“Effects of changing Business Environment on Business Strategies and Challenges of H.R. as O.D. Practitioner.”

1. Presented by: Mangeshika Tiwary
Faculty -H.R.
PICT STM

2. 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

3. Earlier Scenario
 Industrial Enterprise till 80’s
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.

4. 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 MNC’S
came to India.

5. MNC’S 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.

6. Continues….
 In Monopoly– customer was at the mercy of seller.
 In today’s “Competitive environment”—sellers run behind the
customers, making customer “an integral part "of the business.
 With changes in Indian Business Environment, there are
changes in :
 Standard of living
 Product Quality
 Technology
 Consumer Culture
 Quality of services
 Infrastructure
 Education

7. Today the whole market is based on cut-
throat 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.

8. 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?

9. 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
3.)Operationally its easier to
deploy,control,get output
from smaller and flexible
workforce.
Leads to
increase
customers
Customers, gets
discounted price,
quality products at
cheaper rates.

10. Appropriateness of Organization Structure in context of
change demands.
Outer 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.
Inner Context

11. 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.

12. 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.

13. 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.

14. 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.

15. Today’s 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.

16. 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.

17. 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.

18. 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

19. 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.

20. 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.

21. 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.

22. O.D. is an “Organizational
Improvement Strategy”
 Strategy:
“A Strategy is the pattern or plan that integrates an
organization’s major goals, policies and action
sequences into a cohesive whole.”
by-James Brian Quinn’s

23. 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.

24. 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.

25. 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.

26. 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.

27. Any Business Strategy has effect on
H.R.
“This makes H.R. acts as a catalyst or change agent,
leads to Organization Development.”

28. Developing Organization's
Competitive Advantage
 H.R. plays potential role in implementing strategy and
developing an organization competitive advantage.
 In essence ,an organization’s 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.

29. H.R. objective measure of Strategic
Readiness
 H.R. measure this by measuring organization’s
competencies, leadership , Culture, alignment, and
learning.
1. Strategic Competence: understand what competencies
needed, available and plan to close the gap.
1. Leadership: build leadership pipeline.
1. Culture: internalize a shared vision aligned with strategy.
 Culture Alignment Survey
 % of personal understand strategy.

30. 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.

31. 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

32. Business Strategy or Growth
Strategy
Growth Strategies
Organic
Growth
Strategies
In-Organic
Growth
Strategies
•Expansion
•Diversification
•Innovation etc
Merger
&Acquisition
Joint
Ventures
Strategic
Alliances

33. 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.

34. 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

35. 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 merger’s possible impact on people.
(Tetenbaum,1999)

36. Changing focus or focusing on
Human Side of M&A
 In today’s 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.

37. 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.

38. 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

39. 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

40. Role of H.R. Department in M&A
activity
1. Developing key H.R. Strategies for a company’s M&A activities.
2 Managing the administrative role.
3 Providing input into managing the process of change.
4 Advising top management on the merged company’s new
organization structure.
5 Overseeing the communications.
6 Managing the learning process.
7 Re-casting the H.R. Department itself.

41. Role of H.R. Department in M&A
activity
8. Identifying and embracing new roles for the H.R. Leader.
9. Identifying and developing new competencies
10 .Relocation of individuals
11. Harmonisation of compensation & benefits.
12. Training
13. Retention of key people
14. Managing employee insecurities

42. 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.

43. Thank You