08. Unveiling the Value Chain Analysis for Effective Talent Management

For your business to grow, you need to provide your customers with value or risk losing business to competitors. How do you know if your product or service is providing customer value? It’s not always easy to identify. So here is a solution to this problem, it is the value chain analysis.

What is value chain analysis?

Value chain analysis is a means of evaluating each of the activities in a company’s value chain to understand where opportunities for improvement lie.

Conducting a value chain analysis prompts you to consider how each step adds or subtracts value from your final product or service. This, in turn, can help you realize some form of competitive advantage, such as, 

  • Cost reduction, by making each activity in the value chain more efficient and, therefore, less expensive,
  • Product differentiation, by investing more time and resources into activities like research and development, design, or marketing that can help your product stand out.

Typically, increasing the performance of one of the four secondary activities can benefit at least one of the primary activities.

How to conduct a value chain analysis?

Value chain analysis for effective talent management

The purpose of analyzing the value chain of talent-management process is to identify how each business activity within the process contributes to the  overall competitive strategy and where there may be efficiencies and cost savings to be gained within the process.

An organization may create a cost advantage through value-chain analysis by reducing the cost of the individual activities within the value chain or by reconfiguring the value chain.

Steps of value chain analysis for effective talent management

  1. Identify or clarify your overall competitive strategy: This may mean revisiting your vision and/or mission, or reiterating the firm’s short-term and long-term goals, ensuring that everyone within all departments in the organization is on the same page.
  2. Activity analysis: Identify each activity undertaken in the talent-management process (recruiting, hiring, retaining and growing of human capital). This can be accomplished by conducting a brainstorming session or a business process review (BPR) with key individuals who are responsible for carrying out these activities and those who are impacted by these activities.
  3. Value analysis: For each activity, assess the value that the activity brings to the process. Evaluate the pros and cons of making changes to the process. You must also consider how the changes may affect other departments within the organization and evaluate the overall impact of proposed changes.
  4. Planning: Design and implement a strategic plan to reduce the costs of the activities within the talent-management value chain or the cost to reconfigure the value chain.

Advantages of value chain analysis

·    Cost savings in the forms of process efficiency, reduced employee turnover and excellent customer service leading to increased market share and customer loyalty.

·    Gives the organization the ability to identify how each business activity within an internal value chain contributes to the organization’s competitive strategy, creating synergy between departments and making the strategy more systemic overall.


In conclusion, the value chain analysis for effective talent management is not merely a theoretical concept but a practical roadmap for organizations aspiring to thrive in the competitive landscape. It beckons leaders to recognize that talent is not just a resource; it is the driving force that propels the organization forward. By embracing this approach, organizations can unlock the full potential of their human capital, creating a workforce that is not only capable of meeting the challenges of today but poised to shape the opportunities of tomorrow. As we navigate the ever-evolving landscape of work, unveiling the power of value chain analysis in talent management is the compass that guides organizations toward sustained success and resilience.


References

1.      Stobierski, T., 2020. What is a value chain analysis? 3 steps: HBS Online (2020) Business Insights Blog. Available at: https://online.hbs.edu/blog/post/what-is-value-chain-analysis (Accessed: 07 December 2023).

2.      Zmorenski, D. (2013) Using value-chain analysis for effective talent management, Reliable Plant. Available at: https://www.reliableplant.com/Read/29326/value-chain-analysis (Accessed: 07 December 2023).

3.      Jurevicius, O. (2023) Value Chain Analysis: The ultimate guide - SM insight, Strategic Management Insight. Available at: https://strategicmanagementinsight.com/tools/value-chain-analysis/ (Accessed: 07 December 2023). 




Comments

  1. How does value chain analysis contribute to cost savings in talent management, according to the provided information?

    ReplyDelete
    Replies
    1. Hi Pandula, Thank for your feedback. As per the above blog value chain can be contribute to cost saving by forming process efficiency in order to reduce employee turnover. There is a hidden cost in recruiting employees.

      Delete
  2. The value chain concept was first described in 1985 by Harvard Business School professor Michael Porter, in his book Competitive Advantage: Creating and Sustaining Superior Performance. Basically , The value chain framework helps organizations identify and group their own business functions into primary and secondary activities. Pandula has inquired How does value chain analysis contribute to cost savings in talent management. According to my view it can help to Negotiate lower prices for raw materials, equipment, and other services. Through the value chain organizations can achieve a significant cost advantage over their competitors, improve profitability, and ultimately achieve their strategic goals. what is your idea?

    ReplyDelete
  3. Thank you, Mahesh for your feedback, yes true you can achieve their strategic goals through value chain analysis through cost advantage over their competitors and also by improving profitability.

    ReplyDelete
  4. Through the value analysis organizations can find areas for efficiency improvements and cost reductions. The same concept can be applied to Talent Management. It will improve employee performance and guarantee alignment with strategic objectives.

    ReplyDelete
    Replies
    1. Yes agree. There are areas where organizations can use value chain analysis as mentioned above.

      Delete

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