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Most common theme of HR strategy

Human capital is increasingly being seen as an issue of strategic significance in the industry today. It is this aspect of competition that provides most decisive elements of business advantage for a company by way of market responsiveness, process and technology innovation or enhancing customer experience.

A company can maximize the benefits from its human assets, when it is able to align and achieve congruence between individual and organizational goals. The challenge for HR experts in the organization lies in bringing about high degree of alignment so that the contribution of people in each and every activity along the value chain
becomes a key differentiator in the industry.

High levels of performance and competence of people definitely provide a company edge over its competitors, but the second part of challenge for a HR professional lies in making this advantage sustainable over a period of time. This in effect means that people contribute effectively to fulfill the organizational goals both now and in future.

Putting the two challenges together takes us to the core of most generic HR strategy pursued across the industries. The HR professionals responsible for crafting HR strategy should focus on gaining highest levels of commitment from the people towards organizational goals and at the same time building loyalty among the people for the organization. This then is most common and yet the most challenging theme of HR strategy today.
Critical HR factors
Identifying critical factors, competencies and issues which are essential for building a culture of high performance and ensuring excellent long term relationships with employees is crucial for articulating and pursuing effective HR strategy.

Some factors such as empowerment, involvement, respect, trust etc. are basic and generally accepted drivers of excellent long term relationship and commitment with people in an organization. Such factors also emerge from the core values of the organization and may also have basis in ethical values. Complying behaviours with respect to these aspects is considered very important by the organization. A point to remember in this context is that extrinsic benefits like perks and salary by themselves are not major determinants of long term relationship with employees but when designed properly may drive the commitment of people to the organizational goals. Other factors which the HR strategy may target are those issues which are industry specific and play a major role in developing a committed work force.
Industry specific factors of HR strategy
A manufacturing company where hazardous chemical or metallurgical processes are involved, may have safety as key HR aspect for employee commitment and loyalty. A company which is considered pioneer in creating new markets and products may have appropriate measures to encourage creativity and innovation as a major HR challenge. HR strategy of a service organization may typically focus on developing customer orientation at every level in the organization to drive the overall strategic goals of the company. Similarly an organization competing in knowledge based industry (software, consulting etc.) having presence globally may emphasize knowledge sharing as an underlying HR issue for achieving the business goals. A company in a cyclical industry, where downsizing follows the troughs in the business cycle, job security may prove to be a driver for loyalty of the employees.
Framework for identifying key HR issues
A framework initially developed by Alan W. Speaker helps in identifying those overarching HR issues which drive the generic HR strategy of commitment and loyalty. The 2X2 framework bisects the two aspects of HR strategy (impact on organizational goals and employee relations) on two axes as shown below.



Issues which typically appear in top right quadrant have high impact on both achievement of organizational goals and long term relations with employees. Similarly issues appearing in the top left quadrant have high impact on the organizational goals but do not necessarily drive employee loyalty. Issues appearing in the bottom right quadrant typically contribute to excellent long term relations with people and those appearing in the bottom left quadrant are typically transactional in nature, which are taken as givens in an industry. For example payrolls in any industry is treated as given, higher salaries in IT industry and occupational health care in manufacturing industry are taken for granted. These issues are generally taken care of by administrative policies in the company.

The creativity of HR professional lies in identifying the issues that fall in the top right quadrant for an organization and target them to align individual goals and incentives with organizational goals and on the way build long term relations with the people to such an extent that the differentiation brought about by human capital is transformed into a sustainable competitive advantage.

Related articles:
HR contribution to competitiveness
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