Cornell University

Center for Advanced Human Resource Studies

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Fall 2005 CAHRS Partner Conference White Paper Collection

Organizational Growth & HR Implications

The following white papers were prepared by CAHRS graduate research assistants, with generous support from ALCOA and other CAHRS partners, for the fall 2005 partner conference in Ithaca, NY on the HR implications of organizational growth. Along with global economic expansion, many corporations are experiencing rapid organizational growth. However, unlike in the past, when the focus was on top-line growth with markets rewarding such firms with unusually high valuations, this time the emphasis is on achieving more sustainable and profitable growth. The fall 2005 CAHRS meeting discussed the key human resource issues associated with organizations' growth strategies, and these papers review current issues, emerging trends and the wide range of both academic- and practitioner-based literature on the subject.



Building and Preserving Organizational culture in a High Growth Environment

Growth resides at the top of numerous priority lists of companies wishing to provide increasing value to their shareholders. Achieving this goal relies, in part, on the organizational culture. To deliver results, organizational culture must be conducive to growth. Culture guides people's behaviors and therefore drives growth initiatives. "Strong cultures enhance organizational performance in two ways. First, they improve performance by energizing employees- appealing to their higher ideals and values and rallying them around a set of meaningful, unified goals. Second, strong cultures boost performance by shaping and coordinating employees' behavior" (Chatman and Cha, 2003). Numerous characteristics define growth driven companies. While companies can attain these criteria, the critical factor becomes avoiding complacency and preserving a culture that drives double digit growth.

Employee Engagement and the Challenge of Rapid Growth

Growth is almost universally considered a good thing in business, and it certainly is more attractive than the alternative. But with sustained growth comes a new 'and unique set of challenges, particularly in the area of managing and deploying human resources. Other papers in this volume look at mergers and acquisitions, talent development and culture through the lens of rapid growth. This paper will examine employee engagement through that same lens. But what is engagement? And how does it link to important business outcomes? How is engagement created, nurtured and sustained? What are the known and predicted challenges to engagement? Does rapid growth enhance or diminish engagement on average? And do different employee demographic groups react the same? These are important questions in the academic literature, in the practitioner press and in the product baskets of scores of consulting firms. In this paper we will look at the definitions of engagement, the existing proof that engagement is correlated with business outcomes in some positive way, the methods seen as critical to building engagement, and the potential impact of rapid growth on those dimensions.

Innovation-Led Growth and Implications for Human Resources

In a business environment increasingly characterized by maturation and commoditization, differentiation is emerging as a key capability for competitive advantage. Increasing globalization, outsourcing, open technology standards and rapid imitation have led to a quick descent to price-based competition, eroding margins and creating a series of temporary cost and efficiency led advantages. In the pursuit of a more sustainable and enduring value proposition, a few firms have successfully adopted growth strategies fundamentally driven by their innovation capability. Based on a literature review, this paper identifies the key approaches to organizing innovation within firms and discusses the challenges associated with pursuing an innovation-led growth strategy, especially human resource challenges in the areas of organizational structure, reward and recognition, and the building of organizational capabilities for innovation.

The Implications of Growth on Talent Management

As the age of cost-cutting and down-sizing comes to a close, companies are now at financially healthy positions to start taking advantage of the new opportunities that globalization has made available. Leaders have turned their focus to growth, but the current skills and capabilities of their talent are not able to meet the demands for growth, innovation and competitiveness in the new market. HR has a critical role in supporting the growth initiatives of the business by ensuring the retention and acquisition of top talent. However, HR is in an extremely difficult position as external factors work together to create huge barriers in finding and keeping top talent at any one organization. The pressures of an upcoming labor shortage, a transition in empowerment from employer to employee in the labor market, a retiring baby-boomer generation, and a steady decline in skills available in the US. marketplace will force HR professionals to very quickly, strategically, and creatively manage their talent. This paper will discuss these issues in detail as well as the strategies used to manage one of the biggest impediments to sustainable growth, talent management.

HR Implications in Mergers & Acquisitions

Mergers and acquisitions (M&A) are increasingly being used by firms to strengthen and maintain their position in the marketplace. While most early M&A research focuses on the financial and strategic issues, the recent literature focuses on the human resources (HR) aspect of M&A. Today, it is widely accepted that the way in which HR issues are handled is critical to the success of any M&A. Similarly, most M&A failures can be traced to poor support of HR-related issues and activities. Merging companies are responsible for integrating the workforces and cultures of different organizations; however, HR does not always play a key role in the M&A process. An unsuccessful M&A integration process may have huge detrimental effects on a company, including loss of key personnel, a decline in employee productivity, reduced job satisfaction, communication breakdowns, and resistance to change (Cartwright and Cooper, 1993). This paper will discuss how companies use M&A as a growth strategy, common reasons for M&A failures and successes, HR practices critical to successful integration, and the role of HR in M&A.

Maximizing the Deal: A Toolkit for Managers

With companies unable to win in the marketplace on their own in today's economy, managers will increasingly look toward mergers and acquisitions as a way to grow their business. Despite their strategic importance and steep cost, research indicates they fail at astonishing rates: 70-80% don't create wealth, and over half destroy shareholder value. However, this doesn't have to be the case. Some companies - such as GE and Cisco are consistently successful at making deals work. Their success is a direct result of the outlook that integration is a process with predictable elements. This paper examines integration as a process, and details tactics that will raise manager's odds in making their deals succeed.

Creating a Scalable and Robust HR Strategy to Promote Double-Digit Growth

This paper is designed to help human resource (HR) professionals better understand the unique business challenges that double-digit growth companies face as they strive to provide value-added goods and services to their customers while continuing to capture additional market share in existing and new markets. Given a highly competitive and results driven environment, the double-digit growth company needs to have an organizational culture and people practices put in place to facilitate the achievement of its lofty targets. All HR practices, but most especially staffing, training and development, and performance management and compensation, must be scalable and particularly robust to cope with the challenges of fast paced growth. This paper provides a comprehensive five-step framework to guide HR professionals in choosing the organizational and human resource characteristics that are needed to sustain double-digit growth. First, the HR team must define an appropriate culture, review the current culture to see where it does and doesn't measure up, and work on whatever changes are needed. Second, the team must develop a comprehensive HR strategy to support the desired culture. This involves anticipatory staffing to guide the development of a human capital strategy that builds for tomorrow, as well as focused training and development initiatives to provide critical activities in real time. It also involves the development of targeted performance management and compensation systems to identify and generously reward those who display the behaviors and contributions that are key to promoting double-¬digit growth. Finally, results must continually be evaluated to determine where changes must be made.