Competitive Challenges

Influencing HRM

competitive
challenges that
Cos now face will
increase the
importance of
HRM practices:
The Global
The Global
Challenge
Challenge

The Challenge of
The Challenge of
Sustainability
Sustainability
The Technology
The Technology
Challenge
Challenge

The Global Challenge

Cos - to survive must compete in intnl markets as

well as fend off foreign corporations attempts to
gain ground

Offshoring - exporting jobs from

countries to less developed countries

Many Cos entering intnl markets - exporting

products overseas,
building manufacturing
facilities in other countries, entering into alliances
with foreign companies, & engaging in e-commerce

developed

The Technology Challenge

Advances in technology have:

resulted in high-performance models of work
systems,
changed

skill requirements,

increased

working partnerships,

led

to changes in Co. structure & reporting

relationships,

increased

the availability of HRIS, used to

acquire, store, manipulate, analyze, retrieve, &
distribute HR information,

The Sustainability Challenge

Sustainability - ability of a Co. to survive &

succeed in a dynamic competitive envt.
It includes the ability to:
deal with economic & social changes,

engage in
practices,

responsible

&

ethical

business

provide high quality products & services, &

put in place methods to determine if the Co. is

meeting stakeholders needs

HRS
CHALLENGES

The central
challenge facing HR
is to provide a set of
services that make
sense in terms of
the companys
strategy.

STRATEGIC

A strategy is the
companys plan for
how it will balance its
internal strengths &
weaknesses with
external
opportunities &
threats in order to
maintain a
competitive
advantage

What Is Strategic Management?

a process for analyzing a company's

competitive situation,

developing the company's strategic goals, &

devising a plan of action & allocation of

resources (human, organizational, & physical)

Strategic Human Resource Mgt

Pattern of planned HR deployment & activities
intended to enable an organization achieve its
goals:
It focuses on a firms Human Resources as the
primary source of competitive advantage of the
firm.

The activities highlight the HR programs, policies,

& practices as the means through which the
people of a firm can be deployed to gain
competitive advantage.

The pattern & plan imply that there is a fit

between HR strategy & firms business strategy
(vertical fit) & between all of the HR activities

Relationship b/w Strategy,

Objectives, Policies, & Rules:
Strategy The plan
that integrates major
objectives
More
specific
Objectives Goals that
are specific &
measurable
More
specific
Policies Guides to
decision making
More
specific
Procedures/Rules
Specific directions for
decision making

STRATEGIC CHOICES
What business
should we be in?

Corporate objectives,
strategic plans,
vision, & values

How do we win (gain

competitive advantage)
in those businesses?

How should HR help

us win?

Business unit
strategies

HR strategies

Employee attitudes
& behaviours

Competitive
advantage

Generic Business-level
Strategies
Innovator
Cost

Cutter

Customer

Focused

TAILOR THE HR SYSTEM TO THE STRATEGY

Business
Response

Strategy
Innovator:
Increase Product
Complexity &
Shorten Product
Life Cycle

Cost
Cutter:
Focus on
Efficiency

Customer
Focused:
Increase
Customer
Expectations

Product Leadership
Shift to Mass
Customization &
Innovation
Cycle Time

Operational
Excellence
Pursue Cost-effective
Solutions

HR Program
Alignment

Committed
to Agile,
Risk Taking,
Innovative
People

Customer Intimacy:
Deliver Solutions to
Customers

Do More
with Less

Delight
Customer,
Exceed
Expectations

Strategic Importance of HRM

The

increased strategic importance of HRM

means that:
Human

resource specialists must show that they

contribute to the goals & mission of the firm

The

actions, language, & performance of

the HRM function must be:
Measured
Precisely

communicated
Evaluated

Basic Process for HR Strategy

Scan the
Scan the
external
external
envt
envt

Identify
Identify
strategic
strategic
business
business
issues
issues

Identify
Identify
people
people
issues
issues

Develop
Develop
HR
HR
strategy
strategy

Communicate
Communicate
the HR
the HR
strategy
strategy

Components of the Strategic Mgt Process

2 distinct
2 distinct
phases
:
phases :

Strategy
Strategy
Formulation
Formulation

Strategy
Strategy
Implementati
Implementati
on
on

Strategy Formulation
Strategic planning groups decide on:

a strategic direction by defining the cos

mission & goals

its external opportunities & threats, &

its internal strengths & weaknesses

The Role of HRM in Strategy

Formulation

Administrative Linkage Lowest level of

integration; HRM function's attention is focused on
day-to-day activities. No input from the HRM
function to the company's strategic plan is given.
One-Way Linkage The strategic business
planning function develops the plan and then
informs the HRM function of the plan. HRM then
helps in the implementation.
Two-Way Linkage Allows for consideration of
human resource issues during the strategy
formulation process. The HRM function is expected
to provide input to potential strategic choices and
then help implement the chosen option.
Integrative Linkage Is based on continuing,
rather than sequential, interaction. The HR

Strategy Implementation
The organization follows through on the
strategy that has been chosen. This includes:
structuring the organization,
allocating resources,
ensuring that the firm has skilled employees
in place, &
developing reward systems that align
employee behavior with the strategic goals.

Strategy Implementation

Organizational
structure

Types of
Information
Product
market
strategy

Task design

Performance
Reward
systems

Selection,
training, and
development
of people

Traditional HRM versus Strategic

HRM
Traditional HRM

Strategic HRM

Responsibility for
HRM

Staff specialists

Line managers

Focus

Employee relations

Partnerships with
internal & external
customers

Role of HR

Transitional, change
follower, & respondent

Transformational,
change leader & initiator

Initiative

Slow, reactive, fragmented

Fast, proactive,
integrated

Time horizon

Short term

Short, medium, long (as

necessary)

Control

Bureaucratic-roles, policies,
procedures

Organic-flexible, crosstraining, teams

Job design

Tight division of labour,

independence,
specialization

Broad flexible, crosstraining, teams

Key Investments

Capital, products

People, knowledge

Source: Jeffrey A. Mello, Strategic Human Resource Management, Thomson, 2003, p.102.

Accountability

Cost center

Investment center

The new strategic

positioning of HRM
means that
accountability must
be taken seriously

Key Strategic HRM Concepts

Analyzing

& solving problems from a profitoriented point of view

Assessing

& interpreting costs or benefits

of HRM issues

Using

planning models that include

realistic, challenging, specific, &
meaningful goals

Key Strategic HRM Concepts

Preparing

reports on HRM solutions to

problems encountered by the firm

Training

the human resources staff

Emphasizing the strategic importance of HRM

Emphasizing the importance of contributing to the
firms profits

Main Features of Human Resource Assets

The Balanced Scorecard

The balanced scorecard gives managers the

opportunity to look at the Co. from the perspective
of internal & external customers, employees &
shareholders.

It should be used to:

Link HRM activities to the Cos business
strategy.
Evaluate the extent to which the HR function is
helping the Co meet its strategic objectives.

Measures of HR practices primarily relate to

productivity, people, & processes.

The Balanced Scorecard

Customer

How do customers see us?

Time, quality, performance,

service, cost.
Processes that influence customer
satisfaction, availability of
information on service &/or
manufacturing processes.

Internal

What must we excel at?

Innovation
& Learning

Can we continue to
improve
& create value?

Improve operating efficiency,

launch new products, continuous
improvement, empowering of
workforce, employee satisfaction.

How do we look to
shareholders?

Profitability, growth, shareholder

value.

Financial

Meeting Competitive Challenges

Through HRM Practices
HRM

practices that help

co.s deal with the 4
competitive challenges:
The

HR envt.
Acquiring & preparing human
resources
Assessment & devt of human
resources
Compensating
human
resources

Categories of HRM Activities

Transformational
Knowledge mgt
Cultural Change
Strategic redirection & renewal
Mgt devt
Traditional
Recruitment & selection
Training
Performance mgt
Compensation
Employee relations
Transactional
Benefits administration
Record keeping
Employee services