HUMAN RESOURCE

MANAGEMENT
Session 2

STRATEGIC HR

OBJECTIVES

To understand why HR can be a core competency

for todays businesses.
How it can differentiate from competitors.
To understand the linkages between the strategy
of an organization and its HR department.

WHAT IS TO BE STRATEGIC ?

To have a long term vision of your business

A plan to achieve your vision

A plan achievable

Having resources to implement your plan

Communicate your plan to people who can

support you.

WHAT IS TO BE STRATEGIC?

Ask for feedback to improve your performance.

Reevaluate your goals and check on progress

Have alternative courses of action, if problems

arise.
Add to your skills to improve your competitive
advantage.

ASPECTS OF STRATEGY
10

aspects of strategy:

statement of ends, purpose and intent.

high-level plan.

means of beating the competition.

An

element of leadership.

Positioning

for future.

ASPECTS OF STRATEGY
Building

capability.

fit between capabilities and opportunities

result of deep involvement

pattern of behaviour resulting from the

culture.

An

emerging pattern of successful behaviour.

SWOT ANALYSIS

Strategy is formulated from the mission and the

goals of the organisation.
The strategy choice is often the result of a SWOT
analysis
The HR manager needs to ensure that the
human resource needs of skills, behaviours and
culture are developed.

STRATEGIC HR MANAGER ROLE

According

to Christensen, to develop a
detailed HR plan linked to business goals
related to:
Workforce

planning and staffing

Learning and development
Organisational development
Performance management
Employee relations

PERSPECTIVES OF
STRATEGIC
HUMAN RESOURCE
MANAGEMENT

PERSPECTIVES OF STRATEGIC
HUMAN RESOURCE MANAGEMENT
Four

perspectives to become more

strategic:
universalist,
contingent,
configurational and
contextual.

PERSPECTIVES OF STRATEGIC
HUMAN RESOURCE MANAGEMENT
The

universalist perspective refers to best

practices.

The

best practices are characterised by

their ability to:
Demonstrate

a capacity to improve
organisational performance
Be generalisable.

THE CONTINGENCY PERSPECTIVE

According to Martin-Alcazar (2005), there is no

best practices.
Strategic Human Resource Management depends
on variables such as:
corporate

strategy or
internal and external environment.

THE CONFIGURATIONAL
PERSPECTIVE

The HRM system is a set of elements that can be

combined in different ways to obtain an infinite
number of configurations.
This approach suggests that different
combinations of policies and practices can help
the organisation achieve its goals.

THE CONTEXTUAL PERSPECTIVE

It

reconsiders three aspects of SHRM:

The

nature of human resources,

The level of analysis,
The actors implies in the organisational
function.

External environmental factors are also

to be considered.

THE DEVELOPMENT OF SHRM

Development
Outer

to five elements:

context
Inner context
Business strategy content
HRM context
HRM content

HR ACCOUNTING

HR ACCOUNTING AND ITS

IMPACT ON STRATEGY

To know if decisions are effective managers can

use a system of human resource accounting.
HR accounting attempts to measure the impact of
people on organisational functions.

HR ACCOUNTING
HR

accounting has three main roles,

according to Flamholtz (1999),
To

provide organisations with objective

information about the cost and value of human
resources
To provide a framework to guide HR decisionmaking
To motivate decision-makers to take an HR
perspective.

HR ACCOUNTING

One method used is Wyatts Human Capital

Index
The emphasis is on the measurement of
knowledge and intellectual capital as linked to
competitive advantage and profitability.

HR ACCOUNTING

Others tools available include those that measure

economic value added, the balanced score-card
and intellectual capital.
The value added capacity is related to the
knowledge and capabilities of employees.

THE BALANCE SCORECARD

The

measures used relates to productivity,

people and process:
Productivity

measures output and revenue per

employee.
People measures attitudes, behaviour, skills
and knowledge.
Process measures employees satisfaction with
people systems.

THE BALANCED SCORECARD

Can

help to build high performance work

systems that include seven factors:
Employment
Selective

security.

hiring.

Self-managed

teams and decentralised

decision-making.

THE BALANCED SCORECARD

High

compensation contingent on
organisational performance

Training:

proactive rather than reactive.

Reduction
Sharing

of status differences

information.

HIGH PERFORMANCE WORK

SYSTEMS

HPWS link HR strategy and business

performance.
This involves work systems and employment
models that include a mix of key practices.
They also refer to incentives to encourage
motivation and participation.

IDENTIFYING BUNDLES OF HR
PRACTICES
Practices

most likely to link to high

performance regarding four areas:
Competence

of the workforce
Motivation to perform
Opportunity to participate/ perform
Commitment

IDENTIFYING BUNDLES OF HR
PRACTICES
Competence

of the workforce:

Use of psychometric test in selection

Extensive opportunities to update skills
through training and development.

Motivation

to perform:

Employees involved in workplace decisions

Regular use of performance appraisal
Part of pay related to individual
performance

IDENTIFYING BUNDLES OF HR
PRACTICES
Opportunity

perform

to participate and

Keep employee well informed

Actively try to make jobs as interesting and
varied as possible
Use team working where possible
Conducted a company-wide attitude survey.

IDENTIFYING BUNDLES OF HR
PRACTICES
Commitment

Try to fill vacancies within the organisation.

Stated policy of deliberately avoiding
compulsory redundancies.
Actively implement equal opportunities
practices.
Have a range of family-friendly practices in
place.
have a consultative process.

TEAM TASK

According to the following SWOT analysis on

next slide, regarding a fastfood company, develop
a strategy to link the HR function to maintain
competitive advantage.
To choose in one group a role such as HR director,
finance director, marketing director, training
manager.

EXERCISE
Strengths
High gross profit margins on
food
Central locations
Well-known brand
Established product
Opportunities
Large potential labour pool
More people eating out
Expansion of opening hours
Competitive pricing

Weaknesses
High staff turnover
Shortage of trained staff
Poor management practices
Poor attendance record
Customer dissatisfaction
Threats
Industrial action by staff
Employment tribunals
Customer defection due to
poor service
Increased competition

DIVERSITY
A strategic approach

MANAGING DIVERSITY
HR

managers must implement a fair and

equitable rewards system that include :
wages

or salaries,
opportunities for training and career
development
the provision of a work environment in which
all workers are treated with respect.

DIVERSITY
The

HR manager can achieve these

outcomes by:
identifying

the significant differences in the

workforce and the labour market linked.

exploring

the potential advantages from hiring

persons from particular groups

DIVERSITY
The

HR manager can achieve these

outcomes also by:
identifying

relevant diversity factors existing

in the present workforce.

developing,

implementing, monitoring and

evaluating staff management practices

AFFIRMATIVE ACTIONS PLANS

Affirmative

action plans means that an

organization must take certain steps to
show that it is not discriminating.
If

the workforce resembles the community,

then the affirmative action program is
working.

If

there are differences, the organization will

establish goals for correcting the imbalance.

DETERMINING POTENTIAL
DISCRIMINATORY PRACTICES
To

determine if discrimination possibly

occurred, one of four tests can be used:
The

4/5ths rule,
Restricted policies,
Geographic comparisons, and
The McDonnell- Douglas Test.

THE 4/5THS RULE

The company is in compliance if the ratio of

minority to majority members is 80 percent or
greater in an hiring process.

For example if 40 applicants are classified in the

majority and 15 applicants are classified as
members of minority populations.

THE 4/5THS RULE

A company that hire 22 majority and 8 minority

members is in compliance, the ratio of minority
to majority members is (53%/55%= 96%) is
greater than 80%.
According to this test, even though fewer
minority members were hired, no apparent
discrimination has occurred.

RESTRICTED POLICY

A restricted policy infraction occurs whenever an

enterprises HRM activities exclude a class of
individuals.
For instance, to exclude employees over age 40
and recruit on college campuses only to keep
salaries low.

GEOGRAPHICAL COMPARISONS

The company is in compliance if the mix of

individuals at all levels in the organization
reflects its recruiting market.
The key factor here is the qualified pool according
to varying geographic areas.

MCDONNELL-DOUGLAS TEST
Four

components must exist to establish

discrimination:
The

individual is a member of a protected

group.
The individual applied for a job for which he or
she was qualified.
The individual was rejected.
The enterprise, after rejecting this applicant,
continued to seek other applicants with similar
qualifications.

CASE STUDY COLORADO

AEROSPACE

Virtual Campus / Ressources / Session 2 /

Colorado Aerospace

Team work

Diversity management