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Contents
Strategic HRM Defined Basis of SHRM Principles of SHRM Aims of SHRM Objectives of SHRM
Concepts of SHRM
Perspectives of SHRM Strategic Role of HR
Contd.
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Contents (Contd.)
Strategic vs. Traditional HR Strategy Driven Role Behaviors Strategic Typology of HR Activities Strategic Staffing Policies Barriers to SHRM
Challenges to SHRM
Outcomes of SHRM Model of SHRM
strategic resource for the achievement of competitive advantage - Hendry and Pettigrew A set of processes and activities jointly shared by human resources and line managers to solve people-related business problems - Schuler and Walker SHRM focuses on actions that differentiates the firm from its competitors. - Purcell The central premise of strategic human resource management theory is that successful organizational performance depends on a close fit or alignment between business and human resource strategy. - Batt
SHRM is largely about integration and adaptation. Its concern is to ensure that:
1. 2. 3.
HRM is fully integrated with the strategy and the strategic needs of the firm HR policies cohere both across policy areas and across hierarchies HR practices are adjusted , accepted and used by line managers and employees as part of their everyday work
SHRM is an approach that defines how the organizations goals will be achieved through people by means of HR strategies and integrated HR policies and practices Managing SHR includes:
Aligning HR and Business Strategy Reengineering Organization Processes Listening and responding to employees Managing Transformation and Changes
Basis of SHRM
Basis of SHRM
Three propositions
HR/HC play a strategic role in success of an organization and are a major source of competitive advantage 2. HR strategies must be integrated with the business plans (vertical integration)
1.
Allen & White:
The central premise of SHRM theory is that successful organizational performance depends on a close fit or alignment between business and HR Strategy The major focus of SHRM should be aligning HR with firm strategies
Boxell et al:
Individual HR strategies should cohere by being linked to each other to provide mutual support (horizontal integration)
Principles of SHRM
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Principles of SHRM
Ondrack and Nininger: -
There is an overall purpose and the HR dimensions of that purpose are evident 2. A process of developing strategy within the organization exists and is understood, and there is explicit consideration of HR dimensions 3. Effective linkages exist on a continuing basis to ensure the integration of human resource considerations with the organizational decision making process
1.
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The office of the chief executive provided the challenge for integrating HR considerations to meet the needs of the business 5. The organization of all levels establishes responsibility and accountability for HRM 6. Initiatives in the management of HR are relevant to the needs of the business 7. It includes the responsibility to identify and interact in the social, political, technological and economic environments in which the organization is and will be doing business
4.
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Aims of SHRM
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Aims of SHRM
Fundamental Aim
To generate strategic capability by ensuring that the
organization has the skilled, engaged and well motivated employees it needs to achieve sustained competitive advantage
As per the resource based view, the strategic goal: To create firms which are more intelligent and flexible
than their competitors, by hiring and developing more talented staff and by extending their skills base
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concern is to ensure that: HRM is fully integrated with the strategy and strategic needs of
the firm HR policies cohere both across policy areas and across hierarchies HR policies are adjusted, accepted and used by line managers and employees as part of their everyday work
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broad, contingency based and integrative. The rationale for SHRM is the perceived advantage of having an agreed and understood basis for developing and implementing approaches to people management that take into account the changing context in which the firm operates and its longer term requirements Lengnick-Hall: - Underlying this rationale in a business is the concept of achieving competitive advantage through HRM
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Objectives of SHRM
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Objectives of SHRM
1.
2. 3. 4. 5.
To identify and analyze external opportunities and threats that may be crucial to the company's success. To provide a clear business strategy and vision for the future. To supply competitive intelligence that may be useful in the strategic planning process. To recruit, retain and motivate people. To develop and retain highly competent people.
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To ensure that people development issues are addressed systematically. To supply information regarding the company's internal strengths and weaknesses. To meet the expectations of the customers effectively. To ensure high productivity. To ensure business surplus thorough competency
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Concepts of SHRM
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Concepts of SHRM
Resource Based View
Developed by Penrose and expanded by Wernerfelt
Based on Hamel and Prahalad view: It is the range of resources in an organization including its HR, that produces its unique character and creates competitive advantage Jay Barney: Competitive Advantage arises first when firms within an industry are heterogeneous with respect to the strategic resources they control and second when these resources are not perfectly mobile across firms and thus heterogeneity can be long lasting.
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3.
4.
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2.
There is heterogeneity in their availability in the sense of the differences that exist between them across firms in an industry and They are immobile in the sense that competing firms may be unable to recruit them.
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2.
3. 4.
The resource must add positive value to the firm The resource must be unique or rare amongst current and potential competitors The resource must be imperfectly imitable The resource cannot be substituted with another resource by competing firms
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Resource based HRM can produce HR Advantage. The aim is to develop strategic capability. This means strategic fit between resources and opportunities, obtaining added value from the effective deployment of resources, and developing people who can think and plan strategically in the sense that they understand key strategic issues and ensure that what they do supports the achievement of the businesss strategic goals
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This approach highlights the importance of a human capital management approach to HRM and provides the justification for investing in people through resourcing, talent management and learning and development programmes as a means of enhancing competitive advantage.
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Vertical Horizontal
Strategic Flexibility
Ability of a firm to respond and adapt to the changes in
Perspectives of SHRM
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Some HR practices are better than the others and all organizations should adopt these best practices. There is universal relationship between individual best practices and firm performance
Organizations HR policies must be consistent with other aspects of the organization
Holistic approach Independent variables HR practices and Dependent variable Organizational Performance
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Richardson and Thompson: Best Practice Approach (Universalistic) Best Fit Approach (Contingency) Bundling (Configurational)
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As per Pfeffer: 1. Employment and security 2. Selective hiring 3. Self-managed teams 4. High compensation contingent to performance 5. Training to provide a skilled and motivated workforce 6. Reduction of status differentials 7. Sharing information
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As per Guest: 1. Selection and the careful use of selection tests to identify those with potential to make a contribution 2. Training, and in particular a recognition that training is an ongoing activity 3. Job design to ensure flexibility, commitment and motivation, including steps to ensure that employees have the responsibility and autonomy fully to use their knowledge and skills 4. Communication to ensure that a two-way process keeps everyone fully informed 5. Employee share ownership programmes to increase employees awareness of the implications of their actions on the financial performance of the firm
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Delery and Doty seven Strategic HR practices: 1. Internal career ladders 2. Formal training systems 3. Results-oriented appraisal 4. Performance based compensation 5. Employment security 6. Employee voice 7. Broadly defined jobs
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HR strategies should be contingent on the context, circumstances of the organization and its type Vertical integration Models: 1.
Development of a firm takes place in four stages Startup, growth, maturity and decline Baird & Meshoulam: HRs effectiveness depends on its fit with the organizations stage of development. As the organization grows and develops, HRM programmes, practices and procedures must change to meet its needs. Consistent with growth and development models it can be suggested that human resource management develops through a series of stages as the organization becomes more complex
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Models (Contd.): 1.
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o Buller and Napier: Start-up phase HRM may be loose and informal Growth phase Formal structure and functional specialties; role of HR attract the right kinds and numbers of people; talent management; performance management; learning & development and; reward policies and practices Maturity Phase HR may be less innovative and more inclined to consolidate and develop existing practices rather than create new ones. Decline Phase Downsizing and being taken over
Models (Contd.): 2.
Competitive strategy
o Porter: 1. Innovation Strategy 2. Quality Strategy 3. Cost leadership o Schuler & Jackson : - effectiveness can be increased by systematically melding human resource practices with the selected competitive strategy
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Competitive strategy
INNOVATION STRATEGY
Jobs that require close interaction and coordination among groups of individuals PAs that are more likely to reflect longer term and group based achievements
QUALITY STRATEGY
Relatively fixed and explicit job descriptions High levels of employee participation
Jobs that allow employees to A mix of group and individual develop skills that can be used in criteria for PA that is mostly other positions of the firm short term and results oriented 3
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Competitive strategy
INNOVATION STRATEGY Compensation systems that emphasize internal equity rather than external or market based equity
QUALITY STRATEGY
Relative egalitarian treatment of Minimal levels of employee T & employees and some guarantees D of employee security Practices that maximize efficiency by providing means for mgmt to monitor and control closely the activities of employees
Pay rates that tend to be low but Extensive and continuous allow employees to be training and development of stockholders and have more employees freedom to choose the mix of components Broad career paths to reinforce the development of a wide 4 range of skills
0
Models (Contd.): 3.
Strategic configuration
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Miles and snow identified four types or organizations, viz.: 1. Prospectors 2. Defenders 3. Analyzers 4. Reactors Delery and Doty organizations should align their HR systems with the strategy linked to their organization. Two types of systems: 1. Market type system (for Prospector) 2. Internal System (for Defender)
BUNDLING
Development and implementation of several HR practices together so that they are interrelated and therefore complement and reinforce each other. Practices within bundles are interrelated and internally consistent and more is better with respect to the impact on performance, because of the overlapping and mutually reinforcing effect of multiple practices The aim is to achieve high performance through coherence
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Strategic Role of HR
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Strategic Role of HR
SHRM involves the development of consistent, aligned collection of
practices, programs, and policies to facilitate the achievement of the organizations strategic objectives Strategic Partner Model: David Ulrich HR should deliver results that enrich the organizations value to its
customers, investors and employees. This can be accomplished in four ways: By HR becoming partner with senior and line managers 2. By HR becoming an expert in the way work is executed 3. By HR becoming a champion for employees, working to increase employee contribution and commitment to the organization 4. By HR becoming an agent of continuous transformation that shapes processes and culture to improve an organizations capacity for change
1.
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People
changed to facilitate strategy execution identify methods for renovating the parts of the organizational architecture take stock of its own work and set priorities to ensure delivery of results
2. Administrative expert
Shed their image of rule making police while ensuring that the
required routine work still gets done effectively and efficiently. Requires rethinking or improving traditional HR functions
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situations, ensuring that change initiatives are defined, developed and delivered in a timely manner
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voluntarily want to contribute their ideas, skills and energy. Human capital is not owned by the organization and thus CA can be maintained when best employees are recruited, motivated and retained
2. Knowledge Facilitator
Procurement of the necessary employee knowledge and skill sets
that allow information to be acquired, developed, and disseminated, providing a competitive advantage
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(For HR to be a true Business Partner) 1. Strategic Contribution 2. Business Knowledge 3. Personal Credibility 4. HR delivery 5. HR technology
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Developing and implementing HR strategies that are integrated with the business strategy and are coherent and mutually supportive Ensuring that a strategic approach is adopted by the HR function that supports the business and adds value
Attainment of organizational goals by developing and implementing functional strategies that are aligned with the business strategy and integrated with the strategies for other HR functions and adopt a strategic approach in the sense of ensuring that HR activities support the business and add value Attainment of business goals of the organizational unit or function in which they operate Delivering effective HR services within their functions or as members of an HR service centre.
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Responsibility for HR
Focus Role of HR
Staff specialists
Employee relations Transactional, change follower and respondent
Line managers
Partnerships with internal and external customers Transformational, change leader and initiator
Job Design
Key investments
Accountability
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Cost center
Investment center
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HR BEHAVIORS: Cooperative
Highly creative Oriented toward the long-run Risk takers Comfortable with ambiguity (J & J, HP, 3M)
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HR PRACTICES: Group oriented, long-term appraisal systems Generalized skill development and broad career paths Compensation approaches accentuating internal equity Employment security guarantees PfM Systems emphasizing results in the short term Extensive training programmes Participative decision making Virtually no training programmes Very specialized jobs Narrow and specialized career paths Procedures for continual tracking of wage rates in the labor market
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Compliance
Labor Negotiations
Executive Compensation Employee Development Management Development Recruitment Interviewing Important to Executives
Strategic
Value of Activity
payroll Benefits administration Retirement administration Employee records Relocation administration Recruitment Information Processing Important to Employees
Low
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Transactional
Relationship
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Entry : Recruitment
Development : Retention of Core Talent Exit : Frequent Layoffs Source
Of
Labor
CLUB (Low cost producer) HR Strategy : Retention Entry : early Career Development : As generalists, slow paths Exit : Low turnover, Retirement
ACADEMY (Focused Strategy; Niches; Both pdt innovators & competitors in long run) HR Strategy : development Entry : strictly early career Development : Extensive training for specific jobs, elaborate career paths/job ladders Exit : low turnover, retirement, dismissal for poor performance
Internal
Group
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Individual
Contribution
Contribution
Barriers to SHRM
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Challenges to SHRM
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transformed into outputs Includes tools, machinery, equipment, work procedures and employee knowledge & skills Impact of technology on organizations: Requires changes in skills and work habit of employees Elimination of some lower-level positions and layers of management Less hierarchy, more collaboration
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STRATEGIC ISSUES
Impact on productivity Impact on quality of output Impact on timing/delivery of
STRATEGIC HR ISSUES
Necessary expansion/contraction
output Cost of equipment/technology Adequacy of current facilities New market opportunities afforded
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of workforce Training needed to utilize new technology Costs for hiring, severance, training Effective management of change Impact on work group dynamics
The process by which employees work from home 2/3rds of the Fortune 100 companies currently have telecommuting programmes Benefits: Retention aid Flexible work environment enables employees to balance multiple role Helps employers to retain their investments in employees in situations where the employees need to relocate Creates flexibility in recruiting Increases productivity
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Issues: Difficulty in performance monitoring (Have clear performance measurement systems) Difficulty in deciding number and kind of employees to be offered the telecommuting programme; and creation of additional need for strategies to avoid resentment or morale problems amongst non-participants (Pay attention to individual employee characteristics; select employees who have strong organizational and time management skills)
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Issues (Contd.): Expenditure on purchasing equipment for employees home office; Liability for injuries incurred while working at home and Investments in networking systems (Appropriate technology feasibility assessment) Managers resistance in having direct reports away from office (Training programmes for telecommuters and supervisors covering issues such as goal setting, time management and project reporting) Example: -Hewlett-Packard & Cisco
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E-HR
Aims at leveraging of technolgy to deliver HR solutions that brings about convergence in human capital, processes, data and tools as a catalyst towards achieving business strategies Types
Operational payroll, employee data, etc. Relational recruitment, training, performance management, etc. Transformational knowledge management, strategic reorientation, etc.
Advantages
collection of information as the basis for strategic decision-making integral support for the management of human resources and all other basic and support processes within the company prompt insight into reporting and analysis
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E-HR (Contd.)
Advantages (Contd.)
a more dynamic workflow in the business process, productivity and employee satisfaction a decisive step towards a paperless office lower business costs
Disadvantages
Can alienate staff members that need personal support Reduces the need for managers to interact with staff (i.e. less face-time and increased risk of 'losing touch' with staff) Subject to corruption/hacking/data losses
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E-HR (Contd.)
Issues
Resistance of employees and line managers Getting support from small components of the company Guaranteeing security and confidentiality
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values and convictions Subjectively assessed Ethical concern: Off the duty behavior
Ownership of work Fairness of non-compete clauses
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workforce including the fight against stereotypes, prejudice and all kind of discrimination due to the individual perceptions and assumptions- in the manner to maximize the benefit and minimize barriers of different opinions, behavior and attitudes of human beings within a company Diversity with regards to: Generational Diversity Baby Boomers, Gen X, Gen Y Individuals with Disability
Sexual Orientation
Personal and family life cycle dynamics, etc.
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Hobbies
Family Status Marital Status
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1. A Social Responsibility 2. An Economic Payback 3. A Resource Imperative 4. A Legal Requirement 5. A Marketing Strategy 6. A Business Communications Strategy 7. A Capacity-building Strategy
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6.
objectives of the organization Define diversity and determine how inclusive its efforts will be Make a decision as to whether special effort should be extended to attract a diverse workforce Assess how existing employees, customers, and other constituencies feel about diversity Determine specific types of diversity initiatives that will be undertaken
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Workplace): Embrace Diversity Recruit Broadly Select Fairly Provide Orientation & Training Sensitize all Employees Strive to be Flexible Seek to Motivate Individually Encourage employees to embrace diversity
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family, legal issues, possible terrorism & human & financial consequences of mistakes)
Strategic HR Issues in Global Assignments
Next Slide
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Strategic HR Issues
Purpose of Expatriation Selection Employee Family Orientation Employee & Family HQ Staff Managing Expats PM Compensation Labor Relations Ongoing Training Level of Stdzn Ethnocentric Polycentric Regiocentric Geocentric
Repatriation
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Outcomes of SHRM
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Outcomes of Strategic HR
Increased Performance Customer & Employee Satisfaction Enhanced Shareholder Value
through
Effective management of staffing, retention and turnover through selection of employees that fit with both strategy and culture Cost-effective utilization of employees through investment in identified human capital with potential for high retention Integrated HR programs and policies that clearly follow from corporate strategy Facilitation of change and adaptation through a flexible, more dynamic organization Tighter focus on customer needs, key and emerging markets, quality
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Model of SHRM
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Model of SHRM
External environment Competition Government Regulation Technology Market Trends Economic Trends Employee Separation Laws regulating Employment Staffing
HR Strategy HR planning Design of jobs and work systems What workers do What workers need How jobs interface with others
Training
Corporate Strategy
PM HRIS
Compensation
IR
Linking People with the Strategic needs of the Business - The 5 P Model
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Linking People with the Strategic needs of the Business - The 5 P Model
Organizational Strategy Initiates the process of identifying strategic business needs and provides specific qualities to them
Internal Characteristics
Strategic Business Needs Expresses in mission statements or vision statements and translated into strategic business objectives
External Characteristics
SHRM Activities
HR Philosophy
Expressed in statements defining business values & culture Expresses how to treat and value people Establishes guidelines for action on people-related business issues and HR programs Coordinates effort to facilitate change to address major people related business issues Motivates needed role behaviors Defines how these activities are carried out
HR Policies
Expressed as shared values (guidelines)
HR Programs
Articulated as HR strategies
HR Practices
For leadership, managerial and operational roles
HR Processes
87 the formulation and implementation of other activities For