Tuesday, 5 October 2010

Explicit or emergent strategy: Should be corporate and HR strategy planned or piecemeal?

 
The constantly increasing pace at which change is occurring in the external environment has sparked a passionate debate about the process business and HR strategies practically develop, which has engaged business leaders as well as management practitioners. Some Authors contend that strategy is a totally incremental, evolutionary process not necessarily rational, which can be only retrospectively identified by analyzing and reviewing the plan put into action by an employer; whereas others aver that strategy, that is, “the long term direction and scope of an organization” (Johnson et al, 2005) implies a plan, a plot, a pattern and a perspective and should be thus properly formulated and ideally written.

 

Inasmuch as organizations are nowadays increasingly subject to the pressure coming from the exogenous environment and need hence to be ready to take advantage of the opportunities this offers and capable to timely identify and implement the appropriate plan of action necessary to counter the threats this poses; employers need to have crystal clear ideas of the objectives they expect to achieve and of the approach they intend to adopt to attain these in practice.




Technological, legal, political, economic and environmental changes do not necessarily entail adjustments in an organization’s strategy; these occurrences might in fact imply and require a change only in the type of approach or means an employer should better have recourse to in order to pursue its intended strategy. Considering that strategy might be just retrospectively identified could be tantamount to acknowledge that employers act not being aware of what they actually do and of where they go. This would ultimately entail that whether an employer attain or does not attain its objectives this does not depend upon the plan of action this has craftily developed and implemented, but simply on the way events unfold in the exogenous environment. Strategy should be thus regarded as something which essentially escapes to the employer control and unintentionally pursued.




 
This mechanism, or rather, the lack of a controlled mechanism which this idea essentially entails can be considered debatable at best. Not only need strategies to be clear and explicit, but it is of paramount importance that in order for these to produce the expected results these must invariably remain under the employer full control. Whether strategies would not be clearly defined and outlined these might be misread by managers and differently implemented within the different areas or branches of the same organization causing inconsistency, lack of integrity and confusion; ultimately exposing employers to the risk that strategy execution may result in failure.
 


 
Implementation is, by common consent, widely acknowledged as one of the most delicate activities, arguably the most delicate activity, associated with strategy. Line managers play a pivotal role in the execution of this process; different studies conducted on this subject have indeed provided evidence that any given strategy can produce different results according to the way it is executed. It is hence of paramount importance ensuring that all of the individuals involved in the implementation process are singing from the same hymn sheet.



In the event strategy should not be clearly known and understood by managers and employees and be subject to an uncontrolled, incessant process of change, it would be completely impossible for line managers implementing it in a coherent and consistent way and to evaluate the effects produced by their actions vis-à-vis the intended scope.



Looking at strategy exclusively in retrospect would provide employers information about where the organization was at any one point in the past, but it would tell nothing about where the organization actually wants to go and whether the identified and current positions are actually consistent with and meeting the employer expectations. Yet, since the exogenous environment is changing at an increasingly faster pace it would be pointless to even try the exercise.

 

The lack of a precise and clearly defined strategy for an organization may be compared to a soccer match during which all players are continually running after the ball not adhering to any precise attack or defence scheme, that is to say game strategy.




The findings of an investigation conducted by PriceWaterhouseCoopers (2002) revealed that organizations having a written strategy were able to generate 35 percent higher revenue per employee compared to those do not having an explicit strategy.



A company ability to promptly adapt to the external changing circumstances and to get the most of all the opportunities offered by the exogenous environment, coupled with its ability to timely counter the threats this poses, is clearly of pivotal importance. Strategies unquestionably need to be constantly reviewed, adapted and amended whenever it is considered appropriate, but with full consciousness and awareness; clearly knowing where the organization wants to go, why and how, and after having duly analyzed and considered the eventual threats and barriers which could prevent the organization to go ahead with its intended plans.




Strictly associated with strategy formulation is the theme of strategy implementation. Habitually, this process causes indeed many problems, insofar as having been deemed: “weak at best”, “a problematic area” and “patchy and sometimes contradictory.” An organization’s capability to quickly transform strategy into action is crucial for its effectual, practical pursuance. Nonetheless, in the event this is not clearly expressed, it may prove to be rather tricky to properly, effectively and consistently implement it.




Business strategy clearly plays a pivotal role in every organization; the activities and strategies of every company functions are in fact based on this and HR strategy clearly makes no exception. Accepting that business strategy is exclusively dictated by the circumstances would imply that HR strategy would become anytime soon disconnected from and unaligned with it. Whether corporate strategy should actually constantly change, insofar as the employer being able to gain knowledge of this occurrence only looking backwards, HR managers would not be in a position to adapt and amend HR strategy accordingly. Since the scope of HR strategy and of the practices stemming from this is that to support and enable employers to effectually pursue their intended strategy, the moment business strategy should escape from the employer control HR strategy would in turn immediately risk ceasing to produce its intended effects. This would clearly represent an extremely potentially harmful occurrence for employers. HR practices might in fact aim at pointing in a different direction vis-à-vis that suggested by the external pressure on the basis of which, according to the emergent strategy theory taken to extremes, business strategy stems from.

 
 

By reason of the remarkable role played by human capital for the achievement of competitive edge, it is hardly imaginable that HR practices might be unaligned with business strategy. Whether it would be accepted that business strategy can be only retrospectively identified it would be indirectly accepted that this is actually possible, but whether this would really be the case, HR would never be able to accomplish its mission, that is to say support and facilitate the achievement of corporate strategy.




Business and HR strategies are unquestionably influenced by and subject to the changes occurring in the exogenous context, but this does not necessarily implies in turn adjustments and amendments to the content and objectives of strategy. In most cases, these occurrences may just prompt the employer to introduce changes concerned with the means or the way the organization intends to achieve its strategy, not with a comprehensive redesign of the content and core aim of organizational strategy.


A company ability and capability to promptly adapt to these changes clearly represent a remarkable asset to the employer for the achievement of competitive edge. Businesses should also strive to promptly take advantage of the opportunities offered by the external environment and be ready to cope with the treats this poses, but also in this case it is very unlikely that employers would not be in a position to intentionally and consciously change their direction and scope whether required.

 
 

It is absolutely true that the exogenous environment changes and evolves very quickly, but not insofar as not conceding organizations the time to redress their strategies and objectives accordingly. One thing is an employer ability to promptly detect and discern the changes occurring in the external environment and timely adopt and adapt to these, a completely different story is unawareness, confusion and ultimately chaos. A wise and savvy business captain needs to constantly plan and take control of the vessel; regrettably, the risk of shipwreck is constantly around the corner.



Longo, R., (2010), Explicit or emergent strategy: Should be corporate and HR strategy planned or piecemeal?; HR Professionals, [online].