Hr strategies Key concepts and terms

Issues in developing HR strategies
Five fundamental questions that need to be asked in developing HR strategies have been posed 
by Becker and Huselid (1998):
1. What are the fi rm’s strategic objectives?
2. How are these translated into unit objectives?
3. What do unit managers consider are the ‘performance drivers’ of those objectives?
4. How do the skills, motivation and structure of the fi rm’s workforce infl uence these per-
formance drivers?
5. How does the HR system infl uence the skills, motivation and structure of the workforce?
But many different routes may be followed when formulating HR strategies – there is no one 
right way. On the basis of their research in 30 well-known companies, Tyson and Witcher (1994) 
commented that: ‘The different approaches to strategy formation refl ect different ways to manage 
change and different ways to bring the people part of the business into line with business goals.’
In developing HR strategies, process may be as important as content. Tyson and Witcher (1994) 
also noted from their research that: ‘The process of formulating HR strategy was often as 

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56 Human Resource Management
important as the content of the strategy ultimately agreed. It was argued that by working 
through strategic issues and highlighting points of tension, new ideas emerged and a consen-
sus over goals was found.’
There are two key issues to be addressed in developing HR strategies: achieving vertical fi t or 
integration and achieving horizontal fi t or integration (bundling).
1. Achieving vertical fi t – integrating business and HR strategies
Wright and Snell (1998) suggest that seeking fi t requires knowledge of the business strategy, 
knowledge of the skills and behaviour necessary to implement the strategy, knowledge of the 
HRM practices necessary to elicit those skills and behaviours, and the ability quickly to develop 
and implement the desired system of HRM practices.
When considering how to integrate business and HR strategies it should be remembered that 
business and HR issues infl uence each other and in turn infl uence corporate and business unit 
strategies. It is also necessary to note that in establishing these links, account must be taken of 
the fact that strategies for change have also to be integrated with changes in the external and 
internal environments. Fit may exist at a point in time but circumstances will change and fi t 
no longer exists. An excessive pursuit of ‘fi t’ with the status quo will inhibit the fl exibility of 
approach that is essential in turbulent conditions.
An illustration of how HR strategies could fi t vertically with one or other of the competitive 
strategies listed by Porter (1985) is given in Table 3.1.