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03/15/11 Dr B Ratan Reddy, RGBS 1

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STRUCTURE

SHAREDVALUES

STAFF

SYSTEMS

STYLE

STRATEGY

SKILLS

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SHARED VALUES=

Vision

(Why we exist)

Core values

(What we believe in)

Mission

(What we want to be)

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Vision

Statement

A brief statement of what the organizationwishes to contribute tothe world and how itwishes to be seen

Based on the simplepremise that you mustknow where you aregoing. No one can followyou if you do not knowwhere you are headed

Would you tell me, please, which way I ought to go from here?

That depends a good deal on where you want to get to, said theCat.I dont much care where, said Alice.

Then it doesnt matter which way you go, said the Cat

Alices Adventures in Wonderland Lewis Carroll

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Core Values

The set of cherishednotions and beliefs thatguides every move aCompany makes

When the values areshared by all employees,it provides control forguiding behavior

The practice of values across the board becomes

institutionalized when employees observe that theyare followed by the top management. They follow thelead by observing what is practiced, not what ispreached

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Mission

StatementA statement of intent of what a company wantsto create, and throughwhich lines of business

When the Mission isshared by all employees,it provides focus fordriving strategy

Without a clear, quantified and focused description of

how people, time and money are to be used, you donthave a strategy, just an intent

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Building a Vision: Stage IThe Organizational Debate

FOR M GROUPS &FACILITATORS

TRAINFACILITATORS

CREATETASKS

CONDUCT OPENSESSIONS

CONDUCT VALUESESSIONS

ORGANIZE TASK SESSIONS

TEST FOR READINESS

CRAFT VALUESSTATEMENT

ALIGN SYSTEMSTO VALUES

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Building a Vision: Stage IIThe Top Management Preparation

STUDY OTHER ORGANIZATIONS

CONDUCT BESTPRACTICES

SESSION

CONDUCT

LEADERSHIP &TEAM BUILDING

SESSIONS

CONDUCTVALUES

SESSIONS

SET TOPMANAGEMENT

OBJECTIVES

VALIDATEAGAINST VALUES

STATEMENT

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Building a Vision: Stage IIIThe Strategic Search

INDUSTRY WHAT DO WEWANT TO BE?

TECHNOLOGY

CONSUMERS

COMPETITION

COMPETENCE

WHAT DO WEWANT TO BE

KNOWN FOR?

WHY DO WEEXIST?

WHAT DO WEWANT TO

CONTRIBUTEAND TO WHOM?

ANSWER THECRITICAL

QUESTIONS

EXPLORE ANDEXPAND

CONTEXT

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Building a Vision: Stage IVThe Formal Construction

SELECT CROSS-HIERARCHICAL

& CROSS-FUNCTIONAL

TEAM

CRAFT CRITICALANSWERS INTOCOMPELLINGSTATEMENT

PRESENT THESTATEMENT TO

THEORGANIZATION

PREPARECOMMUNICATION

PLAN

SELECTCOMMUNICATION

MEDIA

IMPLEMENT THEROLL-OUT

SCANBUSINESS

OPPORTUNITIES

RULE OUTOPTIONS THATCONTRADICT

VISION

SET DATE FOR REVIEWING THE

STRATEGICINTENT

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Building a Vision: Stage VThe Follow Up

TRANSLATEVISION INTO

GOALS

CREATEMILESTONES

SCANBUSINESS

OPPORTUNITIES

CRAFTSTRATEGY

COLLECTINPUTS

QUANTIFYSTRATEGIES

RE-ALIGNPROCESSES

SUPPORT VISIONWITH DECISIONS

TRANSLATEINTO

SECTIONAL,DEPARTMENTAL,AND INDIVIDUAL

TARGETS

RE-ORIENTAPPRAISAL

SYSTEM

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Some Vision Statements

RALLIS INDIA

To provide the farmerwith a package ofinputs and services foroptimum utilization ofbalanced primary plantnutrients; micro-nutrients; plantprotection chemicals;

water; seeds; post-harvest services; andto develop a genuinepartnership with thefarmer

BATA

To achieve success andbecome the biggest andmost skilful multipleretailing anddistributingorganization with adynamic, flexible andmarket responsiveapproach

a

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Lies, damned lies and Statistics

Companies with Vision Statements : 53%

Proportion of CEOs who feelVision statements are necessary : 98.4 %

Proportion of employees who feelVision statements are necessary : 87.5 %

CEOs choice of area most benefitedby Vision statement : Product

qualityEmployees choice of area most

benefited by Vision statement : GrowthSource: Business Today-Gallup MBA

Survey, December 1996

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Lies, damned lies and StatisticsAreas Considered greatest

beneficiaries

Source: Business Today-Gallup MBASurvey, December 1996

ITEM SENIOR MANAGERS

MIDDLEMANAGERS

JUNIOR MANAGERS

OTHERS

FINANCIALPERFORMANCE

9.8% 4.8% 13.1 % 10.1 %

MARKETPERFORMANCE

14.8 % 14.5% 19.7 % 18.1%

PRODUCTQUALITY

19.7% 25.8 % 21.3% 13.1 %

SENSE OFBELONGING

8.2% 6.5% 6.6 % 7.5 %

ORGANIZATIONAL GROWTH

23.0 % 16.1 % 18.0 % 20.5 %

STRATEGYFORMULATION

13.1 % 14.5 % 6.6 % 0

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The Continuum

No Vision

Fashionstatement

Vision led

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The Fashion statement

A Mission statement is defined as a longawkward sentence that demonstratesmanagements inability to think clearly. All goodcompanies have one.

If for some reason the Companys Missionstatement does not cause a turnaround inprofitability, you might need a Vision statement.In stark contrast to the detailed road mapprovided by a Mission statement, a Visionstatement is more of a high level guide for theCompany.

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The first step in developing a Vision Statementis to lock the Managers in a room and havethem debate what is meant by a VisionStatement and how exactly it differs from aMission Statement or a Business Plan orObjectives. These are important questions,because one wrong move and employees will

start doing vision things when they should bedoing mission things, and before long it will beimpossible to sort it all out.

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The debate over the definition of vision willend as soon as the participants become tootired and cranky to enjoy belittling eachothers intelligence. At that point somebodywill start suggesting various visions just to getthe meeting over with. All good VisionStatements are created by groups of people

with bloated bladders who would rather bedoing anything else.

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To organize the

way work is done, you have to

begin with the specific job, then the

information input, and finally the

human relationships

needed to get the

job done.

Peter F Drucker

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A Functional structure is onethat groups similar or relatedoccupational specialtiestogether;A Divisional structure is one

that is made up of autonomousself-contained units

A Network structure is asmall centralizedorganization that relies onother organizations toperform its basic business

functions on a contract basis;A Taskforce structure is atemporary structure createdto accomplish a specific,well-defined, complex task that requires the involvementof personnel from other

organizational subunits;A Committee structure isone that brings together arange of individuals fromacross functional lines todeal with problems

A Simple structure is low oncomplexity and formalizationbut high on centralization;

A Matrix structure is one thatassigns specialists fromfunctional departments to work on one or more projects thatare led by a project manager;

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Functional Departmentalization: Groupingactivities by functions performed

ProductDepartmentalization: Grouping activity byproduct line

CustomerDepartmentalization: Grouping activities on thebasis of common customers

GeographicDep artmentalization: Grouping activities on thebasis of territory

ProcessDepartmentalization: Grouping activities on thebasis of product or customer flow

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President

VicePresident -Manufacturing

VicePresident -

Marketing

VicePresident -

Finance

VicePresident -

HR

FUNCTIONAL STRUCTURE

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Chairman

Director -

Agri-Group

ExecutiveDirector Director -

EnergyGroup

CEO

Urea

CEO

Seeds

CEOAgriche m

CEOFE

Corp. Plg

Corp.Fin

CorpHR

CorpLegal

CEOThermal

CEOHydel

DIVISIONAL STRUCTURE

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SIMPLE STRUCTURE

Nargis

Rekha SrideviSharmilaTagore

MadhuriDixit

AishwariyaRai

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Urea

Seeds

Agriche m

FE

Manufacturing Marketing Finance Human Resource

MATRIX STRUCTURE

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NETWORK STRUCTURE

CORPORATE

EXECUTIVEGROUP

ContractManufacturing

facility

FranchiseeSalesagencies

CommissionedAfter Sales

Services

Outsourcedtransactionprocessing

Independent R & D and

Consultancy firm

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The One Thing That Seems

Constant Is Change. . .AND THE MOST IMPORTANTTHING ABOUT CHANGE IS . . .

. .THE RATE OF CHANGE

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That deliver results with speedThat deliver results with efficiency

That make business sense

nage change, the world is moving towards s

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HOW?By creating IT enabled structures where:

Information flow is through internet/intranetWork flow is through intranet

Transaction processing takes place online & in real time

By pushing decision-making to the employee closest to the customer

Where decisions cant be pushed down, reducing the time for decision-making by:

De-layering

Increasing the span of control

Outsourcing to specialists

Reducing flab

At the same time addressing organizational interests & employee aspirationsthrough:

Job enlargement

Multi-skilling

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FROM PYRAMIDS TO PLANES TO WEBS

V P

C O M M E

V P

F I N A N

V P

M A R K

P R E S I D E

P R O C E S S

O R D E R F U L

P R O C E S S

O R D E R G E

P R O C E S S

P R O D U C T D

P R E S I D E

Structural Revolution.

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FUTURE ORGANIZATION -how would it look like?

Flatter Structure Change from function based to process based Customer -centric structure Flexible roles - Ameoba structures Need for multiskilling Lateral promotions for breadth of knowledge Constant upgradation of competencies, skills

& knowledge People focus - the key driver

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20th Century Organizationof the Workplace

Linear sequence Success depends on

the stability of eachstage of production

Non-performingunits effect entireeffort

R & DevelopmentManufacturing

Marketing

Sales Service

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21st Century Organizationof the Workplace

Flexible linkages Success depends on

the dynamicexchange betweenunits

Non-performing

units are more easilyreplaced

Engineering(India)

Customers

Manufacturing(Asia)

Marketing

Sales Service

R & D (U.S.)

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The Shifting structures of

Success Centralized Linear Closed Boxes Discrete Identities Stable

Competition Body of Knowledge

Decentralized Webbed Linkages Feedback Loops Convergence Self-correcting

Coopetition Always Learning

20th Century 21st Century

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COMPETENCY DEFINED

It is a

combination of critical

behaviours, traits, motives, knowledge, skills and

applied thought which lead to excellence in performance

or which distinguishes superior

performance from averageperformance

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THE ELEMENTS OF COMPETENCY

COMPETENCY

KNOWLEDGE&

INSIGHT

BEHAVIOURTHOUGHT

TRAITSMOTIVES

SKILLS

KNOWLEDGE & INSIGHT: Refers tofacts, procedures and technical

information possessed by the individ

MOTIVES: The underlying need patte

which drives the individual tolearn and perform

TRAITS: The general disposition of tperson or response characteri

to various needs and deman

BEHAVIOR: The manner or conduct of the individual to the process olearning.THOUGHT: In this context refers to process of idea generation andimaginationSKILLS: The demonstrated ability of carrying out an activity or aprocedure - a practiced ability

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INDIVIDUAL

Aptitude

Skills & Abilities

Knowledge

Physicalcompetencies

Styles Personality

Principles, values,attitudes, beliefs,spirituality

Interests

CONTEXT

Org. structure

Hierarchical levels

Roles

Org.environment

Life cycle

Culture

OUTCOMES

Behaviours

Effective/Ineffective

Observable /Non-observable

SITUATION

Applications Staffing

HR Planning

Team

building Performan

ceappraisal

Training&Development

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VERBAL

NUMERICAL

SPATIAL

PHYSICAL

MECHANICAL

ARTISTIC

BUSINESS

TECHNICAL

APTITUDE

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SKILLS & ABILITIES

THINKING

INTERPERSONAL ORGANIZATIONAL

TECHNICAL/OPERATIONAL

COMMUNICATION

SELF-MANAGEMENT

CUSTOMER-ORIENTATION

BUSINESS

HUMANRESOURCEMANAGEMENT

LEADERSHIP

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IDENTIFYING LINKS

STRATEGIC THINKING

GENERATINGCREATIVE IDEAS

ANALYZINGPROBLEMS

APPLYING COGNITIVECAPABILITY

COMMITTING TOACTION

THINKING

RESPECTING OTHERS

SHARINGINFORMATION

BEING A TEAM-PLAYER

NETWORKING

INFLUENCING

NEGOTIATING WIN-WIN SITUATIONS

DIPLOMACY

RESOLVING CONFLICT

INTERPERSONAL

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ORGANIZATIONAL

WORK PLANNING

RISK-TAKING

RESOURCEMOBILIZATION

GETTING THE JOBDONE

DEALING WITHCRISES

MEASURINGPROGRESS

DEMONSTRATINGTECHNICAL/OPERATIONAL EXPERTISE

WORKING WITHINFORMATIONTECHNOLOGY

USING EQUIPMENT &

TOOLS

TECHNICAL/ OPERATIONAL

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CUSTOMER-ORIENTATION

WORKING WITHCUSTOMERS

DELIVERING PRODUCTS &

SERVICES FOLLOWING UP WITH

CUSTOMERS

CREATING RELATIONSHIPS

BUILDING PARTNERSHIPS

MARKETING PRODUCTS &SERVICES

COMMITTING TO QUALITY

BUSINESS

USING FINANCIALINFORMATION

WORKING WITHIN THESYSTEM

MAKING BUSINESSDECISIONS

GENERATING REVENUE

USING BUSINESS ACUMEN

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HUMAN RESOURCEMANAGEMENT

MAKING A TEAM

MANAGING CHANGE

ENCOURAGINGPARTICIPATION

ASSIGNING WORK

MOTIVATING THE TEAM

BUILDING A TEAM

DEVELOPING TALENT

MENTORING PROVIDING PERFORMANCE

FEEDBACK

VALUING DIVERSITY

TAKING CARE OF TEAM

MEMBERS

LEADERSHIP

DEVELOPING A VISION

PLANNING THE FUTURE

FACILITATING SUCCESS

LEADING CHANGE

PROMOTING A HEALTHYWORK PLACE

INSPIRING

USING ORGANIZATIONALKNOW-HOW

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KNOWLEDGE

GENERAL KNOWLEDGE

PROFESSION-SPECIFICKNOWLEDGE

JOB-SPECIFICKNOWLEDGE

LEVEL-SPECIFICKNOWLEDGE

ORGANIZATIONALKNOWLEDGE

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PHYSICALPROFICIENCY

STRENGTH

COORDINATION

EQUILIBRIUM

DEXTERITY

FLEXIBILITY

PRECISION

STATURE

REACTION TIME

ENDURANCE

PSYCHOPHYSICALCAPACITIES

STAMINA RESISTANCE TO

STRESS

ENERGY

HEALTH

VIGILANCE

SELECTIVEATTENTION

SENSORYACTIVITY

VISUAL

AUDITORY

TACTILE

OLFACTORY TASTE

PHYSICAL COMPETENCIES

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DIRECTIVE

DELEGATIVE

PARTICIPATIVE CONSULTATIVE

NEGOTIATIVE

FOR LEADERS/MANAGERS

RECEPTIVE

SELF-RELIANT

COLLABORATIVE

INFORMATIVE

RECIPROCATING

FOR SUBORDINATES

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SOCIAL ORIENTATION

EMOTIONAL ORIENTATION

RELATIONSHIP ORIENTATION

GOAL ORIENTATION

EXPERIENTIAL ORIENTATION

PERSONALITY

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PRINCIPLESEmpowermentEncouragement,

Excellence

Fairness,Growth, HumanDignity, Honesty,Patience

Humility, Integrity,Potential, Quality,

Service,Trustworthiness

VALUESJustice, Order,Productivity,Security, Sincerity,Truth, Wealth,Fame, Respect,Learning

Sense of accomplishment,Relationships,Development of talent, Effort,Generosity

BELIEFSNotions about reality which help individualsmake sense of their environment and helpdefine casual links, such as control over theenvironment

SPIRITUALITYThe search for meaning, being and purposein all facets of life, including work

PRINCIPLES, VALUES,BELIEFS, SPIRITUALITY

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OCCUPATIONS DEALING WITH THINGS

OCCUPATIONS DEALING WITH FACTS

OCCUPATIONS DEALING WITH AESTHETICS

OCCUPATIONS DEALING WITH PEOPLE

OCCUPATIONS DEALING WITH PERSUASION

OCCUPATIONS DEALING WITHADMINISTRATIVE MATTERS

INTERESTS

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Manpower Planning is the processby which management ensures that

it has the right number and kinds of people at the right places and at theright time who are capable of effectively and efficientlycompleting those tasks that willhelp the organization reach itsoverall objectives

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The manpower planning process comprisesthree basic steps:

Assessing current manpower Assessing future manpower requirements

Developing a programme to meet thefuture manpower requirements

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Current manpower can be assessed through:

Manpower/ Skills inventory

Job analysis

Manpower/skills inventory tells the managementwhat individual employees can do; job analysisdefines jobs and the behaviours necessary toperform them (job analysis can also be used todetermine future manpower requirements)

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XYZ LIMITEDQUESTIONNAIRE FOR ORGANIZATION STUDY

INSTRUCTIONS:

1. Please read the questionnaire carefully2. Fill the questionnaire giving PRECISE, CLEAR AND

COMPLETE DETAILS.3. Fill it in your OWN HANDWRITING4. You may use additional sheets wherever necessary5. Kindly return the completed questionnaire in a

SEALED ENVELOP to OFFICE OF V.P. HRD

FOR VISISHTS USE ONLY

PERSONAL DATA

1. NAME

2. AGE

3. DESIGNATION

4. DIVISION / DEPARTMENT

5. SECTION

6. LOCATION

7. QUALIFICATION

YEARS MONTHS

8. LENGTH OF SERVICE BEFOREJOINING THE ORGANIZATION

9. LENGTH OF SERVICE WITHORGANIZATION

10. LENGTH OF SERVICE IN THEPRESENT POSITION

11. TO WHOM DO YOU REPORT

NAME JOB TITLE

12. WHO REPORT TO YOU

NAME JOB TITLE

13. DESCRIBE IN BRIEF THE NATURE OF WORK PERFORMED BY YOURDEPARTMENT / SECTION

0

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1 3 . M E N T IO N I N D E TA I L T H E N AT U R E O F Y O U R W O R K I N T H ED E PA RT M E N T , S E C T IO N I N T E R M S O F :

T H E F O C U S A R E A S / P R IO R I T I E S / S U C C E S S FA C T O R S R E L AT E D T OY O U R J O B

Y O U R D I R E C T R E S P O N S I B I L I T IE S

D I R E C T R E S P O N S I B I L I T I E S O F S U B O R D I N AT E S R E P O RT I N G Y O U

14. THE TASKS YOU PERFORM PERSONALLY ON A REGULAR BASIS FOR CARRYING OUT YOUR RESPONSIBILITIES. ALSO PLEASE INDICATE THE APPROXIMATE TIME

SPENT ON EACH OF THE TASK TASKS

DAILY

WEEKLY

MONTHLY

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QUARTERLY

HALF YEARLY

ANNUALLY

ANY SPECIAL TASKS YOU PERFORM FROM TIME TO TIME?

KINDLY INDICATE THE KEY RESULT AREAS (KRAS) / OBJECTIVES / TARGETS / GOALS ASSOCIATED WITH YOUR JOB. MENT ION QUANTITATIVE FIGURES WHEREVER

POSSIBLE

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11. LIST THE JOB TITLES INTERNAL TO YOUR ORGANIZATION, BESIDESYOUR SUPERIORS AND SUBORDINATES, WITH WHOM YOU ARE INREGULAR CONTACT IN DISCHARGING YOUR W ORK INDICATING THEPURPOSE AND FREQUENCY OF COMMUN ICATION

JOB TITLE PURPOSE FREQUENCY

12. LIST THE AGENCIES / BODIES / ORGANIZATION EXTERNAL TO YOURCOMPANY, WITH WHOM YOU ARE IN REGULAR CONTACT INDISCHARGING YOUR WORK INDICATING THE PURPOSE ANDFREQUENCY OF SUCH CONTACTS.

AGENCY/ORGANIZATIONPURPOSE FREQUENCY

11. LIST THE MEETINGS / COMMITTEES YOU ATTEND AS A ROUTINEINDICATING THE PURPOSE OF THE MEETING, YOUR ROLE IN IT ANDTHE FREQUENCY

MEETING /COMMITTEE

PURPOSE ROLE FREQUENCY

12. LIST THE REPORTS YOU RECEIVE, THEIR PURPOSE FREQUENCYAND DISTRIBUTING DEPARTMENTS

REPORT PURPOSE FREQUENCY DIST.DEPARTMENT

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11. LIST THE REPORTS YOU PREPARE, THEIR PURPOSE, FREQUENCYAND DISTRIBUTION

JO B T ITLE P URPO SE FREQ UE NCY DIS TRIB UTIO N11. KINDLY INDICATE DETAILS OF DELEGATION OF FINANCIAL,FUNCTIONAL ADMINISTRATIVE AND OTHER AUTHORITY FOR YOUR

POSITION, EITHER APPROVED OR AS PRACTICED.(Eg. Purchase order approvals, Manpower/Recruitment approvals, DepartmentalExpenditure, Capital/Revenue expenses, Leave sanctioning, Travel approval,Material Rejection approval etc.)

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FORMAT FOR JOB DESCRIPTION

JOB DESCRIPTION HERO HONDA MOTORS LIMITED

JOB TITLE COMPANY HHML

DEPARTMENTREFERENCE

SECTION

A. PURPOSE AND SCOPE

B. DUTIES AND RESPONSIBILITIES

C. DIMENSIONS OF THE JOB

D. AUTHORITY

E. WORK CONTACTS INTERNAL : EXTERNAL :

F. REPORTING RELATIONSHIP

G. SUPERVISORY RESPONSIBILITIES

H. WORK CONDITIONS

I. MINIMUM REQUIREMENTS

J. KEY RESULT AREAS (KRAs)

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Programmes to meet future manpower needs include recruitment, downsizing,and training

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Manpower

RequisitionSourcing

Screening

InterviewPlacement

Socialisation

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Manpower

Requisition

As per structure

As per budget

Value

addition

GENERAL INFORMATION Designation, Grade, Section/Department,Location, Designation of person to whomthe incumbent will report, Designations of persons who will report to the incumbent

JOB PROFILE/ DESCRIPTION/KEY RESPONSIBILITIES

At present Three years from now

JOB SPECIFICATIONS/PERSON PROFILEQualifications: Essential/Desirable

Experience: Duration/NatureSpecific Exposure

COMPETENCIES PROFILE

Behavioral Technical Managerial

VACANCY PARTICULARS

Is this a new vacancy/replacement,

If it is a new vacancy, the benefit/valueaddition that would accrue to the Companyby its value-addition

Is it provided in the approved structure

Is it provided for in the approved budget

If it is a replacement, name anddesignation of the person against whom thereplacement is sought

How was the vacancy caused

By what date is the vacancy to be filled

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Sourcing

Internal search

Internal advertisement

Data bank

ReferralsPlacement agencies

Head-hunting

External advertisement

Internet

Employment exchange

Sourcing from within; transfer; spiral-growth; stigma of being unwanted;turf mentality; maturity required

Sourcing from within; transparent; turf mentality; maturity required

Unsolicited and solicited applications

Unsolicited and solicited referrals

Cost and time element; functional/industry specialization

Focused; time consuming; high degree of analytical skills; ethicality;selling skills

Cost; time; 97% trash

Cost/time-effective; low penetration; good for high-tech positions

Mandatory

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Screening

Withinpolicyframework

As per MPR

Technical competence

Aptitude

GroupDiscussion

Prelim.Interview(s)

Medical

Objective:

To induct the best talent to meet business requirements keeping in view a long-termperspective matching competencies with positions.

Policy Statement :

To achieve the objective, the Group shall:

Consider candidates who have a consistently good academic record frominstitutions known for their high standards.

Consider candidates who have relevant experience and a consistently good track record.

Other things being equal, at the Commercial/Technical staff level, give priorityto candidates belonging to or domiciled in the states that the SBU operates in.

Except as warranted by the nature of work and obligations under law, not todiscriminate on the basis of gender or any other consideration.

Other things being equal, not to bar the employment of relatives of existingemployees. (The number of relatives that can be employed shall be restricted to one;relatives shall be considered for employment only in another SBU)

Consider re-employment of ex-employees on merit of each case with vetting byGroup HPD Chief and specific approval from Group Chairman. (Re-employmentshall be considered only if he/she had left due to career stagnation)

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Placement

Grade

Salary

Equity

Hi-talent

Flexibility

Price the incumbentright.

Under-Pricing gives you arolling stone.

Over-Pricing sets othersrolling.

Mis-alignment leads to :

Under / Over employment

Burnout

Frustration / Gossip

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Socialisation

Joining report

Joining formalities

Induction

The RC syndrome

The RC syndrome repeated

Facilitate acceptanceGet - Set - Go

Get set : HR/ Line responsibilityGo : Incumbent's responsibility

Office timings9.00 to 17.00Off days on Sun2nd & 4th Sat

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Style or Culture conveys the assumptions andnorms governing , values, activities and goals.It tells employees how things should be done

and what is important. It determines what theysee and how they respond to their world. Itimpacts all the other six Ss.It is reflected indimensions like individual initiative/authority,risk tolerance, direction, integration,management support, control, identity, rewardsystem, conflict tolerance and communicationpatterns

DEFINITION

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Culture is to an organization as personality is to anindividual

Culture is a perception

The perception lies in the organization, not in theindividual

Irrespective of background or level, individuals tend todescribe culture in similar terms

Culture is concerned with how employees perceive theorganization, not with whether they like it or not. It isdescriptive rather than evaluative

ITS FEATURES

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Member identity - job or organization

Emphasis - individual or group

Focus - task or people

Unit integration - independent orinterdependent

Control - loose or tight

Risk tolerance - high or low

Reward criteria - performance orothers

Conflict tolerance - high or low

Orientation - means or ends

Systems focus - internal or external

Openness

Confrontation

Trust

Authenticity

Proactivity

Autonomy

Collaboration

Experimentation

TWO SCHOOLS OF THOUGHT

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WHAT THE TERMS MEAN

Member Identity : Degree to which employeesidentify with the organization as a whole rather than with their particular work group or field of professional expertise

Group Emphasis : The degree to which work activities are organized around groups rather than individuals

People Focus :The degree to which managementdecisions take into consideration the effect of outcomes on people within the organization

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WHAT THE TERMS MEAN

Reward Criteria : The degree to which rewardssuch as salary increases and promotions areallocated according to employee performancerather than seniority, favouritism or other nonperformance factors

Conflict tolerance :Degree to which employeesare encouraged to air conflicts and criticisms

openly

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WHAT THE TERMS MEAN

Means-ends orientation : The degree to whichmanagement focuses on results or outcomesrather than the techniques and processes used toachieve those outcomes

Open-system focus : The degree to which theorganization monitors and responds to changesin the external environment

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THE CULTURE CONTINUUM

Job

Individual

Task

Independent

Loose

Low

Performance

Low

Means

Internal

Member identity

Group emphasis

People focus

Unit integration

Control

Risk tolerance

Reward Criteria

Conflict toleranceMeans-ends orientation

Open-system focus

Organization

Group

People

Interdependent

Tight

High

Other

High

Ends

External

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CASE DISCUSSION ONE

XYZ is a Urea manufacturing firm. There are extensive rules and regulations thatemployees are required to follow. Every employee has specific objectives to achieve inhis job. Managers supervise employees closely to ensure that there are no deviations.People are allowed little discretion in doing their jobs. Employees are instructed tobring any unusual problems to their superior, who will then determine the solution. Allemployees are required to communicate through formal channels. The management haslittle confidence in the honesty or integrity of its employees and hence imposes verytight controls. Managers and employees alike tend to be hired by the organization earlyin their careers and rotated into and out of various departments on a regular basis. Theyare generalists rather than specialists. Effort, loyalty, cooperation, and avoidance of errors are highly rewarded

What impact will the above have onits business strategy?

How will it impact the organizationstructure?

How will it impact the skills andcompetencies of employees?

Are there likely to be any problemsin hiring and retaining talentedemployees?

What impact will it have on employeeproductivity?

Are employees likely to be committed?What impact will it have on cost of production?

What impact will it have on creativity?

What will employee morale be like?

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CASE DISCUSSION TWO

What impact will the above have onits business strategy?

How will it impact the organizationstructure?

How will it impact the skills andcompetencies of employees?

Are there likely to be any problemsin hiring and retaining talentedemployees?

What impact will it have on employeeproductivity?

Are employees likely to be committed?

What impact will it have on cost of production?

What impact will it have on creativity?

What will employee morale be like?

ABC is a Urea manufacturing firm. There are few rules and regulations. Employees areseen as hard-working and trustworthy, and supervision is loose. Employees areencouraged to solve problems themselves but are free to consult their superiors whenthey need assistance. Top management downplays authority differences. Employees areencouraged to develop their unique special skills. Interpersonal and interdepartmentaldifferences are seen as natural occurrences. Managers are evaluated not only on their

departments performance but also on how well their department coordinates its activitieswith other departments in the organization. Promotions and other valuable rewards go tothe employees who make the greatest contribution to the organization, even when thoseemployees have strange ideas, unusual personal mannerisms, or unconventional work habits.

CASE ANALYSES SOME POINTS

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Element XYZ Limited ABC Limited

Strategy Entrepreneur led; harps onexternal reality where is theopportunity,how do I capitalize onit,what resources do I need,howdo I gain control over them,whatstructure is best?Functional level strategy basedon perception of what ownerwill like

Turf mentality

Manager led; harps on internalreality what resources do Icontrol, what structure determinesour relationship to the market, howdo I minimize the impact of otherson my ability to perform, whatopportunity is appropriate?

Functional level strategy based onperception of what is best for theorganizationCross-functional

Structure Multi-layeredEmpire buildingGenerally mechanisticHigh formalizationHigh complexity

Possible to have flat structurePossible to have organic structuresLow formalizationLow complexity

Element XYZ Limited ABC Limited

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Skills Jack of all trades, master of noneHigh degree of politicking

In house experts availableGreater camaraderie

Staff Several non-professionals presentSeveral non-value addingpositions created

Mainly professionals present

Style BureaucraticHigh on accountability

InformalTendency for low accountability

Systems Standing orders/Code of DisciplinePerformance evaluationRewards for loyaltyReview systemsElaborate security

Emphasis on communication

Heavy investment in trainingPerformance managementSelf review and reporting

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WHAT IS PERFORMANCE APPRAISAL

The

evaluation of

an individuals work performancein order to arrive at

objective personnel

decisions

Purpose of Performance Appraisal

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Purpose of Performance AppraisalFindings of a study

CompensationPromotionPerformance Feedback

TrainingDocumentationTransfersHuman Resources PlanningDismissalResearchRetrenchmentPerformance Improvement

Asia (%)

904721

19210.72.01.2

--

26

712530

10118.06.02.01.50.355

West (%)

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Written Essays : Descriptive pen pictures of strengths & weaknesses

Critical Incidents : Evaluating behaviors that result in effective & ineffective jobperformance

Graphic Rating Scales : Ratings on a 1-5 scale on factors such as quantity,quality, loyalty etc.

Behaviorally Anchored Rating Scale : A cross between Critical incident &Graphic rating scale

Multi Person Comparisons :

Group Order Ranking: Quota system, I.e. 5% Outstanding, 10% Superior,20 % Above Average etc.

Individual Ranking: Ranking system used in schools

Paired comparisons : Comparison of each employee with every other employee with ranking based on number of superior ratings an individualachieves

Methods of Performance Appraisal :

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MANAGEMENT BY OBJECTIVES 42% GRAPHIC RATING OF TRAITS 74%

RANKING 15%

FORCED CHOICE 18%

WEIGHTED CATEGORY LIST 12% CRITICAL INCIDENT ANALYSIS -

ESSAY EVALUATION -

BEHAVIOURALLY ANCHORED RATING 27%

PAIRED COMPARISON 7%

QUESTIONNAIRE METHOD 3%

WORK PROFILING 7%

COMPETENCY BASED ASSESSMENT 23%

PERFORMANCE APPRAISAL TYPES

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WHY APPRAISAL SYSTEMS FAIL

The appraisal system is used to decide pay Appraisal means the form is filled out

Employees think that appraisal system belongs tomanagement and managers think it belongs to HR The interview happens only once a year They both hide behind rigid mechanistic scales and

numbers The appraisers subjective feeling about the

appraisee

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DO WE NEED PERFORMANCE APPRAISAL?

NO

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WHY?

PERFORMANCE APPRAISALS ARE LAGINDICATORS; THEY REPORT ON THECONSEQUENCES OF PAST ACTIONS

SO, WHAT IS REQUIRED?A SYSTEM THAT FOCUSES ON LEADINDICATORS, THE DRIVERS OF FUTURE

PERFORMANCE, THE KEY PERFORMANCEAREAS

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WHAT ARE LEAD INDICATORS?

They are the drivers of performanceThey are what actualize profits

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Performance Management System

Performance Review

PotentialAssessment

DevelopmentNeeds

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VSPERFORMANCE APPRAISAL POTENTIAL APPRAISAL

Expressed Abilities

Tangibles

What one has done

Where one is

What one is

For reward

Innate abilities

Intangibles

What one can do

Where one can go

What one can be

For advancement

The Performance

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The PerformanceValue Chain

- the process of performance accrual

IndividualPerformance

TeamPerformance

Function / Dept.Performance

OrganizationsPerformance

Vision, Mission,Strategy,Objectives,

Turnover etc.,

SupportingStrategy,

Dept. KRAMOPsKRA/KPI/KPA

CommunicatingDefining

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S PECIFIC

MEASURABLEAGREED (and ACHIEVABLE)

R EALISTIC (and RELEVANT)T IMED

formance goals have to b

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REVIEW OF APPRAISAL INTERVIEW

Have you achieved your objectives ? Were the interviews open? Were the discussions constructive ?

Have you gained a greater understanding of your subordinate ?

Are the future targets of individualsclearer ?

Have your subordinates expectations beenmet ?

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Effective Counseling

Empathy

Warmth

Respect

Concreteness

Genuineness

Self disclosure

Confrontation

Immediacy of relationship

S i l P f P f

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Sequential Process of PerformanceCounseling

Rapport Building

Listening / feeling concerns, problems

Empathy

Exploration

Problem Identification

Diagnosis

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"It is the systematic collection and feedbackon behavioral traits and performance of an

individual or group, derived from a numberof stakeholders associated with their jobaimed at improvement in their performancestandards.

What is a 360 degree process

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BadBadNews;News;

NotNotSurprisinSurprisin

ggGoodGood

News;News;

SurprisinSurprisingg

BadBadNews;News;SurprisinSurprisin

gg

O the rs Pe rc e p tio n

Strengths

Devpt. Needs

Your Perception

Strengths Devpt. Needs

GoodGoodNews;News;

NotNotSurprisinSurprisingg

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TRADITIONAL VS CONTEMPORARY APPROACH

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TRADITIONAL VS. CONTEMPORARY APPROACH

Traditional Approach

Region-cum-industry

Internal equity soleconsideration

Pay scales linked to grade

Grade-based annualincrements

Increment-based reward

Largely fixed pay

Contemporary Approach

Based on external, internal andindividual equity

Salary-broadbanding linked tolevel

Mix of fixed and variable pay

Increments limited to inflation-proofing

Rewards based on individual,functional/departmental andcompany performance

Cafeteria approach

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Impact of strategic goals of the organization

STRATEGIC GOAL IMPACT ON COMPENSATION

Set up the Plant within 18 months Pay what will attract the Keymembers of the Project team

Break-even within 24 months of commencing commercial production

Pay the least possible

20 % growth, compounded over thenext 3 years

Pay between the 40 th . & 50 th percentileof the industry average

To become Indias # 1 within 3 years Top performers to receive industrybest

To become Worlds # 1 within 3 years Build in scope for dollar payments

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Impact of structure on Compensation

When there is a high degree of complexity, there will be severalgrades and salary bands

When there is a high degree of complexity, there are likely to beseveral components in the compensation structure

Where there is geographic departmentalization, there are likely to bemultiple compensation structures even for a single grade

Depending on the extent of complexity, it is possible, even desirableto have varying philosophies of compensation

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Impact of the External Environment

At what levels do you induct freshers

From which institutes/ colleges

Where do you attract experienced talent from To whom do you lose talent and why

Are those organizations in India or abroad

The Region-cum-Industry equation Compensation Clubs

The basket of comparators

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Impact of the Internal Environment

Is the organization task-focused or people-focused or is it acombination of both

Does the organization favour interdependence or independence

What is the basis of employee rewards

Does the organization face conflict head-on or does it buy its waythrough

Does it have an open-system focus, i.e. consciousness about theexternal environment

Is it socialistic in its approach or does it favour differentials

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Impact of the nature of Staff

If the organization requires Specialists, compensationlevels will reflect this

The supply-demand position for these Specialists willdetermine if the compensation levels are high or low

Where demand exceeds supply only in the short-term,the compensation philosophy of the organization is likelyto reflect this

Run of the mill staffing patterns will generally result inrun of the mill compensation patterns

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KeyContributor

bonus

IndividualIncentive

TeamIncentive

Fixed CompensationRate for the job

Market Value of individual

BU Performance

Team Projects,eg New BusinessDevelopment

PWC Model

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Position

Person

Performance

What When How How much

Organizationevaluation

Person

evaluation

Business

evaluation

Industry Cycle

Person Cycle

Business Cycle

EvaluationCommittee

90 degree to360 degree

Annual

Planningworkshops &evaluation

Pay for position

Annual increase

Potential of person

Market value of person

Pay for performance

No merit increase

No promotion

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External Equity : Focus on Organizational position vis--vis the industry

Internal Equity : Focus on dimensions of culture

Individual Equity : Employee profile

Hot skills

Performance-linked pay

Individual

TeamCompany

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PERFORMANCE LINKED PAY

Level

Junior

Middle

Senior

Individual Team Company

70%

50%

10%

20%

30%

20% 70%

20%

10%

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Compensation and the Law

Thou shalt not pay less than the statutory minimum wage

Thou shalt pay thy employees their remuneration by:

The 7 th .If thou employest less than 1000 employees

The 10 th if thou employest more than 1000 employees

Deductions from salary shall not exceed 75%/66.67%

Salaries shall be paid in cash

All employees shall be issued a salary slip

Particulars of salaries paid shall be maintained in aPayment of Wages Register

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Compensation and the Law

Thou shalt deduct PF @ 12% of the basic+DA and remit thesame by 15 th

Thou shalt deduct ESI as applicable and remit the same by25 th

Thou shalt pay service compensation if thy Office is in AP

Thou shalt pay Gratuity @ 15 days wages for everycompleted year of service

Thou shalt deduct Professional Tax and Income Tax asapplicable and remit the same by the 5 th and 7 th respectively

Thou shalt make payment to the Labour Welfare Fund

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REWARDS

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INTRINSIC EXTRINSIC

Participatein decisionmaking

Moreresponsibility

Opportunitiesfor personal

growth

Greater job

freedom &discretion

More

interestingwork

Diversity of

activities

Nonfinancialrewards

Preferred

Officefurnishings

Assignedparkingspaces

BusinessCards

Impressive

titles

Preferredlunch hours

Preferredwork

assignments

OwnSecretary

DirectCompensation

Basic

salary

Performancebonuses

Stock options

Overtime &holiday

premiums

ProfitSharing

IndirectCompensation

Pay for timenot worked

Perks &

benefits

Protection

programmes

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ANNUAL INCREMENTS

Copied from theGovernment/Public Sector

No linkage to Strategyimplementation

Motivator ??

INCENTIVE SCHEMES

Traditionally created by Industrial Engineers

Misses the human element in most cases

Salary for attendance, incentive for work

OVERTIME

You scratch my back and Ill scratch yours

Sudhakar Reddy syndromeNandu Bhayya syndrome

PROMOTIONS

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PROMOTIONS

Promote for potential, not for performance

People grow to the level of their incompetence

Idiots get promoted to

Management

PERFORMANCEBONUSES/ESOPS

Align with Strategyimplementation

Recognise individual as well as team

Likely to build long-termcommitment

MISSWORLD/UNIVERSE

High people orientationFlatters the ego

Possibility of missing the wood for the trees

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TEAM VsINDIVIDUAL

Dont talk team and reward individual

Balance between team and individual

BRIBERY

One upmanship

Enlightened self-interest

VRS syndrome

JOB SCULPTING

Aligns job to the

individual Takes care of need for achievement

Employee retention tool

Non monetary reward

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WHAT ARE WE GOING TO LOOK AT

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Discipline in an Organizational Context

Discipline Vs. Creativity

Discipline and the law

Standing Orders

Conduct, Discipline and Appeal Rules



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Handling issues of discipline

Determine what isright

Reporting indiscipline

Charge sheet

Issuing

communications


Domestic Enquiry Enquiry Officer &

Presenting Officer

Procedure Charge,examination, cross-

examination, documents Enquiry report

Speaking orders

Communication of punishment

Suspension-pendingenquiry

DISCIPLINE IN AN ORGANIZATIONAL CONTEXT

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Discipline has too many meanings:The training of people so that they will obey orders and controltheir own feelings and behavior

Training expected to to produce a specific type or pattern of

behavior, esp. training that produces moral or mental improvement

A state of order based on submission to rules and authority

Punishment intended to train or correct

Discipline refers to the norms of behavior thatorganizational members are required to conform to in order that the strategic goals of the organization are achievedefficiently and effectively

DISCIPLINE IN AN ORGANIZATIONAL CONTEXT

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Does conformity to norms of behavior affect creativity?

What is the purpose of norms of behavior?

Is the purpose of the organization that of achieving its strategic

goals or that of encouraging creativity?Which is more important:

Creativity?

Achievement of strategic goals?

Which is more important:

Norms of behavior?

Creativity?

DISCIPLINE VS. CREATIVITY

DISCIPLINE AND THE LAW STANDING ORDERS

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Standing orders are essentially norms of behavior expected from workmen.

The Industrial Employment(Standing Orders) Act callsupon industry to prepare such norms of behavior inconsultation with the employees concerned and to havethem certified. Standing Orders typically cover:

DISCIPLINE AND THE LAW - STANDING ORDERS

Misconducts

Punishments

Disciplinary procedure

Procedures for lay-off,etc.

Work timings

Methods of markingattendance

Shift rotation

Leave procedures

DISCIPLINE AND THE LAW CDA RULES

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Those who are not workmen are sometimes coveredby Conduct, Discipline and Appeal Rules.

More often than not, they are left to the mercy of their employer and God

Conduct, Discipline and Appeal Rules generally cover:

DISCIPLINE AND THE LAW CDA RULES

Motherhood statements of employer expectations

What an employee can doand what he cannot

Whose permission herequires to do what

MisconductsPunishments

Disciplinary procedureThe fact that he can appealto the employer and..God

HANDLING ISSUES OF INDISCIPLINE

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Indiscipline falls into two categories

Acts of ignorance

Acts of defiance

Indiscipline will not go away if ignored for a sufficientlylong time

It will become a habit

Old habits die hardIt is tough to bring in attitudinal change

You will be forced to ..S A C K


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Indiscipline has to be:

Nipped in the bud

Handled head-on

Dealt with firmly

Dealt with fairly

Do not use a sledge hammer to push a flyDo not use a fly to push a sledge hammer


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What is important is what is right, not who is right what in relation to achievement of the strategic goals of the organization

Ascertain facts in a non-threatening way

Give feedback, supported by facts, in a non-threatening way

Advise

AdviseReprimand

Warn

WarnWarn

S A C K, only if appropriate

HANDLING ISSUES OF INDISCIPLINE -PROCESS

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State what actually happened

Not what you think happened

Be specific :

On what day

At what time

What did the person do, or

What is it that he/she had beentold to do but did not do

What exact words did theperson use

Who all were witness tothe incident

Do not make judgmentsDo not pre-judge guiltDo not attempt to analyze why the person behaved inan undisciplined manner

PROCESSReporting indiscipline:

HANDLING ISSUES OF INDISCIPLINE -

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Get the Charge Sheet drafted by an expert

States what is alleged to have happened

States which clause/s of the Standing Orders the act/sviolate/s

Advises the person to submit a written explanation withina specified time-frame

Advises him about the consequences of not submitting awritten explanation

PROCESSChargesheeting


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Issuing the Charge Sheet and subsequentcommunications

If physically present

Issue in front of witnessesTake written acknowledgement of receiptIncase of refusal to accept, read out chargesand take signature of witnesses



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If not physically availableFollow procedure laid down in Standing Orders

Put up on notice board

Send by registered Post A/D and Under certificate of Posting

Publish in local, widely circulated newspaper



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Get the Enquiry conducted by an expert EnquiryOfficer

Get an employee, who is not a trained advocate, topresent the case on behalf of the Management Presenting Officer

PROCESSDomestic Enquiry


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ProcessAscertain if Charge sheet has been received

Ascertain if the written explanation is what is

available on recordRead out the Charges

Ask if person pleads guilty or not guilty

If pleading guilty, ascertain if person wishes tomake statement in defence



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If pleading not guilty, ask Presenting Officer topresent the Management case

Presenting Officer examines every witness

Charge sheeted person cross-examines allManagement witnesses

Charge sheeted person is given an opportunity of examining his witnesses

The presenting Officer cross-examines them



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Charge sheeted person and Presenting Officer make final statements

Proceedings are recorded in writing and signaturestaken

Copies of proceedings are given to CS person andPO



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Enquiry report

Speaking orders

Show cause

Inflicting punishment

Suspension pending enquiry


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WHAT IS ER?

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ER is a sophisticated name for IR IndustrialRelationsER covers relationships between:

unions and employers unions and employer union and employer unions and unions union and unions

employees and unions employees and union

that have a bearing on the terms and conditions of employment or non-employment

WHAT IS ER?

MANAGERIAL PERCEPTIONS

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Union is a bad word Unions are an insult to management Management has been cheated; you can never trust workers Serves X or Y right! There is a foreign hand; it is an act of cross border terrorism the CIA, the ISI, the KGB, the LTTE Our goodness has been taken to be a weakness It is karma; it had to happen

It is normal It is abnormal We have a lousy HR guy S A C K

WHY DO EMPLOYEES FORM UNIONS?

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They form unions when :

they perceive a threat

Asian Coffee

they perceive injustice

Agipi Chemicals

some political Johnny convinces them that they arebeing taken for a ride

Election Reddy

RECOGNITION AND NORMS OF BEHAVIOUR

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Can you afford the luxury of a Union

If you cant, what do you do

Management Union

Break their legs

Have the employees throw it out

GETTING RID OF UNIONS

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DEMANDS

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The Charter of Demands Bombastic

Based on principle of collective bargaining

Union trying to collect ; Management trying tobar the gain of the Union

Counter demands

A-B-C analysis

Lay down ground-rules

Negotiate on Cost to Company basis

DEMANDS

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Region cum industry norm

Dont negotiate on Management Prerogatives

Keeping some demands in abeyance plussesand minuses

Time factor

Duration of settlement

18(1); 18(3)

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SOME POINTS Threats in ER

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Dealing with the Banshee/s Raghurami Reddy the Volcano principle

Transactional analysis Ramesh

Result orientation in meetings Agenda in advance Coming prepared Bombay Labour Union

Minutes and their re-confirmation

Gherao Non-cooperation

JeedimetlaLuther

Tool/Pen down Sloganeering

Preventing persons fromentry

PatancheruPreventing despatches

Satwik Drugs

Strike No work- no pay Lock out

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WHAT IS THE PURPOSE OF BUSINESS?

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The purpose of

business is toachieve

sustained/sustainable competitiveadvantage and earn

WHAT IS THE PURPOSE OF BUSINESS?

For A Resource Or Capability To ProduceC i i Ad I M B

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Competitive Advantage It Must Be:

a VALUABLE

a RARE

a IMPERFECTLY IMITABLE

a NON-SUBSTITUTABLE

Traditional Sources of CompetitiveAdvantage

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Advantage

Access to financial Resources

Economies of scaleProcess Technology and

Protected or Regulatedmarkets

Source Is it Is it rare? Is it costly toi it t ?Is it non-

b tit t bl ?

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valuable?imitate? substitutable?

Financial

Resources

Economies of

Scale

Process

Technology

Protected /

Regulated

Markets

CREATING COMPETITIVE ADVANTAGE

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THROUGH HR REQUIRES THAT IT DELIVERS

THE FOLLOWING IT BUILDS RESOURCES AND CAPABILITIES

THAT CREATE VALUE FOR THE ORGANIZATION

THE RESOURCES AND CAPABILITIES MUSTBE RARE

THEY SHOULD BE DIFFICULT OR TOOCOSTLY TO COPY, AND

THE RESOURCES AND CAPABILITIESSHOULD NOT BE SUBSTITUTABLE WITHANOTHER RESOURCE

3

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INTELLECTUALCAPITAL

HUMANCAPITAL

STRUCTURALCAPITAL

CUSTOMER CAPITAL

CreativityProductivityKnowledge

ExperienceEmotionalIntelligence

InformationsystemsLaboratoriesCompetitive &MarketintelligenceMarketChannelsManagementfocus

Depth(Penetration)Width(Coverage)

Attachment(Loyalty)

WORLDS BIGGEST LIE

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WORLD S BIGGEST LIE

OUR EMPLOYEESARE OUR

GREATEST ASSET

THE TRUTH

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THE TRUTH

EMPLOYEES ARE TREATED AS LIABILITIES

VERY FEW EMPLOYEES ARE REALLYASSETS

MOST EMPLOYEES ARE COSTS

REDUCE COSTS WHERE POSSIBLE

CONVERT AS MANY COSTS INTO ASSETSAS IS POSSIBLE

Human Capital

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DIFFICULT TOREPLACE,

LOW VALUE ADDED


HIGH VALUE ADDED

EASY TO REPLACE,

LOW VALUE ADDEDEASY TO REPLACE,

HIGH VALUE ADDED

Value Addition

Re p la c e me nt

Low High

Easy

Diffic u lt

p

Grid

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Human Capital

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EASY TO REPLACE,

LOW VALUE ADDED

p

Grid Unskilled & Semi-skilled workers Easily substitutable

Companys success doesnot depend on them

Add no value to thecustomer

Reducenumbers/Automate

Commodity Skills

not specific to anybusiness

Easily obtainable

of equal value to allbusinesses

Typing, cheerfultelephone manners,A/C maintenance

Human Capital

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p

Grid Skilled factory workers,experienced secretaries,Quality Assurance staff,Internal Auditors,

CorporateCommunications staff

Dont add direct value tocustomer

Leverage their skills sothat they add moreinformation value thatbenefits customers


LOW VALUE ADDED

Human Capital

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p

Grid People in outboundlogistics, informationsystems

Their work adds a lot of value to customers

Outsource expertise thatis not proprietary, or

Use their skills to createcustomized solutions(Differentiation)

EASY TO REPLACE,

HIGH VALUE ADDED

Leveraged Skills

not specific to anybusiness

more valuable tosome businesses thanto others

Largely industryspecific

Company Lawspecialists Vs. CSs

Human Capital

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p

Grid Research Chemists, top

Sales Executives, ProjectManagers, Movie stars

Their talent & expertiseattract customers

Invest in these assets andmake sure they stay withyou

Their talent can beleveraged to charge apremium

Creates tough entry barrier

DIFFICULTTO REPLACE,

HIGH VALUE ADDED

Proprietary Skills

Company specificskills

In some cases, basesof IPRs

McKinseys expertisein strategy, Bosesexpertise in Audioequipment

How to Build Human Capital

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Define human capital in terms of what employees must knowto serve customers better

Develop Competency Maps that indicate competenciesrequire at each stage of the individual career path

Instead of training people, offer them opportunities to learnskills they can use

Encourage Communities of Practice

Promote cross-fertilization among high-potential employees

and experts in vital technologies Reward improvement in systems and disciplines that are a

part of the Companys intellectual capital

Is it Is it rare? Is it costly toimitate?

Is it non-substitutable?

Competitiveconseq-

Performanceimplications

Road to Sustainable Competitive Advantage

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valuable?tate? substitutable? q

uencesp

No No No NoCompetitivedisadvantage

Belowaveragereturns

Yes No No Yes/NoCompetitiveparity

Averagereturns

Yes Yes No Yes/NoTemporaryCompetitiveadvantage

Average toabove averagereturns

Yes Yes Yes YesSustainableCompetitiveadvantage

Aboveaveragereturns

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