Download - Business Strategy & HR Strategy

8/3/2019 Business Strategy & HR Strategy

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BUSINESS STRATEGY & HR

STRATEGY


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APPROACHESTOTHEDEVELOPMENT

OF HR STRATEGIES

Best- fit approach

Best practice approach

Bundling approach


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BEST- FIT

Linking HR strategy with business strategy.

Analysis of business needs of the firm.

Development of HR strategies supportive of businessinitiative.

Limitations:

Fails to align employee interest with the organization.

Considers HR as reactive rather than proactive.


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BEST- PRACTICE

Organizations should adopt the best practice irrespective ofthe context Superior management practices can be easily identified and

transferred across organizations. 7 best practices are

Employment security Selective hiring Self-managed teams High- compensation contingent on performance Training

Reduction of status differential Sharing information

Limitation- less consensus on best practices, it is not clear what goals

are being served by best practices


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BUNDLING/ HR BUNDLES APPROACH

Development and implementation of several HR

practices together so that they are interrelated

and internally consistent

Internal fit or horizontal integration Integration can take place when HR personnel &

Line managers share their view on what & how

HR policies can be implemented

Examplehigh performance


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APPROACHESFORACHIEVINGSTRATEGICFIT

ApproachesCompetitive

strategy

Organizationaltypology

Life cycleapproach

Focus Differentiation

Defender Prospector Analyzer

Start-up Growth Maturity Decline

Costleadership


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LINKING BUSINESS STRATEGY (PORTER) AND HRSTRATEGY( SCHULER & JACKSON)

Result oriented

Short-term focus andquantities (Volumes)

Suitable for repetitive &predictable business

FMCG, Retailers(Reliance fresh, Bigbazaar, Pantaloon) HUL,P&G

1. Short-term performancemeasures( result/

outcomes)2. Efficiency (explicit job

description, specialized jobassignments)

3. Hierarchical pay, fewincentives

4. Narrow career path,limited training5. Limited employment

security6. Limited participation

Cost leadership Utilization HR Strategy


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Long term focus

Firm distinguishes itsproduct from itscompetitors (unique,extraordinary)

Creative job behaviour

Moderate/high concernfor quality and quantity

Apple, Nike, Sony etc.

External recruitment & hiringof people who bring in new

ideasBroad career paths

Extensive training

Equal and fair pay, manyincentives for creativity

Long term performancemeasures

High employee participation

Some employment security

Differentiation Facilitation HR Strategy


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Different segment ofmarket have different

needs

High concern forquality

Moderate concern for

quantity

Long/medium termfocus

Hiring employeesbelonging to the target

market Equal and fair pay with

many incentives

Broad career paths with

extensive training High employee

participation

Some employee security

Focus Accumulation HR strategy


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ORGANIZATION TYPOLOGY( MILES & SNOW)

& HR STRATEGY

Find changethreatening

Favour strategies thatencourage continuityand security

Bureaucratic approach

Planned and regularly

maintained policies toprovide for lean HR

Build human resources

Likely to emphasize

training programmes andinternal promotion

Defenders HR Strategy


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Thrive on change

Favour strategies ofproduct and marketdevelopment

Creative and flexible managementstyle

Have high quality human resourcesEmphasize redeployment andflexibility of HR

Little opportunity for long term HRPlanning

Acquire human resources

Likely to emphasize recruitment,selection and performance basedcompensation

Prospectors HR Strategy


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Seek to match newventures with the

present business setup

Followers venturesare not new to the

market, only new to thefirm

Low level of monitoringand coordination

Buy as well as makekey human resources

Emphasize HRplanning

Analyzers HR Strategy


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STAGESOFORGANIZATIONALLIFE & HR

PRACTICES

Start-up Flexible pattern of workRecruitment of highly motivated and committedemployees

Competitive pay

Little formality

No unions

Growth More sophisticated recruitment & selectionTraining and development

Performance management processesReward system

Focus on high commitment

Developing stable employee relations


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Maturity Attention to the control of labour costs

Focus on increasing productivity

Control compensation

Strained employee relations

Decline Emphasis on rationalization ofworkforce & downsizing

Abandoning some longstanding

practices to cut costsTrade unions have a marginalized role

Retraining and career consultingservices

Redeployment


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TYPEAND NUMBEROF PRODUCTS

Single product strategy-Functional structure

Subjective selection criteria

Less systematic appraisal

Rewards are distributed in

paternalistic way

Growth strategy Acquisition of unrelatedbusinesses

Different selection criteria fordifferent businesses

Performance appraisal &

rewards are impersonal

Development is cross functional& cross business


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ITC

It is not a pure-play FMCG company, sincecigarettes is its primary business. Other productsare foods, personal care, paper products, lifestyle,hotels & Agri business .

Business strategy

Cost leadership- FMCG sector

HR strategy- utilization strategy

Focus on short-term performance measures

Efficiency being a sought after virtue Narrow career paths & limited training

Compensation of employees at the junior /workmen level inthis sector is marginalized


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Diffentiation - Hotel & lifestyle

HR strategy Facilitation

Extensive training, external recruitment, high employeeparticipation, long term performance measures

Focus- Cigarettes business

maintainhighest standardsof quality owing to the growing business needs for export &catering to the luxury category after imposition of bans &heavy taxes.

HR strategy-

hiring is done from the target market( young engineers from thepremier institute of the market)

Broad career path with extensive training

Lot of employee empowerment & decision making power.


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HSBC

Strategic goal is to diversify into new marketsworld-wide.

HR at HSBC honour diversity within theorganization by building an inclusive workenvironment.

It recruits and maintains a unique blend of peoplewho come from different heritages andexperiences, with a wide range of cultures,

perspectives and talents.


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MC KINSEY

It offers premium management consulting servicesto clients internationally.

Business strategy- differentiator

People are the key differentiator Highly selective of their hires

Up or out policy

Emphasis on high performance level, feedback,

mentoring , credibility & integrity Many assignments come through its alumni

network.


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NOKIA

It caters to two segments of the market, one being theclasses and masses too.

Business strategy cost leadership, differentiator,prospector

A flat, networked organization with speed & flexibility indecision-making

HR practices-

Emphasis on innovation

Long term performance measures Extensive training

Professional & personal growth

Open & effective communication


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PANTALOON

The Cost leadership strategy-providing bestquality at the lowest price possible within themarket.

HR strategy-

Short-term performance measures- the salarystructure of the company is more based on theincentive oriented system.

High rigidity of the job description


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HOW JAPANESEMANUFACTURINGFIRMSALIGNTHEIRHUMANRESOURCEPOLICIESWITHBUSINESSSTRATEGIES: TESTINGACONTINGENCYPERFORMANCEPREDICTIONINA JAPANESECONTEXT.AUTHORS: TAKEUCHI, NORIHIKO1 SOURCE: INTERNATIONAL JOURNALOF HUMAN RESOURCEMANAGEMENT; JAN2009, VOL. 20 ISSUE 1, P34-56, 23P DOCUMENT TYPE: ARTICLE

This study examines the interaction effects of business-level strategyand HRM policies upon performance among Japanesemanufacturers, in response to the current debate around thecontingency fit proposition in the field of strategic human resourcemanagement (SHRM). Specifically, it was hypothesized that the three

generic strategic types -cost reduction, differentiation (innovation),and quality enhancement would moderate the relationship betweenparticular HRM policies and the performance of Japanesemanufacturing firms. The results, based on a sample of 312Japanese manufacturers operating in the domestic environment,reveal the existence of links between appropriate strategy and HRM

policies in predicting performance, providing strong support for theproposition of contingency fit from SHRM theory. The findings areused to discuss how Japanese manufacturers can align their HRMpolicies with business strategies to increase manufacturingperformance.


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BARRIERSTO STRATEGIC HR Short-term mentality/focus on current performance Inability of HR to think strategically

Lack of appreciation for what HR can contribute

Difficulty in quantifying many HR outcomes

Failure to understand line managers role as an HR

manager

Perception of human assets as higher-risk

investments

Incentives for changes that might arise


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SOMEOTHER ISSUES

HR practices are difficult to change andtransfer

It is easier for firms to find a new business

strategy to go with the existing HR practicesand competencies than to develop new HRpractices and competencies to match newbusiness strategies.

Download - Business Strategy & HR Strategy

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