INNOVATION,


QUALITY & COST: STRATEGIC SEPARATION OR INTEGRATION FOR ORGANISATIONAL SUCCESS?


Employers’ costs are rising and this is impacting on the costs of goods and services. Yet businesses need to keep costs low and quality high if they are to maintain sales in the context of the cost-of-living crisis. And products must continue to be innovative. Dr Sue Shortland explores how businesses can achieve these desired outcomes through people.


R


ecent increases in wages in response to inflationary pressures have led to increased employment costs for business. In addition, increased energy and rental costs have also


added to the underlying costs that employers need to pay. As a result, the cost of goods and services has risen as employers have passed on increased labour, energy and property costs to customers, while attempting to maintain their attractiveness to shareholders. In the current cost-of-living crisis customers are


extremely careful as to how they spend their income on both essential and non-essential items. Customers seek out the best prices while simultaneously reviewing feedback from other purchasers to ensure that they receive the highest standards of quality for their hard-earned cash. Customers also seek innovative products and services that closely match their needs and desires rather than simply generic goods. This means that organisations must develop competitive strategies and appropriate supporting HR approaches that can address cost reduction, quality enhancement and innovation.


COMPETITIVE STRATEGIES & ASSOCIATED HR POLICIES A cost-reduction strategy means that goods and services are produced cheaply, potentially more cheaply than the competition, with an emphasis on minimising costs at all stages in the process, including people management. An associated HR policy should imply low-discretion jobs with ad hoc recruitment, minimal training and development, little employee involvement, and low levels of pay. Pursuing a cost-reduction strategy as the sole objective though is unlikely to lead to quality enhancement. A quality-enhancement strategy means that goods


and services are produced at the highest quality possible to differentiate the employer from the rest of the market. In this case, an associated HR policy should imply high-discretion jobs, highly controlled recruitment and selection, extensive induction, training and development programmes, high levels of employee involvement and empowerment, and competitive pay and benefits, with performance appraisal playing a key role. Pursuing a


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GLOBAL LEADERSHIP


HR STRATE G Y


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