SPI Technologies' Strategic Issues and Leadership Competencies - Case Study Example

Table of Contents Introduction……………………………………………………………………………………….2 Acquiring Strategies………………………………………………………………………………2 Developing and Maintaining Strategies…………………………………………………………..4 Enhancement of Business Critical Competencies………………………………………………...4 People and Leadership Development……………………………………………………………..4 Strategic Issues and Leadership Competencies Vital to the Organisation………………………...8 Maintaining and Retaining Strategies……………………………………………………………..9 Promotion of a Conducive Organizational Climate…………………………………………….....9 Building a Culture of Performance………………………………………………………………10 Conclusion……………………………………………………………………………………….13 References………………………………………………………………………………………..14 PUTTING PEOPLE FIRST: DEFINING SPI TECHNOLOGIES’ HUMAN RESOURCES AGENDA SPI Technologies, Inc. has been the first publicly listed IT company on the Philippine Stock Exchange and has been on existence for 23 years; now, it is acknowledged as the largest independent business process outsourcing (BPO) player in Asia, employing no less than 2,000 Filipinos. Its expanse of BPO services diversely cover medical transcription, data conversion / encoding and software support services, mainly delivered for Fortune 500 blue chip companies. The HR agenda also addresses the total strategy of HR’s value chain from acquiring, developing, motivating and retaining. Acquiring Strategies One of the strategies of SPI is to find and select employees who have the right orientation towards work and productivity right at the onset. SPI advocates the idea of a right hire resulting to a quick start. Based on strategic objectives and plans, competency requirements are laid down on a per position - per level basis. These competencies then become the basis of all HR systems, linking these systems clearly and logically. These same competency requirements then become the basis for targeted selection, against which potential employees are behaviorally assessed. This implies that right at the start – at the first step – of hiring, that SPI employees blend well into the organization’s culture and business strategy. Competencies are general descriptions of the abilities necessary to perform a role in the organization. These are usually described in measurable terms. They differ from job descriptions – while job descriptions typically list the tasks or functions and responsibilities for a role, competencies list the abilities needed to conduct those tasks or functions (McNamara, 2005). Assessing an individual’s specific strengths and development needs as they relate to the success profiles across levels of supervisors, managers and executive is a key component to selection, development, and promotion decisions. Information and data used to drive these decisions must be accurate and objective. The organisation has also set up a structured selection system based on Targeted Selection. This ensures that all questions asked of candidates are behaviorally based. Development Dimensions International (2005) described this HR system as follows: Targeted Selection is a system designed to meet the needs of a diversified workforce, offers a solution to common selection problems. Targeted Selection takes a systems approach to selection decisions: All aspects of the selection system are built around job requirements; inconsistencies are eliminated; decision points are clearly defined; all applicants are treated equally; government regulations are adhered to; and the best possible candidate is hired. The accuracy and fairness of the Targeted Selection system are based on six components. By following these components, Ramcar will be able to: Focus interviews and selection procedures on job-related information. Organize the elements of your selection process into an efficient system. Obtain specific behavioral information that can be used accurately to predict future behavior. Assess the motivational fit of candidates. Systematically share information about candidates in an organized data integration session. Make legally credible hiring decisions (Development Dimensions International, 2005). Developing and Maintaining Strategies Enhancement of Business Critical Competencies Among HR’s strategic objectives are as follows, in line with SPI’s often stated dictum “Putting People First”: enhancing critical business competencies, people and leadership development, promoting a conducive organizational climate, and emphasizing a culture of performance. To be able to achieve capability building, the enhancement of business critical competencies is a must. Joe Buot, Vice President for Human Resources, has this to say about training our people: “Training is absolutely essential in our line of work. As an international service provider, we are particularly aware that we are dependent on the diligence, dedication and expertise of our staff in every project. It is our constant challenge to build an integrated workforce that is not only hardworking and intelligent, but superbly trained, experienced and motivated as well…Much of our training is handled via the SPI Learning Academy, which focuses on critical dimensions such as corporate orientation and values, technical expertise for project management practice with global recognition, subject matter expertise for knowledge sharing, and leadership skills to build competencies in organizational and individual perspectives. Building and enhancing our employees’ performance in key business competencies is vital in facing the challenges of growth. As an organization, we believe that giving top priority to our people development agenda will not only ensure that we continually build the talents we need, but will help us in our search for other BPO areas in which we intend to venture.” The value of a clear and compelling vision has always been key to the success of all HR programs of the organisation. Thus, before the Organisation Development Department launches any change management initiative, it ensures that top management has laid down a clear vision for the undertaking and has committed to support the undertaking. This practice has been applicable to the people development agenda of the company. "All leaders have the capacity to create a compelling vision, one that takes people to a new place, and the ability to translate that vision into reality" (Bennis, 1992, p. 46). Modern leadership literature frequently characterizes the leader as the vision holder, the keeper of the dream, or the person who has a vision of the organizations purpose. In Leadership Is an Art (1989), De Pree asserts that "the first responsibility of a leader is to define reality" (p. 9). Bennis (1990) writes that leaders "manage the dream" (p. 46). Vision is defined as "the force which molds meaning for the people of an organization" by Manasse (1986, p. 150). According to Manasse (1986), this aspect of leadership is "visionary leadership" and includes four different types of vision: organization, future, personal, and strategic. Organizational vision involves having a complete picture of a systems components as well as an understanding of their interrelationships. "Future vision is a comprehensive picture of how an organization will look at some point in the future, including how it will be positioned in its environment and how it will function internally" (Manasse, 1986, p. 157). Personal vision includes the leaders personal aspirations for the organization and acts as the impetus for the leaders actions that will link organizational and future vision. "Strategic vision involves connecting the reality of the present (organizational vision) to the possibilities of the future (future vision) in a unique way (personal vision) that is appropriate for the organization and its leader" (Manasse, 1986, p. 162). A leaders vision needs to be shared by those who will be involved in its realization. Shared vision. An important aspect of vision is the notion of a shared vision. "Some studies indicate that it is the presence of this personal vision on the part of a leader, shared with members of the organization, that may differentiate true leaders from mere managers" (Manasse, 1986, p. 151). A leaders vision needs to be shared by those who will be involved in its realization. Murphy (1988) applied the concept of a shared vision to previous studies of policy makers and policy implementation; he found that those studies identified gaps between policy development and its implementation and concluded that this gap also applies to current discussions of vision. He stressed the need for the development of a shared vision. "It is rare to see a clearly defined vision articulated by a leader at the top of the hierarchy and then installed by followers" (Murphy, 1988, p. 656). Valuing human resources. Leaders go beyond the development of a common vision; they value the human resources of their organizations. They provide an environment that promotes individual contributions to the organizations work. Leaders develop and maintain collaborative relationships formed during the development and adoption of the shared vision. They form teams, support team efforts, develop the skills groups and individuals need, and provide the necessary resources, both human and material, to fulfill the shared vision (Westley & Mintzberg, 1989). People and Leadership Development People and leadership development is pursued by fast tracking the development of those in ‘critical few’ business positions, not only in technical tracks but also those which deal with organizational competencies such as project management and problem solving. Strengthening our leadership bench through training of top performers and high potentials is being focused on, for effective succession management. This is our way of ‘growing leaders from within’, our theme in the recently concluded SPI Leadership Forum. A competency tracking tool was also designed to monitor the pace with which strategic skill gaps are being closed. This first step involves determining and defining the key strategic objectives that are vital to the survival, success and growth of the organisation. These are similar to the “strategic elephants” described by Argenti (1989), those key issues or problems that the organisation must deal with in the next two to three years if it is to survive and prosper. They include the vision and strategy of the organisation and the external and internal factors that drive the decisions of the organisation (e.g. changing market share, return on capital, lack of human resource skills in a particular area, etc.). One of the biggest criticisms of many management development programs is that they do not contribute to the business objectives of the organisation. They may develop managerial skills but they do not substantially contribute to business success. It is often incorrectly assumed that if managers gain a skill they will use it to improve the business. It is important for strategic issues to be clarified and agreed on prior to the design of the leadership development program since they should determine the objectives of the program as well as the key competencies that need to be developed in the participants. Recent leadership development programs at PepsiCo, General Electric and Allied Chemical (Linkage, 1997) have involved a clarification of the critical business issues and designed leadership programs around the need to achieve outcomes related to these. Thus, to achieve such a linkage, the company has used the Balanced Scorecard as an HR strategy to ensure that objectives from the organisational level are meaningfully anchored on and aligned to the objectives at the departmental and individual levels. Strategic Issues and Leadership Competencies Vital to the Organisation The following guide has been used by the organisation in the design of its gap analysis tool, to determine the strategic issues and the leadership competencies that will be vital to the success of SPI both in the present and in the future. Are the major issues, factors, trends that are occurring in the external and internal environment of your organisation? Are the most important two external issues and the two most important internal issues that relate to the survival, success and/or growth of your organisation? Describe why each of these is important in terms of what will happen to the organisation if these issues are not properly responded to over the next two to three years. Order to effectively deal with these issues what are the major areas of knowledge, competencies and skills your managers will need to have (which they currently don’t have) over the next two to three years? Are the things that will need to happen within the organisation in terms of human resource practices, rewards, organisational systems (e.g. strategic planning, reporting mechanisms, etc.) and reinforcement to ensure these things will happen after the completion of the leadership development program? Part of people and leadership development in SPI is education in and practice of the corporate values. Each business unit in SPI may be unique, but we assure that everyone adheres to a single, shared values system. The values of speed, flexibility, innovation, competence and integrity are cascaded to all staff members with a view of ingraining further our shared value system. We want employees – more so our leaders – to realize that no matter what they do in the organization, these six values will help them achieve the desired results. These values are also tightly woven with our performance management system. Maintaining and Retaining Strategies Promotion of a Conducive Organizational Climate Turnover includes the arrival of new employees and the departure of existing employees, but most research on turnover focuses on leaving rather than on entering the organization (Price, 2001). Turnover can be classified into two categories: voluntary and involuntary turnover. Voluntary turnover occurs when the employee terminates the employment relationship (Price, 1997). Involuntary turnover is when the employee wants to stay but the employer decides to terminate the relationship (Dess and Shaw, 2001). Price (2001) found that most turnover is voluntary and is, therefore, potentially avoidable and controllable, costly, and disruptive to an organization. Wiley (1993) thought that voluntary turnover could be caused by a number of factors including poor job feedback, job dissatisfaction, unmet job expectations, performance problems, situational constraints, socialization difficulties, greater degree of job stress, and a lack of career advancement opportunities. Intention to leave is a key predictor of actual leaving and most of the time is accurate when the time horizon of the prediction to leave is short (Zenger, 1992). Level of job satisfaction plays a major role in virtually all turnover (Lee and Chen, 1999). Thus, in an effort to maintain a conducive organisational climate, SPI emphasises on worklife balance initiatives. Moreover, each employee’s stay in the company is made worthwhile by emphasizing on skills development and employability. In addition, the rewards system of the company is performance-based rather than tenure or entitlement-based. This ensures that rewards are given out equitably to those who contribute more to organizational bottomlines. Building a Culture of Performance As a banner program for performance management, SPI has launched and implemented the LEAP, or the Leading Edge for Accelerated Performance. In brief, the program aims to: 1.) Create and promote a performance-based culture by rewarding and recognizing the best performing employees and taking corrective action to least effective performers; 2.) Link performance measurement to corporate strategy, and measure performance in ways that both promote future positive results through competencies and business values and reflect performance through the achievement of BSC goals and objectives; 3.) Ensure that performance requirements are equally and well understood by the entire organization; 4.) Put the right measures on performance goals and objectives; and 5.) Measure the effectiveness of the performance management process. The LEAP is the main vehicle through which a performance-based rewards framework is implemented across SPI. Under this framework, employees have shared goals and responsibilities. By ‘shared’, we mean the alignment of corporate objectives to division, department down to individual objectives and the allocation of corresponding weights to these objectives across levels. That the system is performance-based suggests that pay-outs are dependent on performance ratings; thus, the actual pay-out rating is determined by the budget, corporate scorecard rating and the individual’s performance rating. The LEAP also determines the annual pay-out (i.e. incentives). As an effective tool for promoting a performance-based culture, the LEAP provides focus and alignment to corporate objectives, department objectives, and individual objectives. A critical portion of the system is the cascade of BSC objectives to all employees across SBUs. Moreover, it eliminates the mentality of entitlement, and promotes stakeholdership. It also encourages employee / team performance that directly contributes to the bottom line of the business. Finally, it promotes the rewards system as being strongly linked to performance management. It also provides a basis for annual pay-outs and fosters a culture of continuous improvement. Another retention factor is giving project employees the full range of benefits accorded to regular employees after they have rendered one full year of service. This means that they receive more than the mandatory government mandated benefits usually provided for the nature of their work and employment status. Equity theory suggests that motivated behavior is a form of exchange in which individuals employ an internal balance sheet in determining what to do.  It predicts that people will choose the alternative they perceive as fair.  The components of equity theory are inputs, outcomes, comparisons, and results.  Inputs are the attributes the individual brings to the situation and the activities required. Outcomes are what the individual receives from the situation.  The comparisons are between the ratio of outcomes to inputs and some standard. Results are the behaviors and attitudes that flow from the comparison, but other standards of comparison, including oneself in a previous situation, seem equally probable (Adams, 1965). Based on equity theory, the LEAP program of SPI Technologies ought to be an effective vehicle in motivating employees because they perceive that they are compensated equitably. Goals setting theories argue that employees set goals and that organizations can influence work behavior by influencing these goals.  The major concepts in the theory are intentions, performance standards, goal acceptance, and the effort expended. These concepts are assumed to be the motivation.  Participation in goal setting should increase commitment and acceptance.  Individual goal setting should be more effective than group goals because it is the impact of goals on intentions that is important. In goal-setting theory the crucial factor is the goal.  Tests of the theory show that using goals leads to higher performance than situations without goals, and that difficult goals lead to better performance than easy ones (Yukl & Van Fleet, 1992).  Although participation in goal setting may increase satisfaction, it does not always lead to higher performance. This theory has been applied by the company through its annual objective setting exercise where the Balanced Scorecard objectives are clearly cascaded and translated to individual objectives. Conclusion Overall, these are the HR strategies utilized by the company across the phases of the employee cycle. SPI Technologies’ 24-year track record of success and in-depth experience in business process outsourcing, starting from the Company’s humble roots as a data entry organization in 1980, into a diversified BPO provider to the global market today is a living testament that the amount of strategic leadership, human resource planning and focus, and process management led it to achieve very significant business results making the company Asia’s biggest, independent BPO provider. References Adams, J.S. (1965). Inequity in social exchange. Advances in Experimental Social Psychology, 267-299. Argenti, J. (1989), Practical corporate planning. Sydney: Unwin. Dess, G.G. & Shaw, J.D. (2001). Voluntary turnover, social capital, and organizational performance. Academy of Management Review, 26 (3), 446-56. Development Dimensions International. (2005). Retrieved on January 6, 2006 from www.ddiworld.com. Linkage Inc. Proceedings of The 2nd Annual Leadership Development Conference. Linkage Inc., San Francisco, CA. McNamara, C. (2005). Specifying job and role competencies. Retrieved on January 6, 2005 from http://www.managementhelp.org/staffing/specify/cmptncys/cmptncys.htm Price, J.L. (1997). Handbook of organizational measurement. International Journal of Manpower, 18, 4/5/6, 303-558. Price, J.L. (2001). Reflections on the determinants of voluntary turnover. International Journal of Manpower, 22 (7), 600-24. Wiley, C. (1993). Employee turnover: Analyzing employee movement out of the organization. Washington, DC: SHRM. Read More