Chapter 2 and 3 according to

course outline
 CHAPTER 2
Human Resources as Assets

• Activity

• Discuss what Human Resources as Assets is and

what benefits does it give to the organisation.
 Personnel management, HRM
and SHRM
Difference between the following:

• Personnel Management

• Human Resource Management

• Strategic Human Resource Management

 Personnel vs HRM
(Torrington et al., 2008:14)
Emphasis Personnel mgt
Time & planning perspective • Short term, reactive, ad hoc,
Psychological contract marginal
Control systems
• Compliance
Employee relations perspective
• External controls
Preferred structures/systems
• Pluralist, collective, low trust
Roles • Bureaucratic/mechanistic,
centralised, formal defined
Evaluation criteria roles
• Specialist/professional
• Cost minimisation
 Cont’d

Emphasis HRM
Time & planning • Long term, proactive, strategic,
perspective integrated
• Commitment
Psychological contract • Self-control
Control systems
• Unitarist, individual, high trust
Employee relations
perspective
• Organic, devolved, flexible roles
Preferred structures/systems • Largely integrated into line mgt
Roles • Maximum utilisation
Evaluation criteria
 ACTIVITY

• Is there a notable difference between Personnel

management and Human Resources Management
or its just old wine in new bottle..
 The Personal Management Approach
• The usage of Personnel Management Approach was
prominent throughout the early 20th century even though it
remained administrative in nature. The Personnel
Management Approach mainly concerned itself with:
• Keeping employee records
• Ensuring compliance with stated policies
• Implementation of functions such as recruitment, training and
wage administration
• Taking welfare oriented measures such as providing medical
care and vaccinations
• Attempting to increase productivity through wage increases
and training, and enforcement of standards
 Traditional Human Resource Approach
• In the Human Resource Approach the employees of an organization
were considered as valuable resources. Unlike the Personnel
Management Approach the Traditional Human Resource.
• Motivation
• was given to employees through various forms such as free holidays,
creating an active and social community within the workforce besides
monetary incentives.
• Training and Development
• was not only focused on providing work related skills but also
focused on changing attitudes and development of basic skills
• Wage and Salary Administration
• became more complex with the introduction of performance related
payment schemes
The Strategic Human Resource Approach
• The Strategic Human Resource Approach aligns individual
goals and objectives with corporate goals and objectives,
and rather than enforce rules or dictate terms, acts as a
facilitator and promotes a participative approach.
• Increased reliance on performance based short term
contracts instead of long term employment.
• Direct linkage of compensation to the profitability of the
enterprise and the employee’s contribution towards such
profitability.
• New dimensions for training and development function by
encouraging and facilitating innovation and creativity.
 HUMAN CAPITAL DEFINITION

• Human capital is defined as “productive wealth embodied in

labor, skills and knowledge” (OECD, 2001).
• Human capital is the asset that an organization has in form of
its employees. It takes into account the value that the
knowledge, skills and experience of the employees adds to
the organization.
• The skills are acquired by an employee on the job, or
through training. With the addition of skills the human
capital increases.
 Concepts of Human Capital
• The concept of human capital recognizes that all kinds of
employees and the value that they add to the company is not
the same.
• For example: The value of human capital of a worker is
different than the value of human capital of a senior
executive.
• Human capital management is the responsibility of the HR
department of an organization.
• This includes staffing and training the employees to increase
the human capital.
 THE VRIO FRAME WORK

• VALUE

• RARANESS

• IMITABILITY

• ORGANISATION
 RA

VRIO
FRAMEWORK

ATI
T
 VALUE

• The resource creates value when it allows the

company to devise and implement strategies that
will improve its efficiency and effectiveness.
• Departing from traditional strengths, weaknesses,
opportunities and threats (SWOT) analysis, an
attribute creates value and becomes a resource if it
enables the exploitation of opportunities and/or the
neutralization of threats Cardeal, Antonio (2012)
 RARE
The rareness of the resources/ one of its own kind
•If most competitors hold the same valuable resource, then they
will likely explore their use in similar ways, thus implementing
the same value creating strategy. This would not result in any
company achieving competitive advantage as a result of
owning a valuable resource
Example
•coca cola
•Nandos
•Apple/Samsung/Hisense

what is it that moved Nokia /blackberry out of the market

 IMITABILITY
• The companies that have the rare and valuable
resources that are unique in nature and are quite
difficult to imitate gain the first mover advantage in
the market gaining the competitive advantage.

• However, if the resources are innovative and the

resources are not that easy to access, imitation gets
quite difficult. And in such as case, the company
enjoys the long-term and sustained competitive
advantage in the market-beating its arch-rivals and
competition.
 Organisation

Competitive advantage stems from the way firms operate

and interrelate their strategic and non-strategic resources.
The organisation is comprised of the following:

• Policies
• Hierarchy
• Structure
• Management Control systems
 THE INVESTMENT PERSPECTIVE OF HR

• Human Resource is one of the most important resources

in an organization.

• The success or failure of an organization largely depends

on how human resource is used to utilize other resources
available to the organization.

• HRM practitioners & Scholars have long advocated that

HR should be viewed from investment prospective.
 RISKS INVOLVED IN INVESTING IN HUMAN CAPITAL

• Failure to perform as expected

• Death
• Brain Drain
 Activity 2

• Can you discuss the risks of human Capital

Investment
 CHAPTER 3
STRATEGIC HUMAN RESOURCE MANAGEMENT

• Organisational Strategy

• Human Resource Strategy

• Organisational Strategy and HR Strategy

• Theoretical perspectives of SHRM

 Organisational Strategy

An organizational strategy is the sum of the actions a company intends

to take to achieve long-term goals. Together, these actions make up a
company’s strategic plan. 
To create your organizational strategy, you should first divide it into
three distinct categories:
• Corporate level strategy
• Business level strategy
• Functional level strategy
 Organisational strategy vs Vision of the
Organisation.

Samsung’s Vision Statement

• Samsung’s corporate vision is to “Inspire the world with
our innovative technologies, products and design that
enrich people’s lives and contribute to social prosperity by
creating a new future.”
Chinhoyi University of Technology Vision Statement:
• To be the world-class center of excellence
for technological innovation and entrepreneurship.
 Corporate
Strategy

Organisational Strategy Cont..

Business
Strategy
 Corporate Strategy

Corporate Level Strategy is

the main purpose of your
business — it’s the destination toward which
your business is moving.
This includes:
Profits
Turnaround
concentration
 Business Strategy

Business Level Strategy is the bridge between

corporate level strategy and much of the “boots-on-the-
ground” activity that occurs in functional level strategy.
Because of that, business level strategy is more focused
than the corporate level strategy that drives it.
• Increase Marketing budget
• Rebrand
• Investigate new markets
• Broaden exposure
 Functional Level Strategy

• Functional Level Strategies are the specific

actions and benchmarks you assign to departments and
individuals that move your business toward the goals
created by your corporate level strategy. They are a
direct offshoot of your business level strategies.
• Coordination of departments to achieve one goal, every
department on its task to achieve the desired goals.