Lecture 4

The Internal Assessment

Internal audit or internal assessment is done to know the unique resources, capabilities, and
competencies the organizations have.
Resource Based View
Organizational Resources provide competitive advantage that can be sustained. Traditional
resources such as labor costs, access to financial resources and raw materials continue to be
sources of competitive advantage but to a lesser degree
Types of Resources
1. Threshold Resources
The resources needed to meet customers minimum requirements and therefore to continue to exist.
2. Unique Resources & Core Competences
Unique resources can not be easily imitated and critically underpin competitive advantage. Core
competences are the activities and processes through which an organziation deploys the resources
effectively to achieve competitive advatnage in ways non imitable by competitors.
Robustness of Strategic Capabilities
1. Rarity
Capabilities around resources may not be rare as IC may move, competences may be rare and non
transferable. Examples:
Intellectual capital-particularly talented individuals
Relationships with key customers (Loyalty)
2. Non-imitability
Criteria for non-imitability is
Causal ambiguity
Competences get embedded in organizational culture
Tacit knowledge on organizational processes built in one culture may not be
readily idetifiable; counter cultural for comeptitor

 Linkage ambiguity
Whcih activities or processes dependent on which other. What is the chain of
linkages?
The way customers are dealt on phone, return policies on goods, flexibility
in deliveries
3. Valuable
Unique capabilities may not lead comeptitive advantage.
4. Non substitutable
Competencies may also be situtation dependent MNCs have different competences accross the globe.
Competences can be created within organziation and outside with suppliers and distributors.
Dynamic Capabilities
Dynamic capabilities refers to an organizations abilities to develop and change competencies to meet
the needs of rapidly changing environments.
Core Rigidities are former core competencies that sow the seeds of organizational inertia and prevent
the firm from responding appropriately to changes in the external environment.
Strategic myopia and inflexibility can strangle the firms ability to grow and adapt to environmental
change or competitive threats
The Value Chain
The value chain consists of primary andsupport activities.

Primary Activities
Inbound Logistics
Activities used to receive, store, and disseminate inputs to a product.
Operations
Activities necessary to convert the inputs provided by inbound logistics into final product.
Outbound Logistics
Activities involved with collecting, storing, and physically distributing the product to customers.
Marketing and Sales
Activities completed to provide the means through which customers can purchase products and to
induce them to do so.
Service
Activities designed to enhance or maintain a products value.
Support Activities
Firm Infrastructure
Activities that support the work of the entire value chain (general management, planning, finance,
accounting, legal, government relations, etc.). Each activity should be examined relative to competitors
abilities and rated as superior, equivalent or inferior.
Procurement
Activities completed to purchase the inputs needed to produce a firms products.
Technological Development
Activities completed to improve a firms product and the processes used to manufacture it.
Human Resource Management
Activities involved with recruiting, hiring, training, developing, and compensating all personnel.
Internal Assessment Analyses
1. Qunatitative Analyses
a. Balanced Scorecard
b. Basic Financial Ratios
2. Qualitative Analyses
The Balanced Scorecard

Broad based criteria to assess a firm from multiple perspectives

Financial
Ratios
Customer
Value in terms of differentiation, low costs, quick response
Operations
Which processes need to improve? How should they be changed?
Organizational
Adaptability to change? Workforce commitment towards goals?
Qualitative Analyses
Qualitative information supplements quantitative information. Information on employee morale,
commitmnet, creativity, employee views and customer views etc.

Lecture 5
Strategic Human Resource Management
Strategic management is that set of managerial decisions and actions that determines the long-run
performance of an organization. It entails all of the basic management functions; that is, the
organization's strategies must be planned, organized, put into effect, and controlled.

Human Resource Management

HRM is the strategic and coherent approach to the management of an organization's
most valued assets - the people working there who individually and collectively contribute
to the achievement of the objectives of the business

Critical HR Goals
Labor productivity/cost effectiveness
Investment in HR resources
Formal feedback/appraisal systems
Training and selective selection programs
Firm size/economies of scale

 Organizational felxibility
Managing change capability to change
Short Run agiligy (adjusting the price of exisiting labour)
Functional flexibility
Numerical flexibility
Long Run agility (meeting long term targets such as change in technology or market
demands)
Tension between the two contractuals v/s permanent staff e.g.
Social legitimacy
Government regulations
Protection of natural environment
Occupational safety and health
EEO
Tripple bottom line ( financial, environmental and social)
Incentives as best comapnies to work for
Social Accountability 8000 certified auditors or accredited audit agency
Consult employees and unions for complaints and non compliance of HR
practices
Getting the Best Employees
Staffing Workforce Planning
Staffing Specifying Jobs & Roles
Staffing Recruiting
Staffing Outsourcing (having services and functions performed by non-employees)
Staffing Screening Applicants
Staffing Selecting (Hiring) New Employees

 Employees due Benefits & Compensation

Training Employees
Career Development
Employee Orientation
Leadership development
Management Development
Personal Development
Supervisional Development
Ensuring Compliance to Regulations
Personnel Policies & Records
Employee Laws, Topics & Issues
Ethics Practical Toolkit
To comply all Statutory Requirements under Labour Laws
Ensuring Safe Work Environments
Diversity Management
Dealing with Drugs at the Work Place
Employee Assistance Programs
Ergonomics : Safe facilities at the Work Place
Personal Wellness
Preventing Violence at the Work Place
Ensuring Safety at the Work Place
Supporting Spirituality at the Work Place
Sustaining High-Performing Employees
Employee Performance Management
Group Performance Management

 Interpersonal Skills
Personal Productivity
Retaining Employees

Strategic Tensions in HR
Labor scarcity
Labor Motivation
Labor management
Linking HR Practices to Competitive Strategy
Internal fit
Between HR practices
External fit
Organizational/
Managerial
Characteristics

Defenders

Prospectors

Analysers

Competitive Strategies

Limited, stable product line.

Growth through penetration.
Emphasis on efficiency

Changing Product
lines. Growth through
innovation & market

Stable & changing Prod

lines.

Staffing & Development

Strategies

Emphasis on internal training

& development (make)

Emphasis on
Recruitment (buy)

Mixed Approaches( both

make and Buy as nee

Performance Appraisal

Process Oriented and linked to

training needs analysis

Results oriented and

linked to rewards

Mostly process Oriented

Pay Policies

Focused on Internal equity

Focused on external
competitiveness

Concerned with both

internal equity & extern
competitiveness

Matching HR strategy to competitive strategy of business unit

Selected HRM implications of Miles & Snows competitive types

Internal Fit
Complementry fit (single employee fit)
Use of expensive selection processes should be accompanied by training
programs and retention programs
Consistecy (across employees) fit
such as standarized employment and work conditions for same occupational
group such as clerks.
Temporal consistecy
employee A should be treated the same way today as yesterday by the
employer. Reversal of employer behavior can be demotivating
Avoid costly dupilcation of practices (structured interviewing or assesment center
taking 5-6 tests or over designed selection systems where extra hurdles add no
value)

 Avoid deadly combinations (heavy training on teamwork but individualistic

rewards)
Configurationally thinking in HR strategy: two different scenarios
Firms Choice of
Competitive
strategy

Nature of productive
technology in the sector

Implications for HR Strategy

Cost Leadership

High technology or highly

capital- intensive; often low
staff numbers but key
specialist skills very
important to operations

HR strategy should be based on

developing & motivating workers to
maximize the benefits of the
technology (which will help to achieve
the cost leadership strategy).
Prediction: high-wage/high skill
models of labor management are cost
effective. Investments in creating
high performance work systems are
likely to be justified

Cost Leadership

Low-Technology, often
highly labor intensive
operations & large scale

HR strategy is dominated by the need

to survive in an environment where
wages are in competition.
Prediction: firm seek out low wage
sites where productivity is high and
quality is acceptable. Firms will pay
the going rate in the local labour
market but avoid paying premium
conditions or over investing in
training.