Strategic Human Resource Management

An Introduction
Fareha Zafar Saeed

Strategy?
Way of doing something A game plan for action Includes: Formulation of a goal Set of action plans for accomplishment Implies: Consideration of competitive forces (internal) Impact of outside environment on organization actions

Strategy - Mintzberg
A plan, or something equivalent a direction, a guide, a course of action. A pattern, that is, consistency in behaviour over time. A perspective, an organizations fundamental way of doing things. A ploy, a specific maneuvre intended to outwit an opponent or a competitor.

Management By Objective (MBO)

MBO essentially involves three steps: Setting a mission or purpose

Setting goals or objectives

Determining action plans to achieve the goals or objectives

MBO & Strategy

(2/2)

The strategic focus accepts these three basic ideas of MBO but goes beyond them by giving explicit recognition to both the outside and competitive environment. The actions and reactions are the heart of the modern approach to strategy.

Defining:

STRATEGY

The formulation of organizational missions, goals, and objectives, as well as action plans for achievement, that explicitly recognize the competition and the impact of outside environmental forces.

Defining:

STRATEGY

The direction and scope of an organization over the longer term, which ideally matches its resources to its changing environment, and in particular, to its markets, customers and clients to meet stakeholder expectations. Johnson & Scholes

Strategy
determine direction of organization in relation to its environment defines intentions strategic intent
Strategic intent is a high-level statement of the means by which your organization will achieve its vision. It is a statement of design for creating a desirable future (stated in present terms). Putting it simple, a strategic intent is your company's vision of what it wants to achieve in the long term.

allocates / matches resources to opportunities and needs resource based strategy achieves competitive advantage

 Strategy is about implementation, which includes the management of change, as well as planning. An important aspect of strategy is the need to achieve strategic fit. This is used in three senses:
1. matching the organizations capabilities and resources to the opportunities available in the external environment; 2. matching one area of strategy, eg human resource management, to the business strategy; and 3. ensuring that different aspects of a strategy area cohere and are mutually supportive.

Effective organizational strategies are required for the organization to accomplish its mission while being guided by an investment perspective. After scanning the environment for opportunities and threats and the introspective process of evaluating strengths and weaknesses, the organization is ready for strategy formulation.

Importance of Human Resources to Strategy

HRMs importance as a result of: its role in providing competitive advantage the rush to competitiveness an awareness of the demands of the technologically advanced environment of the future

 There is greater recognition that distinctive competencies are obtained through: highly developed employee skills distinctive organizational cultures management processes, and systems

 Increasingly, it is being recognized that competitive advantage can be obtained with a high-quality workforce, which enables organizations to compete on the basis of market responsiveness, product and service quality, differentiated products, and technological innovation, instead of reliance on low costs

 Aside from its role in providing competitive advantage through a quality workforce, the necessity of controlling labor costs also has elevated the role of human resource management (impact of inefficient use of human resources). Managers need look no further than underutilized workers, lack of trust, resistance to change, antagonistic labor management relations, motivational problems, and restrictive work practices to find causes of lower productivity.

 better utilization of human resources may prove to be more cost efficient than investments in plant and equipment. Because of potential cost efficiencies, improved human resource management can play a key role in the organizations competitive strategy and in the development of distinctive competencies.

Economic Turbulence & HRM

Turbulence, globalization, technology, dramatically changing demographics, and differences in workforce values have created almost unprecedented environmental uncertainty.

Strategic human resource management and the sub-process of human resource planning are increasingly being seen as means of buffering environmental uncertainty

Human resource management is becoming integrated into the strategy formulation and planning process. HRM is becoming companys competitive strategy, therefore general management has an incentive to ensure alignment and consistency between strategy and human resource practices and policies

 The first alignment challenge comes with finding the answer to the following question: What kinds of people will be needed to lead the organization in the years to come?

The expectation is that people and practices, which are aligned with future strategic needs, produce superior organizational performance.

 The expectation is that people and practices, which are aligned with future strategic needs, produce superior organizational performance.

Human Resource Management

Human Resource Management is a process of attracting, developing, and retaining capable and willing human resources (employees) to achieve the organizational goals.

Human Resource Management

Attracting Staffing (recruitment, selection, and orientation) Developing Training & Development
Retaining Compensation & Benefits Individual growth opportunities

HRM: Strategic Focus

The operational HRM tasks should be performed in a way that helps the company deal effectively with any environmental forces and competition and ensures the companys long-term achievement of its goals and objectives.

Why Human Resource Management (1/3)

Success comes from successfully implementing strategy and the ability to implement strategy comes from the organizations people.
(The Human Equation, Jeffery Pfeffer)

Human Resource Strategy

(1/2)

Explicitly recognizes the impact of the outside environment Explicitly recognizes the impact of competition and the dynamics of the labor market.

Has a long range focus (3-5 years)

Human Resource Strategy

(2/2)

Focuses on the issues of choice and decision making

Considers all personnel, not just hourly or operational employees Is integrated with overall corporate strategy and functional strategies

Strategic HRM Defined

Strategic HRM is an approach to making decisions on the intentions and plans of the organization in the shape of the policies, programs and practices concerning the employment relationship, resourcing, learning and development, performance management, reward, and employee relations.

 The concept of Strategic HRM comes from strategy and HRM.

It takes the HRM model with its focus on strategy, integration and coherence and adds to that the key notions of strategy, namely, strategic intent, resource-based strategy, competitive advantage, strategic capability and strategic fit.

Strategic Choices

When formulating a corporate strategy, managers must consider several strategic choices.

Strategic Choices
To make appropriate choice, following should be addressed: the

1) Choosing strategy that the company should adopt to maintain or improve its position in the marketplace. 2) Ensuring continued sales growth and maintenance of its workforce to avoid retrenchment and layoff.

Strategic Choices
3) Adopting to environment. its ever-changing

4) Collecting the information it needs to understand and influence its environment.

Human Resource Planning

(1/4)

Once the organizations objectives are specified, communicated, and understood by all affected, the human resource unit should specify its objectives with regard to human resource utilization in the organization.

Human Resource Planning

Strategic Choices:

(2/4)

Shall we attempt to fill positions from within or by hiring individuals from the labor market? Can we meet our commitments to affirmative action?

How do our training and development objectives interface with our human resource planning objectives?

Human Resource Planning

(3/4)

What union constraints do we face in HR Planning, and what policies should we develop to effectively handle these constraints?

What is our policy toward providing everyone in the organization with a meaningful, challenging job (job enrichment)? Will we continue to have some boring, routine jobs, or should we eliminate them?

Human Resource Planning

(4/4)

Can some positions and jobs be eliminated so that we can become more competitive? To what extent can we automate production and operations, and what shall we do about those displaced? How do we ensure that we have a continuously adaptive and flexible workforce.

Recruitment & Selection

Strategic Choices: Make or Buy Budgets Untapped labor sources Internal Vs External Recruiting Whether to develop a plan to retain qualified workers

Training & Development

Strategic Choices:

(1/2)

Compliance of rules or challenging the rules and search for more productive ways to perform their jobs. Developing human resources or hire already developed

Training & Development

(2/2)

Find ways to improve the performance of managerial workers, or should replace them How well does the organizations development strategy match the organizations overall strategy?

Performance Appraisal System

Strategic Choices: Purpose of performance appraisal (corrective, reward determination, individual or group based) Formal or informal Objectivity Vs. Subjectivity Frequency of Performance Appraisal Who will conduct?

Compensation System
Strategic Choices:

(1/2)

Importance of external equity to the organization How closely the compensation plan will be linked to the organizations overall strategic plan.

Compensation System

(2/2)

Merit pay raises or across-the-board raises Level of pay secrecy Internal Equity (job worth) How to mix intrinsic rewards (rewards that come from performing the job) and extrinsic rewards (rewards that comes from a person outside the job)