Strategy & HR Linkage

8/6/2019 Strategy & HR Linkage

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Why study HRM?

Practicing managers : Familiar with HRprocesses, but get an explanation

Why? A re we having this process.What? Is it intended to achieve.

How? Does it contribute to the achievement of organization goals.

Ex: medical test prior to joining.


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T opics to be covered

Behavioral Sciences Linkage with HRM

Organization- Certain percepts / lowest common denominator

Strategy Difference between strategy and tactics Different levels of strategy Strategy in fast changing world: mechanistic vs complex paradigm

HRM Definition Its relevance Its interface with strategy Major areas


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B ehavioral Sciences: Involves systematic analysis

and investigation of human behavior studiedthrough experimental and observational methods.Organiz ational B ehavior:

Ex: Understanding human beings.

your project team member, and what makes him tick the set of relationships surrounding you and your team

member, including authority relationship small-group dynamics, working together to accomplish

well defined tasks Organization as a whole: its culture, processes and

ways of doing things that affect you, your member, therelationship and the small project team of which both of you are a part.


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M otivation

T he basic motivation process:

NEEDS DRIVES INCEN T IVES

Needs: get created when there is a physiological or psychological imbalance.Drives: Or motives are set up to alleviate needs. A ctionoriented.Incentives: A nything that will alleviate a need and reduce

a drive.


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M otivation theories

Content theories: ways to analyse individualsby identifying needs that motivate their behavior. Maslows (physical and conceptual needs) and ERG (existential, relatedness and growth)

P rocess theories: seeks to understand thethought processes that take place in the mindsof people that act to motivate their behaviour.Equity theory


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M otivation

M otivation : describes the forces within an individualthat account for the

level (amount of effort),

direction ( what he chooses to do when presented with a no. of options), andpersistence (how long will he stick to exert effort)

of effort expended at work.


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M otivation

J ob Performance?

individuals attributes: capacity to perform organizational support: opportunity to perform work effort: willingness to perform

Linkage with HRM:

Recruitment and SelectionJ ob design, Right person in Right role, T raining,employee/labour relations, safety and health Right Incentives : Performance appraisals,Compensation and benefits, Developmental inputs


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Ex: I T ES sector: attritionWhat motivates people to stick around in company X?

Organization Development (OD): a planned effort, organization-wide managed from top to increase organization effectiveness and health through interventions in the organizations processes,

using behavioral science principles and practices.

It is a complex strategy intended to change the beliefs,attitudes, values and structure of organizations so thatthey can better adapt to new technologies, markets andchallenges


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T opics to be coveredB ehavioral Sciences Linkage with HRM

O rganization- Certain percepts / lowest common denominator




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What is an Organisation:

Collective Purpose

B rings together an array of resources and applies their specialisations to a common end-product.

- Open system : they take input from the environment,transform them and discharge outputs in the form of products and services.

Organisation and its ecosystem Ex: watch & mobile Second law of thermodynamics, entropy

- What distinguishes business organisation? Ramdev vs B rinda Karat


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I.Business organisation:

M oney in ~ M oney out


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II. Purpose of a businessI s it solely for profit?

B usiness organisation has to run for profit.B ut, running business only for profit tends to be

corrosive.Profit with values is the right approach.

Refer book Built to Last.

Ex: Managing the expectations of variety of stakeholders of the business : shareholders, employees, community,society at large, environment, government.Microsoft: computing power at every desktopPfizer: medicine for river blindness


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II. Purpose of a business

To create a customer.Ex: tractors (horse that eats less and is always willing towork), tape recorder (Sony).

A customer buys a utility, ie, what a product does for him.

To add value to the customer.Ex: Intel and its faster chips. Good enough computingCan you make an Eskimo your customer?

what our business is, and what it should be?Customer: Who is he? Where is he? What does he buy? What

would he like to buy?


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Employment is a contract. Entails expectations from each party .

Exercise: Tell me something about your relationship with your employer.

III. EMPL OYM ENT ?


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EmploymentEmployment: nature of relationship between individual

and firm has components that makes it different fromother contractual relationship

Economic : pay-effort bargain.

L egal : network of common law and statutory rights and obligationsgoverning both the parties to the contract. Various employment A cts and Rules of India.

Social relationship : members of social groups. Responding tosocial norms that influence their actions in place of work. Mentorship

P sychological relationship : dynamic two-way exchange of perceived promises and obligations between employees and firm. Model Code of Conduct


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P sychological relationship: dynamic two-wayexchange of perceived promises and obligations

between employees and firm. T hese are shaped by the social and economiccontext, leadership, communication and HR practices.

Challenges for managers: disbalance Communication through different voices ~ different

beliefs about reciprocal promises and obligations. Ensure that anticipated exchange of value is

confirmed.B oss promises, but cannot deliver.

T raining facilities Cutting edge work

Example: effective communication reduces breach of psychological contract.


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IV. Input ~ Output ~ Outcome

Ex: from corporate social responsibility sector


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Effective M anager?

performance efficiency: measures how wellresources are being used. focus on efficiency and costcontainment. Means ends relationship is certain. So,managers monitor & control performance.

Input ~ output.

performance effectiveness : measures whether important task goals are being attained. Focus on actual

result. Means-ends relationship is uncertain. So,managers need to engage workers intellectual capital,commitment and cooperation.G oal attainment. Outcome


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M iddle managers:

accountable to higher level for work unit results,and dependent on the efforts of subordinates and

other team members to make this happen.

link between brains and its hands.

depends on them for organizational performanceI ncreasingly, they are taking up leadership roles.Ex: ABB, Microsoft


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High performance=effectiveness+efficiency

Eff ective, but noteff icient:

someresources wasted

Eff ective and e ff icient:goals achieved

and resources wellused: area o f high

productivity

Neither e ff ective nor

eff icient:goals not achieved;resources wasted in the

process

Eff icient but not

eff ective:No wasted

resources, but goals notachieved

P erformance

EffectivenessH ow well areG oals being attained?

Performance efficiencyH ow well are resources being used?

P oor

Good

Good

Area of truemanagerialsuccess


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V . WHAT IS MANAGEMENT ? Role of a manager (resource based view)

F inance

InfrastructureMachines

Manpower

Vendors

Clients

Permits..

Manager

Plan

Acquire

Deploy

Monitor

Assess

Develop

Exit


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M anagement as science, politics, controland practice .

M anagement as science

Successful managers are those whohave learned the appropriatebody of knowledge, skills andcompetencies . (PODC)

M anagement as politicsSuccessful managers are those who

work out and cope with unwritten

laws in the organisation .(knowledgeable agents working in dynamic arena,where resources and outcomes areshaped by actions, networks, alliances)

M anagement as control

Successful managers are those whocan exploit and controlresources .

(structures and strategies are instrument and techniques to control and raise

productivity) Eg, Manufacturing

M anagement as practice

Successful managers are those whocan work out and cope withcontradictory demands andpurposes . (activities aimed at continual melioration of diverse, fragmented and contested complex practices) Eg, INT EL

MA NA GE M ENT


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Strategy Difference between strategy and tactics Different levels of strategy Strategy in fast changing world: mechanistic vs complex

paradigm



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W hat is strategy?

Strategy is the creation of a unique and valuableposition, involving a different set of activities.

Strategy is making trade offs in competing. The essence of strategy is deciding what not to

do. Strategy is creating fit among a companys

activities.Michael E Porter,

W hat is strategy?, H BR, 1996


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Strategy :1. A process through which

- the basic mission and objectives of the organisationare set, and- the organisation uses its resources to achieve itsobjectives.

2. Concerned with the definition of competitive advantageand the development of activities, resources andcapabilities that enable the firm to sustain advantage ina changing world.

3. A bridge between high-order goals (vision/mission) andconcrete actions (money out)

T actics = actual means to achieve the end


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Strategy: its three levels- corporate

valuesfinancial goalsnon financial goals

- competitivehow a firm competes in agiven industry

- functionalmarketingfinancialresearchoperationsHR, and so on.


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S trategy development process:

Industry analysis today and tomorrowPositioning sources of competitive advantageCompetitor analysis past and predictedCurrent strategy assessment relative position andsustainability

O ption generation a creative look at newcustomers and positionsAssessment of capabilities positioning for futureopportunitiesChoosing or improving a strategy position, tradeoffs, fit


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H ierarchy of strategy

Low-cost leadershipeg, Wal-Mart (10 feet rule)

Differentiationeg, Levis

F ocused differentiationeg, H igh priced boutiques

F ocused low-costleadership eg, Air Deccan

B roadTarget

NarrowTarget

CompetitiveS cope

B usiness Level: H ow do we compete.Porters competitive strategy model (1985): cost leadership,

differentiation and focus.

Competitive advantage

L ow cost Uniqueness

What would be the HRM practices in each of these companies?


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hRm

Focus people as resources to be utilised likeany other resource:management as a control

labour is disposable commodity to be boughtand controlled.

takes a rational approach towardsmanaging employees, that is, views it as a

any other economic factor, or takes amarginal cost decision invest in labour or technology.B ureaucratic control, technical control

Henry Ford: production lines


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hrMM anagement of people - Looks at

sophisticated ways of enhancing performancethro forms of control that are based oncommitment rather than compliance

Management as a politics Commitment strategies to ensure thatemployee give an organisation its competitiveadvantage.

Needing to be managed ? T o be motivated toproduce the best.


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HrmFocus on people as complex and valuable

members or stakeholders of the firm.Management as a practice

T o be attracted, retained and developed.T he sum of peoples knowledge and expertise,and social relationship has the potential toprovide non substitutable capabilities thatserve as competitive advantage.

Characteristic of resource value, rarity,inimitability, non substitutability drive thecompetitive advantage.

Ex: knowledge worker


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HRM is..HRM is the set of philosophies, processes and

procedures that a company uses to manage:

- T he entry and exit processes in the firm

- T he growth and development of employees- T he reward and recognition systems- T he total organizational climate for how people are

treated


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HRM is..T he growth and development of employees:

T raining vs DevelopmentL earning is a relatively permanent change in behavior that occurs asa result of experience. I nternalising and not acquiring facts.

- Make him able for handling a role, not a job.Role: how does a successful employee looks in a particular setting.

part that an employee is expected to play.- Fewer managerial positions for promotions up: so move

employee into a number of lateral positions.- 360 degree feedback

Ex: Motorola : two weeks of mandatory training. Education is a strategictool here. A s the Co. dominates its core market through expertise andtechnology. Quick learning needed to enter new markets


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HRM is..T he reward and recognition systems:

Reward refers to all of the monetary, non-monetaryand psychological payments that an organisationprovides for its employees in exchange for the workthey perform.

Pay: an actual income in exchange for labour/effort.

Recognition: psychological income, or what makescoming to work really worth while.

Psychological contract : perceived incongruence?notion of fairness?tensions?


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HRM is..T he total organizational climate for how people are

treated:

- A lignment with vision, strategy, competitive

advantage and function.- HR paradigms


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HRM is..seeking alignment of the employment system of a

firm with the

strategy, internal context, and nature of the circumstances (external context) that

an firm faces.

Integration is the key word.T

he set of employmentpolicies, programmes and practices needs to becoherent and integrated with above three.

Exercise: Give examples of contexts in Intel.


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CommitmentHR Strategy (sales driven)

CollaborationHR Strategy (I T )

TraditionalHR Strategy (manufacturing?)

P aternalisticHR Strategy (Govt dept)

Outcomes

L ocus of Workplacecontrol

P rocess

A cquisition of employeesInternal External

Each HR strategy represent a distinctive HR paradigm,or a set of beliefs, assumptions and values that guide the

managers . One example:

Ex ercise: Link each strategy with e x ternal conte x t .


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Changing contexts


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Characteristics of present day workersK nowledge technologists :

Their work is based on substantial amount of theoreticalknowledge which can be acquired only through formaleducation, not through apprenticeship

Their job require putting formal knowledge to work,and

Continual updation of knowledge throughout theirworking lives to keep it current for their work.

Application of thinking power during production process/servicedelivery!!!!

Ex: from a publication industry. Arvind plant at Chennai. Bajajplant at Chakhan


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Changing expectations

O f workers: Allegiance to his branch of specialised knowledge, soFirst loyalty is to others of same profession??? Thus, point of reference may lie outside theorganisation.Each is an autonomous entity, who cometogether for project, but can easily disband.


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O f workers:O rganisation can therefore be conceptualised as an collective of autonomous units workers.O rganisation is defined by interactions,relationships and networks between these

autonomous entities, as well as with outsideenvironment that create unexpected outcomes.


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O f workers:The success of organization depends onpotential power of its workers, and how they interact to produce something unparallel.That is, there has to be a mutually symbiotic relationship.With mobility, and self confidence, no more

adult-child relationship inside the organisation.People practices that tend to be O ne size fitall will no more suffice.


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Changing contexts External contexts:

Global integration Fewer tariffs Easy flow of capital, labour, know-how Interdependency

Linkage to capitalist system Maturation of markets in developed economies T echnological change Political change

New employment and environment laws Social change

A ging population in developed countries Young population in developing countries Value system


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New forms of organisations

V irtual corporation: a temporary network or alliance of otherwise independent companies. Eg,textiles industries of Italy

M ore of a confederation: Loose networktogether by strategy,etc, Eg a syndication, a cooperative

L ife span of organisation: Employees outliveeven successful organisations. Manual workers: workinglife of say 30 years, before they wore out. Knowledgeworkers : working life of say 50 years.


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Ideas and partnership needed: Organisationswill build up on the incremental competencies of scoresof others to provide their services to customer. Ex:

Hollow Corporation

Up-side down pyramid: Perspective that viewsmanagers as helpers, coaches and supporters to serveline managers to deliver to customers. B ecause, withinformation, customer has the power. Ex: B ritish A irways


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Coming together of equals: Knowledge workersneed access to an organisationa collective that brings

together an array of resources and applies their specialisations to a common end-product. B ut, for organisation, these are the main factor of production, theprimary capital.


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Shamrock (three petal) organisation :core group of workers with critical jobs, outsideconsultants performing key jobs, and part-time

workers. Orgn dont control them, dont managethem, but have to make them productive.

V irtual workplace:


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Newer ways of working in organisations

Workforce diversity: elderly, women, student,global mix, high mobility

New work options: job sharing, multiple careers,

part time

Newer form of collectives: allegiance to their specialisation, formation of a guild

Non hierarchical: Knowledge is either relevant, or itis not. So, instead of hierarchy of boss andsubordinates, it will be that of seniors and juniors.


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HR S trategy

E nvironmental/internalin f luences

B usiness strategy


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T he Harvard Model (1984)Stakeholder

interests-Shareholders-Management-Employee groups-Government-Community-Unions

Internal/externalcontexts

-Workforcecharacteristics

-B usiness strategy andconditions

-Management philosophy-Labour Market-Union strength-Task technology-Law and societal values

Human resourceoutcomes

-Commitment-Competence-Congruence-Costeffectiveness

Human resourcemanagement

policy choices-Employee influence-Human resource

flow-Reward systems-Work systems

L ong termconsequences

-Individual well-being

-Organisationaleffectiveness

-Societal well-being

Strategy


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What do HRM professionals do? What affects what they do?

A nd, how do HR professionals dowhat they do?


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F unctions

P lanningStaffingDevelopingM otivatingM aintainingM anaging

relationshipsM anaging

changeEvaluatingExit

Skills

CommunicationL egalP

ower InstructionalInterpersonalCognitiveTechnical

External context Strategy Internal context

Contingencies

HRstrategy

M atching P sP hilosophyP oliciesP rogrammesP racticesP rocesses

Three related dimensions of HR M


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The components of the ideal human organisation

Cultureand mindset

Core processes

Strategy

Long termcompetencies

O rganisationstructure

Alignment of HR processesto create ideal culture and

mindset to achieve strategy

The per f ormance o f the system is not the sum o f its parts, but product o f their interactions.


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T he strategic HR planning processAnalysis of

Critical success factors

Trends(threats, opportunities) Strategy

H uman organisation

O rganisational initiatives

Strategies set in thecriteria for the characteristics of:

Which executes thestrategy

The characteristics of the humanorganisation set the criteria for:

Which creates thehuman organisation


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Strategy: Planned vs emergent

Mechanistic models: Assumes that the future can be known,

predicted and to some extent controlled bymanagers

Emphasis is on intention strategic intent,stability and return to equilibrium.

Success depends on extensive planning and

design, accurate anticipation of resistance tochange and overcoming such resistances.

rational, linear, planned process, where risk is

measured, evaluated and implemented


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Strategy: Planned vs emergent

Complex models: Assumes that the future cannot be predicted with anydegree of certainty; instead it emerges with its owndistinctive properties through random or unexpectedevents.

Emphasis is on managing the show with imperfectinformation, and at various levels with high degree of accountability; nobody has the whole picture.

Success depends on tapping the ideas of various groupsof people, as they are in touch with customers andchanging marketplace. Seemingly adhoc activities aredriven by people who have a sense of ownership of ideas being put into practice.

advising and modi f ying the direction and the boundaries withinwhich e ff ective, improvised, sel f organized solutions can evolve.


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Competitive advantage-organisational capability: represents the

businesss ability to manage organisationalsystems and people in order to match customer and strategic needs. Ex: restaurant

In complex, dynamic, uncertain and turbulentenvironment, this capability derives from theflexibility, adaptiveness and responsiveness.

In less dynamic environment, the capabilityderives from maintaining continuity and stabilityof organisational practices.


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Complex paradigm:

y

Keen to espy patterns in the seemingly discretesets of phenomena.y Comfortable with incomplete set of information, and

is able to take small, iterative steps rather thanwait for the best solution to evolve.

y Keeps on seamlessly moving between past, presentand future through simultaneous attention andlinkage.

y Doesnot believe that there is one best way; insteaduses maps as thinks fit in the given situation.

y Believes that situations and results that are unknownand unstable cannot be analysed using presentdays tools and frameworks.


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Complex paradigm:

Encourage new ideasStimulate innovative approach.Is comfortable with improvisationsCan take leaps of faith, even with incompleteinformation.Thrives on constant changes.Uses collaborative and participative approach.

Does not control, but content with advise and boundary management.


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Strategizing using Complex paradigm:

Enhancing possibility spaceSelf organizing around new opportunities

R ecognition of new patterns emergingManaging co evolution with other players


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Complex paradigm and knowledge worker:

autonomous entities. Control tendency maybackfire, instead advising, guiding andmentoring helpsgenerally have external points of reference,

that is, in contact within the organisation andits ecosystem. T hus, outside-in approach isexpectable.centralised decision making is passe whenthe world changes fast, distributed decisionmaking at variety of levels is needed.


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Complex paradigm:

Leader:

Mirroring the future: Enhancing the possibility space: beacon Self organising around new opportunities: torchbearer Recognising new patterns emerging: seller of dreams Manage coevolution with other players : enablers

Move towards edge of chaos: Resiliency Tolerance to ambiguity

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Strategy & HR Linkage