shrm - aligning hr with strategy

35
STRATEGIC HUMAN RESOURCE MANAGEMENT Aligning HR with strategy

Upload: cygmaxmdu

Post on 18-Nov-2014

7.617 views

Category:

Documents


8 download

TRANSCRIPT

Page 1: SHRM - Aligning HR With Strategy

STRATEGIC HUMAN RESOURCE MANAGEMENT

Aligning HR with strategy

Page 2: SHRM - Aligning HR With Strategy

HR’s emerging role – formulation & implementation of strategy HR field has dramatically changed in

the last few years Importance of HR dept. to involve in the

strategic planning. E.g. designing reward structure – finance dept + HR dept. + top mgmt.

Competitive advantage

Page 3: SHRM - Aligning HR With Strategy

Transition from HRM SHRM

Changes in market conditions, economic conditions, labour markets, industrial structure and international competition importance HR as a competitive advantage.

HR strategy is defined as the set of ideas, policies and practices that management adopts to achieve a people management perspective.

Page 4: SHRM - Aligning HR With Strategy

Transition from HRM SHRM Schuler (1992) developed a ‘5-P model’ of

SHRM that melds five HR activities (philosophies, policies, programs, practices and processes) with strategic business needs, and reflects management’s overall plan for survival, growth, adaptability and profitability. Philosophy: Organization’s attitude towards its

HR & how they should be treated & the role they should play in the success of the business. Found in its values/mission statement culture. e.g creating value through leadership & excellence@ Pepsi-cola

Policies: guidelines about mgmt. of people NOT HR policy manual

Page 5: SHRM - Aligning HR With Strategy

‘5-P model’ of SHRM contd.

Programs: coordinated HR efforts to initiate and sustain strategic organizational change.

Practices: deal effectively with performance problems, encourage creativity in workplace, form work teams & involve employees in decision making.

Processes: involves identification, formulation and implementation of HR activities to meet strategic goals of organ.

Page 6: SHRM - Aligning HR With Strategy

The 5-P Model

ORGANIZATIONAL STRATEGYORGANIZATIONAL STRATEGY

STRATEGIC BUSINESS NEEDSSTRATEGIC BUSINESS NEEDS

INTERNAL CHARACTERISTICS

INTERNAL CHARACTERISTICS EXTERNAL

CHARACTERISTICS

EXTERNAL CHARACTERISTICS

STRATEGIC HRM ACTIVITIES

HR Philosophy Express how to treat and value people

HR Policies Establishes guidelines for action on people-related business issues and HR Programs

HR Programs Coordinates efforts to facilitate change to address major people related business issues

HR Practices Motivates needed role behaviors

HR Process Defines how these activities are carried out

Page 7: SHRM - Aligning HR With Strategy

Traditional HR Vs strategic HR

Traditional HR Strategic HR

Specialize Change according to external needs of work

Formulate rules & procedures; strict implementation

Good communication; flexible rules & regulations

HR policies interdisciplinary

Transactional; short term objectives

Transformational; change agent

People as means to do work People as intellectual assets – competitive advantage

Changes are slow Proactive & systemic changes

Page 8: SHRM - Aligning HR With Strategy

Traditional HR Versus Strategic HR

Page 9: SHRM - Aligning HR With Strategy

Linking Corporate and HR Strategies

Page 10: SHRM - Aligning HR With Strategy

Basic Model of How to AlignHR Strategy

and Actionswith Business Strategy

Translating Strategy into HR Policy and Practice

Page 11: SHRM - Aligning HR With Strategy

Roles of SHRM

1. Strategic role : formulating business decisions, translating corporate strategy into HR strategy & training employees to focus on customer needs.

2. Information & decision-making role: HR dept informs and advices about best practices life efficiency in customer service or new product development or taking decisions on employee problems.

3. Strategic HR functional role : select, design and implement planning & appraisal systems for employees.

4. Administrative: implement policies and procedures; improve administrative system;

Page 12: SHRM - Aligning HR With Strategy

Barriers to Strategic HR

Short-term mentality / focus on current performance

Lack of technical knowledge Inability of HR to think strategically Failure to understand general manager’s

role as an HR manager Difficulty in quantifying many HR outcomes Perception of human assets as high-risk

investments Resistance (of employees) to change

Page 13: SHRM - Aligning HR With Strategy

Models integrating Strategy & HR

Two models are important Model of best practice Model of strategic change Model of best practice Tyson and Doherty developed a model of best

practice that helps in analyzing best practices according to requirements. These outcomes are based at three levels: Strategic level Operational level Business process level

Page 14: SHRM - Aligning HR With Strategy

Model of best practice

Recruiting and selecting employees with desired competencies

Value of the approach effectiveness and efficiency

EffectivenessEffectiveness defines as extent to which the HR Dept. give importance to org. objectives

Efficiency Efficiency defined by the achievement of the objectives in a cost effective manner.

Page 15: SHRM - Aligning HR With Strategy

Strategic level

Implement major changes

Identify programs and policies integrate with production/ service delivery systems

Page 16: SHRM - Aligning HR With Strategy

Operational level

Competencies are created to give competitive advantage.

Develop sound recruitment and retention strategies

Performance assessment and training

Page 17: SHRM - Aligning HR With Strategy

Business process level

Employees should be involved in framing policies

Policies fair and unbiased

Equal weightage to all stakeholders

Page 18: SHRM - Aligning HR With Strategy

Models of strategic change

A flexible model for integrating strategic change was developed at Harvard university.

This model was called “The Map of HRM territory”

Legitimate interest of shareholders and stakeholders in organization aligned with HR and Business strategy

Page 19: SHRM - Aligning HR With Strategy

Map of HRM territory

Stakeholder interests

• Stakeholder mgmt.• Employee groups• Govt. Community

Situational factors

• Workforce characteristics.• Business strategy• Mgmt. philosophy• Labout market• Unions• Technology• Law & societal values

HRM policy

choices• Employee• Influence• HR• flow• Reward systems• work systems

HR outcomes• Commitment• Competence• Congruence• Cost• Effectiveness

Long term consequence• Individual well-being• Organiza. Effectiveness• Social well-being

Page 20: SHRM - Aligning HR With Strategy

Propositions of Guest

Guest, HR expert, has developed a set of propositions based on the Harvard Model: Strategic integration - HRM issues with

strategic plan High commitment - to org. goals High quality - goods & services Flexibility - ability of org. to adjust to

changing business environment

Page 21: SHRM - Aligning HR With Strategy

Integrative model

Hendry & Pettigrew’s integrative approach that integrates all modes of HRM like staffing, recruitment & training.

This model is called “Model of strategic change and HRM”

This model explores implications of employee relations on various approaches to strategic management.

Page 22: SHRM - Aligning HR With Strategy

Model of strategic change and HRM

Inner context• Culture, Structure• Politics / Leadership• Task-technology• Business outputs

Outer context• socioeconomic• technical• political

HRM context• Role• Definition• Organization• HR output

Business strategy content

• Objectives• Product-market• Strategy & tactics

HRM content• HR flows• Work systems• Reward systems• Employee relations

Page 23: SHRM - Aligning HR With Strategy

Storey’s Model – Ideal type

How org’s transformed are being from personnel into HRM

Classified into four areas Beliefs & assumptions – about tasks to be

completed, nature of human relations Strategic concepts – key corporate

planning Line mgmt. – mgmt. skills Key levers – selection, job design, pay,

training & development

Page 24: SHRM - Aligning HR With Strategy

Economic indicators of HRM By developing policies and programs

after aligning biz strategy with HR foll. Objectives will be achieved: Competitive work practices Global practices Effective remuneration & performance

policies that can motivate employees Effective succession planning thro’

recruitment & selection strategies

Page 25: SHRM - Aligning HR With Strategy

Invest perspective of HR

Employee Costs Vs biz. Advantage Potential benefits of training Calculate man-hours lost Value based mgmt.

Page 26: SHRM - Aligning HR With Strategy

Factor affecting investment-oriented organizations

1. Management values – people as assets2. Attitude towards risk – training as risk3. Employee skills – retention strategies4. Cost benefit analysis – experience &

commonsense 5. Outsourcing – focus on core

competency – competitive advantage

Page 27: SHRM - Aligning HR With Strategy

Human capital accounting

American accounting association (1970) defines it as the human resources identification and measuring process and also its communication to the interested parties.

Rensis Likert (1967) first used the term Human asset accounting – now replaced by Human resource accounting.

Likert designed a human capital balance sheet – investments in replacements and development were balanced with losses thro’ attrition and amortization

Page 28: SHRM - Aligning HR With Strategy

What is Human resource accounting ?

HRA is a management tool which is designed to assist senior management in understanding the long term cost and benefit implications of their HR decisions so that better business decisions can be taken

Page 29: SHRM - Aligning HR With Strategy

WHY HRA ? According to Likert (1971), HRA serves the

following purposes in an organisation: It furnishes cost/value information for making

management decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness;

to monitor effectively the use of human resources; It provides a sound and effective basis of human

asset control - whether the asset is appreciated, depleted or conserved;

helps in the understanding the financial consequences of various HR practices.

Page 30: SHRM - Aligning HR With Strategy

Flamholtz’s approach

An individual's conditional value is the present worth of the potential services that could be rendered if the individual stays with the org. for X years.

Conditional value refers to the combination of productivity, transferability and promotability.

Conditional value when multiplied with probability factor (time a person will stay with the org.) will give the expected realizable value.

Realizable value gives a measure of a person’s value - increases as the individual’s learning increases.

Page 31: SHRM - Aligning HR With Strategy

Sources of employee value

Two major sources : Productivity Added Value

Productivity is the level of output generated by a given level of input.

Added value can be defined as the wealth created through the efforts of the enterprise and its people.

Page 32: SHRM - Aligning HR With Strategy

Productivity

Measure productivity and compare with industry standards

^ in productivity leads to increase in sales, profits which increases the performance of the organization

Limitations – This method assumes same average costs for all employees. Also temporary basis employees cannot be accounted for.

Should take into account total cost of contributing labor

Page 33: SHRM - Aligning HR With Strategy

Added value thro’ rewards and benefits

Tie pay to individual performances. Base pay – decided on basis of seniority of

performance - with variable element (determined on the basis of individual performance) and an incentive (if the person performs exceptionally well).

Incentives motivate individuals Stock options aim to distribute benefits of

achieving capital growth & to align employee rewards with that of the shareholders.

Page 34: SHRM - Aligning HR With Strategy

Adding value thro’ attrition & recruitment

Labor turnover is calculated by taking the no. of employees leaving in a time period/

avg. no. of people leaving over a time period.

does not indicate the reason for attrition Lost time and company spent on

recruiting and training Conduct exit intercviews

Page 35: SHRM - Aligning HR With Strategy

Matthewen

Recommended HR audits for calculating value of HR

Four factors Quality of procedures and practices Cost benefit analysis Ability of staff to perform tasks effectively Customer satisfaction