Align strategic HR to Business plan

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I Siva KumarHR Advisor

By

TRAINING PROGRAM ON ALIGN

STRATEGIC HR TO BUSINESS PLANDATED 22/04/13 TO 24/04/13.FOR HR PERSONNEL OF SUGAR CORPORATION & FACTORIES

ORGANIZED BY

CORPORATE HR

CONDUCTED

BUSINESS PLAN & STRATEGY

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ALIGN STRATEGIC HR TO BUSINESS PLANS

In simpler terms business strategy is all about your Product, Customer, People and Processes.

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BUSINESS STRATEGY

MANAGEMENT INFROMATION SYSTEM IN HR• Produce 2.25 million tons of sugar and 181,604 meter cube ethanol;• Produce 101 mega watt electric power by the end of the GTP period;• Finalize expansion projects of the existing sugar factories as well as construction of the new one

at Tendaho;• Build additional ten new sugar factories with a capacity of 12,000 tcd; and cultivate 315,000

hectares of sugar cane plantation;• Export 623,000 tons of raw sugar and 623,000 tons of white sugar which in total makes the

amount 1,246,000 tones by the end of the GTP period;• Substitute up to 44,340 meter cube ethanol for blending purposes by the end of the GTP

period;• Spread six high yield cane verities developed through research;• Establish a well equipped breeding station;• Complete the construction of four tissue culture laboratories and green house;• Enhance the productivity of cane from 145 to 155 tons per hector;• Provide knowledge and skill upgrading training for 21,500 employees at different levels;• Create Job opportunities for more than 162,000 citizens through agriculture, factory, house and

irrigation projects;• Construct the corporation’s head quarters and research & training institutions;

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SUGAR CORPORATION BUSINESS PLANS & OBJECTIVES

Strategic Analysis

BUSINESS STRATEGY

Strategic Analysis• Most businesses will constantly evaluate their position

• Strategic analysis includes different methods of assessing the current position of the business in the market place

• Two basic methods:– Internal – External

BUSINESS STRATEGY

Where Is The Business Now?• Internal Audits – uses data and information generated

from within the businessInternal audits may be carried out through recruitment of an outside consultant to look at how the business works and offer an ‘independent’ viewpoint

• External Audits – uses information and data from outside the business – such information may be outside of the business’s control but has to be factored into decision making

BUSINESS STRATEGY

Internal Audits• Productivity – Human resources/capital• Efficiency – Using ratio analysis, investment data, etc.• Costs – Wastage? Unnecessary expense, cost cutting opportunities?• Internal Data

– Labour turnover, absenteeism– Customer satisfaction surveys– Quality procedures – defects, complaints, etc.– Cash flow statements – record what is actually happening– Sales trends – generate patterns– Skills audit – do the skills in existence match those required?

• SWOT analysis – Strengths and weaknesses can be viewed as internal aspects• Core competencies – What is the business good at and recognised for?

BUSINESS STRATEGY

External Audits• General business environment – Inflation, competitiveness,

unemployment/employment, growth, consumer spending• Competitors – What are they doing?

What threats do they provide?• PEST factors

– Political – e.g. change of government not only in domestic country but in overseas markets

– Economic – potential trends in economic growth, inflation, etc.

– Social – changing nature of social issues – environment, ethical expectations, changed outlook, age structure of population, etc.

– Technological – rapid changes – firm gets left behind?

BUSINESS STRATEGY

Strategic Planning

BUSINESS STRATEGY

Where Will The Business Go In The Next Ten Years?

• How far can the business plan ahead?

• How valuable are such plans?• Strategic intent – provides an outline framework of basic principles and targets to inform operational planning

BUSINESS STRATEGY

Strategic Planning• Competitive Advantage –seeking to identify sources of

competitive advantage• Adding Value – looking at ways to add value• Mass or niche markets? – which is the best route?• Cost based strategies – focus on reducing costs to

compete and grow• Market based strategies – focus on satisfying consumer

needs as the means to growth

BUSINESS STRATEGY

MANAGEMENT INFROMATION SYSTEM IN HR

• Ensure the national supply of Sugar;• Support the national energy supply through cogeneration and

use them for key economic sectors;• Maximize the contribution of the sector to the national

economic growth and create job opportunities for citizens;• Hold an elevated export share in the International market;• Create institutional capacity with the appropriate human

resource and potential for research and technology which help realize the strategic objectives of the sector;

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SUGAR CORPORATION BUSINESS GOALS

MANAGEMENT INFROMATION SYSTEM IN HRVISION: • To create a sustainable and competitive Sugar Industry.MISSION:• Create an institution that plays a major role in the national political & economic

transformation which brings rapid, sustainable and equitable growth;• Create a change and result oriented leadership and workforce with a development mind – set,

ethics and skill;• Satisfy the national sugar demand;• To seize a remarkable export share in the international market;• Support the national energy supply through the use of bi – product of sugar;• Create a wide job opportunity to citizens;• Support and facilitate cultural and social development around sugar development areas;• To bring about technology transfer in sugar development sector;• Enhance the industry’s competitiveness through intercropping;• To create institutional competences capable of attaining the strategic goals of the sugar

Industry;• Create compatible social and economic interlink among public;

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SUGAR CORPORATION VISION & MISSION


• Establish a result – oriented and cost effective attitude system.

• Sustainable change and competitiveness;• Establish good governance;• Virtuous work ethics;• Cooperate with the people and ensure their benefit.

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SUGAR CORPORATION CORE VALUES

BUSINESS PLAN

ORGANISATION• HR Strategy•Structure•People, Process & Systems•People & behavior & Training•Performance & Competency buildingShree Renuka Sugars Limited

BUSINESS PLAN & ORGANIZATION

STRATEGIC HUMAN RESOURCE MANAGEMENT

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ALIGN STRATEGIC HR TO BUSINESS PLANS

Strategic human resource management is the process of linking the human resource function with the strategic objectives of the organization in order to improve performance.HR’S EMERGING ROLE: Strategic human resource management is an approach which defines how the organization’s goals will be achieved through people, by means of HR strategies and integrated HR policies and practices.Strategic HRM has been defined as:“All those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of business”

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STRATEGIC HUMAN RESOURCE MANAGEMENT


• Changes in the business environment brought about by globalization and the development of new technology have made it mandatory for organizations to involve HRM in the strategic Decision Making Process.

• Changes in Market Conditions, economic conditions, labor markets, industrial structure, and international competition have all highlighted the importance to the management of human resources for gaining a competitive advantage.

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STRATEGIC HRM


• The pattern of planned human resource deployments and activities intended to enable the forms to achieve its goals is

• concerned with explaining how Human Resource Management influences organizational performance

• Strategy defines organization's behaviour and how it tries to cope with its environment.

• If HRM is an approach to the management of people,• strategic HRM implies what is done on aplanned way that integrates organizational goals with policies and action sequences.

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STRATEGIC HRM


• 5p model identifies various HR activities that must be aligned with the Strategic needs of the Business to gain a competitive advantage.

• HR Philosophy: refers to Org attitude• HR Policies: Refers to guidelines • HR Programs: Coordinated HR efforts to sustain Change

• HR Practices: includes roles that individuals assume in an Org.

• HR Processes: Involves Identification, formulation and implementation of HR activity

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Transition from HRM to Strategic HRM

• Administrative in nature• Endorsing Specialization of work • Development of Policies and its

Functions• Ensures Adherence to the Rules• Transactional in Nature: routine day

to day work• People Not viewed as Competitive

advantage• Change is Slow and Fragmented.

• Empowering in Nature• Multi Tasking – Changing

according the Environment• It is More Interdisciplinary in

Nature• Rules and Regulations are Flexible. • Focus on Short Term Objectives of

Org. • People as viewed as Intellectual

Assets.• Change is Proactive and

Systematic

Traditional HR Vs Strategic HR


• Strategic Role• Information and Decision Making Role• Strategic HR functional Role• Administrative Role

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Role of strategic HRM (SHRM)

• Focusing on Shot Term Performance• Lack of technical Knowledge• Lack of Strategic perspective• Difficulty in quantifying• Apprehensions towards training people• Resistance of employees

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Barriers To SHRM


• Two models help us understand the relationship between HR and Strategy, they are

• Model of Best Practice• Model of Strategic Change

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Model Integrating Strategy & HR

Strategic Level

Operational Level

Business Process Level

Frame policies

Recruitment and Retention

Checking equal Weight age to allstakeholder

Model Best practice

Models Integrating Strategic Change & HRM

1. Strategic integration2. High commitment3. High quality4. Flexibility

The model has four basic Propositions:

Socio economic, technicalPolitico-legal

Culture, Structure, PoliticsLeadership, task technology

Business outputs

RoleDefinition

OrganizationHR outputs

HR FlowsWork systems

Reward systemsEmployee Relations

ObjectivesProduct – market

Strategy and Tactics

Outer Context

HRM Context

Inner Context

Business strategycontent

HRM Content

Model of Strategic Change & HRM

External Alignment (Business Environment)

ALIGNMENT ORGANISATION

Internal Alignment(Management Processes)

GM OFFICE Agri &Cane FACTORY Operations Finance Materials&

Commercial MIS & IT Sales & Marketing

HR /IR & ADMN

PlanningDevelopmentTrainingCompetency ManagementPerformance ManagementCareer PlanningSuccession PlanningDeploymentBenefit AdministrationHuman Relations

Projects

ALIGNMENT TO ORGANIZATION

EXTERNAL ALIGNMENT : Alignment of Organization with the Business EnvironmentBench marking Industry and best practices Stakeholders including communityCustomers Suppliers

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INTERNAL ALIGNMENT : Alignment of Factories with Corporate Direction/ HR Vision & Mission.

Alignment of Cross functional teams with Corporate Direction/HR Vision & Mission in Corporate/Factories.

Alignment of internal People, Processes & Systems.Alignment of Trade Union & Management TeamsAlignment of individuals in the Organization.

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Manage a Global Organization

Attract, retain and deploy

high end talent

Organizational Momentum

Integrate Factories to maximize synergy

Create a global mindset Global benchmarking Improve Information access

Cross functional teams Cross fertilization of ideas Knowledge networks across Factories

Setting high performance standards provide real time feedback to enhance performance Strengthen people development processes Develop leaders from within

Share the vision, big picture Build ownership, inspire

ORGANIZATION IMPERATIVES

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Human resource is considered as the backbone of economic enterprise.

The optimum utilization of natural resources and the factor in puts of capital technology depend on the extent of use of human resources. The human resource management is a proactive central strategic management activity.

It has tremendous relevance to productivity industry. Human input is the single largest that goes in the Sugar complex Industry.

The level of efficiency of production of Human input reflected in the quality of product provided by the industry to its customer.

Viewing Human Resource as a critical resource

• Investment Perspective of HR– Management Value– Organization Attitude Towards Risk– Employee skills Required– Cost benefit Analysis – Outsourcing

• Human Capital Accounting– Sources of employee value: productivity & added Value– Adding value through rewards & benefits– Adding value through attrition & recruitment

Economic Indicators of HRM

Human Capital comprises of… Intellectual Capital- War for Talent

Building human capital by recruiting, developing and retaining people with best knowledge and skills.

Social Capital- Developing RelationshipsCreating a network of relationships that link and leverage intellectual capital.

Emotional Capital- Building CommitmentCreating an environment that energizes, motivates and builds commitment.

HUMAN CAPITAL

Thus,sustainable advantage is Human Capital alone.

EmotionalCapital

SocialCapital

IntellectualCapital

Talent Audacious standards

Pruning

Line management involvement

in coaching

Relationship

Gain sharing

Health benefits and insurance

Work life balance e.g.5 day week

Creating fun workplace

Commitment

Channels of communication

Flexible networked Company

Peer pressure/Stretch

Values

HUMAN CAPITAL

Responsibility of developing human capital assets rests firmly with the leadership.

• Management Committee (Strategic Architects)» Framing opportunity horizon and performance standards» Building a context of collaboration and support» Developing a sense of corporate purpose, challenge and trust

• Operation/location/function Heads (Developers)» Reviewing, developing and supporting initiatives» Linking dispersed knowledge, skills and competencies» Managing the tension between short term performance and long term ambition

• Team Leaders (Entrepreneurs)» Managing continuous performance improvement» Attracting and developing skills and resources» Creating and pursuing opportunities

HUMAN CAPITAL

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Strategic Partner

Process Expert Employee Champion

Change Management

Process People

Present

Future

Catering to the present need of employees and taking care of employees while advocating their causes

Designing, coordinating and facilitating implementation of various HR Processes with changes from time to time

Preparing people for change to adapt to the future needs as well as dynamic response to changing environment

Aligning HR strategy and processes to the vision and strategy of the organization as well as constituent business units

Role of HR: Taking care of both Process and people.

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The people Process Systems initiative builds competitiveness by aligning people, process and systems.

It facilitates improvements in existing business in terms of people and processes.

Its components include designing and development of organization rejuvenation processes, as well as facilitation and implementation of new businesses/ new projects (factories)/expansions of existing capacities and /or processes to achieve organizational goals.

PEOPLE, PROCESS & SYSTEMS

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The approach is closely study structures and processes. The Organization (System): Structure, strategy, critical success factors, critical business issues, identification of core processes and their categorization into primary, support and management.

The process: Which of the various functions perform independently or cross functionally to deliver out puts.

The people: Who manages the processes, and their job descriptions.

PEOPLE, PROCESS & SYSTEMS

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People, Process,

Systems (PPS) Alignment

Review Business Vision

& Strategic Direction

People strategyStakeholders (CEO)

Technology strategy

NEED OF THE HOUR

HR’s contribution to business strategy

HUMAN RESOURCE MANAGEMENT CONTRIBUTION

Understanding strategic formulation

• Not always as per textbook:– intended strategies– emergent strategies– political strategies

• How does HR contribute:– operationalises business strategy– provides separate people thrust:

• connected with organisational aims• disconnected: HR best practice model

– is an integral part of business strategy

HR’S CONTRIBUTION TO BUSINESS STRATEGY

Types of linkage between business & HR strategy

two way linkage:mutual influence

passing ships:independent HRand businessstrategies

integrative business strategy informs HR actions


Linking business & HR strategy

• Factors that affect this linkage:• Planning process

– formal or informal– deliberative or emergent

• Degree and timing of HR involvement• Extent of challenge permitted• Legitimate areas for HR input• Extent of HR’s alignment with business - broad objectives and current imperatives


Understanding the decision making process

• If decided by formal processes

• If matters are settled beforehand

• If real action happens at operational level

• Get a seat at the decision making table• Build coalitions, work to influence outside meetings

• Ensure you have business partners effective at BU level


Stakeholder management • board• executive committee• senior managers• line managers• team leaders/supervisors

• employees• employee representatives

• external suppliers• government bodies• other agencies

• what is their stake?• what are their goals?• what are their expectations?

• how will change affect them?

• what do they know already?

• what influence do they have?

• what power do they have?


Characteristics of strategic HR• A philosophy underpinning people management

• Seeing people as a competitive resource


Making the case: what Human Capital HR can deliver

• Improved utilisation of talent• Higher productivity• Reduced costs• Better service delivery• Organisational integration• Aligned culture & organisational values • Greater employee engagement • Stronger employee proposition etc


Line Management

Company Culture

Employee Commitment

Customer satisfaction with service

Customer spending intention

Change in sales

Employee Absence

Service-Profit-Chain ModelHR’S CONTRIBUTION TO BUSINESS STRATEGY

Characteristics of strategic HR• A philosophy underpinning people management

• Seeing people as a competitive resource• A planning approach to resources

– numbers– skills– potential

• Adds long-term rather than short term valuein line with business need


horizontal integration

verticalintegration

People management integration

business strategy

reward employee relations

training & devt

work orgn

culture leadership style


Characteristics of strategic HR• Integrated – brings together multifaceted activities

• Comprehensive – covers the entire operation (at BU or corporate level)

• High value added – focuses on business critical issues

• Builds social capital – helps sharing, networking and relationships


Characteristics of strategic HR• Integrated – brings together multifaceted activities

• Comprehensive –covers the entire operation (at BU or corporate level)

• High value-added –focuses business critical issues

• Builds social capital – helps knowledge sharing, networking and relationships

• Anticipates change – through horizon scanning and internal sensing


Connecting business & HR strategies

Businessstrategy

HRstrategy

Businessplans

Imple-mentation Monitor

Internaldrivers

Externaldrivers


How is people & business alignment achieved

• What is the organisation’s big idea?

• What are the business priorities?

• What are the people priorities?

• How do they link?

Bigidea

Businesspriorities

Peoplepriorities


Establishing people priorities

What causes people to come to work, be motivated and perform?

What stops them from being effective?


A model of capability

ability:skills, training

education

motivation:engagementinvolvementapplication:ODproductmarket strategy

access:resourcing

recruitmentsuccession

DeploymentDevelopment

Individual capability

Organisational action


What are external influences?

Conduct environmental scanning:• what is the legal context• how tight/loose is the labour market• are the right skills available• at what price• what is the output from schools, universities,

etc• what are the political priorities


What is the state of the current workforce?

• What proportion is skilled for their current and for future jobs?

• What is its demographic shape?• How committed are employees?

– attendance– productivity– staying or leaving

• What are collective relationships like?• To what extent is employee potential being harnessed?


What stops HR succeeding?• Human capital not recognised as a source of advantage

• Weak organisational leadership• Poor teamworking across organisation • Business strategy poorly defined• There is little forward planning• People resources assumed to be unlimited, free or fully trained

• Resources are hoarded & not shared


HR’s own problem areas• Obstacles to success:

– time– capacity – focus– capability– positioning– organisation


HR’s own problem areas

• Obstacles to success:– time– capacity – focus– capability– positioning– organisation

• Relationships with management not working.The villains:– HR – not letting go– the line – not taking it up

– senior mgt – sending wrong signals


Results

• Inadequate HR service performance • Concentrating on low value tasks• HR policies are disjoined & inconsistent• They serve functional not organisational needs• Weak functional leadership• Poor internal reputation• Human capital not exploited, developed


What should HR do?

• Review your retention model– right level of wastage?– numbers, types, quality

Why dothey leave?

Why dothey join?

Construct a workforce planEstablish the supply/demand balanceAre the right people, in right jobs? Review your recruitment model

■ able to attract - all types?■ brand■ proposition


A strategic review of recruitment and retention

Market availability

Organisationalimpact

OutsourceCommoditise

Attract &retain


What should HR do? (2)

• How well are employees aware of– the bigger picture?– their job?– what success looks like?

How do you know?

Are you able to motivate staff?■degree of engagement■what motivates them?■what demotivates them?■what impact does pay and performance management have?


What should HR do? (3)• How skilled are line managers in

– Appraising performance?– Giving feedback?– Developing skills?

• How effectively are – Employees allocated to jobs?– How well are jobs/the organisation structured?– Employees moved to meet business needs?


What should HR do? (4)• What is the organisation’s

– Ability to change/innovate• How good is the organisation’s governance structure?

• How strong (and respected) are the organisational values, eg– On diversity?– Meritocratic progression?


Measure people and HR functional performance

Through for example• Critical success factors/areas• Key performance indicators• Customer surveys• Employee attitude surveys• Process mapping/activity analysis• Audits/reviews (incl... quality)• Scorecards• Benchmarking


Improve measurement

HRefficiency

PeopleManagementeffectiveness

People management efficiency

HReffectiveness


Examples of measures in multi dimensional measurement

Process metricsRatios

Human Capital

Cost/Incomeagainstheadcount

Strategic alignmentFunctional positioning

Customer views


internal external

businessperformance

managingpeople

business goals

HR policies& practices

HCMmeasuringreporting acting

Human capital measuring & doing


HR Strategies ProvidingSuperior Return on Human

Capital Investments

SMART HR PRACTICES

If you want 1 year of prosperity,grow grain.

If you want 10 years of prosperity,grow trees.

If you want 100 years of prosperity,grow people.

- old Chinese proverb

SMART HR PRACTICES

Purpose

• Provide strategic context about how to use “Smart HR” practices to build value in your organization.

SMART HR PRACTICES

Payoff

• Information about how “Smart HR” practices can reduce costs, improve quality and increase value.

SMART HR PRACTICES

We Help Leadership...

• Align people with business strategies.

• Deal with the "soft" factors driving human performance.

We help managers deal with the toughest issue: their people.

SMART HR PRACTICES

Expertise• Surveys and Assessments• Training and Development• Strategic Planning• Culture Change• Team Building• Coaching

SMART HR PRACTICES

Do I know what is expected of me at work?

Do I have the materials and equipment that I need in order to do my work right?

At work, do I have the opportunity to do what I do best every day?

In the past seven days, have I received recognition or praise for doing good work?

Does my supervisor, or someone at work, seem to care about me as a person?

Is there someone at work who encourages my development?

12 Simple Questions

SMART HR PRACTICES

12 Simple Questions (continued)• At work, do my opinions seem to count?

• Does the mission or purpose of my company make me feel that my job is important?

• Are my coworkers committed to doing quality work?

• Do I have a best friend at work?

• In the past six months, has someone at work talked to me about my progress?

• This past year, have I had opportunities at work to learn and grow?

SMART HR PRACTICES

Iceberg of Ignorance

Adapted From

: Sydney Yoshida on

Quality

SMART HR PRACTICES

Why Bother with Satisfaction?

• New employees are very expensive• Current employees are very valuable• Satisfied employees are very forgiving• Employees respond more strongly to how you treat them than anything else

SMART HR PRACTICES

“Smart HR” Practices

More Productive and Engaged Workforce

Loyal Customers

Improved Business Performance...

Service - Profit ChainSMART HR PRACTICES

Sustainable Competitive Advantage

“The ability to learn faster than your competitors may be the only sustainable competitive advantage.”

People are the key to maximizing shareholder value and increasing profits in today’s economy.

SMART HR PRACTICES

“Smart HR” PracticesStrongest Links to Financial Success

• Collegial, Flexible Workplace• Communications• Prudent Use of Resources• Rewards and Accountability• Recruiting

SMART HR PRACTICES

“Smart HR”: Collegial, Flexible Workplace

• Flexible work arrangements• Encourage teamwork and cooperation • Perks do not vary with position • High employee satisfaction • All employees on first-name basis • Low emphasis on titles

SMART HR PRACTICES

"Smart HR": Communications

• Easy access to communication technologies• Ample opportunity to give ideas and suggestions• Financial information is shared• Input into how work gets done • Business plans and goals are shared

SMART HR PRACTICES

"Smart HR": Prudent Use of Resources

• Profit-sharing based on business unit’s success • Training for advancement• Input into peer evaluation• Input into evaluating managers

SMART HR PRACTICES

"Smart HR": Rewards and Accountability

• Stock plan options• Termination of unacceptable employees• Help poor performers improve • Top performers are significantly paid more• Positions paid above market • Link pay to business strategy • Link performance appraisals to pay• Profit-sharing linked to firm’s overall success

SMART HR PRACTICES

"Smart HR": Recruiting

• Hire well-equipped professionals• Link recruiting to business plan • Reputation as a desirable place to work• Hire well-equipped hourly new employees• Employee input on hiring decisions • Recruiting strategy for hiring critical positions

SMART HR PRACTICES

3 Most Important People Issues?

• Leadership development • Motivational pay • Training and development of their workforce

SMART HR PRACTICES

Employee Commitment and the Bottom Line

• Implementing “"Smart HR"” practices will create an energized, enthusiastic, educated workforce.

• These practices provide difference between retaining a highly qualified workforce or searching needlessly and expensively for new talent.

SMART HR PRACTICES

Peer Coaching: “Smart HR”

• What “Smart HR” Goals would you like to set for yourself?

• What would it look like if you accomplished those goals?

• What next steps must you take to accomplish your goals?

SMART HR PRACTICES

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THANK Q

Align strategic HR to Business plan

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