Human Resource Management (HRM) is one of the crucial departments in modern organizations. The experience and historical context demonstrated the process of evolution of HRM from routine processes and functions into strategic element of organizational development. Current business environment places a lot of emphasis on alignment between HRM and generic strategy of the company. This need for alignment and integration of HRM with other elements of the development in the company can be explained by many factors. First of all, growing size of the companies makes the arena on which their business develops much wider. This creates the need for international mobility and human capital cross-cultural education. Secondly, increasing complexity of the businesses, explains the growing demand for leadership and management capabilities. Moreover, the same factors make the demand for these elements more specific and dynamic, which creates internal complexity for leadership and management development. Finally, each company is a “victim” of competition, and in order to achieve competitive advantage, modern companies should be able to develop unique and innovative solutions. These solutions can only be implemented with a focus on personal and professional development. The above outlines the focus of this work on analyzing the alignment between HRM and strategy in view of Leadership and Management Development (LMD) activities.
Leadership and management Development (LMD) is, essentially a set of organizational policies and actions, aimed to develop individual with potential for assuming positions with people management responsibilities (Mumford, Gold & Thorpe 2010). Each of the companies and business environment will, probably, give its own, personalized, or at least, customized definition of LMD. The diversity of definitions, used for LMD is explained by differing expectations and approaches of the business to their HRM practices. It is interesting to note, however, a general outline of LMD, given by Business dictionary, which highlights communication, management and motivational skills as the core for any LMD. Approaches to LMD include various set of practices, policies and activities and in many cases, companies structure LMD as a time-bound program, involving individuals with varied cultural and professional background. These programs, which became part of HRM practices in many large organizations generally, include theoretical classes, the practical part of the program and personal and professional development tools and policies. Theoretical element focuses on conflict management, emotional management, and learning and leadership styles and is often outsourced to the third-party educational institutions, such as business schools or specialized consultancies. Practical education is a subject to company´s policy and can vary from rotation within divisions and functions during the duration of the program to even international experience that aims at increasing mobility of the future and current leaders and managers in the company. Structural part of the program, personal and professional development planning, often involves performance appraisal practices with personalized objectives for development, based on prior analysis of skills and capabilities of a given person.
LMD recognizes to polar approaches to learning strategy, planned and emergent learning. Major attribute of the planned learning is preliminary and proactive approach to learning and knowledge acquisition, which involves analysis of needs and setting objectives for individual learning plan. Emergent learning, on the contrary, is an experiential, somewhat, “inside-out” process, which is one of the newest fads in business education and the value of this learning strategy is recognized through the ability to experience the need and demand for learning (Taylor 2011). Both learning strategies are essential for LMD and they aim to help LMD program to serve its main purpose to develop an internal pool of talented professionals, which will enable strategic goals and objectives of the organization. With that there are three main roles of LMD in an organization: create long-term internal capabilities, increasing productivity and effectiveness of processes in the organization and building competitive advantage on the market.
LMD and Organizational Performance
Effectiveness of LMD is highly dependent on the quality of other HRM functions in the company. That said, LMD will only be able to complete its objectives if these objectives are correctly identified and formulated by such elements, as competency gap analysis, job analysis and recruitment practices. With that in mind, it is very important that LMD is seen as continuous strategic process and seen as an integral part of strategic planning (Armstrong & Baron 2011).
LMD as a Strategic Process
An insight into the leadership development outlines two distinguishing elements: vertical and horizontal development. These elements also contribute to the effectiveness and alignment of LMD programs in the company and highly differ in the methods used for their application. It is possible to argue that horizontal development is about knowledge transference, while vertical development brings forward leadership transformation and self-discovery. Horizontal development refers to the set of skills, knowledge and competencies, which can be measured on the basis of so-called 360-degree feedback. Vertical development, on the other hand, is the emerging learning strategy within LMD, which focuses on the vertical stage development of individual thinking capability. In other words, it is trying to escalate the capacity for more complex, strategic and multifaceted analysis of the situation. Measurement of this development process is done through surveys and development interviews, conducted internally ( Day, Zaccaro & Halpi 2008).
With these definitions in mind, there are several requirements for vertical and horizontal alignment of LMD within the organization. Horizontal alignment, at the same time, should consider the alignment with the job analysis and recruitment practices, as this alignment will enable the fit-for-purpose talent acquisition and enhancement of their skills and capabilities. From the vertical perspective, it is essential that the company clearly formulates the top level goals and identifies the gaps in leadership development and capabilities. This will enable appropriate focus on vertical development elements. When it comes to vertical alignment, leadership pipeline and three levels of management, including top, middle and junior responsibility, should be incorporated in practical application of LMD. From the alignment perspective, it is important to build training and development activities with adequate learning program, relevant for a specific management level. In practical terms it means that the higher management level is, the stronger the focus on vertical development will be. Top management within the leadership pipeline, therefore, will focus on the development of thinking capabilities, long-term vision and strategic analysis. Given the “generalist” approach to leadership and management, top management LMD will involve much more vertical development activities than LMD participants of middle and junior level. Junior level of the leadership pipeline is a “specialist” level in the leadership pipeline and will, therefore, consider mostly personal development, leading “self” and enhancement of operational skills, required for a specific position with a secondary focus on general management skills.
Talent Management and Management Development Cycle
Business dictionary defines Talent Management (TM) as an organizational commitment to selecting, recruiting, retaining and development of the “fit-for-purpose” talents from the market as well as internally (Business Dictionary 2012). This concept incorporates essentially all the processes aimed at retention and development of effective and productive workforce in the company. Succession planning is an integral part of TM, which focuses on identification and development of internal assets, which are believed to be suitable for fulfilling strategic management and leadership roles in the company (Rothwell 2010).
Management and leadership development, like any strategic process in the company, is a continuous cycle. Given the discussed above levels of management it is possible to highlight the importance of timeliness and relevance in the cycles of development. As such, learning process objectives aim to equip the manager with the required set of skills and capabilities to excel in his current or immediate position. Once this learning is complete and implemented, the manager goes to the next step of personal and professional development, moving vertically through the cyclical step-by-step process (Prokopenko, 1998). It is important to maintain the pace and appropriate evaluation tools as part of management development cycle, as evaluation and re-adjustment of LMD is critical for its effectiveness and building on the talent within the company.
With the above in mind, performance management becomes critical for the strategic process of TM and management development. Such elements of HRM, as performance appraisal process, building the Balanced Scorecard and other more functional and technology-driven activities, help bringing structure and organization to the organizational vertical and horizontal development. It is important to note, however, that any system that stands behind intangible elements of organizational activities, especially within the HRM function will always be subject to effectiveness and professionalism of individuals that use this system. Taking into consideration the contribution, which performance appraisal makes to setting and implementing training and development activities, management control and proper introduction of Performance Management System (PMS) are critical for all the companies. One of the most important contributions, which can be done by PMS is the continuity of the management and individual development processes in the company. PMS allows drawing individual picture of personal progress and build on future planned and emergent learning strategies. This objective of PMS explains the fact that the majority of the contemporary organizations see performance management as an integral part of the strategic process of management development.
Performance Measurement and Assessment
The basic definition of performance management is a scientifically-based and data-oriented management system, which is based upon three critical constructs: measurement of current performance, continuous 360-degrees feedback and positive re-enforcement of learning objectives and strategic goals (ADI, 2013). Performance management is on top of the HRM discussion in modern business environment. The origin of this term, however, dates back to the 70s, when Dr. Aubrey Daniels used the concept to describe the process of “making people do what the organization needs them to do”. The purpose of an integrated performance management approach, as outlined by Daniels (2013) is to ensure that the system aims to reach positive re-enforcement and utilizes the best of individual human capabilities to create a value for the company. This approach allows arguing that strong and effective performance assessment and measurement help HRM to build on LMD strategy and ensure that this process is strategic and cyclical within the company. PMS plays an important role in bringing together both, vertical and horizontal development as it enables to management to set appropriate, measurable and achievable goals, suitable for a specific management level. This, in turn, creates a required pool of leadership and management competencies, which the company needs to support its strategic growth and development.
Performance Assessment and Measurement find different definitions and approaches within the business practices and significantly differ, based on individual frameworks, developed by the organizations. The above mentioned three elements of PMS, however, will continue shaping the technical background of performance management systems, as continuity and universalism of PMS is a core attribute of an effective system. The United States Office for Personnel Management outlines eleven critical elements of effective performance assessment. The four most relevant for LMD include balanced and credible measures, distinctions in level of performance and vertical and horizontal alignment and result-orientation of the system. Performance assessment and measurement is a strategic cycle that starts with the formulation of the organizational goals and ends up with performance appraisal and progress review on the individual level. The key, therefore, for the effectiveness of this process is to be able to ensure smooth top down transition of performance assessment process. This can be done through a scientific data-based approach to the Balanced Scorecard as the core of the performance appraisal system and the reference for performance review for all the organizational levels. Once an individual Balance Scorecard is build, it provides managers with specific and unified tool of setting expectations, assessing the performance against the targets and use positive re-enforcement for pursuing personal development, building on the critical parts of LMD.
Training and Development Activities
Continuous improvement is the crucial element of a learning organization. Learning organization, in its turn, is the company that places LMD in the center of its HRM strategy. In his article Building a learning Organization, David Garvin (1993) argues that many companies fail to perform due to lack of understanding that continuous improvement requires commitment to and development of the learning culture within the organization. This learning cannot be spontaneous and selective, but should be an integral part of all levels in the company, starting from lower leading “self” level to the top management. This objective of embracing learning culture requires implementation of varied training and development activities, which can address all the needs of the company. The experience and examples of different companies within various economic and business sectors illustrate the diversity of such activities within LMD. Some of the most widely used elements and practices, utilized by leadership and management development programs, include basic face-to-face training, virtual learning activities, team buildings, on-field training and case studies. These activities are easy to standardize and re-utilize, and, thus, allow HRM department reacting fast on the newly emerging needs and provide adequate training on different management levels.
The scope of training and development activities, at the same time, is not limited to the traditional practices. Many companies are looking for ways to incorporate more personalized and creative activities in the scope of LMD to improve the return on LMD investment and increase the specificity of learning outcome from planned learning strategy. Some of the latest practices of LMD are addressing emergent learning strategy. These activities include international mobility programs, such as six month rotation within different positions in the company, Virtual Learning Platforms (VLP), which enable independent learning, university-type setting programs and other initiatives. Gurjian (2014) looks at the major reasons for LMD failures in the companies and outlines the following reasons: overlooking the context, decoupling reflection from real work, underestimating the mindsets of trained individuals and failing to measure results (Gurjian, 2014). While the last two elements are clear and have been covered by the discussion of the PMS, it is important to look at the context of the LMD. The point that the author is trying to make is that any LMD should be able to formulate the needs in order to be able to build requirements for creating fit-for-purpose talent pool. Often, the companies lose this focus, being tempted by attracting talented leaders, whose personal vision and qualities do not address organizational needs. Similarly, fit-for-purpose leadership and management are built through alignment of practical and theoretical learning. It is evidenced, that some companies invest in university-like programs, which end up placing training and development activities so far from the working reality as to negatively affect individual performance on a workplace and take individuals out from an organizational culture.
Summary and Conclusion
Organizational behavior is a complex discipline, which requires constant re-evaluation of the primary focus and concepts within HRM focus. The reality shows that learning organizations are those, who recognize the importance of continuous improvement and place diversity, innovation, research and development and other dynamic elements of the business in the center of their organizational generic and functional strategies. Focus on learning and development is old enough to create a specific historical context that allows more in-depth analysis of actual success and failure stories of the companies on the market. The experience shows that many companies, which focus on learning and recognize the need for human capital development, however, fail to perform and reach effectiveness. The reasons for these failures are different for each company, but in the majority of cases they lie in the fallacies of LMD alignment policies with generic company strategy.
A theoretical review of the LMD, TM and performance assessment and measurement practices in contemporary business environment allows concluding that there are several critical constructs of successful LMD. First of all, it should recognize the need for management level differentiation and align the training and development activities with the appropriate level of individual in a leadership pipeline. Secondly, LMD must address both, planned and emergent learning strategies to be able to cover critical aspects of vertical and horizontal development of organizational managers and leaders. This differentiation also outlines the ability of the company to recognize the differences between management and leadership. Thirdly, LMD should be considered in the strategic context and seen as dynamic and evolving process. This dynamism helps company to adequately respond to market changes and evolving needs for internal capabilities and resources. Finally, the success of LMD is strongly linked to the ability to measure and assess the outcomes of learning activities and specific impact of MLD on organizational effectiveness. This can be done only if LMD recognizes PMS as the starting point in strategic alignment.
Overall, it is possible to conclude that LMD plays a paramount role in building on effectiveness and competitive advantage of the companies. With accurate and adequate approach to LMD as a strategic process, companies are able to achieve higher productivity, motivation level and employee retention at a lower long-term cost. It is critical, however, to understand that all the HRM and strategic organizational plans are cyclical and highly dependent on each other. With that LMD alignment with other strategic activities is essential for the success its success.
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