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