ABC Distribution distributes foOD products, mAInly to major retailers. The critical success factors for the organization, as spelt out by its Managing Director and the Director of Finance, are its ability to meet its profit targets and to grow the business substantially on a consistent basis by developing a reputation for providing added value services, developing business with existing customers, winning new customers, and acquisitions. The company has doubled in size in the last four years. Underpinning the development of the company is the need to grow the infrastructure, to develop management and leadership and to extend quality and safety programmes.
The Managing Director agreed that in a sense their business strategy evoLVed in a semi-formal way, but this evolution took place:by the key people understanding what the total business was trying to do, and their part in it; then they went away and put their bits together; then we pulled all of it together.
He commented that:
Our strategy is very simple and very broad… it can be put down in a few sentences. It's what lies around it that has to be developed.
He emphasized that:
We sought to demonstrate to the rest of the business that we (the board) were a team. Where a team hadn't existed before, a team was now running the company.
The Deputy Managing Director explained how he saw the formulation of the business strategy taking place:We put our strategy together within the framework of the financial targets we have to meet and our values for quality, integrity and management style.
In answer to the question: 'How does your organization develop its business strategies?', the Director of Finance said that:
It started off as BEIng very simple in that we had an objective to grow in excess of the rate of growth demanded by our parent company… However, that process has become less na?ve, more detailed and more structured as the business grows… I see planning as a process that goes on and on and on and becomes more complex and more refined.
He also made the following comment:
Don't forget, not all strategies necessarily involve massive change… you can have a strategy to stay as you are.
The Director of Marketing emphasized the dynamic nature of strategy in a growing business operating in a highly competitive environment:
We have a strategy document which is concerned with developing market share and growth and is being continuously updated… The update is driven by the board… We have to make sure that we continue to refresh the strategy.
The Director of HR commented that:
The longer-term strategy is developed basically by the board getting together and working its way through… We also share that plan with the senior management team.
The Managing Director described their approach to developing the HR strategy as follows:
Our HR strategy has to respond to our business needs. The challenge for HR is to look at all the areas it encompasses and make sure they are integrated into the main plan. One of the problems this company used to have up to a few years ago was that HR strategy was seen as something completely separate from corporate strategy. What we have tried to do in the past few years is to make them one and the same thing. So we start with a business plan; we know we are going to grow at a certain rate. Then we do a skills audit and predict how many managers we are going to need. Out of this comes our HR development policy on skills training, leadership training and recruitment.
The Deputy Managing Director thought that the Director of HR was basically responsible for developing their HR strategy:
We all look at our business strategy and express a view on the people we need, but our HR Director pulls it all together and interprets our ramblings into something coherent.
However, in answering a question on how HR strategies were developed, the Director of Finance admitted that:
We probably have more HR policies than strategies because the strategies are there in a simple sense but not 100 per cent well-articulated – for valid reasons; we are a growing business.
The Director of HR referred to the way in which strategic initiatives were developed:
First the HR people meet and we bounce ideas about and seek ideas. Then if we have a new initiative we put it to the board for discussion.
Role of the HR Director
What I want and what I get is a general contribution: whether the individual is HR Director, Finance Director or Marketing Director is in many ways irrelEVAnt. For example, I look at the HR Director in the same way as the Finance Director, which is that when we about business policy and business strategy they would play into that at a general level, and having sorted out the policy, they contribute in their specific areas. Managing Director
The role of HR is to facilitate everything we do. Deputy Managing Director
I would expect the HR Director to be visionary, to see a bigger picture than I can see and to be able to articulate that. There is an element of added value in balancing HR policies with business issues. Director of Finance
Comment on the way in which business strategy is evolved in this company and how HR strategy is integrated with it.
This case study is a good illustration of how business strategy evolves in a rapidly growing company.