11

PresentationPresentationOnOn

Strategic Human Resource Strategic Human Resource ManagementManagement

bybyDr. Jamnean Joungtrakul Dr. Jamnean Joungtrakul

President and CEO, BLCI GROUP President and CEO, BLCI GROUP and Senior Industry Fellow, and Senior Industry Fellow,

Graduate School of Business, Graduate School of Business, Curtin University of Technology, Curtin University of Technology,

AustraliaAustralia3300/71, 11th Floor, Tower B,Elephant 3300/71, 11th Floor, Tower B,Elephant Tower Paholyothin Road, Chompol, Tower Paholyothin Road, Chompol, Chatuchack, BKK 10900Chatuchack, BKK 10900Tel 02-937-3773 Fax 02-937-3770Tel 02-937-3773 Fax 02-937-3770Email: Email: jamnean@blcigroup.comjamnean@blcigroup.com Website: Website: www.blcigroup.comwww.blcigroup.com

22

Food for ThoughtFood for Thought

Strategy is very important. But no one knows Strategy is very important. But no one knows what it means. Every professor in the worlds what it means. Every professor in the worlds

has different version of what strategy means. has different version of what strategy means. This keeps them in business but This keeps them in business but

does not help management. In answer to the does not help management. In answer to the professorial question ‘What is strategy?, there professorial question ‘What is strategy?, there

is only one universally accurate answer: ‘It is only one universally accurate answer: ‘It means exactly what you want it to mean to means exactly what you want it to mean to

make your own point.’ (Owen, 2002, p. 199) make your own point.’ (Owen, 2002, p. 199)

33

Scope of this PresentationScope of this Presentation

Part-1:Part-1: The Concept of Strategy The Concept of StrategyPart-2:Part-2: Strategic Management Strategic ManagementPart-3:Part-3: Human Resource Management Human Resource ManagementPart-4:Part-4: Strategic Human Resource Strategic Human Resource

Management Management Part-5: Part-5: Case StudyCase StudyPart-6:Part-6: Questions and Answers Questions and Answers

44

Part-1: Part-1: The Concept of StrategyThe Concept of Strategy

55

The Origin of StrategyThe Origin of Strategy

The root of strategy can be traced The root of strategy can be traced back to the golden era of the back to the golden era of the

development of classical Chinese development of classical Chinese military strategy back in 772-221 military strategy back in 772-221

BC.BC.

66

The Sun Tzu Bing-Fa: The Art of WarThe Sun Tzu Bing-Fa: The Art of War

The Sun Tzu Bing-Fa, allegedly written by the The Sun Tzu Bing-Fa, allegedly written by the master Sun Tzu in the fourth century BC, is the master Sun Tzu in the fourth century BC, is the most complete and reputable book of military most complete and reputable book of military

strategy that has survived to datestrategy that has survived to date

The Origin of StrategyThe Origin of Strategy(con(con’’t)t)

77

The Most Famous Quotation The Most Famous Quotation from Sun Tzufrom Sun Tzu

““Know your enemy, know yourself, and you Know your enemy, know yourself, and you can fight a hundred battles with no danger of can fight a hundred battles with no danger of defeat. When you are ignorant of the enemy defeat. When you are ignorant of the enemy but know yourself, your chances of winning but know yourself, your chances of winning and losing are equal. If you don’t know both and losing are equal. If you don’t know both your enemy and yourself, you are bound to your enemy and yourself, you are bound to

perish in all battles…know the terrain, know perish in all battles…know the terrain, know the weather, and your victory will be the weather, and your victory will be

complete.” (Chen, 1995, p. 42)complete.” (Chen, 1995, p. 42)

88

The Essence of Sun Tzu’s The Essence of Sun Tzu’s Art of WarArt of War

The major principles of strategies;The major principles of strategies; The importance of moral influences;The importance of moral influences; The quality a good general should and should not The quality a good general should and should not

possess;possess; The role of climate and terrain in determining the The role of climate and terrain in determining the

situation of the battle;situation of the battle; The strategy of enlarging one’s comparative strengths;The strategy of enlarging one’s comparative strengths; The importance of organization and training;The importance of organization and training; The proper usage of discipline which combines The proper usage of discipline which combines

severity and benevolenceseverity and benevolence

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The Principles of StrategiesThe Principles of Strategies

““With careful and detailed planning, one can With careful and detailed planning, one can win, with careless and less detailed planning, win, with careless and less detailed planning,

one cannot win. How much less chance of one cannot win. How much less chance of victory has one who does not plan at all! victory has one who does not plan at all!

From the way planning is done beforehand, From the way planning is done beforehand, one can predict victory or defeat.” (Chen, one can predict victory or defeat.” (Chen,

1995)1995)

1010

Some Critical View Points on Some Critical View Points on StrategyStrategy

““Strategy comes from the Greek word strategos, Strategy comes from the Greek word strategos, which has its roots in military language. It refers which has its roots in military language. It refers

to a general’s grand design behind a war or a to a general’s grand design behind a war or a battle.” (Noe, Hollenbeck, Gerhart and Wright, battle.” (Noe, Hollenbeck, Gerhart and Wright,

2000, p. 42)2000, p. 42)

““Business is like a war in one respect, if its grand Business is like a war in one respect, if its grand strategy is correct, any number of tactical errors strategy is correct, any number of tactical errors

can be made and yet the enterprises proves can be made and yet the enterprises proves successful.” (Wood, cited in Steiner, 1997, p. 5)successful.” (Wood, cited in Steiner, 1997, p. 5)

1111

““Strategy is grounded in the array of Strategy is grounded in the array of competitive moves and business approaches competitive moves and business approaches

management depends on to produce successful management depends on to produce successful performance (Thompson & Strickland, 1995, performance (Thompson & Strickland, 1995,

p. 2)p. 2)

Some Critical View Points on Some Critical View Points on StrategyStrategy (con(con’’t)t)

1212

Some Critical View Points on Some Critical View Points on StrategyStrategy

““When you cut away all the jargon, this is what When you cut away all the jargon, this is what strategy is all about: how you are going to do better strategy is all about: how you are going to do better

by being different.” (Magretta, 2002, p. 72)by being different.” (Magretta, 2002, p. 72)

““Indeed, the essence of good strategy-making is to Indeed, the essence of good strategy-making is to build a market position strong enough and an build a market position strong enough and an

organization capable enough to produce successful organization capable enough to produce successful performance despite unforeseeable events, potent performance despite unforeseeable events, potent

competition, and internal problems.” (Thompson & competition, and internal problems.” (Thompson & Strickland, 1995, p. 3)Strickland, 1995, p. 3)

““The essence of strategy is choosing what not to do.” The essence of strategy is choosing what not to do.” (Porter, cited in Magretta, 2002, p. 71)(Porter, cited in Magretta, 2002, p. 71)

(con(con’’t)t)

1313

The Definition of StrategyThe Definition of Strategy

““Of all the concepts in management, strategy is Of all the concepts in management, strategy is the one that attracts the most attention and the one that attracts the most attention and

generates the most controversy. Almost generates the most controversy. Almost everyone agrees that it is important. Almost no everyone agrees that it is important. Almost no one agrees on what it is.” (Magretta, 2002, p. one agrees on what it is.” (Magretta, 2002, p.

71)71)

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Some Definitions of StrategySome Definitions of Strategy

““Strategy is a deliberate search for a plan of Strategy is a deliberate search for a plan of action that will develop a business’s action that will develop a business’s

competitive advantage and compound it.” competitive advantage and compound it.” (Henderson, 1991, p. 5)(Henderson, 1991, p. 5)

“A strategy is an integrated set of choices which identify the positioning and the competitive

advantages that beat competition on a sustainable basis in meeting consumer needs.”

(Procter & Gamble)

1515

“A strategy is a commitment to undertake one set of actions rather than another.” (Oster,

cited in Thompson & Strickland, 1995, p. 2)

Some Definitions of StrategySome Definitions of Strategy (con(con’’t)t)

1616

Some Definitions of StrategySome Definitions of Strategy

“…“…Strategy, in effect, is management’s game Strategy, in effect, is management’s game plan for strengthening the organization’s plan for strengthening the organization’s

position, pleasing customers, and achieving position, pleasing customers, and achieving performance targets.” (Thompson & Strickland, performance targets.” (Thompson & Strickland,

1995, p. 2)1995, p. 2)

““Strategy has been defined…as ‘the pattern of Strategy has been defined…as ‘the pattern of decisions a firm makes.’” (Hax, cited in Kreitner, decisions a firm makes.’” (Hax, cited in Kreitner,

1998, p. 196)1998, p. 196)

(con(con’’t)t)

1717

““Corporate strategy reconciles what a company Corporate strategy reconciles what a company might do in terms of opportunity, what it can do might do in terms of opportunity, what it can do

in terms of its strength, what its management in terms of its strength, what its management wants it to do, and what it thinks is ethical, legal, wants it to do, and what it thinks is ethical, legal,

and moral.” (Andrews, 1991, p. 450)and moral.” (Andrews, 1991, p. 450)

Some Definitions of StrategySome Definitions of Strategy(con(con’’t)t)

1818

Part-2: Part-2: Strategic ManagementStrategic Management

1919

The pioneering work on which many modern The pioneering work on which many modern strategy ideas rest took place at the Harvard strategy ideas rest took place at the Harvard Business School in the early 1960s lead by Business School in the early 1960s lead by

Kenneth R. Andrews and C. Roland Kenneth R. Andrews and C. Roland Christensen(Montgomery & Porter, 1991Christensen(Montgomery & Porter, 1991

The Concept of Strategic The Concept of Strategic Management Application to BusinessManagement Application to Business

2020

The term strategy was applied to business The term strategy was applied to business enterprises in the late 1970s (Magretta, 2002). enterprises in the late 1970s (Magretta, 2002).

It became a full fledged management discipline It became a full fledged management discipline in the 1980s (Montgomery & Porter, 1991)in the 1980s (Montgomery & Porter, 1991)

The Concept of Strategic The Concept of Strategic Management Application to BusinessManagement Application to Business

(con(con’’t)t)

2121

Some Definition of Strategic Some Definition of Strategic ManagementManagement

““Strategic management is that set of managerial Strategic management is that set of managerial decisions and actions that determines the long-decisions and actions that determines the long-run performance of a corporation. It includes run performance of a corporation. It includes

strategy formulation, strategy implementation, strategy formulation, strategy implementation, and evaluation and control.” (Wheelen & and evaluation and control.” (Wheelen &

Hunger, 1990, p. 7)Hunger, 1990, p. 7)

2222

““Strategic Management is an ongoing process of Strategic Management is an ongoing process of ensuring a competitively superior fit between an ensuring a competitively superior fit between an organization and its changing environment.” organization and its changing environment.” (Teece, 1984, cited in Kreitner, 1998)(Teece, 1984, cited in Kreitner, 1998)

“Strategic management = Strategic Planning + “Strategic management = Strategic Planning + Implementation + Control.” (Kreitner, 1998, p. Implementation + Control.” (Kreitner, 1998, p. 196)196)

Some Definition of Strategic Some Definition of Strategic ManagementManagement

(con(con’’t)t)

2323

Strategic Management ProcessStrategic Management Process

- Deciding what business will be in and forming - Deciding what business will be in and forming a strategic vision of where the organization a strategic vision of where the organization needs to be headed-in effect, infusing the needs to be headed-in effect, infusing the

organization with a sense of purpose, providing organization with a sense of purpose, providing long-term direction, and establishing a clear long-term direction, and establishing a clear

mission to be accomplished.mission to be accomplished.

- Converting the strategic vision and mission into - Converting the strategic vision and mission into measurable objectives and performance targetsmeasurable objectives and performance targets

2424

Strategic Management Strategic Management ProcessProcess- Crafting the strategy to achieve the desired results- Crafting the strategy to achieve the desired results

- Implementing and executing the chosen strategy - Implementing and executing the chosen strategy

efficiently and effectivelyefficiently and effectively

- Evaluating performance, reviewing new developments, - Evaluating performance, reviewing new developments,

and initiating corrective adjustments in long-term and initiating corrective adjustments in long-term

direction, objectives, strategy, or implementation in direction, objectives, strategy, or implementation in

light of actual experience, changing condition, new light of actual experience, changing condition, new

ideas, and new opportunitiesideas, and new opportunities

(Thompson & Strickland, 1995, p.3)(Thompson & Strickland, 1995, p.3)

(con(con’’t)t)

2525

The Five Tasks of Strategic The Five Tasks of Strategic Management Management

(Thompson & Strickland, 1995, p. 4)

Developing a Developing a Strategic Vision Strategic Vision

and Business and Business MissionMission

Evaluating Evaluating Performance, Performance,

Reviewing New Reviewing New Developments, Developments, and Initiating and Initiating

Corrective Corrective AdjustmentAdjustment

Implementing Implementing and Executing and Executing

the Strategythe Strategy

Crafting a Crafting a Strategy to Strategy to Achieve theAchieve theObjectivesObjectives

SettingSettingObjectivesObjectives

Improve/Change Improve/Change as Neededas Needed

Reviews Reviews as Neededas Needed

Reviews Reviews as Neededas Needed

Improve/Change Improve/Change as Neededas Needed

Recycle to Recycle to Tasks 1, 2, 3 orTasks 1, 2, 3 or

4 as Needed4 as Needed

Task Task 11

Task Task 22

Task Task 33

Task Task 55

Task Task 44

2626

P&G Strategy P&G Strategy Deployment SystemDeployment System

Strategy Deployment is intended to be used by Categories to drive dramatic Business

Results. Strategy Deployment forces choice, it forces measurement of strategy. It is

intended for Breakthrough.

2727

The Seven Steps of Strategy The Seven Steps of Strategy Deployment SystemDeployment System Long Term VisionLong Term Vision Develop StrategyDevelop Strategy Deploy StrategyDeploy Strategy CapabilityCapability Do the PlansDo the Plans Review and Audit-MonthlyReview and Audit-Monthly Review and Audit-QuarterlyReview and Audit-Quarterly

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Long Term Vision:Long Term Vision:

Define why we exist, where we are Define why we exist, where we are

headed as a Businessheaded as a Business

2929

Develop Strategy:Develop Strategy:

Develops strategy; defines the Develops strategy; defines the objectives, goals, strategies, objectives, goals, strategies, measures. OGSM’s are the building measures. OGSM’s are the building blocks of the systemblocks of the system

3030

Objectives:Objectives: What we are trying to achieve What we are trying to achieve (1 choice) = Words (1 choice) = Words

Goals:Goals: Howe we will measure the objective Howe we will measure the objective = Numbers= Numbers

Strategies:Strategies: How we will achieve the How we will achieve the objective/goals (1-3 choices) = Wordsobjective/goals (1-3 choices) = Words

Measures:Measures: How we will measure the How we will measure the strategies = Numbersstrategies = Numbers

3131

Deploy Strategy:Deploy Strategy:- Defines the groups responsible for delivering - Defines the groups responsible for delivering

the strategies/measures, and then translates to the strategies/measures, and then translates to actions/measures/accountability for execution.actions/measures/accountability for execution.

- Deployment links strategies throughout the - Deployment links strategies throughout the organization and translates to what “I/we can organization and translates to what “I/we can go do.”go do.”

- The emphasis is on what it will take to achieve - The emphasis is on what it will take to achieve the strategy, not negotiate to a lower need.the strategy, not negotiate to a lower need.

3232

Capability:Capability:

Checks sufficiency of the plans and Checks sufficiency of the plans and capability of the organization to capability of the organization to deliver the plansdeliver the plans

3333

Do the Plans:Do the Plans:

Execute and trackExecute and track

3434

Review and Audit-Monthly:Review and Audit-Monthly:

- Ac- Action Planners ask, “Did we do what we tion Planners ask, “Did we do what we

said;” they check actual vs. target, analyze said;” they check actual vs. target, analyze

gaps, and determine adjustments.gaps, and determine adjustments.

- Reviews are the “heart” of the system, - Reviews are the “heart” of the system,

where strategy becomes action, where strategy becomes action,

accountability is established, and learning accountability is established, and learning

occurs.occurs.

3535

Review and Audit-Quarterly:Review and Audit-Quarterly:

- Management and Action Planners ask “Is it - Management and Action Planners ask “Is it

working, what is needed, what is learned, how working, what is needed, what is learned, how

to maintain the improvement.”to maintain the improvement.”

- Quarterly Reviews are the “test” for leadership’s - Quarterly Reviews are the “test” for leadership’s

behaviour that creates focus, commitment, and a behaviour that creates focus, commitment, and a

learning environment or lack of focus and learning environment or lack of focus and

compliance, or a fear environment.compliance, or a fear environment.

3636

Strategy Deployment Flow ChartStrategy Deployment Flow Chart

REVIEW & ADJUST MONTHLYREVIEW & ADJUST MONTHLY

DO THE PLANSDO THE PLANS

yesyes

REVIEW & ADJUST QUARTERLY/ANNUALLYREVIEW & ADJUST QUARTERLY/ANNUALLY

CAPABLE?CAPABLE?nono

LinkagesLinkagesAction PlansAction PlansFunction OGSMFunction OGSM

DEPLOY STRATEGYDEPLOY STRATEGY

Category OGSMCategory OGSMGather DataGather Data

DEVELOP STRATEGY DEVELOP STRATEGY

Corp. OGSMCorp. OGSMPurpose & Vision & ValuesPurpose & Vision & Values

LONG TERM VISIONLONG TERM VISION “Defines Winning”

“What Are We Going For?” “How Will We Get IT?”

“How Are We Going to Organize”

“Can We Do the Plan?”

“Just Do It”

“Did We Do What We Said We’d Do?”

“Is It Working”

3737

Part-3: Part-3: Human Resource Human Resource Management Management

3838

What is Human Resource What is Human Resource Management?Management?

Human Resource Management is a distinctive Human Resource Management is a distinctive approach to employment management which approach to employment management which

seeks to achieve competitive advantage seeks to achieve competitive advantage through the strategic deployment of a highly through the strategic deployment of a highly committed and capable workforce, using an committed and capable workforce, using an integrated array of cultural, structural and integrated array of cultural, structural and personnel techniques (Storey, 1995, p. 5)personnel techniques (Storey, 1995, p. 5)

3939

The Major Component of The Major Component of HRM-Beliefs and AssumptionsHRM-Beliefs and Assumptions

- That it is the human resource which gives - That it is the human resource which gives competitive advantagecompetitive advantage

- That the aim should be not more compliance - That the aim should be not more compliance with rules, but employee commitmentwith rules, but employee commitment

- That therefore employees should be very - That therefore employees should be very carefully selected and developedcarefully selected and developed

4040

The Major Component of The Major Component of HRM-Strategic QualitiesHRM-Strategic Qualities

- Because of the above factors, HR decisions - Because of the above factors, HR decisions are of strategic importanceare of strategic importance

- Top management involvement is necessary- Top management involvement is necessary

- HR policies should be integrated into the - HR policies should be integrated into the business strategy-stemming from it and business strategy-stemming from it and even contributing to iteven contributing to it

4141

The Major Component of HRM-The Major Component of HRM-Critical Role of ManagersCritical Role of Managers

- Because HR practice is critical to core activities of - Because HR practice is critical to core activities of the business, it is too important to be left to the business, it is too important to be left to personnel specialists alonepersonnel specialists alone

- Line managers need to be closely involved both at - Line managers need to be closely involved both at deliverers and drivers of the HR policiesdeliverers and drivers of the HR policies

- Much greater attention is paid to the management - Much greater attention is paid to the management of managers themselvesof managers themselves

4242

The Major Component of The Major Component of HRM-Key LeversHRM-Key Levers

- Managing culture is more important than - Managing culture is more important than managing procedures and systemsmanaging procedures and systems

“ “Just Do It” Just Do It”

- Integrated action on selection, communication, - Integrated action on selection, communication, training, reward and developmenttraining, reward and development

- Restructuring and job design to allow devolved - Restructuring and job design to allow devolved responsibility and empowerment (Storey, 1995, responsibility and empowerment (Storey, 1995, p.6)p.6)

4343

Human Resource Management vs. Human Resource Management vs. Personnel Management-SimilaritiesPersonnel Management-Similarities

- Both emphasise the importance of integrating - Both emphasise the importance of integrating personnel/HRM practice with organizational goalspersonnel/HRM practice with organizational goals

- Both vest personnel/HRM practice firmly in line - Both vest personnel/HRM practice firmly in line managementmanagement

- Both, in the main, stress the importance of individuals - Both, in the main, stress the importance of individuals developing their abilities fully for their own personal developing their abilities fully for their own personal satisfaction to make their ‘best contribution’ to satisfaction to make their ‘best contribution’ to organizational successorganizational success

- Both identify placing the ‘right’ people into the ‘right’ - Both identify placing the ‘right’ people into the ‘right’ jobs as an important means of integrating jobs as an important means of integrating personnel/HRM practice with organizational goals, personnel/HRM practice with organizational goals, including individual development (Legge, 1995)including individual development (Legge, 1995)

4444

HRM vs. PM- DifferencesHRM vs. PM- Differences - HRM focuses on employees as resources which, like - HRM focuses on employees as resources which, like

other resources, need to be used efficientlyother resources, need to be used efficiently

- Employees are viewed as a key resource, which - Employees are viewed as a key resource, which employers actively pursuing employee commitment to employers actively pursuing employee commitment to corporate goals and values. corporate goals and values.

-Only through a systematic sets of policies on -Only through a systematic sets of policies on recruitment, rewards for performance, staff appraisal, recruitment, rewards for performance, staff appraisal, training and development, and effective training and development, and effective communication, it is argued, can commitment and communication, it is argued, can commitment and excellence be achievedexcellence be achieved

4545

HRM vs. PM- DifferencesHRM vs. PM- Differences

- HRM assumes that personnel management is the - HRM assumes that personnel management is the responsibility of all line managers rather than of responsibility of all line managers rather than of personnel specialistspersonnel specialists

- There is a preference for individual management - There is a preference for individual management communication with employees, rather than communication with employees, rather than relying on collective forms of information relying on collective forms of information exchange through trade unionsexchange through trade unions

- HRM assumes a neo-unitary model of employee - HRM assumes a neo-unitary model of employee relations, in contrast with the pluralist model relations, in contrast with the pluralist model underpinning traditional personnel management underpinning traditional personnel management (Farnham, 1997)(Farnham, 1997)

(con(con’’t)t)

4646

SelectedSelected

characteristicscharacteristics

Dominant models of the personnel functionDominant models of the personnel function

Paternalist welfare modelPaternalist welfare model Professional personnel Professional personnel modelmodel

HRM modelHRM model

OrientationOrientation

Ideology Ideology

Role of personal Role of personal management management

Relationship with line Relationship with line management management

Generic activity relations Generic activity relations

Status of workforce Status of workforce

Contract with workersContract with workers

Role of unionsRole of unions

Change Change

Market positionMarket position

Attitude to workforceAttitude to workforce

Welfare, moral and Welfare, moral and humanisthumanist

PaternalistPaternalist

Person management Person management

AdministrativeAdministrative

Human relations Human relations

WorkersWorkers

SocialSocial

Marginal Marginal

Slow Slow

ProtectedProtected

Cost containment of Cost containment of labourlabour

Occupational, service and Occupational, service and manpower controlmanpower control

CollectivistCollectivist

System management System management

Advisory/executiveAdvisory/executive

Industrial relationsIndustrial relations

EmployeesEmployees

LegalLegal

Adversarial Adversarial

ModerateModerate

StableStable

Cost-effectiveness of Cost-effectiveness of workforceworkforce

Managerial, market and Managerial, market and HR utilisationHR utilisation

Individualist Individualist

ResourceResource

StrategicStrategic

EmployeeEmployee

Professionals Professionals

PsychologicalPsychological

Collaborationist/absentCollaborationist/absent

ContinuousContinuous

CompetitiveCompetitive

Investment in human Investment in human resourcesresources

Differences and Similarities between PM and HRMDifferences and Similarities between PM and HRM

Source: Farnham, 1990

4747

Criticism of HRMCriticism of HRM

- Old wine in new bottles? - Old wine in new bottles?

- Is it a case of the ‘emperor’s new clothes?- Is it a case of the ‘emperor’s new clothes?

- HRM equates to ‘Human Resource - HRM equates to ‘Human Resource Manipulator’?Manipulator’?

- HRM against or avoid trade union?- HRM against or avoid trade union?

4848

My Own Professional OpinionMy Own Professional Opinion

- I see it as a development of management- I see it as a development of management

- I agree with Legge (1995, p. 75)- I agree with Legge (1995, p. 75)

“ “[HRM is], in theory, a more central strategic [HRM is], in theory, a more central strategic management task than personnel management in management task than personnel management in that it is experienced by managers, as the most that it is experienced by managers, as the most valued company resource to be managed; it valued company resource to be managed; it concerns them in the achievement of business gaols concerns them in the achievement of business gaols and it expresses senior management’s preferred and it expresses senior management’s preferred organizational values”.organizational values”.

4949

An Organization with a An Organization with a Strong Commitment to HRMStrong Commitment to HRM - The firm competes on the basis of product quality and - The firm competes on the basis of product quality and

differentiation as well as pricedifferentiation as well as price

- Human resource considerations weigh heavily in - Human resource considerations weigh heavily in corporate strategic decision making and governance corporate strategic decision making and governance

processes. Employee interests are represented through processes. Employee interests are represented through the voice of the human resource staff professionals the voice of the human resource staff professionals

and/or employee representatives consult and participate and/or employee representatives consult and participate with senior executives in decision that affect human with senior executives in decision that affect human

resource policies and employee interests. In either case, resource policies and employee interests. In either case, employees are treated as legitimate stakeholders in the employees are treated as legitimate stakeholders in the

corporationcorporation

5050

An Organization with a An Organization with a Strong Commitment to HRMStrong Commitment to HRM

- Investments in new hardware or physical technology are - Investments in new hardware or physical technology are combined with the investments in human resources and combined with the investments in human resources and changes in organizational practices required to realise the changes in organizational practices required to realise the full potential benefits of these investmentsfull potential benefits of these investments

- The firm sustains a high level of investment in training, - The firm sustains a high level of investment in training, skill development and education, and personnel practices skill development and education, and personnel practices are designed to capture and utilise these skills fullyare designed to capture and utilise these skills fully

- Compensation and reward systems are internally - Compensation and reward systems are internally equitable, competitive and linked to the long-term equitable, competitive and linked to the long-term performance of the firmperformance of the firm

(con(con’’t)t)

5151

An Organization with a Strong An Organization with a Strong Commitment to HRMCommitment to HRM

- Employment continuity and security is an important - Employment continuity and security is an important priority and value to be considered in all corporate priority and value to be considered in all corporate decisions and policiesdecisions and policies

- Workplace relations encourage flexibility in the - Workplace relations encourage flexibility in the organization of work, empowerment of employees to organization of work, empowerment of employees to solve problems, and high levels of trust among solve problems, and high levels of trust among workers, supervisors and managersworkers, supervisors and managers

- Worker rights to representation are acknowledged and - Worker rights to representation are acknowledged and respected. Union or other employee representatives respected. Union or other employee representatives are treated as joint partners in designing and are treated as joint partners in designing and overseeing innovations in labour and human resource overseeing innovations in labour and human resource practices (Beaumont, 1995, p.40)practices (Beaumont, 1995, p.40)

(con(con’’t)t)

5252

Part-4: Part-4: Strategic Human Strategic Human Resource Management Resource Management

5353

Strategic Human Resource Strategic Human Resource Management (SHRM):Management (SHRM):

A pattern of planned human resource A pattern of planned human resource deployments and activities intended deployments and activities intended to enable an organization to achieve to enable an organization to achieve its goals (Noe, Hollenbeck, Gerhart & its goals (Noe, Hollenbeck, Gerhart & Wright, 2001, p.611)Wright, 2001, p.611)

5454

Strategic Human Resource:Strategic Human Resource:

The process of linking HR practices to business The process of linking HR practices to business strategy. Strategic HR is owned, directed, and used strategy. Strategic HR is owned, directed, and used

by line managers to make HR strategies happen. Line by line managers to make HR strategies happen. Line managers invest in the HR function through strategic managers invest in the HR function through strategic HR. Strategic HR creates a process for moving from HR. Strategic HR creates a process for moving from business strategy to organizational capability to HR business strategy to organizational capability to HR practice. HR planning often describes the processes practice. HR planning often describes the processes whereby business strategies results in HR actions. whereby business strategies results in HR actions. Strategic HR serves stakeholders of the business Strategic HR serves stakeholders of the business

(investors, customers, and employees) who want the (investors, customers, and employees) who want the business deliver results (Ulrich, 1997, pp.189-190)business deliver results (Ulrich, 1997, pp.189-190)

5555

The Process of Strategic The Process of Strategic Human Resource ManagementHuman Resource Management

(Noe, Hollenbeck, Gerhart & Wright, 2001, p.22)

Strategy Formulation Strategy Implementation

External AnalysisOpportunities Threat

Mission Goals Strategic Choice

Human Resource Needs Skills BehaviorsCulture

Internal AnalysisStrengths Weaknesses

Human Resources Practices Recruitment Job AnalysisTraining Job DesignPerformance Selection Management DevelopmentLabor Pay Structure Relations IncentivesEmployee Benefits Relations

Human Resource Capability Skills Abilities Knowledge

Human Resource Actions Behaviors Results (Productivity, Absenteeism, Turnover)

Firm Performance Productivity Quality Profitability

Emergent Emergent StrategiesStrategies

5656

Human Resource Strategy Human Resource Strategy Formulation:Formulation:

The process of deciding on a strategic The process of deciding on a strategic direction by defining a company’s mission direction by defining a company’s mission

and goals, its external opportunities and and goals, its external opportunities and threats, and its internal strengths and threats, and its internal strengths and

weaknesses (Noe, Hollenbeck, Gerhart & weaknesses (Noe, Hollenbeck, Gerhart & Wright, 2001, p.611)Wright, 2001, p.611)

5757

Human Resource Strategy:Human Resource Strategy:

-HR strategy refers to building an agenda for -HR strategy refers to building an agenda for the HR function. the HR function.

-HR strategy creates a purpose and focus for -HR strategy creates a purpose and focus for the HR function. the HR function.

-HR strategy serves HR professionals who -HR strategy serves HR professionals who want to add value to their business, and it want to add value to their business, and it defines the mission, vision, and priorities defines the mission, vision, and priorities of the HR function (Ulrich, 1997, p. 190)of the HR function (Ulrich, 1997, p. 190)

5858

The Process of Human Resource The Process of Human Resource Strategy FormulationStrategy Formulation

ExternalAnalysisOpportunities Threats

Mission Goals Strategic Choice

Internal AnalysisStrengthsWeaknesses

(Noe, Hollenbeck, Gerhart & Wright, 2001, p.24)

5959

Types of Human Resource Types of Human Resource Strategy Formulation ProcessStrategy Formulation Process

Afterthought/“Add-on” Integration Isolated

The focus is on business The focus is on business planning, with HR planning, with HR practices considered as an practices considered as an afterthought.afterthought.

The focus is on a synthesis The focus is on a synthesis of business and HR of business and HR planning.planning.

The focus is on HR The focus is on HR practices and how the HR practices and how the HR function can add value to function can add value to line business.line business.

Line managers own the HR Line managers own the HR discussions, with tangential discussions, with tangential involvement of HR involvement of HR professionals.professionals.

Line managers and HR Line managers and HR professionals work as professionals work as partners to ensure that an partners to ensure that an Integrated HR planning Integrated HR planning process occurs.process occurs.

HR professionals work on HR professionals work on the plan and present it to the plan and present it to line managers.line managers.

The outcome is a summary The outcome is a summary of HR practices required to of HR practices required to accomplish business plans.accomplish business plans.

The outcome is a plan that The outcome is a plan that highlights HR practices highlights HR practices that are priorities for that are priorities for accomplishing business accomplishing business results.results.

The outcome is an agenda The outcome is an agenda for HR function, including for HR function, including priority HR practicespriority HR practices

Approaches to Merging Strategic and HR Planning

Ulrich (1997, p.59)

6060

Motorola Human Resource Motorola Human Resource Strategic Formulation ProcessStrategic Formulation Process

- Identify the organizational unit and organize the - Identify the organizational unit and organize the workshopworkshop

- Prioritize the trends in the business environment- Prioritize the trends in the business environment - Specify the sources of competitive advantage and the - Specify the sources of competitive advantage and the

measurements for each source of competitive advantagemeasurements for each source of competitive advantage - Define the desired cultural capabilities together with the - Define the desired cultural capabilities together with the

behavioural expressions of these cultural capabilitiesbehavioural expressions of these cultural capabilities - Identify the HR practices that will have greatest influence - Identify the HR practices that will have greatest influence

on creating and sustaining the desired cultureon creating and sustaining the desired culture - Develop an overall implementation plan- Develop an overall implementation plan

Ulrich & Brockbank (2005, pp.152-153)

6161

Human Resource Strategy Human Resource Strategy Implementation:Implementation:

The process of devising structure and The process of devising structure and allocating resources to enact the allocating resources to enact the strategy a company has chosenstrategy a company has chosen

(Noe, Hollenbeck, Gerhart & Wright, 2001, p.611)

6262

Human Resource OrganizationHuman Resource Organization

-It is the process of diagnosing and improving an -It is the process of diagnosing and improving an HR function to deliver HR services. HR function to deliver HR services.

-It creates a process that ensures HR strategies -It creates a process that ensures HR strategies happen and, like HR strategy, it serves HR happen and, like HR strategy, it serves HR

professionals in adding values to their business.professionals in adding values to their business.

-HR organizations are investments by HR -HR organizations are investments by HR executives in HR professionalsexecutives in HR professionals

Ulrich (1997, p.190)

6363

Human Resource Strategy Human Resource Strategy Implementation Process:Implementation Process:

(Noe, Hollenbeck, Gerhart & Wright, 2001, p.53)

Human Resource NeedsSkills BehaviorsCulture

HR PracticesRecruitment Job AnalysisTraining Job DesignPerformance SelectionManagement DevelopmentLabor Pay StructureRelations IncentivesEmployee BenefitsRelation

Strategic Choice

Human Resource CapabilitySkillsAbilitiesKnowledge

Human Resource ActionsBehaviorsResults(Productivity, Absenteeism, Turnover)

Firm Performance Productivity Quality Profitability

Emergent Strategies

6464

The Case of Amoco CorporationThe Case of Amoco Corporation

Ulrich (1997, p.225)

External and External and Internal Internal

Environment Environment

• • New competitors (foreign national oils, well-heeled independents) New competitors (foreign national oils, well-heeled independents) • Weakened demand • Weakened demand • Loss of oligopolistic • Loss of oligopolistic control • control • Fewer “good opportunities” Fewer “good opportunities” • Decisions need to be faster and closer to the • Decisions need to be faster and closer to the material • Poor recent financial material • Poor recent financial performance • performance • Limited funds for reinvestment Limited funds for reinvestment • Declining productivity • Declining productivity • Domestically focused • Domestically focused businesses • businesses • Centralized decision making Centralized decision making • Strong technical skills • Strong technical skills

Operating Operating Strategy Strategy

• • Build better customer relationships Build better customer relationships • Better manage response to supply/demand • Better manage response to supply/demand cycles • Manage costs cycles • Manage costs through cost reduction and reengineering through cost reduction and reengineering • Increase investment outside North America • Increase investment outside North America • Use joint ventures to increase assets • Use joint ventures to increase assets with limited investment • Acquire and with limited investment • Acquire and divest assets to improve operating efficiencydivest assets to improve operating efficiency

Revised People Strategies Driven by Amoco Strategic Framework and Organizational Capabilities Required to Execute Business Strategies

6565

The Case of Amoco CorporationThe Case of Amoco Corporation

Ulrich (1997, p.225)

Organizational Organizational Capabilities Capabilities

• • Rapid consensus-building and decision-marking Rapid consensus-building and decision-marking • Effective negotiation and deal-making • Effective negotiation and deal-making • Investment/divestment • Investment/divestment opportunities identification • opportunities identification • Rapid deployment of resources Rapid deployment of resources • Rapid development of appropriate products and • Rapid development of appropriate products and services • Relentless focus on costs services • Relentless focus on costs • • Understand cost/value relationships Understand cost/value relationships • Create/sustain relationships • Integrate/manage • Create/sustain relationships • Integrate/manage cultural diversity • Understand/anticipate cultural diversity • Understand/anticipate customer requirements customer requirements

People Strategies People Strategies Strategy 1:Strategy 1: Improve Amoco’s organizational capability to act Improve Amoco’s organizational capability to act quickly and decisively (speed and agility).quickly and decisively (speed and agility).

Strategy 2:Strategy 2: Build and deploy critical people competencies Build and deploy critical people competencies (competence).(competence).

Strategy 3:Strategy 3: Increase the return on investment in people (cost Increase the return on investment in people (cost effectiveness). effectiveness).

(con(con’’t)t)

6666

Human Resource Strategy Human Resource Strategy Evaluation and ControlEvaluation and Control

- The last part of the strategic management model is - The last part of the strategic management model is the evaluation of performance and the control of the evaluation of performance and the control of

work activitieswork activities

- Control follows planning. It ensures that corporation - Control follows planning. It ensures that corporation is achieving what it set out to accomplishis achieving what it set out to accomplish

- Just as planning involves the setting of objectives - Just as planning involves the setting of objectives along with the strategies and programmes necessary along with the strategies and programmes necessary to accomplish them, the control process compares to accomplish them, the control process compares performance with desired results and provides the performance with desired results and provides the

feedback necessary for the management to evaluate feedback necessary for the management to evaluate results and take corrective action, as neededresults and take corrective action, as needed

Wheelen & Hunger (1990, p. 280)

6767

P&G Do and Review P&G Do and Review Monthly Model:Monthly Model:

““Do what we said we would do”Do what we said we would do”““Did we do it, is it working?”Did we do it, is it working?”Step 1:Step 1: Are we doing what we said we would do; if not Are we doing what we said we would do; if not why? If yes, look at targets vs. actual resultswhy? If yes, look at targets vs. actual resultsStep 2:Step 2: Do analysis to determine major cause for gap Do analysis to determine major cause for gap vs. targetvs. targetStep 3:Step 3: Make adjustments, if needed Make adjustments, if neededStep 4:Step 4: Make requests on decisions/resources needed Make requests on decisions/resources neededStep 5:Step 5: Summarize learning Summarize learning

6868

P&G Review and Adjust P&G Review and Adjust Quarterly Model:Quarterly Model:

Is it working?Is it working?

Step 1:Step 1: Review OGSM Review OGSM

Step 2:Step 2: Overview Action Plan and Overview Action Plan and

RationaleRationale

Step 3:Step 3: Review Plan vs. Results Review Plan vs. Results

Step 4:Step 4: Review Summary of Causes and Review Summary of Causes and

AdjustmentAdjustment

6969

HR Performance HR Performance Driver Measures (Sample)Driver Measures (Sample)

Becker, Huselid and Ulrich, 2001, p. 71

Access to business information to facilitate decision making

Adherence by the workforce to core values, such as cost consciousness

Average change in performance-appraisal rating over time

Change in employee mind-setClimate surveys Consistency and clarity of messages

from top management and from HRCustomer complaints/praiseCustomer satisfaction with hiring

process Degree of financial literacy among

employee

Extent to which HR is helping to develop necessary leadership competencies

Extent to which HR does a thorough job of pre-acquisition soft-asset due diligence

Extent to which HR leadership is involved early in selection of potential acquisition candidates

Extent to which HR measurement systems are seen as credible

Extent to which information is communicated effectively to employees

Etc.

7070

Part-5: Part-5: Case StudyCase Study

7171

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7373

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Part-6: Part-6: Questions and AnswersQuestions and Answers