Strategic Human resources Management An Overview

Strategic Human resource Management Chapter 1Instructed by: Dina Shafiey

Ground Rules

ContactsLateness and break timesAbsenteeismAssignmentsText BookAssessmentsFinal Exam and Team presentationProcess in Brief

AgendaChapter 1 Learning objectivesIntroductionStrategy and Strategy MakingStrategic Management and its links to HRMThe resource-based view of organization and its links to HRM1 Strategy and human resource management Learning OutcomesBy the end of this chapter you should be able to: Define the term strategy.Describe and evaluate a range of approaches to strategy making.Analyze links between different approaches to strategy and human resource management (HRM).Understand the significance of strategic integration to explore links between strategy and HRM and its multi-dimensional nature.Analyze the resource-based view of the organization and describe key concepts related to this approach.Describe and evaluate links between resource-based theory and HRM.

AgendaChapter 1 Learning objectivesIntroductionStrategy and Strategy MakingStrategic Management and its links to HRMThe resource-based view of organization and its links to HRMIntroductionSHRM is concerned with the relationship between the organization's strategic management and the management of its human resources

Strategic management focuses on the scope and direction of an organization

Figure 1.1 Mapping the strategy and human resource management territory: a summary diagram of the chapter contentIntroduction (Contd)What is Strategy?How is Strategy formed?

AgendaChapter 1 Learning objectivesIntroductionStrategy and Strategy MakingStrategic Management and its links to HRMThe resource-based view of organization and its links to HRMStrategy and Strategy Making4 Approaches to strategy and strategy making ( by Mintzberg, 1998)Classical ApproachEvolutionary ApproachProcessual ApproachSystemic Approach

Classical ApproachDeveloped as a theoretical discipline in the 1960sEmphasis strategy as being:RationalDeliberateLinear Top-down processClassical Approach (Contd)This process involves a number of strategic planning steps including:Analyzing organization's environment and its internal resourcesIdentifying and evaluating strategic optionsImplementing chosen strategy Classical Approach (Contd)A range of techniques and tools usedSWOT analysis has been used widelyThese techniques leads senior managers to identify a range of strategic options to choose the future organization strategyThe goal is to achieve competitive advantage over competitors or to produce organizational effectiveness

Evolutionary Perspectives Advocates see organization and its managers as being subordinates to the external environment, with managements role as one of reacting to environmental forces.

Managements role is to match strategy to these external forces.Processual ApproachIdentifies strategy as an adaptive and emergent process, driven by learning in an organization.

The formulation and implementation of strategy become more integrated.

Strategies are formed through action.Processual Approach (Contd)Evaluating the processual approach:Emergent strategy making emphasizes Learning,Deliberate strategy emphasizes control (Classical approach seeks to emphasize management control over strategy)The role of organizational leaders to develop an approach to strategic management that exercises control while facilitating learning.Systemic PerspectivesBased on the belief that strategy and strategy making will be affected by the Social and Cultural system within which this occursSystemic Perspectives (Contd)Evaluating the systemic approach:Just as it is important to recognize that there will be variations to strategy formation within a particular country, the systemic approach recognizes that there will be differences related to cultural grounds between societies, thereby invalidating the idea of any universalistic model of strategy formulation.AgendaChapter 1 Learning objectivesIntroductionStrategy and Strategy MakingStrategic Management and its links to HRMThe resource-based view of organization and its links to HRMStrategic Management and its links to HRMDifferent approaches to strategic management impact the formation of HR strategy

To be strategic HRM needs to demonstrate a two-way link to strategy. HRM will be informed by organizational strategy as well as helping to shape the nature of this strategy.Classical approach to strategy making and HRMThis model follows assumptions of classical approach in separating strategy formulation from its implementation.Strategy formulation composed of 3 linear elements:Establishing organization's vision, mission, values and general strategy, then identifying HRM implications.Identifying a range of strategic business issues and establishing strategic business objectivesCrafting specific plans to achieve vision, mission, values and objectives..etc, which also leads to identifying HR implications of such business strategies.Classical approach to strategy making and HRMStrategy implementation includes developing and implementing HR plans using the four-task model of HRM:Engage in HR planningDevelop required employee competenciesEnsure required role behaviorsPromote employee motivationEvolutionary perspectives to strategy and HRM Managers strategic choice would be minimized in circumstances where environmental factors controlled the fate of an organization and HR strategy would need to be closely matched to the organizational strategy determined by these factors in order to achieve success.Success depends on the capability of managers to identify and interpret key environmental variables, so that organizational and HR strategies as adapted as well to environmental circumstances.

Processual approach to strategy making and HRMThe existence of an emergent strategy will need to be recognized and appropriate HR strategies introduced to encourage the behaviors required to promote and support this approach.The development of emergent strategies in organizations is based on learning.This needs to be recognized and supported through HR strategies related to, recruitment and selection, training and development, reward and strategies related to organizational development and structure.Systemic perspectives to strategy and HRMInstitutional differences between countries will affect strategic choice about organizational and HR strategies.The way HR strategy is integrated into organizational strategy will vary based on societal and cultural valuesThe multi-dimensional nature of strategic integrationIntegration is used to explore possible links between different approaches to strategy and HRM.Integration may be a two-way process (HRM informs the nature of organizational strategy as well as being informed by it FULL INTEGRATION), one-way process (organizational strategy informs HRM without being informed by it in any intended or planned way - PARTIAL INTEGRATION)The multi-dimensional nature of strategic integration (Contd)Strategy may be made at a number of levels in an organizationStrategy made at one level (specially higher levels) of an organization will affect decision-making at other levels3 Levels or orders of strategy

The multi-dimensional nature of strategic integration (Contd)The Highest level (First Level)Overall or corporate strategy of an organization UpstreamFirst-order decisions to indicate their status in relation to lower-order ones and the likely way in which other levels of strategy will flow from these higher-order strategiesConcerned with long-term direction and scope of the organizationMulti-product and multi-divisional firms have to make a distinction between corporate and business strategiesCorporate strategies: taken at center, covering entire enterprise (ex; stability, growth, Retrenchment/withdrawal, combination..), affect 2nd and 3rd level strategies including HR strategyBusiness strategies: taken lower down at division or business-unit level and related to the products made and the markets served.

The multi-dimensional nature of strategic integration (Contd)Second and Third levels of strategy are seen as down-stream of corporate strategyThe Second level of strategyConcerns the organizational structures and operating procedures put in place to support first-order decisionsThe Third level of strategyConcerns functional strategies including HRMDeveloped in the context of the first two levelsThe multi-dimensional nature of strategic integration (Contd)Ex. A decision to merge with or take over another organization (first-order / first level)Followed by a set of decisions governing structures and relationships of the new organization (might include delayering, increasing accountability to business units, decentralization..etc.; which impact HR areas as roles performed by employees, reporting relationships, and management style)Functional areas define their strategies (third level) in accordance to the first two levels and the external environmental factors operating on the organizationFigure 1.3 Strands of strategic integration

Figure 1.4 Strands of strategic integration shown in a hierarchical relationship and related to external variables

AgendaChapter 1 Learning objectivesIntroductionStrategy and Strategy MakingStrategic Management and its links to HRMThe resource-based view of organization and its links to HRMThe resource-based view of organization and its links to HRMResource-based theory was analyzed because of its recognition of an organization's internal resources as a potential source of competitive advantage.Forms of organizational capability were analyzed and their relationship to human resource management were evaluated.The resource-based view of organization and its links to HRMOrganizational CapabilityCapacity of the organization to act and change in pursuit of sustainable competitive advantage.Coordination flexibilityThe ability to rapidly reallocate resources to new or changing needs.Resource flexibilityHaving human resources who can do many different things in different ways.Figure 1.5 Resource-based approach to strategySource: Developed from Grant (1991)

Strategic HRM (Concepts and Models)Integration of business strategy and HR strategy: Linking of HR policies and practices with the strategic management process of the organization Internationalization of the importance of HR on the part of line managers Integration of the workforce into the organization to foster commitment37

38More Practice Assignment 1

Solving Self-check and Reflect Questions (P.13, 18, 23, 35)Read Part 1 Case Study (Book p.108) Strategic Human Resource Management at Halcrow Group Limited39Q & As

Thank You References: