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Introduction to Strategic HRM

  1. Strategic Human Resource Management An Introduction Ms. Pooja Rahul Sharma (Faculty of HRM) HLCPE, Ahmedabad
  2. “Strategy comes out of process of ascertaining objectives of business unit, making necessary changes in such objectives taking decisions in respect of utilization of required resources, for achieving objects & taking policy decisions decisions to get resources,its use & its disposal” Strategic Management-As per general opinion, strategic management means strategic planning implemented by the management for solution of various problems arose in the area of production, employees,& finance to the business unit.
  3. Scope of Strategic Management  To fix mission of the unit  To make favourable internal environment  Analysis & evaluation of External environment  SWOT analysis to be made  Selection of new alternatives to achieve mission  To develop grand strategy  To fix short-term annual targets  To raise resources & facilities  Evaluation & control on activities.
  4. HR Strategy  HR Strategy is concerned with two key elements Determining the strategic objective 2. Developing a plan of action 1.
  5. Strategic Human Resource Management  Strategic Human Resource Management is an approach relates to decisions about the nature of employment relationship,recruitment,training,develop ment,performance management, reward,& employee relationship.
  6. Four Components of SHRM
  7. An organization uses combination of several resources Tangible & Intangible resources A) Physical capital resources B) Organizational capital resources C) Human capital resources
  8. Human resources as assets HR are not owned by firm Value of HR may decline HR Assets Cannot be duplicated Can walk over to other organizations
  9. The VRIO Framework  VRIO framework a resource based view of an organization determines the value of human resources for the organization on the basis of four criteria-value,rareness,imitability & organization. Rarene ss Value VRIO Organiz ation Imitabili ty
  10. The Investment perspective of Human Resource  Factors Determining the investment orientation of an organization 1. Management values 2. Attitude towards risk 3. nature of skills needed by employees 4. „utilitarian‟ or „bottom-line‟ perspective 5. availability of outsourcing
  11. Evolution of SHRM Personnel Management Human Resource Management (early 1970s) Strategic Human Resource Management (early 1980s)
  12. Objectives of SHRM  To ensure the availability of a skilled,commited, & highly motivated workforce in the organization to achieve sustained competitive advantage.  To provide direction to the organization so that both the business needs of the organization & the individual & collective needs of its workforce are met.
  13. Difference b/w SHRM & Traditional HRM Traditional HRM SHRM Focus of activity Employee relations Partnership with internal & external groups Role of HR Reactive & transactional Proactive & transformational, change leader Initiative for change Slow & not integrated with larger issues Fast,flexible & systematic Time Horizon Short-term Consider various time frames Control Bureaucratic control Organic control Job design Focused job design Broad job design Important investment Capital,products,technol People & their ogy & finance knowledge skills & abilities
  14. Difference b/w SHRM & HR Strategy SHRM HR Strategies • A general approach to strategic management to HR • Aligned with the organizational intention with future directions • Focus on long term people issue • Defines the areas in which specific HR strategies need to be developed • Focus on macro concern such as structure & culture • Strategic HRM decisions are built into strategic business plans • Outcome of the general SHRM approach. • Focus on specific organizational intentions about what needs to be done. • Focus on specific issues that facilitate the achievement of corporate strategy. • Human resource strategy derived from SHRM
  15. Strategic FIT: A Conceptual Framework  The strategic fit proposes that if an organization seeks to maximize its competitive advantage, it must match its internal resources & skills with opportunities available in the external enviornment.  Five types of Fit1. Best fit approach 2. Fit as contingency 3. Best Practice approach 4. Fit getalt 5. Fit as bundles.
  16. Strategic FIT: A Conceptual Framework Best Fit Approach-This linkage is reffered as external fit or vertical integration means the linkage of HR strategies with business strategies. Bases of classification of HR Strategies:  Different types of business strategies  Stages in the business or product cycle  Types & number of products HR strategy classification
  17. HR Practices corresponding to the stages of an organization‟s life cycle Life Cycle Stages HR Practices Start-up • Flexible patterns of work • Recruitment of highly motivated & committed employees. • Competitive pay •Little formality Growth • More sophisticated recruitment & selection • Training & development • Performance Mgmt process • Reward systems • Developing stable employee relations Maturity • Attention to the control of labour cost • Focus on increasing productivity • Control compensation Decline • Emphasis on rationalization of
  18. Linking Business Strategy HR Strategy Business Strategy HR Strategy Cost Leadership Utilization HR Strategy Differentiation Facilitation HR Strategy Focus Accumulation HR strategy
  19. Miles & Snow‟s Classification of Business Strategy with HR strategy Dominant culture of organization (Business Strategy) HR strategy Defenders  Find change threatening Favour strategies which encourage continuity & security  Bureaucratic approach  Planned & regularly maintained policies  Build human resource Prospectors  Thrive on change  Favour strategies of product or market development  Creative & flexible management style  Have high quality human resource  Little opportunity for long term HR planning.  Emphasize on recruitment,selection & performance based compensation Analyzers  Seek to match new ventures with the present business set-up  These firms are followers- the  Low level of monitoring & coordination  „Buy‟ as well as „Make‟ key human resources
  20. Other frameworks  Golden & Ramanjuman(1985)-4 types of linkage 1. Administrative Linkage 2 .One way linkage 3. Two way linkage 4. Integrated Linkage
  21. „HR Bundles‟ Approach  In general terms the bundles approach is also termed as internal fit or horizontal integration. The purpose of bundling is to bring about coherence b/w HR practises.Coherence exist when a mutually reinforcing set of HR practices is developed to contribute to the strategic objectives of the organizations so that these practices ensure the matching of resources to the needs of organization & bring about the performance quality.
  22. Best Practice Approach  This approach focus on the view that organizations should adopt best practice irrespective of the context. According to this view, superior management practices are readily identifiable & are transferable across organizations. It contains employment security  Selective hiring  Team working  High pay contingent  Extensive training  Reduction of status differences  Information sharing
  23. Distinctive Human Resources Practices HR competencies Outside Development Flexibility Prospect ors Inside selection Outside Development Business Strategies Outside Development Established Markets/niches Inside selection Defenders
  24. Theoretical Perspectives of SHRM SHRM Fit Perspective Functional perspective Economic Perspective Typological perspective
  25. Theoretical Perspectives of SHRM  Fit Perspective-match its internal resources & skills with opportunities available in the external environment.  Functional Perspective-An organization performs best when each departmental unit maximizes its contributions limited to its unique area of expertise.  Economic perspective- Human resources are a unique & distinguishable source of competitive advantage.  Typological Perspective-Three distinct ‘types’ of HR strategies  Inducement  Investment  Involvement
  26. SHRM Approaches: The Indian Context Three Major approaches to understanding people function developed in India are presented- Integrated System Model SHRM(Indian context) HRD Framework HRD as an approach
  27. Alternative HR Strategies  Contract companies in manufacturing sector- The use of contract workers has increased significantly at the production sites in electric & auto industries.  Business Strategy of Contract firmsOperation Workers’ Skill Workers’ Skill Management Policy Level (Development Type) Level (Acquisition Type) Contractormanaged type Development/Cont ractor-managed type Acquisition/Contra ctor-managed type Client Managed type Development/Clien Acquisition/Client t Managed type Managed type
  28. Restructuring & SHRM in Healthcare Organization  The healthcare industry is in a growth mode & there is high level of focus on healthcare cost. As the part of strategy, the hospital industry is likely to engage in downsizing & restructuring  Steps involved in plan to restructuring of hospital  Environmental scan prior to developing restructuring activities.  The environmental scan will result in defining the business strategy  Pre-structuring  Re- structuring  Post-restructuring
  29. Competition related HRM changes in the Retail Banking Industry      Since the mid-1990s,the retail banking divisions of commercial banks are under pressure to change the way they do business banks are faced with an extremely competitive environment as well as threats from non-banking institutions Focus or Niche Strategy-the typical initiatives are as follows: being a „one-stop‟ financial service provider. Aggressive selling to new customers Aggressive cross selling of new products to existing customers. Establishing a presence in chosen geographical markets. Establishing alternative channels of delivery of