“Effects of changing Business Environment on Business Strategies and Challenges of H.R. as O.D. Practitioner.pptx

7/28/2019 Effects of changing Business Environment on Business Strategies and Challenges of H.R. as O.D. Practitioner.pptx

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Presented By: Prof. Mangeshika Tiwary

PICT STM


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Business Environment in INDIA The New Economic Policy(NEP),1991.

Open up the Economy

Removed Licenses and Permit SystemHelped in expanding manufacturing and services

industry.

Allowed easy foreign investment


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Earlier Scenario Industrial Enterprise till 80s

Has been operating within a protected environment

Got accustomed to a protected market application ofR & D, rather than primary R & D

Customer had to wait longer for a product, like in AutoIndustry.


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With New Economic Policy

(NEP),1991. LPG came in India,

L- liberalization

P- privatizationG-globalization, with LPG changes in Indian BusinessEnvironment happened and continued. Lot of MNCScame to India.


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MNCS came in India with,Good quality of product

Fastest delivery

Cheaper goodsGood after sale service

This increase the number of market players/companiesin a particular sector. E.g. Airtel; Vodafone; Reliance

Replaced monopoly or dominant market share with

larger C i.e.Competition.


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Continues.

In Monopoly customer was at the mercy of seller.

In todays Competitive environmentsellers run behind thecustomers, making customer an integral part "of the business.

With changes in Indian Business Environment, there arechanges in : Standard of living Product Quality Technology

Consumer Culture Quality of services Infrastructure Education


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Today the whole market is based on cut-

throat competition. Companies are trying to reduce their overheads so that they can,

i ) sell better;ii) increase their marginal profits

iii) maintain minimum surplus to run the business.

The only area where they can cut cost or reduce overheads isLabor /Employees,because if there is any imbalance in production;

marketing;quality ;technology, then market is gone for that company or marketplayer.As a result today we have leaner/flatter organization.


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Flatter Organization Flatter Organization

Runs on the principles of 1:2:3 now become 1:2:5, where oneemployee works at place of two and desired to give outputof five.

Why we have flatter organization?


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LPG

Boom to Business inINDIA

Reduce Overheads IncreaseProfit

Marginal profitAssured minimum surplus

Surviving theCompetition

1).Labour (Only Area to cutthe cost2.)Limited reduction in,1. Production2. Marketing3. Quality4. Technology

3.)Operationally its easier todeploy,control,get output

from smaller and flexibleworkforce.

Leads toincreasecustomers

Customers, getsdiscounted price,

quality products at

cheaper rates.


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Appropriateness of Organization Structure in context of

change demands.

Outer Context

Outer context is the pressure and demands that externalenvironment put on a company.

Inner context is the state of readiness and the ability of anorganization to cope with the pressures and demands thatexternal environment would make on it.

Inner Context


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Levels of H.R. roles. Today H.R. is playing both administrative role which includes

Level 1 to Level 3 activities as well as role of a businesspartner(strategic role) includes Level 4 & Level 5 activities .

Level 1-Thebottom most level activity. Includes documentation,data gathering, record keeping and MIS.

Level 2-revolves around monitoring and execution in which thefocus is on collecting information, reminding people ,gettingforms filled and statutory obligations fulfilled.E.g. monitoring appraisal forms filled up in time.


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Levels of H.R. roles

Level 3-Here designing and implementing are vital

activities wherein the focus is on reviewing theexisting systems,redesigninng and starting newpractices in performance appraisal, Learning andDevelopment etc.


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Level4-Here H.R. focuses on strategizing, innovating,and leading across the Organization. Here H.R.managers align H.R. functions with organizationalgoals, becomes talent focused and the concern is on

acquiring, retaining, nurturing and multiplying talent.


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Level5-This is the most progressive level focused on

making H.R. a business partner. Here ,managers realizethat there can be no business without talented peopleat all levels and particularly at the top. They believe inphilosophy that people make business and therefore

people-driven talent management "is essential.


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Todays H.R. managers shifted their focus from:

-tangibles to intangibles

-Shortterm goals to building long-term capabilities

-Quarterly results to intellectual capital-building and

shareholder value enhancement.


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Role of H.R. Today Today H.R. understands customers and other stakeholders and

direct the talent to be business focused.

H.R. Managers today aregrowing to be CEO of theOrganizations.

Today H.R. people or managers have business sense, theyinfluence Organizational Culture and make positive changes

within the Organization.


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Role of H.R. Today H.R. has become one of theprofit centers in any

business, by its contributions.

Retention of Key People

By managing change

Improving work culture

Handling surplus employees and making redundancycost-effective.

This is how O.D. comes in picture.


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O.D. is like R&D of H.R. Organization is made up of 3 essential components:

1. Technology

2. Structure &3. People

1.Technology

a) To compete with the competitors

b) To give quality products

c) To satisfy needs of the customers


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O.D. is like R&D of H.R.2.Structure

a)Division of work

b)Defines the levels

c)Authority positions

3.People

a)They control all other resources

b)Use their potential to complete the jobc)Ultimately determines the effectiveness of the strategy

development, its implementation and subsequentcompetitive success.


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O.D. is like R&D of H.R For the organization to achieve its competitive success

,it is H.R. who ensures that the human asset iseffectively aligned with strategy that is chosen by theorganisation.

With this H.R. plays a role of O.D. practitioner in an

organization.


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H.R. plays a role of O.D. practitioner in

an organization.By giving O.D. perspective to H.R. ,H.R. professionals :

1. create and support strategies for organizationaltransformation, including the design and delivery ofH.R. intervention in support of these.

2. Take a lead role in shaping organization design.

1. Support organization in major change andorganization design.


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O.D. is an Organizational

Improvement Strategy

Strategy:

A Strategy is the pattern or plan that integrates anorganizations major goals, policies and action

sequences into a cohesive whole.by-James Brian Quinns


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O.D. is an Organizational

Improvement Strategy If the organization has a mission to accomplish, then

it plans a strategy to attain it.

One of the basic objectives of any organization isgrowth.

Growth and prosperity are closely associated with theStrategic planning of the organization. Thereforecompanies select growth strategies as per their need,are classified into Organic & Inorganic growthstrategies.


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Strategic H.R. Environmental changes and increasing competition among

organizations contribute to fostering an integratedapproach towards the human resource management

strategy and corporate strategy.

This approach links H.R. Function with the long termcorporate strategy.

An organizations choice of strategy determines itsapproach to competitive advantage and provides the basisfor action in the various functional areas, including H.R.


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Strategic H.R. The achievement of the goals and objectives of the

organization depends on the people "in theorganization, how they are made available, developed,

motivated and retained in the organization, all is doneby H.R.

H.R. performs two distinct functions: administrative &Strategic functions.


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Strategic H.R The essence of H.R. is strategic.

Strategic function of H.R. demands right people inplace to carry out strategic initiative. Like senior H.R.personnel's. E.g.- V.P. H.R. or Sr. V.P. H.R.

Requires business knowledge, financial skills as well asconsulting skills.

H.R. Strategy is the way organization plans to utilizeits human resources.


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Any Business Strategy has effect on

H.R.

This makes H.R. acts as a catalyst or change agent,leads to Organization Development.


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Developing Organization's

Competitive Advantage H.R. plays potential role in implementing strategy and

developing an organization competitive advantage.

In essence ,an organizations competitive advantage ismore likely obtained when its H.R. is effectively linkedwith its strategy.

The benefit of H.R. being a part of the strategicprocess can be measured.


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H.R. objective measure of Strategic

Readiness H.R. measure this by measuring organizations

competencies, leadership , Culture, alignment, andlearning.

1. Strategic Competence: understand what competenciesneeded, available and plan to close the gap.

1. Leadership: build leadership pipeline.

1. Culture: internalize a shared vision aligned with strategy. Culture Alignment Survey % of personal understand strategy.


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H.R. objective measure of Strategic

Readiness4.Alignment: personal goals linked to organizational

goals.

% of goal alignment

% of incentive alignment

5.Learning & Knowledge: sharing of knowledge &

experience needed by the strategy. Sharing across departments : best practices, key

people,teams,rewards.


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Business Strategies & Challenges ofH.R. as O.D. Practitioner

With the changing business strategies,H.R. has to

respond with new H.R. strategies which leads tooverall Organizational D


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Business Strategy or Growth

StrategyGrowth Strategies

OrganicGrowth

Strategies

In-OrganicGrowth

Strategies

ExpansionDiversificationInnovation etc

Merger&Acquisition

JointVentures

StrategicAlliances


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Merger & Acquisition as Growth

StrategyAmerger is a combination of two companies to form a

new company,

while

an acquisition is the purchase of one company by

another with no new company being formed.


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Reasons for merger &

acquisition(M&A) To realize economies of scale

Increase revenue

Synergy Geographical or other diversification & recourse

transfer.

Change of management

To create anti-competitive effect To improve operative performance

Expansion


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Human side of merger &

acquisition activity It has been estimated that anywhere from 50% to 75% of all

M&A fail to achieve their financial or strategic objectives.

Organizations tend to invest time ,money and energy ininitial due diligence activities, such as assessing strategicfit, evaluating financial models, considering possiblemarket And customer reactions, and contemplating

productroadmaps,but tend to invest relatively little inunderstanding the mergers possible impact on people.

(Tetenbaum,1999)


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Changing focus or focusing on

Human Side of M&A In todays economy ,the management of human side of

change is the real key to maximizing the value of adeal. i.e. (M&A).

This is where H.R. comes in picture. As H.R. needs tobe engaged in any big organizational change and acts

as a change agent, because people issues occurs atseveral phases or stages of M&A activity.


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Three stages of M&A1. Pre-combination

Identifying reasons for the M&A

Forming M&A team leader

Searching for potential partners

Planning for managing the process of M&A

Planning to learn from processes.


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Three stages of M&A2. Combination & Integration Selecting the integration manager

Designing /implementing teams

Creating the new structure,strategies,leadership

Retaining key employees

Motivating the employees

Managing the change process

Communicating to involving stakeholders

Deciding on H.R. policies and practices


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Three stages of M&A3. Solidification & Assessment Solidifying leadership & staffing

Assessing the new strategies & structure

Assessing the new culture

Assessing the new HRM policies & practices

Assessing the concerns of the stakeholders

Revising as needed

Learning from the process


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Role of H.R. Department in M&A

activity1. Developing key H.R. Strategies for a companys M&A activities.2 Managing the administrative role.

3 Providing input into managing the process of change.

4 Advising top management on the merged companys neworganization structure.

5 Overseeing the communications.

6 Managing the learning process.

7 Re-casting the H.R. Department itself.


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Role of H.R. Department in M&A

activity8. Identifying and embracing new roles for the H.R. Leader.

9. Identifying and developing new competencies

10 .Relocation of individuals

11. Harmonisation of compensation & benefits.

12. Training

13. Retention of key people

14. Managing employee insecurities


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conclusion The key H.R. role is not only in M&A.

The application of H.R. strategies itself is an O.D.intervention.

Change has to be made at all levels in the organization.


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Thank You

Documents

“Effects of changing Business Environment on Business Strategies and Challenges of H.R. as O.D. Practitioner.pptx