LINKING CORPORATE STRATEGY AND HR STRATEGY

Presentation Authors:

Mr. Smit DaveMr. Vishal Acharya

Mr. Avdhesh Kaushik

Main Course Menu

• Corporate and Business Strategy

• Business Strategy and HR Strategy

– Nucor

– Lincoln Electric Company

– McKinsey & Company

• Changes in Business Strategy & HR Strategy

– TCS

– Harley-Davidson

Main Course Menu

Corporate Strategy and HR Strategy

Aditya Birla Group

RPG Group

Tatas

Infosys

Cisco

Starter Course

• Businesses have become more knowledge- and technology-driven

• The importance of people to organizational success

• Importance of the “individualized corporation” - Sumantra Ghosal and Christopher A Bartlett, William Heinemann, London, 1999

Corporate and Business Strategy

• Business strategy

– 2 generic routes (Low cost & Differentiation)

– 4 generic building blocks (Efficiency? Quality? Customer Loyalty? Innovation)

• Distinctive competencies

– Resources: Tangible & Intangible

– Capabilities: Skills, Routines, operations, etc

Can a competency be Core or Single in number??

• Corporate Strategy – Business Portfolio

• Business Strategy – Competitive Advantage

• There is nothing like core competence – 7 P’s model – People

• Building on them is ongoing & functional process (Here comes imp of Learning & Dev & their tools)

• Cost leadership involves focus on volumes & efficiency with close relationship between producing more & earning more

• We shall now see examples where org was able to align their Corporate/Business Strategy with HR strategy

How?? & What??

- Cost Leadership

• Focus on volumes & efficiency

• Well focused recruitment criterion - RFT

• Workers bind by team – Managers bind by org as a whole

• Promotes integrity & cooperation @ middle levels

• Flat org structure – Reduce costs – Promotes transparency

• Cost consciousness & utilization of internal capabilities

• Efficiency? Quality? Customer Loyalty? Innovation? – Focus on these constructs organizational culture

Is it only about products/services?? Lets see !!!!

• Focused on Compensation Structure

• Wages for work & Bonus for performance

• Pay for performance – Reducing costs – Cost leadership

• Company profits distributed end of the year based on an individual merits:

Output

Ideas and cooperation

Dependability and quality

• Asking for performance? Did prepare them for performance?

Lincoln says YES !!!

Cost Leadership Strategy

v/s

Differentiation Strategy

• Premium management consulting

• International presence

• Differentiation Strategy

• People are really at the core of the value proposition

• hires the best people out of the top business schools

• “Up or out”

• Rough Patch in 1980’s initiated major organizational transformation

• Ownership

• Involvement

• Decision Making

• A culture of openness & Transparency

Corporate Strategy and HR Strategy

• Aditya-Birla Group

– Professionalism

– Decision Making

– Transparency in performance measurement

• TATAS

– Recognized early

– XLRI link

– Graduate Engineering Training Scheme

• Infosys - Challenges in world of M & A

Changes in Business Strategy & HR Strategy

• Business Strategy & HR strategy go hand in hand

• TCS

– Good training programmes

– Employee Retention, a challenge

– From merely a passport to USA to top the BT-Indicus survey of 'India's Best Companies to Work for'

How to link both effectively ?

Empowerment Ownership Involvement

Linking HR Strategies and Practices to Strategic Requirements:

5-Point Agenda for HR Professionals

SPEND MORE TIME AND EFFORT UNDERSTANDING

- HR professionals must spend more time and effort understanding the business environment and the key strategic issues faced by the company

- Anticipation is the key – Be prepared

- Understand and explain the external and internal environment to management and people within

- Adapt with changing environment

Get involved

• HR professionals must get more involved in the nitty-gritty’s of the business, i.e., in operational details and issues

• Thin line of demarcation between HR and operations

• Line managers taking up HR responsibilities

Need of the hour - vice versa

• Get into operations to understand requirements and provide service accordingly and effectively

Approach towards integration

• HR professionals must move towards taking an integrated look at the people in the organisation, bridging the gap between HR and IR (Industrial Relations)

- Operational boundaries going away

- More compact now, lot of over lap

- Multi tasking and multi skilled approach

- Opportunity to bring single perspective of HR for all

- Great opportunity for acceptance from all

Knowledge management

• HR professionals must see themselves as knowledge workers and facilitators of knowledge flows within the organisation

- Knowledge is the asset of the organisation

- Most important to keep and increase competitiveness

- Need to reflect in all HR processes

- HR should not be excluded from Knowledge creation, management and absorption

- Change in mindset required

Value Creation

• HR professionals need to change from a support paradigm to a value creation paradigm

- Add value to organisation

- Measurement of right parameters

- Not only HR but also strategic, operational measurement points

Solutions

• Created 'Maitree', an organisation within HR. It's employees plus their spouses.

• Conduct an annual survey called 'Pulse', which goes across the globe and supports 4-5 languages and these inputs are collected

• Recognition even in slow down period

Solutions

• Nominations of star in projects

• Gems points to trade points for products

• Best healthcare benefits in the industry

• Understanding cultural nuances

Solutions

• Created 'Maitree', an organisation within HR. It's employees plus their spouses.

• Conduct an annual survey called 'Pulse', which goes across the globe and supports 4-5 languages and these inputs are collected

• Recognition even in slow down period

Impact

• 43600 offers from August to December (largest ever in TCS ) as compared to 38000 in last year

• Gross hiring plan of 66000

• Attrition rate reduced from 13 % to 12.8 &

Aim

Create partners and not workers

Cultural

Human

Knowledge

Institutional

Financial

Man-Made

Natural Endowments

Soci

al

Tangible Articulations Norms Mental Models

Phys

ical

Ecosystem Services Raw Materials Climate and Location

Transportation, Communication Power Water and Sewerage

Financial Systems Private Wealth Public Wealth

“Good, Clean Governance” Justice System Connective Organizations

Qualitative, Quantitative Data Frameworks and Concepts Knowledge Generation

Health and Population Education and Training Attitudes and Motivation

Respect for Nature, Architecture, Music, Language, Range of Acceptable Behaviors Trust, Wealth Creation Attitudes, Long-term Thinking

Clean Air, Water, Protected Ecosystems Agricultural, Mineral, Petroleum Proximity to Markets

Roads, Ports, Telephone Systems Electric Grids, Generation Capacity Pipelines, Pumping Stations

Banks, Stock Markets Bank Deposits Bank Reserves, Taxes, Duties, Macroeconomic Stability

Transparency, No Hidden Costs, Accountability Property Protection, Predictable Regulations Chambers of Commerce, Unions

Statistics, Opinions, Records Theories, Processes, Procedures Universities, R&D, Market Learning

Nutrition, Medical & Mental Health Primary & Secondary, Technical Self-responsibility, action-orientation

Representative Elements Representative Examples

Source: Based on Wolfensohn framework and Cluster Pulse experience.

SEVEN FORMS OF CAPITAL