MGTO 231 Human Resources Management The Importance of HRM Dr. Kin Fai Ellick WONG

Personnel vs. HRM Personnel Department vs. Human Resource Management –Are they the same? –If no, what are the differences? –How come there are two names? You will know the answer at the end of this class…

Outline Business Strategy Strategy and HRM –Strategic HR Choices Importance of strategic HR Planning

Outline Business Strategy Strategy and HRM –Strategic HR Choices Importance of strategic HR Planning

Business Strategy What is a strategy –Text book definition: The company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunity and threats to maintain a competitive advantage –Simply speaking: A plan that is expected to make an organization adaptive and competitive –Simplest speaking: A plan to make money

Business Strategy Example of strategic choices –Defender vs. Prospector –Exploitation vs. Exploration –Quality vs. Quantity –Focused vs. Diversified

Examples Defender vs. Prospector strategy –A defender strategy ( 保守 ) Conservative, prefer to maintain a secure position in relatively stable product or service areas Not so looking to expand into new territory Attempting to protect market share from competitors; not to engage in new-product development Low risk, stable return

Examples Defender vs. Prospector strategy –A prospector strategy ( 急進 ) Aggressive, emphasize growth and innovation Looking to expand into new territory Attempting to engage in new-product development Failure is regarded as “normal” High risk, high return

Examples Exploitation vs. Exploration –Exploitation Seeking to improve the current version of product Incremental improvement –Exploration Seeking to have breakthrough in product development Dramatic changes in the fundamental concepts or architect of a product

Examples Exploitation vs. Exploration –Examples Game software –EA Sports vs. Nintendo –Game lists of EA »NBA Live 1996 »NBA Live 1997 »NBA Live 1998 »NBA Live…. 07 » –How about Nintendo? »Made in Wario (key control) »Mawaru Made in Wario (key + motion control)

Examples Exploitation vs. Exploration –Examples TV industry –Panasonic vs. Samsung »Panasonic: Improving the quality of CRT TV »Samsung: Switching to LCD TV Mobile phone –Keep improving 2G vs. Switching to 3G

Examples Exploitation vs. Exploration –Similar to prospector, exploration is high risk high return Anyone remember this product by NOKIA

Examples Quality vs. Quantity –Examples Car industry –Rolls Royce vs. Toyota

Examples Focused vs. Diversified –Examples Hey, would you give me an example?

Outline Business Strategy Strategy and HRM –Strategic HR Choices Importance of strategic HR Planning

Personnel vs. HR For organizations with a personnel department –Top-management often regard various HR functions (e.g., recruitment, pay, training) as IRRELEVANT to business strategies; –Their managers usually do not involve in the strategic planning and decision- making of organizations

Personnel vs. HR For organizations with a HR department –Top-management often regard various HR functions (e.g., recruitment, pay, training) as a part of business strategy; –Their managers usually play an important role in strategic planning of organizations

The role of HR managers They have to decide policies and actions that are consistent with their goals! There are many strategies they can choose in various HR contexts The choices may be different for different business strategies

Strategic HR Choices

Strategic HR choices Managers or top-management have to decide policies and actions that are consistent with their goals! There are many strategies they can choose in various HR contexts The choices may be different for different business strategies

Some strategic HR Choices Work Flows  Efficiency  Innovation  Control  Flexibility  Explicit job description  Broad job classes  Detailed work planning  Loose work planning

Staffing  Internal recruitment  External recruitment  Supervisor makes hiring  HR makes hiring  Fit in with firm’s culture  Skill and qualification  Informal hiring  Formal hiring

Separations  Inducing voluntary retirement  Layoffs  Hiring freeze  Recruitment as needed  Continuing support after termination  Letting them fend for themselves  Preferential rehiring  No preference

Performance appraisal  Customized appraisals  Uniform appraisal procedures  Multiple-purpose appraisals  Control-oriented appraisals  Multiple inputs (peers, subordinate)  Supervisory input only

Training and development  Individual training  Team training  Job-specific training  Generic training  Buy skills with higher wages  Make skills at lower wages

Compensation  Fix pay  Variable pay  Job-based pay  Individual-based pay  Seniority-based pay  Performance-based pay  Centralized pay decisions  Decentralized one

International management  Create global company culture  Adapt to local culture  Rely on expatriates  Rely on own country nationals  Repatriation agreement  No formal repatriation  Universal company policies  Country-specific company polices

Choices of HR strategies No HR strategy is “good” or “bad” in and of itself Depend on situation context Fit between the strategies and organizations

Outline Business Strategy Strategy and HRM –Strategic HR Choices Importance of strategic HR Planning

Importance of strategic HR planning Encourage proactive behavior –Vision, active, anticipation Translating the strategic plans into actions A good HR planning makes strategic HR choices that fit the overall organizational strategies

A good HR planning Fits organizational strategies Fits environments

Conclusions HRM is at a strategic level Managers can formulate HR functions in a way that facilitate business strategies It is a matter of fit between the HR choices and (1) business strategies, and (2) environments