Maintaining status quo due to limited environmental opportunities for gaining competitive advantage Few employees will have opportunities for advancement Critical that management identify key employees & develop specific HR retention strategies to keep them Corporate Strategies: Turnaround or Retrenchment Downsizing or streamlining organization in cost-cutting attempt to adjust to competitive environment Few opportunities & many environmental threats Important to develop HR practices to manage “survivors” Business Unit Strategies: Cost Leadership Increases in efficiency & cutting of costs, then passing savings to consumer Assumes price elasticity in demand for products or services is high Assumes that customers are more price sensitive than brand loyal HR strategy focuses on short-term performance measures of results & promoting efficiency through job specialization & cross-training Business Unit Strategies: Differentiation In order to demand a premium price from consumers ◦ Attempting to distinguish organizational products or services from other competitors or ◦ Creating of difference Organization offers employees incentives & compensation for creativity HR strategy focuses on external hiring of unique individuals & on retaining creative employees Business Unit Strategies: Focus Business attempts to satisfy needs of only a particular group or narrow market segment Strategic intent is to gain consumer loyalty of neglected groups of consumers Strategic HR issue is ensuring employee awareness of uniqueness of market segment ◦ Thorough employee training & focus on customer satisfaction are critical factors ◦ Hiring members of target segment who are empathetic to customer in target segment Benefits of a Strategic Approach to HR Facilitates development of high-quality workforce through focus on types of people & skills needed Facilitates cost-effective utilization of labor, particularly in service industries where labor is generally greatest cost Facilitates planning & assessment of environmental uncertainty & adaptation of organization to external forces Human Resources & Resource Based View People management systems
Not all competitive advantage begins with
people management systems ◦ These systems create value to extent that they impact stock, flow, & change of intellectual capital/knowledge ◦ Basis of core competencies Human Resources & Resource Based View “Skill” concept expanded to consider stock of intellectual capital in firm “Behavior” concept reconceptualized as flow of knowledge within firm through its creation, transfer, & integration Core competence arises from combination of firm’s stock of knowledge & flow of knowledge through creation, transfer, & integration in a way that is valuable, rare, inimitable, & organized Human Resources & Resource Based View Dynamic capability construct illustrates interdependent interplay between workforce & core competence as it changes over time The Five P’s Model Philosophy ◦ Statements of how organization values & treats employees; essentially culture of the organization Policies ◦ Expressions of shared values & guidelines for action on employee-related business issues Programs ◦ Coordinated & strategized approaches to initiate, disseminate, & sustain strategic organizational change efforts necessitated by strategic business needs The Five P’s Model of SHRM Practices ◦ HR practices motivate behaviors that allow individuals to assume roles consistent with organization’s strategic objectives ◦ Three categories of roles: Leadership Managerial Operational The Five P’s Model of SHRM Processes ◦ Continuum of participation by all employees in specific activities to facilitate formulation & implementation of other activities The Five P’s Model of SHRM Successful SHRM efforts begin with identification of strategic needs Employee participation is critical to linking strategy & HR practices Strategic HR depends on systematic & analytical mindset Corporate HR departments can have impact on organization’s efforts to launch strategic initiatives