Strategic Human

Resource Management

Building Human Capital in Organizations

for Achieving Business Results
Leveling Off
 What do you currently associate with the Human
Resource function?
 What is your expectation about the role HR should
play in your organization?
 What role does HR actually play in your organization?
How satisfied are you with this situation?
 What do you expect to learn from this course?
 What is the one burning question you have right now
about Strategic HRM?
Understanding Strategic HR
 Why strategic Human Resource
Management?
 What is it?
 Who does it pertain to? Who is it for?
 Where does the Human Resource
Management responsibility reside?
Why Strategic HRM?
In what way are PEOPLE important
to the Business?

Modern-day Thinking…

strong, sustained revenues

Strengthen and profitable operations...
our
Business

satisfied, targeted
Serve our customers leading to...
Customers

capable, aligned and

Enhance
engaged employees leading
Employee
to...
Capability &
Engagement
AGE OF THE KNOWLEDGE WORKER

CREATION OF NEW KNOWLEDGE AS ONLY REAL

SOURCE OF COMPETITIVE ADVANTAGE

MOST CRITICAL RESOURCE: HUMAN INTELLECT

70-80% OF HUMAN PRODUCTION WILL BE DONE

WITH THE BRAIN

VALUE NO LONGER RESIDES IN THE ENGINE:

VALUE LIES WITH INTANGIBLES, CREATED
BY HUMAN CAPITAL
Levels of Employee Commitment

Engagement
How much I
want to and
actually do
Commitment improve our
How much I business results
want to be here

Satisfaction
How much I
like things here
It was not always like
this….
 EVOLUTION OF THE HR FUNCTION

PERSONNEL

PHILOSOPHY Cog in the machine

PERSPECTIVE Cost

AGENDA Efficient services

Personnel Management
Concept of People: cogs in the wheel
What Workers were Looking For: a Job, source of
income, security
Context: Industrial Revolution at the start of the 20th
century. Production. Sweatshops and factories.
Focus: Efficiency to minimize cost

 Scientific Management: F.W. Taylor believed in a combination

of detailed task specs and selection of the “best man” for the
job. It was the function of the managers to think—workers were
expected to do exactly as they were told
 Related concepts: Fordism (continuous assembly line) and
Time and Motion (stopwatch methods of measuring work.
 EVOLUTION OF THE HR FUNCTION

PERSONNEL HRM

PHILOSOPHY Cog in the machine Resource

PERSPECTIVE Cost Asset

AGENDA Efficient services Problem Solver

Human Resource Management
Concept of People: asset in the same way that money and
building are assets. Inputs to production
What People were Looking For: involvement, participation in
decision-making; relationship between the individual and the
organization
Focus: Problem-solver. Use the asset to close the gaps and
improve production. Manipulate the controllable elements of the
environment to make the asset more productive.

 Continuous Improvement. Using employee knowledge and ingenuity,

continually refine product manufacture and development. This requires
management control over the precise detail of work in order to
maximize efficiency.
 Human Relations and Industrial Relations. Recognition of rights of
workers and collaborative work between management and labor.
Human Resource Management
Concept of People: asset in the same way that money
and building are assets. Inputs to production
Focus: Problem-solver. Use the asset to close the
gaps and improve production. Manipulate the
controllable elements of the environment to make the
asset more productive.

 Management by Objectives. Based on Peter Drucker’s work in

the 1950’s MBOs linked achievement to competence and job
performance. It tied rewards and advancement opportunities to
specific agreed objectives.
 EVOLUTION OF THE HR FUNCTION

PERSONNEL HRM HCM

PHILOSOPHY Cog in the machine Resource Investor

PERSPECTIVE Cost Asset Capital

AGENDA Efficient services Problem Solver Value provider

Human Capital Management
Concept of People: investors who invest their skill, time and effort into
the organization.
What People are Looking for: Value for effort, skill, time invested in the
organization in terms of learning, advancement, a feeling of being able
to contribute/make a difference, etc.
Focus: Encourage discretionary investment. “Value-provider”

 Organization Development. “Action Research” by Kurt Lewin which proposed

that changes in processes, attitudes and behavior were possible and that
organizations should be thought of as whole entities impinging on individuals.
 Strategic Management. Directing people to achieve strategic objectives so that
individual goals are tied to the business needs of the whole organization.
Employees are stakeholders in the success of the business. The more they and
the organization succeeds, the more they invest.
Human Capital Management
Concept of People: investors who invest their skill, time and effort
into the organization.
What People are Looking for: Value for effort, skill, time invested
in the organization in terms of learning, advancement, a feeling
of being able to contribute/make a difference, etc.
Focus: Encourage discretionary investment. “Value-provider”

 Leadership. Linked leadership and degree leaders engage their

employees as motivating to employees. Leaders as key to setting an
environment that encourages increasing investment.
 Corporate Culture. Deal and Kennedy (1982). Organizational
effectiveness depends on a strong, positive culture appropriate to the
times and supportive of business goals.
 WHAT IS HUMAN CAPITAL?

ABILITY BEHAVIOR EFFORT TIME

Knowledge
Actions
Application of Chronological
contributing
mental element
Skills to
and physical of
accomplishment
resources HC investment
of a task
Talent
A FAIR RETURN ON INVESTMENT….

INTRINSIC JOB FULFILLMENT

PERSONAL AND PROFESSIONAL GROWTH

CAREER ADVANCEMENT

FINANCIAL REWARDS

GREATER CONTROL ON LIFE

COMMITMENTS
 HRM is an amalgam of
description, prescription and
logical description and that it is
a historically-situated
phenomenon.
- Storey (2001)
As with a hologram, HRM changes its appearance as
we move around its image…As a fluid entity of
apparently multiple identities and forms, it is not
surprising that every time we look at it, it is slightly
different. This is why, conceptually, HRMism
appears to be a moving target, and why, empirically,
it has no fixed (fixable) forms.

- Keenoy (1999)
 Why is this so?
Because the subject matter of Human Resource
Management is the Organization and organizations
are made up of PEOPLE who are not static beings
but who individuate, adapt, influence, create and
develop, each in his unique way.
Thus, HR ROLES still cut across the three
philosophies:

ADMINISTRATIVE EXPERT

EMPLOYEE CHAMPION

CHANGE AGENT

STRATEGIC PARTNER
Course Roadmap

Individual Small Group Organizations

• Understanding • Understanding • Organization Design

Individuals Teams • Communication and
• Motivation • Influencing behavior Decision-Making Processes
• Perception • Power and Politics • Culture
• Personality • Networked Organizations
• Job satisfaction • Leadership

Harnessing Human Capital in Organizations

Homework:
 Read Chapter 4 and 5 of Gibson, et al
 Write a short 2-3 page reflection paper
(double-spaced) on your own
motivations and performance at work.
What are you looking for and what
motivates you in your work?
Basic Approaches to Improving
Productivity
 Scientific Management Approach
 Financial Control
 Human Factors Approach
Scientific Management Approach
 Factory System (Adam Smith, 18th century)
who advocated making work efficient by
means of specialization. Advantages of
division of labor:
 Development of skills
 Saving of time
 Possibility of using specialized tools
 Amount of skill needed to undertake a
specialized task was only the skill necessary
to complete that task.
Scientific Management Approach
 Frederick W. Taylor (1881) formalized the principles of scientific
management. His framework for organization was:
 Clear delineation of authority
 Responsibility
 Separation of planning from operations
 Incentive schemes for workers
 Management by exception
 Task specialization
 Underlying assumptions:
 Presence of a capitalist system and money economy
 Protestant work ethic, assumes people will work hard and
behave rationally to maximize their own income
 An increased size is desirable in order to obtain the
advantages of the division of labor and specialization of
tasks.
Scientific Management Approach
 Frank and Lilian Gilbreth – beginnings of
motion study. Developed laws of human
motion from which evolved the principles of
motion economy.
 Henry Gantt – remembered for his
humanizing influence on management
emphasizing the conditions that have
favorable psychological effects on the worker.
(Gantt Chart)
Financial Control Approach
 Second World War and the Depression led
workers to believe that there was a causal
link between productivity improvement and
further unemployment, thus the pressure to
increase productivity
 Statistical methods (FW Harris, FE
Raymond). Math was applied to project
control, strategic planning and decision
analysis.
Financial Control Approach
 Operational Research (PMS Blackett) – start
of an interdisciplinary approach to tackling
problems thus removing some responsibility
in complex decisions from the existing
management at that time.
 Linear Programming (GB Dantzig) provided
management with a basic tool capable of
handling many of the large-scale and often
complex problems of scheduling and
allocating limited resources to a production
system.
Financial Control Approach
 Organization and Methods (O&M) –
opportunities for productivity improvements
come as much from management and clerical
workers as from the direct workers who
traditionally enjoyed the focus of attention
when productivity improvements were to be
made.
Beginnings of Human Relations
Approach
 As early as 1920’s, there was opposition to scientific
management principles because of its focus on
control and authority and the dehumanizing
experience of work.
 British Industrial Fatigue Research Board (1920)
studied issues involving productivity and motivation
and saw that:
 People have multiple needs, feelings and personal
goals that are not always consistent with good job
design, exact standards and performance measures
obtained from traditional techniques and approaches.
Human Relations Approach

Job Performance = f(ability) (motivation)

Human Relations Approach
 Industrial relations or human relations which
result from the meeting of needs of
management and workers.
 Personal or human relationships which spring
up, grow and exist in any work place
environment.
Human Relations Approach
Assumptions:
 Merely to aim for higher output may bring neither greater output
nor satisfaction to the worker but if the aim is to bring more
personal satisfaction to the worker in his work, both higher
output and job satisfaction may be achieved.
 Good human relationships can only be established if the needs
of an individual are satisfied and his/her will to work is
stimulated.
 The extent to which these hopes and desires are fulfilled in the
work situation governs the degree of job satisfaction derived by
the worker.
 The extent to which personal job satisfaction is achieved is the
measure by which each worker will apply his/her abilities and
will to work.