Strategic HRM

Conceptual Framework, Investment perspective

and aligning people with business strategy

Session 1 & 2

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Agenda points
• Strategy

• HRM

• SHRM
• Investment perspective of SHRM

• Building competitive advantage through people

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Strategy defined?
• Art of commander-in-chief to project and direct the larger military
movements and operation.

Two fundamental meaning:

1. Declaration of intent: what we want
to do and how we do it.

2. Strategic fit: resource and market/product

• ends and means of a business (Child; Boxall)

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5 points to make a good strategy

• Where the organization will be active: market, products and services?

• How a firm will operate: where it will operate or gets its product and services?

• How it will win: what its competitive advantage will be?

• What its moves will be: how it will change and grow?

• How it will be profitable: what business model it will follow

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Concept of Competitive advantage
• CA comes from firms creating value for customers.

• Differentiation: offering a product or service ‘that is perceived industry-wise

as being unique.

• Focus: seeing a particular buyer group or product market ‘more effectively or

efficiently than competitors who compete more broadly.

• Cost leadership: efficiency

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The resource-based view

• Competitive advantage stems from the acquisition and effective use

of bundles of distinctive resources that competitors cannot imitate.

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HRM defined
• Management of people and work towards desired end.

Four aspects of HRM:

1. Set of beliefs and assumptions
2. Decisions about people management
3. Involvement of line managers
4. Has a set of levers to shape desired human behavior

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Matching model of HRM
• Basic assumption is about the congruency between organizational
strategy and four generic function of HR:

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Harvard model of HRM

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HR Systems
• HR philosophies: (values and culture) it express that how to treat people
“We will be passionate about achieving the highest standards of quality, always promoting meritocracy”. Tata motors

PepsiCo: “leadership in people”

• HR policies: (guidelines) for people related business issues and HR programs

• Recruitment, compensation etc.

• HR processes: (defines) how these activities are carried out. (detailed plan)

• HR practices: (leadership, managerial & operational) motivates needed role behavior.

Absence control, flexible working etc.

• HR programs: (co-ordinates) efforts to facilitate major people related business issues

Learning & development, commitment development program, etc.
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SHRM
• How organization’s goal will be realized through human resources by
means of HR policies and practices.

• SHRM considers people as unique resources.

• Central idea is about fit between business strategy and human

resource strategy.

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Basis of Strategic HRM
• Human capital of an organization play a strategic role in its success
and are a major source of competitive advantage.

• HR strategies should be integrated with business plans (vertical

integration).

• Individual HR strategies should cohere by being linked to each other

to provide mutual support (horizontal integration).

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PRINCIPLES OF STRATEGIC HRM
how CSF related to human resources should be addressed?
1. Overall purpose of an organization and linkage of human resources
with that
2. Process of strategy formulation has an explicit consideration for its
human resources.
3. CEO office has a consideration for HR to meet the needs of the
business
4. Responsibility and accountability at all level.
5. HR initiatives are relevant to business needs.
6. Complementary with business environment.
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Aim of Strategic HRM
“to generate strategic capability by ensuring the availability of skilled,
engaged and well motivated human resources.”

(1) human resources (HR) management is fully integrated with the

strategy and strategic needs of the firm;
(2) HR policies cohere both across policy areas and across hierarchies;
and
(3) HR practices are adjusted, accepted and used by line managers and
employees as part of their everyday work.

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Concept of
Resource
Strategic based
HRM view

Strategi
c HRM
Strategi
Strategic c fit
Flexibilit
y
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Perspective on Strategic HRM
• Universalistic perspective: best practice approach
for example: pay for performance, training & development, HR planning

• Contingency perspective: vertical fit or best fit

for example: cost effectiveness and reducing the burden of health care
policies.

• Configurational perspective: bundling

• Degree of fit between a total HR system and an organizational type
(prospector, defender and analyzer)
• Extent to which HR practices are linked together in into a total system
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Human Resource Investment Considerations

• Management values
• Risk and return on investment
• Economic rationale for investment in training
• Specific versus general training
• Utility theory
• Determining the economic value of HR programs, activities, &
procedures
• Outsourcing as an alternative to investment in human
resources
• Invest in HR or outsource to specialized service providers
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 Investment in Training and Development

• Investments in employability
• Developmental experiences enhance employability security
• Coaching, counseling, and training aid employability
• Current practices in training investments
• U.S. lags behind/apprenticeship programs/Corning Inc.
• On-the-job training
• Investments in management development
• Job rotation/cross-functional assignments/management development programs
• Prevention of skill obsolescence
• Due to technological change
• Reduction in career plateauing
Investment in Practices for Improved Retention
• Relationship-oriented organizational cultures
• Team orientation/respect for people
• Effective selection procedures
• Realistic job previews (RJPs)/biodata
• Compensation and benefits
• Fairness/performance-based/incentives/valued benefits
• Job enrichment and job satisfaction
• Practices providing work-life balance
• Fl`extime/child care/family leave/telecommuting
• Organizational vision creates confidence in future
• Training and development/effective policies
 Investments in Job-Secure Workforces

• Recognizing the costs of downsizing and layoffs

• Costs related to "bumping" less-senior employees
• Costs related to the termination of employees
• Administrative costs
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• Intangible costs
• Avoiding business cycle-based lay.fs
• Alternatives to layoffs
• Employment guarantees (e.g., no-layoff policy)
• The work effort and job security relationship
 Techniques for Avoiding Layoffs in the
Long Term 1

• Direct human resource planning toward employment stability

• Place emphasis on training and retraining
• Maintain lean staffing even during periods of prosperity
• Maintain stability with buffers (overtime, vendors, part-time workers)
• Correct poor performance and terminate when warranted
• Select new employees with the goal of long-term retention
• Use probationary periods for new hires
• Focus hiring toward non specialists where possible
• Teach skills needed for next stage of product life cycle
 Nontraditional Investment Approaches
• Investments in employees with disabilities
• Reasonable accommodations

• Investments in employee health

• Programs in nutrition
• No smoking policies & programs
• Fitness centers
• On-site health clinics

• Countercyclical hiring
• Stockpiling top employees & management during downtimes
 HCM Model
HCM Drivers Leadership Practice Employee Knowledge Workforce Learning
Engagement accessibility optimization Capacity
HCM Open and effective Job design and Availability Work processes Innovation, new
Practices communication work taps are well defined ideas are
employees skills and training is welcome
effective
Inclusiveness Commitment Collaboration Working Training
condition
Supervisory skills, Workload and Information Accountability Career
conflict handling, time sharing Development
inspiring, feedback management
Executive skills

Leadership Continuous MIS PMS Value and

development evaluation of support ;
employee learning
engagement management
systems

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