Integrating of Strategy and HumanResource Management
The experiences of several organizations provide good examples of the integration of strategy and human resource management. One such example is provided by the experiences of People’s Bank, a financial services company headquartered in Bridgeport, Connecticut. Massive changes began to take place in the business environment of banking with deregulation and relaxation of ceilings on interest. Money markets began to drain off funds that ordinarily went into banks’ deposits, forcing them to rely on more expensive sources of funds. Further, the money center banks began to compete in the same middle markets as regional banks. People’s, which was a small regional bank, responded by changing its strategy from a product orientation to one directed toward markets. With a product orientation, products are developed and then markets are sought out in which to sell the product. Conversely, a market orientation involves an opposite approach in that market demands are determined and then products developed to serve the market. As a result of these changes, People’s transformed itself into a diversified financial services company with 139 branches and a fully integrated banking services and stock trading presence on the Internet Because of major changes in People’s strategy, there was recognition that new organizational structures would be needed to accommodate the changes. The organization was decentralized, hierarchical levels removed, strategic business units formed, and new senior vice presidencies created within a matrix structure. The bank then conducted a study of the types of employees that would be needed with the new strategy’s skill and organizational requirements. Major changes were undertaken as a result of the audit. For example, the performance appraisal system was revised. The revised system emphasized goal