Strategic HRM

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?
 Strategy

 Strategy is deciding where to go and

the means to get there.
 Strategy is a declaration of intent.
 Levels of Strategy-Making in
a Diversified Company

Corporate-Level Corporate
Managers Strategy

Two-Way Influence
Business-Level
Managers Business Strategies

Two-Way Influence

Functional
Managers Functional Strategies

Two-Way Influence
Operational
managers Operating Strategies
 What is strategic
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
 Competitive 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
 Ex 1-6:
Strategic
Company mission
Management
and social
Process
responsibility

Possible?
External
Internal analysis
environment
Desired?

Strategic analysis and choice

Long-term
Generic and grand strategies
objectives

Short-term objectives; Policies that

Functional tactics
reward systems empower action

Restructuring, reengineering
and refocusing the organization
Legend Strategic control and
Major impact continuous improvement
Minor impact
 Strategic 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
 WHAT IS SHRM?
 Strategic human resource management
has been defined as ‘the linking of human
resources with strategic goals and
objectives in order to improve business
performance and develop innovative
organizational culture that foster
innovation and flexibility.
 Some Organisational
Strategies

Company Strategic Principle

General Be number one or number two in

Electric every industry in which we
compete, or get out

Wal-Mart Low prices, every day

3M Foster innovation
 Aim of SHRM

 Long-term Objectives
 Profitability
 Return on investment
 Competitive position
 Technological leadership
 Productivity
 Employee relations
 Public responsibility
 Employee development
 Aim –Short term
• Detailed work planning
• Emphasis on technical qualifications and
skills
• Emphasis on job-specific training
• Emphasis on job-based pay
• Use of performance appraisal as a
control device
• Team-based training
 Types of HR Strategy
 1) general strategies such as
 high-performance working team
– Supplying competitive intelligence regarding the
external environment
– Supplying information regarding the company’s
internal human strengths and weaknesses.
– Showing how the firm’s HR activities can and do
contribute to creating value for the company
 2) specific strategies relating to the
different aspects of human resource
management such as learning and
development and reward(Human capital
management, corporate social esponsibility,
 organization development, engagement,
knowledge management,employee
resourcing, talent management, learning and
development, reward, employee relations,
and employee well-being
 Difference Between Strategic HRM &
HR strategies:-
STRATEGIC HRM HR Strategies [ HR StrategiesHRS ]

SHRM is a managerial function which implies HRM implies the governance of manpower of
framing of HR strategies in such a way to direct the organization in a thorough and structured
employees efforts towards the goals of organization. manner

Aligned with organizational intention about future Focus on specific organizational intentions about
direction what needs to be done.

Focus on long term people issue Focuses on short term performance measures that is
result/outcome.

SHRM decisions are built into strategic business plan HRSs decisions are derived from SHRM.

Deals with macro-concerns such as quality, HRSs are concerned with ensuring availability of an
commitment, performance, culture & mgnt efficient workforce, training, good employee
development relations

Ref: SHRM – Charles Greer

Defines areas in which specific HR strategies need to HRSs facilitate the successful achievement of
 Strategic fit-
 The HR strategy should be aligned to the
business strategy (vertical fit).

 HR strategy should be an integral part of

the business strategy, contributing to the
business planning process as it happens.
 High-performance management –
 Aims to make an impact on the
performance of the firm through its people
in such areas as productivity, quality, levels
of customer service, growth, profits and,
ultimately, the delivery of increased
shareholder value.
 High-performance management practices
include rigorous recruitment and
selection procedures, extensive and
relevant training and management
development activities, incentive pay
systems and performance management
processes.
 High-commitment management
 HRM is its emphasis on the importance
 of enhancing mutual commitment. ‘A form
of management which is aimed at eliciting a
commitment so that behaviour is
 primarily self-regulated rather than
controlled by sanctions and pressures
 external to the individual, and relations
within the organization are based
 on high levels of trust.’
 High-involvement management-
 The aim is to create a climate in which a
continuing dialogue between managers and
the members of their teams takes place in
order to define expectations and share
 information on the organization’s mission,
values and objectives.
 Types of Strategic Planning
 Corporate-level strategy
– Identifies the portfolio of businesses that, in total,
comprise the company and the ways in which these
businesses relate to each other.
 Diversification strategy
 Vertical integration strategy to streamline its
operations by taking direct ownership of various stages
of its production process
 Consolidation strategy (merging, purchasing, or
partnering with other companies that have similar goals
and products)
 Geographic expansion strategy
 Types of Strategic Planning
(cont’d)
 Business-level/competitive strategy

– Identifies how to build and strengthen the

business’s long-term competitive position in
the marketplace.
 Cost leadership
 Differentiation
 Focus
 Types of Strategic Planning
(cont’d)
 Functional strategies
– Identify the basic courses of action that
each department will pursue in order to
help the business attain its competitive
goals.
 Methodology for strategy
development
 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
 Strategy 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?
 Strategy 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
 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”
 Types of HR Strategy
 1) general strategies such as high-performance
working
 2) specific strategies relating to the different
aspects of human resource management such as
learning and development and reward(Human
capital management, corporate social esponsibility,
 organization development, engagement, knowledge
management,employee resourcing, talent
management, learning and development, reward,
employee relations, and employee well-being
 SHRM 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
 Strategic HRM is about improving business
performance through people.
 The major concerns of strategic HRM are to
meet the business needs of the organization
and the individual and collective needs of
the people employed in it.
 strategic HRM can make a contribution to
improving business performance.
 Strategic HRM (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
 Benefits of SHRM
1. 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
 Theoretical frame work of SHRM

Firm strategy Institutional /

Political forces

Resource dependence
Resource institutional
based view
of the firm HRM Practices

Cybernetics
Behavioral
approach
Agency/transaction costs
Firm level outcomes
HR Capital pool HR behaviors (performance,
satisfaction,
(Skills, abilities) absenteeism etc)
 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
 International strategy
 Multinational, global and transnational
strategies
 Strategic alliances
 Sustainable global competitive advantage
 Globally competent managers
 Location of production facilities
Human resource contributions
to strategy
 Environmental scanning and competitive
advantage
 Implementation of resource reallocation
decisions Slide >

 Lead time for dealing with labour shortages.

..
 HUMAN RESOURCE ACTIVITY TYPOLOGY

High Performance enhancement

Consulting
Staffing planning
Employee relations
Benefitsof planning Labour negotiations
Retirement planning Executive compensation
Employee development
Compliance
Management development
Recruitment interviewing
Strategic value of
activity < IMPORTANT TO EXECUTIVES >
Payroll
Benefits administration
Recruitment information
Retirement administration
processing
Employee records
Relocation administration Employee assistance programs
Recruitment information processing

Low
< IMPORTANT TO EMPLOYEES >

Back Transactional Type of HR activity Relationship

Benefits of integrating HRP with Strategic
planning
 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.
Strategic components of HRM
relevant to internal fit
 Management awareness
 Management of the function
 Portfolio of programs
 Personnel skills
 Information technology
 Awareness of the environment
 Strategy 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
 Effective HR Strategy Formulation
and Implementation

Organizational Consistency Environment

Strategies
Fit Fit
Consistency

Consistency
Improved
HR Strategies Firm
Performance

Fit Fit
Organizational Organizational
Characteristics Consistency Capabilities
 Strategy implementation
work force utilization and employment practices

 Efficient utilization of human resources

 Dealing with employee shortages
 Selection of employees
 Dealing with employee surpluses
 Strategy implementation
work force utilization and employment practices

 Efficient utilization of  Cross training and flexibility in

assigning work
human resources  Using work teams
 Dealing with  Requirements for effective
teams
employee shortages  Forming
 Selection of  Storming
 Norming
employees  performing

 Dealing with  Operating on a non union basis

employee surpluses
 Strategy implementation
work force utilization and employment practices

 Efficient utilization of  Strategic recruiting

human resources  Special recruiting for
 Dealing with minorities and women
employee shortages workers
 Selection of  Flexible retirement as
employees a source of labour
 Dealing with  Managing vendors of
employee surpluses outsourced functions
 Special implementation
challenges
 Career path for technical professionals
 Dual career couples
 Strategy implementation system – Reward
and development systems
 Strategically oriented performance management
system
 Strategically oriented compensation systems
 Employee development
 Strategy implementation system
– Reward and development systems

 Strategically oriented  Performance measurement

approaches
performance  MBO
management system  Graphic scale rating
 Narratives
 Strategically oriented  BARS
 Behavioral observation scales
compensation  360 –degree feedback
systems  Performance evaluation of
executives
 Employee  Effectiveness of performance
development measurement.

YOU GET WHAT YOU MEASURE, YOU MEASURE WHAT YOU VALUE, YOU
CAN NOT CONTROL WHAT YOU CANNOT MEASURE.
 Strategy implementation system
– Reward and development systems

 Strategically oriented  Traditional

performance compensation
management system systems
 Job analysis > job evaluation >
 Strategically oriented salary/wage hierarchy
compensation  Point system
Factor comparison system
systems 

 Hybrid system
 Employee  Internal equity
 > Wage surveys to establish
development external equity.
 Strategy implementation system
– Reward and development systems

 Strategically oriented  Skill based pay

performance  Broad banding single pay
management system band

 Strategically oriented  Team based pay

compensation  Variable
systems compensation
 Employee  Executive
development compensation
 Strategy implementation system
– Reward and development systems

 Strategically oriented  Training programs

performance  Training methods
 Apprenticeships
management system
 Management
 Strategically oriented development
compensation  Management
systems development for
international assignments
 Employee
 Product life cycle and
development managerial fit
 PLC, Evolutionary stage >
Steady state
 Development Vs selection
Copyright © 2002
South-Western. All
rights reserved.
 Barriers to the implementation of
HR strategies
 • Failure to understand the strategic needs of the
business,

 • Lack of assessment of the environmental and

cultural factors that affect the content of the
strategies and the development

 • Taking of ill-conceived and irrelevant actions

 Criteria for an effective HR strategy
 Satisfies business needs
 Founded on detailed analysis and study
 Can be turned into actionable programs
 Coherent and integrated
 Takes account of the needs of line managers
and employees generally as well as those of
the organization and its other stakeholders
 It is coherent and integrated, being
composed of components that fit with and
support each other.
 Roles and Responsibilities of an HR Manager:
 Create and put into action HR initiatives and
strategies that are in line with the overall business
plan.
 Improve ties between management and employees
by responding to requests, grievances, or other
issues.
 Control the hiring and hiring process.
 Support present and future company demands
through growing, involving, inspiring, and
preserving human capital.
 Always maintain legal compliance while
managing human resources
 Contd..
 Create and keep track of the organization’s
overall HR strategies, methods, tactics, and
procedures.
 Cultivate a supportive workplace.
 Managing and maintaining a setup that
promotes optimum performance.
 Maintain the benefits and pay schedule.
 Analyze the training requirements for a
programme and keep an eye on it.
 Report to management and use HR indicators
to assist in decision-making
 REASONS of MERGERS
AND ACQUISITIONS
 There are numerous reasons for companies
to merge or acquire.
 Mergers for market dominance; economies
of scale.
 Mergers for cost cutting, synergies,
defensive drivers.
 Growth for world class leadership and
global reach.
 Survival; critical mass; sales maximization.
 Move quickly and inexpensively.
 Flexibility; leverage.
 Acquisition of cash, deferred taxes, and
excess debt capacity. Adopt potentially
disruptive technologies.
 Financial gain and personal power.
 Gaining a core competence to do more
combinations.
 Acquiring talent, knowledge, and
technology.
 Role of HR in M&A:
 Gaining knowledge of the make-up and
motivation of the two work forces
 Understanding the potential impact on the
companies' multiple stakeholders, including the
employees, the communities, and the unions
 Accessing management team of the other
company
 Conducting analysis of its organizational
structure
 Comparing benefits, compensation policies, and
labour contracts of both firm
 Technology is Changing the Face of HR

 In the last few years, things have changed.

 Emerging technologies like AI (Artificial
Intelligence), RPA (Robotic Process
Automation) and ML (Machine Learning)
have transformed key HR processes to the
point that everyone is now talking about the
new wave of HR
 Contd..
 H R Technology is the application of
technology to redefine fundamental HR
processes like recruitment, talent
management, compliance,
payroll, Performance Management,
employee engagement and so on.
 Applications of HR Technology
 Smart Recruitment
 Automation of Repetitive Tasks
 Employee Engagement Voice of the Employee (VoE) analytics is
a tool that HR teams are increasingly using in order to
monitor employee engagement.)

 Employee Development
 HR Virtual Assistants: virtual HR help-desk and employees are
increasingly using chat-bots to get answers to routine queries. In
the future, it is expected that AI-powered virtual assistants will be
able to handle a range of HR functions — improving employee
engagement, generating insights on talent metrics, managing
process workflows, and so on.
Benefits of HR Technology

 Better Employee Scheduling and

Tracking
 Easier Access to Crucial Information
 Improved Talent Management
 Cost-reduction
 Proper and Secure Documentation
 Total quality management should
contain the following items:
 TQM is a customer focused approach
 It is company-wide strategy and involves everyone in the
organization
 Aims at satisfying the customer or delighting them
 Provides best quality product and satisfy them in a cost
effective manner
 Fundamental changes in basic beliefs and practices
 Prevention of defects is the way and the target is zero
defects
 Total quality management is methodical
 Provides meaningful measures of performance that guide
the self-improvement efforts of everyone involved
 Impact of TQM on HRM
 It emphasizes self-control, autonomy, and
creativity among employees and calls for greater
active cooperation rather than just compliance
 Alignment of HR and Quality
 TQM and HR Practice (organizational commitment and job
involvement of employees increases)
 TQM and Job Analysis
 Talent Resourcing, Training
 Employee Empowerment, Leadership and Team Work
 Strategic HRM