Weaving HR into Strategy:

A Perspective

Presentation by
Prof. Rishikesha T. Krishnan, IIMB
to National HRD Network
Bangalore Chapter
 The Competitive Reality
• The “modern sectors” of Indian industry
have a productivity level of 15 (US=100)
• Changes totally within our control such
as restructuring organisational functions
and tasks and making viable
investments can raise our productivity to
more than 40
• Countries like China are far ahead
 To become
globally competitive...
• We need to play to our distinctive strengths
– IT and software (2% of GDP)
– Network of technology education institutes
– 40 years of management education
– Large number of managers with MBAs, MNC &
international experience
– Ability to understand user needs, integrate diverse
technologies, and design and offer branded
services & products
 To become
globally competitive...
• We need to synergise these strengths
Traditional business houses have
• found it difficult to attract and retain best, qualified
managerial talent,
or
• structure and governance structures prevent
professional managers from making an impact
 To become
globally competitive...
At an individual company and business level,
we need to
• be clear about the basis on which we are
competing
• build the competencies and capabilities
needed to support the chosen basis of
competition
 EMI & the CT Scanner
• EMI pioneered the innovation of the CT
scanner in 1972
• In spite of a strong market position in
early years, by 1977, EMI was forced to
exit the scanner business
– Failure to establish source of competitive
advantage (cost, technology, or service)
– Failure to build integrated market sensing,
design, manufacturing, delivery and service
capability
 Business-level
strategy

Define

Build Competitive Advantage

Defend
 Learn from successful
cost leaders - Nucor
• Consistently good financial performance
in an otherwise lousy industry
• Hires goal-oriented, self-reliant people
who are motivated by striving for
continuous improvement→ monetary
rewards
• Substantial output-based incentive
compensation based on group output;
no retrenchment.
 Learn from successful
cost leaders - Nucor
• Plant managers’ compensation based
on plant RoA; top mgmt on RoE
• Elaborate profit-sharing plan
• Few layers, all managers travel by
economy, even ff miles to company a/c
• In-house group constructs new plants to
leverage earlier learning, prevent
diffusion of proprietary ideas
 Similar stories
• Wal-mart
– World’s largest company and largest
private sector employer
• Lincoln Electric
– Leading US manufacturer of electrodes
and welding equipment
 Learn from prominent
differentiators - McKinsey
• Hire best people out of top business (&
engineering) schools
• Up or out policy - promotes meritocracy,
makes room for new entrants
• Extensive feedback & mentoring to
ensure credibility and integrity of
performance measurement system
• Challenges : specialists, valuing
knowledge ↔ client relationships
 Implications of Differentiation
• Greater diversity in recruitment
– e.g. Diverse problem-solving approaches and
perspectives required for customer-centered
product development
– Microsoft uses anthropologists
• Development of T-shaped skills -
technical and managerial
• Career planning to develop
“heavyweight” project managers
 Implications of Differentiation
• Greater attention to match between
expertise, interests and job to trigger
intrinsic motivation → spark creativity
• Multi-dimensional performance
measurement such as balanced
scorecard
• A product (or service) reflects the
organisation from which it has emerged:
Ford in the 1980s
 Interesting examples of
Indian organisations

• Car rental company

• Indian School of Business

 Transitions
Software majors
• Increase revenue per employee
• Look for higher value addition -
consulting, architecture, products
• More sophisticated requirements of
people - Computer science (not any
engineering), domain expertise,
marketing/branding
 Transitions
Large Pharma companies like Ranbaxy
and Dr. Reddy’s
• Imitative research exploiting Indian
patent laws, production and export of
bulk drugs → Discovery of new
molecules and dosage forms
• Hire foreigners, scientists, create
innovative culture
 To facilitate transitions...
• Genuine belief in people
• Build credibility
• Support values of integrity and
transparency
• Eschew confrontationist paradigm,
politicking
– e.g. Harley-Davidson, Tata Steel
 Linking business strategy
to HR strategy
• Use knowledge as linking device

• Look at the consulting industry for the

competitive strategy →
knowledge management strategy →
human resource strategy link
Competitive strategy
Provide high-quality, reliable and fast information-systems
implementation by reusing codified knowledge

Knowledge Management strategy

People-to-documents: Develop an electronic document system
that codifies, stores, disseminates, and allows reuse of
knowledge

HR Strategy
Hire new graduates well suited to the reuse of knowledge and
the implementation of solutions.
Train people in groups and through computer-based distance
learning
Reward people for using, contributing to document databases
Competitive strategy
Provide creative, analytically rigorous advice on high-level
strategic problems by channeling individual expertise

Knowledge Management strategy

Develop networks for linking people so that tacit knowledge
can be shared

HR Strategy
•Hire MBAs who like problem solving and can tolerate ambiguity
•Train people through one-on-one mentoring
•Reward people for directly sharing knowledge with others
 5-Point Agenda for
HR Professionals

To get closer to top management,

and to be able to take proactive measures:

Spend more time and effort understanding

the business environment and the key
strategic issues faced by your company
 5-Point Agenda for
HR Professionals

Good performance of line managers

in HR roles;
Increasing specialisation in job functions

Get involved in operational details

and issues
 5-Point Agenda for
HR Professionals
The gap between blue collar and white collar is
narrowing;
Manufacturing organisations are becoming lean
and manned by skilled employees

Bridge the gap between HR and IR:

Take an integrated look at people in the

organisation
 5-Point Agenda for
HR Professionals

See yourselves as knowledge workers and

facilitators of knowledge flows within the
organisation
 5-Point Agenda for
HR Professionals

Change from a support paradigm to a

value creation paradigm

HR resources can permit tremendous

flexibility in strategic options - e.g. ICICI
 Some Concerns
• Fragmentation and over-specialisation
of HR function
• Separation of “resourcing” from HR
• Failure to build credibility
• Value-addition not clear
• Is the software industry really that
different?
Thank you

rishi@iimb.ernet.in
98450 22710