MIP MBA 32

STRATEGIC HRM PLAN AT NORTHLANDS LEDGER

HR FINAL ASSIGNMENT

EXECUTIVE SUMMARY As Vincent Potter arrives at Northlands Ledger to take over the publishers job, he discovers that the paper is plagued by several problems in different areas. First of all, the newspaper is losing customers, both from advertising and readers perspective. Second, the quality of the service has declined as well. Finally, the Ledger suffers from high turnover. Moreover, theres no HR department: the Personnel Director seems to occupy a marginal position and training appears to be insufficient. My proposal for solving the problem is the implementation of J.R. Galbraiths Star Model: starting from the redefinition of the newspaper strategy, the structure, the processes, the rewards and the HR policies (the people in the model) could be obtained, with the effect of influencing the employees behaviour and improving the performances. The advantages of the approach suggested by the model are that: it highlights the fact that organisational design is more than the organisational chart (structure) it assumes that different strategies creates different organisations: strategy drives organisational structure it views organisations as processors of information and decision making On the other side, the disadvantages of this approach are that: it assumes that the organisation is a 'tabula rasa', whose history is unimportant as input for the design process. it limits the analysis to the organisation's internal rationale and doses not include an external, more economic analysis.

INTRODUCTION The Northlands Ledger is affected by several problems, which can be associated with a great deficit in HR management in the Company. The newspaper is losing customers, both from an advertising and a readers perspective: in the last two years, home-delivered circulation has declined of 1,5-2% a year (newsstand sales remained constant), and advertising has declined even more (-7% classified advertising, -3% commercial advertising). The quality of the service has declined: delays in delivery are common, and no action has been implemented in order to take back the situation to acceptable levels. The Ledger suffers from high turnover in many key departments, like the complaint department, the newsroom and the advertising sales. Other departments on the contrary show none or very low turnover. From the HR point of view, the situation appears even worst. Theres no HR department, the Personnel Director seems to occupy a marginal position in the organisation, training appears to be insufficient, not focused, and reserved only to new hires: all in all, it seems that nobody is actually managing the Human Resources. The system of rewards and incentives is focusing exclusively on cost and efficiency goals: the incentive system of managers is based on financial parameters only, with no reference to any other indicator (i.e. customer satisfaction, feedback from subordinates, etc). In this way, the culture of the company and the behaviour of employees is concentrated only on cost efficiency, with no interest for the quality of the product. The problem is that not only the quality is decreasing, but also that as a consequence - the financial performances are deteriorating. The origin of this approach to HRM has to be searched into the peculiar features of Mr. Allison profile, the Ledger previous publisher. Allison climbed to the position of publisher after starting his career as a newsboy: he has always been on the sales side of the newspaper business, and on the brink of the retirement he was still the key account for some of the largest advertisers, which were the ones which received the best service from the newspaper, while other minor accounts were not 3

properly served. He managed the company with a beneficent father attitude, but really cared about only few key individuals (the stars and friends), neglecting everyone else. This approach clearly created disaffection and lack of commitment among the ones who were excluded by the inner circle favoured by Mr. Allison. In addition, Allisons vision of the news/media business was ideological: no matter what the customers wanted and what the evolution of the potential market was, the mission of the Ledger was to educate the public. Moreover, and in contrast with his sales-side attitude, he considered irrelevant and not strategic the help and the advice that the newspaper could give to the advertisers. At the same time, on the readers side, he showed no real commitment towards customer satisfaction.

DISCUSSION My proposal for solving the problem is implementing the Star Model, developed by Jay R. Galbraith. The core of the model are the following assumptions: different strategies originate different type of organisations an organisation is more that a simple structure (organisational chart) the alignment of the company strategy, structure, people, processes, rewards may lead to the improvement of the performances and may allow to reach the companys objectives The model assumes that a set of design policies controllable by the management can influence employees behaviour. Design policies are divided into five different categories: strategy, which determines the company direction structure, which allocates the decision-making power processes, which regulates the flow of information in the company rewards (and reward systems), which influence the motivation of people to perform and address organisational goals people (human resource policies), which influence and may define the employees mind-sets and skills

Starting from the redefinition of the newspaper strategy, the structure, the processes, the rewards and the HR policies (the people in the model) could be obtained, with the effect of influencing the employees behaviour, of shaping the companys culture, and of improving the overall performances.

Exhibit - The Star Model

Lets analyse in details the several steps in the Star Model, in relation with the Ledger case. 1- Strategy If Mr. Potter wants to take to the Ledger the customer-focused approach of the Star, he has to start from the redefinition and communication of the strategy, in order to give a sense of direction. These are the action that will have to be implemented first, once the new strategy has been clearly defined at top-management level:

Communicate the strategy: this gives employees an understanding of where the business is headed and what competencies will be important in the future. Articulate the knowledge strategy for the organization: this explains in what areas the Company intends to achieve competitive advantage Link project and unit goals explicitly to the knowledge strategies of the company.

The selection of a particular strategy implies a trade-off between different organisational alternatives.

1- Structure After the new strategy has been defined and communicated, Potter has to proceed with the allocation of decision-making power within the organization. Because of the fact that performance depends on how well knowledge is imported, generated and leveraged throughout the organization, he will have to focus on: Encouraging networks for learning and collaboration Establishing new roles to facilitate knowledge across departments

1- Processes In order to effectively implement the new strategy, the management will have to: Include knowledge objectives in the goals of the company and its units. Regularly communicate team, business unit and company goals and performance progress, including customer and competitor information, so employees can think in terms of overall business requirements.

1- Rewards 6

The rewards system should be aligned to the new strategic objectives (i.e. customer satisfaction), and avoid to include only financial-related KPIs. The Star Model suggests that the reward system must be congruent with the structure and processes to influence the strategic direction of the Company.

2- People HR policies produce the talent required by the strategy and the structure of the organisation, therefore motivation and employees development should be key in the new course; the management should: Design a new employment relationship to motivate employees to contribute to organizational knowledge Support on-going employee development linked to the firms key knowledge needs and organisational goals

A correct design and a continuous execution of the five before mentioned policies its not an easy task, but should be functional in reshaping the behaviour of the employees at all levels, changing the company culture and allowing the Ledger to reach its new objectives

CONCLUSION The Ledger suffers from declining sales, decreasing quality and high employees turnover. The previous management has adopted a set of policies that neglect the importance of working for the customers, that marginalize HR management and that set an incentive structure that is resulting to be ineffective.

The new manager, Mr. Potter, would like to shift the Ledger strategy, adopting a much more customer-centred approach. The solution that I suggest is the application of the Star Model to the Company, in order to realign the whole organisation structure, processes, people and rewards to the new strategy. The core of this approach are the assumptions that different strategies originate different type of organisations, that an organisation is more that organisational chart, and that the alignment of the company strategy, structure, people, processes, and rewards is key for the improvement of the companys performances. The proposed solution should allow influencing the employees behaviour, shaping the companys culture, and improving the overall results obtained by the Company.

REFERENCES
1- Dewar,

R., Northlands Ledger (A), Kellog School of Management at Nothwestern Univesrity

2- Galbraith, Jay R., The Star Model (http://www.jaygalbraith.com/pdfs/StarModel.pdf)

3- Solari, L., Slide of the HR course (MIP MBA 32 Edition)