Key concepts and terms

National School of Business Management

Module Name Strategic Human Resource Management Gajaba Perera-Gunawardena-Management Consultant
People Resourcing Strategy Session Objectives Session Objecti es !ntroduction Objecti e o" resourcing strategy !ntroduction to t#e practice o" HRM in organi$ations %#e strategic HRM approac# to resourcing !ntegrating business and resourcing strategies %#e components o" employee resourcing strategy &undling and resourcing strategy

Introduction
%#e concept t#at t#e strategic capability o" a "irm depends on its resource capability in t#e s#ape o" people 't#e resource-based iew( pro ides t#e rationale "or resourcing strategy) *s e+plained by Grant ',--,(.

"The firms most important resources and capabilities are those which are durable, difficult to identify and understand, imperfectly transferable, not easily replicated, and in which the fi rm possesses clear ownership and control. These are the firms crown jewels and need to be protected; and they play a pivotal role in the competitive strategy which the fi m pursues. The essence of strategy formulation, then, is to design a strategy that makes the most effective use of these core resources and capabilities."
Strategies are "ormulates/d wit# t#e objecti e to create a Competiti e ad antage "or t#e business0 People resource strategy is no di""erent0 t#e objecti e #ere is to create en#anced business per"ormance t#roug# its people0 pro iding t#em 1nowledge0 opportunities and resources t#at would ma+imi$e t#e people2s potential and would result in a better per"orming organisation) !t not only about people wit#in t#e organisation but also about attracting pro"essionals and s1illed wor1"orce "rom t#e mar1et0 t#roug# better image creation0 Strategy s#all "ocus on better utilisation o" s1ills o" people so t#at business prospers and leads t#e mar1et)

Resources Vs. Capabilities A distinction, made by Amit & Schoemaker (1993), is that the encompassing construct previously called "resources" can be divided into resources and capabilities !3" #n this respect, resources are tradable and non$speci%ic to the %irm, &hile capabilities are %irm$speci%ic and are used to engage the resources &ithin the %irm, such as implicit processes to trans%er kno&ledge &ithin the %irm ('akadok, ())1, p3**$3*9+ ,oopes, 'adsen and -alker, ())3, p*9)) .his distinction has been &idely adopted throughout the resource$based vie& literature (/onner and 0rahalad, 1991, p233+, p33*+ 4arney, 'akadok (())1) emphasi5es the distinction bet&een capabilities and resources by de%ining capabilities as 6a special type o% resource, speci%ically an organi5ationally embedded non$trans%erable %irm$speci%ic resource &hose purpose is to improve the productivity o% the other resources possessed by the %irm7(p3*9) 68esources are stocks o% available %actors that are o&ned or controlled by the organi5ation, and capabilities are an organi5ation9s capacity to deploy resources7:!3" p 3; <ssentially, it is the bundling o% the resources that builds capabilities

3mployee retention strategies s#all be employee centred rat#er t#an business centred- do not lose on an asset t#at #as de eloped wit# t#e business o er a period o" time0 Retention #as many ways some o" t#em include pro ision o" better opportunities and rewards t#an ot#ers and by de eloping a positi e psyc#ological contract t#at increases commitment and creates mutual trust) Plus ma1ing sure t#at t#ere are rig#t people at t#e rig#t time "or t#e rig#t job wit# t#e rig#t resources0 t#is would not just #elp in moti ating employees but will also #elp in creating a sense o" mutual respect wit# in t#e business and would result in a more conduci e and better organisational climate)

The aim o" t#is strategy is to ensure t#at a "irm ac#ie es competiti e ad antage by attracting and retaining more capable people t#an its ri als and employing t#em more e""ecti ely) %#ese people will #a e a wider and deeper range o" s1ills and will be#a e in ways t#at will ma+imi$e t#eir contribution) %#e organi$ation attracts suc# people by being 4t#e employer o" c#oice2) !t retains t#em by pro iding better opportunities and

rewards t#an ot#ers and by de eloping a positi e psyc#ological contract t#at increases commitment and creates mutual trust) 5urt#ermore0 t#e organi$ation deploys its people in ways t#at ma+imi$e t#e added alue t#ey create) *n organi$ation2s employee alue proposition consists o" w#at an organi$ation #as to o""er t#at prospecti e or e+isting employees would alue and w#ic# would #elp to persuade t#em to join or remain wit# t#e business) !t will include remuneration 6 w#ic# is important but can be o er-emp#asi$ed compared wit# ot#er elements) %#ese non"inancial "actors may be crucial in attracting and retaining people and include t#e attracti eness o" t#e organi$ation0 t#e degree to w#ic# it acts responsibly0 respect 6 di ersity and inclusion0 wor16li"e balance and opportunities "or personal and pro"essional growt#

Box 2 the employer of choice !mployee Bran"# %#e employee alue proposition can be e+pressed as an employer brand0 de"ined by 7al1er '899:( as 4a set o" attributes and ;ualities 6 o"ten intangible 6 t#at ma1e an organi$ation distincti e0 promise a particular 1ind o" employment e+perience and appeal to people w#o will t#ri e and per"orm t#eir best in its culture2) 3mployer branding is t#e creation o" a brand image o" t#e organi$ation "or prospecti e employees) !t will be in"luenced by t#e reputation o" t#e organi$ation as a business or pro ider o" ser ices as well as its reputation as an employer) The strategic $%M approach to resourcing Strategic HRM emp#asi$es t#e importance o" #uman resources in ac#ie ing organi$ational capability and t#ere"ore t#e need to "ind people w#ose attitudes and be#a ior are li1ely to be congruent wit# w#at management belie es to be appropriate and conduci e to success) !n t#e words o" %ownley ',-<-(0 organi$ations are concentrating more on 4t#e attitudinal and be#a ioral c#aracteristics o" employees2) %#is tendency #as its dangers) !nno ati e and adapti e organi$ations need non-con"ormists0 e en ma eric1s0 w#o can 4buc1 t#e system2) !" managers recruit people 4in t#eir own image2 t#ere is t#e ris1 o" sta""ing t#e organi$ation wit# con"ormist clones and o" perpetuating a dysfunctional culture 6 one t#at may #a e been success"ul in t#e past

but is no longer appropriate in t#e "ace o" new c#allenges 'as Pascale0 ,--90 e+claims0 4not#ing "ails li1e success2()

%#e HRM approac# to resourcing t#ere"ore emp#asi$es t#at matc#ing resources to organi$ational re;uirements does not simply mean maintaining the status quo and perpetuating a moribund 'declining/likely to fail( culture) !t can and o"ten does mean radical c#anges in t#in1ing about t#e s1ills and be#a iors re;uired in t#e "uture to ac#ie e sustainable growt# and cultural c#ange) !t also means using a systematic approac#0 starting wit# #uman resource planning and proceeding t#roug# recruitment0 selection and induction0 "ollowed by per"ormance management0 learning and de elopment0 recognition and reward) &ntegrating business an" resourcing strategies %#e p#ilosop#y be#ind t#e strategic HRM approac# to resourcing is t#at it is people w#o implement t#e strategic plan) *s =uinn Mills ',-<>( #as put it0 t#e process is one o" 4planning wit# people in mind2) %#e integration o" business and resourcing strategies is based on an understanding o" t#e direction in w#ic# t#e organi$ation is going and t#e "ollowing considerations)

Considerations affecting the integration of business and resourcing strategies ? %#e numbers o" people re;uired to meet business needs) ? %#e s1ills and be#a ior re;uired to support t#e ac#ie ement o" business strategies) ? %#e impact o" organi$ational restructuring as a result o" rationali$ation0 decentrali$ation0 delayering 'reduction in t#e number o" layers o" a management #ierarc#y(0 ac;uisitions0 mergers0 product or mar1et de elopment0 or t#e introduction o" new tec#nology0 "or e+ample0 cellular manu"acturing) ? Plans "or c#anging t#e culture o" t#e organi$ation in suc# areas as ability to deli er0 per"ormance standards0 ;uality0 customer ser ice0 team wor1ing and "le+ibility t#at indicate t#e need "or people wit# di""erent attitudes0 belie"s and personal c#aracteristics) %#ese considerations will be strongly in"luenced by t#e type o" business strategies adopted by t#e organi$ation and t#e sort o" business it is in) %#ese may be e+pressed in suc# terms as Porter2s ',-<@( classi"ication o" business strategic aims 'inno ation0 ;uality and cost leaders#ip( or Miles and Snow2s ',-:<( typology o" de"ender0 prospector and analy$er organi$ations)

Resourcing strategies exist to provide the people and skills required to support the business strategy, but they should also contribute to the formulation of that strategy) HR directors #a e an obligation to point out to t#eir colleagues t#e #uman resource opportunities and constraints t#at will a""ect t#e ac#ie ement o" strategic plans) !n mergers or ac;uisitions0 "or e+ample0 t#e ability o" management wit#in t#e company to #andle t#e new situation and t#e ;uality o" management in t#e new business will be important considerations)

The components of people resourcing strategy ' $uman resource planning 'o"ten re"erred to0 especially in t#e public sector0 as wor1"orce planning( 6 assessing "uture business needs0 deciding on t#e numbers and types o" people re;uired and preparing plans "or obtaining t#em "rom wit#in or outside t#e Organi$ation) ? (reating an employer bran" 6 de eloping t#e organi$ation2s employee alue proposition %#e employee alue proposition can be e+pressed as an employer brand0 de"ined by 7al1er '899:( as 4a set o" attributes and ;ualities 6 o"ten intangible 6 t#at ma1e an organi$ation distincti e0 promise a particular 1ind o" employment e+perience and appeal to people w#o will t#ri e and per"orm t#eir best in its culture2) 3mployer branding is t#e creation o" a brand image o" t#e organi$ation "or prospecti e employees) !t will be in"luenced by t#e reputation o" t#e organi$ation as a business or pro ider o" ser ices as well as its reputation as an employer) %etention strategy 6 preparing plans "or retaining t#e people t#e organi$ation needs0
The turnover of key employees can have a disproportionate impact on the business. The people organizations wish to retain are often the ones most likely to leave. It was claimed by Reed (200 ! that" #$very worker is fi ve minutes away from handing in his or her notice% and &0working hours away from walking out of the door to a better offer. There is no such thing as a 'ob for life and today(s workers have few )ualms about leaving employers for greener pastures. #*oncerted action is re)uired to retain talented people but there are limits to what any organization can do. It is also necessary to encourage the greatest contribution from e+isting talent and to value them accordingly.

)bsence management strategy 6 planning "or t#e control o" absence ,bsence
management is the development and application of policies and procedures designed to reduce levels of absenteeism. The *I-. (200/c! report on absence management revealed that on average employers lose eight

working days for each member of staff per year and average sickness absence costs employers 0111 per employee per year. 2omething has to bedone about it. This means understanding the causes of absence% and adopting comprehensive absence management (or more positively% attendance management! policies% measuring absence and implementing procedures for the management of short3 and long3term absence.

? *lexibility strategy 6 5le+ibility planning in ol es ta1ing a radical loo1 at traditional employment patterns) %#is means considering t#e scope "or more "le+ible wor1ing based on multi-s1illing0 de eloping a 4"le+ible "irm2 by identi"ying and employing core and perip#eral employees0 including t#e use o" sub-contracting and outsourcing0 and introducing more "le+ible wor1ing arrangements including job s#aring0 #omewor1ing and telewor1ing0 "le+ible #ours0 and o ertime and s#i"t wor1ing) %#e aim o" "le+ibility planning is to pro ide "or greater operational "le+ibility0 impro et#e utili$ation o" employees2 s1ills and capacities0 increase producti ity and reduce employment ? Talent management strategy 6 ensuring t#at t#e organi$ation #as t#e talented people it re;uires to pro ide "or management succession and meet present and "uture business needs) %#e term 4talent management2 may re"er simply to management succession planning and management de elopment acti ities0 alt#oug# t#is notion does not really add anyt#ing to t#ese "amiliar processes e+cept a new0 alt#oug# admittedly ;uite e ocati e0 name) !t is better to regard talent management as a more compre#ensi e and integrated bundle o" acti ities0 t#e aim o" w#ic# is to secure t#e "low o" talent in an organi$ation0 bearing in mind t#at talent is a major corporate resource) ? %ecruitment an" selection strategy 6 planning t#e approac#es used to obtain people) Recruitment is t#e process o" "inding and engaging t#e people t#e organi$ation needs) Selection is t#at part o" t#e recruitment process concerned wit# deciding w#ic# applicants or candidates s#ould be appointed to jobs) Bun"ling resourcing strategies an" activities * person resourcing is not just about recruitment and selection) !t is concerned wit# any means a ailable to meet t#e needs o" t#e "irm "or certain s1ills and be#a iors) * strategy to enlarge t#e s1ill base may start wit# recruitment and selection but would e+tend into learning and de elopment to en#ance s1ills and modi"y be#a iors0 and met#ods o" rewarding people "or t#e ac;uisition o" e+tra s1ills) Per"ormance management processes can be used to identi"y de elopment needs 's1ill and be#a ioral( and moti ate people to ma1e t#e most e""ecti e use o" t#eir s1ills) Competency "ramewor1s and pro"iles can be prepared to de"ine t#e s1ills and be#a iors re;uired and used in selection0 employee de elopment and employee reward processes)

%#e aim s#ould be to de elop a rein"orcing bundle o" strategies along t#ese lines) %alent management is a 4bundling2 process t#at is an aspect o" resourcing)

Summary
Objective of resourcing strategy+ %o ensure t#at a "irm ac#ie es competiti e ad antage by attracting and retaining more capable people t#an its ri als and employing t#em more e""ecti ely)

,- The strategic $%M approach to resourcing Strategic HRM emp#asi$es t#e importance o" #uman resources in ac#ie ing organi$ational capability and t#ere"ore t#e need to "ind people w#ose attitudes and be#a ior are li1ely to be congruent wit# w#at management belie es to be appropriate and conduci e to success)

2- &ntegrating business an" resourcing strategies ? ? ? ? ? .- The components of employee resourcing strategy Human resource planning includes creating an employer brand0 retention strategy0 absence management strategy0 "le+ibility strategy0 talent management strategy0 and recruitment and selection strategy) %#e numbers o" people re;uired to meet business needs) %#e s1ills and be#a ior re;uired to support t#e ac#ie ement o" business strategies) %#e impact o" organi$ational restructuring) Plans "or c#anging t#e culture o" t#e organi$ation)

/- Bun"ling an" resourcing strategy Resourcing strategy s#ould include t#e bundling o" di""erent aspects o" resourcing to gat#er so t#at t#ey can be mutually supporti e)

Re"erences

Grant0 R M ',--,( %#e resource-based t#eory o" competiti e ad antage. implications "or strategy "ormation0 California Management Review0 .. '>(0 pp ,A6>@ Miles0 R 3 and Snow0 C C ',-:<( Organizational Strategy: Structure and process 0 McGraw-Hill0 New Bor1 Pascale0 R ',--9( Managing on the Edge0 Ci1ing0 Dondon Porter0 M 3 ',-<@( Competitive dvantage: Creating and sustaining superior performance0 New Bor10 %#e 5ree Press =uinn Mills0 E ',-<>( Planning wit# people in mind0 !arvard "usiness Review0 No ember6Eecember0 pp -:6,9@ %ownley0 & ',-<-( Selection and appraisal. reconstructing social relationsF0 in 'ed( G Storey0 #ew $erspectives in !uman resource Management 0 Routledge0 Dondon