1. Human Resource Management T 2 Business Strategy and HRM D. Borisova

2. Personnel Administration vs. Human Resources Management Find the differences

3. Origins of “HRM” Technological developments Changes to labour and product market –Early stages of “globalisation” Neo-liberal politics; “M. Thatcher/R. Reagan” –Consumer driven capitalism and extension of individual share ownership –privatisations of the 80’s –Collapse of communism in Europe “New Managerialism” in UK –The need for organisational flexibility –People as a source of competitive advantage –Employer/employee “branding”

4. Key Concepts HRM as a “Business Partner” - importance of line managers to HR practice; business alignment and integration Long term and strategic planning Commitment as a form of employee control Organic/flexible structures and systems Quality (TQM) Flexibility Commitment Management of organizational culture “Stake holding” Unitarist approach to Employee Relations High trust Individualised relationship of the workforce

5. What is HRM about? Finding –The right number of people –In the right place –With the right skills –At the right price AND –Persuading them to work for you –When you need them

6. The right number of people Labour Market Analysis Work and Job Design Forecasting labour demand Matching to labour supply Recruitment Selection

7. The right place Where in the world? Bringing workers to jobs…. ….. Or jobs to workers? –Increase from –Home working, tele-working, virtual working UK…. 1997 <1m teleworkers (4%) 2005 2.37m (8%)

8. With the right skills Training and development Appraisal Performance management Promotion Career progression Succession planning

9. At the right price Salaries and wages –Piecework –Day rates –Salaries Pay for performance Bonuses and benefits The “effort-reward bargain”

10. Persuading them to work for you Management and Motivation –Intrinsic, i.e. driven from within –Extrinsic, i.e. provoked from outside Working Conditions Communication Employment Relations Trade Unions

11. When you need them Direct employment Terms, conditions and the law Hours and overtime Downsizing & Redundancy Or indirect employment Sub-contracting and outsourcing “Off-shoring”

12. The “Business Partnership” Find out what the management/owners/stakeholders want –Understand the strategy Give it to them –Develop the “best fit” for HR strategy Be seen to give it to them –Make sure HR is represented in the Business Plan

13. Strategy A plan of action for the future, answering the questions of: –What to do? –How to do it? Levels: –Corporate (growth, stability, retrenchment) –Business (cost leadership, differentiation, focus, and innovation) –Functional/Operational

14. HRM a Business Partner Failure here often a critique of Personnel So how to do it better? “Best fit” approach? –Use a business strategy model, eg. Stages of growth models (Boston Box) Strategic orientation (Porter) –Design HR strategy to fit PRODUCT/SERVICE HRM MARKETING LOGISTICS FINANCE

15. BOSTON BOX STARTUPGROWTH MATURITY DECLINE LOW HIGH MARKET GROWTH MARKET SHARE LOW

16. BOSTON BOX STARTUPGROWTH MATURITY DECLINE LOW HIGH MARKET GROWTH MARKET SHARE LOW PURE Digital (DAB) radio sets Motorola Mobile phones Bosch Washing Machines Pioneer Turntables

17. BOSTON BOX & HR FIT LOW HIGH GROWTH MARKET SHARE LOW REDUCE/REALLOCATE STAFF CONTROL WAGE COSTS RETRAINING MAINTAIN Emp RL PEACE MANAGE REDUNDANCY CAREER AND MANPOWER PLANNING CONTROL REWARD SYSTEMS MAINTAIN FLEXIBILITY AND SKILLS IMPROVE PRODUCTIVITY RECRUIT QUALIFIED STAFF SUCCESSION PLANNING MANAGEMENT DEVELOPMENT FORMAL COMPENSATION STRUCTURES MOTIVATION AND MORALE ATTRACT TALENT EXCEED LABOUR MARKET RATES DEFINE FUTURE SKILL NEEDS ESTABLISH CAREER LADDERS DEVELOP Emp RL PHILOSOPHY

18. The Value Chain (Porter) Firm infrastructure (Finance, administration) Human resource management IT/ Technological development Procurement Inbound logistics Operations Support activities Outbound logistics Marketing & Sales Service MARGIN Primary activities

19. Chocolate value added chain

20. COMPANY FOUNDERS & MANAGERS

21. GROWING COCOA

22. PROCESSING RAW COCOA

23. MANUFACTURING CHOCOLATE

24. PRODUCT BRANDING & MARKETING

25. TRANSPORT & LOGISTICS

26. SALES

27. Porter generic strategies Strategic scope: a demand-side dimension Strategic strength: a supply-side dimension that looks at the strength or core competency of the firm

28. Porter’s model of Strategic Orientation LOW COST LEADER Economies of scale; cost reduction DIFFERENTIATOR Enhanced Quality; “something special" FOCUSSED/SEGMENTATION Innovation; concentrates on small scale / niches

29. Cost Leadership Strategy To be successful, this strategy usually requires a considerable market share advantage or preferential access to raw materials, components, labour, or some other important input. Without one or more of these advantages, the strategy can easily be mimicked by competitors. Successful implementation also benefits from: process engineering skills products designed for ease of manufacture sustained access to inexpensive capital close supervision of labour tight cost control incentives based on quantitative targets.

30. Differentiation Strategy The company creates a product that is perceived as unique and thus its features provide superior value for the customer. The price elasticity of demand is reduced and customers are more brand loyal. There are usually additional costs associated with the differentiating product features and this could require a premium pricing strategy. To maintain this strategy the firm should have: strong research and development skills strong product engineering skills strong creativity skills good cooperation with distribution channels strong marketing skills incentives based on subjective measures be able to communicate the importance of the differentiating product characteristics stress continuous improvement and innovation attract highly skilled, creative people

31. Segmentation Strategy The firm concentrates on a select few target markets. It is also called a focus strategy or niche strategy. The firm typically looks to gain a competitive advantage through effectiveness rather than efficiency. It is most suitable for relatively small firms but can be used by any company. Focus on specific skills of the personnel, retention of key people; corporate culture that distinguishes the company from the rest

32. COST LEADER:

33. DIFFERENTIATOR:

34. FOCUSSED:

35. Head of Personnel / HR Department has a place on the main Board of Directors or the equivalent (%)

36. Stage at which HR is involved in development of business strategy (%)

37. Business Strategy (% of organisations)

38. HR Strategy (% of organisations)

39. Sustainability through people Effective Leadership High Commitment & Engagement PROMOTES HR Work Superior Talent & High Innovation POWERS Competitive Shareholder & Stakeholder Value PROJECTS IN PRESERVES

40. “BEST FIT” SEMINAR In the seminar for week three we will be considering the Personnel/HRM implications for a business which adopts different strategic orientations. This involves considering how each of the personnel/HR functions would need to differ depending on the business strategy to achieve “best fit”.