Aligning Human Resources and Business Strategy

508 Pages·2022·8.08 MB·English

by  Linda Holbeche

Aligning Human Resources
and Business Strategy
What diference can the aspiring HR strategist really make to business value?
In the new and extensively updated edition of her ground-breaking book, Linda Hol-
beche answers this question and provides the tools and insights to help HR managers and
directors add value to the organisation by implementing efective HR initiatives that are
aligned to core business strategies.
Tis edition includes new chapters, fresh case questions, specifc sector ‘twists’ like
healthcare, the university sector, travel and tourism, alongside a greater mix of interna-
tional case studies. Taking a more analytical approach than previous works, Holbeche
discusses and explores a number of contemporary academic debates.
Learn how you can strengthen and prove the relationship between people strategy and
business success through your approach to performance and development and impress at
the highest levels with this new edition of an HR classic.
Linda Holbeche is an independent coach as well as developer, consultant, researcher and
author in the felds of HR, strategy, organisation design and development and leader-
ship. She works with UK and international clients in many sectors. A recognised thought
and practice leader and voted one of the UK’s HR Most Infuential, Linda was previously
CIPD’s Director of Research and Policy. She is now Adjunct Professor at Imperial College
London, Visiting Professor at four other UK universities, Honorary Fellow of the Institute
for Employment Studies and of Rofey Park. She is also a Fellow of the Institute of Lead-
ership and Management (ILM) and Fellow of the Chartered Institute for Personnel and
Development (CIPD). Linda has written over 60 research reports, authored or co-edited
16 books, numerous book chapters and articles in the feld.
“The recent turbulent years of change have emphasised even more the importance of
people at the centre of business, and the need to align people strategy with business
strategy. Linda draws on her extensive experience to provide a timely update to this
theme, drawing on contemporary issues, academic research and salient case studies, to
bring to life how HR and business leaders need to work together to build sustainable,
responsible, and resilient organisations for the future.”
Peter Cheese, Chief Executive, CIPD, the professional body for
HR and people development
Aligning Human
Resources and
Business Strategy
Tird edition
Linda Holbeche
Cover image: © Getty Images
Third edition published 2022
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
and by Routledge
605 Third Avenue, New York, NY 10158
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2022 Linda Holbeche
The right of Linda Holbeche to be identified as author of this work has been asserted in
accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in
any form or by any electronic, mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without intent to
infringe.
First edition published by Routledge 2002
Second edition published by Routledge 2009
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
A catalog record has been requested for this book
ISBN: 978-1-032-11457-6 (hbk)
ISBN: 978-1-032-11458-3 (pbk)
ISBN: 978-1-003-21999-6 (ebk)
DOI: 10.4324/9781003219996
Typeset in Minion
by codeMantra
Contents
Preface to the Tird Edition vii
Acknowledgements xiii
Part I Te need for strategic human resources 1
1 Strategic HRM theory 3
2 Te evolution of the HR function 30
3 Te changing context for SHRM 59
4 A strategic agenda for HR 86
5 HR in the digital age 110
6 Crafing HR strategy 134
Part II Strategies for talent 169
7 Workforce planning and recruitment strategies 171
8 Employee engagement and well-being 197
9 Managing and rewarding for high performance 224
10 Strategies for developing people 256
11 Supporting fexible career development 276
v
vi • CONTENTS
12 High fyers and succession planning 296
13 Global HRM 326
Part III Building strategic change capability 355
14 Transforming organisations by design 357
15 Bringing about culture change 382
16 Designing sustainably agile and resilient organisations 413
17 Learning across boundaries 443
18 Conclusion 469
Index 489
Preface to the Tird Edition
So much has been written about the changing role of HR that the reader might w onder
why I have sought to add to the debate. It seems that being an HR professional is a tough
proposition these days. Tere are endless requirements to prove that value is being
added by HR interventions and the HR function is frequently accused of being reactive.
Te pressures on the function are enormous and, in many cases, resources are thinly
stretched. Yet I believe that the situation need not be so bleak, and that HR has poten-
tially the most signifcant contribution to make of all the functions, if it manages to
combine operational excellence with a really strategic approach.
In writing this book, I am not attempting to address all aspects of a strategic and
operational HR agenda. I have focused on some of the performance, developmental and
cultural issues which I consider key if business and HR strategies are to be aligned. I have
tried to illustrate the theory with cases where time permitted. I hope that the ways in
which the HR strategists featured in this book are approaching the challenges of aligning
business and HR strategies in their organisations will provide evidence that outstanding
value can be added by HR and ofer encouragement to practitioners who are fnding the
quest to add value hard going.
Since the frst edition of this book was published, so much has changed in terms of
the employment landscape, HR theory and priorities, that simply updating the text has
not been enough. Each edition of the book so far has coincided with pivotal moments
in the business landscape. At the time of writing the frst edition in 1999, businesses
were concerned about the possible efect of the so-called ‘Millennium bug’ which high-
lighted business’s growing dependence on, and the risks of, high technology. Te revised
edition published in 2002 followed the terrible events of 9/11, and the atmosphere of
uncertainty, polarisation and risk aversion that ensued. Te second edition, published in
2009, followed the fnancial crash that highlighted the need for better governance of de-
regulated fnancial markets and marked the start of a period of fnancial turbulence and
growing social and economic inequalities that continues to this day. Tis third edition
has been written during 2020 and 2021, during what has been described as the ultimate
game-changer, the coronavirus pandemic crisis, which has accelerated underlying trends
with respect to technology and work, including the pursuit of organisational agility and
resilience.
vii
viii • PREFACE TO THE THIRD EDITION
Against this volatile backdrop, the evolution of the HR function has perhaps been
relatively slow, until recently. We have seen some amazing responses by business leaders
and HR teams to some of the challenges posed by the health crisis, such as keeping work-
ers safe and also connected afer whole workforces became home-based overnight. Look-
ing ahead and learning from their handling of the crisis, and to equip organisations to
deal with the pressures they are likely to experience going forward, demands a truly stra-
tegic response from HR. And of all the business functions HR has potentially the most
signifcant contribution to make to business success by building a context where humans
can thrive, alongside technology. To do this HR must combine operational excellence
with a really strategic approach, build talent pipelines, change organisational structures
and cultures and themselves adopt employee-centric and agile ways of working. Tese
are just some of the opportunities for HR to exercise leadership.
At the same time, much has stayed as it was ten years ago. Alongside the opportunities
sit the pressures. Many of the capabilities HR is required to demonstrate remain as before.
Credibility and infuencing ability are central to HR’s ability to work collaboratively with
line managers to continually push up the standards and practice of people management
and development. Such human capital standards provide a foundation of trust on which
sustainable organisational efectiveness can be built. No HR professional can expect to be
taken seriously if he or she is unable to understand and speak the language of business, or
to translate the business strategy into relevant goals and practical people processes which
are appropriate to the users and the context dynamics facing their organisation.
As the HR agenda moves on so the nature of HR interventions continues to expand,
demanding new disciplines, skill sets and behaviours, even within HR’s traditional
heartland. Embracing technology and the use of analytics – for instance to automate
transactional services or using AI and machine learning in recruitment and for suc-
cession planning purposes – is still not widespread and we are apparently some way of
being able to use predictive analytics to help steer the ship. Strategic workforce planning
can put organisations ‘on the front foot’ when it comes to optimising the changing la-
bour market and demographic trends. Borrowing from other disciples like Marketing
gives us techniques such as employer branding and employee segmentation while holistic
approaches to reward enable organisations to attract and retain the talent they need for
success. Organisational design and development is an essential aid to building fexible,
agile cultures. Continuous professional development is key to raising the game.
Te evolving HR role is moving ever more swifly to becoming a core business leader-
ship role, in which HR's own contribution is to ensure that the organisation is equipped
for success, now and in the future. And in the wake of various corporate failures, par-
ticularly within the global fnancial services sector, there is increasingly a spotlight on
HR’s developing role in ethics and governance, raising questions about sensitive matters
such as excessive executive pay deals and high bonuses that appear to lead to a culture
of unfairness, excess and irresponsibility. Similarly, should HR professionals more ob-
viously have a role to play as non-executives on boards, ensuring that good practice in
appointments and reward at the most senior levels in organisations refects the very best
emerging practice and encourages high standards of executive behaviour?
So in writing this third edition of the book I have attempted to update my overview of
the HR landscape, agenda, skill set and challenges in the light of the changing context,
theory and practice. I have added new chapters on crafing HR strategy, workforce plan-
ning, employee engagement and well-being, designing and developing an agile organisa-
tion and learning across boundaries.
PREFACE TO THE THIRD EDITION • ix
My motivation in researching and writing the book is to fnd out how excellent pro-
fessionals are delivering value. Tis is not intended as a technical book, but one which
highlights what practitioners are doing with respect to strategic recruitment, employee
well-being, management and international leadership development, organisational de-
velopment and change management. In some cases I have revisited and updated where
possible case studies featured in the last edition of the book as well as adding other ex-
amples of what I consider interesting practice. Tat is not to say that I believe that the
practitioners featured in this book have created a blueprint for success, but I hope that
some of the approaches described here will provide food for thought for others.
OVERVIEW OF CONTENTS
In Part I, Te Need for Strategic Human Resources, we consider why Strategic HRM
(SHRM) is needed and what it entails. In Chapter 1, we consider a range of mainstream
and critical theorist perspectives to examine what ‘alignment’ means both within the
feld of SHRM theory and within HR practice. Some critics argue for instance that put-
ting business interests frst means that HR loses what is distinctive about its contribution
to business success – the focus on people. Much SHRM research takes the managerial/
organisational perspective with an emphasis on the consequences for organisational per-
formance. Few theorists, if any, question the impact of SHRM on individuals who are
likely to sufer if they lack ‘clout’ in the employment relationship.
And indeed, in Chapter 2, I have looked again at HR transformation and the changing
nature of business partnering in the wake of the infuential ‘Ulrich model.’ Indeed, as
we consider the evolution of the HR function from its Personnel antecedent, it is clear
that many of the pressures on the function to provide value-added are concerned with
HR’s contributions to increased productivity, cost efectiveness and efciency – against a
backdrop of erosion of collective voice and its related protections for employees.
In Chapter 3, we consider context trends which are driving new practice in business.
Longer term trends suggest that developments in advanced technology are irrevoca-
bly changing jobs and working patterns. Many workers sufer from work intensifca-
tion while others have their jobs replaced by automation. Yet the longer-term impact
of perhaps the most vivid example of a black swan event, the coronavirus pandemic of
2020–2021, has yet to be fully understood. What is apparent at this stage is that necessity
has catapulted many organisations into seeking more agile ways of working, and there
appears to be a growing recognition that organisations are afer all human entities and
should be led and managed as such.
In Chapter 4, we consider how the business context drives the HR agenda, espe-
cially as work becomes progressively more knowledge- and talent-intensive. I draw on
a range of HRM theories to suggest that HR leadership should be the preferred direc-
tion of travel if the function is to really add value. HR leadership involves embracing
an employee-centric, strategic culture-building agenda geared to creating healthy and
sustainably high performing organisations. In Chapter 5, we look again at more recent
developments in the transformation of the HR role in the digital age and consider what
agility means for the HR function and skill sets. Delivering a value-adding agenda
requires purpose, focus, a well-formulated strategy and efective methods, as well as
efective measurement to ensure that the right kinds of impact on organisational per-
formance are being achieved. In Chapter 6, we look at how such a well-formulated
strategy can be crafed.