CHAPTER 1
Strategic Human Resource Management–An Overview
CHAPTER OUTLINE
- Strategic Human Resource Management (HRM)
- Transactional role
- Business partner
- Strategic partner
- Change agent
LEARNING OUTCOMES
- Evolution of HRM
- Changing role of human resource (HR) professionals
- Different approaches to strategic human resource management (SHRM)
OPENING CASE
Yes Bank, India’s fifth largest private sector bank has changed its selection process. Along with the traditional evaluation techniques like Group discussions and Interviews, the selection process of Yes bank has game-based evaluation mechanism which is the part of campus recruitment initiative called YES Professional Entrepreneurship Programme (YPEP).
To hire the best available talent, the bank is hiring from the premium business schools of India. Yes Bank has partnered with Mumbai-based consultancy, AbleVentures and UK-based firm with the expertise in game-based assessments, Arctic Shores to develop a game-based app. The app helps to assess the core competencies of the applicants like customer focus, influence & impact, quality focus, professional entrepreneurship, drive for results, and YES personality.
Over 3,000 data points are captured in a 25-minute session, which is 150 times more than a traditional assessment. Candidates also receive an instant feedback, which is easy to interpret and gives them an opportunity to learn something new about themselves.
Deodutta Kurane, group president, human capital management at YES BANK says, “Having experimented with several assessment models and methods over the years, we are confident that this carefully crafted tool, with its higher level of accuracy, will enable YES BANK to acquire the right talent with 21st century competencies and skills to achieve the Bank’s Vision 2020. Apart from a delightful interview and assessment experience with YES BANK, the highlight of the tool is that it also offers the candidates a real-time, customised feedback report.” Can we notice the change in the hiring process with the advent of technology? The role of HR is changing!!
INTRODUCTION
HRM is managing people in the pursuit of the employer-employee relationship which involves the effective utilisation of HRs in attaining the strategic objectives of the organisation and the employee satisfaction. HR strives to align individual and the organisational goal. HRM can be a major contributor to the success of the organisation as it is in a key position to affect customers, business results, and ultimately shareholder value.
HRM is managing people in the pursuit of the employer-employee relationship.
FROM PERSONNEL MANAGEMENT TO STRATEGIC HUMAN RESOURCE MANAGEMENT
HR is perceived as reactive administrative position, which functions indifferently from the organisational goals but the need of an hour is to align HR function with the organisational strategy, thereby transiting from “personnel management” to “SHRM”.
A rapidly changing environment of business, which has resulted in globalisation and a need for competitiveness, has been causing management to bring a new focus to bear on how HRs are organised and managed.
The HRM function has evolved through many stages, from the medieval time through the industrial revolution, the scientific management, the human relations movement, and soon, to the present strategic business partner model. For most of its history, HR has mainly focused on the administrative aspects of HRM, except recently, with the strident call for HRM to become a strategic business partner (Ulrich, 1997; Brockban, 1999; Lawler III & Mohrman, 2000, 2003).
In last 25–30 years, the HRM, as discipline, has transformed, first from personnel management to HRM and then from HRM to SRHM. Transformation of personnel management to HRM was marked by the identification of “employee” as an asset, who can be managed systematically. Later, the realisation of the need to align the HR policies and practices with the organisational strategy was felt and the HRM transformed to SHRM.
In last 25–30 years, the HRM as discipline has transformed, first from personnel management to HRM and then from HRM to SRHM.
The transactional role of HR provided administrative support and was the staff function. The key function of the HR department was the cost containment and administrative support. Managing people is therefore the responsibility of HR manager. Even the transactional functions of HR like training, motivation, reward, and so on should be managed effectively for achieving the organisational objectives.
The SHRM frets the HR function as the strategic business partner. Unlike the traditional HRM, the strategic HRM focuses on aligning HR practices with the organisational goal and accordingly helps organisations gain competitive advantage (Wei, 2006). For Becker and Huselid (2006) the traditional HRM differs from SHRM in two important ways: “First, SHRM focuses on organisational performance rather than individual performance. Second, it also emphasizes the role of HR management systems as solutions to business problems (including positive and negative complementarities) rather than individual HR management practices in isolation.” Hence, the paradigm shift from individual focus to the organisational focus and the organisational performance paints the canvas of HR.
The paradigm shift from the administrative aspects of HRM led to the emergence of SHRM as a new generation of value-added core responsibility or function of HRM. The emphasis of SHRM is that of a strategic business partner.
STAGES OF DEVELOPMENT FROM PERSONNEL MANAGEMENT TO HRM AND SHRM
Major features of each developmental stage are discussed below:
Stage One: Welfare and Administration (1900–1940s)
Personnel functions were performed by supervisors, line managers, and early specialists (e.g., recruitment officers, trainers, welfare officers) long before the establishment of a national association representing a “profession” of personnel or HRM. Taylor’s scientific management provided the structured systems to the routine HR activities, for example, the time and motion study helped in defining the piece-rate wages. Later, the behavioural science provided more reliable and valid ways like psychological testing,while management science contributed to performance management programme. Prior to the Second World War, in 1945, personnel management functions were largely fragmented and often conducted by line managers as part of their overall management responsibilities.
During this period, society was generally stable, though disrupted by the First World War and the Great Depression. Unemployment was low until the 1930s when labour became readily available for employers. Trade unions were active largely focusing on issues of pay and working conditions. Personnel functions were mainly restricted to administrative areas (e.g., wages/salary records, minor disciplinary procedures, and employee welfare activities).
Stage Two: Welfare, Administration, Staffing, and Training (1940s–mid-1970s)
The Second World War, referred to above, had significant repercussions on both those that stayed behind particularly on business and the labour market. During the Second World War, not only was there a scarcity of labour for essential industries such as munitions and food but there was also a corresponding increase in problems and performance of existing employees. Many women had become involved in all areas of industry, to replace their husbands and brothers who were in the military service. Financial, social, and family pressures began to hinder productivity and output of such employees and they became increasingly harder to recruit. When the war ended, returning soldiers flooded the labour market, often with inadequate work skills. Employees were spurred on by government initiatives and their own postwar in a developing economy. Welfare services for employees were seen by some employers as a means of attracting and maintaining employees and ensuring their continued productivity. Training courses were launched to equip practitioners with the necessary skills. Many more organisations began to employ specialists to conduct recruitment, training, and welfare activities to remove these functions from line managers.
This stage is characterised by the expansion of necessary personnel functions for the postwar economy; a gradual move from specialist to more general approaches; the adoption of theories including scientific management, behavioural science, and human relations. This period marked the resurgence of unionism. Unions focused on pay and work conditions issues, forcing further expansions of personnel activities to include industrial relations considerations. Although personnel activities expanded, they were largely separated from those concerned with industrial relations and professional philosophy did not exist.
Stage Three: HRM and SHRM (mid–1970s–1990s)
This period was characterised by fierce competition in the world labour markets. The influences of the “Excellence” theory had begun to affect management of employees. Excellence theory was proposed by W. Deming (1878) and was effectively applied in Japan and the United States industries after the Second World War. It advocates the following principles of management:
- Creation of consistency of purpose toward the product of service management;
- Validation of quality statistically;
- Adoption of arbitrary numerical goals; and
- Removal of barriers.
Excellence theory: It focus on creation of consistency of purpose toward the product of service management, validation of quality statistically; adoption of arbitrary numerical goals; and removal of barriers.
Personnel management transformed into HRM, in 1970s, representing a change toward the integration of personnel functions, strategically focused on overall organisational effectiveness. Unlike previous periods, this stage represents the integration of personnel management and industrial relations into a coordinated and strategic approach to the management of an organisation’s employees and this led to the development of SHRM. SHRM can be perceived as a “macro” perspective (e.g., strategies and policies), whereas represents more of micro approach.
SHRM can be perceived as a “macro” perspective (e.g., strategies and policies), whereas HRM represents more of micro approach.
Inception of the SHRM Concept
Although the evolution of SHRM could be observed throughout the twentieth century like Watson propounded employee friendly environment at IBM in 1930 yet it was always a debate whether the employee is a cost or an asset to the company. The SHRM owes its origin to a sustained economic boom, the growth of service industries, and the liberating power of information technology, the concept that people, not financial capital was the scarce and rare resource began to take hold. “In this decade, it is only people who can sustain the competitive advantage of a company [through] the ability to create rarity, value and inimitability,” claimed Gratton (Table 1).
The SHRM owes its birth to a sustained economic boom, the growth of service industries and the liberating power of IT, the idea that people, not financial capital was the scarce resource began to take hold.
Table 1: Difference Between Strategic Human Resources Approach and Traditional Personnel Approach
It is evident from the fact that, till the beginning of the 1990s, a company’s stock market valuation was invariably gauged by studying its earnings and fixed assets and adding a token amount for goodwill; by the end of the decade, a there was a major change. Ernst and Young reported that the largest share of most companies’ market capitalisation was primarily its intangibles, the talent, knowledge, and teamwork of its workforce. In high-tech companies like Nokia, the percentage was as high as 95 percent; but even “old economy” stalwarts like British Petroleum, despite its huge investments in oil platforms and exploration equipment, notched up a significant 74 percent.
In A New Mandate for HRs, published in 1998, Dave Ulrich, professor of HR at the University of Michigan, made the case that “HR has never been more necessary” in the battle to win competitive advantage because it was responsible for “defining an organisational architecture” that could best tap market opportunities.
“Ulrich discarded the traditional source of competitiveness like cost, technology, manufacturing, and so on, as imitable and hence does not warrant the competitive advantage.
Ulrich defined the role for HR strategist as an agent of continuous transformation and the manger of intellectual capital and knowledge.
The real source of competitive advantage in the modern economy, Ulrich claimed, lay in how an organisation was structured. “Winning will spring from capabilities such as speed, responsiveness, agility, learning capacity and employee competence. Successful organisations will be those that are able to quickly turn strategy into action.” Indeed, Ulrich argued that, henceforth, HR should see itself as “an agent of continuous transformation”.
Ulrich also outlines a second key role for the HR strategist: managing intellectual capital and knowledge. “From now on, successful companies will be theones that are the most adept at attracting, developing and retaining individuals.” Thus an important component of strategic HR is creating a cultural environment and framework that not only taps into individual talents, but encourages knowledge sharing.
Figure 1: Roles and Accountabilities of HR
Four roles of HR based on long- vs. short-term orientation and process vs. people are strategic partner, change agent, administrative expert, and employee relations expert
The “Extended” Ulrich Model
The book, by Dave Ulrich, Human Resource Champions (1997), presents the HR model on 2 × 2 matrix. The matrix is based on process versus people and long-versus short-term strategy. The four roles and 16 accountabilities of HR are shown in Figure 1. The four roles are discussed later in the chapter under “Changing role of HR.”
THE STRATEGIC ROLE OF HRM
The HR function has to always prepare a promising case for any activity that they propose as it is perceived as expenditure by the financial heads. The HR budgets are pared the first in the times of financial crisis. The field of SHRM, facilitates the HR department to demonstrate the value of HR function to the organisation In 1984, Devanna, Fombrun, and Tichy could link the HR and corporate strategy and laid the foundation for new field in HR, that is, SHRM. SHRM focuses on aligning human capital with the corporate strategy to increase competitiveness of the organisation. According to Aswathappa (2004), “the advent of SHRM has brought forward the issues of linkages between the employer–employee relationships and wider organisational strategies and corporate objectives.”
Since, the “employee” is at center of the business as the competitive advantage, the role of SHRM becomes critical. The organisational performance is being linked with the employee development and performance. The role of HR as strategic partner need to be portrayed now and it is expected of HR to work with top management to carve out corporate strategy, which provides the framework to formulate strategy for the most important resource of the organisation “Human Resource.” This integration would help in the identification of employee competencies and behaviours required to achieve the strategic goals and hence would guide the HR strategy implementation by developing HR policies and practices (Figure 2).
If a firm’s competitiveness depends on its employees, then the business function responsible for acquiring, training, appraising, and compensating those employees has to play a bigger role in the firm’s success.
- SHRM benefits the organisation by ushering the path of the top management in strategy formulation and of the employees in achieving the strategic goals of the organisation. This helps in establishing the organisational competitiveness by focussing on the competitive advantage of the firm.
- SHRM is an integrative approach that connects the management and the employees to the business as a whole and to its environment.
SHRM is the creation of linkage or integration between the overall strategic aims of business and the HR strategy and implementation.
Industrial Insight 1: PLAYER OR PARTNER?
Clearly an important part of HR’s strategic role is therefore formulating policies which encourage the distribution of knowledge throughout the organisation and act positively in terms of recruiting and retaining talent. But policy-making alone is not strategic HR. The real point, says Katie Truss, visiting fellow at the London Business School and a prime mover behind the Leading Edge consortium, is that “there’s a pronounced difference between strategic HRM and the strategic role of the HR function.”
At the heart of the question is how the HR function is perceived in any organisation. Some influential academics, notably the University of Bath’s professor of HRM, John Purcell, have argued that in most companies HR remains an essentially a “downstream” function. Thus, its main role is to act as a partner to mainstream business, aligning the formulation and implementation of HR strategy with overall business objectives that have already been defined.
This approach is certainly one that seems to have been readily accepted by much of the profession. In a survey conducted last year, Birkbeck College’s Raymond Caldwell found that many HR directors replied to the question of how they saw their strategic role “with considerable realism.” Responses varied from “HR is oversold if it is too strategic” through to “it’s the P&L people who have to make the strategic difference,” to the bold summation that “we are not partners, and not players.”
But to many at the forefront of the strategic debate, this kind of willingness to assume a downstream role is not so much realist as defeatist. Indeed, Kevin Green, managing director of Qtab, a consultancy which has purposefully styled its remit as “offensive people strategy,” claims he took “this strident view” because he had become so frustrated with the profession’s apparent willingness to remain on the back foot.
“The point is that if you are “aligning” HR strategy [with business strategy] you’re already too late—the actual strategy has already been set without your input. Unless HR is prepared to take on a [leading strategic role], the high ground will be taken by other functions. We need to be at the vanguard of intellectual capital, knowledge management and employer branding,” Green says.
Fellow consultant Paul Kearns agrees: for him, the definition of strategic HR has to be about “giving a business a competitive advantage.” Thus “a good HR strategist will bring something to the business” rather than simply reacting to what others have decreed. As Gratton has pointed out in Living Strategy, real strategic HR is about developing ways of putting people where they belong—at the center of the business, not on the sideline. The notion that people are our greatest assets is “a truism not a cliché” she says, and if companies are going to survive and prosper in a knowledge driven economy, “corporate strategy must reflect this.”
So should the eventual goal of HR be to assume the major strategic role in most companies? Not everyone goes quite so far. “I’m not going to argue that HR should make strategy,” says Ulrich. “Strategy is the responsibility of a company’s executive team - of which HR is a member.”
Moreover, the particular input that HR can make will clearly vary according to the remit of the organisation and where it is in the business cycle, says Shaun Tyson, professor of HRM at Cranfield School of Management. “If you”re fighting for survival, for example, HR may have an input but the [real onus] of strategy-making will fall on the finance department.” Similarly, if a new product range is being launched, the department at the vanguard of strategy-making is likely to be marketing. Nonetheless, HR will still have a major role to play in ensuring that that strategy becomes holistic.
“Even an apparently marketing-led strategy will have a people side to it. How is the new range going to be sold and introduced within an organisation? What does it mean in terms of how the company is positioning itself? What does it mean for the company’s brand values?”
DIFFERENT APPROACHES TO SHRM: RESOURCE BASED VIEW
Resource-based view of strategy emphasises that the strategic capability of any organisation depends on its resource capability, especially its distinctive resources. The research shows that the HR practices impact organisational performance and hence make a clear case for HR as competitive advantage. This requires the role of SHRM by integrating and aligning the HR with business strategy so as to develop critical competencies and resources.
Resource-based view of strategy is that the strategic capability of a firm depends on its resource capability, especially its distinctive resources.
The Best Practice Approach
The best practice approach assumes that there is a universal set of best HRM practices which yield superior organisational performance, irrespective of context. Pfeffer (1998) has listed following “best practices”.
- Employment security
- Selective hiring
- Self-managed teams
- High compensation contingent on performance
- Training to provide a skilled and motivated workforce
- Reduction of status differentials
- Sharing information
Best practice approach: there is a set of best HRM practices that is universal and hence is best in any situation, and that adopting them will lead to superior organisational performance.
The Best Fit Approach
The best fit approach defies the claim of the “best practice approach” that certain HR practices are best irrespective of the context. It states that the HR strategies which finds the “best fit” with the organisational strategies, yield better organisational performance. It further states that the HR strategy also depends on the stage of the organisation life cycle. As the organisation grows, the HR practices need to be modified.
The best fit approach emphasizes that HR strategies should be congruent with the context and circumstances of the organisation. “Best fit” can be perceived in terms of vertical integration or alignment between the organisation’s business and HR strategies.
Universalistic view: The “universalistic” perspective posits the “best” of HR practices, implying that business strategies and HRM policies are mutually independent in determining business performance. This is same as best practice approach.
Contingency view: The “contingency” perspective emphasises the fit between business strategy and HRM policies and strategies, implying that business strategies are followed by HRM policies in determining business performance. This is same as best fit approach.
Configurational view: The “configurational” perspective posits a simultaneous internal and external fit between a firm’s external environment, business strategy and HR strategy, implying that business strategies and HRM policies interact, according to organisational context in determining business performance.
Schuler’s Employee Behaviour Model
Schuler’s strategy is a framework that was developed from the Porter’s three generic strategies for achieving competitive advantages that included cost leadership, differentiation, and focus. Cost leadership also known as cost reduction, which means that maintaining the image as a low cost producer. Differentiation also known as product innovation, which means that the product is uncommon in some viewpoint different from the competitors and the customers will be willing to pay premium prices for it. Focus means that a narrow market segment is being targeted and adopt either differentiation strategy or cost reduction. Schuler’s employee behaviour model is a revised version based on this Porter’s model and it concedes HRM very crucial in achieving the business strategy when these are properly coordinated. Furthermore, he identified various employee behaviours that are essential in getting the organisations selected competitive strategy. In this model, the three different HRM strategies recognized are accumulation, utilisation, and facilitation and these are connected to Porter’s three generic strategies.
Schuler’s strategy is a framework that was developed from the Porter’s three generic strategies for achieving competitive advantages that included cost leadership, differentiation, and focus.
ESSENTIAL ELEMENTS OF SHRM
SHRM does not function as a silo rather works in integration with the internal and external environment. There are certain factors and processes that affect the SHRM.
Essential elements of SHRM are impact of external environment, response to change, organisational response, and organisational change
- Impact of external environment: Those internal processes of organisational change are caused by processes of external environmental change. This argument projects ultimate responsibility for SHRM and the consequences of SHRM action outside the organisation, away from management and onto the environment. This justifies all SHRM initiatives in terms of rational, productivity benefits. These factors are discussed further in Chapter 2.
- Strategic response to the change: Under these new environmental pressures (competition, technology, clients’ demand etc.) management must develop new and appropriate strategies to defend or advance corporate interests. So environmental challenge requires strategic response.
- Organisational response: This strategic response, in turn, requires organisational response. If the organisation is to be capable of achieving or delivering the new strategy, it will be necessary to design and implement changes in any or all aspects of the HR structures and system. Thus, SHRM is represented as developing corporate capability to deliver new organisational strategies.
- Organisational change: The SHRM approach assumes that organisational change is driven by managers’ perceptive and informed understanding of the need for, and the principles of organisational change.
The above-discussed processes indicate that following six key elements are necessary in developing SHRM within the firm.
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Internally transforming HR staff and structure
The HR staff and structure need to be transformed for creating the SHRM philosophy within the organisation.
- Transforming HR professionals
The required competencies for HR professionals with SHRM inclination are significantly different from the “traditional HR.” The SHRM professional need to have competency to play a “strategic business partner” role and should be adept at “change management”. Hence, the transformation of HR professionals is important.
- Transforming the organisational structure
Strategy and structure work in coordination. Since the HR strategy is transformed, the structural transformation should follow. The structure which fits the organisation best to facilitate achieve its strategic objectives, should be designed.
- Transforming HR professionals
- Enhancing administrative efficiency
One of the key roles of HR professionals is being an administrative expert and reengineer and restructure the administrative and other processes of the organisation to achieve the SHRM philosophy. The administrative efficiency needs to be improved and according to the requirement the HR function should be centralized or decentralized. Though it is always advisable to have majority of HR functions to be “centralized,” so that the employees of the organisation, irrespective of the unit are treated similarly. The HR professionals should devise innovative ways to add value.
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Integrating HR into the strategic planning process
The HR needs to work with the top management, as a team, for strategy formulation. HR should not only provide inputs and information for decision making, but should also be able to influence decision making.
- Linking HR practices to business strategy and to one another
The HR practices should be well-aligned with the HR strategy which is aligned with organisational strategy. This fit of HR and strategy can help in accomplishing the organisational goal.
The three aspects of HR fit are as follows:
- Vertical fit: This aspect of vertical fit concerns the coincidence between HR practices and overall business strategy.
- Horizontal fit: This relates to the extent to which HR activities are mutually consistent. Consistency ensures that HR practices reinforce one another.
- External fit: The third aspect concerns how well HR activities match the demands of the external environment.
Along with the strategic “fit,” strategic “flexibility” is required for the long-term competitive advantage. The two types of flexibility identified are as follows:
- Resource flexibility: It is the extent to which a firm can apply its resources to a variety of purposes. It also involves the cost, difficulty, and time needed to switch resources from one use to another.
- Coordination flexibility: It is the extent to which an organisation has decision-making and other systems that allow it to move resources swiftly from one use to another. This task is accomplished by having an effective partnership between HR managers and line managers.
- Developing a partnership with line management
As all HR functions are linked with the operational business activity, when the HR transforms to SHRM, some of its new managerial and strategic functions require the redefined linkages with the line departments. The line managers equally participate in the HR functions and the HR department supports the smooth functioning of these processes, for example, the line manager is responsible for filling up the vacancies in their department and the HR department supports the line manager in sourcing the candidates and arranging for the selection and final placement.
- Focusing on the bottom line impact of HR and measurement of that impact
The evaluation of the HR function, to measure its contribution to overall organisational performance, is critical to the sustainability of SHRM. The HR measurement is discussed in Chapter 8.
HRs impact on bottom line: stakeholder approach, HR impact, monetary value of HR programs, benchmarking
CHANGING ROLE OF HR
As discussed above, Ulrich (1998) has defined four broad roles for HR professionals: administrative excellence, employee champion, strategic partner, and change agent. In addition to the above roles the HR practitioner needs to take on the specific role of integrating people strategies with business strategies in a way that advances the bottom line. The HR manager must play an active and guiding role in selecting, investing, developing, and motivating employees to foster innovation to achieve strategic objectives. The execution of the SHRM system requires the early and active involvement of HR professionals in key strategic business choices and should not only be part of decision making but also shoulder responsibility and accountability of the outcomes.
The HR professional operating under the SHRM system must chart roles that include early and active involvement in key strategic business choices. He or she must become the partner of decision makers in the organisation, and sharing accountability for organizing and performing work.
Strategic Partner
For the sustainable growth of the organisation, the HR managers need to become a strategic partners in development and achievement of the business strategic objectives. As a strategic partner the continuous evaluation of the alignment of HR practices and the business objectives of the organisation, and also a continuous effort to design policies and practices that maximises this alignment is required. HR practitioner should be held responsible for defining an organisational architecture—that is, identifying the organisation’s way of doing business. Such framework as looking at the organisational components—strategy, structure, rewards, processes, people, style, and shared values may be adopted. This new knowledge will allow HR to add value to the executive team with confidence.
As the business partner, HR is expected to understand the business thoroughly and should understand finance and accounting also. They should take responsibility for cost reductions and evaluation of the HR programs and processes. It’s not enough to ask for a seat at the executive table; HR people will have to prove they have the business savvy necessary to sit there.
As the business partner, HR is expected to understand the business thoroughly and should understand finance and accounting also. They should take responsibility for cost reductions and evaluation of the HR programs and processes.
Administrative Excellence
HR’s Role in Executing Strategy: It is important because it is an immediate way of contributing to the overall efficiency of the organisation. As administration expert, one needs to rethink how work is done throughout the organisation. A firm’s functional strategies should support its competitive strategies. HR supports strategy implementation in other ways. For example, HR handles the execution of most firms’ downsizing and restructuring strategies—by out placing employees, instituting pay-for-performance plans, reducing health-care costs, and retraining employees.
HR and Value Chain Analysis: Strategy execution usually involves identifying and reducing costs, and therefore value chain analysis. A company’s value chain identifies the primary activities that create value for customers and the related support activities. Every business consists of a chain of activities, each of which contributes to designing, producing, marketing, and delivering a product or service. Each activity gives rise to costs. Managers use the value chain for visualizing their firm’s strategic activities, and as a tool for isolating and analyzing the company’s strategic costs. Value chain analysis prompts questions such as: “How do our costs for this activity compare with our competitors’?” “Is there some way we can gain a competitive advantage with this activity?” “Is there a more efficient way for us to deliver these services?” “And do we have to perform these services in house?” By applying value chain analysis, HR managers are finding ingenious ways to deliver their own services more cost effectively.
Strategy execution usually involves identifying and reducing costs, and therefore value chain analysis. A company’s value chain identifies the primary activities that create value for customers and the related support activities. Every business consists of a chain of activities, each of which contributes to designing, producing, marketing, and delivering a product or service.
Outsourcing: Letting outside vendors provides services—is another option. Many organisations outsource one or more HR activities such as temporary staffing, recruiting, benefits administration, payroll, and training. Cost reduction is one of the common reasons for this.
Employee Advocate
As an employee advocate, the HR manager needs to look at developing the conducive environment for the employees which is motivating and happy. The HR professional should help in establishing the organisational culture which builds the employees’ sense of ownership and sensitize toward serving the customer well. In this role, the HR manager provides overall talent management strategies, employee development opportunities, employee assistance programs, gain sharing and profit-sharing strategies, organisation development interventions, due process approaches to employee complaints and problem solving, and regularly scheduled communication opportunities.
Consciously helping to create the right organisation culture, monitoring employee satisfaction, and measuring the results of organisation initiatives fall here as well as in the role of employee advocacy. The HR professional contributes to the organisation by constantly assessing the effectiveness of the HR function.
As employee champion or the employee advocate. HR manager has to represent employees in the management meetings. The employee are empowered by giving control over their work schedules.
Change Champion
As a change agent, the HR manager must play a key role in implementing and managing organisation change, assessing potential sources of resistance to change, and collaborating with line managers to overcome these barriers. The HR professional’s role as a change agent is to replace resistance with resolve, planning with results and fear of change with excitement about its possibilities. The role as strategic partner and change agent represent the emerging strategic dimension of HR as SHRM.
REQUISITE STRATEGIC SKILLS AND COMPETENCIES
SHRM is a business partner model for HR. The HR is required to develop a strategic alignment of HR practices with the organisational strategy. Hence, they need to understand the business thoroughly. The strategic partner role of HR expects HR to formulate and execute strategy and to frame the organisation design and structure to execute the strategy and hence competencies to fulfil these tasks. They should have competence of change management. The HR functionmust change from a staff function that delivers prepackaged HR services to a service that helps managers create customized strategic plans to influence the effectiveness of company performance. He provides the leadership role in developing the human capital and the necessary capabilities to enact the strategy and drive the implementation and change management processes to success. Good human capital management is a prerequisite for successful execution of business strategies.
To function as a strategic business partner and successfully execute the new critical and challenging responsibilities, to bring about the bottom line, the HR professional needs to possess the relevant strategic skills or core competencies. Zigarelli (1997) identifies seven strategic skills that can help the manager develop effective strategic plans to handle the emerging challenges in the organisation:
- Diversity handling skill: Due to the increasing diversity in workplace, HR should have skill to manage people from different culture, backgrounds, gender, nationalities, and physical and mental capabilities.
- Business and financial knowledge: The HR professionals need to be well adept to understand the financial reports and organisational strategy and goals.
- Strategic visioning, critical thinking, and problem-solving skills: As a strategic business partner, one needs the skills to take the lead in contributing to strategy, vision, and critical thinking to gain credibility for the HR function.
- Ability to use information technology: The HR professional must be well grounded in information communication technology (ICT) and leverage this for business results. ICT is the engine that drives the modern organisations to business success and offers them sustained competitive advantage.
- In depth HR knowledge: One needs to be well grounded in the theoretical and practical fundamentals of HR to adequately articulate HR HR practices and needs to invest more time and resources for training and development.
- Change management skills: One requires skills to move the organisation to new and more efficient ways of doing business, and needs to show commitment to change management in the organisation.
- Organisational effectiveness skills: These skills enable oneself to diagnose the effectiveness of the organisation as accurately as possible to portray the current and future state of the organisation. One can then monitor and correct inefficiencies.
- Customer orientation: Ability to viewing issues from the perspective of customers.
- Effective communication: The ability to provide both verbal and written information clearly, consistently, and persuasively.
- Credibility and integrity: To walk what you talk, act with integrity in all business transactions and honor personal commitments.
- Systems perspective: The ability to view problems and issues in the context of the bigger picture and understand the inter-relationships among subcomponents.
- Negotiation and conflict resolution skills: The capacity to reach agreements and consensus in spite of different goals and priorities (Figure 3).
Figure 3: Competencies for HR Professional
The Future for Strategic HR
In the knowledge economy, the human capital is the only source of “competitive advantage” and hence requires the strong role of SHRM. The HR strategy would be the important faction of the strategy map persuading HR to take responsibilities for setting the strategic agenda.
The rightful place of HR strategy is thus at centre of the organisation, defining its future direction and shaping the means of obtaining its goals.
Industrial Insight 2: WHAT STRATEGIC HR MEANS TO DIFFERENT ORGANISATIONS?
What strategic HR means to the Department for International Development (DFID) by Lynette Carrington
Q: Establishing a precise definition of strategic HR seems a process fraught with difficulty. What does it mean to you?
A: For me, it’s the “how we get there”; it’s putting people issues into a strategic environment. In this department, we have a new permanent secretary, Sumar Chakrabarti, who is very much a people person, and that leadership characterises and determines the culture. The department not only recognises the value of strategic HR, but has made it central to top-line strategy.
Q: What are you doing to make your HR function more strategic?
A: We are working closely alongside the business, taking a partnership approach. We’re there to help the organisation deliver and if something gets in the way of that it’s our job to remove it. A main aim is greater devolvement of people management to the line, and more accountability in the line for people. We are about to benchmark the function against what other departments and international (organisations) are doing.
Q: How does this differ from what was going on in the past?
A: Although HR has always had a presence at the management board, our focus was much less strategic—public sector HR was all about dealing with personnel issues—servicing the organisation at an operational level. We’ve gone from tea and sandwiches to strategy. Our role is more about influencing and negotiating; we’re looking at where we need to steer the organisation. The move to sustainable development has changed the HR agenda—it’s not so much what we do, as how we do it. We need to encourage different behaviours and recruit different types of people.
Q: What do you hope will be the main impact of the strategy on the organisation?
A: DFID has one main strategic objective: the elimination of world poverty by 2015. Our HR strategy can contribute directly to this by improving the department’s management capability to achieve this goal. At a business level, it has to be almost a way of life. The process would be slower and a lot more painful without our input.
Q: How would you respond to criticism that strategic HR is all mouth and no trousers?
A: The point is that organisations don’t deliver—people do. My experience is that if HR doesn’t get involved strategically at the front end of (a project), you spend an enormous amount of time picking up the pieces at the back end. And the cost of that is often unquantifiable—no one notices once a project has been completed. There is no point sitting down with heads of department saying “you’ve got to do this” unless you’re in a position to tell them why a policy will make the difference to achieving the organisation’s goals.
What strategic HR means to the Nestle‚ UK Group by Nigel Holt.
Q: Establishing a precise definition of strategic HR seems a process fraught with difficulty. What does it mean to you?
A: While I wouldn’t use the term “strategic HR”, what it means to me is HR working as an equal partner with the business units to help identify and resolve issues that promote the commercial development of the organisation. This is not HR as the conscience of the business units, or promoter of the current HR flavour. HR should deliver its service requirements to the business (personnel administration, payroll, policies and high-quality recruitment) before it looks to get accepted as a strategic business partner. But this service role is not the only role of HR.
Q: What are you doing to make your HR function more strategic?
A: First, by getting the basics right—good customer service for all the information and administrative work. Also, by creating a structure that recognizes an HR business partner role. Finally, by training the business partners and giving them tools and methods to get into the strategic arena. This year, for example, our business partners are leading a process of identifying the “people requirements” falling out of each business unit’s medium term (3-year) plan. These people objectives have been defined by the business units, not by HR. But HR is enabling the process and owning agreed supply solutions.
Q: How does this differ from what was going on in the past?
A: Before, our HR role was very generalist. Although senior HR managers did get involved in developing the organisation, they were also involved in much more operational work. The removal of the admin and routine work forces the “organisational development” question to the top of the agenda. The business will only relate to this if it sees real value from the intervention process.
Q: What do you hope will be the main impact of the strategy on the company?
A: Improved business performance; improved overall quality of service from HR, as well as lower cost of HR service.
Q: How would you respond to criticism that strategic HR is all mouth and no trousers?
A: “Try it and see” would be my immediate response to the challenge. You can’t expect to have the mouth (strategic and developmental involvement in the business), unless the trousers (admin and customer facing support roles) are delivering the basics. One isn’t better than the other, they are complementary. It’s just about positioning your priorities, setting your structure, getting the right skills and asking people to do the things the organisation needs to succeed.
What strategic HR means to standard life by Stephen McCafferty
Q: Establishing a precise definition of strategic HR seems to be a process fraught with difficulty. What does it mean to you?
A: Although it’s important to have some input in developing leadership capabilities, culture, and values, we don’t waste a lot of our time worrying about our HR strategy. We’re much more interested in doing the right job for the business.
Q: What are you doing to make your HR function more strategic?
A: We are listening to the business, trying to understand what direction the company is moving, its goals and plans—and then looking at how we can support these. The business strategy at standard life is growth, so the questions we’re addressing are: do we have the right skills to support this? And, how can we take existing values and plant them in new markets elsewhere in the world?
We’re looking at developing the right leadership requirements and skills. We don’t see people-centricity as being the sole domain of HR, we have to be pragmatic about it. I can only persuade top managers that a people-centric business might be a good idea. It’s their job, not ours, to deliver it down the line.
Q: How does this differ from what was going on in the past?
A: We haven’t had a big bang—our role has kind of evolved. We’ve tried in the past to do smart HR stuff around a scorecard, but no-one paid a blind bit of notice. I’m quite cynical about what a lot of that stuff actually achieves. We’ve evolved by listening more, by building relationships and asking the business what problems it is trying to solve, then proposing solutions.
Q: What do you hope will be the main impact of the strategy on the organisation?
A: We’re not interested in measuring what impact we have on the bottom line—no one’s saying to me: “how are you measuring you’re value-add.” In fact, we’d be laughed at if we tried to do that. Our impact is measured through our day-to-day activity of supporting the business’ long-term growth plans.
Q: How would you respond to criticism that strategic HR is all mouth and no trousers?
A: I think it’s probably right. Strategic HR should be about being clear as to where the business is going—and about how and where you can help the business to achieve these objectives.
Research Insight 1: THE NEW HRM FOR THE 21ST CENTURY
HR must now be judged on whether it enhances the firm’s competitive advantage by adding real, measurable economic value as a business partner. The HR function and its processes now must become a strategic player (Beatty & Schneier, 1997).
Twenty-first century HR requires: increased centrality of people to organisational success, focus on whole systems and integrated solutions, strategic alignment and impact, capacity for change. These factors are described below briefly (Ruona & Gibson, 2004).
Increased Centrality of People to Organisational Success: Undoubtedly the most powerful force affecting the evolution of HRM is the increased centrality of people to organisational success. The emergence of resource based views of organisations has placed increasing importance on intellectual and social capital.
Focus on Whole Systems and Integrated Solutions: It is clear that HRM has become increasingly systematic during their evolutions. With the strategic proactive role of HRM, the challenge for HRM is to continue to develop innovative systems by focusing on the integrated functions and systems of organisation.
Annual Conference on Innovations in Business & Management London, UK, 2011
The Center for Innovations in Business and Management Practice 10
Strategic Alignment and Impact: Twenty-first century HR has become more integrated by its measurement efforts and it is expected that the importance of these efforts will increase in the coming years. This is all being driven by increased pressure to work on issues that are most important to the business and to provide organisational leaders with understandable information that helps them to make better and more strategic decisions about the workforce. Ultimately, it is essential to work together to enhance HR’s capacity to contribute to organisational and financial performance.
Capacity for Change: Today’s organisations must thrive in complex and unpredictable environments and must be extremely agile. This demands the development and implementation of structures and processes that facilitate incremental change.
The new HRM for the 21st century should play a strategic role by contributing the strategy formulation process and being a strategic partner during the implementation of these strategies. The HR practices should be designed consistent with the strategies of the organisation taking into consideration the essential HR needs. In parallel with these, organisations can be able to be more flexible, flat and agile in order to struggle with the changes in the competitive environment by gaining competitive advantage with their HR assets.
HR professionals need to lead flatter organisations by encouraging individuals to exercise more initiative, autonomy and accountability by providing tools and techniques that improve their effectiveness and by enabling the acquisition of critical competencies through continuous learning opportunities (Schoonover, 2010).
Summary
- HRM is managing people in the pursuit of the employer–employee relationship.
- In last 25–30 years, the HRM as discipline has transformed, first from personnel management to HRM and then from HRM to SHRM.
- The paradigm shift from the administrative aspects of HRM led to the emergence of SHRM as a new generation of value-added core responsibility or function of HRM. The emphasis of SHRM is that of a strategic business partner.
- Excellence theory focuses on creation of consistency of purpose toward the product of service management, validation of quality statistically; adoption of arbitrary numerical goals; and removal of barriers.
- SHRM can be perceived as a “macro” perspective (e.g., strategies and policies), whereas HRM represents more of micro approach.
- The SHRM owes its birth to a sustained economic boom, the growth of service industries, and the liberating power of IT, the idea that people, not financial capital was the scarce resource began to take hold.
- Ulrich defined the role for HR strategist as an agent of continuous transformation and the manager of intellectual capital and knowledge.
- Four roles of HR based on long- versus short-term orientation and process versus people are strategic partner, change agent, administrative expert, and employee relations expert.
- If a firm’s competitiveness depends on its employees, then the business function responsible for acquiring, training, appraising, and compensating those employees has to play a bigger role in the firm’s success.
- SHRM is the creation of linkage or integration between the overall strategic aims of business and the HR strategy and implementation.
- Resource based view of strategy is that the strategic capability of a firm depends on its resource capability, especially its distinctive resources.
- Best practice approach is a set of best HRM practices that is universal and hence is best in any situation, and that adopting them will lead to superior organisational performance.
- The best fit approach emphasizes that HR strategies should becongruent with the context and circumstances of the organisation. “Best fit” can be perceived interms of vertical integration or alignment between the organisation’s business and HR strategies.
- Schuler’s strategy is a framework that was developed from the Porter’s three generic strategies for achieving competitive advantages that included cost leadership, differentiation, and focus.
- Essential elements of SHRM are impact of external environment, response to change, organisational response, and organisational change.
- As administrative experts, HR staff members must take an active role in reengineering administrative and other processes within the firm and find ways to share services more effectively throughout the organisation.
- HR’s impact on bottom line: stakeholder approach, HR impact, monetary value of HR programs, Benchmarking
- The HR professional operating under the SHRM system must chart roles that include early and active involvement in key strategic business choices. One must become the partner of decision makers in the organisation, and sharing accountability for organizing and performing work.
- As the business partner, HR is expected to understand the business thoroughly and should understand finance and accounting also. They should take responsibility for cost reductions and evaluation of the HR programs and processes.
- Strategy execution usually involves identifying and reducing costs, and therefore value chain analysis. A company’s value chain identifies the primary activities that create value for customers and the related support activities. Every business consists of a chain of activities, each of which contributes to designing, producing, marketing, and delivering a product or service.
- Consciously helping to create the right organisation culture, monitoring employee satisfaction, and measuring the results of organisation initiatives fall here as well as in the role of employee advocacy.
- The HR professional contributes to the organisation by constantly assessing the effectiveness of the HR function.
- The rightful place of HR strategy is thus at center of the organisation, defining its future direction and shaping the means of obtaining its goals.
References
Annual Conference on Innovations in Business & Management London, UK, 2011.The Center for Innovations in Business and Management Practice
Becker, B. E., & Huselid, M. A. (1998). High performance work systems and firm performance: A synthesis of research and managerial implications. Research In Personnel and Human Resources Management, 16, 53–101.
Brockbank, W. (1999). If HR were really strategically proactive: Present and future directions in HR’s contribution to competitive advantage. Human Resource Management, 38, 337–352.
Cascio, W.F. 1989. “Using Utility Analysis To Assess Training Outcomes.” In I. Goldstein (Ed.), Training and Development in Organisations. San Francisco: Jossey-Bass.
Jackson, S., Hitt, M., &DeNisi, A. (Eds.). (2003). Managing knowledge for sustained competitive advantage: Designing strategies for effective human resource management. San Francisco: Jossey-Bass.
Lawler, E. E. (1995). Strategic human resources management: An idea whose time has come. In B. Downie & M. L. Coates (Eds.), Managing human resources in the 1990s and beyond: Is the workplace being transformed? (pp. 46–70). Kingston, Canada: IRC Press.
Lawler, E. E., & Mohrman, S. A. (2000a). Beyond the visions: What makes HR effective?Human Resource Planning, 23(4), 10–20.
Lawler, E. E., & Mohrman, S. A. (2003). Creating a strategic human resources organisation: An assessment of trends and new directions. Stanford: Stanford University Press.
Mohrman, A. M., Galbraith, J. R., Lawler, E. E. and Associates. (1998). Tomorrow’s organisation: Crafting winning capabilities in a dynamic world. San Francisco: Jossey-Bass.
Mohrman, S. A., Lawler, E. E., III, & McMahan, G.C.(1996). New directionsforthe human resources organisation: An organisation design approach. Los Angeles: Center for Effective Organisations.
Personnel Today. Charting the evolution of strategic HR Monday 28 October 2002.
Pfeffer, J. (1994) Competitive Advantage through People. Boston, MA: Harvard Business School Press.
Pfeffer, J. (1998) The Human Equation. Boston, MA: Harvard Business School Press.
Schuler, R.S. and Jackson, S.E. (1987) Organisational Strategy and Organisational Level as Determinants of Human Resource Management Practices.Human Resource Planning, 10(3): 125–141.
Tenkasi, R. V., Mohrman, S. A., & Mohrman, A. M., Jr. (1998). Accelerated Learning During Organisational Transition. In S. A. Mohrman, J. R. Galbraith, E. E. Lawler, III, & Associates (Eds.), Tomorrow’s Organisation: Creating Winning Competencies. San Francisco: Jossey-Bass.
Tichy, N; Fombrun, M; Charles D; Mary A (1982) Strategic Human Resource
Management.Sloan Management Review Winter82 Issue 2 p47.
Ulrich, D. (1997). Human Resources Champions. Boston: Harvard Business School Press.
Wright, P., Dyer, L., &Takla, M. (1999). State-of-the-Art & Practice Council Report. New York: The Human Resource Planning Society
Ulrich (1997).The Human Resource Champions.
Charting the evolution of strategic HR Monday 28 October 2002, Personnel Today.
Business Today, Dec 2009 written by N. Madhvan).
Review Questions
- Explain the meaning and importance of strategic role of HR.
- Discuss the evolution of HRM to human capital management.
- Apply Ulrich’s model to the specific HR functions.
- Compare the case studies of DFID, Nestle, and Standard Chartered (Industrial Insight 2).
Time to Apply Theory to Practice: Assignment
Prepare a competency mapping report for the HR Professionals with the following steps:
- Interview the HR professionals.
- Discuss about the changing role of HR.
- Identify the competencies and the level of competencies required.
Critical and Analytical Thinking: Experience vs. Exuberance
By the turn of the century, it became apparent to the top management of Ashok Leyland Ltd (ALL)– India’s second-largest manufacturer of commercial vehicles that the company needed to undergo a complete transformation if it had to remain a significant player in the rapidly evolving market place.
From just two players then the industry was all set to get crowded with the proposed entry of foreign truck majors such as Volvo and MAN AG. Most importantly, the mindset of customers had begun to change. They were no longer willing to wait for the delivery of vehicles and customer loyalty could not be taken for granted anymore. In short, the commercial vehicle industry was moving from being a sellers’ market to a buyers’ market.
It did not take the ALL brass too long to figure out what the company needed to do. It had to become aggressive and more agile with a strong focus on innovation instead of remaining content with the number two position in the industry and a reasonable profit year after year. They also understood that in order to bring about this change ALL needed to turn younger.
This transformation, the top managers rightly surmised, would not be possible with an executive team whose average age was around 50. By combining the exuberance of youth who are typically experimental, tech-savvy, vibrant, and energetic with the experience of seniors who have depth, maturity, and validated knowledge, ALL wanted to turn itself into a modern outfit and offer a serious challenge not only to Tata Motors, the market leader, but also to the other global majors who were planning an entry into the Indian commercial vehicle market.
The Hinduja Group’s flagship company soon began to bet on youth like never before and by 2003–2004,, young executives (< 35 years of age) accounted for 37 percent of the management rising up to 40 percent by 2005–2006.
But the story did not run according to the script.
The HR department began to notice an increase in attrition levels among the newly recruited young executives. What was initially a trickle (4.8 percent in 2003–2004) soon became a torrent (13 percent in 2005–2006 and 21.3 percent in 2006–2007).
The various employee feedback measures in place, apart from climate and perception studies commissioned by HR, revealed the reason-culture shock! The youngsters, to their rude surprise, found ALL to be a very different creature–a compliant organisation where juniors (often seen as inexperienced) seldom questioned the seniors who, for their part, demanded a culture of reverence from their subordinates.
It was a company where freedom was not a given thing, transparency in decision making not often practised and knowledge sharing, if at all it happened, was within departmental silos. But fresh from college and belonging to what is often referred to as the “restless generation”, the youngsters had no qualms in questioning what they thought was incorrect.
They gave more importance to knowledge than hierarchy and sought immediate results. They also wanted clear (key result areas (KRAs) and goals and were unwilling to leave their career in the hands of their bosses. On the other hand, the seniors, who were used to a different environment, resented and resisted the approach of the youngsters and this, in effect, led to a generation gap. The young executives felt left out and unwanted.
Though R. Seshasayee, MD, ALL, had anticipated higher attrition levels among the young executives, the reasons that caused them to leave deeply worried him after all the company’s transformation hinged on the youngsters and he firmly believed in their role as a catalyst for change.
“We realised that it was important for us to challenge the young executives at work and through that reinforce the reasons for them to stay on,’’ he says. It was then he decided “if the organisation had to change to suit the youth, so be it” and launched “Mission YEs” (acronym for young executives) in 2006.
Mission YEs, says ShekharArora, Executive Director, Human Resources, was conceived to engage, enable and empower youngsters who were feeling isolated and ignored. Under Mission YEs, banner projects, which were important to the company, were given to crossfunctional teams of young executives.
“The teams work on these projects, over and above their routine responsibilities, and come up with recommendations that are then presented to the management committee,’’ explains Arora. For instance, a team draws up the annual management plan and budget (MPB) while another, called Mission Summit, works on frontier technologies. eMitr (mutual improvement through relationship) looks at enhancing customer-relationship management and another cross-functional team works on 21st-century factory credo.
“Through these projects we engaged the youngsters. By offering them management time and lots of data (even confidential information) we enabled them to come up with a solution. Finally, when their recommendations were considered seriously and accepted, they felt empowered,’’ says Arora.
The youngsters grabbed the opportunity and, in their typical style, began to engage the top management. The MPB team, consisting of 23 young executives, while drawing up the annual plan for the year 2007–2008 questioned the production capacity of 1 lakh units drawn up by the managing committee.
They claimed that the capacity could be stretched by 10 percent to 1.10 lakh units. The team explained to the senior management how capacity could be raised through de-bottlenecking production at various units. The management committee accepted the recommendation (which came at a time when demand was booming and capacity was the constraint), and implemented it.
Similarly, another team designed a modern bus (they called it i-Bus) for city transportation in 9 months flat-from concept to prototype. The implementation of eMitr proposals for incentivising channel partners online saw spare parts sales rise by about 20 percent in the Chennai and Vellore regions. It is now being rolled out nationally. ALL also formed “Mission YEs Organisation”, which is run entirely by YEs with an allocated budget. It conducts events, knowledge-sharing sessions, comes up with innovative ideas which then become a banner project.
As these efforts began to capture the imagination of the young executives, ALL rolled out a development-linked career plan (DLCP). The plan sought out highperforming youngsters, identified their aspirations and committed to help them get there in the organisation. For that, the employee commits five years of his career at ALL, and the company, in turn, promises a growth of at least two roles above the current position in that period. Over 150 executives have signed up so far.
But the importance given to the young executives (Seshasayee admits that he spent a disproportionate amount of time on the agenda of making ALL youthfriendly) triggered another round of culture shock within the company–this time, among the seniors, who felt left out. It was then the company decided to rope them in as mentors. Having learnt things the hard way when they joined the company, seniors took to mentoring passionately. Today, many of them have come to be rated as ace mentors (an honour given based on the feedback by young executives).
These measures have broken the ice between the youngsters and the seniors and both have come to respect each other. The results are beginning to show.
“Attrition rate which was 21 percent when Mission YEs was launched has since declined to 11.2 per cent (in 2008–2009). Young executives have begun to take up leadership positions in the company. Not only that, the employees on the shop floor are now seeking a similar process for themselves, and most interestingly, many senior executives want the age criteria of 35 years removed so that they too could participate in Mission YEs,’’ says Arora.
But the challenge for ALL is far from over. “Some parts of the organisation still need loosening up,” admits Seshasayee, adding that “it is a continuous process.”
The immediate challenge for the company, though, is to ensure that youngsters grow as promised. Arora is confident that this will happen as the senior management team, with an average age of 54 (retirement age is 58), will vacate lots of positions in 5 years’ time and the DLCP is dovetailed into succession planning.
But the company has also hedged its bet on growth to move up the young executives. With the market environment turning adverse, the company has been forced to scale back or delay its expansion and diversification plans. A quick market revival, it appears, is a necessity if ALL has to walk the talk.
Questions
If you were the HR manager of Ashok Leyland, how would you formulate the HR strategy aligned with the organisational strategy? Also mention the HR policies and practices that you would have followed.
Internet Sources For Reference
Suggested readings
- The changing role of HR | The Economist
- Human resources transformation | The Economist
- The Changing Role of the Human Resource Profession in the Asia
- The Evolution of HRM- SHRM
Case studies
- Human resource management-Business case studies
- The obstacles of HR changing roles: A Case study of an automotive Company in Eastern Seaboard Industrial Estate, Thailand.
Videos and movies
- History and evolution of Human Resources (HR) - YouTube
- Evolution of HR - YouTube
- The Evolution of HR - Transforming Business
Tools
- A New Mandate for HR
- Development of an instrument to assess HRD