Strategic HRM

Prof. S. Pattnaik

HUMAN RESOURCE MANAGEMENT

Prof. S. Pattnaik

Evolution of the HR Function

• Commodity concept

• Factor of Production concept

• Goodwill concept

• Paternalism

• Humanitarian concept

• Human resource concept

• Partnership concept

Prof. S. Pattnaik

Other things being equal……

MOTIVATIONMOTIVATION• Job Job enrichment enrichment• PromotionsPromotions• CoachingCoaching• FeedbackFeedback• RewardsRewards

MOTIVATIONMOTIVATION• Job Job enrichment enrichment• PromotionsPromotions• CoachingCoaching• FeedbackFeedback• RewardsRewards

ENVIRONMENTENVIRONMENT• Management Management philosophy philosophy• CultureCulture• Empowerment Empowerment

ENVIRONMENTENVIRONMENT• Management Management philosophy philosophy• CultureCulture• Empowerment Empowerment

ABILITYABILITY• RecruitmentRecruitment• Selection Selection • TrainingTraining• DevelopmentDevelopment

ABILITYABILITY• RecruitmentRecruitment• Selection Selection • TrainingTraining• DevelopmentDevelopment

Perf = Perf = f f (A,M,E)(A,M,E)Perf = Perf = f f (A,M,E)(A,M,E)

Prof. S. Pattnaik

The Bottomline

• Getting results

– The bottom line of managing

• HR creates value by engaging in activities that produce the employee behaviors the company needs to achieve its strategic goals.

The Strategic Role of Human Resource Management

Prof. S. Pattnaik

Strategy

• Strategy is deciding where to go and the means to get there.

• Strategy is a declaration of intent.

Definition

Definition

Prof. S. Pattnaik

Some Organisational Strategies

Company Strategic Principle

General Be number one or number two in Electric every industry in which we compete, or get out

Wal-Mart Low prices, every day

3M Foster innovation

Prof. S. Pattnaik

Strategic PlanningThere are three levels of strategic planning -

Corporate Strategy

FunctionalStrategies

BusinessStrategy

BusinessStrategy

BusinessStrategy

Prof. S. Pattnaik

Types of Strategic Planning

• Corporate-level strategy

– Identifies the portfolio of businesses that, in total, comprise the company and the ways in which these businesses relate to each other.

• Diversification strategy

• Vertical integration strategy

• Consolidation strategy

• Geographic expansion strategy

Prof. S. Pattnaik

Types of Strategic Planning (cont’d)

• Business-level/competitive strategy

– Identifies how to build and strengthen the business’s long-term competitive position in the marketplace.

• Cost leadership

• Differentiation

• Focus

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.

Prof. S. Pattnaik

Business Strategy = Overall Cost Leadership

Common OrganizationalCharacteristics

HR Strategies

• Intense supervision of labor

• Tight cost control requiring frequent, detailed control reports

• Low-cost distribution system

• Structured organizationand responsibilities

• Products designed for ease in manufacture

• 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

Prof. S. Pattnaik

Business Strategy = Differentiation

Common OrganizationalCharacteristics

HR Strategies

• Strong marketing abilities

• Product engineering• Corporate reputation for

quality or technological leadership

• Amenities to attract highly skilled labor, scientists, or creative people.

• Emphasis on innovation and flexibility

• Broad job classes• Loose work planning• External recruitment• Team-based training• Emphasis on individual-

based pay

Prof. S. Pattnaik

Business Strategy = Focus

Common OrganizationalCharacteristics

HR Strategies

Combination of cost-leadership and differentiation strategy directed at a particular strategic target.

Combination of HR strategies of the other two strategies.

Prof. S. Pattnaik

Achieving Strategic Fit

• Michael Porter

– Emphasizes the “fit” point of view that all of the firm’s activities must be tailored to or fit its strategy

• Gary Hamel and C. K. Prahalad

– Argue for “stretch” in leveraging resources—supplementing what you have and doing more with what you have

Prof. S. Pattnaik

STRATEGIC HUMAN RESOURCE MANAGEMENT

• Linking HRM with strategic goals and

objectives to improve business performance

and develop organizational cultures fostering

innovation and flexibility.

• Defines the organisation’s intentions and

plans on how its business goals should be

achieved through people.

Prof. S. Pattnaik

Formulate Business Strategy

Identify Employee Competencies and Behaviors that HR must deliver to achieve the strategy

Formulate HR Policies & Activities that will lead to these Employee Competencies and Behaviors

Linking Corporate and HR Strategy

External environme

nt

Internal Strengths & Weaknesses

Prof. S. Pattnaik

HR’s Strategic Roles

• Identify the human issues that are vital to business strategy.

• Help establish and execute strategy.

• Provide alternative insights.

• Are centrally involved in creating responsive and market-driven organizations.

• Conceptualize and execute organizational change.

Prof. S. Pattnaik

HR’s Strategy Formulation Role

• HR helps top management formulate strategy in a variety of ways by.– 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.

Prof. S. Pattnaik

HR’s Strategy Execution Role

• The HR department’s strategies, policies, and

activities must make sense in terms of the

company’s corporate and competitive

strategies, and they must support those

strategies.

Prof. S. Pattnaik

Implications of SHRM

• Successful SHRM efforts begin with identification of strategic needs.

• Employee participation is critical to linking strategy and HR practices.

• Strategic HR depends on a systematic and analytical mindset.

• Corporate HR departments can have an impact on their organization’s efforts to launch strategic initiatives.

Prof. S. Pattnaik

Cost of HR vs Value added by HR

HR ACTIVITY

Strategic (Planning)

Operational(Service delivery)

Administrative(Record keeping and Compliance)

COSTVALUE ADDED

10%

30%

60%

60%

30%

10%

Prof. S. Pattnaik

Human Resource Competencies

BUSINESS MASTERY• Business acumen• Customer

orientation• External relations

HR MASTERYKnowledge of policies and mastery of practice in HR systems

CHANGE MASTERY• Problem solving

skills• Innovation &

CreativityPERSONAL CREDIBILITY• Trust • Courage• Lived values

Prof. S. Pattnaik

Harvard model of HR

Stakeholder Interests

Situational factors

HR strategy and policy choices

Long-term Consequences for Individual, Individual, Organisation, Organisation, SocietySociety

HR Outcomes• Commitment• Congruence• Cost

effectiveness

Prof. S. Pattnaik

Things to Remember as We Move through the course

• HR management: the responsibility of every manager

• HR practices today must address several basic issues including– Improving competitiveness– Globalizing– Technology and internet-based

advances– Contributing to strategic success