Human Resource Management Strategy

MBAO 6030 Human Resource Strategy

Human Resource Management Strategy

The Meaning of “Strategy”

 A critical factor that affects Firm Performance
 A factor that contributes to Competitive
Advantage in markets
 Having a long-term focus
 Plans that involve the top executives and/or
board of directors of the firm
 A general framework that provides a perspective
for selecting specific policies and procedures

MBAO 6030 Human Resource Strategy

Human Resource Management Strategy

Why is HR critical to firm performance?

 Low quality HR leads to low quality customer
service.
 In the 21st century effective knowledge
management translates into competitive
advantage and profits.
 Knowledge comes from a firm’s people.

MBAO 6030 Human Resource Strategy

Human Resource Management Strategy

What is unique about Human Resource Management?

 HR is multidisciplinary: It applies the disciplines
of Economics (wages, markets, resources),
Psychology (motivation, satisfaction),
Sociology (organization structure, culture) and
Law (min. wage, labor contracts, EEOC)
 HR is embedded within the work of all
managers, and most individual contributors due
to the need of managing people (subordinates,
peers and superiors) as well as teams to get
things done.

MBAO 6030 Human Resource Strategy

HR Strategy: Strategic Fit

Corporate Strategy

Business Strategy

HR Strategy

HR System Training Rewards

(Performance Mgmt.)

MBAO 6030 Human Resource Strategy

HR Strategy: HR System Internal Fit

HR Strategy
Goal Setting

Appeal Performance
Measurement

Coaching

Rewards Performance Evaluation

Performance Management System

MBAO 6030 Human Resource Strategy
HR Strategy: Context of HR System

1. The “Five Factors” Influencing the HR System

 External Environment
 Social: social values, roles, trends, etc.
 Political: political forces, changes. Ex. Bush
presidency and its agenda for Social Security.
 Legal: laws, court decisions, regulatory rules.
 Economic: product, labor, capital, factor markets.

MBAO 6030 Human Resource Strategy

HR Strategy: Context of HR System

2. The Workforce
 Demographics

MBAO 6030 Human Resource Strategy

HR Strategy: Context of HR System

3. Organization Culture
 Weak vs. Strong culture
 “Type” of culture

MBAO 6030 Human Resource Strategy

HR Strategy: Context of HR System

4. Organization Strategy
 What are a firm’s distinctive competencies?
 What is the basis that competitive strategy be
sustained?
 What are a firm’s strategic objectives?
 Compare corporate and Business strategies.

MBAO 6030 Human Resource Strategy

HR Strategy: Context of HR System

5. Technology of Production & Organization of

Work
 Physical layout/employee proximity
 Required employee skills
 Ease of monitoring employees’ input

MBAO 6030 Human Resource Strategy

HR Strategy: Context of HR System

Critical Thinking Questions:

1. Should a company monitor the HR environment and
imitate “Best Practices” of HR from successful firms?
What caveats would you want to apply to applying Best
HR Practices?
2. Give an example of a type of Organizational Culture
that would reinforce strategy: What type of HR
practices would fit with this culture?
3. What type of HR practices would fit with jobs with tasks
that are highly ambiguous, uncertain and creative?
What about predictable, routine and certain tasks?

MBAO 6030 Human Resource Strategy

HR Strategy: Strategic Roles

Distribution of Task Outcomes: 3 Possibilities

1. “Foot soldier”: low upside, low downside of
performance variance
2. “Guardian”: low upside, high downside of
performance variance
3. “Star”: high upside, low downside of
performance variance

MBAO 6030 Human Resource Strategy

HR Strategy: Strategic Roles

Critical Thinking Questions:

1. Which Roles are Strategic? Foot soldier,
guardian or star?
2. What are the advantages of focusing on foot
soldiers with the company HR policies?
3. What are the liabilities of stars? When is it
advantageous to cultivate and sustain stars?

MBAO 6030 Human Resource Strategy

HR Strategy: Consistency

Consistency is an important quality related to the

implementation of HR policies. Employees
should receive a clear, undiluted message of
what behaviors are important and desirable.
When there is a fit between HR systems,
employees are likely to receive consistent
feedback. The 3 types of consistency are…
1. Single-employee consistency
2. Among-employee consistency
3. Temporal consistency
MBAO 6030 Human Resource Strategy
HR Strategy: Consistency

Critical Thinking Questions

1. Are there circumstances when it is effective to
have inconsistent HR policies? Give an
example.
2. Does an emphasis on temporal consistency
create a barrier for change when change is
necessary?
3. What impact (if any) would consistency have
on the organization culture?

MBAO 6030 Human Resource Strategy