HUMAN RESOURCE STRATEGIES

Departmental Structure For HRs

President

V.P. Manufacturing

V.P. Finance

V.P. Human Resources

V.P. Marketing

Director Employment

Director Safety & Health

Director Organization Development

Director Wage & Salary

Director Industrial Relations

Recruiting Supervisor

Orientation Supervisor

Organization Improvement Supervisor

Director Human Resources Planning

Training Supervisor

1-2

Example of Corporate, Business, and HR Management Strategy Interrelationship

General Motors Saturn Project
Corporate Level Design and build a production car, based on quality first.

Business Level Redesign the production line, based on the latest technology available, creating new technologies when needed.

HR Level Redefine the role of management and workers based on the concepts of teamwork and involvement.

Dynamic Interaction Based on Sociotechnological Design

1-3

Organizational HR Strategy
Corporate Strategy

Other Functional Strategies (Marketing, Production, etc.)

HR Strategy

Other Unit Strategies (Product, Geographic, etc.)

1-4

Organizational HR Strategy

Prehiring and Hiring Strategies

HR Forecasting Recruiting Selecting

Motivation, Maintenance, and Retention Strategies

Orientation Training Pay and Rewards Benefits

Separation Strategies
Layoff Termination Early Retirement Quits

Placing

1-5

Definition
Peter Drucker says the prime task of strategic
management is thinking through the overall mission of a business:
. . . that is, of asking the question, "What is our Business?" This leads to the setting of objectives, the development of strategies, and the making of today's decisions for tomorrow's results. This clearly must be done by a part of the organization that can see the entire business; that can balance objectives and the needs of today against the needs of tomorrow; and that can allocate resources of men and money to key results.
1-6

Four Topics
1. What is an HR strategy? 2. Is there one best HR strategy? 3. High performance work practices or high commitment practices. 4. Possible contingent factors.

1-7

1. What is an HR strategy?
Make workforce strategies integral to company

strategies and goals.

Leverage HR role in major change initiatives such as: Strategic Planning Mergers and Acquisitions Systems implementation reorganizing / downsizing. Earn the right seat at the corporate table. Develop awareness and/or an understanding of the
business. Understand finance and profits. Helpline managers achieve their goals. 1-8

Strategy = Analysis + Action

ANALYSIS (3 Elements)
1. What is an organisation trying to
achieve? (Mission, goals, objectives) 2. What stands in the way of it achieving what it wants? (External environment + What it is doing already) 3. What can it do to improve its chances of achieving what it wants?
1-9

Strategy = Analysis + Action

ACTION (3 Elements) results in policies and practices..consists of.,
Choices to offer from various
possibilities Its attempt to implement (complex and problematic)

1-10

What is an HR strategy?
HR strategy is a set of HR policies and practices (the actions) designed and implemented by the firm to help overcome the obstacles it sees as standing in the way of its achieving its HR or organizational objectives (like minimizing unit labour costs)

1-11

Examples of Company Strategies and Associated HR Strategies

Corporate strategy: Example: HR Strategies: Retrenchment (cost reduction) GM Layoffs, Wage Reduction, Productivity Increases, Job Redesign, Renegotiated Labor Agreements

1-12

Examples of Company Strategies and Associated HR Strategies

Corporate strategy: Growth Example: Intel HR Strategies: Aggressive Recruiting
and Hiring, Rapidly Rising Wages, Job Creation, Expanded Training and Development

1-13

Examples of Company Strategies and Associated HR Strategies

Corporate strategy: Renewal Example: Chrysler HR Strategies: Managed Turnover,
Selective Layoff, Organizational Development, Transfer/Replacement, Productivity Increases, Employee Involvement
1-14

Examples of Company Strategies and Associated HR Strategies

Corporate strategy: Example: HR Strategies: Niche Focus Kentucky Fried Chicken Specialized Job Creation, Elimination of Other Jobs, Specialized Training and Development

1-15

Examples of Company Strategies and Associated HR Strategies

Corporate strategy: Example: HR Strategies: Acquisition GE Selective Layoffs, Transfers/Placement, Job Combinations, Orientation and Training, Managing Cultural Transitions

1-16

Examples of Strategic Decisions That Have Major Direct Impacts on HRs

Plant Location Plant Closing Job Design/Redesign Production Technology

Wage Cutting
Restructuring Collective Bargaining Automation
1-17

Supervisory Style
Organizational Culture Change Market Expansion/ Retrenchment Mergers/Acquisitions

Examples of Strategic Decisions That Have Minor Indirect Impacts on HRs

Restructuring Loan/Portfolio Public Relations Campaign

Stock Offerings

Changes in Accounting Methods

Product Feature Change

Logo/Name Change

1-18

Pfeffers HR strategy with 7 Elements

1. Employment security 2. Careful hiring 3. Self managed teams and decentralized

4. 5. 6. 7.

decision making Comparatively high pay Extensive training Low-status distinctions and barriers Extensive sharing of financial performance information throughout the org.

1-19

1,4, and 6 designed to motivate employees 2 and 5 to secure competence 3 and 7 designed to do both. A strategy has to have both a consistency and an interdependence between the constituent parts If one item is neglected (2, 3, 5 wont compensate enough for a very low value of 1) there will be a disproportionate failure.
1-20

 All the seven elements look to be reinforcing

one another Display INTERNAL FIT In a strategy, the constituent policies should display coherence or internal fit. (e.g. internal promotion; little or no training; here there is no internal fit) Pfeffer often claims that his seven steps have internal fit and deliver employee competence and motivation.
1-21

Modify the HR definition

HR strategy is a set of interdependent HR
policies chosen to display internal fit and generate appropriate amounts of competence and motivation amongst the workforce.

1-22

2. Is there one best HR strategy?

Pfeffers seven steps are clearly the best way to
secure competent and motivated employees. The optimal choice of HR strategy is contingent on the circumstances. E.g. universities do not use Pfeffers arrangements for their academic staff.
Normally offer, high job security, selection is highly
dependent on interviews which is notorious; self managed teams are not common, and academic freedom (decentralization) is extreme, training is less; profit is non existent, status distinctions are large and small, and info sharing varies.

1-23

According to PFEFFER
Universities are making systematic and huge
mistakes with their HR. Competence and motivation may be achieved through a variety of different policy routes Academics develop their competence through paying for their own training, attending seminars, conferences Motivation is based on:- nature of the work, transfer their skills from one employer to another.
1-24

3. High performance work practices or high commitment practices.

Ordinary employees skills and knowledge are
normally under utilized, stayed hidden. However, Some firms describe their employees as assets In order to utilize the hidden competencies, managers need to develop HR policies to take advantage of employees full competencies. Pfeffers 1, 3, 4 and 6 are such policies. Another way is Build a complex and trusting relationship with employees. It is similar to Waltons COMMITMENT and CONTROL

1-25

Distinction between HR Policies and Practices

Not all the firms have identical HR
policies Pfeffers seven elements cover a range of possible detailed HR practices A Practice is a narrow specification of a Policy. Neither Pfeffer nor anyone else can claim to have truly settled the content of Optimal HR Strategy.
1-26

4. Possible contingent factors

Optimal HR policy depends on internal as well as EXTERNAL FIT, or the integration between HR and the organizations policy choices in other areas. 2 Areas of External fit.., a. Links with product market strategy b. Links with production arrangements
1-27

a. Links with product market strategy

Michael Porters three possible Generic Strategies:
Cost Leadership: aggressive construction of efficient
scale facilities, vigorous cost reductions and cost minimization in the areas of R&D, Service, Sales force, ads Differentiation:- creating a unique design or brand image or technology or customer service Focus:- concentrating on a particular buyer group, segment of the product line or geographic market. Other Approaches: (Miles and Snow) Defender: narrow and relatively stable product markets Prospector: continually search for new product and market Analyzer: hybrids, they watch the pioneers and feed off them.

1-28

Michael Porters Generic Strategies

Cost Leadership Strategies

Differentiation Strategies

Focus Strategies

1-29

The Generic Strategies

Cost Leadership Offer
substitutable products at the lowest price

Differentiation
Distinguish products and services in order to charge a premium price

Focus Follow one of the

other strategies in a narrow market
1-30

Generic Strategies
Cost Leadership Strategies Pursued in conjunction with differentiation
Economies of scale Capacity utilization achieved Linkages with suppliers and distributors Several example firms that are well known for their low-cost leadership strategies are Wal-Mart, McDonald's, Black and Decker, Lincoln Electric
1-31

Generic Strategies
Differentiation Strategies Greater product flexibility
Greater compatibility Lower costs Improved service Greater convenience More features Firms pursuing a differentiation strategy include Dr. Pepper, Jenn-Air, The Limited, BMW, GradyWhite, Ralph Lauren, Maytag, and Cross.
1-32

Generic Strategies
Focus Strategies Industry segment of sufficient size
Good growth potential Not crucial to success of major competitors Firms pursuing a focus strategy include Midas, Red Lobster, Long John Silver, Sprint, MCI, Coors, and Schwinn

1-33

Case Study Box 3

ABC Telecom Corp is a multinational company that produces telecommunications equipment. The market for telecommunications equipment is very different around the world. Its home market in North America is saturated. The company has around 48% of the market share in key product areas. There is little room for growth, but there is an extremely important need to maintain this market share. A small drop in percentage of the market will mean a substantial loss in cash terms. In Europe the situation is somewhat different. After an unsuccessful venture into the European market in the early 1980's, the company realised it needed to understand that Europe was not one, but a number of markets, with telecommunications systems that varied in quality, technology and sophistication. This required a somewhat different strategy than that pursued in North America. In Asia the situation was different again. Many new markets were opening up and there was a great deal of potential for doing business, and often, any business. The strategy here was to 'get any business available' relating to any and all the products ABC Corp sold. a) In which market would ABC be defending, which analysing, and which prospecting? b) What are the implications of each of these strategies for organisational structure, and which function of the business would be the dominant one?

1-34

Tutorial Question
Even though HRM may not necessarily
be anything new, it nevertheless has a positive impact on performance Discuss.

1-35

Answer
First debate whether HRM is
something NEW or Not? Second whether it has a positive impact on performance or Not?

1-36

HRM may not necessarily be anything NEW - Debate

Bring the argument of Guest and Storey:
HRM is something new Distinctive when compared to its predecessor PM Criticize: - use the arguments from Legge
The differences between HRM and PM only emerge when
ideal type models of HRM are compared with descriptive models of PM When ideal type models of HRM and PM are compared, the differences are fewer than the similarities. So it is unreasonable to suggest that HRM is something NEW

1-37

HRM has a positive impact on Performance

Show your awareness of two main competing
perspectives:
HRM has universal performance effects (they have
a positive effect in all organizations irrespective of context) The impact of HRM is context dependent (remember the situational contingency models Schuler and Jackson e.g. which state that the applicability of a high commitment approach may well be dependent on the business strategy adopted i.e. the impact between HRM and performance may be greater where quality / innovation is the main focus of business strategy rather than price / cost leadership)
1-38

Cont
Once showed the awareness of these issues,
explore the empirical evidence Refer authors like Huselid, Arthur, Ichniowski et al., Guest After referring them, arrive to the conclusion which approach was best supported: Universalism or Situational Contingencies? What about the relationship between HRM and performance The relationship emerges in specific context or broader?

1-39