HR strategies for future

What is HR Strategy?

According to a research by Dr Wright (Professor of Strategic Human Resources at the School of Industrial and Labour Relations at Cornell University), published by SHRM, HR strategies need to simultaneously focus on building skills, motivation and behaviour for a successful business strategy as per specific business model.

Case study of Jet Airways

In the beginning

Let’s take the case study of Jet Airways which started operations in India in 1994. Airline company had developed employee culture and best practices from start which became benchmark for the industry and something for Jet Airways to be proud of. Right team of professionals who were experienced in the industry, established SOP and culture which made Jet Airways airline of choice for everybody. Professionally trained staff contributed to company growth as the HR strategy was aligned to the business goal. It is customer experience industry and Jet Airways delivered very well on that count.

Aftermath of Sahara acquisition and 2008 economic crisis

But situation changed from 2007 when Jet Airways acquired Sahara Airlines. Acquisition turned out to be a bad move for Jet Airways. Why? Employee culture to a large extent was to blame for it which overhang for many following years. Clash of interests, discrimination and cultural differences made it a bad fit. Problems worsened when economy slowed down following the 2008 economic crisis and due to high fuel prices. Discretionary spending cut, salary delays, pay cuts and layoffs followed which affected employee morale and that weakened Jet Airways internally. Although wrong business decisions were the main factors, employee morale and behaviour were contributory as well to degraded performance at a time when low cost airlines became more popular and heat of competition was felt. Was the HR strategy still aligned to the business goal? No more I would say.

Efforts to save the Airline – Etihad investment

Etihad investment in the company in 2013 provided opportunity to survive longer but not forever. Although that partnership could be good for standardising and diversification, that brought further complexities of cultural fit to the organisation. Control and Management alignment did not work well and Airline finally succumbed in 2019. More than 20000 highly trained and experienced employees were rendered jobless overnight, set aside more than that employed with vendors and contractors.

Competition with LCC

Airline industry is highly competitive, isn’t it? Low cost Airline like Indigo which started operations in 2006, in contrast to full service airline Jet Airways, had branding pitch line “On Time Every Time”. What flyers want? Most want ‘low cost’ and ‘on time’. Indigo had aligned its HR strategy for its business model and that has continued till today. Needless to say that Indigo is Maruti-Suzuki of India, holding roughly half the market share.

The Conclusion

So, HR strategy needs to match business goals always with changing times like these. Training, discipline and established best practices within available resources become crucial when ship grows larger, particularly, when there are known and unknown headwinds.

Practical Application of HR Strategies

Practically we see three types of human resource strategies companies adopt depending on their business needs, as per Dr Wright:

High Performance Work System (HPWS)

This approach may be adopted by all companies as this would improve the performance.

This system works by answering following questions and answers will tell you the effectiveness of the system for a particular organisation:

  • What proportion of the workforce is included in a formal information-sharing program, such as a newsletter?
  • What proportion of workers have had a formal job analysis?
  • What proportion of non-entry-level jobs have been filled from within in recent years?
  • What proportion of the workforce is administered attitude surveys regularly?
  • What proportion of the workforce participates in Quality of Work Life (QWL) programs, Quality Circles (QC) and/or labour-management teams?
  • What proportion of the workforce has access to company incentive plans, profit-sharing plans and/or gain-sharing plans?
  • What is the average number of hours of training for a typical employee over the last 12 months?
  • What proportion of the workforce has access to a formal grievance procedure and/or complaint resolution system?
  • What proportion of the workforce takes an employment test prior to hiring?
  • What proportion of the workforce has performance appraisals to determine compensation?
  • What proportion of the workforce receives formal performance appraisals?
  • Which of the following promotion decision rules is used most often?       a. Merit of performance rating alone. b. Seniority only if merit is equal. c. Seniority among employees who meet a minimum merit requirement. d. Seniority.
  •  For each of the five positions that your firm hires most frequently, how many qualified applicants are there, on average?

Commitments vs Control Strategies

Most companies would follow either or both of these strategies:

The commitment HR strategy would include:

  • Broadly defined tasks.
  • High levels of employee participation.
  • Highly skilled workers.
  • Extensive training.
  • High wages.
  • High benefits.

However, the control HR strategy would represent the opposite:

  • Narrowly defined jobs.
  • Low participation.
  • Low skill requirements.
  • Intense supervision or control.
  • Limited training.
  • Low wages.
  • Low benefits.

Commitment strategy generally leads to the best firm performance for those using a differentiation business strategy, but the control strategy may work best for firms with a cost business strategy.

The Value Matrix Approach

Organisations may evaluate the job roles, their value to the organisation and availability in the job market; and apply four distinct approaches as follows:

Strategy     Role      Position

Perfor-       Key          Internal

mance        Staff  

Commi-     Core-       Internal

tment         Staff

Comp-       Suppo-    External

liance        rt Staff     or Internal 

Collabo-     R&D        External

rative                          or Internal

How HR Strategies affect Performance

As in case study of the Jet Airways and Indigo discussed in first para, what employees do to achieve the business goal of the company? Obviously, they will give (duty, service, happiness) with what they have (skill, training, attitude). And the result is business goal achieved (happy customer, customer got what they wanted). Training, Development, Engagement and Appreciation motivate employees to not only do their essential duties promptly but also go extra mile in extending discretionary gestures (like bringing smile to the needy and children). Absence of such initiatives would bring opposite results.

Building your own HR Strategy

You may follow the following steps before building an effective HR Strategy for your organisation:

  • Analyse your Industry
  • Understand your Value Chain
  • Recognise your Key Processes
  • Identify your Key People
  • Build your HR Strategy

The Challenges

  • The Talent Requirement

Business leaders and CEOs would need a high performance team to achieve business goals. HR managers and executives would have responsibility to identify the key people and people with required talent to perform the critical jobs like establishing and implementing production, quality, marketing and research best practices.

  • Attracting and Retaining Talent pool with limited resources

As attracting and retaining the required talent is a must to achieve the business goals, there will always be the pressure to do more with less and that might be tactical and balancing act often.

  • Globalisation and Diversity

Globalisation and diversity would further complicate the process of finding talent and applying the HR practices. HR practices to engage talent and key people and standardising such practices across geographies and diverse cultures would have to be mastered for successful implementation.

Conclusion

Discussed above are the practical scenarios, observations and broad guidelines on various HR strategies. What approach you take to formulate the best HR strategy for your organisation depends on your organisation’s business activities, business goals, strengths and weaknesses. A combination of the approaches discussed above may be applied to achieve desired outcomes. A well balanced and engaging HR strategy aligned to the business goals would definitely improve operational performance resulting in higher customer satisfaction and financial outcomes. Needless to say that HR strategy is made for years to come continuously evaluated for its effectiveness and weak points. Better HR strategy will keep evolving with right feedback applied resulting in policies and practices.

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