Bratton & Gold: HRM 3e CHAPTER 2

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Title
Strategic Human Resource Management
Words of wisdom If a global company is to
function successfully, strategies at different
levels need to inter-relate. An organizations
HRM policies and practices must fit with its
strategy in its competitive environment and with
the immediate business conditions that it
faces. The HR-business strategy alignment
cannot necessarily be characterized in the
logical and sequential way suggested by some
writers rather, the design of an HR system is a
complex and iterative process.
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Chapter outline
Strategic Human Resource Management
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Introducing strategy and HRM
Strategic Human Resource Management
A strategic approach to Human Resource
Management A managerial process requiring human
resource policies and practices to be linked with
the strategic objectives of the organization.
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Introducing strategy and HRM
Key questions
What determines how HR strategy is
formulated? Does HR strategy really matter? How
do corporate decisions impact on HRM? How does
HRM impact on the bottom line?
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Strategic Management (Strategy)
Strategic Management
Strategy A specific pattern of decisions and
actions undertaken by the upper echelon of the
organization in order to accomplish performance
goals.
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Strategic Management (Strategic Management)
Strategic Management
Strategic Management A continuous activity that
requires a constant adjustment of three major
interdependent polesthe values of senior
management,the environment,the resources
available.
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Figure 2.1 The three traditional poles of a
strategic plan
Strategic Management
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Strategic Management (Models of Strategic
Management)
Strategic Management
Model of Strategic Management Mission
goalsEnvironmental analysisStrategic
formulationStrategy implementationStrategy
evaluation
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Figure 2.2 The strategic management model
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Strategic Management (Models of Strategic
Management)
Strategic Management

• Environmental analysis
• Internal organizational strengths and weaknesses
• External environment for opportunities and
  threats

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Strategic Management (Models of Strategic
Management)
Strategic Management
Strategic formulation Involves senior managers
evaluating the interaction between strategic
factors and making strategic choices that guide
managers to meet the organizations goals.
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Strategic Management (Models of Strategic
Management)
Strategic Management
Strategy implementation Focuses on the
techniques used by managers to implement their
strategies (e.g. leadership style, organizational
structure, control systems, management of human
resources).
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Strategic Management (Models of Strategic
Management)
Strategic Management
Strategy evaluation Determines to what extent
the actual change and performance match the
desired change and performance.
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Figure 2.3 Hierarchy of strategic decision making
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Hierarchy of Strategy (Corporate Strategy)
Hierarchy of Strategy
Corporate Strategy Describes a corporations
overall direction in terms of its general
philosophy towards growth and the management of
its various business units. WHAT BUSINESS ARE WE
IN?
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Hierarchy of Strategy (Corporate Strategy)
Corporate Strategy

• Establishing investment priorities and steering
  resources into the most attractive business units
• Initiating actions to improve combined
  performance of business units
• Improving synergy between related business units
  to increase performance
• Making decisions re diversification

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Hierarchy of Strategy (Business-Level Strategy)
Hierarchy of Strategy
Business-Level Strategy Deals with decisions and
actions pertaining to each business unit in order
to make each unit more competitive in its
market-place. HOW DO WE COMPETE?
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Figure 2.4 Porters competitive strategies
Business-Level Strategy
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Hierarchy of Strategy (Business-Level Strategy)
Business-Level Strategy
Low-cost leadership To increase market-share by
having the lowest unit-cost and price compared
with competitors. Differentiation
strategy Distinguishing products from
competitors by providing distinctive levels of
service or quality - the customer is prepared to
pay a premium price.
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Hierarchy of Strategy (Functional-Level Strategy)
Hierarchy of Strategy
Functional-Level Strategy Pertains to the major
functional operations within the business unit
(including research and development, marketing,
manufacturing, finance and HR) to maximise
resource productivity. HOW DO WE SUPPORT THE
BUSINESS-LEVEL COMPETITIVE STRATEGY?
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Strategic HRM (Concepts and Models)
Strategic Human Resource Management
Definitions OUTCOME organizational systems
designed to achieve sustainable competitive
advantage (Snell). PROCESS of linking HR
practices to business strategy (Ulrich) with HR
strategy as the outcome.
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Figure 2.5 Environment as a mediating variable
for human resource management strategies
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Strategic HRM (Concepts and Models)
Strategic Human Resource Management

• Integration of business strategy and HR strategy
• Linking of HR policies and practices with the
  strategic management process of the organization
• Internationalization of the importance of HR on
  the part of line managers
• Integration of the workforce into the
  organization to foster commitment

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Figure 2.6 Devanna et al.s strategic human
resource management matching model
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HR Strategy Models
HR Strategy models
HR Strategies The patterns of decisions
regarding HR policies and practices used by
management to design, work and select, train and
develop, appraise, motivate and control workers.
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HR Strategy Models
HR Strategy models
Control-based model Management structures and HR
strategy are instruments and techniques to
control all aspects of work - to secure high
productivity and profitability. The HR strategy
will be consistent with the organizations
competitive strategy. Creates structural tensions
between management and employees.
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HR Strategy Models
HR Strategy models
Resource-based model The sum of peoples
knowledge and expertise, and social
relationships, has the potential to create
competitive advantage. Exploits the distinctive
competencies of a work organization (its
resources and capabilities). Leadership
capabilities are critical to harnassing the
firms human assets.
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Figure 2.7 The relationship between resource
endowments, strategies and sustained competitive
advantage
Resource-based model
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HR Strategy Models
HR Strategy models
Integrative model Integrates management control
model with reward-effort exchange. Characterizes
two main dimensions of HR strategy acquisition
development, locus of control. Four dominant
types of HR strategy commitment, collaborative,
paternalistic, traditional.
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Figure 2.8 Categorizing human resource
management strategies
Integrative model
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Integrative Model
Integrative model
Commitment HR strategy focuses on the internal
development of employees competencies and
outcome control. Traditional HR strategy focuses
on the external recruitment of competencies or
process-based controls. Collaborative HR strategy
subcontracts work to external independent experts
giving autonomy and evaluating performance on end
results. Paternalistic HR strategy offers
learning opportunities and internal promotion as
trade for compliance with process-based control
mechanisms.
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Evaluating SHRM
Evaluating SHRM HR Strategy Models

• Limitations
• Focus on strategic decision-making
• Absence of internal strategies
• Conceptualization of managerial control

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Dimensions of SHRM
Dimensions of SHRM

• Important themes
• HR practices and performance
• Re-engineering organizations and work
• Leadership
• Workplace learning
• Trade unions

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International Comparative HRM
International Comparative HRM
International HRM HRM issues, functions and
policies and practices that result from the
strategic activities of MNCs and that impact the
international concerns and goals of those
enterprises (Scullion). Emphasizes the
subordination of national culture and national
employment practices to corporate culture and HRM
practices (Boxall).
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International Comparative HRM
International Comparative HRM
Comparative HRM Systematic method of
investigation relating to two or more countries
that has analytical rather than descriptive
implications. Involves activities that seek to
explain the patterns of HRM institutions and HR
practices in selected countries.
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Chapter summary (1st half)
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Chapter summary (2nd half)
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Exhibit 2.1 Air Nationals management structure
CASE STUDY Air National
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Exhibit 2.2 Key characteristics of Air
Nationals strategic human resource management
and empowerdevelopment approach
CASE STUDY Air National