STRATEGIC HRM

Human Resource Management

Introduction

A strategy:

Indicates what an organization's key executives hope to accomplish in the long run Is concerned with competition and aligning the resources of the firm

Good HR strategy results in a fit between organizational strategy and HRM policies and programs

Recruitment, selection, outsourcing, telecommuting, performance evaluation, compensation

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Strategic human resource management

formulating and executing HR systems that produce the employee competencies and behaviors the company needs to achieve its strategic aims

Taking a strategic HRM approach means:

Making human resources management a top priority Integrating HRM with the companys strategy, mission, and goals

HRM can make significant contributions if included in the strategic planning process from the outset

The strategic management process helps determine: What must be done to achieve priority objectives How they will be achieved
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Human Resource Management

Strategic HRM: A Key to Success

Three levels of strategy apply to HRM activities:

Strategic (long term) Managerial (medium term) Operational (short term)

Employee selection/placement Rewards Appraisal Development
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The HRM activities are:

Human Resource Management

Strategic HRM: A Key to Success

Strategic HRM planning leads to:

Growth Profits Survival Expands awareness of possibilities Identifies strengths and weaknesses Reveals opportunities Points to the need to evaluate the impact of internal and external forces
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Planning also:

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Traditional HR vs. Strategic HR

Point of distinction Focus Role of HR Initiatives Time horizon Control Job design Traditional HR Employee Relations Transactional change follower and respondent Slow, reactive, fragmented Short-term Strategic HR Partnerships with internal and external customers Transformational change leader and initiator Fast, proactive and integrated Short, medium and long (as required) Organic-flexible, whatever is necessary to succeed Broad, flexible, cross-training teams

Bureaucratic-roles, policies, procedures

Tight division of labor; independence, specialization

Key investments Accountability Responsibility for HR

Capital, products
Cost centre Staff specialists

People, knowledge Investment centre Line managers

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Shifts in HR management in India

Traditional HR practice Administrative role Reactive Separate, isolated from company mission Emerging HR practice Strategic role Proactive Key part of organizational mission

Production focus
Functional organization Individuals encouraged, singled out for praise, rewards People as expenses
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Service focus
Process-based organization Cross-functional teams, teamwork most important

People as key investments/assets

Linking Corporate and HR Strategies

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Strategic Management Process

Environmental Scanning Strategy Formulation

Corporate level Business unit level Functional level

Strategy Implementation

Strategy Evaluation

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HR Role in Strategic Management

In strategy formulation HR manager supplies competitive intelligence that is useful In strategy implementation Encouraging proactive behavior Explicit communication goals Stimulate critical thinking Productivity Quality and Service Proficient strategic management
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A Model to Organize HRM

ARDM means:

Acquiring Rewarding Developing Maintaining and protecting Socially responsible and ethical practices

The goals of the ARDM model are:

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A Model to Organize HRM

The eventual success of any HRM activity is: The organization's employees are the best qualified They perform jobs that suit their needs, skills, and abilities Matching people and activities in order to accomplish goals is easier with a diagnostic approach
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Human Resource Management

Taking a Diagnostic Approach to HRM

The ARDM model has four specific steps: Diagnosis Prescription Implementation Evaluation Managers typically diagnose a work situation by observing and identifying key factors A prescription is then made to translate the diagnosis into action Most human resource problems are too complex to have a single correct prescription
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Human Resource Management

Taking a Diagnostic Approach to HRM

Implementing a solution is the next step, followed by evaluation Evaluation tells managers whether improvement in the ARDM process is needed If an organization teaches its members to focus on ARDM plus the environment, it is likely to achieve: Socially responsible, ethical behaviors Competitive, high-quality products and services

The ARDM model calls for thorough, timely, and systematic review of each situation
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Human Resource Management

External Environmental Influences

HRM processes are influenced by both the internal and external environments

External influences include: Government laws and regulations Union procedures and requirements Economic conditions The labor force Guidelines Limits of available resources Competencies
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HR planning must operate within:

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Economic Conditions

Two economic factors affect HRM programs:

Productivity The work sector of the organization

An important part of a nation's economic condition Representative of an organizations overall efficiency The output of goods and services per unit of input (resources) used in a production process
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Productivity is:

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Economic Conditions

Managers can influence productivity through sound HRM programs

Diagnosis, prescription, implementation, and evaluation Recruitment and selection Motivational and compensation techniques Training and development

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Internal Environmental Influences

HRM programs are influenced by:

Strategy Goals Organizational culture Nature of the task Work groups The leaders style and experience

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Goals

Organizational goals differ within and among departments

Most departments have similar goals Differences arise from the importance placed on the goals

In organizations where profits take precedence, HRM goals receive little attention

This results in effectiveness problems (absenteeism, performance decrements, high grievance rates)
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Organization Culture

A firm's organizational culture is shown by:

The way it does business How it treats customers and employees The autonomy or freedom that exists in the departments or offices The degree of loyalty expressed by employees

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Organization Culture

Organization culture represents the perceptions held by the employees

There is no one "best" culture for the development of human resources Impact behavior, productivity, expectations Provide a benchmark for standards of performance

Culture can:

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Work Group

An employees experiences are largely influenced by the work group

A group is two or more people who: Consider themselves a group Work interdependently to accomplish a purpose Communicate and interact with one another on a continuous basis In many cases, work next to each other

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Leaders Style and Experience

The experience and leadership style of the operating manager directly affects HRM activities

Orchestrating the skills, experiences, personalities, and motives of individuals Facilitating interaction within work groups Providing direction, encouragement, and authority to evoke desired behaviors Reinforcing desirable behavior

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