human resource management t 2 business strategy and hrm d. borisova
TRANSCRIPT
Human Resource Management
T 2 Business Strategy and HRM
D. Borisova
Personnel Administrationvs.
Human Resources Management
Find the differences
Origins of “HRM”
• Technological developments• Changes to labour and product market
– Early stages of “globalisation”
• Neo-liberal politics; “M. Thatcher/R. Reagan” – Consumer driven capitalism and extension of
individual share ownership – privatisations of the 80’s– Collapse of communism in Europe
• “New Managerialism” in UK– The need for organisational flexibility– People as a source of competitive advantage– Employer/employee “branding”
Key Concepts
HRM as a “Business Partner” - importance of line managers to HR practice; business alignment and integration
Long term and strategic planning
Commitment as a form of employee control
Organic/flexible structures and systems• Quality (TQM)
• Flexibility
• Commitment
Management of organizational culture
“Stake holding”
Unitarist approach to Employee Relations•High trust
•Individualised relationship
of the workforce
What is HRM about?
Finding – The right number of people– In the right place– With the right skills– At the right price
AND– Persuading them to work for you– When you need them
The right number of people
• Labour Market Analysis
• Work and Job Design
• Forecasting labour demand
• Matching to labour supply
• Recruitment
• Selection
The right place• Where in the world?• Bringing workers to jobs….….. Or jobs to workers?
– Increase from– Home working, tele-working, virtual working
UK….• 1997 <1m teleworkers (4%)• 2005 2.37m (8%)
With the right skills
• Training and development
• Appraisal
• Performance management
• Promotion
• Career progression
• Succession planning
At the right price
• Salaries and wages– Piecework– Day rates– Salaries
• Pay for performance
• Bonuses and benefits
• The “effort-reward bargain”
Persuading them to work for you
• Management and Motivation– Intrinsic, i.e. driven from within– Extrinsic, i.e. provoked from outside
• Working Conditions• Communication• Employment Relations• Trade Unions
When you need them
Direct employment • Terms, conditions and the law• Hours and overtime • Downsizing & Redundancy
Or indirect employment• Sub-contracting and outsourcing• “Off-shoring”
The “Business Partnership”
• Find out what the management/owners/stakeholders want– Understand the strategy
• Give it to them– Develop the “best fit” for HR strategy
• Be seen to give it to them– Make sure HR is represented in the Business Plan
Strategy
• A plan of action for the future, answering the questions of:– What to do?– How to do it?
• Levels:– Corporate (growth, stability, retrenchment)– Business (cost leadership, differentiation,
focus, and innovation)– Functional/Operational
HRM a Business Partner• Failure here often a critique of Personnel
• So how to do it better?
• “Best fit” approach?– Use a business strategy model, eg.
• Stages of growth models (Boston Box)• Strategic orientation (Porter)
– Design HR strategy to fit
PRODUCT/SERVICE
HRM
MARKETING
LOGISTICS FINANCE
BOSTON BOXSTARTUP GROWTH
MATURITYDECLINE
LOW
HIGH
HIGH
MARKETGROWTH
MARKET SHARELOW
BOSTON BOXSTARTUP GROWTH
MATURITYDECLINE
LOW
HIGH
HIGH
MARKETGROWTH
MARKET SHARELOW
PUREDigital (DAB)radio sets
Motorola
Mobile phones
Bosch
Washing
Machines
Pioneer
Turntables
BOSTON BOX & HR FIT
LOW
HIGH
HIGH
GROWTH
MARKET SHARELOW
•REDUCE/REALLOCATE STAFF•CONTROL WAGE COSTS•RETRAINING•MAINTAIN Emp RL PEACE•MANAGE REDUNDANCY
•CAREER AND MANPOWER PLANNING•CONTROL REWARD SYSTEMS•MAINTAIN FLEXIBILITY AND SKILLS•IMPROVE PRODUCTIVITY
•RECRUIT QUALIFIED STAFF•SUCCESSION PLANNING•MANAGEMENT DEVELOPMENT•FORMAL COMPENSATION STRUCTURES•MOTIVATION AND MORALE
•ATTRACT TALENT•EXCEED LABOUR MARKET RATES•DEFINE FUTURE SKILL NEEDS•ESTABLISH CAREER LADDERS•DEVELOP Emp RL PHILOSOPHY
The Value Chain (Porter)
Firm infrastructure (Finance, administration)
Human resource management
IT/ Technological development
Procurement
Inbound logistics
Operations
Support activities
Outboundlogistics
Marketing & Sales
Service
MARG
IN
MARG
IN
Primary activities
Chocolate value added chain
COMPANY FOUNDERS & MANAGERS
GROWING COCOA
PROCESSING RAW COCOA
MANUFACTURING CHOCOLATE
PRODUCT BRANDING & MARKETING
TRANSPORT & LOGISTICS
SALES
Porter generic strategies Strategic scope:a demand-side
dimension
Strategic strength: a supply-side dimension that looks at the strength or core competency of the firm
Porter’s model of Strategic Orientation
LOW COST LEADER• Economies of scale; cost reduction
DIFFERENTIATOR• Enhanced Quality; “something special"
FOCUSSED/SEGMENTATION • Innovation; concentrates on small scale /
niches
Cost Leadership Strategy
To be successful, this strategy usually requires a considerable market share advantage or preferential access to raw materials, components, labour, or some other important input. Without one or more of these advantages, the strategy can easily be mimicked by competitors. Successful implementation also benefits from:
• process engineering skills • products designed for ease of manufacture • sustained access to inexpensive capital • close supervision of labour • tight cost control • incentives based on quantitative targets.
Differentiation Strategy The company creates a product that is perceived as unique and thus its features provide superior value for the customer. The price elasticity of demand is reduced and customers are more brand loyal. There are usually additional costs associated with the differentiating product features and this could require a premium pricing strategy. To maintain this strategy the firm should have:
• strong research and development skills • strong product engineering skills • strong creativity skills • good cooperation with distribution channels • strong marketing skills • incentives based on subjective measures • be able to communicate the importance of the differentiating product
characteristics • stress continuous improvement and innovation • attract highly skilled, creative people
Segmentation Strategy
• The firm concentrates on a select few target markets. It is also called a focus strategy or niche strategy.
• The firm typically looks to gain a competitive advantage through effectiveness rather than efficiency.
• It is most suitable for relatively small firms but can be used by any company.
• Focus on specific skills of the personnel, retention of key people; corporate culture that distinguishes the company from the rest
COST LEADER:
DIFFERENTIATOR:
FOCUSSED:
Head of Personnel / HR Department has a place on the main Board of Directors or the
equivalent (%)91 88
79 76 76
44
35 34
58
25
40 41
85
32
0
10
20
30
40
50
60
70
80
90
100
France
Sw
eden
Belgium
Spain
Italy
Hungary
Cyprus
Greece
EU A
vg.
Turkey
Bulgaria
US
A
Israel
TurkishC
ypriot
Stage at which HR is involved in development of business strategy (%)
From the outsetThrough subsequent consultation
On implementation Not consulted
France 73 13 12 2Finland 70 15 8 7Italy 69 26 4 1Hungary 58 7 13 22Germany 50 21 10 19Greece 42 22 27 10Estonia 39 30 20 11Slovakia 35 37 15 13EU Avg. 55 22 14 9Turkey 46 10 35 10Bulgaria 30 20 39 12Turkish Cypriot Community 27 6 30 38USA 53 27 8 12Nepal 27 22 43 8
Business Strategy (% of organisations)
Yes, written Yes, unwritten NoSlovenia 91 6 3Sweden 91 5 4Czech Republic 89 10 1Denmark 84 9 6Greece 58 35 5Spain 53 37 7Italy 42 30 27Cyprus 37 24 20EU Avg. 70 19 8Turkey 62 32 4Bulgaria 70 26 2Turkish Cypriot Community 29 59 8USA 73 17 9Israel 48 37 14
HR Strategy (% of organisations)79
7368
52 5144
25
53
67
56,3
44,2
18,3
37
61
0
10
20
30
40
50
60
70
80
90
Sw
ed
en
Cze
chR
ep
ub
lic
De
nm
ark
Ita
ly
Gre
ece
Sp
ain
Cyp
rus
EU
Avg
.
No
rwa
y
Tu
rke
y
Bu
lga
ria
Tu
rkis
hC
ypri
ot
US
A
Tu
nis
ia
Yes, writtenYes, unwrittenNo
Sustainability through people
Effective Leadership
High Commitment &
Engagement
PROMOTES
HR Work
SuperiorTalent & High
Innovation
POWERS
Competitive Shareholder &
Stakeholder Value
PROJECTS IN
PRESERVES
“BEST FIT” SEMINAR
In the seminar for week three we will be considering the Personnel/HRM implications for a business which adopts different strategic orientations. This involves considering how each of the personnel/HR functions would need to differ depending on the business strategy to achieve “best fit”.