FILE014

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ALIGNING HR WITH
STRATEGY
Strategic HRM

Strategic HRM is a set of distinct but
interrelated practices, policies & philosophies.

Its Goal is to facilitate the attainment of
organizational strategy.

These 3 P’s forms a system that attracts,
develops, motivates & train employees who
ensure the effectiveness of org.
The Risks

Increased time & energy involved in decision making.

Information overload

Impossible commitments to employees.

An over-concern with employee reactions that may be
incompatible with industry conditions.

Strategy formulation is easy but motivating employee to
commit is far difficult.

Once committed to one strategy becomes blind to the changes
in the environment.

Becomes inflexible
Linking HR Processes to Strategy

Strategic HRM must facilitate the formulation &
implementation of

Corporate

Business-level strategy

HR Policies & Practices must be aligned with the
firm’s overall strategy.

This alignment can be drawn in three ways:

Corporate strategy leads to HR strategy

HR Competencies Lead to Business Strategy

HR Strategy & Corporate Strategy


Corporate Strategy Leads to HR Strategy

Corporate strategy drives HR strategy.

In other words, personnel needs are based on corporate
plans.

For Example: Cost providers should be based on low
labor cost.
HR Competencies Lead to HR Strategy

Some argues that employee competencies determine
business strategy.

This view states that an org cannot implement a
strategy if it does not have the HR necessary

HR Strategy & Corporate Strategy

An emerging perspective views HR strategy as
contributing to business-level strategy & viseversa.

In many ways business strategy determines HR
strategy & HR strategy generates the business
strategy.

Ex: Hewlett & Packard
Why Planning & Strategy is so
important in HR Planning?

Traditional perspective of HRP was recognized as a tool to
fulfill the gap between demand & supply of labor.

But now the challenge is have competitive advantage, which
requires KSA.

CA much depends on identifying the “best” suited labor,
retaining them & taking out their best.

These in turn requires statistical technique for analyzing
resource supply & demand exactly.

And that is why Scientific & Strategic Planning must be
conducted to have effective HRP
Traditional Vs Strategic HR

Box 2.6
Ways to become Involved in the Strategic
planning Process

Member in the Executive Team



To involve HR in strategic planning process ensure that the person is
from top level of HR
Review/ React Linkage

According to this option HR managers have the opportunity to review
strategic plan before they are implemented.

They can then approve or modify them.
Integrative Linkage

Interaction between members of the executive committee & HR
director is frequent.

HR Director is involved in Strategic decisions
Characteristics of An Effective
HRM Strategy

External & Internal Fit:

External Fit:
Fitting HR strategy to organizational strategy.

Internal Fit:
Linking various HR Programs to functional areas & to
each other.

Focus on Result

Tracking is difficult

Everything should be result oriented.
Strategic
Options
The Environment
Restructuring
Organizational
Strategy
Demand
International
Job
Analysis
Forecasting
Program
Evaluation
Succession
Management
Mergers &
Acquisitions
HRM Strategy
Supply
Outsourcing
HR Management
System
EXERCISE

Identify two contrasting companies (in terms of
corporate strategy) working in the same sector.

Compare & Contrast the Practices of a company
using a low cost provider strategy with one using a
differentiation strategy.

Identify the 5 forces of Porter’s model for each
company.
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