STRATEGIC HUMAN

RESOURCE MANAGEMENT

MANORANJAN DHAL
STRATEGIC MANAGEMENT
 Greek Noun Strategos, meaning; commander in
Chief
 Traditional term – ‘long term planning’ to denote
a specific pattern of behaviour by the upper
echelon of the organization in order to accomplish
its performance goals.
 Hill and Jones define strategy as the direction
and scope of an organization over the long term,
which achieves advantages in a changing
environment through the configuration of
resources and competencies with the aim of
fulfilling stakeholders expectations.
STRATEGIC MANAGEMENT
 It is a continuous process that requires the
constant adjustment of three major,
interdependent poles: the environment, the
resources available, and the values of senior
management.

Values

Resources Environment
STRATEGIC MANAGEMENT
PROCESS
 THE FIVE STEPS
1. Mission and goals
2. Environment analysis (use SWOT)
3. Strategic formulation
 Strategic choice
 Corporate, business and functional strategy

 Where power lies and decision making takes

place
4. Strategy implementation
 Leadership style
5. Strategy evaluation
 Actual change and performance match
SWOT MATRIX: WITH GENERIC
EXAMPLES
Potential Strengths
Market Leadership
Strong research and development
High-quality products
Cost advantages
Patents
Potential Weaknesses
Large inventories
Excess capacity for market
Management turnover
Weak market image
Lack of management depth Growing government regulation
Potential Opportunities
New Overseas markets
Failing trade barriers
Competitors failing
Diversification
Economy rebounding
Potential Threats
Market saturation
Threat of takeover
Low-cost foreign competition
Slower market growth
COMPETITIVE BUSINESS STRATEGY
 Low-cost leadership
 Differentiation

 Focuses differentiation

 Focused low-cost leadership

STRATEGIC ORIENTATION
SHRM
 SHRM can be defined as the linking of human
resources with strategic goals and objectives in
order to improve business performance and
develop organizational culture that foster
innovation, flexibility and competitive advantage.
 All those activities affecting the behaviour of
individuals in their efforts to formulate and
implement the strategic needs of the business.
 The primary role of SHRM is to promote a fit
with the demands of a dynamic and competitive
environment.
STRATEGY IMPLEMENTATION AND THE
FOUR-TASK MODEL OF HRM

HR Task Major Strategic Decisions

Employee assignments and How many employees are needed?
opportunities What qualification will the employees need?
What pay and conditions will attract people to the firm?

Employees Competencies What competencies do employees have now?

What new competencies will be needed in the future?

How can new competencies be purchased or developed?

Employee Behaviours What behaviours does the firm value?

What behaviours are detrimental to the strategy?

What behaviours need to be modified or eliminated?

Employee motivation How much more effort are employees able and willing to give?

What is the optimal length of time for employees to stay with the
firm?
Can productivity be improved by reducing absence and tardiness?
INTREGRATION OF STRATEGY
 Linking of HR policies and practices with the
strategic management process of the organization
 A need for line managers to internalize the
importance of HR
 Integration of the workforce into the organization
to foster commitment to or an ‘identity of
interest’ with the strategic goals
THE RESOURCE BASED MODEL

Shape

Firm’s resources
and capabilities Sustained
•Value Strategies Competitive
•Rarity advantage
•Inimitability
•Non-
substitutability

Develop
AN INTEGRATIVE MODEL OF HR STRATEGY
Outcomes

Commitment Collaborative
HR strategy HR strategy

Locus of
workplace
control
Paternalistic Traditional
HR strategy HR strategy

Process
Internal Acquisition of employees External
MODELS OF SHRM
 HIGH-COMMITMENT MANAGEMENT
MODEL
 HIGH-PERFORMANCE MANAGEMENT
MODEL
 HIGH-INVOLVEMENT MODEL
HIGH-COMMITMENT MANAGEMENT
MODEL

Job flexibility
Reduction of hierarchy and
status differentials
Team work and
Open communication
Merit pay, profit sharing
High involvement of employee in
ensuring quality
HIGH-PERFORMANCE
MANAGEMENT MODEL
 Focus on productivity
 Quality

 Level of customer service

 Growth

 Profit.

 Careful recruitment

 Clear job design

 Performance appraisal

 Self managed and autonomous team

HIGH-INVOLVEMENT MODEL

 Treat employees as partners

 Employees have a voice in the matter concerned
to them
 Collaborative culture
SEVEN HR PRACTICES OF SUCCESSFUL
ORGANIZATION BY PFFEFFER
1. Employment Security
2. Selective Hiring
3. Self-managed Team
4. High compensation contingent on performance
5. Training
6. Reduction in status differentials
7. Sharing information
APPROACHES TO STRATEGIC FIT

 Innovation Strategy

 Quality Enhancement Strategy

 Cost Leadership Strategy

1. INNOVATION STRATEGY
 High degree of creative behaviour
 Greater risk taking
 High tolerance of ambiguity and unpredictability

Corresponding HR Practices
 Close interaction between people

 Allow people to develop skill which can be used in

other positions
 Broader career paths to accommodate wider range
of skills
 Appraisal reflect long-term and group based
achievement
 2. QUALITY ENHANCEMENT
STRATEGY
 High concern for quality
 High concern for process

 Low risk-taking activity

 High levels of commitment

Corresponding HR Practices
 Relatively fixed job description

 Egalitarian treatment of employees and

employment security
 High level of employee participation

 Extensive and continuous training

3. COST LEADERSHIP
STRATEGY
 Concern for results especially quantity of
output
 Low-risk taking activity
 Relatively short term focus
Corresponding HR Practices
 Short-term, result oriented
performance appraisal
 Close monitoring of employee
activities
THE STRATEGY DEVELOPMENT PROCESS
 Relate to but also anticipate the needs of the business
 To be congruent with present or desired culture

 Have capacity to change the direction of business

 Must answer – What is constraining us?

 Collaborating judgment of top management.

 Take account of line managers, employees and

stakeholders
 Anticipate problem in implementation

 Ensure organization has resources

 THE GROWTH-SHARE MATRIX
STAR PROBLEM
Growth phase CHILD/QUESTION MARK
HRM practices Market entry
High Recruit qualified staff,
HRM practices: attract
succession planning,
management development, talent, exceed labour market
formal compensation rate, define future skill needs,
structures, secure motivation establish career ladder,
and morale develop employment relations
philosophy
MARKET
GROWTH
DOG
CASH COW
Decline
Maturity
HRM Practices:
HRM practices: career and
reduce/reallocate staff,
manpower planning, control
control wage costs,
reward systems, maintain
retraining, maintain
flexibility and skills, improve
industrial peace, manage
productivity
Low redundancy

High RELATIVE MARKET SHARE Low

TRANSLATING STRATEGY INTO HR
POLICIES AND PRACTICES
 Step 1: Define the business Strategy
 Step 2: Outline the Company’s Value Chain –
primary activities that creates value for the
customer
 Step 3: Outline a Strategy Map

 Step 4: Identify the strategically required

organizational outcomes
 Step 5: Identify the required workforce
competencies and behaviours
TRANSLATING STRATEGY INTO HR
POLICIES AND PRACTICES
 Step 6: Identify the required HR systems and
Policies and activities
 Step 7: Choose HR scorecard Measures

 Step 8 : Summarize the scorecard measures in a

digital dashboard.
BALANCE SCORECARD
STRATEGIC HR METRICS - EXAMPLE
HR Practice Strategic Metrics
Strategy % employee who can quote company
strategy/vision
Incentives % of employees eligible for incentive pay
Training Number of hours of training
Recruitment Number of applicants per position
HR function HR cost