Chapter 1 (Strategic HRM)

Human Resource Management
Shah M Saad Husain
B Engg, MS Engg, PE, MBA, FICS, FIMM
Human Resource Management by Shah M Saad Husain
Shah M Saad Husain

BEngg, MS Engg, MBA, FICS, FIMM, PE
35 years management experience with

multinational, private sector and government
companies in engineering, petroleum, energy
and mineral sectors.
in General Management, Marketing, HR, Project

Management,
Engineering
Operations,
Business
Development,
External
Affairs,
Corporate Planning, CSR and Customer
Relations.
with PIDC, Habib Group, British Petroleum, BHP

Billiton, Toyota Indus Motor, Pak-Arab Refinery.
26 years teaching experience at IBA, CBM,

PIQC, PIM, NIPA, LUMS. Subjects: Industrial
Marketing, Customer Ascendancy, B to B
Marketing, Marketing Management, Strategic
Management,
HRM,
Performance
&
Compensation
Management,
Project
Management, Japanese Management, CSR.
Course Contents
The Strategic Role of HRM

Job Analysis and Job Design
Staffing
Employee Development
Compensation
Employee Relations
Course Objectives
Knowledge
Practices.
of HRM Theory, Concepts, Processes and
Identifying Sources of Information and using them.

Class Interaction, learning from the Marketplace.
Practical Application of course, developing HRM
Strategies for Organizations.
Performance Assessment: Students nTeacher.

Course Requirements
Readings from selected texts, journals

Theory, Concepts discussed in Class
Student Projects and Reports
Guest Speakers, Real Life Cases
Examinations
Presentations and Class Evaluations
Class Participation, Quizzes, Home Assignments
Strategic Human Resource Management

Instructions for Students
Bring Course File to each class

Read reading materials before class
Write notes as slides are explained and discussed
Keep track of Course Calendar, Class Timings,
Grades, etc., on E-group and with CR
Maintain contact with CR and SSH
Meet Attendance and Punctuality requirements
Discipline is key. Adhere to Class Rules.
Human Resource Management - Grading
Midterms ( 2 x 20 )
Final
Project Report, Presentation
Home Assignments, Quizzes
All Quizzes are open book
For an overall A grade in the course:
A in Final
A in Project Report
Active Class Participation
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30
20
10
Human Resource Management - Readings

I.
Luis R. Gomez Mejia, David B. Balkin,

Robert L. Cardy (2008) : Prentice Hall
Managing Human Resources
II.
Lloyd L. Byars, Leslie W. Rue (1997) : Irwin

McGraw-Hill
III.
Wayne F. Cascio (2005), Tata McGraw-Hill

Managing Human Resources
Introduction to HRM
Human Resources Strategy in a firm is a

firms deliberate and planned use of human
resources to help it gain a competitive
advantage.
The HRM strategy of a firm is its grand plan

to ensure that it effectively uses its people to
accomplish its mission.
Performance & Compensation Management by Shah M Saad Husain
HUMAN RESOURCE MANAGEMENT

Employer/Organizational Objectives
Organizational Structure
Job Identification, Analysis & Design
Job Specification (Before Joining)
Job Description (After Joining)
Tasks, Activities, Responsibilities, Accountabilities
Power (Financial/Administrative)
Reporting Structure
Manpower Planning, Recruitment, Induction
Training & Development
JOB
(Scope & Depth)
Employee Objectives
Work
Growth in
Family & Self
Profession
Career
Security
Social Status
EMPLOYEE
Employee Employer
Relationship
Performance
Management
Performance Evaluation
Increments
Bonus
Incentives
Career Development
Ultimate Potential
Employer Objectives
Services
EMPLOYER
Compensation &
Rewards
Growth in
Goods & Services
Customer Satisfaction
Revenue Generation
Profits
Return on Equity (ROE)
Expansion of Business
Corporate Reputation
Salary
Benefits
Facilities and Perks
Allowances
Professional, Career, Societal
Recognition
Internal + External (Mkt) Equity
10
HRM and the 21st Century
Due to Internet technologies, organizations are undergoing a complete

transformation. The 21st century organization must adapt itself to management
via the web.
Intellectual capital will be critical to success. Advantage of bringing new

technologies to the market will be shorter. Technologies will let competitors
match them almost immediately.
In such times, it will be critical to attract and retain the best thinkers.
Retaining and attracting the top talent will require more than just paychecks. It
will require a culture of empowering people, and a reward system that rewards
the best as if they were the owners of the company.
Intellectual capital will be called on from around the globe. A global corporation
might be based in the US but does its software programming in Sri Lanka,
engineering in Germany, its manufacturing in China, and is linked via the
Internet to allow employees to interact and work in real time.
15
HRM and the 21st Century Corporation

20th Century Corporation
21st Century Corporation
Predicated itself on stability
Predicated itself on constant change
Organized around rigid hierarchies
Organized around networks and teams
Built on self-sufficiency
Built on
alliances
Organizational chart defined as a

shrinking pyramid leading to the CEO
Organizational chart more likely to be a

flat web, intricately woven that links
partners,
employees,
external
contractors, suppliers, and customers
in various collaborations
Constructed on bricks and mortar
Constructed
on
knowledge
technological advantages.
shifting
partnerships
and
and
16
Outcomes of HRM Practices
HRM practices make an important practical

difference in three key organizational
outcomes.
1.
Productivity
2.
Quality of Work Life
3.
Profit : Total Revenue minus the Total Cost
4.
Role of HR Professionals Today
19
Outcomes of HRM Practices:

1. Productivity
A measure of the output of goods and

services relative to the input of labor, capital,
and equipment.
Higher productivity
Leads to higher wages without boosting inflation.
Is not working harder, it is working smarter.
Is about doing more with fewer people, less money, less
time and space, and fewer resources.
20
MORE PRODUCTIVE ORGANIZATIONS GET MORE GOODS AND

SERVICES FROM A GIVEN AMOUNT OF LABOR, CAPITAL, EQUIPMENT.
21
1. Productivity Improvement
Rebuild employee loyalty.
Establish a clear link between rewards and

production.
Say no to Quick Fix approach.
Emphasize on Continuous Improvement.
22
2. Quality of Work Life
Two ways of looking at Quality of Work Life

(QWL)
Organizational Conditions and Practices such as

promotion from within, democratic supervision, participative
management, employee involvement, safe working
conditions, mutual trust, team work.
Employees Perceptions that they are respected, relatively

well satisfied, and able to grow and develop as human beings
and professionals.
23

3. Profit
Management Systems that produce profits through people share the

following dimensions:
1.
Employment Security.
2.
Selective Hiring.
3.
Self-managed teams and decentralization.
4.
High Compensation contingent on organizational performance.
5.
Extensive Training, Development and Professional grooming.
6.
Reduced differences in status. Respect for competence and

performance.
7.
Sharing of information, effective communication systems.
8.
Employee Care and Satisfaction.
9.
Trust.
25
4. Roles of HR Professionals Today

The greatness of an Organisation is due to the Greatness of its People, Eiji Toyoda
1.
Strategic Partners: work with multiple stakeholders to achieve business

plans.
2.
Innovators: create an environment that supports continuous learning and

improvement.
3.
Collaborators: create win-win situations with internal and external

stakeholders.
4.
Change facilitators: anticipate the need for change, think, conceptualize,

articulate, execute and energize organization to bring change.
26
HRM and Corporate Strategic Goals
Human Resource Management is essential to

advance a firms strategic goals.
Linking Corporate Strategic Goals
with
HRM
CORPORATE
STRATEGIC
GOALS
CORPORATE
STRATEGY
HR
STRATEGY
HR
TACTICS
HR
PLANS
HR
POLICIES,
SYSTEMS,
SOPs
HR
PRACTICES
27
The Benefits of HR Planning

1.
Encouragement of proactive rather than reactive behavior
2.
Explicit communication of Company Goals
3.
Stimulation of critical thinking and ongoing examination of

assumptions
4.
Identification of gaps between Current Situation and Future

Vision
5.
Encouragement of Line Managers Participation
6.
Identification of HR constraints and opportunities
7.
Teamwork and creation of common bonds
HRs Strategic Role
Successful firms align their HR strategies

and tactics with:
1.
Environmental Opportunities and Threats.
2.
Business Strategies.
3.
Organizational Unique Characteristics.
4.
Organizations Competence.
29
Selecting HR Strategies to Increase Firms Performances
HR Strategys effect on a firms performance

depends on how well it fits with other factors
Fit refers to the consistency and compatibility

between HR strategies and other important
aspects of the organization
30
Fit with Organization Strategies
Corporate Strategy is referred to as the mix

of businesses a corporation decides to hold
and the flow of resources among those
businesses. e.g., PARCO
Business Unit Strategies are those that are

formulated and implemented by a firm that is
relatively autonomous, even if it is part of a
larger corporation. eg. PAPCO
31
Effective HR Strategy Formulation and Implementation
Selected HR Strategies That Fit Miles and Snows Two Major Types of
Business Strategies
Fit with the Environment
HR strategies should help the organization better exploit

environmental opportunities or cope with the unique
environmental forces that affect it
The relevant environment can be measured in terms of four

dimensions:
1.
Degree of uncertainty: how much accurate information is

available to make appropriate business decisions
2.
Volatility: how often does the environment change
3.
Magnitude of change: how drastic the changes are
4.
Complexity: how many different elements in the environment

affect the firm either individually or together
Selected HR Strategies for Firms Low and High on Different

Environmental Characteristics
Fit with Organizational Characteristics

The production process for converting inputs into
outputs
1.
Routine production process benefits from HR strategies that

emphasize control
example: Specific job description and job specific trainings
Firms with non-routine production processes such as

advertising firms, custom printers, and biotechnology
companies, benefit from flexible HR strategies that support
organizational adaptability, quick response to change and
creative decision making
example: Broad job classes, loose work planning, and generic training

The Firms Market Posture
2.
Firms that experience high sales growth and engage in product

innovation for a wide market segment benefit from HR
Strategies that support growth and entrepreneurial activities
example: External recruitment or buying skills, decentralized pay
decisions, customized appraisal
Firms with low rates of sales growth and limited product

innovation for a narrow market segment benefit from HR
strategies that emphasize efficiency, control, and firm specific
knowledge
example: Internal recruitment or making skills. On-the-job training,
and high dependence on superiors

The firms overall managerial philosophy
3.
Companies whose top executives are risk-averse and operate

with an autocratic leadership style, and are inwardly focused
use HR strategies that match this outlook
example: Seniority based pay, formal hiring and socializing of new employees,
selection decisions made by the HR department and use of top-down
communication channels.
Management characterized by high risk taking, participation,

egalitarianism, and external, proactive environmental orientation
use HR strategies that fits this outlook
example: include variable pay, giving supervisors a major role in hiring
decisions, up-and-down communication channels, and multiple inputs for
performance appraisals

The firms organizational structure
4.
Highly formal organizations that are divided into functional

areas like marketing, finance, production, etc, and
concentrate decision making on top: HR strategies for
such organizations include a control emphasis,
centralized pay decisions, explicit job descriptions, and
job-based pay.
Firms whose structures are less regimented benefit from

HR strategies that include informal hiring and socializing
of new employees, decentralized pay decisions, broad job
classes and individual-based pay.

The firms organizational culture
5.
Companies that foster an entrepreneurial climate have loose work

planning, informal hiring and socializing of new employees and
variable pay.
Firms that discourage entrepreneurship generally prefer a control

emphasis, detailed work planning, formal hiring and socializing of
new employees, and fixed pay.
Firms with emphasis on moral commitment- the extent to which a

firm tries to foster a long-term emotional attachment between the
firm and the employees have emphasis on preventive vs. remedial
disciplinary action to handle employee mistakes, and explicit ethical
codes to monitor and guide behavior.
Firms that are low on moral commitment rely on authoritarian

relationship between employee and company.
Fit with Organizational Capabilities
Distinctive competencies of a firm are its

capabilities
such
as
technology,
management systems, reputation, etc, that
give it a Competitive Edge
HR strategies should enhance a firms

performance by:
.
helping the company exploit its specific advantages or strengths

while avoiding weaknesses
2.
assisting the firm in better utilizing its unique blend of human

resource skills and assets
Choosing consistent and appropriate HR tactics to implement

HR strategies
The best-laid HR strategies may fail when specific HR programs are

poorly chosen or implemented
In addition to fitting with each of the four organizational

characteristics; organizational strategy, environment, organizational
capabilities and characteristics, a firms HR strategies should be
mutually consistent
HR strategies are likely to be successful if they reinforce one

another rather than work at cross-purposes.
example: Working in teams, but traditional individual based
performance appraisals
Choosing Consistent and Appropriate HR Tactics to Implement

HR Strategies
Competencies Required of HR Department to Become a Full Strategic Partner
Reckitt Benckiser diagram
46
PARCO`s Growth and HR Strategy
Projects
Projects
Engineering
Operations
Managerial
Marketing
Business Diversification
Engineering
Operations
Managerial
Marketing
Projects
Engineering
Talent
Management
HR Management
Linking HR & Corporate Goals
Sourcing & Recruitment
Performance Management
Personnel
Payroll
Management
Job Evaluation
Rightsizing
Learning & Development
Benefits
Salary Restructuring
Succession Planning
Leave
Employee Surveys
Recruitment
Industrial Relations
Single Product
Leadership Development
HR Processes
Compensation
SAP & HR Data Management
Work Life Balance
Talent Inventory
2008
1981
Local
Performance
Training and Development
Multi Product
National
2012
2014
Multi Business
Multinational

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Human Resource Management

Shah M Saad Husain

B Engg, MS Engg, PE, MBA, FICS, FIMM

Human Resource Management by Shah M Saad Husain

Shah M Saad Husain

35 years management experience with

in General Management, Marketing, HR, Project

with PIDC, Habib Group, British Petroleum, BHP

26 years teaching experience at IBA, CBM,

Human Resource Management

The Strategic Role of HRM

Human Resource Management by Shah M Saad Husain

Human Resource Management

of HRM Theory, Concepts, Processes and

Identifying Sources of Information and using them.

Performance Assessment: Students nTeacher.

Human Resource Management by Shah M Saad Husain

Human Resource Management

Readings from selected texts, journals

Human Resource Management by Shah M Saad Husain

Strategic Human Resource Management

Bring Course File to each class

Human Resource Management by Shah M Saad Husain

Human Resource Management - Grading

All Quizzes are open book

For an overall A grade in the course:

Human Resource Management by Shah M Saad Husain

Human Resource Management - Readings

Luis R. Gomez Mejia, David B. Balkin,

Lloyd L. Byars, Leslie W. Rue (1997) : Irwin

Wayne F. Cascio (2005), Tata McGraw-Hill

Human Resource Management by Shah M Saad Husain

Human Resources Strategy in a firm is a

The HRM strategy of a firm is its grand plan

Performance & Compensation Management by Shah M Saad Husain

HUMAN RESOURCE MANAGEMENT

Performance & Compensation Management by Shah M Saad Husain

Human Resource Management by Shah M Saad Husain

Human Resource Management by Shah M Saad Husain

Human Resource Management by Shah M Saad Husain

Human Resource Management by Shah M Saad Husain

HRM and the 21st Century

Due to Internet technologies, organizations are undergoing a complete

Intellectual capital will be critical to success. Advantage of bringing new

Performance & Compensation Management by Shah M Saad Husain

HRM and the 21st Century Corporation

21st Century Corporation

Predicated itself on stability

Predicated itself on constant change

Organized around rigid hierarchies

Organized around networks and teams

Organizational chart defined as a

Organizational chart more likely to be a

Constructed on bricks and mortar

Performance & Compensation Management by Shah M Saad Husain

Human Resource Management by Shah M Saad Husain

Human Resource Management by Shah M Saad Husain

Outcomes of HRM Practices

HRM practices make an important practical

Quality of Work Life

Profit : Total Revenue minus the Total Cost

Role of HR Professionals Today

Performance & Compensation Management by Shah M Saad Husain