Presented By: Prof.

Mangeshika Tiwary PICT STM

Business Environment in INDIA

The New Economic Policy(NEP),1991.
Open up the Economy Removed Licenses and Permit System

Helped in expanding manufacturing and services

industry. Allowed easy foreign investment

Earlier Scenario
Industrial Enterprise till 80s
Has been operating within a protected environment Got accustomed to a protected market application of

R & D, rather than primary R & D Customer had to wait longer for a product, like in Auto Industry.

With New Economic Policy (NEP),1991.

LPG came in India,

L- liberalization P- privatization G-globalization, with LPG changes in Indian Business Environment happened and continued. Lot of MNCS came to India.

MNCS came in India with,

Good quality of product
Fastest delivery Cheaper goods

Good after sale service

This increase the number of market players/companies in a particular sector. E.g. Airtel; Vodafone; Reliance Replaced monopoly or dominant market share with larger

C i.e. Competition.

Continues.
In Monopoly customer was at the mercy of seller. In todays Competitive environmentsellers run behind the With changes in Indian Business Environment, there are

customers, making customer an integral part "of the business.

changes in : Standard of living Product Quality Technology Consumer Culture Quality of services Infrastructure Education

Today the whole market is based on cutthroat competition.

Companies are trying to reduce their overheads so that they can,

i ) sell better; ii) increase their marginal profits iii) maintain minimum surplus to run the business. The only area where they can cut cost or reduce overheads is Labor /Employees, because if there is any imbalance in production; marketing; quality ; technology, then market is gone for that company or market player. As a result today we have leaner/flatter organization.

Flatter Organization
Flatter Organization
Runs on the principles of 1:2:3 now become 1:2:5, where one

employee works at place of two and desired to give output of five.

Why we have flatter organization?

LPG

Boom to Business in INDIA

Reduce Overheads

Increase Profit Marginal profit Assured minimum surplus Surviving the Competition

1).Labour (Only Area to cut the cost 2.)Limited reduction in, 1. Production 2. Marketing 3. Quality 4. Technology

Customers, gets
3.)Operationally its easier to deploy,control,get output from smaller and flexible workforce. discounted price, quality products at

cheaper rates.

Leads to increase customers

Appropriateness of Organization Structure in context of change demands.

Outer Context

Inner Context

Outer context is the pressure and demands that external

environment put on a company.

Inner context is the state of readiness and the ability of an

organization to cope with the pressures and demands that external environment would make on it.

Levels of H.R. roles.

Today H.R. is playing both administrative role which includes

Level 1 to Level 3 activities as well as role of a business partner(strategic role) includes Level 4 & Level 5 activities .

Level 1-Thebottom most level activity. Includes documentation,

data gathering, record keeping and MIS.

Level 2-revolves around monitoring and execution in which the

focus is on collecting information, reminding people ,getting forms filled and statutory obligations fulfilled. E.g. monitoring appraisal forms filled up in time.

Levels of H.R. roles

Level 3-Here designing and implementing are vital

activities wherein the focus is on reviewing the existing systems,redesigninng and starting new practices in performance appraisal, Learning and Development etc.

Levels of H.R. roles

Level4-Here H.R. focuses on strategizing, innovating,

and leading across the Organization. Here H.R. managers align H.R. functions with organizational goals, becomes talent focused and the concern is on acquiring, retaining, nurturing and multiplying talent.

Levels of H.R. roles

Level5-This is the most progressive level focused on

making H.R. a business partner. Here ,managers realize that there can be no business without talented people at all levels and particularly at the top. They believe in philosophy that people make business and therefore people-driven talent management "is essential.

Todays H.R. managers shifted their focus from: -tangibles to intangibles -Short term goals to building long-term capabilities -Quarterly results to intellectual capital-building and shareholder value enhancement.

Role of H.R. Today

Today H.R. understands customers and other stakeholders and

direct the talent to be business focused.

H.R. Managers today are growing to be CEO of the

Organizations.

Today H.R. people or managers have business sense, they

influence Organizational Culture and make positive changes within the Organization.

Role of H.R. Today

H.R. has become one of the profit centers in any

business, by its contributions.

Retention of Key People By managing change Improving work culture Handling surplus employees and making redundancy

cost-effective.
This is how O.D. comes in picture.

O.D. is like R&D of H.R.

Organization is made up of 3 essential components:
1. Technology 2. Structure & 3. People

1.Technology a) To compete with the competitors b) To give quality products c) To satisfy needs of the customers

O.D. is like R&D of H.R.

2.Structure a)Division of work b)Defines the levels c)Authority positions 3.People a)They control all other resources b)Use their potential to complete the job c)Ultimately determines the effectiveness of the strategy development, its implementation and subsequent competitive success.

O.D. is like R&D of H.R

For the organization to achieve its competitive success

,it is H.R. who ensures that the human asset is effectively aligned with strategy that is chosen by the organisation. With this H.R. plays a role of O.D. practitioner in an organization.

H.R. plays a role of O.D. practitioner in an organization.

By giving O.D. perspective to H.R. ,H.R. professionals :
1.

create and support strategies for organizational transformation, including the design and delivery of H.R. intervention in support of these.

2. Take a lead role in shaping organization design. 1.

Support organization in major change and organization design.

O.D. is an Organizational Improvement Strategy

Strategy:

A Strategy is the pattern or plan that integrates an organizations major goals, policies and action sequences into a cohesive whole. by-James Brian Quinns

O.D. is an Organizational Improvement Strategy

If the organization has a mission to accomplish, then

it plans a strategy to attain it.

One of the basic objectives of any organization is

growth.
Growth and prosperity are closely associated with the

Strategic planning of the organization. Therefore companies select growth strategies as per their need, are classified into Organic & Inorganic growth strategies.

Strategic H.R.
Environmental changes and increasing competition among

organizations contribute to fostering an integrated approach towards the human resource management strategy and corporate strategy.
This approach links H.R. Function with the long term

corporate strategy.
An organizations choice of strategy determines its

approach to competitive advantage and provides the basis for action in the various functional areas, including H.R.

Strategic H.R.
The achievement of the goals and objectives of the

organization depends on the people "in the organization, how they are made available, developed, motivated and retained in the organization, all is done by H.R.
H.R. performs two distinct functions: administrative &

Strategic functions.

Strategic H.R
The essence of H.R. is strategic.
Strategic function of H.R. demands right people in

place to carry out strategic initiative. Like senior H.R. personnel's. E.g.- V.P. H.R. or Sr. V.P. H.R. Requires business knowledge, financial skills as well as consulting skills. H.R. Strategy is the way organization plans to utilize its human resources.

Any Business Strategy has effect on H.R.

This makes H.R. acts as a catalyst or change agent, leads to Organization Development.

Developing Organization's Competitive Advantage

H.R. plays potential role in implementing strategy and

developing an organization competitive advantage.

In essence ,an organizations competitive advantage is

more likely obtained when its H.R. is effectively linked with its strategy. The benefit of H.R. being a part of the strategic process can be measured.

H.R. objective measure of Strategic Readiness

H.R. measure this by measuring organizations

competencies, leadership , Culture, alignment, and learning. Strategic Competence: understand what competencies needed, available and plan to close the gap. Leadership: build leadership pipeline.

1.

1.

1.

Culture: internalize a shared vision aligned with strategy. Culture Alignment Survey % of personal understand strategy.

H.R. objective measure of Strategic Readiness

4. Alignment: personal goals linked to organizational goals. % of goal alignment % of incentive alignment
5.Learning & Knowledge: sharing of knowledge & experience needed by the strategy. Sharing across departments : best practices, key people,teams,rewards.

Business Strategies & Challenges of H.R. as O.D. Practitioner

With the changing business strategies,H.R. has to

respond with new H.R. strategies which leads to overall Organizational D

Business Strategy or Growth Strategy

Growth Strategies

Organic Growth Strategies

In-Organic Growth Strategies

Expansion Diversification Innovation etc

Merger &Acquisition

Joint Ventures

Strategic Alliances

Merger & Acquisition as Growth Strategy

A merger is a combination of two companies to form a

new company, while an acquisition is the purchase of one company by another with no new company being formed.

Reasons for merger & acquisition(M&A)

To realize economies of scale
Increase revenue Synergy

Geographical or other diversification & recourse

transfer. Change of management To create anti-competitive effect To improve operative performance Expansion

Human side of merger & acquisition activity

It has been estimated that anywhere from 50% to 75% of all

M&A fail to achieve their financial or strategic objectives.

Organizations tend to invest time ,money and energy in

initial due diligence activities, such as assessing strategic fit, evaluating financial models, considering possible market And customer reactions, and contemplating productroadmaps,but tend to invest relatively little in understanding the mergers possible impact on people. (Tetenbaum,1999)

Changing focus or focusing on Human Side of M&A

In todays economy ,the management of human side of

change is the real key to maximizing the value of a deal. i.e. (M&A).
This is where H.R. comes in picture. As H.R. needs to

be engaged in any big organizational change and acts as a change agent, because people issues occurs at several phases or stages of M&A activity.

Three stages of M&A

1.

Pre-combination
Identifying reasons for the M&A

Forming M&A team leader

Searching for potential partners

Planning for managing the process of M&A

Planning to learn from processes.

Three stages of M&A

2. Combination & Integration
Selecting the integration manager Designing /implementing teams Creating the new structure,strategies,leadership Retaining key employees Motivating the employees Managing the change process Communicating to involving stakeholders Deciding on H.R. policies and practices

Three stages of M&A

3. Solidification & Assessment
Solidifying leadership & staffing Assessing the new strategies & structure

Assessing the new culture

Assessing the new HRM policies & practices Assessing the concerns of the stakeholders Revising as needed Learning from the process

Role of H.R. Department in M&A activity

1.
2 3 4 5 6 7

Developing key H.R. Strategies for a companys M&A activities.

Managing the administrative role. Providing input into managing the process of change. Advising top management on the merged companys new organization structure. Overseeing the communications. Managing the learning process. Re-casting the H.R. Department itself.

Role of H.R. Department in M&A activity

8.
9. 10 11. 12. 13. 14.

Identifying and embracing new roles for the H.R. Leader.

Identifying and developing new competencies .Relocation of individuals Harmonisation of compensation & benefits. Training Retention of key people Managing employee insecurities

conclusion
The key H.R. role is not only in M&A.
The application of H.R. strategies itself is an O.D.

intervention.
Change has to be made at all levels in the organization.

Thank You