Organisation’s Strategy & Process

1. Organisation’s Strategy & Process HR Practice In Bangladesh HRM 430, Lecture 6

2. Strategy & Strategic Plan • Strategy is the direction in which an organisation intends to move and establishes the framework for action by which it intends to get there. • Strategic plan is a formal document setting out an organisation’s goals and initiatives over a defined time period. • Strategic plans are characterised by a variety of formats. • The time horizons vary, as do the range of goals targeted, as do the activities that are planned for and the ways in which they are integrated with one another. Boxall & Purcell 2003

3. Organisational Strategy • At the helm of every business, there is a strategy that steers it towards a direction envisioned by the leaders. • The strategy, though shaped in board-rooms, is executed by the people down in the line. • In an organisational context, an HR strategy is a plan to align and motivated people to push the proverbial wheel in the direction of the business goals. • It is pertinent thus, for the HR strategy to cascade from the organisation’s business strategy. Ernst & Young HR Practices Survey BD 2006-2007

4. Organisational Business Strategy and HR Strategy • HR strategy provides the direction for HR policies and practices in an organisation. • While HR policies and practices motivate people towards superior performance, it might also retard the progress of the entire organisation, if not designed and implemented effectively. • In the present Bangladeshi business context, there is an effort to make employees conscious and involved in organisational progression. Ernst & Young HR Practices Survey BD 2006-2007

5. Using HR as a Strategic Business Asset Clarity and articulate the business strategy Develop business case for HR as strategic asset Create a strategy map for the firm business indicators – leading & lagging Identify HR deliverables within the strategy map Periodically test HR measures against the firm’s strategy map & adjust as required Align the HR architecture with HR deliverables: HR function / HR & employee behaviour Design the strategic HR systems: HR scorecard / result measurement etc. Execute management by measurement Becker et al. 2001

6. Linking HR Practices to Competitive Strategy Company mission & values Desired competitive strategy (cost leadership, focus, differentiation) Required employee behaviour e.g. behaviour, degree of teamwork, risk-taking, concern for quality, etc Supportive HR practice e.g. staffing, appraisal, rewards, training, etc HR Outcomes - Employee behaviour aligned with company goals Schuler & Jackson 1987

7. Porter’s Typology of Competitive Strategies • Cost Leadership – Gaining competitive advantage through lower cost. Aggressive business technique for production efficiency. (achieving lowest unit cost in the sector) • E.g. Timex, Bic, Wal-Mart. • Product Differentiation – Creating a unique product that is unsurpassed in quality. (based on superior quality or service). • E.g. Nikon, Jaguar Motors, Morgan Motors. • Focus – Satisfying a specific segment with very low priced or highly distinctive product. (‘niche play’ in cost or differentiation). • E.g. Mercedes-Benz and SsangYong Musso. Porter 1985

8. Alignment of HR Strategy with Business Strategy • A well-aligned HR strategy in an organisation drives performance of people in the direction of business plan. • In about 75% of the surveyed organisation, the HR head is involved in strategic business planning. • Policy is best implemented when it is documented. Documentation also provides transparency. • About 74% organisations have prepared policies in the form of a manual. • Organisations worldwide are now making the policies available in electronic form to help give the employees easy and single point access. Ernst & Young HR Practices Survey BD 2006-2007

9. Alignment of HR & Business Strategy Ernst & Young HR Practices Survey BD 2006-2007

10. Presence of Proactive HR Department • Organisation in Bangladesh are now facing multiple challenges on different fronts. • Thus these organisations have an increased dependence on employees to meet-up with the changes. • The role of HR has increased and almost all organisations need dedicated HR departments to cater to an increasingly complex array of organisational requirements. • Traditionally, Bangladeshi organisations have focused on the operational aspects and HR departments on clerical aspects. • HR had little opportunity to take the position of strategic partner. • With increasing focus on environmental, compliance, ER and ethical standards, increase demand from buyers, HR have to take more and more responsibilities. E.g. compliance of shop floors in garments factories. Ernst & Young HR Practices Survey BD 2006-2007; Packer 2007

11. Presence of Proactive HR Department (continue) Ernst & Young HR Practices Survey BD 2006-2007

12. Best Practice or Best Fit • A practice which has successfully given results in one situation could be replicated with minor customization. • This replication reduces the risk in implementation and also saves time and money in creating something new. Best Practice - the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people. Adoption of a good practice. Best Fit – determining / adjusting the organisational business practice with a particular / specified theory or practice. Aligning existing organisational practice with the best applicable approach. Boxall & Purcell 2003

13. Best Practice or Best Fit (continue) Best practice models concentrates on the following three issues: • Emphasise on enhancing employee abilities or knowledge and skills through good recruitment and strong training. • Emphasise on motivating desired behaviour through strong incentives. • Emphasise on opening up opportunities for better trained and more motivated workers to contribute their ideas through workredesign and indirect forms of employee participation. • Best fit models concentrates on how a particular organisation will align itself with a particular / range of theories and business practices. Boxall & Purcell 2003

14. HR Wheel of Fortune Hubbard 2007, p.30

15. Tracking of HR • Given the criticality of the role of the HR department in future, it is essential to have some mechanism to track the performance of HR department. • The most structured way to do this is to align it with the Performance Management system. • The performance of the HR department can be measured through the department’s achievement against those pre-decided targets in those areas. • What other ways we can think of to track the performance of HR department? Ernst & Young HR Practices Survey BD 2006-2007

16. Introduction of Best In Class HR Practice Ernst & Young HR Practices Survey BD 2006-2007

17. High Performance Organisation • HR policies introduced by Will Keith in Kellogg were extremely pro-employee. He started a gym and cinema in his company for employee recreation. He was known to provide staff with land for a home and garden. He opened a day care centre and paid attractive bonuses. The company continues to be praised for its community outreach program. • Proctor & Gamble recognises the importance of employee welfare. It started giving paid holiday on Saturday afternoon. It started profit sharing plans and provided comprehensive insurance programs for its employees. It took steps towards improving the work environment with special care for women, working mothers and Hispanics. It has won many accolades for practising EEO and diversity management. Ernst & Young HR Practices Survey BD 2006-2007

18. Finally • HR is slowly evolving into the role of strategic business partner. • The HR heads are now a part of the business planning process in high performance organisations. • Over the years HR responsibilities also include focusing on cost reduction and upgrading technology. • The need to incorporate industry practices in HR and transforming from reactive to proactive are the emerging trends.

19. Critical Analysis • What strategic choices in HRM (including key HR policies, practices and investments and the overall system of these choices) are critical to the firm’s performance? • How are managers in the firm making these choices – what processes are involved including analytical and political processes, and how are strategic HR choices connected to other strategic choices in the firm? • How could the firm’s HRM become more effective – what could be done in HRM to improve the firm’s relative performance in its industry, perhaps even to the extent of generating some form of sustained competitive advantage? Boxall & Purcell 2003

20. References Becker, B., Huselid, M., Ulrich, D., (2001), The HR Scorecard, Linking People, Strategy and Performance, Harvard Business School Press, UK. Boxall, P. & Purcell, J., (2003), Strategy and Human Resource Management, Palgrave Macmillan, USA. Ernst & Young, (2007), HR Practices Survey Bangladesh 2006-2007. Hubbard, G., (2007), ‘Wheel of fortune’, HR Monthly, issue. July, pp. 30 – 32. Packer, S., (2007), ‘Extreme makeover’, HR Monthly, issue. Nov, pp. 18 – 24. Porter, M (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press NY, USA. Porter, M., (1996), ‘What is strategy?’ Harvard Business Review, no. Nov / Dec, pp. 61-78. Schuler, R., & Jackson, S., (1987), ‘Linking competitive strategies and human resource management practices’, Academy of Management Executive, vol. 1, no. 3, pp. 207 – 219.

21. Strategy – Should It Be Like This?