Enhancement of Business Critical Competencies - Research Proposal Example

PUTTING PEOPLE FIRST: DEFINING SPI TECHNOLOGIES’ HUMAN RESOURCES AGENDA Number] [Lecturer’s The present research presents an evaluation of the HR strategies employed by SPI Technologies, Asia’s biggest independent business process outsourcing company. The evaluation made use of interview data and running records to gauge the alignment of people strategies to overall business goals. The results indicate that the company exercises HR best practices including the use of Targeted Selection, a competency-based people development plan, a merit-based performance management system, and work life balance initiatives, among others. 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. Table of Contents Introduction……………………………………………………………………………………….4 Aims and Objectives………………………………………………………………………………6 Methodology………………………………………………………………………………………6 Results and Discussion……………………………………………………………………………7 Acquiring Strategies……………………………………………………………………………...13 Developing and Maintaining Strategies………………………………………………………….14 Enhancement of Business Critical Competencies………………………………………………..14 People and Leadership Development…………………………………………………………….16 Retaining Strategies……………………………………………………………………………...17 Promotion of a Conducive Organizational Climate……………………………………………...17 Building a Culture of Performance………………………………………………………………18 Conclusion……………………………………………………………………………………….20 References………………………………………………………………………………………..21 PUTTING PEOPLE FIRST: DEFINING SPI TECHNOLOGIES’ HUMAN RESOURCES AGENDA Introduction 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. In SPI’s long history of success, the value the Company place on its people as the prime mover in realizing our business plans is second to none. In fact, the Company’s very first employee in 1980 who during that time started as the Office Janitor is still working with SPI but this time performing the role of a Senior Administrative Assistant. The contributions made by employees of SPI, past and present, have always inspired the Company to continuously secure the market niches we are currently strong at, and explore new markets for growth and future opportunities. The company’s Balanced Score Card, which serves as its fundamental strategy and performance indicator tool on a corporate-wide scenario takes into account the importance of investing in human resource development initiatives as HR is placed in with equal emphasis with four other factors such as financials, customer, best business practice, and business development. These factors are what SPI views as critical success factors in continuously achieving its vision to be the “premiere global partner in providing business process outsourcing solutions”. SPI is a company that established its roots in the Philippines and has now expanded to facilities in China, Vietnam, India, UK, Germany, and the US but will always take pride that the Filipino knowledge worker propelled SPI into the premiere global spot it occupies today in the BPO space. Today, SPI serves customers globally through 24 production, project management, and customer support centers with a highly skilled global workforce of more than 6,500 business process outsourcing (BPO) specialists. Its core capabilities include: Content editorial, production and electronic delivery Content coding, abstraction and indexing Content aggregation Electronic data discovery Medical transcription Legal transcription Transaction processing Given this bakcground of the company, we now proceed to the importance of planning, not only limiting ourselves to the business process outsourcing industry, but to majority of industries. Importance of Strategic HR Planning The concentration on the synthesis of HRM practices and policies with strategy has been depicted as a paradigm shift from a tactical to a strategic thrust or orientation (Thomason, 1991). Unlike conventional personnel management that is characterized as reactive, parochial, and concentrates on rank and file employees, HRM is proactive in finding and establishing practices and policies which are consistent across all organizational policy areas (Hendry & Pettigrew, 1986; Legge, 1989; Miller, 1989; Schuler, 1991). The HRM orientation necessitates that personnel practices and policies address and adapt to organizational needs (Schuler, 1991). Moreover, HRM considers employees as valued strategic resources rather than as overhead cost (Hendry & Pettigrew, 1986; Miller, 1989). A main thrust of HRM is the potent and effective management of people within the organization – when carried out, this is expected to yield competitive advantage (Kamoche, 1991; Miller, 1989). When compared to conventional personnel management which regards employees as passive , HRM considers people as strategic assets who should be developed to optimize their potential (Kamoche, 1991). Aim and Objectives The current research aims to evaluate the HR strategies of SPI. In particular, the study has the following objectives: 1) To discuss the organization’s strengths, weaknesses, opportunities, and threats; 2) To analyze whether its people programs, across the phases of acquiring, developing, mainitaining, and retaining, are supportive of the organization’s business strategies. Methodology This study employs a qualitative research design. The qualitative research approach is based on a "world view" which is holistic and has the following beliefs: (1) there is not a single reality; (2) reality based upon perceptions that are different for each person and change over time; and (3) what we know has meaning only within a given situation or context. The reasoning process used in qualitative research involves perceptually putting pieces together to make wholes. From this process meaning is produced. A structured interview was used, offering the interviewer the opportunity to follow up and clarify. It also permitted the interviewee to express his/her feelings, opinions and concerns. Moreover, interview data were complemented with running records, to make more valid deductions about corporate social responsibility being an ethical means of attaining competitive advantage. Data were gathered over a total duration of 3 weeks. Following this, interviews were documented and thematically analyzed. The following section presents the results gathered from the research. Results, Discussion, and Analysis Gearing Up: the Challenges That Lie Ahead Before describing its people strategies, it is worth analyzing the organization’s business thrust. The rationale for doing so is to be able to evaluate whether an alignment exists between business goals and people programs. The following section describes and analyzes the business obejctives of the company; these are then matched to its people strategies, which follow this section. The main business objectives of SPI Technologies are as follows: 1) Maintain the offshore service niches in which it has already achieved critical mass; 2) Sustain its best business processes that result in exceptional quality and all-in costs for customers; 3) Leverage on strategic presence in all major offshore locations to reduce risk, increase operational flexibility and allow optimization of skill/cost combinations; 4) Balance the growth and market share potfolio by determining the current strengths and improvement areas of its different SBUs; 5) Maintain its exceptional client relationships, especially with big ticket customers; 6) Increase publishing capability through acquisition of new facility in Kolam, India; 7) Diversify into financial services processing as a new service line; 8) Sustain the SPI service brand as one that represents quality, flexibility, innovation, integrity, competence, and speed. Macroenvironment SPI Technologies is currently the biggest, independent business process outsourcing company in Asia. In terms of country specialization, it has focused more on scholarly publishing services, content solutions, and litigation services. A scan of the BPO country specialization portfolios demonstrates the following: 1) Canada is into application outsourcing and BPO contact centers; 2) Ireland focuses into packaged applications and product development; 3) Russia emphasizes high end software engineering; 4) China specializes in embedded software and hardware services; 5) Israel focuses on high end software and learning systems; 6) India and the Philippines is into application otusourcing, ITO, BPO, product development, contact centers. Strengths It currently enjoys leadership and has attained critical mass in three SBUs: SPI Content Sciences, SPI Litigation Direct, and SPI Publisher Services, which offers digital content conversion services, digital analysis of customized content databases for legal documents, and editorial and content porduction services, respectively. SPI’s superior processes result in exceptional quality and lower all-in costs for customers. It is thus recognized as an industry leader in applying highly disciplined processes in a very scalable fashion to efficiently execute large and complex projects. It should thus continue to advertise production quality as a major differentiator among its clients. Moreover, its Marketing arm should emphasize the fact that SPI processes reduce the amount of post-production quality testing, rework, and client oversight. In turn, this will reduce the client’s project management staffing, cut total costs and accelerate turnaround times. Its strategic presence in all major offshore locations reduces risk, increases operational flexibility, and allows optimization of skills / costs combinations. SPI currently operates through seven production facilities in four countries: Manila in the Philippines; Kolkata and Pondicherry in India; Hanoi and Ho Chi Minh City in Vietnam; and Junan in China. Multiple locations reduce country risk via diversification. Moreover, it ensures cost reduction and flexibility though the use of subcontractors. Its access to a pool of 5,000 skilled employees in these locations across Asia enables SPI to ramp up and ramp down projects rapidly and optimize skill specializations and cost structures as required. Weaknesses There is a need to balance the current business portfolio of the company. Considering the performance of each of its SBUs in terms of growth and market share, cash deployment needs to be adjusted to focus on cash cows, and stars: Moreover, SPI needs to consider expanding in the most prudent way; that is, diversifying into related products and markets. In addition, it should continue focusing on its core competencies. The following illustration depicts the BPO model proposed by Gartner (2003). Clearly, SPI Technologies has managed to niche only in a very small, if not negligible portion of this whole market, but has done so very effectively. Some of the areas of interest that the company is considering expansion on are Finance and HR BPO service segments. A diverse mix of different BPO services provides insulation from sectoral risk. Opportunities * Source: Gartner DataQuest, June 2003 India may be considered as an ideal site for futher offshore expansion because it offers the best quality-scalability costs among competing countries. Prior to acqusition of any existing facility or setting up an entity on the ground, SPI Technologies must conduct an extensive audit considering all factors cited as BPO obstacles, including threats to team, employee unrest, company culture, fear of loss of control, quality service, and cost. SPI’s main issue for growth is optimization: that is, which growth opportunities offer the highest returns, with the least amount of risk, and are synergistic with our current lines of business? The goal is for SPI to have balanced, sustainable, and profitable growth, and not growth for its own sake. Threats Now that we are thoroughly oriented about the organization’s strengths, weaknesses, opportunities, and threats, the following portion presents its people strategies and an assessment of their alignment to organizational goals. 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). 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. 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. 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 Linkage, 1997). 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. 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 its shared value system. 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 & 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. Thus, in an effort to maintain a conducive organizational 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. 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. 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). 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Reflections on the determinants of voluntary turnover. International Journal of Manpower, 22 (7), 600-24. Schuler, R. (1991). Strategic human resource management: linking the people with the strategic needs of the business. Organizational Dynamics, 21 (1), 18-32. SPI Technologies. (2005). Retrieved on January 12, 2005 from www.spitech.com. Thomason, G. (1991), "The management of personnel", Personnel Review, 20(2), 3-10. Wiley, C. (1993). Employee turnover: Analyzing employee movement out of the organization. Washington, DC: SHRM. Read More