Human Resource Systems for Competitive Advantage Ask the students: How does the process of becoming an MBA differ from that of becoming a Jesuit or other priest like advocate for a particular set of beliefs? Jeffrey Skilling, who once said he felt as if he were "doing God's work" at McKinsey, Jeffrey Skilling, then McKinsey's partner in charge of the worldwide energy practice, began advising Enron in the late '80s, but the relationship was cemented when he joined Enron in 1990 with the mandate to create a new way of doing business. In 1950, U.S. graduate business schools awarded only 4,335 degrees -- less than 7 percent of all graduate degrees -- and most offered an education that was more vocational than professional. "What you had were some retired businessmen telling their war stories," says Milton Brown, who joined the Harvard Business School faculty in 1942. "There were no theories or scientific ways of doing things.“ As corporations grew more complex, business leaders and academics recognized the need for well-trained managers. In a 1959 report financed by the Ford Foundation, economist R.A. Gordon of the University of California at Berkeley and James Howell, a professor at the Stanford GSB, criticized the lack of academic rigor in business schools. The authors issued specific guidelines for curriculum reform, emphasizing social sciences, statistics, and a "scientific attitude toward management problems." Persuasive as the pair may have been, however, what really caught university administrators' attention was the millions of dollars that the Ford Foundation had pledged in support of institutions that implemented their recommendations. (Carnegie Mellon, Columbia, MIT, Northwestern, and the University of Chicago were just some of the recipients.) Business schools that embraced Gordon and Howell suddenly had the money and the mandate to hire Ph.D.s and future Nobel Prize winners. That's the conclusion reached this spring by the Association to Advance Collegiate Schools of Business, whose accreditation has been the Good Housekeeping seal of management education since the association's creation in 1916. Dr. Paul M. Swiercz Department of Management Science The George Washington University 202-994-0399 prof1@gwu.edu

“There is nothing quite so practical as a good theory” Kurt Lewin

Outline Introduce strategy and competitive advantage Review of systems theory Resource Theory of the Firm FourSquare Model of Competitiveness

Strategy is: The pattern of decisions that integrates goals and actions into a cohesive whole, directing the allocation of the organizational resources toward the develop of a distinctive competence

Three Levels of Strategy Corporate Business Functional

Systems Theory All systems are open systems Boundaries between systems are artificial Large systems are chaotic Systems tend to be homeostatic

Sustainable Competitive Advantage The unique position an organization develops in relation to competitors that allows it to outperform them consistently. (Hofer and Schendel, 1978)

Resource Theory of the Firm Firms are bundles of resources Firms within a strategic group are mostly similar and modestly different Resource differences are the source of sustainable competitive advantage

Resource Sub-groups Physical Human Organizational

Distinctive competence is: the special skills, capabilities, technologies, products, or resources that enable a firm to distinguish itself from its rivals and create a competitive advantage

Stages of Capitalism Petite Capitalism Industrial Capitalism Global Capitalism

FourSquare Model of Competitiveness Finance Operations Marketing Staffing Rewards Talk about the emergence of global capitalism as distinguished from industrial capitalism. HR Influence Design

What is Strategic HRM? Two step definition: the HR System is the set of policies and practices that mediate the relationship between employer and employee. Strategic HRM is directed at the development and implementation of an HR System contributing to the creation of a sustainable competitive advantage.

FourSquare Model of Competitiveness Competitive Strategy HR Sub-systems Rewards Influence Design Staffing Operations Financial Marketing Human Resources Employment Relationship Individual Behaviors Firm Performance Inducement Investment Involvement Contribution

Summary HR is a key performance sub-system Strategic HR is primarily concerned with the employment relationship the HR system is an organizational resource in its own right