2. Human Resource Management Strategy
The Meaning of “Strategy”
A critical factor that affects Firm Performance
A factor that contributes to Competitive
Advantage in markets
Having a long-term focus
Plans that involve the top executives and/or
board of directors of the firm
A general framework that provides a perspective
for selecting specific policies and procedures
3. Human Resource Management Strategy
Why is HR critical to firm performance?
Service is delivered by people.
Low quality HR leads to low quality customer
In the 21st century effective knowledge
management translates into competitive
advantage and profits.
Knowledge comes from a firm’s people.
4. Human Resource Management Strategy
What is unique about Human Resource Management?
HR is multidisciplinary: It applies the disciplines
of Economics (wages, markets, resources),
Psychology (motivation, satisfaction),
Sociology (organization structure, culture) and
Law (min. wage, labor contracts, EEOC)
HR is embedded within the work of all
managers, and most individual contributors due
to the need of managing people (subordinates,
peers and superiors) as well as teams to get
5. HR Strategy: Strategic Fit
HR System Training Rewards
6. HR Strategy: HR System Internal Fit
Rewards Performance Evaluation
Performance Management System
7. HR Strategy: Context of HR System
1. The “Five Factors” Influencing the HR System
Social: social values, roles, trends, etc.
Political: political forces, changes. Ex. Bush
presidency and its agenda for Social Security.
Legal: laws, court decisions, regulatory rules.
Economic: product, labor, capital, factor markets.
9. HR Strategy: Context of HR System
1. Organization Culture
Weak vs. Strong culture
“Type” of culture
10. HR Strategy: Context of HR System
1. Organization Strategy
What are a firm’s distinctive competencies?
What is the basis that competitive strategy be
What are a firm’s strategic objectives?
Compare corporate and Business strategies.
11. HR Strategy: Context of HR System
1. Technology of Production & Organization of
Physical layout/employee proximity
Required employee skills
Ease of monitoring employees’ input
12. HR Strategy: Context of HR System
Critical Thinking Questions:
2. Should a company monitor the HR environment and
imitate “Best Practices” of HR from successful firms?
What caveats would you want to apply to applying Best
3. Give an example of a type of Organizational Culture
that would reinforce strategy: What type of HR
practices would fit with this culture?
4. What type of HR practices would fit with jobs with tasks
that are highly ambiguous, uncertain and creative?
What about predictable, routine and certain tasks?
13. HR Strategy: Strategic Roles
Distribution of Task Outcomes: 3 Possibilities
2. “Foot soldier”: low upside, low downside of
3. “Guardian”: low upside, high downside of
4. “Star”: high upside, low downside of
14. HR Strategy: Strategic Roles
Critical Thinking Questions:
2. Which Roles are Strategic? Foot soldier,
guardian or star?
3. What are the advantages of focusing on foot
soldiers with the company HR policies?
4. What are the liabilities of stars? When is it
advantageous to cultivate and sustain stars?
15. HR Strategy: Consistency
Consistency is an important quality related to the
implementation of HR policies. Employees
should receive a clear, undiluted message of
what behaviors are important and desirable.
When there is a fit between HR systems,
employees are likely to receive consistent
feedback. The 3 types of consistency are…
16. HR Strategy: Consistency
Critical Thinking Questions
2. Are there circumstances when it is effective to
have inconsistent HR policies? Give an
3. Does an emphasis on temporal consistency
create a barrier for change when change is
4. What impact (if any) would consistency have
on the organization culture?