Strategic Workforce Development

 

Saurabh Gupta1, Ruchi Tyagi2

1Department of Human Capital Development, The University of Southern Mississippi, Gulf Park Campus, Long Beach, MS (USA).

2Department of Business Administration, Bundelkhand University, Jhansi, UP (India).

*Corresponding Author E-mail: saurabh.gupta@usm.edu, ruchi80.tyagi@gmail.com

 

ABSTRACT:

Companies have now realized that human resource is the most crucial resource, whose capabilities have to be consciously developed to sustain organizational competitive advantage.The workforce development is a continuous process of developing knowledge and skills of employees. Recent research literature suggests thatthe human resource aspects should be included as an integral part of strategy formulation and execution.The workforce development process should be aligned with organizational strategic objectives in a way to ensure the best performance of employees. This insight has stressed the importance of developing strategic workforce development approach.The strategic workforce development ensures that employees have right knowledge and skills.Right knowledge and skills means the knowledge and skills necessary to achieve better organizational performance and sustainable competitive advantages.The inability to integrate human resource aspects into strategic value chain may create a failure trap (Gupta, Smith, andShalley, 2006). This paper aims to explore conceptual development and process of strategic workforce development.

 

KEYWORDS: Competitive advantage, resource-based view of the firm, strategic workforce development

 

 


INTRODUCTION:

The history of business has examples when companies have failed to sustain organizational performance due to poor management of knowledge resource (Wentland, 2007). A series of missteps have made companies realize the importance of strategic planning, which could have improved the quality of managerial decisions (Wentland, 2007). According to Drucker (1999), the strategic approach encourages businesses to examine current and future realities, and sets actions to respond better to competitive environment.

The strategic management is a process that assesses environment before taking any action, and then proceeds to formulation, execution, control, and evaluation of strategy towards maintaining organizational competitiveness (Tse, 2010). According to Drucker (1999, p.36), “Strategy converts business into performance. Its purpose is to enable an organization to achieve its desired results in an unpredictable environment. Strategy allows an organization to be purposefully opportunistic”.

 

Though, strategy creates organizational differentiation, it is also important how organizations execute strategy (Becker, Huselid, andBeatty, 2009). According to Beckeret.al.,(2009), the workforce strategy has two goals. First, the strategic goal, and the second is how companies will achieve it (Becker et. al, 2009).Though, current business environment is challenging, it also brings opportunities (Milliron, 2007). Organizations are advised to understand the situations and break the status quo to reap the benefits of opportunities (Milliron, 2007).

 

The most significant development in this regard has been the development of resource-based view of the firm. The resource-based view of the firm postulates that long-term business strategy should be based on deployment and development of its unique resources and capabilities (Grant, 1991). Though all resources are essential for organizational success, no resource has potential of attaining competitive advantage in isolation (Grant, 1991). The resource-based view of the firm has identified human resources and human resource management crucial in attaining organizational success (Pfeffer, 1994) and competitive advantage (Hendry and Pettigrew, 1990). According to Pfeffer (1994), organizations can copy technology, product, and manufacturing processes, but human resource and human resource management practices are difficult to be copied. The human resources and human resource management practices further represents an unique competitive advantage (Pfeffer, 1994).Therefore, scholars suggest organizations should continue developing human resources through investment in training and development (Garavan, 2007).

 

Organizations have not only realized the role of workforce development in business strategy, but are also using workforce strategies to develop new business opportunities (Torraco, and Swanson, 1995). Boxall, Purcell, and Wright (2007) explain that micro human resource management manages sub functions, while strategic human resource management ensures that human resource contributes to organizational success. The strategic approach to workforce development ensures employees’ fitness with organizational objectives, and enhances their strategic contribution (Roberts, Woods, Richardson, Murray, Moss, and Smith, 2008). Development of employees’ skills, knowledge and abilities are considered as human investment perspective of strategic approach to workforce development  (Roberts et. al., 2008). With a focus on strategic impact of workforce, the strategic approach of human resource development enables employees to understand organizational strategy and their role clearly, which further enhances their personal accountability (Becker et. al, 2009).

 

The strategic workforce development is a ‘multi-level concept’ that includes different disciplines and methods to enhance long-term organizational performance (Garavan, 2007). The key factor of strategic approach to workforce development is understanding and assessing environment (Garavan, 2007).Therefore, organizations need to continuously scan external and internal environment before taking any workforce development initiative (Garavan, 2007). Pfeffer (1994) argues, organizations that understand and include environmental changes in business policies are always capable of increasing organizational performance.

 

Prahalad and Hamel (1990) suggest that organizations can develop competencies through application and sharing.If an organization fails to recognize and develop their competencies, these competencies may become weakover time (Prahaladand Hamel, 1990). Therefore, it is essential for organizations to consciously identify and develop human resource capabilities (Fox, 2013). The literature provides sufficient evidence that recognize the role of human capital in developing long-term‘above-normal’ organizational returns (Allen, Fischer, and Swanson, 2008). Some companies succeed, because they have the best talent (Becker et. al, 2009). Since, talent is an asset, itcan be developed (Becker et. al, 2009).Becker (et. al,2009, p.7) further suggest, “instead of thinking in terms of war for talent, the emphasis should be on war with talent” (Becker et. al,2009, p.7). The investment of developing human resource is invaluable (Swanson and Holton, 2001), because they have “unlimited potential for return on that investment” (PandeyandChermack, 2008, p. 834). Leaders in workforce development should design and implement a system that continuously develop and unleash the potential of human resources (Allen et. al., 2008).

 

Wartzman (2014, October 16) argues:

Drucker cautioned, “If knowledge isn’t challenged to grow, it disappears fast. It’s infinitely more perishable than any other resource we have ever had”. To keep it fresh, John Hagel, co-chairman of Deloitte’s Center for the Edge, says that firms need “new architectures” designed to increase the flow of information and learning inside and outside the organization’s walls. (para. 9)

 

Though, the literature provides evidence indicating the role and importance of human resource in the organization, many firms still do not believe in this reality (Barney and Wright, 1998). Therefore, even if the use of strategic practices in human resource development has increased, firms normally use those which are easy to adopt (Burke, 2005). It is advised that instead of depending too much on benchmarking, companies should examine how employees can uniquely contribute to strategic success of the company (Becker et. al., 2009). Strategic approach can definitely be a better way of responding to dynamic business environment, and in sustaining organizational competitive advantage.

 

BACKGROUND:

The strategic workforce development is relatively a new concept (Garavan, 2007). Previous studies on strategic workforce development have related it with strategic management development (McClell, 1994), and mainly focused on developing only leaders. The development in information technology and increasing role of workforce in attaining competitive advantage has increased the role of human resource development in business strategy (Torraco, and Swanson, 1995). Dyer (1983) suggests there is a relationship between strategic plans and workforce development. Manziniand Gridley (1986) have also put emphasis on including staffing and skill development in strategic planning process. BoxallandPurcell (2000) argue that strategic approach to human resource management explains how human resource can contribute to organizational effectiveness.Since, skilled workforce is essential to maintaining competitiveness and sustainable economic growth (A G20 Training Strategy, ILO, 2010), investing in workforce development is a strategic investment (Greenstoneand Looney, 2011).

 

Tichy, Fonibrun, andDevanna (1982, p. 47) define, "Strategy is the process by which the basic mission and objectives of the organization are set, and the process by which the organization uses its resources to achieve those objectives". Decision makers use strategies to achieve organizational objectives and competitive advantage (Dyer, 1983). Strategy exists atthree levels, which includes corporate level, within businesses, and within functions (Dyer, 1983).

 

The workforce development is a wide range synchronization of policies and programs that provide individuals an opportunity for sustainable livelihood, and support organizations in achieving socially responsible goals (Jacobs andHawley, 2009).The individual perspective includes developing individual’s ability for sustainable livelihood (Jacobs and Hawley, 2009). Community/economic development perspective includes developing abilities of workforce to fuel economic activity (Jacobs and Hawley, 2009). The employer, organization, and company perspective includes developing workforce to achieve higher level of productivity and profitability (Jacobs and Hawley, 2009).

 

Swanson (1995, p.208) defines, “Human resource development is a process of developing and/or unleashing human expertise through organization development and personnel training and development for the purpose of improving performance”.  According to Nadler (1983), human resource development is a time specific organized learning process, which brings change, and improves individual and organizational performance. Strategic human resource development is a proactive process of management, which helps organizations to respond and survive in dynamic and competitive business environment (Grieves, 2003).According to Garavan, Costine, andHeraty (1995), the strategic human resource development is a proactive and planned process of developing individuals and groups, which further benefits individuals, groups, and the organization.

 

Clardy (2008) suggests, since the main purpose of strategic workforce development is to develop learning for the future, the human resource development function has to be aligned with organizational strategy and strategic objectives. Essentially, an effective workforce development program includes environmental scanning and SWOT (i.e., strength, weakness, opportunity, and threat) analysis (RothwellandKazanas, 1989). However, it will only be possible when organizations have effective internal strategic partnerships (Ulrich, 1997).  The human resource helps companies in attaining advantage through stock of intellectual capital, knowledge creation and transfer, and adaptive organizational change (Wright, Dunford, and Snell, 2001). Since, strategic workforce development programs develop innovative and strategic thinking withinorganization,it can create greater strategic values to the organizations(Torracoand Swanson, 1995).

 

Torraco and Swanson (1995, p. 12) emphasize on the need of “dynamic strategic planning process and flexible use of resources” to respond to dynamic business environment. Torracoand Swanson (1995, p.12) further argue “In today's marketplace, organizations that possess or can quickly achieve the levels of employee expertise required to meet emerging business needs will win; those that don't will be left behind”.

 

According to Lengnick-Hall, Lengnick-Hall, Andrade, and Drake (2009, p. 64), the strategic view of human resource management is not new. Labor economists have discussed and described strategic view of human resource management during 1920s (Lengnick-Hall et al., 2009, p. 64).Thompson and Strickland (2003) argue, “Organizations with a spirit of high performance typically are intensely people-oriented, and they reinforce their concern for individual employees on every conceivable occasion in every conceivable way” (pp. 439).

 

The concept of strategic human resource development has emerged due to increasing complexity of business environment and the contribution of workforce expertise in organizational strategy (Itika, 2011). Scholars have developed many definitions and ideas, covering both qualitative and quantitative aspects of human resources development in establishing a framework of strategic human resource development (Itika, 2011). 

 

According to Torraco (1993), sooner or later, the organizations will realize that human resource is the only resource, which by being creative and having adaptive abilities drives organizational success in dynamic business situations. Marshall (1959, p. 469) argues, "The most valuable of all capital is that invested in human beings". Harbinson (1973) asserts thatusingnatural resources, human resource further develops social, economic, political organization, and the nation.The national economy or organization cannot be developed without developing skills and knowledge of human resource (Dauda, 2010).

 

The unique set of employees’ capabilities and skills create unique value to organizations (Garavan, 2007). Therefore, the resource-based view of the firm suggests thatin order to increase organizational value, development of employees’ knowledge and skills should be aligned with organizational objectives (Garavan, 2007).The strategic human resource development system aligns internal organizational system with external environment (Pfeffer, 1994). Therefore, the strong organizational system is, which responds strategically to external environment (Semler, 1997). The literature on strategic human resource management has been divided in different bodies of research (Lengnick-Hall et. al., 2009). The first emphasizes on contingency perspectives and fit of human resource practices with organizational strategies;the second focuses on strategic contribution of human resources and development of human capital; the third body of research attempts in expanding the scope of strategic human resource management from organizational level to international level (Lengnick-Hall et. al., 2009).

 

The resource-based view of the firm has been the most significant development in this regard. According to Oliver (1997), the resource-based view of the firm provides a platform for effective selection and deployment of human resources in developing competitive advantage. LadoandWilson (1994) have used resource-based view of the firm to represent that- how human resources can contribute in developing sustainable competitive advantage. The resource-based view of the firm to strategy emphasizes on developing firm’s ‘core competencies’ (Clardy, 2008).Clardy (2008, p. 183) argues, “Since core competencies are based on the internal capabilities of the firm, they are ultimately embedded in the firm’s workforce and imply a Human Resource Development (HRD) function”.

 

Strategic human resource development enables the best use and development of firms’ core capabilities that further maintains competitive advantage (Garavan, 2007). According to Garavan (2007), the literature on strategic human resource development is based on two assumptions.First, the planned training programs; and second, it creates inventory of employees’ strategic KSA (i.e., knowledge, skills, and abilities) and deficiencies in terms of strategic requirements, which are further minimized through training and development (Garavan, 2007). Strategic human resource development responds to environmental changes (Garavan, 2007).

 

Barney andWright (1998) explain by using resource-based view of the firm, human resource develops ‘rareness and non-substitutability’ of the organization, which further creates organizational competitive advantage. MatusikandHill (1998) have used resource-based view of the firm to explain the role of knowledge and potential of human resource. However, the resource-based view of the firm does not explain the process of developing human resource (Clardy, 2008). Since resource-based view of the firm only suggests to how to identify and fill the skills gap (Clardy, 2008), more studies, using resource-based view of the firm, are required to explain the contribution of human resources in organizational strategy (Boxalland Purcell, 2000).

 

According to Hu (2007), the literature on strategic human resource development is based on three paradigms: performance, learning, and change. Swanson (1995) emphasizes on performance, Chalofsky (1992) stresses on learning, and Gilley andMaycunich (2000) focuses on change. Garavan (2007, p. 16) has proposed four levels of context in strategic human resource development model, “a) the global environment b) the organization’s strategy, structure, culture, and leadership c) the value and uniqueness that the firm attaches to particular jobs, and d) individual expectations, employability and careers”.

 

Organizations should take initiatives to make strategic workforce development a frequent and continuous process (PandeyandChermack, 2008). The rational and forward looking approach and learning will further develop learning organizations (PandeyandChermack, 2008). The learning organization encourages knowledge sharing within organizations and greater strategic investment in developing workforce (PandeyandChermack, 2008).Strategies developing workforce also differentiate between well and poorly managed organizations (NedeleaandPăun, 2009). The strategic workforce development ensures the contribution of human resources to organizational success (Baird andMeshoulam, 1988).Leaders in successful organizations use continuous learning and development system to fill the skills gap (NedeleaandPăun, 2009). The strategic workforce development provides direction and method on how to move from current position to desired position (NedeleaandPăun, 2009).

 

The present business environment requires workforce development to not only support organizations, but also to become the integral part of developing business strategy (Torracoand Swanson, 1995). Effective workforce strategy enables organizations to respond effectively to dynamic environment (Torracoand Swanson, 1995).

 

The strategic human resource development policies and practicescreateavailability of human capital for the future (Clardy, 2008).Competition has become the order of current business environment (Babatunde, Adebisi, 2012). The business is now more dynamic and global. Companies are in constant pressure of performing better to remain in the market. Though, it has become increasingly difficult for companies to control external environment, companies can develop their capabilities to respond effectively todynamic and increasingly complex business environment (Adebisi, 2006). An effective business strategy and adaptable business organization is a better solution.

 

The resource-based view of the firm has emphasized the need of effective and efficient deployment and development of organizational resources and capabilities (Grant, 1991). However, the human resource is the most crucial among all resources in attaining sustainable organizational success (Pfeffer, 1994). The inclusion of human resource aspect in strategy formulation has emerged due to increasing role of employees’ expertise in driving organizational success (Torracoand Swanson, 1995). The strategic workforce development is necessary for all kinds of organizations (Itika, 2011).However, the nature and scope of strategic application may be different (Itika, 2011).

 

Strategic Workforce Development Model:

The proposed model of strategic workforce development (see Figure1) is an extension of the model proposed by Hu (2007). The proposed strategic workforce development framework represents all decisions and actions to be taken in formulation and execution of workforce development strategy. According to Hu (2007), the strategic workforce development drives organization from current position to the desired position by enhancing performance, learning, and bringing change in the organization. Strategic workforce development removes skills gap (ACT, 2012). The skills gap is a gap “between skills demanded by employers and the skills possessed by workforce” (ACT, 2012, p.4). As much as the skills gap is minimized, so much it improves the organizational efficiency.


 

 

Figure: 1. Strategic workforce development framework

 


The strategic output of an organization is to attain desired level of organizational performance and sustainable competitive advantage. The literature provides significant evidence indicating the need of strategic human resource development to attain organizational objectives. Therefore, the model of workforce development should be aligned with the changing nature of the environment.

 

Ideally, the first step of strategic workforce development is analysis of external and internal environment (Dessler, 2007), which helps organizations in developing vision and mission that further provides direction to organizational processes. The vision and mission provides a conceptual map to how to move from current position to desired position (Mirvis, Googins, andKinnicutt, 2010). The vision and mission also helps in examining internal consistency within organizational practices (Pfeffer, 1994). The vision is a pulling force (Dove, 1998), while the mission serves the purpose for the organization (Mirvis et. al., 2010).

 

The environmental analysis refers to analysis of factors that directly or indirectly affects organizational processes and decision-making. These factors could be a change in political, social, economic, technological factors and consumer choices. The environmental analysis provides information and direction to minimize the gap between current and desired level of organizational knowledge and skills. Once the required knowledge and skills have been identified, it is possible for organizations to develop an effective plan of transforming people.

 

Espedal (2005) advises, organizations should explore instead of exploit the workforce, as the workforce development is not only organizing training programs, but also is a development of organizational culture. Strategic human resource developmentenhances employees’ motivation and commitment, which increases employees’ willingness to change (Way, 2002).According to The Executive Brief of IBM Learning Solutions (2005, p. 2), “A learning strategy links learning initiatives to overall, enterprise wide organizationalpriorities andgoals People mustbe enabled and re-enabled with the right skills and knowledge to meet thechanging demands of the marketplace, customers and business itself”.

 

Garavan (2007) suggests, organizations should have globalized thinking, which will make them more sophisticated and dynamic in being adaptable to change.Since the nature of strategic workforce development activities is more transformational in long run (Lepak, Bartol, andErhardt, 2005), the ‘structural alignment and congruency’ between organizational processes and external environment is necessary (Semler,1997). The vertical alignment ensures the congruity between organizational goals and practices at different hierarchical levels, while the horizontal alignment confirms the congruity between organizational goal and culture (Schneider, Brief, andGuzzo, 1996).

 

CONCLUSION:

The literature provides sufficient evidence indicating the role and importance of workforce development in organizational strategy. The effectiveness of workforce development strategy further becomes the reason of good and bad organizational performance. The strategic workforce development is a continuous process that not only enhances organizational performance and learning, but also brings change in organizational system, processes, and in the style of managing business. The strategic workforce development prepares organizations in responding effectively to environmental changes, and improves organizational capabilities to sustain competitive advantage. However, since, it is sometimes difficult to motivate employees for continuous learning, Schein (1985) suggests developing organizational culture that supports learning, and therefore ensures that the strategic workforce development process has been embedded into organizational system.

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Received on 22.07.2017                Modified on 11.08.2017

Accepted on 29.10.2017          © A&V Publications All right reserved

Asian Journal of Management. 2018; 9(1):239-245.

DOI: 10.5958/2321-5763.2018.00036.7