Strategy, human resource

management and performance:

Sharpening line of sight
PRESENTED BY:
MAHAM ARIF SP23-RBA-008
ABSTRACT

 This paper talks about how a company's strategy, its human resources (the people who
work there), and its performance are connected. It looks at how human resources can
help a company be better than its competitors. It suggests a model that shows how the
company's strategy and the way it manages its people at different levels (like the whole
company, smaller groups, and individuals) should work together. They say that when
everything is aligned properly, it helps create what they call "human capital" (when you
invest of human resources, the skills and abilities they develop in them is the human
capital) and "social capital" (how well people work together), which are both important
for the company to do well.
 INTRODUCTION

 The article highlights the importance of internal resources and human resources in gaining a competitive
advantage for firms.
 Internal resources refer to the assets, capabilities, and competencies that a firm possesses within its
organization. Internal resources play a crucial role in enabling a firm to develop unique capabilities and
strengths that differentiate it from competitors and create value for customers.
• Tangible assets such as physical infrastructure, technology, and financial resources.
• Intangible assets such as organizational culture, intellectual property, and human resources.
 Human resources refer to the knowledge, skills, abilities, and motivation of the firm's workforce, which are
essential for driving innovation, delivering high-quality products or services, and ultimately achieving
competitive success.
 FRAMEWORK

 The paper proposes a framework that ensures a clear connection between a company's strategy and its
implementation at all levels: organizational, group, and individual.
 It uses the resource-based view (RBV) as a theoretical foundation, suggesting that HR practices can create
human and social capital leading to superior performance.
 The proposed model illustrates how HR practices can align organizational, group, and individual activities
with the company's strategic goals, thereby enhancing organizational performance. It argues that
organizational performance will improve when organizational capabilities, group competencies, and
employee skills are aligned with strategic goals.
 Strategy and human resource management

 Human resource management is crucial for effective strategy implementation. HRM is recognized as
essential for firms to achieve and sustain competitive advantage. The resource-based view (RBV) of the
firm emphasizes the strategic importance of human resources in creating sustainable competitive
advantage.
 Resource-Based View: It's a way of looking at a company's competitive advantage by focusing on its
internal resources rather than just external factors like market conditions or industry trends. The RBV
theory suggests that a firm's unique resources and capabilities, such as valuable skills, or brand
reputation, are what give it a sustainable competitive advantage. It's like saying that what's inside the
company, like its special talents or tools, is what really sets it apart from the competition.
 Strategy and human resource management

Linking HRM to Strategy

 Human resources and HRM practices, including organizational culture and learning, play a significant role in
sustaining competitive advantage.
 HRM practices contribute strategically to firms' ability to formulate and execute their strategies.
 Instead of just seeing HRM practices as routine tasks, the article suggests seeing them as important tools that can
help a company do better than its competitors over a long time.
 Different theoretical perspectives have been employed to understand the relationship between HRM practices and
performance.
 Some focus on developing human capital directly affecting performance outcomes
 Others emphasize the role of HRM practices in fostering social capital, which in turn enhances performance.
Strategy and human resource management
Human Capital Perspective
 HRM practices, such as recruitment, selection,
and employee development, contribute to
organizational performance by enhancing
employees' knowledge, skills, and abilities.
These practices create firm-specific human
capital, which mediates the relationship
between HRM and performance.
Social Capital Perspective
 Social capital, which refers to relationships
and interactions among people, is seen as
crucial for achieving strategic priorities and
ultimately enhancing firm performance. HRM
practices that promote a supportive
organizational culture and effective
networking among employees contribute to
the development of social capital.
 Line of sight (LOS) is about how well employees
understand their company's goals and what they need to
do to help achieve those goals. It's like making sure
Line of Sight everyone knows where the company is headed and how
(LOS) they fit into the big picture. Imagine it as giving
employees clear directions on how they can contribute
to the company's success
Related Ideas

How well employees' values match

Giving employees the chance to be part
the company's culture and whether
of important decisions and meaningful
their goals align with their
work. When employees feel involved and
supervisors'. If employees understand
have the skills and motivation to do their
and share the company's values and
jobs well, they perform better and feel
goals, they're more likely to stay
more satisfied at work.
happy and committed.
 A model for sharpening line of sight

This model has three main levels:

 organizational
 group
 individual.
Organizational capabilities, group
competencies, and individual skills are the
human capital, while organizational
culture, group norms, and individual
motivation and opportunity are social
capital.
Human resource management practices
play a central role in shaping and
maintaining these levels.
 Achieving Overall Firm Performance

 Organizational Capabilities / Culture:

 Organizational capabilities are the collective abilities, resources, and systems within a company that enable it
to perform effectively and achieve its goals.
 These capabilities, along with organizational culture, are crucial for firm performance. Organizational culture
is about shared values and beliefs that align with the company's goals.
 HRM practices play a key role in shaping organizational culture and capabilities. Practices like recruitment,
training, and compensation can influence employee behavior and attitudes, ultimately impacting organizational
outcomes. For example, high-performance work systems are linked to positive results like increased
productivity.
 Achieving Overall Firm Performance

 Organizational Capabilities / Culture:

 Organizational citizenship behavior, or OCB, refers to extra efforts employees put in voluntarily. When
employees go above and beyond, it's often because they share the company's goals and values. This collective
behavior contributes to the organization's culture and performance.
 A company’s strategy must match its organizational capabilities and culture. For instance, if a company aims to
excel in innovation and quality, it needs structures and processes that support these goals. HRM practices
should be designed to align with the strategic direction of the company.
 HRM practices that support and reinforce organizational capabilities and culture, in line with the company's
strategy, lead to improved performance.
 Achieving Overall Firm Performance

 Group level competencies/norms:

 Groups also operate based on shared rules of behavior, known as group norms. These norms influence
individual and group performance, impacting outcomes like organizational citizenship behavior (OCB) and
group effectiveness.
 Competencies and norms unique to a firm's groups can be a source of competitive advantage if they're
valuable, rare, and hard to copy. HRM practices play a role in nurturing and sustaining these competencies and
norms, aligning them with the company's strategy.
 Clear alignment of employee expectations with strategic goals is crucial. When employees understand how
their actions contribute to strategic objectives, they're more likely to perform effectively, regardless of their
role within the organization.
 Achieving Overall Firm Performance

 Individual KSAs/motivation/opportunity
At the individual level, employees need the right skills, motivation, and opportunities to contribute effectively to the
organization's strategic goals. This level is where strategy is put into action through employees' behaviors.
 Action alignment involves ensuring that employees have the necessary skills (Knowledge, Skills, and Abilities -
KSAs) and the chance to apply them to their work effectively. HRM practices can support this by providing clear
communication of strategic objectives and fostering employee participation.
 Interest alignment means aligning employees' interests with the organization's goals. This requires both extrinsic
(e.g., rewards) and intrinsic (e.g., meaningful work) motivators. HRM practices like performance appraisal and
compensation play a crucial role in motivating employees and holding them accountable.
 Achieving Overall Firm Performance

 Individual KSAs/motivation/opportunity
 Balancing Extrinsic and Intrinsic Motivation is important. While external rewards can motivate, solely relying on
them may not be effective in the long run. Employees also need intrinsic satisfaction from their work, feeling that
what they do is meaningful and contributes to important goals.
 Organizational leaders and HRM practices can enhance intrinsic motivation by emphasizing the meaningfulness of
employees' work and fostering a culture where employees feel empowered to contribute to shared goals. This
approach aligns with frameworks like Organizational Citizenship Behavior (OCB).
 Overall, ensuring that employees have the skills, motivation, and opportunities to contribute to strategic objectives
is crucial for organizational success
 We conclude that when a company's human resource
management (HRM) practices, like hiring, training, and
motivating employees, are in line with the company's
CONCLUSION strategy and work well together, it leads to better
performance for the organization. This means having the
right culture, skills, and motivation across the company,
which all support the company's goals and help it succeed.