Building Competitive Advantage through people

Group Members: Ajitesh Mishra Renita Adhvithi S. Ullas K.S. Ankita Srivastava Ashvithi S.

1

Introduction

Managers in today's world know what is required.

Skilled and motivated people helps to flourish in new age.

Organizational delayering, destaffing, restructuring and reengineering occurred on a large scale.

2

Structure is an hindrance in transforming oneself.

Managers are even bigger barriers. Dramatic changes in external strategic

implementation and internal strategic resources.

Many companies continue to have outmoded strategic perspectives.

3

Many leaders were trained in accordance to Competitive Strategic Model.

This system was supposed to help senior managers to decide on how to grow a business.

The problem of imitating or leapfrogging became the hindrance of the organization.

4

In Late 80’s it was recognized that development of resources and capabilities are difficult to imitate.

Focused on knowledge creation and on learning process.

People were not ready to adopt the new knowledge intensive tasks.

5

Competency based strategies are dependent on people.

Knowledge and expertise drive the new product development and personal relations with key clients.

People are the key resources for any organization and therefore strategies must be developed based on them.

6

Senior managers are struggling for change from past two decades.

Bureaucratic system into flexible system and improving employee relations.

It is harder to change the organization, it is even harder to change mindset of managers.

Implementation of third generation strategies through second generation organization with first generation management.

7

Very few managers transformed themselves. Eg. Jack Welch CEO General Electric. To make transaction in the new economy the

transformation is very necessary.

8

A changing view of strategic resources Capital is the critical strategic resources to be

managed and the senior manages key responsibilities should center around the acquisition, allocation and effective use.

Vast majority of companies that assume that there is no longer use of financial resources

Global capital markets have opened up the supply side while widespread excess industry capacity has reduced the demand side.

9

In some sectors many cannot even generate sufficient high quality capital budget projects to use the available resources- mergers- and-acquisition expeditions.

Scarce strategic resource – when it values a mature capital-intensive company like GE at 10 times its book value, greater worth than the physical assets recorded in financial accounts.

10

There is a surplus of capital chasing of talented people and the knowledge they posses.

Traditional strategic planning processes will need to be overhauled and the financial measurement and reward system will have to be redesigned to recognize the strategic importance of human and financial resources.

11

A changing view of value

Shift in the whole concept of value management within the corporations.

1980-competitive strategy- zero sum game. Michael E Porter- maximum economic value

possible. Gradual shift in emphasis from value

appropriation to value creation. Unlike capital, knowledge actually increases

when shared , thus eliminating the zero-sum game.

12

Basic issue – how values should be distributed

Companies operate under the assumptions that shareholders as contributors of capital- primary claim but difficulties in recruiting loyal employees.

Companies have to recognize that the owners are no longer only the shareholders but also the employees.

13

Top management must begin renegotiating both implicit and explicit contracts with key stakeholders.

Unless those who contribute their human and intellectual capital are give the opportunity to enjoy value creation-tradition bound companies.

14

A Changing View of Senior Manager’s

Roles Unlike capital , scarce knowledge and expertise cannot be accumulated at the top the company and distributed.

Heads of the individuals at all levels. Relationship of work groups

1. The Customers

2. The Competitors

3. The Technology

15

The Zero-Sum game

Allocating capital to competing projects The Positive-Sum game

Senior managers must nurture individual expertise and initiate then leverage it through cross-unit sharing.

Senior managers must rethink their role in shaping strategic direction.

Contribution of senior managers shifted Injects meaning into individual efforts.

16

Company values align organizational effort with overall objectives and defines the community the individuals want to belong.

Ensuring the empowerment development and commitment of all members.

Philosophical shift(executives) Purpose Process People

17

Implications for HR Professionals Transition Process an ground for Human –

Resource function. Old-school HR executives. In 1980s era of competitive-strategy analysis-

Supportive and administrative. In 1990s HR managers were included in the

strategic conversation Define and develop core competencies Align the organizational design and

management skills to support strategic assets. 18

War of talent and scare strategic resource. Key players Design Development Delivery New tasks through old lenses. Growing importance of human capital More-aggressive approaches to recruitment Create more-innovative training programs Experiment with more-sophisticated

compensation packages.

19

Human-Resources managers must see employees as “Talent investors”.

Three core tasks that align human resource function with the strategic challenge of developing the company’s human capital for sustainable competitive advantage

Building Linking Bonding

20

The Building Challenge

21

Use of strategy – Recruiting time

Microsoft corp.. Recruit from pool of 25000 computer science

graduates. To identify the 8000 people Targets 2600 for campus interview and

invites only 800 out of them to their head quarter located at Washington.

22

500 receives offers and 400 where in top 2% of that years graduates typically accept.

Basically all the efforts which they put will provide only 20% of new people.

To obtain rest percent company maintains 300 expert recruiters whose full time job is to get best and brightest in the industry.

90’s their company recruited 2000 and more, where these were the best talented people in the industry who joined Microsoft.

23

McKinsey & co’s way of valuing peopleValuing people = more commitment in

development

Training is one which plays important role in development. But they used intensive individual feedback and coaching.

Every one receives the performance review from his/her office partner group twice a year.

These activities consumes 15 to 20% of time.

24

And also other than feedback they used to receive counseling and career advice.

(review is based on reports prepared by each of client engagement managers, senior level consultants)

25

After acquiring top talents company does not stop rather they put efforts in constant development of those individuals.

26

THE LINKING TASK

Emphasis on social networks- sharing, embedding and leverage knowledge.

Avoids loosing or underutilizing the information.

Chief information officer or chief knowledge officer.

Immediate focus is on mapping, modelling, codifying knowledge.

Databases, intranets, expert systems.

27

Lack of advantage and complete utilization by managers.

Problem- although knowledge management can be supported by technical infrastructures it is operated by social network.

Team up and operate in support of individuals who understand human motivation.

Conversion of available information to embedded information.

28

HR executives to take the lead in developing social networks.

Understanding of organization design, processes, interpersonal relationships and trust based culture.

They must also have strong understanding of the business.

29

Challenge is to build on re-engineering process, break down of bureaucrary and unlock core competencies.

Re-engineering process has two levels:

a) Breaking down hierarchical barriers.

b) Opening new horizontal channels for cross unit communication and collaboration.

30

British Petroleum

1990s under the leadership of Mr. John Browne was the head of BP Exploration.

In 1995 as CEO he avoided installing new set of information systems.

Instead focused on practice- “ peer assists”. It encouraged the people on front line to

approach others having similar knowledge or expertize in that field.

31

Cut through formal layers and complex procedures.

Refuse a request for help not acceptable. Peer groups- similar activities or stages of their

life cycle Starting of oil fields, decline- yield oil fields.

Having similar strategic or technical challenge. “Peer- assist” expanded to “Peer challenge”- not

just review one another's goals and business plan but the best performers are made responsible for worst.

32

Technology introduction- only for transmission and storage of information already flowing.

Not encoding or capturing company’s knowledge. Built networks to ensure communication- Visual

Teamwork Group. Although involved major investments in hardware

and software- video clips, desktop, scanners, emails etc.

1/3rd of budget was used to coach managers how to utilize the technology.

They have successfully embedded knowledge with organization difficult to imitate.

33

THE BONDING PROCESS Third major strategic task HR must undertake to help management competent individuals and fully functioning

networks can be converted into engaged, committed action

Companies must reject the notion that loyalty among nations is dead and create environment to attract and energize people

Create an environment that will attract and energize people

34

• Replaced by Free agent talent market• To convert long term trust based

relationships with the employees to short term contracts

• Higher employee turnover, the use of temporary help and the expansion of outsourcing

• Actions will lead to any competitive advantage

35

SAS INSTITUTE

Billion dollar software company Rejects the use of contract programmers and

other outsourcing ( turnover below 5%) CEO Jim Goodnight Ponzi scheme but rather competitive salaries

and generous bonuses Actions and Decisions based on 4 simple

principles

36

There are the hours Different facilities also provided to its

employees Creating a sense of identity and belonging Henri Termeer CEO of Genzyme Bonding process can succeed only wen the

senior management realizes that the company is more than the economic entity

It is also a social institution “Competition for dreams”

37

THE HEART OF STRATEGY

The arrival of information based, knowledge intensive, service driven economy has forced massive change on companies worldwide , most dramatically in the way they must redefine their relationship with their employees.

38

New battle plans Strive for the hearts and minds of talents and

capable people Persuading them to join the enterprise Management must ensure those individuals

become engaged Long re-established mission“ To serve clients

superbly well”

39

McKinsey Dual mission “ To help our clients make distinctive, substantial and lasting improvement in their performance and to attract, develop, excite and retain exceptional people.”

Mckinsey and other organistions have found new meaning in the term competitive strategy as they compete for the hearts, minds and dreams of exceptional people.

40

THANK YOU

41