The Role Played by HR in the Sustained Competitive Edge Paradigm Development and Implementation

Inasmuch as developing a strong, successful business strategy is crucially important in order for organizations to attain competitive edge, its effective, consistent implementation does represent a crucial factor for its actual, successful pursuance. Even appropriate strategy development not followed by consistent execution would soon show to be empty and unwieldy. In order to achieve competitive advantage, nevertheless, employers should duly take into consideration several factors and deploy a different combination of resources, but human capital unquestionably represents the ultimate driving force behind organizations achievement of competitive edge.

HR in its double capacity as people function and strategic partner is definitively well placed to support employers in the Sustained Competitive Edge Paradigm appropriate development and successful implementation (the Paradigm is outlined in a specific article – Sustained Competitive Edge Paradigm). To stress the role played by HR in its effective execution, each component of the Paradigm is now analysed separately, but in connection with the others, identifying the synergic effects which the different components may produce the one in combination with the others.

Business Strategy Development and Execution

Business strategy, intended as corporate-level strategy, basically aims at defining a business direction and scope. Strategy should therefore define and identify an organization geographical scope, range of products and services, approach adopted to expand and gain new business, and the criteria to allocate resources between the different organizational components (Johnson et al, 2017).

As contended by Montgomery (2000), strategy is essentially concerned with managing people, resources and relationships, and making decisions. The way an organization makes a difference and the identification of the beneficiaries of that difference essentially explain the purpose of an organization.

Human capital does definitely represent a crucial factor not only in strategy development but indeed also in strategy execution. Business should therefore focus their efforts on making a difference for their consumer target group as well as for their employees.

The Role Played by HR

Being in charge of looking after employees, managing the entire employee lifecycle and ensuring employees the best possible experience, HR can and should play a particularly significant role in business strategy development and execution.

Table A – HR and Business Strategy

 The benefits of the activities performed by HR are so pervasive and overarching which it can be hardly argued that every single action is actually aimed at pursuing a single objective. Programmes developed and implemented by HR typically covers different areas and bundling with others initiatives more often than not yield even more overarching results, thanks to the synergy each of them produces in combination with the others.

In its role as an effective business partner HR is not in charge of coming up with new business strategy ideas; notwithstanding, its contribution to it may be manifold.

In the business strategy development phase, HR can certainly support the business in the identification, for instance, of new business geographical areas conducting wide labour market intelligence investigations in order to assess the local availability of the specific skills and expertise required by the company and identify the opportunities and threats offered in terms of employment law, reward practices, fiscal law, cost of living, lifestyle, culture and other similar aspects. Some of these pieces of information will prove to be particularly significant when a company, as usually happens, may plan to second employees from a country to another.

HR clearly plays a significant role in the management of the employee lifecycle. The ultimate aim is not only to ensure employees a great experience, but also to secure organizations onboarding and developing individuals having the skills and competencies necessary for them to successfully compete in the relevant markets.

Whilst recruiting and employee development are of paramount importance for enabling business to have the internal skills and expertise they need to develop and constantly review their strategies, leadership, talent management and, once again, employee development can be definitely regarded as crucial factors for strategy implementation. Once developed on paper, even strong, potentially effective strategies may lead business nowhere if not properly executed; management effectiveness, therefore, definitely represents a key factor to this particular end.

Corporate Culture and Organizational Climate

Whereas developing a company culture is mainly an employer task, its consistent implementation concerns all the employees. Executives, managers and line managers in particular should ensure that corporate culture is not a nice to have statement written on paper, but the expression of values, approach to work and way of interacting genuinely accepted and embraced by employees. Organizational culture may actually make or break business strategy and that is the reason why employers are increasingly devoting to it constant, close attention.

Corporate culture is one of the most significant factors jobseekers take into consideration when making their decisions on the company they want to join. Paying lip service to corporate culture and neglecting to consistently showcase it, may seriously jeopardise employers’ ability to attract and retain the talented individuals they may need.

The Role Played by HR

Also in this case, HR may play an important role namely in corporate culture development and implementation phases.

Table B – HR and Corporate Culture

By conducting surveys, focus groups and town hall meetings, HR can assess employee actual perception of culture and identify any potential gap. Listening to employee voice may provide employers food for thought and help them identify potential room for manoeuvre and grounds to review their company culture.

Albeit defining and developing corporate culture is a typical founder responsibility, understanding and taking into consideration employees’ point of view may help employers understand their actual attitudes and values. If considered appropriate and consistent with company values, employers may decide to review and fine-tune their company culture accordingly, alto taking into consideration the changes occurring at an increasingly faster pace in the external environment.

Once HR gathers employee feedback on how they actually live on a daily basis organizational culture, it is extremely important to develop a plan of action in order to follow up on employee voice. Ensuring employee perception of corporate culture, that is, organizational climate properly reflects organizational culture should be regarded by employers and HR as a non-negotiable obligation and firm part of the actions taken to offer employees a valuable experience.

Employees regard any gap they perceive between company culture and organizational climate (that is, their perception about corporate culture) as a marked evidence of inconsistency. Managers talking the talk but not walking the walk cause employees to become disillusioned about corporate culture and feel ill at ease in the workplace. The concomitant existence of these circumstances, lack of ethics and disregards for organizational values drastically impact organizational climate and may be the reasons for employee absenteeism, distraction and inaccuracy, worse still, the causes for employee and team productivity to dramatically plummet.

 Employer Branding and Candidate Experience

The unrelenting, pervasive presence and influence of social media nowadays remarkably impact organization reputation and public image. The implications are noticeable both in terms of employer branding and corporate branding, but the two aspects can indeed be considered as the two sides of the same coin in that it can be hardly contended that the one aspect does not actually affect the other.

Albeit employer branding aims at promoting organizations as the best place to work and at creating in potential applicants an organization’s corporate image of an employer of choice, employer branding reach is not limited to jobseekers and may actually significantly contribute to make or break general public, that is to say potential investors and customers, impression of an organization.

Offering applicants an excellent candidate experience is not only important to show them respect and appreciation for their desire to join the organization, but also because candidates may already be or become at a later stage company customers, investors or both. Yet applicants who have had a negative recruiting experience might spread the word using, in addition to the once powerful word of mouth, the today even more powerful social media and social networks communication channels.

The Role Played by HR

Recruiting is definitely the main pillar of employer branding, HR should ensure that every applicant genuinely has an excellent candidate experience and that recruiting is managed consistently with the organization employer brand image. It may be argued that in some ways recruitment represents the evidence of the consistent execution of an organization employer branding strategy.

Table C – HR and Employer Branding

Organizations are increasingly availing themselves of social media and social networks in order to execute their employer branding strategy. HR puts in place a series of initiatives and actions to showcase their organization corporate culture, positive climate, active participation in environmental and social initiatives, but also employee benefits, flexible work and diversity and inclusion practices as well as any activity and initiative which may enable the organization to attract talented individuals from the relevant labour market (in addition to retain employees).

Albeit as often as not organizations involve their employees as testimonials in their employer branding initiatives, in order to provide candidates a real taste of what daily life is within the organization, candidate reviews and testimonials may make a bigger impact not only on potential candidates, but on general public at large.

Unpleasant candidate experience and inconsistent, worse still, altered representation of a company culture and climate may have counterproductive effects negatively impacting the organization not only by deterring talented individuals from joining the organization, but also customers and potential customers from continuing to buy or starting to buy the company products and services.

Employer branding does therefore represents a powerful way of promoting a business, but it should be managed consistently with organization real reality, offering all candidates an excellent recruiting experience and follow up at every stage of the recruitment process, safe in the knowledge that today’s candidates might be tomorrow’s (or later today) customers or investors.

Corporate Branding and Corporate Image

It may be argued that corporate branding is to consumers and investors as employer branding is to jobseekers, interrelations between the two aspects are nevertheless rather evident and when appropriately manged, may indeed produce significant synergic effects.

Also in this case, employers should be aware of the circumstance that a more or less wide gap between the corporate branding they are striving to build and develop and the general public image of their company brand may exist.

Among the most powerful levers organizations can nowadays use to enhance their corporate branding, Corporate Social Responsibility (CSR) and Environment, Social and Governance (ESG) strategies can be definitely regarded as particularly significant and effective. Both strategies actually aim at showcasing and fostering, albeit in a different and complementary fashion, their commitment to sustainability.

Corporate Social Responsibility

CSR does represent a qualitative, self-regulating approach employers adopt in order to show their unconditioned commitment to sustainable practices. Its ultimate purpose is to positively impact and enhance the environment and society at large (Lutkevich, 2022).

Effective CSR strategies development and implementation enable organizations to maintain a positive corporate image and improve stakeholder morale (Lutkevich, 2022).

 

As maintained by Polley (2022), CSR strategies also make a positive impact on company reputation. By reason of the growing social media and social networks reach, consumers can easily voice their disappointment against organizations, if social and environmental issues are not of concern to businesses, potential loss of turnover and profit highly likely are.

Environment, Social and Governance

ESG strategies use environmental, social, and governance data, measurable objectives and audit findings to evaluate organizations’ sustainability commitment and actual results.

Rating agencies can develop measurable indexes and assign companies scores in the environment, social and governance areas enabling in particular potential investors to evaluate a company long-term sustainability capability (O'Neill, 2022). ESG therefore enhances investor capability to evaluate businesses sustainability.

Being based on metrics and data, ESG may enable organization to maintain corporate reputation and financial success in the future

CSR and ESG

Both CSR and ESG strategies and reports may be used by employers to inform the general public about the company values and objectives. CSR mostly providing qualitative data, whereas ESG providing metrics and therefore quantitative data.

Employers should simultaneously embrace CSR and ESG strategies, in particular:

Ø  CSR should be used by employers to showcase and increase internal awareness of the business sustainability efforts;

Ø  ESG should be mainly (but not exclusively) used to provide metrics and measurable objectives externally to potential investors (O’Neill, 2022).

A recent study conducted by McKinsey and NielsenIQ (Bar Am et al, 2023) suggests that consumers do actually pay special attention to sustainability and “back it up with their wallet.” The study essentially confirms that consumers are not only increasingly paying attention to environmentally and socially responsible products, but are also actually purchasing them.

The Role Played by HR

HR can definitely support employers in developing and implementing CSR practices consistent with their ESG strategies and strongly support employers in developing and communicating externally their ESG strategy, laying great emphasis on the environmental and social aspects.

Table D – HR and Corporate Branding

First and foremost, HR should ensure that both CSR and ESG strategies, and therefore internal and external communications, are aligned with corporate culture, organizational climate and company values and beliefs. In particular, organizational culture should foster respect for the environment, the community at large and give employees a central role in being part of the solution.

Business policies should reflect employer sensitivity to environmental, social and governance areas and consequently show, for instance, serious consideration for an appropriate use of energy, waste treatment, carbon footprint and plastic elimination, as to what concern the environment. To show employers genuine commitment to social environment, HR should develop programmes aiming at offering employees opportunities for volunteering (using paid leave), participating in donations in favour of the community, backing associations and schools in providing support to children who have no access to digital tools, participating in charity projects, supporting fair trade business and associations by purchasing their products, and developing and implementing other similar significant programmes.

Genuine, consistent commitment to social matters should be also reflected in HR policies including, for instance, strong inclusion and diversity statements (also in order to foster innovation) and equal opportunity policies at all levels, career advancements and gender equal pay as well.

As part of the CSR initiatives, HR should establish and keep wide open a two-way communication channel with employees and ensure that they are well-aware of the actions taken by their employer. Fostering, for example, diversity and inclusion practices may make feel employees proud to work for the company and then prove to be a good retention measure, but also an effective way of attracting talented individuals from the external labour market.

HR should communicate the organization CSR initiatives not only internally but also externally, for instance, embedding them into employer brand strategy and supporting CSR communications with relevant ESG metrics and data.

By supporting employers in communicating their ESG commitment, HR will contribute to prove that the business does actually have a specific, well defined vision. Investors are surely keen to know as much as they can about the company they invest their money in and eager to know how sustainable their strategy may actually prove to be. General public as well is becoming increasingly keen to buy products and services marketed by environmentally and socially responsible companies.

There are indeed both overlaps and differences between CSR and ESG strategies but they are both significant for employers and should be used in synergy the one with the other. One size does not fit all, HR and employers should hence focus on their real reality, specific circumstances and distinctiveness to develop their CSR and ESG strategies and avert just doing what competitors do, the same way they do it.

HR may play a particularly significant role in supporting business in gaining competitive edge:

Internally

ü  Developing and implementing strategies and policies consistent with the business CSR and ECG strategies;

ü  Supporting employers in developing strong corporate cultures reflecting CSR, ESG and sustainability strategies;

ü  Properly and effectively communicating employers CSR and ESG strategies, providing them a clear line of sight between these and HR strategy and programmes.

Externally

ü  Embedding corporate culture, CSR strategy and ESG strategies in employer branding strategy and programmes;

ü  Offering applicants an excellent candidate experience and enabling them to perceive organization genuine consideration for governance, the environment and social and sustainability matters.

Longo, R., (2023), The Role Played by HR in the Sustained Competitive Edge Paradigm Development and Implementation; Luxembourg: HR Professionals, [online].

Sustained Competitive Edge Paradigm

Organizational success depends on several factors, some of which may actually be controlled by employers, others which definitely are beyond their control in that related to the external environment and influenced by human perceptions. In order for employers to attain sustainable competitive edge, therefore, they should not only constantly assess and review their ability to stay competitive, but also unrelentingly scan the external environment. The former activity - after all, would be sorely pointless if disconnected from the latter.

The contextual factor

It is an axiomatic fact that the external environment in which employers operate and the incessant, quickening pace change occurs make a remarkable impact on organizations. Employers are prompted to constantly review and adapt their business structure, the approach working activities must be performed, their business strategy and ultimately their corporate culture accordingly.

The contextual factor and its dynamics increasingly influence the way organizations make and review their plans to gain and enhance their competitive edge potential in the market. Businesses strengths and weaknesses are affected by the ever-changing external environment; employers consequently devote close, special attention to environmental scanning tools, like the PESTLE analysis.

Whilst the SWOT analysis, enabling employers to “look in” for strengths and weaknesses and “look out” for opportunities and threats, is rather uniformly applied by employers over time, it can be argued that the main focus of the PESTLE analysis has been subject to change with the passing of time.

In the past, PESTLE analyses were mostly focusing on “political” and “economic” factors, whereas more recently, by reason of the unrelenting technological advances and pervading use of technology in the workplace, employers have paid closer attention to the “technological” factor. “Digital transformation” is an expression most of the employers are acquainted with and behind the projects implemented by many organizations.

Nowadays and highly likely even more in the years to come, the “social” and “environmental” factors represent and will represent the main focus of PESTLE analyses. In many organizations, for example, the expression “digital transformation” has been already replaced with the ESG acronym, which stands for Environment, Social (corporate) Governance. Many employers are therefore already developing and implementing project plans aiming at offering their customers sustainable and environmentally friendly products and services.

The “political” factor has invariably played a significant role and unquestionably will continue to play a significant role in PESTLE analyses; similarly, the legal factor should be regarded as a constant, inescapable component of any environmental scanning tool. Like in the ESG case, not always employers’ choices are actually made regardless of the influence exerted by the regulatory framework in force.

The fact that the environmental and social factors are destined to be the main focus of environmental scanning tools for the years to come does not entail by any means that employers can neglect or pay lip service to the other factors encompassed in the environment scanning tool they may decide to use. Technological advances, for instance, definitely help employers pursue their intended strategies, but also pose serious threat in terms of cybersecurity. To secure appropriate execution of their business strategy, organizations need thus to pay close attention to technology also in order to effectively protect their ICT assets.

 

Table A - Environment Matrix

 

Significant factors coming into play

Paying close attention to the contextual factor does represent a means to an end, not the end itself. Yet the one size does hardly fit all, employers should therefore carefully analyse the information they gather and take action accordingly, taking heed of their specific circumstances and distinctiveness.

To gain sustained competitive edge, employers should not only constantly review and adapt their business model, but also develop and foster strong cultures, functional to the pursuance of their intended strategy, which need then to be effectively, appropriately executed.

Once employers identify and develop the appropriate business model, strategy development, strategy execution and a strong culture may seem to be the only key components of a recipe for sustainable success, but in order for employers to actually gain sustained competitive edge, they need to consider some additional crucial factors.

 

Table B – Sustained Success Key Factors

 

The widespread use of the Internet and social media, and the ease and speed information can nowadays be conveyed accounts for the general public to take into consideration several facts, elements and factors when making their purchase decisions.

Corporate Culture Vs Organizational Climate

Corporate culture does play a crucial role in supporting strategy execution. Organizational values and beliefs or as aptly summarized by Furnham and Gunter (1993) “the way we do things around here,” are of paramount importance for the pursuance of any organization strategy. Notwithstanding, the widely held belief that organizational culture can make or break an employer attempt to successfully pursue its intended strategy can only be partially backed up.

Inasmuch as employers develop and foster organizational culture to influence individual behaviour in the workplace, it is indeed the way employees interpret and translate organizational culture into practical behaviour and actions, that is, organizational climate, which strongly affects the way they behave and act in the workplace.

Corporate culture is essentially concerned with corporate values and beliefs as well as with the behaviour, attitudes, inclination and views, which employers expect employees to exhibit, embrace and share to successfully pursue their intended strategy. Organizational climate is concerned with individual genuine feelings and perceptions of the values and beliefs employers aim at fostering in the workplace. Not always employees’ perceptions are perfectly in line with employers’ expectations.

It may be argued that when it happens corporate culture definition perfectly matches that provided by Herb Kelleher, former Southwest Airlines CEO, during a conference on corporate strategy in New York City in the late 1980s (Taylor, 2019): “Culture is what people do when no one is looking.” In this case, employees genuinely embrace corporate culture insofar as living it regardless of their Manager or any other co-worker presence.

Corporate culture can effectually help employers pursue their intended objectives and achieve competitive edge only when corporate values and beliefs, and the way things should be done in the workplace perfectly coincide with employees values, beliefs and the way they would like to do things in the workplace.

Consistency and ethics should be regarded as the underpinning tenets of corporate culture, if employers talk the talk, but they do not walk the walk it is hardly likely that organizational climate may actually match and support corporate culture, albeit this has been nicely developed and formulated on paper.

The influence of corporate image and reputation

With an estimated 60% of the world population having access to the Internet in 2021 (The UN specialized agency for ICTs, November 2020) information circulation is rising dramatically, despite unevenly across different regions and countries.  The Internet and social media make it extremely easy for consumers to access any kind of information concerning organizations, not necessarily directly linked to their products and services, which may affect their decision-making process.

In particular, corporate image, brand reputation and employer brand are all external factors which may remarkably impact consumer decision-making process.

Employer brand

Employer brand is the term commonly used to refer to a business reputation as an employer. It basically “measures” how attractive an organization is considered by jobseekers when looking for their first or a new job opportunity. People apply for a position in a specific company because is that company that they really want to join.

HR usually establishes and keeps open a number of communication initiatives, especially by means of social media and social networks, to enhance organizations employer brand image, but “candidate experience” definitely represents one of the most significant, arguably the most significant, component of employer branding. Yet it may be used by candidates also to ascertain if employers talk the talk and walk the walk.

Jobseekers as well as potential consumers pay special attention to organizations branded by their own employees as “great place to work” and “employer of choice.” HR typically showcases corporate culture, workplace climate, employee wellbeing initiatives and work-life balance, equal opportunities and diversity and inclusion practices to lure talents and high-fliers, and invite them to browse through their career webpages and apply for suitable positions.

Corporate branding

Consumer decision-making is increasingly influenced by corporate branding, of which employer branding can be considered as a component. As maintained by Roll (2022) “a strong brand is about building and maintaining strong perceptions in the minds of customers.”

Corporate branding can therefore be defined as the series of initiatives and actions taken by employers and the resources they deploy to implement their business model in order to attract and retain new customers.

Also in this case, nevertheless, it is of paramount importance that employer efforts, aiming at conveying a specific message and improving their public image, are consistently received and interpreted by consumers. Despite employers’ efforts to project a strong corporate brand image, customers may indeed get a different idea of their business.

It may be contended that corporate branding is to corporate image as corporate culture is to organizational climate. Employers should not only develop strong corporate cultures and corporate brands, but also do whatever they can to ensure excellence in execution. Appropriate, coherent execution may effectually help employers achieve consistency between development and implementation and avert employees and customers to believe that they talk the talk but do not walk the walk.

Sustained Competitive Edge Paradigm

Attaining sustained competitive edge definitely represents a daunting, herculean task for every employer. It is highly unlikely that organizations may shine, worse still, stay afloat in rough, troubled waters, if they do not ensure that the key factors to achieve competitive advantage are actually synchronised and run like clockwork.

 

Table C – Sustained Competitive Edge Paradigm

In particular, in order for employers to achieve sustained competitive advantage they should play special, close attention to four key components, to wit: Business Strategy, Corporate Culture, Employer Branding and Corporate Branding, safe in the knowledge that implementation and human perceptions can make or break their effort to succeed.

In order for employers to attain sustained competitive advantage, they should ensure that the four development components of the Sustained Competitive Edge Paradigm as well as the related implementation factors are all regularly monitored, reviewed and redeveloped according to environmental scan findings. In contrast, neglecting only a single component or associated factor of the Sustained Competitive Edge Paradigm may cause employers to find it extremely difficult to secure competitiveness, never mind achieve competitive edge.

Being underpinned by several pillars, the Sustained Competitive Edge Paradigm is essentially based on the bundle approach according to which the simultaneous concomitant recourse to different measures, enables employers to produce synergic, multiplicative effects. Also in this case, nevertheless, employers will obtain the positive, synergic effects produced by the bundle approach, only if they devote constant, careful attention to all of the Sustained Competitive Edge Paradigm components and factors, and take prompt action to adapt them accordingly when necessary.

 Longo, R., (2022), Sustained Competitive Edge Paradigm; Luxembourg: HR Professionals, [online].

HR Strategy Between Myth And Reality

Employers can potentially establish various forms of relationships between business strategy and HR strategy; the type of link elected essentially reflects the extent of the impact HR makes on organizational strategy and to some degree the level of trust placed by the organization in the function.

The diverse options available to employers are properly summarized by Torrington et al (2008), who identify five possible alternatives: separation, fit, dialogue, holistic and HR driven (table 1).

Table 1

It is an axiomatic fact that an organization human capital has nowadays great importance for employers and definitely represents the most significant organizational resource, its main distinctive feature being inimitability. Individuals can indeed make a difference and are thus regarded by employers as the real key to competitive advantage.

Proceeding from the “separation” to the “HR driven” approach, in the order showed in table 1, the role played by HR becomes increasingly significant, insofar as prevailing over organizational strategy in the case of the adoption of the HR driven approach; yet, the role of human resource drastically evolves. Butler (1988, 1989) contends that from strategy executor individuals become the centre around which employers develop their business strategy. Human capital is thus no longer regarded as a means to an end, that is, the attainment of organizational strategy, but as an end in itself (Torrington et al, 2008).

The decision about the most suitable link to be created between organizational strategy and HR strategy, nonetheless, cannot be exclusively made on the basis of the significance attached by employers to human resources. Human capital unquestionably represents the most important organizational asset; nevertheless, the type of relationship which has to be established between organizational strategy and HR strategy should be exclusively strategic-dictated.

Inasmuch as it can be agreed with Boxall (1996) that organizational strategy should be regarded as a jigsaw whose pieces are represented by different organizational strategies, HR strategy included, employers constantly seek the talent enabling them to pursue their intended strategy; do not aim at developing the strategy which can be pursued according to the abilities of the individuals haphazardly recruited by the business.

Recruiters’ activity essentially aims at identifying the individuals who can enable employers to go in the direction they point in and who have the capability to promptly adapt to sudden changes of direction. Talented individuals may clearly also help employers to develop their strategies, but the final decision about the direction to point in invariably rests with employers, which clearly need the support and readiness of all the employees to attain their objectives. This essentially is the same purpose served by learning, that is to say put employees in a position to effectually support employers in the pursuance of their strategies.

It is nowadays broadly believed that an organization capability to gain and maintain competitive edge is increasingly depending on its employees’ soft skills rather than on their technical knowledge. The latter can be gained more easily, in comparison with the former, which are definitely harder to learn and whose acquiring process may be sorely influenced and inhibited by individual personality and character traits. Developing and tailoring a business strategy exclusively on the basis of the current employees’ characteristics and skills might hence prevent organizations to actually gain competitive edge in their relevant market(s) rather than favouring the attainment of this objective. Notwithstanding, the role of HR can be on no account regarded as that of a mere executor, which slavishly obey to the business.

The role played by the HR function may be essentially intended by employers in two different ways: as the function supporting the business in the implementation of its strategy or as the function helping the organization to develop and hence formulate its strategy; in both cases HR plays indeed a strategic role. Albeit HR might not be invited by an employer to sit at the strategic table, its role is crucially important for supporting the organization in the attainment of its business objectives and in the pursuance of its intended strategy. HR may not participate in the business strategy development process, but the formulation and implementation of HRM practices, which are in turn of paramount importance for the successful pursuance of business strategy, can be regarded as strategic on their own. Human capital management practices have a huge, direct impact on individual behaviour so that also this HR role has to be considered as sorely strategic.

HRM policies should essentially ensure organizations that individuals feel to be treated fairly and with equity by employers, that employees feel at ease in the workplace insofar as to describe this as a great place to work, and that the employer is openly recognized as an employer individuals would like to work for, that is to say as an employer of choice. Attaining this objective in practice can definitely prove to be a daunting task for HR so that its efforts and resources have to be respectively focused and deployed so as to ensure that nothing interfere with the individuals’ capability to express and use their skills at their best. Since the one size does on no account fit all, the approach adopted by HR to attain this objective definitely needs to be strategic. It can be indeed hardly contended that this is a role HR plays as a mere executor in that it is highly unlikely that an employer might be capable to tell an HR manager or director how to practically achieve this objective.

HR may have no voice in the business strategy development process; albeit to a different extent, nonetheless, its role can be invariably regarded as strategic. It does not typically act as a mere executor but as a partner ensuring the smooth unfolding of the organizational activities. The primary aim of HR is to make sure that all of the employees have the skills, expertise and capabilities required to properly perform their activities, feel recognized and perceive positively the employer and the workplace so as to go the extra mile and exercise discretionary behaviour.

Also in those cases in which HR is invited to sit at the strategic table its overall strategic extent is indeed rather limited. HR is not in a position to establish the direction the employer should point in and the strategy the employer should pursue to gain competitive edge. Making this type of decisions does not only entail business acumen, but an overarching, thorough knowledge of the market and of the financial resources available to the managing director, which HR does not typically have. The role of HR, notwithstanding, is important and thus strategic in that it is in a position to assess whether the employer can realistically meet its objectives banking on the human resources this already has and judge whether this can successfully retain and attract the talent necessary to pursue its intended strategy.

In many respects it can be contended that it is in the employers’ best interests to invite HR to sit at the strategy table. Inasmuch as HR is not in a position to suggest the direction the employer should point in to attain competitive advantage, the employer is not in a position to properly and effectually manage human capital practices. The synergy these create together is of paramount importance and necessary for the successful attainment of the business objectives. General management and human capital management responsibilities, which require different expertise and knowledge, rest indeed with different individuals just to ensure that these can be properly and professionally managed.

It can be hardly averred, for instance, that HR may authoritatively recommend an employer to consolidate in the current market rather than to adopt a market penetration approach or that HR may suggest a market development strategy as preferable to diversification, and infallibly foresee competitors’ reaction. With regard to this specific aspect, the employer should rather listen to the sales director recommendations. In contrast, HR definitely is in a position to assess the organization human capital readiness and aptness to the eventually required change of strategy and to take action so as to enable the employer to pursue the strategy this considers necessary to gain competitive advantage and stay ahead of competition or the strategy the market urges this to pursue. The role played by HR can be thus unquestionably regarded as strategic.

A change of strategy may entail the organization requiring new skills and competencies, which may not invariably be promptly available to the employer in that the existing workforce may lack these. HR should timely and openly provide employers a thorough picture of the current state of play so as to eventually obtain permission to promptly acquire the talent required to effectually pursue the new strategy from the exogenous environment.

Such an approach can nonetheless be deemed reactive, but the HR strategic significance may remarkably increase whether it would adopt a proactive approach to constantly identify the talent needed to face the future challenges and come up with new, original ideas to prepare employees to the likely future changes of strategy. In this regard HR may even prompt employers to envisage the future business strategy, anticipating trends rather than suffering their consequences, and consequently make the necessary arrangements for the organization acquiring the skills and capabilities needed in the future. Proactivity will also enable HR to develop talent from within rather than “buying” it in the exogenous labour market. Yet, change of strategy more than requiring additional skills and capabilities may entail a broader change of the organizational needs in terms of talent. Acquiring additional talent from the exogenous environment, for necessary it may prove to be, would anyway negatively impact the overall personnel budget, whereas developing talent from within would not; never mind the benefits in terms of employer branding, engagement and retention the adoption of such an approach would secure to the employer.

It can be averred that the role of HR is indeed strategic by nature, but to properly and effectively play its role HR, arguably prior to any other organizational function, needs to gain the skills, expertise, talent and professionalism necessary to perform such a daunting, ambitious task. It is otherwise hardly believable that HR may gain the employer trust and confidence and attain valuable objectives in practice.

The strategic role of HR can be taken for granted; it can be argued that every HCM practice is strategic and should be therefore strategically formulated and executed. The relationship that HR should establish with employers should be regarded somewhat of in between the “dialogue” and “holistic” approaches shown in table 1. Despite the dialogue approach entails a two-way communication between HR and business strategy, in contrast with the HR driven method it also entails the predominance of business strategy, which is symbolized in table one by the lower dashed line. The holistic approach implies a close collaboration between employer and HR, somewhat of HR contributing to identify the business direction, which can be in many respects regarded as extreme. Albeit human capital assumes a paramount importance in order for the employer to attain competitive advantage, it can be hardly agreed that HR strategy may be considered as an end in itself. Regarding HR strategy as the core element from which business strategy actually stems entails a limitation of the employer latitude to develop the strategy this considers most suitable for the organization. As discussed above, HR and the employer need to do whatever they can to procure respectively the human and non-human resources necessary to pursue the most profitable strategy; should not aim at developing the strategy they can easily pursue with the current resources, the risk being the organization to be eliminated by the competition.

A concerted approach, as outlined in table 2, stresses the importance of HR and the employer engaging in a genuine, equitable dialogue where the employer and HR constructively work together for a shared purpose.

Table 2

The distinctive feature of this approach is that it aims at producing synergy and thus to more effectively serve the employer best interest, which beyond any rhetoric should actually coincide with the interest of the entire employee population. The adoption of this approach, which ideally implies HR to sit at the strategic table, can indeed enable the employer to gain a thorough, realistic view of what can or cannot be actually achieved and of what it is required to eventually pursue the desired strategy.

A genuine collaboration between HR and the employer can stimulate the discussion and investigation of future scenarios and of the likely future direction the organization might be prompted to point in by reason of the likely emerging market trends. This in turn helps HR to foresee the skills which may be required by the employer in the near future and hopefully distant future, and make plans to ensure that these will be made timely available.

This methodology assumes even greater practical importance whether it is considered the circumstance that many exogenous and endogenous factors do influence the employer intended strategy, insofar as Mintzberg (1994) contends that strategy is “formed” rather than “formulated” and that it is can be only retrospectively identified. Despite this interpretation might be regarded as exaggerated in the extreme, it can be hardly denied that business strategy is subject to a considerable number of variables. Employers and HR should do whatever they can to keep abreast of any future developments and take appropriate action so as to assume full control of the business strategy, HRM practices and of the talent requirements necessary to effectually support its pursuance.

The role of HR is actually crucial for the success of any organization so that employers should never ever hesitate to closely, actively collaborate with this naturally strategic organizational function. HR on the other hand, to gain its invitation to the strategic table, should show and prove to have the knowledge, professionalism and expertise to strategically support the employer. The task this is prompted to perform is everything but straightforward and no employer aims at running the risk of entrusting such a delicate task to individuals who do not have the necessary expertise and may hence jeopardize rather than consolidate the business stability.

Longo, R., (2016), HR Strategy between myth and reality; Milan: HR Professionals, [online].

How corporate culture supports strategy execution

It is an axiomatic fact that strategy execution and corporate culture play a remarkable role in the attainment of organizational success. From the chronological point of view, it can be argued that the significance of corporate culture emerges in between strategy formulation and strategy execution. Organizational strategy can be in fact properly developed on paper, but whether this is not also appropriately executed with great or sufficient precision it is hardly imaginable that an employer might ever be able to successfully point in the right direction and achieve its scope, that is to say successfully pursue its intended strategy. The most effective and appropriate KPI to asses corporate culture can be hence identified with its capability to support organizational strategy and more in particular its consistent and successful execution.

 Table 1

The values, beliefs, behaviour and “the way we do things around here” fostered within a business by an employer in that considered crucial to the attainment of its objectives clearly vary from organization to organization. The fact each company has a different corporate culture peculiar to this and only this should indeed represent the distinctive characteristic of each organization, somewhat of its DNA. In the unlikely event of two or more organizations fostering exactly the same type of culture, nonetheless, even remarkable differences between these are likely to emerge by reason of its different execution.

It can be very pragmatically concluded that the efficacy of corporate culture sorely depends on how helpful and supportive this proves to be of strategy execution. To be deemed appropriate and coherent with the employer’s wants and expectations an organization’s culture essentially needs to ease and favour the effectual strategy implementation process.

Every business founder concentrates and focuses his/her efforts on fostering and promoting a type of culture peculiar to his/her organization so as to enabling this to achieve competitive advantage. Notwithstanding, it can be identified some features and components, which whether properly underpin corporate culture, should contribute to considerably increase employers chances to successfully implement their strategy.

Table 2

Readiness to change

The speed change occurs in the exogenous environment habitually requires employers to introduce changes into their organizations at the same pace. The fact that employees may oppose and resist change, albeit this is necessary for their organization to stay afloat and remain competitive in the relevant market, and the delay in its implementation this habitually entails are likely to have a remarkably negative impact on strategy implementation.

Individual readiness to change should be hence considered as one of the main underpinning pillars of corporate culture and should be invariably inspired by concepts like dynamism, energy, adaptability and innovation. The metaphor of the organization as a chameleon might prove to be effective to properly convey the message. This species of lizards has adapted to live in trees and developed the ability to change the colour of their skin to match their surroundings and escape predators’ attention (though this theory has been relatively recently opposed by some scientists who sustain that the change of the colour of their skin is rather used by these reptiles to communicate and control their body temperature). Since for modern organizations gaining and maintaining competitive edge is crucially important, as chameleons these should aim at constantly growing throughout their lives. Being informed of what occurs in the external environment and about their competitors’ moves is clearly of pivotal importance, too; as chameleons, hence, organizations should be able to simultaneously look at two different directions with a 360-degree view and promptly focus on what they see.

Organizational culture cannot and should be not, nonetheless, only based on a defensive and adaptive approach; employers should attach great importance to their employee capability to come up with new ideas, develop new approaches and anticipate future trends, and should thus encourage everyone within the business to contribute in this sense. Innovation must be hence invariably regarded by employers as an additional important pillar of their organization culture; the most appropriate metaphor organizations can use to convey the message might hence be that of the innovative chameleon.

Clarify and spell out the intended objectives

Individuals are habitually willing and in many respects keen to accept and genuinely embrace change whether these understand and recognize the need for its introduction and the benefits it is intended to bring. Making clear what the reasons for change are and why this is actually necessary for the organization to maintain or expand its presence in the market would clearly help an employer to gain its employees’ support and active participation during the processes of change and strategy execution.

The direction identified by a company should enable this and its people to achieve success and in turn secure employees job stability. The circumstance strategy is implemented and change is eventually introduced to support the process, essentially with the aim of deriving a benefit to the organization, regardless of which this might be, has to be clearly outlined and explained to employees from the outset. It is indeed absolutely necessary that these become fully aware of the positive implications associated with the introduction of change and of how significant their support is in order for their employer to successfully pursue its intended strategy.

Employers must invariably avert talking the talk and do not walking the walk; employees would sooner or later find out whether these have supported their decisions with deceitful arguments and should such circumstance occur the consequences would definitely be disastrous and more often than not irreversible. First and foremost, employers need to gain their employees trust and confidence, which can definitely be regarded as a key prerequisite to establish an effective communication channel with individuals. Openness, transparency and trust should be thus invariably considered as features strongly characterizing corporate culture, but clearly not exclusively “on paper.”

Communications

Communication is of paramount importance more than usual; it essentially represents the only means enabling employers to provide employees a clear-sighted vision. All of the individuals composing the employee population need to have crystal clear ideas of the strategy identified by their employer, should gain a good understanding of how it can enable the organization to achieve a sustainable competitive advantage and thus genuinely back this. The establishment of an open, two-way communication channel can clearly facilitate the process.

Corporate culture, consistently with the aim of inspiring, building up and winning employee confidence and trust, should promote a transparent, honest communication ensuring employees to have their say. The aim of communications should not be hence limited to unveil and share with all the employees the plan of action developed by the employer, but should rather aim at enabling the employer to involve and bring on board all of its employees. Corporate culture should encourage employee continuous contribution and active participation, and encourage employees to continuously come up with and suggest new ideas.

Every individual should feel to be active part of the process and commit his/her contribution to the overall outcome produced by the organization as a whole.

Learning

In order for employees to actively become part of the process these have to be first and foremost put in a position to effectively contribute to organizational success. Involving in the pursuance of organizational strategy individuals who do not have the skills and capabilities required, would clearly produce counterproductive effects. Inasmuch as corporate culture needs to foster individual participation, commitment and contribution to organizational success, this has to encourage individual learning. Employers should thus invariably ensure and secure their employees to have access to the programmes enabling them to gain and expand the capabilities and knowledge necessary to effectually play their role.

A skilled employee population may indeed help employers to reverse the trend in terms of change in that knowledgeable and capable individuals may actually come up with new, ingenious ideas anticipating external pressures and proposing change from within. This circumstance would certainly be ideal, change would not be in fact imposed by others, but proposed by employees, which would thus perfectly know the benefits associated with its introduction and would instantly and naturally become change advocates.

The same result in terms of employee participation should be indeed ideally achieved also in those circumstances in which change is proposed by employers by reason of the pressure exerted by the exogenous environment. Involving employees in the project from the outset and establishing an appropriate two-way communication channel should definitely help employers to successfully perform the feat.

Reward

It can be contended that the old saying “money talks” still definitely holds true. Irrespective of the awareness managers may or may not have, the decisions they make in terms of reward clearly communicate and convey a precise message to employees, a message which individuals more often than not receive clearly and promptly. Whether corporate culture fosters individual participation and involvement, and some individuals behave as desired by the employer and yield the expected results, these need to be openly recognized. The introduction of this mechanism not only reinforces the importance of concepts like consistency and integrity within the business, but may also help employers to sustain and consolidate corporate culture and the tenets underpinning this.

Organizational culture should obviously foster individual commitment and participation, but it should also promote at the same time the employer willingness and readiness to recognize those who support the business in its quest to pursue its intended strategy and attain the desired objectives.

HRM Model

Consistency should be showed at all the organizational levels and layers, corporate culture should be thus consistent also with the HRM model adopted by the employer. It is not indeed just a matter of consistency; the HR management model underpinning the organization human capital practices should also noticeably support and sustain a company culture in that this is also essentially concerned with favouring and easing the attainment of the employer desired objectives.

Management commitment

Individuals will never commit to support their employer and let alone try to go the extra mile whether the organization management does not lead by example. The management commitment has hence to be gained from the very beginning and has to be sorely visible.

The role played by mangers in developing and shaping organizational culture is clearly much more than simply considerable. They have the responsibility to provide employees with a vision, support individuals during their working activities and make decisions about individual growth and hence future.

Mangers can definitely make or break corporate culture so that before appointing a new manager employers should definitely ensure that these have what it takes to properly perform their role and genuinely and truly support the organization strategy and culture. The findings of many studies reveal that bad management is indeed one of the most recurring causes for employees leaving their organization. Notwithstanding, managers are appointed by employers so that the responsibility for individuals leaving their organization ultimately rests with them. The circumstance an organization appoints the wrong person to fill the wrong position has to be essentially regarded as an employer blunder and whether after having made such a huge mistake employers do not take appropriate action it is likely that these will be called to pay for it anytime soon.

***

The great significance of organizational culture for strategy implementation and thus organizational success can be taken as axiomatic. The type of culture fostered by a company founder should be first of all consistent with and peculiar to the specific type of strategy this intends to pursue, the objectives this aims at attaining and the behaviour this expects individuals to exhibit. Nonetheless, employers should invariably shape and develop their businesses culture taking heed of some core, founding pillars such as readiness to change, flexibility, innovation, learning, recognition and open communication. On top of these components business founders, with the help of the organization management, should identify the other values and beliefs which they consider important to gain and maintain competitive advantage over their competitors.

Longo, R., (2015), How corporate culture supports strategy execution; Milan: HR Professionals.