The Dilemma of HR Strategy: When Corporate Strategy Itself Is No Longer Clear

When "Alignment" Loses Its Coordinates

"What is your organization’s talent strategy?" This seemingly basic question persistently creates awkwardness among HR executives. Wharton professor Peter Cappelli notes that most people feel they ought to have an answer, yet struggle to articulate it clearly. The root of this dilemma can be traced back to the rise of corporate strategy concepts in the 1980s.

At that time, Michael Porter’s theory of competitive strategy made companies realize that successful firms must make differentiated choices—either becoming a cost leader or offering uniqueness. Subsequently, the concept of "alignment" became the golden rule of management: all internal functional practices should support the established business strategy. HR was then required to design a unique set of practices that aligned with the company's competitive positioning.

However, this logic is now facing fundamental challenges.

Strategy Itself Has Become "Fragmented"

In reality, companies no longer have long-term, stable, single business strategies. The reason is simple: the competitive environment changes too quickly. Differentiated products are rapidly imitated, marketing advantages vanish, and competitors frequently enter and exit. CEOs are no longer like traditional managers formulating and executing strategies; they are more like portfolio managers—constantly observing the market, deciding when to exit, when to enter (mainly through M&A), and when to increase bets on existing businesses.

Cappelli once sat in on a closed-door discussion among CEOs about how to make a company succeed. Surprisingly, the term "strategy" never appeared in its traditional definition. CEOs talked about dynamic adjustment, capital allocation, and timing, rather than how to compete within a given market.

A survey of 262 CEOs provides quantitative evidence for this phenomenon. When asked to self-assess "whether they can clearly describe the company's strategy" (1 = cannot summarize, 5 = already have a formal, refined statement), the average score was only 2.5, closer to "no strategy." At the execution level, when asked whether specific departmental implementation responsibilities had been clarified during strategy formulation, the average score was even lower, at 2.1. This means that strategy is often chosen first, and only then does the organization think about how to achieve it—rather than designing the execution path in advance.

The Traditional Role of HR: From Executor to Marginalization

If the business strategy itself is vague or changes frequently, how can HR achieve "alignment"? Traditional consulting firms still talk at length about the necessity of organizational alignment, but in reality, HR is caught in a dilemma: if it insists on doing the basics (recruitment, compensation, training) well, it may be seen as a function that can be outsourced; if it tries to engage at the strategic front end, it lacks clear direction.

This is the core of HR’s strategic dilemma. Strategy makers demand that HR support the business, but the business itself lacks a stable "North Star."

Redefining HR Strategy: Finding an Anchor in Ambiguity

Faced with uncertainty, HR strategy cannot simply be abandoned; it needs to transform into a more flexible and forward-looking function. The following directions are worth exploring:1. Moving to the Front End: Participating in M&A and Exit Decisions Many M&A failures stem from cultural and talent integration issues. If HR can engage early in M&A discussions to assess talent risks and design transition plans, they can create substantial value for the company. Similarly, when a company exits the market, HR needs to manage knowledge transfer, layoff compliance, and employee experience—none of which can be remedied after the fact.

2. Building Organizational Agility When the pace of market change outpaces the strategic adjustment cycle, an organization's adaptive capacity itself becomes a competitive advantage. HR can help companies quickly pivot by establishing flexible talent pools, project-based teams, and cross-departmental rotation mechanisms. Agility is not the exclusive domain of tech teams but a capability of the entire organization.

3. Maintaining Cultural Resilience Culture is one of the few relatively stable organizational variables. During strategic shifts, clear values and behavioral norms can provide employees with decision-making guidance, reducing anxiety caused by uncertainty. HR can act as a cultural steward, ensuring core identity remains intact even as business models evolve.

4. Data-Driven Decision Support When strategy is ambiguous, HR should rely on data to provide insights: Which positions' turnover rates affect business continuity? Which skills will become scarce in the future? What is the correlation between employee engagement and customer satisfaction? These analyses can provide a factual foundation for strategic decisions, rather than merely passive responses.

Conclusion: From Alignment to Co-Creation

The traditional formula of "HR strategy = aligning with business strategy" is no longer viable in today's business context. HR should not wait for a perfect strategy to emerge from above but should proactively co-create with business leaders: finding leverage points for capabilities amid ambiguity, and establishing organizational resilience amid change. True HR strategy is no longer about seeking alignment, but about becoming a builder of dynamic competitive advantage.