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Strategic HR

This book is a part of the course by Jaipur National University, Jaipur.This book contains the course content for Strategic HR.

JNU, JaipurFirst Edition 2013

The content in the book is copyright of JNU. All rights reserved.No part of the content may in any form or by any electronic, mechanical, photocopying, recording, or any other means be reproduced, stored in a retrieval system or be broadcast or transmitted without the prior permission of the publisher.

JNU makes reasonable endeavours to ensure content is current and accurate. JNU reserves the right to alter the content whenever the need arises, and to vary it at any time without prior notice.

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Index

ContentI. ...................................................................... II

List of FiguresII. ........................................................... V

List of TablesIII. ...........................................................VI

AbbreviationsIV. ....................................................... VII

Case StudyV. ................................................................ 77

BibliographyVI. ........................................................... 88

Self Assessment AnswersVII. ..................................... 90

Book at a Glance

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Contents

Chapter I ....................................................................................................................................................... 1Introduction to Strategic Management ...................................................................................................... 1Aim ................................................................................................................................................................ 1Objectives ...................................................................................................................................................... 1Learning outcome .......................................................................................................................................... 11.1 Introduction .............................................................................................................................................. 21.2 Strategy ............................................................................................................................................... 2 1.2.1 Hierarchy of Strategy ............................................................................................................... 2 1.2.1.1 Corporate Level Strategy ......................................................................................... 3 1.2.1.2 Business Level Strategy ............................................................................................ 4 1.2.1.3 Functional Level Strategy ......................................................................................... 41.3 Strategic Management ............................................................................................................................. 4 1.3.1 Model of Strategic Management .............................................................................................. 5 1.3.2 Benefits of Strategic Management ........................................................................................... 61.4 Strategic HRM ......................................................................................................................................... 6 1.4.1 Emergence of Strategic Human Resource Management (SHRM) .......................................... 7 1.4.2 The Evolutionary Stages of Strategic HRM ............................................................................ 81.5 Difference Between Traditional HR and Strategic HR ............................................................................ 8Summary ..................................................................................................................................................... 10References ................................................................................................................................................... 10Recommended Reading ............................................................................................................................. 10Self Assessment ............................................................................................................................................11

Chapter II ................................................................................................................................................... 13Strategic Human Resource Management ................................................................................................ 13Aim .............................................................................................................................................................. 13Objectives .................................................................................................................................................... 13Learning outcome ........................................................................................................................................ 132.1 Introduction ............................................................................................................................................ 142.2 Trends in Strategic Human Resource Management ............................................................................... 142.3 HR Practitioners Role ............................................................................................................................ 142.4 Human Resource as Competitive Advantage ......................................................................................... 152.5 Aims of Strategic HRM ......................................................................................................................... 152.6 Approaches to Strategic HRM ............................................................................................................... 152.7 Formulation of HR Strategies ................................................................................................................ 16 2.7.1 The Classical Sequential Approach ....................................................................................... 17 2.7.2 The Empirical Need-based Approach .................................................................................... 172.8 Achieving Strategic Fit .......................................................................................................................... 18 2.8.1 Problems in Achieving Strategic Fit ...................................................................................... 182.9 Benefits of Strategic HRM ..................................................................................................................... 182.10 Barriers to Strategic HRM ................................................................................................................... 19Summary ..................................................................................................................................................... 20References ................................................................................................................................................... 20Recommended Reading ............................................................................................................................. 20Self Assessment ........................................................................................................................................... 21

Chapter III .................................................................................................................................................. 23Human Resource Strategies ...................................................................................................................... 23Aim .............................................................................................................................................................. 23Objectives .................................................................................................................................................... 23Learning outcome ........................................................................................................................................ 233.1 Introduction ............................................................................................................................................ 243.2 HR Strategies Defined ........................................................................................................................... 24

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3.3 Types of HR Strategies .......................................................................................................................... 24 3.3.1 Overarching Strategies ........................................................................................................... 24 3.3.2 Specific HR Strategies ........................................................................................................... 253.4 Criteria for an Effective HR Strategy .................................................................................................... 263.5 Developing HR Strategies ...................................................................................................................... 27 3.5.1 A Methodology for Formulating HR Strategies ..................................................................... 273.6 Setting Out the Strategy ......................................................................................................................... 283.7 Conducting a Strategic Review .............................................................................................................. 283.8 Implementing HR Strategies .................................................................................................................. 313.9 Barriers to the Implementation of HR Strategies ................................................................................... 32 3.9.1 Overcoming the Barriers ........................................................................................................ 32Summary ..................................................................................................................................................... 33References ................................................................................................................................................... 33Recommended Reading ............................................................................................................................. 33Self Assessment ........................................................................................................................................... 34

Chapter IV .................................................................................................................................................. 36Roles in Strategic Human Resource Management.................................................................................. 36Aim .............................................................................................................................................................. 36Objectives .................................................................................................................................................... 36Learning outcome ........................................................................................................................................ 364.1 The Strategic Role of Top Management ................................................................................................ 374.2 The Strategic Role of Front-line Management ...................................................................................... 374.3 The Strategic Role of the HR Director................................................................................................... 374.4 The Strategic Role of the HR Specialists ............................................................................................... 37 4.4.1 The New Mandate for HR...................................................................................................... 384.5 The Specific Strategic Roles of HR ....................................................................................................... 38 4.5.1 Business Partner ..................................................................................................................... 38 4.5.2 The Innovation Role .............................................................................................................. 39 4.5.3 The Change Manager Role .................................................................................................... 39 4.5.4 The Implementer Role ........................................................................................................... 41Summary ..................................................................................................................................................... 42References ................................................................................................................................................... 42Recommended Reading ............................................................................................................................. 42Self Assessment ........................................................................................................................................... 43

Chapter V .................................................................................................................................................... 45Investment Perspective of Human Resource Management and Workforce Diversity ........................ 45Aim .............................................................................................................................................................. 45Objectives .................................................................................................................................................... 45Learning outcome ........................................................................................................................................ 455.1 Introduction to Investment Perspective of HRM ................................................................................... 465.2 Adopting an Investment Perspective ...................................................................................................... 465.3 Valuation of Assets ................................................................................................................................. 465.4 Understanding and Measuring Human Capital ...................................................................................... 475.5 Factors Influencing an Organisation’s Investment Orientation ............................................................. 475.6 Introduction to Workforce Diversity ...................................................................................................... 48 5.6.1 Workforce Diversity Defined ................................................................................................. 48 5.6.2 Benefits of Managing Workforce Diversity ........................................................................... 49 5.6.3 Managing Diverse Workforce in an Organisation ................................................................. 495.7 Challenges for HR Managers ................................................................................................................. 50Summary ..................................................................................................................................................... 51References ................................................................................................................................................... 51Recommended Reading ............................................................................................................................. 51Self Assessment ........................................................................................................................................... 52

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Chapter VI .................................................................................................................................................. 54Resourcing Strategy ................................................................................................................................... 54Aim .............................................................................................................................................................. 54Objectives .................................................................................................................................................... 54Learning outcome ........................................................................................................................................ 546.1 Resourcing Strategy ............................................................................................................................... 556.2 Objectives of Resourcing Strategy ......................................................................................................... 556.3 The Strategic HRM Approach to Resourcing ........................................................................................ 556.4 Integrating Business and Resourcing Strategies .................................................................................... 556.5 Bundling Resourcing Strategies and Activities ...................................................................................... 566.6 The Components of Employee Resourcing Strategy ............................................................................. 566.7 Human Resource Planning ..................................................................................................................... 56 6.7.1 Definition ............................................................................................................................... 56 6.7.2 Link to Business Planning ..................................................................................................... 57 6.7.3 Hard and Soft Human Resource Planning ............................................................................. 57 6.7.4 Limitations ............................................................................................................................. 57 6.7.5 Approaches to Human Resource Planning ............................................................................. 586.8 Resourcing Plans .................................................................................................................................... 59 6.8.1 Internal Resourcing ................................................................................................................ 59 6.8.2 External Resourcing ............................................................................................................... 596.9 Retention Strategy .................................................................................................................................. 60 6.9.1 Analysis of Reasons for Staying or Leaving .......................................................................... 606.10 Flexibility Strategy ............................................................................................................................... 626.11 Talent Management Strategy ................................................................................................................ 62 6.11.1 The Components of Talent Management Strategy ............................................................... 62Summary ..................................................................................................................................................... 64References ................................................................................................................................................... 64Recommended Reading ............................................................................................................................. 64Self Assessment ........................................................................................................................................... 65

Chapter VII ................................................................................................................................................ 67Challenges in Strategic Human Resource Management ........................................................................ 67Aim .............................................................................................................................................................. 67Objectives .................................................................................................................................................... 67Learning outcome ........................................................................................................................................ 677.1 Introduction ............................................................................................................................................ 687.2 The Challenges of Workplace Diversity ................................................................................................ 687.3 The Management of Workplace Diversity ............................................................................................. 69 7.3.1 Planning a Mentoring Program .............................................................................................. 69 7.3.2 Organising Talents Strategically ............................................................................................ 69 7.3.3 Leading the Talk .................................................................................................................... 70 7.3.4 Control and Measure Results ................................................................................................. 707.4 Motivational Approaches ....................................................................................................................... 70 7.4.1 Gain-sharing ........................................................................................................................... 71 7.4.1.1 Managing Gain-sharing ........................................................................................... 717.5 Executive Information Systems ............................................................................................................. 71 7.5.1 Managing EIS ........................................................................................................................ 727.6 HRM Strategic Challenges .................................................................................................................... 72Summary ..................................................................................................................................................... 74References ................................................................................................................................................... 74Recommended Reading ............................................................................................................................. 74Self Assessment ........................................................................................................................................... 75

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List of Figures

Fig. 1.1 Hierarchy of strategic decision making ............................................................................................ 3Fig. 1.2 The three traditional poles of a strategic plan ................................................................................... 4Fig. 1.3 Model of strategic management ....................................................................................................... 5Fig. 2.1 The empirical approach to formulating HR strategy ...................................................................... 17Fig. 3.1 Methodology for formulating HR strategies .................................................................................. 27Fig. 3.2 Strategic review sequence .............................................................................................................. 29Fig. 6.1 Human resource planning flow chart .............................................................................................. 58Fig. 7.1 Strategically organising the talents ................................................................................................. 70Fig. 7.2 HRM strategic challenges .............................................................................................................. 72

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List of Tables

Table 1.1 HRM–shifting paradigms ............................................................................................................... 7Table 1.2 Strategic HRM – from past to present: a journey .......................................................................... 8Table 1.3 Traditional HR vs. strategic HR ..................................................................................................... 9Table 4.1 A change model used by HR staff at GE in the United States ..................................................... 40

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Abbreviations

CEO - ChiefExecutiveOfficerEIS - Executive Information SystemHR - Human ResourceHRD - Human Resource DevelopmentHRM - Human Resource ManagementIT - Information TechnologyMNC - Multi-National CompaniesOD - Organisation DevelopmentSHRM - Strategic Human Resource ManagementSME - Small and Medium Enterprises

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Chapter I

Introduction to Strategic Management

Aim

The aim of this chapter is to:

definetheterm'strategy'•

introduce strategic management•

enlistthebenefitsofstrategicmanagement•

Objectives

The objectives of this chapter are to:

explain the hierarchy of strategy •

differentiate between traditional HR and strategic HR •

discuss the emergence of strategic human resource management•

Learning outcome

At the end of this chapter, the students will be able to:

illustrate the model of strategic management•

definetheconceptofstrategichumanresourcemanagement•

understand the evolutionary stages of strategic HRM•

Strategic HR

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1.1 IntroductionThefieldofHRM(HumanResourceManagement)hasundergone significant changes in scope, functionsandactivitiesovertheyears.Withtheriseinprofessionalmaturityinthefield,personnelmanagementhasbecomeHRM,whichintherecentyearshasturnedintostrategicHRM.Despiteitsyoungage,thissubfieldhasmadetremendousconceptual and empirical strides, especially in the past decade. Strategic HRM is the explicit link that HRM has with the strategic management process of the organisation. In simple terms strategic HRM can be summarised as follows:

StrategicHRMisallaboutsystematicallylinkingpeoplewiththefirm.•Asabodyofideas,thisfieldassertsacriticalrelationshipbetweenenvironment,overallbusinessstrategyand•human resource strategies.It emphasises co-ordination or congruence among the various HRM practices like HR planning, recruitment, •selection, training, development, compensation, retention, evaluation and promotion of personnel within an organisation.It seeks to enhance organisational performance, employee needs and societal well-being.•

1.2 StrategyThe word ‘strategy’ is derived from the Greek noun ‘• strategus’ which means ‘commander in chief’ and was firstusedintheEnglishlanguagein1656.Thedevelopmentandusageofthewordsuggeststhatitiscomposedof ‘stratos’ (army) and ‘agein’ (to lead). Quinndefinesstrategyas“• a plan which integrates an organisation’s major goals, policies and action sequences into a cohesive whole. It is a specific major action or pattern of action for attaining broad corporation objectives.”AccordingtoChandler,“• strategy is the determination of the basic long term goals of any enterprise. It is all about deciding the best course of action and necessary resources allocation for carrying out those defined organisational goals.”Strategy is seen as the matching of activities of an organisation to the internal and external environment in which •itoperates.Itisalsoaboutfindingforsolutionstoproblemsboth,insideandoutsidetheorganisation.In the management context, the word ‘strategy’ has now replaced the more traditional term–long-term planning–to •denoteaspecificpatternofdecisionsandactionsundertakenbytheupperechelonoftheorganisationinorderto accomplish performance goals.

1.2.1 Hierarchy of StrategyAnother aspect of strategic management in the multi-divisional business organisation concerns the level to which strategicissuesapply.Conventionalwisdomidentifiesdifferentlevelsofstrategy—ahierarchyofstrategy.

corporate i. businessii. functionaliii.

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Fig. 1.1 Hierarchy of strategic decision making

1.2.1.1 Corporate Level Strategy

Corporate-level strategy describes a corporation’s overall direction in terms of its general philosophy towards •the growth and the management of its various business units. Such strategies determine the types of business a corporation wants to be involved in and what business units •shouldbeacquired,modifiedorsold.Thisstrategyaddressesthequestion,‘Whatbusinessarewein?’Devising a strategy for a multidivisional company involves at least four types of initiative:•

establishing investment priorities and steering corporate resources into the most attractive business units �initiating actions to improve the combined performance of those business units with which the corporation �firstbecameinvolvedfindingwaystoimprovethesynergybetweenrelatedbusinessunitsinordertoincreaseperformance �makingdecisionsdealingwithdiversification �

Contextualfactors

Product market

Capital market

Labour market

Technology

Covernmentpolicies

European Unionpolicies

North AmericanFree TradeAgreementpolicies

Stakeholderinterests

Human resource management: philosophy, policies,programmes, practices, processes, relationships with managers,

non-managers, trade unions, customers and suppliers

R&D Marketing Humanresources

Manu-facturing Finance

How do we supportthe business-level

competitive strategy?

How do we compete?

What business are we in?

Functional-levelstrategy

Business-level strategy

Corporate-level strategy

Corporate management

BusinessUnit 1

BusinessUnit 2

BusinessUnit 3

Strategic HR

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Senior management

Environment Resources

1.2.1.2 Business Level Strategy

Business-level strategy deals with decisions and actions pertaining to each business unit, the main objective of •a business-level strategy being to make the unit more competitive in its marketplace. Thislevelofstrategyaddressesthequestion,‘Howdowecompete?’Althoughbusiness-levelstrategyisguided•by ‘upstream’, corporate-level strategy, business unit management must craft a strategy that is appropriate for its own operating situation.

1.2.1.3 Functional Level Strategy

Functional-level strategy pertains to the major functional operations within the business unit, including research •anddevelopment,marketing,manufacturing,financeandHR.This strategy level is typically primarily concerned with maximizing resource productivity and addresses the •question,‘Howdowesupportthebusiness-levelcompetitivestrategy?’Consistentwiththis,atthefunctionallevel, HRM policies and practices support the business strategy goals.These three levels of strategy – corporate, business and functional–form a hierarchy of strategy within large •multidivisionalcorporations.Indifferentcorporations,thespecificoperationofthehierarchyofstrategymightvary between ‘top-down’ and ‘bottom-up’ strategic planning. The top-down approach resembles a ‘cascade’ in which the ‘downstream’ strategic decisions are dependent on •higher ‘upstream’ strategic decisions. The bottom-up approach to strategy making recognises that individuals ‘deep’ within the organisation might contribute to strategic planning. Thus, strategies at different levels need to inter-relate. The strategy at corporate level must build upon the strategies at the lower levels in the hierarchy. However, at •the same time, all parts of the business have to work to accommodate the overriding corporate goals.

1.3 Strategic ManagementWheelenandHungerdefinestrategicmanagementas“that set of managerial decisions and actions that determines the long-run performance of a corporation”. Strategic management is considered to be a continuous activity that requires a constant adjustment of three major interdependent poles: the values of senior management, the environment and the resources available.

Fig. 1.2 The three traditional poles of a strategic plan

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1.3.1 Model of Strategic ManagementStrategic management appears as a cycle in which several activities follow and feed upon one another. The strategic managementprocessistypicallybrokenintofivesteps:

mission and goals i. environmental analysis ii. strategic formulation iii. strategy implementation iv. strategy evaluationv.

Figuregivenbelowillustrateshowthefivesteps interact.At thecorporate level, thestrategicmanagement•process includes activities that range from appraising the organisation’s current mission and goals to strategic evaluation. Thefirststepinthestrategicmanagementmodelbeginswithseniormanagersevaluatingtheirpositioninrelation•to the organisation’s current mission and goals. The mission describes the organisation’s values and aspirations and indicates the direction in which senior management is going. Goals are the desired ends sought through the actual operating procedures of the organisation and typically describe short-term measurable outcomes.Environmental analysis looks at the internal organisational strengths and weaknesses and the external environment •for opportunities and threats. The factors that are most important to the organisation’s future are referred to as strategic factors and can be summarised by the acronym SWOT – Strengths, Weaknesses, Opportunities and Threats.SWOTanalysisisatoolforauditinganorganisationanditsenvironment.Itisthefirststageofplanningand•helps marketers to focus on key issues. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

Fig. 1.3 Model of strategic management

STEP 1 Mission and goals Management philosophy Values

Environmental analysisInternal scanExternal scan

Strategic formulationStrategic choiceCorporateBusinessFunctional

Strategy implementationLeadershipStructureControl systemsHuman resources

Strategy evaluationOperating performanceFinancial performance

STEP 2

STEP 3

STEP 4

STEP 5

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Strategic formulation involves senior managers evaluating the interaction between strategic factors and making •strategic choices that guide managers to meet the organisation’s goals. Some strategies are formulated at the corporate,businessandspecificfunctionallevels.The term ‘strategic choice’ raises the question of who makes decisions and why they are made. The notion of •strategic choice also draws attention to strategic management as a ‘political process’ whereby decisions and actions on issues are taken by a ‘power-dominant’ group of managers within the organisation. In a political model of strategic management, it is necessary to consider the distribution of power within the •organisation.AccordingtoPurcellandAhlstrand,“wemustconsiderwherepowerlies,howitcomestobethere, and how the outcome of competing power plays and coalitions within senior management are linked to employee relations”. The strategic choice perspective on organisational decision-making makes the discourse on strategy ‘more •concrete’ and provides important insights into how the employment relationship is managed.Strategy implementation is an area of activity that focuses on the techniques used by managers to implement their •strategies. In particular, it refers to activities that deal with leadership style, the structure of the organisation, the informationandcontrolsystems,andthemanagementofhumanresources.Influentialmanagementconsultantsandacademicsemphasisethatleadershipisthemostimportantanddifficultpartofthestrategicimplementationprocess. Strategy evaluation is an activity that determines to what extent the actual change and performance match the •desired change and performance.Thestrategicmanagementmodeldepictsthefivemajoractivitiesasformingarationalandlinearprocess.It•is, however, important to note that it is a normative model, i.e., it shows how strategic management should be done rather than describing what is actually done by senior managers.

1.3.2 Benefits of Strategic ManagementFollowingarethebenefitsofstrategicmanagement:

allowsidentification,prioritisation,andexploitationofopportunities•provides an objective view of management problems•represents a framework for improved co-ordination and control•minimises the effects of adverse conditions and changes•allows major decisions to better support established objectives•permits more effective allocation of time•allows fewer resources and lesser time to be devoted to correcting erroneous•creates a framework for internal communication among personnel•helps to integrate the behaviours of individual into total effort•providesabasisfortheclarificationofindividualresponsibilities•encourages forward thinking•provides a co-operative, integrated, and enthusiastic approach to tackling problem and opportunities•encourages a favourable attitude towards change•gives a degree of discipline and formality to the management of business•

1.4 Strategic HRMStrategicHRMmaybedefinedasanapproachformakingdecisionson the intentionsof theorganisations•concerning people. It concerns itself with the integration or linkages between the overall strategic aims of the business, human resource strategy and its implementation. Strategic HRM, thus, involves those decisions and actions that concern the management of employees at all •levels in the business and that are related to the implementation of strategies directed towards sustainable competitive advantage.

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It covers broad issues like organisational effectiveness, performance, competence and matching resources to •future business requirements, employees’ development and deployment (i.e., the right man at the right place at the right time).ItplacesagreatemphasisonstrategicHRpractices,flexibility,communication,organisationalcapabilities,•coherence, empowerment, change management, participative management, organisational commitment and organisational culture to achieve a given strategy, to develop and redevelop strategies and to design and oversee the necessary systematic change for gaining and sustaining competitive advantage.Strategic HRM provides a framework within which integrated HR strategies in the main areas of resourcing, •employees’ development, employees’ rewards and relations can be formulated. Themain focus of strategicHRM is to have operational linkages tofitHRMwith the strategic thrust of•the organisation for sustainable competitive advantage bymeans of effective and efficient use of humanresources.It includes management functions relating to the most important, yet intangible and complex asset of any •organisation which emphasises selection, training and development, career planning, compensation, motivation, leadership and commitment of the members of any organisation.

1.4.1 Emergence of Strategic Human Resource Management (SHRM)The last two decades saw major shifts in people management approaches and practices as evident from below table.ThefieldsofHumanresourceManagement(HRM),HumanResourceDevelopment(HRD)andOrganisationDevelopment (OD) have converged into the new strategic HRM.

HRM (Late 20th century) Strategic HRM (21st century)

Reactive1. Proactive1.

Staff function2. Strategic function2.

Production oriented3. People oriented3.

People as liability4. People as investment4.

Just a resource in the produc-5. tion process

Key player in competitive 5. advantage

Isolated from company’s 6. goals and planning

Integrated role in company’s 6. goals and planning

Table 1.1 HRM–shifting paradigms

AsremarkedbyRuonaandGibson,“• twenty-first century strategic HRM lays more emphasis on increased centrality of people for organisational success, importance of whole systems and integrated solutions in strategic alignment and impact and lastly has a tremendous capacity for change.”Management of people in organisations has witnessed a great deal of change in the last two decades. These •changes can be discussed in terms of two major developments:

first,theshiftfromoldpersonneladministrationtoHRM.Thischangeisbasedonthebeliefthat“people �are an important asset in organisation that can be managed systematically by coordinating the shape and substance of the several traditional personnel policies and practices.” second, the reorientation of the generic strategic models of HRM to the more modern concept of strategic �HRM.Itisbasedonthephilosophythat“inadditiontocoordinatingHRpoliciesandpracticeswitheachother, they needed to be coordinated or linked with the needs of the organisation.”

Thepasttwodecadeshavewitnessedagreatdealofemphasisbeingplacedona“strategic”approachtothe•development and implementation of HRM policies and practices.

Strategic HR

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The role of human resources as value added has evolved to broaden the research from micro level (i.e., focussing •on individual effectiveness) to a macro level (i.e., focussing on organisational effectiveness) approach. From this perspective, researchers have argued that HRM practices can contribute to sustainable competitive •advantage by lowering costs and enhancing product differentiation. This perspective has enriched the strategic HR theory, research and practice in many ways. They are as follows:

Strategic HRM makes HR practices important for organisational performance, such as, employee turnover, �productivityandfinancialperformance.It provides a clear explanation for why HR practices would be and should be linked to strategy; it posits a �testable mediating construct (required behaviours).Ithelps researchers tie traditionalHRtheories like rolebehaviour to thestrategicpostureof thefirms. �

1.4.2 The Evolutionary Stages of Strategic HRMStrategicHRMasafieldofstudyhasareasonablylonghistoryandhasgonethroughvariousstagesoftransition.The table below refers to six major stages in the journey of strategic HRM from the late 19th Century till present. We trace the evolutionary process of strategic HRM from the beginning of paternalism to present day strategic HRM.

Time Period Evolutionary HR Stages Influences

Late 19th century clerical operation immigration to the US from all over the world

Early 1900s-1930sPaternalism, labour administration

filedrawermaintenance market pressures, World War 1, great economic depression

1930s – 1950sPersonnel administration, PM and IR

unions, role specialisation labour relations,staffing,training growth of labour unions, World War 2

1960s – 1970sPM and IR

legalramificationsofpolicies, regulatory issues, compensation, benefitsandappraisal

government legislations

1970s – 1984HRM, HRD

strategic business partner, health care, cost containment, OD, teamwork and communication

globalisation, economic liberalisation

1984 –Strategic HRM

strategic player: adding value, mergers and acquisitions, downsizing and diversity

IT and communication revolution, globalisation continues, emergence of China and India as new centres of economic power

Table 1.2 Strategic HRM – from past to present: a journey

1.5 Difference Between Traditional HR and Strategic HRThe key difference between traditional and strategic concepts is the extent to which management of HR is •integrated into the strategic decision making processes that direct organisational efforts towards coping with the environment.WhiletraditionalHRideasemphasisesolelyonphysicalskills,concernforindividualefficiencyandqualityand•finallyworkforceasmanagementadversary,theemergingstrategicHRMideasemphasisethetotalcontributionofthefirm,innovativeandcreativebehaviour,overalleffectiveness,crossfunctionalintegration,investmentonpeopleandfinallyworkforceas“managementpartner”.

The following table appropriately illustrates the difference between traditional HR and strategic HR:

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Traditional HR Strategic HRStaff specialist1. Line manager1.

Employee relation2. Partnership with internal and external customers2. Transactional change, follower and 3. respondent Transformational change, change leader and initiator3.

Slow, reactive, fragmented4. Fast, proactive and integrated4.

Time horizon – short term5. Time horizon – short, medium or long term as required5.

Tight division of labour6. Broad,flexibleandcrosstrainingoflabour6. Investments in capital and products7. Investment in people knowledge7. Cost centre8. Investment centre8. Administration expert9. Strategic partner9.

Table 1.3 Traditional HR vs. strategic HR

Strategic HR

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SummaryThefieldofHRM(HumanResourceManagement)hasundergonesignificantchangesinscope,functionsand•activities over the years.Strategic HRM emphasises co-ordination or congruence among the various HRM practices like HR planning, •recruitment, selection, training, development, compensation, retention, evaluation and promotion of personnel within an organisation.Strategy is a plan which integrates an organisation’s major goals, policies and action sequences into a cohesive •whole.Itisaspecificmajoractionorpatternofactionforattainingbroadcorporationobjectives.Strategic management is considered to be a continuous activity that requires a constant adjustment of three major •interdependent poles: the values of senior management, the environment and the resources availableStrategic HRM provides a framework within which integrated HR strategies in the main areas of resourcing, •employees’ development, employees’ rewards and relations can be formulated.The key difference between traditional and strategic concepts is the extent to which management of HR is •integrated into the strategic decision making processes that direct organisational efforts towards coping with the environment.Strategic HRM makes HR practices important for organisational performance, such as, employee turnover, •productivityandfinancialperformance.

ReferencesHR Topics• . Available at: <http://www.cipd.co.uk/hr-topics/> www.cipd.co.uk/NR/rdonlyres/...EF5C.../SHRM_Chapter_01.doc. [Last accessed on 17th March, 2011].Strategic HRM• . Available at: <http://www.hrmguide.net/hrm/chap6/ch6-links.html>. [Last accessed on 17th March 2011].

Recommended ReadingChristensen, R., 2005. • Roadmap to Strategic HR: Turning a Great Idea into a Business Reality, AMACOM.Reilly, P. and Williams, T., 2006. • Strategic HR: Building the Capability to Deliver, Gower Technical Press.Sharma, A. and Khandekar, A., 2006. • Strategic Human Resource Management: an Indian perspective.1st ed., Response Books.

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Self Assessment

Withtheriseinprofessionalmaturityinthefield,personnelmanagementhasbecome_____________,which1. in the recent years has become strategic HRM.

training and developmenta. financemanagementb. marketing managementc. human resource managementd.

___________helps researchers tie traditional HR theories like role behaviour to the strategic posture of the 2. firms.

HR departmenta. HR managersb. SHRM c. HRMd.

In a management context, the word ‘strategy’ has now replaced the more traditional term ___________.3. long term planninga. short term planningb. performance goalsc. co-ordinationd.

Whodefinedstrategyasaplanwhichintegratesanorganisation’smajorgoals,policiesandactionsequences4. intoacohesivewhole?

Chandlera. Quinnb. Hungerc. Wheelend.

Asperconventionalwisdom,whichoftheseisnotalevelofstrategy?5. Corporate a. Businessb. Functionalc. Organisationald.

Strategic management is considered to be a continuous activity that requires a constant adjustment of _________ 6. major interdependent poles.

onea. twob. threec. fourd.

Strategic management gives a degree of discipline and formality to the ___________ of business.7. formulationa. controlb. directionc. managementd.

Strategic HR

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StrategicHRMmaybedefinedasanapproachformakingdecisionson the intentionsof theorganisations8. concerning __________.

machinesa. peopleb. buildingsc. managementd.

Whichstatementisfalse?9. The mission describes the organisation’s values and aspirations and indicates the direction in which senior a. management is going. Goals are the desired ends sought through the actual operating procedures of the organisation short-term b. measurable outcomes.Organisational analysis looks at the internal organisational strengths and weaknesses and the external c. environment for opportunities and threats. The term ‘strategic choice’ raises the question of who makes decisions and why they are made. d.

WhichtimeperiodsawunionsandlabourrelationsatanevolutionaryHRstage?10. 1960s–1970sa. 1930s–1950sb. 1970s–1984c. 1900s–1930s d.

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Chapter II

Strategic Human Resource Management

Aim


presenthighlightsofthefieldofstrategichumanresourcemanagement•

introduce the trends in SHRM•

discuss the HR practitioners role in SHRM•

Objectives


analyse the aims of strategic HRM •

discuss various approaches to strategic HRM•

identify the barriers in implementing HR strategies•

Learning outcome


discussthewaysinwhichstrategicfitisachieved•

recognisethebenefitsofstrategicHRM•

identify formulation of HR strategies•

Strategic HR

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2.1 IntroductionStrategicHumanResourceManagement(SHRM)canbedefinedasthelinkingofhumanresourceswithstrategicgoalsand objectives in order to improve business performance and develop organisational culture that foster innovation, flexibilityandcompetitiveadvantage.Inanorganisation,SHRMmeansacceptingandinvolvingtheHRfunctionas a strategic partner in the formulation and implementation of the company’s strategies through HR activities such as recruiting, selecting, training and rewarding personnel. Strategic human resource management is the process of linking the human resource function with the strategic objectives of the organisation in order to improve performance. If a global company is to function successfully, strategies at different levels need to inter-relate.

Anorganisation’shumanresourcemanagementpoliciesandpracticesmustfitwithitsstrategyinitscompetitiveenvironment and with the immediate business conditions that it faces. The human resources–business strategy alignment cannot necessarily be characterised in the logical and sequential way suggested by some writers; rather, the design of an HR system is a complex and iterative process.

Following are the key features of SHRM:There is an explicit linkage between HR policy and practices and overall organisational strategic aims and the •organisational environment.There are some organising schema linking individual HR interventions so that they are mutually supportive.•Much of the responsibility for the management of human resources has devolved down the line.•

2.2 Trends in Strategic Human Resource ManagementHuman resource management professionals are increasingly facing the issues of employee participation, human •resourceflow,performancemanagement,rewardsystemsandhighcommitmentworksystemsinthecontextof globalisation. Older solutions and recipes that worked in a local context do not work in an international context. Cross-cultural •issues play a major role here. These are some of the major issues that HR professionals and top management involved in SHRM are grappling •withinthefirstdecadeofthe21st century:

internationalisation of market integration �increased competition, which may not be local or even national through free market ideology �rapid technological change �new concepts of line and general management �constantly changing ownership and resultant corporate climates �cross-cultural issues �the economic gravity shifting from ‘developed’ to ‘developing’ countries �

SHRMalsoreflectssomeofthemaincontemporarychallengesfacedbyhumanresourcemanagementsuch•as:

aligning HR with core business strategy �demographic trends on employment and the labour market �integrating soft skills in HRD �knowledge management �

2.3 HR Practitioner's RoleThe HR managers have keen role in the effective planning and implementation of the policies and decisions •that tune in with the business changes. They should act as strategic partners and be proactive in their role than mere reactive, passive spectators.

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The HR managers should understand how far their decisions contribute to business surplus incorporating human •competency and performance to the organisation. Strategic HR managers need a change in their outlook from seeing themselves as relationship managers to •strategic resource managers. Major HRM innovations occur when senior management takes the lead and adoption of innovative SHRM practices •is dependent on the nature of relationship of the HR department with the CEO and the line managers. Adoption of an innovation by an organisation depends largely on HR practitioners’ credibility with information •and resource providers. HR department and HR managers in these innovative organisations play a strategic role linking the HR strategy with the business strategy of the organisation. AcrucialaspectconcerningSHRMistheconceptsoffitandflexibility.Thedegreeoffitdeterminesthehuman•resourcesystem’sintegrationwithorganisationstrategy. It is theroleofHRmanagerstoensurethisfit inbetween human resource system with the organisation strategy.

2.4 Human Resource as Competitive AdvantageCompetitive advantage lies not just in differentiating a product or service or in becoming the low cost leader •but also in able to tap the company’s special skills or core competencies and rapidly respond to customer’s need and competitors moves.It is management’s ability to consolidate corporate-wide technologies and production skills into competencies •that empower individual business to adapt quickly to changing opportunities.Roles assumed by the HR function are:•

strategic partner �change agent �administrative expert �people’s advocate �

2.5 Aims of Strategic HRMThe aim of strategic HRM is to generate strategic capability by ensuring that the organisation has skilled, •committed and well motivated employees that are needed to achieve sustained competitive advantage. The objective of strategic HRM is to provide a sense of direction in a turbulent environment in order that the •organisational needs and individual needs of employees can be met by the development and implementation of coherent and practical HR policies and programmes.While considering the aims of strategic HRM, it shall be necessary to address the extent to which HR strategy •should take into account the interest of all the stakeholders in the organisation. Soft strategic HRM will need to place greater emphasis on the human resource aspect of people management. •Hard strategic HRM on the other hand will emphasise the yield to be obtained by investing in human resources in the interest of the business.Strategic HRM attempts to achieve a balance between hard and soft elements. All organisations exist to achieve •a purpose and need to ensure that they have resources required and they also use them effectively. But they also must take into account the human considerations of the concept of soft strategic HRM and plan with people in mind, taking into account the needs and aspirations of the employees of the organisation. Mostly in organisations, thehardstrategicHRMisconsideredfirst,leavingsoftoneswaybehind.The rationale for strategic HRM is the perceived advantage of having an agreed and understood basis for •developing approaches to people management in the longer term.

2.6 Approaches to Strategic HRMThere are three main approaches to development of HR strategies. These are as described below:

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Best practice• This approach is based on the belief that there is a set of best HRM practices and that adapting them will lead to superior organisational performance. Some of the best practices have been enumerated below:

Sophisticate selection and recruitment process: selection tests to identify those with potential to make a �contribution.Jobdesigntoensureflexibility,commitment,andmotivation:employeeshouldhavesenseofresponsibility �and must be given autonomy to use their knowledge and skills to the full extent.recognising that training is an on-going activity �two way process of communication to ensure that everyone is fully informed �tokeepemployeesawareoftheimplicationsoftheiractionsincludingabsence,attritionetc.,forthefinancial �performanceofthefirmcoherent appraisal system �quality improvement teams �high level participation processes �high compensation contingent on performance �monitoring of attitude �promotion and compensation schemes �

OnemayconsiderHRMtobeagoodpractice,butitisdifficulttoacceptthattheyuniversallyconstitutebestpractice.Whatworkswellinanorganisationmaynotnecessarilyworkwellinanother,becauseitmaynotfititsstrategy,culture, management practices technology or working style.

Best fit• ThebestfitapproachisbasedonthebeliefthattherecanbenouniversalprescriptionsforHRMpolicies �and practices. It is all contingent on the organisation’s context, culture, and the business strategy. Itisacceptedbymanycommentatorthat‘bestfit’ismoreimportantthan‘bestpractice’.Thefocusofthe �‘bestfit’approachisonthelinkageofHRstrategieswithbusinessstrategies.Thislinkageisalsoreferredto as vertical integration. ‘Bestfit’alsomeansthatHRstrategiesshouldmatchthestagesofthedevelopmentofthefirm.Theapproach �implies that an organisation’s performance will improve when HR practices reinforce the organisation’s competitive position.

Configuration• Theconfigurationapproachfocusesonthesearchfordistinctiveconfigurations–arrangementsof‘joined �up’ HR practices, that when combined, will function more effectively by complementing and supporting one another.Configurationapproachisalsocalledthe‘HRBundles’approach.Theproblemwiththisapproachisthe �difficultyofdecidingonthebestwaytocombinedifferentpractices.Thereisnoevidencethatonebundleis generally better than the other. A good number of researchers have also shown that using a large number of high performance practices will produce better results.Strategic HRM is holistic; it is concerned with the organisation as a whole in order to enable it to achieve �its corporate strategic objectives. It does not take interest in isolated programmes and techniques or in the ad hoc development of HR programmes.

2.7 Formulation of HR StrategiesFormulation of HR strategies has two key elements:

Strategic objectives:• This refers to what the organisation is supposed to achieve through HR.Plan of action:• This refers to the means by which organisation proposes that the objectives will be met.

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Described below are the approaches to HR strategy formulation:

2.7.1 The Classical Sequential ApproachThis approach follows the traditional belief that strategy formulation is a formal, logical, systematic and sequential process.The following methodology may be proposed for this approach:

Access feasibility:• Check whether the numbers and types of key people required for making the proposal succeed can be obtained on a timely basis and at a reasonable cost.Determine desirability:• Examine the implications of strategy in terms of HR policies.Determine goals:• These indicate the main issues to be worked on and are derived from the content of business strategy (e.g., a strategy to become lower cost producer would require reduction of labour costs; it may aim for high performance standards and reduced headcounts).Decide means of achieving goals:• It refers to the style adopted by the company in creating strategies and monitoring their implementations considering the external and internal environment.

2.7.2 The Empirical Need-based ApproachAn empirical approach to strategic HRM is based on an understanding of the realities of organisational life.

Fig. 2.1 The empirical approach to formulating HR strategy

Fromtheabovefigure,wemayseethattheempiricalapproachisamatterofturningtheprocessesofbusinessdecision making at the top and identifying key business issues, needs and priorities, in order to describe in broad term the strategic intentions of the organisation. The HR implications of these intentions can then be established, which can lead to development of appropriate HR strategies and plans for implementing them taking into account environmental factors and core organisational competencies.

Business issues needs and intention

Programme for the implemention of HR

strategy

Analysis of environment

Analysis of core competencies

HR Strategies to meet business needs and

intentions

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2.8 Achieving Strategic FitStrategicfitreferstotheverticalintegrationofHRandbusinessstrategiesandhorizontalintegrationofHRstrategieswith one another.

Vertical fit • ItisknownthatbusinessandHRissuesinfluenceeachotherandinturninfluencecorporateandbusiness �unit strategies. While establishing these links, one must take into account that strategies for change have also to be integrated �with changes in the external and internal environments. Fitmayexistatapointoftime,butwithchangesincircumstances,fitmaynolongerexist.Therefore, �flexibilityofapproachisessentialinturbulentconditions.

Horizontal fit • ItreferstomutuallysupportingHRstrategies,thehorizontalfitisachievedwhenvariousHRstrategiescohereand are mutually supporting. This process will be driven the needs and characteristics of the business. The steps required are:

analyse the need of the business and its characteristics �assess how HR strategy can help to meet the business needs and also in turn be congruent with the �characteristics of businessidentify the capabilities and behaviours required on the part of employees in order to contribute to �achievements of strategic goalsassess how effective are current HR practices and the need for change �analyse the scope for linking various HR practices so that they become mutually reinforcing and therefore, �coherentformulate programmes for the development of these practices �

2.8.1 Problems in Achieving Strategic Fit

Complexityoftheorganisationanditsstrategies,whichmaymakeitdifficulttoachievecoherenceinactivities•and plan.Senior mangers may look for short term solutions, which may not cohere to the HR strategies.•Managementpressureorfinancialconstraintsmaybeanimpedimenttoachieveinternalhorizontalfit.•Difficulty in implementationwhere it is difficult tomaintain linksbecauseof indifferentor incapable line•managers.

2.9 Benefits of Strategic HRMThefollowingarethebenefitsofasuccessfulSHRM:

identifiesandanalysesexternalopportunitiesandthreatsthatmaybecrucialtothecompany’ssuccess•provides a clear business strategy and vision for the future•supplies competitive intelligence that may be useful in the strategic planning process•recruits, retains and motivates people•develops and retains of highly competent people•ensures that people development issues are addressed systematically•supplies information regarding the company’s internal strengths and weaknesses•meets the expectations of the customers effectively•ensures high productivity•guarantees business surplus thorough competency•

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2.10 Barriers to Strategic HRMBarriers to successful strategic HRM implementation are complex. The main reason is a lack of growth strategy or failure to implement one. Other major barriers are summarised as follows:

inducing the vision and mission of the change effort•high resistance due to lack of cooperation from the bottom line•interdepartmentalconflict•the commitment of the entire senior management team•plans that integrate internal resource with external requirements•limited time, money and resources•the status quo approach of employees•fear of incompetency of senior level managers to take up strategic steps•diverse work-force with competitive skill sets•fear towards victimisation in the wake of failures•improperstrategicassignmentsandleadershipconflictoverauthority•ramificationsforpowerrelations•vulnerability to legislative changes•resistance that comes through the legitimate labour institutions•presence of an active labour union•rapid structural changes•economicandmarketpressuresinfluencedtheadoptionofstrategicHRM•more diverse, outward looking approach•

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SummaryStrategic human resource management is the process of linking the human resource function with the strategic •objectives of the organisation in order to improve performance.Anorganisation’shumanresourcemanagementpoliciesandpracticesmustfitwithitsstrategyinitscompetitive•environment and with the immediate business conditions that it faces.The HR managers have keen role in the effective planning and implementation of the policies and decisions •that tune in with the business changes.The aim of strategic HRM is to generate strategic capability by ensuring that the organisation has skilled, •committed and well motivated employees that are needed to achieve sustained competitive advantage.The rationale for strategic HRM is the perceived advantage of having an agreed and understood basis for •developing approaches to people management in the longer term.The classical sequential approach follows the traditional belief that strategy formulation is a formal, logical, •systematic and sequential process.An empirical approach to strategic HRM is based on an understanding of the realities of organisational life.•Barriers to successful strategic HRM implementation are complex. The main reason is a lack of growth strategy •or failure to implement one.

ReferencesSociety for Human Resource Management• . Available at: <http://www.shrm.org/Research/Articles/Pages/default.aspx> Last Accessed on 23rd March 2011.Strategic Human Resource Management (SHRM): An Over View• . Available at: <http://www.indianmba.com/Faculty_Column/FC309/fc309.html> Accessed on 23rd March 2011.

Recommended ReadingHoe, Siu-Loon, 2005. • Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. Journal of the Australian and New Zealand Academy of Management, 11(1).Reilly, P. A. and Williams T., 2006. • Strategic HR: Building the Capability to Deliver. Gower Publishing, Ltd. Sheehan,C.andScafidi,A.,2005.• The Strategic Role of HR Managers in Australian Organisations: Cues from Organisational Recruitment Sources. Journal of Management & Organisation, 11(1).

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Self Assessment

Strategichumanresourcemanagementcanbedefinedasthelinkingof_________withstrategicgoalsand1. objectives.

human resourcesa. resourcesb. financesc. marketsd.

Whichstatementisfalse?2. ThebestfitapproachisbasedonthebeliefthattherecanbeanuniversalprescriptionsforHRMpoliciesa. and practices. Itisacceptedbymanycommentatorthat‘bestfit’ismoreimportantthan‘bestpractice’.b. Thefocusofthe‘bestfit’approachisonthelinkageofHRstrategieswithbusinessstrategies.c. ‘Bestfit’alsomeansthatHRstrategiesshouldmatchthestagesofthedevelopmentofthefirm.d.

Whatdeterminesthehumanresourcesystem’sintegrationwithorganisationstrategy?3. Strategicfita. Verticalfitb. Horizontalfitc. Degreeoffitd.

HR department and HR managers in innovative organisations play a ________ role linking the HR strategy 4. with the business strategy of the organisation.

reactivea. strategicb. proactivec. legal d.

While considering the aims of strategic HRM, it shall be necessary to address the extent to which HR strategy 5. should take into account the interest of all the _________ in the organisation.

employeesa. managersb. stakeholdersc. administratorsd.

Which approach to strategic HRM is based on the belief that there is a set of best HRM practices and that 6. adaptingthemwillleadtosuperiororganisationalperformance?

Bestfita. Best practiceb. Configurationc. Verticalfitd.

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Which approach to strategic HRM is based on the belief that there can be no universal prescriptions for HRM 7. policiesandpractices?


WhichapproachtostrategicHRMfocusesonthesearchfordistinctiveconfigurations–arrangementsof‘joined8. up’HRpractices?


WhichapproachtostrategicHRMisalsocalledasthe‘HRBundles’approach?9. Bestfita. Best practiceb. Configurationc. Verticalfitd.

Which approach follows the traditional belief that strategy formulation is a formal, logical, systematic and 10. sequentialprocess?

The classical sequential approacha. The empirical needs-based approachb. Theconfigurationapproachc. Thebestfitapproachd.

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Chapter III

Human Resource Strategies

Aim


introduceHRstrategiesbydefiningthem•

explain the types of HR strategies•

state in brief the criteria for an effective HR strategy•

Objectives


generalise the concept of HR strategies•

specify the approaches of developing HR strategies•

determine the ways in which HR strategies can be implemented•

Learning outcome


identify how a strategic review is conducted •

suggest the ways in which HR strategies are implemented•

discuss the barriers to the implementation of HR strategies•

judge and analyse the ways in which the barriers can be overcome•

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3.1 IntroductionStrategic HRM is the process that results in the formulation of HR strategies. The terms ‘strategic HRM’ and ‘HR strategy’ are often used interchangeably, but a distinction can be made between them.

Strategic HRM can be regarded as a general approach to the strategic management of human resources in accordance with the intentions of the organisation on the future direction it wants to take. What emerges from this process is a stream of decisions over time, which form the pattern adopted by the organisation for managing its human resources anddefinetheareasinwhichspecificHRstrategiesneedtobedeveloped.HRstrategieswillfocusonthespecificintentions of the organisation on what needs to be done and what needs to be changed.

3.2 HR Strategies DefinedHR strategies set out what the organisation intends to do about its human resource management policies and practices, and how they should be integrated with the business strategy and each other. The purpose of HR strategies is to guide development and implementation programmes. They provide a means of communicating to all concerned the intentions of the organisation about how its human resources will be managed. They enable the organisation to measure progress and evaluate outcomes against objectives.

3.3 Types of HR StrategiesAll HR strategies are different because all organisations are different. There is no such thing as a set of standard characteristics. Research into HR strategy revealed many variations. Some strategies are simply very general declarationsofintent.Othersgointomuchmoredetail.ButtwobasictypesofHRstrategiescanbeidentifiedwhichare relating to the different aspects of human resource management. These types are as described below:

3.3.1 Overarching Strategies

Overarching strategies describe the general intentions of the organisation about how people should be managed •and developed and what steps should be taken to ensure that the organisation can attract and retain the people it needs and ensure so far as possible that employees are committed, motivated and engaged. They are likely to be expressed as broad-brush statements of aims and purpose, which set the scene for more •specificstrategies.Theyareconcernedwithoverallorganisationaleffectiveness–achievinghumanresourceadvantage by employing ‘better people in organisations with better process’, developing high-performance work processes and generally creating ‘a great place to work’.Following are some examples of overarching HR strategy statements:•

AEGON: � The Human Resources Integrated Approach aims to ensure that from whatever angle staff now looks at the elements of pay management, performance, career development and reward, they are consistent and linked.B&Q: � Enhance employee commitment and minimize the loss of B&Q’s best people. Position B&Q as one of the best employers in the UK.Egg: � ThemajorfactorinfluencingHRstrategywastheneedtoattract,maintainandretaintherightpeopletodeliverit.Theaimwastointroduceasystemthatcomplementedthebusinessthatreflectedthewaywewanted to treat our customers–treating our people the same. What we would do for our customers we would alsodoforourpeople.Wewantedtomakeanimpactontheculture–thewaypeopledobusiness.—(HRDirector)GlaxoSmithKline: � We want GSK to be a place where the best people do their best work.An insurance company: � Without the people in this business we don’t have anything to deliver. We are driven to getting the people issues right in order to deliver the strategy. To a great extent it’s the people that create and implement the strategy on behalf of the organisation. We put people very much at the front of ourstrategicthoughtprocess.Ifwehavetherightpeople,therighttraining,therightqualificationsandtherightsortofculturethenwecandeliverourstrategy.Wecannotdoitotherwise.—(ChiefExecutive)Lands’ End: � Based on the principle that staff who are enjoying themselves, are being supported and developed,andwhofeelfulfilledandrespectedatwork,willprovidethebestservicetocustomers.

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Pilkington Optronics: � ThebusinessstrategydefineswhathastobedonetoachievesuccessandthatHRstrategy must complement it, bearing in mind that one of the critical success factors for the company is its ability to attract and retain the best people. HR strategy must be in line with what is best in industry.A public utility: � The only HR strategy you really need is the tangible expression of values and the implementationofvalues…unlessyougetthehumanresourcevaluesrightyoucanforgetalltherest.—(Managing Director)A manufacturing company: � The HR strategy is to stimulate changes on a broad front aimed ultimately at achieving competitive advantage through the efforts of our people. In an industry of fast followers, those wholearnquickestwillbethewinners.—(HRDirector)A retail stores group: � The biggest challenge will be to maintain [our] competitive advantage and to do that we need to maintain and continue to attract very high calibre people. The key differentiator on anything any company does is fundamentally the people, and I think that people tend to forget that they are the most important asset. Money is easy to get hold of; good people are not. All we do in terms of training and manpowerplanningisdirectlylinkedtobusinessimprovement.—(ManagingDirector)

3.3.2 Specific HR StrategiesSpecificHRstrategiessetoutwhattheorganisationintendstodoinareassuchas:

Talent management:• how the organisation intends to ‘win the war for talent’.Continuous improvement:• providing for focused and continuous incremental innovation sustained over a period of time.Knowledge management: • creating, acquiring, capturing, sharing and using knowledge to enhance learning and performance.Resourcing:• attracting and retaining high-quality people.Learning and developing:• providing an environment in which employees are encouraged to learn and develop.Reward:• definingwhat theorganisationwants todo in the longer term todevelopand implement rewardpolicies, practices and processes that will further the achievement of its business goals and meet the needs of its stakeholders.Employee relations:• definingtheintentionsoftheorganisationaboutwhatneedstobedoneandwhatneedsto be changed in the ways in which the organisation manages its relationships with employees and their trade unions.

FollowingaresomeexamplesofspecificHRstrategies:The Children’s society

Implement the rewards strategy of the Society to support the corporate plan and secure the recruitment, retention •and motivation of staff to deliver its business objectives.Manage the development of the human resources information system to secure productivity improvements in •administrative processes.Introduce improved performance management processes for managers and staff of the Society.•Implement training and development, which supports the business objectives of the Society and improves the •quality of work with children and young people.

DiageoThese are the three broad strands to the Organisation and People Strategy:

Reward and recognition:• use recognition and reward programmes to stimulate outstanding team and individual performance contributions.Talent management:• drive the attraction, retention and professional growth of a deep pool of diverse, talented employees.

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Organisational effectiveness:• ensure that the business adapts its organisation to maximise employee contribution and deliver performance goals.

It provides direction to the company’s talent, operational effectiveness and performance and reward agendas. The company’s underlying thinking is that the people strategy is not for the human resource function to own but is the responsibility of the whole organisation, hence the title ‘Organisation and People Strategy’.

A Government agencyThe key components of the HR strategy are:

Investing in people: • improving the level of intellectual capital.Performance management: • integrating the values contained in the HR strategy into performance management processes and ensuring that reviews concentrate on how well people are performing those values.Job design: • a key component concerned with how jobs are designed and how they relate to the whole business.The reward system: • in developing rewards strategies, taking into account that this is a very hard driven business.

HR strategies for higher education institutions (The Higher Education Funding Council):Addressrecruitmentandretentiondifficultiesinatargetedandcosteffectivemanner.•Meetspecificstaffdevelopmentandtrainingobjectivesthatnotonlyequipstafftomeettheircurrentneedsbut•also prepare them for future changes, such as using new technologies for learning and teaching. This would include management development.Develop equal opportunity targets with programmes to implement good practice throughout an institution. This •would include ensuring equal pay for work of equal value, using institution-wide systems of job evaluation. This could involve institutions working collectively – regionally or nationally.Carryoutregularreviewsofstaffingneeds,reflectingchangesinmarketdemandsandtechnology.Thereviews•would consider overall numbers and the balance of different categories of staff.Conduct annual performance reviews of all staff, based on open and objective criteria, with reward connected •to the performance of individuals including, where appropriate, their contribution to teams.Take action to tackle poor performance.•

A local authorityThe focus is on the organisation of excellence. The strategy is broken down into eight sections: employee relations, recruitment and retention, training, performancemanagement, pay and benefits, health and safety, absencemanagement and equal opportunities.

3.4 Criteria for an Effective HR StrategyAn effective HR strategy is one that works in the sense that it achieves what it sets out to achieve. The strategy should be such that it:

will satisfy business needs•can be founded on detailed analysis and study, not just wishful thinking•can be turned into actionable programmes that anticipate implementation requirements and problems•iscoherentandintegrated,beingcomposedofcomponentsthatfitwithandsupporteachother•takes account of the needs of line managers and employees generally as well as those of the organisation and •its other stakeholders. HR planning should aim to meet the needs of the key stakeholder groups involved in peoplemanagementinthefirm.

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3.5 Developing HR StrategiesFollowing is the six-step approach of developing HR strategies as proposed by Gratton:

Build the guiding coalition:1. involve people from all parts of the business.Image the future:2. create a shared vision of areas of strategic importance.Understand current capabilities and identify the gap:3. establish where the organisation is now and the gap between aspirations for the future and the reality of the present.Create a map of the system:4. ensure that the parts can be built into a meaningful whole.Model the dynamics of the system:5. ensure that the dynamic nature of the future is taken into account.Bridge into action:6. agreethebroadthemesforactionandthespecificissuesrelatedtothosethemes,developguiding principles, involve line managers and create cross-functional teams to identify goals and performance indicators.

But many different routes may be followed when formulating HR strategies–there is no one right way. The different approachestostrategyformationreflectdifferentwaystomanagechangeanddifferentwaystobringthepeoplepartof the business into line with business goals. The process of formulating HR strategy was often as important as the content of the strategy ultimately agreed. It was argued that, by working through strategic issues and highlighting points of tension, new ideas emerged and a consensus over goals was found.

3.5.1 A Methodology for Formulating HR StrategiesDyer and Holder developed a methodology for formulating HR strategies as follows:

Fig. 3.1 Methodology for formulating HR strategies

Assess feasibility: • From an HR point of view, feasibility depends on whether the numbers and types of key people required to make the proposal succeed can be obtained on a timely basis and at a reasonable cost, and whether the behavioural expectations assumed by the strategy are realistic (e.g., retention rates and productivity levels).Determine desirability:• Examine the implications of strategy in terms of sacrosanct HR policies (e.g., a strategy of rapid retrenchment would have to be called into question by a company with a full employment policy).Determine goals:• These indicate the main issues to be worked on and they derive primarily from the content

Assess feasibility

Decide means of achieving

goals

Methodology for formulating

HR StrategiesDetermine desirability Determine goals

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of the business strategy. For example, a strategy to become a lower-cost producer would require the reduction of labour costs. This in turn translates into two types of HR goals: higher performance standards (contribution) and reduced headcounts (composition).Decide means of achieving goals:• Thegeneralruleisthattheclosertheexternalandinternalfit,thebetterthestrategy,consistentwiththeneedtoadaptflexiblytochange.Externalfitreferstothedegreeofconsistencybetween HR goals on one hand and the exigencies of the underlying business strategy and relevant environmental conditionsontheother.InternalfitmeasurestheextenttowhichHRmeansfollowfromtheHRgoalsandotherrelevant environmental conditions, as well as the degree of coherency or synergy among various HR means.

3.6 Setting Out the StrategyFollowing are the headings under which a strategy and the plans for implementing it could be set out:

Basis: • This includes business needs in terms of the key elements of the business strategy, environmental factors and analysis, cultural factors – possible helps or hindrances to implementationContent:• This includes the details of the proposed HR strategy.Rationale:• The business case for the strategy against the background of business needs and environmental/cultural factors. This includes action programme, responsibility for each stage, resources required, proposed arrangements for communication, consultation, involvement and training, project management arrangements.Costs and benefits analysi• s: An assessment of the resource implications of the plan (costs, people and facilities) andthebenefitsthatwillaccrue,fortheorganisationasawhole,forlinemanagersandforindividualemployees(sofaraspossiblethesebenefitsshouldbequantifiedintermsofvalueadded).Butthereisnostandardmodel;it all depends on the circumstances of the organisation.

3.7 Conducting a Strategic ReviewAlthoughHRstrategiescanemergeandevolveundertheinfluenceofevents,thereismuchtobedoneforadoptinga systematic approach to their formulation. This can take the form of a strategic review, which assesses strategy requirements in the light of an analysis of present and future business and people needs. Such a review provides answers to three basic questions:

Wherearewenow?1. Wheredowewanttobeinone,twoorthreeyears’time?2. Howarewegoingtogetthere?3.

The stages of a strategic review are illustrated below.

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Fig. 3.2 Strategic review sequenceThefollowingisanexampleofastrategicreviewascarriedoutinalargenot-for-profitorganisation.

HR strategic review

BackgroundA major strategic review of the business has taken place and a new Chief Executive and other members of the senior management team have been appointed within the last two years. In essence, the review led to a business strategy that:

redefinedthepurposeoftheorganisation•emphasised that the core purpose will continue to be given absolute priority•

Analysis:Whatisthebusinessstrategyandwhatarethebusinessneedsemergingfromit?•Whataretheculturalandenvironmentalfactorsweneedtotakeintoaccount?•WhatarethekeyHRweaknessesandissues?•Whatarethegapsbetweenwhatwearedoingandwhatweoughttodo?•

Diagnosis:WhydotheHRweaknessesandissuesexist?•Whatisthecauseofanygaps?•Whatfactorsareinfluencingthesituation(cultural,environmental,competition,•political,etc)?

Conclusions and recommendations:Whatareourconclusionsfromtheanalysis/diagnosis?•Whatdoweneedtodotofillthegaps?•Whatalternativestrategiesareavailable?•Whichalternativeisrecommendedandwhy?•

Action planningWhatactionsdoweneedtotaketoimplementtheproposals?•Whatproblemsmaywemeetandhowwillweovercomethem?•Whotakestheactionandwhen?•How do we ensure that we have the committed and capable line managers •required?

Resource planning:Whatresourceswillweneed(money,people,time)?•Howwillweobtaintheseresources?•Howdoweconvincemanagementthattheseresourcesarerequired?•Whatsupportingprocessesarerequired?•

Benefits:Whatarethebenefitstotheorganisationofimplementingtheseproposals?•Howdotheybenefitindividualemployees?•Howdotheysatisfybusinessneeds?•

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set out the need to secure the future of activities outside its core purpose•madeproposalsdesignedtoshapeandsecurethefinancialfuture•

HR issues emerging from the strategic reviewThe key HR issues emerging from the strategic review are that:

it will lead to the transformation of the organisation•this involves major cultural changes, for example:•

some change in the focus to activities other than the core activity �a move away from a paternalistic, command-and-control organisation �introducingprocessesthatenabletheorganisationtooperatemoreflexibly �clarifying expectations but simultaneously gaining commitment to managing and carrying out activities on �the basis of increased self regulation and decision making at an operational level rather than pressures or instructions from abovemore emphasis on managerial as distinct from technical skills for managers �greaterconcentrationonthefinancialrequirementtobalanceincomeandexpenditurewhilecontinuingto �develop and improve service delivery

Asignificantchangeintheregionalorganisationandtherolesofthemanagementteamandregionalcontrollers/•managers is taking place; this means that new skills will have to be used that some existing managers may not possess.From a human resource planning viewpoint, decisions will have to be made on the capabilities required in the •future at managerial and other levels and these may involve establishing policies for recruiting new managerial talent from outside the organisation rather than relying on promotion from within.Difficultdecisionsmayhavetobemadeonretainingsomeexistingmanagersintheirpostswholacktherequired•skills and there may be a requirement to reduce staff numbers in the future.More positively, management development and career planning activities will need to be introduced that •reflectthechangingcultureandstructureoftheorganisationandthedifferentrolesmanagersandotherswillbe expected to play.The provision of the core HR services such as recruitment and training is not an issue.•

Steps to address the issuesSteps have already been taken to address these issues, for example:

major communication initiatives introduced by the Chief Executive•a review of the pay system, which will no doubt bear in mind the unsatisfactory experience of the organisation •in applying performance management/pay procedures a few years agodecisions on the shape of the regional organisation•an analysis and diagnosis on cultural issues i.e., what the present culture is and what it should become•

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Future strategyAgainst this background, it is necessary to build on the steps already taken by:

Adopting a systematic approach to the achievement of culture change, bearing in mind that this can be a long •haulbecauseitinvolveschangingbehaviourandattitudesatalllevelsandisdifficultifnotimpossibletoattainsimply by managerial dictation.Developing an HR strategy that, as a declaration of intent, will provide a framework for the development of HR •processes and procedures that address the issues referred to above; this involves:

strategic integration, matching HR policies and practices to the business strategy �a coherent approach to the development of these processes so that HR activities are interrelated and mutually �reinforcinga planned approach, but one that is not bureaucratic �an emphasis on the need to achieve flexibility, quality and cost-effectiveness in the delivery ofHR �services

Focusing on the activities that will not only deal with the HR issues, but also help to achieve culture change, •such as:

Resourcing: � Deciding what types of people are required and ensuring that they are available.Human resource development: � Identifying the skills required, auditing the skills available, taking steps to match skills to present and future business requirements and initiating processes for enhancing organisational and individual learning related to business needs.Reward: � Using reward processes to ensure that people are valued according to their contribution and to convey messages about the behaviour, capabilities and results expected of them.Employee relations: � Building on the steps already taken to communicate to employees and to involve them in decision-making processes on matters that concern them.

The HR strategy will have to establish priorities. Because the thrust of the strategic review initially makes most •impact on managers, the priority may well be given to people at this level but without neglecting the needs of the rest of the staff.

3.8 Implementing HR StrategiesBecause strategies tend to be expressed as abstractions, they must be translated into programmes with clearly •stated objectives and deliverables. But getting strategies into action is not easy. The term ‘strategic HRM’ has been devalued in some quarters, sometimes to mean no more than a few generalised •ideas about HR policies and at other times to describe a short-term plan, for example to increase the retention rate of graduates. It must be emphasised that HR strategies are not just programmes, policies, or plans concerning HR issues that •the HR department happens to feel are important. The problem with strategic HRM is that, too often, there is a gap between what the strategy states will be •achieved and what actually happens to it. ThefactorsidentifiedbyGratton• et al that contribute to creating this gap included:

the tendency of employees in diverse organisations only to accept initiatives they perceive to be relevant �to their own areasthe tendency of long-serving employees to cling to the status quo �complex or ambiguous initiatives may not be understood by employees or will be perceived differently by �them, especially in large, diverse organisationsitismoredifficulttogainacceptanceofnon-routineinitiatives �employeeswillbehostiletoinitiativesiftheyarebelievedtobeinconflictwiththeorganisation’sidentity, �e.g., downsizing in a culture of ‘job-for-life’the initiative is seen as a threat �inconsistencies between corporate strategies and values �

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the extent to which senior management is trusted �the perceived fairness of the initiative �the extent to which existing processes could help to embed the initiative �a bureaucratic culture that leads to inertia �

3.9 Barriers to the Implementation of HR StrategiesEach of the factors listed by Gratton • et al can create barriers to the successful implementation of HR strategies. Other major barriers include failure to understand the strategic needs of the business, inadequate assessment •of the environmental and cultural factors that affect the content of the strategies, and the development of ill-conceived and irrelevant initiatives, possibly because they are current fads or because there has been an ill digestedanalysisofbestpracticethatdoesnotfittheorganisation’srequirements.Theseproblemsarecompoundedwheninsufficientattentionispaidtopracticalimplementationproblems,the•important role of line managers in implementing strategies and the need to have established supporting processes for the initiative (e.g., performance management to support performance pay).

3.9.1 Overcoming the BarriersTo overcome these barriers, it is necessary to:

conduct a rigorous preliminary analysis of needs and requirements •formulate the strategy•enlist support for the strategy•assess barriers•prepare action plans •project-manage implementation •follow up and evaluate progress so that remedial action can be taken as necessary•

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SummaryStrategic HRM can be regarded as a general approach to the strategic management of human resources in •accordance with the intentions of the organisation on the future direction it wants to take.HR strategies set out what the organisation intends to do about its human resource management policies and •practices, and how they should be integrated with the business strategy and each other. Overarching strategies describe the general intentions of the organisation about how people should be managed •and developed and what steps should be taken to ensure that the organisation can attract and retain the people it needs and ensure so far as possible that employees are committed, motivated and engaged.SpecificHRstrategiessetoutwhattheorganisationintendstodoinareassuchastalentmanagement,continuous•improvement, knowledge management, resourcing, learning and developing, reward and employee relations.The problem with strategic HRM is that, too often, there is a gap between what the strategy states will be •achieved and what actually happens to it. Major barriers to the implementation of HR strategies include failure to understand the strategic needs of the •business, inadequate assessment of the environmental and cultural factors that affect the content of the strategies, and the development of ill-conceived and irrelevant initiatives.The HR strategy will have to establish priorities. Because the thrust of the strategic review initially makes most •impact on managers, the priority may well be given to people at this level but without neglecting the needs of the rest of the staff.

ReferencesHuman Resource Management.• Available at: <http://www.accel-team.com/human_resources/hrm_08.html> [Accessed on 24th March, 2011].Strategic Human Resource Management. • Available at: <http://www.indianmba.com/faculty_column/fc722/fc722.html> [Accessed on 24th March, 2011].

Recommended ReadingSingh, M. and Krishna, S., • Strategic Human Resource Management: three-stage process and influencing organisational factors. [pdf].Available at: <http://www.iimahd.ernet.in/publications/data/2004-06-04manjari.pdf> [Accessed on 24th March, 2011].The Strategic Human Resource Management Model• . [pdf]. Available at: <http://highered.mcgraw-hill.com/sites/dl/free/0070951764/447763/Chapter01.pdf> [Accessed on 24th March, 2011].Theoretical perspectives for strategic human resource management. • [pdf]. Availableat:<http://findarticles.com/p/articles/mi_m4256/is_n2_v18/ai_12720961/pg_12/?tag=content;col1>[Accessedon24th March ,2011].

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Self Assessment

Strategic HRM is the process that results in the formulation of HR _____________.1. policiesa. rulesb. proceduresc. strategiesd.

Which type of HR strategy describes the steps that should be taken to ensure that the organisation can attract 2. andretainthepeopleitneeds?

Overarching strategiesa. Specificstrategiesb. Bestfitstrategiesc. Configurationstrategiesd.

TheapproachofdevelopingHRstrategiesasproposedbyGrattonconsistsofhowmanysteps?3. Foura. Fiveb. Sixc. Sevend.

WhodevelopedamethodologyforformulatingHRstrategies?4. Grattona. Dyer and Holderb. Purcellc. Currie and Procterd.

_________ refers to the degree of consistency between HR goals on the one hand and the exigencies of the 5. underlying business strategy and relevant environmental conditions on the other.

Internalfita. Externalfitb. Horizontalfitc. Verticalfitd.

The problem with strategic HRM is that, too often, there is a ________ between what the strategy states will 6. be achieved and what actually happens to it.

bridgea. holeb. gapc. differenced.

Whichofthesefocusonthespecificintentionsoftheorganisationonwhatneedstobedoneandwhatneeds7. tobechanged?

HR policiesa. HR rulesb. HR proceduresc. HR strategiesd.

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HR strategies provide a means of communicating to all concerned the intentions of the organisation about how 8. its ______________ will be managed.

human resourcesa. financesb. productionsc. purchasesd.

Whichstatementistrue?9. HR strategies do not serve the purpose to guide development and implementation programmes.a. Because all organisations are same, all HR strategies are also same.b. Specificstrategiesdescribethegeneralintentionsoftheorganisationabouthowpeopleshouldbemanagedc. and developed.An effective HR strategy is one that works in the sense that it achieves what it sets out to achieve.d.

Whichstatementisfalse?10. Many different routes may be followed when formulating HR strategies.a. InternalfitmeasurestheextenttowhichHRmeansfollowfromtheHRgoalsandotherrelevantenvironmentalb. conditions.As strategies tend to be expressed as abstractions, they must be translated into programmes with clearly c. stated objectives and deliverables.Specificstrategiesdescribethegeneralintentionsoftheorganisationabouthowpeopleshouldbemanagedd. and developed.

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Chapter IV

Roles in Strategic Human Resource Management

Aim

The aim of the chapter is to:

classify various roles of strategic HRM•

determinethespecificstrategicrolesofHRlikebusinesspartner,theinnovationrole,thechangemanagerrole•

and the implementer role

explain the strategic role of front-line management and top management•

Objectives


explain the strategic role of the HR director•

discuss the strategic role of the HR specialists•

introduce the new mandate for HR•

Learning outcome


theorise the concept of various strategic roles played by HR people in strategic HR•

distinguish between the strategic roles played by top management, front-line management, HR director and •

HR specialists

explain change model used by HR, with the help of example•

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4.1 The Strategic Role of Top ManagementTopmanagementistheretoprovidevisionaryleadership,definepurposesandvaluesandsetthedirection.Itdevelopsthe overall business strategies and ensures that functional strategies for marketing, product/service development, customer service, operations, IT and HR are prepared and implemented in ways that provide sustained support to the achievement of business goals.

4.2 The Strategic Role of Front-line ManagementHR can initiate new policies and practices, but it is the line that has the main responsibility for implementing •them.Inotherwords,“HRproposesbutthelinedisposes.”Front-line managers bring HR policies to life. If line managers are not disposed favourably towards what HR •wants them to do, they won’t do it or, if compelled to, they will be half-hearted about it.High levels of organisational performance are not achieved simply by having a range of well-conceived HR •policies and practices in place. What makes the difference is how these policies and practices are implemented. That is where the role of line managers in people management is crucial. The way line managers implement and enact policies, show leadership in dealing with employees and in exercising control come through as a major issue.A further factor affecting the role of line management is their ability to do the HR tasks assigned to them. People-•centredactivitiessuchasdefiningroles,interviewing,reviewingperformance,providingfeedback,coachingandidentifying learning and development needs all require special skills. Some managers have them; some don’t. Performance-related pay schemes sometimes fail because of untrained line managers.Line managers should actively participate in the ‘thinking’ as well as the ‘doing’ of strategy. Line managers •can champion alternatives by conceiving opportunities that fall outside an organisation’s current concept of strategy. They can synthesise information about emerging issues, for example, internal or external developments and •events and trends viewed as important to the organisation. They can also stimulate change that has not been catered for in the organisation’s deliberate strategy by supporting more radical activities. Line managers can carry out these roles if they are given authority as well as responsibility, have the freedom •to experiment and, importantly, are included in strategic decision making. To promote the role of front-line managers as ‘strategic partners’ it is necessary to involve them in strategic •planning activities as members of cross functional project teams and to provide them with the training and development that will enable them to play their part. The realisation of HR strategy is likely to be a process of ‘negotiated evolution’ with line managers and other stakeholders.

4.3 The Strategic Role of the HR DirectorHR directors have a key role in strategic HRM, especially if they are on the board or members of the top •management team. They are there to envision how HR strategies can be integrated with the business strategy, to prepare strategic plans and to oversee their implementation. They should play a major part in organisation development and change management and in the achievement of •coherence in the different aspects of HR policy. HR directors who will most probably play a full strategic role as business partners are likely to be involved in •business planning and the integration of human resource plans with business plans and will be well placed to exertinfluenceonthewayinwhichtheenterpriseisorganised,managedandstaffed–allwithaviewtohelpingit achieve its strategic objectives. Although professionally competent in HR techniques, their contribution and credibility will depend mainly on •their business awareness and skills and their ability to play a full part as members of the top team.

4.4 The Strategic Role of the HR SpecialistsHRexecutives,tobefullyfledgedstrategicpartnerswithseniormanagement,shouldimpelandguideserious•discussion of how the company should be organised to carry out its strategy.

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HR must take stock of its own work and set clear priorities. At any given moment, the HR staff might have a •dozen initiatives in its sights, such as pay-for performance, global teamwork and action-learning development experiences. But to be truly tied to business outcomes, HR needs to join forces with operating managers to assess systematically •the impact and importance of each one of these initiatives. Which ones are really aligned with strategy implementation?Whichonesshouldreceiveimmediateattentionandwhichonescanwait?Whichones,inshort,arereallylinkedtobusinessresults?The answers must be obtained to six questions:•

Shared mindset: � Towhatextentdoesourcompanyhavetherightculturetoachieveourgoals?Competence: � Towhatextentdoesourcompanyhavetherequiredknowledge,skillsandabilities?Consequence: � Towhatextentdoesourcompanyhavetheappropriatemeasures,rewardsandincentives?Governance: � To what extent does our company have the right organisation structure, communication systemsandpolicies?Capacity for change: � To what extent does our company have the ability to improve work processes, to changeandtolearn?Leadership: � Towhatextentdoesourcompanyhavetheleadershiptoachieveitsgoals?

4.4.1 The New Mandate for HRAccordingtoUlrich,“HRshouldnotbedefinedbywhat itdoesbutbywhat itdelivers–results thatenrichtheorganisation’s value to customers, investors and employees”. Ulrich believes that for HR to deliver excellence it should:

become a partner with senior and line managers in strategy execution, helping to improve planning from the •conference room to the marketplacebecomeanexpertinthewayworkisorganisedandexecuted,deliveringadministrativeefficiencytoensurethat•costs are reduced while quality is maintainedbe a champion for employees, vigorously representing their concerns to senior management and at the same •time working to increase employee contribution, that is, employees’ commitment to the organisation and their ability to deliver resultsbecome an agent of continuous transformation, shaping processes and a culture that together improve an •organisation’s capacity for changecommunicate the importance of the soft, people-centred issues•defineHRdeliverablesandbeaccountableforthem•invest in innovative HR practices•

4.5 The Specific Strategic Roles of HRThefourspecificstrategicrolesofHRareasdiscussedbelow:

Business partner:• working alongside business colleagues to align HR and business strategy and manage human resources strategicallyInnovator:• developing integrated HR strategiesChange agent:• the management of transformation and changeImplementer:• getting strategies into action

4.5.1 Business Partner

HR practitioners as business partners share responsibility with their line management colleagues for the success •of the enterprise. They have the capacity to identify business opportunities, to see the broad picture and to see how their HR role can help to achieve the company’s business objectives. They integrate their activities closely with top management and ensure that they serve a long-term strategic purpose.

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As business partners, HR practitioners are aware of business strategies and the opportunities and threats facing •the organisation. They are capable of analysing organisational strengths and weaknesses and diagnosing the issues facing the enterprise and their human resource implications. HR practitioners know about the critical success factors that will create competitive advantage and they can •draw up a convincing business case for innovations that will add value. But in acting as a business partner, HR must still deliver effective services.

4.5.2 The Innovation Role

A strategic approach to HRM will mean that HR specialists will innovate and introduce new processes and •procedures that they believe will increase organisational effectiveness.The need for innovation should be established by processes of analysis and diagnosis that identify the business •need and the issues to be addressed. ‘Benchmarking’ can take place to identify ‘best practice’ as adopted by otherorganisations.Butintheinterestsofachieving‘bestfit’theinnovationshouldmeettheparticularneedsof the business, which are likely to differ from those of other ‘best practice’ organisations. Ithastobedemonstrablethattheinnovationisappropriate,beneficialandpracticalinthecircumstancesand•canbeimplementedwithouttoomuchdifficultyintheshapeofoppositionfromthoseaffectedbyitortheunjustifiableuseofresources–financialandthetimeofthoseinvolved.The danger is that HR people may go in for ‘impression management’–aiming to make an impact on senior •managersandcolleaguesthroughpublicisinghigh-profileinnovations.HRspecialistswhoaimtodrawattentiontothemsimplybypromotingthelatestflavourofthemonth,irrespective•ofitsrelevanceorpracticality,arefallingintothetrapthatisdescribedasfollows:“TheconstantworryofallHR administrators is their inability to prove that they are making a contribution to the enterprise. Their pre-occupation is with the search for a ‘gimmick’ which will impress their management colleagues.”The risk is that people believe ‘all can be improved by a wave of the magic wand and the slaying of a few evil •characters along the way’. This facile assumption means that people can too readily devise elegant solutions that do not solve the problem because of the hazards encountered during implementation, for example indifference or open hostility. These have to be anticipated and catered for.

4.5.3 The Change Manager Role

JohnsonandScholessuggestthat“organisationsthatsuccessfullymanagechangearethosethathaveintegrated•their human resource management policies with their strategies and the strategic change process.”Strategies involve change and failures to implement strategies often arise because the changes involved have •not been managed effectively. HR practitioners can play a major part in developing and implementing organisational change. They must pay •particular attention to managing change when implementing HR initiatives. This means considering:

Whowillbeaffectedbythechange? �Howtheywillreacttoit? �Barrierstoimplementation(e.g.,Resistanceorindifferencetochange)andhowtheywillbeovercome? �Whoisavailabletochampionthechange? �How line managers and others will be involved in the change process, including the formulation as well as �theimplementationofchangedpolicies?Howthepurposeandimpactofchangewillbecommunicatedtoallconcerned? �Whatdifferentskillsandbehaviourswillberequiredandhowtheyaretobedeveloped? �Howthechangeprocesswillbemonitored? �Howtheeffectivenessofthechangewillbemeasured? �Whatstepswillbetakentoevaluatetheimpactofchange? �Resource requirements for implementing change (these resources include the commitment and skill of those �involved in the change as well as people, time and money)

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Example:A change model used by HR staff at GE in the United States to guide a transformation process in the company is shown in the table below. The model is based on the statement that ‘change begins by asking who, why, what and how’.

Key success factors in change Questions to assess and accomplish the key success factors for change

Leadership

Do we have a leader:whoownsandchampionschange?•whopubliclycommitstomakingithappen?•whowillgarnertheresourcesnecessarytosustainit?•whowillputinthepersonaltimeandattentionneededtofollowthrough?•

Creating a shared need (Whydoit?)

Do employees:seethereasonforthechange?•understandwhyitisimportant?•seehowitwillhelpthemandthebusinessintheshortandlongterm?•

Shaping a vision (What will it look like whenitisdone?)

Do employees:see the outcomes of the change in behavioural terms (i.e., in terms of what •peoplewilldodifferentlyasaresultofthechange)?getexcitedabouttheresultsofaccomplishingthechange?•understandhowitwillbenefitcustomersandotherstakeholders?•

Mobilising commit-ment (Who else needs tobeinvolved?)

Do the sponsors of the change:recognisewhoelsehastobecommittedtothechangetomakeithappen?•knowhowtobuildacoalitionofsupportforthechange?•havetheabilitytoenlistthesupportofkeyindividualsintheorganisation?•havetheabilitytobuildaresponsibilitymatrixtomakeithappen?•

Leading change (Who isresponsible?)

Do the sponsors of the change:understandhowtolinkittootherhrsystemssuchasstaffing,training,ap-•praisal,rewards,structureandcommunications?recognisethesystemsimplicationsofthechange?•

Monitoring progress (How will it be mea-sured?)

Do the sponsors of the change:haveameansofmeasuringitssuccess?•plan to benchmark progress against both the results of the change and the •processofimplementingit?

Making it last (How will it get started and last?)

Do the sponsors of the change:recognisethefirststepsingettingitstarted?•haveashort-termandlong-termplantokeepattentionfocusedonthechange?•haveaplantoadaptthechangeovertime?•

Table 4.1 A change model used by HR staff at GE in the United States

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4.5.4 The Implementer Role

HR strategists have to decide where they want to go and how they mean to get there. They are in the delivery •business–making things happen, getting things done. They are thinking performers–they have to think carefully about what they are planning in the context of their •organisation and within the framework of a recognised body of knowledgeThey have to perform effectively in the sense of delivering advice, guidance and services that will help the •organisation to achieve its strategic goals.

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SummaryTopmanagementistheretoprovidevisionaryleadership,definepurposesandvaluesandsetthedirection.•High levels of organisational performance are not achieved simply by having a range of well-conceived HR •policies and practices in place.Line managers can champion alternatives by conceiving opportunities that fall outside an organisation’s current •concept of strategy.The realisation of HR strategy is likely to be a process of ‘negotiated evolution’ with line managers and other •stakeholders.HR directors have a key role in strategic HRM, especially if they are on the board or members of the top •management team.Although professionally competent in HR techniques, HR directors’ contribution and credibility will depend •mainly on their business awareness and skills and their ability to play a full part as members of the top team.HRexecutives,tobefullyfledgedstrategicpartnerswithseniormanagement,shouldimpelandguideserious•discussion of how the company should be organised to carry out its strategy.AccordingtoUlrich,“HRshouldnotbedefinedbywhatitdoesbutbywhatitdelivers–resultsthatenrichthe•organisation’s value to customers, investors and employees”.HR practitioners as business partners share responsibility with their line management colleagues for the success •of the enterprise.A strategic approach to HRM will mean that HR specialists will innovate and introduce new processes and •procedures that they believe will increase organisational effectiveness.Strategies involve change and failures to implement strategies often arise because the changes involved have •not been managed effectively.

ReferencesBobinski D., 2004. • The Role of HR in Strategic Planning. Available at: <http://www.management-issues.com/2006/5/25/opinion/the-role-of-hr-in-strategic-planning.asp>. Accessed on 28th March, 2011.Domingo R. T., • The Strategic Role of HR. Available at: <http://www.rtdonline.com/BMA/GM/1.html> Accessed 28th March, 2011.

Recommended ReadingAsafo-Adjei Agyenim Boateng, 2007. • The Role of HRIS in Strategic Human Resource Management, Master of Science Theses in Accounting, Swedish School of Economics and Business Administration. Available at: <http://www.pafis.shh.fi/graduates/agyasa05.pdf>Accessedon28th March, 2011.Fombrun C. J., Tichy N. M. and Devanna M. A., 1984. • Strategic Human Resource Management. John Wiley and Sons. Mayer, S. J., 2008. S• trategic Human Resource Management: Practices of High Performance Organizations. Developing Human Capacity for Innovative Organizations. pp.1–4. Available at: <http://www.innovativehumandynamics.com/Strategic.pdf> Accessed on 28th March, 2011.

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Self Assessment

_________providesvisionaryleadership,definespurposesandvaluesandsetsthedirection.1. Middle level managementa. Top level managementb. Bottom level managementc. Line managementd.

WhobringHRpoliciestolife?2. Front-line managersa. Marketing managersb. Production managersc. Finance managers d.

____________ should actively participate in the ‘thinking’ as well as the ‘doing’ of strategy.3. Marketing managersa. Production managersb. Finance managersc. Line managersd.

Who has a key role in strategic HRM, especially if they are on the board or members of the top management 4. team?

Share holdersa. Line managersb. HR directors c. Finance managersd.

Who are included in the top management to envision how HR strategies can be integrated with the business 5. strategy,topreparestrategicplansandtooverseetheirimplementation?

Board of directorsa. Front- line managersb. HR directorsc. HR specialistsd.

The realisation of HR strategy is likely to be a process of _________with line managers and other 6. stakeholders.

negotiated revolution a. negotiated resolutionb. negotiated solution c. negotiated evolutiond.

Accordingtowhom"HRshouldnotbedefinedbywhatitdoesbutbywhatitdelivers–resultsthatenrichthe7. organisation’svaluetocustomers,investorsandemployees"?

Johnson a. Ulrichb. Scholesc. Coxd.

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Whoadministerstheroleofthemanagementoftransformationandchange?8. Change agent a. Business partner b. Innovatorc. Implementerd.

Whichstatementistrue?9. As innovators, HR practitioners are aware of business strategies and the opportunities and threats facing a. the organisation.A strategic approach to HRM will mean that HR specialists will innovate and introduce new processes and b. procedures that they believe will increase productivity.Strategies involve change and failures to implement strategies often arise because the changes involved c. have been managed effectively.HR strategists have to decide where they want to go and how they mean to get there.d.

Whichstatementisfalse?10. High levels of organisational performance are not achieved simply by having a range of well-conceived a. HR policies and practices in place.Line managers should actively participate in the ‘thinking’ as well as the ‘doing’ of strategy.b. To promote the role of front-line managers as ‘change agents’ it is necessary to involve them in strategic c. planning activities.HRexecutives,tobefullyfledgedstrategicpartnerswithseniormanagement,shouldimpelandguideseriousd. discussion of how the company should be organised to carry out its strategy.

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Chapter V

Investment Perspective of Human Resource Management and Workforce Diversity

Aim


state the investment perspective of HRM and workforce diversity•

introduce the method of adopting an investment perspective•

explain the valuation of assets•

Objectives


defineworkforcestrategy•

discuss the measurement of human capital•

classifythefactorsinfluencinganorganisation’sinvestmentorientation•

Learning outcome


discussthebenefitsofmanagingworkforcediversity•

determine the methods of managing diverse workforce in an organisation•

state the challenges for HR managers•

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5.1 Introduction to Investment Perspective of HRMOrganisations of the information age industry started realising that besides all other factors that contribute to performance, human element is very critical. Whatever is the size or nature of an organisation, the activities it undertakes and the environment in which it operates, its success is determined by the decisions its employees make and the behaviours in which they engage. Managers are realising that competitive advantage comes from having the appropriate system for attracting, motivating and managing the organisation’s human resources.Therefore it may be noted that:

Human element is critical for success.•Employees decision making and their behaviour attributes to success of the organisation.•Critical source of competitive advantage come from having the appropriate system for attracting, motivating •and managing human resources.

The various sources of employee value are:technical knowledge (market, customer, process, environment)•ability to learn and grow (openness to new ideas, acquisition of knowledge and skills)•decision making capabilities•motivation•commitment•teamwork (interpersonal skills, leadership abilities)•

5.2 Adopting an Investment PerspectiveThe concept does not encourage viewing HR as variable cost of production. It views human resource as human •assets and that they should be viewed as any other physical assets like plant, property, machinery etc. as high return assets to its strategic objectives. This allows organisation to determine how to best invest in people and helps in allocating current expenditures to meet long-term performance goals by considering the risk and return on possible expenditure related to procurement, training, etc.Physical assets can be cloned by competitors, but investment perspective toward human resource is critical. •Human assets cannot be cloned or duplicated and therefore, become the competitive advantage that organisation may enjoy in its market.An organisation’s technology is becoming more invested in people than in capital as technology have created •a workplace where labours are being replaced with knowledge workers.Organisations that ignore to follow investment perspective of human assets may be less attractive to prospective •employees. Organisations need to reduce the attrition forces and retain trained employees in the organisation. Organisations need to develop strategies to ensure that employees stay longer in order to realise an acceptable •return on investment.Financial and physical assets are relatively easy to measure via accounting practices. Most of these assets are •tangible and have some clear market value. Market and operational assets are bit more challenging to measure, but accounting practices have been developed that generally can place a subjective value on such assets. Humanassetsareverydifficulttomeasure;attemptstodosoareatforefrontofcurrentresearchbeingconducted•in HRM.

5.3 Valuation of AssetsTherearefivemajorkindsofassetsthatorganisationscanleveragetoaidinperformanceandaddvaluetooperations.These assets are:

Financial assets, which includes equity, securities and investments and account receivables.•Physical assets are plant, land, equipment and raw material.•Market assets include goodwill, branding, customer loyalty, product line, distribution networks, patents, •

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trademarks and copyrights.Operational assets include the management practices, structure of work and technology.•Human assets include education, knowledge, skills, competencies, work habits, motivation and personal •relationships with co-workers, customers, suppliers, regulators and lenders.

5.4 Understanding and Measuring Human CapitalPerformance can be measured via four different sets of outcomes, which are:

employee outcomes refer to attitude and behaviour of employees �organisational outcomes can be productivity and quality �financial/accountingoutcomesrefertoexpenses,revenueandprofitability �market based outcomes are stock prices �

In order to achieve competitive advantage and bottom-line performance, HR practitioners are faced with the •taskofdevelopingappropriateHRmetrics,whichspecificallyillustratethevalueofHRpracticesandactivities,particularlyrelativetoaccountingprofitsandmarketvaluationoftheorganisation.Many HR practitioners may stress that they lack accurate and meaningful methods that measure performance, •despite the fact that human assets account for as much as 80 percent of the value of an organisation. Analysis of human assets can be value-laden, subjective, expensive and hence ignored.

5.5 Factors Influencing an Organisation’s Investment OrientationThe extent to which an organisation can be characterised as investment oriented can be revealed through answering the following:

Doestheorganisationseeitspeopleasbeingcentraltoitsmissionorstrategy?•Do the company’s mission statement and strategic objectives, both company-wide and within individual business •unit,supportsthevalueoforevenmentionhumanassetsandtheirroleinachievinggoals?Does the management philosophy of the organisation encourage the development of any strategy to prevent the •depreciationofitshumanassetsoraretheyconsideredreplicableandamortisable,likephysicalassets?

Therearefivefactorsthataffect,howinvestmentorientedacompanyisinitsmanagementofhumanresources.These factors are as stated below:

Management values: i. Senior management values and actions will determine organisational investment in assets. It is critical to understand, how the organisation’s strategy mandates the investment in particular assets relative to others. Whether management values its people will be critical factor in its willingness to invest in them.Attitude towards risk: ii. Investments in human assets are far more risky for an organisation than investments in physical assets. Some organisations see investment in human resources as necessary for success and they develop strategies to minimise the potential risk of loosing the investments.Nature of employee skills: iii. Organisations that provide specialised training in skills need to ensure various retention strategies, as they are likely to be poached by competitors. Investment in employee skill investment becomes more risky.Utilitarianism: iv. Itisabottomlineperspectiveorcostbenefitanalysis. The costs of investments are weightedagainsttheirbenefitstodeterminewhethertheprospectiveinvestmentsareprofitableorcommonly achieve the target rate of return.Availability of outsourcing: v. Decision on cost effective outsourcing. Investment oriented approach to managing an organisation will attempt to determine whether its investment produce sustainable competitive advantage over time. Certain time specialists are outsourced.

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5.6 Introduction to Workforce DiversityThe demographic mix in the workplace has become highly diverse. The term workforce diversity refers to •varied personal characteristics that make the workforce heterogeneous, such as gender, race, age, lifestyles, culture, etc.Workforce diversity is a primary concern for most of the businesses. Today’s organisations need to recognise •and manage workforce diversity effectively. Workforce diversity is a complex phenomenon to manage in an organisation.The management of workforce diversity as a tool to increase organisational effectiveness cannot be underscored •specially with current changes sweeping across the globe. It is argued that organisations that value diversity willdefinitelycultivatesuccessandhaveafutureinthisdynamicgloballabourmarket.Workforce diversity management has become an important issue for both governments and private organisations. •Itsimportancehasmainlybeenbroughtaboutbythefreemovementoflabourduetoglobalisationandthefightfor human rights by certain minority groups, who feel excluded from the employment sector.The workforce diversity emerged mainly to further the availability of equal opportunities in the workplace. •This equal opportunity philosophy is aimed at ensuring that organisations make the most out of the difference fromadiverseworkforceratherthanlosingtalent,whichmightassisttheorganisationtobemoreefficientandeffective. The increased mobility and interaction of people from diverse backgrounds as a result of improved economic and •political systems and the recognition of human rights by all nations has put most organisations under pressure to embrace diversity at the work place. Diversity brings with it the heterogeneity that needs to be nurtured, cultivated and appreciated as means of •increasing organisational effectiveness in this competitive world.

5.6.1 Workforce Diversity Defined

Diversitymanagementisbroadlydefinedasthesystematicandplannedcommitmentbytheorganisationsto•recruit, retain, reward and promote a heterogeneous mix of employees. Theories and techniques of diversity management have been developed and enthusiastically supported by a •growing number of chief executives, training specialists, diversity consultants and academics. Diversity can improve organisational effectiveness. Organisations that develop experience in managing diversity •will likely attract the best personnel.Diversity refers to the co-existence of employees from various socio-cultural backgrounds within the company. •Diversity includes cultural factors such as race, gender, age, colour, physical ability, ethnicity, etc. Thebroaderdefinitionofdiversitymay includeage,nationalorigin, religion,disability,sexualorientation,•values, ethnic culture, education, language, lifestyle, beliefs, physical appearance, economic status and workforce composition. Diversity requires a type of organisational culture, in which each employee can pursue his or her career •aspirations without being inhibited by gender, race, nationality, religion or other factors that are irrelevant to performance. Managing diversity means enabling the diverse workforce to perform its full potential in an equitable work •environment where no one group has an advantage or disadvantage.Diversity has increasingly become a major issue in corporate circles. For example, managing workforce diversity •isoneofthemostdifficultandpressingchallengesofmodernorganisations.The demographic differences like sex, age, culture, etc., were conventionally related to team level outcomes. •Managers in corporate will have to understand, predict and manage this intriguing nature of the diverse workforce.While many organisations have embraced diversity, others still consider it merely an issue of compliance with •legal requirements. Effective diversity management has historically been used to provide a legally defensive position,thatis,afirmwithadiverseworkforcecouldarguethattheywerenotguiltyofdiscriminationbecause

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of the prima facie case based on their workforce demographics representing the demographics of the local community.However, in more recent years, the view of diversity has dramatically changed to a more proactive concept. •Manybusinessleadersarenowbeginningtobelievethatdiversityhasimportantbottom-linebenefits.Diversity in the workforce can be a competitive advantage because different viewpoints can facilitate unique •and creative approaches to problem-solving, thereby increasing creativity and innovation, which in turn leads to better organisational performance.Fororganisations,thismeansthattheirmarketshare,efficiency,humancapital,internationalcompetitiveness•and level of innovation will depend, in part, upon their ability to effectively manage a diverse workforce both, within and across organisational boundaries. Businesses must have a more diverse workforce in order to be more effectively understood.

5.6.2 Benefits of Managing Workforce Diversity

Managingdiversitycancreateacompetitiveadvantage.Potentialbenefitsofthisdiversityincludebetterdecision-•making, higher creativity and innovation, greater success in global environment. According to a study, culturally diverse groups relative to homogeneous groups are more effective in both, •theinteractionprocessandjobperformance;thesebenefitsoccurafteradiversegrouphasbeentogetherforaperiod of time. Organisations with a diverse workforce can provide superior services because they can better understand •customers’ needs. As all the segments of society have a stake in the development and prosperity of society as a whole, creating and managing a diverse workforce should be seen as a social and moral imperative.As there is shift from industrial age economics to information age economics wherein service industries are •having larger contribution to economic growth, diversity issues will gain importance because in a service economy effective interactions and communications between people are essential to business success. As globalisation is increasing, diversity will help organisations to enter the international arena. Diversity •enhances creativity and innovation and produces competitive advantages. Diverse teams make it possible to enhanceflexibilityandrapidresponseandadaptationtochange.

5.6.3 Managing Diverse Workforce in an OrganisationOrganisations can succeed at diversity if the initiative to create, manage and value the diverse workforce has the full support of the top management. The following conditions can be recommended for workforce diversity to be successful in any organisation:

The task of diversity management should be assigned to a senior manager.•The organisation should link concerns for diversity to human resource management decisions around recruitment, •selection, placement, succession planning, performance management and rewards.The organisation should create such a working environment that will increase the motivation, satisfaction and •commitment of diverse people.Performance standards must be clearly and objectively established, effectively communicated and used on •objective criteria without any bias. Identify desirable and undesirable behaviours that must be based upon performance feedback discussions involving a diverse workforce.The strategy must be based on the strength and culture of the organisation.•Training and development programs will improve the skills in dealing with the day-to-day diversity •dilemmas.Intercultural communication will aid in managing a diverse workforce. An individual will be able to understand •how cultural and ethnic differences shape the conflict process and coming upwith conflict resolutionstrategies.Mentoring programs, involvement of experienced advisors and helps others for the period of years. This mentor •should be able to advise employees on the whole concept of workforce diversity and the reasons why diversity

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should be managed in the workplace.Assess one’s beliefs about work values, being able to identify work values of others from different cultural •backgrounds.Creating the support system will reduce isolation and discrimination. This can be done through the encouragement •of a formal system and informal networks.Building language competence that will help in crossing the barrier of communication in multicultural •organisation.Communicate what diversity is and what the organisation intends to achieve by managing diversity so that the •rationale for diversity training programmes is not misunderstood.Present a clear business case for diversity initiatives and link with changing demographics and social changes. •This gives diversity a context that enhances understanding.Ensure that senior and line managers are included on diversity training courses as well as employees from •different functions and departments.Ask participants for examples from their own experience where they have not been treated fairly or with mutual •respect, to make people understand that concept is for them.

5.7 Challenges for HR ManagersHuman resource managers has to face challenges in relation to diversity in the following aspects:

workforce composition•workforce availability•shortage of talent skill•ageing population and ageing workforce•workforce of educated knowledge workers•women in workforce•changing nature of employment Relationship•

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SummaryWhatever is the size or nature of an organisation, the activities it undertakes and the environment in which •it operates, its success is determined by the decisions its employees make and the behaviours in which they engage.Critical source of competitive advantage come from having the appropriate system for attracting, motivating •and managing human resources.Adopting an investment perspective enables to view human resource as human assets and as any other physical •assets like plant, property, machinery etc. as high return assets to its strategic objectives.Organisations that ignore to follow investment perspective of human assets may be less attractive to prospective •employees as organisation.Many HR practitioners may stress that they lack accurate and meaningful methods that measure performance, •despite the fact that human assets account for as much as 80 percent of the value of an organisation.Some organisations see investment in human resources as necessary for success and they develop strategies to •minimise the potential risk of loosing the investments.The term workforce diversity refers to varied personal characteristics that make the workforce heterogeneous, •such as gender, race, age, lifestyles, culture, etc.Workforce diversity refers to the co-existence of employees from various socio-cultural backgrounds within •the company.Workforce diversity enhances creativity and innovation and produces competitive advantages. Diverse teams •makeitpossibletoenhanceflexibilityandrapidresponseandadaptationtochange.The organisation should link concerns for diversity to human resource management decisions around recruitment, •selection, placement, succession planning, performance management and rewards.

ReferencesAn Overview of Diversity Awareness.• Available at: <http://pubs.cas.psu.edu/freepubs/pdfs/ui362.pdf> Accessed on 29th March, 2011.The Investment Perspective In Human Resource Management.• Available at: <http://www.docstoc.com/docs/18359828/The-Investment-Perspective-In-Human-Resource-Management> Accessed 29th March, 2011.

Recommended ReadingGuidelines on Workplace Diversity. • [pdf]. Available at: <http://www.apsc.gov.au/publications01/diversityguidelines.pdf> [Accessed 29 March 2011].Lien, M., 2004. • Workforce Diversity: Opportunities in the Melting Pot. Occupational Outlook. [pdf] Available at: < http://www.bls.gov/opub/ooq/2004/summer/art02.pdf>.[Accessed 29 March 2011].Rosado, C., 2006. • What Do We Mean By “Managing Diversity”? [pdf]. Available at: < http://www.edchange.org/multicultural/papers/rosado_managing_diversity.pdf> [Accessed 29th March, 2011].

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Self Assessment

Organisations of the information age industry started realising that besides all other factors that contribute to 1. performance, __________ element is very critical.

moneya. machineb. humanc. marketingd.

Managers are realising that competitive advantage comes from having the appropriate system for attracting, 2. motivating and managing the organisation’s ___________.

financesa. productsb. goodwillc. human resourcesd.

Adopting an investment perspective enables to view humans as __________ assets.3. variable a. physical b. financialc. returnd.

__________ cannot be cloned or duplicated and therefore, become the competitive advantage that organisation 4. may enjoy in its market.

Human assetsa. Physical assetsb. Fixed assetsc. Variable assetsd.

Whichassetsareverydifficulttomeasure?5. Human assetsa. Physical assetsb. Fixed assetsc. Variable assetsd.

Plant,land,equipmentandrawmaterialfallunderwhichtypeofassets?6. Human assetsa. Physical assetsb. Fixed assetsc. Variable assetsd.

__________ outcomes refer to attitude and behaviour of employees.7. Organisationala. Financial b. Market basedc. Employeed.

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The term _________ diversity refers to varied personal characteristics that make the workforce heterogeneous, 8. such as gender, race, age, lifestyles, culture, etc.

culturala. traditionalb. workforcec. geographicald.

Whichstatementisfalse?9. Workforce diversity is a primary concern for most of the businesses.a. The workforce diversity emerged mainly to further the availability of equal opportunities in the b. workplace.Workforce diversity brings with it the heterogeneity that needs to be nurtured, cultivated and appreciated as c. means of increasing organisational effectiveness in this competitive world.Changemanagementisbroadlydefinedasthesystematicandplannedcommitmentbytheorganisationstod. recruit, retain, reward and promote a heterogeneous mix of employees.

Organisations can succeed at diversity if the initiative to create, manage and value the diverse workforce has 10. the full support of the ____________.

middle level managementa. top level managementb. bottom level managementc. front-line managementd.

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Chapter VI

Resourcing Strategy

Aim


explain the concept of resourcing strategies•

defineresourcingwithstrategicapproach•

discuss integrating business and resourcing strategies and how to bundle resourcing strategies and activities•

Objectives


definehumanresourceplanning•

analyse the components of employee resourcing strategy•

discuss the approaches and limitations to human resource planning•

determinetheretentionstrategyandflexibilitystrategythatshouldbeadoptedbyanorganisation•

Learning outcome


explain the objectives of resourcing with strategic approach•

state the two types of resourcing plans•

discuss the components of talent management strategy•

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6.1 Resourcing StrategyResourcingstrategyensuresthattheorganisationobtainsandretainsthepeopleitneedsandemploysthemefficiently.It is a key part of the HRM process. HRM is fundamentally about matching human resources to the strategic and operational needs of the organisation and ensuring the full utilisation of those resources. It is concerned not only with obtaining and keeping the number and quality of staff required but also with selecting and promoting people who‘fit’thecultureandthestrategicrequirementsoftheorganisation.

6.2 Objectives of Resourcing StrategyThe objective of HRM resourcing strategies is to obtain the right basic material in the form of a workforce •endowed with the appropriate qualities, skills, knowledge and potential for future training. The selection and recruitment of workers best suited to meeting the needs of the organisation ought to form a core •activity upon which most other HRM policies geared towards development and motivation could be built.Theconceptthatthestrategiccapabilityofafirmdependsonitsresourcecapabilityintheshapeofpeople•providestherationaleforresourcingstrategy.Theaimofthisstrategyisthereforetoensurethatafirmachievescompetitive advantage by employing more capable people than its rivals. These people will have a wider and deeper range of skills and will behave in ways that will maximise their contribution. The organisation attracts such people by being ‘the employer of choice’. It retains them by providing better •opportunities and rewards than others and by developing a positive psychological contract that increases commitment and creates mutual trust. Furthermore, the organisation deploys its people in ways that maximise the added value they supply.

6.3 The Strategic HRM Approach to ResourcingHRMplacesmoreemphasis than traditionalpersonnelmanagementonfindingpeoplewhoseattitudesand•behaviour are likely to be congruent with what management believes to be appropriate and conducive to success. In other words, organisations are concentrating more on ‘the attitudinal and behavioural characteristics of •employees’. This tendency has its dangers. Innovative and adaptive organisations need non-conformists, even mavericks, who can ‘buck the system’. Ifmanagersrecruitpeople‘intheirownimage’thereistheriskofstaffingtheorganisationwithconformist•clones and of perpetuating a dysfunctional culture–one that may have been successful in the past but is no longer appropriate in the face of new challenges.The HRM approach to resourcing therefore emphasises that matching resources to organisational requirements •does not simply mean maintaining the status quo and perpetuating a moribund culture. It can and often does mean radical changes in thinking about the skills and behaviours required in the future to achieve sustainable growth and cultural change.

6.4 Integrating Business and Resourcing StrategiesThe philosophy behind the strategic HRM approach to resourcing is that it is people who implement the strategic •plan. AsQuinnMillshasputit,theprocessisoneof“planningwithpeopleinmind.”Theintegrationofbusiness•and resourcing strategies is based on an understanding of the direction in which the organisation is going and the determination of:

the numbers of people required to meet business needs �the skills and behaviour required to support the achievement of business strategies �the impact of organisational restructuring as a result of rationalisation, decentralisation, delayering, �mergers, product or market development, or the introduction of new technology, for example cellular manufacturingplans for changing the culture of the organisation in such areas as ability to deliver, performance standards, �quality, customer service, teamworkingandflexibility that indicate theneed forpeoplewithdifferent

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attitudes, beliefs and personal characteristics

Thesefactorswillbestronglyinfluencedbythetypeofbusinessstrategiesadoptedbytheorganisationand•the sort of business it is in. Resourcing strategies exist to provide the people and skills required to support the business strategy, but they should also contribute to the formulation of that strategy. HR directors have an obligation to point out to their colleagues the human resource opportunities and constraints •that will affect the achievement of strategic plans. In mergers or acquisitions, for example, the ability of management within the company to handle the new situation and the quality of management in the new business will be important considerations.

6.5 Bundling Resourcing Strategies and ActivitiesEmployee resourcing is not just about recruitment and selection. It is concerned with any means available to •meettheneedsofthefirmforcertainskillsandbehaviours.A strategy to enlarge the skill base may start with recruitment and selection but would also extend into learning •and development programmes to enhance skill and modify behaviours and methods of rewarding people for the acquisition of extra skills. Performance management processes can be used to identify development needs (skill and behavioural) and •motivate people to make the most effective use of their skills. Competencyframeworksandprofilescanbepreparedtodefinetheskillsandbehavioursrequiredandusedin•selection, employee development and employee reward processes. The aim should be to develop a reinforcing bundle of strategies along these lines.

6.6 The Components of Employee Resourcing StrategyThe components of employee resourcing strategy are:

Human resource planning:• Assessing future business needs and deciding on the numbers and types of people required.Resourcing plans:• Preparingplansforfindingpeoplefromwithintheorganisationand/orfortrainingprogrammestohelppeoplelearnnewskills.Ifneedscannotbesatisfiedfromwithintheorganisation,preparinglonger-termplans for ensuring that recruitment and selection processes will satisfy them.Retention strategy:• Preparing plans for retaining the people that the organisation needs.Flexibility strategy:• Planningforincreasedflexibilityintheuseofhumanresourcestoenabletheorganisationto make the best use of people and adapt swiftly to changing circumstances.Talent management strategy: • Ensuring that the organisation has the talented people it requires to provide for management succession and meet present and future business needs.

All these components are described below in detail.

6.7 Human Resource Planning

6.7.1 Definition

Human resource planning determines the human resources required by the organisation to achieve its strategic •goals.AsdefinedbyBullaandScottitis“the process for ensuring that the human resource requirements of an organisation are identified and plans are made for satisfying those requirements”.Human resource planning is based on the belief that people are an organisation’s most important strategic •resource. It is generally concerned with matching resources to business needs in the longer term, although it will sometimes address shorter-term requirements. It addresses human resource needs both in quantitative and in qualitative terms. This means answering two basic questions:

Howmanypeople? �Whatsortofpeople? �

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Human resource planning also looks at broader issues relating to the ways in which people are employed and •developed in order to improve organisational effectiveness. It can therefore play an important part in strategic human resource management.

6.7.2 Link to Business Planning

Humanresourceplanningshouldbeanintegralpartofbusinessplanning.Thestrategicplanningprocessdefines•projected changes in the types of activities carried out by the organisation and the scale of those activities. Itidentifiesthecorecompetencestheorganisationneedstoachieveitsgoalsandthereforeitsskillandbehavioural•requirements. Humanresourceplanninginterpretstheseplansintermsofpeoplerequirements.Butitmayinfluencethebusiness•strategy by drawing attention to ways in which people could be developed and deployed more effectively to further the achievement of business goals as well as focusing on any problems. Human resource planning is a decision-making process that combines three important activities:•

identifying and acquiring the right number of people with the proper skills �motivating them to achieve high performance �creating interactive links between business objectives and people-planning activities �

6.7.3 Hard and Soft Human Resource Planning

A distinction can be made between ‘hard’ and ‘soft’ human resource planning. The former is based on quantitative •analysis in order to ensure that the right number of right sort of people is available when needed. The latter is more explicitly focused on creating and shaping the culture of the organisation so that there is a •clear integration between corporate goals and employee values, beliefs and behaviours. But, as they point out, the soft version becomes virtually synonymous with the whole subject of human resource management.Human resource planning is indeed concerned with broader issues about the employment of people than the •traditional quantitative approach of ‘manpower planning’. But it also addresses those aspects of human resource management that are primarily about the organisation’s requirements for people from the viewpoint of numbers, skills and how they are deployed.

6.7.4 Limitations

However, it must be recognised that although the notion of human resource planning is well established in the •HRMvocabulary,itdoesnotseemtobeembeddedasakeyHRactivity.AsRothwellsuggests,“Apartfromisolated examples, there has been little research evidence of increased use or of its success”. She explains the gap between theory and practice as arising from:

theimpactofchangeandthedifficultyofpredictingthefuture–‘theneedforplanningmaybeininverse �proportion to its feasibility’the ‘shifting kaleidoscope’ of policy priorities and strategies within organisations �the distrust displayed by many managers of theory or planning – they often prefer pragmatic adaptation to �conceptualisationthe lack of evidence that human resource planning works �

Research conducted by Cowling and Walters indicated that the only formal and regular activities carried •outbyrespondentsweretheidentificationoffuturetrainingneeds,analysisoftrainingcostsandanalysisofproductivity. Fewer than half produced formal labour supply and demand forecasts, and less than 20 per cent formally monitored HR planning practices.Summarisingtheproblem,Taylorcommentsthat,“Itwouldseemthatemployers,quitesimply,prefertowait•untiltheirviewofthefutureenvironmentclearssufficientlyforthemtoseethewholepicturebeforecommittingresources in preparation for its arrival. The perception is that the more complex and turbulent the environment, the more important it is to wait and see before acting.” Bethatasitmay,itisdifficulttorejectoutofhandthebeliefthatsomeattemptshouldbemadebroadlyto•

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determine future human resource requirements as a basis for strategic planning and action.

6.7.5 Approaches to Human Resource PlanningResourcing strategies show the way forward through the analysis of business strategies and demographic trends. They are converted into action plans based on the outcome of the following interrelated planning activities:

Demand forecasting: � estimating future needs for people and competences by reference to corporate and functional plans and forecasts of future activity levels.Supply forecasting: � estimating the supply of people by reference to analyses of current resources and future availability, after allowing for wastage. The forecast will also take account of labour market trends relating to the availability of skills and to demographics.Forecasting requirements: � analysingthedemandandsupplyforecaststoidentifyfuturedeficitsorsurpluseswith the help of models, where appropriate.Action planning: � preparingplans todealwith forecastdeficits through internalpromotion, trainingorexternal recruitment; if necessary, preparing plans for unavoidable downsizing so as to avoid any compulsory redundancies,ifthatispossible;developingretentionandflexibilitystrategies.

Although these are described as separate areas, they are closely interrelated and often overlap. For example, •demand forecasts are estimates of future requirements and these may be prepared on the basis of assumptions about the productivity of employees. But the supply forecast will also have to consider productivity trends and how they might affect the supply of •people.Aflowchartoftheprocessofhumanresourceplanningisshowninthefigurebelow.

Fig. 6.1 Human resource planning flow chart

Business plan

Forecast of activity levels

Analysis of requirements: numbers, skills and

behaviours

Demand forecast Supply forecast

Forecast of future requirements

Action planning:•recruitment•training•downsizing•increasingflexibility

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6.8 Resourcing PlansThe analysis of future requirements should indicate what steps need to be taken to appoint people from within the organisation and what learning and development programmes should be planned. The analysis will also establish howmanypeoplewillneedtoberecruitedintheabsenceofqualifiedemployeeswithintheorganisationortheimpossibility of training people in the new skills in time.

6.8.1 Internal ResourcingIdeally, internal resourcing should be based on data already available about skills and potential. This should have been provided by regular skill audits and the analysis of the outcomes of performance management reviews. A ‘trawl’ can then be made to locate available talent, which can be accompanied by an internal advertising campaign.

6.8.2 External ResourcingExternal resourcing requirements can be met by developing a recruitment strategy. The aims of this strategy would befirsttomaketheorganisation‘theemployerofchoice’initsparticularfieldorforthepeopleitwantstorecruit(e.g.graduates).Secondly,thestrategyshouldplanthebestmethodsofdefiningpreciselywhatisneededintermsof skills and competencies. Finally, the strategy should be concerned with planning the use of the most effective methods of obtaining the number and type of people required. The steps required are set out in more detail below:

Define skill and competency (behavioural) requirements:1. Ideally this should be carried out with the use of systematic skill and competence analysis techniques. These can form the material upon which focused and structured interviews can take place and be used as criteria for selection. They may also indicate where and how psychometric tests could be helpful.

Analyse the factors affecting decisions to join the organisation:2. These include:thepayandtotalbenefitspackage–thismayhaveaconsiderableeffectondecisionstojointheorganisation•butitisbynomeanstheonlyfactor,andthosesetoutbelowcanbejustasimportant,evenmoresignificantfor some peoplecareer opportunities•the opportunity to use existing skills or to acquire new skills•the opportunity to use the latest technology and equipment with which the organisation is well supplied (of •particular interest to research scientists and engineers)opportunities for learning and development and access to high-level training•a responsible and intrinsically rewarding job•a belief that what the organisation is doing is worthwhile•the reputation of the organisation as an employer•the opportunity the job will provide to further the individual’s career•for example, the scope to achieve and have achievements recognized, an increase in employability or a respected •company name to put on a CV

Competitive resourcing:3. This will start from an analysis of the basis upon which the organisation competes withotherfirmsforemployees.Thefactorsmentionedaboveshouldbecoveredandtheaimwouldbetoseekcompetitive advantage by exploiting those that are superior to rivals. One of the factors will be pay, which may not be the only one but it can be important. There may be other factors but it is necessary to track market rates and make a policy decision on where the organisation wants to be in relation to the market.

Alternative strategies for satisfying human resource requirements:4. These consist of:outsourcing•re-engineering•increasingflexibility•

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skills training•multi-skilling•downsizing•

Recruitment and selection techniques:5. The strategy should explore methods not only of recruiting the number ofpeoplerequiredbutalsooffindingstaffwhohavethenecessaryskillsandexperience,whoarelikelytodelivertherequiredsortofbehaviourandwhowillfitintotheorganisation’sculturereadily.Theseprocessesand techniques will include the use of:skills analysis•competency mapping•the internet for recruitment•bio data•structured interviews•psychometric testing•assessment centres•

The aim of the strategy is to develop the best mix of recruitment and selection tools. It has been demonstrated that a ‘bundle’ of selection techniques is likely to be more effective as a method of predicting the likely success of candidates than relying on a single method such as an interview.

6.9 Retention StrategyRetention strategies aim to ensure that key people stay with the organisation and that wasteful and expensive levels of employee turnover are reduced. They will be based on an analysis of why people stay and why they leave.

6.9.1 Analysis of Reasons for Staying or LeavingAn analysis of why people leave through exit interviews may provide some information but they are unreliable – people rarely give the full reasons why they are going. The reasons why people remain with the organisation or may want to leave it can be established through attitude surveys. These could segment respondents according to their length of service and analyse the answers of longer-serving employees to establish if there are any common patterns. The survey results could be supplemented by focus groups, which would discuss why people stay and identify any problems.

The retention plan should address each of the areas in which lack of commitment and dissatisfaction can arise. The actions to be considered under each heading are listed below:

Pay: • Problems arise because of uncompetitive, inequitable or unfair pay systems. Possible actions include:reviewing pay levels on the basis of market surveys �introducing job evaluation or improving an existing scheme to provide for equitable grading decisions �ensuring that employees understand the link between performance and reward �reviewing performance-related pay schemes to ensure that they operate fairly �adapting payment-by-results systems to ensure that employees are not penalised when they are engaged �only on short runstailoringbenefitstoindividualrequirementsandpreference �involving employees in developing and operating job evaluation and contingent pay systems �

Job design: • Dissatisfaction results if jobs are unrewarding in themselves. Jobs should be designed to maximise skillvariety,tasksignificance,autonomyandfeedback,andtheyshouldprovideopportunitiesforlearningandgrowth.Performance: • Employees can be demotivated if they are unclear about their responsibilities or performance standards, are uninformed about how well they are doing, or feel that their performance assessments are unfair. The following actions can be taken:

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Express performance requirements in terms of hard but attainable goals. �Get employees and managers to agree on those goals and the steps required to achieve them. �Encourage managers to praise employees for good performance but also get them to provide regular, �informative and easily interpreted feedback – performance problems should be discussed as they happen in order that immediate corrective action can be taken.Train managers in performance review techniques such as counselling; brief employees on how the �performance management system works and obtain feedback from them on how it has been applied.

Learning and development: • Resignations and turnover can increase if people are not given adequate opportunities for learning and development, or feel that demands are being made upon them that they cannot reasonablybeexpectedtofulfilwithoutpropertraining.Newemployeescangothroughan‘inductioncrisis’ifthey are not given adequate training when they join the organisation. Learning programmes and training schemes should be developed and introduced that:

giveemployeesthecompetenceandconfidencetoachieveexpectedperformancestandards �enhance existing skills and competences �help people to acquire new skills and competences so that they can make better use of their abilities, take �on greater responsibilities, undertake a greater variety of tasks and earn more under skill- and competence based pay schemesensure that new employees quickly acquire and learn the basic skills and knowledge needed to make a good �start in their jobsincrease employability, inside and outside the organisation �

Career development: • Dissatisfaction with career prospects is a major cause of turnover. To a certain extent, this has to be accepted. More and more people recognise that to develop their careers they need to move on andthereislittletheiremployerscandoaboutit,especiallyintoday’sflatterorganisationswherepromotionprospects are more limited. These are the individuals who acquire a ‘portfolio’ of skills and may consciously change direction several times during their careers. To a certain degree, employers should welcome this tendency. The idea of providing ‘cradle-to-grave’ careers is no longer as relevant in the more changeable job markets of today,andthisself-planned,multi-skillingprocessprovidesfortheavailabilityofagreaternumberofqualifiedpeople. But there is still everything to be said in most organisations for maintaining a stable core workforce and in this situation employers should still plan to provide career opportunities by:

providing employees with wider experience �introducing more systematic procedures for identifying potential such as assessment or development �centresencouraging promotion from within �developing more equitable promotion procedures �providing advice and guidance on career paths �

Commitment: • This can be increased by:explaining the organisation’s mission, values and strategies and encouraging employees to discuss and �comment on themcommunicating with employees in a timely and candid way, with the emphasis on face-to-face communications �throughsuchmeansasbriefinggroupsconstantly seeking and taking into account the views of people at work �providing opportunities for employees to contribute their ideas on improving work systems �introducing organisation and job changes only after consultation and discussion �

Lack of group cohesion: • Employees can feel isolated and unhappy if they are not part of a cohesive team or if they are bedevilled by disruptive power politics. Steps can be taken to tackle this problem through:

Teamwork: � setting up self-managing or autonomous work groups or project teamsTeam building: � emphasising the importance of teamwork as a key value, rewarding people for working effectively as members of teams and developing teamwork skills

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Dissatisfaction and conflict with managers and supervision: • A common reason for resignations is the feeling that management in general, or individual managers and team leaders in particular, are not providing the leadership they should, or are treating people unfairly or are bullying their staff (not an uncommon situation). This problem should be remedied by:

selecting managers and team leaders with well-developed leadership qualities �trainingtheminleadershipskillsandinmethodsofresolvingconflictanddealingwithgrievances �introducing better procedures for handling grievances and disciplinary problems, and training everyone in �how to use them

Recruitment, selection and promotion: • Rapid turnover can result simply from poor selection or promotion decisions. It is essential to ensure that selection and promotion procedures match the capacities of individuals to the demands of the work they have to do.Over-marketing: • Creating unrealistic expectations about career development opportunities, tailored training programmes, increasing employability and varied and interesting work can, if not matched with reality, lead directly to dissatisfaction and early resignation.Care should be takennot to oversell thefirm’s employeedevelopment policies.

6.10 Flexibility StrategyTheaimsoftheflexibilitystrategyshouldbetodevelopa‘flexiblefirm’byprovidinggreateroperationalandroleflexibility.Thestepstobeconsideredwhenformulatingflexibilitystrategyareasfollows:

takingaradicallookattraditionalemploymentpatternstofindalternativestofull-time,permanentstaff–this•may take the form of segregating the workforce into a ‘core group’ and one or more peripheral groupsoutsourcing–gettingworkdonebyexternalfirmsorindividuals•multi-skilling, to increase the ability of people to switch jobs or carry out any of the tasks that have to be •undertaken by their team

6.11 Talent Management StrategyTalent management strategies deal with the processes required to ensure that the organisation attracts, retains, •motivates and develops the talented people it needs.It is sometimesassumed that talentmanagement isonlyconcernedwithkeypeople– thehighflyers.But•everyone in an organisation has talent and talent management processes should not be limited to the favoured few, although they are likely to focus most on those with scarce skills and high potential.As a concept, talent management came to the fore when the phrase ‘the war for talent’ emerged in the 1990s. •There is nothing new about the various processes that add up to talent management. What is different is the development of a more coherent view as to how these processes should mesh together •with an overall objective – to acquire and nurture talent wherever it is and whenever it is needed by using a number of interdependent policies and practices. Talent management is the notion of ‘bundling’ in action.

6.11.1 The Components of Talent Management StrategyThe components of talent management strategy are:

developing the organisation as an ‘employer of choice’ – a ‘great place to work’ •using selection and recruitment procedures that ensure that good quality people are recruited who are likely to •thrive in the organisation and stay with it for a reasonable length of time (but not necessarily for life)designing jobs and developing roles that give people opportunities to apply and grow their skills and provide •them with autonomy, interest and challengeproviding talented staff with opportunities for career development and growth•creating a working environment in which work processes and facilities enable rewarding (in the broadest sense) •jobs and roles to be designed and developed

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providing scope for achieving a reasonable balance between working in the organisation and life outside •workdeveloping a positive psychological contract•developing the leadership qualities of line managers•recognising those with talent by rewarding excellence, enterprise and achievement•conducting talent audits that identify those with potential and those who might leave the organisation•introducing management succession planning procedures that identify the talent available to meet future •requirements and indicate what management development activities are required

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SummaryResourcing strategy ensures that the organisation obtains and retains the people it needs and employs them •efficiently.The objective of HRM resourcing strategies is to obtain the right basic material in the form of a workforce •endowed with the appropriate qualities, skills, knowledge and potential for future training.HRMplacesmoreemphasis than traditionalpersonnelmanagementonfindingpeoplewhoseattitudesand•behaviour are likely to be congruent with what management believes to be appropriate and conducive to success.The HRM approach to resourcing emphasises that matching resources to organisational requirements does not •simply mean maintaining the status quo and perpetuating a moribund culture.Employee resourcing is not just about recruitment and selection. It is concerned with any means available to •meettheneedsofthefirmforcertainskillsandbehaviours.Human resource planning determines the human resources required by the organisation to achieve its strategic •goals.Human resource planning is indeed concerned with broader issues about the employment of people than the •traditional quantitative approach of ‘manpower planning’.The analysis of future requirements should indicate what steps need to be taken to appoint people from within •the organisation and what learning and development programmes should be planned.Retention strategies aim to ensure that key people stay with the organisation and that wasteful and expensive •levels of employee turnover are reduced.Theaimsoftheflexibilitystrategyshouldbetodevelopa‘flexiblefirm’byprovidinggreateroperationaland•roleflexibility.Talent management strategies deal with the processes required to ensure that the organisation attracts, retains, •motivates and develops the talented people it needs.

ReferencesHumanResourcePlanning.Availableat:<http://www.cedworks.com/files/pdf/free/P203BHR01.pdf>[Accessed•on 30th March, 2011].Strategic HRM: Aligning Resourcing to Business Strategy. Available at: <http://bizcovering.com/business/•strategic-hrm-aligning-resourcing-to-business-strategy/> [Accessed on 30th March, 2011].

Recommended ReadingCherukulath, W. K., Raghuraman, R. N. & Kalaskar, R. S., 1999. Information Management: An Overview on •Human Resources Planning. DRTC Workshop on Information Management. Jackson S. E., & Schuler R. S., 1990. Challenges for Industrial/Organisational Psychologists. • American Psychological Association 45(2).Schuler, R. S., & Jackson, S. E., 2009. • Strategic Human Resource Management. 2nd ed., Wiley-India.

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Self Assessment

_________ strategy ensures that the organisation obtains and retains the people it needs and employs them 1. efficiently.

Talent managementa. Resourcingb. Retentionc. Flexibilityd.

Theconceptthatthestrategiccapabilityofafirmdependsonitsresourcecapabilityintheshapeofpeople2. provides the rationale for _____________.

flexibilitystrategya. retention strategyb. training strategyc. resourcing strategyd.

Whatistheaimoftheresourcingstrategy?3. Toensurethatafirmachievescompetitiveadvantagebyemployingmorecapablepeoplethanitsrivals.a. To ensure that people get proper training.b. To ensure that people get proper remuneration.c. Toensurethatpeopleareflexibleintheirwork.d.

Whichstatementistrue?4. The philosophy behind the strategic HRM approach to retention is that it is people who implement the a. strategic plan.ThephilosophybehindthestrategicHRMapproachtoflexibilityisthatitispeoplewhoimplementtheb. strategic plan.The philosophy behind the strategic HRM approach to resourcing is that it is people who implement the c. strategic plan.The philosophy behind the strategic HRM approach to training is that it is people who implement the d. strategic plan.

Whoquotedthat"theresourcingprocessis–planningwithpeopleinmind"?5. Grattona. Coxb. Scottc. Quinn Millsd.

______________ can be used to identify development needs (skill and behavioural) and motivate people to 6. make the most effective use of their skills.

Performance management processesa. Training processesb. Retention processesc. Talent management processesd.

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Which component of employee resourcing strategy assesses future business needs and decides on the numbers 7. andtypesofpeoplerequired?

Human resource planning a. Resourcing plans b. Retention strategy c. Flexibility strategy d.

Which component of employee resourcing strategy prepares plans for retaining the people the organisation 8. needs?

Human resource planning a. Resourcing plans b. Retention strategy c. Flexibility strategy d.

______________ is based on the belief that people are an organisation’s most important strategic resource.9. Resourcing plana. Human resource planning b. Retention strategy c. Flexibility strategyd.

Human resource planning also looks at broader issues relating to the ways in which people are employed and 10. developed in order to improve ______________.

organisational effectivenessa. organisational cultureb. organisational climatec. organisational productivityd.

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Chapter VII

Challenges in Strategic Human Resource Management

Aim

The aim of the chapter is to:

classify the challenges in strategic HRM•

highlight the challenges of workplace diversity•

discuss various practices of managing workplace diversity•

Objectives


state various approaches to motivation •

discuss the strategy to manage gain sharing•

determine various HRM strategic challenges•

Learning outcome


recognise the challenges in strategic HRM•

understand how to manage workplace diversity •

discuss the methodology to manage executive information systems•

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7.1 IntroductionThe HRM function has some strategic challenges, which will affect the whole organisation in the future. The strategic challenges will change the organisation of the HRM function and its role in the organisation.

The current role of the HRM function is about providing services to the organisation and the managers are clear clients of the HRM processes. The HRM function usually do not provide challenging questions and initiatives to the organisation and the business leaders do not have to worry about the HRM function as the salaries are paid correctlyateverypaydatedefinedbytheorganisation.Organisationsthatdonotputtheiremphasisonattractingandretainingtalentsmayfindthemselvesindireconsequences,astheircompetitorsmaybeoutplayingtheminthestrategic employment of their human resources.

With the increase in competition, locally or globally, organisations must become more adaptable, resilient, agile, and customer-focused to succeed. And within this change in environment, the HR professional has to evolve to become a strategic partner, an employee sponsor or advocate, and a change mentor within the organisation. In order to succeed, HR must be a business driven function with a thorough understanding of the organisation’s big picture andbeabletoinfluencekeydecisionsandpolicies.

In general, the focus of today’s HR manager is on strategic personnel retention and talent development. HR professionals will be coaches, counsellors, mentors, and succession planners to help motivate organisation’s members andtheirloyalty.TheHRmanagerwillalsopromoteandfightforvalues,ethics,beliefs,andspiritualitywithintheirorganisations, especially in the management of workplace diversity.

This chapter will highlight on how a HR manager can meet the challenges of workplace diversity, how to motivate employees through gain-sharing and executive information system through proper planning, organising, leading and controlling their human resources.

7.2 The Challenges of Workplace DiversityThe future success of any organisation relies on the ability to manage a diverse body of talent that can bring •innovative ideas, perspectives and views to their work. The challenges and problems faced in workplace diversity can be turned into a strategic organisational asset if an organisation is able to capitalise on this melting pot of diverse talents. With the mixture of talents of diverse cultural backgrounds, genders, ages and lifestyles, an organisation can •respond to business opportunities more rapidly and creatively, especially in the global arena which must be one of the important organisational goals to be attained. More importantly, if the organisational environment does not support diversity broadly, one risk is of losing •talent to competitors.This is especially true for multinational companies (MNCs) who have operations on a global scale and employ •people of different countries, ethical and cultural backgrounds. Thus,aHRmanagerneeds tobemindfulandmayemploya“ThinkGlobal,ActLocal”approach inmost•circumstances. For example, the challenge of workplace diversity is also prevalent amongst Singapore’s Small and Medium Enterprises (SMEs). With a population of only four million people and the nation’s strive towards high technology and knowledge-•based economy; foreign talents are lured to share their expertise in these areas. Thus, many local HR managers have to undergo cultural-based HRM training to further their abilities to motivate a group of professional that arehighlyqualifiedbutculturallydiverse.Furthermore, the HR professional must assure the local professionals that these foreign talents are not a threat •to their career advancement. In many ways, the effectiveness of workplace diversity management is dependent on the skilful balancing act of the HR manager.One of the main reasons for ineffective workplace diversity management is the predisposition to pigeonhole •employees,placingtheminadifferentsilobasedontheirdiversityprofile.

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In the real world, diversity cannot be easily categorised and those organisations that respond to human complexity •by leveraging the talents of a broad workforce will be the most effective in growing their businesses and their customer base.

7.3 The Management of Workplace DiversityIn order to effectively manage workplace diversity, a HR manager needs to change from an ethnocentric view •(“ourwayisthebestway”)toaculturallyrelativeperspective(“let’stakethebestofavarietyofways”).This shift in philosophy has to be ingrained in the managerial framework of the HR manager in his/her planning, •organising, leading and controlling of organisational resources.There are several best practices that a HR manager can adopt in ensuring effective management of workplace •diversity in order to attain organisational goals. These are as discussed below:

7.3.1 Planning a Mentoring Program

One of the best ways to handle workplace diversity issues is through initiating a Diversity Mentorin0g Program. •This could entail involving different departmental managers in a mentoring program to coach and provide feedback to employees who are different from them. For the program to run successfully, it is wise to provide practical training for these managers or seek help from •consultantsandexpertsinthisfield.Usually,suchaprogramwillencourageorganisation’smemberstoairtheiropinionsandlearnhowtoresolveconflictsduetotheirdiversity.More importantly, the purpose of a Diversity Mentoring Program seeks to encourage members to move beyond •their own cultural frame of reference to recognise and take full advantage of the productivity potential inherent in a diverse population.

7.3.2 Organising Talents Strategically

Many companies are now realising the advantages of a diverse workplace. As more and more companies are going •global in their market expansions either physically or virtually (for example, e-commerce-related companies), there is a necessity to employ diverse talents to understand the various niches of the market. For example, when China was opening up its markets and exporting their products globally in the late 1980s, •the Chinese companies (such as China’s electronic giants such as Haier) were seeking the marketing expertise of Singaporeans. This is because Singapore’s marketing talents were able to understand the local China markets relatively well (almost 75% of Singaporeans are of Chinese descent) and as well as being attuned to the markets in the West due to Singapore’s open economic policies and English language abilities.With this trend in place, a HR manager must be able to organise the pool of diverse talents strategically for the •organisation. He/She must consider how a diverse workforce can enable the company to attain new markets and other organisational goals in order to harness the full potential of workplace diversity.An organisation that sees the existence of a diverse workforce as an organisational asset rather than a liability •would indirectly help the organisation to positively take in its stride some of the less positive aspects of workforce diversity.

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Fig. 7.1 Strategically organising the talents

7.3.3 Leading the Talk

A HR manager needs to advocate a diverse workforce by making diversity evident at all organisational levels. •Otherwise, some employees will quickly conclude that there is no future for them in the company. As the HR manager, it is pertinent to show respect for diversity issues and promote clear and positive responses •to them. He/she must also show a high level of commitment and be able to resolve issues of workplace diversity in an •ethical and responsible manner.

7.3.4 Control and Measure Results

AHRmanagermustconductregularorganisationalassessmentsonissueslikepay,benefits,workenvironment,•management and promotional opportunities to assess the progress over the long term. There is also a need to develop appropriate measuring tools to measure the impact of diversity initiatives at the •organisation through organisation-wide feedback surveys and other methods. Withoutpropercontrolandevaluation,someofthesediversityinitiativesmayjustfizzleout,withoutresolving•any real problems that may surface due to workplace diversity.

7.4 Motivational ApproachesWorkplacemotivationcanbedefinedastheinfluencethatmakesemployeesdothingstoachieveorganisational•goals: this isaresultofour individualneedsbeingsatisfied(ormet)so thatwearemotivatedtocompleteorganisational tasks effectively. As these needs vary from person to person, an organisation must be able to utilise different motivational tools to encourage their employees to put in the required effort and increase productivity for the company.Whydoweneedmotivatedemployees?Theanswerissurvival.Inourchangingworkplaceandcompetitivemarket•environments, motivated employees and their contributions are the necessary currency for an organisation’s survival and success. Motivational factors in an organisational context include working environment, job

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characteristics, and appropriate organisational reward system and so on.The development of an appropriate organisational reward system is probably one of the strongest motivational •factors.Thiscaninfluenceboth,jobsatisfactionandemployeemotivation.The reward system affects job satisfaction by making the employee more comfortable and contented as a result •oftherewardsreceived.Therewardsysteminfluencesmotivationprimarilythroughtheperceivedvalueoftherewards and their contingency on performance.To be effective, an organisational reward system should be based on sound understanding of the motivation •of people at work. In this chapter, one of the more popular methods of reward systems–gain-sharing is discussed.

7.4.1 Gain-sharing

Gain-sharing programs generally refer to incentive plans that involve employees in a common effort to improve •organisational performance and are based on the concept that the resulting incremental economic gains are shared among employees and the company.In most cases, workers voluntarily participate in management to accept responsibility for major reforms. This •type of pay is based on factors directly under a worker’s control (i.e., productivity or costs). Gains are measured and distributions are made frequently through a predetermined formula. Because this pay •is only implemented when gains are achieved, gain-sharing plans do not adversely affect company costs.

7.4.1.1 Managing Gain-sharingIn order for a gain-sharing program that meets the minimum requirements for success to be in place, Paulsen and Boyett have suggested a few pointers in the effective management of a gain-sharing program. They are as follows:

AHRmanagermustensurethatthepeoplewhowillbeparticipatingintheplanareinfluencingtheperformance•measuredbythegain-sharingformulainasignificantwaybychangesintheirday-to-daybehaviour.The main idea of the gain sharing is to motivate members to increase productivity through their behavioural •changes and working attitudes. If the increase in the performance measurement was due to external factors, then it would have defeated the purpose of having a gain-sharing program.An effective manager must ensure that the gain-sharing targets are challenging but legitimate and attainable. •Inaddition,thetargetsshouldbespecificandchallengingbutreasonableandjustifiablegiventhehistoricalperformance, the business strategy and the competitive environment. If the gain-sharing participants perceive the target as impossibility and are not motivated at all, the whole program will be a disaster.A manager must provide useful feedback as guidance to the gain-sharing participants concerning how they need •to change their behaviour(s) to realise gain-sharing payouts. The feedback should be frequent, objective and clearly based on the members’ performance in relation to the gain-sharing target.A manager must have an effective mechanism in place to allow gain-sharing participants to initiate changes in •work procedures and methods and/or requesting new or additional resources such as new technology to improve performance and realise gains. Thoughamanagermusthaveatightcontrolofcompany’sresources,reasonableandjustifiablerequestsfor•additional resources and/or changes in work methods from gain-sharing participants should be considered.

7.5 Executive Information SystemsExecutiveInformationSystem(EIS)isthemostcommontermusedfortheunifiedcollectionsofcomputer•hardware and software that track the essential data of a business’ daily performance and present it to managers as an aid to their planning and decision-making. With an EIS in place, a company can track inventory, sales, and receivables, compare today’s data with historical •patterns. Inaddition,anEISwillaidinspottingsignificantvariationsfrom“normal”trendsalmostassoonasitdevelops,•giving the company the maximum amount of time to make decisions and implement required changes to put

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your business back on the right track. This would enable EIS to be a useful tool in an organisation’s strategic planning, as well as day-to-day management.

7.5.1 Managing EIS

As information is the basis of decision-making in an organisation, there lies a great need for effective managerial •control. A good control system would ensure the communication of the right information at the right time and relayed •to the right people to take prompt actions.WhenmanaginganExecutiveInformationSystem,aHRmanagermustfirstfindoutexactlywhatinformation•decision-makerswouldliketohaveavailableinthefieldofhumanresourcemanagementandthentoincludeit in the EIS. This is because having people simply use an EIS that lacks critical information is of no value-add to the •organisation. In addition, the manager must ensure that the use of information technology has to be brought into alignment •with strategic business goals.

7.6 HRM Strategic ChallengesThe role of the HR manager must parallel the needs of the changing organisation. Successful organisations are •becoming more adaptable, resilient, quick to change directions, and customer-centred. Within this environment, the HR professional must learn how to manage effectively through planning, organising, •leading and controlling the human resource and be knowledgeable of emerging trends in training and employee development.ThemainHRMstrategicchallengescanbedefinedinfourmainareas:

HRM Strategic Challenges

Leadership DevelopmentManagement Development

Globalisation Outsourcing

Fig. 7.2 HRM strategic challenges

Leadership development: • The leadership development is one of the biggest HRM challenges. The leadership development is the only way to secure the organisation for the future. The supply of the leaders is very limited and

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the organisation has to focus on the growth of the potential available inside the organisation. The HRM function has to take the responsibility for the initiatives to identify and grow the potential inside the organisation and to secure the best potential to stay in the organisation. The leadership development initiatives are extremely costly, but the organisation has to recognise the need to invest in such initiatives. This is a major HRM Challenge.Management development: • The line management is another HRM challenge. The line management is the main user and client of the HRM value added processes and they have to be able to use the processes correctly. The HRM function can be seen as the enemy, but the HRM challenge is to develop and train the line management inthedailyusageofthevalueaddedHRMprocessestomaketheorganisationmoreefficient.Globalisation: • The globalisation is another HRM challenge. The HRM function has to make its policies, procedures and processes to work on the global level. Currently, most of the HRM policies are focused on the concrete country, but the employees have to start to move from the country to another country and the HRM processes have to be able to support such a need in the organisation. The globalisation has a huge impact on the HRM function and it is usually not ready to take more responsibility in the movement of the workforce around the globe.Outsourcing: • The outsourcing is the main issue for the HRM function. The HRM function has to be able to outsource its non-core services for the organisation and it has to be able to keep the service level for the organisation. The outsourcing HRM challenge is pretty huge as it requests a lot of standardisation and practice from the HRM function.

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SummaryThe HRM function has some strategic challenges, which will affect the whole organisation in the future. •The strategic challenges will change the organisation of the HRM function and its role in the organisation.•The future success of any organisation relies on the ability to manage a diverse body of talent that can bring •innovative ideas, perspectives and views to their work.One of the main reasons for ineffective workplace diversity management is the predisposition to pigeonhole •employees,placingtheminadifferentsilobasedontheirdiversityprofile.In order to effectively manage workplace diversity, a HR Manager needs to change from an ethnocentric view •(“ourwayisthebestway”)toaculturallyrelativeperspective(“let’stakethebestofavarietyofways”).Workplacemotivationcanbedefinedastheinfluencethatmakesusdothingstoachieveorganisationalgoals.•To be effective, an organisational reward system should be based on sound understanding of the motivation of •people at work.Gain-sharing programs generally refer to incentive plans that involve employees in a common effort to improve •organisational performance.ExecutiveInformationSystem(EIS)isthemostcommontermusedfortheunifiedcollectionsofcomputer•hardware and software that track the essential data of a business’ daily performance and present it to managers as an aid to their planning and decision-making.The role of the HR manager must parallel the needs of the changing organisation. The HR professional must •learn how to manage effectively through planning, organising, leading and controlling the human resource and be knowledgeable of emerging trends in training and employee development.

ReferencesChallenges in Strategic Human Resource Management. • Available at: <http://www.scribd.com/doc/43740927/Challenges-in-Strategic-Human-Resource-Management> Accessed on 30th March 2011.Storey, J., 2009. • The Routledge Companion to Strategic Human Resource Management. Taylor & Francis. 529 pages.

Recommended ReadingBahaudin G. Mujtaba & Guergana Karadjova-Stoev, 2009. • Strategic Human Resource Management and Global Expansion Lessons from the Euro Disney Challenges in France. International Business & Economics Research Journal 8(1). Becker, B. E. & Huselid, M. A., 2006.• Strategic Human Resources Management: Where Do We Go From Here? Journal of Management, 32(6). Salaman, G., Storey, J. & Billsberry, J., 2005. • Strategic Human Resource Management: Theory and Practice. 2nd ed., SAGE.

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Self Assessment

The focus of today’s HR manager is on strategic personnel __________ and talents development.1. resourcinga. trainingb. retentionc. strategyd.

____________ will be coaches, counsellors, mentors, and succession planners to help motivate organisation’s 2. members and their loyalty.

Finance professionalsa. Marketing professionalsb. Operations professionalsc. HR professionalsd.

The challenge and problems faced of __________ can be turned into a strategic organisational asset if an 3. organisation is able to capitalise on this melting pot of diverse talents.

workplace diversitya. talentb. demographicc. aged.

WhatdoesSMEstandfor?4. Short and Medium Enterprisesa. Small and Medium Enterprisesb. Small and Mix Enterprisesc. Single and Multiple Enterprisesd.

The leadership development initiatives are extremely __________.5. difficulta. costly b. unavoidablec. exhaustingd.

In order to effectively manage workplace diversity, a HR manager needs to change from an ethnocentric view 6. to a ___________ relative perspective.

traditionallya. emotionallyb. culturallyc. officiallyd.

Whichisoneofthebestwaystohandleworkplacediversityissues?7. Initiating a diversity mentoring programa. Initiating a talent programb. Initiating a development programc. Initiating a resourcing programd.

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____________ can be defined as the influence thatmakes employees do things to achieve organisational8. goals.

Co-ordinationa. Selectionb. Directionc. Motivationd.

Whydomostorganisationsneedmotivatedemployees?9. For organisational effectivenessa. For productivityb. For survivalc. Fororganisationalefficiencyd.

The ___________ influencesmotivation primarily through the perceived value of the rewards and their10. contingency on performance.

training systema. development systemb. reward systemc. resourcing systemd.

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Case Study I

CitigroupCitibank, a member of Citigroup, commenced operations in Singapore in 1902. Now a century later, the bank has evolved to a diverse franchise of businesses including the Citigroup Corporate & Investment Bank, Citibank Consumer Bank, The Citigroup Private Bank, Citibank International Personal Bank, Smith Barney Private Client Group and Citigroup Asset Management. With a presence in more than 100 countries, Citigroup is a leader in the financialservicessectorandachoicepartnerofcorporations,consumersandhighnetworthindividuals.Toremaina leading force, Citibank recognises the importance of excellent recruitment and selection processes.

The challengeIdentifyingandhiringtherighttalentisparticularlydifficultinSingapore’scompetitivefinancialservicessector.This is compounded by the country’s small population which limits the talent pool.

Recruitment & selection strategyThe bank’s recruitment and selection strategy has always been to attract the best talent by leveraging on its strong brand name, meritocratic practices and the opportunities it offers as a diverse and global organisation.

Cost effectiveness and the incorporation of best practices are also rigorously pursued in the recruitment process. The selection process includes a vigilant screening for competencies, skills, experience and integrity before an offer is made.

Decentralised recruitmentRecruitment used to be centralised and led by a team of recruitment specialists. The country recruitment specialists have since been decentralised. They are now employed within each business group as a HR generalist offering a spectrum of HR services including selection and recruitment.

The bank also outsourced the task of resume management to an external vendor and invested in a web-based resume management system which enables recruiters and line managers to have real time access to curriculum vitaes remotely. The system is equipped with e-recruit features, which free up the recruiters’ time in screening, interview scheduling and replying to unsuccessful applicants.

The centralised database with a vast reservoir of talent allows recruiters to mine for suitable candidates, thereby optimising cost of advertising and agency search fees.

Outsourced administrationThe HR function is inevitably saddled with a variety of administrative activities, which often distract HR practitioners from their true purpose, which is to provide value-added HR services. The outsourcing of such administrative chores liberated substantial time and resources for HR practitioners, allowing them to be more strategic and effective in theirroles.Inoutsourcing,a“hubandspoke”modelwasadopted.Thegeneralistssupportingthevariousbusinessesformed the “spoke”,while the “hub” represented a centralisedHumanResourceunit,which includedproductspecialists as well as administrative functions that are partly outsourced.

Theneteffectinoutsourcinghasbeensubstantialintermsofcostsynergies,standardisedandsimplifiedprocesses,andreducedbottlenecksinrecruitment.Asthevendorhastoensureadequatestaffingduringstaff’sabsencedueto vacation and medical leave, turnaround time has remained consistent. Productivity and morale among the HR practitioners also improved as a result of outsourcing. Outsourcing has enabled Citibank’s recruiters to focus on value-addedfeaturesofrecruitmentsuchasevaluatingstaffinggaps,drivingcreativeemploymentstrategies,refiningindividual processes and formulating strategies and solutions to counter recruitment and selection challenges and issues.

Talent inventory reviewTalentbuildingovertheyearshasallowedCitigrouptorelysignificantlyoninternalchannelstofillkeypositions.

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Its Talent Inventory Review (TIR) process is one of the most successful sources of recruitment for executive as well asmanagerialpositionsascandidateshaveprovenfitwiththeBank’scorporateculture.

The purpose of TIR is to assess the current performance and future capabilities of the company’s leadership team. Itassessestheindividual’spersonalprofile,includingqualifications,experiencesandcareerinterest,anddesignsa development plan for each high potential staff. This is done once a year. Through disciplined and consistent practice over the years, it has become a robust succession-planning tool built on a comprehensive talent inventory database.

The process is also helpful in determining the leadership team’s readiness to compete in the marketplace by examining the performance and growth potential of individuals and integrating this information across the diverse functions andbusinessesofCitigroup.Italsohighlightsthestaffinganddevelopmentactionsneededtobuildandmaintainaworld-class leadership team. From the staff ’s perspective, it provides them with a vehicle to assess their performance, professional skills and development needs against their long-term career objectives.

Internal job postingAn internal job advertisement policy is diligently practised for all job openings. Internal staffs are encouraged to apply for positions across the franchise locally and globally. This policy underscores the bank’s commitment to competency and career development, contributing to broader skills set, greater job satisfaction, morale and staff retention.

Employee referral programmeThe bank has a successful employee referral programme to complement its other recruitment activities. It enables employees to play a part in identifying potential candidates for permanent and contract positions in the organisation. The rewards for successful referrals vary, depending on the level of the hired candidate.

Structured interview for selection successInterview process to screen candidates for the organisation is highly disciplined. As a large corporation with a proud heritage, strong corporate culture, distinctive values and work ethics, Citigroup’s assessment techniques need to be rigoroustoselectcandidateswiththerightfit.

Interviews are structured to elicit candidates’ past behaviour, preferences, choices, patterns and insights, which are then used to predict the likely trends of their behaviour in the future. Using the same software globally, the results of interviews are able to provide insights on candidates’ general approaches, their motivations and dislikes, accomplishments, strengths and weaknesses, and their attitudes and assumptions about people. It can also go far in helpingtopredicthowapersonwillreacttoaspecificsetofcircumstances.

Moving forwardCitigroup continually assesses its recruitment and selection strategies, policies and processes, with the objective of hiring the best in the shortest time and at the lowest cost, whether such hires are from internal or external sources.

TheHRsystemiscurrentlybeingenhancedtoachieveevenbetterefficiency.Thesystemwillallowcandidatestobeidentifiedusingobjectiveselectioncriteria.Self-serviceportalswillbeavailabletocandidates,hiringmanagersand HR throughout the recruiting cycle. Some of the enhancements include real-time tracking of position openings, candidate’sstatus,successprofile,costperhire,cycletimeandmarketsalarydata.

In the pipeline are plans to set up a regional shared service centre for more streamlined HR processes and cost synergies.

Questions:Singapore society is multi-racial, multi-cultural and multi-religious. Should Citigroup give importance to 1. workforcediversity?Comment.

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AnswerEmployers and employees must appreciate the diversity of the workforce and work together to achieve workplace harmony. Employers should treat all staff fairly and continue to recruit based on skills, merit, experience, capability and relevant job requirements.

What all points should be considered by the Citigroup management while selecting and recruiting people from 2. diversegroups?AnswerCandidates for employment should be selected on merit, experience, capability and other job requirements.•For situations of business necessity where race, language, religion and culture are considerations for the job, •parties must recognise that selection is based on the special attributes of the candidates who meet the requirements of the job.Employers should adopt good human resource practices, including non discriminatory employment practices •in order to attract the best talents for the organisations.

Whattypeofselectioncriteria,doyouthink,shouldbeadoptedbyCitigroup?3. AnswerEmployers are recommended to apply selection criteria consistently for all aspects of employment, including recruitment,training,appraisal,jobupgrading,andposting.Suchcriteriashouldbespecificallyrelatedtotherequirements of the job and avoid references that have no relevance to the requirements.

Examples of requirements include:Type of experience, such as marketing experience.•Amountofexperience,suchasfiveyearsinrelevantfield.•Educationalqualifications,suchasdiplomainmarketing.•Specificskillssuchastechnicalandmanagerial,suchaslanguageorcomputerskills.•Personal qualities required for the job, such as willingness to travel.•

Criteria and the terms and conditions of employment should be:made known to all employees and job applicants on request•circulated to all employees on a regular basis.•

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Case Study II

AIR NATIONALAir National’s (AN) 1998 Annual Report glowed with optimism. Bradley Smith, CEO, stated in his letter to shareholders,‘Asanewlyprivatisedcompany,wefacethefuturewithenthusiasm,confidentthatwecancompeteina deregulated industry.’ By April 2000, however, the tone had changed, with a reported pre-tax loss of $93 million. The newly appointed CEO, Clive Warren, announced a major change in the company’s business strategy that would lead to a transformation of business operations and HR practices in Europe’s largest airline company.

BackgroundDuring the early 1980s, civil aviation was a highly regulated market, and competition was managed via close, if notalwaysharmonious,relationshipsbetweenairlines,theircompetitorsandgovernments.Nationalflag-carriersdominated the markets, and market shares were determined not by competition but by the skill of their governments in negotiating bilateral ‘air service agreements’. These agreements established the volume and distribution of air trafficand therebyrevenue.Within thesemarkets,ANdominatedothercarriers;despite theemergenceofnewentrants, AN’s share of the domestic market in the early 1980s, for example, increased by 60 per cent.

The competitionInthemiddleofthe1980s,AN’sexternalenvironmentwassubjectedtotwosetsofsignificantchange.First,in1986,ANwasprivatisedbyBritain’sConservativegovernment.Thispotentiallyreducedthepoliticalinfluenceofthe old corporation and exposed the new company to competitive forces. Preparation for privatisation required a painful restructuring and ‘downsizing’ of assets and the workforce, driven largely by the need to make the company attractive to initially sceptical investors.

Privatisationalsoofferedsignificantpolitical leverage,whichANwasabletodeploytosecurefurtherstabilityin its key product markets. It was this context, rather than the stimulus of market competition, that gave senior management the degree of stability and security needed to plan and implement new business and HRM strategies. The second set of pressures, potentially more decisive, was generated by prolonged economic recession and the ongoing deregulation of civil aviation in Europe and North America.

With these environmental forces, AN attempted to grow out of the recession by adopting a low-cost competitive strategy and joining the industry-wide price war. Bradley Smith, when he addressed his senior management team, stated, ‘this strategy requires us to be aggressive in the marketplace and to be diligent in our pursuit of cost reductions and cost minimisation in areas like service, marketing and advertising’. The low-cost competitive strategy failed. Passenger numbers slumped by 7 percent during the late 1980s, contributing to a pre-tax loss. Following the appointment of the new CEO, AN changed its competitive strategy and began to develop a differentiation business strategy or what is also referred to as an ‘added-value’ strategy.

In 2002, following the September 11 attacks in New York and Washington in which four commercial planes were hijacked and crashed, killing almost 3000 people, international air travel bookings fell sharply. The catastrophes caused the loss of more than 100,000 airline jobs around the world. In addition, early in 2002, new discount airlines started operating in Europe, and there was a costly battle for market share between AN, HopJet Airlines and Tango Airlines.

Air National’s new competitive strategyUnder the guidance of the newly appointed CEO, Clive Warren, AN prioritised high-quality customer service,‘re-engineered’ the company and launched a discount airline that operated as a separate company. The management structure was reorganised to provide a tighter focus on operational issues beneath corporate level. AN’s operations weredividedintoroutegroupsbasedonfivemajormarkets(refertothefiguregivenbelow).Eachgroupwastobe headed by a general manager who was given authority over the development of the business, with a particular emphasis on marketing. The company’s advertising began also to emphasise the added-value elements of AN’s services. New brand names were developed and new uniforms were introduced for the cabin crews and point-of-service staff.

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Air National’s management structureAN’s restructuring also aimed to cut the company’s cost base. Aircraft and buildings were sold and persistently unprofitablerouteseithersuspendedorabandonedaltogether.AN’soverallrouteportfoliowascutby4percentduring2001alone.Labourcostsofferedthemostsignificantpotentialsavings,andwith35,000employeesAN’sre-engineering included ‘one of the biggest redundancy programmes in British history’. Once the redundancy programme was underway, the company was able to focus on product development, marketing, customer service andHRdevelopment.Thecompany’ssharpenedfocusonthenew‘customer-first’programmepromptedamajorreview of the management of employees and their interface with customers.

Air National’s human resources strategy The competitive and HR strategies pursued by AN mainline business in the wake of this restructuring process, are congruent with an HR strategy that emphasizes employee empowerment and commitment. As Clive Warren stated in a television interview, ‘In an industry like ours, where there are no assembly lines or robots, people are our most important asset and our long term survival depends upon how they work as part of a team’. In the closing part of her presentation, Elizabeth Hoffman, AN’s Director of Human Resources, outlined the need for a new approach to managing AN’s mainline employees: ‘We must emphasise to our managers that they must give up control if our employeesaretoimprovetheirperformance’seethefiguregivenbelow:

Key characteristics of Air National’s strategic human resource management and empower–developmental approach

As part of the ‘new way of doing things’, demarcation between craft groups, such as avionics and mechanical engineers, were removed, and staff were organized into teams of multi-skilled operatives led by team leaders. Even those middle managers who supported the new work teams found this approach to managing their subordinates uncomfortable, as one maintenance manager acknowledged: ‘The hard part is having to share power. I confess, I like to be able to say yes or no without having to confer all the time and seek consensus from the team.’ AN instituted a series of customer service training seminars and invested in training and development. The senior management also developed a ‘strategic partnership’ with the unions. At the onset of the restructuring process, Clive Warren and ElizabethHoffmanundertookto‘openthebooks’totheunionsandestablishedteambriefingsandregular,formalconsultationmeetingswithunionrepresentatives.Aprofit-relatedpaysystemwasalsolaunched,withthefullsupportof the unions. In addition, senior management held major training programmes, designed and delivered by leading business school academics, on the importance of trust, motivation and ‘visionary’ leadership.Running parallel to these developments was the company’s concurrent objective of cost reduction. Between 1996 and 2000, AN shed 37 per cent of its workforce, nearly 25 per cent leaving in 1998. Job cuts were managed entirely through voluntary severance and redeployment. The requirement to sustain and improve performance in the face

Group 1(North

America)

Group 2(Pacific)

Group 3(India)

Group 4 (Europe)

Group 5 (Domestic)

Corporate Management

Differentiation competitive strategyCorporate values recognising the contribution of Air National employeesEffective voice for human resources at the strategy table

Priority given to security of employmentInvestment in workplace learningCompetitive and equitable pay policies

Broad task design and self-managed teamsEmphasis on employee empowerment and self-accountabilityClimate of cooperation, commitment and trust

Corporate Level

Human Resources

Policy Level

Workplace Level

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of such job losses produced, however, a preoccupation with productivity levels, and attempts to alter shift patterns sometimesprovokedconflict.Disputeswereresolvedquickly,usuallybythecompanyremindingemployeesofAN’s commitment to job security, training and development, and through senior management ‘throwing money at the problem’.

GoJet competitive and human resources strategyAN also launched its GoJet product in November 2002 to take advantage of the dramatic shift by European and North American passengers towards discount airlines. GoJet planes have more seats because there is less room between the seats and the business-class section has been removed, which allows the planes to carry an additional 20passengers.GoJetcostswillbe20percentlowerthanthoseofAN’scomparablemainlineflightspartlybecauseGoJet’s employees will be paid a lower wage than their counterparts at AN. Clive Warren has, however, said that wages will be competitive with GoJet’s competitors in the discount market.

Reviewing the developments, Clive Warren considered that AN had been ‘transformed by re-engineering’. Deep indebtinthelate1980s,ANwentintoprofitinthefirstquarterof1998andthensufferedalossinthelastquarterof2001andthefirstquarterof2002.Thecompany’saircraftwereflyingto164destinationsin75countriesfrom16UKairports.‘Ifwearetomaintainourmarketshareindomesticandinternationalpassengertrafficwehavetohave a business plan that recognises the realities of airline travel in the 21st century’, said Warren.

Questions:You are an HR consultant employed by a rival national airline to investigate AN’s competitive and HR strategy. Prepare a written report on the following questions:

What factors enabled AN’s senior management to take a strategic approach to its business and to adopt an 1. empowering-developmentalapproachtoHRM?How useful is the concept of ‘strategic choice’ in understanding the linkage between AN’s competitive and HR 2. strategies?Whatproblems,ifany,doyouenvisagewithAN’sHRstrategyandGoJet’sHRstrategy?3.

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Case Study III

Indian Airlines Human Resource Problems

Flying lowIndian Airlines (IA) – the name of India’s national carrier conjured up an image of a monopoly gone berserk with the absolute power it had over the market. Continual losses over the years, frequent human resource problems and gross mismanagement were just some of the few problems plagued the company.Widespreadmediacoverage regarding the frequent strikesby IApilotsnotonly reflected theadamantattitudeof the pilots, but also resulted in increased public resentment towards the airline. IA’s recurring human resource problems were attributed to its lack of proper manpower planning and underutilisation of existing manpower. TherecruitmentandcreationofpostsinIAwasdonewithoutproperscientificanalysisofthemanpowerrequirementsof the organisation. IA’s employee unions were rather infamous for resorting to industrial action on the slightest pretext and their arm-twisting tactics to get their demands accepted by the management.During the 1990s, the Government took various steps to turn around IA and initiated talks for its disinvestment. Amidst strong opposition by the employees, the disinvestment plans dragged on endlessly well into mid 2001. The IA story shows how poor management, especially in the human resources area, could spell doom even for a Rs 40 bn monopoly.

Background noteIA was formed in May 1953 with the nationalisation of the airlines industry through the Air Corporations Act. Indian Airlines Corporation and Air India International were established and the assets of the then existing nine airline companies were transferred to these two entities. While Air India provided international air services, IA and its subsidiary, Alliance Air, provided domestic air services. In 1990, Vayudoot, a low-capacity and short-haul domestic airline with huge long-term liabilities, was merged with IA. IA’s network ranged from Kuwait in the west to Singapore in the east, covering 75 destinations (59 within India, 16 abroad). Its international network covered Kuwait, Oman, UAE, Qatar and Bahrain in West Asia; Thailand, Singapore and Malaysia in South East Asia; and Pakistan, Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives in the South Asian subcontinent. Between themselves, IA and Alliance Air carried over 7.5 million passengers annually. In 1999, the companyhadafleetstrengthof55aircraft-11AirbusA300s,30AirbusA320s,11BoeingB737sand3DorniersD0228. In 1994, the Air Corporation Act was repealed and air transport was thrown open to private players. Many big corporate houses entered the fray and IA saw a mass exodus of its pilots to private airlines. To counter increasing competition IA launched a new image building advertisement campaign. It also improved its services by strictly adhering to flight schedules and providing better in-flight and ground services. It also launched several other new aircraft, with a new, younger, and more dynamic in flight crew. These initiatives were soon rewarded in form of 17% increase in passenger revenues during the year 1994. However, IA could not sustain these improvements. Competitors like Sahara and Jet Airways (Jet) provided better servicesandnetwork.UnabletomatchtheperformanceoftheseairlinesIAfacedseverecriticismforitsinefficiencyand excessive expenditure human resources. Staff cost increased by an alarming Rs 5.9 bn during 1994-98. These costs were responsible to a great extent for the company’s frequent losses. By 1999 the losses touched Rs 7.5 bn. In the next few years, private players such as East West, NEPC, and Damania had to close shop due to huge losses. Jet was the only player that was able to sustain itself. IA’s market share, however continued to drop. In 1999, while IA’s market share was 47%, the share of private airlines reached 53%. Unnecessary interference by the Ministry of Civil Aviation was a major cause of concern for IA. This interference ranged from deciding on the crew’s quality to major technical decisions in which the Ministry did not even have thenecessaryexpertise.IAhadtooperateflightsintheNorth-Eastathighlysubsidisedfarestofulfillitssocial

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objectivesofconnectingtheseregionswiththerestofthecountry.TheseflightscontributedtotheIA’slossesoverthe years. As the carrier’s balance sheet was heavily skewed towards debt with an equity base of Rs 1.05 bn in 1999asagainstlongtermloansofRs28bn,heavyinterestoutflowsofRs1.99bnfurtherincreasedthelosses. IA could blame many of its problems on competitive pressures or political interference; but it could not deny responsibility for its human resource problems. A report by the Comptroller and Auditor General of India stated, “Manpowerplanninginanyorganisationshoulddependontheperiodicandrealisticassessmentofthemanpowerneeds, need-based recruitment, and optimum utilisation of the recruited personnel and abolition of surplus and redundantposts.Identificationofthequalificationsappropriatetoallthepostsisabasicrequirementofefficienthumanresourcemanagement.IAwasfoundgrosslydeficientinalltheseaspects.”

‘Fighter’ pilotsIA’s eight unionswere notorious for their defiant attitude and their use of unscrupulousmethods to force themanagement to agree to all their demands. Strikes, go-slow agitations and wage negotiations were common.

For each strike there was a different reason, but every strike it was about pressurising IA for more money. From November 1989 to June 1992, there were 13 agitations by different unions. During December 1992-January 1993, there was a 46-day strike by the pilots and yet another one in November 1994. The cavalier attitude of the IA pilots was particularly evident in the agitation in April 1995. Thepilotsbegantheagitationdemandinghigherallowancesforflyingininternationalsectors.Thisdemandwasturneddown.Theythenrefusedtoflywithpeoplere-employedonacontractbasis.Thereaftertheywentonastrike,sayingthatthecabincrewearnedhigherwagesthanthemandthattheywouldnotflyuntilthisissuewasaddressed.Due to adamant behaviour of pilots many of the cabin crew and the airhostesses had to be off-loaded at the last moment from aircrafts. In 1996, there was another agitation, with many pilots reporting sick at the same time. Medical examiners, who were sent to check these pilots, found that most of these were false claims. Some of the pilots were completely fit; others somehow managed to produce medical certificates to corroborate their claims. In January 1997, there was another strike by the pilots, this time asking for increased foreign allowances, fixed flying hours, free meals and wage parity with Alliance Air. Though the strike was called off within a week, it again raised questions regarding IA’s vulnerability. April 2000 saw another go-slow agitation by IA’s aircraft engineers who were demanding pay revision and a change in the career progression pattern. The strategies adopted by IA to overcome these problems were severely criticised by analysts over the years. Analysts noted that the people heading the airline weremore interested inmaking peacewith the unions than looking at the company’s long-term benefits. Russy Mody (Mody), who joined IA as chairman in November 1994, made efforts to appease the unions by proposing to bring their salaries on par with those of Air India employees. This was strongly opposed by the board of directors, in view of the mounting losses. Mody also proposed to increase the age of retirement from 58 to 60 to control the exodus of pilots. However, government rejected Mody’s plans. When Probir Sen (Sen) took over as chairman and managing director, he bought the pilot emoluments on par with emoluments other airlines, thereby successfully controlling the exodus. In 1994, the IA unions opposed the re-employment of pilots who had left IA to join private carriers and the employment of superannuated fliers on contract. Sen averted a crisis by creating Alliance Air, a subsidiary airline company where the re-employed people were utilised.Hewasalsoinstrumentalineffectingsubstantialwagehikesfortheemployees.Theextrafinancialburdenon the airline caused by these measures was met by resorting to a 10% annual hike in fares. (Refer to the following table)

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Date of fare increase Impact (%) 25/07/1994 16.221/10/1995 2522/09/1996 3615/10/1997 13.441/10/1998 8.8

Impact of staff cost hike in fare increase (%)Source: IATA-World Air Transport Statistics

Initially,Sen’seffortsseemedtohavepositiveeffectswithanimprovementinaircraftutilisationfigures.IAalsomanagedtocutlossesduring1996-97andreportedaRs.140mnprofitin1997-98.Butrecessionarytrendsintheeconomyanditsmounting wage bill pushed IA back into losses by 1999. Sen and the entire board of directors were sacked by the government. In the late 1990s, in yet another effort to appease its employees, IA introduced the productivity-linked scheme. Theideaoftheproductivitylinkedincentive(PLI)schemewastopersuadepilotstoflymoreinordertoincreaseaircraft utilisation. But the PLI scheme was grossly misused by large sections of the employees to earn more cash. For instance, the agreement stated that if the engineering department made 28 Airbus A320s available for service every day, PLI would be paid.Thisnumberwaslaterreducedto25andfinallyto23.Therewerealsoreportsthatflightsleaving30-45minuteslatewereshownasbeingontimeforPLIpurposes.Pilotswereflying75hoursamonth,whiletheyflewonly63 hours. Eventually, the PLI schemes raised an additional annual wage bill of Rs 1.8 bn for IA. It was alleged thatIAemployeesdidnoworkduringnormalofficehours;thiswaytheycouldnotworkovertimeandearnmoremoney. Though experts agreed that IA had to cut its operation costs. To survive the airline continued to add to its costs, by paying more money to its employees. (Refer Table 2). The payment of overtime allowance (OTA) which included holiday pay to staff, increased by 109% during 1993-99. It was also found that the payment of OTA always exceeded the budget provisions. Between 1991-92 and 1995-96, the increase in pay and allowances of the executive pilots was 842% and that of non-executive pilots was 134%. Even the lowest paid employee in the airline, either a sweeper or a peon, was paid Rs 8,000 – 10,000 per month which included overtime.

Year Staff cost (in Rs bn)

No. of employ-ees

Per employee cost (in mn)

Total expenditure (in Rs bn)

Staff cost as per-centage of total operational expen-diture

Effective fleet size

1993-94 2.85 22182 0.13 20.75 15% 541994-95 3.74 (31.18%)* 22683 0.16 22.59 19% 581995-96 5.71 (52.59%) 22582 0.25 26 25% 551996-97 7.10 (24.35%) 22153 0.32 29.29 26% 401997-98 8.17 (15.03%) 21990 0.37 32.21 27% 401998-99 8.75 (7.12%) 21922 0.39 34.31 28% 41

Increase in staff costsSource: IATA-World Air Transport Statistics

* Figures in brackets indicate increase over the previous year. # Excludes 4 aircraft grounded from 1993-94 to 1995-96 as well as 12 aircraft leased to Airline Allied Services

Ltd. from 1996-97 to 1998-99.

In1998,IAtriedtopersuadeemployeestocutdownonPLIandovertimetohelptheairlineweatheradifficult

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period; however there efforts failed.Though IA incurred losses during 1995-96 and 1996-97 and made only marginal profits during 1997-98 and 1998-99, heavy payments were made on account of PLI. A net loss of Rs 641.8 mn was registered during the period 1995-99. PLI payments alone amounted to Rs 6.66 bn, during the same period. According to unofficial reports, arrears to be paid to employees on account of PLI touched nearlyRs. 7 bn by 1999. Over the years, the number of employees at IA increased steadily. IA had the maximum number of employees per aircraft. (Refer Table 3). It was reported that the airline’s monthly wage bill was as high as of Rs. 680 mn, which doubled in the next three years. There were 150 employees earning above Rs. 0.3 mn per annum in 1994-95 and the number increased to2,109by1997-98.TheBrarcommitteeattributedthisabnormalincreaseinstaffcoststoinefficientmanpowerplanning, unproductive deployment of manpower and unwarranted increase in salaries and wages of the employees.

Name of Airlines Number of aircraftinfleet

No. of employ-ees

ATKm (in Million)

ATKm per Em-ployee

Employees per aircraft

Singapore Airlines 84 13,549 14418.324 1064161 161

Thai Airways Inter-national 76 24,186 6546.627 270678 318

Indian Airlines 51 21,990 2113.671 398204 431

Gulf Air 30 5,308 1416.235 245831 177

Kuwait Airways 22 5,761 345.599 92853 261

Jet Airways 19 3,722 1094.132 49756 196

A comparison of various airlinesSource: IATA-World Air Transport Statistics

Analysts criticised the way posts were created in IA. In 1999, six new posts of directors were created of which three were created by dividing functions of existing directors. Thus, in place of 6 directors in departments’ prior April 1998, there were 9 directors by 1999 overseeing the same functions. There were 30 full time directors, who in turn had their retinue of private secretaries, drivers and orderlies. The posts in non-executive cadres were to be created after the assessment by the Manpower Assessment committee. But analysts pointed that in the case of cabin crew, 40 posts were introduced in the Southern Region on an ad-hoc basis, pending the assessment of their requirement by the Staff Assessment Committee. Anotherproblemwasthatnobasiceducationalqualificationsprescribedforseniorexecutiveposts.Evenamatriculatecouldbecomeamanager,byacquiringthenecessaryjob-relatedqualifications&experience.IlliterateIAemployeesdrew salaries that were on par with senior civil servants. After superannuation, several employees were re-employed by the airline in an advisory capacity. According to reports, IA employed 132 retired employees as consultants during1995-96oncontractbasis.Witheachstrike/go-slowandsubsequentwagenegotiations,IA’sfinancialwoeskept increasing. Though at times the airline did put its foot down, by and large, it always acceded to the demands for wage hikes and other perquisites. Troubles SkiesFrequent agitations were not the only problem that IA faced in the area of human resources. There were issues that had been either neglected or mismanaged.For instance, the rates of highly subsidised canteen items were not revised even once in three decades and there was no policy on fixing rates. Various allowances such as out-of-pocket expenses, experience allowance, simulator allowances etc. were paid to those who were not strictly eligible for these. Excessive expenditurewas incurred on benefits given to senior executives such as retention of company car, and roomair-conditioners even after retirement. All these problems had a negative impact on divestment procedure. This did not augur well for any of the parties involved, as privatisation was expected to give the IA management an opportunity to make the venture a commercially viable one. Freed from its political and social obligations, the

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carrierwouldbeinamuchbetterpositiontohandleitslabourproblems.Thebiggestbeneficiarieswouldbeperhapsthe passengers, who would get better services from the airline.

Questions:Analyse the developments in the Indian civil aviation industry after the sector was opened up for the private 1. players. Evaluate IA’s performance. Why do you think IA failed to retain its market share against competitors likeJetAirways?IA’s human resource problems can largely be attributed to its poor human resource management policies. Do 2. youagree?Givereasonstosupportyourstand.WhatwerethemajorwrongdecisionstakenbythetopmanagementofIAregardingitshumanresource?List3. them out with their reasons.

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Bibliography

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Recommended ReadingAsafo-Adjei Agyenim Boateng, 2007. • The Role of HRIS in Strategic Human Resource Management, Master of Science Theses in Accounting, Swedish School of Economics and Business Administration. Available at: <http://www.pafis.shh.fi/graduates/agyasa05.pdf>Accessedon28th March, 2011.Bahaudin G. Mujtaba & Guergana Karadjova-Stoev, 2009. • Strategic Human Resource Management and Global Expansion Lessons from the Euro Disney Challenges in France. International Business & Economics Research Journal 8(1).Becker, B. E. & Huselid, M. A., 2006.• Strategic Human Resources Management: Where Do We Go From Here? Journal of Management, 32(6). Cherukulath, W. K., Raghuraman, R. N. & Kalaskar, R. S., 1999• . Information Management: An Overview on Human Resources Planning. DRTC Workshop on Information Management. Christensen, R., 2005. • Roadmap to Strategic HR: Turning a Great Idea into a Business Reality,. AMACOM.Fombrun C. J., Tichy N. M. and Devanna M. A., 1984. • Strategic Human Resource Management. John Wiley and Sons.

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Guidelines on Workplace Diversity.• Available at: <http://www.apsc.gov.au/publications01/diversityguidelines.pdf> [Accessed 29 March 2011].Hoe, Siu-Loon, 2005. Strategic Management: Formulation, Implementation, and Control in a Dynamic •Environment. Journal of the Australian and New Zealand Academy of Management, 11(1).Jackson S. E., & Schuler R. S., 1990. Challenges for Industrial/Organisational Psychologists. • American Psychological Association 45(2).Lien, M., 2004. Workforce Diversity: Opportunities in the Melting Pot. Occupational Outlook• . Available at: < http://www.bls.gov/opub/ooq/2004/summer/art02.pdf>.[Accessed 29 March 2011].Mayer, S. J., 2008. Strategic Human Resource Management: Practices of High Performance Organisations. •Developing Human Capacity for Innovative Organizations. Available at: <http://www.innovativehumandynamics.com/Strategic.pdf> [Accessed on 28th March, 2011].Reilly, P. A. and Williams T., 2006. • Strategic HR: Building the Capability to Deliver. Gower Publishing, Ltd. Reilly, P., Williams, T., 2006. Strategic HR: Building the Capability to Deliver, Gower Technical Press•Rosado, C., 2006. • What Do We Mean By “Managing Diversity”? pp.1–15. Available at: < http://www.edchange.org/multicultural/papers/rosado_managing_diversity.pdf> [Accessed 29th March, 2011].Salaman, G., Storey, J. & Billsberry, J., 2005. • Strategic Human Resource Management: Theory and Practice. 2nd ed., SAGE.Schuler, R. S., & Jackson, S. E., 2009. • Strategic Human Resource Management. 2nd ed., Wiley-India. Sharma, A. & Khandekar, A., 2006. • Strategic Human Resource Management: an Indian perspective.1st ed., Response Books.Sheehan,C.andScafidi,A.,2005.• The Strategic Role of HR Managers in Australian Organisations: Cues from Organisational Recruitment Sources. Journal of Management & Organisation, 11(1).Singh,M.&Krishna, S, StrategicHumanResourceManagement: three-stage process and influencing•organisational factors. Available at: <http://www.iimahd.ernet.in/publications/data/2004-06-04manjari.pdf> [Accessed on 24th March, 2011].The Strategic Human Resource Management Model. Available at: <http://highered.mcgraw-hill.com/sites/dl/•free/0070951764/447763/Chapter01.pdf> [Accessed on 24th March, 2011].Theoreticalperspectives forstrategichumanresourcemanagement.Availableat:<http://findarticles.com/p/•articles/mi_m4256/is_n2_v18/ai_12720961/pg_12/?tag=content;col1>[Accessedon24th March ,2011].

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Self Assessment Answers

Chapter Id1. c2. a3. b4. d5. c6. d7. b8. c9. b10.

Chapter IIa1. a2. d3. b4. c5. b6. a7. c8. c9. a10.

Chapter IIId1. a2. c3. b4. b5. c6. d7. a8. d9. d10.

Chapter IVb1. a2. d3. c4. c5. d6. b7. a8. d9. c10.

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Chapter Vc1. d2. b3. a4. a5. b6. d7. c8. d9. b10.

Chapter VIb1. d2. a3. c4. d5. a6. a7. c8. b9. a10.

Chapter VIIc1. d2. a3. b4. b5. c6. a7. d8. c9. c10.

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