HUMAN RESOURCE STRATEGY

Goals

Understand how HR contributes to bottom line of organization

Understand that organizations could have same policies with very different results based upon its culture

HR MODELS

CLERICALLEGALFINANCIALHUMANISTICBEHAVIORAL SCIENCESTRATEGIC

Strategic Model (SHRM)

Historically, HR focused on employeeSHRM focuses on organizational

effectiveness How can HR can help company become more

profitable?

System approach HR is part of the production process that can

increase value of good or service

Strategy

plan of what business to we want to compete in

developing goalswhat are we best atwhat can’t we do

ALTERNATIVE STRATEGIC APPROACHES BEST PRACTICES-there are practices that are

just good for everyone RESOURCE BASED VIEW

focuses on how employees can add value to the firm for sustained competitive advantage

resources that are difficult to copy resources that add value

CONTIGENCY THEORY Contends that best HR practices will depend upon firm

strategy Argues for multiple ways to achieve goals Do HR practices fit with firm’s strategy

Resource Based View

Sustained Competitive Advantage Perceived customer value

technology specialization economies of scale financing Employees

How are we different from competitorsProvides economic benefitsCannot be duplicated

management is particularly difficult to duplicate

Contingency Perspective

Firms that match business strategy and HR practices will have the highest performance

Strategic Objectives

CostQualityInnovationGrowthFocus

©a Times Mirror Higher Education Group, Inc., company, 1997a Times Mirror Higher Education Group, Inc., company, 1997

IRWIN

InnovationInnovation Cost LeadershipCost LeadershipHR RoleHR Role

Focus of firm Employee role

Training

Staffing

Compensation

Performancemanagement

- efficiency

- specific & repetitive

- specific/short-term skills- promote internally

- internal pay equity

- behavior-oriented

- creative, risk-taking

- broader tasks creative risk-takers- broad career paths

- recruit more from outside- external pay equity

-long-run-results-oriented -Allows for mistakes

HR Needs in Strategy Formulation

AdministrativeLinkage

StrategicPlanning

HRFunction

SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

HR & Strategy Formulation

AdministrativeLinkage

One-WayLinkage

StrategicPlanning

StrategicPlanning

HRFunction

HRFunction

SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

HR & Strategy Formulation

AdministrativeLinkage

One-WayLinkage

Two-WayLinkage

StrategicPlanning

StrategicPlanning

StrategicPlanning

HRFunction

HRFunction

HRFunction

SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

HR & Strategy Formulation

AdministrativeLinkage

One-WayLinkage

Two-WayLinkage

IntegrativeLinkage

StrategicPlanning

StrategicPlanning

StrategicPlanning Strategic

Planning

HRFunction

HRFunction

HRFunction

HRFunction

SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

How is HR Strategy Formulated?

Role of Culture

Having HR policies not enough, need to know whether these policies are interpreted, understood, and believed by employees

Strong climates – “the organization means it”

Factors that contribute to a strong culture

Visibility – do people know what the policies and expectations are?

Understandability JetBlue Legitimacy of authority – does management

mean it? Relevance – what difference does it make? Do I

care? Consistency- helps reinforce the above Consensus – do we have buy in across

employees? Are the policies fair? Strong cultures lend meaning to the policies

Strategy Summary

HR strategy is about managing employees effectively to improve organizational performance

Best practice view

good practices that will benefit all

difficult to copy & add value Strategic HRM

contingency view - good practices depend on business strategy

Resource based view

HR policies and practices can lend strategic advantage