Strategic HRM
Strategic HRM
Strategic HRM
What is strategy?
What is strategy?
– Is it a plan?
– Does it refer to how we will obtain the ends we
seek? Is it a position taken?
– Just as military forces might take the high ground
prior to engaging the enemy,
– might a business take the position of low-cost
provider?
– does strategy refer to perspective, to the view one
takes of matters, and to the purposes, directions,
decisions and actions stemming from this view?
– Does strategy refer to a pattern in our decisions and
actions?
– does repeatedly copying a competitor’s new product
offerings signal a "me too" strategy?
Ref: SHRM – Charles Greer
Meaning
Strategy is a term that comes from the
Greek strategia, meaning "generalship."
In the military, strategy often refers to
maneuvering troops into position before
the enemy is actually engaged
Strategy
n
ti o
ni
efi
Corporate-Level Corporate
Managers Strategy
Two-Way Influence
Business-Level
Managers Business Strategies
Two-Way Influence
Functional
Managers Functional Strategies
Two-Way Influence
Operational
managers Operating Strategies
What is strategic
management?
A continuous, iterative process aimed at
keeping an organization as a whole
appropriately matched to its environment
(Samuel C. Certo and J. Paul Peter, Strategic Management)
Keeping the business in tune with
management and marketing forces both
outside and inside the firm
Competitive strategy
Competitive strategy leads to competitive
advantage
– Generates supernormal ROI
– Offers services of value
– Uses cost effective technology
– Avoids erosion of competitive advantage by
exploiting and developing a technological base
Ex 1-6:
Strategic
Company mission
Management
and social
Process
responsibility
Possible?
External
Internal analysis
environment
Desired?
Feedback
Feedback
Strategic analysis and choice
Long-term
Generic and grand strategies
objectives
Restructuring, reengineering
and refocusing the organization
Legend Strategic control and
Major impact continuous improvement
Minor
impact
Strategic analysis HRM
“To be competitive, organizations in many
industries must have highly skilled.
Knowledgeable workers. They must also have a
relatively stable labour force since employee
turnover works directly against obtaining the kind
of coordination and organizational learning that
leads to fast response and high-quality products
and services”
- Edward Lawler
WHAT IS SHRM?
Strategic human resource management
has been defined as ‘the linking of human
resources with strategic goals and
objectives in order to improve business
performance and develop innovative
organizational culture that foster
innovation and flexibility.
Some Organisational
Strategies
3M Foster innovation
Prof. S. Pattnaik
Aim of SHRM
Long-term Objectives
Profitability
Return on investment
Competitive position
Technological leadership
Productivity
Employee relations
Public responsibility
Employee development
Aim –Short term
•Detailed work planning
•Emphasis on technical
qualifications and skills
•Emphasis on job-specific
training
•Emphasis on job-based pay
•Use of performance appraisal as a control device
•Team-based training
Types of HR Strategy
1) general strategies such as
high-performance working team
– Supplying competitive intelligence regarding the
external environment
– Supplying information regarding the company’s
internal human strengths and weaknesses.
– Showing how the firm’s HR activities can and do
contribute to creating value for the company
2) specific strategies relating to the different
aspects of human resource management
such as learning and development and
reward(Human capital management, corporate
social esponsibility,
organization development, engagement,
knowledge management,employee resourcing,
talent management, learning and development,
reward, employee relations, and employee
well-being
Difference Between Strategic HRM &
HR strategies:-
STRATEGIC HRM HR Strategies [ HR StrategiesHRS ]
Aligned with organizational intention about future Focus on specific organizational intentions about
direction what needs to be done.
Focus on long term people issue Focuses on short term performance measures that
is result/outcome.
SHRM decisions are built into strategic business HRSs decisions are derived from SHRM.
plan
Deals with macro-concerns such as quality, HRSs are concerned with ensuring availability of
commitment, performance, culture & mgnt an efficient workforce, training, good employee
development relations
Defines areas in which specific HR strategies need HRSs facilitate the successful achievement of
to be developed. Ref: SHRM – Charles Greerobjectives + goals
corporate
Approaches to SHRM
The resource-based approach-A resource-based
approach will address methods of increasing the firm’s
strategic capability by the development of managers
and other staff who can think and plan strategically and
Prof. S. Pattnaik
Types of Strategic Planning
(cont’d)
Functional strategies
– Identify the basic courses of action that
each department will pursue in order to
help the business attain its competitive
goals.
Methodology for strategy
development
Strategic analysis
– Environmental analysis
human resource environment
human resource legal environment
– Establish organizational direction
Strategy formulation
– Human resource planning
Strategy implementation
– Work force utilisation and employment practices
– Reward and development system
Strategic control
– Performance impact of human resource practices
– Human resource evaluation
Strategy formulation
What are the purpose(s) and objective(s) of
the organization?
Where is the organization presently going?
What critical environmental factors does the
organization currently face?
What can be done to achieve organizational
objectives more effectively in the future?
Strategy formulation process
Development of organizational philosophy and
mission statement
Environmental scanning
Analysis of SWOT
Formulation of strategic objectives
Generation of alterative strategy
Evaluation and selection of strategies
Informal / incremental strategic planning
– Managed/logical incremental planning
A strategy is the pattern or plan that integrates an organisation’s major goals, policies,
and action sequences into a cohesive whole
HR strategy ?
'a human resource system that is tailored to the
demands of the business strategy'
-Miles and Snow 1984
'the pattern of planned human resource activities
intended to enable an organization to achieve its
goals'
- Wright and McMahan 1992
“the pattern planned human resource deployments and
activities intended to enable an organisation to
achieve its goals”
Types of HR Strategy
1) general strategies such as high-performance
working
2) specific strategies relating to the different aspects
of human resource management such as learning and
development and reward(Human capital management,
corporate social esponsibility,
organization development, engagement, knowledge
management,employee resourcing, talent management,
learning and development, reward, employee relations,
and employee well-being
SHRM concern
SHRM concern is to ensure
– HR management is fully integrated with the
strategy and strategic needs of the firm
– HR policies cohere across policy areas and
areas of hierarchy
– HR practices are adjusted and used by line
manages and employees as part of their
everyday work
Strategic HRM is about improving business
performance through people.
The major concerns of strategic HRM are to
meet the business needs of the organization
and the individual and collective needs of
the people employed in it.
strategic HRM can make a contribution to
improving business performance.
Strategic HRM (IMPORTANCE)
Needs investment –ROI
Cost of investment
Reduction in total Labour cost
Efficiency in operation
Optimal use of human resources
A source of competitive advantage
Technical skills (pace of technological change)
Knowledge and capabilities
Management of critical and Difficult HR areas
Management of change (Resistance to change)
Lack of trust
Antagonistic labour
Motivational problems
Management relations
Economic turbulence
Within the country (turbulence)
Globalisation
Dramatically changing demographics
Differences in workforce values
Strategic human resource management and ∟ HRP are considered important
to manage uncertainties; HR is integrated with strategy; Integrating and
aligning HR function with strategy
Benefits of SHRM
1. Identifying and analysing external opportunities and
threats that may be crucial to the company's success.
2. Provides a clear business strategy and vision for the
future.
3. To supply competitive intelligence that may be useful in
the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are
addressed systematically.
7. To supply information regarding the company's internal
strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough competency
Theoretical frame work of SHRM
Resource dependence
Resource institutional
based view
of the firm HRM Practices
Cybernetics
Behavioral
approach
Agency/transaction costs
Firm level outcomes
HR Capital pool HR behaviors (performance,
Non-Strategy driven
– Resource dependence and power theories
– Power and politics= legislation, unionization, control of resources, expectations of
social responsibility.
– Institutional theory
– In appropriate performance evaluation dimensions (inertia / rational decision
making.appraisal
International strategy
Multinational, global and transnational
strategies
Strategic alliances
Sustainable global competitive advantage
Globally competent managers
Location of production facilities
Approaches to SHRM
The resource-based approach-A resource-based
approach will address methods of increasing the firm’s
strategic capability by the development of managers
and other staff who can think and plan strategically and who
understand the key strategic issues.
Strategic fit-The HR strategy should be aligned to
the business strategy (vertical fit).
HR strategy should be an integral part of the
business strategy, contributing to the business
planning process as it happens.
High-performance management - aims to
make an impact on the performance of the
firm through its people in such areas as
productivity, quality, levels of customer
service, growth, profits and, ultimately, the
delivery of increased shareholder value.
High-performance management practices
include rigorous recruitment and selection
procedures, extensive and relevant training
and management development activities,
incentive pay systems and performance
management processes.
High-commitment management
HRM is its emphasis on the importance
of enhancing mutual commitment. ‘A form
of management which is aimed at eliciting a
commitment so that behaviour is
primarily self-regulated rather than
controlled by sanctions and pressures
external to the individual, and relations
within the organization are based
on high levels of trust.’
High-involvement management-
The aim is to create a climate in which a
continuing dialogue between managers and
the members of their teams takes place in
order to define expectations and share
information on the organization’s mission,
values and objectives.
Human resource contributions
to strategy
Environmental scanning and competitive
advantage
Implementation of resource reallocation
decisions Slide >
Lead time for dealing with labour shortages.
..
HUMAN RESOURCE ACTIVITY TYPOLOGY
Low
< IMPORTANT TO EMPLOYEES >
A strategy is the pattern or plan that integrates an organisation’s major goals, policies,
and action sequences into a cohesive whole
Effective HR Strategy Formulation
and Implementation
Consistency
Consistency
Improved
HR Strategies Firm
Performance
Fit Fit
Organizational Organizational
Characteristics Consistency Capabilities
Strategy implementation
work force utilization and employment practices
employee surpluses
YOU GET WHAT YOU MEASURE, YOU MEASURE WHAT YOU VALUE, YOU
Ref: SHRM – Charles Greer
CAN NOT CONTROL WHAT YOU CANNOT MEASURE.
Strategy implementation system
– Reward and development systems
Hybrid system
Employee – Internal equity
– > Wage surveys to establish
development external equity.