Strategic HRM

109

Transcript of Strategic HRM

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What is strategy?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?

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Strategy isStrategy is Strategy is all these— it is perspective, position, plan, and pattern. Strategy is the bridge between policy or high-order goals on

the one hand and tactics or concrete actions on the other. Strategy and tactics together straddle the gap between ends

and means. strategy is a term that refers to a complex web of thoughts,

ideas, insights, experiences, goals, expertise, memories, perceptions, and expectations that provides general guidance for specific actions in pursuit of particular ends.

Strategy is at once the course we chart, the journey we imagine and, at the same time, it is the course we steer, the trip we actually make. Even when we are embarking on a voyage of discovery, with no particular destination in mind, the voyage has a purpose, an outcome, an end to be kept in view.

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MeaningMeaning

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

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definitions in usedefinitions in use Some of the definitions in use include the

following: – Strategy is that which top management does that is

of great importance to the organization. – Strategy refers to basic directional decisions, that is,

to purposes and missions. – Strategy consists of the important actions necessary

to realize these directions. – Strategy answers the question: What should the

organization be doing? – Strategy answers the question: What are the ends

we seek and how should we achieve them?

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What is strategic What is strategic management?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

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Competitive strategyCompetitive 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

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Stages in Strategic managementStages in Strategic management

Strategic analysis– Environmental analysis– Establish organizational direction

Strategy formulationStrategy implementationStrategic control

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Strategy & HRM ?Strategy & HRM ? – NEED FOR STRATEGIC HRM – NEED FOR STRATEGIC HRM

Physical assets are viewed as investments Can

– superior technology– Superior facility– Superior product

Bring about and more importantly sustain competitive advantage?

Physical facilities can be duplicated, cloned or reverse engineered and they no longer provide competitive advantage

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Strategy & HRM ?Strategy & HRM ? – NEED FOR STRATEGIC HRM – NEED FOR STRATEGIC HRM

Cost of employees as variable cost of production.– No formal recognition of human resource as a key

resource– No recognition of firms contribution to training– Cost of recruitment, training and replacement– ROI for investments in human resources

“maintainable advantage usually from outstanding depth in selected human skills, logistics capabilities, knowledge bases

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HRM – HRM – Changing times?Changing times?

Views of employees as cost center is changing Selection process Induction and training process Education Retention - negative impact of employee turn over

Compensation Innovation and learning – cost of un recorded knowledge

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strategic HRM strategic HRM

HRM is a strategic tool only if it contributes to the bottom line. The question is; Does it?– Forecasts of shifts in skill needs from manual

to cerebral– Human Resources needs to looked at from an

Investment perspective.

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Strategic analysis HRMStrategic 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

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Human resourcesHuman resourcesInvestment considerationsInvestment considerations

Management valuesRisk return on investmentsEconomic rationale for investment in

trainingUtility theory

– Outsourcing as an alternative to investment in Human resources

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Human resourcesHuman resourcesInvestment considerationsInvestment considerations

Management values Risk return on

investments Economic rationale for

investment in training Utility theory

– Outsourcing as an alternative to investment in Human resources

Values, Philosophies of management / senior managers.

Cost center– HR cost center– Replaceable resource

Investment– HR value adder– Critical resource

KEY personnel– Enhances human capital/

prevents depletion

BPL, Govt,Vs Infosys, Vs Reliance, TCS

Education, training, reward, promotion.

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Human resourcesHuman resourcesInvestment considerationsInvestment considerations

The employers do not own the resource in which they have invested.

Returns must be great enough to overcome the risks

Cash outlays to maintain no layoff policy, the benefits are not easily quantified

Incur costs in short run for long term strategic benefit.

– Flexible committed work force– Better organizational culture

Reliance communication Bond money

Management values Risk return on

investments Economic rationale for

investment in training Utility theory

– Outsourcing as an alternative to investment in Human resources

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Human resourcesHuman resourcesInvestment considerationsInvestment considerations

Human capital theory– Empr Not to bear the cost of Gen

training as the employees transfer skills developed at employers expense.

General training – OJT, Tuition fee reimbursement– Recoup cost of general training

[loyalty, flexibility] Specific training Employee related

– Cost of mobility, relocation, residence, children's education and other psychological issues,

– new salary lower/ greater LAY OFF

Management values Risk return on

investments Economic rationale for

investment in training Utility theory

– Outsourcing as an alternative to investment in Human resources

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Human resourcesHuman resourcesInvestment considerationsInvestment considerations

Utility of each HR activity [attempts to determine economic value of human resource programs activities and procedures]

– Recruitment process Employee with higher

productivity– Performance appraisal

Return on output Return on sales

– Advt, training, special roles,

Management values Risk return on

investments Economic rationale for

investment in training Utility theory

– Outsourcing as an alternative to investment in Human resources

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Human resourcesHuman resourcesInvestment considerationsInvestment considerations

Where world class capabilities and strategic advantage cannot be developed.

The resources devoted to perform the service internally is greater than those needed when outsourced

Excessive dependence on suppliers can be avoided.

Salary, executive search, HRIS, Benefits administration etc are outsourced

Key areas viz., performance appraisal, employee relations and labour relations are retained by companies.

Management values Risk return on

investments Economic rationale for

investment in training Utility theory

– Outsourcing as an alternative to investment in Human resources

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Investments in training and Investments in training and developmentdevelopment

Investments in employability– Who moved my cheese?/ Jack Welch –

• the building was still standing , but the people were gone.

– Employers have responsibility to ensure they are getting the best results from each employee before terminating them. (the employer will have to coach, counsel and train the employee and also take advantage of the same.

Current practices– OJT– MDP– Prevention of skill obsolescence M,NC, CNC/ soft wares domain / telecommunication

– Reduction of career plateauing narayan murthy / VRS, golden hand shake/

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Investment practices for improved retentionInvestment practices for improved retention Organizational cultures emphasizing interpersonal

relationship values Effective selection procedures Compensation and benefits Job enrichment and job satisfaction Practices providing work life balance Organizational direction creating confidence in

the future Retention of technical employee Other practices in facilitating retention

– Opportunities for training, growth, new learning, liberal transfer policies

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Investments in job-secure work forcesInvestments in job-secure work forces Recognition of the costs of downsizing and lay offs

– Bumping less senior employees Reduced productivity Cost of training the incumbent, wage supplement

– Costs relating to termination of employees Separation payments, higher rates for unemployment

compensation, Depletion of the firms investment in training employees.

– Administrative costs Human resource processing activities, Clerical expenses, cost

of conducting medical examination of laid off employees, increased supervisory obligations for managers of reassigned employees.

– Intangible costs Morale, disruption of efficiencies in work processes,

Accidents, Depletion of goodwill, irregular age distribution

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Investments in job-secure work forcesInvestments in job-secure work forces

Avoiding business cycle-based layoffs Alternatives to layoffs

– When down turn is of short duration– Block / shut off inflow of personnel into the organization –

attrition brings down the cost– Redeployment of current employees– Curtailment of sub contractors and reallocate the work to

permanent employees– Sharing of economic loss – wipro– Fewer work days

Employment guarantees The work effort and job security relationship

– The less secure the greater is the flexibility and productivity

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Ethical implications of employment Ethical implications of employment practicespractices

Job securityPerformance pressures CompensationWork environment

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Non-traditional investment Non-traditional investment approachesapproaches

Investment in (disabled) Differently-abled employees

Investments in employee healthCountercyclical hiring – technical personnel .

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ExerciseExercise = Identify the type of investment = Identify the type of investment

Employment security Self-managed teams and decentralization of decision-

making Extensive training and development Continuous improvement HR programs Reduced status distinctions and barriers Sharing of financial and performance information Trust between management and employees at all

organizational levels Communication in global markets Efficient and effective use of new information technologies

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ECC recognises that people are the real source of competitive advantage.  It is through people that ECC delivers total customer satisfaction. An extensive and rigorous recruitment process ensures quality induction.  L&T's Graduate Engineer Trainee recruitment process covers India's major engineering colleges and institutions.  Programmes, plant visits and comprehensive information-sharing facilitate induction.

The basic principles of ECC's Human Resources policies include Recruitment based solely on merit by following well-defined and

systematic selection procedures without discrimination  Sustain motivated and quality work force through appropriate and fair

performance evaluation, reward and recognition systems  Identify training needs within the Organisation and design and implement

those need based training programmes resulting in continuous upgradation of knowledge, skills and attitudes of the employees 

Maintain a quality Human Resource Management System to meet the international standards as per ISO 9001. Plan, design, train, equip and motivate the department staff to meet this standard of expectation.

ECC's Work Culture Work culture emphasises:· Freedom to experiment· Continuous learning and training · Transparency· Quality in all aspects of work· Rewards based on performance and potential

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Stages in Strategic managementStages in Strategic management 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

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The human resource The human resource environment environment

Global changes– WTO, GATT, EU, G&, G10 etc.

Boarders and barriers E-commerce, M-commerce Emerging markets, new markets. Technology Demography Culture

Etc….– The imperative >>‘HR focus’

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The human resource environment The human resource environment -General environment-General environment

Technology and organisational structureWorker values and attitudinal trendsManagement trendsDemographic trendsTrends in utilisation of human resourcesInternational developments

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The human resource environment The human resource environment -General environment-General environment

Technology and organisational structure

Worker values and attitudinal trends

Management trends Demographic trends Trends in utilisation of

human resources International

developments

Influence of technology HRIS Redeployment of HR staff to

operating units New organisational structures

(Short / accountability)– Unbounded corporations– Virtual corporations /

networked organisations– Cellular organisations/guilds – Respondent organisations/

supply niche components Stimulus for entrepreneurial

business

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The human resource environment The human resource environment -General environment-General environment

Technology and organisational structure

Worker values and attitudinal trends

Management trends Demographic trends Trends in utilisation of

human resources International

developments

Ethical/moral issues (older generation blaming

younger generation) Time spent on work/ leisure Work enjoyment / satisfaction /appeals Loyalty of employees

– Location near / far Age

– Younger no loyalty and expect none

– New employee Perception before joining and after joining the job (extrinsic to intrinsic)

(image, induction and orientation, socialization process)

Emphasis on core values, cultures, family, social service)

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The human resource environment The human resource environment -General environment-General environment

Management of diversity Work teams Virtual teams Human resource outsourcing Open book management TQM Integrated manufacturing Reengineering Management of professionals Managing of aftermath of Mrg

& Aqui

Technology and organisational structure

Worker values and attitudinal trends

Management trends Demographic trends Trends in utilisation of

human resources International

developments

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The human resource environment The human resource environment -General environment-General environment

Aging work force (HMT)

Baby boom-US, China Labour Shortages Racial diversity Occupational

distribution for women Dual career couples

Technology and organisational structure

Worker values and attitudinal trends

Management trends Demographic trends Trends in utilisation of

human resources International

developments

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The human resource environment The human resource environment -General environment-General environment

Telecommuting / working from home

Relocation from work Growing use of

temporary and contingent workers

Employee leasing

Technology and organisational structure

Worker values and attitudinal trends

Management trends Demographic trends Trends in utilisation of

human resources International

developments

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The human resource environment The human resource environment -General environment-General environment

NAFTA EU GATT WTO G7

Technology and organisational structure

Worker values and attitudinal trends

Management trends Demographic trends Trends in utilisation of

human resources International

developments

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The human resource environment The human resource environment -Legal environment-Legal environment

An overview of Industrial Relations Climate Emerging trends and paradigm shifts towards

Employee Relations Employee Relations Policy Implications of:

– Employment Related Legislations – Payment Related Legislations – Social Security Related Legislations – Welfare Related Legislations

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The human resource environment The human resource environment -Legal environment-Legal environment

Equal employment opportunity for women.– Age, gender discrimination, promiscuous gender based

harassment. Promiscuity, Dealing with incidences, pregnancy discrimination, Disability discrimination, Religious discrimination, Reservations and protection, health care benefits, family and medical leave.

Employee relations– Negligent hiring, immigration, Employment at will, Drug testing,

Safety Labour relations and collective bargaining. Emerging issues Strategic impact of the legal environment

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Labour Legislations in IndiaLabour Legislations in India The Apprentices Act, 1961 The Bonded Labour System

(Abolition) Act, 1976 The Child Labour (Prohibition &

Regulation) Act, 1986 The Children (Pledging of Labour)

Act, 1933 The Contract Labour (Regulation &

Abolition) Act, 1970 The Employees Provident Funds and

Misc. Provisions Act,1952 The Employees State Insurance Act,

1948 The Employers Liability Act, 1938 The Employment Exchange

(Compulsory Notification of Vacancies) Act, 1959

The Equal Remuneration Act, 1976 The Factories Act, 1948 The Workmen's Compensation Act,

1923 The Weekly Holidays Act, 1942

The Industrial Disputes Act The Industrial Employment

(Standing Orders) Act,1946 The Inter-state Migrant Workmen

(Regulation of Employment and Conditions of Service) Act, 1979

The Labour Laws (Exemption from Furnishing Returns & Maintaining Registers by Certain Establishments) Act, 1988

The Maternity Benefit Act, 1961 The Minimum Wages Act, 1948 The Payment of Bonus Act, 1965 The Mines Act,1952 The Payment of Gratuity Act, 1972 The Payment of Wages Act, 1936 The Sales Promotion Employees

(Conditions of Service) Act, 1976 The Shops and Establishments Act,

1953 The Trade Union Act, 1926

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Labour legislationsLabour legislations

The term `labour legislation’ is used to cover all the laws which have been enacted to deal with “employment and non-employment” wages, working conditions, industrial relations, social security and welfare of persons employed in industries.

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Need for labour legislation in India:Need for labour legislation in India: Organized industry in a planned economy calls for the

spirit of co-operation and mutual dependence for attaining the common purpose of greater, better and cheaper production. Since this has not been happening voluntarily, the need for State intervention.

The need for labour legislation may be summarized as under:– Necessary for the health, safety, and welfare of workers;– Necessary to protect workers against oppressive terms as

individual worker is economically weak and has little bargaining power;

– To encourage and facilitate the workers in the organization;– To deal with industrial disputes;– To enforce social insurance and labour welfare schemes.

In India, labour legislation is treated as an arm of the State for the regulation of working and living conditions of workers.

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Principles of labour legislationPrinciples of labour legislation Social Justice: Social Equity Standards in terms of living, position in

society etc. of the working population. National Economy International Uniformity

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Principles of labour legislationPrinciples of labour legislation Social Justice: Social Equity Standards in terms of living,

position in society etc. of the working population.

National Economy International Uniformity

– The essence of democracy is ensuring social justice to all sections of the community.

– This demands the protection of those who cannot protect themselves.

– In modern industrial set-up, workers, left to themselves, are unable to protect their interest.

– Therefore, the State has to intervene to help them by granting them freedom of association, the power of collective bargaining and by providing for mediation or arbitration in the case of industrial conflict.

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Principles of labour legislationPrinciples of labour legislation Social Justice: Social Equity Standards in terms of living,

position in society etc. of the working population.

National Economy International Uniformity

Legislation based on this principle provides for achievement of definite standards.– EQUAL REMUNERATION

ACT– Specific provisions of law

– such as in factories act– Work timings– Work environment– Dangerous machines act

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Principles of labour legislationPrinciples of labour legislation Social Justice: Social Equity Standards in terms of living,

position in society etc. of the working population.

National Economy International Uniformity

These standards for the working class can be achieved by bringing about changes in the Law of our land.– Power to change the

Law is exercised by the government.

– Existing laws may be amended to meet the changed standards.

ESI EPF Minimum wages

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Principles of labour legislationPrinciples of labour legislation Social Justice: Social Equity Standards in terms of living,

position in society etc. of the working population.

National Economy International Uniformity

Measures have to be provided through legislation to:– Ensure normal growth

of industry for the benefit of the nation as a whole

– Satisfy the physical and intellectual needs of the citizens

– Ensure the growth of industrial efficiency such as to adjust the wage system with a view to increase the productivity and prosperity of the workers

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Principles of labour legislationPrinciples of labour legislation Social Justice: Social Equity Standards in terms of living,

position in society etc. of the working population.

National Economy International Uniformity

ILO Since its inception, securing minimum standards (for the working population – worldwide) on a uniform basis in respect of all labour matters has been the main objective of ILO.o To this end, conventions are passed at the conferences of ILO.– As a member of the ILO,

adopting these conventions would require appropriate legislation to be brought about.

– The influence of international labour conventions has been significant in shaping the course of labour legislation in India.

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Legal environmentLegal environment- Bench mark- Bench mark

Obey the Law. Law is society’s codification of right and wrong; Play by the rules

• It is important to perform in a manner consistent with expectations of government and the law.

• It is important to comply with various national and supra-national laws and regulations.

• It is important to be a law-abiding corporate citizen. • It is important that a successful firm be defines as one that fulfils

its legal obligations. • It is important to provide goods and services that at least meet

the minimal legal requirements.  

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Strategy formulationStrategy 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?

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Strategy formulation processStrategy 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

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Competitive strategy in Business Competitive strategy in Business UnitsUnits

Periodic forward scanning Analysis based on longer time frame Communication about goals and resource allocation Framework for short-term plan evaluation and

integration Decisional criteria framework for short term decision

making PLANNING IN SBU’S

– Base strategy will be integrated with functional specializations to exploit the opportunity seen by the strategy and achieve the goals.

– Low cost leadership, differentiation, niche

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Value Chain AnalysisValue Chain Analysis Primary

activities– Inbound logistics– Operations– Outbound

logistics– Marketing and

sales– Service

Secondary Activity– Procurement – Human

Resource Management

– Technology Development

– Infrastructure

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Steps in Value Chain Steps in Value Chain AnalysisAnalysis

Value chain analysis can be broken down into a three sequential steps:1. Break down a market/organisation into its key

activities under each of the major headings in the model (primary activities / secondary activities)

2. Assess the potential for adding value via cost advantage or differentiation, or identify current activities where a business appears to be at a competitive disadvantage;

3. Determine strategies built around focusing on activities where competitive advantage can be sustained

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HR strategy ?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”

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SHRM concernSHRM 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

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Strategic HRMStrategic HRM (IMPORTANCE) (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

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Benefits of SHRMBenefits of SHRM1. 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

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HRM Practices

Firm strategy Institutional / Political forces

HR Capital pool(Skills, abilities)

HR behaviorsFirm level outcomes

(performance, satisfaction,

absenteeism etc)

Resource based view of the firm

Cybernetics

Agency/transaction costs

Resource dependence institutional

Behavioral approach

Theoretical frame work of SHRM

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Theoretical frame work of SHRM Strategy driven

– Resource based view Competitive advantage based on unique allocation of resources {selection

/Compensation package} (TCS)– Behavioral view

Control and influence the behaviors of individuals (Infosys)– Cybernetics systems

Adoption or abandonment of practices based on feedback on contributions to strategy (Bosch – MICO)

– Agency/transactions cost view Use of control systems, performance evaluation and reward systems etc

– (In the absence of performance evaluation strategy may not be pursued)

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

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International strategyInternational strategy

Multinational, global and transnational strategies

Strategic alliancesSustainable global competitive advantageGlobally competent managersLocation of production facilities

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Human resource contributions Human resource contributions to strategyto strategy

Environmental scanning and competitive advantage

Implementation of resource reallocation decisions Slide >

Lead time for dealing with labour shortages.

..

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Industry matrix

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Other issuesOther issues Strategy driven role behaviors and practices

– Innovation – cooperation, group oriented, long term appraisal system, generalized skill development, broad career path, compensation approaches accentuating internal equity flexible compensation packages including stock ownership

– quality enhancement- employment security guarantees. Extensive training programs, participative decision making (process orientation)

– cost reduction – performance evaluation system emphasizing results in the short term. Virtually no training programs, very specialized jobs, narrow specialized career jobs,Procedure for continual tracking of wage rates in the labour market.

Strategic human resource activity typology– Relational : transactional $ High : low strategic value Slide >

Classifying human resource types Jeffrey sonnenfeld and Maury peiperl Slide Miles and snow: Defenders, prospectors, analyzers and reactors

Network organization and strategy Integration of strategy and human resource planning

– Evolution of strategy and human resource planning integration. Evolution of linkages between Strategic business planning and HRM

– Administrative linkage, one way – HR is involved in implementation, two way- involved HRM and strategic business plans, integrated– Determinants of integration

Conditions under which determinants may not be appropriate.

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HUMAN RESOURCE ACTIVITY TYPOLOGY

Staffing planningBenefits of planningRetirement planningCompliance

Performance enhancementConsultingEmployee relationsLabour negotiationsExecutive compensationEmployee developmentManagement developmentRecruitment interviewing

< IMPORTANT TO EXECUTIVES >PayrollBenefits administrationRetirement administrationEmployee recordsRelocation administrationRecruitment information processing

< IMPORTANT TO EMPLOYEES >

Recruitment information processingEmployee assistance programs

Strategic value of activity

Low

High

RelationshipTransactional Type of HR activityBack

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Classifying human resource types *Classifying human resource types *BACK

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Benefits of integrating HRP with Strategic Benefits of integrating HRP with Strategic planningplanning

Generates more solutions to complex organizational problems

Ensures consideration of human resources in organizational goal setting process

Ensures consideration of human resources in assessment of organizational abilities to accomplish goals and implement strategies

Reciprocal integration prevents strategy formulation based on personal rigidities/preferences

Facilitates concurrent consideration of strategic plans and managerial succession.

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Strategic components of HRM Strategic components of HRM relevant to internal fitrelevant to internal fit

Management awarenessManagement of the functionPortfolio of programsPersonnel skillsInformation technologyAwareness of the environment

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HR Practitioners Role HR Practitioners Role The HR managers have keen role in the effective planning and

implementation of the policies and decisions that in tune with the business changes. – They should act as strategic partners and be proactive in their role than mere

reactive, passive spectators.– The HR managers should understand how far their decisions contribute to

business surplus incorporating human competency and performance to the organisation.

– Strategic HR managers need a change in their outlook from seeing themselves as relationship managers to strategic resource managers.

Kossek (1987, 1989) argues that major HRM innovations occur when senior management takes the lead and adoption of innovative SHRM practices is dependent on the nature of relationship of the HR Department with the CEO and the line managers.

Legge (1978) commenting on the actions of the personnel practitioner in the innovation process suggests that adoption of an innovation by an organization depends largely on HR practitioners' credibility with information and resource providers.

– HR Department and HR managers in these innovative organizations play a strategic role (Ulrich, 1997) linking the HR strategy with the business strategy of the organization.

– A crucial aspect concerning SHRM is the concepts of fit and flexibility. The degree of fit determines the human resource system's integration with organization strategy.  It is the role of HR Managers to ensure this fit in between Human Resource System with the Organization Strategy.

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Requirements for SHR-ManagersRequirements for SHR-Managers

Information management skillsPlanning skillsManagement skillsIntegration skillsChange management skills

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Human resource planningHuman resource planning

Strategic role of HRPOver view of HRPManagerial issues in planningSelecting forecasting techniqueForecasting the supply of human resourcesForecasting the demand for human

resources

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Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Developmental planning for strategic leadership

Assessment of strategic alternatives

Adding value Contribution to strategic

human resource management

Strategic salary planning.

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Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Steps in HRP– Interfacing strategic planning and

scanning the environment– Taking an inventory of the companies

current human resources.– Forecasting the demand for human

resources– Forecasting the supply of human resources

both from within the organization and from the external labor market

– Comparing the forecast of demand and supply

– Planning the actions needed to deal with anticipated shortages or overages

– Feeding back such information into the strategic management process

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Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Planning in a context of change

Responsibility for human resource planning

Failure to plan for human resources

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Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Personal implications Changing receptivity

towards planning– Stricter legislations for

lay off etc Other issues

– Mind set of work force and related actions.

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Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Purpose of planning Organisational

characteristics Industry characteristics Environmental turbulence Other consideration

– Technique of forecasting– Cost– Accuracy

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Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Replacement charts Mgr posi

Human resurce inventories Succession planning Markov analysis …. Renewal models

age cohorts, internal mobilization

Computer simulation Regression analysis Trend extrapolation

– Utilisation of supply forecasting techniques

Page 77: Strategic HRM

Human resource planningHuman resource planning Strategic role of HRP Over view of HRP Managerial issues in

planning Selecting forecasting

technique Forecasting the supply of

human resources Forecasting the demand

for human resources

Heuristics, Rule of thumb and the Delphi technique

Operations research and management science technique

Regression analysis– Utilisation of demand

forecasting technique– Trend extrapolation

Page 78: Strategic HRM

Markov analysis Markov analysis back

Distribution of employees in time

Job 1 27 .66 .11 .09 .03 .02 .09Job 2 41 .15 .60 .08 .06 .01 .10Job 3 55 .03 .08 .55 .13 .10 .11Job 4 64 .00 .09 .18 .54 .03 .16Job 5 73 .00 .08 .10 .17 .45 020

260 26 44 55 57 41 37Job 1 Job 2 Job 3 Job 4 Job 5 exit

Page 79: Strategic HRM

Strategy formulation processStrategy 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

Page 80: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Efficient utilization of human resourcesDealing with employee shortagesSelection of employeesDealing with employee surpluses

Page 81: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Cross training and flexibility in assigning work

Using work teams– Requirements for effective

teams Forming Storming Norming performing

Operating on a non union basis

Page 82: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Strategic recruiting Special recruiting for

minorities and women workers

Flexible retirement as a source of labour

Managing vendors of outsourced functions

Page 83: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Managing vendors of outsourced functions

– Making the outsourcing decision

– Selecting and negotiating with outsourcing vendors

– Managing the outsourcing transactions

– Managing vendor relationships

– Monitoring and evaluating vendor performance

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Page 84: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Reliability and validity– Predictive validity– Concurrent validity– Content validity

Job analysis KSA

Interviews Behavioural interviews Testing Assessment centres

Page 85: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Redeployment and retraining

Early retirement Retreat from

employment security policy

Downsizing and layoffs

Termination strategies

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Page 86: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Downsizing and layoffs– Findings

Co are not well prepared 6 months to 1 year co indicators

do not improve –profits, ROI, Stock prices, expense ratios

Survivors syndrome Myth of job security exploded

(Who moved my cheese) Sustained improvement can be

brought about only with improvements in productivity, quality and effectiveness and integrate reductions in head count with planned changes in the way the work is designed.

Downsizing in not a one time quick fix solution to enhance competitiveness. –is a part of continuous improvement.

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Page 87: Strategic HRM

Strategy implementationStrategy implementationwork force utilization and employment practiceswork force utilization and employment practices

Downsizing and layoffs– Guide lines for conduct of layoffs

Give early warnings / announcements of layoffs

Soften the impact with compensation and benefits

Utilise the services of outplacement firms

Supply retraining services Provide equitable and decent

treatment to laid off employees Ensure supportive treatment of

survivors Maintain a cooperative approach

with unions Uphold obligation to the

community

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses

Page 88: Strategic HRM

Special implementation Special implementation challengeschallenges

Career path for technical professionalsDual career couplesStrategy implementation system – Reward

and development systems Strategically oriented performance management

system Strategically oriented compensation systems Employee development

Page 89: Strategic HRM

Strategy implementation system Strategy implementation system – Reward and development systems– Reward and development systems

Performance measurement approaches

– MBO– Graphic scale rating– Narratives– BARS– Behavioral observation scales– 360 –degree feedback

Performance evaluation of executives

Effectiveness of performance measurement.

YOU GET WHAT YOU MEASURE, YOU MEASURE WHAT YOU VALUE, YOU CAN NOT CONTROL WHAT YOU CANNOT MEASURE.

Strategically oriented performance management system

Strategically oriented compensation systems

Employee development

Page 90: Strategic HRM

Strategy implementation system Strategy implementation system – Reward and development systems– Reward and development systems

Strategically oriented performance management system

Strategically oriented compensation systems

Employee development

Traditional compensation systems

– Job analysis > job evaluation > salary/wage hierarchy

Point system Factor comparison system Hybrid system

– Internal equity– > Wage surveys to establish

external equity.

Page 91: Strategic HRM

Strategy implementation system Strategy implementation system – Reward and development systems– Reward and development systems

Traditional compensation systems

– Inadequacies Wage for know-how not

given Compensated for specific

job only Impact of collective

bargaining on wage structures.

Does not work well with managers and professionals

Strategically oriented performance management system

Strategically oriented compensation systems

Employee development

Page 92: Strategic HRM

Strategy implementation system Strategy implementation system – Reward and development systems– Reward and development systems

Skill based pay Broad banding Team based pay Variable compensation Executive

compensation

Strategically oriented performance management system

Strategically oriented compensation systems

Employee development

Page 93: Strategic HRM

Strategy implementation system Strategy implementation system – Reward and development systems– Reward and development systems

Strategically oriented performance management system

Strategically oriented compensation systems

Employee development

Training programs Training methods Apprenticeships Management development Management development

for international assignments Product life cycle and

managerial fit– PLC, Evolutionary stage >

Steady state– Development Vs selection

Page 94: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Individual high performance practices Limitations of individual practices Evolution of practices Systems of high performance human resource

practices Individual best practices Vs systems of practices Universal practices Vs contingency perspectives

Page 95: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Seven management practices that enhance performance –Jefrey Pfeffer1. Employment security2. Selective hiring of new personnel3. Self managed teams and

decentralization of decision making as basic principle of org design

4. Comparatively high compensation on organizational performance

5. Extensive training6. Reduced status distinctions and

barriers 7. Extensive sharing of financial and

performance information.

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Page 96: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Compensation– High compensation linked to organisational

performance– Incentive based compensation– Profit sharing– Team based compensation

Diversity Employment

– Countercyclical hiring, downsizing, early retirement programs, employment security, human resource outsourcing.

Industrial relations– Decertification of union

bargaining agent– Positive labour relations– Strikes, lockouts

Internal labour market

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Page 97: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

motivation – Decentralized decision

making– Self managed teams– Open book management– Reduced status differentials

or symbolic egalitarianism Performance management Staffing

– Cognitive tests, staffing selectivity, CEO succession insider outsider, yield analysis of recruiting sources

Training

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Page 98: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Each practice has a different kind of impact on individual workers – if possible to address at individual levels the same may be done.

Results of studies that give positive or negative indication can not be taken as absolute

Page 99: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

HR practices are path dependant. They consist of policies that are developed over time and cannot be simply purchased in the market by competitors.

Page 100: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Has positive impact Commitment oriented systems

– Decentralized decision making, general training, Highly skilled employees, High wages - bonuses

Human capital enhancement– Comprehensive training, BARS,

Technical and problem solving skills, selective staffing

Human resource administrative system– Hourly pay, individual equity,

individual incentive, result based performance appraisal

Motivation and commitment system– Receptiveness to new training,

compensation contingent on firms performance, extent of status differentials

Skills and organizational structures– Attitude survey, access to grievance

procedures, formal job anasysis, info sharing

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Page 101: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Mxed evidence and response

– Some individual practices have had positive impact

– Systems of practices have both

Adoption Implementation fit

Page 102: Strategic HRM

The performance impact of The performance impact of human resource practiceshuman resource practices

Individual high performance practices

Limitations of individual practices

Evolution of practices Systems of high performance

human resource practices Individual best practices Vs

systems of practices Universal practices Vs

contingency perspectives

Have their own applicability

– Evidence for success of both

– Greater evidence for contingency

Page 103: Strategic HRM

Human Resource EvaluationHuman Resource Evaluation

Overview of evaluationApproaches to evaluationPrevalence of evaluationEvaluating strategic contributions of

traditional areasEvaluating strategic contributions in

emerging areas

Page 104: Strategic HRM

Human Resource EvaluationHuman Resource Evaluation Overview of evaluation Approaches to evaluation Prevalence of evaluation Evaluating strategic

contributions of traditional areas

Evaluating strategic contributions in emerging areas

Scope of evaluation Strategic impact Level of analysis Criteria Level of constituents Ethical dimensiona

Page 105: Strategic HRM

Human Resource EvaluationHuman Resource Evaluation Overview of evaluation Approaches to evaluation Prevalence of evaluation Evaluating strategic

contributions of traditional areas

Evaluating strategic contributions in emerging areas

Audit approaches Analytical approaches Quantitative and

qualitative measures Balance scorecard

perspective Benchmarking Industry influences

Page 106: Strategic HRM

Human Resource EvaluationHuman Resource Evaluation Overview of evaluation Approaches to evaluation Prevalence of evaluation Evaluating strategic

contributions of traditional areas

Evaluating strategic contributions in emerging areas

Little Results not revealed

Page 107: Strategic HRM

Human Resource EvaluationHuman Resource Evaluation Overview of evaluation Approaches to evaluation Prevalence of evaluation Evaluating strategic

contributions of traditional areas

Evaluating strategic contributions in emerging areas

HRP Staffing Training Performance evaluation

systems Compensation systems Utility analysis labour and employee

relations

Page 108: Strategic HRM

Human Resource EvaluationHuman Resource Evaluation Overview of evaluation Approaches to evaluation Prevalence of evaluation Evaluating strategic

contributions of traditional areas

Evaluating strategic contributions in emerging areas

Equal employment opportunity and management of diversity

Quality readiness

Page 109: Strategic HRM