HRMG100 – WEEK 10[WEEK 10 IN TEXTBOOK]

STRATEGIC HUMAN

RESOURCE MANAGEMENT

HUMAN RESOURCE MANAGEMENT

• the person, department or section of an organisation which deals with people

• it involves the process of co-ordinating all aspects of what needs to happen to and for people in an organisation – recruitment, training, monitoring and appraisal

• it also involves policy development, systems, processes and procedures , planning and development

ONE TYPE DOES NOT FIT ALL

Human Resource Management departments or sections vary from one organisation to another, depending upon :

• size of an organisation• the type of organisation• the age of an organisation• staff stability or high staff turnover

HRM SUPPORTS THE WHOLE ORGANISATION

The aim of a Human Resource Management section is to support the strategic direction of an organisation

In other words the HRM Department should plan for and recruit staff to:

• Enable the organisation to function well now• Enable the organisation to function well in

the future

SOME HRM OBJECTIVESLike other departments – Accounting, Research & Development etc – HRM must assist the organization in achieving its objectives:

• Organizational effectiveness – employee selection, job satisfaction, productivity, low wastage, motivation, change, recognition, performance evaluation, rewards etc.

• Profit – cost containment in the staffing area (downsizing etc)

• Customer Service• Ethical behaviour – social responsibility

The Basic Elements of Human Resource Management

• Job analysis, evaluation & classification• Job design • Recruitment• Selection• Induction, training and development• Skills audit• Performance Management

THE HRM PROCESS

SOME STEPS IN THE SELECTION PROCESS

APPLICATIONS:• Cover Letter and Resume or CV• These should address “selection criteria”SHORT-LISTING:

Choosing some of the applications who best meet the “selection criteria” for interview

INTERVIEW:• an individual interviewer or a Panel• an individual interview or a Group Interview

THE POTENTIAL OF HRM By hiring certain people, or groups of people,

organisations can attempt to:

• maintain the status quo • strengthen the current organisational culture• prepare an organisation for change• enable an organisation to change – including

changing its organisational culture.

Strategy-Structure-Culture

Strategy-Structure-Culture

• HRM exists as part of a larger system• To be effective HRM must be familiar and

congruent to the other parts in the system• The strategy-structure-culture interaction

suggests that changes in one may require changes in another as the three are interconnected

STRATEGIC HUMAN RESOURCE MANAGEMENT

To be strategic is to:- plan- design- scheme- manoeuvre- plot- develop a game-plan

To be strategic is to - be tactical- achieve an advantage- have a long term plan for success - outwit your enemies (your competitors)

Strategic Human Resource Management (SHRM) aims to ensure that you are at least one step ahead of your competitors

The organisation aims to have a competitive advantage

SHRM by considering the future goals of an

organisation Strategic Human Resource Management should ensure that an organisation has the staff it needs in the future to be able to achieve those goals:

• staff re-training and/or development• recruitment• decruitment

Strategic HRM• Definition of SHRM: The process of HRM

which is driven by planning, foresight and analytical decision making

• SHRM involves:– Setting standards and policies and developing a

culture that aligns with the organisation’s environment and objectives

– Identifying and implementing activities and policies to enact the chosen strategy and to manage the employment relationship

SHRM & ORGANISATIONAL PERFORMANCE• SHRM is important to an organisation’s

survival and sustainability• SHRM should lead to improved

organisational performance - short term- medium term

- long term

Competitive Advantage – The Resource Based View

An organisation can have a competitive advantage (an advantage over competitors) by having :

• human skills• knowledge• learning mechanisms• systems and processes• behaviours

that are superior to its competitors

The Resource Based ViewPfeffer & Vaiga 1999

Effective staff management and effective HRM practices should deliver:

• increased productivity and less waste• greater collaborative problem solving• better skills in use of equipment• improved customer satisfaction• fewer accidents• less staff turnover and absenteeism• increased staff loyalty

The Resource Based View(The negatives)

It assumes that the organisation is always in control and seems to overlook that there are many external environmental factors beyond the firm’s control which can affect its performance:

• minimum wage rates (for the sector)• EEO requirements• trade union activity• Economic conditions

The Resource Based view tends to reduce people to assets.

SHRM is intangible

Intangible = it can’t be measured in financial terms:

An organisation can obtain non-financial advantage from:- skills developed- location- knowledge and intellectual property- relationships and networks- efficient and effective systems and processes

THE BALANCED SCORECARDKaplan and Norton (1996) developed the Balanced Scorecard as a simple way of measuring organisational performance:

• it is one way of assessing intangible and intellectual assets

• it translates an organisation’s vision, mission, value and strategy into a comprehensive set of performance measures

• this serves as the framework for a strategic management system

THE BALANCED SCORECARD

The four areas addressed in the Balanced Scorecard are:

1.The customers’ perspective2.The innovation & learning perspective3.The internal perspective – what do the

workers excel at?4.The shareholders’ perspective – financial

returns on funds investd!

MODELS OF SHRM (1)

JACKSON AND SCHULER (1995):– A variety of macro-level environmental

characteristics influence the adoption of HRM practices, policies and philosophiesEG. laws & regulations, culture, politics, markets, industry dynamics

– Information interpretation depends on the organisation’s technology, structure, size, life cycle stage and strategy

MODELS OF SHRM (2)

KOCHAN AND BAROCCI (1985):– Causal links between environmental changes,

HRM policies and practices and the needs/goals of stakeholders

– The need to recognise HRM policies and practices that respond to environmental changes both inside and outside the organisation

– Accurate and comprehensive understanding of the organisation’s history is necessary

MODELS OF SHRM (3)

KLATT, MURDICK AND SCHUSTER (1978):– A systems approach aimed at planning and

development– HR implications should be considered when

developing organisational objectives:• Type of employees required• How employee behaviours impact on

organisational objectives• What systems are required regarding

behaviour and accountability

The SHRM Application Tool

• The SHRM Application Tool provides a framework for analysing the organisation, its environment and issues as a whole

• It presents six steps in a decision-making process of SHRM

• To be effective, this tool needs to be continuous, with ongoing monitoring, constant responses and regular evaluation

The SHRM Application Tool

Step 1Analyse environmental factors

• Environmental factors should be analysed at three levels:1. Monitor/analyse data and the organisation’s history,

present factors and trends2. Internal organisational environment

• Strategy, size, structure and culture

3. External environment• Technology, governments, customers and globalisation,

economics, labour market, political/legal, social and demographics

• This provides a picture of the organisation’s present situation

Step 2Detect potential problem or opportunity

• Need to identify strengths, weaknesses, opportunities and threats

• Gap analysis• At what level do these issues occur?– Individual, group or organisational

• Assess potential impact and prioritise– Porter’s five forces (see slide 35)– SWOT analysis

Step 3 Verify /falsify potential problem or opportunity

• Issues should be put into environmental contexts– What is the cause?– Positive or negative outcomes expected?

• This step sets the stage for considering specific approaches to solving the issue

• If the issue is verified, planning is required for evaluating alternatives and developing a plan of action

Step 4

Devise plan and success criteria

• Identify alternatives– Identify all conceivable courses of action which

will address the issue(s) in Step 3– Brainstorming and mind mapping

• Evaluate alternatives– Be realistic: does the alternative address the

issue?– Suitability, feasibility, acceptability

Step 4Devise plan and success criteria (cont.)

Establish success criteria– Identify the functional activities required to

implement the alternative, including resources– Identify the preferred action plan, including

criteria for evaluation– Be mindful of managerial decisions

(i.e. mode of communication, leadership, resistance)– Overall, how will this action lead to the organisation

developing a competitive advantage?

Step 5Implement the plan

• The decision is translated into action• Be aware of employee resistance to change– Customise to personnel and sections– Low risk: Minimal employee resistance is expected

but should still be monitored– High risk: Greater uncertainty and resistance is

expected (more time may be needed on this step) along with worker education and participation

Step 6Evaluate against success criteria

• Evaluate the effectiveness of the action against the criteria developed in Step 4

• Analyse positive and negative effects– We can learn from failures as well as successes

• This is not the end!– SHRM is a continuous process as the organisation

and its environment change continuouslyEvery organisation is unique; there is no one best way to conduct SHRM

PORTER’S FIVE FORCES

To check out your competitors/rivals Porter says investigate the following five forces:

1.Intensity of rivalry2.Barriers to entry3.Buyer power4.Supplier power5.Threat of substitutes

THE AIMS OF SHRM Strategic Human Resource Management aims to

align the functions and processes of HRM with the strategic aims and objectives and competitive advantage of an organisation.

The availability and skills, knowledge, experience and superiority of staff is as important as finance, technology, location and innovation.

SHRM AIMS TO LINK IT ALL TOGETHER.