Hhrmp 03 Strategic Hrm

8/8/2019 Hhrmp 03 Strategic Hrm

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1 Strategic HRM defined2 The concept of strategy

3 The reality of strategy formulation4 The meaning of strategic HRM5 Aims of strategic HRM6 Approaches to strategic HRM7 Strategic review sequence8 Linking HR and competitive strategies9 Common elements in HR strategy areas

10 Strategic HRM models

3 STRATEGIC HUMAN RESOURCE

MANAGEMENTContents


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Strategic HRM is an approach to making decisions on the intentions and plans of the organization concerning its recruitment, training, development, performancemanagement, reward and employee relations strategies, policies and practices andthe employment relationship generally.

The defining characteristic of strategic HRM is that it is integrated HR strategiesare integrated vertically with the business strategy and horizontally with one another.The HR strategies developed by a strategic HRM approach are essentialcomponents of the organizations business strategy.

STRATEGIC HRM DEFINED


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Strategy determines the direction in which the organization is going in relation to itsenvironment. It is the process of:

defining intentions ( strategic intent )

allocating or matching resources to opportunities and needs ( resource-basedstrategy )

achieving strategic fit between corporate and functional strategies

achieving competitive advantage

developing the strategic capability of the organization which will include the

ability not only to formulate strategic goals but also to develop and implementstrategic plans through the process of strategic management s trategy isabout implementation, which includes the management of change, as well asplanning.

THE CONCEPT OF STRATEGY


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THE REALITY OF STRATEGY FORMULATION

Strategy is a pattern in a stream of activities. Strategy formulation is not necessarily rational and continuous. In theory,strategy is a systematic process: first we think, then we act; we formulate then we implement. But we also act in order tothink. In practice, a realized strategy can emerge in response to an evolving situation and the strategic planner is often apattern organizer, a learner if you like, who manages a process in which strategies and visions can emerge as well as bedeliberately conceived.

Source: Henry Mintzberg (1987) Crafting strategy, Harvard Bu siness R e v iew, J ulyAugust

Strategy has always been emergent and flexible it is always about to be, it never exists at the present time.

Strategy is not only realized by formal statements but also comes about by actions and reactions.

Strategy is a description of a future-orientated action which is always directed towards change.

The management process itself conditions the strategies that emerge.

Source: Sean Tyson (1997) Human resource strategy: a process for managing the contribution of HRM to organizational

performance, I nte r na tion al J our nal of Huma n R eso urc e Ma nag e ment, 8 (3)

Big strategies in HRM are most unlikely to come, ex ca the dra , from the board as a fully formed, written strategy or planningpaper. Strategy is much more intuitive and often only visible after the event seen as emerging patterns of action. This isespecially the case when most of the strategy, as in HRM, is to do with internal implementation and performancestrategies, not exclusively to do with external market ploys.

Source: J ohn Purcell (2001) The meaning of strategy in human resource management, in Huma n R eso urc e Ma nag e ment: A cr iti cal text , 2nd edn, ed J Storey, Thompson Learning


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Strategic HRM has four meanings:

1. The use of planning.

2. A coherent approach to the design and management of personnel systemsbased on an employment policy and manpower strategy and often underpinnedby a philosophy.

3. Matching HRM activities and policies to some explicit business strategy.

4. Seeing the people of the organization as a strategic resource for theachievement of competitive advantage.

Source: Hendry, C and Pettigrew, A (1986) Human resource management: an agenda for the 1990s,I nte r na tion al J our nal of Huma n R eso urc e Ma nag e ment, 1 (3)

THE MEANING OF STRATEGIC HRM


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The aims of strategic HRM are to:

generate strategic capability by ensuring that the organization has the skilled,committed and well-motivated employees it needs to achieve sustained

competitive advantageprovide a sense of direction in an often turbulent environment so that thebusiness needs of the organization and the individual and collective needs of itsemployees can be met by the development and implementation of coherent andpractical HR policies and programmes

provide unifying frameworks which are at once broad, contingency based and

integrative. (Dyer and Holder*)

Source: Dyer, L and Holder, G W (1998) Strategic management and planning, in Huma n R eso urc e Ma nag e ment: Ev olv ing r ol es a nd r esponsibi l ities, ed L Dyer, Bureau of National Affairs

AIMS OF STRATEGIC HRM


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APPROACHES TO STRATEGIC HRM

Resource-based strategic HRM sustained competitive advantage stems from the acquisition and effectiveuse of bundles of distinctive resources that competitors cannot imitate. (Barney, 1991). This is achieved bydeveloping HR strategies and policies which increase the resource capability of the organization by ensuring that(1) it has higher quality people than its competitors (2) the unique intellectual capital possessed by the businessis developed and nurtured (3) organizational learning is encouraged and (4) organization-specific values and aculture exist which bind the organization together (and) gives it focus (Purcell et al , 2003).

Strategic fit vertical fit or integration is necessary to provide congruence between business and human

resource strategy so that the latter supports the accomplishment of the former and, indeed, helps to define it.Horizontal integration with other aspects of the HR strategy is required so that its different elements fit together.The aim is to achieve a coherent approach to managing people in which the various practices are mutuallysupportive.

Best practise the unfounded belief that there is a set of best HRM practices and that adopting them will leadto superior organizational performance.

Best fit the belief that there can be no universal prescriptions for HRM policies and practices. It is allcontingent on the organizations context and culture and its business strategy best fit is better than bestpractise.

Bundling the belief that improved organizational performance will be achieved by developing inter-related HRpractices which, when they are linked together, will function more effectively by complementing and supportingone another than if they existed as separate entities.


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STRATEGIC REVIEW SEQUENCEAnalysis

What is the business strategy and the business needs emerging from it?

What are the cultural and environmental factors we need to take into account?

What are the key HR weaknesses and issues?

What are the gaps between what we are doing and what we ought to do?

Diagnosis

Why do the HR issues and weaknesses exist?

What is the cause of any gaps?

What factors are influencing the situation (cultural, environmental, competition, political etc)?

Conclusions and recommendations

What are the conclusions from t he analysis and diagnosis?What do we need to do to fill the gaps?

What alternative strategies are available?

Which alternative is recommended and why?

Action planning

What actions do we need to take to implement the proposals?

What problems might we meet and how would we overcome them?

Who takes the action and when?

How do we ensure that we have the committed and capable line managers we need?

Resource planning

What resources do w e need and, how will we obtain them and how will we convince management that they are necessary?

What supporting processes are required?

Costs and benefits

What are the costs and benefits to the organization?

How will employees benefit?

What business needs w ill the strategy satisfy?


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LINKING HR AND COMPETITIVE STRATEGIESCompetitive strategy HR strategy

R eso urc ing HR strategy

Huma n r eso urc e d e v e l op ment

HR strategyR ew ard

Achieve competitiveadvantage throughinnovation.

Recruit and retain highquality people withinnovative skills andexperience.

Develop strategic capabilityand provide encouragementand facilities for enhancinginnovative skills andintellectual capital.

Provide financial incentivesand other rewards (egrecognition) for successfulinnovations.

Achieve competitiveadvantage through quality.

Use sophisticated selectionprocedures to recruit peoplewho will deliver quality andhigh levels of customer service.

Develop a learningorganization; implementknowledge managementprocesses; support totalquality and customer careinitiatives with focusedtraining.

Link rewards to qualityperformance and theachievement of high levels of customer service.

Achieve competitiveadvantage through cost-leadership.

Develop core/peripheryemployment structures;recruit people who will addvalue; if unavoidable, plan

and manage downsizinghumanely.

Implement productivityimprovement and just-in-timetraining linked to immediatebusiness needs which will

generate measurableimprovements in cost-effectiveness.

Review all reward practicesto ensure that they addvalue.

Achieve competitiveadvantage by employingpeople who are better thanthose employed bycompetitors.

Use sophisticatedrecruitment and selectionprocedures based on arigorous analysis of thespecial capabilities requiredby the organization.

Develop organizationallearning processes;encourage self-managedlearning through the use of personal development plansas part of performance

management.

Develop performancemanagement processeswhich enable both financialand non-financial rewards tobe related to competenceand skills; ensure that pay

levels are competitive.


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COMMON ELEMENTS IN HR STRATEGY AREASO verall HR strategy Resourcing HR development Reward

Improve performance. Use competence-basedrecruiting; assessmentcentres.

Use competence-basedtraining; developmentcentres.

Implement competence-related pay.

Extend skills base. Use targeted recruitmentbased on analysis of skillsrequirements.

Use skills analysis andfocused training in areas of identified need.

Use skills-based pay.

Develop competence andcareers.

Develop competencyframeworks and role profiles;

identify competence levelsand potential throughperformance management.

Use performancemanagement to define

learning needs; implementpersonal developmentplanning to meet definedneeds; establish career pathsin job families defined incompetence terms.

Develop career familystructures in which career

paths are clarified bydefinitions of the levels ineach career family in terms of the knowledge and skills(competences) required.

Increase commitment. Use sophisticated selectionmethods to recruit peoplewho are likely to fit well intothe organization; define andcommunicate theorganizations mission andcore values.

Provide learning experienceswhich enhanceunderstanding andacceptance of core values;use performancemanagement to reinforcevalues and encourage value-driven behaviour.

Reinforce value-drivenbehaviour by providingrewards which are based onevidence that core values arebeing upheld.

Increase motivation. Analyse characteristics of well-motivated employeesand structure selection

procedures to identify peoplewith those characteristics.

Provide learning opportunitieswhich reinforcecharacteristics of well-

motivated employees.

Use total reward approachto recognize achievementand encourage discretionary

behaviour and effort.


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STRATEGIC HRM MODELSHigh-performancemanagement

A clear line of sight exists between the strategic goals of the organization and those of itsdepartments and employees at all levels.Management defines what it wants in the shape of performance improvements, sets goals for

success and monitors performance to ensure they are achieved.Leadership from the top engenders a shared belief in continuous improvement.Focus on promoting positive attitudes that lead to the development of a motivated and committedworkforce.Performance management processes are aligned to the objectives of the organization to ensurethat people are engaged in achieving high standards of performance.Capabilities of people developed at all levels to support performance improvement.People provided with opportunities to make full use of their skills and abilities.

People valued and rewarded according to their contribution.High-commitmentmanagement

The development of career ladders and emphasis on trainability and commitment as highlyvalued characteristics of employees at all levels in the organization.*A high level of functional flexibility with the abandonment of potentially rigid job descriptions.*The reduction of hierarchies and the ending of status differentials.*Reliance on team structure for disseminating information, structuring work and problem solving.*

J ob design which increases the intrinsic satisfaction derived from work.**No compulsory redundancies.**New forms of assessment and payment systems.**High involvement of employees in the management of quality.**

High-involvementmanagement

Treating employees as partners in the enterprise who have a voice on matters that concern them.Establishing a mutual understanding of what is to be achieved and a framework for managing anddeveloping people to ensure that it wi ll be achieved.

* Source: Beer, M et al (1984) Ma nag ing Huma n Assets, Free Press

** Source: Wood, S and Albanese, M (1995) J our nal of Ma nag e ment S t ud ies , March

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Hhrmp 03 Strategic Hrm