See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/341592739

Alignment of HR Policies and Practices with Business Strategy: A Case Leading

Lubricant Company

Chapter · July 2017

CITATION READS

1 3,243

Some of the authors of this publication are also working on these related projects:

GST Implementation in India: What Punjab says? View project

All content following this page was uploaded by Shalini Shukla on 23 May 2020.

The user has requested enhancement of the downloaded file.

 Advances in Agri-Management, pp 247-257
© 2017, New India Publishing Agency, New Delhi, India
Editors: Dr. Rakhi Gupta et al.

23
Alignment of HR Policies and Practices
with Business Strategy: A Case Leading
Lubricant Company
Shalini Shukla

Abstract
This case study investigates that how HR policies and practices are aligned
with the respective business strategy of ABC Ltd. The strategy classification
of M. Porter were used to analyze the different approaches used by
organizations for competing in the market and the way they use HR policy
and practices to support their business strategy. Data collection instrument
(questionnaire) has been used for collecting the data form employee as
well as HR manager. Based on the qualitative study of various functional
managers and secondary data (annual report, press release, websites content
etc), this study highlights the internal as well as external synergy of HR
policies and practices. Different SHRM models were used to find out the
strategic alignment. Study presents number of implication for lubricant
industry and HR professional in emerging economy like India.
Keywords- Strategic Alignment, SHRM, Lubricant Industry, HRM.

Introduction
An increasing number of views accept that India is going to play important
role in the world economy. But its success does not only depends upon the cheap
labor and information technology but on other part also. Due to various attracting
factor it has always been a lucrative place for foreign direct investment. Political
stability is further increasing the chance of foreign direct investment. Observation
are indicating that entry of foreign player in Indian economy give a push to domestic
companies to revise their policies, strategies as well as operating process for
survival. Sustainability of economic achievements is always subjected to the
situations and environment. Various researches on strategic management opined
248 Advances in Agri-Management

that the performance of organization is a product of ‘fit’ between systems, strategy

and environment. Various studies have confirmed the improved performance in
better aligned organizations.
Human resource is one of the important determinants for the success of any
organization. Alignment with this determinant is one of the prime requisite for
better performance. Keeping this notion as a pivotal theme, present study tries to
capture the HR-Strategy alignment of one the leading lubricant company in India.
Literature Review
Human resource management is the field that has witnessed many paradigm
shifts. Many research studies are vouchering the changing pattern of people
management. In present era human resource management is not just an
administration activity but it is thriving as a strategic key area. Every strategic
posture adopted by companies demand different set of intangible asset and affects
the way company performs. Fit between HR policies and practices with strategy
and goal are must for successful implementation.
Management research area has recently started focusing on alignment issue
of business strategy & HR policies and practices (Brockbank 1990, Delery &
Doty 1996, Wright & MacMahan 1992, Martell & Caroll 1995). In the field of
strategic management role of HRM is evolved as a value added and become a
source of sustainable competitive advantage (Baired & Meshoulam 1988, Barney
1991, 1992, Schuler & Jackson 1987, Wright & MacMahan 1988). Researchers
opined that human resource practices and policies affect the behavior and role of
employees in (Schuler & Jackson 1987) and generate specific type of culture
(Wei et al 2008) in any organization, so that if HR policies and practices are
aligned with business strategy it will direct the role and effort of the employee
towards the achievement of organizational goals and objectives. Cooke and Saini
(2010) commented that if innovation strategy of organization has to be implemented
flawlessly it should be properly supported with respective HR policies and practices.
Role of HR as strategic is also enforced by Bhatnagar & Sharma (2005) in his
research study which focuses on organizational learning capabilities. Various
researchers has confirmed in their empirical study that better alignment of HR
policy & practices with business strategy leads to the better financial performance
(Wei et al, 2008; Martell & Caroll, 1995 etc). These researches confirm that
SHRM is working as bridge between Strategic Management and HRM.
Lubricant Industry in India
India is sixth largest lubricant market in the world and dominated by public
sector undertakings (Government owned companies). However, industry has seen
approx 18.6 percent growth from last 6 years. Basically, there are two category
of lubricant, these are:
1. Automobile lubricant (For Automobile product)
2. Industry Lubricant (For Industrial output)
 Alignment of HR Policies and Practices with Business Strategy 249

From above two segment automotive lubricant are high margin that is used
for commercial vehicles, tractors by diesel engines etc compare to industrial
lubricant. Sale of lubricant has three routes original equipment manufacturer, petrol
pumps and bazaar trade.
In present scenario, with 1 percent growth of manufacturing sector, 6.3
percent of capital goods sector, 2.5 percent of mining sector, 2.6 percent (Sale)
and 1.2 percent (Production) of automotive sector affecting the financial of lubricant
industry as well.
Better growth prospects are expected by veterans due to political stability,
lowering of oil prices, recovery in Euro Zone and USA etc. Rising disposable
income, soaring population of automobile used, increased industrial activity etc
are some key drivers that are suppose to affect the lubricant industry positively.
Some of the prominent private players of Lubricant Industry in India are ABC
Ltd., Castrol India Ltd., Bharat Petroleum Corp. Ltd., Shell India Market Private
Ltd., and ELF India Ltd. Table indicates 1 the market capitalization of Lubricant
companies in India:
Table 1: Market Capitalization (BSE) of Lubricant Companies in India (As on July 28, 2015)

S. No. Company Name Market Cap

(Rs. Cr)

1 Castrol 24,520.34
2 ABC Ltd. Lubri 2,453.34
3 Tide Water Oil 1,325.53
4 Continent Petro 2.97

Source: http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/lubricants.html

Indeed, due to dominance of national companies, there is less opportunity

available for private companies in lubricant industry in India. Therefore, analyzing
one of the prominent private players of lubricant industry will provide the better
insights that how HR-strategy alignment can be use as a tool for creating competitive
edge over big giants.
Purpose of the Study
Purpose of this study is to measure and assess the HR-Strategy alignment of
one of lubricant company in emerging economy India. It is well known that
India’s population is considered as window of opportunity for country’s growth
and development. Thus, it will be interesting to see how one of leading lubricant
company is utilizing human resource for generating the competitive advantage.
Research Methodology
Present study used the qualitative research design (Case Study Method) for
probing the subtle issues involved in complex process of HR-Strategy alignment.
250 Advances in Agri-Management

Triangulation of method of data collection has been used to get the holistic
information for case study:
1. Interview with Senior HR Personnel
2. Structured Questionnaire
3. Content analysis of Annual Reports (FY 2013, 14, 15) and other disclosure
means (Website)
Company Profile
In year 2006 merger of ABC India Ltd. and IDL Industries Ltd. form the
company named ABC Ltd. Chemical hub of Hinduja group enables the company
to leverage the marketing network of lubricant and industrial explosive business.
The chronological development of ABC Ltd. is:
1920- Gulf is introduced in India by Silvertown Lubricant
1930- ABC Ltd. India is formed with the acquisition of Silvertown by Gulf
1974- ABC India Ltd becomes part of the JP Goenka group and is renamed as
petrosil India
1984- Hinduja Group acquires the rights to the Gulf brand globally.
1993- ABC Ltd.-India is setup by the Hinduja Group.
2002- Hinduja merges ABC Ltd.-Indis with IDL Industries.
2012- Acquires Industrial lubricant’ major Houghton International
(Source: http://www.gulfoilindia.com/about-us/awards-milestones)
Company has 3 operating division with the following portfolio:
• Energetics Division- Industrial explosives, detonators, explosive bonded, metal
clads, special devices for defence and space applications.
• Mining and Infrastructure Contracts Division- Mining services in coal, iron
ore, limestone and bauxite mines. Contract in many infrastructure projects
metro railways, elevated highways, Industrial structures etc.
• Property Developments- Property development in SEZ, industrial parks and
other commercial conglomerates.
(Source: Website of ABC Ltd.- http://www.gulfoilcorp.com/aboutgulf_in_india.php)
Business Strategy of Company
Being the company of Industrial goods and services, ABC Ltd. Corporation is
working with following strategy intent, as depicted in Table 2:
 Alignment of HR Policies and Practices with Business Strategy 251

Table 2: Strategic Intent of ABC Ltd.

Gulf’s Vision Gulf’s Mission Core/ Business Value

• To be amongst the top To achieve sustainable • Care

3 lubricant brands in India. market share growth in • Courage
• Provide world-class lubricant targeted segment by • Endurance
product and solution allied delivering world class • Inspiration
automotive related product product and value • Youth
and services to our customer. added solution that
• We will strive that we five our customer more
continuously add value to all than what other
stakeholder. competitors gives.

As it mission statement itself emphasized its pursuance towards lowering the

cost with quality improvement. “More than what other competitors give.” Following
recent activities of ABC Ltd. Corporation (Official website of Gulf), emphasized
its focus towards cost leadership:
• Widespread nationwide availability.
• State-of art blending plats with a capacity of 72,000 MTPA.
• More than 300 distributors and 50,000 retailers.
Analyzing the content of annual report, strategic moves and focus of the
company, strategic imperatives of ABC Ltd. are found as:
• Continuous improvement
• State of art technology
• Value added solution
• Wide spread availability
• Huge capacity for economy of scale
• Customer satisfaction
• Word Class product (Quality)
• Market-share growth
• Brand strength and market aggression etc.
According to above imperatives their HR policies should be focused towards
fewer errors in production process and generation of specialized skills to reduce
the overall cost of product.
Required HR Police and Practices
According to the strategic imperatives identified by secondary source and
questionnaire, the HR policy and practices of the ABC Ltd. should be focused
towards the cost reduction and efficiency improvement. Therefore, their HR
policies should be configured with the following practices, as identified with literature
review (Baried & Meshoulam 1988, Schuler & Jackson 1987, Wright & MacMahan
1992 etc.):
252 Advances in Agri-Management

• Internal source of recruitment

• Repetitive and explicit job design
• Minimum and practical training
• Encourage specialisation
• Narrowly defined career path
• Cutting staff number minimum
• Rewarding high output
• Predictable and compliant employee behaviour
• Output linked compensation, competitive (Market equity based) compensation
• Individual performance appraisal
• Less information sharing
• Low employee involvement
• Tight and close supervision.
Prevalent HR Policies and Practices
ABC Ltd. emphasized their people as their strength, in the content of website
as, “Our biggest strength is our people. Their hard work, passion and relentless
pursuit for excellence have made the brand that we know today.”As, its core
values are having youth as one important business value, it shows in their HRM
policies and practices, “Our value are the foundation of our culture and the basis
of our operational mode.” Working culture is given important in ABC Ltd. as
written in HR section of website, “We’re proud to have a culture that brings out
the best in individual and encourage them to pursue excellence.”
Diversified workforce is important consideration during recruitment and
selection process. Internal as well as external source of recruitment is used to get
the right mix of workforce. It is seen that company focuses on getting hard
working employees rather than innovation or creative, “....hard work, passion
and relentless pursuit for excellence have made the brand that we know today.”
Acquisition of talent is considered as one of the important key for managing
the human resource during whole year. Basically channel sales, B2B, infrastructure,
Mining and fleet verticals is given most important with the objectives, “Right
skills at Right Time.”
Training and development is mostly focus on technical competency
development with training programs on ISO/TS, 16949, FMEA, problem solving
techniques, safety etc. Behavioral and soft skill development has given less
importance during training session for employees. As emphasized in Annual Report
(2015) of the company, “As part of strategic plans and enhancing capability
building for our employees in the Energetics Division, based on the performance
Management System and training need identification, extensive training program
on Statistical Quality control has been introduced.”
 Alignment of HR Policies and Practices with Business Strategy 253

Organizational credo written in Annual report (2014) in HR section, “NO

LIMITS ONLY GOALS” emphasized the focus of organization toward target
achievement and performance linked with target achievement.
Employee’s career growth or path is also taken care predominantly by HRM
system for reducing the employee turnover and cost of workforce management.
It is emphasized in website that, “...we continuously drive towards managing the
employees’ career and growth aspiration and believe in building employee equity,
right through their association with the company.”
Employee welfare activities are also one of focus areas of HR department
with workplace safety. Employee recognition has also been emphasized as “The
Energetics Division has also demonstrated its commitment to recognizing employee
performance by conducting employee of the Month awards to recognize exceptional
performances by employees and inculcating a commitment to perform beyond the
regular roles and responsibilities” (Annual Report, 2015).
Therefore, HR configuration of ABC Ltd. is:
• Internal as well external source of recruitment.
• Hard working employees.
• Focus on technical skill development.
• Extensive training for competency and specialisation
• Narrow career path.
• Tight supervision.
• Less information sharing.
• Target base performance.
HR- Strategy Alignment
ABC Ltd. Corporation won the Best employer Brand Award (2009-10), by Oil
& Gas Private Sector Replica. However, HR- Strategy alignment is not given
much importance in content of ABC Ltd’s annual report and website. Though
some text is written and emphasizing the imperatives from employees. As it is
mention on the company website that, “...Quality, customer satisfaction and
continual improvement are the personal responsibility of each employees.”
Following Table 3 illustrates the HR-Strategy alignment of ABC Ltd.:
Table 3: HR-Strategy Alignment of ABC Ltd.

Business Strategy Desired Behaviour Required HR policies/ practices Prevalent HR policies/ practices

Cost Leadership/ low cost strategy • Specialised skills • Internal source of recruitment. • Internal as well external source
• Hardworking • Repetitive and explicit job design of recruitment.
• Production Orientation • Minimum and practical training • Hard working employees.
• Risk Aversive • Encourage specialisation. • Focus on technical skill
254 Advances in Agri-Management

• Less innovative • Narrowly defined career path. development.

• Predictable behaviour • Cutting staff number minimum. • Extensive training for
• Efficiency oriented. • Rewarding high output competency and specialisation
• Predictable and compliant • Narrow career path.
employee behaviour. • Tight supervision.
• Output linked compensation, • Less information sharing.
competitive (Market equity • Target base performance.
based) compensation. • Individual performance based
• Individual performance appraisal. appraisal.
• Less information sharing. • Low employee involvement.
• Low employee involvement • Recognizing employee
• Tight and close supervision. performance

Source: Prepared by Author through Analysis

 Alignment of HR Policies and Practices with Business Strategy 255

Qualitative Assessment of Hr-Strategy Alignment of ABC LTD.

On the basis of above case study of ABC Ltd, the assessment of HR-Strategy
alignment status is as follows. As Previous, the three point scale has been used
for analyzing alignment-
1. Aligned HR Practice
2. Neutral HR Practice
3. Un-Aligned HR Practice
As, following Table 4 given the assessment of HR-Strategy alignment status
of ABC Ltd.:
Table 4: Assessment of HR-Strategy Alignment of ABC Ltd

Required HR Policies/Practices Prevalent HR Policies/ Practices Assessment

Internal source of recruitment Internal as well external source of

recruitment Neutral
Repetitive and explicit job Specialisation of skills by intensive
design training Neutral
Minimum and practical training Extensive training for competency and
specialisation Neutral
Encourage specialization Focus on technical skill development Neutral
Narrowly defined career path Narrow career path Aligned
Cutting staff number minimum - -
Rewarding high output Recognizing employee performance Aligned
Predictable and compliant Hard working employees Neutral
employee behaviour
Output linked compensation, Target base performance Aligned
competitive
Individual performance appraisal Individual performance based appraisal Aligned
Less information sharing Information sharing Neutral
Low employee involvement Low employee involvement Aligned
Tight and close supervision Tight supervision Aligned

Suggestions and Conclusion

Qualitative assessment of ABC Ltd. Corporation shows that HRM System of
that is properly aligned with their strategic requirement. There are need to restructure
and reformulate their HR policies as per their focused strategic imperatives. Some
practices are found to have neutrally aligned with strategy of the organization as
source of recruitment, training system and information sharing practices. Focusing
on internal source of recruitment with development of soft skills with training
system will increase the alignment with strategic requirement of the company.
Proper communication of strategic requirement and imperatives to employees
will eventually increase the HR-Strategy alignment.
256 Advances in Agri-Management

References
A Thompson Jr Arthur. (2008). Crafting and Executing The Strategy. 14th edition, Tata McGraw-
Hill Publishing Company Ltd, New Delhi,.
Pearce II john et al. (2008). Strategic Management. (Formulation, implementation and control),
Tata McGraw Hill Education Private Limited, New Delhi, 3rd edition.
Baird, L. and Meshoulam, I. (1984). Strategic human resource management: Implications for
training human resource professionals, Training and Development Journal, 38(1): 76-78.
Baird, L. and Meshoulam, I. (1988). Managing two fits of strategic human resource management.
Academy of Management Review, 13(1):116-128.
Barney J. (1991). Firm resources and Sustained Competitive advantages. Journal of Management
17(1): 99-120.
Barney J. (1992). Integrating organizational behavior and strategy formulation research: A resource
based analysis. In J. Dutton, Advance in Strategic Management, 8:39-61.
Becker, G.S. (1964). Human capital. New York: Columbia University Press.
Bhatnagar and Anuradha Sharma (2004). The four pillars of the proposed strategic HRM dimensions
model. IJTO, 40 (1).
Bhatnagar Jyotsna and Anuradha Sharma. (2005). The Indian perspectives of strategic HR roles
and organizational learning capability. International Journal of Human Resource
Management, 16 (9):1711-1739.
Bomberger and Meshoulam, Human Resource Strategy, Formulation, Implementation and Impact.
Sage Publication.
Brockbank, W. (1999). If HR were really strategically proactive: present and future directions in
HR’s contribution to competitive advantage. Human Resource Management, 38 (4): 337-
352.
Cooke Fang Lee, and Saini S. Debi. (2010). How (Does) the HR strategy support an innovation
oriented business strategy? An investigation of institutional context and organisational
practices in India firms. Human Resource Management, 377-400.
Delery, J.E. and Doty, D.H. (1996). Modes of theorizing in strategic human resource management:
tests of universalistic, contingency and configurational performance predictions. Academy
of Management Journal, 39 (4): 802-836.
Inyang Benjamin James, (2010). Strategic Human Resource Management (SHRM): A paradigm
shift for achieving sustained competitive advantage in organization. International Bulletin
of Business Administration, 23-32.
Johson G. and Scholes K. Exploring corporate strategy: Text & Cases. Sixth Ed., London: Prentice
Hall.
Kazmi Azhar. (2011). Strategic Management and Business Policy. 3rd Edition, Tata McGraw Hill
Education Private Ltd.
Lomash Sukul and Mishra P.K. (2010). Business Policy and Strategic Management. 6th Edition,
Noida, Vikas Publishing House Pvt. Ltd., New Delhi
M. Kishore Ravi. (2010). Strategic Management. Texmann Publishing (p.) Ltd., New Delhi
M. Wright Patrick et al, (2011). Exploring Human Capital: putting Human back into strategic
human resource management. Human Resource Management Journal, 21 (2):93- 103.
Martell Kathryn and Carroll Stephen J. (1995). How Strategic is HRM? Human Resource
Management Summer, 34 (2):253-267.
McMahan, G. C., Virick, M. and Wright, P.M. (1999). Alternative theoretical perspectives for
strategic human resource management revisited: Progress, problems, and prospects. In P.
M. Wright., L.D. Dyer., J. W. Boudreau and G.T. Milkovich (Eds.), Strategic Human
Resource Management in the 21st Century, London: JAI Press, 99-122.
Miles R.E. and Snow C.C. (1984). Designing Strategic Human Resource Management.
Organizational Dynamic, Summer, 36-52.
 Alignment of HR Policies and Practices with Business Strategy 257

Miles, R.E. and Snow, C.C. (1978). Organizational Strategy, Structure and Process. New York:
McGraw-Hill.
Mutsuddi Indranil, (2010). Essentials of Human Resource Management. 5th Edition, New Age
International Publishers.
Penrose, E T. (1959). The Theory of the Growth of the Firm. New York: John Wiley.
Rao V S P. (2000). Human Resource Management (Text and Cases). Fifth edition, Published by
Excel Books,
Schuler Randall S. Schuler and Jackson E Susan, (1987). Linking Competitive strategies with
Human Resource Management Practices. The Academy of Management Executive, 1 (3):
207-219.
Schuler, R.S. (1992). Linking the People with the Strategic Needs of the Business. Organizational
Dynamic, Issue- Summer, 18-32.
Selznick Philip. (1957). Leadership in Administration.
Sharma, J. K. and Shukla, S. (2015). Strategic HR Orientation of Companies in India: A Content
Analysis Approach. Prabandhan: Indian Journal of Management, 8(7):7-22.
Shukla, S. (2014). Emerging Issues and Challenges for HRM in Public Sectors Banks of
India. Procedia-Social and Behavioral Sciences, 133: 358-363.
Snell Scott A., Mark A Shadur, Wright M. Patrick, Human Resource Strategy: The Era of our
Ways. CAHRS: Working Paper Series, Cornell University, USA.
Snell, S.A. and Dean, J.W. (1992). Integrated manufacturing and human resource management: A
Human capital perspective. Academy of Management Journal, 35(3), 467- 504.
Snell, S.A., (1992). Control theory in strategic human resource management: The mediating effect
of administrative information. Academy of Management Journal, 35, 292- 327.
Taponoy Deb. Strategic Approach to HRM: Concept Tools and Applications. Atlantic Publishers,
New Delhi.
Ulrich, D., (1997). Measuring human resources: an overview of practice and a prescription for
result. Human Resource Management, 36(3): 303-320.
Wei Li- qun, Jan liu, Yichi Zhang and Randy K. Chiu, (2008). The role of corporate culture in the
process of strategic human resource management evidence from Chinese enterprises.
Human Resource Management, 47 (4): 777-794.
Wei, L. (2006). Strategic human resource management: Determinants of fit. Research and Practice
in Human Resource Management, 14 (2): 49-60.

View publication stats