MBA IV SEM

Manav Rachna College of Engg.

Strategic Human Resource Management

Presentation by Tanushree Gulati

Unit 1 Syllabus
HR Environment HRM in Knowledge Economy Concept of SHRM Investment Perspective of SHRM Evolution of SHRM Strategic HR vs. Traditional HR Barrier to Strategic HR Role of HR in Strategic Planning

HR Environment
1. Business Environment Globalization and Increased Competition Mergers and Acquisitions Downsizing 2. Changing Nature of work Industrial and occupational shifts Technological Advancements Outsourcing Flexible work Arrangements

HR Environment
3.Demographic, Societal and Workforce trends Workforce Diversity
Workforce Composition Workforce Availabity

Ageing Population and Workforce Educated and Knowledge Workforce Women in Workforce Changing Family structures Global Workforce Contingent Workforce/Workforce flexibility 4. Changing nature of Employment Relationship

HR Environment
5. Labour market 6. Legal Considerations 7. Society 8. Unions 9. Shareholders 10. Competition 11. Customers 12. Technology 13. Cyber work 14. Economy 15. Anticipated Event

Environment of Human Resource Management

Unions
Legal Considerations

EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT

Society

Technology

Marketing

Operations Unanticipated Events

Human Resource 1 Management

Economy

Finance

Safety and Health

Other Functional Areas

Shareholders

Customers

Competition

Labor Market

Labor Market

Potential employees located within geographic area from which employees are recruited are always changing

Society

No longer content to accept, without question, the actions of business Ethics - Discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation Corporate social responsibility - Implied, enforced or felt obligation of managers to serve or protect interests of groups other than themselves

Unions

Group of employees who have joined together for purpose of dealing collectively with their employer
Becomes a third party when dealing with the company

Shareholders
Owners

of corporation

Because

they have invested money in firm, they may at times challenge programs considered by management to be beneficial to organization

Competition

Firms may face intense competition in both their product or service and labor markets

Must maintain a supply of competent employees Bidding war often results

Customers

People who actually use firms goods and services Management has task of ensuring its employment practices do not antagonize members of market it serves

Workforce should be capable of providing top-quality goods and services

Technology

The world has never before seen technological changes occur as rapidly as they are today. Created new roles for HR professionals Additional pressures on them to keep abreast of technology In 2010 survey of CEOs worldwide, 83% ranked Change as most important issue confronting their organization

Cyberwork

Possibility of never-ending workday BlackBerrys, cell phones, text messaging, and e-mail create endless possibilities for communication Some workers believe their employer wants them available 24/7

Economy

In general, when economy is booming, it is often more difficult to recruit qualified workers. When a downturn is experienced, more applicants are typically available.

Unanticipated Events

Occurrences in external environment that could not be foreseen Every disaster, whether manmade or by nature, requires a tremendous amount of adjustment with regard to human resource management

Technology and HRM

Technology Challenges for HRM

Workforce Demographic Changes

The Graying of the Workforce Negative Aspects of Older Workers

Perceived resistance to change by older workers. Increased health-care costs for senior workers Blocking advancement opportunities for younger workers Higher wage and salary costs for senior workers

Positive Aspects of Older Workers

As productive or more productive than younger workers Have more organizational loyalty than younger workers Possess broader industry knowledge and professional networks

Workforce Demographic Changes

Baby Boomers (19451962)

In excess supply in middle management ranks HR challenge is to manage plateaued workers

Baby Busters (1963mid-1970s)

Are career bottlenecked by the Boomers Who have skills in high demand are doing and will do well

Generation Xers (late 1970searly 1980s)

Have life-long exposure to technology and constant change Seek self-control, independence, personal growth, creativity Are not focused on job security or long-term employment.

HR Roles in Knowledge-Based Economy

Human capital steward

Creates an environment and culture in which employees voluntarily contribute skills, ideas, and energy Human capital is to be nourished by organization

Knowledge facilitator
Procures necessary employee knowledge and skill sets that allow information to be acquired, developed, and disseminated Provides a competitive advantage Must be part of strategically designed employee development plan

Tanushree Gulati

HR Roles in Knowledge-Based Economy

Relationship

builder

Develops structure, work practices, and culture that allow individuals to work together Develops networks that focus on strategic objectives

Rapid

deployment specialist

Creates fluid and adaptable structure and systems Global, knowledge-based economy mandates flexibility and culture that embraces change

Tanushree Gulati

Knowledge Management Cycle

Tanushree Gulati

HR Roles in Knowledge-Based Economy

(Rodriguez & Ordonez de Pablos)

Stages

of knowledge management

Generating or capturing knowledge Structuring and providing value to gathered knowledge Transferring knowledge Establishing mechanisms for use and reuse of knowledge for individuals and groups

Tanushree Gulati

HR Roles in Knowledge-Based Economy (Rodriguez & Ordonez de Pablos)

How

HR management systems can contribute to development of organizational knowledge

Labor markets can be exploited in order to attract and select individuals with high cognitive abilities Internal labor markets can contribute to development of firm specific assets Cross-functional and inter-organizational teams can be utilized

Tanushree Gulati

HR Roles in Knowledge-Based Economy (Rodriguez & Ordonez de Pablos)

How

HR systems can support and enhance knowledge transfer

Apprenticeship and mentoring Cross-functional teams Stimulate and reward information sharing Provide free access to information Job rotations

Tanushree Gulati

Challenges facing HR in the Knowledge Economy

Attracting and Retaining Knowledge workers Ensuring availability, development and utilization of human capital to enhance its value Motivating Knowledge Workers Ensuring Maximum utilization of temporary or contingent employees Encouraging employees to commit for continuous learning Facilitating sharing of knowledge within organizations Facilitating work-life balance

Challenges facing HR in the Knowledge Economy

Rewarding knowledge acquisition and knowledge sharing Enhancing cross-functional teamwork and team identification Creating a flexible human resource management team that sets and supports the agenda for change Co-ordinating between organizational functions Obtaining commitment from workers in the context of a changed employer-employee contract

Concept of Strategic HRM

Fombrun, Tichy and Devana were the first to formulate the concept of Strategic HRM in 1984. SHRM involves the planned and effective use of human resources by an organization to help it to gain or maintain an edge over its competitors. Wright and McMahan (1992) defined SHRM as the pattern of planned human resource deployment and activities intended to enable the firm to achieve its goals.

Concept of Strategic HRM

Hendry and Pettigrew (1986) put forward 4 meanings of SHRM

The use of planning in Human Resource Management An integrated approach to the design and implementation of HR systems Matching HR policies and activities with the business strategy of the organization Viewing people as a strategic resource for the achievement of competitive advantage

Four Components of SHRM

Purposeful- People, activities and plans are directed toward the achievement of organizational goals Human Resources- Primary source of competitive advantage of the firm Activities- HR Programs and practices are the means for deploying people of a firm to gain competitive advantage Pattern and Plan- There is a fit between HR strategy and the firms business strategy and between all HR activities

Model of Strategic HR Management

Tanushree Gulati

Strategic Human Resource Management

Involves development of consistent, aligned collection of practices, programs, and policies to facilitate achievement of strategic objectives Requires abandoning mindset and practices of personnel management, and focusing on strategic issues, rather than solely on operational issues

Integration of all HR programs within larger framework, facilitating mission and objectives
Tanushree Gulati

SHRM Critical Competencies

HRs success as true strategic business partner dependent on five specific competencies:

Strategic contribution - development of strategy Business knowledge - understanding nuts and bolts of organization Personal credibility - measurable value demonstrated in programs and policies HR delivery - serving internal customers through effective and efficient programs HR technology - using technology to improve organizations management of people

Tanushree Gulati

Outcomes of Strategic HR

Tanushree Gulati

Investment Perspective of SHRM

Traditional concept of HR as a cost to the organization. Mello(2003) identified 5 major factors that affect how investment oriented a company is in its management of HR:

Management Values Attitude towards Risk Nature of skills needed by employees Utilitarian or Bottom-line Perspective Availability of Outsourcing

Investment Perspective of SHRM

Employees are human assets that increase in value to the organization and the marketplace when investments of appropriate policies and programs are applied. Effective organizations recognize that their employees do have value, much as same as the organizations physical and capital assets have value. Employees are a valuable source of sustainable competitive advantage.

Sources of Employee Value

Technical Knowledge

Markets, Processes, Customers, Environment

Ability to Learn and Grow

Openness to new ideas Acquisition of knowledge and skills

Decision Making Capabilities Motivation Commitment Teamwork

Interpersonal skills, Leadership ability

Investment Orientation

The Investment-Oriented Organization

Organizational Characteristics Sees people as central to its mission/strategy. Has a mission statement and strategic objectives that espouse the value of human assets in achieving goals. Has a management philosophy that encourages the development and retention of human assets and does not treat or regard human assets in the same ways as physical assets.

Investment Orientation Factors

Senior Management Values and Actions

An organizations willingness to invest in its human resources is determined by the investment orientation of its managers. Investment in human resources is inherently riskier due to lack of absolute ownership of the asset.
The more likely that skills developed by employees are marketable outside the firm, the more risky the firms investment in the development of those skills.

Attitude Toward Risk

Nature of Skills Needed by Employees

Investment Orientation Factors

Utilitarian (Bottom Line) Mentality

An attempt is made to quantify employee worth to the organization through a cost-benefit analysis. The soft benefits of HR programs and polices are difficult to objectively quantify because they affect many different organizational areas and have differential effects on individual employees.
If cost-effective outsourcing is available, investments will be made only in HR activities producing the highest returns and largest sustainable competitive advantages.

Availability of Outsourcing

Evolution of SHRM

Personal Management (Part of mechanistic organization, bureaucratic, high centralization, high formalization, low flexibility) HRM (Part of organic organization, crosshierarchical and cross-functional teams, decentralized, low formalization, flexible)

SHRM (Convergence between HRM and business strategy, Proactive HRM, Concerned with organizational sustained competitive advantage)

EVOLVING TRENDS IN SHRM

EMPHASIS ON STRATEGIC PLANNING & SUCCESSION

VP of HR is a Strategic Manager, Management Succession Planning

EMPHASIS ON COST-RELATED ISSUES / COST CONTROL

Global Competition, Outsourcing and Downsizing

NEW SPECIALTIES EMERGING IN HR

HR Planning, International HR, Employee Assistance Programs

GROWTH OF GOVERNMENTAL REGULATIONS

Wages (1930s), Unionization (1940s), Employment (1960s)

PROFESSIONALIZATION OF HR MANAGEMENT

Professional HR Societies & HRCI (Certification Institute)

THE INTERNET REVOLUTION

Electronic Recruiting, Records Management, and HRIS

A RECENT SURVEY OF TOP HRM CONCERNS (Helman)

84% 80%

COMPENSATION SUCCESSION PLANNING

68%
40% 40% 34% 28% 26% 24% 20% 18%

MANAGEMENT STAFFING
HR STRATEGIC PLANNING EMPLOYEE COMMUNICATIONS WORKFORCE MANAGEMENT BENEFITS PERFORMANCE EVALUATION EMPLOYEE RELATIONS PERSONNEL POLICIES LABOR RELATIONS

16%
4% 9%

TRAINING AND DEVELOPMENT

EEO/AFFIRMATIVE ACTION OTHER

Traditional HR Versus Strategic HR

Tanushree Gulati

Barriers to Strategic HR
Short-term mentality/focus on current performance Inability of HR to think strategically Lack of appreciation for what HR can contribute Failure to understand line managers role as an HR manager Difficulty in quantifying many HR outcomes Perception of human assets as higher-risk investments Incentives for changes that might arise Lack of proper expertise

Tanushree Gulati

Factors That Determine HR Plans

HR Planning Process

Human Resource Planning

Human Resource (HR) Planning

The process of analyzing and identifying the need for and availability of human resources so that the organization can meet its objectives. Top HR executive and subordinates gather information from other managers to use in the development of HR projections for top management to use in strategic planning and setting organizational goals

HR Planning Responsibilities

Roles of HR in Strategic Planning (Ulrich, 1997)

Tanushree Gulati

HR Planning Process

HR Strategies

The means used to anticipate and manage the supply of and demand for human resources.

Provide overall direction for the way in which HR activities will be developed and managed.

Overall Strategic Plan

Human Resources Strategic Plan

HR Activities

Benefits of HR Planning

Better view of the HR dimensions of business decisions

Lower HR costs through better HR management.

More timely recruitment for anticipate HR needs More inclusion of protected groups through planned increases in workforce diversity. Better development of managerial talent

An Effective HRP
Is

a subcomponent of the business plan Is driven by the business strategy Line Managers should identify key components HR provides the technical roadmap HR consults on the technical and legal appropriateness of the HRP

Tanushree Gulati 54

An EffectaNve HRP An Effective

Line management has the final decision on the HRP Prioritize what is most important and where you can actually make a difference Organizations HRP HR dept. business plan

HRP

Tanushree Gulati 55

QUESTIONS ANSWERS