STRATEGIC HUMAN RESOURCE MANAGEMENT

By : Prof. V.P.KAKKAR

TRADITIONAL HR Vs STRATEGIC HR

TRADIONAL HR STRATEGIC HR

RESPONSIBILITY HR STAFF LINE MANAGERS

FOCUS EMPLOYMENT RELATIONSHIP PARTNERSHIP WITH INTERNAL & COMPLIANCE WITH LAW & EXTERNAL CUSTOMERS

ROLE OF HR REACTIVE & TRANSACTIONAL PROACTIVE & TRANSFORMATIONAL

INITIATIVES SLOW & FRAGMENTED FAST,FLEXIBLE & INTEGRATED

TIME HORIZON SHORT TERM SHORT, MEDIUM & LONG TERM

CONTROL BUREAUCRATIC ORGANIC ( RULES,POLICIES, PROCEDURES) ( FLEXIBILITY,FEW RESTRICTIONS)

JOB DESIGN FOCUS ON SCIENTIFIC MGMT BROAD JOB DESIGN,GROUPS DIVISION OF LABOUR & TEAMS, CROSS FUNCTIONAL TRG

KEY INVESTMENTS PRODUCTS, TECHNOLOGY PEOPLE (KNOWLEDGE, SKILLS, ABILITIESACCOUNTABILITY COST CENTRE INVESTMENT CENTRE

EVOLUTION OF SHRM

PERSONNEL MGMT

HRM SHRM

. MECHANISTIC

. BUREAUCRATIC

. HIGH CENTRALISATION

. HIGH FORMALISATION

. LOW FLEXIBILITY

. PART OF ORGANIC ORG

. CROSS HIERARICAL & CROSS FUNCTIONAL TEAMS. DECENTRALISATION. LOW FORMALISATION. FLEXIBLE.

. CONVERGENCE BETWEEN

HRM & BUSINESS STRATEGY . PROACTIVE HRM . CONCERNED WITH ORGANISATIONAL EFFECTIVENESS & PERFORMANCE

INVESTMENT PERSPECTIVE OF HR(How best to invest in its people )

• RESOURCE BASED VIEW ( VRIO FRAMEWORK )

value , rareness , limitability & organization

• ENHANCING HUMAN CAPITAL

collective skills, knowledge & capabilities

• TRADITIONAL COST VIEW : HR related budget ( salaries, training etc.. )

STATEGIC VIEW : Employees as valuable investments

In knowledge economy : Knowledge is important (not goods, services or

technology ) for all economic activities.

• INVESTMENT IN HUMAN RESOURCES IMPORTANT for getting

competitive advantage to keep pace with changing technologies & processes• COST OF TRG & OTHER INVESTMENTS TO BE CONSTANTLY REVIEWED

AGAINST BENEFITS.• RISKS INVOLVED : Enhanced employability of employees that makes them more

desirables to competitors.

BARRIERS TO STRATEGIC HR• SHORT TEM MENTALITY/ FOCUS ON CURRENT PERFORMANCE Reason: No Long term view of investments. More focus on performance evaluation and compensation based on sort term.• INABILITY OF HR TO THINK STRATEGICALLY Reason: insufficient management training and segmented understanding of entire business• LACK OF APPRECIATION OF WHAT HR CAN CONTRIBUTE FROM STRATEGIC

PERSPECTIVE Reason : Seeing HR function as providing unnecessary bureaucracy• FUNCTIONAL MANAGERS SEEING THEMSELVES AS HR MANAGERS Reason : Concerned more with technical aspects of their areas than huma aspects.• DIFFICULTY IN QUANTIFYING MANY HR OUTCOMES REASON: Tendency towards programs that are quantifiable rather than developmental programs.• PERCEPTION OF HR ASSETS AS HIGH RISK INVESTMENTS THAN CAPITAL ASSETS. REASON: HR assets not owned by organizations. More investment in technology & information• DISINCENTIVES FOR CHANGE REASON: Strategic approach may call for drastic changes in system. Natural resistance is there

to change initiatives. So Risk is involved as these changes might fail MOST OF ABOVE BARRIERS ARE ROOTED IN CULTURE OF AN ORGANISATION ( Organizations history, values and management practices act as act as barriers to change

initiatives. Overcoming these barriers is the real challenge of STRATEGIC HRM )

RELATIONSHIP BETWEEN BUSINESSAND HR STRATEGIES

• THREE TYPES OF BUSINESS STRATEGIES ARE ADOPTED BY ORGANISATIONS: COST LEADERSHIP & DIFFERENTIATION

• HR STRATEGIES ARE OUTCOME OF GENERAL SHRM APPROACH• FOR WINNING A SUSTAINABLE GLOBAL COMPETITIVE ADVANTAGE, A

PERFECT STRATEGIC FIT IS REQUIRED TO BE CREATED BETWEEN BUSINESS STRATEGIES AND HR STRATEGIES

Following 5 types of strategic fits are generally adopted:BEST FIT APPROACH: Also called external fit or vertical integration with business

strategies. HR strategies should match stages of development of firm ie need for different types of people as well as diverse approaches towards investment in HUMAN CAPITAL.

FIT AS CONTIGENCY : HR approaches to ensure that internal practices of organization respond to external factors : market, skill availability etc.FIT AS AN IDEAL SET OF PRACTICES( BEST PRACTICE APPROACH) Identifying any organization as benchmark which has reputation for excellence and

copying its practices.FIT AS GESTALT : Emphasizes the importance of finding an appropriate combination of HR practices wrt business strategies.FIT AS BUNDLES (Configuration Approach) : Development and implementation of

several HR practices together so that they are interrelated and internally consistent. Each HR practice reinforces and complements the other. Also termed as internal fit oe Horizontal integration.

COMPETING APPROACHES AND MODELS

SHRM

FITPERSPECTIVE

FUNCTIONALPERSPECTIVE

ECONOMICPERSPECTIVE

TYPOLOGICALPERSPECTIVE

Human resources to be

Integrated withStrategic plg

Each functionalarea optimize performance wrtBusiness Strategy

To use Human Resourcesas distinguishableSource of competitiveadvantage

Use of 3 distinctHR Strategies. Inducement. Investment. Involvement

MACKENZIE’S 7S MODEL

STRATEGY

SKILLS

STRUCTURE

SHAREDVISION

STAFF

SYSTEMS

STYLE