1. A Strategic View on Winning Employees’ Hearts and Minds Clint Chadwick Associate Professor of Strategy and Human Resource Management 4/2/15

2. Topics of Discussion Topic 1: What people are saying about strategic HRM Topic 2: Principles of strategic HRM Topic 3: How do organizations put this into practice?

3. Topic 1: What People Are Saying about Strategic HRM The focus of strategy has shifted to internal factors Today, labor comprises approximately 65% of companies’ cost structures – People management has traditionally been either oversimplified or seen as an art – Thus, people management is a key untapped strategic leverage point

4. Traditional HRM vs. SHRM Individual HR policies and practices Individual or group level performance Transactional decision making HR systems Organizational performance Strategic choice

5. Lots of evidence linking commitment-based HR systems and organization performance This has led to universalistic prescriptions But there are lots of reasons to be skeptical… Is this accurate? – Lots of differences between systems – “File drawer” problem that non-significant results go unpublished Is this interesting? – Strategy is about choice, and universal prescriptions run counter to choice

6. SHRM Research Emphasizes “More HRM is Better”

7. Always upward sloping? Source: Chadwick, C. 2007

8. It’s easy to overdo it with part-time workers Source: Chadwick & Flinchbaugh, 2012

9. Can Strategy Theory Get Us Past Sloganeering?

10. Topic 2: How People Issues Influence Organization Performance--Principles The Resource-based View Strategic Factor Markets Human Capital “Mind the gap”

11. The Resource-based View Value Rareness Inimitability Non-Substitutability Immobility

12. Some Attributes of Perfect Market Competition Perfect price and product quality information Costless transactions Free exchange between parties in the market Free movement into and out of the market Participants that behave in their rational self- interest

13. Implications of the RBV Operational effectiveness vs. competitive advantage Business units: What do you do that isn’t a commodity service or activity? Does a stakeholder care enough to pay for it? Organizations: Not all employees matter to the same degree

14. Strategically Valuable Characteristics of Human Beings Adaptability Inherent uniqueness Coordination Knowledge, creativity, innovation Non-depletion with use Relationships Free will

16. What Does This Mean For Me? The RBV: What do I do for the organization that they can’t get from anyone else? – Labor can be a commodity, like anything else – How can I signal to my organization that I’m providing this value? – Differentiation isn’t just uniqueness

17. Topic 3: How do organizations put this into practice? HRM systems Portable vs. Organization-specific Human Capital The Dual Nature of Employment Discretionary effort/Types of commitment

18. HR Systems on the Organization Level HRM Systems Strategy Performance

19. Example HR system: Pfeffer’s HR Best Practices employment security selective recruiting high wages incentive pay employee ownership information sharing participation and empowerment self-managed teams training and skill development cross-utilization and cross-training symbolic egalitarianism wage compression promotion from within

20. Portable vs. Organization-specific Human Capital Portable HC: Valuable for many organizations – Employees typically make these investments – Organizations need assurances that they will not forfeit their investment Organization-specific HC: Valuable only for one organization – Organizations typically make these investments – Employees need assurances that organizations will not take advantage of them if they invest in organization-specific skill

21. The portable skill/organization specific skill paradox Organization SpecificPortable Commonn/aOK for organizations, bad for workers ScarceGreat for organizationsGreat for workers What can your organization credibly offer you to induce you to make bigger investments in organization specific skill?

22. The Dual Nature of Employment Employment as an economic exchange – Labor for wages – Uncertain contracts – Indefinite contracts Employment as an affective relationship – Reciprocal exchanges – Psychological contracts – Importance of non- economic factors

23. Example: Profit-sharing Behavioral modification view: Employees work harder to increase profitsharing payouts – 1/n problem – Line of sight problems – Is the amount large enough? Affective view: Employees reciprocate the gift of profitsharing with greater effort

24. Discretionary Effort/ Types of Commitment Behavioral/Compliance Normative Affective

25. Control Systems and Types of Commitment Behavioral/Compliance: bureaucracy, hierarchy, budgetary Normative/Affective: culture, leadership, relationships with co-workers, mission

26. Conclusion Thank you – Let’s continue the conversation Clint Chadwick Associate Professor of Strategy and Human Resource Management University of Kansas School of Business 326 Summerfield Hall office: (785) 864-7559 1300 Sunnyside Avenue fax: (785) 864-5328 Lawrence, KS 66045-7601 web: www.business.ku.edu/faculty/chadwick-clint/www.business.ku.edu/faculty/chadwick-clint/