achieving strategic alignment of business and hr

Corporate Partners Research Programme

Achieving strategic alignment of businessand human resources

Natalie Turner

A C H I E V I N G S T R A T 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 6

1.1 The theory: Developing a human resource strategy 7

1.2 Human resource strategy and… 8

1.3 The practice: Aligning human resource and business strategies 10

1.4 So why bother? 12

2. Aligning HR and business in practice 15

2.1 Why? 15

2.2 How? 17

2.3 Outcomes 18

2.4 Success factors 20

2.5 The key challenges to the alignment process 21

3. Conclusion 23

3.1 Does alignment matter? 23

3.2 What does this mean for organisations? 24

4. Case studies 26

4.1 Borough of Telford & Wrekin 26

4.2 Standard Life Healthcare 31

4.3 Seven Worldwide 35

4.4 AutoGlass 43

Annex 1: Methodology

Bibliography

• Businesses that aim to align their human resources

strategy (HRS) with their business strategy tend to be

more profitable and more efficient than those that do

not. This depends on: in the first instance,

understanding what the business strategy or strategies

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

seeing if there is sufficient congruency.

• When organisations are asked about strategy, it is

tempting for the professionals to reveal the process

as formal and considered, perhaps captured in

boardrooms and strategic documents. But the more

critical, and more realistic, management and academic

literature suggests that this cannot be the case.

• Theory too offers many approaches to the process;

practice highlights the difficulties in achieving

alignment. Yet having greater congruity between HRSs

and business strategy is more desirable than a situation

where for example, an organisation’s pay and reward

strategy does not encourage the behaviours that

deliver business goals.

• This report argues that the process of aligning HRS with

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

throwing up different problems and opportunities that

need addressing.

• Focusing on making the organisation a great place to

work is as – and sometimes more – important as other

HRS outcomes. Cultural nuances mean that every

organisation, indeed in some cases every site, requires

a bespoke approach within an overall strategic

framework where first the organisational purpose is

clearly defined and then the organisational objectives

carefully delineated.

• HR departments need to become far more literate

in the language of business and financial planning,

improve their networking skills across the organisation

and understand that HR strategy development works

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

• Each HR strategy requires the development of robust

metrics that enable the HR department to show ‘before

and after’ effects wherever possible. Some examples are

reduced employee turnover, new skills acquisition by

staff, increased numbers of ideas and levels of

innovation through reorganisation.


Executive summary

5

Studies into business and HR strategy (HRS) proffer no

shortage of advice for organisations on how to be

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

between business strategy and how people are managed.

The business strategy of an organisation refers to ‘the

expressed intentions of how managers expect to achieve

particular business results over a stated period of time’.1

A business strategy therefore deals with ‘choices

regarding how an organisation’s marketplace activities

are configured to gain competitive advantage’.2 Strategies

may include cost reduction, innovation, joint venturing,

value added, rapid customer response or having a focus

on quality. Businesses may be pursuing more than one

strategy at any time, and strategies may well be neither

made explicit across the organisation, nor well

understood. This paper explores these issues further.

But the success, or failure, of UK businesses depends on

how well strategic decisions respond to a multitude of

external factors – for example the emergence of new

customers or competitors – many of which may be

outside the immediate control of individual managers.

Internally, HR strategy and practice is just one key

function, alongside finance, core business areas and

customer-facing services, that can help a business

obtain its strategic goals and performance targets.

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

set of interdependent human resource (HR) policies

and practices designed and implemented by a firm to

achieve its objectives.’3

HRS therefore cannot be cocooned from changes in the

marketplace. It is also subject to specific influences on

human capital, such as new employment legislation and

shortages in the labour market. For HR strategies to

succeed, it makes sense for them to be aligned with

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

in conflict. For example, having a competitive strategy

founded on innovation but a culture that is risk-averse

will not bring about the required human behaviours to

achieve objectives.

Of course, achieving alignment of the kind we read about

is rarely a stable destination. Many organisations argue

that the alignment being prescribed is not only difficult

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

it requires constant re-adjustment and several iterations.

The speed and subtlety with which aspects of business

focus or competitive edge are expected to change mean

that supporting processes, such as HR management, must

be fleet of foot rather than monolithic in their responses.

In many organisations, it is strategic ‘fit’ and agility that

really keep things on the rails.

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

become too obsessed with strategic alignment as an end

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

think about this ‘fit’ with any frequency, then it is probably

missing the point. The notion of organisations as flexible

adaptive systems can have resonance here, and is being

embraced by a number of academics and practitioners as

they seek to break free from the concept that

organisations have to get all their structural and strategic

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

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

achieving greater overall coherency between HR and

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

• provide an overview of the theory and rhetoric of the

‘strategic alignment’ debate, and find out how

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

1. Introduction

6

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

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

organisations have achieved a fit between their

strategy and HR practices

• understand how and why business and HR strategy

align to produce business benefits

• identify the processes and measures they have used

to both achieve and sustain alignment.

1.1 The theory: Developing a humanresource strategyThe central debate concerning HRSs hinges on two broad

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

1.1.1 Universalistic approach

Academics such as Peters and Waterman, Huselid and

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

way to manage HR.4 In other words, they have identified a

number of HR policies and practices, which they suggest

if followed would always result in organisational success.

Pfeffer, for example, advocates the use of seven integrated

practices, which will enable organisations to ‘obtain

profits through people’.5 These practices are:

1. employment security

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

5. extensive training

6. reduced status distinctions and barriers (including

dress, language, office arrangements and wage

differentials across levels)

7. extensive sharing of financial and performance

information throughout the organisation.

1.1.2 Contingency approach

In contrast to the universalistic approach to HRS, the

contingency approach argues that what firms should do

depends on their circumstances. This approach is more

akin to the idea of strategic alignment because it claims

that the optimal personnel policy choice depends on the

unique characteristics of the individual organisation. The

argument goes that organisations need to achieve a fit

between personnel policy choice and broader strategic

considerations, particularly of product market conditions

and business strategy. Porter, MacDuffie, and Schuler and

Jackson6 are among those who favour the contingency

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

between HR and the firm’s wider policy choices.

Mabey and Salaman’s contingency model is called the

‘open approach’.7 The operating environment requires

a corporate strategy, which in turn requires desired

employee behaviours. These HR outcomes pursued

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

culture, and personnel practices and policies. For the HRS

to be deemed successful, two forms of integration must

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

and ‘internal’ (where structural, cultural and personnel

strategies are integrated with one another).

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

Guest, and Hendry and Pettigrew8, assume that there

will be fixed outcomes whatever the HR activities being

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

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

‘A company facing extreme product market pressure to

produce as cheaply as possible a product which requires

very little employee skills, may be very conscious of the

HRM goals of integration and cost-effectiveness but much

less enthusiastic about pursuing employee competence


7

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)

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

to treat employees as highly dispensable. In this case,

expenditure on training and policies to secure high

employee commitment would be seen as wasteful.’9

However, while more realistic, the contingency approach

does not provide an attractive one-size-fits-all solution.

And the specific bundle of policies and practices that an

organisation might pursue is further complicated by the

nature of the contingency – does HRS depend on

organisational life-cycle, business strategies or

organisational structure? The next section looks at these

three areas in more detail.

1.2 HRS and…1.2.1 Organisational life-cycle

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

organisation. Kochan and Barocci10 identified four life-

cycle stages: start-up; growth; maturity; decline. ( Table 1.)

1.2.2 Business strategy

Deriving HRS directly from the corporate or business

strategies an organisation is pursuing supports the view

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

decision-making. For instance, academics such as Miles

and Snow, and Schuler and Jackson11 regard HRS as

central to the execution of firms’ corporate and business

strategies, putting a formulated business strategy into

effect. ( Table 2.)


8

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

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

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

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


9

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

Gunnigle and Moore observe three levels of strategic

decision-making: corporate, business and functional.

‘Each level involves decisions that are strategic in nature.

However, decisions at higher levels, such as those at

corporate or business level, will guide subsequent

decisions on functional strategy’.12 Strategies at corporate

level can be defined as the ‘direction and scope of an

organisation over the long term’. 13

Corporate or first-order decisions14 have implications

on business and functional strategies. These are called

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

Purcell, and refer to company and individual business unit

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

downstream decisions, flowing logically from higher

order decisions to help implement the overall strategy

of an organisation.

Claims about the nature of the relationship between HR

and business strategies have been advanced, in particular

by Schuler and Jackson. They argue that ‘organisational

effectiveness can be increased by systematically melding

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 project-

based team performance appraisal, which recognises developmental and team-based

activities

Considerable investment in training and career development

Compensation that emphasises internal equity

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

HR practices with the selected competitive strategy’.15

There are typical business strategies – termed ‘innovation’,

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

appropriate HRS can be derived. 16

More specifically, Marchington evaluates the influence

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

The relative levels of competition that an organisation

experiences in its product markets will influence the

degree of management discretion in making strategic

policy decisions in all functional areas, including HR. For

example:

• High monopoly power affords management greater

discretion in choosing a particular personnel policy

configuration. It is also likely to facilitate the adoption

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

tenure commitments and gain sharing.

• Where product market competition is intense,

management is likely to have considerably less scope

to make choices on their personnel approach and

may adopt more control-oriented HR approaches.

1.2.3 Organisational structure

This third category suggests that the focus of HRS should

be contingent not only on the nature of the corporate or

business strategy being pursued, but also on the type of

organisational structure associated with this.18 This

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

business environment and technological systems.

Mintzberg describes an organisation’s structure as ‘the

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

distinct tasks and how these are coordinated’.19 He claims

that there are five configurations that can explain most

organisation structures: simple structure, machine

bureaucracy, professional bureaucracy, divisional and

adhocracy, and that each of these will affect which

strategies, policies and practices are or should be used.

1.3 The practice: Aligning human resourceand business strategies The reality of these suggested links between HRS and

corporate strategies, structures or life-cycles is much more

problematic than the models may suggest. While the links

may appear to be reasonably logical and even useful, they

may be based more on deduction than empirical data.20

Indeed, the reality of devising and implementing a

strategy is too complex for any single link to be made

between business and HRS. It is reasonable to assume

that organisations in different markets will be at different

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

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

completely unique and flexible package of policies and

practice. The reasons for tailor-made HRSs are outlined

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

not work.

1.3.1 Lack of clear business strategy

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

need to be apparent to the managers of an organisation.

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

strategies are available they are often extremely vague’.21

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

of reasons why managers may not have a clear

knowledge of their organisational context, required

behaviours and relevant practices required for strategy

development.22 These include:


10

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

Meeting, Cincinnati, Ohio

• The nature of change: As environments change in

a non-cyclical and discontinuous manner, it becomes

harder for managers to obtain the information they

need to understand organisational contexts.

• Imperfect knowledge: Research suggests that the

way individuals interpret information is flawed and,

particularly where there are multiple variables, they

may fail to understand causal relationships.23

• Organisation size, location and structure: Larger,

diversified and geographically dispersed organisations

may have unique competitive circumstances requiring

unique strategic elements. This may subvert the success

of a centralised strategy.

1.3.2 Lack of a single strategy

Business strategies at corporate level frequently do not

fall into the three simple categories described in Table 2,

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

themselves admit that their model is an oversimplification

of reality, as companies may follow more than one

competitive strategy at a time and need to manage the

resulting tensions and conflicts.24

These arguments suggest that HRS will vary significantly

within companies operating in the same industry sector.

Implementation of an HRS may well follow different paths

in terms of take-up and integration into the business

strategy, even in different units of the same organisation.

Authors such as Mintzberg, Sheppeck and Militello, and

Thornhill25 all argue that more often than not, strategies

emerge in a piecemeal rather than planned fashion. Also,

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

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

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

seem more easily embedded in the firm’s business

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

processes’, such as setting objectives and rewarding

performance outcomes that are in line with business

goals, are relatively more strongly linked to the business

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

basic skills and aspirations of the workforce to prepare for

the longer term; creating an organisational structure and

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

role of the HR practitioner is therefore to focus the

organisation on the longer-term and to challenge the

predominant short-term thinking.’27

1.3.3 Time-lags

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

will be inhibited by the time lag between conception and

implementation of the new practices associated with the

HRS, and a further lag between the implementation of

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

a particularly crucial aspect of people strategies because

the time cycles for people resources are considerably

longer than those for financial and technological

resources.’28 Indeed, it may take years rather than months

for the effects of HR policies and practices to be realised

because these initiatives mean that individuals may have

to relearn elements of their jobs and adjust ingrained

routines in their day-to-day work.

1.3.4 Office politics

The process of designing and implementing an HRS is

affected by cultural and political factors operating in

organisations rather than by following a highly rational

and normative model. These factors no doubt affect

perceptions about the need for change, its management

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


11

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

example why some of the organisations Gunnigle and

Moore surveyed appeared to be successfully aligning HR

policies and business strategy, while others were failing.29

Organisations may be seen as composed of different

groups of stakeholders, each with a particular set of

interests. ‘Dominant managers or groups of managers

in an organisation may therefore seek to exercise

discretionary power, as well as any formal authority vested

into them, to influence the outcome of decisions that will

affect their interests.30 It is therefore inappropriate to view

HRSs as rational and objective entities, as they exist within

a value-laden system and can be described as being

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

occasion, the implementation of any strategic change is

likely to be problematic and to meet resistance on the

part of employees at virtually all levels within an

organisation, and HRS is no different. Change judged

‘deviant’ will be perceived as imposed and outside

prevailing cultural norms. Strategic change may also be

associated with uncertainty and threat, as it alters familiar

working methods and reward systems.32

1.3.5 Rigid systems and processes

Like people, rigid systems and processes may also inhibit

the development and alignment of strategies. Wright

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

hampered by structural inertia.33 Rigidity caused by

bureaucracy (particularly in more developed

organisations), organisational practices that have become

part of a shared definition of reality, and political

processes that result in battling with the internal power

structure all prevent HR practices from being adaptable

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

Other factors that may impinge on any straightforward

link suggested between business and HRS may include

the presence or absence of trade unions, legal regulation,

the actual and perceived role of HR and HR professionals

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

decision-making about HRS.

1.4 So why bother?This analysis of HRS suggests that strategic management

is basically a human process beleaguered with all the

challenges inherent in attempts to make decisions in

conditions of uncertainty, competition and limited

resources. It would appear that alignment is perhaps a

tortuous process, even when you have decided on which

of the many theoretical textbooks provides the most

convincing approach. Yet having a range of policies

and practices that are in sharp discord with the overall

direction of the business is not a desirable outcome

either. This section discusses why it is important to bother

about aligning HRS with business strategy, despite the

lack of a blueprint.

1.4.1 The symbolism of HR

Having outlined the two broad positions in the debate

about HRS, let us now consider in general terms the

single components of an HRS, their symbolism and

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

strategic alignment, and rather than offering a blueprint,

will demonstrate which policies and practices might be

chosen to match different business strategies.

Authors such as Johnson and Scholes, and Tyson34

highlight the ‘symbolic connotations’ of HR practices

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

a certain set of practices and policies to instil specific

values. Some examples of these are:


12

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

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

• Rewards: ‘Payment systems tell employees what an

organisation regards as its most important objectives:

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

• Recruitment and selection: ‘Recruitment and selection

procedures are a vital mechanism not only for ensuring

the employment of appropriate staff, but also for

sending messages about the nature of the organisation

and its core values.’ 36

• Employee development: In the research conducted

by Tyson into different routes to excellence, employee

development – and especially at managerial level –

was regarded as one of the ‘strongest levers, which

were pulled to make the organisation change’.37

• Training: This is a time-honoured method of seeking

to change attitudes and behaviours of employees.

Among its advantages are: developing a great sense of

employee ownership of change; introducing fresh ideas

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

potential of this approach as a way of introducing

change. It may be rather time consuming, expensive

and not least arouse ‘the big new management idea’

syndrome and thus meet employee resistance through

negative attitudes to change.

• Employee communication and involvement

programmes: This is also a policy area steeped in

symbolism: ‘What is communicated is probably less

important than how and to whom the communication

is addressed.’38 The chances of HR initiatives succeeding

are generally thought to be greater when there is

genuine employee involvement.

• Reorganisation of personnel at the top of the

organisation: Change may be accomplished very

quickly through changes in personnel at the top of the

organisation with people from outside the organisation.

Such changes are highly visible and symbolise the

necessity to change.

1.4.2 HRS, strategic fit and performance

Choosing suitable HR policies and practices is the first

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

how they will affect organisational performance. While

there is an abundance of writing on HRS theory and lots

of prescriptive management guidance, very few studies

have attempted to measure the impact of HRS and high-

performance work practices on the bottom-line

performance and productivity of organisations. To

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

Research has found a positive correlation between

‘high performance’ HR practices and productivity, but

for different reasons: 39

• Arthur’s study of 30 mini steel mills found that

commitment-based HRM systems had low turnover

and scrap rates and higher productivity than those

emphasising efficiency and reduction of labour costs.

• MacDuffie looked at HR bundles in relation to

manufacturing performance. His study suggested that

the plant whose bundle of HR practices were consistent

with the production and/or business strategy

outperformed the plant which did not. This report

strongly supports the case for alignment and external

fit, but not internal fit.

• Huselid’s study attempted to evaluate the links

between high-performance work practices and

organisational performance. His study found that

such work practices have a significant impact on both

intermediate employee outcomes and both short-

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

however, find evidence for either internal or external fit.

• Ichinowski et al found that there was a strong

correlation between HR practices and productivity

outcomes, but which were more to do with changes

in attitudes than the practices themselves.


13

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)

• 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

This section looks at the process of aligning HRS

and business strategy in reality. It focuses on four

organisations that have managed alignment with

positive outcomes. (See Table 3.)

2.1 Why?The organisations in this report demonstrated both

internal and external reasons for engaging – knowingly

or not – in an alignment process.

External drivers:

• Profit loss: Loss in profit at Standard Life Healthcare

(SLH) spurred a process of improving customer service

and retention. This took place through new and more

focused HR policies and practices that aligned with

business objectives, such as career paths, a good

programme of training for all staff, internal

communications initiatives focusing on informing

staff about developments, and receiving their feedback.

This increased new business.

• Merger: There are a number of people-related issues

that stem from merging two organisations. Most

notably that two organisations can have very distinct

cultures and modi operandi. Poor management of

mergers can be detrimental to business performance,

particularly in the longer term. However, HR can

through bridging business and people issues assist this

process. An excellent example is the Borough of Telford

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

cultures can result in large-scale organisational


2. Aligning HR and business in practice

15

COMPANY BUSINESS STRATEGY ALIGNMENT PROCESS OUTCOMES

Public sector

Borough of Customer service delivery Consultation Increased flexibility among the

Telford & Wrekin and efficiency 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

Table 3: Summary of the case study organisations


16

improvements when assisted by an alignment process.

• A need to increase market share: Although Autoglass

had experienced sustained success for many years,

there were opportunities for growth through increasing

market share. HR practices and policies have a key

contribution to this objective through HR’s position on

the board and working closely with business. For

instance, training initiatives improved performance

of fitters, which was a central part of interaction with

customers.

• Managing changes within external markets: Seven

Worldwide (SWW ) saw a need to move away from

traditional print towards multimedia. This created a

challenge for the organisation, and a director of people

and change was appointed to help manage the

transition. The role took responsibility for managing

the changing employee demographic and harmonising

the terms and conditions of remaining staff.

Internal drivers:

• Cultural problems: Each case study demonstrates a

struggle of varying degrees with organisational culture.

At SLH, the culture needed to be refocused around

customer service in order to reverse profit

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

changes that were necessary after the merger of the

county council and district council.

• Senior management influence: The three private

sector case studies all had some form of pressure from

top-level management that encouraged and/or aided

the alignment of HR and business strategies. Autoglass

was encouraged by its parent company to run a

strategic review, part of which was a review of HR

and people. Highlighted in the review were business

weaknesses that HR could help resolve. At SLH, a

new CEO brought with him good commercial ideas

combined with HR corporate values, and was the

key driver for HR working closely with the business.

• Consultation and demographics: In contrast to the

previous point, at T&W the greater pressure came

from consulting widely with staff and from a better

understanding of labour market demographics. Both

these factors highlighted that flexibility was going to

be key to the efficiency of the organisation. It would

suit the labour market and the customer. HR played a

key role in preparing the organisation for an

increasingly flexible workforce.

Interestingly, the actions taken to resolve these issues

generally fall under the rubric of ‘change management

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

This suggests that HR can play a role in managing

organisational change through alignment with business

strategy.

The findings of the The Work Foundation’s Workplace

Trends Survey 2004 show that 45% of companies report

that they have significantly changed their business

strategy this year, and the most common changes to

business strategy are: reorganisation of their internal

structure; expansion plans; introducing a new focus or

reorientation of activities. These challenges are reflected

in the case studies presented here. However, the data

also shows that ‘changes in HR strategy appear to be

somewhat sluggish in their response to either overall

strategic concerns, nor are they reviewed in relation to

what really concerns HR in practice. Only 10% of

organisations [as part of the survey] are currently

reviewing their objectives as far as HR strategy

is concerned.’41

41 Ibid

2.2 How?The case studies in this report are all examples of where

the specific needs of the organisation and strategic

direction were considered carefully and HR practices

chosen to complement them.

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

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

resource (HR) policies and practices designed and

implemented by a firm to achieve its objectives.’42

Organisations achieved alignment between business

and HR strategy, and improved business performance in

a variety of ways:

2.2.1 Strategic understanding of the HR function

• Creating an HR director role: Both SWW and

Autoglass created a director-level role for HR. This

meant that they had access to board-level decision

making and, where respect was gained, influence

over it.

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

SWW, a key role for HR was ensuring that management

is equipped to manage people properly and take

responsibility for HR issues. For simplicity, SWW created

desktop intranet links to management guides.

• Data gathering: For two reasons, this had perhaps the

most positive effect on the alignment process. First, it

was a route to gather data on which to base strategy

development. For example, at T&W understanding

demographics and consulting with employees was the

main driver for embarking on the alignment process.

Second, data gathering demonstrated to the

organisation that HR and business would be working

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

hosted coffee mornings together to talk about key

issues and brainstorm solutions.

• Independent assessment and internal review: Data

gathering of this kind was an important part of the

process and allows suitable strategic elements to be

chosen. In the early stages of developing the strategy,

SWW had an independent review of the HR function

carried out by a university. Similarly, at Autoglass a

‘people review’ was conducted as part of a broader

organisational review. This allowed an assessment of

where the function was performing well and where

improvements could be made in terms of the overall

business direction, starting with a snapshot of the

current status of the organisation’s demographics and

culture.

2.2.2 Organisational initiatives

• Structural and reward changes: These allow HR

to drive itself into the heart of the business. The way

people are rewarded can have a huge impact on

organisational culture, assuming that rewarding certain

behaviours encourages them. At SWW, HR drove

structural changes to make pay policies and practices

more uniform and to improve organisational efficiency.

• Training and development: T&D to encourage and

support specific behaviours was a key feature in all of

the case study organisations, often related to broader

cultural and structural changes:

Standard Life Healthcare: A training programme

called ‘Customer Service Excellence’ (now called

‘Total Customer Satisfaction’) was devised, which all

employees have undergone. The course covered what

customer service meant to individuals, what good and

bad companies were doing and how the company

could improve. All new employees still take this course.

Seven Worldwide: A training and development

strategy was devised to support the organisational

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

and team building.


1742 Richardson R, Lecture 2: MSc Industrial Relations, Managing Human Resources series/module, London School of Economics, 1999/2000

Autoglass: The training and development initiative in

partnership with its National Skills Centre improved

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

managers and employees took it seriously.

Borough of Telford & Wrekin: The council soon

realised that a sound management development

programme was an essential part of managing a

flexible workforce.

• Culture change: This was perceived as an aim in all

four case studies. The alignment process focuses a great

deal on using HR policy and practice to elicit certain

behaviours, creating an organisational culture that

can move the business strategy forward. The most

pronounced cultural changes were seen at SLH,

which turned itself round from a poor-performing

organisation to a customer focused one with

sustainable profits. Although ‘culture change’ sounds

broad and complicated, actually small actions can

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

whole organisation train at one location improved

communication and removed the sense that people

were isolated in their sites.

2.3 OutcomesThe case study companies in this report show a number

of indirect and direct outcomes on practice43 and

performance. Many of these outcomes are interrelated,

and although segmented here, are parts of a more

complicated ‘web’ of achievements in each case.

2.3.1 For organisational performance

Tradition has shown that it is notoriously difficult to link

the alignment process – or indeed an single factor – to

organisational performance, and attempts have boggled

the minds of academic professors and business

professionals alike. The case studies reflect this.

The following measures are illustrative of improvements

in individual organisational performance measures. Note

that other factors, which may have influenced these

measures, have not been controlled for:

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

Performance Assessment, received IiP status and has

extended the number of service days.

• SLH has moved into profit, increased customer

satisfaction to 98 per cent and increased new business

by 26 per cent.

• SWW has enjoyed increased revenues per employee

and the new structure is proving much more efficient

in terms of managing clients.

• Autoglass has seen a positive impact on staff

performance through its National Training Centre.

The findings of the Workplace Trends Survey 2004

show that some types of HRS will have an effect on

organisational performance through association with a

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


1843 Table 1 (page 8) and Table 2 (page 9) are good illustrations of the impact on practice.

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.’

Case study 1: Borough of Telford & Wrekin was the

result of merging an existing county council and district

council. The resulting organisation contained two very

distinct cultures and two sets of terms and conditions

that needed to be aligned in order for the organisation

to be able to provide an efficient service. Through

internal consultation with employees at all levels and

investigation of the external environment, flexibility

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

the alignment process.

both organisational restructuring and changing working

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

strategy is also strongly associated with a commitment

to training and development. Rather than confirming a

direct link between HRS and performance, it shows that

certain HR components are more closely correlated with

successful business strategies.

2.3.2 For human performance

Though less tangible, and to an extent of greater concern

to internal audiences rather than the market, there are a

range of indicators of human performance improvements

– as opposed to organisational performance – resulting

from better strategic alignment.

For example:

• Decrease in staff turnover: At SLH and SWW, this

means that recruitment costs are contained and the

experience of staff in key roles is retained.

• Improvement in sickness absence rates: Uncertified

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

sickness absence management was counterbalanced

by flexible working, with a reduction in unauthorised

absences. Likewise, SLH has seen a reduction in sickness

absence and now has a rate of only three per cent.

• Increase in applications: At T&W this was an

especially positive outcome of the alignment process

because the local labour market is very competitive.

2.3.3 For organisational culture

The benefits to organisational culture are the least

tangible of the outcomes but are often the issues

preoccupying HR professionals. For example, one HR

director felt that one of the most positive achievements

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

because staff flexibility, measured by the increase in

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

work fluctuations, thus improving the efficiency of the

organisation. These benefits are measured in

improvements to staff attitudes towards their employer,

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

HR director proudly explained that staff satisfaction

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

the 25th percentile of the Gallup Q12 staff engagement

survey, which was one of the major performance

outcomes.

2.3.4 For HR as a function

HR professionals who are worried that alignment means

a large increase in their workload should consider the

beneficial outcomes for their department before hiding

in the filing cupboard! These include:

• Increase in respect: It can mean that the function is

taken more seriously because the organisation can

witness the positive outcomes of policies and practices.

This was seen at SLH where managers are now happy

to wait for the ‘right people’ during the recruitment

process, indicating that there is an increase in trust

between HR and business managers.

• Increased influence and involvement: For example,


19

Case study 2: Standard Life Healthcare went

through a period of major financial difficulties in the

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

on sales rather than on the customer. A new chief

executive joined in 1998 and brought with him some

strong ideas about working with HR to improve

customer services. This, combined with a commitment to

the idea that Standard Life Healthcare could be a great

place to work, resulted in a strong market position and

healthy profits.

HR professionals at SWW are invited to management

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

and business planning.

• Increase in HR skill across the organisations: Where

a process of devolvement has taken place, this can

mean an increase in HR skills across the organisation,

allowing HR professionals to do more developmental,

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

at T&W where HR projects are devolved to business

heads, and now HR can concentrate on management

development and other newer issues.

It is also important to highlight that there were some

unexpected outcomes. Many of the case studies found

a need for a greater focus on management development.

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

increasingly remote workforce and more virtual teams.

2.4 Success factorsAlthough the inputs and outcomes of each case were

different, there were marked similarities among the

success factors:

2.4.1 Treating alignment as an iterative process

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

continual process. The case study describes many ‘start

again points’ where those involved did not shy away from

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

particular case, responding to the needs of employees

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

2.4.2 Time and effort

Each case shows that time and effort are needed. In

particular, HR professionals must keep on top of both the

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

a strategic focus.

2.4.3 Good working relationships

Central to the alignment process, good relationships

between HR and all levels of the organisation cannot

be overlooked.

• Director level: Support at this level means including

HR on the board which, in turn, means that HR has

access to, and influence on, the business decision-

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

for a business strategy supported by HR policies and

practices. This was supported by the loss of senior

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

• Senior management level: The Autoglass case study

shows that a key role for HR during the alignment

process is the ability to influence business heads. Once

this is achieved, the senior managers act as role models

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

leisure services manager, which enables the process to

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

department retains its strategic role, partly due to

‘enlightened’ senior managers.

• Line management: Good working relationships here

are essential for driving HR practice into the business.

Line managers are usually responsible for execution so


20

Case study 3: Seven Worldwide formerly focused on

traditional print businesses and had a heavily unionised

workforce. Moving towards a multi-media focus brought

with it a new employee and customer demographic.

There was a need for a different style of employee

support and a HR department was created. The

department has grown from strength to strength and

since appointing a HR director in 2000, close attention

has been paid to making sure HR policies and practices

align with the business direction.


21

they have a great effect on the outcome of various

initiatives.

• Employee level: This is also important for making

new policies and practices work. At SWW, employees

approaching HR directly was seen as a major plus point

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

levels of the organisation) directly to decide what else

they need to achieve.

2.4.4 Confidence within HR

At SWW, HR took a hard line on certain issues, which

demonstrated to the organisation the confidence they

had in their abilities. This confidence is supported by

the background of the director, who has an established

career in HR and change management consultancy.

Similarly, at Autoglass, the HR director believes that HR

professionals who know what they are doing and who

are confident to be part of the business are central to

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

processes work alongside each other to encourage

business performance.

2.5 The key challenges to the alignmentprocessTable 4 on page 22 outlines the challenges that affected

the alignment process in the case studies, and how these

were overcome. These challenges reflect similar themes

to those outlined in the literature review.

Case study 4: Autoglass has had a progressive HR

department for some years. With an HR director on the

board, the organisation appreciates the importance of

the people element. Most recently, the HR function

played a key role in an organisational review focusing

on personnel, and identified a number of areas where

improvements could be made, which would reap

business benefits.


22

Table 4: Challenges affecting alignment and their solutions

Challenge

Sudden changes in external markets can

hinder the alignment process. For example,

setting out on a route to develop staff was

interrupted by the need to reduce staff

numbers, creating a tense environment

Changes in markets and customer demand

affect ‘external’ performance measures, but

may not give an accurate indication of the

health of the organisation internally

In many cases, finance for developing HR

components was unavailable

Often, the HR solution to business issues is

a longer term strategy, which might not fit

with short-term business goals

Tensions among management brought on

by perceived loss of control and HR being

‘too big for their boots’ can interfere with

HR playing a role in business issues, which

is a key part of the alignment process

Employees can often be suspicious of new

initiatives and changes to working practice.

Those brought about by the alignment

process are no different

How was it overcome?

At SWW, external market changes were managed through foresight

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

restructuring the business in 2002 to improve efficiency. HR

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

also be necessary to act reactively

Choosing measures that are most appropriate to the organisation’s

business environment is key. For example, measuring retention

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

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

beneficial

The organisational review at Autoglass was conducted with

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

At Autoglass, the HR professionals persisted with longer term

initiatives, developing a clear business case from the outset

Autoglass has built up respect over the years through delivering

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

line on issues and achieving improvements demonstrated the value

that HR could add

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

uncomfortable in the new environment. Encouraging cynical staff

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

flexible environment could work for them assisted the transition

Issue

External

market

changes

Measuring

benefits

Resources

Long-term

solutions to

short-term

goals

Politics

Response

to change

Finding out to what extent strategic alignment of

business strategy and HR feature in the thinking and

actions of good organisations is no easy task. Asking

organisations, or more specifically HR professionals,

whether or not they align HRS and business strategy will

not answer this question satisfactorily. A simple positive

response would fail to capture the complexities of the

alignment process, or what importance was attributed to

it in terms of organisational performance. To understand

the extent of alignment within organisations requires a

more in-depth analysis.

The more prescriptive management literature suggests

that aligning business and HRS is a formal and considered

process, perhaps formalised in boardrooms and captured

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

literature suggests that this cannot be the case, for two

reasons. First, developing and aligning strategy is

fundamentally a human process and will fall foul of

human error. Second, business environments are

influenced by a wide array of factors that cannot easily

be controlled for all at once.

But, there is evidence that organisations do attempt to

align their business and HR strategies to encourage high

performance. The case studies suggest that alignment is

a very real process in organisations, despite the fact that

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

business and academic literature describes. In reality, the

alignment process was incremental and two-way, where

HRS responded to business issues and strategic direction

but also informed it where it proved to be successful.

The findings of The Work and Enterprise Panel of Inquiry45

show that high performing or excellent organisations

do have HR policies and practices that complement and

support the direction of their business strategy. But in

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

HRS is aimed at encouraging specific behaviours among

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

their business goals and improving performance. The

Workplace Trends Survey 2004 found that there are often

associations between HR practices and performance

rather than direct causal links. For example:

• a new CEO is associated with employment growth

• an appraisal HR strategy that for example promotes

employee innovation and commitment and unlocks

potential through career development, is associated

with increasing employment levels.

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

approach to managing the organisation as a whole and

other areas are afforded equal importance, including, for

example, addressing the needs of stakeholders and

shareholders. ‘Effective people management is oil to the

whole organisational system and not a distinct strategy.’46

‘Alignment’ conveys something too rational and formulaic,

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

important to note that large and profitable organisations

believe there is an impact, indirectly or directly, of a

strategic fit between HR and business strategy, and its

impact on organisational performance. Indeed, the

common theme among all the case studies in the report

was to create an ambitious, aspirational and engaged

workforce.

3.1 Does alignment matter?The complexity of the alignment process means that it is

hard to measure. In the case studies, basic measures were

used to try and track improvements including turnover,

recruitment, staff satisfaction, sales per employee and

profits, but it is important to remember that these could

be influenced by any number of internal and external

factors. For example, Seven Worldwide had to increase,


3. Conclusion

2345 Harding R, Cowling M and Turner N, The Missing Link: From productivity to performance, The Work Foundation, 2003

46 Ibid

reduce, and then increase staff levels due to market

pressures, so staff turnover would not necessarily be

a useful measure. In addition, some cases show that

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

there is an HR resource deficit, implementation is often

more at the fore than attempting to measure or

understand outcomes.

While the case studies show there is evidence that

alignment can make a tangible impact on organisational

practice, the link with labour productivity is not so

straightforward. The Workplace Trends Survey 2004 reaffirms

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

goal of a HRS is to try and encourage the employee

behaviours that will suit the tasks needed for business

performance.

‘Cynics may suggest that there is a yawning gap between

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

and outcomes. A more likely explanation is that HR

practices have other outcomes, for example on employee

wellbeing and organisational performance, rather than a

direct effect on employee productivity.’47

The evidence in this report suggests that HRSs can have

a positive impact on organisational performance when

they interact with business strategy. For organisations,

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

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

organisations and may reap no reward. Not having the

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

part of organisational information that may be vital to

understanding how strategic goals will translate into the

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

role for HR in helping organisations adapt to changing

business strategy, and external consultants and experts

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

3.2 What does this mean fororganisations? The key finding from the case studies is that it is vital for

organisations to understand the details of their own case

so they can think about why certain policies and practices

may be more relevant to their strategic goals than others.

For many, this may be about reflecting on what their

business strategy is in the first instance, and then on

what constitutes their HRS.

This means that data gathering, reviewing, consultation

and information sharing are good starting points for

organisations wanting to make sure their HR and business

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

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

offer support for a more contingent approach to strategic

alignment, even though we would not try to argue that

there may be some best practice policies and practices

that all organisations could make good use of. The report

advocates that it would be wise for professionals to

understand their position in relation to all three

approaches to developing strategy – organisational life-

cycle, business strategy and organisational structure – as

one or all three will have a major impact on what policies

and practices will ‘suit’ the organisation.

Businesses will need to make a clear and transparent link

through simple, common metrics between the business

outcomes they are hoping to achieve and how people

contribute to this. For example, if an organisation

measures sales per head and publicises those measures

internally, the organisation will assume that sales are the

most important goal, particularly if reward is also based

around these measures. Similarly, all managers will need

to think about how HR initiatives are affecting or will

affect culture through encouraging particular behaviours,

ie by asking are these suitable?


2447 Ibid

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


25

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.

CASE STUDY 1 – Borough of Telford & Wrekin

Background

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

means it is responsible for all local government services in

the area, including education, social services and libraries.

The authority took over these responsibilities on 1 April 1998.

Before this time, the services were run by Shropshire County

Council.

Borough status was granted to the council in the spring of

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

a successful, prosperous and healthy community which offers

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

The borough council is a medium-sized, public sector

organisation with 54 members, 5,350 employees, 180

operational buildings, and it manages an annual budget

of more than £125 million.

The case for alignment

The borough council (BC) was formed from two separate

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

(DC). The CC had a very traditional and formal culture, where

people frequently used surnames or titles to address each

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

more progressive culture.

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

different sets of conditions that needed aligning. There were

also two distinct types of employees: those used to working

very flexibly and those used to working Monday to Friday

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

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

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

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

needed to be created to replace the two existing cultures.

Investigation

Flexibility emerged as the key theme. This was supported

by both the geography of the BC and some examination of

the area and organisational demographics. The BC is situated

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

only a small pool of local workers as local employment rates

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

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

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

of single parents and a high rate of teenage pregnancy, so

flexible working is crucial. Further to this, organisational data

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

are therefore customers of the council. Supporting them in

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

of building commitment, assisting the local economy and

reducing the demands on council caring services.

As more and more work and consultation took place around

values, what were at first considered HR issues emerged to be

directly related to service delivery and organisational

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

a strong alignment between HR policy and practice and the

service units was cemented.

How has alignment been achieved?

There was no planned alignment strategy. It has been

an entirely emerging one, with many ‘start again points’

being reached along the way. The first milestone was the

development of three, clear employment principles – ‘value,

fairness and trust’. This was achieved by asking employees

what they wanted.

Following this, work on the terms and conditions was carried

out with the trade unions. When employees were asked about

what they wanted, they were more concerned with getting

something clear and understandable, and which gave them

some control rather than something ‘amazing’. Likewise,


Case studies: 1–4

26

managers wanted something ‘not too prescriptive, something

that they could control and can be adapted to suit their

location’.

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

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

as for trade unions and managers. The workshops consulted

on questions about flexible working, issues and problems,

and encouraged realistic visualising of where the

organisation needed to be.

The outcome from regular employee surveys were also used

to inform decisions, and following the 2001 survey it was

decided to create an organisational development initiative.

This was overseen by the chief executive in order to provide

profile and top management support. Significantly, the issue

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

project was characterised by line managers leading

individual project groups, with P&D acting as hands-on

consultants. This has also enabled the organisation to

develop new skills among managers, along with a broader

view of the corporate organisation.

These workshops were such a success that the idea was

extended to incorporate the whole of the organisation.

‘Making Better Happen’ was an innovative offsite training

day organised by P&D. A random selection of staff were

chosen from the chief executive downwards, and there

were firm rules, including:

• only first names should be used

• no employment roles should be divulged at any point

• casual dress only.

The workshops allowed people to talk freely about what the

organisation should be and the format was highly successful.

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

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

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

In 1998, HR had a traditional structure – the training function

did training and the personnel function managed personnel

administration. It was decided that a more consultant-led

structure was needed to devolve HR responsibility into the

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

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

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

projects were given to different service managers to lead on

while being supported by a personnel manager. For example,

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

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

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

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

This approach also has the benefit of keeping the application

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

ideas/concepts will not apply to the business.

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

responses in the employee attitude survey, and it was

decided to do something new. This phase focused on:

• general workforce development

• management development

• communication.

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

Management development was considered in detail using

360-degree appraisal linked closely to management

competencies. These included supporting flexible working,

being responsive to individual issues, demonstrating a high

degree of trust, realistic objectives and judging quality of

outputs, not length of time spent at desks. Although the

management group were already well-versed on these issues,

there was still room for improvement. A good management

development programme with credibility was needed so,

following a detailed scoping exercise, the organisation


27

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

as an employer. The aim was to create a document that

outlined the crux of what Telford & Wrekin did as employers,

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

importantly the document needed to be simple, but it took

‘complex drafts of difficult documents to get to one simple

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

produced.

The business strategy is ‘lived and breathed’ throughout the

organisation, and since the alignment process began, this

has got stronger. Achieving alignment at Telford & Wrekin

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

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

process. Business strategy is effectively one with individual

and team development initiatives now the two strategies

have merged as much as aligned.

Outcomes

The organisation is now further developing its HR direction

and has recently invested in a development day in which

unions, elected members, managers, employees and HR

specialists worked together to identify the key employment

actions needed to deliver the employment agenda over the

next five years. The event was facilitated by the regional

employers’ organisation and has led to an action framework

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

• employment practice

• culture

• performance management

• development and learning

• leadership

• communication

• employee relations

• health and work

• flexibility

• workforce planning

• conditions of service.

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

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

employer’. This was independently identified by the recent

Comprehensive Performance Assessment report. To support

this, there is a raft of flexible working policies including

domestic and special leave schemes, and flexible working

(term time and home working). These policies are promoted

in the organisation and externally through roadshows, the

internet, weekly bulletins and the employee newsletter.

Potential employees can read all about them on the internet.

This may have led to the percentage of employees working

part-time hours – now the dominant group.

However, most importantly as ‘flexibility’ is further ingrained

into the culture, more and more people approach managers

to talk about how flexibility can work for them. To deal with

this, more focus was placed on management development.

Managers are all assessed against key competencies, which

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

living example. The attitude survey shows that and has built

on regular ‘temperature testing’ in the organisation through

the employee surveys, which show an increasing percentage

of staff who believe or believe strongly that their manager

accommodates their personal needs.

An HR approach (rather than the more limited personnel

and training approach) has emerged and developed in the

organisation. The key characteristic of this has been line

managers taking active responsibility for HR issues in their

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

more effectively. While there is some debate about which of


28

these effects came first, the result is an organisation that

understands the need for strategic thinking and planning

around people issues.

The HR director feels that managers now think about

capacity throughout the business planning process, which

might suggest that training and learning have been

institutionalised to a certain extent. An important component

of embedding this approach has been the Investors in People

standard. All business units were required to commit to these

two years ago as individual teams. All are now accredited

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

This is important in further developing a ‘one organisation’

framework, increasingly important in the one-stop public

service delivery culture that the government is establishing.

The significant change in the role of HR – with responsibility

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

being expanded and built on across the organisation. With

service heads working as HR champions, other managers

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

involved partly through volunteering and partly because

they were identified as doing something well and then

approached. This has not been perceived as a difficult

process.

Although it is difficult to quantify the beneficial outcomes

for organisational performance in financial terms, the

council has experienced:

• increased full service opening by three days a year

• staff and therefore knowledge retention in an area of high

employment

• a committed workforce

• a counterbalancing of sickness absence management with

flexible working and a reduction in unauthorised absence

• an increase in applications

• an increase in the level of training

• part-time employees outnumbering full-time employees

so it is easier to respond to short-term work fluctuations.

Most significantly, the Comprehensive Performance

Assessment awarded the council with an ‘excellent

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

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

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

authorities. Significantly, it has achieved this while charging

one of the lowest levels of council tax among unitary

authorities and in its region, despite having a number of

areas of high deprivation in its boundaries. Recent customer

satisfaction surveys have also indicated an increasing

percentage of satisfied customers.

Conditions for success

Painting a picture of the organisation through data

gathering was crucial to the success of the alignment

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

the organisation and then benchmarked against other

organisations. While academic and management theories are

well known and understood, these were deliberately not held

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

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

the process is consistent reviewing. For example, two years

after the merger there was a dip in many indicators from

the employee survey responses so senior management

recognised that something new needed to be done. The other

data that was really essential was the analysis of workforce

demographics. This gave a really good understanding of

employee needs and how these could fit in with business

objectives.

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

particularly as the emerging nature of the process demanded

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

The fact that all the people concerned were persistent kept


29

the developments moving, sometimes ‘it might have felt that

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

write down a rigid processes document instead’. The trade

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

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

The response was strongly positive. There are nine trade

unions in all that have been involved, as well as HR staff,

managers (line, director and chief executive) and employees.

The ‘Making Better Happen’ offsite workshop was absolutely

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

communications subgroup made this happen. The process

emphasised the importance of two-way communication –

listening and responding – and that the need for change

should be recognised by all. More intangibly, the process

required an element of trust; putting flexibility into action

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

specific as possible to embrace the wide and differing range

of employee interests, but are held within a devolved

managerial framework enabling local decision-making

informed by organisational direction.

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

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

time and effort of those involved were key to this process

and ‘living what you say’ was absolutely critical to the

achievements. More tangibly, retaining staff in an area of

high employment was seen as outweighing any input costs.

Where funding was concerned, there was an initial boost

from the government to support creation of the new council.

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

also won some government challenge funding, which helped.

The money was used to initiate home working with the

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

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

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

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

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

bought for home workers but the costs were so huge the

buying policy was changed to buying laptops and docking

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

that have been learned throughout the process.

Challenges

People felt the change and responded to it in differing

amounts. It was quite a paternalistic organisation and some

people were forced into change that they were not used or

prepared for. Although there was an attempt to handle this

sensitively, the process may still have been uncomfortable for

some who experienced limited change in a more protected

environment before. One of the most unexpected outcomes

was that some people would rather have a structured

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

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

without some degree of turbulence.’

The organisation is far more business-oriented now and the

perception of some individuals is that it is not so cosy and

comfortable. Some people feel more insecure and new

challenges are frequent, but not necessarily to the detriment

of job security.

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

to funding has now run out and government funding, which

is awarded per head of the population, does not keep up with

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

additional pressure from some negative comments over the

changes, with some people perceiving flexible working as a

waste of money.

Ensuring that senior managers are involved at the head of

human resources issues has meant developing a pool of

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


30

day job proves tricky and ensures that HR matters maintain

a realistic edge. Although this is mainly a workload burden,

it has a hidden benefit of renewing energy in the projects.

Managing and communicating with a majority part-time

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

challenge. The organisation is currently in the development

stage of this approaching issue.

Sustainability

Despite the challenges and the relentless nature of managing

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

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

‘what do we want to do now?’.

HR has a key role in this now that much of the HR skill has

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

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

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

CASE STUDY 2 – Standard Life Healthcare

Background

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

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

with a six per cent market share. Following the acquisition

of Prime Health Limited in June 1994, Standard Life renamed

in April 2000 to become Standard Life Healthcare. It now

employs 770 staff – 450 people in Guildford and 320 in

Stockport. The ratio between female and male staff is

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

are part-time staff.

SLH offers a range of products from traditional private

medical insurance to self-pay options, which reduce

premiums. It has also recently started providing healthcare

solutions that aim to prevent health problems before they

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.


31

How has alignment been achieved?

The new chief executive brought with him good commercial

ideas that combined with HR corporate values, including

customer and quality focus, team work, communications

and integrity. These values were key to demonstrating to

employees what was important to the organisation. The chief

executive worked closely with the existing HR team, which

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

what the business needed at this stage: profitable growth

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

directors was refreshed. To improve customer retention in a

competitive market, SLH needed to create a great place to

work and to encourage staff to provide the best possible

service. It decided that the people needed were already a

part of the organisation, but were not supported, nurtured

or encouraged to use their potential.

At this point, the HR strategy needed to be broadly about

co-creating and consultation. It was important to energise

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

by the executive team. The process was largely iterative and

developed over time, although a small amount of external

data was drawn on.

Aligning HR and business has focused on building trust

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

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

to have their own demands in return. People want to be

valued for what they do.’

Early on, it was clear that communication with staff needed

to be improved dramatically and a programme was initiated

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

HR hosted two coffee mornings a month where employees

could speak frankly about any issues from any area of the

business. People were even encouraged to speak out if they

thought their jobs were limited by business processes. It was

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

to individuals (through a letter) with tangible actions for

improving the situation or an explanation of why the

situation could not be addressed. This went some way to

building trust with the staff who were then more willing to

support the organisation as they saw actual improvements.

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

directors work in all different parts of the organisation and

quarterly staff briefings. The chief executive resolved to meet

every new employee when they start and to support this

there is also a presentation, through which they are told

three key messages:

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

2. Everyone is encouraged to contribute ideas.

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

colleagues, and a work-life balance is necessary to

perform well.

The key changes were made to the customer services division.

It was recognised that the organisation had some of its

lowest paid people on the front line dealing with customers.

Technically, improvements were made to the telephony

system, but with greater effect the employees in this division

were paid the highest market rates for their skills and set

proper career paths. For example, career streams were created

for claims and administrative roles to allow for success

through different skill sets.

Developing a good training programme was also central to

improving customer service. The ‘Customer Service Excellence’

programme was devised and it addressed what customer

service meant to individuals, what the good and bad

companies are doing and how the company can improve.

During 2000, every employee took this training and the

course is still running (although it has been rebranded as

‘Total Customer Satisfaction’).


32

It was assumed that if SLH became a great place to work it

would reflect on staff performance and quality of service. In

addition to training and communications, SLH sought to

promote work-life balance and staff engagement. This has

included a staff consultative committee designed around

the European Works Council model and an integrated

communications platform with an online and offline health

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

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

staff restaurant, eating well for energy seminars with expert

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

nutritional assessment drive.

In order to make sure HR is and continues to align with

business objectives, everybody works closely with the business

strategy documents. Staff are taken through the documents

at quarterly briefings. Their basic aim is to increase market

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

intends to achieve this by differentiating through customer

service and HR has a big role to play in this. HR measure

internally using straightforward metrics like turnover and

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

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

learning and development. There is also continual appraisal

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

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

not inadvertently work against it.

Outcomes

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

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

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

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

current HR strategy has focused activities, with a designated

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

• staff engagement

• resourcing and retaining staff

• reward and recognition

• learning organisation

• partnership with staff.

So far, measuring the outcomes of the initiatives has shown

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

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

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

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

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

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

The Gallup Q12 action-planning sessions are also showing

improvements in terms of involvement and contribution,

with customer satisfaction currently at 97/98 per cent overall

and customer retention up 2.2 per cent

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

looking sustainable with new business up by 26 per cent.

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

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

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

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

per cent of employees are now registered with the Vielife

service. This has improved employee health, nutrition in

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

and staff are so involved they are introducing their own

initiatives, for example keep-fit classes after work.

Everybody is trained through the customer service excellence

programme and they continue to train on this course rather

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

trainers to staff, allowing continual development. For

instance, there is an open-access development centre and

training undertaken does not have to be related to work.

The most positive outcomes for HR were showing how

important it was as a function and the difference it could


33

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

that SLH should only recruit the best people, the organisation

sticks to this, even if it means not filling a vacancy.


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

spent eight years managing private hospitals and in the

medical insurance field, so he joined with an excellent

understanding of the whole spectrum of health service

delivery. The leadership element has proved critical to the

turnaround at SLH, in particular ensuring that words and

actions match up. ‘In business people do things without

thinking and employees realise when they are being conned,’

says Mike Hall.

There is an active approach to performance management

and not just in formal terms. The chief executive explained

that if there was performance issues, then they would sit

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

that nine out of ten people respond positively to this type

of ‘critical friend’ feedback. In one instance, there was an

employee with a very negative attitude that was affecting

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

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

Another key condition for success was fostering teamwork

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

involved through a consultative committee, a little like the

European Works Council model. No trade unions are involved

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

addressing bad news early on and managing uncertainty

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

Birmingham office in 2000, the chief executive went and met

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

no longer viable. In addition, everyone was offered assistance

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

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

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

not one employee left early.

Finally, the head of HR feels that it is vital to get the right

people and the most effective processes and systems working

together. He felt that his relationship with the chief executive

and support for HR initiatives were central to improvements.

Now all issues are worked through with the People Tactical

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

Challenges

When the new chief executive started, there was a large

element of change. There were exits from staff who were

not prepared to follow the new values. The chief executive

felt that change can be slow to start in a poor culture and

management need to show trust and belief in people – this

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

all the cultural and internal issues are set in a business

environment that is extremely competitive.

The most prominent challenge at first was the number of

things that needed to change and improve – sales, customer

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

was combined with limited resources, and most of the work

relied on what was available internally. There are 12 people

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

only five people in training and development. Therefore,

personal effort and energy was a major input into the

alignment process and should not be underestimated. A good

example is the coffee mornings, which often produced seven

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

and a sizeable to-do list!

Another key challenge was getting line managers

comfortable with new working styles. Moving from

command-and-control-style senior management to one

that encourages more autonomy and focuses on innovating


34

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

towards tapping into employee ideas.

Some of the initiatives had unexpected outcomes and

created new problems, which is why it was essential to

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

get employees to refer problems to line managers rather

than relying on the coffee mornings.

Sustainability

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

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

positive outcomes achieved so far can be maintained and

developed:

• Focus on the business objectives: sticking to the

business strategy and working with it.

• Continue using initiatives that work: especially the

staff involvement initiatives like coffee mornings, health

and well-being programme and customer service training.

• Avoid complacency: continuing to focus on how to

make SLH a great place to work and always thinking

about improvements. This includes considering the

physical environment, for which the head of HR has

full responsibility, and looking at areas that cause

dissatisfaction.

CASE STUDY 3 – Seven Worldwide

Background

Seven is a worldwide imaging busines with operations in

the United States, Europe and Australia, and affiliates in

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

positioned to provide production and distribution solutions

to an international client base. Seven’s vision is ‘to be the

world leaders for the production of visual brand

communications’. They offer the complete range of graphic

imaging services for the production of advertising,

promotional and packaging artwork, as well as interactive

multimedia in support of clients’ visual brand

communications. Seven boasts a client list with blue-chip

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

Sainsbury’s.

Seven UK operates in different locations: Seven Worldwide

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

Birmingham, Manchester and Newcastle. The separate sites

house different areas of the business. Seven London and

Seven Soho house the advertising pre-press imaging

business, along with the promotional and publications

business. The interactive growth areas work from studios

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

multimedia have caused Seven to reassess its business aims.

It took the strategic decision to divest its printing businesses

in order to concentrate on graphic imaging services and a

move toward interactive and digital solutions. Although the

existing business areas remained profitable, they became

less so and employees witnessed downsizing and voluntary

redundancies. The sale of the traditional printing businesses

has consequently reduced the company’s workforce in the

UK from 5,500 to fewer than 600.

In May 1999, Seven Worldwide was acquired by Applied

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

outsourced digital imaging and communication solutions,

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

portfolio of major corporations. Seven joined AGT and Black

Dot Group as three separately managed businesses within

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

venture capitalist Kohlberg and Co.

Kholberg and Co subsequently appointed a new chief

executive who, having conducted a fundamental review

of the business, is pushing forward a restructuring to form

a single global business under the Seven Worldwide brand.

Case for alignment

Until the divestment of the print business in 1998, the

majority of the workforce consisted of printers who were

heavily unionised. The prevailing attitude toward unions

reflected the traditional viewpoint that unions would ‘look

after’ the workforce, thus excluding the need for a formal

personnel department. Today, the GPMU union still exists, but

its presence has weakened and the workforce has changed.

There are fewer printers and unionised members. Most of the

militant union members and former fathers of chapel have

taken voluntary redundancy. Newer employees in the

multimedia and new technology profession stay for a short

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

interactive business is high, but this is not uncommon in

this industry and contrasts with the more traditional pre-

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

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

performance appraisals, wage structures or role profiles

in place. Also, no systematic data existed on employees

and each location was run as a separate business.

In the late-1990s, the company appointed an HR person to

start the process of integrating HR into the business, but after

a while they realised that much more needed to be done

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

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

strategy that would align with the business strategy.

The challenge was to build an integrated set of personnel

practices, common to all sites, despite the existence of

different deep-seated sub-cultures and modi operandi across

locations, and even within each site. At this point there were

fewer than 500 people in the UK business and too many

different ways of managing them, so there needed to be

structural changes. In addition, responding to domestic

and EU legislation was becoming increasingly demanding.

Consistent changes to the business environment highlighted

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

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

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

the business that to succeed in any change management

programme people and process need to be fully aligned.

How was alignment achieved?

HR feels that the first hurdle to overcome was gaining

respect. In 2000, the HR function was independently

assessed49 and the key issues were highlighted. Since this time,

HR has followed a path to integration and along the way

they have won the respect needed to assist them in adding

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


3649 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

dissertation, 2000

in leading managers to work efficiently by developing

processes, training, getting managers involved and providing

tools. For example, line managers have been provided with

20 HR guidelines, which are available online. Electronic

workflows have been developed by HR to assist managers

in the recruitment and induction of new employees. There is

instant access from links on their desktops, which provides on

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

absence and disciplinary procedures.

The most significant achievement was HR’s involvement

in restructuring the UK business in 2002. This project was

designed, facilitated and implemented by HR as an

organisational design project, aimed at integrating up

to seven separate businesses into a single functional

management structure. The new structure had a number

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

business to share common working procedures, best practice,

and the ability to form teams to service client needs from

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

order to support the management structure, job titles and job

families were standardised for the 75 per cent of the business

that worked for the operations function. This was a key

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

HR previously had to produce four separate handbooks

and other HR process and procedures to reflect the different

heritages, cultures and management styles of the four main

sites. Instead of replicating four businesses in four geographic

silos, the single structure allows work to move around the

business more efficiently and to use capacity more effectively.

Another significant strain for the business was the continued

decline in the advertising market and the increased

importance of the corporate packaging market. To this end,

a London packaging operation was established in 2002 to

mirror the work undertaken at the Birmingham, Manchester

and Newcastle facilities.

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

employees, the organisation adopted broad salary bands

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

essential to remedy the untidy and confusing range of

practices and pay rates that had been inherited from the

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

among employees. More recently, HR has focused further

on performance improvements through the adoption of a

competency model to offer initial support for performance

appraisals and training.

Having worked through the initial templates of this

framework with the director of strategic accounts and the

head of client service, HR was able to incorporate definitive

role-specific competencies, thus enabling Seven to look into

areas where either internal or external training may be

required to develop or enhance existing skills in different

levels throughout the business. By identifying these areas,

the managers were able to put together a 12-month

development plan for their team members. One of the main

advantages of this is that employees felt that time and

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

added value and commitment on their part. This is allowing

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

increasing demands being placed on them by their clients

and the business environment in which it operates.

Key to supporting the organisational change project has

been the training and development strategy. At the end of

2001, HR took the deliberate decision that people from all

sites would train together at Manchester. This was so that

people could meet colleagues from other sites and start to

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

local management resisted this change but eventually the

benefits were seen. Most notably when the training and

development efforts were recognised by the receipt of

Investor in People accreditation in August 2003. The training


37

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


AREA

Corporate

strategy

Business

strategy

Culture

Structure

and interaction

Pay structures

Work assessment

and feedback

ISSUES IN 2000

• 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

• 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

• 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

• 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

• 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

• 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

BUSINESS OUTCOME

• 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

• 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

• 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

• 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)

• 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

• 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

HR RESPONSE

• 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

• Newsletters and roadshows to inform

employees about developments in the

business

• 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

• Structural changes designed and

implemented by HR to focus and play

to people’s strengths, and clearly define

individuals’ roles within the business

• 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

• 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


AREA

Communication

Training

Career

development

and support

Managerial

experience

Role of

trade unions

ISSUES IN 2000

• Employee survey showed that only half

of respondents responded favourably

to upward communication and at most

only half to downward communication

• Majority of employees interviewed

received no training

• Employee survey shows the majority of

European responses were unfavourable

or uncertain about training and

development

• 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

• Managers are technically competent

but lack soft skills

• Unions were seen as unnecessary.

Managers in particular saw the unions

as having a negative impact on

business

BUSINESS OUTCOME

• 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

• 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

• 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

• Union influence is now limited to non-

existent. However, it remains. Following

a recent dismissal there was an increase

in applications to join the trade union

HR RESPONSE

• 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 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

• Performance planning, training and job

descriptions

• Succession planning. All vacancies

advertised internally across the business

• 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

• 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

and development strategy was designed with both business

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

development programme. It comprises four, two-day modules

over two years, which include: environment, operations, people

and finance. The first batch of managers graduated this

summer and programme effectiveness will be assessed.

The benefit of such a training programme is that the

managers will have a greater understanding of what is

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

building an awareness of the different areas in the business

where they can contribute and make a difference in the way

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

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

generally felt that this type of information was too sensitive

or confidential. One of the main outcomes Seven is expecting

for the business is a management team that is able to

understand how they operate and why, and which is capable

of taking a more efficient business forward into the future.

Outcomes

The hard measures show some positive outcomes so far.

Over the two-year period 2002/3, revenues per employee

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

(once exchange rate movements have been accounted for).

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

2002 to 9.9 per cent in 2003.

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

characteristic of the old print industry has been a large part

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

culture where employees feel involved and work flexibly with

a common purpose. They see flexibility as something that is

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

towards this have been:

• reorganising the structure and clarifying people’s place

within it

• increasing training and career development

• focusing on performance management and improvement.

There was a significant increase in positive responses in the

2002 employee attitude survey when compared to the 2000

results. In addition, HR feels that employees trust that they

can approach HR with issues and get a response, and there

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

employees have more career support and succession

planning is helping good performers.

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

encouraging flexibility among staff working on different

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

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

through a quiet period, rather than waiting for more work

coming in from that client, their resource can be redeployed

to another client project that may be particularly busy. This

works not only onsite, but across the UK. Evidence of this is

substantiated by the amount of inter-company sales that

are tracked on a monthly basis.

The positive outcomes for HR have been threefold: influence,

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

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

enjoyed more involvement, for example being invited to sit on

local operations team meetings. For HR, the most unexpected

outcome has been the respect gained from taking a hard line

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

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

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

to do it right.’


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


40

larger companies as a consultant on HR and restructuring,

there were three key reasons for success:

1. Relationship with management colleagues: The

director of operations, who sits in Birmingham, has roughly

75 per cent of the organisation reporting to him. The

Birmingham site had relatively poor results from the

original 2000 employee opinion survey, so he knew there

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

closely together to make improvements. These included

macro issues such as timing of salary reviews, performance

appraisals and the delivery of training, through to local

issues surrounding the management and interrelationship

with staff.

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

director: The new MD came from a sales background

but saw that the existing management structure was

inefficient, having developed over a number of years

without a robust analysis of whether it suited business

needs. The new MD saw that HR could act as a catalyst

for change and became a champion for the new

management structure.

3. Getting people involved through training and

development: HR regards the training strategy as win-

win. As people learnt, other more subtle cultural changes

were achieved. People met colleagues from other sites and

formed their own networks supporting the one company

strategy. This in turn supported the strategy of

implementing single company-wide pay structures. This

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

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

before it became apparent that there were different pay

strategies in operation across the different locations

founded on the culture and history of the different

businesses.

4. HR views a key condition for success as the

acceptance and growing understanding of the role

HR can play in the business: This ranged from

involvement in local issues such as recruitment, supporting

managers through the management of performance issues

and dismissals, through to development of training and

appraisal strategies. In the old world these were issues that

management often would have to manage on their

own with little support from the wider business.

5. Having time to start to bed HR into the business

before embarking on the significant organisational

and structural changes: The US parent is now

attempting a similar change programme on a much larger

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

condition for success as the time to demonstrate to the

business the role HR can play.

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

spending time and effort getting the structure in place,

this was crucial for getting employees and managers

more involved with the business.

Challenges

There have been and continues to be challenges to the

successful alignment of the HR strategy and function with

the business:

• Politics: Working with changing senior managers has

been difficult. Three years ago there was an attempt to

remove HR presence from the board but the HR director

pushed back. HR spent time building bridges and used wins

such as successfully managing downsizing programmes

to demonstrate the worth of HR to the business.

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

should be, purely supportive and it has taken over two

years to get away from this. Some managers have seen

HR as inhibiting the business and working beyond its

remit. This remains a challenge and HR recognises that

they have to strive daily to find the right balance between

being supportive of management while protecting the

wider business interest. HR see the example of the

recruitment processes they have implemented as being


41

an example of this.

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

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

challenge but believe it has been fortunate in being able to

demonstrate to the business the role HR can play without

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

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

• Measuring benefits: This is always hard, particularly

with cultural outcomes often being intangible by nature.

HR is using students to measure the effects of the training

courses in exchange for a university project.

• Market changes: The move towards digital solutions

was supported by the rapid development of digital

imaging technology available in the marketplace. The

market is driven by new technology and requires flexibility

and the ability to respond to change. It is vital Seven

invests continually in new technology to gain market

credibility and position. This change in the strategic

direction of the business and the move away from print

into digital artwork build and solutions over the last ten

years has been a challenge for the business in how it

manages its people. As discussed previously, the traditional

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

which professional people management techniques were

essential.

• Developing and managing the HR strategy through

periods of economic downturn, for example that

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.

• Changes fed down by the parent company: The

current aim is to make the company global rather than

broken up in subsidiaries. This will include a common

bonus structure, and some bonuses may be substantially

reduced. This will potentially create very bad politics to deal

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

their ability to earn bonuses reduced as company-wide

schemes are introduced.

Sustainability

• The financial position has improved with the venture

capital investment, which will help provide stability.

• Although there are likely to be changes passed down

from the parent company, the structural changes that

have already fed through are not going to change.

• More training and development and in particular

succession planning is seen as key to developing Seven’s

own talent.

• Continuing to resolve historical anomalies in the pay

structure.

• Better communication more often with staff.

• HR feels that despite the challenges, the positive outcomes

outweigh the low points. The HR team will keep enjoying

working across the whole range of HR issues and processes.

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

in advertising market, the downsizing of companies and

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

respect.’


42

CASE STUDY 4 – Autoglass

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

glass company. In the UK, there are just over 2,000 employees,

approximately 1,100 of whom are mobile technicians,

working out of 130 branches.

There are three main groups of employee: trained and trainee

technicians based throughout the UK; customer service staff

based in the customer contact centre in Bedford and in

Autoglass branches across the UK, and support staff located

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

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

all the HR functions including: resourcing, employee relations,

management development, technical training, internal

communications, health and safety, and technical services.

The case for alignment

The organisation has always performed well. HR has a good

reputation and has been an important part of the business

since the late-1990s. (From the early-1990s, HR was known

as ‘Personnel and Training’.) The HR plan is formulated with

close consideration to the business strategy, but as well as

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

processes. The HR director is a member of the executive

committee, which is responsible for strategy and business

development.

In 2002, although the company continued to be successful,

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

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

Autoglass committed to a strategic review. This ran in

partnership with the parent company. An important part of

this was a people review, which examined:

• 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.

How was alignment achieved?

Although historically there has been a personnel function

in Autoglass since the early-1990s, the HR director role was

created in 1997. HR is now an established fulcrum between

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

which HR endeavours to interweave. Improving:

1. business performance by working closely with the

business heads and the yearly/five-year business plans

2. the working lives and conditions of employees and, as it

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

The HR director believes that working conditions affect the

standard of people coming into the company. For example,

HR recently increased holiday entitlement for managers after

noticing that their offering was a bit short of the national

average. This was done despite some management

resistance.

A great example of HR working in line with the business

at Autoglass was the role played in critical structural and

reward changes in 2000 after it was recognised that the

business structures had become too complex. HR led the

approach to these changes while working very closely with

regional managers, providing professional competence,

guidance and moral support. For the organisation, it was

an excellent example of cross-functional working. The

changes included:

• Discontinuation of the network structure, so branches

became independent

• Even stronger commitment to the mobile working strategy:


43


4450 Based on 2002 comparative data collected by Capita and HR Benchmarker survey in association with Personnel Today

51 Based on 2002 figures

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

HR INITIATIVE

Training and development

Autoglass invest more than average in its training and

development programme50, providing a comprehensive training

programme for technicians through the National Skills Centre. In

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

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

utilisation rate of just under five per cent51

Managing director’s ‘open house’ programme

Field-based HR roles

Pay and benefits

The pay scales are in the upper quartile and all staff are on a

variable earnings plan

Performance management

Autoglass has a well-established performance management

system. Every manager has received training in the process.

Recent trends show that positive ratings are on the increase

BUSINESS OUTCOME

Staff turnover has fallen

The quality of service has improved

Improving the quality of branch management

Staff satisfaction is used as a key performance

indicator and the overall index score has

increased from 50 to 61 since 1995.

Business performance has improved year on year

since 2000, with 2003 being the best year ever

The staff survey shows the highest positive

results around ‘clarity of goals and what’s

expected of me’. This suggests the organisation

is providing a framework for employees to work

to their maximum capacity


45

‘We come to you.’

• Productivity-based reward system for technicians, which

was a huge benefit to the business.

The management and output of the strategic people review

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

which focuses on the practical and does not ‘over

intellectualise’ in pursuit of best practice. The HR director

feels that it is more important to realise that organisations

are not linear: learning about your specific case and finding

out ‘where the pain is’ in the business is more realistic. While

working towards more ‘blue sky’ improvements is important,

it is critical to balance this with attending to existing

problems. HR see this balance as their key role.

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

business needs, Autoglass uses both quantitative and

qualitative methods including staff satisfaction survey

results, turnover and sickness data as well as listening to

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

example, senior managers go out into the business and lead

open house participative sessions with a cross-section of

staff. HR facilitate these sessions, focusing on what issues

are being dealt with in the business currently and managing

staff expectations.

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

Resources for the review were found almost entirely internally

rather than using large-scale consultancy to manage the

process. For the strategic review, Autoglass used an internal

team (including a regional manager, a contact centre

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

manager), with support from their parent company Belron

and one independent consultant from The Work Foundation

to provide an external perspective.

Outcomes

Generally, according to the staff attitude survey, satisfaction

ratings have improved in gradual progression over roughly

the last 8-year period to 61 from a base of 50. Although

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

great deal about its contribution to the business and the

working lives of staff overall. The pace of improvement has

accelerated since the changes in 2000 that resulted from the

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

was energised.

More specifically, the people review provided an excellent

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

and processes were working well generally, it was felt that

there were areas of real weakness that were a cost to the

business and could be improved on. The main issue was

that the recruitment process for technicians was not working.

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

designed and perfected a new approach to recruitment.

Although there is habitually high turnover in the industry,

this has improved. The process has been well received

throughout the business.

Training and development initiatives have had a positive

effect on the business. Drop-out rates from training

programmes are low, indicating that staff and their

managers value training and give it a high priority. Around

56 per cent of people are working to a personal development

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

impact, most notably on performance of fitters, and a

business case for a relocation and expansion of the facility

was approved earlier in the year.

Succession planning has resulted in a balance at senior levels

between internal promotion and external appointments.

Most vacancies are advertised internally, but an exclusively

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

and experience do not exist in the organisation or new blood

is needed.


The good reputation of HR is critical to its involvement in

business planning and performance improvements. The HR

director feels that HR people who understand the business

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

to it is central to sustaining their reputation. This combined

with enlightened senior management is how HR sustains its

strategic role.

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

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

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

says the HR director. With an overwhelming majority of their

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

major challenge although there can be ‘tensions’ in getting

people to realise that long-term solutions are vital to

managing out short-term problems. For example, getting

people to use new recruitment approaches and getting

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

Sustainability

• Building on achievements and working with the business

as they evolve.

• Consistently reviewing HR policies and processes.

• Continuing to find the weak spots in the business and

looking at where HR can intervene.

• Pushing the boundaries of the ‘employer of choice’ agenda,

for instance implementing a sabbatical policy.

• Learning and sharing across the Belron group, particularly

looking at the more mature businesses in the organisation,

such as those in Belgium and Holland.


46

The research has been based on the collection and

analysis of several forms of evidence:

Literature reviewA short and focused review of both academic and

business literature was conducted to set the context

for the project. This included theoretical approaches to

developing HRS and aligning it with business, the reality

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

performance.

Company case studiesWe 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

learning points for other organisations (Section 2).

Secondary dataThe qualitative findings from the case studies are

illustrated with quantitative data from this year’s

Workplace Trends Survey report52 and with further

qualitative evidence from The Work Foundation’s Work

and Enterprise Panel of Inquiry report.53


Annex 1: Methodology

4752 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

Bevan S, Cowling M and Horner L, The Workplace Trends

Survey 2004: Summary report, The Work Foundation,

2004

Boxall P and Purcell J, Strategy and Human Resource

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1994

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49

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