Thursday, 12 December 2013

Title: Integrating HR Strategy with the Business strategy

Author: Nitu Ghosh

AffiliationBrindavan College, Bangalore.

Address: Dwarkanagar, Bagalur Main Road,
Yelahanka, Bangalore- 560063.

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“Expecting the unexpected” is the main mantra of doing business in the present millennium. The consequences of the 2009 Global economic recession are witnessed even today. The world economy is in doldrums and every nation is now facing the problem of low GDP, unemployment, volatile stock market, falling businesses, increasing debts and credit crisis. In such an uncertain environment, mere survival is becoming an issue for businesses.
In this global economy, business organizations are driven by market pressures and they need to include in their goals, improved quality and productivity, greater flexibility, continuous innovation and the ability to change to respond rapidly to market needs and demands. Pro-activeness and change is the secret of sustaining business houses. Thus, in this intensely competitive and global marketplace, maintaining a competitive advantage by becoming a low-cost leader or a differentiator entails having a highly committed and competent workforce. Competitive advantage lies not just in differentiating a product or service or in becoming the low-cost leader but in also being able to tap the organization’s special skills or core competencies and rapidly respond to customer’s needs and competitor’s moves. In other words, competitive advantage lies in management ability to consolidate corporate wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities and hence innovate. This has been the driving mantra for most organizations in this millennium that have consistently maintained the leadership positions in their own sectors. Be it Apple Computers, Google, Cognizant, TCS, Tata Motors, Tata Steel, Nucor etc., these are the names that have made big through their Human capital. Its their human resources and the strategic way they procure, utilize and develop their human resources that has enabled them to have a competitive edge over their competitors and sail through the stormy business environment. Companies that have not been able to tap their human capital in a strategic manner have ceased to remain as an innovator and hence have failed to sustain their leadership positions. Infosys, HP and Motorola are best examples that have made way for their rivals to replace them as the leaders. Motorola’s decline has resulted from its delay in innovating and as a result a company that had pioneered the concept of learning organization and six-sigma is now no more. Better are the fates of Hewlett Packard and Infosys. Poor leadership and utilization of human resources are the causes of the giant’s infamous decline and for Infosys, failure to tap the future markets as has been smartly done by its near rivals TCS and Cognizant. The consequences of these minor delays and fallacies are catastrophic. Infosys that has consistently been the leader in Indian IT industry for nearly a decade has been replaced by TCS according to the latest performance records.
These are some recent examples of the significance of human capital in today’s organizations and how the strategic integration of human resource practices with the corporate goals can make a difference. The changing competitive business environment has made the human capital an organization’s key asset, with HR largely responsible for cultivating it. Recognizing the importance of human capital, in turn, makes the HR function more strategic and fundamental to an organization’s success. Human competency in an organization helps in coordinating its resources and using them productively. These competencies get embedded in an organization’s routines and processes. By nature, competencies are more difficult to copy or imitate as they are often the result of a complex interaction between the structure, systems and values of an organization. Though it is sometimes difficult to explain post facto how exactly a capability was created, or for an organization to re-trace the path traversed by another organization that enabled the latter to create certain capabilities, it is possible for an organization to take deliberate actions to create capabilities[1]. The deliberate actions taken to create resources and capabilities, spring from the functional strategies adopted by an 

[1] Dorothy Leonard Wellsprings of Knowledge Harvard Business School Press, 1995

organization[2]. Thus Leaders today must juggle the tasks of monitoring current performance, managing incremental innovation, and leading revolutionary or discontinuous change efforts. A clear understanding of the drivers of performance, innovation and change is required to manage human capital in today's competitive environment.
Organisations are increasingly looking at human resources as a unique asset that can provide sustained competitive advantage. The changes in the business environment with increasing globalisation, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never-ending changes that organisations are undergoing have led to increased importance of managing human resources (Devanna, Fombrum, & Tichy, 1981; Wright, 1998). In this scenario, a human resource (HR) department that used to be highly administrative in function has to operate more strategically so as to add a competitive edge to the organization through its competent human resources or rather human capital. The three-step process of SHRM involving strategy formulation, implementation and evaluation is recommended in the light of external and internal environmental variables. The Integrated Approach of SHRM is best suited for modern organizations enabling them to sustain as learning organizations.
HR professionals are expected to be proactive as their actions and ideas influence organisational objectives, policies and procedures. Therefore, HR professionals need to demonstrate consistent and high level of integrity in the form of reliability, honesty, equality, transparency and fairness that help motivate staff and further engagement. HR professionals must spend more time and effort understanding the business environment and the key strategic issues faced by the company. They must see themselves as knowledge workers and facilitators of knowledge flows within the organization. They must be involved in the main decision and strategy making process as a line manager

[2] Krishnan, Rishikesha T. “Linking Corporate Strategy and HR Strategy: Implications for HR Professionals,” In R. Padaki, N.M. Agrawal, C. Balaji and G. Mahapatra (eds.) Emerging Asia: An HR Agenda, New Delhi: Tata McGraw-Hill, 2005, pp. 215-223.

 rather than as a staff. They must act as transformers and change agents. For this it is inevitable that HR professionals  make a transit from the support paradigm to a value-creation paradigm.
If a global company is to function successfully, strategies at different levels need to inter-relate. An organization’s human resource management policies and practices must fit with its strategy in its competitive environment and with the immediate business conditions that it faces. The human resources–business strategy alignment cannot necessarily be characterized in the logical and sequential way suggested by some writers. A HR system has to be designed which is a complex and iterative process. The integration between business goals and HR strategies is inevitable to sustain in today’s uncertain ever-changing environment. Hence HR professionals have to act as the strategic business partners and change agents to lead their organizations towards sustainable growth.

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