Keywords: Strategic management, Strategy development, Strategic leadership and strategic implementation, Theories of Organizational strategy development, School of thought about strategy, Rational Planning Model, Leadership and environment analysis, Emergent strategies, Strategic choice and implementation, Problem of strategy implementation, Human Resources Management (HRM) contribution and development of strategy, ULRICH framework, Leadership and management assignment writing services
In this essay, strategy development process, leadership role in development and implementation of the strategy as well as the contribution made by the HRM in strategy development are evaluated.
According to Hills, Jones and Schilling (2016), strategic management is concerned with managing the future of the organization through effective strategy development. Competitive challenge such as innovation, globalization, and the dynamic external business environment has put pressure on the organization and consequently on the managers to create a strategy on which company can rely and achieve its objectives.
Barney, Ketchen and Wright (2015) explained that the strategic decision involves direction and scope for the organization, matching resources with the external environment as well as achieving stakeholder satisfaction.
Strategy development involves many approaches based on the need, position and situation of the organization. The strategy development process could be deliberate or emergent based on internal capabilities (resource-based view) or based on the market requirement (Positioning based approach) (Eden and Ackermann, 2015).
Furthermore, after the development of the strategy the important step is the implementation of the strategy because even a very good strategy will not achieve the desired benefit without effective execution of such strategy. This has highlighted the importance of role of the strategic leadership to implement the strategy. Finally, employees are considered as a strategic asset for an organization and contribution made by Human resources management (HRM) plays an important role (Gamble, Thompson and Peteraf, 2014).
According to Chandler (2003, p.13), the strategy is defined as course of action to achieve the specific outcome. In addition, strategy specified vision, mission as well as objectives of the organization through developing policies which allocate resources along with the implementation of policies (Chandler, 2003).
Drucker (1999) explained that strategic planning is a continuous process of making decision in systematically manner in the light of future knowledge; efforts to carry out these activities, process of organizational capabilities to create value for the stakeholders along with systematical feedback.
Eden and Ackermann (2015) discussed that the three level of strategy development in an organization involves strategic, operational and tactical. Strategic planning is concerned with long term direction of an organization. Tactical planning involves support for the strategic plan by translating the overall strategy into distinct area of organization. Nevertheless, operational strategy involves how daily operations of the business will be carried out.
According to Mintzberg (2000), the design school defines strategy as a process of conception in which unique and clear strategies are deployed by the organization. The planning school defines the strategy development as a formal process which clear steps are taken through situation analysis and execution of the strategy. It concerns with strategic planning through vision, resources allocation as well as control of activities.
The position school defines the strategy formulation as an analytical process to improve the current position of the organization. Moreover, the learning school defines strategy as an emergent which is developed out of the pattern of behavior. Furthermore, the cultural school is considered as collective process and strategy is collective and cooperative process.
At last, not least, the environment school describes strategy formulation as reactive process in which strategy is formulated as a response to external environment challenge (Eden and Ackermann, 2015).
According to Roney (2014), the rational planning (outside-in approach) involves step-by-step approach to formation, evaluation and selection of the strategy. The advantages associated with rational planning that it helps the organizations to identify the risk present in the environment and devising policies and procedures for effective control. The rational planning model is based on three stages which are strategic position analysis, strategic choice and strategic implementation.
Barney, Ketchen and Wright (2014) described that the first step involves in the strategic planning is position analysis is of internal and external environment is the first step involve in strategy development. The environmental analysis highlights the factors which help to determine the future direction.
The internal environment involves the factors which are present within the company and it’s usually developed through conducting SWOT analysis. It highlights the strength and weakness from the internal perspective and strength and weakness from the external perspective (Kornberger, 2017).
On the other hand, for external environment analysis, the ranges of methodology deployed are stakeholder analysis and elaborating mission, goals and objectives of organization. The environment scanning models deployed are PEST analysis, porter five forces, porter diamond, Value chain, life cycle and competitor analysis are carried out to determine the strategic position and factor affecting the organization (Hussey, 2015).
According to Davenport, Leibold and Voelpel (2015), after organization determine it strategic position and factor influencing the organization, the next stage involves strategic making the strategic choices in terms of how to compete in the specific market.
At this stage selection of Porter (1997) generic strategies (cost leadership, differentiation and focus) and decision on where to compete market strategy (Ansoff matrix) as well as market entry strategies are evaluated (Selig, LeFave and Bullen, 2014,p .53).
Gamble, Thompson and Peteraf (2015) discussed that strategic implementation involves deploying control and executing the policies to successfully achieve the desired objectives. This involves setting up the internal controls, the structure of the organization along with performance measurement.
The effective tools at implementing stage involve benchmarking and balance scorecard. The problems associated with the rational method are that rational planning control as bureaucratic and time consuming (Kaplan and Norton, 2011).
According to Lockett and Wild (2014), the resource-based view (Inside out approach) to strategy involves exploiting own resources and competence to create the competitive advantage which competitor cannot copy. The resources are either tangible or intangible and competencies are made up from a combination of resources. It is a process of matching the organization internal resources to opportunities presented in the external environment.
Gupta and Malhotra (2015) added that in the resources based view, the organization identifies the resources and appraises strengthens of the resources. The next stage involves identification of the firm capabilities to work effectively in conjunction with these resources. The next stage is evaluating the potential for the competitive advantage and return which can be generated for the firm.
At last, not least, the organization matches these capabilities to external opportunities. The VRIO (Value, Rareness, Imitability, and Organization) analysis is a useful tool to identify the resources which can be a source of competitive advantage for the organization (Kornberger, 2015).
Swayne, Duncan and Ginter (2015) stated that the emergent strategy is evolved out of patterns of behaviors in an organization and also known as realized strategy. It is actions or behaviors which have consistent pattern and it was not intended in the rational planning (Deliberate strategy). Emergent strategy proposed that organization is learning which works in reality and it is important get adapt to such practices in order to survive and growth of the organization.
Suddaby, Seidl and Le (2013) discussed that strategic draft occurs when an organization fails to get adapt to emerging behaviors and try to replicate the order the ordering strategy to achieve success in new markets. Organization failure incurs when an organization fails to adapt to the external environment and, therefore, unable to meet the demand of the customer. The examples of the strategic draft include the Nokia and Kodak in which organization fail to understand the changing market landscape.
Thus, companies who ignore the value of the emerging strategies and stick to deliberate/intended planned strategies usually face the strategic drift and resulting fails to survival in the market.
According to Cummings and Worley (2014), strategy implementation is an important and integral part of the strategic planning. The effectiveness of the strategy can only be determined once the strategy is implemented. The implementation of strategy involves setting up internal control systems, measuring the results and feedback the result in the strategy to achieve the improvements.
Bodenmuller (2014) added that without successful implementation strategy is nothing more than a piece of paper and implementation/strategic control is regarded as most component. Strategic leadership have most important role in strategic implementation and organization with lack of strategic leadership is classified as major constraint for the organization.
Cummings and Worley (2014) stated that strategic leadership is the ability of the leader to anticipate the change, maintain the flexibility to adapt to change as well as empower others to adapt and create strategic change. In addition, strategic leadership is concerned with integration and accommodation of the internal and external information to manage the change and strategic direction of an organization.
Speculand (2015) discussed the role of the strategic leadership is to communicate the vision of the organization, setting targets, managing organizational culture and resources as well as control to successfully implement the strategy.
The key capabilities of the effective leadership involve insight on the internal and external information; focus on achieving the strategy, alignment of the organization (structure and rewards system), execution of the strategy as well as keep motivation among the employees to achieve the target.
According to Kaplan and Norton (2001), the five steps involved in the strategic implementation are translating the strategy into operational terms, resource alignment, involving everyone, strategy as continuous process and leadership manage the change. Consequently, leadership with effective capabilities can manage these five steps and achieve the success of the organization strategy.
Beer, Eisenstat and Foote (2016) added that the silent killer of the strategy which are top-down management style (lack of empowerment), conflict in setting the priorities, ineffective team, poor vertical communication, lack of coordination as well as lack of the leadership skills to tackle the change and integration of information.
Thus, to successfully implement the strategy it is important that leadership have capabilities to tackle different issues surrounded the implementation of the strategy. One of the key areas which address the problem associated with the strategy implementation and facilitates the implementation of the strategy is leadership styles (McDermott et al., 2014).
According to Freedman and Tregoe (2015), strategic Leadership is key driver in order to effective implement the strategy. In addition, lack of strategic leader is known as key barrier in the implementation of the strategy.
Strategic leadership is defined the ability of the leadership to identify the change, maintain vision and flexibility as well as empower the staff to manage the change and effectively implement the strategy. Moreover, strategic leadership role is to integrate the internal and external environment to manage the process the information for effective decision making (Kaplan and Norton, 2004).
Jooste and Fourie (2016) elaborated that the role of the strategic management to implement the strategy involves setting the strategic direction, devise and implement effective control system, promote and maintain organizational culture as well as focus on the ethical practices to ensure the effective strategy.
The importance of strategic leadership could not be ignored in today’s dynamic business environment. The role of strategic leadership is to provide support and effectively manage the team, focus on the targets markets, devise and implement effectively strategy, maintain sustainable competitive advantage as well as develop strong relationship with the customers. The strategic implementation is important because it the business idea translated into action and failure result in failure of the strategy (Bodenmuller, 2014).
Transactional leadership is based on the punishment and reward system in which are reward for the good performance and punished for the errors. Transaction leadership style does not encourage a team empowerment, vertical communication or long term perspective of the organization activities. Leaders in transactional leadership motivate and direct the employee for the self-interest and employee is follower and obey the instruction of the leader (Sperry, 2013).
Mapetere et al (2015) explained that the four dimension of the transactional leadership are that leaders linked performance to the reward trough setting standards, management is carried through ‘management by expectation’, employees are neither empower and leaders intervene when management miss the targets and lack of direction for the employees.
Consequently, the approach is less likely to successful when developing the strategy because the focus is on conducting the transaction rather achieving long-term objectives of the organization.
Cummings and Worley (2014) stated that transformational leadership involves setting the goals and empowering the team based on the positive relationship with the employees. In transformational leadership leaders develop their subordinates and followers get motivated because of their involvement in organization activities. Leader set clear goals for the employee communicate the direction of the organization as well as empower the employees to make decision.
Avolio and Yammarino (2013) added that the clear goals, reasonable expectation and empowerment encourage the employees through recognition and involvement. Leadership looks beyond their personal interest and inspires the employee through creating vision, motivate employee and trusted based relationship development with employees.
For that reason, transformational leadership approach is most in terms of strategy formulation and implementation of the strategy. Transformational leader is important to overcome range of strategy implementation through communication the clear direction and goals. The diagram below encloses the role of transformational leadership in order to implement the strategy (Sperry, 2016).
Secord (2017) analyzed that the role of human resource management (HRM) has evolved over the years from the personnel department administrative to strategic function, which can improve performance of the organization. HRM consider the implication of the corporate strategy and translate the objectives of the organization in people specific function.
The strategic element of HRM is to link the HR function with the strategic objectives of the organization. The function of the HR is to manage people, recruiting and training people with right skills as well as alignment of the workforce with strategic objectives of the organization. The changing nature of the HR could not be emphasized less as employees are considered as strategic source and i.e. source of competitive advantage (Suddaby, Seidl and Le, 2017).
In the light of ULRICH framework, there are four HR role. The first is as strategic partner which involve defining organization and make contribution towards management decision making. Verweire and Berghe (2004) discussed that framework aligns the business strategy with HR strategy to manage the people in order to support the execution of the strategy. Likewise, strategic approach to HRM helps in strategy development, plan and facilities the deployment and redesigns the organization support strategy. The processes involve the recruitment, developing and training the right people which facilitate the development and implementation of strategy.
Bratton and Gold (2012) added that the second role of HRM is act as change agent through acting as facilitator as well as champion for change. It communicates and buy-in the employee to ensure that change is implemented in effective manner. The communicating to ensure that employee understands the strategic direction of the organization is an important to successful achieves the objectives of the organization.
HR role as the employee advocate ensure that people contribute to the success of the organization. The numbers of important task such as develop employee skills and competences, training to overcoming the challenges as well as provide a climate for the actions. This helps to motivate the employee and better performance of the organization (Marler and Fisher, 2013).
At last, not lease, the administrative function of HR is recruitment, selection and ensuring the process efficiency. This deliver the competitive advantage for the organization based on the efficient HRM function which fulfill the human resource through align of objectives and HR strategy. The recruitment and selection, training and development of the staff help the organization to deploy the right people to achieve the objectives (Wilton, 2015).
Storey, Wright and Ulrich (2015) explained that the continuous change in the external business environment has forced the organization to adopt approach to management which can address the challenges of the modern business environment.
As a result, it is important that HRM is aligned with overall business strategy to achieve the objectives of organization. Business strategy is concerned how to competitive in the specific market. Moreover, employees are strategic asset of the organization and even the Mckinsey 7P model involves the ‘p’ for people.
Torrington, Hall and Taylor (2016) highlighted that the separation model considers no relationship between the business strategy and HRM and business exist in isolation. The model ignores the strategic importance of HRM and typically found in the small organization. The holistic approach describes the HR function as single function.
This approach closely linked with system theory in which organization is considered as an element of interacting equally important components and the organization operates on the basis of these components.
Hussey (2015) added that the HR driven model takes on the extreme position through placing the HR function in the central position. The HR drive model considers the employees as a key resource of the organization and, thus, the careful approach should be deployed to manage the employees. This approach is consistent with a resource-based view and considers the employees as a strategic asset.
Marler and Fisher (2013) proposed that the model of dialog believes involves two-way communications between the HRM and organization strategy. Therefore, in order to successfully manage the changing business environment, it is important that organization get adapted to applying the new approach to the human factor.
The strategic nature of HRM acknowledges the close relation between the origination strategy and HRM strategy and focus should be given on directing, development and changing the human behavior to provide resources for the organization to achieve its objective (McDermott et al., 2013).
Strategic planning is important for an organization to achieve their objectives. The strategy defines the direction and scope for the organizations and resource allocation to add value for the stakeholders.
The process of the strategic planning could be deliberate planning or emerging and it’s important that organization deploy the right strategy. The rational planning is also important to devise the strategy in step-by-step and logical manner but in order to avoid strategic drift, it is important that management review the strategy and market to get best fit for the organization.
Nevertheless, the success of the strategy depends upon the leadership of the organization. The leadership styles have important implication in terms of strategy development and implementation. The best leadership style is transformational leadership which involves stakeholders through effect communication, coordination through empowerment.
At last, not least, HRM function has changed into a strategic function for the organization. This HR role is to evaluate the human capital need of organization, managing change and support strategic development.
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