Strategic management of human resources: The American steel and wire company

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A lthough the antecedents of corporate strategy go back to ancient Greece (Ulrich 1983), where strategy referred to military settings in which generals made decisions to help nations conquer other nations, corporate strategy itself has had a comparatively brief history. In fact, most of its underpinnings have been developed since World War II. Today, corporate strategy constitutes a well-established set of practices and is considered by many to be an essential ingredient for success. Until recently, however, one component of strategy, the strategic management of human resources, received scant attention from either researchers or corporate decision makers. Many managers regarded employees as expenses instead of assets or resources; human needs and rights were often viewed as nuisances to be dealt with as expediently and cheaply as possible to minimize the drain on corporate profits. This situation is rapidly changing as firms increasingly realize that their ability to aggressively pursue the best external opportunities available presumes an ability to assign and utilize the right human talents in the right positions within the firm. As a result of economic pressures from such factors as increased foreign competit ion and deregulation, the efficient utilization of human resources has become an important focus for management. The success of companies like Lincoln Electric, whose productivity is two to three times higher than its domestic and international competitors (including the Japanese), and is attributed in large measure to utilization of its human resources, has also generated interest in the human factor. This interest is reflected in the growing body of literature and research on the strategic management of human resources. Much of the literature, however, has been concerned with human resources strategies in firms experiencing decline (Perry 1984; Ferris, Schellenberg, and Zammuto 1984; Cook and Ferris 1986). This article examines one company whose strategic management of human resources was not the result of a decline in its fortunes, but was an integral part of its strategy to ensure its future success in the highly competitive, quality-oriented steel industry. Since its inception in 1986, American Steel & Wire Company (AS&W) has operated under the phi losophy that people are their number-one resource and that quality and customer advantage come from the efforts of hard-working, dedicated entrepreneurial employees. This strategy enabled AS&W to become a profitable, high-quality producer of rod and wire products in just 11 months. Today, the company continues to thrive. Its success is even more impressive considering that 75 percent of its current work force never worked in a steel mill prior to being employed by AS&W. One company shows how attention to people can make a big difference in the bottom fine.