Every business requires human resources that require substantial attention when cultivating and maintaining a successful business strategy. A successful business strategy is grounded in the ability to predict the future or at least win the argument about what the future will look like (Kearns, 2010). For business leaders it needs to be about creating value, namely the greatest possible value, from all capital resources at their disposal, and this includes the crucial component of human capital (Aston, 2010; Becton & Schraeder, 2009; Gross, 2004; Leopold, 2010; Kearns, 2010; McKinsey, 2011; Odden, 2011).
On this very subject, Ohmae (1982) considers the crux of any business strategy to be competitive advantage because without competition there is no need for business strategy; thus, within the development of a business strategy, the need to maximize one's strengths to be more effective than competitors is implied. From this logic, Kearns (2010) suggests the best way to gain competitive advantage is for a business to focus on managing human resources better than its competitors. In his text, Kearns (2010) maintains, "any business strategy that does not explicitly and consciously integrate with an HR strategy will no longer qualify as the best strategic option" (p. 1). It seems this idea that businesses should prioritize effective management of their human capital is long overdue in the business world.
In his introduction, Kearns (2010) makes it clear that the management of human resources is a responsibility that is both inseparable and indivisible from the organization's business strategy. In other words, the two lines of operations, human resource management and business strategy, should be inextricably linked throughout all operations and processes of formulation, development, implementation, evaluation, management, and adjustment (when necessary).
In formulating an HR business strategy that ensures that a company remains competitive, the focus will be on core competencies, synergy, and value. Strategic formulation is the result of the necessary planning and decision-making to establish the overall goals and objectives of an organization, the expectations for performance, and the action-steps (plan) required to achieve and fulfill them. In this stage, I believe the focus is on answering the following questions:
1. What does the organization seek to do?
2. How does the organization seek to do this/these better than others?
3. How do we best communicate our goals and expectations to the entire organization and solicit feedback in an organized and appropriate manner?
4. What markers for success are expected?
5. How do we make sure that all of the parts (primarily human resources in connection with other resources interact and function in a way that people feel they belong to a greater whole?
6. How do we make sure that our people feel valued?
7. How do we empower people rather than direct them and ensure they understand and realize their full potential in the system?
8. Are our expectations and formulations realistic? How does our plan happen? Where do we need revision?
Gathering the necessary information during the formulation stage and developing an effective strategic plan that honors the inextricable link between strategic management in business and human resource management is much more complex than the implementation of the strategy. This is not to say that the implementation stage does not face its challenges but within the formulation stage, leaders must be constantly considering the "how" because the greatest plan is only as effective as its ability to be implemented.
As the economy struggles, businesses struggle but effective organizations have a better chance at surviving this challenging time. Leaders must keep in mind that it is the workforce, the human resources at their disposal that is the hardest hit. Ironically, in times of economic growth and vitality, it is still the workforce that remains hardest hit. Traditionally, organizations are all about the bottom line. They cut corners, make adjustments, and make decisions in such a way that maximizes their profits and competitive advantage even if it means compromising their integrity in the way they treat and manage employees.
Kearns (2010) states, "An HR-business strategy is a conscious and explicit attempt to maximize organizational value by gaining a sustainable competitive advantage from human capital" (p. 10). As far as establishing certain elements, Aston (2010) suggests using the Workwell Model, a business model that focuses on employee wellness and engagement in order to boost performance at the human-level to ultimately boost overall performance at the organizational level. This model uses the following approaches to achieve its purpose: (1) Employers cultivate a working environment that allows and encourages employees to make healthy lifestyle decisions in and outside the workplace, respectively; (2) Employers effectively give employees control of their own work-life and cultivate a happy, engaging work environment; (3) Employers establish protocols and procedures for early intervention and proactive management in supporting wellness and recovery in the system; (4) Employers ensure best practices in the realm of communication to show the importance of healthy relationships horizontally, vertically, and outside the workplace where communication is equally important to creating health.
In the Wellness Model, collaboration and open communication are heavily valued and necessary for it to work (Aston, 2010). Another model action plan described by Reed-Woodard (2010) suggests a more simplistic structure that is rooted the equal importance of being strategy-focused, people-focused, market-driven, and value-minded. The U.S. Office of Personnel Management (1999) talks about human resource alignment, or the integration of decision-making with regards to people and organizational effectiveness, suggesting similar elements as have already been mentioned with respect to relational connectedness, well-being, communication, and collaboration between and among human resources, management, and executives.
Leopold speaks more directly to employee benefits as an important investment to be made by management/executives in the creation of value and connection with business strategy. He states, "A company's investment in employee benefits is significant -- and when managed effectively, has the potential to deliver invaluable returns in the form of employee attraction, retention, and productivity" (p. 24). Again, the emphasis here is on employee health, well-being, security, and work/life balance. Becton and Schraeder (2009) focus more on elements like education and training for employees, communication protocols, HR systems and practices, orientations, and the maturity of management in transforming human resource management processes "from their traditional administrative focus to a more strategic business contribution…. A key to improving performance of individuals and the organization (p. 1).
Ultimately, an organization must make its own decisions about the specific strategies that are right to meet the demands and expectations of performance within their system. The common factor among all the above-mentioned elements and others out there is this: An HR-business strategy is more holistic, more dynamic, more mature, and more effective.
Earlier it was stated that a business model or strategic plan is only formulated as effectively as it is implemented and that is true but it is only implemented as effectively as it is evaluated using processes of external and internal audits and SWOT analysis. SWOT analysis looks at strengths, weaknesses, opportunities, and threats within and surrounding a system (organization). Relying on the important elements that make an HR-business strategy that is unique to a particularly organization, a plan is formulated to be implemented and in that formulation stage, procedures for evaluation are created and those procedures outline all the necessary steps, expectations, and adjustment procedures.
Traditionally, a SWOT analysis looks at the aspects of an organization that give it a competitive advantage as strengths; the aspects of an organization that give it disadvantages in the marketplace as weaknesses; the possibilities for growth and increased profit offered by the external environment as opportunities; and those external possibilities for stunting, unhealthy, and decreased profit as threats. In conducting a SWOT analysis traditionally, the leaders do not take human capital into account when in fact it is at the top of each category depending on the circumstances at play. Human capital can be the greatest strength or the greatest weakness depending on how employees are treated. The human capital can be the greatest opportunity for growth and increased profit or the greatest threat to an organization's success. Thus, internal and external audits can no longer be considered and performed without explicit connection to human capital. They need to be involved and considered to ensure the greatest possible success.
As quoted by Kearns (2010), Michael Porter states as follows:
"Sustainable advantage comes from systems (our emphasis) of activities that are complementary. Companies with sustainable competitive advantage integrate lots of activities within the business: their marketing, service, designs, and customer support. All those things are consistent, interconnected and mutually reinforcing. As a result, competitors don't' have to match just one thing; they have to match the whole system. And until rivals achieve the whole system, they don't' get very many of the benefits" (p. 13).
Porter's ideas are magnificent. He is talking about complete and holistic strategies as the way of success in organizations for now and for the sake of the future. He is talking about reframing the…