STRATEGIC HRM

INTRODUCTION TO HRM

Definitions

There are five basic functions of Management:

Planning, Organizing, staffing, Leading and

controlling.
Staffing refers to the Personnel management or
Human resource management or the people aspect
of any organization.

Dessler ( 2000) referred HRM to the practices and

policies needed to carry out people or personnel

aspects of management job.
The HRM Aspects here include:

conducting job analysis,

planning labour needs, s
electing candidate,
orienting and training new employees,
managing wages and salaries,
providing incentives and benefits,
appraising performance,
communication,
training and development

Johansson, P. (2009) in his book HRM in

changing organizational Context defined Human

resource management (HRM, or simply HR)
as a function in organizations designed to
maximize employee performance in service of their
employers strategic objectives.
HR is primarily concerned with how people are
managed within organizations, focusing on policies
and systems.

Human resource (HR) management can be defined as

the effective use of human resources in an organization

through the management of people-related activities.
It is a central and strategic organizational activity of
increasing complexity and importance.
This introductory survey course covers the range of HR
activities all managers need to understand: strategic
HR, legal issues, staffing, recruitment and selection,
performance management, training, compensation,
labor relations, and technical support systems.
Through interactive lectures and cases, students
become familiar with the basic principles and
techniques of human resource management.

traditional definition of HRM

HRM is the process of managing people in
organizations in a structured and thorough
manner.
It covers the fields of staffing (hiring people),
retention of people, pay and perks setting and
management, performance management, change
management and taking care of exits from the
company.

Modern definition of HRM

HRM encompasses the management of people in

organizations from a macro perspective i.e. managing

people in the form of a collective relationship
between management and employees.
This approach focuses on the objectives and
outcomes of the HRM function.
What this means is that the HR function in
contemporary organizations is concerned with the
notions of people enabling, people development and a
focus on making the employment relationship
fulfilling for both the management and employees.

FUNCTIONS OF HRM
Man power planning/HRP

Staffing levels
Skills

Recruitment & Selection/Resourcing

Selection
Interviewing
Pre-employment testing

Training & Development

Orientation/Induction/Onboarding
Management development
Training Needs Assessment
Skills Training
Career planning & development
Workshops/Conferences
Sponsorships

Performance Management & Reward

Performance appraissal
Perfomance reward
Total Reward
Incentives
Benefits

Employee relations

Union employees
Non-union employees

Employee voice practices

Collective bargaining
Employee discipline
Employee participation

The changing Environment of HRM

Nothing in this world is constant except change
We need to understand HRs role in organizations

today.
We must understand how organizations are
changing and the trends that are causing these
changes to occur.

Forces of Change
Globalization
Technological advances -HRIS
Deregulation entry tariffs and Government

protection no longer exist

Economical changes
Political changes
Legal forces

Trends in the nature of work

Shift from Manufacturing to service jobs

Service jobs require new types of knowledge workers, new HR

management methods and a new focus on Human Capital
( Knowledge, Education, Training, Skills and expertise)
Knowledge- Intensive high tech manufacturing: a lot of
mechanization and automation taking place at the factory level

The center of gravity is moving fast from manual to and clerical

workers to knowledge workers who resist the command and
control of yester years taken from military sector
New HR systems and skills will be required to select, train and
motivate such employees and win their commitment.

Workforce Diversity

Race, age, gender, values, cultural norms etc any attribute

that tells people apart.
More women in the work place
Four generations at the workplace and a fifth one cropping in
Races due to globalisation
Labour force is getting older
Increased diversity create more challenges for HR

NEW MANAGEMENT PRACTICES

The quest to be more competitive has led many

organizations to change how they are organized and

managed.
The traditional, pyramid-shaped organization is going
out of style, many organizations stressing cross
functional teams and boosting interdepartmental
communication
Boundaryless organizations -Employees do not identify
themselves with separate departments but instead
interact with whomever they must to get the job done.

Employees are being empowered more emphasis is

put on customer satisfaction- line managers are

provided with whatever is necessary to ensure
customer needs are met
Flatter organizations are becoming the norm
Work is increasingly organised among teams and
processes rather than specialized functions

Bases of power are changing- title and authority are

no longer adequate tools for managers to rely on to

get their jobs. Instead, success depends on tapping
into sources of good ideas, on figuring out whose
collaborating is needed to act on those ideas and on
working with both to get results.

Managers today must build commitment- getting

employees more involved and excited about their

jobs.

The changing role of HRM

HR and employee commitment contribution of HR

practices in creating employee commitment

HR and performance Contribution of HR to
organizational performance
HR and corporate strategy- Increasing role in
developing and implementing the company's
strategy

The Evolving Strategic Role of HRM

The

Role of human resource management in

organization has been evolving dramatically
No more a personnel department
HR is being seen as a strategic HR partner
SHRM involves making the function of managing
people the most important priority in the
organization and integrating all HR programs and
policies within the framework of a companys
strategy

Strategic HRM realizes that people make or break an

organization because all decisions made regarding

finance, marketing, operations or technology are
made by an organizations people
Strategic HRM involves the development of a
consistent, aligned collection of practices ,programs
and policies to facilitate the achievement of the
organizations strategic objectives

Strategic Human Resource Management is the

process of linking the human resource function with

the strategic objectives of the organization in order
to improve performance
Establishing a strong HR strategy that is clearly
linked to the organizations strategy is not enough
HR strategy needs to be communicated, practicedspelled out and written down

Ulrich's Model of Human Resource

Management

STRATEGIC FOCUS
Strategic partner
Change Agent
SYSTEMS

PEOPLE

Administrative expert

Employee champion

OPERATIONAL

HR can be defined by what it does, or by what it

delivers
HR can perform 4 different Roles
Strategic Partner: HR is responsible for the
organizational architecture / structure; work with
executive team to add value and achieve company
objectives.
Administrative Expert: HR makes sure that the
work gets done effectively and efficiently; streamline
and automate most operations

Change Agent: HR helps the organization adopt

and profit from change; helps plan for and overcome

resistance to change.
Employee Champion: HR responsible for
motivating, advocating for, and representing the
employees; work with and train line managers to
achieve these goals

Strategic Human Resource Management

Traditional HRM

Strategic HRM

Staff personnel in the HR

department

Line Managers, all

managers responsible for
people are HR managers

Focus of activities

Employees relations,
motivation, productivity,
compliance with laws

Partnerships with
internal and external
customers

Role of HR

Reactive and
transactional

Proactive and
transformational, change
leader

Initiative for change

Slow, piecemeal,
fragmented, not
integrated with larger
issues

Fast, flexible, systematic,

change initiatives
implemented in concert
with other HR systems

Responsibility for HR
Programmes

Strategic Human Resource Management

Traditional HRM

Strategic HRM

Short term

Consider various time

frames as necessary (short,
medium, or long)

Control

Bureaucratic control
through rules, procedures
and policies

Organic control through

flexibility as few restrictions
on employee behaviour as
possible

Job design

Focus on scientific
management principlesdivision of labour
independence and
specialization

Broad job design, flexibility,

teams and groups and cross
training

Importance
investments

Capital , products,
technology and finance

People and their knowledge,

skills and abilities

Time horizon

Strategic Human Resource Management

Accountability

Traditional HRM

Strategic HRM

Cost Centre

Investment Centre

Difference between SHRM and HR Strategies

SHRM

HR Strategies

A general approach to strategic

management of human resources

Outcome of the general SHRM

approach

Aligned with the organizational

intention about its future direction

Focus on specific organizational

intentions about what needs to be done

Focus on long term people issue

Focus on specific issues that facilitate

the achievement of corporate strategy

Defines the areas in which specific HR

strategies need to be developed

Human resource strategy decisions are

derived from SHRM

Focus on macro concerns such as

structure culture
Business plans
Strategic HRM decisions are built into
the strategic business plan

Evolution of SHRM

PM
1930-1940

HRM Early
SHRM
1970s
1980 onwards

Challenges for HR Managers

1. Globalization
. Effective global competition requires more than

creating a product in a home market and shipping it

as it is to the new market.
. It requires complex net work of global centres of
excellence that draw on technologies invented in one
locale and shared worldwide-rapid ideas around the
world to meet local needs It needs local
commitment(thinking globally but acting locally)

2. Value chain for business competitiveness

and HR services
HR professionals and theorists have emphasized
building HR practices within a form
Refocusing HR practices more on the value
chain(Suppliers and customers)and less on activities
within the firm has profound implications
The shift to a customer focus redirects attention from
the firm to the value chain in which it is embedded
This help the firm to be more customer responsive

3. Profitability through cost and growth

.Cutting costs has been one of the means to become

more profitable-It is however increasingly being

realized that revenue growth is other means for
increasing profits
.The point is not to replace cost with growth but to find
ways to experience profitable growth by leveraging
customers ,leveraging core organizational
competencies and inorganic route to Mergers and
acquisitions/joint ventures are the other means for
profitable growth

4. Capability
Building capabilities of confidence
Becoming boundary less, allowing flow of information
and ideas across hierarchical, horizontal and external
boundaries
Achieving capacity for change, the flexibility and agility
that allow constant innovation
Learning, attaining change that builds on and maintain
itself
HR managers have to constantly seek the capablities
necessary for success

5. Change
Managers ,employees and Organizations must learn to
change faster and more comfortably
HR professionals need to help their organization change
How to unlearn what we have learnt
How to honour the past and adapt for the future
How to encourage risk taking necessary for change
without putting the firm in jeopardy
How to determine which HR practices to change for
transformation and which to leave for continuity

6. Technology
Technology has made our world smaller, closer and
faster- ideas and images spread quickly worldwide
Technology will dramatically affect how and where
work is done through teleconferencing,
telecommunicating and shared data sources
Proximity was critical when a firms boundaries were
geographical
HR Professionals will have to figure out how to make
technology a viable and productive part of the setting

7. Attracting ,Retaining and measuring

competence and intellectual capital

. Sourcing and retaining talent has become the
competitive battleground
. Sourcing intellectual capital means upgrading the
leadership bench
. Leadership in the future will be team focused and
shared rather than driven by single person
. The task of seeking intellectual capital will change a
firms measurement process(vs profitability or financial
performance etc)

8. Turnaround
Turnaround so often seen in the corporate world is
not transformation
Transformation changes the fundamental image of
the business as seen by customers and employees
Transformation focuses on creating mind-share
more than market share
HR professionals who focus on transformation
create fundamental change

Organizations have difficulty achieving their

strategic objectives because employees do not really

understand these or how their jobs contribute to
overall organizational effectiveness
Fewer than 50% employees understand their
organization strategy

Effective strategy management require not only that

the organizations strategic objective be

communicated to employees but that there is a link
between employees productivity-relative to these
objectives-and the organizations reward system

OVERVIEW OF STRATEGIC
MANAGEMENT
LESSON 2

Strategic Human Resource Management

The SHRM is rooted in manpower planning
It was the work of influential management gurus(for

example Ouchi, 1981; Peters & Waterman, 1982),affirming the importance of the effective management
of people as a source of competitive advantage
This encouraged academics to develop frameworks
emphasizing the strategic role of the HR function (for
example Beer et al., 1985; Fombrun etal., 1984)
-attaching the prefix strategic to the term human
resource management

Fombrun

,Tichy and devana were the first to

formulate the concept of strategic HRM in 1984
These researchers emphasize a strategic fit between
HRM and corporate strategy

STRATEGY
The 6 Blind Men and the Elephant (Jogn Godfrey 1816 1887)
THEY ALL WENT TO SEE THE ELEPHANT

The First

approached the Elephant: God bless me but the Elephant-Is very like a wall!

The Second, feeling of the tusk, Cried, This wonder of an Elephant -Is very like a spear!

The

Third approached the animal, And happening to take The squirming trunk with in his

hands - I see, The Elephant Is very like a snake!

The

Fourth reached out an eager hand, And felt around the knee. Tis clear enough the

Elephant Is very like a tree!

The Fifth .

The Sixth
..

 Strategy is a highly ambiguous word that is usually

associated with a long range planning, a hierarchically

structured system of objectives and goals, and a
selected way of creating a fit between external
environment, internal resources and capabilities

 Strategy is about deciding where you want to go and how

you mean to get there.

A strategy is a declaration of intent: This is what we want

to do and this is how we intend to do it.

Strategies define longer-term goals but they are more

concerned with how those goals should be achieved.

Strategy is the means to create value.
A good strategy is one that works, one that guides

purposeful action to deliver the required result.

 Strategy

is the direction and scope of an

organization over the longer term ideally, which

matches its resources to its changing environment,
and in particular, to its markets, customers and
clients to meet stakeholder expectations. (Johnson
and Scholes, 1993)

 Strategy is concerned with the match between the

internal capabilities of the company and its external

environment (Kay, 1999)
The emphasis (in strategy) is on focused actions that
differentiate the firm from its competitors (Purcell,
1999)

THE CONCEPT OF STRATEGY

The

concept of strategy is based on three

subsidiary concepts:

competitive advantage,
distinctive capabilities and
strategic fit

 Competitive advantage (Michael Porter , 1985).

Arises out of a firm creating value for its customers.
Firms select markets in which they can excel and present a
moving target to their competitors by continually improving
their position.
Differentiation - offering a product or service that

is perceived industry-wise as being unique; and

focus seeing a particular buyer group or product
market more effectively or efficiently than
competitors who compete more broadly.

SPECIFIC COMPETITIVE STRATEGIES

innovation being the unique producer;
quality delivering high-quality goods and

services to customers;
cost leadership the planned result of policies

aimed at managing away expense.

 Distinctive capabilities (Kay, 1999)

Distinctive capabilities are those characteristics or

competencies that cannot be replicated by competitors, or
can only be imitated with great difficulty.
core competences that are superior to its rivals and when it
learns faster and applies its learning more effectively than its
competitors.
describe what the organization is specially or uniquely
capable of doing.

 examples

technology,

innovation,

marketing,

delivering quality, and making good use of human

and financial resources
The most distinct of all knowledge, skills, expertise

and commitment

value creation for the customer;

rarity compared to the competition;
non-imitability;
non-substitutability

Resource based approach to strategy

 Strategic fit (Hofer and Schendel (1986)

states that to maximize competitive advantage a firm must
match its capabilities and resources to the opportunities
available in the external environment.
matching organizational competences (internal resources
and skills) with the opportunities and risks created by
environmental change in ways that will be both effective and
efficient over the time such resources will be deployed.

THE FUNDAMENTALS OF STRATEGY

strategic intent
strategic capability
strategic management

strategic intent

vision
mission
strategic objectives

Strategic capabilities
the ability of an organization to develop and

implement strategies that will achieve sustained

competitive advantage.
sustained competitive advantage stems from the
acquisition and effective use of bundles of
distinctive resources that competitors cannot
imitate.
capacity to select the most appropriate vision,
define realistic intentions, match resources to
opportunities and prepare and implement strategic
plans

STRATEGIC MANAGEMENT
Strategic management is the process of specifying

the organization's objectives, developing policies

and plans to achieve these objectives, and
allocating resources to implement the policies and
plans to achieve the organization's objectives.

 Strategic management is the set of decisions and

actions resulting in the formulation and

implementation of strategies designed to achieve
the objectives of an organization.
focus is on identifying the organizations mission
and strategies, but attention is also given to the
resource base required to make it succeed.

Strategy Formulation process

referred to as determining where you are now, where

you want to go, and then how to get there.

Performing a situation analysis,
self-evaluation and
competitor analysis

both internal and external; both micro-environmental and

macro-environmental.
Concurrent with this assessment, objectives are set.

crafting vision statements (long term view of a possible

future), mission statements (the role that the organization

gives itself in society), overall corporate objectives (both
financial and strategic), strategic business unit objectives
(both financial and strategic), and tactical objectives.
suggest a strategic plan. The plan provides the details of

how to achieve the set objectives.

Typology of strategy formulation

Classical strategy formulation as a rational process of

deliberate calculation. The process of strategy formulation is

seen as being separate from the process of implementation.
Evolutionary strategy formulation as an evolutionary

process that is a product of market forces in which the most

efficient and productive organizations win through.

 Process based strategy formulation as an incremental process

that evolves through discussion and disagreement. It may be

impossible to specify what the strategy is until after the event.
Systemic strategy as shaped by the social system in which it is

embedded.

Choices

are

constrained

by

the

cultural

and

institutional interests of a broader society rather than the

limitations of those attempting to formulate corporate strategy.

Types of strategies

Thank you