Strategic HRM

Final Notes
 Our Goal for SHRM:
 To understand the strategic issues in using
Human Resources for sustainable
competitive advantage and how to
implement the changes necessary to
achieve this. This requires that we be able
to:
 Think systematically and strategically about
managing human assets
 Understand what really needs to be done to
implement these policies.
 HR Creating Value

Adapted from: David Ulrich, Human Resource Champions, p.247

 “The War for Talent”
 “In the new economy, competition is glob
al, capital is abundant, ideas are develop
ed quickly and cheaply, and people are w
illing to change jobs often. In that kind of
environment… all that matters is talent…
superior talent will be tomorrow’s prime s
ource of competitive advantage.”
Chambers, E. et al. (1998)
“The War for Talent.”
McKinsey Quarterly, 2-15
 Case Studies
 Southwest Airlines
 MacTemps
 Morgan Stanley
 The Men’s Wearhouse
 NUMMI
 PSS World Medical
 Visionary Design Systems
 Harrah’s Entertainment
 Looking Back on the course….
 Exposure to some intriguing HR practices
 Vision, values, and key success factors
 Contingency workforce
 Selection for “fit” as well as skills
 Investing in people (intellectual capital)
 Long-term employment vs. free agency
 Psychological vs. financial ownership
 Performance management
 Two Mysteries about the
Cases
 How have these companies achieved
extraordinary performance with people
who are no different from those
employed by the competition?
 If what they are doing is so
understandable, why haven’t their
competitors simply replicated them and
achieved similar competitive advantages?
 HR and Competitive
Advantage
 The bad news: It’s not easy to do.
 The good news: It’s hard to imitate.
 The HR levers for competitive advantage
are identifiable. The only issue is whether
we consciously manage them.

 To do this effectively requires us to think

about motivation in a non-intuitive way.
Conventional Model of
Motivation
The Fundamental Attribution
Error
 When we watch people behave, we tend
to “see” their behavior as being
“caused” by something about their
personality or dispositions.
 When we explain our own behavior, we
are far more conscious of the pressure
of the situation (e.g., deadlines,
rewards, the opinions of others.)
An Alternative Model of
Motivation
The Social Construction of
Reality
 “Three people were at work on a constr
uction site. All were doing the same job,
but when each was asked what his job
was, the answers varied. ‘Breaking rock
s,’ the first replied. ‘Earning my living,’ s
aid the second. ‘Helping to build a cathe
dral,’ said the third,”
Values-based Organizations
 “These organizations place less emphasis on f
ollowing a clear strategy than on building a ri
ch, engaging corporate purpose…focus less o
n formal structural design and more on effecti
ve management processes…and are less conc
erned with controlling employees’ behavior th
an with developing their capabilities. Such a tr
ansformation can start only with top manage
ment.”
 Value-based Practices
 Values and culture come first.
 Hiring for fit.
 Investment and opportunities for all people in
the company.
 Widespread information sharing of operational
and financial data.
 Reliance on teams and involvement.
 Emphasis on equity and non-monetary rewards.
 Leaders, not managers.
 Two Bases of “Ownership”

Financial Ownership

YES NO
YES Southwest MacTemps
Psychological NUMMI
Ownership NO Many high Traditional
tech Companies
companies
 HR’s Role
 The job of Human Resources is NOT primarily to:
 Keep the company out of court
 Enforce rules and maintain consistency.
 Manage administrative processes.
 Tell people “No”.
 HR’s job is to:
 Help build and reinforce the company’s values and cult
ure
 Play a leadership role in building capabilities that ensur
e the successful execution of business strategy.