Question

The overall strategy of a company directly impacts its HR practices. Discuss, and give specific examples of, various HR practices that should be used related to the following three business strategies: growth strategy, stability strategy, and reduction strategy.

Answer 1

HR practices related to the following business strategies are being pointed out:-

A) Growth Strategy

1) Specific recruitment of technically sound workforce related to the field.

2) Huge recruitment of sales workforce depending on the size and nature of the target market.

3) Extensive training and development program to be carried out among the recruited workforce for educating about the product or service being offered.

4) Defining the HR mission and vision statements with concrete action plan of how to achieve them.

5) Maintain transparency in the compensation/benefits and incentive part of the growing workforce.

Example :- An established company like Uber targeting a new market like India implemented the growth strategy

B) Stability Strategy

1) Taking care of the employees with an established compensation system associated with benefits like medical, insurance, houserent etc. which create long serving employees.

2) Regular performance appraisal and incentive system to motivate the workforce.

3) Training and development program for the employees to be provided with encouragement on cross functional expertise of an employee.

4) A well designed grievance redressal system or portal for the employees with regular followup on them.

5) New employees being hired at a constant rate pertaining to the flat growth rate of the company.

Example :- IBM an ageold giant MNC follows the stability strategy throughout the world

C) Reduction Strategy

1) Hire experienced candidates (no freshers) and retain top performers inside the company.

2) Retrenchment and processed layoff for underperming employees.

3) Cost reduction by automation of many repeatative processes of the company.

4) The training and development cost is reduced to minimal (almost zero).

5) Consolidate many operational and entertainment activities to reduce overall cost (like combining team outing or decrasing paperwork saving stationaries etc)

Example :- Company like Nokia followed reduction strategy