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RESOURCE
MANAGEMENT
Aligning HR with strategy
HR’s emerging role –
formulation & implementation of strategy
HR field has dramatically changed in the last
few years
Importance of HR dept. to involve in the
strategic planning. E.g. designing reward
structure – finance dept + HR dept. + top
mgmt.
Competitive advantage
Transition from HRM SHRM
Changes in market
conditions, economic
conditions, labour markets,
industrial structure and
international competition
importance HR as a
competitive advantage.
HR strategy is defined as the
set of ideas, policies and
practices that management
adopts to achieve a people
management perspective.
Transition from HRM SHRM
Schuler (1992) developed a ‘5-P model’ of SHRM
that melds five HR activities (philosophies,
policies, programs, practices and processes) with
strategic business needs, and reflects
management’s overall plan for survival, growth,
adaptability and profitability.
Philosophy: Organization’s attitude towards its HR
& how they should be treated & the role they should
play in the success of the business. Found in its
values/mission statement culture. e.g creating
value through leadership & excellence@ Pepsi-cola
Policies: guidelines about mgmt. of people NOT
HR policy manual
‘5-P model’ of SHRM contd.
Programs: coordinated HR efforts to initiate
and sustain strategic organizational change.
Practices: deal effectively with performance
problems, encourage creativity in workplace, form
work teams & involve employees in decision
making.
Processes: involves identification, formulation
and implementation of HR activities to meet
strategic goals of organ.
The 5-P Model
ORGANIZATIONAL STRATEGY
INTERNAL EXTERNAL
CHARACTERISTICS CHARACTERISTICS
STRATEGIC BUSINESS NEEDS
Traditional HR Strategic HR
Specialize Change according to external needs of
work
Formulate rules & procedures; strict Good communication; flexible rules &
implementation regulations
HR policies interdisciplinary
Transactional; short term objectives Transformational; change agent
People as means to do work People as intellectual assets –
competitive advantage
Changes are slow Proactive & systemic changes
Traditional HR Versus Strategic HR
Linking Corporate and HR Strategies
Translating Strategy into
HR Policy and Practice
Basic Model
of How to
Align
HR Strategy
and Actions
with Business
Strategy
Roles of SHRM
Stakeholder
interests
• Stakeholder mgmt.
• Employee groups
• Govt. Community HRM policy
choices
• Employee
HR
outcomes Long term
• Influence
• HR • Commitment consequence
• flow • Competence • Individual well-
Situational • Reward • Congruence being
• Cost • Organiza.
factors systems
Effectiveness
• work systems • Effectiveness
• Workforce • Social well-being
characteristics.
• Business strategy
• Mgmt. philosophy
• Labout market
• Unions
• Technology
• Law & societal values
Propositions of Guest
Guest, HR expert, has developed a set of
propositions based on the Harvard Model:
Strategic integration - HRM issues with strategic
plan
High commitment - to org. goals
Inner context
• Culture, Structure
• Politics / Leadership
• Task-technology
• Business outputs
HRM content
• HR flows
• Work systems
• Reward systems
• Employee relations
Storey’s Model – Ideal type
How org’s transformed are being from
personnel into HRM
Classified into four areas
Beliefs& assumptions – about tasks to be
completed, nature of human relations
Strategic concepts – key corporate planning
HRA is a management
tool which is designed to
assist senior management
in understanding the long
term cost and benefit
implications of their HR
decisions so that better
business decisions can be
taken
WHY HRA ?
According to Likert (1971), HRA serves the following
purposes in an organisation:
It furnishes cost/value information for making management
decisions about acquiring, allocating, developing, and
maintaining human resources in order to attain cost-
effectiveness;
to monitor effectively the use of human resources;
Added Value
Productivity is the level of output generated
by a given level of input.
Added value can be defined as the wealth
created through the efforts of the enterprise
and its people.
Productivity
Measure productivity and compare with industry
standards
^ in productivity leads to increase in sales, profits
which increases the performance of the
organization
Limitations – This method assumes same average
costs for all employees. Also temporary basis
employees cannot be accounted for.
Should take into account total cost of contributing
labor
Added value thro’ rewards and
benefits
Tie pay to individual performances.
Base pay – decided on basis of seniority of
performance - with variable element (determined on
the basis of individual performance) and an incentive
(if the person performs exceptionally well).
Incentives motivate individuals
Stock options aim to distribute benefits of achieving
capital growth & to align employee rewards with that
of the shareholders.
Adding value thro’ attrition & recruitment
Customer satisfaction