MGTO 231Human Resources

Management

The Importance of HRM

Dr. Kin Fai Ellick WONG

Personnel vs. HRM

• Personnel Department vs. Human Resource Management– Are they the same? – If no, what are the differences? – How come there are two names?

• You will know the answer at the end of this class…

Outline

• Business Strategy

• Strategy and HRM– Strategic HR Choices

• Importance of strategic HR Planning

Outline

• Business Strategy

• Strategy and HRM– Strategic HR Choices

• Importance of strategic HR Planning

Business Strategy

• What is a strategy– Text book definition: The company’s long-term

plan for how it will balance its internal strengths and weaknesses with its external opportunity and threats to maintain a competitive advantage

– Simply speaking: A plan that is expected to make an organization adaptive and competitive

– Simplest speaking: A plan to make money

Business Strategy

• Example of strategic choices– Defender vs. Prospector– Exploitation vs. Exploration– Quality vs. Quantity– Focused vs. Diversified

Examples

• Defender vs. Prospector strategy– A defender strategy (保守 )

• Conservative, prefer to maintain a secure position in relatively stable product or service areas

• Not so looking to expand into new territory• Attempting to protect market share from

competitors; not to engage in new-product development

• Low risk, stable return

Examples

• Defender vs. Prospector strategy– A prospector strategy (急進 )

• Aggressive, emphasize growth and innovation

• Looking to expand into new territory• Attempting to engage in new-product

development• Failure is regarded as “normal”• High risk, high return

Examples

• Exploitation vs. Exploration– Exploitation

• Seeking to improve the current version of product

• Incremental improvement

– Exploration• Seeking to have breakthrough in product

development• Dramatic changes in the fundamental

concepts or architect of a product

Examples

• Exploitation vs. Exploration– Examples

• Game software– EA Sports vs. Nintendo– Game lists of EA

» NBA Live 1996» NBA Live 1997» NBA Live 1998» NBA Live…. 07» http://www.easports.com/

– How about Nintendo?» Made in Wario (key control)» Mawaru Made in Wario (key + motion control)

Examples

• Exploitation vs. Exploration– Examples

• TV industry– Panasonic vs. Samsung

» Panasonic: Improving the quality of CRT TV» Samsung: Switching to LCD TV

• Mobile phone– Keep improving 2G vs. Switching to 3G

Examples

• Exploitation vs. Exploration– Similar to prospector, exploration is high

risk high return• Anyone remember this product by NOKIA

Examples

• Quality vs. Quantity– Examples

• Car industry– Rolls Royce vs. Toyota

Examples

• Focused vs. Diversified– Examples

• Hey, would you give me an example?

Outline

• Business Strategy

• Strategy and HRM– Strategic HR Choices

• Importance of strategic HR Planning

Personnel vs. HR

• For organizations with a personnel department– Top-management often regard various

HR functions (e.g., recruitment, pay, training) as IRRELEVANT to business strategies;

– Their managers usually do not involve in the strategic planning and decision-making of organizations

Personnel vs. HR

• For organizations with a HR department– Top-management often regard various

HR functions (e.g., recruitment, pay, training) as a part of business strategy;

– Their managers usually play an important role in strategic planning of organizations

The role of HR managers

• They have to decide policies and actions that are consistent with their goals!

• There are many strategies they can choose in various HR contexts

• The choices may be different for different business strategies

Strategic HR Choices

Strategic HR choices

• Managers or top-management have to decide policies and actions that are consistent with their goals!

• There are many strategies they can choose in various HR contexts

• The choices may be different for different business strategies

Some strategic HR Choices

• Work FlowsEfficiency InnovationControl FlexibilityExplicit job description Broad job

classesDetailed work planning Loose work

planning

• Staffing Internal recruitment External recruitment Supervisor makes hiring HR makes hiring Fit in with firm’s culture Skill and qualification Informal hiring Formal hiring

• Separations Inducing voluntary retirement Layoffs Hiring freeze Recruitment as needed Continuing support after termination Letting them fend for themselves Preferential rehiring No preference

• Performance appraisal Customized appraisals Uniform appraisal procedures Multiple-purpose appraisals Control-oriented appraisals Multiple inputs (peers, subordinate) Supervisory input only

• Training and development Individual training Team training Job-specific training Generic training Buy skills with higher wages Make skills at lower

wages

• Compensation Fix pay Variable pay Job-based pay Individual-based pay Seniority-based pay Performance-based

pay Centralized pay decisions Decentralized one

• International management Create global company culture Adapt to local culture Rely on expatriates Rely on own country nationals Repatriation agreement No formal repatriation Universal company policies Country-specific company

polices

Choices of HR strategies

• No HR strategy is “good” or “bad” in and of itself

• Depend on situation context

• Fit between the strategies and organizations

Outline

• Business Strategy

• Strategy and HRM– Strategic HR Choices

• Importance of strategic HR Planning

Importance of strategic HR planning

• Encourage proactive behavior– Vision, active, anticipation

• Translating the strategic plans into actions

• A good HR planning makes strategic HR choices that fit the overall organizational strategies

A good HR planning

• Fits organizational strategies

• Fits environments

Conclusions

• HRM is at a strategic level

• Managers can formulate HR functions in a way that facilitate business strategies

• It is a matter of fit between the HR choices and (1) business strategies, and (2) environments