Achieving Strategic Alignment Of Business And Hr

Corporate Partners Research Programme Achieving strategic alignment of business and human resources Natalie Turner

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

Contents Executive summary 1. Introduction

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1.1 The theory: Developing a human resource strategy

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1.2 Human resource strategy and…

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1.3 The practice: Aligning human resource and business strategies

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1.4 So why bother?

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2. Aligning HR and business in practice

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2.1 Why?

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2.2 How?

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2.3 Outcomes

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2.4 Success factors

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2.5 The key challenges to the alignment process

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3. Conclusion

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3.1 Does alignment matter?

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3.2 What does this mean for organisations?

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4. Case studies

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4.1 Borough of Telford & Wrekin

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4.2 Standard Life Healthcare

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4.3 Seven Worldwide

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4.4 AutoGlass

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Annex 1: Methodology Bibliography

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Executive summary •

Businesses that aim to align their human resources

throwing up different problems and opportunities that

strategy (HRS) with their business strategy tend to be

need addressing.

more profitable and more efficient than those that do not. This depends on: in the first instance,

•

Focusing on making the organisation a great place to

understanding what the business strategy or strategies

work is as – and sometimes more – important as other

are; second, what constitutes the HR strategy; and third,

HRS outcomes. Cultural nuances mean that every

seeing if there is sufficient congruency.

organisation, indeed in some cases every site, requires a bespoke approach within an overall strategic

•

When organisations are asked about strategy, it is

framework where first the organisational purpose is

tempting for the professionals to reveal the process

clearly defined and then the organisational objectives

as formal and considered, perhaps captured in

carefully delineated.

boardrooms and strategic documents. But the more critical, and more realistic, management and academic

•

HR departments need to become far more literate in the language of business and financial planning,

literature suggests that this cannot be the case.

improve their networking skills across the organisation

•

Theory too offers many approaches to the process;

and understand that HR strategy development works

practice highlights the difficulties in achieving

best when there is a strong cultural and business ‘fit’.

alignment. Yet having greater congruity between HRSs and business strategy is more desirable than a situation

•

Each HR strategy requires the development of robust

where for example, an organisation’s pay and reward

metrics that enable the HR department to show ‘before

strategy does not encourage the behaviours that

and after’ effects wherever possible. Some examples are

deliver business goals.

reduced employee turnover, new skills acquisition by staff, increased numbers of ideas and levels of

•

This report argues that the process of aligning HRS with

innovation through reorganisation.

business strategy should be based on circumstance (contingency) rather than a one-size-fits-all approach (universalist). Consequently, it will not point the reader down some specific, ‘primrose’ path where strategy and HR can be aligned for benefits all round.

•

By reporting on practice, it shows that a HRS does not operate in isolation and cannot be bolted onto other organisational strategies very easily. The research evidence indicates an organic process of development where HRSs achieve strategic alignment through a process of trial and error, with each new phase

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1. Introduction

Studies into business and HR strategy (HRS) proffer no

succeed, it makes sense for them to be aligned with

shortage of advice for organisations on how to be

business strategies, or at the very least, not to have them

‘strategic’, and the importance of ‘strategic alignment'

in conflict. For example, having a competitive strategy

between business strategy and how people are managed.

founded on innovation but a culture that is risk-averse will not bring about the required human behaviours to

The business strategy of an organisation refers to ‘the

achieve objectives.

expressed intentions of how managers expect to achieve particular business results over a stated period of time’. 1

Of course, achieving alignment of the kind we read about

A business strategy therefore deals with ‘choices

is rarely a stable destination. Many organisations argue

regarding how an organisation’s marketplace activities

that the alignment being prescribed is not only difficult

are configured to gain competitive advantage’. 2 Strategies

to attain, but difficult to describe and measure. In practice

may include cost reduction, innovation, joint venturing,

it requires constant re-adjustment and several iterations.

value added, rapid customer response or having a focus

The speed and subtlety with which aspects of business

on quality. Businesses may be pursuing more than one

focus or competitive edge are expected to change mean

strategy at any time, and strategies may well be neither

that supporting processes, such as HR management, must

made explicit across the organisation, nor well

be fleet of foot rather than monolithic in their responses.

understood. This paper explores these issues further.

In many organisations, it is strategic ‘fit’ and agility that really keep things on the rails.

But the success, or failure, of UK businesses depends on how well strategic decisions respond to a multitude of

Some argue, with some justification, that it is possible to

external factors – for example the emergence of new

become too obsessed with strategic alignment as an end

customers or competitors – many of which may be

in itself. And if people in an organisation are having to

outside the immediate control of individual managers.

think about this ‘fit’ with any frequency, then it is probably missing the point. The notion of organisations as flexible

Internally, HR strategy and practice is just one key

adaptive systems can have resonance here, and is being

function, alongside finance, core business areas and

embraced by a number of academics and practitioners as

customer-facing services, that can help a business

they seek to break free from the concept that

obtain its strategic goals and performance targets.

organisations have to get all their structural and strategic

For the purposes of this report, HRS is defined as ‘a

‘ducks in a row’ before change can even start.

set of interdependent human resource (HR) policies and practices designed and implemented by a firm to achieve its objectives.’

3

However, having a set of HR policies and practices that is at odds with the overall business strategy is also undesirable. Alignment may therefore be a case of

HRS therefore cannot be cocooned from changes in the

achieving greater overall coherency between HR and

marketplace. It is also subject to specific influences on

business strategy. With all this in mind, this paper aims to:

human capital, such as new employment legislation and

•

shortages in the labour market. For HR strategies to

provide an overview of the theory and rhetoric of the ‘strategic alignment’ debate, and find out how

1 Tyson S, Human Resource Strategy: Towards a General Theory of Human Resource Management, Pitman Publishing, London, 1995, p 169 2 Sheppeck M A and Militello J,‘Strategic HR configurations and organisational performance’, Human Resource Management, Vol 39 No 1, pp 5-16, 2000

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3 Richardson R, Lecture 2: MSc Industrial Relations, Managing Human Resources series/module, London School of Economics, 1999/2000

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organisations have achieved a fit between their

depends on their circumstances. This approach is more

strategy and HR practices

akin to the idea of strategic alignment because it claims

understand how and why business and HR strategy

that the optimal personnel policy choice depends on the

align to produce business benefits

unique characteristics of the individual organisation. The

identify the processes and measures they have used

argument goes that organisations need to achieve a fit

to both achieve and sustain alignment.

between personnel policy choice and broader strategic considerations, particularly of product market conditions

1.1 The theory: Developing a human resource strategy

and business strategy. Porter, MacDuffie, and Schuler and

The central debate concerning HRSs hinges on two broad

approach and focus on ‘external fit’; that is, the integration

approaches: the ‘universalistic’ and ‘contingency’ positions.

between HR and the firm’s wider policy choices.

1.1.1 Universalistic approach

Mabey and Salaman’s contingency model is called the

Academics such as Peters and Waterman, Huselid and

‘open approach’. 7 The operating environment requires

Pfeffer have claimed that there is ‘one-best’ or ‘universal’

a corporate strategy, which in turn requires desired

Jackson 6 are among those who favour the contingency

way to manage HR. In other words, they have identified a

employee behaviours. These HR outcomes pursued

number of HR policies and practices, which they suggest

through the HRS require three ‘key levers’: structure,

if followed would always result in organisational success.

culture, and personnel practices and policies. For the HRS

Pfeffer, for example, advocates the use of seven integrated

to be deemed successful, two forms of integration must

practices, which will enable organisations to ‘obtain

be achieved: ‘external’ (alignment of business and HRS)

profits through people’. 5 These practices are:

and ‘internal’ (where structural, cultural and personnel

1. employment security

strategies are integrated with one another).

4

2. selective hiring of new personnel 3. self-managed teams and decentralisation of decision making as the basic principles of organisational design 4. comparatively high compensation contingent on organisational performance

1.1.3 Which approach? The contingency approach makes no attempt to prescribe a particular HRS, or indeed the outcomes. More prescriptive ‘universalist’ models, for instance those of

5. extensive training

Guest, and Hendry and Pettigrew 8, assume that there

6. reduced status distinctions and barriers (including

will be fixed outcomes whatever the HR activities being

dress, language, office arrangements and wage

pursued. Yet in practice, this may not necessarily be the

differentials across levels)

case. For example, as Thornhill et al point out:

7. extensive sharing of financial and performance information throughout the organisation.

‘A company facing extreme product market pressure to produce as cheaply as possible a product which requires

1.1.2 Contingency approach

very little employee skills, may be very conscious of the

In contrast to the universalistic approach to HRS, the

HRM goals of integration and cost-effectiveness but much

contingency approach argues that what firms should do

less enthusiastic about pursuing employee competence

4 Peters and Waterman (1982), Huselid (1995) and Pfeffer (1998) 5 Pfeffer J, The Human Equation, Harvard Business School Press, 1998, p 64 6 Porter (1980), MacDuffie (1995), and Schuler and Jackson (1987) 7 Mabey C and Salaman G, Strategic Human Resource Management, Blackwell, Oxford, 1995 8 Guest (1987) , and Hendry and Pettigrew (1990)

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and commitment. It may be an intrinsic part of the HRS

1.2 HRS and…

to treat employees as highly dispensable. In this case,

1.2.1 Organisational life-cycle

expenditure on training and policies to secure high

HRS should be determined by the life-cycle stage of an

employee commitment would be seen as wasteful.’

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organisation. Kochan and Barocci 10 identified four lifecycle stages: start-up; growth; maturity; decline. ( Table 1.)

However, while more realistic, the contingency approach does not provide an attractive one-size-fits-all solution.

1.2.2 Business strategy

And the specific bundle of policies and practices that an

Deriving HRS directly from the corporate or business

organisation might pursue is further complicated by the

strategies an organisation is pursuing supports the view

nature of the contingency – does HRS depend on

that HRS is a function of, not an adjunct to, strategic

organisational life-cycle, business strategies or

decision-making. For instance, academics such as Miles

organisational structure? The next section looks at these

and Snow, and Schuler and Jackson 11 regard HRS as

three areas in more detail.

central to the execution of firms’ corporate and business strategies, putting a formulated business strategy into effect. ( Table 2.)

Table 1: Summary of Kochan and Barocci’s four life-cycle stages

Stage

Key features of the organisation/HRS

Start-up

There is a need to attract high-calibre employees, partly by paying market or above market rates, and partly by establishing skill requirements for future development and a suitable organisational culture

Growth

Various categories of part-time, temporary or sub-contract labour may be used to create labour flexibility

Maturity

A large internal labour market, and the emphasis shifts towards manpower retention. Accordingly, wages tend to be based more on grade definitions than profitability or skills

Decline

There is less employee participation, and downturns in profitability may result in layoffs A focus on restructuring, cost control, redundancies and outplacements Downward pressure on wages and a need to agree criteria on which to base redundancy decisions. In such a crisis situation, the future of an organisation is clearly uncertain

9 Thornhill A, Lewis P, Millmore M and Saunders M, Managing Change: A Human Resource Strategy Approach, FT/Prentice Hall, Harlow, 2000, p 20 10 Kochan T and Barocci T (Eds), Human Resource Management and Industrial Relations, Little Brown, Boston, 1985

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11 Miles and Snow (1978, 1984), and Schuler and Jackson (1987)

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Table 2: Summary of Schuler and Jackson’s three competitive business strategies and related HR policies

Strategy

HR policies and employee behaviours

Cost reduction

Structures that emphasise control and low investment in training Usually with narrow job descriptions and career paths Short-term, results-oriented performance appraisals and close monitoring of market pay levels for use in making compensation decisions

Quality enhancement

Fixed and explicit job descriptions High levels of employee participation in decision making relevant to work, short-term and results-orientated appraisal Extensive and continuous employee training and development

Innovation

Structures that encourage co-operation and creativity eg an emphasis on projectbased team performance appraisal, which recognises developmental and team-based activities Considerable investment in training and career development Compensation that emphasises internal equity

Gunnigle and Moore observe three levels of strategic

‘second’ and ‘third-order’ strategies – or ‘downstream’ – by

decision-making: corporate, business and functional.

Purcell, and refer to company and individual business unit

‘Each level involves decisions that are strategic in nature.

level respectively. In this context, HRS would be part of

However, decisions at higher levels, such as those at

downstream decisions, flowing logically from higher

corporate or business level, will guide subsequent

order decisions to help implement the overall strategy

decisions on functional strategy’. Strategies at corporate

of an organisation.

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level can be defined as the ‘direction and scope of an organisation over the long term’. 13

Claims about the nature of the relationship between HR and business strategies have been advanced, in particular

Corporate or first-order decisions have implications

by Schuler and Jackson. They argue that ‘organisational

on business and functional strategies. These are called

effectiveness can be increased by systematically melding

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12 Gunnigle P and Moore S,‘Linking Business Strategy and Human Resource Management: Issues and Implications’, Personnel Review, Vol 23 No 1, pp 63-84, 1994 13 Johnson G and Scholes K, Exploring Corporate Strategy, Third Edition, Prentice Hall, Hemel Hempstead, 1993, p 10 14 Purcell J,‘The Impact of Corporate Strategy on HRM’, in Storey J (Ed), New Perspectives on Human Resource Management, Routledge and Kegan Paul, London, 1989, p 70

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HR practices with the selected competitive strategy’. 15

organisation structures: simple structure, machine

There are typical business strategies – termed ‘innovation’,

bureaucracy, professional bureaucracy, divisional and

‘quality enhancement’ and ‘cost reduction’ – from which

adhocracy, and that each of these will affect which

appropriate HRS can be derived.

strategies, policies and practices are or should be used.

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of ‘product market’ on the development of an HRS. 17

1.3 The practice: Aligning human resource and business strategies

The relative levels of competition that an organisation

The reality of these suggested links between HRS and

experiences in its product markets will influence the

corporate strategies, structures or life-cycles is much more

degree of management discretion in making strategic

problematic than the models may suggest. While the links

policy decisions in all functional areas, including HR. For

may appear to be reasonably logical and even useful, they

example:

may be based more on deduction than empirical data. 20

•

High monopoly power affords management greater

Indeed, the reality of devising and implementing a

discretion in choosing a particular personnel policy

strategy is too complex for any single link to be made

configuration. It is also likely to facilitate the adoption

between business and HRS. It is reasonable to assume

of resource-based and ‘benign’ HR practices, such as

that organisations in different markets will be at different

tenure commitments and gain sharing.

points in the business life-cycle, as well as having different

Where product market competition is intense,

structures. HRS is not just about ‘fit’, but about devising a

management is likely to have considerably less scope

completely unique and flexible package of policies and

to make choices on their personnel approach and

practice. The reasons for tailor-made HRSs are outlined

may adopt more control-oriented HR approaches.

below and clarify why a one-size-fits-all approach may

More specifically, Marchington evaluates the influence

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not work. 1.2.3 Organisational structure This third category suggests that the focus of HRS should

1.3.1 Lack of clear business strategy

be contingent not only on the nature of the corporate or

For a link even to be considered, a business strategy will

business strategy being pursued, but also on the type of

need to be apparent to the managers of an organisation.

organisational structure associated with this.18 This

However, as Storey and Sisson point out, ‘where such

includes paying attention to the organisation’s size, age,

strategies are available they are often extremely vague’. 21

business environment and technological systems.

Further to this, Wright et al suggests that there a number

Mintzberg describes an organisation’s structure as ‘the

of reasons why managers may not have a clear

sum total of the ways in which its labour is divided into

knowledge of their organisational context, required

distinct tasks and how these are coordinated’. He claims

behaviours and relevant practices required for strategy

that there are five configurations that can explain most

development. 22 These include:

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15 Schuler R S and Jackson S E,‘Linking Competitive Strategies with Human Resource Management Practices’, The Academy of Management Executive, Vol 1 No 3, pp 207-219, 1987 16 Other similar models include those put forward by Treacy and Wiersema (1995), and Miles and Snow (1984) 17 Marchington M,‘Analysing the Links between Product Markets and the Management of Employee Relations’, Journal of Management Studies, Vol 27 No 2, 1990 18 For investigations into organisational structure, see for example Chandler (1962), Child (1984) and Mintzberg (1983) 19 Mintzberg H, Structure in Fives: Designing Effective Organisations, Prentice-Hall, Englewood Cliffs, London, 1983, p 3 20 See for example Hendry and Pettigrew (1990) 21 Storey J and Sisson K, Managing Human Resources and Industrial Relations, Open University Press, Buckingham, 1993, p 69 22 Wright P M, McCormick B, Sherman S and McMahan G,‘The role of Human Resource Practices in petro-chemical refinery performance’, paper presented at the 1996 Academy of Management

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Meeting, Cincinnati, Ohio

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•

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The nature of change: As environments change in

seem more easily embedded in the firm’s business

a non-cyclical and discontinuous manner, it becomes

strategy than others. More specifically, ‘short-term HR

harder for managers to obtain the information they

processes’, such as setting objectives and rewarding

need to understand organisational contexts.

performance outcomes that are in line with business

Imperfect knowledge: Research suggests that the

goals, are relatively more strongly linked to the business

way individuals interpret information is flawed and,

strategy than are ‘long-term’ HRSs (ie transforming the

particularly where there are multiple variables, they

basic skills and aspirations of the workforce to prepare for

may fail to understand causal relationships.

the longer term; creating an organisational structure and

23

Organisation size, location and structure: Larger,

value set that will underpin longer-term success). ‘A key

diversified and geographically dispersed organisations

role of the HR practitioner is therefore to focus the

may have unique competitive circumstances requiring

organisation on the longer-term and to challenge the

unique strategic elements. This may subvert the success

predominant short-term thinking.’ 27

of a centralised strategy. 1.3.3 Time-lags 1.3.2 Lack of a single strategy

Wright suggests that the ability of an HRS to achieve ‘fit’

Business strategies at corporate level frequently do not

will be inhibited by the time lag between conception and

fall into the three simple categories described in Table 2,

implementation of the new practices associated with the

and instead are a jumble of all three. Schuler and Jackson

HRS, and a further lag between the implementation of

themselves admit that their model is an oversimplification

these and realised outcomes. ‘[A] long-term perspective is

of reality, as companies may follow more than one

a particularly crucial aspect of people strategies because

competitive strategy at a time and need to manage the

the time cycles for people resources are considerably

resulting tensions and conflicts.

longer than those for financial and technological

24

resources.’ 28 Indeed, it may take years rather than months These arguments suggest that HRS will vary significantly

for the effects of HR policies and practices to be realised

within companies operating in the same industry sector.

because these initiatives mean that individuals may have

Implementation of an HRS may well follow different paths

to relearn elements of their jobs and adjust ingrained

in terms of take-up and integration into the business

routines in their day-to-day work.

strategy, even in different units of the same organisation. 1.3.4 Office politics Authors such as Mintzberg, Sheppeck and Militello, and

The process of designing and implementing an HRS is

Thornhill 25 all argue that more often than not, strategies

affected by cultural and political factors operating in

emerge in a piecemeal rather than planned fashion. Also,

organisations rather than by following a highly rational

as Gratton et al point out, ‘we could not assume that what

and normative model. These factors no doubt affect

is “intended” (with regard to both business and HRS)

perceptions about the need for change, its management

would be “realised”’. 26 They found that some HR processes

and the way HRS may be used. This could explain for

23 Wright P M and Snell S A,‘Toward a unifying framework for exploring fit and flexibility in strategic human resources management’, Academy of Management Review, Vol 23 No 4, p 756, 1988 24 Schuler R S and Jackson S E,‘Linking Competitive Strategies with Human Resource Management Practices’, The Academy of Management Executive, Vol 1 No 3, pp 207-219, 1987 25 Mintzberg (1987, 1989), Sheppeck and Militello (2000), and Thornhill (2000) 26 Gratton L, Hope-Haley V, Stiles P and Truss C,‘Linking individual performance to business strategy: the people process model’, Human Resource Management, Vol 38 No 1, 1999, p 18 27 Ibid, p 28 28 Wright P M and Snell S A,‘Toward a unifying framework for exploring fit and flexibility in strategic human resources management’, Academy of Management Review, Vol 23 Issue 4, p 756, 1998

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example why some of the organisations Gunnigle and

the presence or absence of trade unions, legal regulation,

Moore surveyed appeared to be successfully aligning HR

the actual and perceived role of HR and HR professionals

policies and business strategy, while others were failing. 29

(ie proactive or reactive) and other factors that also affect

Organisations may be seen as composed of different

decision-making about HRS.

groups of stakeholders, each with a particular set of interests. ‘Dominant managers or groups of managers

1.4 So why bother?

in an organisation may therefore seek to exercise

This analysis of HRS suggests that strategic management

discretionary power, as well as any formal authority vested

is basically a human process beleaguered with all the

into them, to influence the outcome of decisions that will

challenges inherent in attempts to make decisions in

affect their interests. It is therefore inappropriate to view

conditions of uncertainty, competition and limited

HRSs as rational and objective entities, as they exist within

resources. It would appear that alignment is perhaps a

a value-laden system and can be described as being

tortuous process, even when you have decided on which

‘constantly in play, negotiated, revised and adapted’. 31 On

of the many theoretical textbooks provides the most

occasion, the implementation of any strategic change is

convincing approach. Yet having a range of policies

likely to be problematic and to meet resistance on the

and practices that are in sharp discord with the overall

part of employees at virtually all levels within an

direction of the business is not a desirable outcome

organisation, and HRS is no different. Change judged

either. This section discusses why it is important to bother

‘deviant’ will be perceived as imposed and outside

about aligning HRS with business strategy, despite the

prevailing cultural norms. Strategic change may also be

lack of a blueprint.

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associated with uncertainty and threat, as it alters familiar working methods and reward systems. 32

1.4.1 The symbolism of HR Having outlined the two broad positions in the debate

1.3.5 Rigid systems and processes

about HRS, let us now consider in general terms the

Like people, rigid systems and processes may also inhibit

single components of an HRS, their symbolism and

the development and alignment of strategies. Wright

outcomes. This will begin to demonstrate the ‘how’ of

suggests that the ability of an HRS to achieve ‘fit’ will be

strategic alignment, and rather than offering a blueprint,

hampered by structural inertia. 33 Rigidity caused by

will demonstrate which policies and practices might be

bureaucracy (particularly in more developed

chosen to match different business strategies.

organisations), organisational practices that have become part of a shared definition of reality, and political

Authors such as Johnson and Scholes, and Tyson 34

processes that result in battling with the internal power

highlight the ‘symbolic connotations’ of HR practices

structure all prevent HR practices from being adaptable

and policies. When designing an HRS, a firm may consider

to ‘fit’ with either external or internal business demands.

a certain set of practices and policies to instil specific

Other factors that may impinge on any straightforward

values. Some examples of these are:

link suggested between business and HRS may include

29 Gunnigle P and Moore S,‘Linking Business Strategy and Human Resource Management: Issues and Implications’, Personnel Review, Vol 23 No 1, pp 63-84, 1994 30 Thornhill A, Lewis P, Millmore M and Saunders M, Managing Change: A Human Resource Strategy Approach, FT/Prentice Hall, Harlow, 2000, p 8 31 Mabey C and Salaman G, Strategic Human Resource Management, Blackwell,Oxford, 1995, p 108 32 Ibid 33 Wright P M and Snell S A,‘Toward a unifying framework for exploring fit and flexibility in strategic human resources management’, Academy of Management Review, Vol 23 Issue 4, p 756, 1998

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34 Johnson and Scholes (1993), and Tyson (1995)

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Rewards: ‘Payment systems tell employees what an

1.4.2 HRS, strategic fit and performance

organisation regards as its most important objectives:

Choosing suitable HR policies and practices is the first

individual vs team effort, output, quality, skills.’ 35

hurdle in developing an HRS. It is also crucial to consider

Recruitment and selection: ‘Recruitment and selection

how they will affect organisational performance. While

procedures are a vital mechanism not only for ensuring

there is an abundance of writing on HRS theory and lots

the employment of appropriate staff, but also for

of prescriptive management guidance, very few studies

sending messages about the nature of the organisation

have attempted to measure the impact of HRS and high-

and its core values.’

performance work practices on the bottom-line

36

Employee development: In the research conducted

performance and productivity of organisations. To

by Tyson into different routes to excellence, employee

conclude this review, we will look at the most well known.

development – and especially at managerial level –

•

was regarded as one of the ‘strongest levers, which

Research has found a positive correlation between

were pulled to make the organisation change’. 37

‘high performance’ HR practices and productivity, but

Training: This is a time-honoured method of seeking

for different reasons: 39

to change attitudes and behaviours of employees.

•

Among its advantages are: developing a great sense of

commitment-based HRM systems had low turnover

employee ownership of change; introducing fresh ideas

and scrap rates and higher productivity than those

and long-lasting change. Clearly there is a limit to the

emphasising efficiency and reduction of labour costs.

potential of this approach as a way of introducing

•

•

MacDuffie looked at HR bundles in relation to

change. It may be rather time consuming, expensive

manufacturing performance. His study suggested that

and not least arouse ‘the big new management idea’

the plant whose bundle of HR practices were consistent

syndrome and thus meet employee resistance through

with the production and/or business strategy

negative attitudes to change.

outperformed the plant which did not. This report

Employee communication and involvement

strongly supports the case for alignment and external

programmes: This is also a policy area steeped in

fit, but not internal fit.

symbolism: ‘What is communicated is probably less

•

Huselid’s study attempted to evaluate the links

important than how and to whom the communication

between high-performance work practices and

is addressed.’ The chances of HR initiatives succeeding

organisational performance. His study found that

are generally thought to be greater when there is

such work practices have a significant impact on both

genuine employee involvement.

intermediate employee outcomes and both short-

Reorganisation of personnel at the top of the

and long-term measures of performance. He did not,

organisation: Change may be accomplished very

however, find evidence for either internal or external fit.

38

•

Arthur’s study of 30 mini steel mills found that

quickly through changes in personnel at the top of the

•

Ichinowski et al found that there was a strong

organisation with people from outside the organisation.

correlation between HR practices and productivity

Such changes are highly visible and symbolise the

outcomes, but which were more to do with changes

necessity to change.

in attitudes than the practices themselves.

35 Clark J (Ed), Human Resource Management and Technical Change, Sage, London, 1993, p 130 36 Ibid, p 137: see also Johnson G and Scholes K, Exploring Corporate Strategy, Third Edition, Prentice Hall, Hemel Hempstead, 1993 37 Tyson S, Human Resource Strategy: Towards a General Theory of Human Resource Management, Pitman Publishing, London, 1995, p 97 38 Clark J, (Ed), Human Resource Management and Technical Change, Sage, London, 1993, p 99 39 See for example, Arthur (1995), MacDuffie (1995), Huselid (1995), Ichinowski et al (1997) and Neal et al (2004)

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

•

More recently, a discussion paper by Neal et al suggests that the use of high quality HR practices mostly benefits organisations with poor organisational climates and find little validity for the argument about internal fit.

Even though the links may be weak, such research suggests that the fit between HRM practices and climate is a predictor of changes in productivity over time. The Work Foundation’s own study looking at these links also found strong associations between certain bundles of HR practices and business performance. 40 Together, these studies show that there is evidence for a link between HR practices and productivity, but only MacDuffie’s study provides data that supports an argument for alignment, too.

14

40 Bevan S, Cowling M, Horner L, Workplace Trends Survey 2004: Summary report, The Work Foundation, 2004

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

2. Aligning HR and business in practice

This section looks at the process of aligning HRS

business objectives, such as career paths, a good

and business strategy in reality. It focuses on four

programme of training for all staff, internal

organisations that have managed alignment with

communications initiatives focusing on informing

positive outcomes. (See Table 3.)

staff about developments, and receiving their feedback. This increased new business.

•

2.1 Why?

Merger: There are a number of people-related issues

The organisations in this report demonstrated both

that stem from merging two organisations. Most

internal and external reasons for engaging – knowingly

notably that two organisations can have very distinct

or not – in an alignment process.

cultures and modi operandi. Poor management of mergers can be detrimental to business performance,

External drivers:

particularly in the longer term. However, HR can

•

Profit loss: Loss in profit at Standard Life Healthcare

through bridging business and people issues assist this

(SLH) spurred a process of improving customer service

process. An excellent example is the Borough of Telford

and retention. This took place through new and more

& Wrekin ( T&W ) case, which shows how merging two

focused HR policies and practices that aligned with

cultures can result in large-scale organisational

Table 3: Summary of the case study organisations

COMPANY

BUSINESS STRATEGY

ALIGNMENT PROCESS

OUTCOMES

Borough of

Customer service delivery

Consultation

Increased flexibility among the

Telford & Wrekin

and efficiency

Public sector

workforce and increased number of service days

Private sector Standard Life

From customer to

New CEO working closely

Increased profits and improved

Healthcare

market focus

with HR

customer services

Seven Worldwide

Customer focus

HR as a new function

Improved efficiency

AutoGlass

From customer

HR always worked closely

Consistently good business

to market focus

with business and recently

performance and market share.

took a key role in an

More recently improvements in

organisational review

retention and quality of service

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

•

improvements when assisted by an alignment process.

combined with HR corporate values, and was the

A need to increase market share: Although Autoglass

key driver for HR working closely with the business.

had experienced sustained success for many years,

•

•

Consultation and demographics: In contrast to the

there were opportunities for growth through increasing

previous point, at T&W the greater pressure came

market share. HR practices and policies have a key

from consulting widely with staff and from a better

contribution to this objective through HR’s position on

understanding of labour market demographics. Both

the board and working closely with business. For

these factors highlighted that flexibility was going to

instance, training initiatives improved performance

be key to the efficiency of the organisation. It would

of fitters, which was a central part of interaction with

suit the labour market and the customer. HR played a

customers.

key role in preparing the organisation for an

Managing changes within external markets: Seven

increasingly flexible workforce.

Worldwide (SWW ) saw a need to move away from traditional print towards multimedia. This created a

Interestingly, the actions taken to resolve these issues

challenge for the organisation, and a director of people

generally fall under the rubric of ‘change management

and change was appointed to help manage the

initiatives’ (the next section looks at this in more detail).

transition. The role took responsibility for managing

This suggests that HR can play a role in managing

the changing employee demographic and harmonising

organisational change through alignment with business

the terms and conditions of remaining staff.

strategy.

Internal drivers:

The findings of the The Work Foundation’s Workplace

•

Cultural problems: Each case study demonstrates a

Trends Survey 2004 show that 45% of companies report

struggle of varying degrees with organisational culture.

that they have significantly changed their business

At SLH, the culture needed to be refocused around

strategy this year, and the most common changes to

customer service in order to reverse profit

business strategy are: reorganisation of their internal

loss. T&W also used alignment to assist with cultural

structure; expansion plans; introducing a new focus or

changes that were necessary after the merger of the

reorientation of activities. These challenges are reflected

county council and district council.

in the case studies presented here. However, the data

Senior management influence: The three private

also shows that ‘changes in HR strategy appear to be

sector case studies all had some form of pressure from

somewhat sluggish in their response to either overall

top-level management that encouraged and/or aided

strategic concerns, nor are they reviewed in relation to

the alignment of HR and business strategies. Autoglass

what really concerns HR in practice. Only 10% of

was encouraged by its parent company to run a

organisations [as part of the survey] are currently

strategic review, part of which was a review of HR

reviewing their objectives as far as HR strategy

and people. Highlighted in the review were business

is concerned.’ 41

•

weaknesses that HR could help resolve. At SLH, a new CEO brought with him good commercial ideas

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41 Ibid

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•

2.2 How?

Independent assessment and internal review: Data

The case studies in this report are all examples of where

gathering of this kind was an important part of the

the specific needs of the organisation and strategic

process and allows suitable strategic elements to be

direction were considered carefully and HR practices

chosen. In the early stages of developing the strategy,

chosen to complement them.

SWW had an independent review of the HR function carried out by a university. Similarly, at Autoglass a

To reiterate a point made in the first section of this report,

‘people review’ was conducted as part of a broader

an HRS can be defined as ‘a set of interdependent human

organisational review. This allowed an assessment of

resource (HR) policies and practices designed and

where the function was performing well and where

implemented by a firm to achieve its objectives.’

improvements could be made in terms of the overall

42

business direction, starting with a snapshot of the Organisations achieved alignment between business

current status of the organisation’s demographics and

and HR strategy, and improved business performance in

culture.

a variety of ways: 2.2.2 Organisational initiatives 2.2.1 Strategic understanding of the HR function

•

•

Structural and reward changes: These allow HR to drive itself into the heart of the business. The way

Autoglass created a director-level role for HR. This

people are rewarded can have a huge impact on

meant that they had access to board-level decision

organisational culture, assuming that rewarding certain

making and, where respect was gained, influence

behaviours encourages them. At SWW, HR drove

over it.

structural changes to make pay policies and practices

Devolution of HR to management: At both T&W and

more uniform and to improve organisational efficiency.

SWW, a key role for HR was ensuring that management

•

•

Creating an HR director role: Both SWW and

•

Training and development: T&D to encourage and

is equipped to manage people properly and take

support specific behaviours was a key feature in all of

responsibility for HR issues. For simplicity, SWW created

the case study organisations, often related to broader

desktop intranet links to management guides.

cultural and structural changes:

Data gathering: For two reasons, this had perhaps the

Standard Life Healthcare: A training programme

most positive effect on the alignment process. First, it

called ‘Customer Service Excellence’ (now called

was a route to gather data on which to base strategy

‘Total Customer Satisfaction’) was devised, which all

development. For example, at T&W understanding

employees have undergone. The course covered what

demographics and consulting with employees was the

customer service meant to individuals, what good and

main driver for embarking on the alignment process.

bad companies were doing and how the company

Second, data gathering demonstrated to the

could improve. All new employees still take this course.

organisation that HR and business would be working

Seven Worldwide: A training and development

together. For example, at SLH the CEO and HR director

strategy was devised to support the organisational

hosted coffee mornings together to talk about key

change project. It includes soft skills, ‘time is money’

issues and brainstorm solutions.

and team building.

42 Richardson R, Lecture 2: MSc Industrial Relations, Managing Human Resources series/module, London School of Economics, 1999/2000

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Autoglass: The training and development initiative in

2.3 Outcomes

partnership with its National Skills Centre improved

The case study companies in this report show a number

fitter skills, and with low drop-out rates showed that

of indirect and direct outcomes on practice 43 and

managers and employees took it seriously.

performance. Many of these outcomes are interrelated,

Borough of Telford & Wrekin: The council soon

and although segmented here, are parts of a more

realised that a sound management development

complicated ‘web’ of achievements in each case.

programme was an essential part of managing a

•

flexible workforce.

2.3.1 For organisational performance

Culture change: This was perceived as an aim in all

Tradition has shown that it is notoriously difficult to link

four case studies. The alignment process focuses a great

the alignment process – or indeed an single factor – to

deal on using HR policy and practice to elicit certain

organisational performance, and attempts have boggled

behaviours, creating an organisational culture that

the minds of academic professors and business

can move the business strategy forward. The most

professionals alike. The case studies reflect this.

pronounced cultural changes were seen at SLH, which turned itself round from a poor-performing

The following measures are illustrative of improvements

organisation to a customer focused one with

in individual organisational performance measures. Note

sustainable profits. Although ‘culture change’ sounds

that other factors, which may have influenced these

broad and complicated, actually small actions can

measures, have not been controlled for:

make a difference. At SWW, the decision to have the

•

T&W received an ‘excellent’ in its recent Comprehensive

whole organisation train at one location improved

Performance Assessment, received IiP status and has

communication and removed the sense that people

extended the number of service days.

were isolated in their sites.

•

SLH has moved into profit, increased customer satisfaction to 98 per cent and increased new business by 26 per cent.

Case study 1: Borough of Telford & Wrekin was the

•

SWW has enjoyed increased revenues per employee

result of merging an existing county council and district

and the new structure is proving much more efficient

council. The resulting organisation contained two very

in terms of managing clients.

distinct cultures and two sets of terms and conditions that needed to be aligned in order for the organisation

•

Autoglass has seen a positive impact on staff performance through its National Training Centre.

to be able to provide an efficient service. Through internal consultation with employees at all levels and

The findings of the Workplace Trends Survey 2004

investigation of the external environment, flexibility

show that some types of HRS will have an effect on

emerged as a key theme and was used as the basis for

organisational performance through association with a

the alignment process.

particular type of business strategy. 44 Specifically, that a market-focused strategy had a positive correlation with performance by increasing profit and market share. This strategy is associated with organisations that focus on

43 Table 1 (page 8) and Table 2 (page 9) are good illustrations of the impact on practice.

18

44 More specifically that:‘Particular strategic positions help organisations maintain profits in comparison to decline, but are not the same as those which help growth rather than maintain it.’

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both organisational restructuring and changing working

•

Increase in applications: At T&W this was an

practices with an internal focus on HR. A market-based

especially positive outcome of the alignment process

strategy is also strongly associated with a commitment

because the local labour market is very competitive.

to training and development. Rather than confirming a direct link between HRS and performance, it shows that

2.3.3 For organisational culture

certain HR components are more closely correlated with

The benefits to organisational culture are the least

successful business strategies.

tangible of the outcomes but are often the issues preoccupying HR professionals. For example, one HR

Case study 2: Standard Life Healthcare went

director felt that one of the most positive achievements

through a period of major financial difficulties in the

was being seen as a ‘can do, flexible employer’. This is

late-1990s, which was accompanied by a narrow focus

because staff flexibility, measured by the increase in

on sales rather than on the customer. A new chief

part-time workers, means that it is easier to respond to

executive joined in 1998 and brought with him some

work fluctuations, thus improving the efficiency of the

strong ideas about working with HR to improve

organisation. These benefits are measured in

customer services. This, combined with a commitment to

improvements to staff attitudes towards their employer,

the idea that Standard Life Healthcare could be a great

the organisation as a whole and their jobs. Indeed, one

place to work, resulted in a strong market position and

HR director proudly explained that staff satisfaction

healthy profits.

ratings have improved gradually over the last eight years, about the same period of time that HR has had a seat on the board. Similarly, SLH cited the fact that they were in

2.3.2 For human performance

the 25th percentile of the Gallup Q12 staff engagement

Though less tangible, and to an extent of greater concern

survey, which was one of the major performance

to internal audiences rather than the market, there are a

outcomes.

range of indicators of human performance improvements – as opposed to organisational performance – resulting

2.3.4 For HR as a function

from better strategic alignment.

HR professionals who are worried that alignment means a large increase in their workload should consider the

For example:

beneficial outcomes for their department before hiding

•

Decrease in staff turnover: At SLH and SWW, this

in the filing cupboard! These include:

means that recruitment costs are contained and the

•

•

Increase in respect: It can mean that the function is

experience of staff in key roles is retained.

taken more seriously because the organisation can

Improvement in sickness absence rates: Uncertified

witness the positive outcomes of policies and practices.

absence is always a major cost to organisations. At T&W,

This was seen at SLH where managers are now happy

sickness absence management was counterbalanced

to wait for the ‘right people’ during the recruitment

by flexible working, with a reduction in unauthorised

process, indicating that there is an increase in trust between HR and business managers.

absences. Likewise, SLH has seen a reduction in sickness absence and now has a rate of only three per cent.

•

Increased influence and involvement: For example,

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•

HR professionals at SWW are invited to management

continual process. The case study describes many ‘start

meetings. At T&W, HR has helped shape service delivery

again points’ where those involved did not shy away from

and business planning.

giving up and going back to the drawing board. In this

Increase in HR skill across the organisations: Where

particular case, responding to the needs of employees

a process of devolvement has taken place, this can

is key and, intuitively, these are ever-changing.

mean an increase in HR skills across the organisation, allowing HR professionals to do more developmental,

2.4.2 Time and effort

rather than day-to-day work. An excellent example is

Each case shows that time and effort are needed. In

at T&W where HR projects are devolved to business

particular, HR professionals must keep on top of both the

heads, and now HR can concentrate on management

day-to-day demands of their jobs while also maintaining

development and other newer issues.

a strategic focus.

It is also important to highlight that there were some

2.4.3 Good working relationships

unexpected outcomes. Many of the case studies found

Central to the alignment process, good relationships

a need for a greater focus on management development.

between HR and all levels of the organisation cannot

For example, T&W is now looking at how to manage an

be overlooked.

increasingly remote workforce and more virtual teams.

•

Director level: Support at this level means including HR on the board which, in turn, means that HR has

Case study 3: Seven Worldwide formerly focused on

access to, and influence on, the business decision-

traditional print businesses and had a heavily unionised

making process. At SLH, a new CEO was the key driver

workforce. Moving towards a multi-media focus brought

for a business strategy supported by HR policies and

with it a new employee and customer demographic.

practices. This was supported by the loss of senior

There was a need for a different style of employee

managers who did not feel they could work in this way.

support and a HR department was created. The

•

Senior management level: The Autoglass case study

department has grown from strength to strength and

shows that a key role for HR during the alignment

since appointing a HR director in 2000, close attention

process is the ability to influence business heads. Once

has been paid to making sure HR policies and practices

this is achieved, the senior managers act as role models

align with the business direction.

for line management. The T&W case takes this one step further; senior managers volunteer to lead on specific HR projects. For example, the IiP process is led by the

2.4 Success factors

leisure services manager, which enables the process to

Although the inputs and outcomes of each case were

be ‘mixed in’ with service issues. At Autoglass, the HR

different, there were marked similarities among the

department retains its strategic role, partly due to

success factors:

‘enlightened’ senior managers.

•

20

Line management: Good working relationships here

2.4.1 Treating alignment as an iterative process

are essential for driving HR practice into the business.

T&W is a perfect example of how alignment must be a

Line managers are usually responsible for execution so

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

•

they have a great effect on the outcome of various

processes work alongside each other to encourage

initiatives.

business performance.

Employee level: This is also important for making approaching HR directly was seen as a major plus point

2.5 The key challenges to the alignment process

and at T&W, they consult with employees (and other

Table 4 on page 22 outlines the challenges that affected

levels of the organisation) directly to decide what else

the alignment process in the case studies, and how these

they need to achieve.

were overcome. These challenges reflect similar themes

new policies and practices work. At SWW, employees

to those outlined in the literature review. 2.4.4 Confidence within HR At SWW, HR took a hard line on certain issues, which

Case study 4: Autoglass has had a progressive HR

demonstrated to the organisation the confidence they

department for some years. With an HR director on the

had in their abilities. This confidence is supported by

board, the organisation appreciates the importance of

the background of the director, who has an established

the people element. Most recently, the HR function

career in HR and change management consultancy.

played a key role in an organisational review focusing

Similarly, at Autoglass, the HR director believes that HR

on personnel, and identified a number of areas where

professionals who know what they are doing and who

improvements could be made, which would reap

are confident to be part of the business are central to

business benefits.

sustaining their reputation and therefore involvement in business issues. 2.4.5 Culture of the organisation Organisational culture may be a reason for change and an outcome, but also a factor in the success or failure of an HR policy or practice, either by reinforcing new polices and practice, or indeed undermining them. Some particular examples are:

•

Perceptions of the role of HR: At Autoglass, HR has been a feature of organisational life for some time and HR is highly regarded. This, combined with a track record of delivering results, sustains it strategic involvement.

•

Culture of continuous performance management: SLH is open about performance management. The CEO is keen that line managers can approach employees about their day-to-day performance, as well as it being a formal process. In this way, formal and informal HR

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Table 4: Challenges affecting alignment and their solutions

Issue

Challenge

How was it overcome?

External

Sudden changes in external markets can

At SWW, external market changes were managed through foresight

market

hinder the alignment process. For example,

around business direction. The HR department played a key role in

changes

setting out on a route to develop staff was

restructuring the business in 2002 to improve efficiency. HR

interrupted by the need to reduce staff

accepted that although initiatives have a long-term focus, it will

numbers, creating a tense environment

also be necessary to act reactively

Measuring

Changes in markets and customer demand

Choosing measures that are most appropriate to the organisation’s

benefits

affect ‘external’ performance measures, but

business environment is key. For example, measuring retention

may not give an accurate indication of the

among key groups of staff. Also, as measures will never provide

health of the organisation internally

concrete evidence, there needs to be faith that the process is beneficial

Resources

In many cases, finance for developing HR

The organisational review at Autoglass was conducted with

components was unavailable

minimal external cost. Only one consultant was hired and other resources were internal. The experience of their parent company was drawn on for an objective view

Long-term

Often, the HR solution to business issues is

solutions to a longer term strategy, which might not fit short-term

At Autoglass, the HR professionals persisted with longer term initiatives, developing a clear business case from the outset

with short-term business goals

goals Politics

Tensions among management brought on

Autoglass has built up respect over the years through delivering

by perceived loss of control and HR being

results. Similarly, at SWW the HR director found that taking a hard

‘too big for their boots’ can interfere with

line on issues and achieving improvements demonstrated the value

HR playing a role in business issues, which

that HR could add

is a key part of the alignment process

22

Response

Employees can often be suspicious of new

At T&W, the two cultures merging meant some employees felt

to change

initiatives and changes to working practice.

uncomfortable in the new environment. Encouraging cynical staff

Those brought about by the alignment

to think about, with the support of their manager, how a more

process are no different

flexible environment could work for them assisted the transition

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3. Conclusion

Finding out to what extent strategic alignment of

many cases, the link is subtle and the content of their

business strategy and HR feature in the thinking and

HRS is aimed at encouraging specific behaviours among

actions of good organisations is no easy task. Asking

employees who will, in turn, act as a lever for achieving

organisations, or more specifically HR professionals,

their business goals and improving performance. The

whether or not they align HRS and business strategy will

Workplace Trends Survey 2004 found that there are often

not answer this question satisfactorily. A simple positive

associations between HR practices and performance

response would fail to capture the complexities of the

rather than direct causal links. For example:

alignment process, or what importance was attributed to

• •

it in terms of organisational performance. To understand

a new CEO is associated with employment growth an appraisal HR strategy that for example promotes

the extent of alignment within organisations requires a

employee innovation and commitment and unlocks

more in-depth analysis.

potential through career development, is associated with increasing employment levels.

The more prescriptive management literature suggests that aligning business and HRS is a formal and considered

In addition, the HRS is only one part of an integrated

process, perhaps formalised in boardrooms and captured

approach to managing the organisation as a whole and

in documents. But the more critical, and more realistic,

other areas are afforded equal importance, including, for

literature suggests that this cannot be the case, for two

example, addressing the needs of stakeholders and

reasons. First, developing and aligning strategy is

shareholders. ‘Effective people management is oil to the

fundamentally a human process and will fall foul of

whole organisational system and not a distinct strategy.’ 46

human error. Second, business environments are

‘Alignment’ conveys something too rational and formulaic,

influenced by a wide array of factors that cannot easily

which is rarely the case in practice. However, it is

be controlled for all at once.

important to note that large and profitable organisations believe there is an impact, indirectly or directly, of a

But, there is evidence that organisations do attempt to

strategic fit between HR and business strategy, and its

align their business and HR strategies to encourage high

impact on organisational performance. Indeed, the

performance. The case studies suggest that alignment is

common theme among all the case studies in the report

a very real process in organisations, despite the fact that

was to create an ambitious, aspirational and engaged

it might not be as formal and formulaic as some of the

workforce.

business and academic literature describes. In reality, the alignment process was incremental and two-way, where

3.1 Does alignment matter?

HRS responded to business issues and strategic direction

The complexity of the alignment process means that it is

but also informed it where it proved to be successful.

hard to measure. In the case studies, basic measures were used to try and track improvements including turnover,

The findings of The Work and Enterprise Panel of Inquiry

45

recruitment, staff satisfaction, sales per employee and

show that high performing or excellent organisations

profits, but it is important to remember that these could

do have HR policies and practices that complement and

be influenced by any number of internal and external

support the direction of their business strategy. But in

factors. For example, Seven Worldwide had to increase,

45 Harding R, Cowling M and Turner N, The Missing Link: From productivity to performance, The Work Foundation, 2003 46 Ibid

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pressures, so staff turnover would not necessarily be

3.2 What does this mean for organisations?

a useful measure. In addition, some cases show that

The key finding from the case studies is that it is vital for

measurement can be a bit of an after-thought. Where

organisations to understand the details of their own case

there is an HR resource deficit, implementation is often

so they can think about why certain policies and practices

more at the fore than attempting to measure or

may be more relevant to their strategic goals than others.

understand outcomes.

For many, this may be about reflecting on what their

reduce, and then increase staff levels due to market

business strategy is in the first instance, and then on While the case studies show there is evidence that

what constitutes their HRS.

alignment can make a tangible impact on organisational practice, the link with labour productivity is not so

This means that data gathering, reviewing, consultation

straightforward. The Workplace Trends Survey 2004 reaffirms

and information sharing are good starting points for

how complex the link is. In many cases, the most realistic

organisations wanting to make sure their HR and business

goal of a HRS is to try and encourage the employee

strategies, in whatever form they take, are aligned or at

behaviours that will suit the tasks needed for business

least, more coherent. In this way, this report seems to

performance.

offer support for a more contingent approach to strategic alignment, even though we would not try to argue that

‘Cynics may suggest that there is a yawning gap between

there may be some best practice policies and practices

the rhetoric or the impact of HR, the reality of HR practice

that all organisations could make good use of. The report

and outcomes. A more likely explanation is that HR

advocates that it would be wise for professionals to

practices have other outcomes, for example on employee

understand their position in relation to all three

wellbeing and organisational performance, rather than a

approaches to developing strategy – organisational life-

direct effect on employee productivity.’ 47

cycle, business strategy and organisational structure – as one or all three will have a major impact on what policies

The evidence in this report suggests that HRSs can have

and practices will ‘suit’ the organisation.

a positive impact on organisational performance when they interact with business strategy. For organisations,

Businesses will need to make a clear and transparent link

then, the way forward is clear. There is no use having an

through simple, common metrics between the business

HR department that works in a silo. This is a cost to

outcomes they are hoping to achieve and how people

organisations and may reap no reward. Not having the

contribute to this. For example, if an organisation

HR director sit on the board is a barrier to sharing a large

measures sales per head and publicises those measures

part of organisational information that may be vital to

internally, the organisation will assume that sales are the

understanding how strategic goals will translate into the

most important goal, particularly if reward is also based

business. Further to this, research suggests that there is a

around these measures. Similarly, all managers will need

role for HR in helping organisations adapt to changing

to think about how HR initiatives are affecting or will

business strategy, and external consultants and experts

affect culture through encouraging particular behaviours,

are costly. 48 So, why not use internal skills?

ie by asking are these suitable?

47 Ibid

24

48 Bevan S, Cowling M, Horner L, Workplace Trends Survey 2004: Summary report, The Work Foundation, 2004

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

For HR, it is important that HR advertises what the function achieves internally and highlights the positive outcomes. This will enhance the reputation of HR and strengthen its ability to negotiate change – even if it is more exposed. This should be combined with HR training and development for all managers in order to develop good working relationships and networking within the business. Each HR strategy requires the development of strong metrics that enable the HR department to show before and after effects wherever possible. If the case is to be made that HR acts as a business driver helping to manage the strategic spaces between the various core areas of a business, then measurement of change – reduced employee turnover, new skills acquisition by staff, increased levels of ideas and innovation through re-organisation as some examples – becomes critical.

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Case studies: 1–4 CASE STUDY 1 – Borough of Telford & Wrekin

Investigation Flexibility emerged as the key theme. This was supported by both the geography of the BC and some examination of

Background

the area and organisational demographics. The BC is situated

The Borough of Telford & Wrekin is a unitary authority, which

on the edge of the West Midlands conurbation, and there is

means it is responsible for all local government services in

only a small pool of local workers as local employment rates

the area, including education, social services and libraries.

are high, so retention is essential. In addition, demographics

The authority took over these responsibilities on 1 April 1998.

showed that Telford is a ‘young’ town; the average age of

Before this time, the services were run by Shropshire County

inhabitants is 32, and within the area there is a high number

Council.

of single parents and a high rate of teenage pregnancy, so flexible working is crucial. Further to this, organisational data

Borough status was granted to the council in the spring of

showed that 66 per cent of staff live in Telford & Wrekin and

2002. The Borough of Telford & Wrekin’s focus is on: ‘Building

are therefore customers of the council. Supporting them in

a successful, prosperous and healthy community which offers

caring for children and/or elderly relatives has the triple effect

a good quality of life for all the people of Telford & Wrekin.’

of building commitment, assisting the local economy and

The borough council is a medium-sized, public sector

reducing the demands on council caring services.

organisation with 54 members, 5,350 employees, 180 operational buildings, and it manages an annual budget

As more and more work and consultation took place around

of more than £125 million.

values, what were at first considered HR issues emerged to be directly related to service delivery and organisational

The case for alignment

objectives. It was at this point, around 1999, that the case for

The borough council (BC) was formed from two separate

a strong alignment between HR policy and practice and the

authorities – a county council (CC) and a district council

service units was cemented.

(DC). The CC had a very traditional and formal culture, where people frequently used surnames or titles to address each

How has alignment been achieved?

other, while in contrast the DC was very informal with a

There was no planned alignment strategy. It has been

more progressive culture.

an entirely emerging one, with many ‘start again points’ being reached along the way. The first milestone was the

When the DC and the CC merged in 1998, there were two very

development of three, clear employment principles – ‘value,

different sets of conditions that needed aligning. There were

fairness and trust’. This was achieved by asking employees

also two distinct types of employees: those used to working

what they wanted.

very flexibly and those used to working Monday to Friday

26

from 9am to 5pm with no days off. The DC’s culture initially

Following this, work on the terms and conditions was carried

provided inspiration for improving the BC’s culture. It was a

out with the trade unions. When employees were asked about

really people-friendly place to work, and this was seen as a

what they wanted, they were more concerned with getting

positive. At this point, it was decided that a third culture

something clear and understandable, and which gave them

needed to be created to replace the two existing cultures.

some control rather than something ‘amazing’. Likewise,

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

managers wanted something ‘not too prescriptive, something

but they also wanted to be able to grow their careers.

that they could control and can be adapted to suit their location’.

In 1998, HR had a traditional structure – the training function did training and the personnel function managed personnel

In the early stages, workshops were set up by HR for different

administration. It was decided that a more consultant-led

specialists within Personnel and Development (P&D), as well

structure was needed to devolve HR responsibility into the

as for trade unions and managers. The workshops consulted

business. Five portfolios (service areas) were developed in the

on questions about flexible working, issues and problems,

organisation and now there is an HR team for each, which is

and encouraged realistic visualising of where the

funded out of the individual portfolio budget. Individual ‘HR’

organisation needed to be.

projects were given to different service managers to lead on while being supported by a personnel manager. For example,

The outcome from regular employee surveys were also used

the IiP process is led by the leisure services manager, which

to inform decisions, and following the 2001 survey it was

enables the process to be mixed in with service issues. There

decided to create an organisational development initiative.

is a sense that this process ‘just works’ for the council, and

This was overseen by the chief executive in order to provide

because of this, they continue to use it without question.

profile and top management support. Significantly, the issue

This approach also has the benefit of keeping the application

of front-line buy-in to outcomes was addressed and the

of HR theory in check; the service managers can say when

project was characterised by line managers leading

ideas/concepts will not apply to the business.

individual project groups, with P&D acting as hands-on consultants. This has also enabled the organisation to

Two years after the merger, there was a dip in positive

develop new skills among managers, along with a broader

responses in the employee attitude survey, and it was

view of the corporate organisation.

decided to do something new. This phase focused on:

These workshops were such a success that the idea was

• • •

extended to incorporate the whole of the organisation.

general workforce development management development communication.

‘Making Better Happen’ was an innovative offsite training day organised by P&D. A random selection of staff were

A leadership model was devised where everybody is a ‘leader’.

chosen from the chief executive downwards, and there

Management development was considered in detail using

were firm rules, including:

360-degree appraisal linked closely to management

• • •

only first names should be used

competencies. These included supporting flexible working,

no employment roles should be divulged at any point

being responsive to individual issues, demonstrating a high

casual dress only.

degree of trust, realistic objectives and judging quality of outputs, not length of time spent at desks. Although the

The workshops allowed people to talk freely about what the

management group were already well-versed on these issues,

organisation should be and the format was highly successful.

there was still room for improvement. A good management

People wanted to feel like they could go home at the end of

development programme with credibility was needed so,

the day without feeling guilty and like they were ‘skiving off’,

following a detailed scoping exercise, the organisation

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

formed a partnership with Birmingham University to develop and deliver the programme. In order to crystallize the P&D business plan, time was spent with the chief executive and directors to visualise the council

• • • • •

employee relations health and work flexibility workforce planning conditions of service.

as an employer. The aim was to create a document that outlined the crux of what Telford & Wrekin did as employers,

It is felt that there has been an impact on the culture with

and which would act as a reference point for everyone. Most

the council being seen more and more as a ‘can-do, flexible

importantly the document needed to be simple, but it took

employer’. This was independently identified by the recent

‘complex drafts of difficult documents to get to one simple

Comprehensive Performance Assessment report. To support

one!’. Eventually, the ‘Success through People’ document was

this, there is a raft of flexible working policies including

produced.

domestic and special leave schemes, and flexible working (term time and home working). These policies are promoted

The business strategy is ‘lived and breathed’ throughout the

in the organisation and externally through roadshows, the

organisation, and since the alignment process began, this

internet, weekly bulletins and the employee newsletter.

has got stronger. Achieving alignment at Telford & Wrekin

Potential employees can read all about them on the internet.

was not so much a case of ‘sitting down with the business

This may have led to the percentage of employees working

strategy’, but more of adding to it through the learning

part-time hours – now the dominant group.

process. Business strategy is effectively one with individual and team development initiatives now the two strategies

However, most importantly as ‘flexibility’ is further ingrained

have merged as much as aligned.

into the culture, more and more people approach managers to talk about how flexibility can work for them. To deal with

Outcomes

this, more focus was placed on management development.

The organisation is now further developing its HR direction

Managers are all assessed against key competencies, which

and has recently invested in a development day in which

include work-life balance standards and the need to be a

unions, elected members, managers, employees and HR

living example. The attitude survey shows that and has built

specialists worked together to identify the key employment

on regular ‘temperature testing’ in the organisation through

actions needed to deliver the employment agenda over the

the employee surveys, which show an increasing percentage

next five years. The event was facilitated by the regional

of staff who believe or believe strongly that their manager

employers’ organisation and has led to an action framework

accommodates their personal needs.

involving all stakeholders. Key activity areas to build on are:

• • • • • •

28

employment practice

An HR approach (rather than the more limited personnel

culture

and training approach) has emerged and developed in the

performance management

organisation. The key characteristic of this has been line

development and learning

managers taking active responsibility for HR issues in their

leadership

area. This in turn has enabled HR specialists to focus their role

communication

more effectively. While there is some debate about which of

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

these effects came first, the result is an organisation that understands the need for strategic thinking and planning

•

part-time employees outnumbering full-time employees so it is easier to respond to short-term work fluctuations.

around people issues. Most significantly, the Comprehensive Performance The HR director feels that managers now think about

Assessment awarded the council with an ‘excellent

capacity throughout the business planning process, which

standard’, placing it in the top-tier of high-performing

might suggest that training and learning have been

council’s nationally. It is the first and only authority in

institutionalised to a certain extent. An important component

the region to be placed in the top ten per cent of local

of embedding this approach has been the Investors in People

authorities. Significantly, it has achieved this while charging

standard. All business units were required to commit to these

one of the lowest levels of council tax among unitary

two years ago as individual teams. All are now accredited

authorities and in its region, despite having a number of

and the council is soon to be assessed as an individual body.

areas of high deprivation in its boundaries. Recent customer

This is important in further developing a ‘one organisation’

satisfaction surveys have also indicated an increasing

framework, increasingly important in the one-stop public

percentage of satisfied customers.

service delivery culture that the government is establishing. Conditions for success The significant change in the role of HR – with responsibility

Painting a picture of the organisation through data

devolved to the line – has meant that HR-related skills are

gathering was crucial to the success of the alignment

being expanded and built on across the organisation. With

process. Key change drivers were ‘real statistics‘ drawn from

service heads working as HR champions, other managers

the organisation and then benchmarked against other

realise how important it is. Initially, the service heads were

organisations. While academic and management theories are

involved partly through volunteering and partly because

well known and understood, these were deliberately not held

they were identified as doing something well and then

up as solutions as it was believed that engagement and buy-

approached. This has not been perceived as a difficult

in would be more difficult to achieve. In this case the key to

process.

the process is consistent reviewing. For example, two years after the merger there was a dip in many indicators from

Although it is difficult to quantify the beneficial outcomes

the employee survey responses so senior management

for organisational performance in financial terms, the

recognised that something new needed to be done. The other

council has experienced:

data that was really essential was the analysis of workforce

• •

increased full service opening by three days a year

demographics. This gave a really good understanding of

staff and therefore knowledge retention in an area of high

employee needs and how these could fit in with business

employment

objectives.

• • • •

a committed workforce a counterbalancing of sickness absence management with

The input of the individuals involved was a key success factor,

flexible working and a reduction in unauthorised absence

particularly as the emerging nature of the process demanded

an increase in applications

effort beyond day-to-day jobs from a variety of stakeholders.

an increase in the level of training

The fact that all the people concerned were persistent kept

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

the developments moving, sometimes ‘it might have felt that

learnt from the pilot, but the funding, skills and expertise

it would be easier to go back to the way things were and just

were needed to get it right. For example, at first two PCs were

write down a rigid processes document instead’. The trade

bought for home workers but the costs were so huge the

unions ‘played a helpful role’. They worked with HR on the

buying policy was changed to buying laptops and docking

terms and conditions, which were then voted for in a ballot.

stations instead. This is illustrative of the ‘painful lessons’

The response was strongly positive. There are nine trade

that have been learned throughout the process.

unions in all that have been involved, as well as HR staff, managers (line, director and chief executive) and employees.

Challenges People felt the change and responded to it in differing

The ‘Making Better Happen’ offsite workshop was absolutely

amounts. It was quite a paternalistic organisation and some

essential. Commitment from service managers, P&D and a

people were forced into change that they were not used or

communications subgroup made this happen. The process

prepared for. Although there was an attempt to handle this

emphasised the importance of two-way communication –

sensitively, the process may still have been uncomfortable for

listening and responding – and that the need for change

some who experienced limited change in a more protected

should be recognised by all. More intangibly, the process

environment before. One of the most unexpected outcomes

required an element of trust; putting flexibility into action

was that some people would rather have a structured

meant making mistakes. The policies are as loose and non-

environment than a flexible one. However, it is felt that:

specific as possible to embrace the wide and differing range

‘You can’t have a strategy that develops as you go along

of employee interests, but are held within a devolved

without some degree of turbulence.’

managerial framework enabling local decision-making informed by organisational direction.

The organisation is far more business-oriented now and the perception of some individuals is that it is not so cosy and

Due to the emerging nature of the alignment process, it was

comfortable. Some people feel more insecure and new

felt that the resources it drew on were hard to identify. The

challenges are frequent, but not necessarily to the detriment

time and effort of those involved were key to this process

of job security.

and ‘living what you say’ was absolutely critical to the achievements. More tangibly, retaining staff in an area of

Resources may be a challenge in the future. The initial boost

high employment was seen as outweighing any input costs.

to funding has now run out and government funding, which is awarded per head of the population, does not keep up with

Where funding was concerned, there was an initial boost

the fast growth the new town experiences. Also, there was

from the government to support creation of the new council.

additional pressure from some negative comments over the

This budget was to last for a three-year period. The council

changes, with some people perceiving flexible working as a

also won some government challenge funding, which helped.

waste of money.

The money was used to initiate home working with the

30

assistance of BT. A similar scheme has been tried before with

Ensuring that senior managers are involved at the head of

individuals, but ‘got stuck’. This time the aim was to get a

human resources issues has meant developing a pool of

whole team to be able to work from home. A great deal was

volunteers to take over when juggling this with their day-to-

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

day job proves tricky and ensures that HR matters maintain

CASE STUDY 2 – Standard Life Healthcare

a realistic edge. Although this is mainly a workload burden, it has a hidden benefit of renewing energy in the projects.

Background

Managing and communicating with a majority part-time

Standard Life Healthcare (SLH) is one of the largest health

and remote workforce is, and will continue to be, a key

insurance companies in the UK, insuring 435,000 lives and

challenge. The organisation is currently in the development

with a six per cent market share. Following the acquisition

stage of this approaching issue.

of Prime Health Limited in June 1994, Standard Life renamed in April 2000 to become Standard Life Healthcare. It now

Sustainability

employs 770 staff – 450 people in Guildford and 320 in

Despite the challenges and the relentless nature of managing

Stockport. The ratio between female and male staff is

the ‘flexible’ culture, the aim is to keep going. Using elements

roughly 60:40, and 20 per cent of company employees

of the process that worked well, the key is to keep asking

are part-time staff.

‘what do we want to do now?’. SLH offers a range of products from traditional private HR has a key role in this now that much of the HR skill has

medical insurance to self-pay options, which reduce

devolved to the line more, and it has freed up HR time to work

premiums. It has also recently started providing healthcare

strategically. This will help the alignment to be sustained. It is

solutions that aim to prevent health problems before they

also key to realise that ‘you do not need to reinvent the world’.

occur and manage absence for corporate customers. Case for alignment The organisation was in major financial difficulties and had lost money in the financial year 1997/98. There was no clear business strategy and business focus was entirely on sales. This resulted in poor customer service, with increasing numbers of complaints. Supporting the failing business was a poor culture characterised by siloed management, poor leadership, blame and power struggles. Staff turnover was running at an unacceptably high 20 per cent a year. As a result, the HR strategy was simply focused on survival and was mainly reactive (focusing on recruitment). There was no support or resources for new initiatives, like job evaluation or appraisal systems. In 1998, a new chief executive joined the company with ideas to turn the business around. The head of HR saw an opportunity to prove what HR could contribute to improving the company and its performance. Working closely with the chief executive, HR helped achieve desired business outcomes.

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

How has alignment been achieved?

the head of HR’s responsibility to take notes and get back

The new chief executive brought with him good commercial

to individuals (through a letter) with tangible actions for

ideas that combined with HR corporate values, including

improving the situation or an explanation of why the

customer and quality focus, team work, communications

situation could not be addressed. This went some way to

and integrity. These values were key to demonstrating to

building trust with the staff who were then more willing to

employees what was important to the organisation. The chief

support the organisation as they saw actual improvements.

executive worked closely with the existing HR team, which

In addition, there is a back-to-the-floor scheme where

was progressive and capable, from the outset. It was clear

directors work in all different parts of the organisation and

what the business needed at this stage: profitable growth

quarterly staff briefings. The chief executive resolved to meet

and cost-cutting. To help provide a fresh start, the team of

every new employee when they start and to support this

directors was refreshed. To improve customer retention in a

there is also a presentation, through which they are told

competitive market, SLH needed to create a great place to

three key messages:

work and to encourage staff to provide the best possible

1. Everyone’s job is important to the success of the business

service. It decided that the people needed were already a

2. Everyone is encouraged to contribute ideas.

part of the organisation, but were not supported, nurtured

3. It’s important to enjoy work and get on well with

or encouraged to use their potential.

colleagues, and a work-life balance is necessary to perform well.

At this point, the HR strategy needed to be broadly about co-creating and consultation. It was important to energise

The key changes were made to the customer services division.

managers so they were not waiting to be told what to do

It was recognised that the organisation had some of its

by the executive team. The process was largely iterative and

lowest paid people on the front line dealing with customers.

developed over time, although a small amount of external

Technically, improvements were made to the telephony

data was drawn on.

system, but with greater effect the employees in this division were paid the highest market rates for their skills and set

Aligning HR and business has focused on building trust

proper career paths. For example, career streams were created

and engagement with staff, as the chief executive, Mike Hall

for claims and administrative roles to allow for success

explains: ‘SLH expects a lot from its people and expects them

through different skill sets.

to have their own demands in return. People want to be valued for what they do.’

Developing a good training programme was also central to improving customer service. The ‘Customer Service Excellence’

Early on, it was clear that communication with staff needed

programme was devised and it addressed what customer

to be improved dramatically and a programme was initiated

service meant to individuals, what the good and bad

that had some quick results. The chief executive and head of

companies are doing and how the company can improve.

HR hosted two coffee mornings a month where employees

During 2000, every employee took this training and the

could speak frankly about any issues from any area of the

course is still running (although it has been rebranded as

business. People were even encouraged to speak out if they

‘Total Customer Satisfaction’).

thought their jobs were limited by business processes. It was

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A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

addition to training and communications, SLH sought to

• • •

promote work-life balance and staff engagement. This has

So far, measuring the outcomes of the initiatives has shown

included a staff consultative committee designed around

improvements. Turnover is at less than ten per cent at both

the European Works Council model and an integrated

sites (reduced by 60 per cent), and sickness absence is at

communications platform with an online and offline health

about three per cent. In addition, the staff opinion survey,

and well-being solution (provided by Vielife). The health and

which is based on the Gallup Q12, is used. SLH is now in

well-being initiatives include: health fairs, a review of the

the top 25th percentile of companies in the UK for staff

staff restaurant, eating well for energy seminars with expert

engagement and it is finding that ex-staff are returning.

nutritionists, free fruit and fibre days, free drink bottles and a

The Gallup Q12 action-planning sessions are also showing

nutritional assessment drive.

improvements in terms of involvement and contribution,

It was assumed that if SLH became a great place to work it would reflect on staff performance and quality of service. In

reward and recognition learning organisation partnership with staff.

with customer satisfaction currently at 97/98 per cent overall In order to make sure HR is and continues to align with

and customer retention up 2.2 per cent

business objectives, everybody works closely with the business strategy documents. Staff are taken through the documents

In hard terms, the business has moved into profit, and is

at quarterly briefings. Their basic aim is to increase market

looking sustainable with new business up by 26 per cent.

share from six to 15 per cent over the next five years. SLH

SLH has won industry awards for both ‘Health Insurer of the

intends to achieve this by differentiating through customer

Year’ and ‘Best Customer Service’ for the past three years.

service and HR has a big role to play in this. HR measure internally using straightforward metrics like turnover and

The head of HR feels that the improvements are a ‘virtuous

sickness absence rates. In addition, there has been a review of

circle’ and SLH is increasingly a great place to work. Eighty

the reward and recognition practices, and SLH’s approach to

per cent of employees are now registered with the Vielife

learning and development. There is also continual appraisal

service. This has improved employee health, nutrition in

of HR policies and procedures in order to make sure that the

particular, by 35 per cent (based on the Vielife analysis)

policies support the ethos of a ‘great place to work’ and do

and staff are so involved they are introducing their own

not inadvertently work against it.

initiatives, for example keep-fit classes after work.

Outcomes

Everybody is trained through the customer service excellence

The first positive benefits were seen in 2000, about two years

programme and they continue to train on this course rather

after the changes began. It took a further 18 months to two

than it being a one-off. There is now a greater proportion of

years for the developments to really bed down. The head of

trainers to staff, allowing continual development. For

HR feels that they are now going into the next stage. The

instance, there is an open-access development centre and

current HR strategy has focused activities, with a designated

training undertaken does not have to be related to work.

member of HR to lead with a review date. The areas are:

• •

staff engagement

The most positive outcomes for HR were showing how

resourcing and retaining staff

important it was as a function and the difference it could

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

make. The polices are now taken seriously; when HR decide

so effective that in the nine months running up to the closure

that SLH should only recruit the best people, the organisation

not one employee left early.

sticks to this, even if it means not filling a vacancy. Finally, the head of HR feels that it is vital to get the right Conditions for success

people and the most effective processes and systems working

The new chief executive worked for 12 years in the NHS and

together. He felt that his relationship with the chief executive

spent eight years managing private hospitals and in the

and support for HR initiatives were central to improvements.

medical insurance field, so he joined with an excellent

Now all issues are worked through with the People Tactical

understanding of the whole spectrum of health service

Group, which consists of the head of HR and four directors.

delivery. The leadership element has proved critical to the turnaround at SLH, in particular ensuring that words and

Challenges

actions match up. ‘In business people do things without

When the new chief executive started, there was a large

thinking and employees realise when they are being conned,’

element of change. There were exits from staff who were

says Mike Hall.

not prepared to follow the new values. The chief executive felt that change can be slow to start in a poor culture and

There is an active approach to performance management

management need to show trust and belief in people – this

and not just in formal terms. The chief executive explained

is essential to drive people. It is also important to note that

that if there was performance issues, then they would sit

all the cultural and internal issues are set in a business

people down and tell them where the problem is. He felt

environment that is extremely competitive.

that nine out of ten people respond positively to this type of ‘critical friend’ feedback. In one instance, there was an

The most prominent challenge at first was the number of

employee with a very negative attitude that was affecting

things that needed to change and improve – sales, customer

the rest of the team. She was taken aside and asked about

services, reducing costs, communications, training, etc. This

her behaviour – she did not even realise she was doing it.

was combined with limited resources, and most of the work relied on what was available internally. There are 12 people

Another key condition for success was fostering teamwork

in the HR team to cover two sites, and at the start there were

and moving away from an ‘us and them’ culture. The staff are

only five people in training and development. Therefore,

involved through a consultative committee, a little like the

personal effort and energy was a major input into the

European Works Council model. No trade unions are involved

alignment process and should not be underestimated. A good

but there has been good feedback from this process. Also,

example is the coffee mornings, which often produced seven

addressing bad news early on and managing uncertainty

or eight sides of notes, giving the head of HR writers’ cramp

was seen as really important. When SLH had to close its

and a sizeable to-do list!

Birmingham office in 2000, the chief executive went and met

34

the employees face-to-face to explain why the business was

Another key challenge was getting line managers

no longer viable. In addition, everyone was offered assistance

comfortable with new working styles. Moving from

in finding a job. Forty-eight out of 50 people found another

command-and-control-style senior management to one

job and the other two decided to take career breaks. This was

that encourages more autonomy and focuses on innovating

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

processes was a tough challenge, but it was a critical step

CASE STUDY 3 – Seven Worldwide

towards tapping into employee ideas. Background Some of the initiatives had unexpected outcomes and

Seven is a worldwide imaging busines with operations in

created new problems, which is why it was essential to

the United States, Europe and Australia, and affiliates in

review them regularly. For example, it is proving hard to

Chile, Hong Kong, Japan and Singapore. It is strategically

get employees to refer problems to line managers rather

positioned to provide production and distribution solutions

than relying on the coffee mornings.

to an international client base. Seven’s vision is ‘to be the world leaders for the production of visual brand

Sustainability

communications’. They offer the complete range of graphic

‘Sustainability is a myth – it comes from leadership,’ says

imaging services for the production of advertising,

Mike Hall, and there are three key areas to ensure that the

promotional and packaging artwork, as well as interactive

positive outcomes achieved so far can be maintained and

multimedia in support of clients’ visual brand

developed:

communications. Seven boasts a client list with blue-chip

• Focus on the business objectives: sticking to the

names such as British Airways, BT, the Post Office and

business strategy and working with it.

• •

Sainsbury’s.

Continue using initiatives that work: especially the staff involvement initiatives like coffee mornings, health

Seven UK operates in different locations: Seven Worldwide

and well-being programme and customer service training.

St. Marks House (UK head office functions), Soho, London,

Avoid complacency: continuing to focus on how to

Birmingham, Manchester and Newcastle. The separate sites

make SLH a great place to work and always thinking

house different areas of the business. Seven London and

about improvements. This includes considering the

Seven Soho house the advertising pre-press imaging

physical environment, for which the head of HR has

business, along with the promotional and publications

full responsibility, and looking at areas that cause

business. The interactive growth areas work from studios

dissatisfaction.

based in London, New York, Chicago and San Francisco. The packaging imaging business is in Manchester, Birmingham and Newcastle. A small printing operation remains at St Marks House, and is used primarily to produce proofs for the advertising pre-press business. Seven began in 1926 and it has grown through acquisition. Seven has experienced and is continually experiencing change in its business make-up. In the 1980s, the company was at its biggest, having over 70 sites across the world. Its prime function was craft printing and pre-press. Previously known as ‘Wace’, the business re-branded as ‘Seven’ in 1998. The recession of the 1980s and the boom in interactive

35

C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

multimedia have caused Seven to reassess its business aims.

interactive business is high, but this is not uncommon in

It took the strategic decision to divest its printing businesses

this industry and contrasts with the more traditional pre-

in order to concentrate on graphic imaging services and a

press activities. Line managers dealt with all HR issues on a

move toward interactive and digital solutions. Although the

reactive and ad hoc basis. In summer 2000, Seven had no

existing business areas remained profitable, they became

performance appraisals, wage structures or role profiles

less so and employees witnessed downsizing and voluntary

in place. Also, no systematic data existed on employees

redundancies. The sale of the traditional printing businesses

and each location was run as a separate business.

has consequently reduced the company’s workforce in the UK from 5,500 to fewer than 600.

In the late-1990s, the company appointed an HR person to start the process of integrating HR into the business, but after

In May 1999, Seven Worldwide was acquired by Applied

a while they realised that much more needed to be done

Graphics Technologies Inc (AGT ), the largest US provider of

and someone more senior was needed. In 2000, the first UK

outsourced digital imaging and communication solutions,

HR director was appointed with a view to setting up an HR

with over 25 years of experience in the field and an unrivalled

strategy that would align with the business strategy.

portfolio of major corporations. Seven joined AGT and Black

The challenge was to build an integrated set of personnel

Dot Group as three separately managed businesses within

practices, common to all sites, despite the existence of

the AGT Inc portfolio. In August 2003, AGT was acquired by

different deep-seated sub-cultures and modi operandi across

venture capitalist Kohlberg and Co.

locations, and even within each site. At this point there were fewer than 500 people in the UK business and too many

Kholberg and Co subsequently appointed a new chief

different ways of managing them, so there needed to be

executive who, having conducted a fundamental review

structural changes. In addition, responding to domestic

of the business, is pushing forward a restructuring to form

and EU legislation was becoming increasingly demanding.

a single global business under the Seven Worldwide brand. Consistent changes to the business environment highlighted Case for alignment

the need for HR to be more about culture change, so instead

Until the divestment of the print business in 1998, the

of a more traditional HR director, Seven has a director for

majority of the workforce consisted of printers who were

people and change; the job title being a clear indication to

heavily unionised. The prevailing attitude toward unions

the business that to succeed in any change management

reflected the traditional viewpoint that unions would ‘look

programme people and process need to be fully aligned.

after’ the workforce, thus excluding the need for a formal personnel department. Today, the GPMU union still exists, but

How was alignment achieved?

its presence has weakened and the workforce has changed.

HR feels that the first hurdle to overcome was gaining

There are fewer printers and unionised members. Most of the

respect. In 2000, the HR function was independently

militant union members and former fathers of chapel have

assessed 49 and the key issues were highlighted. Since this time,

taken voluntary redundancy. Newer employees in the

HR has followed a path to integration and along the way

multimedia and new technology profession stay for a short

they have won the respect needed to assist them in adding

amount of time and are not unionised. The turnover in the

real value to the business. Part of this has been carving a role

49 Farruggio D, Heron N and Turner N,‘Issues surrounding the design and implementation of an HR Strategy at Seven Worldwide’, MSc in Industrial Relations and Personnel Management

36

dissertation, 2000

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in leading managers to work efficiently by developing

To affirm all of the strategic changes in the eyes of the

processes, training, getting managers involved and providing

employees, the organisation adopted broad salary bands

tools. For example, line managers have been provided with

in the operations function for all the different jobs. This was

20 HR guidelines, which are available online. Electronic

essential to remedy the untidy and confusing range of

workflows have been developed by HR to assist managers

practices and pay rates that had been inherited from the

in the recruitment and induction of new employees. There is

old site-based structure, the nature of which caused tension

instant access from links on their desktops, which provides on

among employees. More recently, HR has focused further

the spot advice on a number of HR-type issues, like sickness

on performance improvements through the adoption of a

absence and disciplinary procedures.

competency model to offer initial support for performance appraisals and training.

The most significant achievement was HR’s involvement in restructuring the UK business in 2002. This project was

Having worked through the initial templates of this

designed, facilitated and implemented by HR as an

framework with the director of strategic accounts and the

organisational design project, aimed at integrating up

head of client service, HR was able to incorporate definitive

to seven separate businesses into a single functional

role-specific competencies, thus enabling Seven to look into

management structure. The new structure had a number

areas where either internal or external training may be

of objectives, but key among these was the ability of the

required to develop or enhance existing skills in different

business to share common working procedures, best practice,

levels throughout the business. By identifying these areas,

and the ability to form teams to service client needs from

the managers were able to put together a 12-month

across the business, thus drawing on a wider pool of talent. In

development plan for their team members. One of the main

order to support the management structure, job titles and job

advantages of this is that employees felt that time and

families were standardised for the 75 per cent of the business

interest had been shown in them as individuals, this in turn

that worked for the operations function. This was a key

added value and commitment on their part. This is allowing

change for both business and HR efficiency. As an example,

Seven to develop a greater skill base to be able to meet the

HR previously had to produce four separate handbooks

increasing demands being placed on them by their clients

and other HR process and procedures to reflect the different

and the business environment in which it operates.

heritages, cultures and management styles of the four main sites. Instead of replicating four businesses in four geographic

Key to supporting the organisational change project has

silos, the single structure allows work to move around the

been the training and development strategy. At the end of

business more efficiently and to use capacity more effectively.

2001, HR took the deliberate decision that people from all sites would train together at Manchester. This was so that

Another significant strain for the business was the continued

people could meet colleagues from other sites and start to

decline in the advertising market and the increased

relate to a single company culture. In the early days, some

importance of the corporate packaging market. To this end,

local management resisted this change but eventually the

a London packaging operation was established in 2002 to

benefits were seen. Most notably when the training and

mirror the work undertaken at the Birmingham, Manchester

development efforts were recognised by the receipt of

and Newcastle facilities.

Investor in People accreditation in August 2003. The training

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

Table 5: Summary of HRS developments and outcomes from 2000 until present at Seven Worldwide

AREA

ISSUES IN 2000

HR RESPONSE

BUSINESS OUTCOME

Corporate strategy

• Senior managers claim an overriding group strategy, but there was little consensus about content • Managers had little exposure to the group’s strategy • Attitude survey: 60% of employees in Europe uncertain if there is a common group goal

• Newsletters and roadshows to inform employees about developments in the business • HR became a conduit for recent changes following takeover of AGT by Kholberg & Co

• The wider business group has embarked on a fundamental change process • The UK business is, to a certain extent, sheltered from this. It has undertaken its own change process in recent years

Business strategy

• No shared understanding of strategy at company level • Employees suggest little exposure to business strategy – it doesn’t filter down • Variety of business divisions and corresponding needs

• Newsletters and roadshows to inform employees about developments in the business

• The attitude survey showed roughly a 30 per cent increase in positive responses to ‘we have the information to do our job’ • There was also an increase in understanding about products

Culture

• Employees didn’t think there was a distinct culture • Managers agreed but thought one would emerge soon, and senior managers had mixed opinions • The visions and values were seen by some as superficial

• One single Christmas party for all locations and setting up of a consultative works council framework encouraged staff involvement • Managed time out to watch World Cup football during working hours

• Overriding objective is that flexibility on behalf of the company in its dealings with its people will in most cases generate a flexible approach from employees in their approach to the company and their work

Structure and interaction

• Managers complain about the bureaucracy related to corporate structure and lack of finance • Employees demonstrate only a very basic knowledge of functional strategy and are involved in business objectives in a disconnected way

• Structural changes designed and implemented by HR to focus and play to people’s strengths, and clearly define individuals’ roles within the business

• Increased efficiency across the business through greater cooperation between facilities • An increase in people responding favourably to ‘we cooperate between sites’ (by 30 per cent) and to ‘we are structured to get things done in a timely manner’ (by 20 per cent)

Pay structures

• Discrepancies in wage structures: following acquisition, employees retain packages from previous companies • Employee survey showed that responses about pay and benefits, promotion and salary policies were either unfavourable or uncertain

• Broad wage structures were introduced for the 75 per cent of the business in the operations function. This provides managers with clear guidelines in which to work when reviewing and setting salaries • Three- to five-year programme to resolve ‘historical anomalies’, freezing or reducing increases for those above the bands and larger increases for those below • Timetable for pay reviews published at year-end and adhered to

• People are supportive of culture change in order to form a professional business that promotes fairness and equal opportunity. ‘Face fits mentality’ prevalent under previous arrangements

Work assessment and feedback

• There is no consistent assessment of work and there is no appraisal system. • AGT employee opinion survey shows 43.8 per cent responded unfavourably when asked about performance management

• Performance and appraisal system developed and implemented in 2002, refined and enhanced in 2003 and 2004. Purpose was to get managers and staff comfortable with appraisal as a key concept in staff relations

• By 2002, increase of nearly 20 per cent in favourable responses to ‘performance objectives are measured and defined’. In 2003 and 2004, as with pay reviews, appraisal timetable published and adhered too. Policed by HR

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AREA

ISSUES IN 2000

HR RESPONSE

Communication

• Employee survey showed that only half of respondents responded favourably to upward communication and at most only half to downward communication

• The importance of communication in the work environment unit of the professional manager course emphasises coaching and mentoring. Over 100 managers and supervisors have attended this key course

Training

• Majority of employees interviewed received no training • Employee survey shows the majority of European responses were unfavourable or uncertain about training and development

• Training and development strategy including: • Keys skills training for managers and supervisors in relating to their staff and the management of the workplace • Soft skills such as presentation, appraisal and assertiveness • Management development programme to develop the future leaders of the business • In 2004, online training in production tools and Microsoft Office products

• Over 20 per cent of employees responded favourably to ‘the company is prepared to invest in training’. Training together has helped form one culture and increased basic skills

Career development and support

• Little or no career development support. The attitude survey shows that European respondents were either unfavourable or uncertain about career development support. No vacancies advertised internally. Majority of vacancies filled from external market

• Performance planning, training and job descriptions • Succession planning. All vacancies advertised internally across the business

• Increased career support. Employees now approach HR for advice • Increasingly, posts are filled internally thus supporting Seven’s objective of supporting the career development of its people, which is key to its equal opportunity objectives • Developing own talent is cost-effective to the business and reduces the cost and inefficiency of inducting new people into the business

Managerial experience

• Managers are technically competent but lack soft skills

• First intervention was three, two-day courses: coaching and mentoring; professional manager; and time management. Since the inception of this programme at the end of 2001, over 100 managers and supervisors have attended these courses to raise their skills and confidence in dealing with their employees • The management development programme builds on this first intervention to generate a group of more rounded managers who will lead the business in the future. Again, objective is to develop internal talent

• The empowerment of line management. First-line managers and above have a clear position in the organisational hierarchy and the delegated authority to manage their staff. Decisions previously taken by site managing directors now devolved to line management • The management development programme will support managers to manage their staff and their parts of the business during a period of rapid change • Currently being assessed. First group of managers will graduate in summer 2004

Role of trade unions

• Unions were seen as unnecessary. Managers in particular saw the unions as having a negative impact on business

• Change of emphasis and downsizing changed the make up of the workforce, reducing the number of unionised employees and trade union representatives. No collective bargaining. Union role one of individual representation

• Union influence is now limited to nonexistent. However, it remains. Following a recent dismissal there was an increase in applications to join the trade union

BUSINESS OUTCOME

C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

and development strategy was designed with both business

•

within it

need and skill deficiency in mind. It includes: soft skills (customer care); ‘time is money’ (finance); and team building. In addition, there is a comprehensive management

reorganising the structure and clarifying people’s place

• •

increasing training and career development focusing on performance management and improvement.

development programme. It comprises four, two-day modules over two years, which include: environment, operations, people

There was a significant increase in positive responses in the

and finance. The first batch of managers graduated this

2002 employee attitude survey when compared to the 2000

summer and programme effectiveness will be assessed.

results. In addition, HR feels that employees trust that they can approach HR with issues and get a response, and there

The benefit of such a training programme is that the

has been no employment tribunal in four years. In return,

managers will have a greater understanding of what is

employees have more career support and succession

required of them in the positions they hold, as well as

planning is helping good performers.

building an awareness of the different areas in the business where they can contribute and make a difference in the way

The new structure is also proving to be more efficient. It is

things are done. In the past, little or none of this information

encouraging flexibility among staff working on different

had been cascaded down from top-level management. It was

accounts and it has also led to silos breaking down. For

generally felt that this type of information was too sensitive

example, if a team working for one specific client is going

or confidential. One of the main outcomes Seven is expecting

through a quiet period, rather than waiting for more work

for the business is a management team that is able to

coming in from that client, their resource can be redeployed

understand how they operate and why, and which is capable

to another client project that may be particularly busy. This

of taking a more efficient business forward into the future.

works not only onsite, but across the UK. Evidence of this is substantiated by the amount of inter-company sales that

Outcomes

are tracked on a monthly basis.

The hard measures show some positive outcomes so far. Over the two-year period 2002/3, revenues per employee

The positive outcomes for HR have been threefold: influence,

has increased in the region of between 10 to 15 per cent

size,and involvement. Its influence has been amplified, the

(once exchange rate movements have been accounted for).

team has increased in size from 2 to 4 people and they have

In addition, staff turnover has fallen from 13.9 per cent in

enjoyed more involvement, for example being invited to sit on

2002 to 9.9 per cent in 2003.

local operations team meetings. For HR, the most unexpected outcome has been the respect gained from taking a hard line

Breaking down the old ‘us and them’ culture, which was

on various issues. HR feel that they have opened colleagues’

characteristic of the old print industry has been a large part

eyes to what they can do: ‘It is about teaching managers that

of the HRS. HR feel it has gone a long way towards creating a

they’re not there to block managerial activity, but to get them

culture where employees feel involved and work flexibly with

to do it right.’

a common purpose. They see flexibility as something that is

40

exchanged: ‘you get it if you offer it’. The three major steps

Conditions for success

towards this have been:

In addition to the HR director’s experience of working with

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larger companies as a consultant on HR and restructuring,

involvement in local issues such as recruitment, supporting

there were three key reasons for success:

managers through the management of performance issues

1. Relationship with management colleagues: The

and dismissals, through to development of training and

director of operations, who sits in Birmingham, has roughly

appraisal strategies. In the old world these were issues that

75 per cent of the organisation reporting to him. The

management often would have to manage on their

Birmingham site had relatively poor results from the original 2000 employee opinion survey, so he knew there

own with little support from the wider business. 5. Having time to start to bed HR into the business

were issues. He saw that HR could help so they worked

before embarking on the significant organisational

closely together to make improvements. These included

and structural changes: The US parent is now

macro issues such as timing of salary reviews, performance

attempting a similar change programme on a much larger

appraisals and the delivery of training, through to local

scale and over half the time. In the UK, HR regards a key

issues surrounding the management and interrelationship

condition for success as the time to demonstrate to the

with staff.

business the role HR can play.

2. In April 2002, the appointment of a new managing

6. A good relationship with the trainers: As well as

director: The new MD came from a sales background

spending time and effort getting the structure in place,

but saw that the existing management structure was

this was crucial for getting employees and managers

inefficient, having developed over a number of years

more involved with the business.

without a robust analysis of whether it suited business needs. The new MD saw that HR could act as a catalyst

Challenges

for change and became a champion for the new

There have been and continues to be challenges to the

management structure.

successful alignment of the HR strategy and function with

3. Getting people involved through training and development: HR regards the training strategy as win-

the business:

•

Politics: Working with changing senior managers has

win. As people learnt, other more subtle cultural changes

been difficult. Three years ago there was an attempt to

were achieved. People met colleagues from other sites and

remove HR presence from the board but the HR director

formed their own networks supporting the one company

pushed back. HR spent time building bridges and used wins

strategy. This in turn supported the strategy of

such as successfully managing downsizing programmes

implementing single company-wide pay structures. This

to demonstrate the worth of HR to the business.

was done in the knowledge that it was likely that as people

•

Perception of HR: Some thought the role of HR was, or

from different sites met, it would only be a matter of time

should be, purely supportive and it has taken over two

before it became apparent that there were different pay

years to get away from this. Some managers have seen

strategies in operation across the different locations

HR as inhibiting the business and working beyond its

founded on the culture and history of the different

remit. This remains a challenge and HR recognises that

businesses.

they have to strive daily to find the right balance between

4. HR views a key condition for success as the

being supportive of management while protecting the

acceptance and growing understanding of the role

wider business interest. HR see the example of the

HR can play in the business: This ranged from

recruitment processes they have implemented as being

41

C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

•

•

an example of this.

current aim is to make the company global rather than

Starting from scratch: Having no HR at all was a mixed

broken up in subsidiaries. This will include a common

blessing. They had to build up knowledge. HR sees this as a

bonus structure, and some bonuses may be substantially

challenge but believe it has been fortunate in being able to

reduced. This will potentially create very bad politics to deal

demonstrate to the business the role HR can play without

with and will generate a range of issues as key people see

carrying too much baggage. As the HR director puts it, ‘we

their ability to earn bonuses reduced as company-wide

had a fertile green field in which to develop the function’.

schemes are introduced.

Measuring benefits: This is always hard, particularly with cultural outcomes often being intangible by nature.

Sustainability

HR is using students to measure the effects of the training

•

•

Market changes: The move towards digital solutions

•

from the parent company, the structural changes that

imaging technology available in the marketplace. The

have already fed through are not going to change.

•

succession planning is seen as key to developing Seven’s

invests continually in new technology to gain market

own talent.

•

into digital artwork build and solutions over the last ten years has been a challenge for the business in how it

Continuing to resolve historical anomalies in the pay structure.

direction of the business and the move away from print

• •

Better communication more often with staff. HR feels that despite the challenges, the positive outcomes

manages its people. As discussed previously, the traditional

outweigh the low points. The HR team will keep enjoying

role of the trade union has diminished, which left a void in

working across the whole range of HR issues and processes.

which professional people management techniques were

•

2001 was a difficult time for the business due to the decline

essential.

in advertising market, the downsizing of companies and

Developing and managing the HR strategy through

the 9/11 attacks. ‘You have to manage through to gain

periods of economic downturn, for example that

respect.’

associated with 9/11: The HR department regards managing downsizing as part of the job – and another example where the use of best practice can ensure employee support is maintained while protecting the company from subsequent claims in employment tribunals. As mentioned previously, the HR department is proud that the business has achieved significant downsizing and change while avoiding any claims to an employment tribunal over the last four years.

42

More training and development and in particular

and the ability to respond to change. It is vital Seven credibility and position. This change in the strategic

•

Although there are likely to be changes passed down

was supported by the rapid development of digital market is driven by new technology and requires flexibility

•

The financial position has improved with the venture capital investment, which will help provide stability.

courses in exchange for a university project.

Changes fed down by the parent company: The

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CASE STUDY 4 – Autoglass

this was a people review, which examined:

Background

• •

Autoglass is the UK’s leading vehicle glass repair and replacement company, and has the largest market share. It is part of the Belron group, which is the world’s biggest vehicle

who have we got? The demographic picture how people enter and exit the business – recruitment, tenure and turnover

• •

how people are managed the organisational culture.

glass company. In the UK, there are just over 2,000 employees, approximately 1,100 of whom are mobile technicians,

How was alignment achieved?

working out of 130 branches.

Although historically there has been a personnel function in Autoglass since the early-1990s, the HR director role was

There are three main groups of employee: trained and trainee

created in 1997. HR is now an established fulcrum between

technicians based throughout the UK; customer service staff

company and staff. There are two key strands to this role,

based in the customer contact centre in Bedford and in

which HR endeavours to interweave. Improving:

Autoglass branches across the UK, and support staff located

1. business performance by working closely with the

in the state-of-the-art head office in Bedford.

business heads and the yearly/five-year business plans 2. the working lives and conditions of employees and, as it

The HR department is a team of 25 people, which manages

is not a unionised environment, HR takes this role seriously.

all the HR functions including: resourcing, employee relations, management development, technical training, internal

The HR director believes that working conditions affect the

communications, health and safety, and technical services.

standard of people coming into the company. For example, HR recently increased holiday entitlement for managers after

The case for alignment

noticing that their offering was a bit short of the national

The organisation has always performed well. HR has a good

average. This was done despite some management

reputation and has been an important part of the business

resistance.

since the late-1990s. (From the early-1990s, HR was known as ‘Personnel and Training’. ) The HR plan is formulated with

A great example of HR working in line with the business

close consideration to the business strategy, but as well as

at Autoglass was the role played in critical structural and

this HR is in a position to add to the business planning

reward changes in 2000 after it was recognised that the

processes. The HR director is a member of the executive

business structures had become too complex. HR led the

committee, which is responsible for strategy and business

approach to these changes while working very closely with

development.

regional managers, providing professional competence, guidance and moral support. For the organisation, it was

In 2002, although the company continued to be successful,

an excellent example of cross-functional working. The

it was felt there was a need to map out new opportunities

changes included:

for growth and to review the strengths of the business, so

•

became independent

Autoglass committed to a strategic review. This ran in partnership with the parent company. An important part of

Discontinuation of the network structure, so branches

•

Even stronger commitment to the mobile working strategy:

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Table 6: Aligning HR and business at Autoglass – what is done and why HR INITIATIVE

BUSINESS OUTCOME

Training and development Autoglass invest more than average in its training and development programme , providing a comprehensive training

Staff turnover has fallen

50

programme for technicians through the National Skills Centre. In

The quality of service has improved

addition, there is a management training plan, and management development centres have been run based on carefully analysed leadership success factors Succession planning An organisation-wide capability review has recently been

Improving the quality of branch management

conducted The trainee management programme is Autoglass’s graduate recruitment programme, which is fairly unique in the industry Employee relations There is an employee assistance programme, which has a

Staff satisfaction is used as a key performance

utilisation rate of just under five per cent

indicator and the overall index score has

51

Managing director’s ‘open house’ programme

increased from 50 to 61 since 1995.

Field-based HR roles Pay and benefits The pay scales are in the upper quartile and all staff are on a

Business performance has improved year on year

variable earnings plan

since 2000, with 2003 being the best year ever

Performance management Autoglass has a well-established performance management

The staff survey shows the highest positive

system. Every manager has received training in the process.

results around ‘clarity of goals and what’s

Recent trends show that positive ratings are on the increase

expected of me’. This suggests the organisation is providing a framework for employees to work to their maximum capacity

50 Based on 2002 comparative data collected by Capita and HR Benchmarker survey in association with Personnel Today

44

51 Based on 2002 figures

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•

‘We come to you.’

Outcomes

Productivity-based reward system for technicians, which

Generally, according to the staff attitude survey, satisfaction

was a huge benefit to the business.

ratings have improved in gradual progression over roughly the last 8-year period to 61 from a base of 50. Although

The management and output of the strategic people review

managers own the results of their area, HR feels this says a

is a good reflection of the overall HR ethos in Autoglass,

great deal about its contribution to the business and the

which focuses on the practical and does not ‘over

working lives of staff overall. The pace of improvement has

intellectualise’ in pursuit of best practice. The HR director

accelerated since the changes in 2000 that resulted from the

feels that it is more important to realise that organisations

‘changing the game’ project. The business, after an initial dip,

are not linear: learning about your specific case and finding

was energised.

out ‘where the pain is’ in the business is more realistic. While working towards more ‘blue sky’ improvements is important,

More specifically, the people review provided an excellent

it is critical to balance this with attending to existing

birds-eye view of how HR was functioning. While the policies

problems. HR see this balance as their key role.

and processes were working well generally, it was felt that there were areas of real weakness that were a cost to the

To plan current and future HR work so that it aligns with

business and could be improved on. The main issue was

business needs, Autoglass uses both quantitative and

that the recruitment process for technicians was not working.

qualitative methods including staff satisfaction survey

In response to the review findings, in under a year HR has

results, turnover and sickness data as well as listening to

designed and perfected a new approach to recruitment.

what people at all levels around the business are saying. For

Although there is habitually high turnover in the industry,

example, senior managers go out into the business and lead

this has improved. The process has been well received

open house participative sessions with a cross-section of

throughout the business.

staff. HR facilitate these sessions, focusing on what issues are being dealt with in the business currently and managing

Training and development initiatives have had a positive

staff expectations.

effect on the business. Drop-out rates from training programmes are low, indicating that staff and their

The HR department is confident in its ability to add value.

managers value training and give it a high priority. Around

Resources for the review were found almost entirely internally

56 per cent of people are working to a personal development

rather than using large-scale consultancy to manage the

plan. More crucially, the National Skills Centre had a positive

process. For the strategic review, Autoglass used an internal

impact, most notably on performance of fitters, and a

team (including a regional manager, a contact centre

business case for a relocation and expansion of the facility

manager, an HR manager, the HR director and the rewards

was approved earlier in the year.

manager), with support from their parent company Belron and one independent consultant from The Work Foundation

Succession planning has resulted in a balance at senior levels

to provide an external perspective.

between internal promotion and external appointments. Most vacancies are advertised internally, but an exclusively

45

C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

external process is used if it is known that the necessary skills

major challenge although there can be ‘tensions’ in getting

and experience do not exist in the organisation or new blood

people to realise that long-term solutions are vital to

is needed.

managing out short-term problems. For example, getting people to use new recruitment approaches and getting

Conditions for success

people to stick with it even if it does not work at first.

The good reputation of HR is critical to its involvement in business planning and performance improvements. The HR

Sustainability

director feels that HR people who understand the business

•

to it is central to sustaining their reputation. This combined with enlightened senior management is how HR sustains its

• • •

Continuing to find the weak spots in the business and Pushing the boundaries of the ‘employer of choice’ agenda, for instance implementing a sabbatical policy.

In Autoglass it is accepted that people are ‘part of the

•

Learning and sharing across the Belron group, particularly

dynamic is crucial – people are a vital part of our business,’

looking at the more mature businesses in the organisation,

says the HR director. With an overwhelming majority of their

such as those in Belgium and Holland.

customers meeting technicians in the field face-to-face, the people element cannot be ignored. HR is fundamental to recruiting and managing these people. Influencing business heads is an important and iterative process at Autoglass. Partnerships with business heads are central to most of the projects they work on, for example the structural and pay changes in 2000. In addition, persistence with initiatives and ideas has been a large part of HR’s success in adding value. ‘While you need a few quick wins, issues such as motivation and leadership are only long term. There is no use in pretending otherwise,’ says the HR director. Challenges Phase One of the overall strategic process took longer than anticipated due to some complicated market research. As a consequence, the follow-up stages have been delayed. Often the stark realities of business needs are cyclical and demand short-term responses, which can inhibit longer term thinking. However, HR views this as ‘the way things are’ rather than a

46

Consistently reviewing HR policies and processes. looking at where HR can intervene.

strategic role.

solution rather than part of the problem’. ‘The people

Building on achievements and working with the business as they evolve.

they are in and are confident to be part of the issues peculiar

A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

Annex 1: Methodology

The research has been based on the collection and

learning points for other organisations (Section 2).

analysis of several forms of evidence:

Secondary data Literature review

The qualitative findings from the case studies are

A short and focused review of both academic and

illustrated with quantitative data from this year’s

business literature was conducted to set the context

Workplace Trends Survey report 52 and with further

for the project. This included theoretical approaches to

qualitative evidence from The Work Foundation’s Work

developing HRS and aligning it with business, the reality

and Enterprise Panel of Inquiry report. 53

of this process and evidence of its impact on bottom-line performance.

Company case studies We spoke to four organisations with different experiences of strategically aligning human resources and business issues (see Table 3 for a summary). These were the Borough of Telford & Wrekin, Standard Life Healthcare, Seven Worldwide and Autoglass. An attempt was made to represent both public and private organisations in a variety of sectors. The case studies are based on secondary background information (web-based material, promotional material, company documents and media coverage) on each organisation and semi-structured interviews with HR directors or managers. The interviews focused on:

•

the business case for aligning HR and business strategies

• • • •

how alignment has been achieved the positive business outcomes of the process what factors made the alignment process successful the main challenges to the process.

The case studies are analysed both vertically and horizontally. The vertical analysis looks at each case in turn and provides context to the processes and outcomes specific to each case (Section 4). The horizontal analysis draws out common themes with an aim of providing

52 Bevan S, Cowling M and Horner L, The Workplace Trends Survey 2004: Summary report, The Work Foundation, 2004 53 Harding R, Cowling M and Turner N, The Missing Link: From productivity to performance, The Work Foundation, 2003

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C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

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