Human Resource

Management Strategy
Human Resource Management
Strategy
The Meaning of “Strategy”
 A critical factor that affects Firm Performance
 A factor that contributes to Competitive
Advantage in markets
 Having a long-term focus
 Plans that involve the top executives and/or
board of directors of the firm
 A general framework that provides a
perspective for selecting specific policies and
procedures
Human Resource Management
Strategy
Why is HR critical to firm performance?
 85% of all firms in the US are service firms.
 Service is delivered by people.
 Low quality HR leads to low quality customer
service.
 In the 21st century effective knowledge
management translates into competitive
advantage and profits.
 Knowledge comes from a firm’s people.
Human Resource Management
Strategy
What is unique about Human Resource Management?
 HR is multidisciplinary: It applies the
disciplines of Economics (wages, markets,
resources), Psychology (motivation,
satisfaction), Sociology (organization
structure, culture) and Law (min. wage, labor
contracts, EEOC)
 HR is embedded within the work of all
managers, and most individual contributors
due to the need of managing people
(subordinates, peers and superiors) as well as
teams to get things done.
HR Strategy: Strategic Fit
Corporate Strategy

Business Strategy

HR Strategy

HR System Training Rewards

(Performance Mgmt.)
HR Strategy: HR System Internal Fit
HR Strategy
Goal Setting

Performance
Appeal Measurement

Coaching

Rewards Performance Evaluation

Performance Management System

HR Strategy: Context of HR System
1. The “Five Factors” Influencing the HR System
◦ External Environment
◦ Social: social values, roles, trends, etc.
◦ Political: political forces, changes. Ex. Bush
presidency and its agenda for Social Security.
◦ Legal: laws, court decisions, regulatory rules.
◦ Economic: product, labor, capital, factor markets.
HR Strategy: Context of HR System
2. The Workforce
◦ Demographics
HR Strategy: Context of HR System
3. Organization Culture
◦ Weak vs. Strong culture
◦ “Type” of culture
HR Strategy: Context of HR System
4. Organization Strategy
◦ What are a firm’s distinctive competencies?
◦ What is the basis that competitive strategy be
sustained?
◦ What are a firm’s strategic objectives?
◦ Compare corporate and Business strategies.
HR Strategy: Context of HR System
5. Technology of Production & Organization of
Work
◦ Physical layout/employee proximity
◦ Required employee skills
◦ Ease of monitoring employees’ input
HR Strategy: Context of HR System
Critical Thinking Questions:
1. Should a company monitor the HR environment and
imitate “Best Practices” of HR from successful firms?
What caveats would you want to apply to applying
Best HR Practices?
2. Give an example of a type of Organizational Culture
that would reinforce strategy: What type of HR
practices would fit with this culture?
3. What type of HR practices would fit with jobs with
tasks that are highly ambiguous, uncertain and
creative? What about predictable, routine and
certain tasks?
HR Strategy: Strategic Roles
Distribution of Task Outcomes: 3 Possibilities
1. “Foot soldier”: low upside, low downside of
performance variance
2. “Guardian”: low upside, high downside of
performance variance
3. “Star”: high upside, low downside of
performance variance
HR Strategy: Strategic Roles
Critical Thinking Questions:
1. Which Roles are Strategic? Foot soldier,
guardian or star?
2. What are the advantages of focusing on foot
soldiers with the company HR policies?
3. What are the liabilities of stars? When is it
advantageous to cultivate and sustain stars?
HR Strategy: Consistency
Consistency is an important quality related to
the implementation of HR policies.
Employees should receive a clear, undiluted
message of what behaviors are important and
desirable. When there is a fit between HR
systems, employees are likely to receive
consistent feedback. The 3 types of
consistency are…
1. Single-employee consistency
2. Among-employee consistency
3. Temporal consistency
HR Strategy: Consistency
IBM motivates its employees through: •
Performance-based opportunities. • Leadership.
• Hiring diverse and talented people. •
Flexibility. • A values-based climate. But what
role does HR play in building the ideal IBM
workforce? Again, at IBM, the goals are clear.
At IBM, HR is expected to:
Anticipate and build skills.
Lead transformation.
Grow IBM