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 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
Source: 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-
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
Strategic Alignment: Employee—Customer Mirror
Freedom Begins with Me Southwest Airlines The Freedom to Fly

The Ritz-Carlton Serving Ladies and

Ladies and Gentlemen…
Gentlemen

Simply Palm Palm Simplicity at Work

Example—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 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
III. Dubai’s People Proposition
• Dubai has become a cosmopolitan state with more than 3 million people
from over 100 countries around the globe
I. How has Dubai preserved its Arab traditions and fostered social tolerance
in its citizens while accommodating huge numbers of foreigners, many of
them from the West and Asia?
II. 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?
Dubai’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 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 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 reality of the strategic process is 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, or
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 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 unit 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 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 goal
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: Enhancing the business model as
it develops and learning how best to execute the business strategy
3. Value protection and 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 strategies
markets 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 balancing
products in new markets local and corporate demands

Firms grow through new products Emphasizes radical innovation and continuous improvement
within existing markets
Firms may grow through new Combine approach 3 and 4
products 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 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, temporary or sub-contract 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 functions, Reward cost management behaviour,
Short-term, results-oriented performance appraisals
Quality enhancement Fixed and explicit job descriptions.
High levels of employee participation in decision-making relevant to
work, short-term and results-oriented appraisal.
Extensive and continuous employee training and development
Innovation (product differentiation) Encourage cooperation and creativity e.g. an emphasis on project-based
team performance appraisal, which recognizes developmental and team-
based 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 and long-terms, 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 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 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
innovation at its core – changes lives, homes and
businesses in real ways every day
3M Case
Year-End 2009
Sales Where they are ?
Worldwide.................................  Sell products in over 200 countries
$23.1 billion
International (63% of total)........
$14.6 billion  Operations in more than 65 countries
Earnings  35 international companies with manufacturing
operations, 35 with laboratories
Net income................................
$3.19 billion  In the United States, operations in 28 states
R&D Expenditures  8000 researchers worldwide; 3,400 in the
For 2019................................... United States
Total last 5 years...................
$1.90 billion
$6.86 billion Outstanding and excellent innovative strategies
Employees adopted by the company remains as the
Worldwide....................................
..... remarkable success of the firm.
United Since its inception in 1902 as Minnesota Mining
States................................. 74,835
31,513 and Manufacturing Company, 3M Company has
prioritized innovation as a key pillar in driving its
businesses
More Than 35 business Units
Organized Into Six Market-Leading Businesses

• Consumer and Offic e

• Display and Graphics

• Electro and Communications
• Health Care
• Industrial and Transportation
•
3M’s Technology Platforms
Ab Bi Pm Sm
Polymer
Abrasives Biotech 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
Microbial
Nw Pp Tt
Adhesives Drug Flexible 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-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 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” (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 on the base
of 3M materials and mailing
 Voting and selecting the best Eco-film
 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:
 Brand ambassador
Aligning Individual’s Purpose and  Community partner
Energy with Organizational Goals  Social responsibility and sustainability
 Family appreciation events
Pride  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 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 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?