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Chapter 1 (Strategic HRM)
Chapter 1 (Strategic HRM)
33 years management experience with government, Pakistani private sector and multinational companies in engineering, petroleum, energy and mineral sectors.
in HR, General Management, Marketing, Project Management, Engineering Operations, Business Development, External Affairs, Corporate Planning, CSR and Customer Relations. with PIDC, Habib Group, British Petroleum, BHP Billiton, Toyota Indus Motor, Pak-Arab Refinery.
22 years teaching experience at IBA, CBM, PIQC, PIM, NIPA, LUMS. Subjects: HRM, Performance & Compensation Management, Marketing Management, Strategic Management, Project Management, Industrial Marketing, Japanese Management, CSR, Customer Ascendancy.
Human Resource Management by Shah M Saad Husain
The Strategic Role of HRM Job Analysis and Job Design Staffing Employee Development Compensation Employee Relations
Identifying Sources of Information and using them. Class Interaction, learning from the Marketplace. Practical Application of course, developing
Strategies for Organizations.
HRM
Readings from selected texts, journals Theory, Concepts discussed in Class Student Projects and Reports Real Life Cases Examinations Presentations and Class Evaluations Class Participation, Quizzes, Home Assignments
Bring Course File to each class Read reading materials before class Write notes as slides are explained and discussed Keep track of Course Calendar, Class Timings, Grades, etc., on E-group and with CR Maintain contact with CR and SSH Meet Attendance and Punctuality requirements Discipline is key. Adhere to Class Rules.
Midterms ( 2 x 20 ) Final Project Report, Presentation Home Assignments, Quizzes All Quizzes are open book
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40 30 25 5
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Employee Objectives
Growth in
Family & Self Profession Career Security Social Status Work
Employer Objectives
Services Growth in Goods & Services Customer Satisfaction Revenue Generation Profits Return on Equity (ROE) Expansion of Business Corporate Reputation
EMPLOYEE
EMPLOYER
Compensation & Rewards
Performance Management
Salary Benefits Facilities and Perks Allowances Professional, Career, Societal Recognition Internal + External (Mkt) Equity
Introduction to HRM
Human Resources Strategy in a firm is a firms deliberate and planned use of human resources to help it gain a competitive advantage. The HRM strategy of a firm is its grand plan to ensure that it effectively uses its people to accomplish its mission.
HR PRACTICES
Due to Internet technologies, organizations are undergoing a complete transformation. The 21st century organization must adapt itself to management via the web. Intellectual capital will be critical to success. Advantage of bringing new technologies to the market will be shorter. Technologies will let competitors match them almost immediately.
In such times, it will be critical to attract and retain the best thinkers.
Retaining and attracting the top talent will require more than just paychecks. It will require a culture of empowering people, and a reward system that rewards the best as if they were the owners of the company.
Intellectual capital will be called on from around the globe. A global corporation might be based in the US but does its software programming in Sri Lanka, engineering in Germany, its manufacturing in China, and is linked via the Internet to allow employees to interact and work in real time.
Organizational chart more likely to be a flat web, intricately woven that links partners, employees, external contractors, suppliers, and customers in various collaborations Constructed on knowledge technological advantages. and
HRM practices make an important practical difference in three key organizational outcomes.
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Productivity Quality of Work Life Profit : Total Revenue minus the Total Cost
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A measure of the output of goods and services relative to the input of labor, capital, and equipment.
Higher productivity Leads to higher wages without boosting inflation. Is not working harder, it is working smarter. Is about doing more with fewer people, less money, less time and space, and fewer resources.
MORE PRODUCTIVE ORGANIZATIONS GET MORE GOODS AND SERVICES FROM A GIVEN AMOUNT OF LABOR, CAPITAL, EQUIPMENT.
Organizational Conditions and Practices such as promotion from within, democratic supervision, participative management, employee involvement, safe working conditions, mutual trust, team work. Employees Perceptions that they are respected, relatively well satisfied, and able to grow and develop as human beings and professionals.
Management Systems that produce profits through people share the following dimensions:
1. 2. 3. 4. 5. 6. 7. 8. 9.
Employment Security. Selective Hiring. Self-managed teams and decentralization. High Compensation contingent on organizational performance. Extensive Training, Development and Professional grooming. Reduced differences in status. Respect for competence and performance. Sharing of information, effective communication systems. Employee Care and Satisfaction. Trust.
Strategic Partners: work with multiple stakeholders to achieve business plans. Innovators: create an environment that supports continuous learning and improvement. Collaborators: create win-win situations with internal and external stakeholders. Change facilitators: anticipate the need for change, think, conceptualize, articulate, execute and energize organization to bring change.
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Environmental Opportunities and Threats. Business Strategies. Organizational Unique Characteristics. Organizations Competence.
Encouragement of proactive rather than reactive behavior Explicit communication of Company Goals Stimulation of critical thinking and ongoing examination of assumptions Identification of gaps between Current Situation and Future Vision Encouragement of Line Managers Participation Identification of HR constraints and opportunities Teamwork and creation of common bonds
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Maintaining a competitive advantage Reinforcing overall business strategy Avoiding excessive concentration on day-to-day problems Developing HR strategies suited to unique organizational features Coping with the environment Securing management commitment Translating the strategic plan into action Combining intended and emergent strategies Accommodating change
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HR Strategys effect on a firms performance depends on how well it fits with other factors Fit refers to the consistency and compatibility between HR strategies and other important aspects of the organization
Corporate Strategy is referred to as the mix of businesses a corporation decides to hold and the flow of resources among those businesses. e.g., PARCO Business Unit Strategies are those that are formulated and implemented by a firm that is relatively autonomous, even if it is part of a larger corporation. eg. PAPCO
Selected HR Strategies That Fit Miles and Snows Two Major Types of Business Strategies
HR strategies should help the organization better exploit environmental opportunities or cope with the unique environmental forces that affect it The relevant environment can be measured in terms of four dimensions:
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Degree of uncertainty: how much accurate information is available to make appropriate business decisions Volatility: how often does the environment change Magnitude of change: how drastic the changes are Complexity: how many different elements in the environment affect the firm either individually or together
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Selected HR Strategies for Firms Low and High on Different Environmental Characteristics
Firms with non-routine production processes such as advertising firms, custom printers, and biotechnology companies, benefit from flexible HR strategies that support organizational adaptability, quick response to change and creative decision making
example: Broad job classes, loose work planning, and generic training
Firms that experience high sales growth and engage in product innovation for a wide market segment benefit from HR Strategies that support growth and entrepreneurial activities
example: External recruitment or buying skills, decentralized pay decisions, customized appraisal
Firms with low rates of sales growth and limited product innovation for a narrow market segment benefit from HR strategies that emphasize efficiency, control, and firm specific knowledge
example: Internal recruitment or making skills. On-the-job training, and high dependence on superiors
Companies whose top executives are risk-averse and operate with an autocratic leadership style, and are inwardly focused use HR strategies that match this outlook
example: Seniority based pay, formal hiring and socializing of new employees, selection decisions made by the HR department and use of top-down communication channels.
Management characterized by high risk taking, participation, egalitarianism, and external, proactive environmental orientation use HR strategies that fits this outlook
example: include variable pay, giving supervisors a major role in hiring decisions, up-and-down communication channels, and multiple inputs for performance appraisals
Companies that foster an entrepreneurial climate have loose work planning, informal hiring and socializing of new employees and variable pay. Firms that discourage entrepreneurship generally prefer a control emphasis, detailed work planning, formal hiring and socializing of new employees, and fixed pay. Firms with emphasis on moral commitment- the extent to which a firm tries to foster a long-term emotional attachment between the firm and the employees have emphasis on preventive vs. remedial disciplinary action to handle employee mistakes, and explicit ethical codes to monitor and guide behavior. Firms that are low on moral commitment rely on authoritarian relationship between employee and company.
Distinctive competencies of a firm are its capabilities such as technology, management systems, reputation, etc, that give it a Competitive Edge HR strategies should enhance a firms performance by:
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helping the company exploit its specific advantages or strengths while avoiding weaknesses assisting the firm in better utilizing its unique blend of human resource skills and assets
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The best-laid HR strategies may fail when specific HR programs are poorly chosen or implemented In addition to fitting with each of the four organizational characteristics; organizational strategy, environment, organizational capabilities and characteristics, a firms HR strategies should be mutually consistent HR strategies are likely to be successful if they reinforce one another rather than work at cross-purposes. example: Working in teams, but traditional individual based performance appraisals