Achieving strong vertical and horizontal alignment - Article Example

ACHIEVING STRONG VERTICAL AND HORIZONTAL ALIGNMENT Inserts His/Her Inserts Grade Inserts 's Name 10 November 2008 Introduction Human resource management (HRM) practices are critical to the success of business organizations. The goal of organizations is to maintain a strong customer base and increase revenue, but how to achieve this is equally important. Strategic HRM approaches involve a spotlight on the alignment of HRM practices with each other, which is referred to as internal consistency or alignment; and the alignment of the HRM procedures with an organization's approach, known as external consistency or alignment (Burke & Cooper 2005). Gratton and Truss (2007) proposed a three-dimensional people strategy used by HRM in organizations as vertical alignment, horizontal alignment, and an implementation dimension to show the extent to which the people strategy affects the daily operations of employees and the conduct of managers. This paper focuses on two of the three-dimensional people strategies as aforementioned. Vertical alignment involves the link between the people strategy and a business unit strategy, that is, the link between the HRM and the people in an organization. This determines whether HR interventions in decision making serve as inhibitors to success or confer competitive advantages to the organization (Gratton & Truss 2007). On the other hand, horizontal alignment operates within the limits of HR policies and aims at achieving a functional approach to managing the people in an organization (Gratton & Truss 2007). Achieving strong vertical alignment Effron, Gandossy and Goldsmith (2003) highlighted an example in which James Houghton became the CEO of Corning Incorporated by inheriting the job from his brother. The company (Corning) had been dilapidated and was suffering from among other factors, poor labor relations. However, less than ten years later, the company was producing new, high quality products that made it take a competitive position in the market. James simply formed a team that created a vision and change of behavior at the company while building an architecture of productive change (Effron, Gandossy & Goldsmith 2003). According to McLeish (2002), vertical alignment is the employment of an approach that is manifested in the actions of employees through a jointly shared direction. This means that the management of an organization implementing vertical alignment takes an initiative to lead and empower employees in the work they do, thus improving job execution (Effron, Gandossy & Goldsmith 2003). In order to achieve strong vertical alignment, the HRM of an organization has to target "quick owns" by having an understanding of the processes that would result in a quick delivery of the business goal (Gratton & Truss 2007). For instance, the initiatives could be through innovative product offering or short term training programs to educate and empower employees in handling clients and customers. Effective reputation arises when a business organization meets the expectations of the line of management (Gratton & Truss 2007; McLeish 2002). Organizations that have strong vertical alignment are characterized by presence of business-focused HR teams. The HR team is usually very close to the business units as opposed to cases in which managers are separated from junior employees and rarely assess what the junior staffs do. A good example is the US-based company, Kraft Foods, whose staff in the business units work alongside managers in making strategic decisions (Gratton & Truss 2007). A strong alignment is achieved by proper planning with focus on key objectives and evaluation of success factors (McLeish 2002). The strategy must encompass the organization staff at all levels, and the employees must particularly understand the benefits that accrue at both personal level and organizational level (McLeish 2002). In this respect, each employee has to know the role that one has to play in order to achieve a specific goal. An important step in vertical alignment is to review the progress of each action undertaken by an organization and its impact (McLeish 2002). Achieving strong horizontal alignment Unlike vertical alignment where the strategy is reflected in every employee's behavior, the goal of horizontal management is to link the entire organization's actions in a manner that builds loyalty and happiness in those who provide financial resources or any other kind of resources to the organization (McLeish 2002). This strategy therefore encompasses all aspects of the organization such as staffing, performance management, development and rewards, all of which are integrated to produce desirable role behaviors (Shields 2007). Shields (2007) noted that firms that attain and sustain horizontal alignment usually enjoy competitive advantage over other firms in that they offer practical human resource menus. In horizontal alignment, an organization evaluates all the six human resource practices, that is, planning, staffing, training and development, appraisal, compensation and labor relations and makes rational decisions based on the findings (Shields 2007). The six practices are then matched with the three types of business strategies, that is, cost reduction, quality enhancement and innovation (Shields 2007). In matching the resource practices and business strategies, caution has to be taken so that that the right balance is struck. On the contrary, if the right balance is not got, a plethora of very innovative schemes may end up down the drain as it happened with BT Payphones. The company had come up with so many initiatives, which were thought to be a people-strategy but they were so complicated, hence, the project failed. Furthermore, this implies that if so many initiatives were attempted simultaneously, it would be impossible to track their individual impact on an organization at particular times (Gratton & Truss 2007). Multinational corporations such as Henkel have attested that "whole is more than the sum of its parts." The implication of this is that business units are collectively more successful than if they acted individually. Thus, the HRM must define the priorities to confer competitive advantage over rivals of an organization. This is done through evaluation of the market and collective making of decisions (Gratton & Truss 2007). Although Henkel is a multinational company, its decisions are made collectively by the managers before being implemented in the various countries where the company operates (Shields 2007). In addition to striking the right balance in decision-making, creative dialogue is a vital component of achieving strong horizontal alignment. Conversations in organizations enable continual and mutual adjustments, which are crucial to the success of companies. Gratton and Truss (2007) noted that there was poor performance in companies in which functional processes remained isolated, for example where pay experts rarely talked with performance management experts. Kraft Foods achieved effective dialogue by assigning HR staff to the operational business units. This enabled the HR staff to be close to their juniors thereby improving their relationship and boosting quality and performance of the general staff (Gratton & Truss 2007). Effective dialogue among various categories of staff also enhances systematic thinking that brings innovative ideas into an organization (Gratton & Truss 2007). In order to achieve a strong horizontal alignment, McLeish (2002) opined that there must be effective gathering and inseminating of data throughout an organization. Furthermore, the organization must have an understanding of its stakeholders by addressing issues such as which stakeholders are most important, the opportunities available, how well the organization satisfies its customers and clients, the organization's competitors and the models that need to be changed in order to achieve specific objectives (McLeish 2002). Conclusion Vertical and horizontal alignment are important to any organization it its bid to fulfill its objectives. Vertical alignment involves a link between people and the business strategy. HR teams have to collaborate effectively with other employees in order to bolster the achievement of organization goals through vertical alignment. Employees have to be incorporated in the whole process so that they identify with the benefits. Horizontal alignment is limited within the policy of an organization and its dealings with outsiders. While implementing horizontal alignment, there is need for evaluation of the resource practices in comparison to business strategies in order effectively collect, analyze and disseminate information pertaining to an organization. REFERENCES BT Payphones, available from http://www.payphones.bt.com/ (10th November, 2008) Burke R J & Cooper C L 2005, Reinventing Human Resource Management: Challenges and New Directions, Routledge, New York Corning, available from http://www.corning.com/index.aspx (10th November, 2008) Effron, M; Gandossy R P & Goldsmith, M 2003, Human Resources in the 21st Century, John Wiley and Sons, New York Gratton, L & Truss, C 2007, "The three dimensional people strategy: Putting human resources policies into action" In Schuler R S & Jackson S E, Strategic Human Resource Management: Text and Readings, Blackwell Publishing, New York Henkel, available from http://www.henkel.com/cps/rde/xchg/henkel_com/hs.xsl/index.htm (10th November, 2008) Kraft, available from http://www.kraft.com/ (10th November, 2008) McLeish, B 2002, Achieving Customer/Donor Alignment: Principles, Priorities, And Process, McConkey/Johnston, Inc, New York Shields, J 2007, Managing Employee Performance and Reward: Concepts, Practices, Strategies, Cambridge University Press, Cambridge Read More