Shrm notes

Meaning of SHRM

An approach to HRM that has the goal of using people most wisely with respect to the strategic needs of the organization.

In other words…

Strategic HRM is a process that involves the use of overarching approaches to the development of HR strategies, which are integrated vertically with the business strategy and horizontally with one another

APPROACHES TO STRATEGIC HRM

• The resource-based approach

• High-performance management

• High-commitment management

• High-involvement management

The resource based approach

is to develop strategic capability – achieving strategic fit between resources and opportunities and obtaining added value from the effective deployment of resources. A resource-based approach will address methods of increasing the firm’s strategic capability by the development of managers and other staff who can think and plan strategically and who understand the key strategic issues.

High-performance management

aims to make an impact on the performance of the firm through its people in such areas as productivity, quality, levels of customer service, growth, profits and, ultimately, the delivery of increased shareholder value. High-performance management practices include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management processes.

High-commitment management

‘A form of management which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust.’

High-involvement management

This approach involves treating employees as partners in the enterprise whose interests are respected and who have a voice on matters that concern them. It is concerned with communication and involvement. The aim is to create a climate in which a continuing dialogue between managers and the members of their teams takes place in order to define expectations and share information on the organization’s mission, values and objectives.

Universalistic Approach

• Universalistic approach to Strategic HRM is the process of transforming traditional HR practices into a limited set of “correct” HR procedures and policies.

• There is no single best way to manage human resources and strategy. The set of HR practices include: High levels of employment security, Selective hiring practices, A focus on teams and decentralized decision making, High pay levels, Extensive employee training and so on.

Configurational approach

• The Configurational approach to SHRM suggests that there are various configurations of HR practices that go hand- in-hand and, collectively improving the business performance. The effectiveness of HRM in enhancing a firm’s competitive advantage depends on a set, or bundle, of HR practices rather than on any single HR program or policy.

Steps In SHRM

1. Aligning business and HR needs 2. Developing your HR strategy 3. Organisational performance 4. Organisational design and structure5. Strategic resourcing 6. Organisation development7. Compensation and benefits8. Organisation culture

© 2008 by Prentice Hall 1-11

Environment of Human Resource Management

EXTERNAL ENVIRONMENTINTERNAL ENVIRONMENT

1

Human Resource

Management

Other Functional

Areas

OperationsMarketing

Finance

Lega

l Con

side

ratio

ns E

cono

my

Technology

Society

Shareholders

Unions

Customers Competition Labor Market

Human Resource

Development

Com

pens

ation

Staffing

Employee and Labor

Relations

Safety and Health

Unanticipated Events

HUMAN RESOURCES ENVIRONMENT The framework for scanning the environment is composed

of the following categories:– Technology . – Organizational structure.– Values & attitudinal trend of employees.– Managerial trends.– Demographic trends.– HR utilization trends.– International developments impacting organization.

HUMAN RESOURCES ENVIRONMENT • After developing investment prospective for making strategic decision about human

resources managers need to scan the environment before formulating strategy.• Technology has massive impact on the organizational environment requiring technically

qualified employees to run the operations. During these days of rapid changes ,the process of formulating strategies & planning and their implementation is more difficult but important.

• Organizations which scanned the environment , developed right strategies and planed alternatives for dealing with changing conditions , were successful comparative to those who ignored these important factors.

• The framework for scanning the environment is composed of the following categories:– Technology . – Organizational structure.– Values & attitudinal trend of employees.– Managerial trends.– Demographic trends.– HR utilization trends.– International developments impacting organization.

TECHNOLOGY AND ORGANIZATIONAL STRUCTURE

• BROAD INFLUENCES TECHNOLOGY • Technology particularly information technology is having a major impact or the structure

of organizations and the nature of managerial work.• Major areas of business , manufacturing , sales, finance, supply chain management and

human resources have integrated through company’s software systems.• The information technology has enabled companies to gain numerous benefits like

efficiency gains, quicker response time, better inventory management, enhanced coordination and improved decision making.

• Managers to be effective in such an environment requires special skills as the nature of managerial assignment has changed. Lean and flat organizations, alternative job assignments and opportunities are needed for development of effective managers for future needs.

• The use of technology has changed the hierarchal structure of the organizations as physical supervision need has been reduced.

• Technology has also reduced work process cycle time. Changes in the work processes and design warrants well planned training and development programs to ensure availability of employees with updated skills.


• Influence of HRIS.– The organizations have heavily invested in acquisition of fast and reliable

software's ( People soft, HRIS. SAP, JD Edward, MRP, Oracle etc) for different operations including HR information system, which provide facility of automatic human resources processes and immediate information to decision makers.

• Redeployment of HR Staff to operating Units.– HR staff now part of operating units rather than centralized HR department.

This has been done to provide spontaneous HR support to operating units.– HR as business partners

• New organization structure.– Due to advance technology, the distinction between management and labour

have become blurred. workers are becoming more responsible and accountable as job owners, making decisions at their level;

– Task forces , more flexible work arrangements, project teams have replaced normal manager employee hierarchal relationship.


• All structural changes on account of technological changes are focused to enhance organizational ability to coupe up with the current & future challenges. There are four new structural forms of interest:

• Unbundled corporations.• Autonomous business unit functions as profit centers.• Traditional support services are outsourced.

• Network organizations or virtual corporations.• Organizations which are similar to unbundled corporations.• One of the driving force for creating such network organizations is

the need to outsource activities that other companies , consultants, or joint venture partners can perform better or more quickly or at reduced cost.


• Cellular organizations.• This structural form organizations are typically groups of small technology oriented companies

that maintain affiliations over time. • Employees of these companies are mostly technical professionals to take various projects. • Managerial needs for such organizations is technical knowledge, cross functional experience,

international exposure, collaborative, leadership and self management skills.• Respondent organizations.

• In this structural form, organization is essentially an entrepreneurial corporation that exist by filling niches (positions) to supply customized services to unbundled corporations.

• in such corporations decision making is quick and is likely to be retained at the level of central entrepreneurial level.

• These corporations are risky and have high failure rate.• The positive aspect is that employees in such set up have more opportunities to learn new

skills and develop as generalist.• Stimulus for entrepreneurial business is technical knowledge of those managers who can

manage a small set up of their own and provide organizations required services/ components / spares at economical price with guarantee of desired quality level.

VALUES & ATTITUDINAL TREND OF EMPLOYEES.

– Values .– Principles, standards, morale , ethics, concepts , beliefs that

guide how we make decisions about and evaluations of behaviours and events . Basic conviction that a specific mode or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence.

– Attitudes.– Positive or negative feelings concerning objects, people, or

events.– Attitudes are less stable than values.


• Work ethics may vary over time and places. Older people believe that things were better or at least more moral, more decent, when they were young.

• There has been some shifts in work values of importance to strategic management . The Most important of these are values & attitudes of employees towards their employers.

• It is important to understand these values and attitudes to understand future human resources environment.

• Interest and capability of employees for learning new skills to face challenges of change, flexibility to adjust to changed environment have significant impact on organizational work environment.

IMPACT OF MANAGEMENT TRENDS ON HUMAN RESOURCES

• Management of diversity.– Effective management of diversity can be supportive to enhance

productivity / efficiency and through this organizations can gain competitive advantage.

• Work teams.– Work teams have been of increasing interest to managers.– Benefits include improved decision making, improved performance,

improved quality, increased flexibility, reduced labour cost, lower employee turnover, greater service efficiency, facilitative for change , shorter product cycle time.

• Virtual teams.– Members from different functions work together from different

locations, different countries, different time zones, through teleconferences, webex, net meetings etc.

MANAGEMENT TRENDS

• HR outsourcing.– Most significant forces affecting HR functions are

outsourcing of HR function..– This is result of several strategic and operational influences.. – This is intended to have greater efficiency, better service

and less response time and cost effectiveness.

• Open book management.– The practice of sharing financial and performance

information is known as open book management.– The reason for this is the belief that empowered employees

can make informed decisions.

MANAGEMENT TRENDS• Total quality management.

• A continuing trend of importance to management strategists is Total Quality Management pioneered by Edward Deming which is a broad based systematic approach for achieving high level of quality and required to survive against the pressure of world class competition.

• TQM emphasized: » Articulation of strategic vision.» Objectives and accurate measurement.» Benchmarking.» Employees empowerment and team building.» Striving for continuous improvement.» Conceptualize quality related activities.» Leadership commitment to quality.» Emphasis on customer satisfaction.

• TQM emphasizes on training, which makes it important from HRM prospective as well.

• Aim of TQM is to add value to all stake holders in every activity, which is necessary to make company more efficient and increase productivity.

MANAGEMENT TRENDS• Integrated manufacturing.– Integrated manufacturing systems provide a new approach

for streamlined manufacturing, which are composed of advanced manufacturing technology, just in time inventory and other technological resources.

– When these technologies and managerial systems are combined , integrated manufacturing systems have the potential to provide greater dissemination of information, remove barriers related to functional specialization, promote collaboration to solve quality problems etc.

– These systems require knowledge workers and their technical and problem solving skills are advanced to make them more effective at their jobs.

MANAGEMENT TRENDS• Reengineering.– Also known as process innovation, core processes

redesign and business processes reengineering is practiced since 1980s .

– Reengineering requires cross functional coordination and crossing of organizational boundaries .

– because it may disrupt existing power relationship and– Some senior executives are still not convinced of the

ultimate value of reengineering due to their concerns about long range human impacts due to elimination of l jobs.

MANAGEMENT TRENDS

• Management of professionals.– Professional requires different form of

management. They often have low organizational loyality, require substatial autonomy, follow their own professional code of ethics and standards.

– HR problem for the future will be to provide career path for professionals.

MANAGEMENT TRENDS

• Demographic trends –major challenges.– Aging workforce, .– Racial diversity .– Greater feminization of the workforce.– Labour shortages-scarcity of skilled , needed labour

force. – Support services like child care for dual career couples.

TRENDS IN UTILIZATION OF HUMAN RESOURCES

• Telecommuting.-telecommunication.– Remote working / working from home / beneficial, cost effective , no

Geographical relocation and travel expense.• Relocation of work-decentralized .

– Allowed migration of workers from cities to small towns / rural areas. – Companies are also relocating their operations.

• Growing use of temporary and contingent workers.• Factors contributing to use of temps / contingent workers-advantages, low

cost, responsibility / liability shift..• Factors limiting the use of temps / contingent workers-disadvantages,

training, loyalty, • Employee leasing-existing employees are leased to external supplier.•

International developments

• Global competition.• Global sourcing.• North American Free Trade Agreement

(NAFTA) –across boundaries• European community.


• BROAD INFLUENCES TECHNOLOGY • Technology particularly information technology is having a major

impact or the structure of organizations and the nature of managerial work.

• Major areas of business , manufacturing , sales, finance, supply chain management and human resources have integrated through company’s software systems.

• The information technology has enabled companies to gain numerous benefits like efficiency gains, quicker response time, better inventory management, enhanced coordination and improved decision making.

• Managers to be effective in such an environment requires special skills as the nature of managerial assignment has changed. Lean and flat organizations, alternative job assignments and opportunities are needed for development of effective managers for future needs.


• All structural changes on account of technological changes are focused to enhance organizational ability to coupe up with the current & future challenges. There are four new structural forms of interest:

• Unbundled corporations.• Autonomous business unit functions as profit centers.• Traditional support services are outsourced.

• Network organizations or virtual corporations.• Organizations which are similar to unbundled corporations.• One of the driving force for creating such network organizations is

the need to outsource activities that other companies , consultants, or joint venture partners can perform better or more quickly or at reduced cost.


• Cellular organizations.• This structural form organizations are typically groups of small technology

oriented companies that maintain affiliations over time. • Employees of these companies are mostly technical professionals to take

various projects. • Managerial needs for such organizations is technical knowledge, cross

functional experience, international exposure, collaborative, leadership and self management skills.

• Respondent organizations.• In this structural form, organization is essentially an entrepreneurial

corporation that exist by filling niches (positions) to supply customized services to unbundled corporations.

• in such corporations decision making is quick and is likely to be retained at the level of central entrepreneurial level.

• These corporations are risky and have high failure rate.• The positive aspect is that employees in such set up have more

opportunities to learn new skills and develop as generalist.


– Values .– Principles, standards, morale , ethics, concepts , beliefs that

guide how we make decisions about and evaluations of behaviours and events . Basic conviction that a specific mode or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence.

– Attitudes.– Positive or negative feelings concerning objects, people, or

events.– Attitudes are less stable than values.


• Work ethics may vary over time and places. Older people believe that things were better or at least more moral, more decent, when they were young.

• There has been some shifts in work values of importance to strategic management . The Most important of these are values & attitudes of employees towards their employers.

• It is important to understand these values and attitudes to understand future human resources environment.

• Interest and capability of employees for learning new skills to face challenges of change, flexibility to adjust to changed environment have significant impact on organizational work environment.

IMPACT OF MANAGEMENT TRENDS ON HUMAN RESOURCES

• Management of diversity.– Effective management of diversity can be supportive to enhance

productivity / efficiency and through this organizations can gain competitive advantage.

• Work teams.– Work teams have been of increasing interest to managers.– Benefits include improved decision making, improved performance,

improved quality, increased flexibility, reduced labour cost, lower employee turnover, greater service efficiency, facilitative for change , shorter product cycle time.

• Virtual teams.– Members from different functions work together from different

locations, different countries, different time zones, through teleconferences, webex, net meetings etc.

MANAGEMENT TRENDS

• HR outsourcing.– Most significant forces affecting HR functions are

outsourcing of HR function..– This is result of several strategic and operational influences.. – This is intended to have greater efficiency, better service

and less response time and cost effectiveness.

• Open book management.– The practice of sharing financial and performance

information is known as open book management.– The reason for this is the belief that empowered employees

can make informed decisions.

MANAGEMENT TRENDS• Total quality management.

• A continuing trend of importance to management strategists is Total Quality Management pioneered by Edward Deming which is a broad based systematic approach for achieving high level of quality and required to survive against the pressure of world class competition.

• TQM emphasized: » Articulation of strategic vision.» Objectives and accurate measurement.» Benchmarking.» Employees empowerment and team building.» Striving for continuous improvement.» Conceptualize quality related activities.» Leadership commitment to quality.» Emphasis on customer satisfaction.

• TQM emphasizes on training, which makes it important from HRM prospective as well.

• Aim of TQM is to add value to all stake holders in every activity, which is necessary to make company more efficient and increase productivity.

MANAGEMENT TRENDS• Integrated manufacturing.– Integrated manufacturing systems provide a new approach

for streamlined manufacturing, which are composed of advanced manufacturing technology, just in time inventory and other technological resources.

– When these technologies and managerial systems are combined , integrated manufacturing systems have the potential to provide greater dissemination of information, remove barriers related to functional specialization, promote collaboration to solve quality problems etc.

– These systems require knowledge workers and their technical and problem solving skills are advanced to make them more effective at their jobs.

MANAGEMENT TRENDS• Reengineering.– Also known as process innovation, core processes

redesign and business processes reengineering is practiced since 1980s .

– Reengineering requires cross functional coordination and crossing of organizational boundaries .

– because it may disrupt existing power relationship and– Some senior executives are still not convinced of the

ultimate value of reengineering due to their concerns about long range human impacts due to elimination of l jobs.

MANAGEMENT TRENDS

• Management of professionals.– Professional requires different form of

management. They often have low organizational loyality, require substatial autonomy, follow their own professional code of ethics and standards.

– HR problem for the future will be to provide career path for professionals.

MANAGEMENT TRENDS

• Demographic trends –major challenges.– Aging workforce, .– Racial diversity .– Greater feminization of the workforce.– Labour shortages-scarcity of skilled , needed labour

force. – Support services like child care for dual career couples.

TRENDS IN UTILIZATION OF HUMAN RESOURCES

• Telecommuting.-telecommunication.– Remote working / working from home / beneficial, cost effective , no

Geographical relocation and travel expense.• Relocation of work-decentralized .

– Allowed migration of workers from cities to small towns / rural areas. – Companies are also relocating their operations.

• Growing use of temporary and contingent workers.• Factors contributing to use of temps / contingent workers-advantages, low

cost, responsibility / liability shift..• Factors limiting the use of temps / contingent workers-disadvantages,

training, loyalty, • Employee leasing-existing employees are leased to external supplier.•

International developments

• Global competition.• Global sourcing.• North American Free Trade Agreement

(NAFTA) –across boundaries• European community.

2. RETRECHMENT STRATEGIES

Retrenchment strategy is followed when an organisation substantially reduces the scope of its activities

Turnaround strategy

Disinvestment

Liquidation

Turnaround strategies Turnaround strategies derive their name from the

action involved, i.e. reversing a negative trend and turning around the organisation to profitability.

Disinvestment

Divestment strategy involves the sale or liquidation of a portion of business, or a major division, profit centre or SBU. (Divestiture or Cutback)

Liquidation

Liquidation involves closing down an organisation and selling its assets.

Retrenchment Strategies Failed to meet objectives & goals consistency; has

distinctive competencies

Firm is one of weaker competitors

Inefficiency, low profitability, poor employee morale, pressure for stockholders

Strategic managers have failed

Rapid growth in size; major internal reorganization necessary

Education

Shrm notes