Introduction to Strategic Human Resource Management PDF

INTRODUCTION TO STRATEGIC HUMAN RESOURCE MANAGEMENT Prepared by: Maria Lourdes J. Javier, MIR Topics for Discussion ✓Definition and Scope of SHRM ✓The Evolving / Strategic Role of Human Resource Management ✓SHRM vs. Traditional HRM Strategic HRM Strategic HRM is an appr...

INTRODUCTION TO STRATEGIC HUMAN RESOURCE MANAGEMENT Prepared by: Maria Lourdes J. Javier, MIR Topics for Discussion ✓Definition and Scope of SHRM ✓The Evolving / Strategic Role of Human Resource Management ✓SHRM vs. Traditional HRM Strategic HRM Strategic HRM is an approach that defines how the organization’s goals will be achieved through people by means of HR strategies and integrated HR policies and practices Other Definition of Strategic HRM Strategic HRM is concerned with ‘seeing the people of the organization as a strategic resource for the achievement of competitive advantage’ (Hendry and Pettigrew, 1986) A set of processes and activities jointly shared by human resources and line managers to solve people-related business problems’ (Schuler and Walker, 1990) Other Definition of Strategic HRM The macro-organizational approach to viewing the role and function of HRM in the larger organization’ (Butler et al, 1991) The pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals’ (Wright and McMahan, 1992) Evolving/Strategic Role of Human Resource Management The Context of Strategic Human Resource Management ✓Taking a strategic approach to HR management involves abandoning the mindset and practices of “personnel management” and focusing more on strategic issues than operational issues. ✓Strategic HR management involves making the function of managing people the most important priority in the organization and integrating all HR programs and policies within the framework of a company’s strategy. The Context of Strategic Human Resource Management ✓Strategic HR management realizes that people make or break an organization because all decisions made regarding finance, marketing, operations, or technology are made by an organization’s people. ✓Strategic HR management involves the development of a consistent, aligned collection of practices, programs, and policies to facilitate the achievement of the organization’s strategic objectives The Context of Strategic Human Resource Management ✓It considers the implications of corporate strategy for all HR systems within an organization by translating company objectives into specific people management systems. How can a Company become Strategic? How can HR/HRM become Strategic? Models of Strategy 1. Industrial / Organizational Model 2. Resource Bases View (RBV) I/O Model ✓This “traditional” model formed the basis of strategic management through the 1980s. ✓The I/O model argues that the primary determinant of an organization’s strategy should be the external environment in which the organization operates and that such considerations have a greater influence on performance than internal decisions made by managers. I/O Model ✓The I/O model assumes that the environment presents threats and opportunities to organizations, that organizations within an industry control or have equal access to resources, and that these resources are highly mobile between firms. ✓The I/O model argues that organizations should choose to locate themselves in industries that present the greatest opportunities and learn to utilize their resources to suit the needs of the environment. I/O Model ✓An organization can be most successful by offering goods and services at a lower cost than its competitors or by differentiating its products from those of competitors such that consumers are willing to pay a premium price. RBV Model ✓The organization’s resources and capabilities, rather than environmental conditions, should be the basis for organizational decisions. ✓Included among these resources are an organization’s HR (human resource). ✓Organizations hence gain competitive advantage through the acquisition and value of their resources. RBV Model ✓It has been argued that the RBV of the firm has formed the foundation for strategic HR management as an understanding of its theoretical foundation is indispensable when attempting to implement the concepts of strategic HR management in the workplace. ✓The RBV challenges the assumptions of the I/O model and assumes that an organization will identify and locate key valuable resources and, over time, acquire them. RBV Model ✓Under this model, resources may not be highly mobile across organizations because once they are acquired by a particular organization, that organization will attempt to retain those resources that are of value. ✓Resources are only of value to an organization when they are costly to imitate and nonsubstitutable. I/O vs RBV Model I/O model suggests that an RBV argues that strategy should organization’s strategy is driven be driven by internal by external considerations considerations I/O model argues that strategy RBV argues that strategy is will drive resource acquisition determined by resources  Interestingly….. Research has provided support for both positions Important Caveat of Strategic HRM There is no one best way to manage people in any given organization Process of Strategic Management 1. Mission Statement 2. Analysis of Environment 3. Organization Self-Assessment 4. Establishing Goals and Objectives 5. Setting Strategy Process of Strategic Management ✓First step of strategic management is for the organization to establish or examine its mission statement ✓All organizations have a mission statement that explains in very simple terms the organization’s purpose and reason for existence ✓Mission statements are usually very broad and generally limited to no more than a couple of sentences ✓Mission statements serves as the foundation for everything that the organization does Process of Strategic Management Process of Strategic Management ✓Second step, analyze the external environment in which the organization operates consistent with the I/O model of strategic management ✓Decision makers need to analyze a variety of different components of the external organization, identify key “players” within those domains, and be very cognizant of both threats and opportunities within the environment Process of Strategic Management ✓Among the critical components of the external environment are competition and industry structure, government regulations, technology, market trends, and economic trends Process of Strategic Management ✓Third step, assessing the internal environment of the organization, the key outcome is for decision makers to identify the organization’s primary strengths and weaknesses and find ways to capitalize on the strengths and improve or minimize the weaknesses, as espoused by the RBV of strategic management ✓This requires the organization to examine both its resources and its internal management systems Process of Strategic Management Resources ✓Financial resources can significantly affect an organization’s competitive advantage. ✓An organization that has the ability to generate internal funds and/or borrow significant sums is able to convert these funds into other assets. Process of Strategic Management Resources ✓Physical resources include the actual equipment and machinery owned or leased as well as the location of the business and its proximity to customers, labor, raw materials, and transportation ✓HR includes not only the sum of technical knowledge of employees but also their personal traits, including commitment, loyalty, judgment, and motivation Process of Strategic Management Resources ✓An organization is only as strong or as weak as its employees, and the skills, backgrounds, and motivation these employees bring to their jobs will therefore be a key factor in the organization’s overall performance ✓The organization also needs to consider the kinds of obligations it has to employees in the form of contracts or agreements to continue to employ them and the extent that it wishes to enter into such agreements in the future Process of Strategic Management Resources ✓Technological resources include the processes by which the organization produces its goods and services. The technology used by an organization can be a major influence on its cost structures and measures of efficiency ✓A large number of organizations leverage this resource to their advantage by obtaining patents, trademarks, or copyrights Process of Strategic Management Resources ✓Capital resources include all other items of value, including brand names, reputations with customers, relationships with key constituents in the environment, and goodwill. ✓Many items that can be grouped here are intangibles that do not show up on an organization’s financial statements. Process of Strategic Management Resources ✓It has been argued that the more unobservable or intangible a resource is, the more sustainable an advantage it might supply Process of Strategic Management Management Systems ✓In assessing culture, an organization needs to understand the core values and philosophies that guide its day-to-day activities. ✓Many aspects of culture are covert and not clearly articulated but are rather assumptions that individuals in the organization make about the company. Process of Strategic Management Management Systems ✓It is critical that elements of culture be identified and that an understanding be achieved about how these elements of culture influence behavior and impact overall performance. ✓Organization structure has a significant impact on how work is carried out, how groups and departments interact with each other, and where accountability for performance lies Process of Strategic Management Management Systems ✓It is critical that elements of culture be identified and that an understanding be achieved about how these elements of culture influence behavior and impact overall performance. ✓Organization structure has a significant impact on how work is carried out, how groups and departments interact with each other, and where accountability for performance lies Process of Strategic Management Management Systems ✓No standard type of organization structure or way to draw up an organization chart exists ✓Assessing power dynamics and politics allows an organization to see who really controls what happens in an organization ✓Decision making processes can be a competitive advantage to an organization or a weight that inhibits timely, effective action. Process of Strategic Management Management Systems ✓An examination of the organization’s past strategy and performance is critical to understanding its internal environment. ✓It is critical to examine the organization’s work systems. Work systems involve the design of jobs and allocation of responsibilities to assist an organization in meeting its objectives Process of Strategic Management ✓Fourth step, Establishing Goals and Objectives ✓Goals should be specific and measurable; in fact, at the same time they are established, decision makers should also identify how performance toward these goals will be measured and evaluated. ✓Goals also need to be flexible, because the whole process of setting goals involves dealing with the future and anticipating what might or might not happen, realistic goals should not be “carved in stone.” Process of Strategic Management ✓Fifth, Strategy, very simply, is how the organization intends to achieve its goals. ✓The means it will use, the courses of action it will take, and how it will generally operate and compete constitute the organization’s strategy. ✓This HR strategy will serve as a framework by which the organization can develop a consistent and aligned set of practices, policies, and programs that will allow employees to achieve the organization’s objectives Process of Strategic Management ✓Fifth, Strategy, very simply, is how the organization intends to achieve its goals. ✓The means it will use, the courses of action it will take, and how it will generally operate and compete constitute the organization’s strategy. ✓This HR strategy will serve as a framework by which the organization can develop a consistent and aligned set of practices, policies, and programs that will allow employees to achieve the organization’s objectives Traditional vs. Strategic HRM Traditional vs. Strategic HRM Discussion for Next Meeting Strategic HRM Frameworks/Models and Theoretical Foundations