BITS Pilani

Pilani Campus

MMZC 441/MMVA ZC441

Human Resource
Management
Session 2

Date 10/08/2015

By : Jayashree Mahesh

BITS
Pilani
Pilani Campus

Chapter 2: Context of Human Resource Management

Chapter 3 : Integrating HR Strategy with Business Strategy
Text Book : Aswathappa K., Human Resource Management- Text and Cases, Tata McGraw Hill, 7th
Edition, 2013.

Ch 2 Context of HRM - Learning Outcome

External and internal environment impacting HR functions
Describe each Factor and its Impact on HRM

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Environment
Environment
may
be understood as
all
those
forces
which have their
bearing
on
the
functioning of HR
department

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Political - Legal

Legislature Executive Judiciary

Article 14: equality before law
Article 15: no discrimination
Article 23: no forced labour
Prohibition of child labour, equal wage act, factory act,
maternity leave , workmen compensation, provident fund,
gratuity act etc
Influences recruitment, placement, training, Employeerelations
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Economic Environment
Economic forces Economic growth, industrial production,
agriculture, population, national and per capita income,
money and capital markets, suppliers, competitor,
customers, and industrial laws etc..
All these influences quality of labor which in turn impacts
productivity.

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Specific Environment
Suppliers For HR dept, suppliers are those who provide
human Resources to an organization. Ex: Consulting firms,
training institutes.
Competitors Competition plays significant role in HR
function and Activities. Organization need to groom its
employees
through
well
managed
HR
planning
programmes to withstand competition
Customers Customers have their own influence on
companies personal Functions. So everybody in the
organization must endeavour to offer products which
gives satisfaction for the money customers pay.
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Globalization & Implications of Global

Economy
Tendency of firms to extend their sales , ownership and
manufacturing to newer markets abroad
Worldwide company culture
Worldwide recruiting
Global alliance needs highly trained and devoted staff
Deal with virtual workforce
Outsourcing

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Technology
Technology plays a vital role in HR functions, in order to
make people more intellectual and efficient.
Managing well knowledgeable people - incentives, wlb,
flexi time, profit sharing
HRIS: managing a virtual workforce
Managing employee alienation
Training & retraining employees to manage obsolescence
Providing work life balance

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HR and Technology
Consideration of
adopting a new
technology

Strategic Issues
Impact on productivity
Impact of quality of output
Impact on training/delivery of
output
Cost of equipment/technology
Adequacy of current facilities
New market opportunities
afforded

Strategic HR issues
Impact on productivity
Necessary expansion/
contraction of workforce
Training needed to utilise
new
technology
Costs for hiring, severance,
training
Effective management of
change
Impact on work group
dynamics
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Socio- Cultural Influence

Culture refers to the complex whole which includes
knowledge, belief, morals, laws, customs and other
capabilities and habits acquired by an Individual as a
member of society.
Ex: Tatas culture Hire the right people and let them
free
L & Ts culture They are known for their professional
approach
Culture indicates attitude of workers towards work
Time dimensions which influence HRM (past, present,
future)
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Internal Forces
Unions
A firms personal activities will be influenced by its own
unions as well as the unions of other plants.
A trade union may be understood as association of
workers or management formed to protect their own
individual interest.
All HR activities like recruitment, selection, training,
compensation are carried out in consultation with union
leaders.
Eg : The Bokaro steel plant has 68 trade unions. Calcutta
Corporation has about 100 trade unions.
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Internal Forces
Strategy, Task and Leadership
Strategy and HR, Task and Motivation, Leadership and
followers.
Organizational Culture and Conflict
Conflict arises as: Goals, Ethics, Authority vs Autonomy,
Leadership vs followership, Change vs stability etc.

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Scanning the Environment

Involves surveillance of the environment to determine
trends and projections that would affect the fortunes of
the organization.
Focuses on the specific environment
Provides relevant information for planning and decision
making
The relevant areas for HRM to be scanned are labor
market, legal environment, constitutional provisions and
technology
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Summary of Chapter
The HRM environment comprises of both external and
internal forces.
The external environment consists of political-legal,
economic, technological and cultural factors (PEST).
The internal environment consists of unions, suppliers,
customers , competitors and professional bodies.
The study of environment enables HR experts to become
proactive in their approach to personnel aspects.

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Ch 3 Integrating HR Strategy With Business

Strategy- Learning Outcome
Understanding the Nature of Strategic HRM
Describe the Strategic Management Process
Integrate HR Functions with Strategic Management Process

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Strategic Management
Strategy: the companies long term plan for how it will
balance its internal strengths and weakness with its
external opportunities and threats to maintain a
competitive advantage.
Strategic management: refers to the process of crafting
strategies , their implementation and evaluation of their
effectiveness.
Strategies bridge where the company is now , with where
it wants to be tomorrow
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Traditional HRM vs. Strategic HRM

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Strategic HR Model
Firm
strategy

Resourcebased view
of the firm

HR Capital
Pool (skills,
abilities)

HRM Practices

Institution
al/ Political
forces
Resource
dependen
ce
institution
al

Cybernetic
Agency/
Transaction
Costs
HR
Behaviours

Behaviou
ral
Approac
Firm-levelh Outcomes
(performance,
satisfaction,
absenteeism, etc.)

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Strategic Management Process

I.
II.
III.
IV.
V.

Environmental Scanning
Identifying sources of competitive advantage
HR Strategy formulation
HR Strategy Implementation
Strategy Evaluation and Monitoring

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I: Environmental Scanning
Consists of External and Internal environment
External environment : PEST analysis
Internal environment: SWOT analysis, organizational
culture, organizational structure, employee morale,
industrial relations, unionization etc..

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Worksheet for Environmental Scanning

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What is a SWOT
Analysis?
A scan of the internal and external environment is an
important part of the strategic planning
process.
Environmental factors internal to the firm usually can
be classified as strengths (S) or weaknesses (W), and
those

external

to

the

firm

can

be

classified

as

opportunities (O) or threats (T).

Such an analysis of the strategic environment is referred to
23
as a SWOT analysis.

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SWOT
Analysis

The SWOT analysis provides information that is helpful in matching

the firm's resources and capabilities to the competitive environment in

which it operates
As such, it is instrumental in strategy formulation and selection.
The

following diagram shows how a SWOT analysis fits

into

an environmental scan:

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The SWOT Framework

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Strengt
hs
A firm's strengths are its resources and capabilities that can be used for
developing a competitive advantage. Examples of such strengths include:
Patents
Strong brand names
Good reputation among customers
Cost advantages from proprietary know-how
Exclusive access to natural resources
Good access to distribution networks
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Weakness
es

The absence of certain strengths are a weakness. For example, the

following may be considered weaknesses:
Lack of patent protection
A weak brand name
Poor reputation among customers
High cost structure
Lack of access to best natural resources
Lack of access to key distribution channels
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Weaknesses - Continued
In some cases, a weakness may be the flip side of a strength.
For example, a firm has a large amount of manufacturing capacity.
While this capacity may be considered a strength that competitors do not
share, it also may be a considered a weakness if the large investment in
manufacturing capacity prevents the firm from reacting quickly to changes
in the strategic environment.

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Opportuniti
es
The external environmental analysis may reveal certain
new opportunities for profit and growth.
Some examples of such opportunities include:
An unfulfilled customer need
Arrival of new technologies
Loosening of regulations
Removal of international trade barriers
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Threa
ts

Changes in the external environmental also may present

threats to the firm.
Some examples of such threats include:
shifts in consumer tastes away from the firm's products
emergence of substitute products
new regulations
increased trade barriers
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Example: Surf excel SWOT

Analysis
Launched in 1954. Oldest detergent used in more then 20 countries

Very strong brand communication

Available in wide variety and product size. (surf excel blue, matic, quick wash, comfort
in 5 kg, 2kg, 250grm)
Solid base company of Unilever (HUL) , employee 2lks, operated in 100 countries,
$868 m in R&D;
Strong competitors, (tide, nirma, ariel, oxyclean, sundry)
Substitute products (liquid detergent, bars)
Lack of control in supply chain management
No famous brand ambassador
High price of product
Changing life style
Applying tactics and surprise
Explore new geographical market
Political effects, economical effect, legislative effect; environmental effect
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Pilani,
Deemed
to be University under Section 3 of UGC Act, 1956
Chances of price war

Analysis
:
Strength:

Strong brand
portfolio
Brand name
Solid base of
company
Innovative aspects
Success of slogan:
stain is good

Weakness:

Opportunities:

Threats:

Changing life style of the

people
New market vertical, horizontal

Increasing the volume of

the production
Seasonal weather and
fashion
influences
Technology innovation
and development

Political effect
Legislative effect
Environmental effect
Introduction of local
product
Change in life style
Chances of price
war
Economic crisis

High price of the products

No famous brand ambassador
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SWOT
:Naukri.com

For the first six months we did not have internet connection. We would go to Anil Lalls house with two floppies and he would upload the site..... remembers
Sanjeev Bikchandani the founder of www.naukri.com. But then was the internet boom. Uploading content on web became a lot easier for us. There was growing
number of internet users. We knew that the idea would click. But there were other constraints. With little finance in hand and limited technical resources, running
the business was difficult. But we were all committed and wanted to make this business successful. So we started posting jobs from different magazines and
newspapers on our
website. The recruiters came to know about us from the applications received by them- stating with reference to your advertisement in naukri.com. The
recruiters started discussing, Hey, what is this naukri.com Within 6 months of the launch, a direct mail letter was sent to HR managers and recruiters. For Rs.
350/- you could list a job on the site. For Rs. 6,000/- you could get annual subscription which gave you unlimited listings through the year. And thus naukri.com
began to get business. Low business, maybe Rs. 2-2.5 lakhs, but in a year two, more direct mails were sent out. Revenues increased between 8-9 times in one
year. The job market was growing and the MNCs were entering Indian market.
The year was 1999. Investment bankers were throwing off their ties and setting up .com businesses. Sanjeev Bikhchandani too started getting feelers, we would
like to invest in your company, they said. His initial reaction was: I dont need your money. We are breaking even now. Next year, we will continue to grow, bring
in Rs. 50-60 lakhs and make profits. And I will be Happy.
The truth was happy as a small company, operating from home. After years of struggle, the company could finally see the word profit in its horizon. I didnt want
to sign complex agreements, have somebody breathing down my neck and be under pressure for growth. I was comfortable, leading an uncomplicated life. Around
that time, he came across international magazines talking about dotcoms, like Yahoo! And its listing on stock market. I figured out that something was happening in
here. But I said I dont want money anyway: neither from Stock markets IPO nor from investment bankers, no matter what the valuation.
But then, funded competition launched. The advertising budget of jobsahead.com (just the launch) was twice as large as naukris annual turnover. They had
deep pockets. When that happened Sanjeev realized that the game has changed. And something has to be done to keep the market share intact.

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Soluti
on

Strengths: Committed promoters, economical pricing,

Weakness: Little finances and technological resources, complacency
and contentment with limited growth
Opportunity:Internet boom, rising number of internet users, recruiters
awareness about Naukri through applicants, growing job market,
MNCs entering Indian market, investment bankers willing to invest
into .com business
Threat:
Competition from funded companies, heavy advertising
expenditure by funded companies

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II. Identify Sources of Competitive Advantage

Sources are quality, price, brand positioning, timely delivery and
customer service.

Competitive Advantage Core capabilities Intellectual Capital

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III. Identify HRM

Strategies
Indirect
Interventio
ns

Direct
Interventio
ns

Devolved Informal
learning Developing
awareness of learning
opportunities

Empowered
informal
learning
Creating a learning
environment (i,.e. a
context conducive to
social capital)

Learning as
socialization
Delivering formal
training, learning
and development
interventions

Engineering
Creating and
controlling
communities-ofpractice and social
networks

Human
Capital

Social
Capital

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IV. Implementing HR
Strategies,&
V. Monitoring and
Implementation through HR plans, policies and
Evaluation
practices.

Monitoring as
establishing
targets,measuring
performance,
analyzing the
deviation
and
executing the modifications.

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Benefits of Strategic
Management

Allows identification, prioritisation and exploitation of opportunities.

Provides an objective view of management problems.
Represents a framework for improved co-ordination and control of activities.
Minimises the effects of adverse conditions and changes.
Allows major decisions to better support established objectives.
Allows more effective allocation of time and resources to identified
opportunities.
Allows fewer resources and lesser time to be devoted to correcting erroneous
or adhoc decisions.
Creates a framework for internal communication among personnel.
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Benefits of Strategic Management

Helps to integrate the behaviours of individuals into a
total effort.
Provides a basis for the clarification of individual
responsibilities.
Gives encouragement to forward thinking.
Provides a co-operative, integrated and enthusiastic
approach to tackling problems and opportunities.
Encourages a favourable attitude towards change.
Gives a degree of discipline and formality to the
management of a business.
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HR Role in Strategic
Management
In strategy formulation
HR manager supplies competitive intelligence that is useful
In strategy implementation
Encouraging proactive behaviour
Explicit communication goals
Stimulate critical thinking Productivity
Quality and Service
Proficient strategic management

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Summary
Strategy management
SWOT
Role of HRM in aligning with Business strategy

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