Aligning HR and IT Strategy: ARAM CO and ABV Rock



Whenever a company is assessed, the first thing which is noticed is that how capable it is of providing the service or the product which it is promising. Capabilities of a company can be defined as complex bundles of professional skills and accumulated knowledge which are only possible if exercised through organizational procedures, due to this a firm is able to co-ordinate activities and make application of the assets.

The word strategy is originated from Greek language but was not used in the same meanings as it is being used nowadays. Today, dictionary defines strategy as a "systematic plan of action" or "an action plan that has been intended to attain a particular goal". Here, the meaning shows the importance of this strategy in various fields of life and business is among one of them. A business also requires strategy based planning to run its operations in a smooth manner. As we know that large firms divide their business into different operational parts like Human Resource, Marketing, Finance and IT etc. each of that operational part also requires an individual strategy to help add some value for the business overall.

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First of all, a strategic analysis is to done for this purpose whose aim is to gather the relevant information. This process consists of internal and external strategic analysis for the classification of primary issues and subsequently evaluating options and selection among one of the option that fits best with the organizational setting (Campbell, Stonehouse and Houston, 2002).

There are three basic capabilities which influence a client and customer relationship which are as follows

Human Resources

Information Technology

Marketing Knowledge

Human Resources

Human resource helps when performance and relating issues of a company are concerned. For example managers prefer to get information from general public and this public adds value by interpreting and adding context as feedback in to the raw information already obtained. For the Human resource capability DeLone and McLean in the year 1992 developed numerous measures to calculate system quality assessing attributes such as system reliability, response time and system accessibility (Delone and Meclean, 1992). Ravichandran and Lertwongsatien in 2005 calculated human capital by personal skill and human resource specificity (Ravichandaran and lertwongsatien, 2005). Byrd and Turner in the year 2000 had the method of using human capability as the component of personnel skills and competencies, technology knowledge, business knowledge, management knowledge, and technical skills (Byrd and Turner, 2000).

Human Resources sometimes also referred to as personnel departments, are responsible for handling any company's entire human quota. It is the responsibility of this department to add value to any company. Some departments are successful in achieving this while others may not be able to do so. Typical human resource departments nowadays have a command and follow setup. This sort of set up needs to be changed as the duty of any human resource department is to help the employees and increase their productivity; this can be easily and quickly achieved by incorporating certain aspects of IT into this area.

Information Technology

The capability of having information technology for a company helps in contributing towards the business value and also it affects the performance of a company. The tools of information technology help in realizing how fast the market moves and also response according to the rapid changes in the marketing environment. IT infrastructure flexibility can be defined as "the capabilities to easily and readily support a broad variety of software, hardware, data, communications technology, skill and competency, and core application" (Byrd and Turner, 2000). Their instrument assessing IT capability consists of three factors:



IT personnel flexibility.

The integration factors refer to the respondents who consider that transparent access into all organizational platforms contributes to the flexibility of the IT infrastructure. The modularity factor is the technical IT infrastructure, which is associated with hardware, software, and data in the organization. IT personnel flexibility refers to the human component of the existing IT infrastructure.

Marketing Knowledge

It is a mechanism for distributing knowledge resources. There are two views on knowledge and how knowledge markets can function. One view uses a legal construct of intellectual property to make knowledge a typical scarce resource, so that traditional commodity market mechanism can be applied directly to distribute it. An alternative model is based on treating knowledge as a public good and hence encouraging free sharing of knowledge. The components of "organizational learning, includes information acquisition, information dissemination, shared interpretation, declarative memory, and procedural memory" (Tippins and Sohi, 2003). It is also possible that knowledge management can be measured by the infrastructure potential of technology, structure, culture and the process capability of acquisition, conversion, application, and protection (Gold, Malhotra and Seagers, 2001).

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If a flow chart of these three capabilities has to be shown it would look like this:

Here one can see that three major steps are important. First it is important to identify the capabilities in the company then it is important that the control variables, that are satisfaction and trust, are present between both the client and the company. If either one is absent there could be major problems at both ends. As every one knows that satisfaction is something that the company has to deliver to the client either in the form of product or in the form of services, the variable satisfaction also should broadly include tangibles, reliability, responsiveness, competence, courtesy, credibility, a feeling of security, access, communication, and understanding, all these points do have a validity under the heading of satisfaction (Parasuraman, Zeithaml, and Berry, 1988). Whereas trust is something which comes from the client's end, if there is trust towards the company one is trying to approach then for sure half work is already in the bracket of top quality. Trust contains elements like power, expertise, similarity, likeability, extent of social interaction, frequent contact, and length of relationship which are the key to help identify a salesperson trust. So both trust and satisfaction goes hand in hand and are needed for a successful venture.

The most important thing which is mandatory to be discussed is the ICT strategy taken by the two companies which have been assigned to us. Also as discussed above a two way strategy can be followed that is using Human Resources and Information technology. Why we are not using the marketing capability is due to the reason that both of the companies are at the levels where marketing is not necessary. ARAM CO and ABV Rock Group are companies which are not selling their services or products at consumer levels, at which the marketing techniques are much more important, so here only two techniques that is HR and ICT capabilities would be enough for us to look upon. It would be easier when both techniques are discussed separately and then discussed together in order to realize what are the main goals which could be achieved by them. First the HR strategies would be discussed then IT strategies are going to be evaluated.

HR Strategies

Human resource means the human capital available for work on the various organizational positions. Human resources are the people with capabilities, skills and experiences that are beneficial for the organization. The field with the help of which human capital of an organization is managed is called Human Resource Management (HRM). Human Resource Management is defined as developing systems to make sure that human resources of an organization are being used effectively to attain the goals and objectives of the organization (Jackson and Mathis, 2008).

Therefore, the process of managing human capital in an organization also requires developing of sharp plans that are useful to effectively utilize the skills and expertise possessed by the human capital. Developing the action plan is the core objective of strategy as elaborated through its definition. We can configure that developing an HR strategy is essential for the organization in order to recruit, utilize and retain skillful employees that in the long run, would be able to help organization achieve its long term objectives. In this section we will discuss in detail, the process of strategic planning, HR process and models and how an organization can develop and apply HR strategy to achieve long term success.

The strategic process

Mintzberg and Quinn (1992) defined strategies in the form of five Ps that are plan, play, pattern of behaviors, position as compared to that of competitors and perspective. In addition, Chandler (1962) defines strategy as the process of developing the action plan to recognize and achieve long term goals and objectives of an organization. The process of developing an action plan cannot be accomplished without resources. A business firm can have four types of resources that are categorized as financial resources, human resources, physical resources and intellectual resources (Campbell et al, 2002). There are five commonly used and most agreed upon approaches to strategy:

Planning approach requires a long term planning to create a fit between strategy and external environment (Andrews, 1987). The competitive positioning approach is developing a strategic fit between organization and environment and taking advantage of it through a five forces model of competitive strategies (Porter, 1985). Learning approach believes that there is always a gap between planned and actual situation so the organization should be dynamic and favor learning due to the volatility of the environment in which it operates (Mintzberg et al 1995). Knowledge based approach is considered as a part of competitive strategies most of the time.

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The process of strategic management involves four steps that are scanning of internal and external environment, strategy formulation in shape of mission, objective and policies, implementation of the strategy through standard operating procedures, programs and budgets and subsequently controlling and evaluation of performance results. Feedback is taken from all key stakeholders throughout the course of process. Environmental scanning is done through scanning the important variables present in the task and societal environment of the enterprise e.g. social, technological, political, etc. Issue priority matrix, Porter's approach to industry analysis, industry matrix, value chain analysis and PEST analysis are tools mostly used to scan internal and external environment of the firm. SWOT analysis, review of organizational mission and objectives, SFAS matrix, TOWS matrix, BCG matrix approach, GE business screen and portfolio analysis are considered in the strategy formulation stage. Managers of the firm implement the strategy through procedures, budgets and programs.

Structure of the organization plays a vital role in determining who should implement what level of strategy. Recruiting the manager then training him according to strategy implementation skills is crucial. In evaluation and control, managers of the firm determine what needs to be measured and develop performance standards. They monitor the performance, identify the gap between actual and desired performance and try to fill out the gap by taking corrective actions like training and development of the employees or human capital of the firm in order to equip them with essential skills that are required to complete the task. Control can be implemented in the form of input and behavior control. Feedback plays an important role in determining the appropriate measures for each stage (Wheelen, Hunger and Rangarajan, 2004).

Human Resource Management

The process of human resource management is related with the management of human beings working in the firm. There are five core activities of human resource management that are recruitment, selection, training and development, reward and compensation and finally performance appraisals. A thorough job analysis is also required before recruiting the people in the organization. Carrying out human resource best management practices is necessary for the organization because it is aimed to reduce the employee turnover ratio, hire best people for the positions, and to reduce the chances of law suits for discriminating and unfair human resource treatment. Human resource management is evolving continuously. Thus the firm needs to be aligned with current trends of human resource management. Globalization for instance is an emerging concept in recruitment and selection that allow selected people from remote areas to work for the firm without the need of bringing them physically to company's location (Dessler, 2008).

The HR Process

The human resource process involves various steps to complete the HRM cycle for example HR planning, recruitment and selection, training and development, compensation management, performance appraisal and management and maintaining relationships with employees. We discuss these elements individually below.

HR Planning

HR planning involves determining the need of organizational staffing by categorizing the managerial positions and number of skilled labor required. This task is accomplished through doing job analysis and preparing detailed job descriptions. Job analysis task is accomplished by conducting interviews, filling out questionnaires, long observations and maintaining logs. Some quantitative techniques are also available. Resources available on Internet can play a positive role in conducting job analysis. Job descriptions are developed after the job analysis. These are the statements about general tasks and responsibilities of a certain position. Job description also states the performance standards and working conditions. It states the relationship of position with other positions in the enterprise (Dessler, 2008).

Recruitment and Selection

Through the recruitment process, a firm creates a pool of qualified candidates. In the selection process, it selects the most appropriate person from the group generated by recruitment process. Recruitment is a critical process that involves careful planning and strict human resource policies because it leads to the development of employer brand. HR planning should be done in detail in order to successfully go through the recruitment process. There are two main sources of recruitment i.e. internal recruitment and external recruitment. External recruitment can be accomplished through advertising, employment agencies and Internet. While internal recruitment is done through employee referrals which is the largest source of recruitment for business firms in the world. Final selection process is completed by selecting most appropriate candidate by testing him with the help of established tools like written test, interviews, psychological and personality tests and physical examinations (Gomez-Mejia, Balkin, and Cardy, 2009).

Training and Development

Training of an employee starts right after his selection. This is called orientation. Orientation is carried out at first to introduce the employees with culture, core business, background and operations of the organization. The purpose of training and development is to improve the performance and skills of human resources of the organization. Garavan, Costine, and Heraty (1995) categorized it into training, education and development. Training can be of any type like technical or job related or interpersonal. Trainings on career development are also conducted for the employees. Issues related with training and development are nature, subject, cost and time required for conducting such programs. Training can be both internal and external. Online training programs are also gaining rapid importance nowadays (Jackson and Mathis, 2008).

Compensation and Rewards

Compensation and rewards are of many types. Compensation can be divided in categories of basic pay or wages, variable pay and benefits. Reward is a broad terminology. It can be both monetary and non monetary. There are two main philosophies of compensation division. One is entitlement philosophy which states that employee is entitled to pay rise if he worked another year irrespective of the performance standards that employee exhibited during last year. Another one is performance philosophy which believes that pay should only be raised only if there is a difference between employees' previous and current performance. Maintaining internal and external equity is important for the organization while deciding the pay for various positions. In addition to monetary rewards, firm should strategically plan giving non monetary rewards like appreciation and employee of the month incentives. They help to increase the motivation level of employees (Jackson and Mathis, 2008).

Performance Management and Appraisal

In this process, standards, goals and objectives are designed for the employees at the beginning. They have to meet the goals and objectives remaining in the certain standards set for completing the tasks. At the end of the working year the actual performance is compared with goals and objectives set at the start of the year. If the performance matches the set criteria, new goals and performance standards are established for the New Year. But if there is a gap in actual and desired performance, the reasons for this gap are identified and tried to be eliminated.

There could be many reasons for the gap like lack of employee competencies and skills or lack of resources allocated etc. There are established methods through research to measure the performance and take the feedback from employees. Some of them are "Paired Comparison Method, Graphic Rating Scale, Forced Distribution Method, Alternation Ranking Method, Annual confidential Report (ACR), Critical Incident Method, Narrative Forms, Behaviorally Anchored Rating Scale and Management by Objective (MBO)". Web based and computerized performance appraisal programs are also gaining importance in the business world gradually. Main questions of appraisal are nowadays that who should do the appraisal and how to overcome the problems rising from using different appraisal methods mentioned before (Dessler, 2008).

Managing Employee Relations

Most important thing for managing employee relation is that the firm should have a sound know how of the employment laws and regulations of the country in which the company is doing business. Laws related to wages, work hours, industrial relations, harassment and gender discrimination are also important to consider. Taking care of employee work safety and health issues, ethical behavior in the workplace, discipline and privacy issues and union management issues is also equally imperative (Gomez-Mejia, Balkin, and Cardy, 2009).

Strategic Role of HR

Results of the research of Yang (2008) suggested that HR capability positively impacts the Customer Relationship Management (CRM). Importance of less response time of employee to customers and well informed and correct response is necessary for the firm to succeed. Yang (2008) argued that this can be achieved by increasing HR capability by raising the skills and productive capacities of the workers. This study shows the strategic role of managing human resource for organizational success. When a company gives weight to the training and development of the workforce, it results in the long term benefit of the organization. There should be a "fit" between a corporate strategy and HR strategy which is a functional level strategy (Holbeche, 2009).

Background for Strategic HR

Why firms want to strategically plan HR? Simple answer to this question is that because of rapidly changing business (economic, social and legal) environment, globalization as expected by Ohmae (1985) that it will have an effect on all dimensions of life, volatility in consumer demands and rapid and enormous changes in technology. For these reasons a firm has to think strategically on every business aspect in order to succeed. The organization is in great need of developing strategic HR because human resource is the asset who formulate and execute other strategies of the firm ultimately leading to success or failure (Dessler, 2008).

Developing HR Strategies

HR strategy is a functional level strategy. It must be developed in accordance with business and corporate level strategies. From this we mean that HR strategy must be aligned with upper level organizational strategies in order to be beneficial for the firm. This argument is consistent with that of Holbeche (2009) who also argued that HR strategy and business strategy must be contingent. For creating the "fit" or match between corporate and business strategies and HR strategies, development process of HR strategies can be broken into the following steps (Holbeche, 2009).

Analyze the structure of organization e.g. divisional or functional and determine its culture and management style e.g. flat

Determine the skills, competencies and expertise of the people working in the organization

Determine and analyze the human resource management system and policies

The HR strategies should be developed to reflect other organizational policies and objectives. HR strategies can be made on various HR issues like whether the firm should hire low cost less skilled labor (as of China) or hire high cost but experienced and skilled labor. Whether it should hire individuals for permanent work or hire teams on projected tasks. Whether it should hire permanent employees or lease them from some other agencies because fringe benefits are not to be paid to employees that are leased or hired temporarily. It is also a significant issue of present days due to globalization that whether a firm should induce diverse workforce or people of the same race (Wheelen, Hunger and Rangarajan, 2004). According to the study of Richard (2000), the firms with higher work force diversity are more productive than firms with comparatively low racial diversity.

When an inimitable and effective HR strategy is developed, it creates competitive advantage for the firm. For instance, in Toyota the workforce diversity is considered to be an advantage that is necessarily achieved by developing competent HR strategy. Today, Strategic HR is faced with three challenges i.e. continuous improvement, supporting productive corporate strategy and increasing human element in design as well as in execution and formation. High performance work systems should be established in order to accomplish the strategic HR role (Dessler, 2008).

Strategic management has taken vital part of business planning at all levels recently. HR at lowest strategic level requires more attention than any other functional area to develop strategies carefully because it deals with human capital which is responsible for overall success or failure of the organization. Managing human resource strategically means taking as much benefit from them as possible and aligning them with the corporate strategy. So the firm should adopt a sound HR strategy in order to compete in the modern business environment.

ICT Strategies

There are tons of ways which could be used in pulling of an excellent IT strategy that could work for both ARAM CO and ABV Rock. There are various different types of ICT models which can contribute to the effectiveness of the company in many social and economic ways which give rise to inclusion of more interest in the human aspect. An effective strategy must be adopted to consider both the hardware and software aspects of the company to come up with the necessary amount of development and progress within the infrastructure. The implementation of the right ICT strategies can result in considerable progress and the growth of leadership and effective abilities to tackle any emerging problems head-on. There are many strategies and models which different companies look to worldwide on different levels. One of the most important strategies of this sector is the ISU model which would be discussed below

The ISU Model

The first technique which would be used is known as ISU (Information System Use) model. Basically this model has a set of constructs on which it works upon. There are two levels of loops in this model. The outer circle is on the strategies that are being implied where as the inner set works upon the tactics which would be used. Senior management rules the outer circle where as the technical staff works in the inner circle and both of these loops are inter-connected through the middle management and that is mostly the information resource officer. The Venn diagram of those two loops is as follows:

The loop starts clock wise from top left and its sequence is in the following flow:

Briefing for strategy actors. Strategy actors can be defined as the administration which is found in top circle.

Statement of rules for the development of IT

Specific Strategies implied for

Information Technology

Information Systems

Information Jobs

Information resources

Design, implementation and support of key line and staff roles that includes :

Information Resource Manager

Information Resource Officer

Systematic learning, which helps us entering the next loop

Coming towards the next loop which is the tactical circle, this loop includes:

Study loops for the information staff

Design circle. This is the participative adaptation of the design team which is included in the outer circle

Again design, implementation and support for the careers that revolve around the following jobs:

Constructive users

Routine users


Some Detail Points about the ISU Model

Above all the major points about the ISU model have been discussed. As the second loop ends the ISU model enters the third loop so it goes on and on but only two loops are worth mentioning. As everyone knows that the ISU model is mostly about how IT roles are fitted into a company and its desirable limits. This is mainly because of the reason that there is certain amount of imperialism and cultural politics which is always present in the data processing departments. This happens because non technical staff defers and technical staff claims its authority over technical issues, and this results into having IT strategies and IT projects thrown into the nowhere zone. As these ideas or projects are abandoned by the managers who are not good enough to handle them to those who can only be casted as technically qualified. And solution to this is the techie filter. In the heading below this filter has been discussed in detail.

The techie filter

As the name suggests, the basic role of this is to filter out the people who may have technical skills but lack the required administrative skill and then incorporate the required abilities into them by giving them training and polishing the abilities that they already possess. The filter can have different outcomes which can be looked upon. Here both technical plus administrative skills have been tried in a combination, so that the information cycle could be complete. This step can be achieved when selecting people for job or by giving them training where they lack. Mostly those jobs are of IROs or IRMs. Technical work has never been the issue when it comes to this technique; managing the advance and retreat of the boundary has always been important responsibility of IROs in their project managing role.

Here both ARAM CO and ABV Rock Company have people who are highly technically qualified in their field. It can be said that training about managing a project could be given to those technicians who can handle the IT sector more efficiently then they have done in the past.

These technicalities can more easily be understood by the diagram given below.

th techie domain.bmp

The Practice of ISU model

There are three major aspects that are important to be discussed when it comes to the practical implementation of the ISU model. Those three aspects are as follows:

Educational Development and Training : this provides a basic idea to the people working in the company about concepts and the representation for the structure of the model

Progressive, systematic and explicit refinement of understanding: learning this provides a methodological approach about how to implement an organizational system. "A soft systems approach".

Acquisition of increased options in action: this aspect provides us the key note to the operative style and some more in depth outlines.

All these aspects and some more are also clearly explained in the figure below


Human Resource and IT strategies merged

IT and HR merged.bmp

Merging is looked upon differently in both IT and Human Resource departments. As Human Resource may have to deal with the changes which have to be made in the financial aspect and at the same time taken care of the old and new employee concerns about their payment changes. IT comes in such a situation in this way that when drastic changes are taking place in the company; the Human Resource department has to be able to effectively communicate with different employees at all the levels involved in the changes being made. Through particular measures the IT department can help manage the communications more effectively, helping the other departments in avoiding many possible hassles

As the above given illustration of the ISU model also suggests, when IT and Human Resources are combined we come up with a whole new approach while staying on familiar grounds. Information Resources, a combination of Human Resources and Information Technology helps the company using this model to handle a wide array of aspects more efficiently and effectively. Through this new angle the people working behind the managerial desk become directly involved with the people behind the technical operations.

Thus, we come up with three highly effective areas of interest. Information technology, Information systems and information jobs are the results which give radical control over the information sector as well as handling of the internal framework of employee systems and the technical aspects of the various jobs the company is providing. The jobs system can effectively control the employee to employee as well the employee to manager communication. This gives the appearance of a tightly knit infrastructure which, due to better understanding of what needs to be done and how it needs to be done leads to faster growth and more probable work capacity and potential.

Other models may be considered when looking at the merged capabilities of IT and Human Resources, but the ISU model especially because of its intra business strategy has the most desirable outcomes.


IT capability can link the "front office" where things like sales, marketing, and customer service are going to the services of an organization with the "back office" where services like financial, operations, logistics and human resources are being commenced. Thus, IT capability expands the traditional customer service approach which is going door to door for feedback of the client to a new level by adding technology tools such as the Internet into the overall company e-commerce applications. This will cut down costs on different levels as well as employee levels. It is no doubt that IT has given a new definition to the meaning of communication, interaction and the ISU model gives a very detailed picture of how to implement information technology in the company, by merging human resource with information technology one can expect wonders from an organization. It is evident from all of the above given arguments that this approach should be widely utilized for the fast progress of any new or old well established company.

Both ARAM CO and ABV Rock should consider the merging of their human resources with Information technology not just at the administrative level but also at the technical level. If the technical staff has the understanding of the usage of human resources plus information technology then work of both the management and administration would be much easier when a project that would require great amount of IT assistance would be in front of these companies