Basing yourself on such HR issues raised in the case study, critically evaluate the importance of HR in the development of business strategy with an organization
The development and implementation of business strategy is a key element of business success, and Human Resources are uniquely positioned to establish and realization of such strategies. Unlike any other resource in an organization, Human Resources is widespread, inter-departmental, and involved throughout the company; the nature of HR is to interact with and understand the processes of the business as a whole HR is involved in all aspects of the value chain. Consequently, An effective HR Strategy drives a business towards achieving its overall goals - mission, with its people being the resources for success. Additionally, the human resource is the only resource that a company poses that cannot be replicated. Hence, HR forms the basis of the firm's competitor advantage by creating value through out the value chain.
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Yahoo! Operates to achieve its goals, someone has to define those goals and the means of achieving them. Management is that someone. This management is part of HR. But the lack of ownership and accountability that is been highlighted by Brad Garlinghouse is a clear evidence this key planning function which encompasses defining an organizations goals (mission and vision), and developing a comprehensive set of plans to integrate and coordinate activities are in confusion at Yahoo! (Organizational behavior, 12th Edition - Stephen.P.Robbins, Timothy.A.Judge Page 5) 'We lack a focused, cohesive vision for our company' 'We lack clarity of ownership and accountability' these attributes that are apparent in Yahoo! Will hinder its goal setting and the planning process. Managers are also responsible for designing an organizations structure. We call this function organizing. It includes determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made. (Organizational behavior, 12th Edition - Stephen.P.Robbins, Timothy.A.Judge Page 5) So HR will be directly responsible in creating company structure and direction.
The American steel manufacturer, Nucor, is an excellent example of a company that has integrated its human resource strategy tightly with their business strategies to create inimitable capabilities and drive competitive advantage. Nucor's competitive advantage is based on cost leadership. It achieves this through efficiency, quality, innovation and responsiveness. At the base is a well-matched human resource strategy. Nucor hires goal-oriented, self-reliant people who are motivated by striving for continuous improvement that yields them increasing monetary compensation. Since the production of quality steel depends on teamwork, workers within the plant are eligible for substantial incentives based on the output of their group. But, plant managers' compensation depends not only on the performance of the plant they are managing, but of the company as a whole, this is to provide an incentive to transfer best practices and innovations to other parts of the organization. To keep costs down, it has very few layers, all managers' travel by economy class. Nucor builds small plants, close to locations where there is demand for its products; this is to reduce transportation costs, but also to be more responsive to its customers. Nucor undertakes little research and development on its own, but maintains close links with technology suppliers the world over and keeps a close watch on developments that could affect its competitiveness. It is willing to experiment with new technologies that have been proven at the pilot plant level by using its plant design skills to scale these technologies up to a commercial scale. ("Linking Corporate Strategy and HR Strategy: Implications for HR Professionals," In R. Padaki, N.M. Agrawal, C. Balaji and G. Mahapatra (Eds.) Emerging Asia: An HR Agenda, New Delhi: Tata McGraw-Hill, 2005, pp. 215-223).
For example, At times of new product development when new skills must be learned and messages must be communicated through out business unit HR will have positive contribution. HR provides operational enhancement at the heart of the firms production process or service creation by rationalizing labor for efficiency or economy.
Mangers in their day-to-day operations faces with issues that are specific to that function, division, department or project will control HR that are critical to strategic success of the organization as a whole. They are likely to be most knowledgeable about change in part of business environment. These managers need to understand how the capabilities in their resource area contribute to the overall attainment of business strategy by managing its resource. (Exploring corporate strategy 8th Edition 474 page) however, possession of HR doesn't guarantee strategic success, strategic success lies on how these resource are utilized, managed, controlled and motivated to create competitive advantage. (Exploring corporate strategy 7th Edition 448 page). Furthermore, HR is influenced both through their competencies and behaviors culture. Failure to understand, address and changes in behavior and/or culture might hinder the overall strategy pursued by the business unit.
Write a short memo to the CEO of Yahoo! Proposing HR strategies you would recommend to Yahoo! At this stage of their development.
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As I mentioned above the most important resource of an organization is its people. That's why the importance of what people do, the process and the relationship that is developed in the organization is vital. Yahoo! Is having a traditional formal structure, where a top-down, command control and highly bureaucratic business unit, where managers at the top made the decision and the rest of the organization simply follow and implement them. However, in the current context knowledge is held all through out the organization, its held by employees at every level in the organization, and where change is constant, relying on overly bureaucratic top down structure may no longer be healthy. Structure is a key ingredient of organizing for success. But within any structure, what makes organizations work are the formal and informal organizational processes. These processes can be thought of as controls on the organizations operations and can therefore help or hinder the translation of strategy in to action. (Exploring corporate strategy 7th edition - G.Johnson, K.Scholes, & R.Whittington page 410)
Memo to Yahoo! CEO
How ownership and accountability restored? How Yahoo could change the current business structure? How to decentralize? How to reduce our head count by 15%-20%?
1.To help Yahoo mange its human resources under a strategic change and restructuring process.
2.To be able to assist and eliminate human resource problems at Yahoo especially in redundancies.
3.Restoring accountability and ownership.
III. Areas of Consideration
1. The company lacks human resource management efficiency. They live in different silos.
2. The company is too bureaucratic and there is job duplication within the organization.
3. Top down tall management structure is lacks decisiveness.
4. Lack of accountability and unacceptable leadership.
5. Duplication of work - plumbing of competitive advantage.
1. Societal Trends - Emergence of new social networks,
2. Local Laws and Regulations
IV. Alternative Courses of Actions:
1.Yahoo! Need to do a Strategic Review
Focus on one well thought out vision - need to define boldly what is Yahoo!
Define a mission, where and what direction is Yahoo! Heading. It must be clear, well defined, committed and embraced at all levels.
Find means to have a clear ownership - by creating a sculpted strategy with a decartelization structure.
Top management has to set out goals and need to be accountable.
It is vital important to review the strategy that Yahoo, because changes in strategic direction usually have implications for HR. In this case Yahoo is formulating a deliberately sculpted strategy to focus on core business and to eliminate or exit non-core business and duplicative projects and businesses. The plan to concentrate its resources narrowly will impact on the HR of the whole organization. Clearly HR thinking and practice needs to evolve in response to these challenges of flexibility and changes, specifically in the areas of:
Ownership and accountability.
Staff appraisal where little or no formal supervision.
Distribution of authority where employees are empowered.
Information flow all though out the organization.
Remuneration strategies where not easily attributable to individuals alone.
Planning horizons, where teamwork is key.
2.Structure should follow strategy.
A static concept of formal structure is less and less appropriate for volatile, fast moving, knowledge driven, uncertain Internet search engine such as Yahoo! Your organization needs to be able to constantly adopt and skilled at reorganizing in response to changing conditions. Secondly, the importance of knowledge creation and sharing, need to identify and harness the vital knowledge that lies throughout the organization, it requires more of an informal relationship formal top down hierarchies will not help Yahoo! In generating and sharing the knowledge that is fundamental to competitive advantage. Yahoo! Need to foster both concentration of expertise and encourage people to share knowledge.
3. Audit of the existing HR is necessary to provide a kind of stock take of what Yahoo already has in terms of HR, audits will identify people's core competencies. In this case, there are far too many employees; there is another person with dramatically similar and overlapping responsibilities. They need to restructure and be efficient and effective with fewer people.
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Therefore, Yahoo needs to change its HR strategy
Limiting future recruitment for vacancies that arise
Retraining of staff for new roles
Transfers and job sharing
Shorter work week
Remove one layer of management
Voluntary or early retirements
After which, Yahoo will need to ensure that other aspects of HR are carried out so that the performance of the workforce is maximized. Two of the most important HR activities that will be necessary in order to ensure good performance and effective management of employees are;
- First, a system of performance appraisal, so each workers (from top to bottom) performance is evaluated continuously.
- Secondly, a system of rewards and benefits that will both compensate and motivate them fully so them perform to Yahoo's best interest.
3.Dramatic changes need to be taken, Yahoo! Need to be fast and flexible if they are to survive. Management of Yahoo! Need to take responsibility and create a customer responsive culture. Culture where knowledgeable, accessible, friendly and courteous staff is critical. Prompt in responding to customer needs and necessity to please the customer is vital.
I highly recommend that the alternative courses of actions will greatly benefits the company in assessing its HR issues. By implementing them the company has an increase chance to grow to even a bigger company with out de-motivating its employees or alarming any negatives to its investors. By following a good performance appraisal and reward system will enable the company to motivate its employees. Further, job enrichments, job rotations and job enlargements need to be incorporated to Yahoo's plan of action because motivated staff will be more productive than de-motivated. Satisfying not only customer's needs but also employees. And be a faster customer responsive company. The De-layering of management, indicate powerfully that Yahoo is serious nature and intent of change. The removal also provides perceived opportunities for employees below. Yahoo must be flexible, flexible enough to cope with rapid changes in the environment.
Giving the company profits and a good name, as good employee Yahoo as a perception on both external and internal factors.
I therefore conclude that being a company like Yahoo with its massive assets both tangible and intangible needs to be more learning. With all the experience and the highly skilled resources they have Yahoo can prosper in the future. They need to concentrate on getting there act together be focused and create a structural flow where business unit managers are accountable and take ownership for there actions. Yahoo can be stronger and faster a company with clearer vision and clear ownership and clearer accountability. They need to eliminate duplication of work, which has plumbed its competitive advantage. Reductions of work forces need to be handled with care and respect.
How would you assess the effectiveness of your proposed HR strategy and its eventual impact on overall strategy
Companies need solid HR strategies if they want to achieve their goals. HR Strategy underpins the business strategy by helping to reveal the talents of the personnel, getting the most out of the organization's HR at all levels. A successful HR strategy will develop and organize your people, their knowledge and their ways of working within interlinking processes; building capacity to effectively deliver on organizational priorities. Bratton and Gold (2007) mentioned Human Resources Management is "part of the management process that specialties in the management of people in work organizations. HRM emphasizes that employees are critical to achieving sustainable competitive advantage, that human resource practices need to be integrated with the corporate strategy, and that human resource specialists help organizational controllers to meet both efficiency and equity objectives" Hence, its of essence to align HR strategy with overall strategy of an organization.
The proposed HR strategy, gives Yahoo much-needed effectiveness with fewer people. By restructuring Yahoo's tall, ridged, overly bureaucratic structure, to be liner and elimination of layers will result in quicker responsive culture to Yahoo! A flat structure that I have proposed will encourage entrepreneurial sprites, innovation, competitiveness, drive, and team sprites so yahoo can move away from too much of analysis paralysis and silo syndrome. De centralization of authority, which will foster employee empowerment, enables Yahoo to build a culture where flexibility and adaptability will strive. Too much staff doing the same or similar tasks have resulted in plumbing of competitive advantage for Yahoo the fewer staff will result in quality work. Which enables Yahoo to gain competitive advantage. Further, yahoo need to keep its employees motivated during this redundancies. They need to focus on staff motivation such as job enrichment, job rotation and job enlargement because de-motivated staff is going to be less productive.
Most companies and researchers believe human resource management systems can enable organizations to pursue - and achieve - a vast array of strategic options. However, few agree on how HR really affects performance. HR span of control typically includes fundamental areas like identification, recruitment of top performers; training them to work effectively; monitoring employee progress and rewarding employees for accomplishing goals. Depending on the company's economic model, competitive and strategic goals, HR management often controls a variety of other functions. (hr SPECTRUM November - December 2005 - HR Strategy and Corporate Strategy Page 1)
To propel their organization's sustained competitive advantage,
As I have discussed above, it is also critical that the HR team has a high level of expertise in aligning major HR interventions and their relevance to business performance. This calls for expert HR thinking and identifies the requisite interventions and, equally important, how they fit together to leverage organization performance. If there is a strong need for the organization to develop a faster company, for instance, you should align your compensation strategy to reinforce this objective? If the organizational structure defines the accountabilities clearly at every level of the organization, is your HR team selecting and developing against them? This is joined-up HR at work. (Developing HR strategy: 8 steps towards delivering a successful HR strategy-Louise Allen is a director of HR consultancy Cedar International -19 November 2002) The business' goals - that is its strategic imperatives - sit at the heart of any HR strategy and in order to align business and HR needs one key question must to be answered, "Can your organization's internal capability deliver its business goals?"
Critically review the necessity of setting up a performance appraisal and reward management system including performance appraisal to recognize contribution and achievement at Yahoo!
As I have mentioned earlier setting up an appraisal of performance is a vital part of the HR cycle, it acts as a great source of motivation through enabling it to reward with higher achievement such as a promotion, a pay raise, or identify employee competences. Periodic performance appraisals, aids technical, professional and management development, a systematic follow-up of staff developments. This will eventually lead to increased performance and help organizations achieve goals and individual objectives. The appraiser is in a valuating position to identify good prospects for the future as well as set up objectives for the next period, which will foster accountability and responsibility. Further, it helps to develop vital relationship between employee and employer, and enhance corporate cultural norms. Therefore, it is vital that Yahoo! Looks at implementing a scheme to appraise its employees periodically. Most schemes rely on an annual meeting between the employee (appraisee) and appraiser. Appraisal system should provide the individual with necessary feedback on their performance and focus on future activities.
Nevertheless, alls not marry with the above appraisal system. Appraisers incompetence's, little or no training, lack of preparation by both parties, and fear of voicing their opinion will hinder the outcome of a performance appraisal will result in important aspects may be left unexplored and point to a wrong direction. A another key pitfall has been lack of follow through (no actions taken) Therefore, to set up a effective appraisal system appraiser need to have the right skills in carrying out an appraisal interview proper training need to be given to conduct a professional performance appraisal. Selection of the most appropriate appraisal method is vital, the purpose and objective of the system should be widely understood and participants need to be committed. Setting up objectives are part of a performance appraisal involves agreement on SMART objectives (Specific, Measurable, Achievable, Realistic and Time bounded).
There are few types of appraisal exist;
Self-Appraisal - This often take place in preparation for a supervisor/appraise meeting. Can save management time but the value is questionable.
Supervisor/Appraise - Person who allocates work and establishes authority over appraises where there are many workers this might not be possible.
180 Degree - Often mangers, especially those in project teams or matrix and professionals, who do not know the appraiser sufficiently well. To some extent collecting anonymous or named views of colleagues. This can performed in the open groups session with the emphasis first on the group and then the individual contribution.
360 Degree - This is where appraise prepares feedback on the appraiser as well as getting 180 degree feedback from colleagues.
(The official CIMA learning system Enterprise operations 2009 - Bob Perry page 212-213)
Designing of a reward system should be appropriate to the individual needs of an organization for example, size, which geographic location it operates, external influences, etc. it might include one of number of factors both financial and non financial. Armstrong and Murlis (2007) suggest that rewards system consist of two elements:
Pay ranges, with a method for moving through (progression) or up (promotion)
The benefit package, pension, sick pay, car payments, fuel allowance, etc.
Rewards systems, help organizations motivate employees, consistently retain people and reduce turnover cost and development pathways, help the recruitment process because its differentiates from its competitors makes the organization attractive. Gratton (2004) addresses both motivation and incentives by synthesizing recent research into the area. She concludes that financial gain is overestimated as a staff motivator, but that money is still important. Rewards can be categorized in to two
Financial Rewards - it creates a link between pay and performance by introducing additional payments above the scale of maximum to recognize high performance.
Non-Financial Rewards - Finding from a retention initiatives report claims that employees are more likely to look for a new job when their needs for career advancement or training are not being met, or when their relationship with their manger is poor (Anon, 2005). Career progression, flexible working hours, training, home working, conducive culture.
Therefore, as I have outlined above Yahoo! Should set up a good performance appraisal system where each project matrix will be reviewed by an appraiser and attach it to a motivating reward system either financial or non-financial or may be a combination of both so accountability and ownership will be restored. Further, as I have proposed HR strategy earlier at time of uncertainty for its employees it will be a much-needed motivator in retaining high performers at Yahoo! and increasing its productivity.