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STRATEGIC HRM
FINALS MODULE

Module 2. HR Profession and Design and Implementation of Strategic HRM and ER

Practices

Work Design and HR Planning: A

Strategic Perspective
Strategic Performance and
Commitment Management
Strategic Learning and Development
Managing Employee Voice
Managing Change and HRM
Strategic Compensation and Benefits
Management
Special Topics in SHRM & ER

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Strategic Learning and Development

Learning Outcomes
At the end of this chapter, you should be able to:
• Review of key theoretical bases of learning and development
• Analyse the dominant drivers of internal career orientations of individuals
• Examine and analyse the relationship between strategy and learning and development
• Analyse the key drivers of training

Managing Employee Learning and Development: Theoretical Foundations

From a strategic HRM perspective, this chapter examines the role that training, learning, and skill development can play
in the development of individual and organizational capabilities necessary for achieving sustained competitive
advantage.

Skills development is extensively well-developed at a macro-, meso- and micro-level.

The theoretical underpinnings of this important activity spans across the fields of economics, strategy, public policy and
other disciplinary domains.

The focus is on skills development in an organizational context, encompassing three distinctive levels:

 Individual,

 group/team and

 organizational development

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Managing Employee Learning and Development: Theoretical Foundations

“Who is responsible for creating ‘industry ready’ workers? Is it the individual, organization or state?”

Game Theory (Finegold 1992) - the weakest stakeholder group loses

Human Capital Theory (Becker 1964) - for improved wages and increased productivity, investment in human capital is vital.

 high levels of skills and knowledge enables people to perform better in their jobs, which ultimately raise their
productivity.

 Increases in productivity and presence of higher order skills is rewarded in the form of higher wages.

 Another hypothesis this theory examines is whether firms should invest in generic and transferable skills or only firm
specific and by implementing non-transferable skills?

 argues that firms will not invest in generic and transferable skills as these are also of equal value to other employers.
Investment in technical and non-transferable (or firm-specific) skills training is logical as the investing firm can recover
the costs of such training during the tenure of an employee and such skills will make the employee more productive in
their current job. “

Managing Employee Learning and Development: Theoretical Foundations

Neo-Human Capital theory, A variant of Human Capital Theory - focuses on investment in training to overcome changes in technology
(Acemoglu and Pischke 1998; Bartel and Litechenberg 1987).

 argue that firms will invest in generic and transferable skills because of the information asymmetry that exists at the time of hiring new
employees.

 postulates that the demand for highly skilled employees will decline with a firm’s experience on the use of a given technology, hence with
each event of new production, managerial or process technologies, firms can expect a spike in investment in learning.

 that most studies of high performance work systems (HPWS) invariably features training and development as a key element in the bundle
(Ashton and Sung 2002).

 Similarly, even the RBV models highlight the importance of investing in firm-specific skills, resources and capabilities to make the resources
valuable, rare, and inimitable by the firm’s immediate competitors because of the way they are organized in the production function

(Barney 1991; Wright et al. 1994) cited by Malik

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Managing Employee Learning and Development: Theoretical Foundations

Why firms invest in training?

1. To improve the performance or productivity of a system. This bears resemblance with

Swanson’s (2001) conceptualization of human resource development (HRD) and the role it
plays in an organizational context. Swanson (2001) argued that for HRD to survive, the
performance paradigm should prevail over learning paradigm.

2. Building on research undertaken in the UK, Smith and Hayton (1999) analyzed the factors
affecting the provision of enterprise training in Australia.

Managing Employee Learning and Development: Theoretical Foundations

Why firms invest in training? The key factors affecting a firm’s decision to invest in training can

be summarized into two groups:

a. Internal organizational influences - includes factors such as workplace change, product or

process change, enterprise size, industry type, introduction of quality management systems and new
technology,

b. External contextual influences - includes factors such as client specifications, government

regulation and inadequacies of the educational systems (Malik 2009; Malik and Nilakant 2011;
Smith et al. 2004; Ashton and Sung (2002, 2006).

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Managing Employee Learning and Development: Theoretical Foundations

Why firms invest in training? KEY FACTORS:

From a strategic HRD perspective, Malik (2009) and Pereira and Malik (2015) found that Firms that invested greater amounts in
training and development were also firms that were operating in a medium- to higher-level product market segment of the IT
industry.

 high-end product markets demand greater inputs of training investment,

 Evenin relatively less complex or low-end product and service markets have known to allocate greater investments in training,
especially FAST-GROWING industry and is witnessing high levels of employee turnover.

Managing Employee Learning and Development: Theoretical Foundations

Why firms invest in training? KEY FACTORS

Contextual Factors

1. inadequacies in the educational infrastructure to produce market ready workforce,

2. high growth rates witnessed by the industry and

3. dynamism in a firm’s products and service offerings.

 This trend has been borne out in the study of large IT firms delivering in both simple and complex levels of service
delivery.

 Training in these organizations has played a strategic role in not only keeping the overall workflow steady, but also in
the longer term, through sustained investments in learning and development infrastructure, these firms were able to
offer a lower unitized cost of training and hence contribute to a firm’s bottom line (Malik 2017).

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Career Development
HR developers tasks:

 skills development for core roles in an organisation,

 retention of key talent in an organisation.

 managing individual’s career aspirations.

 From a strategic perspective, HR developers must consider the business and competitive strategy before making
extensive investments in learning and development and indeed offering employees career paths (Lloyd 2005;
Stewart and Brown 2009).

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Career Development
Whose responsibility is it to invest in an individual’s personal learning and career development needs?

• Schien’s (1996) work on career anchor theory, is relevant here as he focuses on

first understanding the Strategic Learning and Development 96 individual’s
internal career anchors before offering them with a career path in an organisation.
Career Anchors are a configuration of aptitudes, intentions, and beliefs that
help in directing, limiting, stabilizing and assimilating an employee’s
careers goals.
people’s career anchors (internal career orientations) take time to get
stabilized (up to first 5 years of their working lives) and following this these
anchors stabilize and generally do not change over time.

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Career Development
Whose responsibility is it to invest in an individual’s personal learning and career development needs?

People have up to two dominant career anchors from the following list of anchors:

1. Managerial competence,

2. Technical and Functional competence,

3. Pure challenge,

4. Creativity,

5. Service/dedication,

6. Security,

7. Autonomy

8. Lifestyle.

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Career Development

9. Career anchors may change over an individual’s working life due to major shocks or contextual changes.

From a strategic HR perspective, organizations are better placed to identify and place individuals in career
paths that match with their dominant career anchors rather than placing people in careers that they are not
anchored in.

Classic examples of mismatch

People want to pursue technical excellence in their respective disciplines are offered to take on a specialist management roles. This
creates an internal cognitive dissonance in the minds of such individuals who are more anchored in technical excellence as they do
not have excellent people management skills nor are they interested in it. Eventually, this will lead to dissatisfaction at work and
may result in voluntary turnover. Read the following case study of managing careers in a multinational firm operating in the UK

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Case Study Format

I. Introduction: Overview of your topic and its impact and why
the issue needs to be studied.
II. Aims: V. Discussion
1. The issue you are researching and why 1. What the results mean towards your hypothesis
2. How your research could have been done
2. Knowledge gaps in your issue
differently
3. Questions you plan to look into 3. Unanswered questions in your research
4. Difficulties in this particular area VI. Recommendations
III. Methods 1. Future questions to research
2. How your methods could be changed for more
1. List of interviews you plan to conduct
detailed results
2. Questionnaires
3. Planned observations
IV.Results
1. Conclusions of your research, what you’ve learned
2. Variances in expected results
3. Studies that failed to meet criteria
4. Follow up research to validate claims

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PERFORMANCE MANAGEMENT SYSTEM

Key Learning Outcomes

At the end of this chapter, you should be able to:

• Analyze the key elements impacting individual level performance

• Analyze the key elements impacting systems level performance

• Evaluate the effectiveness of performance management systems

• Explain the causes of poor performance at individual and systems level

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Key Elements Impacting Individual Level Performance

A quick way to tell how well the performance management system (PMS):

1. Ask multiple employees their understanding of the organization’s strategy, its goals, key performance indicators and how employees
think they are contributing to the same (Boselie 2010).

2. Verify this understanding with the senior management team. One would most likely find gaps in understanding of expected and
actual performance.

Performance is a multifaceted and multi-level concept and thus needs attention:

 a micro (individual level)

 a meso-level (organizational systems level)

How high performance is achieved at each level - the performance ‘black box’ from multiple disciplinary perspectives
including from HR perspective.

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Key Elements Impacting Individual Level Performance

Of course, many have attempted to unlock the performance ‘black box’ from multiple disciplinary perspectives including
from HR perspective.

With an increasing interest and sophistication in research designs, which focus on multi-level and multi-respondent
explanations of performance, there is some comfort in agreeing that a combination of certain HR and management
practices can contribute to sustained levels of organizational level performance.

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Key Elements Impacting Individual Level Performance

• Performance management in ‘HR speak’ comprises of numerous factors that can contribute to
improving the performance of a system.

• The performance rubric, P = f (AMO) was introduced, wherein

‘A’ stands for ability,

‘M’ for motivation

‘O’ for opportunity

Individual level performance requires the presence of all three factors for achieving high performance.

Hiring people who have the relevant knowledge, skills and ability is a key foundation for expecting people to perform well in a
given role

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Key Elements Impacting Individual Level Performance

FOCUS on a combination of intrinsic and extrinsic motivational approaches to offer satisfying and motivating jobs
for employees and hope to improve their performance.

Line managers and supervisors play an important part in providing the environment or ‘opportunity’ for their staff
to remain motivated and to apply their abilities to the fullest.

Basic Tenets of the goal-setting theory

• Directing employee’s attention to goals

• Regulating the effort

• increasing their persistence

• encouraging the development of plans to achieve the goals

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Key Elements Impacting Individual Level Performance

The goals should be set at the right (stretch) level to motivate employees to aspire to achieve higher and that such
goals should be quantifiable and clear.

HR practitioners and line managers have a responsibility to deliver on these counts if they are expecting the best out of
their employees.

The focus here is not to get into different performance management systems such as the MBO, rating scales, Six Sigma,
or 360-degree multi-rater feedback, it is more around understanding guiding principles that have worked well in
managing performance.

An equally relevant consideration here is of distributive justice.

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Key Elements Impacting Individual Level Performance

Managers and HR leaders must ensure that employee perceptions about rewards and its appropriation are fair.

The role of line managers and supervisors is extremely critical in clearly communicating the expectations.

Where necessary, this has to be supplemented with support by way of training and development and/or a nurturing
environment to improve the performance of individual contributors.

Equally important is adopting an integrated approach to HRM practices and ensure there is a horizontal fit between
HRM practices.

For example, recruitment and selection practices should be supported by employee development and motivational
support from managers

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Key Elements Impacting Individual Level Performance

Key considerations in designing an effective performance management system Shields (2007) notes that there are some

Elements for an Effective Performance Management System:

• Valid - to know what it takes to apply the design consistently to avoid problems of perceived inequity and poor implementation.
Excessive focus on unrealistic ‘stretch’ goals may lead to unintended consequences such as poor performance and adverse
outcomes such as dysfunctional employee turnover, poor employee well-being, stress and fatigue; aim to increase their
employees’ job satisfaction and organizational commitment

• Reliable - efforts must offer a combination of intrinsic and extrinsic rewards to achieve job satisfaction and maintain affiliation
with an organisation (Shields 2007). Additionally, employers must also avoid any breaches in psychological contract of their
employees through issues of poor design and implementation. Shields (2007) further notes that the most common culprits here
are: lack of consistency, perceived or felt unfairness of the system and poor distributive and procedural justice.

• Cost-effective - all of these factors affect an employee’s motivation, attitudes towards the job and the firm, which subsequently
has an affect on behaviour of employees and their discretionary performance

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Key Elements Impacting Individual Level Performance

Organisational Level Performance–HRM Systems

Factors for achieving high levels of organisational and systems performance through HRM practices

• creating and managing a desired culture to support the performance expectations;

• providing the relevant structural elements such as a sound performance management design and
other mutually reinforcing HR practices; and

• ensuring ‘integration and fit’ with the firm’s competitive strategy.

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Key Elements Impacting Individual Level Performance

Organisational Level Performance–HRM Systems

Key questions for HR managers:

 To what extent are there complementarities between HR and other management functions?

 Are HRM practices mutually fitting and reinforcing – in other words, achieving an internal or horizontal fit?

 Are they applied consistently across the organisation?

 Attending to these questions may result in a better fit as per the best-fit school

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Key Elements Impacting Individual Level Performance

Conclusion

Overall the performance–HRM link, though on a strong footing, with a plethora of studies pointing to its positive
association with performance, requires further research from under researched geographical contexts, especially from
emerging markets, which can further test the evidence base.

Scholars are beginning to challenge whether it is possible to sustain the tested frameworks in today’s neoliberal and
managerial approaches. This burning question is logical as there are signs of weakness in the dominant capitalist logic
with declining levels of employee wellbeing and health outcomes, especially when firms continue to implement high
performance work designs and do not effectively balance the demands such practices place on its human resources.

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Key Elements Impacting Individual Level Performance

Conclusion

Performance – HRM link, though on a strong footing, with a plethora of studies pointing to its positive association with
performance, requires further research from under researched geographical contexts, especially from emerging
markets, which can further test the evidence base.

Scholars are beginning to challenge whether it is possible to sustain the tested frameworks in today’s neoliberal and
managerial approaches. This burning question is logical as there are signs of weakness in the dominant capitalist logic
with declining levels of employee wellbeing and health outcomes, especially when firms continue to implement high
performance work designs and do not effectively balance the demands such practices place on its human resources.

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The Six Sigma Methodology comprises five data-driven stages — Define, Measure, Analyze, Improve and Control (DMAIC). When fully
implemented, DMAIC standardizes an organization’s problem-solving approach and shapes how it ideates new process solutions.

1. Define

The “Define” stage seeks to identify all the pertinent information necessary to break down a project, problem or process into tangible,
actionable terms. It emphasizes the concrete, grounding process improvements in actual, quantifiable and qualifiable information rather
than abstract goals.

Examples of terms in the Define stage include:

Project scope charter, including budget, focus and driving motivation

Voice of customer (VoC) research

Value stream maps

Project timeline

2. Measure

In the “Measure” phase, organizations assess where current process capabilities are. While they understand they need to make
improvements and have listed those improvements concretely in the Define phase, they cannot go about tweaking and tailoring
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Key Elements Impacting Individual Level Performance

Individual Level Performance Management

• a cyclical process, which involves

• the performance expectations of a role
• setting and planning an individual’s goals
• providing the individual with learning and development
support where necessary
• monitoring their progress and providing ongoing feedback
through formal and informal means regarding their actual
performance against the expected performance.

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Glossary

High performance work practices is a ‘set’ or a ‘bundle’ of HRM practices, which, if implemented collectively can be the
source of sustained competitive advantage to firms. Even though there is extensive research on this topic, consensus is far
from being reached in terms of the ‘set’ or ‘bundle’ of HRM practices that are central to high performance.

Performance Appraisal is a process that involves planning, observing, measuring and evaluating an individual’s
performance against a set of performance expectations using a set criteria.

Performance Management is a holistic process that focuses on linking an individual’s goals to an organization’s overall
strategic direction and scope. The process involves goal-setting, development, reward, appraisal and ongoing mentoring
and coaching using formal and informal mechanisms including the use of single and multiple feedback systems such as
360-degree feedback systems

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