Strategic HRM
HR Services (HRD & OD Consultants)
What is Strategy?
 What
is Strategy?
– Is it a plan?
– Does it refer to how we will obtain the
ends we seek? Is it a position taken?
–
– Just as military forces might take the
high ground prior to engaging the
enemy,
– Might a business take the position of
low-cost provider?
What is Strategy?
– does strategy refer to perspective, to
the view one takes of matters, and to
the purposes, directions, decisions and
actions stemming from this view?
– Does strategy refer to a pattern in our
decisions and actions?
– does repeatedly copying a competitor’s
new product offerings signal a
"me too" strategy?
Meaning of Strategy
 Strategy
is a term that comes from
the Greek word strategia, meaning
"generalship.“

In the military, strategy often refers to
manoeuvring troops into position before
the enemy is actually engaged.
Strategy
 Strategy
is deciding where to go and
the means to get there.
 Strategy
is a declaration of intent.
By Prof. S. Pattnaik
Levels of Strategy-Making in
a Diversified Company
Corporate-Level
Managers
Corporate
Strategy
Two-Way Influence
Business-Level
Managers
Business Strategies
Two-Way Influence
Functional
Managers
Functional Strategies
Two-Way Influence
Operational
Managers
Operating Strategies
What is Strategic Management?
A
continuous, iterative process aimed
at keeping an organization as a whole
appropriately matched to its
environment.
(Samuel C. Certo and J. Paul Peter, Strategic Management)

Keeping the business in tune with management
and marketing forces both outside and inside the
firm.
Competitive Strategy
 Competitive
strategy
competitive advantage
leads
to
– Generates supernormal ROI
– Offers services of value
– Uses cost effective technology
– Avoids erosion of competitive advantage by
exploiting and developing a technological base
Strategic Management Process
Company mission
and social
responsibility
External
environment
Possible?
Internal analysis
Desired?
Strategic analysis and choice
Long-term
objectives
Short-term objectives;
reward systems
Generic and grand strategies
Functional tactics
Restructuring, reengineering
and refocusing the organization
Legend
Major impact
Minor impact
Strategic control and
continuous improvement
Policies that
empower action
Strategic Analysis HRM
“To be competitive, organizations in
many industries must have highly skilled.
Knowledgeable workers. They must also
have a relatively stable labour force since
employee turnover works directly against
obtaining the kind of coordination and
organizational learning that leads to fast
response and high-quality products and
services.”
- Edward Lawler
WHAT IS SHRM?

Strategic Human Resource Management
has been defined as:
“The linking of human resources with
strategic goals and objectives in order
to improve business performance and
develop innovative organizational
culture that foster innovation and
flexibility.”
Some Organizational Strategies
Company
Strategic Principle
General
Electric
Be number one or number two in
every industry in which we
compete, or get out
Wal-Mart
Low prices, every day
3M
Foster innovation
Aim of SHRM

Long-term Objectives –
 Profitability
 Return on investment
 Competitive position
 Technological leadership
 Productivity
 Employee relations
 Public responsibility
 Employee development
Aim –Short Term
•Detailed work planning
•Emphasis on technical qualifications and skills
•Emphasis on job-specific training
•Emphasis on job-based pay
•Use of performance appraisal as a control device.
•Team-based training
Types of HR Strategy
1) GENERAL STRATEGIES, such as
 High-Performance Working
Team (HPWT)
– Supplying competitive intelligence regarding the
external environment
– Supplying information regarding the company‟s
internal human strengths and weaknesses.
– Showing how the firm‟s HR activities can and do
contribute to creating value for the company
Types of HR Strategy
2) Specific Strategies relating to the different
aspects of Human Resource Management such as:
– Learning & Development (L&D)
– Rewards
– Human Capital Management (HCM),
– Corporate Social Responsibility (CSR),
– Organization Development (OD),
– Engagement,
– Knowledge Management,
– Employee Resourcing,
– Talent Management,
– Employee Relations (ER), and
– Employee Well-being
Difference Between
Strategic HRM & HR Strategies
STRATEGIC HRM
•
HR Strategies HR Strategies - HRS ]
General Approach to Strategic Management of • Outcome [manifestation] of general HRM
HR
approach
•
Aligned with organizational intention about •
future direction
Focus on specific organizational intentions
about what needs to be done.
•
Focus on long term people issue
•
Focuses on short term performance measures
that is result/outcome.
•
SHRM decisions are built into strategic •
business plan
HRSs decisions are derived from SHRM.
•
Deals with macro-concerns such as quality, •
commitment, performance, culture & mgnt
development
HRSs are concerned with ensuring availability
of an efficient workforce, training, good
employee relations
•
Defines areas in which specific HR strategies •
need to be developed.
HRSs facilitate the successful achievement of
corporate objectives + goals
Approaches to SHRM

The Resource-Based Approach-
A resource-based approach will address methods of
increasing
the
firm‟s
strategic
capability
by
the
development of managers and other staff who can think
and plan strategically and who understand the key
strategic issues.
Approaches to SHRM

Strategic Fit-
The HR strategy should be aligned to the business
strategy (vertical fit).
HR strategy should be an integral part of the
business strategy, contributing to the business
planning process as it happens.
Approaches to SHRM

High-Performance Management –
Aims to make an impact on the performance of the
firm through its people in such areas as productivity,
quality, levels of customer service, growth, profits
and,
ultimately,
shareholder value.
the
delivery
of
increased
Approaches to SHRM

High-Performance Management Practices-
This includes rigorous recruitment and selection
procedures, extensive and relevant training and
management development activities, incentive pay
systems and performance management processes.
Approaches to SHRM

High - Commitment Management HRM is its emphasis on the importance of
enhancing mutual commitment.
„A form of management which is aimed at
eliciting a commitment so that behaviour is
primarily self-regulated rather than controlled by
sanctions and pressures external to the
individual, and relations within the organization
are based on high levels of trust.‟
Approaches to SHRM

High - Involvement Management-
The aim is to create a climate in which a continuing
dialogue between managers and the members of their
teams takes place in order to define expectations and
share information on the organization‟s mission,
values and objectives.
Types of Strategic Planning
 Corporate
- Level Strategy -
– Identifies the portfolio of businesses that, in
total, comprise the company and the ways in
which these businesses relate to each other.

Diversification Strategy

Vertical Integration Strategy

Consolidation Strategy

Geographic Expansion Strategy
Types of Strategic Planning (cont’d)
 Business
– Level / Competitive Strategy -
– Identifies how to build and strengthen the
business‟s long-term competitive position in
the marketplace.

Cost / Price leadership

Differentiation

Focus
Types of Strategic Planning (cont’d)
 Functional
Strategies -
– Identify the basic courses of action that each
department will pursue in order to help the
business attain its competitive goals.
Methodology For Strategy Development
 Strategic
Analysis -
– Environmental Analysis
Human Resource Environment
 Human Resource Legal Environment

– Establish Organizational Direction
Methodology For Strategy Development
 Strategy
Formulation –
– Human resource planning
 Strategy
Implementation
– Work force utilisation and employment
practices
– Reward and development system
Methodology For Strategy Development
 Strategic
Control –
– Performance impact of human resource
practices
– Human resource evaluation
Strategy Formulation

What are the purpose(s) and objective(s) of the
organization?

Where is the organization presently going?

What critical environmental factors does the
organization currently face?

What can be done to achieve organizational
objectives more effectively in the future?
Strategy Formulation Process

Development of organizational philosophy
and mission statement
 Environmental scanning
 Analysis of SWOT
 Formulation of strategic objectives
 Generation of alterative strategy
 Evaluation and selection of strategies

Informal / incremental strategic planning
– Managed/logical incremental planning
A strategy is the pattern or plan that integrates an organization's
major goals, policies, and action sequences into a cohesive whole
HR Strategy ?
„A human resource system that is tailored to the
demands of the business strategy'
-Miles and Snow 1984
„The pattern of planned human resource activities
intended to enable an organization to achieve
its goals'
- Wright and McMahan 1992
“The pattern planned human resource
deployments and activities intended to enable
an organization to achieve its goals”
Types of HR Strategy
1)
General Strategies such as High-Performance
Work System (HPWS).
2)
Specific Strategies relating to the different
aspects of Human Resource Management.
SHRM Concern
Strategic Human Resource Management
(SHRM) concern is to ensure:
– HR Management is fully integrated with the
Strategy and Strategic needs of the firm.
– HR policies cohere across policy areas and
areas of hierarchy.
– HR practices are adjusted and used by line
manages and employees as part of their
everyday work
SHRM Concern
- Strategic HRM is about improving business
performance through people.
- The major concerns of Strategic HRM are to meet
the business needs of the organization and the
individual and collective needs of the people
employed in it.
- Strategic HRM can make a contribution to
improving business performance.
Strategic HRM (IMPORTANCE)
 Needs
Investment –ROI
Cost of investment
 Reduction in total Labour cost
 Efficiency in operation
 Optimal use of human resources

A
Source of Competitive Advantage
Technical skills (pace of technological
change)
 Knowledge and capabilities

Strategic HRM (IMPORTANCE)
 Management
of Critical and Difficult HR
Areas
Management of change (Resistance to change)
 Lack of trust
 Antagonistic Labour
 Motivational Problems
 Management Relations

Strategic HRM (IMPORTANCE)
 Economic
Turbulence
Within the country (turbulence)
 Globalisation
 Dramatically changing demographics
 Differences in workforce values

Strategic human resource management and HRP are
considered important to manage uncertainties;
HR is integrated with strategy; Integrating and aligning
HR function with strategy
Benefits of SHRM

Identifying
and
analysing
opportunities and threats that
crucial to the company's success.
external
may be

Provides a clear business strategy and
vision for the future.

To supply competitive intelligence that may
be useful in the strategic planning process.

To recruit, retain and motivate people.

To develop and retain of highly competent
people.
Benefits of SHRM

To ensure that people development issues
are addressed systematically.

To supply information regarding
company's
internal
strengths
weaknesses.

To meet the expectations of the customers
effectively.
the
and
 To ensure high productivity.

To ensure business
competency.
surplus
thorough
Theoretical Frame Work of SHRM
Institutional /
Political forces
Firm strategy
Resource
based view
of the firm
Resource dependence
institutional
HRM Practices
Cybernetics
Agency/transaction costs
HR Capital pool
(Skills, abilities)
HR behaviors
Behavioral
approach
Firm level outcomes
(performance,
satisfaction,
absenteeism etc)
Theoretical Frame Work of SHRM
 Strategy
Driven –
– Resource Based View
 Competitive advantage based on unique allocation of
resources {selection /Compensation package} (TCS)
– Behavioral View
 Control and influence the behaviors of individuals
(Infosys)
Theoretical Frame Work of SHRM
 Strategy
Driven –
– Cybernetics Systems
 Adoption or abandonment of practices based
on feedback on contributions to strategy
(Bosch – MICO)
– Agency / Transactions Cost View
 Use
of control systems, performance
evaluation and reward systems etc.
– (In the absence of performance
evaluation strategy may not be pursued)
Theoretical Frame Work of SHRM
 Non-Strategy
Driven -
– Resource dependence and power
theories
– Power and politics = legislation,
unionization, control of resources,
expectations of social responsibility.
– Institutional theory
– In appropriate performance evaluation
dimensions (inertia / rational decision
making – appraisals)
International strategy

Multinational, Global and Transnational
Strategies

Strategic Alliances

Sustainable
Advantage

Globally Competent Managers

Location of Production Facilities
Global
Competitive
Approaches to SHRM
•
•
•
•
•
•
The Resource-Based Approach Strategic Fit High - Performance Management High - Performance Management
Practices High - Commitment Management High - Involvement Management -
Human Resource Contributions
To Strategy
 Environmental
Scanning and Competitive
Advantage
 Implementation
of Resource Reallocation
Decisions
 Lead
time
Shortages.
for
dealing
Ref: SHRM – Charles Greer
with
Labour
HUMAN RESOURCE ACTIVITY TYPOLOGY
High
Performance
Enhancement
Consulting
Staffing
planning
Benefits of planning
Retirement planning
Compliance
Employee
relations
Labour negotiations
Executive compensation
Employee development
Management development
Recruitment interviewing
Strategic value of
activity
< IMPORTANT TO EXECUTIVES >
Payroll
Benefits administration
Retirement
administration
Employee records
Relocation administration
Recruitment information processing
Low
Recruitment
information processing
Employee assistance programs
< IMPORTANT TO EMPLOYEES >
Transactional
Type of HR activity
Relationship
Benefits of integrating HRP with
Strategic Planning

Generates more solutions
organizational problems.

Ensures consideration of human resources in
organizational goal setting process.

Ensures consideration of human resources in
assessment of organizational abilities to
accomplish goals and implement strategies.
to
complex
Benefits of integrating HRP with
Strategic Planning

Reciprocal integration prevents strategy
formulation based on personal rigidities /
preferences.

Facilitates concurrent consideration of strategic
plans and managerial succession.
Strategic components of HRM
relevant to internal fit

Management Awareness

Management of the Function

Portfolio of Programs

Personnel Skills

Information Technology

Awareness of the Environment
Requirements for SHR-Managers

Information Management Skills

Planning Skills

Management Skills

Integration Skills

Change Management Skills
Strategy Formulation Process

Development of organizational philosophy
and mission statement

Environmental scanning

Analysis of SWOT

Formulation of strategic objectives

Generation of alterative strategy

Evaluation and selection of strategies

Informal / incremental strategic planning
– Managed / logical incremental planning
Effective HR Strategy Formulation and
Implementation
Organizational
Strategies
Fit
Consistency
Consistency
Fit
Organizational
Characteristics
Environment
Consistency
HR Strategies
Fit
Improved
Firm
Performance
Fit
Consistency
Organizational
Capabilities
Strategy implementation
work force utilization and employment practices

Efficient utilization of human resources

Dealing with employee shortages

Selection of employees

Dealing with employee surpluses
Strategy implementation
work force utilization and employment practices

Efficient utilization of
human resources

Dealing with
employee shortages

Cross training and
flexibility in assigning
work
 Using work teams
– Requirements for
effective teams


Selection of
employees




Dealing with
employee surpluses

Forming
Storming
Norming
performing
Operating on a non
union basis
Strategy implementation
work force utilization and employment practices

Efficient utilization of
human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses

Strategic recruiting
 Special recruiting for
minorities and women
workers
 Flexible retirement as
a source of labour
 Managing vendors of
outsourced functions
Special implementation challenges

Career path for technical professionals

Dual career couples

Strategy implementation system Reward and development systems
Strategically
oriented
performance
management system
 Strategically oriented compensation systems
 Employee development

Strategy Implementation System
– Reward and Development Systems

Strategically oriented
performance
management system
 Strategically oriented
compensation systems
 Employee
development

Performance measurement
approaches
–
–
–
–
–
–
MBO
Graphic scale rating
Narratives
BARS
Behavioral observation scales
360 –degree feedback

Performance evaluation of
executives
 Effectiveness of
performance measurement.
YOU GET WHAT YOU MEASURE, YOU MEASURE WHAT YOU VALUE, YOU
CAN NOT CONTROL WHAT YOU CANNOT MEASURE.
Strategy Implementation System
– Reward and Development Systems

Strategically oriented
performance
management system
 Strategically oriented
compensation systems
 Employee
development

Traditional
compensation systems
– Job analysis > job
evaluation > salary/wage
hierarchy
 Point system
 Factor comparison
system
 Hybrid system
– Internal equity
> Wage surveys to
establish external equity.
Strategy Implementation System
– Reward and Development Systems

Strategically oriented
performance
management system
 Strategically oriented
compensation systems
 Employee
development





Skill based pay
Broad banding
Team based pay
Variable compensation
Executive
compensation
Strategy Implementation System
– Reward and Development Systems

Strategically oriented
performance
management system
 Strategically oriented
compensation systems
 Employee
development

Training programs
 Training methods
 Apprenticeships
 Management development
 Management development
for international
assignments
 Product life cycle and
managerial fit
– PLC, Evolutionary stage
> Steady state
– Development Vs
selection
Barriers To The Implementation of
HR Strategies

Failure to understand the strategic needs of the
business,

Lack of assessment of the environmental and
cultural factors that affect the content of the
strategies and the development

Taking of ill-conceived and irrelevant actions
Criteria for an Effective HR Strategy

Satisfies Business needs;

Founded on detailed analysis and study;

Can be turned into actionable programs;

Is coherent and integrated?;

Takes account of the needs of line managers
and employees generally as well as those of
the organization and its other stakeholders.
Criteria for an Effective HR Strategy

It is coherent and integrated, being
composed of components that fit with and
support each other.

It takes account of the needs of line
managers and employees generally as well
as those of the organization and its other
stakeholders.
Questions
&
Answers
Thank You!
References:
o Book:
Strategic Human Resource Management
By – Charles R Greer