Human resources within organisational strategy

It often seems like HR is the same no matter where you go – e.g. mining, manufacturing, and tech companies are all concerned about the same things namely: attract, engage, and retain talent. There are however important differences to take note of.

Types of organisational strategy

Your personality is unique; however, certain aspects of your personality can be classified into a useful paradigm of personality types that can help you understand yourself and other people. These personality types can describe what energises you, the kind of information you pay attention to, and how you make decisions. The same idea applies in organisations. Whilst organisational strategy is unique in each organisation, there are strategic archetypes that can be generalised across organisations.

One classic typology of organisational strategy, that is still relevant today, was proposed by Miles, et al, in 1978. They categorised organisations as either ‘defenders’, ‘prospectors’, or ‘analysers’. These organisational types describe generic elements of strategy and their implications for HR and talent management.

Defenders

Organisations employing a defender strategy usually operate in stable and predictable environments. They have carved out a competitive niche for themselves, or the barriers to entry is so high in their industry (capex, or regulations) that the threat of new entrants or substitutes isn’t an immediate concern.Defenders

Defenders tend to innovate for the sake of efficiency. This means that they are always looking for ways to remove waste from their processes, to produce more at lower input costs.

Boeing for example, isn’t worried that the demand for commercial aircraft will be disrupted soon. They are however worried that Airbus becomes able to produce more aircraft at lower cost, causing them to lose market share.

Prospectors

On the other side of the spectrum, organisations employing a prospector strategy, isn’t too concerned with achieving cost advantage. They compete by continuously launching new products and services. Tech start-ups, especially in the US, really don’t care about profitability in the beginning – they just want to achieve scale as quickly as possible. More mature prospectors forego some of their profitability by continuously reinvesting to remain at the forefront of the market.

Thus, prospectors tend to innovate in service of effectiveness. This means they are constantly trying to differentiate themselves with how relevant their offerings are in meeting client needs.

Management consultancies for example will pay close attention to their clients’ pain-points and opportunities and continuously develop new solutions to meet these needs. Relevance is more important than being as cost-effective as possible.

Analysers

Between defenders and prospectors, you will find analysers. These companies try to find a balance between the two extremes. These organisations try to be ambidextrous – balancing efficiencies with effectiveness, trying to get the best of both worlds. This is a difficult strategy to pull off, but you will find many examples of companies who try to do just this. Some leaning more toward defender, and others more to prospector, often depending on the nature of the industry itself.

Microsoft is a good example of an analyser. They tend to refine their core products (e.g. Windows, Office, and Azure), and then allow their users to add additional modules in unique combinations to meet their specific needs. They thus innovate around a core set of technologies.

What does this mean for HR?

Defender companies are more likely to have long-tenured employees, and to promote from within. They may have large graduate recruitment drives and invest in employee development, to ‘make’ the talent they require in the future. Strategic jobs can often be found in finance and production departments. Defenders will tend to employ a functional structure with high levels of formalisation and division of labour. Because of this, communication lines will tend to be vertical and decision-making centralised.

Prospectors will tend to ‘buy’, or ‘borrow’ talent as and when required, with limited internal promotion and development. Strategic jobs can often be found in R&D, sales, and marketing departments. Graduates may be used as interns, willing to work for very little so as to add the company on their CVs. Prospectors will likely employ a product or market-based structure with low levels of formalisation, decentralised decision-making, and diverse cross-functional teams.

Analysers would tend to take a balanced approach between the first two strategies, often through structural ambidexterity (different departments, or business units focused on efficiency, and effectiveness, respectively). Strategic jobs may be found in various places in the organisation. Analysers will likely employ a matrix structure, mixing both functional and product management. Coordination can become quite complex in these types of organisations due to multiple reporting lines.

This typology of strategy isn’t new, and it may be an over-simplification, but it does provide a useful framework through which to view common HR practices. It allows HR practitioners to better understand their organisation’s archetype and subsequently design fit for purpose interventions, policies, and processes.

References:

Birkinshaw, J., & Gupta, K. (2013). Clarifying the distinctive contribution of ambidexterity to the field of organisational studies. Academy of Management Perspectives, 27(4), 287–298. /10.5465/amp.2012.0167

Cappelli, P., & Keller, J. (2014). Talent management: conceptual approaches and practical challenges. Annual Review of Organisational Psychology and Organisational Behaviour, 1, 303-331. /10.1146/annurev-orgpsych-031413-091314

Martin, A. F., Romero, F. P., Valle, C. R., & Dolan, S. L. (2001). Corporate business strategy, career management and recruitment: do Spanish firms adhere to a contingency model? Career Development International, 6(3), 149-156.

Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J. (1978). Organisational strategy, structure, and process. The Academy of Management Review, 3(3), 546-562.