Strategic HRM

What is strategy?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?
– 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?

Strategy isStrategy is
 Strategy is all these—
 it is perspective, position, plan, and pattern.
 Strategy is the bridge between policy or high-order goals on
the one hand and tactics or concrete actions on the other.
 Strategy and tactics together straddle the gap between ends
and means.
 strategy is a term that refers to a complex web of thoughts,
ideas, insights, experiences, goals, expertise, memories,
perceptions, and expectations that provides general guidance
for specific actions in pursuit of particular ends.
 Strategy is at once the course we chart, the journey we
imagine and, at the same time, it is the course we steer, the
trip we actually make. Even when we are embarking on a
voyage of discovery, with no particular destination in mind, the
voyage has a purpose, an outcome, an end to be kept in
view.

MeaningMeaning
Strategy is a term that comes from the
Greek strategia, meaning "generalship."
In the military, strategy often refers to
maneuvering troops into position before
the enemy is actually engaged

definitions in usedefinitions in use
 Some of the definitions in use include the
following:
– Strategy is that which top management does that is
of great importance to the organization.
– Strategy refers to basic directional decisions, that is,
to purposes and missions.
– Strategy consists of the important actions necessary
to realize these directions.
– Strategy answers the question: What should the
organization be doing?
– Strategy answers the question: What are the ends
we seek and how should we achieve them?

What is strategicWhat is strategic
management?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 strategyCompetitive strategy
Competitive strategy leads to competitive
advantage
– Generates supernormal ROI
– Offers services of value
– Uses cost effective technology
– Avoids erosion of competitive advantage by
exploiting and developing a technological base

Stages in Strategic managementStages in Strategic management
Strategic analysis
– Environmental analysis
– Establish organizational direction
Strategy formulation
Strategy implementation
Strategic control

Strategy & HRM ?Strategy & HRM ?– NEED FOR STRATEGIC HRM– NEED FOR STRATEGIC HRM
 Physical assets are viewed as investments
 Can
– superior technology
– Superior facility
– Superior product
 Bring about and more importantly sustain competitive
advantage?
 Physical facilities can be duplicated, cloned or
reverse engineered and they no longer provide
competitive advantage

Strategy & HRM ?Strategy & HRM ?– NEED FOR STRATEGIC HRM– NEED FOR STRATEGIC HRM
 Cost of employees as variable cost of production.
– No formal recognition of human resource as a key
resource
– No recognition of firms contribution to training
– Cost of recruitment, training and replacement
– ROI for investments in human resources
“maintainable advantage usually from outstanding
depth in selected human skills, logistics
capabilities, knowledge bases

HRM –HRM – Changing times?Changing times?
 Views of employees as cost center is changing
 Selection process
 Induction and training process
 Education
 Retention - negative impact of employee turn over
 Compensation
 Innovation and learning – cost of un recorded knowledge

strategic HRMstrategic HRM
HRM is a strategic tool only if it contributes
to the bottom line. The question is; Does it?
– Forecasts of shifts in skill needs from manual
to cerebral
– Human Resources needs to looked at from an
Investment perspective.

Strategic analysis HRMStrategic 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

Human resourcesHuman resources
Investment considerationsInvestment considerations
Management values
Risk return on investments
Economic rationale for investment in
training
Utility theory
– Outsourcing as an alternative to investment in
Human resources

 Management values
 Risk return on
investments
 Economic rationale for
investment in training
 Utility theory
– Outsourcing as an
alternative to
investment in Human
resources
 Values, Philosophies of
management / senior managers.
 Cost center
– HR cost center
– Replaceable resource
 Investment
– HR value adder
– Critical resource
 KEY personnel
– Enhances human capital/
prevents depletion
 BPL, Govt,Vs Infosys, Vs
Reliance, TCS
 Education, training, reward,
promotion.

 The employers do not own the
resource in which they have
invested.
 Returns must be great enough
to overcome the risks
 Cash outlays to maintain no
layoff policy, the benefits are
not easily quantified
 Incur costs in short run for long
term strategic benefit.
– Flexible committed work force
– Better organizational culture
 Reliance communication
 Bond money
 Risk return on
investments
 Utility theory
alternative to
investment in Human
resources

 Human capital theory
– Empr Not to bear the cost of Gen
training as the employees transfer skills
developed at employers expense.
 General training
– OJT, Tuition fee reimbursement
– Recoup cost of general training
[loyalty, flexibility]
 Specific training
 Employee related
– Cost of mobility, relocation,
residence, children's education and
other psychological issues,
– new salary lower/ greater
 LAY OFF
 Risk return on
investments
 Utility theory
alternative to
investment in Human
resources

 Utility of each HR
activity [attempts to determine
economic value of human resource
programs activities and procedures]
– Recruitment process
 Employee with higher
productivity
– Performance appraisal
 Return on output
 Return on sales
– Advt, training, special roles,
 Risk return on
investments
 Utility theory
alternative to
investment in Human
resources

 Where world class capabilities and
strategic advantage cannot be
developed.
 The resources devoted to perform
the service internally is greater
than those needed when outsourced
 Excessive dependence on suppliers
can be avoided.
 Salary, executive search, HRIS,
Benefits administration etc are
outsourced
 Key areas viz., performance
appraisal, employee relations and
labour relations are retained by
companies.
 Risk return on
investments
 Utility theory
alternative to
investment in Human
resources

Investments in training andInvestments in training and
developmentdevelopment
 Investments in employability
– Who moved my cheese?/ Jack Welch –
• the building was still standing , but the people were gone.
– Employers have responsibility to ensure they are getting the best
results from each employee before terminating them. (the
employer will have to coach, counsel and train the employee and
also take advantage of the same.
 Current practices
– OJT
– MDP
– Prevention of skill obsolescence M,NC, CNC/ soft wares domain / telecommunication
– Reduction of career plateauing narayan murthy / VRS, golden hand shake/

Investment practices for improved retentionInvestment practices for improved retention
 Organizational cultures emphasizing interpersonal
relationship values
 Effective selection procedures
 Compensation and benefits
 Job enrichment and job satisfaction
 Practices providing work life balance
 Organizational direction creating confidence in
the future
 Retention of technical employee
 Other practices in facilitating retention
– Opportunities for training, growth, new learning, liberal
transfer policies

Investments in job-secure work forcesInvestments in job-secure work forces
 Recognition of the costs of downsizing and lay offs
– Bumping less senior employees
 Reduced productivity
 Cost of training the incumbent, wage supplement
– Costs relating to termination of employees
 Separation payments, higher rates for unemployment
compensation, Depletion of the firms investment in training
employees.
– Administrative costs
 Human resource processing activities, Clerical expenses, cost
of conducting medical examination of laid off employees,
increased supervisory obligations for managers of reassigned
employees.
– Intangible costs
 Morale, disruption of efficiencies in work processes,
Accidents, Depletion of goodwill, irregular age distribution

Investments in job-secure work forcesInvestments in job-secure work forces
 Avoiding business cycle-based layoffs
 Alternatives to layoffs
– When down turn is of short duration
– Block / shut off inflow of personnel into the
organization –attrition brings down the cost
– Redeployment of current employees
– Curtailment of sub contractors and reallocate the work
to permanent employees
– Sharing of economic loss – wipro
– Fewer work days
 Employment guarantees
 The work effort and job security relationship
– The less secure the greater is the flexibility and
productivity

Ethical implications of employmentEthical implications of employment
practicespractices
Job security
Performance pressures
Compensation
Work environment

Non-traditional investmentNon-traditional investment
approachesapproaches
Investment in (disabled) Differently-abled
employees
Investments in employee health
Countercyclical hiring – technical personnel .

ExerciseExercise = Identify the type of investment= Identify the type of investment
 Employment security
 Self-managed teams and decentralization of decision-
making
 Extensive training and development
 Continuous improvement HR programs
 Reduced status distinctions and barriers
 Sharing of financial and performance information
 Trust between management and employees at all
organizational levels
 Communication in global markets
 Efficient and effective use of new information
technologies

 ECC recognises that people are the real source of competitive
advantage. It is through people that ECC delivers total customer
satisfaction. An extensive and rigorous recruitment process ensures
quality induction. L&T's Graduate Engineer Trainee recruitment
process covers India's major engineering colleges and institutions.
Programmes, plant visits and comprehensive information-sharing
facilitate induction.
 The basic principles of ECC's Human Resources policies include
 Recruitment based solely on merit by following well-defined and
systematic selection procedures without discrimination
 Sustain motivated and quality work force through appropriate and fair
performance evaluation, reward and recognition systems
 Identify training needs within the Organisation and design and
implement those need based training programmes resulting in
continuous upgradation of knowledge, skills and attitudes of the
employees
 Maintain a quality Human Resource Management System to meet the
international standards as per ISO 9001. Plan, design, train, equip and
motivate the department staff to meet this standard of expectation.
 ECC's Work Culture
Work culture emphasises:
· Freedom to experiment
· Continuous learning and training
· Transparency
· Quality in all aspects of work
· Rewards based on performance and potential

Stages in Strategic managementStages in Strategic management
 Strategic analysis
– Environmental analysis
 human resource environment
 human resource legal environment
– Establish organizational direction
 Strategy formulation
– Human resource planning
 Strategy implementation
– Work force utilisation and employment practices
– Reward and development system
 Strategic control
– Performance impact of human resource practices
– Human resource evaluation

The human resourceThe human resource
environmentenvironment
 Global changes
– WTO, GATT, EU, G&, G10 etc.
 Boarders and barriers
 E-commerce, M-commerce
 Emerging markets, new markets.
 Technology
 Demography
 Culture
 Etc….
– The imperative >>‘HR focus’

The human resource environmentThe human resource environment
-General environment-General environment
Technology and organisational structure
Worker values and attitudinal trends
Management trends
Demographic trends
Trends in utilisation of human resources
International developments

 Technology and
organisational structure
 Worker values and
attitudinal trends
 Management trends
 Demographic trends
 Trends in utilisation of
human resources
 International
developments
 Influence of technology
 HRIS
 Redeployment of HR staff to
operating units
 New organisational structures
(Short / accountability)
– Unbounded corporations
– Virtual corporations /
networked organisations
– Cellular organisations/guilds
– Respondent organisations/
supply niche components
 Stimulus for entrepreneurial
business

 Technology and
attitudinal trends
human resources
 International
developments
 Ethical/moral issues
 (older generation blaming
younger generation)
 Time spent on work/ leisure
 Work enjoyment / satisfaction
/appeals
 Loyalty of employees
– Location near / far
 Age
– Younger no loyalty and expect
none
– New employee Perception
before joining and after joining
the job (extrinsic to intrinsic)
 (image, induction and orientation,
socialization process)
 Emphasis on core values, cultures,
family, social service)

 Management of diversity
 Work teams
 Virtual teams
 Human resource outsourcing
 Open book management
 TQM
 Integrated manufacturing
 Reengineering
 Management of professionals
 Managing of aftermath of Mrg
& Aqui
 Technology and
attitudinal trends
human resources
 International
developments

 Aging work force (HMT)
 Baby boom-US, China
 Labour Shortages
 Racial diversity
 Occupational
distribution for women
 Dual career couples
 Technology and
attitudinal trends
human resources
 International
developments

 Telecommuting /
working from home
 Relocation from work
 Growing use of
temporary and
contingent workers
 Employee leasing
 Technology and
attitudinal trends
human resources
 International
developments

 NAFTA
 EU
 GATT
 WTO
 G7
 Technology and
attitudinal trends
human resources
 International
developments

-Legal environment-Legal environment
 An overview of Industrial Relations Climate
 Emerging trends and paradigm shifts towards
Employee Relations
 Employee Relations Policy
 Implications of:
– Employment Related Legislations
– Payment Related Legislations
– Social Security Related Legislations
– Welfare Related Legislations

-Legal environment-Legal environment
 Equal employment opportunity for women.
– Age, gender discrimination, promiscuous gender based
harassment. Promiscuity, Dealing with incidences, pregnancy
discrimination, Disability discrimination, Religious discrimination,
Reservations and protection, health care benefits, family and
medical leave.
 Employee relations
– Negligent hiring, immigration, Employment at will, Drug testing,
Safety
 Labour relations and collective bargaining.
 Emerging issues
 Strategic impact of the legal environment

Labour Legislations in IndiaLabour Legislations in India
 The Apprentices Act, 1961
 The Bonded Labour System (Abolition)
Act, 1976
 The Child Labour (Prohibition &
Regulation) Act, 1986
 The Children (Pledging of Labour) Act,
1933
 The Contract Labour (Regulation &
Abolition) Act, 1970
 The Employees Provident Funds and
Misc. Provisions Act,1952
 The Employees State Insurance Act,
1948
 The Employers Liability Act, 1938
 The Employment Exchange (Compulsory
Notification of Vacancies) Act, 1959
 The Equal Remuneration Act, 1976
 The Factories Act, 1948
 The Workmen's Compensation Act, 1923
 The Weekly Holidays Act, 1942
 The Industrial Disputes Act
 The Industrial Employment (Standing
Orders) Act,1946
 The Inter-state Migrant Workmen
(Regulation of Employment and
Conditions of Service) Act, 1979
 The Labour Laws (Exemption from
Furnishing Returns & Maintaining
Registers by Certain Establishments)
Act, 1988
 The Maternity Benefit Act, 1961
 The Minimum Wages Act, 1948
 The Payment of Bonus Act, 1965
 The Mines Act,1952
 The Payment of Gratuity Act, 1972
 The Payment of Wages Act, 1936
 The Sales Promotion Employees
(Conditions of Service) Act, 1976
 The Shops and Establishments Act, 1953
 The Trade Union Act, 1926

Labour legislationsLabour legislations
 The term `labour legislation’ is used to
cover all the laws which have been
enacted to deal with “employment and
non-employment” wages, working
conditions, industrial relations, social
security and welfare of persons
employed in industries.

Need for labour legislation in India:Need for labour legislation in India:
 Organized industry in a planned economy calls for the
spirit of co-operation and mutual dependence for
attaining the common purpose of greater, better and
cheaper production. Since this has not been happening
voluntarily, the need for State intervention.
 The need for labour legislation may be summarized as
under:
– Necessary for the health, safety, and welfare of workers;
– Necessary to protect workers against oppressive terms as
individual worker is economically weak and has little
bargaining power;
– To encourage and facilitate the workers in the
organization;
– To deal with industrial disputes;
– To enforce social insurance and labour welfare schemes.
In India, labour legislation is treated as an arm of the
State for the regulation of working and living conditions
of workers.

Principles of labour legislationPrinciples of labour legislation
 Social Justice:
 Social Equity
 Standards in terms of living, position in
society etc. of the working population.
 National Economy
 International Uniformity

 Social Justice:
 Social Equity
 Standards in terms of living,
position in society etc. of
the working population.
– The essence of democracy
is ensuring social justice to
all sections of the
community.
– This demands the
protection of those who
cannot protect themselves.
– In modern industrial set-up,
workers, left to themselves,
are unable to protect their
interest.
– Therefore, the State has to
intervene to help them by
granting them freedom of
association, the power of
collective bargaining and by
providing for mediation or
arbitration in the case of
industrial conflict.

 Social Justice:
 Social Equity
 Legislation based on this
principle provides for
achievement of definite
standards.
– EQUAL REMUNERATION
ACT
– Specific provisions of
law – such as in
factories act
– Work timings
– Work environment
– Dangerous machines act

 Social Justice:
 Social Equity
 These standards for the
working class can be
achieved by bringing
about changes in the Law
of our land.
– Power to change the
Law is exercised by the
government.
– Existing laws may be
amended to meet the
changed standards.
 ESI
 EPF
 Minimum wages

 Social Justice:
 Social Equity
 Measures have to be
provided through
legislation to:
– Ensure normal growth
of industry for the
benefit of the nation as
a whole
– Satisfy the physical and
intellectual needs of the
citizens
– Ensure the growth of
industrial efficiency such
as to adjust the wage
system with a view to
increase the productivity
and prosperity of the
workers

 Social Justice:
 Social Equity
 ILO Since its inception,
securing minimum
standards (for the working
population – worldwide) on
a uniform basis in respect of
all labour matters has been
the main objective of ILO.
o To this end, conventions
are passed at the
conferences of ILO.
– As a member of the ILO,
adopting these conventions
would require appropriate
legislation to be brought
about.
– The influence of
international labour
conventions has been
significant in shaping the
course of labour legislation
in India.

Legal environmentLegal environment
- Bench mark- Bench mark
Obey the Law. Law is society’s codification of
right and wrong; Play by the rules
• It is important to perform in a manner consistent
with expectations of government and the law.
• It is important to comply with various national and
supra-national laws and regulations.
• It is important to be a law-abiding corporate
citizen.
• It is important that a successful firm be defines as
one that fulfils its legal obligations.
• It is important to provide goods and services that
at least meet the minimal legal requirements.

Strategy formulationStrategy 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 processStrategy 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 organisation’s major goals, policies,
and action sequences into a cohesive whole

Competitive strategy in BusinessCompetitive strategy in Business
UnitsUnits
 Periodic forward scanning
 Analysis based on longer time frame
 Communication about goals and resource
allocation
 Framework for short-term plan evaluation and
integration
 Decisional criteria framework for short term
decision making
 PLANNING IN SBU’S
– Base strategy will be integrated with functional specializations to
exploit the opportunity seen by the strategy and achieve the goals.
– Low cost leadership, differentiation, niche

Value Chain AnalysisValue Chain Analysis
 Primary activities
– Inbound logistics
– Operations
– Outbound logistics
– Marketing and
sales
– Service
 Secondary Activity
– Procurement
– Human Resource
Management
– Technology
Development
– Infrastructure

Steps in Value Chain AnalysisSteps in Value Chain Analysis
 Value chain analysis can be broken down
into a three sequential steps:
1. Break down a market/organisation into its key
activities under each of the major headings in
the model (primary activities / secondary
activities)
2. Assess the potential for adding value via cost
advantage or differentiation, or identify current
activities where a business appears to be at a
competitive disadvantage;
3. Determine strategies built around focusing on
activities where competitive advantage can be
sustained

HR strategy ?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 organisation to
achieve its goals”

SHRM concernSHRM concern
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

Strategic HRMStrategic HRM(IMPORTANCE)(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
 Management of critical and Difficult HR areas
 Management of change (Resistance to change)
 Lack of trust
 Antagonistic labour
 Motivational problems
 Management relations
 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 SHRMBenefits of SHRM
1. Identifying and analysing external opportunities and
threats that may be crucial to the company's success.
2. Provides a clear business strategy and vision for the
future.
3. To supply competitive intelligence that may be useful
in the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are
addressed systematically.
7. To supply information regarding the company's
internal strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough competency

HRM Practices
Firm strategy Institutional /
Political forces
HR Capital pool
(Skills, abilities)
HR behaviors
Firm level outcomes
(performance,
satisfaction,
absenteeism etc)
Resource
based view
of the firm
Cybernetics
Agency/transaction costs
Resource dependence
institutional
Behavioral
approach
Theoretical frame work of SHRM

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)
– 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)
 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.appraisal

International strategyInternational strategy
Multinational, global and transnational
strategies
Strategic alliances
Sustainable global competitive advantage
Globally competent managers
Location of production facilities

Human resource contributionsHuman resource contributions
to strategyto strategy
Environmental scanning and competitive
advantage
Implementation of resource reallocation
decisions Slide >
Lead time for dealing with labour shortages.
..

Other issuesOther issues
 Strategy driven role behaviors and practices
– Innovation – cooperation, group oriented, long term appraisal system, generalized skill
development, broad career path, compensation approaches accentuating internal equity flexible
compensation packages including stock ownership
– quality enhancement- employment security guarantees. Extensive training programs,
participative decision making (process orientation)
– cost reduction – performance evaluation system emphasizing results in the short term. Virtually
no training programs, very specialized jobs, narrow specialized career jobs,Procedure for
continual tracking of wage rates in the labour market.
 Strategic human resource activity typology
– Relational : transactional $ High : low strategic value Slide >
 Classifying human resource types
 Jeffrey sonnenfeld and Maury peiperl Slide
 Miles and snow: Defenders, prospectors, analyzers and reactors
 Network organization and strategy
 Integration of strategy and human resource planning
– Evolution of strategy and human resource planning integration.
 Evolution of linkages between Strategic business planning and HRM
– Administrative linkage, one way – HR is involved in implementation, two way- involved HRM
and strategic business plans, integrated
– Determinants of integration
 Conditions under which determinants may not be appropriate.

HUMAN RESOURCE ACTIVITY TYPOLOGY
Staffing planning
Benefits of planning
Retirement planning
Compliance
Performance enhancement
Consulting
Employee relations
Labour negotiations
Executive compensation
Employee development
Management development
Recruitment interviewing
< IMPORTANT TO EXECUTIVES >
Payroll
Benefits administration
Retirement administration
Employee records
Relocation administration
Recruitment information processing
< IMPORTANT TO EMPLOYEES >
Recruitment information
processing
Employee assistance programs
Strategic value of
activity
Low
High
RelationshipTransactional Type of HR activityBack

Classifying human resource types *Classifying human resource types *BACKBACK

Benefits of integrating HRP with StrategicBenefits of integrating HRP with Strategic
planningplanning
 Generates more solutions to complex
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
 Reciprocal integration prevents strategy
formulation based on personal
rigidities/preferences
 Facilitates concurrent consideration of strategic
plans and managerial succession.

Strategic components of HRMStrategic components of HRM
relevant to internal fitrelevant to internal fit
Management awareness
Management of the function
Portfolio of programs
Personnel skills
Information technology
Awareness of the environment

HR Practitioners RoleHR Practitioners Role
 The HR managers have keen role in the effective planning and
implementation of the policies and decisions that in tune with the
business changes.
– They should act as strategic partners and be proactive in their role than
mere reactive, passive spectators.
– The HR managers should understand how far their decisions
contribute to business surplus incorporating human competency and
performance to the organisation.
– Strategic HR managers need a change in their outlook from seeing
themselves as relationship managers to strategic resource managers.
 Kossek (1987, 1989) argues that major HRM innovations occur when senior
management takes the lead and adoption of innovative SHRM practices is
dependent on the nature of relationship of the HR Department with the CEO and
the line managers.
 Legge (1978) commenting on the actions of the personnel practitioner in the
innovation process suggests that adoption of an innovation by an organization
depends largely on HR practitioners' credibility with information and resource
providers.
– HR Department and HR managers in these innovative organizations play a
strategic role (Ulrich, 1997) linking the HR strategy with the business
strategy of the organization.
– A crucial aspect concerning SHRM is the concepts of fit and flexibility.
The degree of fit determines the human resource system's integration with
organization strategy. It is the role of HR Managers to ensure this fit in
between Human Resource System with the Organization Strategy.

Requirements for SHR-ManagersRequirements for SHR-Managers
Information management skills
Planning skills
Management skills
Integration skills
Change management skills

Human resource planningHuman resource planning
Strategic role of HRP
Over view of HRP
Managerial issues in planning
Selecting forecasting technique
Forecasting the supply of human resources
Forecasting the demand for human
resources

 Strategic role of HRP
 Over view of HRP
 Managerial issues in
planning
 Selecting forecasting
technique
 Forecasting the supply of
human resources
 Forecasting the demand
for human resources
 Developmental planning
for strategic leadership
 Assessment of strategic
alternatives
 Adding value
 Contribution to strategic
human resource
management
 Strategic salary planning.

planning
technique
human resources
for human resources
 Steps in HRP
– Interfacing strategic planning and
scanning the environment
– Taking an inventory of the companies
current human resources.
– Forecasting the demand for human
resources
– Forecasting the supply of human
resources both from within the
organization and from the external labor
market
– Comparing the forecast of demand and
supply
– Planning the actions needed to deal with
anticipated shortages or overages
– Feeding back such information into the
strategic management process

planning
technique
human resources
for human resources
 Planning in a context
of change
 Responsibility for
human resource
planning
 Failure to plan for
human resources

planning
technique
human resources
for human resources
 Personal implications
 Changing receptivity
towards planning
– Stricter legislations for
lay off etc
 Other issues
– Mind set of work force
and related actions.

planning
technique
human resources
for human resources
 Purpose of planning
 Organisational
characteristics
 Industry characteristics
 Environmental turbulence
 Other consideration
– Technique of forecasting
– Cost
– Accuracy

planning
technique
human resources
for human resources
 Replacement charts Mgr posi
 Human resurce
inventories
 Succession planning
 Markov analysis ….
 Renewal models age cohorts, internal
mobilization
 Computer simulation
 Regression analysis
 Trend extrapolation
– Utilisation of supply
forecasting techniques

planning
technique
human resources
for human resources
 Heuristics, Rule of
thumb and the Delphi
technique
 Operations research
and management
science technique
 Regression analysis
– Utilisation of demand
forecasting technique
– Trend extrapolation

Markov analysisMarkov analysis backback
Distri
bution
of
emplo
yees
in
time
Job 1 27 .66 .11 .09 .03 .02 .09
Job 2 41 .15 .60 .08 .06 .01 .10
Job 3 55 .03 .08 .55 .13 .10 .11
Job 4 64 .00 .09 .18 .54 .03 .16
Job 5 73 .00 .08 .10 .17 .45 020
260 26 44 55 57 41 37
Job 1 Job 2 Job 3 Job 4 Job 5 exit

Strategy implementationStrategy implementation
work force utilization and employment practiceswork force utilization and employment practices
Efficient utilization of human resources
Dealing with employee shortages
Selection of employees
Dealing with employee surpluses

 Efficient utilization of
human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses
 Cross training and flexibility in
assigning work
 Using work teams
– Requirements for effective
teams
 Forming
 Storming
 Norming
 performing
 Operating on a non union basis

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

 Managing vendors of
outsourced functions
– Making the outsourcing
decision
– Selecting and negotiating
with outsourcing vendors
– Managing the outsourcing
transactions
– Managing vendor
relationships
– Monitoring and evaluating
vendor performance
human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses

human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses
 Reliability and validity
– Predictive validity
– Concurrent validity
– Content validity
 Job analysis
 KSA
 Interviews
 Behavioural interviews
 Testing
 Assessment centres

 Redeployment and
retraining
 Early retirement
 Retreat from
employment security
policy
 Downsizing and
layoffs
 Termination strategies
human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses

 Downsizing and layoffs
– Findings
 Co are not well prepared
 6 months to 1 year co indicators
do not improve –profits, ROI,
Stock prices, expense ratios
 Survivors syndrome
 Myth of job security exploded
(Who moved my cheese)
 Sustained improvement can be
brought about only with
improvements in productivity,
quality and effectiveness and
integrate reductions in head count
with planned changes in the way
the work is designed.
 Downsizing in not a one time
quick fix solution to enhance
competitiveness. –is a part of
continuous improvement.
human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses

 Downsizing and layoffs
– Guide lines for conduct of layoffs
 Give early warnings /
announcements of layoffs
 Soften the impact with
compensation and benefits
 Utilise the services of
outplacement firms
 Supply retraining services
 Provide equitable and decent
treatment to laid off employees
 Ensure supportive treatment of
survivors
 Maintain a cooperative approach
with unions
 Uphold obligation to the
community
human resources
 Dealing with
employee shortages
 Selection of
employees
 Dealing with
employee surpluses

Special implementationSpecial implementation
challengeschallenges
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 systemStrategy implementation system
– Reward and development systems– Reward and development systems
 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.
 Strategically oriented
performance
management system
compensation systems
 Employee
development

performance
management system
 Employee
development
 Traditional
– Job analysis > job evaluation >
salary/wage hierarchy
 Point system
 Factor comparison system
 Hybrid system
– Internal equity
– > Wage surveys to establish
external equity.

 Traditional compensation
systems
– Inadequacies
 Wage for know-how not
given
 Compensated for specific
job only
 Impact of collective
bargaining on wage
structures.
 Does not work well with
managers and
professionals
performance
management system
 Employee
development

 Skill based pay
 Broad banding
 Team based pay
 Variable compensation
 Executive
compensation
performance
management system
 Employee
development

performance
management system
 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

The performance impact ofThe performance impact of
human resource practiceshuman resource practices
 Individual high performance practices
 Limitations of individual practices
 Evolution of practices
 Systems of high performance human resource
practices
 Individual best practices Vs systems of practices
 Universal practices Vs contingency perspectives

 Seven management
practices that enhance
performance –Jefrey Pfeffer
1. Employment security
2. Selective hiring of new personnel
3. Self managed teams and
decentralization of decision
making as basic principle of org
design
4. Comparatively high
compensation on organizational
performance
5. Extensive training
6. Reduced status distinctions and
barriers
7. Extensive sharing of financial and
performance information.
 Individual high performance
practices
 Limitations of individual
practices
 Systems of high performance
human resource practices
 Individual best practices Vs
systems of practices
 Universal practices Vs
contingency perspectives

 Compensation
– High compensation linked to organisational
performance
– Incentive based compensation
– Profit sharing
– Team based compensation
 Diversity
 Employment
– Countercyclical hiring,
downsizing, early retirement
programs, employment security,
human resource outsourcing.
 Industrial relations
– Decertification of union
bargaining agent
– Positive labour relations
– Strikes, lockouts
 Internal labour market
practices
practices

 motivation
– Decentralized decision
making
– Self managed teams
– Open book management
– Reduced status differentials
or symbolic egalitarianism
 Performance management
 Staffing
– Cognitive tests, staffing
selectivity, CEO succession
insider outsider, yield analysis
of recruiting sources
 Training
practices
practices

practices
practices
 Each practice has a
different kind of impact on
individual workers – if
possible to address at
individual levels the same
may be done.
 Results of studies that
give positive or negative
indication can not be
taken as absolute

practices
practices
 HR practices are path
dependant. They consist
of policies that are
developed over time and
cannot be simply
purchased in the market
by competitors.

Has positive impact
 Commitment oriented systems
– Decentralized decision making, general
training, Highly skilled employees,
High wages - bonuses
 Human capital enhancement
– Comprehensive training, BARS,
Technical and problem solving skills,
selective staffing
 Human resource administrative system
– Hourly pay, individual equity,
individual incentive, result based
performance appraisal
 Motivation and commitment system
– Receptiveness to new training,
compensation contingent on firms
performance, extent of status
differentials
 Skills and organizational structures
– Attitude survey, access to grievance
procedures, formal job anasysis, info
sharing
practices
practices

practices
practices
 Mxed evidence and
response
– Some individual practices
have had positive impact
– Systems of practices have
both
 Adoption
 Implementation
 fit

practices
practices
 Have their own
applicability
– Evidence for success of
both
– Greater evidence for
contingency

Human Resource EvaluationHuman Resource Evaluation
Overview of evaluation
Approaches to evaluation
Prevalence of evaluation
Evaluating strategic contributions of
traditional areas
Evaluating strategic contributions in
emerging areas

 Overview of evaluation
 Approaches to evaluation
 Prevalence of evaluation
 Evaluating strategic
contributions of traditional
areas
contributions in emerging
areas
 Scope of evaluation
 Strategic impact
 Level of analysis
 Criteria
 Level of constituents
 Ethical dimensiona

areas
areas
 Audit approaches
 Analytical approaches
 Quantitative and
qualitative measures
 Balance scorecard
perspective
 Benchmarking
 Industry influences

areas
areas
 Little
 Results not revealed

contributions of
traditional areas
areas
 HRP
 Staffing
 Training
 Performance evaluation
systems
 Compensation systems
 Utility analysis
 labour and employee
relations

areas
areas
 Equal employment
opportunity and
management of diversity
 Quality readiness

Strategic HRM

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