Gaining Competitive Advantage and Business Success

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HRDI 6:3 (September 2003), pp. 405–411

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Gaining competitive advantage and business success through strategic HRD: an Indian experience Biswajeet Pattanayak Indian Institute of Management, Indore

Abstract: This article offers a case study of a strategic HRD initiative to enhance organizational performance. Based at a corporation in India, the initiative involved an action research component to understand factors hindering current performance and HRD interventions aligned to business strategy to address the identified factors. The case study illustrates the potentials for taking a strategic approach to improving performance through HRD.

Organizational strategy is basically concerned with the creation of missions and the setting of organizational objectives. Specific policies are then formulated and implemented to achieve those objectives, including policies, procedures, methods and programmes relating to the organization’s human resources. Those policies and practices should be linked to business objectives and corporate strategy (Pfeiffer 1998), with human resource development having a key role in ensuring the strategic alignment of training and development, career development and cultural change to the overall performance improvement of the organization. Strategic HRD therefore aims to leverage and/or align HRD practices to build critical organizational capabilities that enable an organization to achieve its goals (Ulrich and Lake 1990). Aligning HRD to the business is an essential component of achieving HRD effectiveness (Rao 1999). One integrative framework for achieving this (offered by Yeung and Berman 1997) used three paths through which HR practices can contribute to business performance: building organizational capabilities, improving employee satisfaction and shaping customer and shareholder satisfaction. This framework was used in the following case study in strategic HRD in an Indian corporation.

The setting
The liberalization, privatization and globalization of the Indian economy started in early 1990s and picked up pace in the second half of the decade. Indian organizations therefore faced new pressures to improve performance, and this increased the need for the strategic alignment of HRD activities with business strategy. However, in most Indian family-owned businesses, alignment of HRD tends to be hindered by the ritualistic nature of confining strategy decisions to the top decision-makers. This limits the synchronization between the competencies required to deliver future business Human Resource Development International ISSN 1367-8868 print/ISSN 1469-8374 online © 2003 Taylor & Francis Ltd DOI: 10.1080/13678860210140913

Perspectives on Practice

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activities and the competencies available in the organization. In order to bridge this gap, larger organizations have tended to develop existing employees, whereas smaller organizations have tended to hire developed people. This case study is based on the implementation of strategic HRD in the Essar Group, one of India’s leading business conglomerates with an asset base of over US $4 billion. The group is committed to the development of core sector and infrastructure business in India and abroad, and is involved with steel, shipping, oil and gas, power and telecommunications. One of its companies, Essar Steel, is currently the second largest in the Indian private sector, producing 2.2 million metric tons per annum (MMTPA) of hot rolled flat products in Hazira (Gujarat, India).

Understanding the context
The company started the commercial production in 1995 using the latest technology at an integrated steel plant. After two...
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