Welcome to the Strategic Class of HRM

Strategic Human Resource Management: A Framework Prof. Hiteshwari Jadeja

 Strategy  A chosen course of action.  It is a company’s long term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.  Strategic Management  The process of identifying and executing the organization’s mission by matching its capabilities with the demands of its environment.

The Strategic Management Process

Levels of strategy

Corporate level strategy Corporate level strategy -Topmost level of strategy- making: it focuses on the value creation for the entire organization. Eg: Pepsi Co runs Pepsi, Frito-lay, and others Its three components are:  Growth strategy focuses on the development and accomplishment of growth objectives.

Corporate level strategy (contd.)  Portfolio strategy focuses on the determination of the portfolio of business units for the organization.  Parenting strategy focuses on the allocation of resources and development of organizational capabilities across the business units.

Business level strategy Business level strategy focuses mostly on creating and sustaining competitive advantage for products through one or more of distinguishing factors like price/cost leadership and product differentiation. Eg: DELL, Volvo, Ferrari.

Functional level strategy At the functional level, specific strategies are made for the functional activities of the organization. This strategy may encompass production, marketing, purchase, finance, HR, research and development, and other similar activities of the firm.

Strategic human resource management: meaning Strategic human resource management is a process of aligning HR strategies with the business strategy to accomplish the performance goals through the employees’ competency and commitment.

SHRM vs HRM 1. Its based on soft HRM(employees as precious resources) 2. Focuses on business- level outcomes 3. Proactive in nature 4. Aims at developing overall strategic competencies 5. Strategic HR managers operates at higher level of mgt. 1. Its based on hard HRM(employess as tools of production) 2. Focuses on HR- level outcomes 3. Reactive in nature 4. Aims at developing functional competencies 5. HR managers functions at relatively lower levels of org. SHRMHRM

SHRM vs HRM (cont.) 6. In SHRM, HR strategies and business strategies suppliment each other. 7. Gaining competitive advantage is basis of SHRM 6. HRM accomplishes the HR goals and targets set by business strategy. 7. Managing employees is the primary aim of HRM. SHRMHRM

Models of strategic human resource management

Models of strategic human resource management (contd.)  Business-oriented model  Strategic fit model  Strategic Labour Allocation Model (SLAP) model

Business-oriented model  Focuses on the factors contributing to the competitive advantage of the firm.  This model aims at value creation by developing a HR system that creates and sustains the competitive advantage through human resources.  SHRM under this model covers the decisions and actions of managing employees at every level of business.

Strategic fit model  This model focuses on matching the HR capabilities and resources with the external opportunities.  It also focuses on developing HR practices in such a way that they complement one another. Two types of strategic fits are:  Vertical fit (deals with the extent of alignment between the HR strategies and business strategy).  Horizontal fit (deals with the extent of alignment among the components of the HR strategy).

SLAP model  SLAP(Strategic labour allocation process) was advocated by E.H.Bax  This method focuses on the interdependences among HR strategies, business strategies and organizational changes.  This model acknowledges HRM as a continuous process of balancing the demand for and the supply of labour.

Models of strategic formulation  High involvement management model  High commitment management model  High performance management model

High involvement management model This model aims at creating an environment that facilitates the continuous exchange of information between the superiors and the subordinates.

High commitment management model This model aims at obtaining voluntary commitment from employees by adopting mutually beneficial HR practices.

High performance management model This model aims at constantly improving the performance of individuals and the organization. A high-performance management is achieved by continuously educating the employees and improving their skills.

Benefits of strategic HRM  Achieves cost-effective engagement of labour.  Meets the changing needs and expectations of the customers effectively.  Necessities the development of clear-cut goals, direction and future focus to the entire organization.  Facilitates the planning and execution of organizational changes in a timely and effective manner.  Ensure the optimum utilization of organizational resources.

Benefits of strategic HRM (contd.)  Helps in developing, managing and sustaining the skills and knowledge of its human resources.  Enhances the coordination among the various functional centres and the top management.  Facilitates the continuous scanning of external environment.

Barriers to an effective SHRM  Absence of long-term orientation.  Lack of strategic reasoning.  Lack of adequate support from top management.  Resistance from labour unions.  Fear of failure.  Rigidity of HR practices.  Fear of attrition.  Absence of measurement techniques.

Strategic Role of HRM  Strategy Execution  Strategy Formulation

3–26 Measuring HR’s Contribution  The HR Scorecard  Shows the quantitative standards, or “metrics” the firm uses to measure HR activities.  Measures the employee behaviors resulting from these activities.  Measures the strategically relevant organizational outcomes of those employee behaviors.

3–27 Creating an HR Scorecard Outline value chain activities Define the business strategy Outline a strategy map Identify strategically required outcomes Identify required workforce competencies and behaviors 67 8 Choose HR Scorecard measures Identify required HR policies and activities Summarize Scorecard measures on digital dashboard and monitor, predict, and evaluate The 10-Step HR Scorecard Process

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