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Human Aspects Of Strategy Implementation




Human aspects of strategy implementation • Behavioral issues in strategy implementation • Matching culture with strategy • Human side of M &A • Leadership, power & politics • Employee morale • Personal values &business ethics • Behavioral issues in strategy implementation • Matching culture with strategy • Human side of M &A • Leadership, power & politics • Employee morale • Personal values &business ethics Behavioral issues in strategy implementation • It is vital to bear in mind that organizational organizational change is not an intellectual process concerned concerned with the design of ever-morecomplex and elegant organization structures. structures. It is to do with the human side of enterprise and is essentially about changing  people’s attitudes, feelings and – above – above all else –  else – their their behaviour. The behavioural of the employees affect the success of the organization. Strategic implementation implementation requires support, discipline, motivation motivation and hard work from all manager and employees  Influence Tactics: The organizational leaders have to successfully implement implement the strategies and achieve the objectives. Therefore the leader has to change the behaviour of  superiors, peers or subordinates. For this they must develop and communicate the vision of the future and motivate organizational members to move into that direction.  Power: it is the potential ability to influence the behaviour of  others. Leaders often use their power to influence others and implement implement strategy. Formal authority that comes through leaders position in the organization (He cannot use the power to influence customers and government officials) the leaders have to exercise something more than that of the formal authority (Expertise, charisma, reward power, information power, legitimate power, coercive power)  Empowerment as a way of Influencing Behaviour: The top executives have to empower lower level employees. Training, self managed work groups eliminating whole levels of  management in organization and aggressive use of automation are some of the ways to empower people at various places.  Leadership Style and Culture Change: Culture is the set of  values, beliefs, behaviours that help its members understand what the organization stands for, how it does things and what it considers important. Firms culture must be appropriate and support their firm. The culture should have some value in it . To change the corporate culture involves persuading people to abandon many of their existing beliefs and values, and the behaviours that stem from them, and to adopt new ones  Values and Culture: Value is something that has worth and importance to an individual. People should have shared values. This value keeps the every one from the top management down to factory persons on the factory floor pulling in the same direction.  Ethics and Strategy: Ethics are contemporary standards and a principle or conducts that govern the action and behviour of  individuals within the organization. In order that the business system function successfully the organization has to avoid certain unethical practices and the organization has to bound by legal laws and government rules and regulations  Managing Resistance to Change: T o change is almost always unavoidable, but its strength can be minimized by careful advance Top management tends to see change in its strategic context. Rank-and-file employees are most likely to be aware of its impact on important aspects of their working lives. Some resistance planning, which involves thinking about such issues as: Who will be affected by the proposed changes, both directly and indirectly? From their point of view, what  aspects of their working lives will be affected? Who should  communicate information about change, when and by what  means? Whatmanagement style is to be used?  Managing Conflict: Conflict is a process in which an effort is purposefully made by one person or unit to block another that results in frustrating the attainment of the others goals or the furthering of his interests. The organization has to resolve the conflicts.  Linking Performance and Pay to Strategies: In order to implement the strategies effectively the organization has to align salary increases, promotions, merit pay, bonuses etc., more closely to support the long term objectives of the organization Matching culture with strategy Organizational effectiveness results from the alignment of three main components:  Culture: How we do things around here in order to succeed.  Leadership: Creating a vision and direction for the organization and mobilizing people to accomplish them.  Strategy: Establishing the fundamental focus for action that the organization must take in order to provide significant added value to customers. strategy culture leadership The Four Core Cultures Collaboration Control Diversity • Systematize • Objectivity • Order • Involvement United We Stand, Stability Standardization • Utility • Divided We Fall Harmony • People Realism Discipline • Interaction Complementary Pragmatism Cultivation Competence Growth and Development • Commitment • Professionalism • Pursuit of Excellence • Continuous Growth Commitment and Improvement • Competition for It.s Dedication • Involvement Creativity Own Sake • Purpose • Let Things Evolve • Subjectivity • Values Efficiency • Autonomy and Individual are Paramount • Meaningfulness Freedom • Fulfillment • Culture is important because it limits or enables strategy. It provides consistency, order and structure, and sets internal ways of life and patterns for internal relationships. It determines conditions for internal effectiveness and drives effective performance. .The most important thing that leaders can do is create and manage culture. The most important culture driver is the nature of the business. If you understand what the business is about, you are likely to understand the core culture. The Four Core Strategies Synergy Certainty Close partnership • High Dependability • Efficiency customization Total solution • High Interaction with Customer personalization Codevelopment Enrichment Superiority Fuller realization of potential One of a kind • Create market niche Growth of Customer • Raising of  Extremely unique • Unmatched human spirit • Further realization of  product / service • Excellence • ideals, value, higher-order purposes Constant innovation • Operational excellence Product leadership • Reinvention The Four Core Leadership Participative Directive Team Builder • Coach • Close Partner With Customers • Authoritative • Conservative • Integrator • Push for Consensus •Conflict Manager • Amiable •Pragmatist Driver Firm and Assertive •  Integrator: Ensures Utilization of   Diversity Definitive • Realist Structurer: Builds Systems  Epicenter: People Process  Epicenter: System  Motive: Affiliation  Motive: Power Goal attainment: Organizational  Goal attainment: Unique customer  system Charismatic Standard Setter Cultivator • Catalyst • People Conceptual Visionary • Challenger Steward Idealist • Commitment of Others • Spurs Competition • Builder Expressive • Idealist Tough Taskmaster • Stretcher of   Developer: Appeals to Higher- People Analyst level Vision  Exceller: Drives Constant  Epicenter: Values  Improvement  Motive: Self-actualization  Epicenter: Concepts  Motive: Achievement Goal attainment: Value-centered  Goal attainment: Conceptual  Human Side of Mergers and Acquisitions Types of Business Combination • Merger or Amalgamation  –  Merger or amalgamation may take two forms: •  Absorption is a combination of two or more companies into an existing company. • Consolidation is a combination of two or more companies into a new company.  –  In merger, there is complete amalgamation of the assets and liabilities as well as shareholders’ interests and businesses of the merging companies. • Forms of Merger:  –  Horizontal merger it is a merger when two or more firms dealing in the similar lines of activity combine together.  –  Vertical merger it is a merger that includes two or more stages of  production/distribution that are usually separate. A supplier and company. E.g., a leather supplier and a shoemaker.  –  Conglomerate merger it is a merger in which the firms engaged of totally different unrelated activities combine together.  Acquisition •  Acquisition may be defined as an act of acquiring effective control over assets or management of a company by another company without any combination of businesses or companies. Types of Business Combination • Takeover  –  The term takeover is understood to connote hostility. When an acquisition is a ‘forced’ or ‘unwilling’ acquisition, it is called a takeover. •  Parties in the Acquisition a) Holding company  – it is a company that holds more than half  of the nominal value of the equity capital of another company, or controls the composition of its Board of Directors. b) Subsidiary company- the company with the lesser number of  share is called subsidiary company. Both the companies maintain separate forms of accounts . • Most merger activity is fairly well planned relative to financial, product line & operational decision, the human element of merger & acquisition is often ignored. ILO found that neglecting human resource activities in merger & acquisition results in a much higher risk of failure. The lack of communication erodes trust & loyalty, resulting in increased job insecurity & workplace stress. The ILO reports states that a full two third of merger fail to achieve their objective, largely because of the inability to merge cultural & other human factors. HR’s role in merger/acquisition Pre-deal Due diligence Identifying people Estimating related issues employee related costs Integration planning implementation Developing communication strategies Managing employees communications Assessing individual’s fit with new needs Estimating Designing talent employees related retention program saving Aligning rewards with organizational needs Assessing ‘cultural fit’ between organization Assessing cultural Planning for issues as potential overcoming challenges resistance Monitoring the new culture & employees dynamics Educating top management on • Pre-deal- selection of the target organisation • Due diligence- during which time the parties meet & disclose all information relevant to the merger. • Integration planning or pre merger activity just prior to the formal launch • Fourth stage is actual implementation Role of HR in Mergers and Acquisition • 1. Due diligence should be very clear 2. Employee’s dissatisfaction to be avoided 3. Conduct common understanding programmes with the executive level employees of the company which you are going to takeover. 4. Negotiate and make the Union Leaders understand about the entire issue and their future positions after M&A. 5. Clear assessment of Manpower to be done 6. Understand the Org. Structure/Salary Structure and try to reduce the parity between the two companies. • 7. Understand all the legal cases pending with the acquiring company and take full accreditation of the cases to take next steps 8. Information to sent to all the bodies as per statute. 9. Proper Audit with re to Fixed and Tangible asset to be done and accordingly value to be determined. 10. Proper retrenchment policy to be implemented for excess staff  • The Human Side of M&A Activity Plenty of attention is paid to the legal, financial, and operational elements of mergers and acquisitions. But executives who have been through the merger process now recognize that in today’s economy, the management of the human side of change is the real key to maximizing the value of a deal. The management of the human side of M&A activity, however, based upon the failure rates of M&As, appears to be a somewhat neglected focus of the top management’s attention. People issues occur at several phases or stages of M&A activity. More specifically, people issues in just the integration phase of mergers and acquisitions include: 1) Retention of key talent; (2) Communications; (3) Retention of key managers; and (4) Integration of corporate cultures. HR issues in three Stage Models of Mergers and  Acquisitions • The three stages: • (1) Pre-combination; • (2) Combination and integration of the partners; and • (3) Solidification and advancement. Pre-Combination • Identifying reasons for the M & A Forming M & A team/leader Searching for potential partners Selecting a partner Planning for managing the process of the M and/or A Planning to learn from the process Combination and Integration • Selecting the integration manager Designing/implementing teams Creating the new structure/strategies/ leadership Retaining key employees Motivating the employees Managing the change process Communicating to and involving stakeholders Deciding on the HR policies and practice Solidification and Assessment • Solidifying leadership and staffing Assessing the new strategies and structures Assessing the new culture Assessing the new HRM policies and practices Assessing the concerns of stakeholders Learning from the process Role of the HR Department in M&A activity 1.Developing key strategies for a company’s M&A activities 2. Managing the soft due diligence activity 3. Providing input into managing the process of change 4. Advising top management on the merged company’s new organizational structure 5. Overseeing the communications 6. Managing the learning processes 7.Re-casting the HR department itself  8. Identifying and embracing new roles for the HR leader 9. Identifying and developing new competencies Conclusion • Merger and Acquisitions success entirely depends on the people who drive the Business, their ability to Execute, Creativity, and Innovation. It is of utmost importance to involve HR Professionals in Mergers and Acquisitions discussions as it has an impact on key people issues. As Mergers and Acquisitions activity continues to step up globally, Companies involved in these transactions have the opportunity to adopt a different approach including the increased involvement of HR professionals. By doing so they will achieve a much better outcome and increase the chance that the overall deal is a total success. Personal values & business ethics BUSINESS ETHICS • Head of Merck once said, “when I went to Japan 15 years ago, I was told by Japanese business people that it  was Merck that brought medicine after  world war 2 to eliminate TB which was  eating up their society. We did that. We  didn’t make any money.”   A basic problem • Ethical course of action is not always clear  to a company’s manager. • Managers are answerable toward investors & shareholders. • If company spend all money on charitable projects that lost money they’ll claim that company is not justified in investing their  money and hence act unethically Purpose of course • To provide a deeper knowledge of nature of ethical principles & concepts, and understanding of implication of these concepts in ethical problems encountered in business. • In short “To provide enough knowledge and  understanding that can make their ethical  course of action clear. “ Ethics: define as, “A conception of right & wrong conduct, serving as a   guide to moral behavior”  OR “The discipline that examines one’s moral standards or  moral standards of society”  Business Ethics can be defined as, “An application of general ethical ideas to business  behavior is Business Ethics”  Morality • Standards that an individual or a group has about what is right & wrong, or good & evil • Sources include family, society etc. • Moral Norms: general rules or statements • “Always tell the truth” • Moral Values: Statements describing objects or  features of objects that have worth. • “Honesty is good” Role of Ethics in Business • Thompson & Strickland (1995): “A strong corporate culture founded on ethical principles and sound values is a vital driving force behind continued strategic success.”  Arguments For & Against Business Ethics Objections to Bringing Ethics into Business • Perfectly Competitive Free Markets • Interest of firm • Ethics means obey the law PRISONER’S DILEMMA •  ASSUMPTIONS • Police commissioner tells each prisoner separately; • If neither admits that the two of them robbed the store, they will both be kept in jail for  1 year. • If both prisoners confess to robbing the store, each will get 2 years in jail. • If one keeps quiet while the other confesses, one who keeps quiet will get 3 years  in jail while the other one will go free. Prisoner’s Dilemma: Summary  •  A situation that gives 2 choices to both parties. i.e. cooperate or do not cooperate. • If both parties cooperate  both gain • If both parties do not cooperate neither  will gain •  Any 1 cooperate  1 who does not will gain Why Ethical Problems Occur in Business Reasons • Personal Gain & Selfish interest • Competitive Pressure on Profits • Business Goals Vs Personal Values • Cross-Cultural Contradictions