Strategic Human Resource Management

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Strategic Human Resource Management

• Dr. George S. Benson
• benson_at_uta.edu
• http//management.uta.edu/Benson/default.htm

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Human Resource Management
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Who performs the HR function?

• Companies need around 100 employees to have
  dedicated HR staff
• HR to staff ratio around 1 to 100 for larger
  businesses
• Supervisors perform many HR functions
• Professionalism of HR staff
• 75 of HR Executives have backgrounds in HR
• Specialization within fields
• Compensation and Benefits
• Training and Development
• HR Information Systems
• Organizational Development

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• We want to have more people selling instead of
  watching people sell and fewer human resource
  people watching God only knows that they
  watch.
• Bob Lipp -- Citigroup Cost Cutter
• Fortune Magazine January 11, 1999

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Bathroom Breaks at Jim Beam

• Workers on the bottling line are fuming about
  being limited to four breaks per 8 1/2 hour
  shift, only one of which can be unscheduled.
• "Our policy is fair and reasonable and it does
  respect the real needs that our employees have,"
  said Jack Allen, human resources director at the
  Clermont plant.
• CNN Aug 28, 2002

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Changing Views of HR

• Business strategies require specific skills and
  behaviors to be successful.
• HR practices can be crafted to develop certain
  types of skills and encourage behaviors.
• HR practices should support the core
  competencies and strategy of the organization.

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Strategic View of Human Resources

• Employees are human assets that increase in value
  when appropriate policies and programs are
  applied.
• Effective organizations recognize that their
  employees do have value, much as same as the
  organizations physical and capital assets have
  value.
• Employees are a source of sustainable competitive
  advantage.

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Sources of Employee Value

• Technical Knowledge
• Markets, Processes, Customers, Environment
• Ability to Learn and Grow
• Openness to new ideas
• Acquisition of knowledge and skills
• Decision Making Capabilities
• Motivation
• Commitment
• Teamwork
• Interpersonal skills, Leadership ability

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Implications for Organizations

• Job and work design
• Training and employee development
• Determination of compensation
• Integrated performance management
• Advancement opportunities
• Development of retention strategies
• Measuring the impact of HR

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The Investment-Oriented Organization

• Organizational Characteristics
• Sees people as central to its mission/strategy.
• Has a mission statement and strategic objectives
  that espouse the value of human assets in
  achieving goals.
• Has a management philosophy that encourages the
  development and retention of human assets and
  does not treat or regard human assets in the same
  ways as physical assets.

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Investment Orientation Factors

• Senior Management Values and Actions
• An organizations willingness to invest in its
  human resources is determined by the investment
  orientation of its managers.
• Attitude Toward Risk
• Investment in human resources is inherently
  riskier due to lack of absolute ownership of
  the asset.
• Nature of Skills Needed by Employees
• The more likely that skills developed by
  employees are marketable outside the firm, the
  more risky the firms investment in the
  development of those skills.

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Investment Orientation Factors

• Utilitarian (Bottom Line) Mentality
• An attempt is made to quantify employee worth to
  the organization through a cost-benefit analysis.
• The soft benefits of HR programs and polices
  are difficult to objectively quantify because
  they affect many different organizational areas
  and have differential effects on individual
  employees.
• Availability of Outsourcing
• If cost-effective outsourcing is available,
  investments will be made only in HR activities
  producing the highest returns and largest
  sustainable competitive advantages.

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The Strategic Importance of HRM

• Competitive Advantage
• When all or part of the market prefers the firms
  products and/or services.
• Ways firms can use HRM to gain sustainable
  competitive advantage
• Maximize the value added by employees
• Acquire rare employees
• Develop a culture that cant be copied.
• Performance requires HR practices that
• Match the business strategy
• Are internally consistent
• Fit with organizational values and beliefs