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Strategic Human Resource Management
Amity University
MBA IB
This module will place previous studies of Human Resource Management within a strategic, international dimension so as to illustrate the concept of competitive advantage applied to human resources.
Semester Two
Ms. Snigdha Malhotra
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STRATEGIC HUMAN RESOURCE MANAGEMENT
Course Objective:
This module will place previous studies of Human Resource Management within a
strategic, international dimension so as to illustrate the concept of competitive advantage
applied to human resources.
Learning Outcomes:
On completion of this module students will be above to:
Demonstrate an understanding of the historical development of approaches to labour mangement, (including HRM) in certain western societies and critically
appraise the relevance and appropriateness of each of these to contemporary
organisations and employment.
Identify the strategic aspects of HRM and linkages between these and business terms of effectiveness and best practice' approaches.
Understand and evaluate the role of organisational change in affecting HR policies and employee perceptions of organisations.
Course Contents:
Module I: Introduction & Development of Ideas on Human resources
Introduction to Strategic Human Resource Management
Difference between traditional HR and SHRM
Pluralism, unitarism and frames of References:
the 'excellence' literature and new managerialism
Summary & Review Questions, Case Studies.
Module II: Business and HR Strategy
Relationships between the business and HR strategy,
competing approahces and models Changing Profiles of employees and customers
Globalisation of Business and Human Resources
Challenges of leading an organisation
Summary & Review Questions, Case Studies
Module III: Employment realtionship and organisational change
Restructuring 'leanness' and 'downsizing' and the implications for the mangement of HR
Implications of contextual change for HRM in relation to resourcing, development
Management of human resources, and business.
Concepts and Growth of HRM and HRD
Summary & Review Questions, Case Studies.
Module IV: Personality and Leadership
Concepts of Leadership, Determinants, Models of Personality
Concept of self esteem, Socialisation, Components of attitudes
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Leadership styles and organisational values
Challenges in Global business environs and Situational Leadership
Summary & Review Questions, Case Studies.
Module V: Leading Effective Teams & working in Groups
Team as a competitive strategy & obstacles for effective team performance
Groups Importance & Dynamics
Global Organisation, Reaching out the Global Customer & Role of individuals
Functional & Dysfunctional competition and cooperation in Organisation
Summary & Review Questions, Case Studies.
Module VI: Learning organisations & Organisational learning
Organisational learning Process, Policy, Diffusion & Institutionalisation
Change & Effective implementation
Employee autonomy and ethical Managers
Goals, Policies, Creating and sharing vision
Summary & Review Questions, Case Studies.
Text & References:
Text:
Mello Jeffrey, 2003, Strategic Human Resource Management, Thomson Learning
References:
Robbins, Stephen. P. Management, PHI, New Delhi, 2000
Udai Pareek, 2000, Understanding Organisational Behaviour, Oxford University Press.
Monappa, Arun, Managing human resources - Delhi: Macmillan, 1997
Mejia, Luis R G,Managing human resource,4th,Pearson Education,New Delhi,2006
Beck, Robert C,Motivation theories and principles,Pearson Education,New Delhi,2000
Cascio, Wayne F, Managing Human Resource, 6th,Tata McGraw Hill,New Delhi,2003
Ivancevich, John M,Human resource management,Tata McGraw Hill,New Delhi,2004
Sanghi, Seema,Towards personal excellence,Response Books, New Delhi,2002
Epstein Robert,The big book of motivation games, Tata McGraw Hill, New Delhi,2001
Aswthappa, K., HR and Personnel Management, Tata McGraw Hill, New Delhi, 2005
Biddle, Derek, Human Aspects of management, 2nd, Jaico Publishing House,Mumbai,2002
www.indianmba.com
www.umuc.edu
http://www.indianmba.com/http://www.umuc.edu/
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www.allbusiness.com
www.icmrindia.org/casestudies/Case_Studies
www.irex.org/programs/uasp/CaseStudies
www.questia.com
www.books.google.co.in/en.wikipedia.org/wiki/Human_Resource_Management
CONTENTS
http://www.allbusiness.com/http://www.icmrindia.org/casestudies/Case_Studieshttp://www.irex.org/programs/uasp/CaseStudieshttp://www.questia.com/http://www.books.google.co.in/en.wikipedia.org/wiki/Human_Resource_Management
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1. Introduction & Development of Ideas on Human resources.5
2. Business and HR Strategy...19
3. Employment Relationship and Organizational Change..28
4. Personality and Leadership....36
5. Leading Effective Teams and working in Groups....66
6. Learning Organizations and Organizational Learning...77
7. Other Study Material and Case Studies ...92
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MODULE I:
INTRODUCTION & DEVELOPMENT OF IDEAS ON
HUMAN RESOURCES
Strategic Human Resource Management deals with how people are treated in
organization. Its main object is to bringing people into the organization, help them to
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perform their work, compensate them for their labors, & solve their problems which arise
in organization. Commitment and Motivation are important aspect Strategic Human
Resource Management. This helps us to connect Strategy Human Resource Management
with organizational behavior & management strategy.
The process of Strategy Human Resource Management is complex which is being studied
and discussed by commentators. Human Resource Management which helps in
acquiring, stimulating & helps in retaining the outstanding employees as it provide both
effectiveness & efficiency for the working of the organization, in present world it is being
used in strategic way hence is termed as Strategic Human Resource Management.
The two authors convey message about Strategic Human Resource Management which
has similar meaning but have different approach to Strategy. Strategic Human Resource
Management is a long-term goal, which helps the organization to regulate environment to
a free market environment, has direct implication for Strategic Human Resource
Management Practices in India and Human Resource Management. The Department is
under pressure to bring changes in their organizations. Their implementations are more
able to achieve their goals & objectives. It integrates traditional Human Resource
Management activities. It helps employees to build pool of skill, knowledge & abilities.
Which are needed in organization for their betterment & to achieve their future goals.
Strategic Human Resource Management helps organization to form with the vision,
mission & goals for the organization. Strategic Human Resources Management is a
concept which deals with all Human Resource activities within a firms overall strategic
planning implementation. The set of policies & practices which will help the employees
to build better skills, knowledge & abilities, which are needed for achieving
organizational goals and for betterment of organization.
There has been an increasing awareness that Human Resource function were like an
island with the people who are softer centered value which was far away from the really
hard world of real business. To justify its own existence Human Resource is getting more
and more connected with Strategy & current running of the business side. In the early
1980s the Debate about the meaning of Strategic Human Resource Management dates
backs to an extensive literature on the major difference between the terms Human
Resource Management & Personnel Management. This issue of the relationship between
Strategy & Human Resource Management is at centre of the debate concerning the
difference between Human Resource Management and Strategic Human Resource
Management concept of Strategic Human Resource Management has act as a barrier
between business strategy the management of human resource. Basically Human
Resource Strategy is a set of process & activity which is jointly shaped by Human
Resource & line manager, which help them to solve people-related business issue.
The organization must develop strategic objective that direct the work of the members of
the organization towards achievement of the mission. To energize and focus the work of
the member of the organization, strategic objectives must be developed from the mission
statement to specify the task that must be done and the goals that must be met to achieve
the mission. Strategic Human Resource Management objectives must be developed for
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the human resources planning, recruitment, selection, training & development, job
design, compensation & benefits, quality of the work life and worker health & safety.
Strategic Human Resource Management helps organization plays a vital role in forming
the objectives for the organization along with the goals, mission & vision. The vision
mission & goals of a company is a short introduction of its operational plans for the
future. A mission statement shows people the need of the company to subsist, the vision
statement of the organization give a brief idea of the organization, their inspiration and
the frame work for its future strategy, and goals are the path where they progress to
achieve it. For all the parts of the organization it is just a mental image which is to be
perceived as real & not in present, but to be achieved in future.
Goal is a statement which and individual or an organization want to achieve. (Dhar,
2008). The goals of the organization are the statement that is the main aim of the
organization which has to be achieved in future.
Now the goals, and objectives of the organization has been set, its time to analyze the
organization internally as well as externally, knowing the strength, weaknesses,
opportunities, and threats is known as SWOT analysis. It plays a vital role to form the
goals, mission, vision & objectives. It Stands for Strength, Weakness, Opportunities &
Threats. With the help of the analysis we come to know about the current situation,
competitors, and position etc. of the organization in the market. Which help us to become
better than others. SWOT gives an idea about the market value, the current scenario so
with the help of that we have better chance that where it is leading.
The changes which take place in the organization are known as Transformation. The
way organization or the teams as whole accept these changes without affecting the
working ability is known as Transformational Management. Transformational Leader
focuses on tasks and getting them accomplished at all costs, a Transformational Leader
focuses on the worker and the best way to motivate them to achieve the desire result.
Transformational leader are those who change organizations by developing a vision and
communicating & implementing this vision through effective leading of subordinates.
Transformational leader are able to handle both task and relation dimension of leadership.
Transformational has primary focus on individual performance, satisfaction,
effectiveness. The main function of the transformational leadership is to satisfy
employees & to performance. The outcome such as leadership effectiveness,
innovativeness, quality improvement & both subjective & objective rating performance
has also been linked with Transformational Leadership. The incentives given to the
employees make employees committed towards organization & this bringing in new
trends. To perform any task the employee should be loyal with particular organization so
he can perform better for the organization in future. That faith & loyalty of the employee
towards organization is known as commitment.
Commitment is a word which denotes the connection between two or more parties. It is
an important aspect of Human Resource that deals with the psychological attachment of
an employee. When an organization gives the best possible funds such as such one can
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live a comfortable life then why would someone quit opt to quit. The ability to furnish
ones family with all the necessary amenities gives every employee a motivation to keep
working. Commitment is an important aspect of Human Resource which deals with the
psychological attachment of an employee. It is said that commitment unlocks the doors
of imagination, allows vision and gives us the right manner over dreams into reality.
Now the employees are faithful or loyal to the organization and has caliber to perform
well, so certain authority need to be given in order to make them perform well, this is
known as Empowerment. Employment Empowerment could be defined as controlled
transfer of authority to make decisions and take actions. Management can implement this
policy by development of commitment and facilitation to the employees. Though
Employees make suggestions, final analysis is still to be made by the managers.
Employee Empowerment is very crucial to maintain the employees because it develops
broader horizons, maximizes on-the-job learning, inspires confidence and high self-
esteem and finally increases well-being. Donald Peterson, the CEO of ford, transformed
the company from one that was loosing money and market share to one that produce
high-quality produce made big profit and created the ford Taurus, one of the best selling
cars in an American Automobile History.
Business context is helping a person by the business in order to take work from him.
Business context mainly provides an international focus on the theory and practices
related to people management in Human Resource Management.
The main duty of the manager in the organization is to handle the situation, and make
sure that work given to the employee is done on time and to check them. To get better
work from the employee manager should motivate their employee. By which work will
be done in a better manner. To understand motivation one must understand human nature
itself. To improve productively, quality & services positive motivation philosophy and
practices plays very important role in the organization. Motivation plays a vital role in
achieving goals, to gain positive perspective, creates the power to change, and gives
confidence, it helps in building self esteem and capability. It also helps them in
managing their own development and also helps others with theirs. Motivation also helps
us in rapid changing workplace. Employees who are motivated help organization to
survive for longer time & are more productive. Following are the way in which the
employee is motivated is Economic Reward, Promotion & Transfer, Opportunity to grow,
Challenging & Stimulating work etc. thus level of motivation differ from individual to
individual at different point of time. Another way of motivating people could be by
providing flexible working time.
The term flexible working refers to working practices, which is mutually agreed by two
parties employee & employer, which cover hours of working, place & pattern of work. If
your workplace arrangement is flexible you and your employee will improve the way
your workplace operates. Flexibility helps in tapping our own potentialities & carving a
niche in our professional career .By creating a good workplace it helps business and has a
number of advantages like by improving your ability which helps to attract skilled and
motivate employees, it helps in creating staff loyalty & will give higher return on training
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investment, reduces stress level among employees & improve moral & commitment. It
also helps employee to work creatively and which will result in better and improved
productivity. To attract talents, to retained valued employees, to raise morale and job
satisfaction, to reduce stress and burnout. Etc. Organization has started thinking about
their flexible working timing for their employees.
After solving the internal affairs related to the organization the company can concentrate
on there external affairs existing in the market, such as high quality service & customer
satisfaction. High quality of service can be expected only when the employees are
committed to the organization so that it can prosper. Providing customer with High
Quality Service the chances of Customer Satisfaction is more. Fulfilling customers
requirement most appropriate & efficient way it greatly enhances the perceived value of
the product. By Giving High Quality service it further adds value to a product, providing
incremental income & customer loyalty. Mc Donalds has an excellent A rated service.
Which provide the customer with lots of privilege & services. Every time a customer
walks in they promise to give the product within 1 minute, which gives the customer a
warm welcome feeling. The practice applied by Mc Donalds is to work as a team and
contribute to the organization Reputation.
Only providing high quality service doesnt mean you are satisfying your customer make
your customer satisfied by providing value for the money is vital. Customer service, like
any aspect of business, is a practiced art that takes and effort to master. Customer service
is one of the most important aspects of the business. Customer satisfaction is nothing but
fulfilling the customers need. If in a hotel a guest orders for a coffee and if the service of
the coffee is not on time or the coffee is cold it create a negative impacts on the guest
mind, about the organization and the way they treat guest. And because of the poor
quality service the organization may loose business & profits.
Strategic Human Resources Management basically deals with longer-term people related
issue. It is also macro-concerned about the structures, quality, culture, values,
commitment and matching resources for the future needs. It deals with all those activities
which are affecting human behaviors of the individuals in their efforts to formulate and
implement the strategic needs of business. For retaining talented workers, they need some
value more than what others get. The most important thing which should be kept in mind
is equality of opportunity. Flexible working would be best for the employees to balance
their commitments. This policy would surely retain the employees. As Woolwich Dairy,
does employee empowerment, it would be helpful to them to retain their employees
because employees getting authority would be working whole heartedly, keeping in mind
the broader visions. This way the customer would be satisfied and as everyone knows
customer satisfaction leads to employees job satisfaction.
Introduction
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Liberalization and indust6rialisation has paved an increasing pressure on organizations in
India to change from indigenous, costly, sub-optimal levels of technology to performance
based, competitive and higher technology provisions. The response to liberalization has
created opportunities for technology upgrading and sophistication, resource mobilization
from new sources, highly competitive input/output market, high growth and buoyant
environment and HRM issues associated with strategic initiatives of diversification,
mergers and acquisitions, restructuring, joint ventures, strategic alliances and for overall
internationalization of the economy. Change from a regulated environment to a free
market environment has direct implications for SHRM practices in India and HRM
specialists and the HRM departments are under severe pressure to bring about large-scale
professionalized changes in their organizations in order to cope with the challenges
brought about by economic liberalization. Strategic Human Resource Management
(SHRM) has received a great deal of attention in recent years, most notably in the fields
of Human Resource Management (HRM), Organizational Behavior, and Industrial
Relations. An area that demands greater understanding is that of Strategic Human
Resource Management (SHRM). SHRM is concerned with top managements attention
and approach to HRM as a critical strategic dimension affecting firm performance; which
is the objective of this article. Strategic human resource management (SHRM) enhances
productivity and the effectiveness of organizations. Their implementation in
organizations has proven that when organizations employ such personnel practices
(mentioned in this paper) they are more able to achieve their goals and objectives. This
article first describes what the word Strategy means and shifts its focus on HRM at a
strategic level highlighting its importance in the present day organizations. The paper
then highlights what best practices (as a result of strategic planning) the organizations can
adopt that would ensure them of success.
What are Strategies?
Strategy is a multi-dimensional concept going well beyond traditional competitive
strategy concepts. Strategies are broad statements that set a direction. Strategies are a
specific, measurable, obtainable set of plans carefully developed with involvement by an
institution's stakeholders. These action statements are linked to an individual or
individuals who are accountable and empowered to achieve the stated result in a specific
desired timeframe. They are patterns of action, decisions, and policies that guide a group
toward a vision or goals.
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FORMULATION OF A STRATEGY
Strategic human resource management (SHRM)
Strategic human resource management is a complex process which is constantly evolving
and being studied and discussed by academics and commentators. Strategic Human
Resource Management (SHRM) is an area that continues to evoke a lot of debate as to
what it actually embraces. Definitions range from 'a human resource system that is
tailored to the demands of the business strategy' to 'the pattern of planned human resource
activities intended to enable an organization to achieve its goals'.
Strategic human resource management (SHRM) is a concept that integrates traditional
human resource management activities within a firm's overall strategic planning and
implementation. SHRM integrates human resource considerations with other physical,
financial, and technological resources in the setting of goals and solving complex
organizational problems. SHRM also emphasizes the implementation of a set of policies
and practices that will build employee pool of skills, knowledge, and abilities that are
relevant to organizational goals. Thus a larger variety and more complete set of solutions
for solving organizational problems are provided and the likelihood that business goals of
the organization will be attained is increased.
Strategic Human Resource Management (SHRM) is an area that continues to evoke a lot
of debate as to what it actually embraces. Definitions range from 'a human resource
system that is tailored to the demands of the business strategy' to 'the pattern of planned
human resource activities intended to enable an organization to achieve its goals'.
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Although the difference between these two seems subtle, the implications of the
difference are considerable. Where in the first definition human resource management is
a 'reactive' management field in which human resource management becomes a tool to
implement strategy, in the latter definition it has a proactive function in which human
resource activities actually create and shape the business strategy.
Strategic HRM can be regarded as a general approach to the strategic management of
human resources in accordance with the intentions of the organisation on the future
direction it wants to take. It is concerned with longer-term people issues and macro-
concerns about structure, quality, culture, values, commitment and matching resources to
future need. It has been defined as:
All those activities affecting the behaviour of individuals in their efforts to formulate and
implement the strategic needs of business.
The pattern of planned human resource deployments and activities intended to enable the
forms to achieve its goals.
Approaches of the SHRM
o attempts to link Human Resource activities with competency based
performance measures
o attempts to link Human Resource activities with business surpluses or
profit
These to approaches indicate two factors in an organisational setting. The first one is the
human factor, their performance and competency and the later is the business surplus. An
approach of people concern is based on the belief that human resources are uniquely
important in sustained business success. An organization gains competitive advantage by
using its people effectively, drawing on their expertise and ingenuity to meet clearly
defined objectives. Integration of the business surplus to the human competency and
performance required adequate strategies. Here the role of strategy comes into picture.
The way in which people are managed, motivated and deployed, and the availability of
skills and knowledge will all shape the business strategy. The strategic orinetation of the
business then requires the effective orinetation of human resource to competency and
performance excellance.
Benefits of SHRM
1. Identifying and analyzing external opportunities and threats that may be crucial to the
company's success.
2. Provides a clear business strategy and vision for the future.
3. To supply competitive intelligence that may be useful in the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are addressed systematically.
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7. To supply information regarding the company's internal strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough comopetency
Barriers of SHRM
Barriers to successful SHRM implementation are complex. The main reason is a lack of
growth strategy or failure to implement one. Other major barriers are summarized as
follows:
1. Inducing the vision and mission of the change effort.
2. High resistance due to lack of cooperation from the bottom line.
3. Interdepartmental conflict.
4. The commitment of the entire senior management team.
5. Plans that integrate internal resource with external requirements.
6. Limited time, money and the resources.
7. The statusquo approach of employees.
8. Fear of incomopetency of senior level managers to take up strategic steps.
9. Diverse work-force with competitive skill sets.
10. Fear towards victimisation in the wake of failtures.
11. Improper strategic assignments and leadership conflict over authority.
12. Ramifications for power relations.
13. Vulnerability to legislative changes.
14. Resistance that comes through the legitimate labour institutions.
15. Presence of an active labour union.
16. Rapid structural changes.
17. Economic and market pressures influenced the adoption of strategic HRM.
18. More diverse, outward looking approach.
HR Practitioners Role
The HR managers have keen role in the effective planning and implementation of the
policies and decisions that in tune with the business changes. They should act as strategic
partners and be proactive in their role than mere reactive, passive spectators. The HT
managers should understand how far their decisions contribute to business surplus
incorporating human competency and performance to the organisation. Strategic HR
managers need a change in their outlook from seeing themselves as relationship managers
to strategic resource managers. Kossek argues that major HRM innovations occur when
senior management takes the lead and adoption of innovative SHRM practices is
dependent on the nature of relationship of the HR Department with the CEO and the line
managers. Legge (1978) commenting on the actions of the personnel practitioner in the
innovation process suggests that adoption of an innovation by an organization depends
largely on HR practitioners' credibility with information and resource providers. HR
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Department and HR managers in these innovative organizations play a strategic role
(Ulrich, 1997) linking the HR strategy with the business strategy of the organization. A
crucial aspect concerning SHRM is the concepts of fit and flexibility. The degree of fit
determines the human resource system's integration with organization strategy. It is the
role of HR Managers to ensure this fit in between Human Resource System with the
Organization Strategy.
STRATEGIC HRM AND HUMAN CAPITAL MANAGEMENT
A number of writers have argued that strategic HRM and human capital management
(HCM) are one and the same thing, and indeed the concept of strategic HRM matches
that of the broader definition of HCM quite well as the following definition of the main
features of strategic HRM by Dyer and Holder shows5:
Organisational level - because strategies involve decisions about key goals,
major policies and the allocation of resources they tend to be formulated at the
top.
Focus - strategies are business-driven and focus on organisational effectiveness;
thus in this perspective people are viewed primarily as resources to be managed
toward the achievement of strategic business goals.
Framework - strategies by their very nature provide unifying frameworks which
are at once broad, contingency-based and integrative. They incorporate a full
complement of HR goals and activities designed specifically to fit extant
environments and to be mutually reinforcing or synergistic.
This argument has been based on the fact that both HRM in its proper sense and HCM
rest on the assumption that people are treated as assets rather than costs and both focus on
the importance of adopting an integrated and strategic approach to managing people
which is the concern of all the stakeholders in an organization not just the people
management function. However, the concept of human capital management complements
and strengthens the concept of strategic HRM rather than replaces it1. It does this by:
drawing attention to the significance of management through measurement, the
aim being to establish a clear line of sight between HR interventions and
organizational success
providing guidance on what to measure, how to measure and how to report on the
outcomes of measurement
underlining the importance of using the measurements to prove that superior
people management is delivering superior results and to indicate the direction in
which HR strategy needs to go
reinforcing attention on the need to base HRM strategies and processes on the
requirement to create value through people and thus further the achievement of
organizational goals
defining the link between between HRM and business strategy
strengthening the HRM belief that people are assets rather than costs
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emphasising role of HR specialists as business partners.
Hence both HCM and HRM can be regarded as vital components in the process of people
management and both form the basis for achieving human capital advantage through a
resource-based strategy.
An alternative way of looking at the relationship between strategic HRM and human
capital is in terms of the conversion of human capital into organisational value. Human
capital evaluation is useful in that it provides information about the current and potential
capabilities of human capital to inform the development of strategy. Business success
will be achieve if the organisation is successful at managing this human capital to achieve
this potential and embed it in products and services which have a market value.
Strategic HRM could therefore be viewed as the defining framework within which these
evaluation, reporting and management process take place and ensure that they are
iterative and mutually reinforcing. Human capital therefore informs and in turn is shaped
by strategic HRM but it does not replace it.
Strategic role of HRM
The global economy has become increasingly changing and demanding. In order to stay
competitive companies need to have, build, and sustain resources that are valuable, rare,
non substitutable, and hard to copy (VRNH)5. Based on Barneys resource-based view
(RBV) Dollinger identified six types of strategic resources: physical, reputational,
organisational, financial, intellectual/human, and technological. While tangible resources
(physical, financial, technical) are rarely the source of sustainable competitive advantage,
especially the human related intangible resources become increasingly important7.
HRMs responsibilities include organisational resources (including structure and culture),
intellectual/human resources (including training and development) and reputational
resources (including employee attraction and employer branding). Thus, human
resource management and the corporate strategy need to be linked and aligned with each
other.
The theories that attempt to integrate HRM and business strategy are summarized as
strategic HRM (SHRM) and can be defined as all those activities affecting the behaviour
of individuals in their efforts to formulate and implement the strategic needs of the
business8. The different approaches can be categorized into two groups: First, the best-
practice or universalistic theories and second the best-fit or contingency theories9.
Best-practice theory
The best-practice theory is based on the assumption that HR practices observed in high-
performing firms can be transformed to other companies with the same results.10
Pfeffers list of seven HR practices for competitive advantage through people is one of
the best known set of best-practices.
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Employment security
Selective hiring
Self-managed teams or team working
High pay contingent on company performance
Extensive training
Reduction of status differences
Sharing information
In essence, recruiting and retaining talented, team-oriented, highly motivated people is
seen to lay a basis for superior business performance or competitive advantage. But this
theory, like several other universal models, has been criticised for a variety of reasons:
Disconnection from companys goals and context
Disregard of national differences such as management practices and culture12
Inconsistency between the RBVs emphasis on in-imitability and best-practice universalism13
Although best-practices are too general, some researchers have found empirical evidence
showing a correlation between the application of best-practice theories and companys
performance. The reason can be seen in the validity of the underpinning AMO (ability,
motivation, opportunity) framework.14
Best-fit theory The contingency or best-fit approach questions the universality assumption of the best-
practice perspective. Instead it emphasises the fit between HR activities and the
organisations stage of development (external-fit). According to the best-fit theory, a
firm that follows a cost-leadership strategy designs narrow jobs and provides little job-
security, whereas a company pursuing a differentiation strategy emphasises training and
development. This approach is a counterpart to the one strategy fits all seen in Pfeffers
seven best practices. The best-fit school, therefore, argues that all SHRM activities must
be consistent with each other (horizontal fit) and linked to the strategic needs of the
business (vertical fit).15 However, best-fit approach has been criticised for the
following reasons:16
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Lack of alignment with employee interests, compliance with prevailing social norms and legal requirements
Too simplistic view of business strategy (the reality is more complex than only innovation, cost-reduction and quality-enhancement strategy in the Schuler and
Jackson model)
Too much focus on existing competitive strategy (reactive) rather than ongoing environmental changes (proactive)
Proactive HR strategy Strategic HR, in its proactive form, involves identifying opportunities that create
competitive advantage. This is achieved through the more effective utilisation of peoples
competencies, potential, commitment and capabilities. A HR strategy to address skill
shortages involves anticipating and preparing for changes in regulation and workforce
demographics. Furthermore, HR strategy could also include segmenting the
organisations workforce according to the criticality of the functions they perform. The
task then is to decide how to source the required skills through one of three means:
make growing talent from within
buy recruiting people with the requisite skills or
rent using the services of on-hired employees from an employment services company.
Strategic human resource management can also involve setting up and managing a
relationship with a strategic partner around a range of workforce issues. These can
range from recruitment and selection to providing on-hired employees and going
offshore to have work performed by skilled people in other countries
Because talent is rare, valuable, difficult to imitate, and hard to substitute, organizations
that better attract, select, and retain this talent should outperform those that do not.25
Given that the war for talent is very real and relevant to organizations around the globe, it
is critical that organizations recognize the need for a strategic approach towards attraction
as part of an employer branding strategy26.
Best-practice example Over the past ten years more and more large companies have established tight
cooperations with universities and universities of applied sciences to attract high school
graduates rather than university graduates. The offered programs combine the theoretical
education at a university and their practical application within the companies.
Furthermore, many companies integrate tailored trainings to deliver soft skills, which are
most often not part of traditional university studies. Thus, companies like Siemens27 and
Bayer, have shifted their attention from university graduates to high school graduates.
Their strategic human resource management approach is to attract and bond employees as
early as possible. And Siemens is also offering their best-practice programs as a service
to other companies and use them a product in the market.28
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According to Hans-Georg Kny, the following skills and qualifications of young
professionals are desired by Siemens:
Team work and appreciation of group performance
Entrepreneurial thinking
Efficient use of new technology
Global thinking and ability to work in an multi-cultural environment
Furthermore, Siemens integrates trainings and internships into its bachelor programs,
which focus on developing the following competences:
technical competence expertise, hard skills
methods competence project-, time- and information management
social competence communication skills, ability to handle critics and conflict
self competence learning strategies, flexibility, customer orientation
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MODULE II: BUSINESS AND HR STRATEGY
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Business Strategy and HR Strategy
The American steel manufacturer, Nucor, is an excellent example of a company that has
integrated its human resource strategy tightly with other functional strategies to create
inimitable capabilities and drive competitive advantage. Nucors competitive advantage
is based on cost leadership. It achieves this through all the four building blocks
efficiency, quality, innovation and responsiveness. At the base is a well-matched human
resource strategy. Nucor hires goal-oriented, self -reliant people who are motivated by
striving for continuous improvement that yields them increasing monetary
compensation.5 Since the production of quality steel depends on teamwork, workers
within the plant are eligible for substantial incentives based on the output of their group.
But, plant managers compensation depends not only on the performance of the plant
they are managing, but of the company as a whole this is to provide an incentive to
transfer best practices and innovations to other parts of the organisation. To keep costs
down, it has very few layers, all managers travel by economy class, and even frequent
flier miles are used by the company. Nucor builds small plants, close to locations where
there is demand for its products this is to reduce transportation costs, but also to be
more responsive to its customers. Every time it has to build a new plant it assembles an
in-house group to build it so that it can take advantage of its learning from earlier projects
as well as prevent diffusion of its innovations to others. Nucor undertakes little research
and development on its own, but maintains close links with technology suppliers the
world over and keeps a close watch on developments that could affect its
competitiveness. It is willing to experiment with new technologies that have been proven
at the pilot plant level by using its plant design skills to scale these technologies up to a
commercial scale.
Another legendary company that has matched its business strategy to its human resource
strategy is the Lincoln Electric Company. A producer of electrodes and welding
machinery, Lincoln is also a cost leader. Lincolns cofounder James F. Lincoln believed
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that everyone could develop to his or her full potential through a system of incentives
designed to encourage both competition and teamwork.6 This system has four
components: wages for most factory jobs based on piecework output; a year-end bonus
that could equal or exceed an individuals regular pay; guaranteed employment and
limited benefits. Like Nucor, Lincoln focuses on hiring individually motivated, high
performers. These individuals have their compensation tightly linked to their output with
laid-down minimum quality levels. A substantial portion of the companys profits is also
distributed to employees at the end of the year based on an individual merit rating that is
computed from output, ideas and cooperation, dependability and quality. Lincolns
innovative HR strategy enabled it to gain, by 1995, a market share of 36% in the
otherwise fragmented US market for welding equipment and supplies. Interestingly
Krishnan, Rishikesha T. Linking Corporate Strategy and HR Strategy: Implications for
HR Professionals, In R. Padaki, N.M. Agrawal, C. Balaji and G. Mahapatra (eds.)
Emerging Asia: An HR Agenda, New Delhi: Tata McGraw-Hill, 2005, pp. 215-223.
though, Lincoln found that applying this same system in ventures acquired outside the
United States was not effective. In fact, large -scale expansion through acquisition and a
rigid application of the US system to the acquired companies almost resulted in disaster
for Lincoln. Thus the choice of a human resource strategy also depends on cultural
factors, both at the societal and organizational levels.
In both the examples we looked at above, the companies adopted cost leadership
strategies and were able to align their human resource strategies to their business
strategies effectively. Cost leadership typically involves a focus on volumes and
efficiency with a close relationship between producing more and earning more. In such
cases it is relatively easy to structure incentive systems that align individual and business
interests. Typically, human resource strategies for companies competing on a
differentiation plank tend to be more complex. Differentiation is much more dependent
on value created through research and development and product development, and on the
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marketing end of the value chain. Performance measurement takes place on many more
dimensions and it is therefore more challenging to align individual and business interests.
McKinsey and Company is a good example of a differentiator. It offers premium
management consulting services to clients internationally. This is a case in which people
are really at the core of the value proposition. McKinsey hires the best people out of the
top business schools (and in recent years, engineering and other disciplines as well). To
ensure that it can have a steady inflow of such new talent, it follows an Up or out
policy; associates who dont make the grade have to leave the firm after a few years. Yet,
this policy has not created an army of embittered ex-McKinseyites. This is because of the
extensive feedback McKinsey employees get almost from the day they enter the firm, as
also the close mentoring by senior McKinsey partners. McKinsey puts tremendous
emphasis on the credibility and integrity of its performance measurement and feedback
system because they have recognised that this is critically important to running a
meritocracy. And it doesnt hurt business either many McKinsey assignments come
through the McKinsey alumni network who are often senior managers in large
corporations.
Linking HR Strategies and Practices to Strategic Requirements:
A 5-Point Agenda for HR Professionals
For corporate, business and HR strategies to be integrated well, it is apparent that the top
management, business heads and HR professionals need to work closely with each other.
In most of the companies mentioned above, the lead and the philosophy have come from
the vision and strongly-held beliefs of the CEO with HR professionals in an important,
but essentially complementary role. There are five ways in which HR professionals can
enhance their ability to contribute to this integration process.
1. HR professionals must spend more time and effort understanding the business
environment and the key strategic issues faced by the company
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HR professionals need to be able to anticipate issues that will be of concern to the top
management before they actually come on the table. They also need to build credibility
with the top management. With the increasing uncertainty in the business environment,
and the volatility of different markets, organisations are increasingly forced to take
drastic decisions at short notice such as the rapid downsizing of the airline industry post-
September 11, 2001. To be mentally prepared for all possibilities, to be able to give a
clear picture of changes to fellow employees, and to be able to look ahead and foresee
changes on the horizon that could involve changes in HR policies and practices,
understanding the business environment and the key strategic issues faced by the
company on a continuing basis is essential.
2. HR professionals must get more involved in the nitty-grittys of the business, i.e.,
in operational details and issues
In many prominent companies, managers from line functions have taken over major
responsibilities for HR and, by all reports, are doing a good job of it. Line managers with
a good track record enjoy almost immediate credibility with people across the
organisation. They are also seen as being able to focus more on performance issues. In a
highly competitive environment, few organisations want to make any compromise on
performance. In this context, HR professionals have no option but to get their hands dirty
by understanding as much of operational issues as they can. If opportunities arise to move
into a business or operational role, they should be pursued with alacrity. Better
understanding of operational concerns will also help HR professionals play a more useful
role in training and development, transcending behavioral training programmes and
leadership. This is particularly important in an era when domain knowledge and
technical expertise are becoming more important.
3. HR professionals must move towards taking an integrated look at the people in
the organisation, bridging the gap between HR and IR (Industrial Relations)
Krishnan, Rishikesha T. Linking Corporate Strategy and HR Strategy: Implications for
-
HR Professionals, In R. Padaki, N.M. Agrawal, C. Balaji and G. Mahapatra (eds.)
Emerging Asia: An HR Agenda, New Delhi: Tata McGraw-Hill, 2005, pp. 215-223.
Manufacturing organisations are becoming more compact and relying more on
manufacturing technology (automation, CNC machines, cellular plant designs) to ensure
output and quality. The worker on the shopfloor is becoming more qualified, multiskilled
and is operating more and more expensive equipment. In service organisations
such as call centres and other remote service providers, in spite of the repetitive nature of
the work, employees see themselves more as professionals than blue collar workers. This
is therefore an opportunity for HR professionals to bring a single HR perspective to the
organisation, and to cast aside the confrontational mindset often inherent in the IR
paradigm.
4. HR professionals must see themselves as knowledge workers and facilitators of
knowledge flows within the organisation
Organisations are increasingly dependent on leveraging knowledge from within the
organisation to be competitive in the marketplace. Documentation and sharing of such
knowledge helps organisations do this effectively. Performance appraisal processes and
incentive systems need to reflect the importance of this activity. Besides creating such
systems within the organisation, HR professionals need to first internalise the knowledge
creation and dissemination mindset within themselves.
5. HR professionals need to change from a support paradigm to a value creation
paradigm
To be recognised as an important contributor to the performance of the company, HR
contributions need to be measured in the right framework. Unfortunately, HR
professionals often measure themselves in a very limited way such as we hired 120
people instead of we enabled the addition of an additional Rs. 5 crores to the EVA of
the company. Human resource valuation may never enter balance sheets, but concepts
like EVA are here to stay, so HR has to find ways of linking itself to such measurement
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concepts.
Changes in Business Strategy & HR Strategy
Changes in business strategy pose interesting problems for HR strategy. Consider the
case of Tata Consultancy Services (TCS), Indias largest and highly successful software
company. TCS has always been well known for its good training programmes that
enabled engineers from diverse disciplines to become productive software programmers
within a short period of time. In the days of bodyshopping, TCS was seen by students on
engineering campuses as a passport to the US. After a few assignments with TCS, many
of them found jobs in the US, often with the very companies where they were working
for TCS. TCS did take action against some of these people, filing cases to recover bond
amounts, but on the balance did not seem exceedingly concerned by the constant outflow
and the need to replenish the stock of software professionals. However, with the increase
in size, the shift to the offshore mode, and the need to increase value added per employee,
employee retention and a higher skill profile have become more important. Today TCS is
making a transition to hiring experienced people from the top business schools with
competitive salaries and to shedding the image of being a relatively poor paymaster and
merely a passport to the US. Yet, the old image continues to linger.
However, some principles of human resource strategy transcend business strategy
concerns. At times of crisis or major environmental shift, it is the goodwill and
commitment of employees that can be a major source of resilience. Such goodwill and
commitment can not be engendered through a confrontational human resource policy.
Transparency and fairness on a continuing basis are essential to create the reservoir of
goodwill that makes employees willing partners in organisational transformation. This
lesson comes out most clearly from the case of the legendary motorcycle company,
Harley-Davidson. One of the top performers on the US stock market (its returns to
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investors in recent years exceed those of industry icons like GE), Harley-Davidson went
through a particularly rough patch in the mid-1980s as its productivity levels and
frequency of new product introductions fell behind those of Japanese competitors. A
sense of complacency had crept in, inducing the then CEO Rich Teerlink to initiate a
major organisational transformation. A part of this transformation included employees at
all levels taking greater ownership for their respective activities and being more involved
in the decision-making process. Harley-Davidson was able to make this transformation to
a highly empowered and self-governing organisation because of the tremendous
credibility the CEO and his top management team enjoyed with the rank and file of the
organisation. This credibility was the result of years of plain speaking and a culture of
openness and transparency.
Corporate Strategy and HR Strategy
HR has come centrestage in Indian traditional business houses which were exposed to
global competition for the first time in the last decade. Increasingly, questions are being
asked about what value the business group adds to each individual business. Most groups
have focused on HR as an area for change the Aditya Birla group and the RPG group
are two examples of prominent business houses that have made visible and substantive
interventions in the HR arena towards increasing professionalisation, independence in
operational decision-making, greater transparency in performance measurement, and
market-linked compensation. Some groups like the Tatas recognised early that HR
initiatives were a powerful way for the group to create value the creation and running of
the TMTC; the Tata Administrative Service; support for XLRI; and an industryrenowned
graduate engineer training scheme at Tata Steel and Telco.
For companies with otherwise strong HR strategies like the software majors, the new
challenges for HR are likely to be on a fresh dimension of corporate strategy - mergers
and acquisitions. For the last two years, there have been persistent reports that Infosys is
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on the verge of making an acquisition. One of the concerns in the mind of Infosys CEO
Narayana Murthy must be the ability to effectively integrate any acquired company given
the strong culture prevailing in Infosys. Research on the success and failure of M&A has
consistently found post-merger integration to be a significant factor in the success of a
merger or acquisition. Companies that have grown through acquisitions like Cisco
Systems have specialised groups that focus on these integration issues.
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MODULEIII:
EMPLOYMENT REALTIONSHIP AND ORGANISATIONAL
CHANGE
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Employment realtionship and organisational change
Employment is a contract between two parties, one being the employer and the other
being the employee. An employee may be defined as: "A person in the service of another
under any contract of hire, express or implied, oral or written, where the employer has the
power or right to control and direct the employee in the material details of how the work
is to be performed.
In a commercial setting, the employer conceives of a productive activity, generally with
the intention of generating a profit, and the employee contributes labor to the enterprise,
usually in return for payment of wages. Employment also exists in the public, non-profit
and household sectors. To the extent that employment or the economic equivalent is not
universal, unemployment exists.
Models of the employment relationship
Scholars conceptualize the employment relationship in various ways.[4]
A key assumption
is the extent to which the employment relationship necessarily includes conflicts of
interests between employers and employees, and the form of such conflicts. [5]
In
economic theorizing, the labor market mediates all such conflicts such that employers
and employees who enter into an employment relationship are assumed to find this
arrangement in their own self-interest. In human resource management theorizing,
employers and employees are assumed to have shared interests (or a unity of interests,
hence the label unitarism). Any conflicts that exist are seen as a manifestation of poor
human resource management policies or interpersonal clashes such as personality
conflicts, both of which can and should be managed away. From the perspective of
pluralist industrial relations, the employment relationship is characterized by a plurality
of stakeholders with legitimate interests (hence the label pluralism), and some conflicts
of interests are seen as inherent in the employment relationship (e.g., wages v. profits).
Lastly, the critical paradigm emphasizes antagonistic conflicts of interests between
various groups (e.g., the competing capitalist and working classes in a Marxist
framework) that are part of a deeper social conflict of unequal power relations. As a
result, there are four common models of employment:[6]
http://en.wikipedia.org/wiki/Employment#cite_note-3http://en.wikipedia.org/wiki/Employment#cite_note-4http://en.wikipedia.org/wiki/Employment#cite_note-5
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1. Mainstream economics: employment is seen as a mutually-advantageous transaction in a free market between self-interested legal and economic equals
2. Human resource management (unitarism): employment is a long-term partnership of employees and employers with common interests
3. Pluralist industrial relations: employment is a bargained exchange between stakeholders with some common and some competing economic interests and
unequal bargaining power due to imperfect labor markets
4. Critical industrial relations: employment is an unequal power relation between competing groups that is embedded in and inseparable from systemic inequalities
throughout the socio-politico-economic system.
These models are important because they help reveal why individuals hold differing
perspectives on human resource management policies, labor unions, and employment
regulation.[7]
For example, human resource management policies are seen as dictated by
the market in the first view, as essential mechanisms for aligning the interests of
employees and employers and thereby creating profitable companies in the second view,
as insufficient for looking out for workers interests in the third view, and as
manipulative managerial tools for shaping the ideology and structure of the workplace in
the fourth view. [8]
Globalization and employment relations
The balance of economic efficiency and social equity is the ultimate debate in the field of
employment relations.[9]
By meeting the needs of the employer; generating profits to
establish and maintain economic efficiency; whilst maintaining a balance with the
employee and creating social equity that benefits the worker so that he/she can fund and
enjoy healthy living; proves to be a continuous revolving issue in westernized societies.
Globalization has effected these issues by creating certain economic factors that disallow
or allow various employment issues. Economist Edward Lee (1996) studies the effects of
globalization and summarizes the four major points of concern that affect employment
relations:
1. International competition, from the newly industrialized countries, will cause unemployment growth and increased wage disparity for unskilled workers in
industrialized countries. Imports from low-wage countries exert pressure on the
manufacturing sector in industrialized countries and foreign direct investment
(FDI) is attracted away from the industrialized nations, towards low-waged
countries.
2. Economic liberalization will result in unemployment and wage inequality in developing countries. This happens as job losses in un-competitive industries
outstrip job opportunities in new industries.
3. Workers will be forced to accept worsening wages and conditions, as a global labour market results in a race to the bottom. Increased international
competition creates a pressure to reduce the wages and conditions of workers.
http://en.wikipedia.org/wiki/Employment#cite_note-6http://en.wikipedia.org/wiki/Employment#cite_note-7http://en.wikipedia.org/wiki/Employment#cite_note-8
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4. Globalization reduces the autonomy of the nation state. Capital is increasingly mobile and the ability of the state to regulate economic activity is reduced.
What also results from Lees (1996) findings is that in industrialized countries an average
of almost 70 per cent of workers are employed in the service sector, most of which
consists of non-tradable activities. As a result, workers are forced to become more skilled
and develop sought after trades, or find other means of survival. Ultimately this is a result
of changes and trends of employment, an evolving workforce, and globalization that is
represented by a more skilled and increasing highly diverse labour force, that are growing
in non standard forms of employment.
As the employment relationship changes from a paternalistic model of loyalty-for-job
security to an adult-to-adult model of creativity and skill application exchanged for
increased knowledge and learning opportunities, the worker had gained power as a
resource, if not the last strategic competitive advantage of value for today's organizations.
Understanding this, individuals are now rethinking their reasons for organizational
engagement and reexamining work in regards to wholeness and personal value
integration. Evidence suggests that individuals are seeking to align themselves with
groups and workplaces committed to similar core values. Work, itself, is no longer
viewed as an economic livelihood, but is emerging as a critical environment for the
sharing and integration of like values and beliefs. Cognizant organizations are coming to
realize the survival rationality for creating workplaces that are nurturing and healing by
naming, claiming, and aligning core organizational values with business visions and
objectives.
Restructuring 'leanness' and 'downsizing' and the implications for the mangement
of HR
The pace of organizational change has accelerated, competitive pressures have
intensified, and most organizations are now forced to operate within much more complex
environments than was the case a relatively few years ago. In the past, many
organizations focused on vertical integration as a means of increasing control in uncertain
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environments and/or taking advantage of economies of scale. High volume was believed
to be the key to success. Today, however, organizations are finding it less beneficial to
own and operate a large number of factories or to employ a large number of people.
Increased global competition has caused many organizations to realize that the key to
competitiveness is not "high-volume" but "high-value."
One important way firms are responding to these changes in economic and environmental
conditions is by increasingly looking for alternatives to the traditional hierarchical
organizational structure. To survive, many firms are attempting to design and initiate
fundamental changes in organizational forms and management practices (Bresnen and
Fowler 1994). Pioneering and traditional companies alike are experimenting with novel
organizational structures and management processes in order to accommodate the fast
pace of technological change, global competition, and the emergence of a knowledge-
based economy. These developments have collectively precipitated a shift in the
corporate paradigm, a move away from large, hierarchical, rigid organizations and toward
smaller, flexible, agile organizations that can compete successfully in today's global
business environment (Bahrami 1992).
The New Employment Model
Contemporary organizational structures and environments require a new employment
model. Under the old model, employees were expected to fit into the corporate culture,
work hard, and remain committed and loyal to the organization for long periods of time.
In return, the organization offered extended employment, promotion opportunities, and
rewards for long-term tenure.
Under the new model, organizations no longer promote "lifetime" employment. Instead,
they offer employees learning opportunities and development options, as well as career
coaching and assessment tools. In return, employees accept responsibility for steering
their own careers and, simultaneously, commit their time, effort and loyalty to the
organization for at least several years -- as long as they are learning and growing. Thus,
the new employment model emphasizes mutual responsibility for skill development and
professional growth, and fosters the "employability" of the individual, both inside and
outside the present organization.
This type of employment model -- based on shared responsibility -- promises benefits to
both employees and employers. Employers can expect significant improvements in
productivity, quality, and customer service, along with greater flexibility and higher
profits. Employees gain relevant cross-training, transferable skills, and career counseling,
leading to greater self-confidence and broader employability.
However, to achieve these benefits, managers must "truly" relinquish much of the control
they traditionally held over employees, give authority to work teams, and provide
individuals with opportunities for self-improvement. At the same time, employees must
continually look for and experiment with better ways of accomplishing tasks, which
requires intelligent risk taking. In addition, organizations will need to work harder at
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becoming attractive places to work, as well as integrate all parts of their human resource
strategy to maximize the contributions of employees to the organization's long-term
competitiveness.
This shift away from employment and toward employability represents the key
psychological differentiator of the new employment model. To be successful, this shift
will require a significant change in managerial thinking to ensure that employees become
more able to leave, but also more motivated to stay. Thus, as organizations move toward
employability as a conceptual model, they must find alternative programs and strategies
to develop skills and to retain and motivate employees.
Interesting facts of downsizing and Change Management
As organizations downsize, survivors often must redouble their efforts in order to
accomplish remaining organizational tasks. In a typical scenario, survivors are left to
carry their Own workloads, as well as the workloads of their departed colleagues. To
make matters worse, specialist skills may have "walked-out-the-door" and tasks that used
to be completed quickly may now take much longer as survivors are left to discover how
they should be accomplished. In addition, traditional job responsibilities may have been
redesigned as part of restructuring. The new job responsibilities may incorporate tasks,
technologies, and skill requirements that the surviving employees do not currently
possess.
However, organizations can lessen the turbulent effects of restructuring by putting
programs in place to address survivors' needs and to sustain organizational change
initiatives over time. As restructuring efforts proceed, it is especially important to
introduce programs that: (1) help employees deal with change, (2) counsel survivors to
take intelligent risks and accept responsibility in the newly restructured organization, and
(3) help managers coach and mentor employees. In addition, the organization should
address ways to maintain, over time, the new behaviors and attitudes it now expects of its
employees. Additionally, career planning and development workshops should
communicate the competencies employees will need in the restructured organization.
They should also help employees identify current professional capabilities, potential skill
gaps, and short- and long-term professional goals. This type of career guidance
demonstrates a tangible commitment to survivors, even as the organization is
communicating its new work expectations.
Also, these types of programs help create a work force that is more multifaceted and
well-rounded, as well as better able to respond more nimbly to shifting work demands, to
changing customer needs, to evolving job and organizational circumstances, and to
volatile market conditions. Finally, by providing programs that enhance employability,
the organization provides the means for employees to make easier and less stressful
transitions if the organization at some point no longer needs their services and skills. This
can relieve organizations of some of the psychological and financial responsibilities if
future downsizing initiatives are undertaken.
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If successful, these programs should also help fill part of the void left by the dissolution
of the old employment contract by serving as a model of the new contract between the
organization and surviving employees. To that end, programs should focus on equipping
people with emerging core competencies and with an orientation to engage in learning on
an ongoing basis. These new competencies and learning orientations also must be
integrated into ongoing employee training and development programs, performance and
evaluation criteria, and reward and recognition systems. In today's competitive
environment, leading-edge knowledge and expertise can generate significant competitive
advantage. Therefore, fostering a "learning ethic" within the organization can contribute
both to improved employee competence and performance, as well as increased
organizational resilience and competitiveness.
When implemented correctly, survivor programs speed workers' commitment to new
organizational priorities and help energize employees to become fully engaged in the new
vision.
An organization's work force forms the core of its quality, productivity, and customer
satisfaction effort. But employees must feel valued and supported by the organization
before they will deliver high levels of quality, productivity, and customer service over
the long-term. Recent research shows that increasing employee satisfaction deepens
commitment and increases productivity, ultimately resulting in increased customer
satisfaction.
Achieving employee satisfaction depends, to a large degree, on providing people what
they need to do their jobs. Training and development in a supportive work environment
should lead to greater job satisfaction among surviving employees. Given this type of
supportive environment, survivors are more likely to deliver consistent quality,
increased productivity, and high levels of service -- all leading to satisfied, loyal
customers which in the long term will result in increased organizational
competitiveness.
Given the potential negative effects of downsizing, the challenge for the organization is
to keep surviving employees' attitudes and behaviors from eroding productivity, quality,
and customer service at a time when performance is critical. If companies reduce head
count without redesigning processes and structures, remaining employees simply must
take on more work, resulting in an overworked staff with a high potential for employee
burnout. Over time, the result is low morale and cynicism, and an attitude of "I'll do
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just enough to get by." Ultimately, productivity, quality and customer service will
suffer. However, by redesigning processes and structures and by providing the training
and guidance needed, the survivors can perform more valuable work.
However, before organizations and employees can move forward, management needs
to be honest and sincere about what has happened in the organization and provide
employees with information about where the organization is headed. Managers also
must be able to forge new relationships with their subordinates based on mutual
respect, clear expectations, and "win/win" objectives. Also, it is critically important
that surviving employees clearly see the links between the redesigned process and
improved products and services to customers.
If managers create a climate of trust and teamwork, and value employee input as well
as output, and support employees as internal customers with diverse needs, the
organization can achieve consistent quality and productivity, and thus improve bottom-
line results. Today, getting survivors aligned behind organizational goals and
objectives is a key determinant of long-term competitive advantage and a leading
benchmark of organizational effectiveness.
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MODULE IV: PERSONALITY AND LEADERSHIP
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Good leaders are made not born. If you have the desire and willpower, you can become
an effective leader. Good leaders develop through a never ending process of self-study,
education, training, and experience. This guide will help you through that process.
To inspire your workers into higher levels of teamwork, there are certain things you must
be, know, and, do. These do not come naturally, but are acquired through continual work
and study. Good leaders are continually working and studying to improve their leadership
skills; they are NOT resting on their laurels.
Before we get started, lets define leadership. Leadership is a process by which a person
influences others to accomplish an objective and directs the organization in a way that
makes it more cohesive and coherent. Leaders carry out this process by applying their
leadership attributes, such as beliefs, values, ethics, character, knowledge, and skills.
Although your position as a manager, supervisor, lead, etc. gives you the authority to
accomplish certain tasks and objectives in the organization, this power does not make you
a leader, it simply makes you the boss. Leadership differs in that it makes the followers
want to achieve high goals, rather than simply bossing people around.
Bass' (1989 & 1990) theory of leadership states that there are three basic ways to explain
how people become leaders. The first two explain the leadership development for a small
number of people. These theories are:
Some personality traits may lead people naturally into leadership roles. This is the
Trait Theory.
A crisis or important event may cause a person to rise to the occasion, which
brings out extraordinary leadership qualities in an ordinary person. This is the
Great Events Theory.
People can choose to become leaders. People can learn leadership skills. This is
the Transformational Leadership Theory. It is the most widely accepted theory
today and the premise on which this guide is based.
When a person is deciding if she respects you as a leader, she does not think about your
attributes, rather, she observes what you do so that she can know who you really are. She
uses this observation to tell if you are an honorable and trusted leader or a self-serving
person who misuses authority to look good and get promoted. Self-serving leaders are not
as effective because their employees only obey them, not follow them. They succeed in
http://www.nwlink.com/~donclark/leader/leadcon.html#one
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many areas because they present a good image to their seniors at the expense of their
workers.
The basis of good leadership is honorable character and selfless service to your
organization. In your employees' eyes, your leadership is everything you do that effects
the organization's objectives and their well-being. Respected leaders concentrate on what
they are [be] (such as beliefs and character), what they know (such as job, tasks, and
human nature), and what they do (such as implementing, motivating, and providing
direction).
What makes a person want to follow a leader? People want to be guided by those they
respect and who have a clear sense of direction. To gain respect, they must be ethical. A
sense of direction is achieved by conveying a strong vision of the future.
The Two Most Important Keys to Effective Leadership
According to a study by the Hay Group, a global management consultancy, there are 75
key components of employee satisfaction. They found that:
Trust and confidence in top leadership was the single most reliable predictor of
employee satisfaction in an organization.
Effective communication by leadership in three critical areas was the key to
winning organizational trust and confidence:
1. Helping employees understand the company's overall business strategy. 2. Helping employees understand how they contribute to achieving key
business objectives.
3. Sharing information with employees on both how the company is doing and how an employee's own division is doing - relative to strategic
business objectives.
So in a nutshell -- you must be trustworthy and you have to be able to communicate a
vision of where the organization needs to go. The next section, "Principles of
Leadership", ties in closely with this key concept.
Principles of Leadership
To help you be, know, and do; follow these eleven principles of leadership (later chapters
in this guide expand on these and provide tools for implementing them):
1. Know yourself and seek self-improvement - In order to know yourself, you have to understand your be, know, and do, attributes. Seeking self-improvement means
continually strengthening your attributes. This can be accomplished through self-
study, formal classes, reflection, and interacting with others.
2. Be technically proficient - As a leader, you must know your job and have a solid familiarity with your employees' tasks.
3. Seek responsibility and take responsibility for your actions - Search for ways to guide your organization to new heights. And when things go wrong, they always
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do sooner or later -- do not blame others. Analyze the situation, take corrective
action, and move on to the next challenge.
4. Make sound and timely decisions - Use good problem solving, decision making, and planning tools.
5. Set the example - Be a good role model for your employees. They must not only hear what they are expected to do, but also see. We must become the change we
want to see - Mahatma Gandhi
6. Know your people and look out for their well-being - Know human nature and the importance of sincerely caring for your workers.
7. Keep your workers informed - Know how to communicate with not only them, but also seniors and other key people.
8. Develop a sense of responsibility in your workers - Help to develop good character traits that will help them carry out their professional responsibilities.
9. Ensure that tasks are understood, supervised, and accomplished - Communication is the key to this responsibility.
10. Train as a team - Although many so called leaders call their organization, department, section, etc. a team; they are not really teams...they are just a group of
people doing their jobs.
11. Use the full capabilities of your organization - By developing a team spirit, you will be able to employ your organization, department, section, etc. to its fullest
capabilities.
Factors of leadership
There are four major factors in leadership:
Follower
Different people require different styles of leadership. For example, a new hire requires
more supervision than an experienced employee. A person who lacks motivation requires
a different approach than one with a high degree of motivation. You must know your
people! The fundamental starting point is having a good understanding of human nature,
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such as needs, emotions, and motivation. You must come to know your employees' be,
know, and do attributes.
Leader
You must have an honest understanding of who you are, what you know, and what you
can do. Also, note that it is the followers, not the leader who determines if a leader is
successful. If they do not trust or lack confidence in their leader, then they will be
uninspired. To be successful you have to convince your followers, not yourself or your
superiors, that you are worthy of being followed.
Communication
You lead through two-way communication. Much of it is nonverbal. For instance, when
you "set the example," that communicates to your people that you would not ask them to
perform anything that you would not be willing to do. What and how you communicate
either builds or harms the relationship between you and your employees.
Situation
All are different. What you do in one situation will not always work in another. You must
use your judgment to decide the best course of action and the leadership style needed for
each situation. For example, you may need to confront an employee for inappropriate
behavior, but if the confrontation is too late or too early, too harsh or too weak, then the
results may prove ineffective.
Various forces will affect these factors. Examples of forces are your relationship with
your seniors, the skill of your people, the informal leaders within your organization, and
how your company is organized.
Environment
Every organization has a particular work environment, which dictates to a considerable
degree how its leaders respond to problems and opportunities. This is brought about by
its heritage of past leaders and its present leaders.
Goals, Values, and Concepts
Leaders exert influence on the environment via three types of actions:
1. The goals and performance standards they establish. 2. The values they establish for the organization. 3. The business and people concepts they establish.
Successful organizations have leaders who set high standards and goals across the entire
spectrum, such as strategies, market leadership, plans, meetings and presentations,
productivity, quality, and reliability.
Values reflect the concern the organization has for its employees, customers, investors,
vendors, and surrounding community. These values define the manner in how business
will be conducted.
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Concepts define what products or services the organization will offer and the methods
and processes for conducting business.
These goals, values, and concepts make up the organization's "personality" or how the
organization is observed by both outsiders and insiders. This personality defines the roles,
relationships, rewards, and rites that take place.
Roles ad Relationships
Roles are the positions that are defined by a set of expectations about behavior of any job
incumbent. Each role has a set of tasks and responsibilities that may or may not be
spelled out. Roles have a powerful effect on behavior