Investigating the link between strategy and HRD
| Published date | 01 December 2000 |
| Date | 01 December 2000 |
| DOI | https://doi.org/10.1108/00483480010296960 |
| Pages | 769-790 |
| Author | Mikko Luoma |
| Subject Matter | HR & organizational behaviour |
Strategy and
HRD
769
Personnel Review,
Vol. 29 No. 6, 2000, pp. 769-790.
#MCB University Press, 0048-3486
Received June 1997
Revised January 1999
Accepted January 1999
Investigating the link between
strategy and HRD
Mikko Luoma
University of Vaasa, Vasa, Finland
Keywords Human resource development, Strategy, Metals industry, Finland
Abstract This article is a theoretical presentation of human resource development (HRD)
within the context of strategic management. It represents a single component view of human
resource management (HRM) by concentrating on developing human assets only. According to
this view, HRM is too complex and multidimensional an entity to be handled as a set of people-
related activities in relation to strategy. The article presents conceptions of strategic HRD based
on earlier theory, and deduces three distinct logics, labelled as need-driven, opportunity-driven,
and capability-driven approaches to HRD. These approaches are summarized in an integrated
framework which is suggested as an illustration of the full potential of HRD's contribution to the
business success. Accounts of organizations adopting the approaches are presented.
Introduction
It is often stated that a company's human resource management (HRM)
practices ± human resource development (HRD) activities among them ± should
fall in line with the strategy of the company. While nobody denies the
importance of such a connection, the deeper nature of this relationship receives
amazingly scant attention.
Defining what is actually meant by strategic HRD is an issue that needs to
be addressed. In the minds of many practising HRD people, all development
becomes easily strategic, especially if it is targeted at those in management
positions, or if it deals with initiatives that are generally associated with
successful performance. However, there are some theoretical presentations
which help to bring order to the confusion by identifying several ways of
linking developmental processes with strategic management. For example,
Burgoyne (1988) describes a stepladder model of management development
that distinguishes six levels of integration between developmental actions and
corporate strategy, Catalanello and Redding (1989) outline three distinct
strategic roles for the development function of a company, and Torraco and
Swanson (1995) discuss the importance of HRD in both supporting and shaping
strategy.
For its own part, this article contributes to this discussion by creating a
framework which distinguishes several approaches to the strategic HRD of a
company. It differs from the presentations mentioned above in its views on the
central concepts and because of its focus on an entire organization instead of
managerial positions only.
The objective of this paper is to answer the question: what is the linkage
between strategy and HRD like? The paper sets out by studying two
conventional forms of the relationship between strategy and HRD. Then the
theory of organizational capabilities as a source of competitiveness is presented
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Personnel
Review
29,6
770
and the role of HRD as an executor of strategy is discussed. An integrated
framework is then formed and illustrations of different forms of HRD in some
Finnish organizations are presented.
Strategy, HRM and HRD
The concepts of strategy and HRM are both somewhat ambiguous. What is the
outcome when we put these two together? The result is a strict definition of
strategic HRM or a more general idea of valuing people as key elements in a
company's business ± or something in between (see Milkovich et al., 1983, p. 3).
It all depends on the way we view these terms.
Let us start from the concept of strategy. The fact is that numerous
approaches to this ``art of the general'' can be ± and certainly have been ± made
(see the profound discussion, for example, in Mintzberg, 1990), and it would be
all too simple to choose only one right way. Understanding the existence of
different dimensions of strategy ± perspectives on the content and the process ±
helps strategists avoid the pitfall of being too limited in their thinking.
As time has passed from the early days of strategic management, some
evolution has taken place in strategic thinking. Traditionally, more attention
has been paid to elements outside the organization than to those inside.
Carrying out a formal planning procedure and selecting the right position in the
competitive arena have been seen as the main strategic concerns of the top
management. Later, the focus on internal resources and processes has enriched
the discussion. It can be stated that only the recognition of the internal
component has made it possible for people-related questions to truly find their
way into the strategic arena.
Likewise, HRM has been viewed from several angles. Hendry (1995, p. 3)
notes that HRM has different connotations for different people and does not yet
constitute a unified theory. So far, HRM has been approached, most popularly
perhaps, as a set of human resource systems (Devanna et al., 1984). Some other
approaches see HRM as a philosophy of management (Beer et al. 1984) and ±
quite recently ± as a set of outcomes (Ulrich, 1997).
A connection to strategy has been largely emphasized as one central feature
of HRM, especially when HRM is compared to a more traditional approach,
personnel administration. This has made several authors adapt the findings of
the study of strategy also from the viewpoint of HRM. For example, Schuler
(1989); Routamaa (1991); and Butler et al. (1991) have created integrated
frameworks to cover different aspects of HRM by using a certain approach to
business strategy. In this paper a broad view of strategy is applied on purpose.
Choosing one distinct strategy approach, and connecting it to an idea of HRM
would surely lead to clear but, from the practical point of view, simplistic
frameworks. Here strategy is seen generally as an idea of how a company
reaches its goals. The process of forming this idea is called strategy making (or
strategic planning), and a company's progress in this direction is called the
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