TERM REPORT [OPTION 2

-CASE STUDY]
Course: Organizational Behaviour (MAN302-D)
Semester: Fall 2015

Submitted to: Professor Baber Khairi

Submitted by: Shahzada Ayub
ID: 13640

December 5, 2015

CREATING PEOPLE ADVANTAGE 2014, BY BOSTON CONSULTING

GROUP
INTRODUCTION
HR department, in any business organization regardless of size or
business nature, has the potential to play a key role in the strategic
decisions that are taken at organizational level and that affect the overall
companys growth and performance in the long run. However, not all HR
departments recognize their strategic position and therefore they tend to
perform mediocre functions that include day-to-day HR activities which,
although help in the normal functioning of the firm, but dont essentially
leave an impact at overall organizational level. The purpose of the case
study, Creating People Advantage (prepared by BCG in collaboration with
WFPMA), is to highlight the fact that HR people have more serious role to
play than it has been conceived in general, and that they can greatly
influence and affect the way organizations are operating around the world.
Louis Efron, who writes extensively on leadership, people management
and like topics, writes on Forbes Magazine, It is not uncommon for business
leaders to describe their H.R. departments as reactive, uncreative and lacking basic
business understanding. This stems from H.R. teams measuring and focusing on things
that dont add true value to their organization, like: speed of hire, percentage of completed
performance review, number of managers trained. He further comments on what

should be the real role of HR within today`s business organizations: The

job of Human Resources today is to make people and organizations grow, yet it has only
marginally evolved since its inception around the end of the nineteenth century. Starting as
Personnel, to protect women and girls in industrial environments, it gradually morphed
into other realms including employee hiring, firing, attendance, and compensation.
Motivation, organizational behavior, and selection assessments were added to the mix in
the 1960s and 70s. Over the last decade or so, the title of H.R. Bu siness Partner
essentially a business-focused H.R. Manager role was introduced with little impact.

(Efron, 2014)
Louis wants to explain that HR departments have more serious role to play. Besides
fulfilling the typical HR functions, they should be driven more towards helping

organizations meet their challenges and act as strategic partners. The case study,
Creating People Advantage -2014-2015 (8th of the series) also aims at highlighting
those HR functions and areas that can help fulfil this mandate by providing HR
people a clear view of what can be done to enhance the most crucial HR capabilities
that have their dramatic impact not just within the HR department but, more
importantly, across various other departments within the organization. The report
explores trends in people management by focusing on ten HR areas which are
deemed essential by experts, analysts and researchers around the globe, and then
subdividing those ten broad HR topics into 27 subtopics for a more comprehensive
analysis.

Each subtopic has been selected keeping in view of the fact that it has close relevance
with regard to its future importance for companies and how capable they are with
regard to these subtopics in their current situations. The more important certain HR
topic is and the less capable the HR department of a firm around that specific area,
the more urgent it becomes for the firm to bring the issue to the table and resolve it.
As a matter of fact, organizations that are excelling in their performance are the ones
who dont encounter the need of this urgent action with regard to any of the 27 HR
subtopics mentioned in the case study. The reason being they have already been
working on these areas in the past and the outcome has been quite fulfilling. These
27 subtopics around which the entire case study is built are listed in the Exhibit 3
below. 1

1 Data is taken from the case study, Creating People Advantage, by Boston
Consulting Group.

The research conducted by Boston Consulting Group (BCG) is comprised of 3057

respondents from 101 countries; these participants have been carefully chosen so as
to ensure they represent organizations operating across diverse industries.
Furthermore, 64 HR and non-HR Executives in leading organizations around the
globe have been interviewed. The data thus taken has been critically analyzed and the
following findings are produced:
HR capabilities correlate with economic performance: In organization where
emphasis is given on the core HR topics such as motivation, leadership,
teamwork, stress management and organizational culture, talent
management, engagement, behaviour etc, it has been observed that the
economic performance if these organizations went manifold compared to
the ones that do not have strong capability in the HR topics.

Analytics and key performance indicators give HR a seat at the table: Through proper
record and tracking system, the HR department can play a role beyond their
conventional functions and help organizational managers set goals and objectives
that reflect the core findings and data that have been maintained through these KPIs,
Analytics and steering tools. These various tracking tools help the HR people monitor

and quantify workforce performance and thus obtain a key role in the strategic
discussion of the firms.

KPIs should link to strategic actions: Use of Key Performance Indicators and other
performance steering tools should be such that they help the manager make sound
decisions when it comes to taking strategic actions. The more effectively these tools
are linked to the strategic actions organizations make, the more important the role of
HR will become in the strategic matters.

Globally, the leadership and talent management topics are the ones in the most
urgent need of action. The survey of over 3500 respondents across 101 countries
showed that leadership and talent management topics are the ones with most urgent
need of action as there has been least amount of work done around these crucial
areas while their importance has gained momentum to a great extent.

HR department need to be more consistent in their investment decisions. HR topics

with most urgent need of action have to be given priority in terms investing, time,
efforts and money. Furthermore, the efforts put on these crucial areas need to be
consistent so as to ensure that the desired outcome is gained and workforce
performance is enhanced across all the departments.

HR needs to listen more to internal clients: This helps them look at the problem from
a fresh perspective. Sometimes, the HR people are victim of their own biases and are
not able to look at the problem from a natural perspective. To stay more objective,
they will need to get ideas from non-HR people the other employees who work
within the organization and review them to ensure that no particular HR topic with
urgent need of action is being missed out or overlooked.

In ideal scenario, however, the great HR functions should be able to serve the
following three purposes: 2

Connect: They ensure to stay hands on and team up with all the stakeholders inside
and outside of the organization with the aim to improve performance and achieve
organisational goals and objectives not just the goals of HR department.

Prioritize: what is most important is given due attention. HR topics that directly
influence the firms productivity and demand urgent action are given priority when it
comes to investing time, money and efforts.

Impact: HR factions create an impact by using key performance indicator and other
such performance monitoring tools to help the organization achieve its strategic
goals and objectives.

ANALYSIS
The Major Issue:
Across the world there is a variation found in how HR departments of various
organizations are able to play a strategic role to create a real impact on the economic
performances of those organizations. Some HR departments are quite excelling at
this role, but majority of them are not.
Throughout the case study what seems to be a consistent point of discussion is the
dilemma as to why in certain organizations (that have proven track record and
phenomenal growth) the HR departments also tend to play a strong, strategic role.
This is where the real problem comes into view. There is a close connection between
stellar growth, productivity and workforce-performance and the roles/functions the
HR department plays in any organization. However, in most of the cases the HR
2 In the case study, Creating People Advantage, these functions have been
named as the three hallmarks of great HR functions

capabilities are questionable when it comes to the key HR functions that could create
a real impact on how the employees perform to achieve organizational goals and
objectives.

The Minor Issues:

HR capabilities with most urgent need of action are not being focused on.

(Leadership and talent management show the greatest urgency)

HR respondents rate their capabilities higher than non-HR respondents do.
Prioritization of HR topic in non-performing organization is an issue. Areas

that need urgent attention need to be attempted /invested in first.

Skilled and qualified talent force is shrinking around the globe (pg 23)
Most of the challenges that HR managers face around the world today are
more

contextual

rather

than

universal,

thus

requiring

contextual

understanding and approaches.

The Major Objective:

To help HR departments gain a strategic role within organizations by working on key
areas that create impact at overall organizational level.
To help achieve this goal, 10 main HR topics have been broken out into 27 subtopics, and then the relative importance of each topic is explained and demonstrated
through research findings, mini cases and expert analyses. Each of the given function
is focused around the idea of how to empower the HR department in a way it could
play more strategic role in the overall goal setting, planning, organizing and decision
making process of an organization.

Minor Objectives:
To highlight the fact that HR department, by having a strong relationship with other
departmental units within organization, can recognize the most demanding needs
and strategic objectives of the organization.

Demonstrate as to why emphasizing on certain HR areas (that may vary from one
firm to the other) is important from a strategic point. HR topics that directly
influence the firms productivity and demand urgent action should be given due
consideration over less important HR matters. High performers align HR
investment.3

Highlight the importance of deploying various performances tracking tool whereby

HR departments can create real impact and make their participation inevitable in the
strategic decisions of an organization.

Exhibit and demonstrate the fact that organizations with robust financial
performance are usually the ones that excel in HR capabilities when compared to the
non-performing organizations.

To highlight what specific HR topics are deemed highly important that companies
operating across diverse industries and geographic locations feel the need to invest
their time and resources in (in the nearest future).

SUMMAY
The entire case can be broken down into the following five chapters:
1. Key HR topics 2. The link between financial performance and HR
capabilities 3. HRs business impact 4. Regional and industry capabilities 5.
What sets great HR functions apart?

3 Exhibit 8, Creating People Advantage Case Study (by BCG)

Key HR topics:
The case study includes 10 broad HR topics which have further been divided into 27
subtopics, as exhibited below:

Of all the 27 topics the areas that were considered highly important invariably across
all industries and regions are leadership, talent management, behaviour and
culture.4

The Link between Financial Performance and HR Capabilities:

The major purpose of the case study is to highlight the link and correlation between
HR capabilities and financial performances of organizations. For this purpose the
average operating margin and avg. Revenue changes of top 100 and bottom 100
companies have been analyzed for the last two years (2013 and 2014) as an indicator
of their economic performance. Companies chosen for analysis purposes had
minimum 50 employees to qualify the analysis.
It was thus found that those companies which exhibit higher capability people
management have relatively strong economic performance. As well as, among high
performing organizations no urgent need of action was observe in regard to any of
the 27 HR subtopics.
On the other hand, companies with poor economic performances showed urgent
need for action across almost all the 27 HR-Subtopics. Moreover, there was a clear
difference

found

between

how

the

low-performing

and

high-performing

organizations essentially prioritize various HR functions/subtopics in terms of their

future importance. Topics like HR & Workforce analytics, HR internationalization,
HR & People Strategy, Recruitment and career model etc., are not paid due attention
in low-performing organizations. Low performing companies usually fail to discern
the HR topics which are more important than the ones which are less important, so
the fail make right investment and deploying time and efforts into right things. As a
result, their efforts go vain and any investments they tend to make in the less
important HR areas fail to give them the biggest bank for their bucks.

HRs Business Impact

4 2014 BCG and WFPMA proprietary Web survey and analysis

This chapter focuses on the factors that are important for HR departments to be able
to play a strategic role and have a seat at the table for strategic discussions. HR
leaders need to crystallize the business impact of HR and establish in quantitative
terms all the areas in which the companys strategic decisions are supported by HR.
Once they are successful in establishing and managing a well-rounded analytical
system and prove themselves to be more objective and data driven, then it is likely
the HR departments participation in the strategic discussion will not be overlooked.
The case research has found that HR departments which are more data driven and
could keep track of areas like employee productivity and personnel cost etc are likely
to have a greater strategic role in the organization compared to the ones that fail to
quantitatively establish the areas which are deemed important from the standpoint
of strategic decision. Yet, majority of the respondents answered they even if they use
KPIs and other performance steering tools, its only occasional. They usually dont
feel the need of making the system data driven, maintain analytics, and make use of
KPIs and performance steering tools (because they dont feel the need to participate
in strategic discussion of the organization). Exhibit 9 summarizes the research
finding as described in the case (Creating People Advantage by BCG, 2013-2014):

Regional and Industry Capabilities

Under this chapter, using urgency metric, the 27 HR topics are narrowed down to a
certain few topics that have the greatest priority for all companies across all regions.
These are those HR topics that have invariably shown the greatest urgency for action.
As per the regional view, two HR topics showing the greatest urgency for action
across most industries and geographic regions are LEADERSHIP AND TALENT
MANAGEMTN. Leadership is by far the only topic with the utmost need for action
followed by talent management. Aside from these two areas, however, variation has
been observed as to the level of importance and urgency organizations feel pertaining
to the other HR topics. For instance, employee engagement, behaviour & culture are
the topics that are given more priority in US than in any other regions. In Brazil the
focus seems to be more on talent management considering the fact that there is
shortage of qualified human resources for organizations. As a results, reward and
recognition turn out to be the HR topics that were ranked as more urgent in Brazil

than in most of the other regions. Similarly, in many EU countries aging problem has
become a challenge for organizations. HR managers are deeply concerned about
strategic workforce planning and talent management. A glimpse of country-wise
differences with regard to urgency of HR subtopics can be taken from Exhibit 11
below. 5

What Sets Great HR Functions Apart?

5 2014 BCG and WFPMA proprietary web survey and analysis

Based on the analysis of research data and BCGs own experience, its observed that
great HR functions are critical differentiating factor for organizations. In highperforming companies mangers excel in all HR functions that deemed most
important and there is lesser urgency of action with regard to any HR subtopic that
matters.

All in all, the following three characteristics describe great HR functions that help
organizations stand out from the crowed.
Connect: communication is key and the element that sets great HR apart. In
organization where internal clients are kept in the loop and communication is
streamlined, there remains less confusion as what the needs and expectations of the
staff is, what challenges do they face, how their performance can be enhanced, what
are the effective way HR managers can provide the workforce timely feedback etc.
This is called getting the basics right. HR department needs to make sure that that
the HR strategies dont function stand along, rather they are aligned and closely
linked to the overall organizations business strategy.
Prioritize: What is most important is be given due attention. HR topics that directly
influence the firms productivity and demand urgent action are given priority when it
comes to investing time, money and efforts.
Impact: Great HR factions create an impact by using key performance indicator and
other such performance monitoring tools to help the organization achieve its
strategic goals and objectives.

CASE METHODOLOGY
The research conducted by Boston Consulting Group (BCG) is comprised of 3057
respondents from 101 countries; these participants have been carefully chosen so as
to ensure they represent organizations operating across diverse industries. About
83% of the participants were from HR field such as HR business partners, generalists
and member of a centre of excellence etc.

Furthermore, 64 HR and non-HR

Executives in leading organizations around the globe have been interviewed. Ten
broad HR areas has been chosen, which were then divided into 27 subtopics for
effective analysis purposes. Also, in March 2014, an online survey was conducted that
lasted for 4 months. The aim of this survey was to have respondents rate each
subtopic using a six-point scale on future importance, their organizations current
capabilities pertaining to the subtopics and the degree of attention paid or efforts
invested in the subtopics in terms of time, human resources and money during the
past three years.

APPLICATION OF THE RESEARCH METHOD ON IoBM

UNIVERSITY
The method used by Boston Consulting Group can prove to be highly effective if a
research of similar nature is conducted on IoBM University. The university has fullfledged HR department, but its very likely that there will be possible areas that need
to be fixed / worked on to help make the HR department strong and play an effective
role in the overall strategy building for the institution. A research can be carried out
by identifying certain areas pertaining to the HR functions that are relevant from the
point of academia as well as general business perspective, then collecting research
data from a diverse genre of participants, both from within the HR department and
outside of it. Selection of students, faculties and staff from other departments of
IoBM and the HR professionals, as well as interviewing other HR non-HR
professionals institutes of benchmark (such as IBA and LUMS) can help provide a
valuable blend of information and data that can be analyzed to highlight the key
areas that the HR department of IoBM is to work on to be able to play a more
strategic role in achieving the goals and objectives set by the institute.

BENEFITS
The case study analysis was a lot beneficial in that it helped me develop a general
understanding of how a professional research can be conducted. The methodologies
used in the research can also easily be implemented in other form of formal research

(that has a personal use for me). Besides developing a strong understanding of the
case in point, other benefits that I cannot overlook are the ones that can come in very
handy if I ever needed to conduct an independent research in the course of my
academic and professional career. Preparation of research, selection of interest
group, collection and organization of data, its interpretation and how conclusions are
made based on research findings are some of key areas that I wasnt very much
familiar with, and in the process of analyzing this case study I was able to walk
through the entire research process in my own gradual pace. The whole project, if I
were to mark it in one keyword, was invaluable!

Recommendations
Following additional recommendations can be made to help the HR
department play a strategic role and contribute to the organizations
success:
1. Feedback Method: Feedback is an essential element and a tool the HR
department can use to help drive the work force in the direction which ensures
optimal yield and productivity. Feedback should be consistent in order for it to
obtain a strategic value.
2. Industry Best Practices: Most of times why some players out there in the
market are better off and some are not is because of the best industry practices
they follow. If you think certain organization in your industry vertical is
constantly showing extraordinary performance, then you need to make it your
bench mark! The HR department can learn from the best practices that are
prevalent in those organizations and replicate them in their own organization
to help achieve the same level of success.
3. Acquisition of Great HR Staff and Managers: They are necessary to
bring in constant flow of creative ideas that transform organizations.
4. Inclusion of creativity and innovation as a major factor in
leadership building plan:

Rewarding the innovative minds and

appreciating creative ideas contributed by employees at all level by providing

taking different measure such as organizing annual or by annual creativity
awards for employees. etc.

5. One HR department for all stakeholders: The HR functions should go

beyond conventional role and help organizations navigate through the critical
changing business phases by playing a multi-faceted role that could help meet
the needs of both the employer and employees of an organization.

REFERENCES
Efron, L. (2014). What Organizations Need Now From Human Resources. Forbes
Magzine , http://www.forbes.com/sites/louisefron/2014/08/18/what-organizationsneed-now-from-human-resources/.
Group, B. C. (2013-2014). Creating People Advantage .