Managerial Level

02

ML-S06 Strategic Human Resource Management

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Chartered Institute of Personnel Management Sri Lanka (Inc.)

Web.www.cipmlk.org
Contents
Session 01 .......................................................................................................................................... 4
Concept of Strategic Human Resource Management ..................................................................... 4
Session 02 ........................................................................................................................................ 15
Competencies and Competency ..................................................................................................... 15
Framework ..................................................................................................................................... 15
Session 03 ........................................................................................................................................ 23
Developing and Application of ....................................................................................................... 23
Competencies .................................................................................................................................. 23
Session 04 ........................................................................................................................................ 31
HR Strategy Development (Proposed change Development & Delivering HR Strategy ........... 31

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 Strategic Human Resource Management

"At the end of the day you bet on people, not strategies." (Larry Bossidy). The
development of Human Resource Management is a well-documented and highly
regarded field in the management studies. In a global economy, the organizations are
driven by highly competitive market pressures which in turn emphasizes on been goal
oriented, improved quality, productivity, flexibility, innovation, ability to change and
sustainability. Thus, the modern perspective of Human Resource Management
highlights the significance of human resource professional’s role as a strategic partner
in the organizations. Hence, the need to develop more focused and coherent
approaches to manage people becomes vital in the rapidly changing business
environment. Therefore, the significance of human resource as a strategic partner is
considered as a key driver in achieving competitive advantage.

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Session 01
Concept of Strategic Human Resource
Management

Introduction
The origin of the concept of strategy can be traced in its military orientation, going
back to the Greek word ‘strategos’, for a general who organizes, leads and directs his
forces to the most advantageous position (Bracker, 1980; Legge, 1995; Lundy and
Cowling, 1996). Thus, in the business context, strategy relates to the key concerns for
the long- term future of organizations. Example: Should universities concentrate their
resources on research excellence or teaching quality or try to combine both? The
process by which objectives of an organization are expressed and achieved is referred
to as strategic management and strategy plays a key role in achieving the set
objectives.

Strategy Defined
Defining strategy as the long term direction of an organization provides a broader
picture. Following are three definitions of strategy as exemplified by three leading
strategy theorists;

“The determination of the long-run goals and objectives an enterprise and the
adoption of courses of action and the allocation of resource necessary for carrying
out these goals”
Alfre d D. Chandler

“Competitive strategy is about being different. It means deliberately choosing a

different set of activities to deliver a unique mix of value”
Michael Porter

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 A Pttern in a stream of decisions

Henry mintzberg

Three elements of the strategy Definition:

1. The Long term
2. Strategic Direction
3. Organization
Strategy determines the direction in which the organization is going in relation
to its environment. It is the process of defining intention (strategic intent) and
allocating or matching resources to the opportunities and needs (resources-
based strategy). Business strategy is concerned with achieving competitive
advantage. Strategy is expressed in strategic goals and developed and
implemented in strategic plans through the process of strategic management.

An important aspect of strategy is to achieve strategic fit. This is used in three

senses:

 Matching the organization’s capabilities and resources to the

opportunities available in the internal and external environment.
 Matching one area of strategy, eg. Human resource management to the
business strategy.
 Ensuring that different aspects of a strategy area are coherent and are
mutually supportive.
Refer: Johnson et.al, 2012

Significance of Strategy
 It determines the direction.
 It is the process of defining intension (Strategic Intent) and allocating
resources.
 Planning
 Implementation
 Strategic Direction

Good Strategy + Good Strategy Execution = Good Management

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Mintzberg in 1988 suggest that strategy can have a number of meanings:
 A plan – or something equivalent – is a direction, a guide, a course of action.
 A pattern – that is consistency in behavior overtime.

 A perspective – an organization’s fundamental way of doing things.

 A ploy – a specific maneuver intended to outwit an opponent of competitor.

Levels of Strategy
 Corporate Level – Concerned with the overall scope of an organization and
how value is added to the constituent business of the organizational whole.
 Business Level – how the individual businesses should compete in their
particular markets
 Operational strategies – how the components of an organization deliver
effectively the corporate and business level strategies in terms of resources,
processes and people.

Models of Business Strategies

Business strategy is relevant to private sector, charities and public sector organizations
to achieve competitive advantage. The concept of strategy is based on a number of
associated concepts such as competitive advantage, resource based strategy,
distinctive capabilities, strategic intent, strategic capability, strategic management,
strategic goals and plans. Competitive advantage is concerned with how strategic
business units(SBU) create value for its users both greater than the cost of supplying
them and superior to that of rival SBU’s.

To be competitive the organizations must ensure that the customers see sufficient
value that they are prepared to pay more than competitors. To have an advantage,
organizations must create greater value than competitors.

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Michel Porter identified basic types of competitive advantage
 Cost advantage
 Focus strategies
 Differentiation advantage
Innovation
Efficiency
Quality
Customer responsiveness

HRM Defined
HRM could be defined as a strategic and coherent approach to the management of an
organization’s most value assets- the people working there who individually and
collectively contribute to the achievement of its objectives. Overall, the aim of HRM

strategies is to adopt a planned and coherent approach to improving organizational

effectiveness.

An effective strategy can be defined broadly as one that achieves its purpose by
meeting the wants and needs of its stakeholders, matching its resources to
opportunities, adapting flexibly to environmental changes and creating a culture that
promotes commitment, creativity, shared values and mutual trust.

Concept of Strategic HRM

Strategic HRM Defined

Strategic HCM has been defined as all those activities affecting the behavior of individual
in their efforts to formulate and implement the strategic needs of the business. The pattern
of planed human resource developments and activities intended to enable the firm to
achieve its role.
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Strategic HRM is an approach to making decision on the intention and plans of the
organization concerning the employment relationships and its recruitments, training,
developments, performance management, rewards, and employee relations policies and
practices. It is essential components of the organization’s corporate or business strategy.
SHRM is concerned with the relationship between HRM and strategic management in the

firm. SHRM refers to overall direction the organization wishes to pursue in achieving its
objectives through people. It’s argued that, because human capital is a major source of
competitive advantage, and in the last analysis it is people who implement the strategic

plans, top management must take these key considerations fully into account in
developing corporate strategies, SHRM is an integral part of those strategies. SHCM
addresses broad organizational concerns relating to changes in structure and culture,
organizational effectiveness and performance, matching resources to future requirements,
the development of capabilities, and the management of change.

Hendry and Pettigrew (1986), identifies four meanings of SHRM;

 The use of planning
 A coherent approach to the design and management of personnel systems
based on an employment policy
 Matching HRM activities and policies to the business strategy
 Seeing the people of the organization as a strategic resource for the
achievement of competitive advantage

SHRM is facilitated to the extent to which the following seven principles are followed
(Ondrack and Nininger, 1984);
 There is an overall purpose and the HR dimensions of that purpose are evident
 A process of developing strategy within the organization exists and is
understood, and there is explicit consideration of HR dimensions
 Effective linkages exist on a continuing basis to ensure the integration of HR
considerations with the organizational decision making process
 The office of the chief executive provides the challenge for integrating HR
considerations to meet the needs of the business

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  The organization of all levels establishes responsibility and accountability for
HR management
 Initiatives in the management of HR are relevant to the needs of the business
 It includes the responsibility to identify and interact the social, political,
technological and economic environments in which the organization is and
will be doing business.

Aims of Strategic SHRM

The aim of SHRM enables strategic decisions to be made that have a major and long-
term impact on the behavior and success of the organization by ensuring that the
organization has the skilled, committed and well-motivated employees it needs to
achieve sustained competitive advantage. The HR strategies should take into account
the interests of all stakeholders in the organization, employees in general as well as
owners and management.

Strategic Fit
The notion of strategic fit or integration, sometimes describes as “the matching model”, is
central to the concept of strategic HRM. Strategic integration is necessary to provide
congruence between business and HR strategy so that the latter supports the
accomplishment of the former and, indeed, helps to define it .The aim is to provide
strategic fit and consistency between the policy goals of HR management and the
business. HR strategies are deferent, however in the sense that they are intertwined with
all other strategies. The management of people is not a distinct function but the means by
which all business strategies are implemented. HR planning should be an integral part of
all other strategies formulation. Where it separates it needs to be closely aligned.

The concept of External and Internal fit

External fit (vertical) means that HR strategies are congruent with business strategies,
match the firm’s stage of developments, take account of organizational dynamic, and are
in line with the characteristic of the organization. Congruence with business strategies

may means aligning HR strategies to the strategic orientation of the firm. Different
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orientation establishes the need for different type of people and required changes in
approaches to investing in the firm’s human capital. If the business strategy is to
differentiate the organization from its competitors based on superior service, then

selection and training programs should be developed to hire and train people in the skills
and attitudes necessary to deliver superior service.

Internal fit or horizontal integrations (bundling) is accomplished by developing coherent

range of interconnected and mutually reinforcing HR policies and practices. This may be
achieved by the use of shared process such as competence analysis, performance
management, employee development and reward. This will take place between line
managers and HR mangers on how HR policies should be implemented. For example if
the marketing department is developing and advertising plans that promises 24 hour
access to customer service representatives but the HR plan does not include compensation
differentials for shift work, the overall marketing strategy might fail. Competency
frameworks can be planned that are used in assessment and development centers and to
specify recruitment standards, identify training needs, indicate standards for performance
and serve as basis for human resource planning.

Strategic Flexibility
Strategic flexibility has been defined as "a firm's abilities to respond to various demands
from dynamic competitive environments," Flexibility provides organizations with the
ability to modify current practices in response to changes in the environment. Flexibility
requires detecting changes in the environment and retaining a sufficient pool of novel
actions so that these changes can be accommodated

Strategic Capability
The concept refers to the ability of an organization to develop and implement
strategies that will achieve competitive advantage. Therefore, it is the capacity to
select the most appropriate vision, to define realistic intentions, to match the resources
to opportunities and to prepare and implement strategic plans.
SHRM is to generate strategic capabilities to add value through. People…
Competent people
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Committed people
Competitive people

The Resource- Based View

The resource-based view of strategy is that the strategic capability of a firm depends
on its resource capability. The view states that the competitive advantage is achieved
if the for’s resources are v valuable, rare and costly to imitate.

The Resourced- Based View of SHRM

Different perspective is provided by the concept of resource – based view. This is founded
on the belief that competitive advantage is obtained if a firm can obtain and develop
human resources that enable it to learn faster and apply its learning more effectively. The
aim of resource-based approach is to improve resource capability achieving strategic fit
between resources and opportunities and obtaining added value from the effective
development of resources.

In line with human capital theory, resource- based strategy emphasize that investment in
people adds to their value to the firm, basically hiring and developing more talented staff
by extending their skills based. Resource – based strategy is therefore concerned with the
enhancement of human or intellectual capital of the firm, because the knowledge has
become a direct competitive advantage for companies selling ideas and relationships.

An organization’s HR strategies, policies and practices are a unique blend of processes,

procedures, personalities, styles, capabilities and organizational culture. One of the keys
to competitive advantage is the ability to differentiate service in the market. Such
differentiation could be achieved by having HR strategies that ensure that company has
higher quality people than its competitors by developing and nurturing the intellectual
capital process by the business and by functioning as a learning organization.
A resource- based approach will address methods of increasing the firm’s strategic
capabilities by the development of managers and other staff who can think and plan
strategically. Competitive advantage through people resources arises because 1) there is

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heterogeneity in their availability in the sense of the difference that exist between them
across firms in an industry and 2) they are immobile in the sense that competing forms
may be unable to recruit them ( Weight and McMahan (1992).

Perspectives on Strategic HCM

 The universalistic perspective – some HR practices are better than others and
all organization should adopt these best practices
 The contingency perspective – an organizations HR polices must be
consistent with other aspects of the organization (strategy). This is described
as the vertical fit
 The configurational perspective – and organization must develop an HR
system that achieves both horizontal & vertical fit.

The Best Practice Approach

The view that there are “best practices” which all firms can advantageously adopt. Best
practices produced by Pfeffer(1994) are:
o Employment security
o Elective hiring
o Self-managed teams
o High compensation contingent on performance
o Training to provide a skilled and motivated workforce
o Reduction of status differential
o Information sharing

Critique of Best Practice Approach

o Too much diversity in lists of best practices and do not specify the pathway
or intervening variables through which they are supposed to improve
business performance.
o Major object to the idea of universally valid set of HR practices is socio-
cultural one as there is a problem with trying to specify a set of cross

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 culturally best practices as there are significant differences across
countries in cultural values.

Best Fit approach

HR strategies should be contingent on the context the circumstance of the
organization and its type. Best fit can be perceived in terms of vertical integration or
alignment between the organization’s business and HR strategies.

o The life-cycle model

Theory suggests the development of a firm takes place in four stages:
start-up, growth, maturity and decline. During start-up phase
management of the HR function may be loose and informal. During
growth stage the demand for new employee’s increases. The
organization responds to this pressure by adding more formal structure
and functional specialists. The HR’s role is to attract right kinds and
numbers of people and aim at innovation and the development of the
talent management, learning and development and reward management
and practices. At the maturity stage HR’s focus is to consolidate and
develop existing practices than creating new ones. During declining
stage HR will be involved in the difficult decision that follows
downsizing and being taken over.

o Competitive strategies
To achieve the maximum effect it is necessary to match the role
characteristics of people in an organization with the preferred strategy
whether it is innovation, quality or cost leadership.

o Strategic configuration
Miles and Snow(1978) identified four types of organizations.
a) Prospectors – operate in an environment characterized by rapid and
unpredictable changes

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 b) Defenders – operate in a more stable and predictable environment
and engage in long-term planning.
c) Analyzers- a combination of prospector and defender
d) Reactors- unstable organizations in unpredictable environments.
HR should align its systems with the strategy linked to configuration.

Reference
Armstrong, M. (2006). A handbook of Human Resource Management Practice.
Armstrong, M.(2009). A handbook of Strategic Human Reasource Management.(4th &
5th Edition)
Armstrong, M. (2010). Armstrong's Essential Human Resources Management
Practice: A Guide to People Management.
Johnson, G., Whittington, R., & Scholes, K. (2012). Fuindamentals of Strategy.

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Session 02
Competencies and Competency
Framework

Competency Based HRM

Competency based HRM is about using the notion of competency and the results of
competency analysis to inform and improve HR processes, especially those concerned
with recruitment and selection, learning and development, performance and reward
management. It has an important part to play in a number of HR activities

Development of the Concept

The concept of competence was conceived in the UK as a fundamental part of the
process of developing standards for NVQs/SNVQs. These specify minimum
standards for the achievement of set tasks and activities expressed in ways that can
be observed and assessed with a view to certification. An element of competence in
NVQ language is a description of something that people in given work areas should
be able to do. They are assessed on being competent or yet competent.

Competency Defined
Defining competencies is problematic. There are no clear cut definitions. Some human
characteristics definitely fall within most definitions, but from there a wide variety
of human characteristics may be included. These first two competencies are agreed
upon by almost everyone:

Knowledge. This is the accumulated information that the individual has attained
through education and experience.

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Skill. This is the application of knowledge to particular situations. These are the
things (tasks)the individual can do

Together these might be called the individual's ability: these two factors are the
essential characteristics of individuals that are required to do the job (as in the
motivation model that states that performance is a function of ability x effort x
opportunity). Knowledge and skill requirements are the basis of the selection process
and can be found in the job specification section of Role Profile.

A second level of competencies is that of behaviors. These competencies represent

the application of skills and knowledge in work related situations, much like
behavior-based questions interviewers would ask of applicants

A third level of competencies are more controversial, those of personal

characteristics. This opens up competencies to a wide variety of factors such as
motives, general disposition, attitudes, values and self-image.2 The premise behind
using these kinds of factors is that through observation and research, the organization
can elicit the critical factors that distinguish superior performance. Then the
characteristics that distinguish superior performance from average performance can
be used as rewards. The ultimate goal being that the total productivity of the
organization be increased. What the organization is seeking to discover with these
factors is what causes the individuals to apply their effort: this answers the part of
'effort' in the motivation model. However, these factors may vary by areas within the
organization and over time as the organization grows and changes

The Difference between Competence and Competency

Competence and competencies tend to differ in certain basic ways:
An ability based on a work task for a job outputs, is referred to as a competence where
as the ability based on behavior, tends to be referred to as a competency. In other
words, one describes what people can do while the other focus on how they do it.

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Competence Competency
Skill- based Behavior-based
Standard attained Manner of behavior
What is measured How the standard is achieved

Use of Different Types of Competencies

o The Menu Approach
This approach selects competencies that are relevant to generic or
individual roles. Some organizations provide guidelines on the number
of competencies to be selected and others combine their core
framework with a menu so that users are required to select the
organization wide core competencies but can add a number of optional
ones.

o Role-specific Competencies
These are incorporated in a role profile in addition to a statement of
key result areas. This is adapted in performance management processes,
recruitment person specifications and in preparation of learning
programs.

o Graded competencies
Competencies are graded in career or job family structures (marketing,
operations, finance etc..) these are related through the activities carried
out and basic knowledge, skills required in the levels of responsibly.

Why Use Competencies at Work Place

Knowledge of competencies and competency modeling is increasingly important for
workplace learning professionals tasked with learning results. If developing talent is
critical to the future success of organizations, then understanding and using
competencies to create a more talented workforce is key to maintaining a competitive
edge.
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Learning and performance professionals have an important role to play in this future
success through the use of competencies. Competencies are not about duties, they are
about people. In that respect, they are different from job analysis (a process) and its
traditional output (a job description). Theoretically, all HR efforts should be based on
job descriptions. Unfortunately, job descriptions focus on the work, not on the unique
characteristics of people who are successful doing the work. As a result, job
descriptions often fail to address measurable results; and since job descriptions are
based on activities or duties, they may change quickly as organizations recognize
work assignments or change how the work is done.

Competencies are more enduring than job tasks. Competencies focus on the
characteristics of people who are successful performing the work. Competencies are
part of people, not the work they do. Competencies do better in pinpointing the
unique characteristics of people that lead to success.

Organizations that understand the characteristics of those who get the best results
develop a competitive advantage. They are better positioned to recruit, select,
develop, reward, and promote the most successful people. Hence, competencies are
an important tool, much like a compass, to find direction in attracting, developing,
retaining, and positioning the best, most productive and promotable people. In this
regard, competencies are the "glue" that holds talent management programs together.

Types of Competencies

Behavioral Competencies
These define behavioral expectations, ie the type of behavior required to deliver
results under such headings such as teamwork, communication, leadership and
decision making. These are known as soft skills.

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Technical Competencies
These define what people have to know and be able to do (knowledge and skills) to
carry out their roles effectively. They are related to either generic roles or to
individual roles. These are not usually a part of a behavioral based competency
framework.

Competency Framework
A competency framework contains definitions of the behavioral competencies used
for all employees in an organization or for particular occupations such as managers. It
provides the basis for the use of competencies in areas such as recruitment and
selection.

Competency Headings
The most common competencies in frameworks are people skills, although outcome-
based skills, such as focusing on results and solving problems are popular. The main
competency headings with definitions used are as follows:

Table 1: Competency Headings

COMPETENCY SUMMARY DEFINITION
HEADING
Team Orientation The ability to work co-operatively and flexibly with other
members of the team with a full understanding of the
role to be played as a team member

Communication The ability to communicate clearly and persuasively,

orally and in writing

People Management The ability to manage and develop people and gain their
trust and cooperation to achieve results

Customer Focus The exercise of unceasing care in looking after the

interests of external and internal customers to ensure that
their wants, needs and expectations are met or exceeded.

Results Orientation The desire to get things done well and the ability to set
and meet challenging goals, create own measures of

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 excellence, and constantly seek ways of improving
performance.

Problem Solving The capacity to analyze situations, diagnose problems,

identify key issues, establish and evaluate alternative
courses of action and produce logical, practical and
acceptable solution

Planning and Organizing The ability to decide the courses of action, ensuring that
resources required to implement the action will be
available and scheduling the program of work required to
achieve a defined end result.

Technical Skills Profession of knowledge, understanding and expertise

required to carry out work effectively

Leadership The capacity to inspire individuals to give their best to

achieve a desired result and to maintain effective
relationship with individuals and the team as a whole.

Business Awareness The capacity continually to identify and explore business

opportunities, understand the business needs and
priorities of the organization and constantly to seek
methods of ensuring that the organization becomes more
business like

Decision Making The capacity to make sound and practical decisions

which deal effectively with the issues and are based on
thorough analysis and diagnosis

Change Orientation The ability to manage and accept change

Developing Others The desire and capacity to foster the development of

members of his or her team, providing feedback, support,
encouragement and coaching

Influence and Persuasion The ability to convince others to agree on or to take a

course of action

Initiative The capacity to take action independently and to assume

responsibility for ones actions

Strategic Orientation The capacity to take a long term and visionary view of
the direction to be followed in the future.

Creativity The ability to originate new practices,concepts and ideas

Information Management The capacity to originate and use information effectively

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 Quality Focus The focus on delivering quality and continuous
Self confidence and improvement
assertiveness Belief in oneself and standing up for one’s own rights.

Self Development Managing one’s own learning and development

Managing Managing resources, people, programs and projects.

Developing a Competency Framework

A competency framework should be as simple to understand and use as possible.
When developing competencies, if they are used for performance management or
competency- related pay, it is essential to ensure that they can be assessed. The steps
involved in developing a competency framework are as follows:

Step 1: Programme Launch

o Decide on the purpose of the framework and the HR processes for where it will be
used.
o Set out the benefits to the organization such as improved performance, better
selection outcomes, more focused performance management, employee
development and reward processes
o Prepare a project plan that includes an assessment of the resources required and
the costs..

Step 2 : Involvement and Communication

Involve line managers and employees in the design of the framework by setting up a task
force.

Step 3: Framework Design – Competency List

o The task force should draw up a list of the core competencies and values of the
business
o Establishment of skill standard – after the skills and knowledge that form a
competency model have been developed, the amount of skills and knowledge
required to succeed must be determined.
o Identify Skill Gaps
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Step 4: Framework design – definition of competencies
The following four questions have been produced by Mirabile (1998) to test the extent to
which a competency is valid and can be used
o Can you describe the competency in terms that others understand and agree with?
o Can you observe it being demonstrated or failing to be demonstrated?
o Can you measure it?
o Can you influence it in some way ex. By training, coaching or some other method
of development?

Step 5: Define the Uses of the Competency framework

The competency framework could be used in applications such as Performance
management, recruitment, Learning and Development, and reward.

Step 6: Test the Framework

Test the framework by gauging the reactions of a balanced selection of line
managers and other employees

Step 7: Finalize the framework.

Prepare guidance notes on how it is to be used

Step 8: Communicate
Step 9: Train
Step 10 : Monitor and Evaluate

Reference
Armstrong, M. (2012). A handbook of Human Resource Management Practice. (12th
Edition)

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Session 03
Developing and Application of
Competencies

Competencies for Competitive Advantage

Factors internal to an organization, such as its personnel and its previous experiences,
are crucial to its chances of success in executing a chosen policy in an organization.
These Distinctive competencies affect the competence of an organization and its
success. Therefore, competence both generic and specific plays an important role in
the success of an organization.

The competence mapped should always we linked to the corporate strategy. The
managers should compile a comprehensive checklist of their firms skills and
resources, that I, a grid of competencies. This document become a permanent
reference guide for future strategy decisions and could be used in assessing the likely
success of diversification. Managers should build capabilities and then encourage the
development plans.

Competencies are an organization’s most important resources because they are

valuable, rare and difficult to initiate. Organizations can capitalize on these resource-
managers after identifying them, can make decisions about how to exploit them and
also learn how to expand them in gaining competitive advantage.

Developing Competency Models

The key to gaining competitive advantage edge is the ability of the workforce of an
organization to maximize the advantages of state- of – the art technology, superior
products and steady source of capital to enter into the market place. Therefore, it is

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needed to develop competency models to identify the essential knowledge, skills and
attributes needed for successful performance in a job aligned with the strategy and
integrating it to the HR strategy See fig 1).

Agree organization’s mission

Specify Organization’s strategy

Design Organization to deliver strategy

Specify competencies and technical skills required of people for high performance at
different levels in organization and for specific jobs

Design and operate assessment procedures Design and

operate
to determine whether people have the attributes development and
training
for the immediate job and the potential and systems
aspiration to perform in higher jobs

Career path planning/ succession planning

Figure 1: Linking HR processes to Organizational Strategy

A competency model includes both innate and acquired aspects. It is essentially a

pyramid (see Fig. 2) built on the foundation of inherent talents, incorporating the
types of skills and knowledge that can be acquired through learning effort and
experience

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 Behaviour

Knowledge
Skills

Aptitude Personal Characteristics

Figure 2: Competency Pyramid Model

A useful competency model should;

 Define competencies along with examples to illustrate when a particular
competency is being demonstrated
 Although the innate characteristics are fixed in a person for the most part,
behaviors can be modified and taught.

Data Collection Methods for Development of Competency Models

 Interviews
 Questionnaires
 Focus groups
 Observations

The information gathered helps in validating the behavior stated in the model,
accurately describing the way the individuals carry out work.

Things to consider while developing a competency model

 Certain competencies as customer focus might be generic across the
organizations while behavior relating competencies could widely vary.
 Within the same organization two management jobs may present very
different challenges and acquire different skills
 The competency model should be developed with a specific role in mind.
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Benefits of a competency model
 Hiring the best available people
 Productivity maximization
 Enhancing the 360 degree feedback process
 Adapting to change
 Aligning behavior with organizational strategies and values

The personal competency framework

In 1986 the first version of the Job Competences Survey (JCS) was produced in the
fields of assessment centers and management competencies in the 1970s and 1980s
(Dulewicz and Fletcher 1982). It was originally used as a questionnaire for the first
stage of the job analysis process, for identifying competencies of senior and middle
managers in large companies such as Shell International, Barclays etc..

The Personal Competency Framework stems from the findings of JCS. It consist of 45
competencies under six main headings as shown in table 2

Table 2: The 45 Competencies

Intellectual Personal Communication Interpersonal Leadership Result
oriented
Information Adaptability Reading Impact Organizing Risk taking
collections
Problem Independence Written Persuasiveness Empowering Decisiveness
Analysis Communication
Numerical Integrity Listening Sensitivity Appraising Business
Interpretation sense
Judgment Stress Oral Expression Flexibility Motivating Energy
Tolerance others
Critical Resilience Oral Ascendancy Developing Concern for
Faculty Presentation others excellence
Creativity Detail Negotiating Leading Tenacity
Consciousness

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Planning Self- Initiative
management
Perspective Change Customer
oriented oriented

Organizational
Awareness
External
Awareness
Learning
Oriented
Technical
Expertise

Developing the Competency Model

 Determine the objectives and Scope(why are we doing it?
o What jobs, functions or business units will we target? What methods
we will use to develop the model? Who will carry out the work? )
 Clarify implementation goals and standards (what is the intended result of the
project?
o How do we know when we have achieved it? To provide direction to
the project the goal should be expressed in terms of performance or
output. Set SMART goals and implementation standards should
address quality, quantity and timing)
 An action plan is essential
o (what are the tasks that are involved? Who is responsible? When must
be completed? Identify possible problems and be ready with a
contingency plan Etc..)
 Identification of individual performance against established performance
criteria.

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 o (what does successful performance on the job look like? What job
outputs or results will be examined? Identification of individuals at
previous performance levels)
 Caution
o It is essential to understand the business need which drives project and
identify the key success factors. The competency model should reflect
the unique aspects of the position in a given organization and not be
developed in a vacuum.

Issues Related to Developing Competency Models

While building competency-based models to achieve ultimate effectiveness it is
necessary to address all the issues, alternatives, pros and cons.
 Is the organization serious about it?
o Until there is total commitment, the competency model output is sure
to be doomed.
o Organizations where total commitment from top to bottom is not there,
and the culture to support it the process will be stopped.
o Leadership must have a vision to drive the process and the potential to
complete it.
o The methods of personal decisions should be uniform
 What is the Goal-Quality or Excellence?
o What is the organization trying to accomplish? Is it striving for quality
ot excellence or both?
 Is the development effort periodic or Continuous?
o The competencies would have changed little over the years based on
the environment and the industry.
 Is the Assessment a Continuous Process or is it a one-time endeavor?
o Should the assessment be periodic or on demand? If the annual
assessment plan is decided for the year, a batch assessment process
must be completed. If it is being continuously monitored, a continuous
assessment application should be created.
 Are the competencies reflecting current activities or future activities?

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  What should be the time frame for the project?
 How will the organization use the results?
 What is the value addition to the organization?
 What is the value addition to the employees?
 How will the determinants of success be measured?
 What are the desired outcomes?
 Who is the owner of the process?
 Who will be targeted & involved in development?
 Who will be assessed and by whom?
 How to validate the assessment?
 How will the competency project be communicated to the employees?

Application of competency- based HRM

The top four areas where competencies were applied are:
 Learning and development
 Performance management
 Selection
 Recruitment

Learning and development

Role profiles, which are either generic or individual, can include statements of the
technical competencies required. These can be used as the basis for assessing the
levels o competency achieved by individuals and so identifying their learning and
development needs.

Performance Management
Competencies in performance management are used to ensure that performance
reviews do not simply focus on outcomes but also consider the behavioral aspects of
how the work is carried out, which determine those outcomes.
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Recruitment and Selection
It is used as the basis for the person specification that is set ut under competency
headings as developed through role analysis. These competencies are used as the
framework for recruitment and selection. Thus, is held to identify which selection
techniques such as psychological testing, behavioral interviews are most likely to
produce useful evidence.

Reward Management
Competency framework is linked to pay through competency related pay. It provides
people to be rewarded according to both the results they achieve and their level of
competence.

Reference
Amstrong, M. (2009). Amstrong;s Handbook of Human Resouce Management
Practice (11th ed.).
Sanghi, S. (2007). The Handbook of Competency Mapping (2nd ed.).

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Session 04
HR Strategy Development (Proposed change
Development & Delivering HR Strategy

Strategy Formulation Propositions

Boxall (1933) has drawn up a number of useful propositions concerning the
formulation of HR strategy:
 There is typically no single HR strategy in a firm
 Business Strategy may be an important influence on HR strategy but it is only
one of several factors and relationship is not unilinear
 Implicit(if not explicit) in the mix of factors that influence the shape of HR
strategies is a set of historical compromises and tradeoffs from stakeholders.
 Management may seek to shift the historical pattern of HR strategies
significantly in response to major contextual change, but not all managements
will respond in the same way to equally effectively.
 Strategy formulation process is complex, and excessively rationalistic models
that advocate formalized links between strategic planning and HR Planning
are not particularly helpful to our understanding of it.
 Descriptions of the dimensions that underpin HR strategies are critical to the
development of useful typologies but remain controversial, in that no one set
of constructs have established an intellectual superiority over others.

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Process Issues

There are a number of process issues that affect the ways in which strategy is
formulated.

Problematic Nature of HR Strategy.

It is much harder to assess what factors organizations should take into account and
what processes they can use when developing and implementing strategies. The process
by which strategies come to be realized is not only through formal HR policies or
written directions: strategy realization can also come from actions by managers
and others.
 Strategy has always being emergent and flexible
 Strategy is not only realized by formal statements but comes about also by
actions and reactions.
 Strategy corresponds to a description of a future- orientated action intended to
lead to change
 The management process itself conditions the strategies that emerge.

The Complexity of the Process

Many different routes may be followed in developing HR strategies. “The different
approaches to strategy formulation reflect different ways to manage change and
different ways to bring people part of the business in line with business goals”

Concepts of strategy development

Key Concepts and Issues

a) Resource Capability
 The basis of resource- based strategy to HR strategy is the
acknowledgment of the “stock of know-how” in the firm
 It is concerned with the actions, processes, and related behavioral
efforts required to attain a competitive positions.
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  Firms attempt to gain competitive advantage using human resources
through developing distinctive capabilities.
 It is also concerned with the acquisition, development and retention of
human capital.

b) Alignment to Business Strategy

 People management strategy will influence as well as be influenced by
business strategy.
 Business and HR issues influence each other and in turn influence
corporate business unit strategies.

c) Achieving Horizontal fit

 It is achieved when the various HR strategies linked and mutually
supporting.
 This can be achieved with the process of bundling
 Links between one area and other complementary areas must be
established to support the overall achievement of the strategy.

Strategic Agenda

Key Business Issues

 Intentions concerned with growth or retrenchment, acquisitions, mergers,
divestments, diversification, product/market development.
 Globalization and International operations
 Increasing competitive advantage
 Perceived need to develop more positive and customer oriented culture
 Gaining commitment

Contextual Factors
 External Business, Social and Economic Environment and the Internal
Environment of the organization
 Globalization

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  Profitability through growth
 Technology
 Intellectual Capital
 Change

Components of the Strategic HR Agenda

The components of the strategic people management agenda consist of overall
organizational issues and strategies for particular areas of HR policy and
practice.

Organizational Strategies
 Organizational Development
 Culture Management
 Change Management
 Developing high-performance, high- commitment and high-
involvement management approaches
 The employment relationship

Strategies for key areas of HR policy and practice

 Resourcing
 HRD
 Performance Management
 Reward
 Development and use of competency framework
 Employee relations
 Health & Safety etc..

The Development Process

Steps in the Overall Approach (Gratton, 2000)
 Building the guiding coalition (involving people from all parts of business)
 Imagining the future (create a shared vision of areas of strategic importance)
 Understanding current capabilities and indentifying the gap
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  Creating a map of the system (ensure the parts can be built in to a meaningful
whole)
 Modeling the dynamics of the vision (future is taken in to account)
 Birding into action (there is no great strategy, only great execution)
o Agree broad themes of action and the specific issues related to those
themes
o Develop guiding principles
o Involve line managers
o Create issue-based cross functional teams to define what needs to be
done, identify targets and goals etc..

Types of Processes
 The integrated processes – HR strategy is an integral part of the business and
other functional strategies
 The aligned approach – HR strategy is developed together with the business
strategy
 The separate Process – a distinct HR plan is developed, It is prepared and
considered separately from the overall business plan.

Strategic Options and Choice

The choice of practices that an employer pursues is heavily contingent on a number of
factors at organizational level including business and production strategies, support
for HR policies and cooperative labour relations.

Approaches to the development of HR Strategies

 Strategy formulation is an evolutionary process
 Define the strategic intent

Essential Questions
Formulation of HR strategies requires answers to three questions:
 Where are we now?
 Where do we want to be?
 How are we going to get there?
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 Classical Sequential Approach
An approach based on the neat sequential model illustrated in Fig. 3 could be regarded
as “classical” in that it conforms to the beliefs of the deisgn strategy formulation
school. It incorporates all the actions that ideally should take place if there is a
formally expressed mission and business strategy.

Figure 3- Source: Strategic HRM, Armstrong & Baron

The Essence of Empirical Approach

 Tuning in to the processes of business decision making at the top
 Identifying key business issues and needs
 Describe broad and possibly informal terms the strategic intentions of the
business needs
 Establishing the implications of those issues, needs and intentions
 In conjunction with the stakeholders, line managers and employees determine
the options

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 Strategic fit considerations
 Knowledge of the skills and behaviors necessary to implement the strategy
 Knowledge of the HRM practices necessary to elicit those skills and
behaviors
 The ability quickly to implement the desired system of HRM practices

Flexibility Considerations

 Develop HR systems that can be adapted flexibly

 Develop a human capital pool with a broad range of skills
 Select people who have the ability to train and adapt
 Promote behavioral flexibility
 Use performance management and reward processes that encourage flexibility
 Bundle these with participative work systems

Implementing HR Strategies: A systematic Approach

 The extent to which senior management is trusted

 The perceived fairness of the initiative
 The extent to which the existing processes could help to embed the initiative
 A bureaucratic culture that tends towards inertia

Barriers to implementation of HR strategies

 Failures to understand the strategic needs of the business

 Inadequate assessment of the environmental factors
 The selection of one initiative in isolation without considering its implication
on other areas
 Failure to appreciate the practical problems in getting the initiative accepted
by all
 Inability to persuade top management actively to support

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  Inability to achieve ownership among line managers
 Inability to gain understanding and acceptance of the employees
 Failure to monitor and evaluate implementation of the strategy to take
remedial action
 Failure to appreciate that the implementation involves major changes to
existing policies and practices which have to be managed.

Reference

Armstrong, M., & Baron, A. (2002). Strategic HRM: The Key to Improved Business
Performance.
Armstrong, M & Baron,A.(2005). A handbook of Strategic Human Reasource
Management.The key to improved business performance

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