HR Transformation at Pfizer and Intel: A Comparative Study

Introduction

The case studies examined here are those of Pfizer and Intel. The two cases are closely related in that both are founded on the principle of improving organizational capability through better HR practices. They demonstrate that HR practices are essential to ensuring organizational success and driving better performance. As noted by Ulrich et al. (2009), the case studies illustrate the importance of thinking about organizational capability and HR practices together — and how they impact performance — rather than the other way around. The case studies also highlight organizational capability as a source of competitive advantage, showing that viewing the organization from an inside-out perspective, rather than an outside-in perspective, is key to ensuring the sustainability of change and grounding that change in effective reasoning (Zhang, 2010).

In the case of Pfizer, the organization's capabilities are reflected in how it structures its business for optimal delivery of products and services, and how the outputs of various business units are coordinated to achieve improved results. The HR strategy adopted by Pfizer does not merely enable business success — it actively drives it. This is evident in the company's emphasis on linking business performance achievements to the fulfillment of its mission, vision, and values. The company also demonstrates a strong commitment to attracting and retaining the best talent by offering growth opportunities, as detailed in its approach to talent development and competitive remuneration (Ulrich et al., 2009).

Intel's case study presents a picture of fast-paced innovation being matched by efforts to attract and retain top talent and foster proactive collaboration. In the company's HR strategy, the most prominent elements were the reduction of complexity in tactical delivery and the development of an HR competency strategy. These initiatives were designed to complement the company's culture and support employees in making the most of their opportunity with Intel (Ulrich et al., 2009).

The two case studies are success stories, but in order to identify the missing link between the two organizations' approaches to transformation, it is important to revisit the challenges each faced at the outset. The two companies faced different challenges initially, which may appear to explain the divergence in their transformation strategies. However, a deeper examination reveals that the underlying challenges were quite similar. Both companies had issues managing their human resources, including difficulties with documentation and with attracting and retaining their workforces. Cost was also a major concern, as both companies were spending heavily on their employees, making cost reduction a central aspect of both transformation strategies.

The way the two companies chose to address these shared challenges differed, which can be attributed to the need to contextualize problems within each organization's unique setting. The key contextual difference is that the two companies operate in different industries — Pfizer is a pharmaceutical company while Intel is a chip manufacturer. Pfizer's issues centered on changing its hiring requirements, leadership development, employee development, promotion, and knowledge-sharing strategies, while Intel's challenges were more broadly related to HR strategy implementation. A notable similarity is that both companies experienced significant growth in the 2000s, which brought substantial increases in their workforces. This rapid, unexpected growth is considered the primary source of both companies' HR challenges.

Challenges Faced

Pfizer's challenges stemmed largely from its growth strategy of mergers and acquisitions. As the company acquired other organizations, it inherited differing payroll practices, pension and benefit schemes, and performance and talent-related practices. This meant that each business unit operated with different HR functions and policies. Incorporating these varied practices into a coherent organizational strategy made it difficult to deliver quality service competitively. Talent promotion and acquisition also suffered considerably as a result (Ulrich et al., 2009).

These challenges explain why Pfizer's HR transformation is characterized as inside-out. The company had to make its HR strategies efficient internally before it could drive overall business performance and maintain competitiveness (Ulrich et al., 2009).

Intel faced similar human resource challenges. The company also pursued acquisition as a growth strategy, which led to heightened employee expectations. Furthermore, Intel was operating in a highly innovative environment in which all parts of the organization — except HR — were keeping pace with rapid change. The company was also burdened by high human resource management costs, making expenditure a significant concern (Ulrich et al., 2009).

Internal and External Influences

Both companies faced internal pressure to improve their processes and achieve greater efficiency. They were each striving to gain competitive advantage through effective HR practices and were seeking significant cost reductions to improve profitability. These were the primary internal influences shared by both organizations.

Beyond these shared pressures, each organization faced its own distinct internal factors. Intel recognized the need to restructure its organization to make HR processes more efficient, driven by the realization that other parts of the company had become faster and more capable than the HR department. In Pfizer's case, an additional internal factor was the imperative to make HR a driver of business success, stemming from the recognition that HR was embedded in each of Pfizer's top five organizational priorities (Ulrich et al., 2009).

Both organizations also faced external pressures. Shareholder and investor expectations were a major external factor for both companies, as demands for higher profits required the organizations to improve their systems and create efficiencies that would lead to cost savings, increased revenue, and greater profitability. Increased competition was another common external factor. Operating in highly competitive industries, both companies were compelled to reassess their strategies and find new ways to build competitive advantage (Ulrich et al., 2009).

Conclusion

Zhang, J. (2010). Employee orientation and performance: An exploration of the mediating role of customer orientation. Journal of Business Ethics, 91, 111–121.