A Close Alignment of Organisational Strategy with the Human Resource Development Functions - Case Study Example

A CLOSE ALIGNMENT OF ORGANIZATION STRATEGY WITH HUMAN RESOURCE DEVELOPMENT (HRD), AS A WAY TO IMPROVE INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE MGT3HRD There is increased need of human resources development to meet today’s organizations’ needs, which are ever changing due to globalization that has resulted into more competition in the global markets (Garavan, Heraty, & Barnicle, 2002). According to Hyland (2005), human resource development (HRD) refers to the process of enhancing human resource capability through strategies and development, organization development and career development in order to boost their performance, which in turn boosts an organization’s performance. Therefore, HRD functions can be described as a set of organized and systematic activities, which are planned to provide opportunities to an organization’s members to acquire skills necessary for meeting their present and future job requirements (Chien-Chi & Gary, 2008). In today’s competitive markets and ever changing external environmental factors, HRD has become of great importance since it ensures productive and successful management (Du Plessis, Nel, Struthers, Robins, & Williams, 2007). Many organizations have therefore adopted the strategy of integrating their organization’s strategy into their HRD functions (Schuler, 1992), in addressing the changing external environment. Hyland defines organizational strategy as a plan of activities that an organization needs to undertake in order to meet its short-term and long-terms goals (2005). Schuler explains that integration of business strategy with HRD functions does not only assist an organization in enduring the changing external environmental factors but also boost individual and organizational performance. Therefore, this essay aims to address three main objectives: to establish the relationship between organization strategy and HRD, to discuss how a close alignment of organizational strategy with HRD functions may enhance individual performance, and to discuss how a close alignment of organizational strategy with HRD functions may enhance organizational performance. Due to globalization, there is increased competition among firms, which is creating the need for organizations to record high performance in order to survive in the available global markets. In order to achieve high individual and organizational performance, management executives should ensure that their HRD functions align with their business strategies (Armstrong & Baron, 2002). The current business setting calls for HRD to align with the business strategies as well as take a fundamental role in determining the business strategy (Garavan, Heraty, & Barnicle, 1999). Armstrong and Baron (2002) explain that an organization’s success greatly depends on its ability to fully utilize its human resources expertise and skills in shaping and executing is business strategy. Sthapit (2008) argue that integrating HRD with an organization’s goals, mission and strategies steer an organizations towards achieving positive HRD results which in turn impact positively on the organization’s overall performance. Hyland (2005) describes HRD as a process, which encompasses functions e.g. training and development, organizational development, as well as career development (Garavan, Heraty, & Barnicle, 2002), which are intended to promote personal and managerial performance. Therefore according to (Garavan, Heraty, & Barnicle, 1999), HRD functions are a set of activities, which are designed in such a way that they will enhance Employees’ capabilities to boots their individual performance that in turn enhances an organization’s performance. Schuler (1992) defines the word strategy as plan that is designed to achieve set goal and objectives under uncertain circumstances. Schuler therefore describes HRD in a broader perspective as a set of planned activities, which are designed to ensure that an organization’s human resource is able to acquire the required organizational behavior and achieve the set individual and organizational goals under all circumstances. On the other hand, Du Plessis, et al (2007) describe HRD functions as the activities, which are planned in such a way that they will enable an organization’s human resources toad value to the organization. HRD functions have been defined as the activities encompassing training as well as development, career development and managerial development, which are designed to maximize individual and organizational performance. According to Luoma (2000), just from their definitions, a strong connection exists amid HRD functions and business strategy. According to Figen, Umit, and Jillian (1997), business strategy and HRD share a common goal, which is to enhance organizational performance. This implies that for an organization to achieve good performance, its HRD functions must align with its business strategy. This because the alignment of business strategy and HRD functions lead to improved individual performance by ensuring that employees understand their organization’s mission and goals and adopting the expected behavior and values in order to achieve what is expected of them. Zucchi and Edwards (1999) support Luoma’s argument by stating that HRD may only be considered strategic if it integrates the general business strategy. Claire and Garavan (2009) describe aligning of business strategy with HRD functions as the process of developing an organizational strategy that is linked with the HRD goals and objectives. Figen, Umit, and Jillian (1997) stress that HRD functions are pivotal in an organization because they are a strategy through which an organization is able to implement successfully its business strategy. According to Figen, Umit, and Jillian (1997) every business strategy focuses on ensuring that the business human resource capacity is enhanced in order to deliver as expected. On the other hand, Liao (2006) explains that HRD encompasses a set of planned activities, which are aimed at boosting the capacity of the human resource to ensure they meet the business’s expectations. Theories of motivation support Birchfield (2003) argument that HRD and business strategy both aim at ensuring the capacity of human resources is improved to boost their competence and hence enhance both individual and organizational performance. A CLOSE ALIGNMENT OF ORGANIZATIONAL STRATEGY WITH HRD FUNCTIONS MAY ENHANCE INDIVIDUAL PERFORMANCE Luoma (2000) argues that alignment of business strategy with HRD functions is one of factors that enhance individual employee performance. Various researchers have argued that integration of business strategy into HRD functions lead to improved employee individual performance (Armstrong & Baron, 2002; Schuler, 1992; Garavan et al, 2002). Schuler (1992) argues that the most important aspect of aligning business strategy with HRD functions is that it helps employees in understanding the business’s mission, values and goals and how their individual work is related to them. Figen, Umit and Jillian (1997) point out that when the business strategy is integrated into the HRD functions, employees are made aware of the expected behavior and values, which will ensure that they steer the firm towards attaining its mission and goals. Garavan et al. (2002) argue that a close alignment of organizational strategy with HRD functions leads to improved workplace learning, since the workplaces are developed in such a way that they are conducive for employee learning purposes. Through improved workplace learning, an employee stands to benefit a lot by learning form others or from training hence acquiring more skills and knowledge, which enhance his or her individual performance. According to Liao (2006) the aim of every business strategy is to ensure there is an efficient employee compensation scheme aimed at motivating employees to improve their performance. Therefore, as Liao (2006) argues a close alignment of business strategy and HRD functions ensures that the employee compensation scheme put in place improves the equity between employee reimbursement and level of accountability (Balls, 2006). When HRD functions are integrated into the business strategy, the HRD reimbursement scheme that is implemented is effective in such a way that it compensates the employee depending on their level of accountability an through this way, improves the equity between employee accountability and reimbursement. Alignment of business strategy and HRD functions therefore ensures that employees improve their level of accountability in order to get reimbursement and through this way improve their individual performance. According to Figen, Umit, and Jillian (1997), integration of business strategy into HRD functions leads to increased employee job satisfaction. This is because when a business strategy is aligned with the HRD functions, it incorporated all the needs of the employees. When employees feel that their needs are met, they are satisfied with their job and even work harder to improve their individual performance in order to achieve their own personal career goals (Schuler, 1992). Liao (2006) explains that an HRD integrated business strategy ensure that adequate budget aimed at boosting human resource capacity within the organization. Through this way, enough adequate finances are allocated to take care of staff training, employee career development, reimbursement and other kind of activities aimed at improving employee individual performance. Whenever a business strategy takes into consideration its HRD functions, it ensures that all its employees from all level of department within the organization are involved in the decision-making processes and the implementation of all its strategies (Sthapit, 2008). The involvement of all staff members in the decision making process does not only produce sound and inclusive decisions but also leads to improved individual performance since very employees gets chance to acquire decision making skills and other skills and knowledge required in implementing and executing the various organization strategies or projects (Garavan et al., 2002). According to Liao (2006), an HRD integrated business strategy ensures that the organizational arrangements that are done are able to encourage employee participation and teamwork. In order to encourage organizational learning and hence boost employee’s individual performance, business executives should ensure that their business strategies support teamwork and employee participation (Chien-Chi, & Gary, 2008). When employees are involved in teamwork and are lowed to participate in the implementation and execution of challenging projects they do not only get the opportunity to sharpen their hands on experience and boots their individual performances, but also get the opportunity to learn from others and correct their mistakes. It is important to point out that the most important issue that has been has been raised in the literature review is the need to align HRD functions with business strategy in order to enhance employee individual performance. A CLOSE ALIGNMENT OF ORGANIZATIONAL STRATEGY WITH HRD FUNCTIONS MAY ENHANCE ORGANIZATIONAL PERFORMANCE It is important to understand that most of the research that has been done in relation to this topic points out that integration of business strategy into the HRD function enhances organizational performance. According to Sthapit (2008), for any business strategy to implement successfully, it has to be integrated into the HRD functions. The main aim of any business strategy is to ensure that an organization achieves its goals and objectives under all circumstance. One of the goals of any company is to achieve high organizational performance. This means that by integrating the business strategy into the HRD functions, an organization is able to achieve its mission and goals and hence enhance its organizational performance. Claire and Garavan (2009) explain that an HRD aligned business strategy leads to increased organizational capacity to achieve its set goals and objectives. When an organization capacity is improved, its organizational performance is enhanced since it is able to achieve its business goals; such as improved efficiency of production, improved sales, hence high profitability, improved competitive advantage over its rival companies just to mention but a few. Garavan et al (1999) argue that when a business aligns its business strategy with its HRD functions, it leads to increased level of employee performance. Armstrong and Baron (2002) argue that for any organization to improve its level of performance it has to improve its employee individual performance first. Therefore, the alignment of business strategy with the HRD functions does not only result into improved employee individual performance but also increases the level of organizational performance. When a business strategy is aligned with HRD functions it improves the organization’s efficiency and workers’ productivity hence reducing the cost of production (Zucchi & Edwards, 1999). An organization working at minimal cost of production is able to make high profits and this is a clear indication that the organization performance is high. According to Hyland, Di Milia, and Becker (2002), change is inventible for any organization in the today’s ever-changing external business environment. In order for business to effectively handle and manage change, they have to ensure that their human resource is well equipped with all the skills. According to McCracken and Wallace (2000), HRD is said to be mature if it is able to ensure that an organization’s human resources have the required behavior, skills and knowledge to handle and effectively manage change. An HRD aligned business strategy therefore enhances organizational performance since it ensures that it improves the organization’s ability to successfully manage change (Hyland, Di Milia, & Karen, 2002). When a business aligns its business strategy with its HRD functions, it ensures that a performance management system is developed and maintained in order to effectively mange employee performance and therefore boost the organization’s overall performance (Luoma, 2000). Luoma (2000) points out that an HRD aligned business strategy ensures that an organization focuses and invests in employee training in order to boost their job performance, which in turn boosts the organization’s performance. For any organization to record good organizational performance, it must ensure that its human resource is linked with the business needs (Schuler, 1992). Schuler explains that one way of ensuring the human resource is linked to the business needs is by aligning the business strategy with HRD functions since through this way, the employees get the opportunity to familiarize with the business goals and expectations which form what is being termed as business needs. From the above review, I can recommend and hence supports Gilley’s idea that in the future, business executives need to design their HRD in such a way that they put under consideration the business needs in order to enhance employee individual performance and the overall business performance CONCLUSION From the extensive literature review conducted, there is more than enough evidence that there is a strong link between business strategy and HRD. Both business strategy and HRD functions encompass planned activities that ensure that an organization achieves its mission and goals under all circumstances. Various researchers have acknowledged the fact that for any HRD to be termed strategic, it has to align with the business strategy. From the literature review, it can be concluded that the alignment of business strategy with HRD functions is a crucial tool for any business that aims to achieve its business goals in today’s ever-changing external business environment. The literature has provided enough evidence that has supported the hypothesis that alignment of business strategy with HRD function enhances individual and organizational performance. Therefore business strategy is crucial in making sure that a business performs properly. It is crucial that HRD is carried appropriately in order to deliver strategy insights in the firm to enable the firm to be more efficient in sourcing, assessing as well as motivating workers. It has to go on offering administrative services that the firm can depend on, which are responsive as well as cost effective. REFERENCES Armstrong, M., & Baron, A. 2002. Strategic HRM: the key to improved business performance. Developing practice. London: chartered institute of personnel and development. Balls, A. 2006. Keeping your best people. New Zealand Small Business, 20(3): 64. Birchfield, R. 2003. The future of HR: What are the critical issues? New Zealand Management, 50(10): 45-48. Chien-Chi, T., & Gary, M. 2008. 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