Current trends place added burdens on the human resources management

function, increasing its importance and calling for a reassessment

and broadening of its organizational role.

Human Resources
Management:
A Strategic Perspective

Mary Anne Devanna

Charles Fombrun
Noel Tichy

4 t has become clichC to talk about the increas-

ing importance of personnel or human re-
tion, or industrial
is typically
relations, or whatever title is used,
not a major mover in the firm . . . The re-
active not the proactive tradition is strong in the per-
sources management. In 1970, Mason Haire
sonnel field.
stated:
Some generally agreed-upon fac-
We are coming to a time when the management of tors account for the growing importance of
human resources must take a more prominent place
human resources management :
in the firm’s decisions. The value and leverage of the
resources is simply too great for the kind of reactive 1. Economic shifts. The 1970s
response to pressures which has characterized it in brought the interacting problems of infla-
the past As it stands today, the personnel func- tion, sluggish capital investment, and slim

Organizational Dynamics, Winter 1981. 8 7981, AMACOM, a division of

American Management Associations. All rights reserved. 0090-2616/81/0016-0051/$02.00/0 51
 gains in productivity. These trends are ex-
pected to continue to put pressure on pro-
ductivity, which was disastrously low from
1974 through 1979 (the rate of increase has
been generally estimated at 0.9 percent a
year). In addition, the economy continues to
be increasingly service-oriented and thus in-
creasingly labor-intensive.
2. Demographic shifts. In the 1980~
the post-World War II baby boom will hit
the workforce. This is a well-educated group
Mary Anne Devanna is research coordinator of
with high expectations about careers and job
the Center for Research in Career Development
satisfaction. However, at the same time the and associate director of the Strategy Research
workforce will be aging; changes in retire- Center at Columbia University’s Graduate
ment laws have caused this phenomenon to School of Business. Before returning to
occur even faster than it would have on the academia, Ms. Devanna was advertising direc-
basis of demographics alone. These demo- tor for Longines. Currently a Ph.D. candidate
in the Management of Organizations Depart-
graphic shifts put pressure on the effective
ment at Columbia University’s Graduate School
utilization of human resources. Although of Business, she holds a B.A. from St. lohn’s
rapid industrial growth provided an outlet in University and an M.B.A. from Columbia
the past for the rising expectations and the University. In addition to doing research on
increasing professionalism of the workforce, human resources management, she is con-
ducting a study focusing on M.B.A. career put-
this will not be so for most organizations in
terns, with an emphasis on the differences be-
the 1980s. For one thing, the workforce is be- tween white males and minorities in the same
coming increasingly overeducated for jobs cohort. Ms. Devanna consults in the private
available: college graduates are now doing and public sectors and serves as editor-in-chief
jobs that high school graduates would have of the Columbia Journal of World Business.
performed a decade ago and, in many cases,
M.B.A.s are filling jobs that college graduates
once filled. This, coupled with prospective that pressure the human resources function
employees’ high expectations for meaningful are, in part, responsible for making large
work, is presenting organizations with a ser- corporations’ general management increas-
ious human resources problem. ingly complex and difficult. The selection,
3. Entitlement and regulation laws. development, and compensation of mana-
Another factor having a profound impact on gers will become a critical organizational
organizations is the regulatory environment, concern in the 1980s.
particularly in the areas of affirmative action Despite these demands for change,
and health and safety. The future may also very little progress has been made. More and
bring a major impact from some form of cor- more major corporations are struggling with
porate bill of rights. (The Privacy Act of human resources problems, but few if any
1974 was the first step in this direction.) have created the strong proactive human re-
Again, the human resources function takes sources function needed.
center stage when such issues arise. This article provides a set of action
4. The increasing complexity and steps for organizations interested in upgrad-
52 difficulties of management. The same forces ing their personnel or human resources
function. Three areas are covered in depth:
The state of the art in human
l

resources management.
Assessing a company’s human
l

resources management capability by means

of the Human Resources Management Audit
(HRMA).
Guidelines
l for developing a
human resources strategy.

STATE OF THE ART Charles Fombrun, an assistant professor at the

Wharton School, University of Pennsylvania,
holds a Ph.D. from the Columbia Graduate
Our assessment is presented in terms of School of Business. Articles of his have ap-
Robert Anthony’s three levels of management peared in Human Relations, the Academy of
-strategic, managerial, and operational. Management Review, and other journals on the
The strategic level, which deals application of network analysis to organiza-
with policy formulation and overall goal set- tional settings. He is coauthor with Ms. Deuanna
and Professor Tichy of a book focusing on
ting, is mainly concerned with the long-term
the implications of human resources manage-
positioning of the organization in its envi- ment for strategy formulation and implementa-
ronment. Critical questions addressed at the tion, which will be published by Little, Brown
strategic level are: What is the core mission in 1981. In addition to his research and
of the organization? What businesses should teaching interests, Professor Fombrun acts as a
consultant for organizations in the public and
it be in? Given the organization’s strengths
private sectors on the more effective use of
and weaknesses in the projected environ-
human resources.
ment, what should its strategy be?
The managerial level is concerned
with the availability and allocation of re- sources functions for illustrative purposes.
sources to carry out the strategic plan. To be For example, in the personnel selection/place-
in the business specified at the strategic level, ment area, operational-level activities in-
what capital, information, and human re- clude the annual staffing and recruitment
sources does the company need? The time plans. The managerial level is more con-
frame is medium-range, and the parameters cerned with staff planning for the interme-
are typically set by the strategic plan. diate-range future. For instance, if the com-
At the operational level, the day- pany is about to open two plants in different
to-day management of the organization is parts of the country, what kinds of people
carried out -ideally under the umbrella of will be needed and how will they be found?
the managerial plans. Thus annual budgets, Strategic-level activities look to the
staffing plans, production plans, and control long-term future. What kinds of people will
systems should be directly linked to the me- be needed to manage and run the organiza-
dium-term managerial plans. tion in the future? The implications of the
Figure 1 lists the human resources long-run position are then traced back to
activities associated with the strategic, man- guide current selection, placement, and train-
agerial, and operational levels. These repre- ing practices. If, for instance, a major oil
sent only a subset of the principal human re- company formulates a strategic business 53
 At GE, an adherent of product portfolio analysis,
strategic objectives for the company’s wide-ranging
products are defined as “grow,” “defend,” and “har-
vest” depending on the product life cycle. Now its
general managers are being classified by personal
style of orientation as “growers,” “caretakers,” and
“undertakers” to match managerial type with the
product’s status.
It is probably not a great exaggera-
tion to say that most human resources man-
agement functions are run at the operational
rToe1Tichy is an associate professor of level. To determine why, it is useful to look
3rganizational Behavior at the University of to the past. Most personnel departments
Michigan’s Graduate School of Business Ad- grew from reactive responses to environ-
ninistration nnd n faculty associate at the In- mental problems. For example, the shift in
;titute for Social Research at The University of
the labor force from blue-collar to white-
Michigan. Formerly an ussociate professor at
collar called for recruitment strategies more
he Graduate School of Business, Columbia
lniversity, he launched and directed the Ad- closely tied to the collegiate educational sys-
Tanced Program in Organization Development tem: More recently, the push for equal em-
md Human Resources Management. He holds ployment opportunity and affirmative ac-
I Ph.D. from Columbia University and a B.A. tion has provoked a series of responses that
‘ram Colgate University. The author of several
include workshops for women and minor-
Jooks, including Organization Design for
ities, adjustments in pay, and more attention
‘rimary Health Care and Strategic Change
vlanagement (forthcoming), he has also written to the promotion of women and minorities.
numerous articles on organization theory, Few organizations have done significant
Cuelopment, and change appearing in various work at the managerial level in any of the
ournals -including Journal of Applied human resources functions.
khavioral Science, Organizational Dynamics,
The strategic issues noted in Figure
4dministrative Science Quarterly, Human
telations, and Columbia Journal of World I focus on longer-term, broad-policy, and
3usiness. Dr. Tichy consults widely in the systems issues. Only a handful of U.S. orga-
tusiness sector and the public sector. nizations approach human resources man-
agement in any systematic way at the stra-
tegic level. There are many reasons that this
is true, including the following:
plan for major diversification by the year 1. Because management doesn’t
2oo0, what kinds of people should it be re- perceive a need to address these issues, it
cruiting now so that it will have employees proceeds with business strategic planning
capable of running the diversified company without much regard for the organization’s
20 years from now? human side.
Another example of a strategic- 2. The human resources function
level human resources practice is the attempt itself is generally not competent enough to
to match an individual’s managerial style be of much value at the strategic level. Dif-
with key strategic characteristics of the busi- ferent skills are involved in a move from op-
ness the individual will be managing. This is erational to strategic activities.
happening at GE. In the words of Business 3. The nature of human resources
54 Week: data is critically different from that of the
 Figure 1
HUMAN RESOURCESFUNCTIONS

Employee Rewards
Level Selechon/Placement (Pay and Benefits) Appraisal Development Career Planning

Strategic 1. Specify the charac- 1. Determine how I. Determine what 1. Plan developmental 1. Develop long-term
(long-term) teristics of people workforce will be should be valued in experiences for system to manage
needed to run rewarded over the long term. people running individual and or-
business over long long term based on 2. Develop means to future business. ganizational needs
term. potential world appraise future for both flexibility
2. Set up systems with
conditions. dimensions. and stability.
2. Alter internal and with flexibility
external systems to 2. Link to long-term 3. Make early identifi- necessary to adjust 2. Link to business
reflect future. business strategy. cation of potential. to change. strategy.

Managerial 1. Make longitudinal 1. Set up five-year 1. Set up validated sys- 1. Establish general 1. Identify career paths.
(medium-term) validation of selec- compensation plans terns that relate cur- management devel-
2. Provide career de-
tion criteria. for individuals. rent conditions and opment program.
velopment services.
2. Develop recruitment future potential. 2. Provide for organiza-
2. Set up cafeteria 3. Match individual
marketing plan. benefits packages. 2. Set up assessment tional development.
with organization.
3. Develop new centers for develop- 3. Foster self-develop-
markets. ment. ment.

Operational 1. Make staffing plans. 1. Administer wage and 1. Set up annual or less 1. Provide for specific 1. Fit individuals to
(short-term) 2. Make recruitment salary program. frequent appraisal job skill training. specific jobs.
plans. system.
2. Administer benefits 2. Provide on-the-job 2. Plan next career
3. Set up day-to-day packages. 2. Set up day-to-day training. move.
monitoring systems. control systems.

-
3
 Figure 2
THE HUMAN RESOURCESMANAGEMENT AUDIT

(a) Business
Mission/
Strategy

Resources
Strategy

Description of Components
(a) Business mission/strategy: This includes the organization’s reason for being, its basic approach to carrying out its
mission, its strategy, and its criteria for effectiveness.
(b) Tasks: This refers to technology by which the organization’s work is accomplished.
(c) People: This includes the characteristics of the members of the organization, their background, motivational
patterns, managerial style, and so forth.
(d) Prescribed structure: This refers to the organization’s explicitly designed social structure. It includes the organi-
zation of subunits, communication and authority networks, and structural mechanisms for integrating the
organization.
(e) Organizational processes: These are the mechanisms (for example, communication, decision making, conflict
management, control, and reward) that enable the formal organization to carry out the dynamics of work.
(f) Emergent structure: This includes the structures and processes that, while not. planned or formally prescribed,
inevitably emerge in the organization.
56
marketing, production, or financial func- coordination. The future needs more sophis-
tions, for example. ticated internal mechanisms that integrate
Human resources staff would be the total function to maximize its impact on
hard pressed to give an accounting of current the organization.
human inventory, let alone to project human
potential into the future. Thus line manage-
ment, with some justification, prefers to IMPROVINGTHE MANAGEMENTOF HUMAN
make its own intuitive assumptions about RESOURCES
the human resources variable at the strategic
level. Edgar Schein summarizes the argu- According to Richard Beckhard, any im-
ment when he states that: provement process or change effort can be
l Human resources must be meshed broken into three distinct segments: (1) a
with other critical organizational resources, diagnosis of the present state, (2) a clear
such as money, technology, space, and in- statement of the desired future state, and (3)
formation. a strategy for managing the transition from
l Human resources are not stable the present to the desired state.
and passive but change over time and are, A comprehensive assessment of the
therefore, difficult to manage. function’s current status in the company as a
l Human resources are increasingly whole is critical to the process. Data must be
critical for organizational performance, es- collected and analyzed and results drawn
pecially in a postindustrial society. that suggest areas needing improvement.
l The complexity of large organiza- The Human Resources Management Audit
tions requires a variety of people in the (HRMA) serves this purpose.
workforce; hence no one approach to human
resources will work. A varied and flexible
The Human Resources Management Audit
function is required.
The function ought to be concerned The HRMA is designed on the premise that
with the upper two levels of Figure 1. This is all organizations have a range of human re-
not to say that operational activities are to sources service needs. The audit, therefore,
be ignored. On the contrary- they, too, takes an overall organizational perspective,
need to be improved. However, the function focusing on the human resources function as
should assume a broader perspective. a service unit of the organization delivering
In summary, the human resources these services to an internal marketplace of
management function needs to move in the client users. Figure 2 depicts the outlook that
following directions: guides the HRMA.
1. Within subfunctions (selection, The human resources organization
rewards, development, appraisal, and so (represented by the two circles in the bottom
forth), managerial- and strategic-level issues portion of Figure 2) is embedded in the cor-
must be addressed and managed. poration. It interacts with client groups and
2. The interface with business stra- is impacted by the corporation’s business
tegic planning must be developed. strategy as well as the world outside the cor-
3. Integration of the total human poration. The core of the framework for our
resources function must take place. Histor- study is represented by the items labeled (a)
ically, the subfunctions have been operating through (f), each of which represents a key
as relatively autonomous units with no real organizational component. These compon- 57
 Figure 3
DIAGNOSTIC PLAN

Components of
Organizational Model Specific Information Sought Method of Data Collection

Environment How complex is the environment in terms Documents/interviews

of the number of domains and organ-
izations with which the human
resources staff must actively deal?
How stable is the environment? Documents/interviews
How quickly is change occurring?
How predictable are changes in the Documents/interviews
environment?
Mission/strategy/objectives What do key actors in the system per- Questionnaire (open-ended
ceive as the mission/strategy and ob- written response)
jectives of the human resources
department?
How are possible system goals rated? Questionnaire ratings
What are managers’ concepts of strategy? Interviews
How are strategic decisions actually Interviews/observation
made? (Use tracer decisions.)
People (management style) What are managers’ styles? For example, Interviews and observation
would you categorize them as risk-
taking, seat-of-pants, participative,
open communication, flexible?
Do the key managers possessbasic
management competence?

ents are defined briefly at the bottom of the model in Figure 2, but in how well they fit
figure. together in a system. The more compatible -
Using these components, the hu- or the better the “fit” among- the people,
man resources function itself is depicted as tasks, structures, and processes, the more ef-
an organization in its own right. To do the fective the human resources organization is
tasks that must be done (selection, training, likely to be in servicing its clients.
compensation, and so forth), people are hired The HRMA uses this framework to
and placed in a prescribed structure; then try to answer such questions as these:
they make decisions, get into conflicts, and 1. Are the mission and strategy of
build their own emergent networks. The re- the human resources organization designed
sult is a distinct package of services that are to match its environment -both the external
provided to the clients. These clients, in climate and the internal markets?
turn, evaluate them and provide a mechan- 2. Does the design of the human
ism for assessing their performance. resources organization enhance its ability to
The key to the organization’s effec- accomplish its strategy?
tive functioning is not to be found in the 3. Are the kinds of people who
58 characteristics of each component of the conduct the human resources function good
 Figure 3
(continued)

Components of
Organizational Model Specific Information Sought Method of Data Collection
Prescribed structure What is the overall formal organization Documents and interviews
design?
What integration mechanisms exist, and Interviews and question-
how do they function? naire ratings
Organizational processes What are the characteristics of communi- Interviews/observation
cation -openness, distortion, time lag,
quantity?
How is conflict handled in the organiza- Interviews/questionnaire
tion? (norms and behavior) ratings
How is decision making handled by the Interviews/observation
human resources staff-for example,
what’s the degree of participation? How
systematically is it handled? How
flexible is the approach? and so forth.
Emergent structure Who speaks most frequently to whom to Interviews using socio-
gather information, to exert or gain metric questions/
influence, and to fulfill affective needs? observations
output What is the organization’s performance Documents/interviews
over time and in comparison to com-
parable systems?
What is the level of individual’s satis- Questionnaires
faction?

choices for the ongoing tasks, structures, level. Whatever the focus, the audit’s boun-
and processes? daries must be specified from the start.
2. Resources, What resources are
available for conducting the audit? Staff
Conducting the HRMA
time as well as money are key resources that
An HRMA is a major organizational inter- must be available. In addition, line manage-
vention. It raises expectations that some- ment’s involvement should be given particu-
thing will be done in response to its findings; lar consideration. Pressures for change could
therefore, careful consideration should be well result from an HRMA. If the audit is
given to the organization’s responsiveness to likely to uncover areas requiring major pol-
change. In particular, the following issues icy changes but senior line management is
should be addressed: not ready or willing to address these issues,
1. Focus of audit. What unit is to it might be appropriate to delay or abort the
be analyzed? In large corporations, the focus audit. Line management’s commitment, un-
of the audit can be the total corporate per- derstanding, and involvement with the
sonnel/human resources management func- HRMA is essential if it is to be of real value
tion, or it can be the divisional or subsidiary to the organization.
 3. Diagnostic plan. The audit should sources function. Questionnaires were col-
begin with the development of a diagnostic lected from and interviews conducted with
work plan that specifically takes into ac- 78 of the 80 individuals who administer the
count the data to be collected, the methods human resources function (35 professionals,
to be used in data collection, the individuals 45 support staff) and 42 of the 48 clients they
who will do the data collection, and the indi- named as their most frequent contacts. Both
viduals responsible for analyzing the data. groups were asked to evaluate various as-
4. Managing the HRMA. There is pects of human resources activities and to
a range of alternative methods for manag- assess areas of agreement and disagreement
ing, overseeing, and carrying out an HRMA. over work priorities. Six company vice-
The three basic methods are (1) having an presidents were also interviewed to deter-
external consultant manage it, (2) having in- mine their strategic outlook and to clarify
ternal staff and an external consultant man- their perceptions of the human resources
age it jointly, and (3) having line manage- function.
ment join internal staff and an external con- Analysis of data from both internal
sultant in managing it. and external sources made it increasingly
Each method has advantages and clear that the human resources staff was an
disadvantages. The external consultant for- extremely high-performing unit. While mi-
mat is both simplest and fastest to carry out. nor improvements could be made, the inter-
Potentially, however, it has the least impact nal organization was quite efficient in pro-
since it is likely to generate the most defen- viding client services. However, most staff
siveness and may cause key staff members to activities were highly operational, with little
dismiss the findings. The use of an external strategic content. Because the corporation’s
consultant with an internal staff is moderate- mission statement set strategic human re-
ly simple to manage and can be conducted sources planning as a goal for the human re-
quickly. It has some of the same weaknesses sources function, the results of the HRMA
as the outside consultant format-that is, made the staff begin to develop a tactical
line management may not feel a proprietary plan that would move them from purely op-
interest in either the process or the results. erational activities toward a more strategic
The three-party format has the advantage of role in the company.
committing all parties to the process and the
results. Although it has the greatest potential
Summary of the Audit Results
for bringing about needed change, it calls for
the most complex organization and manage- Figure 4 summarizes the analysis of each
ment and can easily run into problems. Man- model component fit. The overall analysis
aging the process effectively is probably the led to the development of an ideal state or
single most important requirement of the goal for the human resources organization.
HRMA because it will largely determine the The diagnostic findings answered basic ques-
audit’s future impact on the organization. tions such as those raised at the beginning of
the article. For example,
1. How well do the human re-
A CASEIN POINT sources organization’s mission and strategy
match its environment, markets, regulatory
To demonstrate how an HRMA can be used, constraints, and so on? The findings indicated
we present the results of a field study of a there were some problems of fit because of
60 high technology corporation’s human re- the complexity of the internal marketplace,
 Figure 4
SUMMARY OF AUDIT FOR MODEL COMPONENTS
(casestudy corporation)
Component Summary Diagnosis
Environment Environment is quite complex and changing. It includes multiple markets
with the need for multiple services.
Mission/strategy Both mission and strategy fit well with environment but they are not fully
understood or agreed upon by many staff members, and they are seen as
inaccurate by many clients and users.
Tasks Tasks are appropriate at the operational level, but are not well developed
at the managerial and strategic levels.
Prescribed structure Prescribed structure is functionally organized with reliance on simple
integrating mechanisms, such as rules and hierarchy, and a lack of more
complex mechanisms, such as liaison roles, teams, and information
systems.
People People are technically competent at the operational level (with a few ex-
ceptions). Motivational needs are not well matched with organizational
rewards, especially career mobility. People lack strategic orientation.
Emergent structure Emergent structure is nontask-related - that is, people do not interact
informally across functional areas.
Processes Conflict about tasks is well-managed. Communication about goals needs
to be improved. Rewards need to be changed. Control system needs to
be upgraded.

the multiple clients, multiple service needs, costs for the human resources function.
and a management that didn’t give clear di- 3. How well do the processes fit
rections. The mission and strategy ought to with the tasks and the organization design?
reflect this complex environment and be well Again, at the operational level the fit was
understood and accepted by the staff. Be- fine, but if new managerial and strategic
cause such a strategy was lacking, manager- tasks were to be introduced into the organi-
ial and strategic tasks were ignored. zation and a more complex set of integrating
2. How well do the structures of mechanisms used, the processes would have
the human resources organization fit with its to be adjusted. The reward system would
strategy and tasks? At the operational level, have to reflect the new tasks. People would
the fit was good. However, it wasn’t good at have to be rewarded not only for operational-
the managerial and strategic levels. To level performance, but for contributions to
match the mission and strategy more closely managerial- and strategic-level tasks. This
to external complexities, new and more com- would be difficult because complex tasks are
plex job functions would have to be devel- more difficult to evaluate quantitatively in
oped. These job functions would require the short run, New control systems would
more complex integrating mechanisms than have to be designed to monitor progress on
were available in the organization. All this long- and medium-term tasks. Finally, com-
would culminate in the creation of higher munication about goals would have to be 61
 improved. Managerial and strategic tasks -technical, political, and cultural. Any ma-
can be carried out only when people under- jor organizational change requires adjust-
stand one another’s goals and are committed ment in all three areas. The technical area re-
to them. Strategic and managerial planning fers to the way in which the organization
processes are needed to define and accom- solves the production problem - that is, how
plish a total set of goals. the organization arranges people, informa-
4. How well do the characteristics tion, capital, and so forth to produce its ser-
of the people who conduct the human re- vices. The political area deals with the alloca-
sources function match the tasks, organiza- tion problem - that is, how the organization
tion design, processes, and emergent net- allocates power; how it fits in with other
works? At both the operational level and the power centers in its environment; and how
managerial level the fit was good, but not at such rewards as promotion and pay are allo-
the strategic level. The people were highly cated. The cultural area refers to the
professional; the majority had received grad- value/ideology mix problem-that is, the ap-
uate training in personnel-related areas. In propriate norms and beliefs about behavior
addition, they were professionally oriented that organization members should possess.
and motivated to upgrade themselves. How- Change dynamics are different in
ever, they were unfamiliar with strategic- each instance, but the change strategy for the
level issues and thinking. They had had little human resources organization in this case
experience in that area, had never been would involve shifts in all three of these
rewarded for operating at that level, and areas. Technical change would require using
needed considerable development to do so. rational problem-solving tools to come up
5. How well does the emergent with analytically sound blueprints for
structure fit with the other components? change and engineering model fits for the
Managerial- and strategic-level tasks fit technical area. Because the political area is
poorly because they require networks that based on conflict, change there must rely on
are interconnected across functions and lev- tactics like bargaining, manipulation, and
els. A fluid structure allows problem-solving confrontation. Change in the cultural area
groups to come from across the organization calls for an examination of norms and val-
to bring their expertise together to concen- ues, often using such group-based methods
trate on tasks that need doing. To foster the as action research, data feedback designs,
development of such networks, people should and team building. Changes proposed for
be rewarded for managerial- and strategic- the case example include:
level activities. In addition, the practice of Technical changes. The human
l

rotating people through the human resources resources organization must review its mis-
organization and the use of task forces and sion and strategy to see whether they fit the
committees promotes the emergence of a complexity of its environment. In addition,
fluid structure rich in interrelationships. the mission and strategy must be clearly
communicated, understood, and adhered to
by all key parties. Following this, the inter-
Proposed Action
nal organization must become more fluid in
The audit uncovered a number of major structure. The change implications shown in
areas that required change. A change strat- Figure 5 provide the basic blueprint.
egy that would move the human resources l Political changes. The technical
organization through the transition state changes will trigger a set of political issues.
62 would have to manage three types of change First, the proposed changes have political
 Figure 5
ANALYSIS OF Fr~s
(case study corporation)
Fits Change Implications

Environment to mission and strategy: Need to further articulate the strategy for the
Not well matched as the environment is com- complex environment; need to stress ongoing
plex and changing, and the mission and marketing functions for assessing changing client
strategy is quite mechanistic in practice. needs, as well as stressing the development of a
more integrated strategy.
Mission/strategy and tasks: Need to develop managerial and strategic level
The fit with the espoused mission is not good tasks.
as it implies managerial- and strategic-level
tasks that are not performed.
Tasks and prescribed organization: Need to develop more complex integrating
If managerial- and strategic-level tasks are mechanisms to manage managerial and strategic
developed then there will be poor fit. level tasks.
People/tasks/prescribed organization/processes: Technically, people OK for both operational
People in moderately good fit even if the and managerial level activities, need develop-
other components change. ment at the strategic level; the managerial style
at the top is organic, need to develop others
reporting to the top.
Processes/prescribed organization: Need to have more open communication cutting
Fit is not OK for managerial and strategic across functions, need a reward system better
levels. matched to people, and need a control system
to monitor managerial and strategic activities.
Emergent/prescribed organization/processes: Need to foster more task-relevant networks by
Fit is not OK for managerial and strategic (a) placing people strategically, (b) developing
levels. liaisons, and (c) rewarding strategic activities.

implications for the human resources organi- may find themselves in less powerful posi-
zation’s relationship with line managers. By tions, while newer staff members with more
moving into the strategic area, human re- generalized training may gain power. New
sources staff must also bargain with senior roles that emerge as a result of the organiza-
management about the amount of influence tional structure-for example, liaison people
each group will have on decisions that were -may create new power bases. The change
previously the sole prerogative of senior process will need to handle the inevitable po-
managers. In addition, the human resources litical conflict created by the technical
organization’s budget may have to be in- changes.
creased to provide an allocation adjustment. l Cultural changes. The technical
Within the human resources organization, and political changes in the organization will
technical changes could mean that some peo- trigger changes in the cultural area. For one
ple’s power bases are increased while others’ thing, the functional specialist will no longer
are decreased. More experienced staff mem- be as highly valued. New norms will emerge
bers who may be more operationally focused that tend to reinforce and place a higher 63
 value on a generalist orientation that focuses Step 3 -Get Staff Commitment
on managerial and strategic issues. Also, and Development
proactive behavior will be more valued than
reactive responses. The process will have to Once the scope of senior management’s man-
deal with the transition to a new culture date is set, the total human resources staff
with, most likely, conflicting subcultures. would have to be brought on board. The
audit would have to be thoroughly reviewed
with them, and the management strategy
would have to be shared and understood. At
FIVE STEPS TOWARD THE GOAL
this stage, a combination educational and
problem-solving process would be useful.
The following steps were proposed as guide-
The staff could use the audit review as a
lines to help the human resources depart-
means of buying into the change strategy
ment move toward its goals.
and of becoming educated about opera-
tional, managerial, and strategic issues. The
Step 1 -Set Priorities human resources staff should then become
involved in developing ways to manage the
The first task is for the human resources de- transition-for example, setting up task
partment to clarify its own priorities on the forces to focus on different aspects of the
basis of the audit’s findings. Then, on the change that is needed. These task forces
basis of a technical, political, and cultural could be organized by components of the
assessment of the whole corporation, it model and/or political, technical, and cul-
would have to be determined whether it was tural change issues.
a good time to launch a major change activ-
ity. If the decision to go ahead is made, the Step d-Set Strategy for Working with
group will have to set its priorities for Clients/Users
change and develop a technical, political,
and cultural set of strategies for managing Groundwork must be laid with clients and
the transition. users who would have to deal with any
changes in the human resources organiza-
Step 2-Get a Mandate from Senior tion’s operation. One approach might be to
Management provide them with summary feedback from
the study, showing them what the audit
The next step entails getting a new mandate found and how the human resources depart-
from senior management concerning the hu- ment plans to improve its operation and up-
man resources department’s role in the orga- grade its service. It would be best for the
nization. If senior management won’t sup- staff to work out political issues involving
port the proposed move into managerial and clients as they arise. The change process will
strategic activities, it would be politically de- extend over several years and any changes in
structive for the department to make a major power will occur gradually. It will be impor-
change in this direction. It was recom- tant, however, to monitor clients over a pe-
mended that the audit be used as a means of riod of time by readministering the portions
bringing the problem to senior manage- of the audit that collected data from them.
ment’s attention. The data feedback would Such monitoring will provide ongoing
64 give them a handle on the problem. market research information.
Step 5 -Set up a Development Plan for the The change might start with task forces as-
Organization signed to certain tasks, then the task forces
might become teams, and finally, they might
To help the human resources department be placed into permanent matrix structures
staff during the transition, the development to manage the tasks. It is conceivable that
should probably follow the sequence pre- higher-level human resources managers’ jobs
sented below: could include operational and managerial
Mission/strategy. Change here tasks as well as strategic tasks. Just as Texas
should be based largely on needs created by Instruments’ senior managers devote part of
the external environment, a complex chang- their time to managing products and part to
ing market, and a changing regulatory and developing strategy, human resources man-
economic environment. A strategic decision- agers could divide their time among tasks at
making process should be put into place to the three levels.
accomplish the following: It is also important to use the same
l Tie into the business strategic motivational assumptions when you con-
plan by providing the organization’s strategic struct individual components of the human
decision makers with useful, quantitative resources function and integrate operational-
data on current and future human resources level tasks. Too often, the motivational as-
needs. sumptions behind the designs of such com-
l Have a strong marketing orienta- ponents as the compensation system, the
tion to the multiple client and user groups development system, and the selection sys-
in the organization. This will require devel- tem are inconsistent or even mutually exclu-
opment of ongoing market-scanning me- sive.
chanisms. People. The shift in the human
l Involve key human resources resources function to more managerial- and
staff at many levels of the strategic decision- strategic-level tasks calls for a shift in the or-
making process so they understand and are ientation of human resources managers. The
committed to the human resources strategy. points of view of both the general business
Tasks. These follow from the mis- manager and the technical specialist are
sion and strategy. Once they are developed, needed. Although Masters of Business Ad-
a matrix like that in Figure 1 can be used to ministration have not traditionally been
list critical tasks for each function at the hired as human resources staff members,
three levels. Then an assessment of what is they are one group that combines both
needed to successfully carry out each task in points of view and, as such, are a valuable
terms of people, organization design, pro- source of such managers.
cesses, and emergent networks can be made. Processes. The two key processes
Formal structure. The critical con- that need major attention are reward and
cern here must be to design a structure that control. As the tasks and the organization
integrates and coordinates organizational re- design shift, these two processes must be
sources to accomplish the priority tasks. The brought into line so that they will reinforce
design is not automatically plugged in; it and improve upon the change. The audit
must be incrementally developed and the or- data that have been collected and monitored
ganization must be helped to move toward should help the organization match the re-
it. Thus an ongoing organization design pro- wards the staff values with the rewards the
cess needs to be developed for the transition. organization can afford. Control systems 65
 that monitor tasks at all three levels will also mational, space, and other resources as re-
have to be developed. flected in the organization’s different stra-
Emergent networks. These are best tegic commitments.
developed by using the rewards system to 2. Managerial link. The business
encourage human resources staff to infor- side of the process begins with the strategic
mally address managerial and strategic con- plan as the guiding framework. The major
cerns. Also, transfer and promotion proced- focus is on resource acquisition to carry out
ures can be used to weave together emergent the strategic plan as well as the development
networks that foster the development of the of procedures for measuring and monitoring
whole human resources department. performance. On the human resources side,
the issues are the development of an effective
and efficient human resources system for ac-
SUMMARY AND CONCLUSIONS quiring, appraising, rewarding, and devel-
oping human resources to achieve the stra-
This article has suggested a process for mov- tegic goals.
ing the human resources management func- The managerial link involves dia-
tion from one dominated by operational- logue around such issues as: Do we promote
level concerns toward one that supports and from within or hire from outside to develop
improves organizational activities at the the human resources needed in the medium
managerial and strategic levels. term; how do we meet the needs of the inter-
Three sets of linkages must be es- nal markets for human resources services;
tablished: what are the strategies for each of the sub-
1. Strategic link. On the business functions of human resources?
side, the key issues involve deciding what 3. Operational link. At the opera-
business the organization is in, choosing ob- tional level, the business side is concerned
jectives and reviewing them, identifying ma- with the execution of day-to-day tasks -pro-
jor priorities, specifying major programs, ducing the organization’s products. On the
and developing policies to achieve goals. On human resources side, the concern is ensur-
the human resources side, the key issue is de- ing that the people come to work, perform,
termining the kind of people needed to run get evaluated, and rewarded and that they
the business in the long term, choosing the have the job skills they need or are trained
specific policies and programs for the long- in acquiring them.
term development of human resources for
the future, and fostering the appropriate so-
Guidelines for Improving Human Resources
cial and cultural context within which the
Management
objectives are likely to succeed.
The strategic link calls for dialogue Upgrading the human resources manage-
between the business concerns and the hu- ment function entails forging the strate-
man resources concerns. This dialogue gets gic managerial operational links discussed
reflected in the establishment of boundaries above. This calls for a five-step program.
around the human resources context for stra- Step 1 -Conduct an organization-
tegic planning (for example, what kind of wide human resources management audit.
human resources will the organization need Change efforts should be grounded in a sys-
over the long-term?). In addition, the stra- tematic data-based assessment of the current
tegic link involves a dialogue about the state of human resources management. The
66 trade-offs between human, financial, infor- HRMA consists of an organizational model
 along with specific data-collection instru- links is a joint line and staff responsibility.
ments that are designed for just such an as- Step S-Upgrade the human re-
sessment . sources function by making technical, polit-
Step 2-Make plans for the future ical, and cultural adjustments. The transi-
based on market data. The audit includes tion to a new level of human resources
a focus on the organization’s external envi- operations entails major adjustments in how
ronment as well as on marketing data from the function is organized to deliver its ser-
internal groups of client/users. The develop- vices. Political adjustments are required
ment of the desired state for the human re- since line managers have typically assumed
sources function should be based on both the that many important human resources deci-
internal market analysis and an assessment sions are primarily their prerogative. At the
of the external environment. cultural level, new norms and values will be
Step 3 -Make sure line manage- required to support the professional manage-
ment owns the process. Ultimately to be use- ment of people. Human resources staff will
ful, the audit must have the commitment of have to develop a more proactive stance,
senior line management because it is this take a more long-range perspective and line
group that must make the political ad- orientation. Finally, line management itself
justments needed to upgrade the function. will have to develop a new sensitivity to and
Step 4-Make sure that managing awareness of the human resources implica-
the strategic, managerial, and operational tions of their work.

SELECTED BIBLIOGRAPHY article, Walker described how several companies

were beginning to make the linkage. The Walker
The distinction between strategic, managerial, and framework provides a useful catalogue of strate-
operational activities was presented by Robert gic planning issues.The caseexamples used in the
Anthony in his now classicbook, Planning and article have yet to meet the expectations raised
Control Systems: A Framework for Analysis (Di- more than two years ago.
vision of Research, Graduate School of Business A well-developed argument for linking
Administration, Harvard University, 1965). This human resourcesplanning to strategic planning is
book provides one of the earlier sets of guidelines presented in Edgar Schein’s Career Dynamics:
for strategic planning in business firms. Matching Individual and Organizational Needs
A good summary of the current state of (Addison-Wesley, 1978). Schein presents a very
the art in strategic planning is found in Charles comprehensive framework that can also provide
Hofer and Dan Schendel’sStrategy Formulation: guidelines for the design of a more integrated hu-
Analytical Concepts (West Publishing Company, man resources system.
1978). It can be noted in their book that scant at- Finally, the article deals with managing
tention has been given to strategic human re- change. Richard Beckhard and Ruben T. Harris
sources concerns. provide a set of practical guidelines along with
James Walker made the casefor a better case examples of how to successfully manage
link between strategic business planning and hu- complex organizational change. Their book is
man resourcesplanning in an article that appeared Organizational Transitions: Managing Complex
in Human Resource Planning, Spring 1978. In this Change (Addison-Wesley, 1978). 67