PowerPoint Presentation to accompany Human Resource Management, 4rd Edition by Raymond J. Stone Prepared by Retha Wiesner © John Wiley & Sons Australia. Ltd 2002

STRATEGIC HUMAN RESOURCE MANAGEMENT Chapter 1

Much of life now looks like [a] doughnut Much of life now looks like [a] doughnut. Organisations as well as individuals have come to realise that they have an essential core, a core of necessary jobs and necessary people, a core which is surrounded by an open flexible space, which they fill with flexible workers and flexible supply contracts. The strategic issue for organisations, nowadays, is to decide what activities and which people to put in which space. It is not always obvious (CHARLES HANDY, British academic, business consultant and author).

OBJECTIVES Explain what is meant by human resource management. Understand the relationship between human resource management and management. Describe the HR manager’s role. Understand the human resource management activities performed in organisations. Explain the meaning of strategy. Discuss the meaning of strategic human resource management. Describe a strategic approach to human resource management. Appreciate the strategic challenge facing human resource management.

WHAT IS HUMAN RESOURCE MANAGEMENT? Managing people within the employer-employee relationship. It involves the productive use of people in achieving the organisation’s strategic business objectives and the satisfaction of individual employee needs.

HRM is either a part of the problem or part of the solution in gaining the productive contribution of people. The HR manager, as with any other functional manager in marketing, production or finance, is responsible for performance. His or her position exists foremost to help achieve the strategic business objectives of the organisation. The HR function is recognised for contributing to the ‘bottom line (which refers to a final result such as net profit after taxes).

HRM AND MANAGEMENT HRM is management, but management is more than HRM. HRM is that part of management dealing directly with people, whereas management also includes marketing research and development, and accounting and finance. Because the purpose of HRM is to improve the productive contribution of people, it is intimately related to all other aspects of management. Organisations needing to trim overheads or reduce corporate flab cut HRM.

Who is responsible for HR? It should be quite clear that human resource management functions are not necessarily executed by a human resource specialist or department. Precisely how the human resource management functions are divided between the human resource department’s specialists and the organisation’s other managers varies from situation to situation and is contingent upon a vast number of circumstantial factors.

Circumstantial Factors Internal factors: organisational history, size, structure and location, the values, philosophies and management styles of top management, the nature of the workforce, the type of industry. External factors: economic conditions, legislative requirements, industrial relations.

Myths that keep HR from being a profession Old Myths People go into HR because they like people. Anyone can do HR. New Realities HR departments are not designed to provide corporate therapy or to act as social or health-and-happiness retreats. HR professionals must create the practices that make employees more competitive, not more comfortable. HR activities are based on theory and research. HR professionals must master both theory and practice.

Old Myths New Realities HR deals with the soft side of business and therefore is not accountable. HR focuses on costs, which must be controlled. New Realities The impact of HR practices on business results can and must be measured. HR professionals must learn to translate their work into financial performance. HR practices must create value by increasing the intellectual capital within the firm. HR professionals must add value, not only reduce costs.

Old Myths New Realities HR’s job is to be the policy police and the health-and-happiness patrol. HR is full of fads. New Realities The HR function does not own compliance. HR practices have evolved over time. HR professionals must see their current work as part of an evolutionary chain and explain their work with less jargon and more authority.

Old Myths New Realities HR is staffed by nice people. HR is HR’s job. At times, HR practices should force vigorous debates. HR professionals should be confrontative and challenging as well as supportive. HR work is as important to line managers as are finance, strategy, and other business domains. HR professionals should join with managers in championing HR issues.

APPROACHES TO HRM Instrumental HRM (hard approach): stresses the rational, quantitative and strategic aspects of managing human resources. Humanistic HRM (soft approach): while emphasising the integration of HR practices with strategic objectives, it stresses competitive advantage is achieved by employees with superior know-how, commitment, job satisfaction, adaptability and motivation.

The New Role of HR Managers STRATEGIC PARTNER HR professionals play a strategic role when they have the ability to translate business strategy into action. This facilitating role allows the HR manager to become part of the business team. ADMINISTRATIVE EXPERT To become administrative experts HR professionals must be able to re-engineer HR activities through the use of technology, process engineering and total quality management. EMPLOYEE CHAMPION The HR professional must be able to relate to and meet the needs of employees CHANGE AGENT The HR manager needs to serve as a catalyst for change within the organisation. This can be achieved by leading change in the HR function and by developing problem-solving communication and influence skills. In short, the HR manager must know how to manage change.

HRM ACTIVITIES Job analysis defines a job in terms of specific tasks and responsibilities and identifies the abilities, skills and qualifications needed to perform it successfully. Human resource planning or employment planning is the process by which an organisation attempts to ensure that it has the right number of qualified people in the right jobs at the right time. Employee recruitment is the process of seeking and attracting a pool of applicants from which qualified candidates for job vacancies within an organisation can be selected. Employee selection involves choosing from the available candidates the individual predicted to be most likely to perform successfully in the job.

HRM ACTIVITIES (cont) Performance appraisal is concerned with determining how well employees are doing their jobs, communicating that information to the employees and establishing a plan for performance improvement. Training and development activities help employees learn how to perform their jobs, improve their performance and prepare themselves for more senior positions. Career planning and development activities benefit both employees - by identifying employee career goals, possible future job opportunities and personal improvement requirements - and the organisation - by ensuring that qualified employees are available when needed. Employee motivation is vital to the success of any organisation. Highly motivated employees tend to be more productive and have lower rates of absenteeism, turnover and lateness.

HRM ACTIVITIES (cont) Compensation refers to the cash rewards, such as the base salary, bonus, incentive payments and allowances which employees receive for working in an organisation. Benefits are sometimes referred to as indirect or non-cash compensation. Industrial relations is concerned with the relationship between an organisation and its employees. Effective health and safety programs help guarantee the physical and mental wellbeing of employees. Management of diversity and successfully integrating Australia’s multi-cultural population into the work force maximises the contribution of all employees.

WHAT IS STRATEGY Defines the direction in which an organisation intends to move and establishes the framework for action by which it intends to get there.

Business Legal Political Industrial Relations Economic Environmental     Business   Industrial Relations Economic HRM AUDIT Evaluation of performance HRM OUTCOMES Commitment Competence Cost-effectiveness Congruence Adaptability Performance Job satisfaction Motivation Trust ASSESS INTERNAL AND EXTERNAL INFLUENCES ORGANISATIONAL PURPOSE ORGANISATIONAL OBJECTIVES STRATEGY STRUCTURE CULTURE HUMAN RESOURCE MANAGEMENT OBJECTIVES What is to be achieved HUMAN RESOURCE MANAGEMENT STRATEGY How it is to be achieved HRM RESOURCE ACTIVITIES Acquisition      Development Reward and motivation Maintenance Departure Environmental Legal Political Social Technological Demographic Cultural

What are out weaknesses?   SWOT analysis   Internal environment What are our strengths? Skilled work force Superior quality products   Financial strength Excellent research and development What are out weaknesses? High labour costs Poor industrial relations putation for poor customer service       Management succession problems Lack of international marketing expertise   External environment What are our opportunities? New markets in Asia   Low inflation Weak competition ·         Decentralisation of industrial relations/enterprise bargaining What are our threats? Increased government regulation High taxation Domestic shortages of skilled labour Rising costs of imported raw materials

STRATEGIC INTENT Companies that have achieved global leadership, have created a sustained obsession to achieve a challenging long-term objective. This obsession is called strategic intent. Achieve this requires organisations to move from their traditional conscript mindset (externally motivated) to a volunteer mindset internally motivated).

Strategic Intent Establish a mission and key objectives Analyse the environment Analyse and select business strategies Implement the strategies Monitor and evaluate performance F E D B A C K    

Link between organisation and HRM objectives and strategies BHP Charter To survive and prosper, we must create a high performance organisation in which every individual accepts responsibility and is rewarded for results.   Business strategy We have adopted a portfolio business asset model to compete in a clearly defined and targeted approach. People strategy We are committed to providing a great company to work for, with great jobs and attractive rewards. Remunera-tion strategy Our executives will be able to see the link between the results they produce and the level of reward they achieve through a flexible remuneration delivery model.   Link between organisation and HRM objectives and strategies Source: BHP, ‘Coming out of a tight corner; Report to Shareholders, 2000, p. 31.

TYPES OF STRATEGIES Growth Retrenchment Stability Combination

HRM STRATEGY AIMS TO ENABLE ORGANISATION TO ACHIEVE STRATEGIC OBJECTIVES BY: Ensuring all business processes recognise the value of people Seeing that all concerned appreciate the HR implications of their proposals Achieving a close match between corporate business objectives and objectives of the HR function Designing a culture, climate and organisational processes conducive to optimal performance of staff Identifying the firm’s distinctive competencies and the types of people that match these competencies. Assessing the performance requirements Reviewing levels of commitment throughout the organisation

STRATEGIC HRM OBJECTIVES CAN BE LINKED TO STRATEGIC OBJCTIVES SUCH AS: Cost containment Customer service Social responsibility Organisational effectiveness

ASSESSMENT OF INFLUENCES Where are we now? Where do we want to be in the future? What path is best for us? How and when can we implement it?

EXTERNAL INFLUENCES Political Legal Environmental Technological Cultural Demographic Social Business Economic Industrial relations

INTERNAL INFLUENCES Organisational mission and purpose Objectives and strategies Organisational culture Organisational structure

OUTCOMES IN EVALUATING HRM STRATEGIES AND POLICIES Commitment Competence Cost-effectiveness Congruence Adaptability Performance Job satisfaction Employee motivation Trust

THE HRM CHALLENGE “Strategic HRM demands HR professionals who have competencies at a general management level and who are willing to accept responsibility for organisational performance outside HRM” Davidson

Summary In the current turbulent environment HR managers need to adopt a strategic approach, be part of the top management team, be involved in corporate planning and develop a vision for HRM. HRM activities must be part of a coordinated effort to improve the productive contribution of people in meeting the organisation’s strategic business objectives. Inability to do so means that the organisation will ultimately stagnate and fail.