Corporate Partners Research Programme

Achieving strategic alignment of business

and human resources

Natalie Turner
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Contents

Executive summary

1. Introduction 6
1.1 The theory: Developing a human resource strategy 7
1.2 Human resource strategy and… 8
1.3 The practice: Aligning human resource and business strategies 10
1.4 So why bother? 12

2. Aligning HR and business in practice 15

2.1 Why? 15
2.2 How? 17
2.3 Outcomes 18
2.4 Success factors 20
2.5 The key challenges to the alignment process 21

3. Conclusion 23
3.1 Does alignment matter? 23
3.2 What does this mean for organisations? 24

4. Case studies 26
4.1 Borough of Telford & Wrekin 26
4.2 Standard Life Healthcare 31
4.3 Seven Worldwide 35
4.4 AutoGlass 43

Annex 1: Methodology
Bibliography
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Executive summary

• Businesses that aim to align their human resources
strategy (HRS) with their business strategy tend to be
more profitable and more efficient than those that do
not. This depends on: in the first instance,
understanding what the business strategy or strategies
are; second, what constitutes the HR strategy; and third,
seeing if there is sufficient congruency.
• When organisations are asked about strategy, it is
tempting for the professionals to reveal the process
as formal and considered, perhaps captured in
boardrooms and strategic documents. But the more
critical, and more realistic, management and academic
literature suggests that this cannot be the case.
• Theory too offers many approaches to the process;
practice highlights the difficulties in achieving
alignment. Yet having greater congruity between HRSs
and business strategy is more desirable than a situation
where for example, an organisation’s pay and reward
strategy does not encourage the behaviours that
deliver business goals.
• This report argues that the process of aligning HRS with
business strategy should be based on circumstance
(contingency) rather than a one-size-fits-all approach
(universalist). Consequently, it will not point the reader
down some specific, ‘primrose’ path where strategy and
HR can be aligned for benefits all round.
throwing up different problems and opportunities that
need addressing.
• Focusing on making the organisation a great place to
work is as – and sometimes more – important as other
HRS outcomes. Cultural nuances mean that every
organisation, indeed in some cases every site, requires
a bespoke approach within an overall strategic
framework where first the organisational purpose is
clearly defined and then the organisational objectives
carefully delineated.
• HR departments need to become far more literate
in the language of business and financial planning,
improve their networking skills across the organisation
and understand that HR strategy development works
best when there is a strong cultural and business ‘fit’.
• Each HR strategy requires the development of robust
metrics that enable the HR department to show ‘before
and after’ effects wherever possible. Some examples are
reduced employee turnover, new skills acquisition by
staff, increased numbers of ideas and levels of
innovation through reorganisation.

• By reporting on practice, it shows that a HRS does not

operate in isolation and cannot be bolted onto other
organisational strategies very easily. The research
evidence indicates an organic process of development
where HRSs achieve strategic alignment through a
process of trial and error, with each new phase

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1. Introduction
Studies into business and HR strategy (HRS) proffer no
shortage of advice for organisations on how to be
‘strategic’, and the importance of ‘strategic alignment'
between business strategy and how people are managed.
The business strategy of an organisation refers to ‘the
expressed intentions of how managers expect to achieve
particular business results over a stated period of time’. 1
A business strategy therefore deals with ‘choices
regarding how an organisation’s marketplace activities
are configured to gain competitive advantage’. 2 Strategies
may include cost reduction, innovation, joint venturing,
value added, rapid customer response or having a focus
on quality. Businesses may be pursuing more than one
strategy at any time, and strategies may well be neither
made explicit across the organisation, nor well
understood. This paper explores these issues further.
But the success, or failure, of UK businesses depends on
how well strategic decisions respond to a multitude of
external factors – for example the emergence of new
customers or competitors – many of which may be
outside the immediate control of individual managers.
Internally, HR strategy and practice is just one key
function, alongside finance, core business areas and
customer-facing services, that can help a business
obtain its strategic goals and performance targets.
For the purposes of this report, HRS is defined as ‘a
set of interdependent human resource (HR) policies
and practices designed and implemented by a firm to
3
achieve its objectives.’
HRS therefore cannot be cocooned from changes in the
marketplace. It is also subject to specific influences on
human capital, such as new employment legislation and
shortages in the labour market. For HR strategies to
1 Tyson S, Human Resource Strategy: Towards a General Theory of Human Resource Management, Pitman Publishing, London, 1995, p 169
2 Sheppeck M A and Militello J,‘Strategic HR configurations and organisational performance’, Human Resource Management, Vol 39 No 1, pp 5-16, 2000
6 3 Richardson R, Lecture 2: MSc Industrial Relations, Managing Human Resources series/module, London School of Economics, 1999/2000
succeed, it makes sense for them to be aligned with
business strategies, or at the very least, not to have them
in conflict. For example, having a competitive strategy
founded on innovation but a culture that is risk-averse
will not bring about the required human behaviours to
achieve objectives.
Of course, achieving alignment of the kind we read about
is rarely a stable destination. Many organisations argue
that the alignment being prescribed is not only difficult
to attain, but difficult to describe and measure. In practice
it requires constant re-adjustment and several iterations.
The speed and subtlety with which aspects of business
focus or competitive edge are expected to change mean
that supporting processes, such as HR management, must
be fleet of foot rather than monolithic in their responses.
In many organisations, it is strategic ‘fit’ and agility that
really keep things on the rails.
Some argue, with some justification, that it is possible to
become too obsessed with strategic alignment as an end
in itself. And if people in an organisation are having to
think about this ‘fit’ with any frequency, then it is probably
missing the point. The notion of organisations as flexible
adaptive systems can have resonance here, and is being
embraced by a number of academics and practitioners as
they seek to break free from the concept that
organisations have to get all their structural and strategic
‘ducks in a row’ before change can even start.
However, having a set of HR policies and practices that
is at odds with the overall business strategy is also
undesirable. Alignment may therefore be a case of
achieving greater overall coherency between HR and
business strategy. With all this in mind, this paper aims to:
• provide an overview of the theory and rhetoric of the
‘strategic alignment’ debate, and find out how
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organisations have achieved a fit between their
strategy and HR practices
• understand how and why business and HR strategy
align to produce business benefits
• identify the processes and measures they have used
to both achieve and sustain alignment.
1.1 The theory: Developing a human
resource strategy
The central debate concerning HRSs hinges on two broad
approaches: the ‘universalistic’ and ‘contingency’ positions.
1.1.1 Universalistic approach
Academics such as Peters and Waterman, Huselid and
Pfeffer have claimed that there is ‘one-best’ or ‘universal’
way to manage HR. In other words, they have identified a
4
number of HR policies and practices, which they suggest
if followed would always result in organisational success.
Pfeffer, for example, advocates the use of seven integrated
practices, which will enable organisations to ‘obtain
profits through people’. 5 These practices are:
1. employment security
2. selective hiring of new personnel
3. self-managed teams and decentralisation of decision
making as the basic principles of organisational design
4. comparatively high compensation contingent on
organisational performance
5. extensive training
6. reduced status distinctions and barriers (including
dress, language, office arrangements and wage
differentials across levels)
7. extensive sharing of financial and performance
information throughout the organisation.
1.1.2 Contingency approach
In contrast to the universalistic approach to HRS, the
contingency approach argues that what firms should do
4 Peters and Waterman (1982), Huselid (1995) and Pfeffer (1998)
5 Pfeffer J, The Human Equation, Harvard Business School Press, 1998, p 64
6 Porter (1980), MacDuffie (1995), and Schuler and Jackson (1987)
7 Mabey C and Salaman G, Strategic Human Resource Management, Blackwell, Oxford, 1995
8 Guest (1987) , and Hendry and Pettigrew (1990)
depends on their circumstances. This approach is more
akin to the idea of strategic alignment because it claims
that the optimal personnel policy choice depends on the
unique characteristics of the individual organisation. The
argument goes that organisations need to achieve a fit
between personnel policy choice and broader strategic
considerations, particularly of product market conditions
and business strategy. Porter, MacDuffie, and Schuler and
Jackson 6 are among those who favour the contingency
approach and focus on ‘external fit’; that is, the integration
between HR and the firm’s wider policy choices.
Mabey and Salaman’s contingency model is called the
‘open approach’. 7 The operating environment requires
a corporate strategy, which in turn requires desired
employee behaviours. These HR outcomes pursued
through the HRS require three ‘key levers’: structure,
culture, and personnel practices and policies. For the HRS
to be deemed successful, two forms of integration must
be achieved: ‘external’ (alignment of business and HRS)
and ‘internal’ (where structural, cultural and personnel
strategies are integrated with one another).
1.1.3 Which approach?
The contingency approach makes no attempt to
prescribe a particular HRS, or indeed the outcomes. More
prescriptive ‘universalist’ models, for instance those of
Guest, and Hendry and Pettigrew 8, assume that there
will be fixed outcomes whatever the HR activities being
pursued. Yet in practice, this may not necessarily be the
case. For example, as Thornhill et al point out:
‘A company facing extreme product market pressure to
produce as cheaply as possible a product which requires
very little employee skills, may be very conscious of the
HRM goals of integration and cost-effectiveness but much
less enthusiastic about pursuing employee competence
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and commitment. It may be an intrinsic part of the HRS
to treat employees as highly dispensable. In this case,
expenditure on training and policies to secure high
employee commitment would be seen as wasteful.’
However, while more realistic, the contingency approach
does not provide an attractive one-size-fits-all solution.
And the specific bundle of policies and practices that an
organisation might pursue is further complicated by the
nature of the contingency – does HRS depend on
organisational life-cycle, business strategies or
organisational structure? The next section looks at these
three areas in more detail.
1.2 HRS and…
1.2.1 Organisational life-cycle
HRS should be determined by the life-cycle stage of an
9
organisation. Kochan and Barocci 10 identified four life-
cycle stages: start-up; growth; maturity; decline. ( Table 1.)
1.2.2 Business strategy
Deriving HRS directly from the corporate or business
strategies an organisation is pursuing supports the view
that HRS is a function of, not an adjunct to, strategic
decision-making. For instance, academics such as Miles
and Snow, and Schuler and Jackson 11 regard HRS as
central to the execution of firms’ corporate and business
strategies, putting a formulated business strategy into
effect. ( Table 2.)

Table 1: Summary of Kochan and Barocci’s four life-cycle stages

Stage Key features of the organisation/HRS

Start-up There is a need to attract high-calibre employees, partly by paying market or above market rates,
and partly by establishing skill requirements for future development and a suitable organisational
culture

Growth Various categories of part-time, temporary or sub-contract labour may be used to create labour
flexibility

Maturity A large internal labour market, and the emphasis shifts towards manpower retention. Accordingly,
wages tend to be based more on grade definitions than profitability or skills

Decline There is less employee participation, and downturns in profitability may result in layoffs

A focus on restructuring, cost control, redundancies and outplacements

Downward pressure on wages and a need to agree criteria on which to base redundancy
decisions. In such a crisis situation, the future of an organisation is clearly uncertain

9 Thornhill A, Lewis P, Millmore M and Saunders M, Managing Change: A Human Resource Strategy Approach, FT/Prentice Hall, Harlow, 2000, p 20
10 Kochan T and Barocci T (Eds), Human Resource Management and Industrial Relations, Little Brown, Boston, 1985
8 11 Miles and Snow (1978, 1984), and Schuler and Jackson (1987)
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Table 2: Summary of Schuler and Jackson’s three competitive business strategies and related HR policies

Strategy HR policies and employee behaviours

Cost reduction Structures that emphasise control and low investment in training

Usually with narrow job descriptions and career paths

Short-term, results-oriented performance appraisals and close monitoring of market

pay levels for use in making compensation decisions

Quality enhancement Fixed and explicit job descriptions

High levels of employee participation in decision making relevant to work, short-term

and results-orientated appraisal

Extensive and continuous employee training and development

Innovation Structures that encourage co-operation and creativity eg an emphasis on project-

based team performance appraisal, which recognises developmental and team-based
activities

Considerable investment in training and career development

Compensation that emphasises internal equity

Gunnigle and Moore observe three levels of strategic
decision-making: corporate, business and functional.
‘Each level involves decisions that are strategic in nature.
However, decisions at higher levels, such as those at
corporate or business level, will guide subsequent
decisions on functional strategy’. Strategies at corporate
12
level can be defined as the ‘direction and scope of an
organisation over the long term’. 13
Corporate or first-order decisions have implications 14
on business and functional strategies. These are called
‘second’ and ‘third-order’ strategies – or ‘downstream’ – by
Purcell, and refer to company and individual business unit
level respectively. In this context, HRS would be part of
downstream decisions, flowing logically from higher
order decisions to help implement the overall strategy
of an organisation.
Claims about the nature of the relationship between HR
and business strategies have been advanced, in particular
by Schuler and Jackson. They argue that ‘organisational
effectiveness can be increased by systematically melding

12 Gunnigle P and Moore S,‘Linking Business Strategy and Human Resource Management: Issues and Implications’, Personnel Review, Vol 23 No 1, pp 63-84, 1994
13 Johnson G and Scholes K, Exploring Corporate Strategy, Third Edition, Prentice Hall, Hemel Hempstead, 1993, p 10
14 Purcell J,‘The Impact of Corporate Strategy on HRM’, in Storey J (Ed), New Perspectives on Human Resource Management, Routledge and Kegan Paul, London, 1989, p 70 9
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HR practices with the selected competitive strategy’. 15 organisation structures: simple structure, machine
There are typical business strategies – termed ‘innovation’, bureaucracy, professional bureaucracy, divisional and
‘quality enhancement’ and ‘cost reduction’ – from which adhocracy, and that each of these will affect which
appropriate HRS can be derived. 16
strategies, policies and practices are or should be used.

More specifically, Marchington evaluates the influence
of ‘product market’ on the development of an HRS. 17
The relative levels of competition that an organisation
experiences in its product markets will influence the
degree of management discretion in making strategic
policy decisions in all functional areas, including HR. For
example:
• High monopoly power affords management greater
discretion in choosing a particular personnel policy
configuration. It is also likely to facilitate the adoption
of resource-based and ‘benign’ HR practices, such as
tenure commitments and gain sharing.
• Where product market competition is intense,
management is likely to have considerably less scope
to make choices on their personnel approach and
may adopt more control-oriented HR approaches.
1.2.3 Organisational structure
This third category suggests that the focus of HRS should
be contingent not only on the nature of the corporate or
business strategy being pursued, but also on the type of
organisational structure associated with this.18 This
includes paying attention to the organisation’s size, age,
business environment and technological systems.
Mintzberg describes an organisation’s structure as ‘the
sum total of the ways in which its labour is divided into
distinct tasks and how these are coordinated’. He claims
that there are five configurations that can explain most
1.3 The practice: Aligning human resource
and business strategies
The reality of these suggested links between HRS and
corporate strategies, structures or life-cycles is much more
problematic than the models may suggest. While the links
may appear to be reasonably logical and even useful, they
may be based more on deduction than empirical data. 20
Indeed, the reality of devising and implementing a
strategy is too complex for any single link to be made
between business and HRS. It is reasonable to assume
that organisations in different markets will be at different
points in the business life-cycle, as well as having different
structures. HRS is not just about ‘fit’, but about devising a
completely unique and flexible package of policies and
practice. The reasons for tailor-made HRSs are outlined
below and clarify why a one-size-fits-all approach may
not work.
1.3.1 Lack of clear business strategy
For a link even to be considered, a business strategy will
need to be apparent to the managers of an organisation.
However, as Storey and Sisson point out, ‘where such
strategies are available they are often extremely vague’. 21
Further to this, Wright et al suggests that there a number
of reasons why managers may not have a clear
knowledge of their organisational context, required
19
behaviours and relevant practices required for strategy
development. 22 These include:

15 Schuler R S and Jackson S E,‘Linking Competitive Strategies with Human Resource Management Practices’, The Academy of Management Executive, Vol 1 No 3, pp 207-219, 1987
16 Other similar models include those put forward by Treacy and Wiersema (1995), and Miles and Snow (1984)
17 Marchington M,‘Analysing the Links between Product Markets and the Management of Employee Relations’, Journal of Management Studies, Vol 27 No 2, 1990
18 For investigations into organisational structure, see for example Chandler (1962), Child (1984) and Mintzberg (1983)
19 Mintzberg H, Structure in Fives: Designing Effective Organisations, Prentice-Hall, Englewood Cliffs, London, 1983, p 3
20 See for example Hendry and Pettigrew (1990)
21 Storey J and Sisson K, Managing Human Resources and Industrial Relations, Open University Press, Buckingham, 1993, p 69
22 Wright P M, McCormick B, Sherman S and McMahan G,‘The role of Human Resource Practices in petro-chemical refinery performance’, paper presented at the 1996 Academy of Management
10 Meeting, Cincinnati, Ohio
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• The nature of change: As environments change in
a non-cyclical and discontinuous manner, it becomes
harder for managers to obtain the information they
need to understand organisational contexts.
• Imperfect knowledge: Research suggests that the
way individuals interpret information is flawed and,
particularly where there are multiple variables, they
may fail to understand causal relationships.
• Organisation size, location and structure: Larger,
diversified and geographically dispersed organisations
may have unique competitive circumstances requiring
unique strategic elements. This may subvert the success
of a centralised strategy.
1.3.2 Lack of a single strategy
Business strategies at corporate level frequently do not
fall into the three simple categories described in Table 2,
and instead are a jumble of all three. Schuler and Jackson
themselves admit that their model is an oversimplification
of reality, as companies may follow more than one
competitive strategy at a time and need to manage the
resulting tensions and conflicts. 24
These arguments suggest that HRS will vary significantly
within companies operating in the same industry sector.
Implementation of an HRS may well follow different paths
in terms of take-up and integration into the business
strategy, even in different units of the same organisation.
Authors such as Mintzberg, Sheppeck and Militello, and
Thornhill 25 all argue that more often than not, strategies
emerge in a piecemeal rather than planned fashion. Also,
as Gratton et al point out, ‘we could not assume that what
is “intended” (with regard to both business and HRS)
would be “realised”’. 26 They found that some HR processes
seem more easily embedded in the firm’s business
strategy than others. More specifically, ‘short-term HR
processes’, such as setting objectives and rewarding
performance outcomes that are in line with business
goals, are relatively more strongly linked to the business
strategy than are ‘long-term’ HRSs (ie transforming the
basic skills and aspirations of the workforce to prepare for
23
the longer term; creating an organisational structure and
value set that will underpin longer-term success). ‘A key
role of the HR practitioner is therefore to focus the
organisation on the longer-term and to challenge the
predominant short-term thinking.’ 27
1.3.3 Time-lags
Wright suggests that the ability of an HRS to achieve ‘fit’
will be inhibited by the time lag between conception and
implementation of the new practices associated with the
HRS, and a further lag between the implementation of
these and realised outcomes. ‘[A] long-term perspective is
a particularly crucial aspect of people strategies because
the time cycles for people resources are considerably
longer than those for financial and technological
resources.’ 28 Indeed, it may take years rather than months
for the effects of HR policies and practices to be realised
because these initiatives mean that individuals may have
to relearn elements of their jobs and adjust ingrained
routines in their day-to-day work.
1.3.4 Office politics
The process of designing and implementing an HRS is
affected by cultural and political factors operating in
organisations rather than by following a highly rational
and normative model. These factors no doubt affect
perceptions about the need for change, its management
and the way HRS may be used. This could explain for

23 Wright P M and Snell S A,‘Toward a unifying framework for exploring fit and flexibility in strategic human resources management’, Academy of Management Review, Vol 23 No 4, p 756,
1988
24 Schuler R S and Jackson S E,‘Linking Competitive Strategies with Human Resource Management Practices’, The Academy of Management Executive, Vol 1 No 3, pp 207-219, 1987
25 Mintzberg (1987, 1989), Sheppeck and Militello (2000), and Thornhill (2000)
26 Gratton L, Hope-Haley V, Stiles P and Truss C,‘Linking individual performance to business strategy: the people process model’, Human Resource Management, Vol 38 No 1, 1999, p 18
27 Ibid, p 28
28 Wright P M and Snell S A,‘Toward a unifying framework for exploring fit and flexibility in strategic human resources management’, Academy of Management Review, Vol 23 Issue 4, p 756, 1998 11
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example why some of the organisations Gunnigle and
Moore surveyed appeared to be successfully aligning HR
policies and business strategy, while others were failing. 29
Organisations may be seen as composed of different
groups of stakeholders, each with a particular set of
interests. ‘Dominant managers or groups of managers
in an organisation may therefore seek to exercise
discretionary power, as well as any formal authority vested
into them, to influence the outcome of decisions that will
affect their interests. It is therefore inappropriate to view
30
HRSs as rational and objective entities, as they exist within
a value-laden system and can be described as being
‘constantly in play, negotiated, revised and adapted’. 31 On
occasion, the implementation of any strategic change is
likely to be problematic and to meet resistance on the
part of employees at virtually all levels within an
organisation, and HRS is no different. Change judged
‘deviant’ will be perceived as imposed and outside
prevailing cultural norms. Strategic change may also be
associated with uncertainty and threat, as it alters familiar
working methods and reward systems. 32
1.3.5 Rigid systems and processes
Like people, rigid systems and processes may also inhibit
the development and alignment of strategies. Wright
suggests that the ability of an HRS to achieve ‘fit’ will be
hampered by structural inertia. 33 Rigidity caused by
bureaucracy (particularly in more developed
organisations), organisational practices that have become
part of a shared definition of reality, and political
processes that result in battling with the internal power
structure all prevent HR practices from being adaptable
to ‘fit’ with either external or internal business demands.
Other factors that may impinge on any straightforward
link suggested between business and HRS may include
29 Gunnigle P and Moore S,‘Linking Business Strategy and Human Resource Management: Issues and Implications’, Personnel Review, Vol 23 No 1, pp 63-84, 1994
30 Thornhill A, Lewis P, Millmore M and Saunders M, Managing Change: A Human Resource Strategy Approach, FT/Prentice Hall, Harlow, 2000, p 8
31 Mabey C and Salaman G, Strategic Human Resource Management, Blackwell,Oxford, 1995, p 108
32 Ibid
33 Wright P M and Snell S A,‘Toward a unifying framework for exploring fit and flexibility in strategic human resources management’, Academy of Management Review, Vol 23 Issue 4, p 756, 1998
12 34 Johnson and Scholes (1993), and Tyson (1995)
the presence or absence of trade unions, legal regulation,
the actual and perceived role of HR and HR professionals
(ie proactive or reactive) and other factors that also affect
decision-making about HRS.
1.4 So why bother?
This analysis of HRS suggests that strategic management
is basically a human process beleaguered with all the
challenges inherent in attempts to make decisions in
conditions of uncertainty, competition and limited
resources. It would appear that alignment is perhaps a
tortuous process, even when you have decided on which
of the many theoretical textbooks provides the most
convincing approach. Yet having a range of policies
and practices that are in sharp discord with the overall
direction of the business is not a desirable outcome
either. This section discusses why it is important to bother
about aligning HRS with business strategy, despite the
lack of a blueprint.
1.4.1 The symbolism of HR
Having outlined the two broad positions in the debate
about HRS, let us now consider in general terms the
single components of an HRS, their symbolism and
outcomes. This will begin to demonstrate the ‘how’ of
strategic alignment, and rather than offering a blueprint,
will demonstrate which policies and practices might be
chosen to match different business strategies.
Authors such as Johnson and Scholes, and Tyson 34
highlight the ‘symbolic connotations’ of HR practices
and policies. When designing an HRS, a firm may consider
a certain set of practices and policies to instil specific
values. Some examples of these are:
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• Rewards: ‘Payment systems tell employees what an
organisation regards as its most important objectives:
individual vs team effort, output, quality, skills.’ 35
• Recruitment and selection: ‘Recruitment and selection
procedures are a vital mechanism not only for ensuring
the employment of appropriate staff, but also for
sending messages about the nature of the organisation
and its core values.’ 36
• Employee development: In the research conducted
by Tyson into different routes to excellence, employee
development – and especially at managerial level –
was regarded as one of the ‘strongest levers, which
were pulled to make the organisation change’. 37
• Training: This is a time-honoured method of seeking
to change attitudes and behaviours of employees.
Among its advantages are: developing a great sense of
employee ownership of change; introducing fresh ideas
and long-lasting change. Clearly there is a limit to the
potential of this approach as a way of introducing
change. It may be rather time consuming, expensive
and not least arouse ‘the big new management idea’
syndrome and thus meet employee resistance through
negative attitudes to change.
• Employee communication and involvement
programmes: This is also a policy area steeped in
symbolism: ‘What is communicated is probably less
important than how and to whom the communication
is addressed.’ The chances of HR initiatives succeeding
38
are generally thought to be greater when there is
genuine employee involvement.
• Reorganisation of personnel at the top of the
organisation: Change may be accomplished very
quickly through changes in personnel at the top of the
organisation with people from outside the organisation.
Such changes are highly visible and symbolise the
necessity to change.
35 Clark J (Ed), Human Resource Management and Technical Change, Sage, London, 1993, p 130
36 Ibid, p 137: see also Johnson G and Scholes K, Exploring Corporate Strategy, Third Edition, Prentice Hall, Hemel Hempstead, 1993
37 Tyson S, Human Resource Strategy: Towards a General Theory of Human Resource Management, Pitman Publishing, London, 1995, p 97
38 Clark J, (Ed), Human Resource Management and Technical Change, Sage, London, 1993, p 99
39 See for example, Arthur (1995), MacDuffie (1995), Huselid (1995), Ichinowski et al (1997) and Neal et al (2004)
1.4.2 HRS, strategic fit and performance
Choosing suitable HR policies and practices is the first
hurdle in developing an HRS. It is also crucial to consider
how they will affect organisational performance. While
there is an abundance of writing on HRS theory and lots
of prescriptive management guidance, very few studies
have attempted to measure the impact of HRS and high-
performance work practices on the bottom-line
performance and productivity of organisations. To
conclude this review, we will look at the most well known.
Research has found a positive correlation between
‘high performance’ HR practices and productivity, but
for different reasons: 39
• Arthur’s study of 30 mini steel mills found that
commitment-based HRM systems had low turnover
and scrap rates and higher productivity than those
emphasising efficiency and reduction of labour costs.
• MacDuffie looked at HR bundles in relation to
manufacturing performance. His study suggested that
the plant whose bundle of HR practices were consistent
with the production and/or business strategy
outperformed the plant which did not. This report
strongly supports the case for alignment and external
fit, but not internal fit.
• Huselid’s study attempted to evaluate the links
between high-performance work practices and
organisational performance. His study found that
such work practices have a significant impact on both
intermediate employee outcomes and both short-
and long-term measures of performance. He did not,
however, find evidence for either internal or external fit.
• Ichinowski et al found that there was a strong
correlation between HR practices and productivity
outcomes, but which were more to do with changes
in attitudes than the practices themselves.
13
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• More recently, a discussion paper by Neal et al

suggests that the use of high quality HR practices
mostly benefits organisations with poor organisational
climates and find little validity for the argument about
internal fit.

Even though the links may be weak, such research

suggests that the fit between HRM practices and climate
is a predictor of changes in productivity over time. The
Work Foundation’s own study looking at these links also
found strong associations between certain bundles of
HR practices and business performance. 40 Together, these
studies show that there is evidence for a link between
HR practices and productivity, but only MacDuffie’s
study provides data that supports an argument for
alignment, too.

14 40 Bevan S, Cowling M, Horner L, Workplace Trends Survey 2004: Summary report, The Work Foundation, 2004
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

2. Aligning HR and business in practice

This section looks at the process of aligning HRS
and business strategy in reality. It focuses on four
organisations that have managed alignment with
positive outcomes. (See Table 3.)
2.1 Why?
The organisations in this report demonstrated both
internal and external reasons for engaging – knowingly
or not – in an alignment process.
External drivers:
• Profit loss: Loss in profit at Standard Life Healthcare
(SLH) spurred a process of improving customer service
and retention. This took place through new and more
focused HR policies and practices that aligned with
business objectives, such as career paths, a good
programme of training for all staff, internal
communications initiatives focusing on informing
staff about developments, and receiving their feedback.
This increased new business.
• Merger: There are a number of people-related issues
that stem from merging two organisations. Most
notably that two organisations can have very distinct
cultures and modi operandi. Poor management of
mergers can be detrimental to business performance,
particularly in the longer term. However, HR can
through bridging business and people issues assist this
process. An excellent example is the Borough of Telford
& Wrekin ( T&W ) case, which shows how merging two
cultures can result in large-scale organisational

Table 3: Summary of the case study organisations

COMPANY BUSINESS STRATEGY ALIGNMENT PROCESS OUTCOMES

Public sector

Borough of Customer service delivery Consultation Increased flexibility among the

Telford & Wrekin and efficiency workforce and increased number
of service days

Private sector

Standard Life From customer to New CEO working closely Increased profits and improved
Healthcare market focus with HR customer services

Seven Worldwide Customer focus HR as a new function Improved efficiency

AutoGlass From customer HR always worked closely Consistently good business

to market focus with business and recently performance and market share.
took a key role in an More recently improvements in
organisational review retention and quality of service

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improvements when assisted by an alignment process.
• A need to increase market share: Although Autoglass
had experienced sustained success for many years,
there were opportunities for growth through increasing
market share. HR practices and policies have a key
contribution to this objective through HR’s position on
the board and working closely with business. For
instance, training initiatives improved performance
of fitters, which was a central part of interaction with
customers.
• Managing changes within external markets: Seven
Worldwide (SWW ) saw a need to move away from
traditional print towards multimedia. This created a
challenge for the organisation, and a director of people
and change was appointed to help manage the
transition. The role took responsibility for managing
the changing employee demographic and harmonising
the terms and conditions of remaining staff.
Internal drivers:
• Cultural problems: Each case study demonstrates a
struggle of varying degrees with organisational culture.
At SLH, the culture needed to be refocused around
customer service in order to reverse profit
loss. T&W also used alignment to assist with cultural
changes that were necessary after the merger of the
county council and district council.
• Senior management influence: The three private
sector case studies all had some form of pressure from
top-level management that encouraged and/or aided
the alignment of HR and business strategies. Autoglass
was encouraged by its parent company to run a
strategic review, part of which was a review of HR
and people. Highlighted in the review were business
weaknesses that HR could help resolve. At SLH, a
new CEO brought with him good commercial ideas
16 41 Ibid
combined with HR corporate values, and was the
key driver for HR working closely with the business.
• Consultation and demographics: In contrast to the
previous point, at T&W the greater pressure came
from consulting widely with staff and from a better
understanding of labour market demographics. Both
these factors highlighted that flexibility was going to
be key to the efficiency of the organisation. It would
suit the labour market and the customer. HR played a
key role in preparing the organisation for an
increasingly flexible workforce.
Interestingly, the actions taken to resolve these issues
generally fall under the rubric of ‘change management
initiatives’ (the next section looks at this in more detail).
This suggests that HR can play a role in managing
organisational change through alignment with business
strategy.
The findings of the The Work Foundation’s Workplace
Trends Survey 2004 show that 45% of companies report
that they have significantly changed their business
strategy this year, and the most common changes to
business strategy are: reorganisation of their internal
structure; expansion plans; introducing a new focus or
reorientation of activities. These challenges are reflected
in the case studies presented here. However, the data
also shows that ‘changes in HR strategy appear to be
somewhat sluggish in their response to either overall
strategic concerns, nor are they reviewed in relation to
what really concerns HR in practice. Only 10% of
organisations [as part of the survey] are currently
reviewing their objectives as far as HR strategy
is concerned.’ 41
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
2.2 How?
The case studies in this report are all examples of where
the specific needs of the organisation and strategic
direction were considered carefully and HR practices
chosen to complement them.
To reiterate a point made in the first section of this report,
an HRS can be defined as ‘a set of interdependent human
resource (HR) policies and practices designed and
implemented by a firm to achieve its objectives.’
Organisations achieved alignment between business
and HR strategy, and improved business performance in
a variety of ways:
2.2.1 Strategic understanding of the HR function
• Creating an HR director role: Both SWW and
Autoglass created a director-level role for HR. This
meant that they had access to board-level decision
making and, where respect was gained, influence
over it.
• Devolution of HR to management: At both T&W and
SWW, a key role for HR was ensuring that management
is equipped to manage people properly and take
responsibility for HR issues. For simplicity, SWW created
desktop intranet links to management guides.
• Data gathering: For two reasons, this had perhaps the
most positive effect on the alignment process. First, it
was a route to gather data on which to base strategy
development. For example, at T&W understanding
demographics and consulting with employees was the
main driver for embarking on the alignment process.
Second, data gathering demonstrated to the
organisation that HR and business would be working
together. For example, at SLH the CEO and HR director
hosted coffee mornings together to talk about key
issues and brainstorm solutions.
42 Richardson R, Lecture 2: MSc Industrial Relations, Managing Human Resources series/module, London School of Economics, 1999/2000
• Independent assessment and internal review: Data
gathering of this kind was an important part of the
process and allows suitable strategic elements to be
chosen. In the early stages of developing the strategy,
SWW had an independent review of the HR function
carried out by a university. Similarly, at Autoglass a
‘people review’ was conducted as part of a broader
organisational review. This allowed an assessment of
where the function was performing well and where
42
improvements could be made in terms of the overall
business direction, starting with a snapshot of the
current status of the organisation’s demographics and
culture.
2.2.2 Organisational initiatives
• Structural and reward changes: These allow HR
to drive itself into the heart of the business. The way
people are rewarded can have a huge impact on
organisational culture, assuming that rewarding certain
behaviours encourages them. At SWW, HR drove
structural changes to make pay policies and practices
more uniform and to improve organisational efficiency.
• Training and development: T&D to encourage and
support specific behaviours was a key feature in all of
the case study organisations, often related to broader
cultural and structural changes:
Standard Life Healthcare: A training programme
called ‘Customer Service Excellence’ (now called
‘Total Customer Satisfaction’) was devised, which all
employees have undergone. The course covered what
customer service meant to individuals, what good and
bad companies were doing and how the company
could improve. All new employees still take this course.
Seven Worldwide: A training and development
strategy was devised to support the organisational
change project. It includes soft skills, ‘time is money’
and team building.
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Autoglass: The training and development initiative in
partnership with its National Skills Centre improved
fitter skills, and with low drop-out rates showed that
managers and employees took it seriously.
Borough of Telford & Wrekin: The council soon
realised that a sound management development
programme was an essential part of managing a
flexible workforce.
• Culture change: This was perceived as an aim in all
four case studies. The alignment process focuses a great
deal on using HR policy and practice to elicit certain
behaviours, creating an organisational culture that
can move the business strategy forward. The most
pronounced cultural changes were seen at SLH,
which turned itself round from a poor-performing
organisation to a customer focused one with
sustainable profits. Although ‘culture change’ sounds
broad and complicated, actually small actions can
make a difference. At SWW, the decision to have the
whole organisation train at one location improved
communication and removed the sense that people
were isolated in their sites.
Case study 1: Borough of Telford & Wrekin was the
result of merging an existing county council and district
council. The resulting organisation contained two very
distinct cultures and two sets of terms and conditions
that needed to be aligned in order for the organisation
to be able to provide an efficient service. Through
internal consultation with employees at all levels and
investigation of the external environment, flexibility
emerged as a key theme and was used as the basis for
the alignment process.
43 Table 1 (page 8) and Table 2 (page 9) are good illustrations of the impact on practice.
18 44 More specifically that:‘Particular strategic positions help organisations maintain profits in comparison to decline, but are not the same as those which help growth rather than maintain it.’
2.3 Outcomes
The case study companies in this report show a number
of indirect and direct outcomes on practice 43 and
performance. Many of these outcomes are interrelated,
and although segmented here, are parts of a more
complicated ‘web’ of achievements in each case.
2.3.1 For organisational performance
Tradition has shown that it is notoriously difficult to link
the alignment process – or indeed an single factor – to
organisational performance, and attempts have boggled
the minds of academic professors and business
professionals alike. The case studies reflect this.
The following measures are illustrative of improvements
in individual organisational performance measures. Note
that other factors, which may have influenced these
measures, have not been controlled for:
• T&W received an ‘excellent’ in its recent Comprehensive
Performance Assessment, received IiP status and has
extended the number of service days.
• SLH has moved into profit, increased customer
satisfaction to 98 per cent and increased new business
by 26 per cent.
• SWW has enjoyed increased revenues per employee
and the new structure is proving much more efficient
in terms of managing clients.
• Autoglass has seen a positive impact on staff
performance through its National Training Centre.
The findings of the Workplace Trends Survey 2004
show that some types of HRS will have an effect on
organisational performance through association with a
particular type of business strategy. 44 Specifically, that a
market-focused strategy had a positive correlation with
performance by increasing profit and market share. This
strategy is associated with organisations that focus on
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
both organisational restructuring and changing working
practices with an internal focus on HR. A market-based
strategy is also strongly associated with a commitment
to training and development. Rather than confirming a
direct link between HRS and performance, it shows that
certain HR components are more closely correlated with
successful business strategies.
Case study 2: Standard Life Healthcare went
through a period of major financial difficulties in the
late-1990s, which was accompanied by a narrow focus
on sales rather than on the customer. A new chief
executive joined in 1998 and brought with him some
strong ideas about working with HR to improve
customer services. This, combined with a commitment to
the idea that Standard Life Healthcare could be a great
place to work, resulted in a strong market position and
healthy profits.
2.3.2 For human performance
Though less tangible, and to an extent of greater concern
to internal audiences rather than the market, there are a
range of indicators of human performance improvements
– as opposed to organisational performance – resulting
from better strategic alignment.
For example:
• Decrease in staff turnover: At SLH and SWW, this
means that recruitment costs are contained and the
experience of staff in key roles is retained.
• Improvement in sickness absence rates: Uncertified
absence is always a major cost to organisations. At T&W,
sickness absence management was counterbalanced
by flexible working, with a reduction in unauthorised
absences. Likewise, SLH has seen a reduction in sickness
absence and now has a rate of only three per cent.
• Increase in applications: At T&W this was an
especially positive outcome of the alignment process
because the local labour market is very competitive.
2.3.3 For organisational culture
The benefits to organisational culture are the least
tangible of the outcomes but are often the issues
preoccupying HR professionals. For example, one HR
director felt that one of the most positive achievements
was being seen as a ‘can do, flexible employer’. This is
because staff flexibility, measured by the increase in
part-time workers, means that it is easier to respond to
work fluctuations, thus improving the efficiency of the
organisation. These benefits are measured in
improvements to staff attitudes towards their employer,
the organisation as a whole and their jobs. Indeed, one
HR director proudly explained that staff satisfaction
ratings have improved gradually over the last eight years,
about the same period of time that HR has had a seat on
the board. Similarly, SLH cited the fact that they were in
the 25th percentile of the Gallup Q12 staff engagement
survey, which was one of the major performance
outcomes.
2.3.4 For HR as a function
HR professionals who are worried that alignment means
a large increase in their workload should consider the
beneficial outcomes for their department before hiding
in the filing cupboard! These include:
• Increase in respect: It can mean that the function is
taken more seriously because the organisation can
witness the positive outcomes of policies and practices.
This was seen at SLH where managers are now happy
to wait for the ‘right people’ during the recruitment
process, indicating that there is an increase in trust
between HR and business managers.
• Increased influence and involvement: For example,
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HR professionals at SWW are invited to management
meetings. At T&W, HR has helped shape service delivery
and business planning.
• Increase in HR skill across the organisations: Where
a process of devolvement has taken place, this can
mean an increase in HR skills across the organisation,
allowing HR professionals to do more developmental,
rather than day-to-day work. An excellent example is
at T&W where HR projects are devolved to business
heads, and now HR can concentrate on management
development and other newer issues.
It is also important to highlight that there were some
unexpected outcomes. Many of the case studies found
a need for a greater focus on management development.
For example, T&W is now looking at how to manage an
increasingly remote workforce and more virtual teams.
Case study 3: Seven Worldwide formerly focused on
traditional print businesses and had a heavily unionised
workforce. Moving towards a multi-media focus brought
with it a new employee and customer demographic.
There was a need for a different style of employee
support and a HR department was created. The
department has grown from strength to strength and
since appointing a HR director in 2000, close attention
has been paid to making sure HR policies and practices
align with the business direction.
2.4 Success factors
Although the inputs and outcomes of each case were
different, there were marked similarities among the
success factors:
2.4.1 Treating alignment as an iterative process
T&W is a perfect example of how alignment must be a
20
continual process. The case study describes many ‘start
again points’ where those involved did not shy away from
giving up and going back to the drawing board. In this
particular case, responding to the needs of employees
is key and, intuitively, these are ever-changing.
2.4.2 Time and effort
Each case shows that time and effort are needed. In
particular, HR professionals must keep on top of both the
day-to-day demands of their jobs while also maintaining
a strategic focus.
2.4.3 Good working relationships
Central to the alignment process, good relationships
between HR and all levels of the organisation cannot
be overlooked.
• Director level: Support at this level means including
HR on the board which, in turn, means that HR has
access to, and influence on, the business decision-
making process. At SLH, a new CEO was the key driver
for a business strategy supported by HR policies and
practices. This was supported by the loss of senior
managers who did not feel they could work in this way.
• Senior management level: The Autoglass case study
shows that a key role for HR during the alignment
process is the ability to influence business heads. Once
this is achieved, the senior managers act as role models
for line management. The T&W case takes this one step
further; senior managers volunteer to lead on specific
HR projects. For example, the IiP process is led by the
leisure services manager, which enables the process to
be ‘mixed in’ with service issues. At Autoglass, the HR
department retains its strategic role, partly due to
‘enlightened’ senior managers.
• Line management: Good working relationships here
are essential for driving HR practice into the business.
Line managers are usually responsible for execution so
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they have a great effect on the outcome of various
initiatives.
• Employee level: This is also important for making
new policies and practices work. At SWW, employees
approaching HR directly was seen as a major plus point
and at T&W, they consult with employees (and other
levels of the organisation) directly to decide what else
they need to achieve.
2.4.4 Confidence within HR
At SWW, HR took a hard line on certain issues, which
demonstrated to the organisation the confidence they
had in their abilities. This confidence is supported by
the background of the director, who has an established
career in HR and change management consultancy.
Similarly, at Autoglass, the HR director believes that HR
professionals who know what they are doing and who
are confident to be part of the business are central to
sustaining their reputation and therefore involvement
in business issues.
processes work alongside each other to encourage
business performance.
2.5 The key challenges to the alignment
process
Table 4 on page 22 outlines the challenges that affected
the alignment process in the case studies, and how these
were overcome. These challenges reflect similar themes
to those outlined in the literature review.
Case study 4: Autoglass has had a progressive HR
department for some years. With an HR director on the
board, the organisation appreciates the importance of
the people element. Most recently, the HR function
played a key role in an organisational review focusing
on personnel, and identified a number of areas where
improvements could be made, which would reap
business benefits.

2.4.5 Culture of the organisation

Organisational culture may be a reason for change and
an outcome, but also a factor in the success or failure of
an HR policy or practice, either by reinforcing new polices
and practice, or indeed undermining them. Some
particular examples are:
• Perceptions of the role of HR: At Autoglass, HR has
been a feature of organisational life for some time and
HR is highly regarded. This, combined with a track
record of delivering results, sustains it strategic
involvement.
• Culture of continuous performance management:
SLH is open about performance management. The CEO
is keen that line managers can approach employees
about their day-to-day performance, as well as it being
a formal process. In this way, formal and informal HR

21
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Table 4: Challenges affecting alignment and their solutions
Issue Challenge
External Sudden changes in external markets can
market hinder the alignment process. For example,
changes setting out on a route to develop staff was
interrupted by the need to reduce staff
numbers, creating a tense environment
Measuring Changes in markets and customer demand
benefits affect ‘external’ performance measures, but
may not give an accurate indication of the
health of the organisation internally
Resources In many cases, finance for developing HR
components was unavailable
Long-term Often, the HR solution to business issues is
solutions to a longer term strategy, which might not fit
short-term with short-term business goals
goals
Politics Tensions among management brought on
by perceived loss of control and HR being
‘too big for their boots’ can interfere with
HR playing a role in business issues, which
is a key part of the alignment process
Response Employees can often be suspicious of new
to change initiatives and changes to working practice.
Those brought about by the alignment
process are no different
22
How was it overcome?
At SWW, external market changes were managed through foresight
around business direction. The HR department played a key role in
restructuring the business in 2002 to improve efficiency. HR
accepted that although initiatives have a long-term focus, it will
also be necessary to act reactively
Choosing measures that are most appropriate to the organisation’s
business environment is key. For example, measuring retention
among key groups of staff. Also, as measures will never provide
concrete evidence, there needs to be faith that the process is
beneficial
The organisational review at Autoglass was conducted with
minimal external cost. Only one consultant was hired and other
resources were internal. The experience of their parent company
was drawn on for an objective view
At Autoglass, the HR professionals persisted with longer term
initiatives, developing a clear business case from the outset
Autoglass has built up respect over the years through delivering
results. Similarly, at SWW the HR director found that taking a hard
line on issues and achieving improvements demonstrated the value
that HR could add
At T&W, the two cultures merging meant some employees felt
uncomfortable in the new environment. Encouraging cynical staff
to think about, with the support of their manager, how a more
flexible environment could work for them assisted the transition
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
3. Conclusion
Finding out to what extent strategic alignment of
business strategy and HR feature in the thinking and
actions of good organisations is no easy task. Asking
organisations, or more specifically HR professionals,
whether or not they align HRS and business strategy will
not answer this question satisfactorily. A simple positive
response would fail to capture the complexities of the
alignment process, or what importance was attributed to
it in terms of organisational performance. To understand
the extent of alignment within organisations requires a
more in-depth analysis.
The more prescriptive management literature suggests
that aligning business and HRS is a formal and considered
process, perhaps formalised in boardrooms and captured
in documents. But the more critical, and more realistic,
literature suggests that this cannot be the case, for two
reasons. First, developing and aligning strategy is
fundamentally a human process and will fall foul of
human error. Second, business environments are
influenced by a wide array of factors that cannot easily
be controlled for all at once.
But, there is evidence that organisations do attempt to
align their business and HR strategies to encourage high
performance. The case studies suggest that alignment is
a very real process in organisations, despite the fact that
it might not be as formal and formulaic as some of the
business and academic literature describes. In reality, the
alignment process was incremental and two-way, where
HRS responded to business issues and strategic direction
but also informed it where it proved to be successful.
The findings of The Work and Enterprise Panel of Inquiry
show that high performing or excellent organisations
do have HR policies and practices that complement and
support the direction of their business strategy. But in
45 Harding R, Cowling M and Turner N, The Missing Link: From productivity to performance, The Work Foundation, 2003
46 Ibid
many cases, the link is subtle and the content of their
HRS is aimed at encouraging specific behaviours among
employees who will, in turn, act as a lever for achieving
their business goals and improving performance. The
Workplace Trends Survey 2004 found that there are often
associations between HR practices and performance
rather than direct causal links. For example:
• a new CEO is associated with employment growth
• an appraisal HR strategy that for example promotes
employee innovation and commitment and unlocks
potential through career development, is associated
with increasing employment levels.
In addition, the HRS is only one part of an integrated
approach to managing the organisation as a whole and
other areas are afforded equal importance, including, for
example, addressing the needs of stakeholders and
shareholders. ‘Effective people management is oil to the
whole organisational system and not a distinct strategy.’ 46
‘Alignment’ conveys something too rational and formulaic,
which is rarely the case in practice. However, it is
important to note that large and profitable organisations
believe there is an impact, indirectly or directly, of a
strategic fit between HR and business strategy, and its
impact on organisational performance. Indeed, the
common theme among all the case studies in the report
was to create an ambitious, aspirational and engaged
workforce.
3.1 Does alignment matter?
The complexity of the alignment process means that it is
hard to measure. In the case studies, basic measures were
used to try and track improvements including turnover,
45
recruitment, staff satisfaction, sales per employee and
profits, but it is important to remember that these could
be influenced by any number of internal and external
factors. For example, Seven Worldwide had to increase,
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reduce, and then increase staff levels due to market
pressures, so staff turnover would not necessarily be
a useful measure. In addition, some cases show that
measurement can be a bit of an after-thought. Where
there is an HR resource deficit, implementation is often
more at the fore than attempting to measure or
understand outcomes.
While the case studies show there is evidence that
alignment can make a tangible impact on organisational
practice, the link with labour productivity is not so
straightforward. The Workplace Trends Survey 2004 reaffirms
how complex the link is. In many cases, the most realistic
goal of a HRS is to try and encourage the employee
behaviours that will suit the tasks needed for business
performance.
‘Cynics may suggest that there is a yawning gap between
the rhetoric or the impact of HR, the reality of HR practice
and outcomes. A more likely explanation is that HR
practices have other outcomes, for example on employee
wellbeing and organisational performance, rather than a
direct effect on employee productivity.’ 47
The evidence in this report suggests that HRSs can have
a positive impact on organisational performance when
they interact with business strategy. For organisations,
then, the way forward is clear. There is no use having an
HR department that works in a silo. This is a cost to
organisations and may reap no reward. Not having the
HR director sit on the board is a barrier to sharing a large
part of organisational information that may be vital to
understanding how strategic goals will translate into the
business. Further to this, research suggests that there is a
role for HR in helping organisations adapt to changing
business strategy, and external consultants and experts
are costly. 48 So, why not use internal skills?
47 Ibid
24 48 Bevan S, Cowling M, Horner L, Workplace Trends Survey 2004: Summary report, The Work Foundation, 2004
3.2 What does this mean for
organisations?
The key finding from the case studies is that it is vital for
organisations to understand the details of their own case
so they can think about why certain policies and practices
may be more relevant to their strategic goals than others.
For many, this may be about reflecting on what their
business strategy is in the first instance, and then on
what constitutes their HRS.
This means that data gathering, reviewing, consultation
and information sharing are good starting points for
organisations wanting to make sure their HR and business
strategies, in whatever form they take, are aligned or at
least, more coherent. In this way, this report seems to
offer support for a more contingent approach to strategic
alignment, even though we would not try to argue that
there may be some best practice policies and practices
that all organisations could make good use of. The report
advocates that it would be wise for professionals to
understand their position in relation to all three
approaches to developing strategy – organisational life-
cycle, business strategy and organisational structure – as
one or all three will have a major impact on what policies
and practices will ‘suit’ the organisation.
Businesses will need to make a clear and transparent link
through simple, common metrics between the business
outcomes they are hoping to achieve and how people
contribute to this. For example, if an organisation
measures sales per head and publicises those measures
internally, the organisation will assume that sales are the
most important goal, particularly if reward is also based
around these measures. Similarly, all managers will need
to think about how HR initiatives are affecting or will
affect culture through encouraging particular behaviours,
ie by asking are these suitable?
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For HR, it is important that HR advertises what the

function achieves internally and highlights the positive
outcomes. This will enhance the reputation of HR and
strengthen its ability to negotiate change – even if it is
more exposed. This should be combined with HR training
and development for all managers in order to develop
good working relationships and networking within the
business.

Each HR strategy requires the development of strong

metrics that enable the HR department to show before
and after effects wherever possible. If the case is to be
made that HR acts as a business driver helping to
manage the strategic spaces between the various core
areas of a business, then measurement of change –
reduced employee turnover, new skills acquisition by
staff, increased levels of ideas and innovation through
re-organisation as some examples – becomes critical.

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Case studies: 1–4
CASE STUDY 1 –
Borough of Telford & Wrekin
Background
The Borough of Telford & Wrekin is a unitary authority, which
means it is responsible for all local government services in
the area, including education, social services and libraries.
The authority took over these responsibilities on 1 April 1998.
Before this time, the services were run by Shropshire County
Council.
Borough status was granted to the council in the spring of
2002. The Borough of Telford & Wrekin’s focus is on: ‘Building
a successful, prosperous and healthy community which offers
a good quality of life for all the people of Telford & Wrekin.’
The borough council is a medium-sized, public sector
organisation with 54 members, 5,350 employees, 180
operational buildings, and it manages an annual budget
of more than £125 million.
The case for alignment
The borough council (BC) was formed from two separate
authorities – a county council (CC) and a district council
(DC). The CC had a very traditional and formal culture, where
people frequently used surnames or titles to address each
other, while in contrast the DC was very informal with a
more progressive culture.
When the DC and the CC merged in 1998, there were two very
different sets of conditions that needed aligning. There were
also two distinct types of employees: those used to working
very flexibly and those used to working Monday to Friday
from 9am to 5pm with no days off. The DC’s culture initially
provided inspiration for improving the BC’s culture. It was a
really people-friendly place to work, and this was seen as a
positive. At this point, it was decided that a third culture
needed to be created to replace the two existing cultures.
26
Investigation
Flexibility emerged as the key theme. This was supported
by both the geography of the BC and some examination of
the area and organisational demographics. The BC is situated
on the edge of the West Midlands conurbation, and there is
only a small pool of local workers as local employment rates
are high, so retention is essential. In addition, demographics
showed that Telford is a ‘young’ town; the average age of
inhabitants is 32, and within the area there is a high number
of single parents and a high rate of teenage pregnancy, so
flexible working is crucial. Further to this, organisational data
showed that 66 per cent of staff live in Telford & Wrekin and
are therefore customers of the council. Supporting them in
caring for children and/or elderly relatives has the triple effect
of building commitment, assisting the local economy and
reducing the demands on council caring services.
As more and more work and consultation took place around
values, what were at first considered HR issues emerged to be
directly related to service delivery and organisational
objectives. It was at this point, around 1999, that the case for
a strong alignment between HR policy and practice and the
service units was cemented.
How has alignment been achieved?
There was no planned alignment strategy. It has been
an entirely emerging one, with many ‘start again points’
being reached along the way. The first milestone was the
development of three, clear employment principles – ‘value,
fairness and trust’. This was achieved by asking employees
what they wanted.
Following this, work on the terms and conditions was carried
out with the trade unions. When employees were asked about
what they wanted, they were more concerned with getting
something clear and understandable, and which gave them
some control rather than something ‘amazing’. Likewise,
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managers wanted something ‘not too prescriptive, something
that they could control and can be adapted to suit their
location’.
In the early stages, workshops were set up by HR for different
specialists within Personnel and Development (P&D), as well
as for trade unions and managers. The workshops consulted
on questions about flexible working, issues and problems,
and encouraged realistic visualising of where the
organisation needed to be.
The outcome from regular employee surveys were also used
to inform decisions, and following the 2001 survey it was
decided to create an organisational development initiative.
This was overseen by the chief executive in order to provide
profile and top management support. Significantly, the issue
of front-line buy-in to outcomes was addressed and the
project was characterised by line managers leading
individual project groups, with P&D acting as hands-on
consultants. This has also enabled the organisation to
develop new skills among managers, along with a broader
view of the corporate organisation.
These workshops were such a success that the idea was
extended to incorporate the whole of the organisation.
‘Making Better Happen’ was an innovative offsite training
day organised by P&D. A random selection of staff were
chosen from the chief executive downwards, and there
were firm rules, including:
• only first names should be used
• no employment roles should be divulged at any point
• casual dress only.
The workshops allowed people to talk freely about what the
organisation should be and the format was highly successful.
People wanted to feel like they could go home at the end of
the day without feeling guilty and like they were ‘skiving off’,
but they also wanted to be able to grow their careers.
In 1998, HR had a traditional structure – the training function
did training and the personnel function managed personnel
administration. It was decided that a more consultant-led
structure was needed to devolve HR responsibility into the
business. Five portfolios (service areas) were developed in the
organisation and now there is an HR team for each, which is
funded out of the individual portfolio budget. Individual ‘HR’
projects were given to different service managers to lead on
while being supported by a personnel manager. For example,
the IiP process is led by the leisure services manager, which
enables the process to be mixed in with service issues. There
is a sense that this process ‘just works’ for the council, and
because of this, they continue to use it without question.
This approach also has the benefit of keeping the application
of HR theory in check; the service managers can say when
ideas/concepts will not apply to the business.
Two years after the merger, there was a dip in positive
responses in the employee attitude survey, and it was
decided to do something new. This phase focused on:
• general workforce development
• management development
• communication.
A leadership model was devised where everybody is a ‘leader’.
Management development was considered in detail using
360-degree appraisal linked closely to management
competencies. These included supporting flexible working,
being responsive to individual issues, demonstrating a high
degree of trust, realistic objectives and judging quality of
outputs, not length of time spent at desks. Although the
management group were already well-versed on these issues,
there was still room for improvement. A good management
development programme with credibility was needed so,
following a detailed scoping exercise, the organisation
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formed a partnership with Birmingham University to develop
and deliver the programme.
In order to crystallize the P&D business plan, time was spent
with the chief executive and directors to visualise the council
as an employer. The aim was to create a document that
outlined the crux of what Telford & Wrekin did as employers,
and which would act as a reference point for everyone. Most
importantly the document needed to be simple, but it took
‘complex drafts of difficult documents to get to one simple
one!’. Eventually, the ‘Success through People’ document was
produced.
The business strategy is ‘lived and breathed’ throughout the
organisation, and since the alignment process began, this
has got stronger. Achieving alignment at Telford & Wrekin
was not so much a case of ‘sitting down with the business
strategy’, but more of adding to it through the learning
process. Business strategy is effectively one with individual
and team development initiatives now the two strategies
have merged as much as aligned.
Outcomes
The organisation is now further developing its HR direction
and has recently invested in a development day in which
unions, elected members, managers, employees and HR
specialists worked together to identify the key employment
actions needed to deliver the employment agenda over the
next five years. The event was facilitated by the regional
employers’ organisation and has led to an action framework
involving all stakeholders. Key activity areas to build on are:
• employment practice
• culture
• performance management
• development and learning
• leadership
• communication
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• employee relations
• health and work
• flexibility
• workforce planning
• conditions of service.
It is felt that there has been an impact on the culture with
the council being seen more and more as a ‘can-do, flexible
employer’. This was independently identified by the recent
Comprehensive Performance Assessment report. To support
this, there is a raft of flexible working policies including
domestic and special leave schemes, and flexible working
(term time and home working). These policies are promoted
in the organisation and externally through roadshows, the
internet, weekly bulletins and the employee newsletter.
Potential employees can read all about them on the internet.
This may have led to the percentage of employees working
part-time hours – now the dominant group.
However, most importantly as ‘flexibility’ is further ingrained
into the culture, more and more people approach managers
to talk about how flexibility can work for them. To deal with
this, more focus was placed on management development.
Managers are all assessed against key competencies, which
include work-life balance standards and the need to be a
living example. The attitude survey shows that and has built
on regular ‘temperature testing’ in the organisation through
the employee surveys, which show an increasing percentage
of staff who believe or believe strongly that their manager
accommodates their personal needs.
An HR approach (rather than the more limited personnel
and training approach) has emerged and developed in the
organisation. The key characteristic of this has been line
managers taking active responsibility for HR issues in their
area. This in turn has enabled HR specialists to focus their role
more effectively. While there is some debate about which of
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
these effects came first, the result is an organisation that
understands the need for strategic thinking and planning
around people issues.
The HR director feels that managers now think about
capacity throughout the business planning process, which
might suggest that training and learning have been
institutionalised to a certain extent. An important component
of embedding this approach has been the Investors in People
standard. All business units were required to commit to these
two years ago as individual teams. All are now accredited
and the council is soon to be assessed as an individual body.
This is important in further developing a ‘one organisation’
framework, increasingly important in the one-stop public
service delivery culture that the government is establishing.
The significant change in the role of HR – with responsibility
devolved to the line – has meant that HR-related skills are
being expanded and built on across the organisation. With
service heads working as HR champions, other managers
realise how important it is. Initially, the service heads were
involved partly through volunteering and partly because
they were identified as doing something well and then
approached. This has not been perceived as a difficult
process.
Although it is difficult to quantify the beneficial outcomes
for organisational performance in financial terms, the
council has experienced:
• increased full service opening by three days a year
• staff and therefore knowledge retention in an area of high
employment
• a committed workforce
• a counterbalancing of sickness absence management with
flexible working and a reduction in unauthorised absence
• an increase in applications
• an increase in the level of training
• part-time employees outnumbering full-time employees
so it is easier to respond to short-term work fluctuations.
Most significantly, the Comprehensive Performance
Assessment awarded the council with an ‘excellent
standard’, placing it in the top-tier of high-performing
council’s nationally. It is the first and only authority in
the region to be placed in the top ten per cent of local
authorities. Significantly, it has achieved this while charging
one of the lowest levels of council tax among unitary
authorities and in its region, despite having a number of
areas of high deprivation in its boundaries. Recent customer
satisfaction surveys have also indicated an increasing
percentage of satisfied customers.
Conditions for success
Painting a picture of the organisation through data
gathering was crucial to the success of the alignment
process. Key change drivers were ‘real statistics‘ drawn from
the organisation and then benchmarked against other
organisations. While academic and management theories are
well known and understood, these were deliberately not held
up as solutions as it was believed that engagement and buy-
in would be more difficult to achieve. In this case the key to
the process is consistent reviewing. For example, two years
after the merger there was a dip in many indicators from
the employee survey responses so senior management
recognised that something new needed to be done. The other
data that was really essential was the analysis of workforce
demographics. This gave a really good understanding of
employee needs and how these could fit in with business
objectives.
The input of the individuals involved was a key success factor,
particularly as the emerging nature of the process demanded
effort beyond day-to-day jobs from a variety of stakeholders.
The fact that all the people concerned were persistent kept
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the developments moving, sometimes ‘it might have felt that
it would be easier to go back to the way things were and just
write down a rigid processes document instead’. The trade
unions ‘played a helpful role’. They worked with HR on the
terms and conditions, which were then voted for in a ballot.
The response was strongly positive. There are nine trade
unions in all that have been involved, as well as HR staff,
managers (line, director and chief executive) and employees.
The ‘Making Better Happen’ offsite workshop was absolutely
essential. Commitment from service managers, P&D and a
communications subgroup made this happen. The process
emphasised the importance of two-way communication –
listening and responding – and that the need for change
should be recognised by all. More intangibly, the process
required an element of trust; putting flexibility into action
meant making mistakes. The policies are as loose and non-
specific as possible to embrace the wide and differing range
of employee interests, but are held within a devolved
managerial framework enabling local decision-making
informed by organisational direction.
Due to the emerging nature of the alignment process, it was
felt that the resources it drew on were hard to identify. The
time and effort of those involved were key to this process
and ‘living what you say’ was absolutely critical to the
achievements. More tangibly, retaining staff in an area of
high employment was seen as outweighing any input costs.
Where funding was concerned, there was an initial boost
from the government to support creation of the new council.
This budget was to last for a three-year period. The council
also won some government challenge funding, which helped.
The money was used to initiate home working with the
assistance of BT. A similar scheme has been tried before with
individuals, but ‘got stuck’. This time the aim was to get a
whole team to be able to work from home. A great deal was
30
learnt from the pilot, but the funding, skills and expertise
were needed to get it right. For example, at first two PCs were
bought for home workers but the costs were so huge the
buying policy was changed to buying laptops and docking
stations instead. This is illustrative of the ‘painful lessons’
that have been learned throughout the process.
Challenges
People felt the change and responded to it in differing
amounts. It was quite a paternalistic organisation and some
people were forced into change that they were not used or
prepared for. Although there was an attempt to handle this
sensitively, the process may still have been uncomfortable for
some who experienced limited change in a more protected
environment before. One of the most unexpected outcomes
was that some people would rather have a structured
environment than a flexible one. However, it is felt that:
‘You can’t have a strategy that develops as you go along
without some degree of turbulence.’
The organisation is far more business-oriented now and the
perception of some individuals is that it is not so cosy and
comfortable. Some people feel more insecure and new
challenges are frequent, but not necessarily to the detriment
of job security.
Resources may be a challenge in the future. The initial boost
to funding has now run out and government funding, which
is awarded per head of the population, does not keep up with
the fast growth the new town experiences. Also, there was
additional pressure from some negative comments over the
changes, with some people perceiving flexible working as a
waste of money.
Ensuring that senior managers are involved at the head of
human resources issues has meant developing a pool of
volunteers to take over when juggling this with their day-to-
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day job proves tricky and ensures that HR matters maintain
a realistic edge. Although this is mainly a workload burden,
it has a hidden benefit of renewing energy in the projects.
Managing and communicating with a majority part-time
and remote workforce is, and will continue to be, a key
challenge. The organisation is currently in the development
stage of this approaching issue.
Sustainability
Despite the challenges and the relentless nature of managing
the ‘flexible’ culture, the aim is to keep going. Using elements
of the process that worked well, the key is to keep asking
‘what do we want to do now?’.
HR has a key role in this now that much of the HR skill has
devolved to the line more, and it has freed up HR time to work
strategically. This will help the alignment to be sustained. It is
also key to realise that ‘you do not need to reinvent the world’.
CASE STUDY 2 – Standard Life Healthcare
Background
Standard Life Healthcare (SLH) is one of the largest health
insurance companies in the UK, insuring 435,000 lives and
with a six per cent market share. Following the acquisition
of Prime Health Limited in June 1994, Standard Life renamed
in April 2000 to become Standard Life Healthcare. It now
employs 770 staff – 450 people in Guildford and 320 in
Stockport. The ratio between female and male staff is
roughly 60:40, and 20 per cent of company employees
are part-time staff.
SLH offers a range of products from traditional private
medical insurance to self-pay options, which reduce
premiums. It has also recently started providing healthcare
solutions that aim to prevent health problems before they
occur and manage absence for corporate customers.
Case for alignment
The organisation was in major financial difficulties and had
lost money in the financial year 1997/98. There was no clear
business strategy and business focus was entirely on sales.
This resulted in poor customer service, with increasing
numbers of complaints. Supporting the failing business was
a poor culture characterised by siloed management, poor
leadership, blame and power struggles. Staff turnover was
running at an unacceptably high 20 per cent a year. As a
result, the HR strategy was simply focused on survival and
was mainly reactive (focusing on recruitment). There was
no support or resources for new initiatives, like job evaluation
or appraisal systems.
In 1998, a new chief executive joined the company with
ideas to turn the business around. The head of HR saw an
opportunity to prove what HR could contribute to improving
the company and its performance. Working closely with the
chief executive, HR helped achieve desired business outcomes.
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How has alignment been achieved?
The new chief executive brought with him good commercial
ideas that combined with HR corporate values, including
customer and quality focus, team work, communications
and integrity. These values were key to demonstrating to
employees what was important to the organisation. The chief
executive worked closely with the existing HR team, which
was progressive and capable, from the outset. It was clear
what the business needed at this stage: profitable growth
and cost-cutting. To help provide a fresh start, the team of
directors was refreshed. To improve customer retention in a
competitive market, SLH needed to create a great place to
work and to encourage staff to provide the best possible
service. It decided that the people needed were already a
part of the organisation, but were not supported, nurtured
or encouraged to use their potential.
At this point, the HR strategy needed to be broadly about
co-creating and consultation. It was important to energise
managers so they were not waiting to be told what to do
by the executive team. The process was largely iterative and
developed over time, although a small amount of external
data was drawn on.
Aligning HR and business has focused on building trust
and engagement with staff, as the chief executive, Mike Hall
explains: ‘SLH expects a lot from its people and expects them
to have their own demands in return. People want to be
valued for what they do.’
Early on, it was clear that communication with staff needed
to be improved dramatically and a programme was initiated
that had some quick results. The chief executive and head of
HR hosted two coffee mornings a month where employees
could speak frankly about any issues from any area of the
business. People were even encouraged to speak out if they
thought their jobs were limited by business processes. It was
32
the head of HR’s responsibility to take notes and get back
to individuals (through a letter) with tangible actions for
improving the situation or an explanation of why the
situation could not be addressed. This went some way to
building trust with the staff who were then more willing to
support the organisation as they saw actual improvements.
In addition, there is a back-to-the-floor scheme where
directors work in all different parts of the organisation and
quarterly staff briefings. The chief executive resolved to meet
every new employee when they start and to support this
there is also a presentation, through which they are told
three key messages:
1. Everyone’s job is important to the success of the business
2. Everyone is encouraged to contribute ideas.
3. It’s important to enjoy work and get on well with
colleagues, and a work-life balance is necessary to
perform well.
The key changes were made to the customer services division.
It was recognised that the organisation had some of its
lowest paid people on the front line dealing with customers.
Technically, improvements were made to the telephony
system, but with greater effect the employees in this division
were paid the highest market rates for their skills and set
proper career paths. For example, career streams were created
for claims and administrative roles to allow for success
through different skill sets.
Developing a good training programme was also central to
improving customer service. The ‘Customer Service Excellence’
programme was devised and it addressed what customer
service meant to individuals, what the good and bad
companies are doing and how the company can improve.
During 2000, every employee took this training and the
course is still running (although it has been rebranded as
‘Total Customer Satisfaction’).
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It was assumed that if SLH became a great place to work it
would reflect on staff performance and quality of service. In
addition to training and communications, SLH sought to
promote work-life balance and staff engagement. This has
included a staff consultative committee designed around
the European Works Council model and an integrated
communications platform with an online and offline health
and well-being solution (provided by Vielife). The health and
well-being initiatives include: health fairs, a review of the
staff restaurant, eating well for energy seminars with expert
nutritionists, free fruit and fibre days, free drink bottles and a
nutritional assessment drive.
In order to make sure HR is and continues to align with
business objectives, everybody works closely with the business
strategy documents. Staff are taken through the documents
at quarterly briefings. Their basic aim is to increase market
share from six to 15 per cent over the next five years. SLH
intends to achieve this by differentiating through customer
service and HR has a big role to play in this. HR measure
internally using straightforward metrics like turnover and
sickness absence rates. In addition, there has been a review of
the reward and recognition practices, and SLH’s approach to
learning and development. There is also continual appraisal
of HR policies and procedures in order to make sure that the
policies support the ethos of a ‘great place to work’ and do
not inadvertently work against it.
Outcomes
The first positive benefits were seen in 2000, about two years
after the changes began. It took a further 18 months to two
years for the developments to really bed down. The head of
HR feels that they are now going into the next stage. The
current HR strategy has focused activities, with a designated
member of HR to lead with a review date. The areas are:
• staff engagement
• resourcing and retaining staff
• reward and recognition
• learning organisation
• partnership with staff.
So far, measuring the outcomes of the initiatives has shown
improvements. Turnover is at less than ten per cent at both
sites (reduced by 60 per cent), and sickness absence is at
about three per cent. In addition, the staff opinion survey,
which is based on the Gallup Q12, is used. SLH is now in
the top 25th percentile of companies in the UK for staff
engagement and it is finding that ex-staff are returning.
The Gallup Q12 action-planning sessions are also showing
improvements in terms of involvement and contribution,
with customer satisfaction currently at 97/98 per cent overall
and customer retention up 2.2 per cent
In hard terms, the business has moved into profit, and is
looking sustainable with new business up by 26 per cent.
SLH has won industry awards for both ‘Health Insurer of the
Year’ and ‘Best Customer Service’ for the past three years.
The head of HR feels that the improvements are a ‘virtuous
circle’ and SLH is increasingly a great place to work. Eighty
per cent of employees are now registered with the Vielife
service. This has improved employee health, nutrition in
particular, by 35 per cent (based on the Vielife analysis)
and staff are so involved they are introducing their own
initiatives, for example keep-fit classes after work.
Everybody is trained through the customer service excellence
programme and they continue to train on this course rather
than it being a one-off. There is now a greater proportion of
trainers to staff, allowing continual development. For
instance, there is an open-access development centre and
training undertaken does not have to be related to work.
The most positive outcomes for HR were showing how
important it was as a function and the difference it could
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make. The polices are now taken seriously; when HR decide
that SLH should only recruit the best people, the organisation
sticks to this, even if it means not filling a vacancy.
Conditions for success
The new chief executive worked for 12 years in the NHS and
spent eight years managing private hospitals and in the
medical insurance field, so he joined with an excellent
understanding of the whole spectrum of health service
delivery. The leadership element has proved critical to the
turnaround at SLH, in particular ensuring that words and
actions match up. ‘In business people do things without
thinking and employees realise when they are being conned,’
says Mike Hall.
There is an active approach to performance management
and not just in formal terms. The chief executive explained
that if there was performance issues, then they would sit
people down and tell them where the problem is. He felt
that nine out of ten people respond positively to this type
of ‘critical friend’ feedback. In one instance, there was an
employee with a very negative attitude that was affecting
the rest of the team. She was taken aside and asked about
her behaviour – she did not even realise she was doing it.
Another key condition for success was fostering teamwork
and moving away from an ‘us and them’ culture. The staff are
involved through a consultative committee, a little like the
European Works Council model. No trade unions are involved
but there has been good feedback from this process. Also,
addressing bad news early on and managing uncertainty
was seen as really important. When SLH had to close its
Birmingham office in 2000, the chief executive went and met
the employees face-to-face to explain why the business was
no longer viable. In addition, everyone was offered assistance
in finding a job. Forty-eight out of 50 people found another
job and the other two decided to take career breaks. This was
34
so effective that in the nine months running up to the closure
not one employee left early.
Finally, the head of HR feels that it is vital to get the right
people and the most effective processes and systems working
together. He felt that his relationship with the chief executive
and support for HR initiatives were central to improvements.
Now all issues are worked through with the People Tactical
Group, which consists of the head of HR and four directors.
Challenges
When the new chief executive started, there was a large
element of change. There were exits from staff who were
not prepared to follow the new values. The chief executive
felt that change can be slow to start in a poor culture and
management need to show trust and belief in people – this
is essential to drive people. It is also important to note that
all the cultural and internal issues are set in a business
environment that is extremely competitive.
The most prominent challenge at first was the number of
things that needed to change and improve – sales, customer
services, reducing costs, communications, training, etc. This
was combined with limited resources, and most of the work
relied on what was available internally. There are 12 people
in the HR team to cover two sites, and at the start there were
only five people in training and development. Therefore,
personal effort and energy was a major input into the
alignment process and should not be underestimated. A good
example is the coffee mornings, which often produced seven
or eight sides of notes, giving the head of HR writers’ cramp
and a sizeable to-do list!
Another key challenge was getting line managers
comfortable with new working styles. Moving from
command-and-control-style senior management to one
that encourages more autonomy and focuses on innovating
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processes was a tough challenge, but it was a critical step
towards tapping into employee ideas.
Some of the initiatives had unexpected outcomes and
created new problems, which is why it was essential to
review them regularly. For example, it is proving hard to
get employees to refer problems to line managers rather
than relying on the coffee mornings.
Sustainability
‘Sustainability is a myth – it comes from leadership,’ says
Mike Hall, and there are three key areas to ensure that the
positive outcomes achieved so far can be maintained and
developed:
• Focus on the business objectives: sticking to the
business strategy and working with it.
• Continue using initiatives that work: especially the
staff involvement initiatives like coffee mornings, health
and well-being programme and customer service training.
• Avoid complacency: continuing to focus on how to
make SLH a great place to work and always thinking
about improvements. This includes considering the
physical environment, for which the head of HR has
full responsibility, and looking at areas that cause
dissatisfaction.
CASE STUDY 3 – Seven Worldwide
Background
Seven is a worldwide imaging busines with operations in
the United States, Europe and Australia, and affiliates in
Chile, Hong Kong, Japan and Singapore. It is strategically
positioned to provide production and distribution solutions
to an international client base. Seven’s vision is ‘to be the
world leaders for the production of visual brand
communications’. They offer the complete range of graphic
imaging services for the production of advertising,
promotional and packaging artwork, as well as interactive
multimedia in support of clients’ visual brand
communications. Seven boasts a client list with blue-chip
names such as British Airways, BT, the Post Office and
Sainsbury’s.
Seven UK operates in different locations: Seven Worldwide
St. Marks House (UK head office functions), Soho, London,
Birmingham, Manchester and Newcastle. The separate sites
house different areas of the business. Seven London and
Seven Soho house the advertising pre-press imaging
business, along with the promotional and publications
business. The interactive growth areas work from studios
based in London, New York, Chicago and San Francisco. The
packaging imaging business is in Manchester, Birmingham
and Newcastle. A small printing operation remains at St
Marks House, and is used primarily to produce proofs for
the advertising pre-press business.
Seven began in 1926 and it has grown through acquisition.
Seven has experienced and is continually experiencing
change in its business make-up. In the 1980s, the company
was at its biggest, having over 70 sites across the world. Its
prime function was craft printing and pre-press. Previously
known as ‘Wace’, the business re-branded as ‘Seven’ in 1998.
The recession of the 1980s and the boom in interactive
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 C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E
multimedia have caused Seven to reassess its business aims.
It took the strategic decision to divest its printing businesses
in order to concentrate on graphic imaging services and a
move toward interactive and digital solutions. Although the
existing business areas remained profitable, they became
less so and employees witnessed downsizing and voluntary
redundancies. The sale of the traditional printing businesses
has consequently reduced the company’s workforce in the
UK from 5,500 to fewer than 600.
In May 1999, Seven Worldwide was acquired by Applied
Graphics Technologies Inc (AGT ), the largest US provider of
outsourced digital imaging and communication solutions,
with over 25 years of experience in the field and an unrivalled
portfolio of major corporations. Seven joined AGT and Black
Dot Group as three separately managed businesses within
the AGT Inc portfolio. In August 2003, AGT was acquired by
venture capitalist Kohlberg and Co.
Kholberg and Co subsequently appointed a new chief
executive who, having conducted a fundamental review
of the business, is pushing forward a restructuring to form
a single global business under the Seven Worldwide brand.
Case for alignment
Until the divestment of the print business in 1998, the
majority of the workforce consisted of printers who were
heavily unionised. The prevailing attitude toward unions
reflected the traditional viewpoint that unions would ‘look
after’ the workforce, thus excluding the need for a formal
personnel department. Today, the GPMU union still exists, but
its presence has weakened and the workforce has changed.
There are fewer printers and unionised members. Most of the
militant union members and former fathers of chapel have
taken voluntary redundancy. Newer employees in the
multimedia and new technology profession stay for a short
amount of time and are not unionised. The turnover in the
49 Farruggio D, Heron N and Turner N,‘Issues surrounding the design and implementation of an HR Strategy at Seven Worldwide’, MSc in Industrial Relations and Personnel Management
36 dissertation, 2000
interactive business is high, but this is not uncommon in
this industry and contrasts with the more traditional pre-
press activities. Line managers dealt with all HR issues on a
reactive and ad hoc basis. In summer 2000, Seven had no
performance appraisals, wage structures or role profiles
in place. Also, no systematic data existed on employees
and each location was run as a separate business.
In the late-1990s, the company appointed an HR person to
start the process of integrating HR into the business, but after
a while they realised that much more needed to be done
and someone more senior was needed. In 2000, the first UK
HR director was appointed with a view to setting up an HR
strategy that would align with the business strategy.
The challenge was to build an integrated set of personnel
practices, common to all sites, despite the existence of
different deep-seated sub-cultures and modi operandi across
locations, and even within each site. At this point there were
fewer than 500 people in the UK business and too many
different ways of managing them, so there needed to be
structural changes. In addition, responding to domestic
and EU legislation was becoming increasingly demanding.
Consistent changes to the business environment highlighted
the need for HR to be more about culture change, so instead
of a more traditional HR director, Seven has a director for
people and change; the job title being a clear indication to
the business that to succeed in any change management
programme people and process need to be fully aligned.
How was alignment achieved?
HR feels that the first hurdle to overcome was gaining
respect. In 2000, the HR function was independently
assessed 49 and the key issues were highlighted. Since this time,
HR has followed a path to integration and along the way
they have won the respect needed to assist them in adding
real value to the business. Part of this has been carving a role
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
in leading managers to work efficiently by developing
processes, training, getting managers involved and providing
tools. For example, line managers have been provided with
20 HR guidelines, which are available online. Electronic
workflows have been developed by HR to assist managers
in the recruitment and induction of new employees. There is
instant access from links on their desktops, which provides on
the spot advice on a number of HR-type issues, like sickness
absence and disciplinary procedures.
The most significant achievement was HR’s involvement
in restructuring the UK business in 2002. This project was
designed, facilitated and implemented by HR as an
organisational design project, aimed at integrating up
to seven separate businesses into a single functional
management structure. The new structure had a number
of objectives, but key among these was the ability of the
business to share common working procedures, best practice,
and the ability to form teams to service client needs from
across the business, thus drawing on a wider pool of talent. In
order to support the management structure, job titles and job
families were standardised for the 75 per cent of the business
that worked for the operations function. This was a key
change for both business and HR efficiency. As an example,
HR previously had to produce four separate handbooks
and other HR process and procedures to reflect the different
heritages, cultures and management styles of the four main
sites. Instead of replicating four businesses in four geographic
silos, the single structure allows work to move around the
business more efficiently and to use capacity more effectively.
Another significant strain for the business was the continued
decline in the advertising market and the increased
importance of the corporate packaging market. To this end,
a London packaging operation was established in 2002 to
mirror the work undertaken at the Birmingham, Manchester
and Newcastle facilities.
To affirm all of the strategic changes in the eyes of the
employees, the organisation adopted broad salary bands
in the operations function for all the different jobs. This was
essential to remedy the untidy and confusing range of
practices and pay rates that had been inherited from the
old site-based structure, the nature of which caused tension
among employees. More recently, HR has focused further
on performance improvements through the adoption of a
competency model to offer initial support for performance
appraisals and training.
Having worked through the initial templates of this
framework with the director of strategic accounts and the
head of client service, HR was able to incorporate definitive
role-specific competencies, thus enabling Seven to look into
areas where either internal or external training may be
required to develop or enhance existing skills in different
levels throughout the business. By identifying these areas,
the managers were able to put together a 12-month
development plan for their team members. One of the main
advantages of this is that employees felt that time and
interest had been shown in them as individuals, this in turn
added value and commitment on their part. This is allowing
Seven to develop a greater skill base to be able to meet the
increasing demands being placed on them by their clients
and the business environment in which it operates.
Key to supporting the organisational change project has
been the training and development strategy. At the end of
2001, HR took the deliberate decision that people from all
sites would train together at Manchester. This was so that
people could meet colleagues from other sites and start to
relate to a single company culture. In the early days, some
local management resisted this change but eventually the
benefits were seen. Most notably when the training and
development efforts were recognised by the receipt of
Investor in People accreditation in August 2003. The training
37
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Table 5: Summary of HRS developments and outcomes from 2000 until present at Seven Worldwide
AREA ISSUES IN 2000
Corporate • Senior managers claim an overriding
strategy group strategy, but there was little
consensus about content
• Managers had little exposure to the
group’s strategy
• Attitude survey: 60% of employees in
Europe uncertain if there is a common
group goal
Business • No shared understanding of strategy
strategy at company level
• Employees suggest little exposure to
business strategy – it doesn’t filter
down
• Variety of business divisions and
corresponding needs
Culture • Employees didn’t think there was a
distinct culture
• Managers agreed but thought one
would emerge soon, and senior
managers had mixed opinions
• The visions and values were seen by
some as superficial
Structure • Managers complain about the
and interaction bureaucracy related to corporate
structure and lack of finance
• Employees demonstrate only a very
basic knowledge of functional strategy
and are involved in business objectives
in a disconnected way
Pay structures • Discrepancies in wage structures:
following acquisition, employees retain
packages from previous companies
• Employee survey showed that
responses about pay and benefits,
promotion and salary policies were
either unfavourable or uncertain
Work assessment • There is no consistent assessment of
and feedback work and there is no appraisal system.
• AGT employee opinion survey shows
43.8 per cent responded unfavourably
when asked about performance
management
HR RESPONSE
• Newsletters and roadshows to inform
employees about developments in the
business
• HR became a conduit for recent changes
following takeover of AGT by Kholberg
& Co
• Newsletters and roadshows to inform
employees about developments in the
business
• One single Christmas party for all
locations and setting up of a
consultative works council framework
encouraged staff involvement
• Managed time out to watch World
Cup football during working hours
• Structural changes designed and
implemented by HR to focus and play
to people’s strengths, and clearly define
individuals’ roles within the business
• Broad wage structures were introduced
for the 75 per cent of the business in
the operations function. This provides
managers with clear guidelines in
which to work when reviewing and
setting salaries
• Three- to five-year programme to
resolve ‘historical anomalies’, freezing
or reducing increases for those above
the bands and larger increases for
those below
• Timetable for pay reviews published
at year-end and adhered to
• Performance and appraisal system
developed and implemented in 2002,
refined and enhanced in 2003 and
2004. Purpose was to get managers and
staff comfortable with appraisal as a
key concept in staff relations
BUSINESS OUTCOME
• The wider business group has
embarked on a fundamental change
process
• The UK business is, to a certain extent,
sheltered from this. It has undertaken
its own change process in recent years
• The attitude survey showed roughly
a 30 per cent increase in positive
responses to ‘we have the information
to do our job’
• There was also an increase in
understanding about products
• Overriding objective is that flexibility
on behalf of the company in its
dealings with its people will in most
cases generate a flexible approach
from employees in their approach to
the company and their work
• Increased efficiency across the business
through greater cooperation between
facilities
• An increase in people responding
favourably to ‘we cooperate between
sites’ (by 30 per cent) and to ‘we are
structured to get things done in a
timely manner’ (by 20 per cent)
• People are supportive of culture
change in order to form a professional
business that promotes fairness and
equal opportunity. ‘Face fits mentality’
prevalent under previous arrangements
• By 2002, increase of nearly 20 per cent
in favourable responses to ‘performance
objectives are measured and defined’. In
2003 and 2004, as with pay reviews,
appraisal timetable published and
adhered too. Policed by HR
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
AREA ISSUES IN 2000
Communication • Employee survey showed that only half
of respondents responded favourably
to upward communication and at most
only half to downward communication
Training • Majority of employees interviewed
received no training
• Employee survey shows the majority of
European responses were unfavourable
or uncertain about training and
development
Career • Little or no career development
development support. The attitude survey shows
and support that European respondents were either
unfavourable or uncertain about career
development support. No vacancies
advertised internally. Majority of
vacancies filled from external market
Managerial • Managers are technically competent
experience but lack soft skills
Role of • Unions were seen as unnecessary.
trade unions Managers in particular saw the unions
as having a negative impact on
business
HR RESPONSE
• The importance of communication
in the work environment unit of the
professional manager course
emphasises coaching and mentoring.
Over 100 managers and supervisors
have attended this key course
• Training and development strategy
including:
• Keys skills training for managers and
supervisors in relating to their staff
and the management of the workplace
• Soft skills such as presentation,
appraisal and assertiveness
• Management development programme
to develop the future leaders of the
business
• In 2004, online training in production
tools and Microsoft Office products
• Performance planning, training and job
descriptions
• Succession planning. All vacancies
advertised internally across the business
• First intervention was three, two-day
courses: coaching and mentoring;
professional manager; and time
management. Since the inception of
this programme at the end of 2001,
over 100 managers and supervisors
have attended these courses to raise
their skills and confidence in dealing
with their employees
• The management development
programme builds on this first
intervention to generate a group of
more rounded managers who will
lead the business in the future. Again,
objective is to develop internal talent
• Change of emphasis and downsizing
changed the make up of the workforce,
reducing the number of unionised
employees and trade union
representatives. No collective bargaining.
Union role one of individual
representation
BUSINESS OUTCOME
• Over 20 per cent of employees
responded favourably to ‘the company
is prepared to invest in training’.
Training together has helped form
one culture and increased basic skills
• Increased career support. Employees
now approach HR for advice
• Increasingly, posts are filled internally
thus supporting Seven’s objective of
supporting the career development of
its people, which is key to its equal
opportunity objectives
• Developing own talent is cost-effective
to the business and reduces the cost
and inefficiency of inducting new
people into the business
• The empowerment of line
management. First-line managers
and above have a clear position in
the organisational hierarchy and the
delegated authority to manage their
staff. Decisions previously taken by site
managing directors now devolved to
line management
• The management development
programme will support managers to
manage their staff and their parts of
the business during a period of rapid
change
• Currently being assessed. First group of
managers will graduate in summer 2004
• Union influence is now limited to non-
existent. However, it remains. Following
a recent dismissal there was an increase
in applications to join the trade union
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and development strategy was designed with both business
need and skill deficiency in mind. It includes: soft skills
(customer care); ‘time is money’ (finance); and team building.
In addition, there is a comprehensive management
development programme. It comprises four, two-day modules
over two years, which include: environment, operations, people
and finance. The first batch of managers graduated this
summer and programme effectiveness will be assessed.
The benefit of such a training programme is that the
managers will have a greater understanding of what is
required of them in the positions they hold, as well as
building an awareness of the different areas in the business
where they can contribute and make a difference in the way
things are done. In the past, little or none of this information
had been cascaded down from top-level management. It was
generally felt that this type of information was too sensitive
or confidential. One of the main outcomes Seven is expecting
for the business is a management team that is able to
understand how they operate and why, and which is capable
of taking a more efficient business forward into the future.
Outcomes
The hard measures show some positive outcomes so far.
Over the two-year period 2002/3, revenues per employee
has increased in the region of between 10 to 15 per cent
(once exchange rate movements have been accounted for).
In addition, staff turnover has fallen from 13.9 per cent in
2002 to 9.9 per cent in 2003.
Breaking down the old ‘us and them’ culture, which was
characteristic of the old print industry has been a large part
of the HRS. HR feel it has gone a long way towards creating a
culture where employees feel involved and work flexibly with
a common purpose. They see flexibility as something that is
exchanged: ‘you get it if you offer it’. The three major steps
towards this have been:
40
• reorganising the structure and clarifying people’s place
within it
• increasing training and career development
• focusing on performance management and improvement.
There was a significant increase in positive responses in the
2002 employee attitude survey when compared to the 2000
results. In addition, HR feels that employees trust that they
can approach HR with issues and get a response, and there
has been no employment tribunal in four years. In return,
employees have more career support and succession
planning is helping good performers.
The new structure is also proving to be more efficient. It is
encouraging flexibility among staff working on different
accounts and it has also led to silos breaking down. For
example, if a team working for one specific client is going
through a quiet period, rather than waiting for more work
coming in from that client, their resource can be redeployed
to another client project that may be particularly busy. This
works not only onsite, but across the UK. Evidence of this is
substantiated by the amount of inter-company sales that
are tracked on a monthly basis.
The positive outcomes for HR have been threefold: influence,
size,and involvement. Its influence has been amplified, the
team has increased in size from 2 to 4 people and they have
enjoyed more involvement, for example being invited to sit on
local operations team meetings. For HR, the most unexpected
outcome has been the respect gained from taking a hard line
on various issues. HR feel that they have opened colleagues’
eyes to what they can do: ‘It is about teaching managers that
they’re not there to block managerial activity, but to get them
to do it right.’
Conditions for success
In addition to the HR director’s experience of working with
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
larger companies as a consultant on HR and restructuring,
there were three key reasons for success:
1. Relationship with management colleagues: The
director of operations, who sits in Birmingham, has roughly
75 per cent of the organisation reporting to him. The
Birmingham site had relatively poor results from the
original 2000 employee opinion survey, so he knew there
were issues. He saw that HR could help so they worked
closely together to make improvements. These included
macro issues such as timing of salary reviews, performance
appraisals and the delivery of training, through to local
issues surrounding the management and interrelationship
with staff.
2. In April 2002, the appointment of a new managing
director: The new MD came from a sales background
but saw that the existing management structure was
inefficient, having developed over a number of years
without a robust analysis of whether it suited business
needs. The new MD saw that HR could act as a catalyst
for change and became a champion for the new
management structure.
3. Getting people involved through training and
development: HR regards the training strategy as win-
win. As people learnt, other more subtle cultural changes
were achieved. People met colleagues from other sites and
formed their own networks supporting the one company
strategy. This in turn supported the strategy of
implementing single company-wide pay structures. This
was done in the knowledge that it was likely that as people
from different sites met, it would only be a matter of time
before it became apparent that there were different pay
strategies in operation across the different locations
founded on the culture and history of the different
businesses.
4. HR views a key condition for success as the
acceptance and growing understanding of the role
HR can play in the business: This ranged from
involvement in local issues such as recruitment, supporting
managers through the management of performance issues
and dismissals, through to development of training and
appraisal strategies. In the old world these were issues that
management often would have to manage on their
own with little support from the wider business.
5. Having time to start to bed HR into the business
before embarking on the significant organisational
and structural changes: The US parent is now
attempting a similar change programme on a much larger
scale and over half the time. In the UK, HR regards a key
condition for success as the time to demonstrate to the
business the role HR can play.
6. A good relationship with the trainers: As well as
spending time and effort getting the structure in place,
this was crucial for getting employees and managers
more involved with the business.
Challenges
There have been and continues to be challenges to the
successful alignment of the HR strategy and function with
the business:
• Politics: Working with changing senior managers has
been difficult. Three years ago there was an attempt to
remove HR presence from the board but the HR director
pushed back. HR spent time building bridges and used wins
such as successfully managing downsizing programmes
to demonstrate the worth of HR to the business.
• Perception of HR: Some thought the role of HR was, or
should be, purely supportive and it has taken over two
years to get away from this. Some managers have seen
HR as inhibiting the business and working beyond its
remit. This remains a challenge and HR recognises that
they have to strive daily to find the right balance between
being supportive of management while protecting the
wider business interest. HR see the example of the
recruitment processes they have implemented as being
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an example of this.
• Starting from scratch: Having no HR at all was a mixed
blessing. They had to build up knowledge. HR sees this as a
challenge but believe it has been fortunate in being able to
demonstrate to the business the role HR can play without
carrying too much baggage. As the HR director puts it, ‘we
had a fertile green field in which to develop the function’.
• Measuring benefits: This is always hard, particularly
with cultural outcomes often being intangible by nature.
HR is using students to measure the effects of the training
courses in exchange for a university project.
• Market changes: The move towards digital solutions
was supported by the rapid development of digital
imaging technology available in the marketplace. The
market is driven by new technology and requires flexibility
and the ability to respond to change. It is vital Seven
invests continually in new technology to gain market
credibility and position. This change in the strategic
direction of the business and the move away from print
into digital artwork build and solutions over the last ten
years has been a challenge for the business in how it
manages its people. As discussed previously, the traditional
role of the trade union has diminished, which left a void in
which professional people management techniques were
essential.
• Developing and managing the HR strategy through
periods of economic downturn, for example that
associated with 9/11: The HR department regards
managing downsizing as part of the job – and another
example where the use of best practice can ensure
employee support is maintained while protecting the
company from subsequent claims in employment
tribunals. As mentioned previously, the HR department
is proud that the business has achieved significant
downsizing and change while avoiding any claims to
an employment tribunal over the last four years.
• Changes fed down by the parent company: The
42
current aim is to make the company global rather than
broken up in subsidiaries. This will include a common
bonus structure, and some bonuses may be substantially
reduced. This will potentially create very bad politics to deal
with and will generate a range of issues as key people see
their ability to earn bonuses reduced as company-wide
schemes are introduced.
Sustainability
• The financial position has improved with the venture
capital investment, which will help provide stability.
• Although there are likely to be changes passed down
from the parent company, the structural changes that
have already fed through are not going to change.
• More training and development and in particular
succession planning is seen as key to developing Seven’s
own talent.
• Continuing to resolve historical anomalies in the pay
structure.
• Better communication more often with staff.
• HR feels that despite the challenges, the positive outcomes
outweigh the low points. The HR team will keep enjoying
working across the whole range of HR issues and processes.
• 2001 was a difficult time for the business due to the decline
in advertising market, the downsizing of companies and
the 9/11 attacks. ‘You have to manage through to gain
respect.’
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CASE STUDY 4 – Autoglass
Background
Autoglass is the UK’s leading vehicle glass repair and
replacement company, and has the largest market share. It is
part of the Belron group, which is the world’s biggest vehicle
glass company. In the UK, there are just over 2,000 employees,
approximately 1,100 of whom are mobile technicians,
working out of 130 branches.
There are three main groups of employee: trained and trainee
technicians based throughout the UK; customer service staff
based in the customer contact centre in Bedford and in
Autoglass branches across the UK, and support staff located
in the state-of-the-art head office in Bedford.
The HR department is a team of 25 people, which manages
all the HR functions including: resourcing, employee relations,
management development, technical training, internal
communications, health and safety, and technical services.
The case for alignment
The organisation has always performed well. HR has a good
reputation and has been an important part of the business
since the late-1990s. (From the early-1990s, HR was known
as ‘Personnel and Training’. ) The HR plan is formulated with
close consideration to the business strategy, but as well as
this HR is in a position to add to the business planning
processes. The HR director is a member of the executive
committee, which is responsible for strategy and business
development.
In 2002, although the company continued to be successful,
it was felt there was a need to map out new opportunities
for growth and to review the strengths of the business, so
Autoglass committed to a strategic review. This ran in
partnership with the parent company. An important part of
this was a people review, which examined:
• who have we got? The demographic picture
• how people enter and exit the business – recruitment,
tenure and turnover
• how people are managed
• the organisational culture.
How was alignment achieved?
Although historically there has been a personnel function
in Autoglass since the early-1990s, the HR director role was
created in 1997. HR is now an established fulcrum between
company and staff. There are two key strands to this role,
which HR endeavours to interweave. Improving:
1. business performance by working closely with the
business heads and the yearly/five-year business plans
2. the working lives and conditions of employees and, as it
is not a unionised environment, HR takes this role seriously.
The HR director believes that working conditions affect the
standard of people coming into the company. For example,
HR recently increased holiday entitlement for managers after
noticing that their offering was a bit short of the national
average. This was done despite some management
resistance.
A great example of HR working in line with the business
at Autoglass was the role played in critical structural and
reward changes in 2000 after it was recognised that the
business structures had become too complex. HR led the
approach to these changes while working very closely with
regional managers, providing professional competence,
guidance and moral support. For the organisation, it was
an excellent example of cross-functional working. The
changes included:
• Discontinuation of the network structure, so branches
became independent
• Even stronger commitment to the mobile working strategy:
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Table 6: Aligning HR and business at Autoglass – what is done and why

HR INITIATIVE BUSINESS OUTCOME

Training and development

Autoglass invest more than average in its training and Staff turnover has fallen
development programme , providing a comprehensive training
50

The quality of service has improved

programme for technicians through the National Skills Centre. In
addition, there is a management training plan, and management
development centres have been run based on carefully analysed
leadership success factors

Succession planning

An organisation-wide capability review has recently been Improving the quality of branch management
conducted

The trainee management programme is Autoglass’s graduate

recruitment programme, which is fairly unique in the industry

Employee relations

There is an employee assistance programme, which has a
utilisation rate of just under five per cent
Managing director’s ‘open house’ programme
Staff satisfaction is used as a key performance
51
indicator and the overall index score has
increased from 50 to 61 since 1995.

Field-based HR roles

Pay and benefits

The pay scales are in the upper quartile and all staff are on a Business performance has improved year on year
variable earnings plan since 2000, with 2003 being the best year ever

Performance management

Autoglass has a well-established performance management The staff survey shows the highest positive
system. Every manager has received training in the process. results around ‘clarity of goals and what’s
Recent trends show that positive ratings are on the increase expected of me’. This suggests the organisation
is providing a framework for employees to work
to their maximum capacity

50 Based on 2002 comparative data collected by Capita and HR Benchmarker survey in association with Personnel Today
44 51 Based on 2002 figures
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S
‘We come to you.’
• Productivity-based reward system for technicians, which
was a huge benefit to the business.
The management and output of the strategic people review
is a good reflection of the overall HR ethos in Autoglass,
which focuses on the practical and does not ‘over
intellectualise’ in pursuit of best practice. The HR director
feels that it is more important to realise that organisations
are not linear: learning about your specific case and finding
out ‘where the pain is’ in the business is more realistic. While
working towards more ‘blue sky’ improvements is important,
it is critical to balance this with attending to existing
problems. HR see this balance as their key role.
To plan current and future HR work so that it aligns with
business needs, Autoglass uses both quantitative and
qualitative methods including staff satisfaction survey
results, turnover and sickness data as well as listening to
what people at all levels around the business are saying. For
example, senior managers go out into the business and lead
open house participative sessions with a cross-section of
staff. HR facilitate these sessions, focusing on what issues
are being dealt with in the business currently and managing
staff expectations.
The HR department is confident in its ability to add value.
Resources for the review were found almost entirely internally
rather than using large-scale consultancy to manage the
process. For the strategic review, Autoglass used an internal
team (including a regional manager, a contact centre
manager, an HR manager, the HR director and the rewards
manager), with support from their parent company Belron
and one independent consultant from The Work Foundation
to provide an external perspective.
Outcomes
Generally, according to the staff attitude survey, satisfaction
ratings have improved in gradual progression over roughly
the last 8-year period to 61 from a base of 50. Although
managers own the results of their area, HR feels this says a
great deal about its contribution to the business and the
working lives of staff overall. The pace of improvement has
accelerated since the changes in 2000 that resulted from the
‘changing the game’ project. The business, after an initial dip,
was energised.
More specifically, the people review provided an excellent
birds-eye view of how HR was functioning. While the policies
and processes were working well generally, it was felt that
there were areas of real weakness that were a cost to the
business and could be improved on. The main issue was
that the recruitment process for technicians was not working.
In response to the review findings, in under a year HR has
designed and perfected a new approach to recruitment.
Although there is habitually high turnover in the industry,
this has improved. The process has been well received
throughout the business.
Training and development initiatives have had a positive
effect on the business. Drop-out rates from training
programmes are low, indicating that staff and their
managers value training and give it a high priority. Around
56 per cent of people are working to a personal development
plan. More crucially, the National Skills Centre had a positive
impact, most notably on performance of fitters, and a
business case for a relocation and expansion of the facility
was approved earlier in the year.
Succession planning has resulted in a balance at senior levels
between internal promotion and external appointments.
Most vacancies are advertised internally, but an exclusively
45
 C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E

external process is used if it is known that the necessary skills
and experience do not exist in the organisation or new blood
is needed.
Conditions for success
The good reputation of HR is critical to its involvement in
business planning and performance improvements. The HR
director feels that HR people who understand the business
they are in and are confident to be part of the issues peculiar
to it is central to sustaining their reputation. This combined
with enlightened senior management is how HR sustains its
strategic role.
In Autoglass it is accepted that people are ‘part of the
solution rather than part of the problem’. ‘The people
dynamic is crucial – people are a vital part of our business,’
says the HR director. With an overwhelming majority of their
customers meeting technicians in the field face-to-face, the
people element cannot be ignored. HR is fundamental to
recruiting and managing these people.
major challenge although there can be ‘tensions’ in getting
people to realise that long-term solutions are vital to
managing out short-term problems. For example, getting
people to use new recruitment approaches and getting
people to stick with it even if it does not work at first.
Sustainability
• Building on achievements and working with the business
as they evolve.
• Consistently reviewing HR policies and processes.
• Continuing to find the weak spots in the business and
looking at where HR can intervene.
• Pushing the boundaries of the ‘employer of choice’ agenda,
for instance implementing a sabbatical policy.
• Learning and sharing across the Belron group, particularly
looking at the more mature businesses in the organisation,
such as those in Belgium and Holland.

Influencing business heads is an important and iterative

process at Autoglass. Partnerships with business heads are
central to most of the projects they work on, for example the
structural and pay changes in 2000. In addition, persistence
with initiatives and ideas has been a large part of HR’s
success in adding value. ‘While you need a few quick wins,
issues such as motivation and leadership are only long term.
There is no use in pretending otherwise,’ says the HR director.

Challenges
Phase One of the overall strategic process took longer than
anticipated due to some complicated market research. As a
consequence, the follow-up stages have been delayed. Often
the stark realities of business needs are cyclical and demand
short-term responses, which can inhibit longer term thinking.
However, HR views this as ‘the way things are’ rather than a

46
 A C H I E V I N G S T R AT E G I C A L I G N M E N T O F B U S I N E S S A N D H U M A N R E S O U R C E S

Annex 1: Methodology

The research has been based on the collection and learning points for other organisations (Section 2).
analysis of several forms of evidence:
Secondary data
Literature review The qualitative findings from the case studies are
A short and focused review of both academic and illustrated with quantitative data from this year’s
business literature was conducted to set the context Workplace Trends Survey report 52 and with further
for the project. This included theoretical approaches to qualitative evidence from The Work Foundation’s Work
developing HRS and aligning it with business, the reality and Enterprise Panel of Inquiry report. 53
of this process and evidence of its impact on bottom-line
performance.

Company case studies

We spoke to four organisations with different experiences
of strategically aligning human resources and business
issues (see Table 3 for a summary). These were the
Borough of Telford & Wrekin, Standard Life Healthcare,
Seven Worldwide and Autoglass. An attempt was made
to represent both public and private organisations in a
variety of sectors.

The case studies are based on secondary background

information (web-based material, promotional material,
company documents and media coverage) on each
organisation and semi-structured interviews with HR
directors or managers. The interviews focused on:
• the business case for aligning HR and business
strategies
• how alignment has been achieved
• the positive business outcomes of the process
• what factors made the alignment process successful
• the main challenges to the process.

The case studies are analysed both vertically and

horizontally. The vertical analysis looks at each case in
turn and provides context to the processes and outcomes
specific to each case (Section 4). The horizontal analysis
draws out common themes with an aim of providing

52 Bevan S, Cowling M and Horner L, The Workplace Trends Survey 2004: Summary report, The Work Foundation, 2004
53 Harding R, Cowling M and Turner N, The Missing Link: From productivity to performance, The Work Foundation, 2003 47
 C O R P O R AT E PA R T N E R S R E S E A R C H P R O G R A M M E
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