Unit One: The Emerging Role of HR Professionals

Table of Contents
Unit 1
Introduction 2
Basic Characteristics of the business environment
 Globalization 2
 Technological Trends 3
 Nature of Work 3
Strategic Human Resources Management
 Definition of Strategic management 3
 Strategy Formulation 4
 Strategy Implementation 7
 HR Role in Creating Competitive Advantage 8
 Definition of Strategic Human Resources Management 8
 Human Resources Strategic Management Process 9
 Strategic Human Resources Management Challenges 9
The Role of Human Resources Professionals
 Strategic Role 10
 Role of Managing a Diverse Workforce 12
 Innovator Role 12
 Change and Knowledge Facilitator Role 12
 Measuring Human Resources Management Effectiveness 13
Human Resources Professionals Proficiencies 13

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 UNIT ONE
THE EMERGING ROLE OF HR PROFESSIONALS
The role of the human resources management is evolving with the changes in the competitive
market environment and the realization that human resources management must play a more
strategic role in the success of an organization. Consequently, organizations that do not put
their emphasis on attracting and retaining talents may find themselves in dire consequences,
as their competitors may be outplaying them in the strategic employment of their human
resources. This is due to the rapid changes that are increasing in the business environment,
locally as well as globally, which requires organizations to become more adaptable, resilient,
agile, and customer-focused to succeed.

As such, the human resource professional has to evolve to become a strategic partner, an
employee sponsor or advocate, and a change mentor within the organization i.e. An effective
human resource professional must be business driven function with a thorough understanding
of the organization’s big picture in order to be able to influence key decisions and policies.

This unit will highlight the following:

 Basic Characteristics of Today's Business Environment

 Strategic Human Resources Management

 The Roles of Human resources professionals

 Proficiencies of Human Resources Professionals

BASIC CHARACTERISITCS OF THE BUSINESS ENVIRONMENT

Globalization:

The tendency to extend sales, ownership, manufacturing to new markets abroad. Firms go
abroad for:

 New markets for its services and products

 Labor cost reduction

Globalization means:

 Higher level of competition which means employees have to be more productive, to

do things better while reducing cost.

 Consumer will get better quality at lower cost.

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  Business will have the opportunity of higher sales volume but at the same time
higher competition in the local market.

Technological trends

The increased reliance on virtual on line communities to improve efficiency. For example,
Zara no longer relies on inventories as it operates a worldwide distribution network linked to
checkout registers at its stores around the world. This helps in:

 Monitoring store sales

 Computerized manufacturing system swings its action when an item runs out of a
store.

 The manufacturing process is done in accordance and the item is directly sent to the
store.

Nature of work:

The technological change had a huge impact on how people impact on how people work, their
skills and training needed. Today, business environment needs:

 High tech jobs where knowledge intensive high tech manufacturing systems are
replacing traditional jobs.

 Service jobs where globalization will shift production to low labor cost areas added
to it technological changes that increase productivity. For example, Just -in-time
manufacturing will reduce inventory cost and consequently fewer employees will be
required.

 Knowledge work and human capital: The jobs that remain require continuous
education and skills enhancement and, thus, growing emphasis on human capital.

STRATEGIC HUMAN RESOURCES MANAGEMENT

Definition of strategic management

 It is the process of identifying and executing the organization's strategic plan, by

matching the company's capabilities with the demands of its environment.

 Systematic analysis of the factors associated with customers and competitors (the
external environment) and the organization itself (the internal environment) to
provide the basis for rethinking the current management practices. Its objective is to
achieve better alignment of corporate policies and strategic priorities.

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 Strategic management process

Strategy Formulation

a. Direction Setting: Vision, Mission

Definition of Vision: A general statement of an organization’s intended direction that

evokes emotional feelings in organization members.

Example: Disney Land …. "To be the happiest place on earth"

Definition of Mission: Spells out who the company is, what it does, and where it’s
headed.

Example: Disney Land …. "To make people happy"

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 b. Internal and External Environment Analysis (SWOT Analysis)

Internal Environment S W

External Environment O T

 Strengths: Internal resources and capabilities that can be used as a basis for
developing a competitive advantage.

 Weaknesses: Internal weaknesses (attributes on the firm).

 Opportunities: External opportunities for profit and growth.

 Threats: External changes in the environment that prevents or slows down the
organization’s ability to achieve its aims.

 Example: Disneyland strengths

- Global Standardization

- Target Customer: Children

- Creative Process

- Popular Brand Name

- Diversification

Disneyland weaknesses

- High sunk cost

- Excessive Research & Development

- High Investment

- High Risk Factor

Disneyland opportunities

- Global Localization: Think global, Act Local

- Characters of national or regional appeal

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 - Cheaper alternatives to soft toys

- Disney Music Channel

- Disney School of Management/Training Institute

- Decreased international travel expense

Disneyland threats

- Competitors: National, Regional & Global

- Employee Retention

- Highly Demanding in terms of Sales, Creativity and Innovation

- Unprofitable or hasty acquisition

- Brand Consistency

- Product Differentiation

c. Generate, evaluate and Select Strategies

Definition of Strategy: A chosen course of action.

Types of strategies

 Corporate Strategy: It identifies the portfolio of business that, in total, comprises

the company and the ways in which these businesses relate to each other. There are
several generic possibilities:

 Diversification corporate strategy; the firm expands by adding new product

lines.

 Vertical integration strategy; the firm expands by producing its own raw
material or selling its products direct.

 Consolidation; the firm reduces its company size

 Geographical expansion; the firm takes the business abroad.

 Competitive Strategy: It identifies how to build and strengthen the business's long-
term competitive position in the market place i.e. how the company will achieve a
competitive advantage – how it will differentiate its products or services from those
of its competitors to increase market share. There are several competitive strategies
that can be used:

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  Cost leadership aims at becoming low cost leader in an industry.

 Differentiation where the firm seeks to be unique in its industry along

dimensions that is widely valued. For example, Mercedes Benz emphasizes
on reliability and quality.

 Focusers carve out a market niche and compete by providing a product or

service customers can get in no other way. For example, Ferrari Cars

 Functional Strategy: It identifies the basic course of action each department will
pursue in order to help the business attain its competitive goals.

Strategic Planning Definition

How an organization intends to balance its internal strengths and weaknesses with its external
opportunities and threats to maintain a competitive advantage over the long-term.

Achieving the strategic fit: The Dilemma

 Analysis reveals that there are opportunities that could be pursued but the company
does not have the required strengths and assets.

 Analysis reveals that there is a threat that the company has overwhelming
weaknesses.

What should the company do?

1. Fit: Michael Porter emphasizes the "fit" point of view i.e. firm's functional strategies
should fit (align) with and support its corporate and competitive strategies.

2. Leverage: Hamel and Prahalad argue that preoccupation with "fit" can limit the
organization's growth. Though alignment is important, yet leveraging resources can
be more important (supplementing what you have and /or doing more with what you
have?)

Strategy Implementation

The pattern of decisions and actions that are intended to carry out the plan. It involves:

 Stakeholders relations management

 Organization resources management

 Creation of organizational design and control systems

 Performance evaluation

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 Human Resources Management Role in Creating Competitive Advantage

In most firms today, it is the employees' skills and commitment, and the management system
that produces them that makes the difference and not the technology in itself. This is simply
because the technology is available to all organizations. Thus operational flexibility is what
counts (plant operators and managers who use the technology) first and then equipment and
computer integration comes second.

Definition of Strategic Human Resources Management

 It refers to the specific human resource management courses of action the company
pursues to achieve its strategic aims.

 Formulating and executing human resource policies and practices that produce the
employee competencies and behaviors the company needs to achieve its strategic
aims.

Example 1:

FedEx strategic aim: Achieve superior levels of customer service and high profitability
through a highly committed workforce preferably in non-union environment.

FedEx human resource strategy:

 Use tools to build two way communication

 Look for people-oriented managers

 Guarantee greatest extent of fair treatment and employee security

 Utilize promotion from within which allows employees to realize their full potential

Example 2:

Southwest Airline strategic aim: To deliver low cost, convenient service on short haul routes
by:

 Getting fast, 15 minute turnarounds at gates

 Keep plans turned around

Southwest Airline employee competencies:

 All employees should do whatever it takes to get planes turned around

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 Southwest Airline human resource policies and practices:

 High compensation

 Flexible job assignments

 Cross training

 Employee stock ownership

Human Resources Strategic Management Process

Company's

Competitive environment

"Opportunities and threats"

Company's strategic plan

Company's strategic situation "Expansion, cost cutting,

diversification"

Company's
Company's HR Strategies
Internal environment
What are the Basic courses of
"Strengths and weaknesses" action HR will pursue to ensure
that the HR systems will achieve
the company strategic plan.
ORGANIZATIONAL
PERFORMANCE

Strategic Human Resources Management Challenges

 Organization Performance Improvement: The need to support corporate productivity

and performance improvement efforts.

 Technology is useless without competent and committed employees: Employees play

an expanded role in employer's performance improvement efforts.

 How the firm makes money: Human resource units must be more involved in
designing the organization's strategic plan i.e. Human resource managers need to
fully understand the value creating proposition of the firm.
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 THE ROLES OF HUMAN RESOURCES PROFESSIONALS
The Strategic Role

 They should be part of the company's strategic planning team in order to identify
human issues that are vital to the business strategy.

 Human resource managers should work closely with senior management in both
formulating and implementing their firm's strategic plans.

 Creation of human resource management policies and practices that support

employer's strategic goals with an assumption that the human resource manager can
measure how well the practices and policies are achieving the strategic goals.

 Human resource department plays two roles:

 Strategy formulation: With globalization, more competition means more

performance which requires boosting employees' competencies and
commitment, which makes human resource management knowledge and
expertise crucial to strategy formulation process. Strategy formulation
requires external and internal analysis (SWOT analysis) with the resulting
strategic plan capitalizing on opportunities and strengths and minimizing or
neutralizing threats and weaknesses. It is the role of human resources to:

- Provide details regarding incentive plans.

- Analyze how competitors constructed their organization chart and

staffing levels.

- Determine how competitors group their brands into divisions

(who reports to whom). This may reflect how competitors set
their strategic priorities.

- Provide input on company's internal human strengths and

weaknesses.

 Strategy implementation (execution): Based on the company's corporate and

competitive strategies, the human resource manager designs strategies,
policies and practices, as for example:

- Administration of downsizing or restructuring efforts

- Institution of pay-for performance plans

- Reduction of health care costs

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  Human resource function
 Human resource professionals with strategic management competencies

 Human resource system

 High performance work system consisting of strategically aligned human
resource policies, practices and activities

 Employee behavior
 Employee competencies, values, motivation and behavior required by the
company's strategic plan

 High performance work system: Every company tends to build its HR

system that is uniquely appropriate to its needs. With globalization, there is
a growing need for high performance work system that includes:

- Multi-skilled work teams

- Empowered front line workers

- Extensive training

- Labor-management cooperation

- Commitment to quality

- Committed to customer satisfaction

Example: Comparison of HR practices in high performance and low

performance companies
Low performance High performance
company HR company HR
system Bottom 10% system Top 10%
Number of qualified applicants per person 8.24 36.5
% hired based on a validated selection test 4.26 29.67
% of jobs filled from within 34.90 61.46
Number of hours of training for new 13.40 72.00
employees (less than one year)
% of employees receiving regular 41.31 95.17
performance appraisal
Employee turnover 34.09 20.87
Sales per employee $158,101 $617,576
Market value to book value 3.64 11.06

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 The Role of Managing a Diverse Workforce

 The future success of any organizations relies on the ability to manage a diverse
body of talent that can bring innovative ideas, perspectives and views to their work.
Thus:

 A diverse workforce can be turned into a strategic organizational asset if an

organization is able to capitalize on this melting pot of diverse talents.

 The mixture of talents of diverse cultural backgrounds, genders, ages and

lifestyles, the organization can respond to business opportunities more
rapidly and creatively, especially in the global arena which must be one of
the important organizational goals to be attained.

 Organizations failing to accept a diverse workforce within its culture runs

the risk of losing talent to competitors.

 The role of the human resources manager becomes one of:

 Search for human resources requirements globally and then organize the
pool of diverse talents strategically for the organization.

 Harnesses the full potential of workplace diversity by creating a culture that

accept diversity.

The Innovator Role

Today, organizations are asking their HR departments for innovative approaches and
solutions to improve productivity and the quality of work life while complying with the law in
an environment of high uncertainty, energy conservation, and intense international
competition. This means that human resources departments should continually streamline
their operations and redesign the way work gets done.

Change and Knowledge Facilitator Role

It's increasingly necessary for organizations to adapt new technologies, structures, processes,
cultures, and procedures to meet the demands of intense competition. Organizations look to
the human resource department for

 The skills to facilitate organizational change and to maintain organizational

flexibility and adaptability.

 The need to be more focused on the future.

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  Guiding the discussion and flow of knowledge, information and learning throughout
the organization.

Measuring Human Resources Management Effectiveness

Human resource managers are expected to show in specific and measurable terms how human
resource activities contribute to the firm's profit i.e. Human resource manager should show in
measurable terms how the human resource system is supporting the employer's strategic aims,
productivity indicators for example.

HUMAN RESOURCES PROFESSIONALS PROFICIENCIES

 HR proficiencies: Refers to knowledge and skills in human resources activities as
hiring, training …etc.

 Business proficiencies: Refers to the ability to assist top management in formulating

strategies, strategic planning, marketing, production and finance.

 Leadership proficiencies: Refers to the ability to work with and lead management
groups and to drive change.

 Learning proficiencies: Refers to the ability to learn and apply new technology.

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