In The Subject Of Pharmaceutical Advanced Human Resource Management
READING 5.3
If HR Were Really strategically Proactive: Present And Future Directions In HR’s Contribution To Competitive Advantage
1. Introduction:-
This is article who tells about how HR is important for any organization to achieve their goal or objectives. It also talks about the role of human resource in firms to take an advantage. What is the role HR management in future and past periods. How it is affect to the organization and importance of HR in many aspect. There are different studies also have been conducted to know about HR growing importance at university of Michigan.
In early periods, higher performing firms focus on both strategic & operational aspect of HR. while some are more focus on strategic rather than operational aspect and some of the firms could focus on higher valued HR agendas. The seminal and ongoing work to date on the relationship between financial performance and HR practices has been conducted by Brian Becker and Mark Huselid.
In addition to this there are following other evidences:
- The number of companies in which senior HR executives report to the CEO appears to be increasing
- CEOs in high performing firms are giving greater focus to HR issues
- Improvement in firm performance
The increase in the importance of HR are a function of specific changes in the environment with the increased rate of transnational wealth, a firm’s ability to compete in global environment.
2. Competitive Advantage:-
The distinction between the operational and strategic levels of HR has received considerable attention in the literature. Operational HR activities generally refer to the routine, day-to-day delivery of HR basics. The strategic level of HR activity is more complex and involves five criteria:
· Long term
· Comprehensive
· Planned
· Integrated
Combining of two term “Proactive” and “Reactive” yield a framework around which the HR field may organize its thinking about the past, present, and future of HR. Among this two term proactive is one of the words that often “feel good” and it is more popular while reactive is less popular.
Ø Operationally reactive HR focuses on implementing the basics; it addresses activities like administering benefits, maintain market based salary grid etc.
Ø Operationally proactive HR improves on the design and delivery of the HR basics; it address activities like reengineering HR processes, applying TQM principles to HR activities, and ensuring positive morale in the workforce.
Ø Strategically reactive HR focuses on implementing the business strategy; it include activities like identifying and developing the technical knowledge, tactical skills, and business culture etc.
Ø Strategically proactive HR focuses on creating future strategic alternatives. Such activities include creating a culture of innovation and creativity; identifying merger and acquisition possibilities etc.
Competitive advantage entails having the capability to provide better products, services, or financial returns than the competition does. But proactive versus reactive dimension suggests that value creating HR activities be done before they are done by the competition. Combination of these into the HR Competitive Advantage Index enables HR to calibrate the extent to which an HR practices creates strategic value before the competition.
The competitive advantage of HR activities is better understood by following framework.
Reactive
|
Proactive
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Strategic
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Make strategy happen
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Creates strategic alternative
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Operational
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Implement the basics
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Improves the basic
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2.1. HR competitive advantage:
Adopting HR competitive advantage creates true competitive advantage. The most business requires that people are paid, benefits are administered, people are hired, and basic skills are ensured. In early era most of the agendas was focus on reengineering, TQM. In late ninties most agendas was linking HR to business strategy. Strategically proactive HR agendas include identifying portfolio requirements, selecting mergers and acquisitions, creating institutional change capacity, building organizational cultures of radical innovations and identifying social trends that can be parlayed into products and services.
3. Application Of The HR Competitive Advantage Index:-
3.1. Operationally reactive HR:
The main reason to adopt this strategy is that virtually all firms already do the HR basics; like hire entry level employee, have benefit of some kind. Without these activities a firm will fail, but with them, little competitive advantage is gained.
3.2. Operationally proactive HR:
Firms in the operationally reactive mode focus on improving the productivity of their HR department and firms have to improve efficiency because of the increased global competition. Emergence of technology and reengineering In firms enable to making some transactional HR work automated. In addition, firms also become productive and efficient which include such practice like outsourcing, work elimination, reallocation of activities.
By applying the principles of TQM, the HR field sought to improve the accuracy of its HR works. Alcoa and Motorola developed robust lists of measure- ments for productivity in HR functional areas. HR mission statements abounded, which promised to Òsurprise and delightÓ internal customers and to provide ‘error-free HR work’.
3.3. Strategically Reactive HR:
HR may be strategically reactive in business strategy implementation through
1. supporting the execution of tactics
2. developing the cultural and technical capabilities
HR may also assist in the process of strategy implementation by following ways
ü Tactical Support. The capacity of HR to be strategically reactive assumes the presence of a business strategy with its accompanying operational tactics.
ü Creating the Strategy-Focused Culture. The second channel through which HR practices may be linked to business strategy is through the establishment of a powerful and strategically focused culture and in the continual availability of state-of-the-art technical knowledge and skills. . The process by which this linkage may be established can be divided into eight steps.
o Step 1: Define the business unit for which the HR practices are being designed.
o Step 2: Specify the key trends in the external business environment.
o Step 3: Identify and prioritize the firm’s sources of competitive advantage.
o Step 4: Define the required culture (including specific behaviors) and technical knowledge and skill areas that the firm requires to create and support the sources of competitive advantage.
o Step 5: Identify the cultural characteristics that the firm should reduce or eliminate if it is to optimize competitive advantage.
o Step 6: Design the HR practices that will have greatest impact on creating the desired culture.
o Step 7: With these decisions made, the firm should establish action plans for detailed design of the HR processes.
o Step 8: The final step specifies the means by which effectiveness of the entire process is measured.
ü Management of Change:- The third set of activities by which HR is strategically reactive is found in change management programs. There are seven critical success factors for change:
o Ensuring support from key executives.
o Creating a shared need for change among those who live with the change, including both employees and management.
o Ensuring a clearly articulated vision of the end-state of change.
o Eliciting the commitment of key stakeholders to the change vision and to the steps necessary to achieve desired outcomes.
o Leveraging the management and HR systems that support and drive the change.
o Defining insightful measurement by which the progress of change can be monitored.
o Establishing learning loops through which change efforts may ensure ongoing improvement and progress.
3.4 Strategically Proactive HR:
HRs position at the proactive strategy table can be earned in two ways: (1) by learning enough about the other functional areas, to be able to contribute to business discussions in the terms and concepts of the other functional areas, and (2) by expanding and enriching the parameters of HR agendas through which strategic alternatives may be defined and created.
The following three conditions are necessary for strategically proactive HR:
ü Creating the culture of creativity and innovation
ü Being involved in the full breadth of mergers and acquisition activities.
ü Creating internal capabilities based on future external environment requirements.
Innovativeness can enhance the strategic value of the firm through providing new & improved product and service, reducing cost, improving quality, discovering new application for existing product. To enhance the probability of innovation, two prediction generally must exist.
First, There must be a conscious decision by key decision maker that innovation is desirable corporate focus of agenda.
Second, obstacle to creativity must be removed. This infrastructure includes Communication in the firms; Staffing; Training and development programs for the employees to enhance creativity and Measurement and rewards to the employees to motivate them for creative thinking.
HR again bring important values to the process by negotiation phase which has both content role and process role. Second condition is being involved in mergers and acquisition activities. Strategically proactive HR helps in this by understanding the firms’ core competencies i.e. knowledge, skills and culture. HR can help in analyzing these by HR audit function. And helps in better mergers and acquisition. Even in the negotiation phase HR plays an important role in mergers and acquisition. In the integration phase of mergers and acquisitions there are major chances of breaking of the deals due to some political considerations. HR helps in solving this problem through fair recruitment and reengineering.
Third condition is creating capabilities based on future external environment requirement. HR should not only consider the internal customers; it should also consider the external customers. HR goal should be to make those employees happy who are happy making the marketplace happy. HR practices helps in making the firm to be customer focused. This is by creating customer focused culture and by providing training to the employees to be customer centric.
Hence, innovativeness, creativity, productivity, effectiveness, efficiency, customer satisfaction, organization culture, compete in external environment, improving quality and many more factors are affected by strategic reactive. But majorly it affected by the strategically proactive human resource management.
Reading 9.2
Designing Management Training And Development For Competitive Advantage: Lessons From The Best
Introduction:-
Training and development are very essential for the organization to take competitive advantage. Organization can buy SKA from through the hiring or through T&D. Traditionally, organization are use to provide a training in their existing employees as per the requirement. T&D is use to motivation, flexibility, readiness and superior skill to get competitive advantage of the employees. This can possible through the supervisory, management, executive training and continuous improvement of existing organization practices.
Benchmark is used to identified the practice of organization recognized as leader and innovator in specific areas. It is also help as comparison point to assessing the organization progress. T&D in organization Is helpful to collect the information of employees for best in class practice for structuring the firm, implementation and conducting the program.
It can be done through five sources: Malcolm baldrige awards, Fortune magazine, American society for T&D, Readers survey awards. Hence it is a best practice model to achieve and sustain competitive advantage.
The T&D Framework:-
The major element of T&D framework adopt Plan, Do, Check and Act cycle. Other than these sometime shewhart or demings cycle which provide both conceptual and practical means to differentiate the component and stages of T&D. benchmark organization use this model to measuring many aspect of the organization which is related with T&D.
1. Phase 1- Plan:
The first step in T&D framework is planning which involves the creating of policies and values, assessment, development of plans and job performance.
1.1. How do exemplary companies tie T&D to their Strategic Business Plans?
In benchmark organization, T&D system advances the organization mission and is exploited as sources of strategic advantages. It is differentiate the organization mission and goal of program. T&D goals and processes are reviewed and updated annually and T&D executives are integrated into the strategic planning process to assure that strategic goals are formulated using accurate information.
Apple uses both human and information support systems to fold business executives into T&D mission and goal formulation process. P&G executives demonstrate these and conduct an interview to study. Motorola assures tight coupling between CEO’s agenda and its implementation through T&D.
1.2. What policies and values do exemplary companies used To Support T&D Systems?
Policies are formal means to communicate the expectations regarding T&D program and values statements are informal and decentralized means of pushing managers to develop attitudes toward T&D that are aligned with business strategy. Policy statements provide clear and consistent communication regarding expected attitudes and behaviors that support learning. Many organizations establish T&D policies as part of structured career paths, a prerequisite for consideration for promotion or a requirement once the promotion is obtained.
Organizations also strive to mold the attitudes and behaviors of their supervisors and managers through values oriented T&D statements.
1.3. How do exemplary companies link business strategy with T&D Need Assessment?
T&D need assessment is also account for effective system. Needs are influenced by factor both internal and external to the organization. So interview are designed to asees reliance on environment, organization, job and person information.
The need assessment is done on three levels: (1) Organizational level (2) Task level (3) Individual level. All of these include the organization mission statement, strategy and particular work is given to employees, how they use their KSA to complete it, performing their duties and responsibilities or not and at last personal information and their area of interest, existing level of performance and skill, knowledge respectively.
1.4. How do exemplary organization build transfer into T&D?
It refers to the degree of continuity between learning in the T&D context and behaviors and results in the job environment. There are three approaches to maximize transfer
· On the job training: this is the simplest form to do both the things simultaneously i.e. learning and transferring. It reduces downtime, eliminates travel costs, maximizes content relevance and increases the likelihood that the learning will become embedded into routine processes.
· Making T&D part of an overarching human resource framework that systematically hires, promotes, develops and rewards people using core set of competencies and behaviors. It helps translating T&D learning into behavior and results on the job.
· Third transfer approach recognizes that it is not enough that co-workers and supervisors are passive observers of the trainee’s improvement following T&D. To ensure transfer, they must be involved in proactively supporting knowledge based and behavioral improvements in T&D.
2. Phase 2- Do:
This phase involve selecting training program content and choosing how to deliver it.
2.1. Determining The Content Of T&D:
Content of the T&D are derive from their strategic objectives, culture, values and skill needs. The most common addressed T&D area is leadership training which is provide through the short courses. Organization have developed leadership program so that event become integrated capstone in career path.
For eg. In an attempt to boost the probability of success when employees receive promotions into management, federal express developed a series of critical hurdles for entry into its leadership institute.
2.2. Choosing The Best T&D Method:
T&D content areas are varied so its deliver methods also differ which is depends on culture, values, objective of T&D, profile of trainee & trainer, availability of fininace, technologies, time, location etc.
Many developments are occurring but most preferred is on-the-job training which increased efficiency, exploitation of technology to aid learning and focus on mentoring.
· A shift towards on the job training. It has a lot of advantages regarding time, and transferability but has a problem that it is unplanned and unsystematic. Systematically planned trainings are more efficient and cost effective.
· Second development method involves attempt to increase the efficiency and cost effectiveness of off the job training. For e.g. Motorola university’s goal has been to achieve 50% per year reduction In the cycle time for design, delivery and administration of new T&D products and services.
· Third development in T&D methods is the increased exploitation of the technology aided learning especially, information and telecommunications technologies. For eg. Apple’s electronic campus draws on the computer manufacturer’s globally networked information system to facilitate T&D information exchange. It is a team based learning through network.
· Fourth development is an increased emphasis on teams. This emphasis takes a variety of forms including training intact work terms to maximize relevance to job conditions, delegating decision making authority to the team to determine perception of its T&D requirements including the team in T&D design and most importantly using the team or selected team members of as deliverers of the T&D content. For eg. The Colgate Palmolive plant in Cambridge, OH allots 40 hours annually to interaction training for the entire team, most of it on the job.
· Finally mentoring is becoming in increasingly important vehicle for the development of management and executive succession capabilities, especially with regard to historically disadvantaged groups.
3. Phase 3- Check:
It includes the evaluation part of the training and development program. Many organizations lack in this part. This evaluation should be done to know whether the T&D programs are having the intended effects or not.
Evaluating Value Added By T&D:
Very few organizations evaluate their T&D expenditure against return on those investments. Organizations interviewed for this study focused on two activities for assessing T&D effectiveness- gauging on site participant reactions to T&D and measuring learning by means of behavioral exercises during T&D.
Xerox uses multiple methods, including observations of trainees once they return to their regular positions, interviews with trainees’ managers and examination of trainees’ post behavioral performance appraisals.
Some organizations do 360 degree appraisals. For example Johnson & Johnson uses a post-training self report form to evaluate participants’ on the job changes. Few organizations are moving towards a profit centered approach to the T&D function, where T&D services are sold to internal customers. This forces responsiveness to the needs of the internal customers and demonstration of value added if in house units will continue purchasing T&D services.
A systematic T&D evaluation provides insights into the relative returns on expenditure behind T&D.
4. Phase 4- Act:
This involves sustaining efforts on T&D activities. This means there should be continuous learning in the organizations. Lack of learning leads to failure of T&D. After planning, implementing and evaluating a program, the organizations should modify the programs and should start a cycle again.
Sustaining And Enhancing Role Of T&D:
The T&D should be in sustaining form as the organizations are spending lot of money behind it.
An effective T&D is not a onetime activity or program. It requires a sustained and deepening investment to the point that T&D is the cornerstone of the organization’s value system, part of the routine behaviors of all of its employees from the most senior on down, and preserved during financial downturns.
The only way to sustain the necessary commitment of time, passion, and resources to executive development is through believing that leadership is the critical source of competitive advantage and that leadership is developed through systematic attention to development.
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