hr strategy

HUMAN RESOURCE HUMAN RESOURCE STRATEGIESSTRATEGIES

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V.P.M anufacturing

V.P.Finance

RecruitingSupervisor

OrientationSupervisor

DirectorEm ploym ent

DirectorSafety &

Health

T rainingSupervisor

OrganizationIm provem ent

Supervisor

DirectorHum an

ResourcesPlanning

DirectorOrganizationDevelopm ent

DirectorW age &Salary

DirectorIndustrialRelations

V.P. Hum an Resources

V.P.M arketing

President

Departmental Structure For HRsDepartmental Structure For HRs

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Example of Corporate, Business, and HR Example of Corporate, Business, and HR Management Strategy InterrelationshipManagement Strategy Interrelationship

General Motors Saturn Project

Corporate LevelDesign and build a production

car, based on quality first.

Business Level

Redesign the production line, based on the latest

technology available, creating new technologies when

needed.

HR Level

Redefine the role of management and workers based on the concepts of

teamwork and involvement.

Dynamic Interaction Based on Sociotechnological Design

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Corporate Strategy

HR StrategyOther Functional Strategies

(Marketing, Production, etc.)

Other Unit Strategies (Product,

Geographic, etc.)

Organizational HR StrategyOrganizational HR Strategy

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Motivation, Maintenance, and Retention

Strategies

Prehiring and Hiring Strategies

Separation Strategies

HR Forecasting

Recruiting

Selecting

Placing

Orientation

Training

Pay and Rewards

Benefits

Layoff

Termination

Early Retirement

Quits

Organizational HR StrategyOrganizational HR Strategy

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DefinitionDefinition

• Peter Drucker says the prime task of strategic management is thinking through the overall mission of a business:

. . . that is, of asking the question, "What is our Business?" This leads to the setting of objectives, the development of strategies, and the making of today's decisions for tomorrow's results. This clearly must be done by a part of the organization that can see the entire business; that can balance objectives and the needs of today against the needs of tomorrow; and that can allocate resources of men and money to key results.

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Four Topics Four Topics

1. What is an HR strategy?

2. Is there one best HR strategy?

3. High performance work practices or high commitment practices.

4. Possible contingent factors.

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1. What is an HR strategy?1. What is an HR strategy?

• Make workforce strategies integral to company strategies and goals.

• Leverage HR’ role in major change initiatives such as:

• Strategic Planning

• Mergers and Acquisitions

• Systems implementation

• reorganizing / downsizing.

• Earn the right seat at the corporate table.

• Develop awareness and/or an understanding of the business.

• Understand finance and profits.

• Helpline managers achieve their goals.

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Strategy = Analysis + ActionStrategy = Analysis + Action

ANALYSIS (3 Elements)1. What is an organisation trying to

achieve? (Mission, goals, objectives)

2. What stands in the way of it achieving what it wants?

(External environment + What it is doing already)

3. What can it do to improve its chances of achieving what it wants?

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Strategy = Analysis + ActionStrategy = Analysis + Action

ACTION (3 Elements) results in policies and practices..consists of.,

• Choices to offer from various possibilities

• Its attempt to implement (complex and problematic)

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What is an HR strategy?What is an HR strategy?

HR strategy is a set of HR policies and practices (the actions) designed and implemented by the firm to help overcome the obstacles it sees as standing in the way of its achieving its HR or organizational objectives (like minimizing unit labour costs)

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Examples of Company Strategies Examples of Company Strategies and Associated HR Strategiesand Associated HR Strategies

Corporate strategy: Retrenchment Retrenchment (cost reduction)

Example: GMGMHR Strategies: Layoffs,

Wage Reduction, Productivity Increases, Job Redesign, Renegotiated Labor Agreements

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Corporate strategy: GrowthGrowthExample: IntelIntelHR Strategies: Aggressive Recruiting

and Hiring,Rapidly Rising Wages, Job Creation,Expanded Training and Development


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Corporate strategy: RenewalRenewalExample: ChryslerChryslerHR Strategies: Managed Turnover,

Selective Layoff, Organizational

Development,Transfer/Replacement,

Productivity Increases, Employee Involvement


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Corporate strategy: Niche FocusNiche Focus

Example: Kentucky Fried ChickenKentucky Fried Chicken

HR Strategies: Specialized Job Creation, Elimination of Other Jobs, Specialized Training and

Development


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Corporate strategy: AcquisitionAcquisition

Example: GEGE

HR Strategies: Selective Layoffs,

Transfers/Placement, Job

Combinations, Orientation and Training, Managing Cultural

Transitions


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Examples of Strategic Decisions That Examples of Strategic Decisions That Have Major Direct Impacts on HRsHave Major Direct Impacts on HRs

Plant Location Job Design/Redesign

Plant Closing Production Technology

Wage Cutting Supervisory Style

Restructuring Organizational Culture Change

Collective Bargaining Market Expansion/

Retrenchment

Automation Mergers/Acquisitions

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Examples of Strategic Decisions That Examples of Strategic Decisions That Have Minor Indirect Impacts on HRsHave Minor Indirect Impacts on HRs

Restructuring Loan/Portfolio Public Relations Restructuring Loan/Portfolio Public Relations Campaign Campaign

Stock OfferingsStock Offerings Changes in Changes in Accounting Accounting MethodsMethods

Logo/Name ChangeLogo/Name Change Product Feature Product Feature

ChangeChange

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•Pfeffer’s HR strategy with 7 Pfeffer’s HR strategy with 7 ElementsElements

1. Employment security

2. Careful hiring

3. Self managed teams and decentralized decision making

4. Comparatively high pay

5. Extensive training

6. Low-status distinctions and barriers

7. Extensive sharing of financial performance information throughout the org.

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• 1,4, and 6 – designed to motivate employees

• 2 and 5 – to secure competence

• 3 and 7 – designed to do both.

• A strategy has to have both a consistency and an interdependence between the constituent parts

• If one item is neglected (2, 3, 5 won’t compensate enough for a very low value of 1) there will be a disproportionate failure.

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• All the seven elements look to be reinforcing one another

• Display INTERNAL FIT

• In a strategy, the constituent policies should display coherence or internal fit. (e.g. internal promotion; little or no training; here there is no internal fit)

• Pfeffer often claims that his seven steps have internal fit and deliver employee competence and motivation.

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Modify the HR definitionModify the HR definition

• HR strategy is a set of interdependent HR policies chosen to display internal fit and generate appropriate amounts of ‘competence’ and ‘motivation’ amongst the workforce.

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2. Is there one best HR 2. Is there one best HR strategy?strategy?

• Pfeffer’s seven steps are clearly the best way to secure competent and motivated employees.

• The optimal choice of HR strategy is ‘contingent’ on the circumstances.

• E.g. universities do not use Pfeffer’s arrangements for their academic staff.

• Normally offer, high job security, selection is highly dependent on interviews – which is notorious; self managed teams are not common, and academic freedom (decentralization) is extreme, training is less; profit is non existent, status distinctions are large and small, and info sharing varies.

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•According to PFEFFERAccording to PFEFFER

• Universities are making systematic and huge mistakes with their HR.

• Competence and motivation may be achieved through a variety of different policy routes

• Academics develop their competence through paying for their own training, attending seminars, conferences

• Motivation is based on:- nature of the work, transfer their skills from one employer to another.

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3. High performance work practices 3. High performance work practices or high commitment practices.or high commitment practices.

• Ordinary employees skills and knowledge are normally under utilized, stayed hidden.

• However, Some firms describe their employees as assets

• In order to utilize the hidden competencies, managers need to develop HR policies to take advantage of employee’s full competencies.

• Pfeffer’s 1, 3, 4 and 6 are such policies.• Another way is … Build a complex and

trusting relationship with employees. It is similar to Walton’s COMMITMENT and CONTROL

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Distinction between HR Policies Distinction between HR Policies and Practicesand Practices

• Not all the firms have identical HR policies

• Pfeffer’s seven elements cover a range of possible detailed HR practices

• A Practice is a narrow specification of a Policy.

• Neither Pfeffer nor anyone else can claim to have truly settled the content of Optimal HR Strategy.

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4. Possible contingent factors4. Possible contingent factors

Optimal HR policy depends on internal as well as EXTERNAL FIT, or the integration between HR and the organization’s policy choices in other areas.

2 Areas of External fit..,

a. Links with product market strategy

b. Links with production arrangements

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a. Links with product market a. Links with product market strategystrategy

• Michael Porter’s three possible Generic Strategies: • Cost Leadership: – aggressive construction of efficient scale

facilities, vigorous cost reductions and cost minimization in the areas of R&D, Service, Sales force, ads

• Differentiation:- creating a unique design or brand image or technology or customer service

• Focus:- concentrating on a particular buyer group, segment of the product line or geographic market.

Other Approaches: (Miles and Snow)• Defender: narrow and relatively stable product markets• Prospector: continually search for new product and market• Analyzer: hybrids, they watch the pioneers and feed off

them.

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Michael Porter’s Generic StrategiesMichael Porter’s Generic Strategies

Cost Leadership Strategies

Differentiation Strategies

Focus Strategies

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The Generic StrategiesThe Generic Strategies

• Cost Leadership – Offer substitutable products at the lowest price

• Differentiation – Distinguish products and services in order to charge a premium price

• Focus – Follow one of the other strategies in a narrow market

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Generic StrategiesGeneric Strategies

Cost Leadership Strategies –Cost Leadership Strategies –• Pursued in conjunction with differentiation Economies of scale Capacity utilization achieved Linkages with suppliers and distributors

• Several example firms that are well known for their low-cost leadership strategies are Wal-Mart, McDonald's, Black and Decker, Lincoln Electric

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Differentiation Strategies –Differentiation Strategies –• Greater product flexibility Greater compatibility Lower costs Improved service Greater convenience More features

• Firms pursuing a differentiation strategy include Dr. Pepper, Jenn-Air, The Limited, BMW, Grady-White, Ralph Lauren, Maytag, and Cross.

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Focus Strategies –Focus Strategies –• Industry segment of sufficient size Good growth potential Not crucial to success of major competitors

• Firms pursuing a focus strategy include Midas, Red Lobster, Long John Silver, Sprint, MCI, Coors, and Schwinn

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Case Study Box 3

ABC Telecom Corp is a multinational company that produces telecommunications equipment. The market for telecommunications equipment is very different around the world. Its home market in North America is saturated. The company has around 48% of the market share in key product areas. There is little room for growth, but there is an extremely important need to maintain this market share. A small drop in percentage of the market will mean a substantial loss in cash terms. In Europe the situation is somewhat different. After an unsuccessful venture into the European market in the early 1980's, the company realised it needed to understand that Europe was not one, but a number of markets, with telecommunications systems that varied in quality, technology and sophistication. This required a somewhat different strategy than that pursued in North America. In Asia the situation was different again. Many new markets were opening up and there was a great deal of potential for doing business, and often, any business. The strategy here was to 'get any business available' relating to any and all the products ABC Corp sold. a) In which market would ABC be defending, which analysing, and which prospecting? b) What are the implications of each of these strategies for organisational structure, and which function of the business would be the dominant one?

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Tutorial QuestionTutorial Question

• “Even though HRM may not necessarily be anything new, it nevertheless has a positive impact on performance” Discuss.

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AnswerAnswer

• First debate – whether HRM is something NEW or Not?

• Second – whether it has a positive impact on performance or Not?

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•HRM may not necessarily be HRM may not necessarily be anything NEW - Debateanything NEW - Debate

• Bring the argument of Guest and Storey: • HRM is something new

• Distinctive when compared to its predecessor – PM

• Criticize: - use the arguments from Legge • The differences between HRM and PM only emerge when

ideal type models of HRM are compared with descriptive models of PM

• When ideal type models of HRM and PM are compared, the differences are fewer than the similarities.

• So it is unreasonable to suggest that HRM is something NEW

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HRM has a positive impact on HRM has a positive impact on PerformancePerformance

• Show your awareness of two main competing perspectives:• HRM has universal performance effects (they have

a positive effect in all organizations irrespective of context)

• The impact of HRM is context dependent (remember the situational contingency models – Schuler and Jackson e.g. which state that the applicability of a high commitment approach may well be dependent on the business strategy adopted – i.e. the impact between HRM and performance may be greater where quality / innovation is the main focus of business strategy rather than price / cost leadership)

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Cont…Cont…

• Once showed the awareness of these issues, explore the empirical evidence

• Refer authors like Huselid, Arthur, Ichniowski et al., Guest

• After referring them, arrive to the conclusion – “which approach was best supported: Universalism or Situational Contingencies?

• What about the relationship between HRM and performance

• The relationship emerges in specific context or broader?

hr strategy

Documents

hr strategiescorporate

high commitment

display internal

hr strategy

external fit

hr strategies

internal fit

hr policies