.

Strategy is the responsibility of a company’s executive team and the HRD is a member of this team. However, in order to be fully-fledged strategic partners with senior management, HR executives should implement and guide serious discussion about how the company should be organized to carry out its strategy. HRDs should be held responsible for defining the organizational architecture, i.e. it should identify the underlying model of the company’s way of doing business. Several well-established frameworks can be used in this process.

In advancing the role of Strategic Human Resource Management (SHRM) in an organization Anil et.al (1996) pointed out that the human resource department should play an important role in helping a company to achieve its strategic goals by contributing to strategy implementation.

Therefore, SHRM will involve in linking the human resource department to the organization’s strategic goals and objectives, with the aim of improving business performance and developing an organizational culture that nurtures innovation, flexibility, and the competitive advantage. In an organization, SHRM means accepting and involving the HRD as a strategic partner in driving the formulation and implementation of the company’s strategies through HR activities such as recruiting, selecting, training, and rewarding personnel.  For strategy implementation to be achieved there is a need for a fit between SHRM and the organization’s strategies (Ragui, 2013).

Furthermore, in relation to the proposed actions to change the HR department trajectory to a strategic implementer, Bititci et al (2003) introduced a human resource management model that adopts an approach that is nearer to the engineering focus, as it is considered comprehensive by professionals from other departments which HR interfaces with. There has been a number of frameworks or models that have been incorporated into human resources in an attempt to demonstrate the value it plays as a strategic partner. One such framework is the Resource – Based-View of the Firm (Barney, 1991; Wernerfelt, 1984). According to Barney and Wright (1997), “the Resource-Based View of organizations provides for an economic foundation for examining the role of human resource in firm competitiveness. This view focuses on firm resources that can be a source of competitive advantage”. One of the key implications of the framework is that the human resource department manages the set of resources such as talent, human capital skills, employee commitment, culture, teamwork etc. that are critical in the delivery and implementation of a strategy of an organization (Barney and Wright, 1997).

The HRD effectiveness depends on its fit with the organization’s stage of development. As the organization grows and develops, HRM programs, practices, and procedures must change and develop to meet its needs. If HRD is to be effective and fit the organization, its growth must parallel that of the organization of which is a part of (Baird and Meshoulam, 1998).   

HRD is in an ideal position to facilitate the implementation of the business strategy (Schuller, 1999), which will include:

< >Assisting the business in the formulation and implementation of the strategic direction and needsIdentifying business culture consistent with the business strategy developing and implementing HR policies, programs, and practices consistent with the business culture ensuring that the HR process is consistent with the business culture and strategy. Be transformational, not transactional; Think about its structure; Be credible, which means having educated, experienced, trained human resources practitioners; and provide the organization with a valuable service.

The role of the human resource department in the strategy implementation within GEMS followed a systematic and project managed approach in ensuring that the three identified enablers are developed and implemented.

The HR department provides more support and strategic services to the organization's senior management and business, an option foreseen as the future of the area, but which has yet to be established.

People issues should be driven and surfaced as part of the strategy formulation and implementation as one of the enablers and resources that contribute to their competitive advantage. Human capital or resources is unique, inimitable (people's intellectual capital that is not easily replicated by competitors) and non-transferable, and human capital is not easily acquired in the market (Paauwe and Boselie, 2003).

“Some researchers call for a courageous HR department one with attitude, translated into a clear point of view and position the department performance (Meisinger, 2007)”.  Others, taking into account the findings of a large survey conducted by David Ulrich and collaborators in the United States, Latin America, Europe, China, and Australia, involving 9,798 respondents in 393 business units, discusses and validates the new identified set of key competencies for an effective HR (Grossman, 2007). These competencies will include credible activist, cultural steward, organizational designer, strategic architect, business ally and operational executor that the human resources department should champion in an organization to bring about an HR role’s enhanced and its stature as strategic implementer recognized.

In playing a critical role during the strategy implementation, this has seen the Human Resource Department moving from transactional to transformational which involves many changes from attitude changes to a broad-ranging change of activities (Quinn, 2016).  For strategic implementation to be achieved there is a need for a fit between the Human Resource Department and the Scheme strategic plan as advocated by Ragui (2013). The Human Resource Department should align its systems, processes, and structure to enable strategy implementation.

In the view of Collins (1987) and in discussing the role of the human resource department, it should be considered that Human resource management has been a relative late-comer to the arena of strategic management. Consideration of the strategic contributions of the human resource department to the organizational functioning and performance requires a qualitatively different approach from that according to the traditional perspectives of personnel management.

According to Lawler III (2012), the human resource department plays a strategic role in bringing the organization to its desired strategic goals. Business leaders need to acknowledge and guarantee the pivotal role of the HR function. This view is supported by Missildine (2014), who argues that the human resources department role should go beyond the strategy formulation but its impact should be on strategy execution and on how it is measured.

Lawler III further commented that the Human Resource Department should play a strategic role and be trusted by business leaders and it ought to transform from transactional to transformational and operate as a business. The Human Resource Department, through its Executive, need to understand the business strategy and how it relates to organizational capabilities and core competencies and how this connects to pivotal talent and organizational design decisions. Human Resource Department need to use their knowledge to help the organization to set and implement their strategic goals and to develop business plans in ways that are consistent with the business’s strategic direction.

 

Author: Samuel Lewatle, DBA student at LIGS University

 

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