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.