S T R AT E G I C

ALIGNMENT
BETWEEN HR AND
BUSINESS
S T R AT E G Y: VA L U E
C R E AT I O N A N D
S U S TA I N A B I L I T Y

Lalith Weragoda
PhD (USJ), MBA (PIM-SJP), BSc – Special, MCIPM, FASA
Group Chief Human Resource Officer
Sampath Bank PLC
Overview
Strategic alignment is the strength of the links “between an
organization’s overall goals and the goals of each of the
units/areas that contribute to the success of those overall goals”
(Andolsen, 2007)
Two strategic aspects to be aligned.
How well does business strategy support the fulfillment of
company purpose?
How well does the organization support achievement of
business strategy?
Overview …
The idea that HR strategy should be an integral element of business
strategy is the holy grail of contemporary business and HR leaders.
What ‘align’ and ‘How to align’’ should be the main aim of HR strategy is
coming to be questioned
Strategy becomes a window on both the general business conditions and
specific stakeholder expectations so that HR can connect their work to
external factors (Dave Ulrich, 2020)
Principle of alignment: Every aspect of an organization’s activities should
be integrated and pulled together to achieve corporate goals
What is strategic alignment?
There are three propositions essential to the success of
strategy:
• Value proposition:: Utility buyers receive from the product or service
minus the price they pay for it
• Profit proposition:: Price of the offering minus the cost of producing
and distributing it
• People proposition:: Readiness of employees to execute the new
strategy with all of their energy, to the best of their abilities, and
voluntarily
What is strategic alignment?
• For any strategy to be successful and sustainable, an organization
must develop an offering that
• Attracts buyers
• Enables to make money out of its offering
• Motivate the people working for or with the company to execute the strategy
• If a strategy does not fully develop and align the three strategic
propositions, short-lived
lived success or failure typically results
What is strategic alignment?

To make a successful strategic move, an organization’s top

executives must take responsibility for and ensure strategic
alignment
Typically, executives with a strong functional bias cannot
successfully fulfill this important role because they tend to focus
on one rather than all of the three strategic propositions
urce: Chan Kim & Renée Mauborgne, Blue Ocean Strategy
Why Alignment is Essential: Design Effective
Business Strategy
Business strategy of an organization reflects the intentions of leaders
about how they expect to achieve results over a stated period of time
Any business strategy should provide answers to some basic questions:
• What are we going to do?: vision, mission, goals
• How, where and by when and with what resources are we going to do it?
• Who is going to do it: workforce planning and enabling, performance
management, development etc
Business strategies should take into account the changing needs of
external stakeholders and critical resources need to achieve strategic
objectives
Why Alignment is Essential: Design Effective
Business Strategy …
Such critical resources include capital, technology, and most importantly people,
their brain power and attitudes
Simply telling people what needs to be done may not be enough to produce
action
The process of aligning people’s behaviour involves attunement, whereby
employees become engaged at an emotional level with what they are being
asked to do
Attunement:: I. To bring into harmony, II. An approach that goes beyond authority-
authority
based methods used to gain organizational alignment
Providing answers to the question ‘why’,’, is key to attunement
https://www.youtube.com/watch?v=ytjeyqlTjyY
Why Alignment is Essential: Design Effective
Business Strategy …
Typical leadership processes for answering these questions:
• What? Visioning
• How? Designing the organization / roles
• Who? Enabling the people
Answers to these questions need to be reflected in people’s jobs so that
they have a clear line of sight in their daily work with the higher-level goals
and purpose their organization is pursuing
trategic Alignment: Employee—Customer
Employee Mirror
Freedom Begins with Me Southwest Airlines The Freedom to Fly

The Ritz-Carlton
Ritz Serving Ladies and
Ladies and Gentlemen…
Gentlemen

Simply Palm Palm Simplicity at Work

Example—Ritz
Ritz Carlton:
“Ladies and Gentlemen
Serving, Ladies and Gentlemen”

What will I be doing? How will I develop?

Functional I will be serving the world’s elite. I will be given extensive training
Benefits on how to execute my job exceptionally well. I will be a service
professional and will be treated with dignity and respect

How will I be rewarded?

Economic
I can expect to receive market level cash compensation with above
Value average perks!

How will it make me feel? What will I be a part of?

Psychological
I will be part of one of the world’s most elite hotels. I will feel
Benefits special
Why Alignment is Essential: To achieve
Emergent Needs
Models of strategic processes are often linear, sequential and apparently
rational
However, in current business environment flexible planning is essential
Flexibility provides the organization with the ability to adapt to the
changing environment
To meet the above need, leaders need to manage their organizations as
dynamic, real-time entities,, not as bureaucratic systems
This requires flexible alignment: intelligent talent management and labour
relations, customer-focused
focused policies, processes and technologies
conducive to speed and effectiveness
Successful examples of strategic
alignment: case of Dubai (The City of
Dream )

I. Dubai’s Value Proposition

• The value proposition begins
with a dozen world-class free
trade zones with unbeatable
incentives for investors
II. Dubai’s Profit Proposition

Instead of exploiting conventional

income channels such as corporate
and personal taxes, which would
discourage foreign investors, the
government has invested in the
infrastructure that supports the
investors’ activities – shipping and
port services, transport, tourism, etc
II. Dubai’s People Proposition
Dubai has become a cosmopolitan state with more than 3 million
people from over 100 countries around the globe
. How has Dubai preserved its Arab traditions and fostered social
olerance in its citizens while accommodating huge numbers of
oreigners, many of them from the West and Asia?
I. With no social benefits or citizenship rights to offer, how did Dubai
attract foreign talent central to the government’s ability to execute its
strategy?
’s People Proposition
Unsuccessful examples of strategic
alignment: TATA NANO
Why did the people not want the people’s car?

Introduced as the cheapest car in the world

• Tata Motors couldn’t reach out to its target market since their dealer
network was situated only in the urban
• The project faced an eighteen-month
month delay as the production unit had
to be shifted from Singur, West Bengal to Sanand, Gujrat
• Tata was not able to keep up with that price and the on-road
on price for a
base variant Nano started to come to around 2.59 lakhs which defeated
their marketing campaign for the car
Why Alignment is Essential: To meet
Challenges of Implementation
Having a strategy alone does not automatically produce results; people have to
be willing and able to implement the agreed strategy
If employees know what these aims are and why they need to be achieved, they
are able to contribute their skills in the most effective way
In many organizations, the day-to-day
day reality of the strategic process is some-
some
what messy due to following facts
• Capabilities of employees involved were not sufficient
• Training and instruction given to lower level employees were not adequate
• Leadership and direction provided by departmental managers were not adequate
Cultural Alignment
Culture is the tacit social order of an organization (HBR, Jan – Feb
2018)
It shapes attitudes and behaviors in wide-ranging and durable ways
Cultural norms define what is encouraged, discouraged, accepted, o
rejected within a group
When properly aligned with personal values, drives, and needs,
culture can unleash tremendous amounts of energy toward a shared
purpose and foster an organization’s capacity to thrive
Cultural Alignment …
“Culture
Culture eats strategy for breakfast” (Peter
( Drucker)
Strategy offers a formal logic for the company’s goals and orients
people around them
Culture expresses goals through values and beliefs and guides
activity through shared assumptions and group norms
Line managers need to think what kind of culture needed in each uni
to align people to deliver business strategy
They also need to think behavioural characteristics desired for
employees to implement business strategy successfully
Convergence of Culture
When we compared employees’ views on their organization’s
most salient cultural attributes, two types of organizations
emerged;
• Low convergence: Employees
mployees rarely agreed on the most important
cultural attributes
• High convergence: views were more closely aligned
Why is high convergence important?
Because it correlates with levels of employee engagement and
customer orientation
Pros and Cons of Culture Style
CARING CULTURE : Warm, sincere, relational
Improved teamwork, engagement, communication, trust, and
sense of belonging
Overemphasis on consensus building may reduce exploration
of options, stifle competitiveness, and slow decision making
Pros and Cons of Culture Style …
LEARNING CULTURE : Open, inventive, exploring
Improved innovation, agility, and organizational learning
Overemphasis on exploration may lead to a lack of focus and
an inability to exploit existing advantages
Pros and Cons of Culture Style …
RESULTS ORIENTED CULTURE : Achievement driven, goal
focused
Improved execution, external focus, capability building, and goa
achievement
Overemphasis on achieving results may lead to communication
and collaboration breakdowns and higher levels of stress and
anxiety
Aligning HR Structures with Business
Strategy
1. Value Creation:: Ensuring the organization has the ability to build
and acquire talent and in turn develop the value proposition
inherent in the business model
2. Value improvement and leverage:
leverage Enhancing the business model
as it develops and learning how best to execute the business
strategy
3. Value protection and preservation:
preservation Design and maintenance of
effective governance processes, constructive surfacing of the risks
inherent in a business model and appropriate mitigation strategies
Factors to Take into in Aligning People with
Business: Organization Stage
Growth Phase HR Implication
Firms grow within existing Create business cultures through which revenue-enhancing
revenue
markets strategies are implemented can be a major source of competitive
advantage
Firm purchases a competitor Identify ideal culture which is required for both companies

Firms grow through existing Facilitate growth, selecting the right local leadership and
roducts in new markets balancing local and corporate demands

Firms grow through new Emphasizes radical innovation and continuous improvement
roducts within existing
markets
Firms may grow through new Combine approach 3 and 4
roducts and new markets
Factors to Take into in Aligning People with
Business: Stage of Organization Life Cycle
Stage Key Features of HR Strategy
Start-up Need to attract high-calibre
calibre employees, partly by paying market or above
market rates, and partly by establishing skill requirements for future
development and a suitable organizational culture
Growth Various categories of part-time,
time, temporary or sub-contract
sub labour may be
used to create labour flexibility
Maturity A large internal labour market, and the emphasis shifts towards
manpower retention. Accordingly, wages tend to be based more on grade
definitions than profitability or skills
Decline Focus on restructuring, cost control, redundancies and outplacements
Factors to Take into in Aligning People with
Business: Type of Business Strategy
Business Strategy HR Strategy
Cost Leadership Outsourcing non-core
non functions, Reward cost management
behaviour, Short-term,
Short results-oriented performance appraisals
Quality enhancement Fixed and explicit job descriptions.
High levels of employee participation in decision-making
decision relevant to
work, short-term
term and results-oriented
results appraisal.
Extensive and continuous employee training and development
nnovation (product Encourage cooperation and creativity e.g. an emphasis on project-
project
ifferentiation) based team performance appraisal, which recognizes
developmental and team-based
team activities.
Considerable investment in training and career development.
Service Leadership Attract service oriented individuals, Set service standards, Promote
stewardship,
Aligning with Learning and Development with
Business
Play critical role in enhancing competitive advantage
Competency based learning and development
• Business acumen
• Stake holder Relations
• Leadership and personal effectiveness
• Impaired facility management
• Risk and compliance management
• Digital channel management
• Financial acumen
Leadership and Management development
Career development and succession planning
Support for continuous improvement
Aligning with Performance Management
with Business
Align with goal setting approach: Participative or directive
approach
Types of goals: Short-term
term and long-terms,
long Financial and non-
financial, Output and outcome, social goals, Health / eco goal
Degree of stretching
Method of evaluation
Method of feedback: Open or closed
Aligning with Rewards and Recognition
with Business
Financial or non-financial
financial rewards
Implicit or explicit rewards
Short-term or long-term
Team or individual rewards
Variable or fixed or both
Open or closed
Vertical and Horizontal Alignment
Vertical alignment refers to the alignment of human resource
practices to the organizational context in order to support specific
organizational objectives
Characteristics of Vertical Alignment;
• The top management incorporating human resource plans, requirements and
activities during the establishment of the organization’s direction
• Top level managers being trained to integrate all levels of the organization’s
management hierarchy and functional departments into the organizational
decision-making process
• The human resource department is fully integrated into the strategic planning
process
Vertical and Horizontal Alignment
Horizontal integration is the degree to which specific human
resource practices are orchestrated in a coherent and consistent
manner to support one another in the best way possible and to
integrate with other department
Characteristics of Horizontal Alignment;
• Human resource department strive to maintain the corporate partnership with
individual managers
• Human resource department regularly checks with other departments to
identify organizational learning needs
• Human resource department supports departmental managers in carrying out
critical HRM functions as part of their core functions
Model for Strategic Alignment: McKinsey
7S Framework

Developed by Waterman and Peters in 1980s

Theory behind the model: Seven elements of organization need to be
aligned and mutually reinforcing for an organization to perform well
They are classified into soft and hard elements: People and Business
elements of the organization
This model helps to explain need of alignment between people with
business
 Hard Elements:
Business Element

Soft Elements:
People Element
Hard Elements
1. Strategy
Organization's plan for building and maintaining a competitive
advantage over its competitors
2. Structure
How organization is organized to execute strategy
3. System
How processes and procedures design and organized to
perform jobs / tasks
Soft Elements
4. Skills
Abilities of employees to perform well in given job
5. Staff
What types of people need to achieve given job
6. Style
Way the company is managed by top-level
top managers, how they
interact, what actions do they take and their symbolic value
7. Shared Value
Norms and standards that guide employee behaviour
3M Case
Strategy: Three priority areas
• Science for Circular: Design solutions that
do more with less material, advancing a
global circular economy
• Science for Climate: Innovate to
decarbonize industry, accelerate global
climate solutions and improve our
environmental footprint
• Science for Community: Create a more
positive world through science, and inspire
people to join us.
3M Case
5.9 percent of sales back into the science: $ 1.9
B invested for R & D in 2019
Produce more than 3,500 patents each year
120,383 patents as at December 2019
8,000 researchers worldwide
Insatiable curiosity
3M’s work – with integrity, collaboration and
nnovation at its core – changes lives, homes
and businesses in real ways every day
3M Case
Year-End 2009
Sales Where they are ?
Worldwide...............................
$23.1 billion
..  Sell products in over 200 countries
International (63% of $14.6 billion  Operations in more than 65 countries
total)........
 35 international companies with manufacturing
Earnings operations, 35 with laboratories
Net $3.19 billion  In the United States, operations in 28 states
income................................
 8000 researchers worldwide; 3,400 in the
R&D Expenditures United States
For $1.90 billion
2019...................................
Outstanding and excellent innovative
Total last 5 $6.86 billion
years................... strategies adopted by the company remains
as the remarkable success of the firm.
Employees Since its inception in 1902 as Minnesota
Worldwide...............................74,835
.......... Mining and Manufacturing Company, 3M
United 31,513
States.................................
Company has prioritized innovation as a key
pillar in driving its businesses
More Than 35 business Units
Organized Into Six Market-Leading
Market Businesses

• Consumer and Offic e

• Display and Graphics

• Electro and Communications
• Health Care
• Industrial and Transportation
• Safety, Security and Protection Services
3M’s Technology Platforms
Ab Bi Pm Sm
Abrasives Biotech Polymer Specialty
Melt Materials
Processing

Ac Ce Em Nt Po Su
Acoustics Ceramics Electronic Nano- Porous Surface
Materials technology Materials & Modification
Membranes

Ad Dd Fc Mi Nw Pp Tt
Adhesives Drug Flexible Microbial Nonwoven Precision Track and
Delivery Converting Detection & Materials Processing Trace
& Packaging Control

Am Di Fe Fs Is Me Mo Op Pr
Process
Vp
Advanced Display Flexible Filtration, Integrated Metal Matrix Molding Opto- Vapor
Materials Electronics Separation, Systems Composites electronics Design & Processing
Purification Design Control

An Do Fi Im Lm Mf Mr Pd Rp We
Analytical Dental & Films Imaging Light Mechanical Micro- Particle & Radiation Accelerated
Orthodontic Mgmt Fasteners replication Dispersion Processing Weathering
Materials Processing

As Ec Fl In Md Pe Se Wo
Application Energy Fluoro- Inspection & Medical Predictive Sensors Wound
Software Components materials Measure- Data Mgmt Engineering Mgmt
ment & Modeling
Strategic Alignment HR Business
3M Strategies Critical HR Strategies
Engaged,
Productive 1. Engage employees and strengthen
and Diverse employment brand
Grow the current HR Vision
HR partners with 3M Employees
core business
the business to 2. Enhance ability to acquire
drive growth 3M Strategy
Acceleration and retain the right workforce
through people.
Through HR
Leadership and
Complimentary Expertise 3. Enable effective human capital planning
acquisitions and increased workforce productivity
3M Workforce and
Organizational
HR Mission Readiness 4. Optimize HR administration including
Provide workforce global web and call centers
International growth and organizational
solutions to Operational
accelerate strategy Excellence and
execution and drive Productivity of 5. Accelerate the development of talent
Global HR
Build new operational Services
businesses excellence.
6. Design compensation and benefits plans
Protect the
Corporation to meet evolving business needs
Engagement Objective
• Improve employee engagement levels to drive
organizational outcomes
• Key Components
• Corporate-wide:
• Improve employees’ understanding of 3M’s vision, future and decision-
decision
making
• Increase communication of business goals, plans and achievement
• Involve employees to help them understand what is engagement and what is
the business case
• Within Businesses:
• Provide support to the Big B/Area/Staff Groups to take action on the
concepts communicated in and through the corporate-wide
corporate components of
the strategy
• Additional areas of focus to address identified gaps
3M Leadership Attributes
Thinks from outside in
Drives innovation and growth
Develops, teaches and engages others
Makes courageous decisions
Leads with energy, passion and urgency
Lives 3M values

Engagement is essentially a leadership responsibility.

Building a Stronger Brand
Start Here
Employee Engagement

Customer Engagement

Share of Customer

Sales Revenue
Monday to Friday Activities
Monday: Recycling
 Presentation of the film: The
Inconvenient Truth global warming
documentary movie
 Collect used paper, cans etc. to gather
money in return and donate the money
to local ZOO
 Mailing – recycling!
Wednesday: Switch Off
 Take back event – a small gift for
employees
 Contest „Green eco-photo”
eco (awards:
books, calendar with ecological
advices), exhibition of best works
 Clean your office
(one hour desk cleaning)
 Mailing – switch off!
Friday: Make It Green
 Day with a car (bicycle, car sharing) –
small awards for those who arrive first
to work on bicycle
 Seat trees, sow grass
 Bicycle race – options:
 For each km 3M pays 1 PLN and
donates the money to local ZOO
 Training bike on the site.
 Mailing – Green Office!

Tuesday: Save Thursday: Go On Foot

 Contest “Eco-film” (ecological films
recorded on mobile phones) – award
the best film employees voting
 Presentation of 3M ecological and
sustainability projects
 Calculate the energy you use! – Mailing
 Quiz Eco-knowledge
knowledge on the base
of 3M materials and mailing
 Voting and selecting the best Eco-film
Eco
 Event “Exchange or forward”: bring your
old books or any products you are not
going to use and exchange for other
products you might use.
 Mailing – go on foot. Economic driving.
Employee Engagement:
Engagement:
Aligning Individual’s Purpose  Brand ambassador
 Community partner
and Energy with Organizational  Social responsibility and sustainability
Goals Pride  Family appreciation events
 Media coverage
in 3M  External recognition and awards
 Performance oriented company
 Challenge and growth
 Career advancement and broadening
Career Fulfillment  Personal career development
 Effective supervisor and peer relationships
 Safe working conditions
 Equitable compensation and benefits
Basic Employee Needs  Ethical business practices
 HR principles
 3M values
jReguler
Reguler and Open
Regular and Open Communication
Communication
Alignment Matrix
Very best chance of winning
Companies that score highly on both scales stand the very best chance of
winning in their competitive field
Alignment manifests itself in more than just superior financial performance
It leads to a more positive work climate, above-average
above staff engagement
and a strong commitment to values
https://www.arm.com
• ARM organizations purposefully for innovation by maximizing opportunities for
knowledge sharing and collaboration throughout its entire ecosystem comprising
thousands of external partners
• Its microprocessors are used in over 95% of the world’s smart devices, including iOS
and Android smartphones and tablets
Best of intentions, but incapable
Companies that score highly on the purpose and strategy
alignment scale, but low on the strategy and organization scale,
are more or less incapable of implementing their strategy as
intended
The performance penalty may be manifest in poor customer
attraction and retention, higher--than-expected costs,
organizational dysfunctions, or simple financial
underperformance
Boldly going nowhere
Businesses that have strong alignment between their strategy
and organization, but weak alignment between strategy and
purpose
There are many capable businesses with great people that lack
a coherent, overarching purpose that helps guide shifts in
strategy
Kodak is a famous example of a terrifically capable blue chip
business brought low by confusion about how best to fulfil its
purpose in the digital world
Not long for this world
Companies that score low on both scales are in crisis, even if it
isn’t immediately obvious
Their strategies do not – cannot – fulfill their larger purpose,
because they fail to effectively address customer preference,
market conditions, and competitor capability
Equally significant, their organization is incapable of delivering
against strategic priorities
Royal Bank of Scotland (RBS)
Questions to think!
What is strategic alignment?
Why it is essential ?
What are the effective tool can be used for strategic alignment?
What are roles of leadership and HR in setting up of
boundaryless alignment?