Lesson 1 introduction to shrm

INTRODUCTION TO
STRATEGIC HRM
KATOPOLA, D. A @ NIT_2016
LESSON 1

Contents
• Introduction
• Concept of SHRM
• Objectives of SHRM
• Approaches to SHM
• Role of SHRM
• Models of SHRM
• Contribution of HRM to business strategy
• Contemporary issues in HRM
• Internal and external fit in SHRM systems
• Summary
22/7/2017 KATOPOLA, Daudi : Lesson 1

Preamble (1-3)
2/7/2017 KATOPOLA, Daudi : Lesson 1 3
• SHRM covers the concepts and practices that guide and
align Human Resource Management philosophy, tactical
planning and practice with the strategic and long term
goals of the organization, with a particular focus on
human capital. It deals with the macro-concerns of the
organization regarding structure, quality, culture, values,
commitment, matching resources to future needs and
other longer term people issues.

Preamble (2-3)
• Strategic HRM gives direction on how to build the
foundation for strategic advantage by creating an effective
organizational structure and design, culture, employee
value proposition, systems thinking, an appropriate
communication strategy and preparing an organization for
a changing landscape, which includes downturns and
mergers & acquisitions. Sustainability and corporate
social responsibility come within the ambit of this
discipline, especially with reference to organizational
values and their expression in business decision making.

Preamble (3-3)
• Strategic HRM emphasizes organizational codes of
ethics, managing the societal impact of business
decisions, philanthropy and the role of the human
resource professional in improving the quality of life of
employees, their families and the community at large.

Introduction
• Although most business leaders recognize the importance
of the people factor, few of them have been successful in
using HR effectively, in such a way as to inspire success
and to achieve a high-performance business strategy.

…cont’d
• Business leaders who believe they can decide the HR
priorities without a deeper understanding of the
relationship between business strategy, organization and
people will find that their organization never becomes a
truly high-performing company. HR managers who believe
they can determine the HR agenda for any organization
largely within the HR function itself will fail to add value to
the organization they work for.

…cont’d
• In our view, the CEO and the HR leader need to form a
natural alliance so that together they manage the balance
between keeping the successful core activities of the past,
doing away with other, less successful existing activities
and building new capabilities for growth and future
success.

…cont’d
• What is needed more than ever before is a common view
on the business HR agenda that needs to be delivered in
order for the organization to be successful overall. Rapid
change is happening in all sectors of public and corporate
life, and the ability to adapt to such change has become
of strategic importance. Clarity on what needs to be done
on the human side of the organization is vital. In a high-
performance company, people behave in an inspired,
responsible and decent manner. Such a company has a
way of doing business whereby ‘heart and mind’ come
together.

HR Practices corresponding to the stages
of an organization’s life cycle
Life Cycle
Stages
HR Practices
Start-up • Flexible patterns of work
• Recruitment of highly motivated & committed employees.
• Competitive pay
•Little formality
Growth • More sophisticated recruitment & selection
• Training & development
• Performance Mgmt process
• Reward systems
• Developing stable employee relations
Maturity • Attention to the control of labour cost
• Focus on increasing productivity
• Control compensation
Decline • Emphasis on rationalization of workforce & downsizing
• Retraining & career consulting services

Concept of SHRM
• In order to understand the meaning and nature of
Strategic HRM, the concepts of strategy and strategic
management need to be understood.

Strategy meaning (1-2)
• Strategy is a term that comes from the Greek strategia,
meaning "generalship." In the military, strategy often
refers to maneuvering troops into position before the
enemy is actually engaged

Strategy (2-2)
Institutions CRDB
Bank
NMB Bank NBC Bank TBL Tahmeed
Assets
Worth
Tsh5.3
trillion ($2.4
billion)
Tsh4.5
trillion ($2
billion)
$0.7 billion
Market
Share
20% 17% 6%
Strategy Product
Innovation
Close to
customer
?? Quality Customer
Care

Quote: ATE Employer of the Year-2016 (TBL)
"TBL certification demonstrates that delivering World Class
human resources practices is possible in the country and
could be easily linked with the overall TBL's consistent high
performance in the market."
-TBL Human Resource Director Mr. David Magese

Definitions in use
• Some of the definitions in use include the
following:
• Strategy is that which top management does that is of
great importance to the organization.
• Strategy refers to basic directional decisions, that is, to
purposes and missions.
• Strategy consists of the important actions necessary to
realize these directions.
• Strategy answers the question: What should the
organization be doing?
• Strategy answers the question: What are the ends we
seek and how should we achieve them?

Strategic Management-As per general opinion, strategic
management means strategic planning implemented by
the management for solution of various problems arose in
the area of production, employees,& finance to the
business unit.

Scope of Strategic Management
• To fix mission of the unit
• To make favourable internal environment
• Analysis & evaluation of External environment
• SWOC analysis to be made
• Selection of new alternatives to achieve mission
• To develop grand strategy
• To fix short-term annual targets
• To raise resources & facilities
• Evaluation & control on activities.

Stages in Strategic management
• Strategic analysis
• Environmental analysis
• Establish organizational direction
• Strategy formulation
• Strategy implementation
• Strategic control

Stages in Strategic management
• Strategic analysis
• Environmental analysis
• Establish organizational direction
• Strategy formulation
• Human resource planning
• Strategy implementation
• Work force utilisation and employment practices
• Reward and development system
• Strategic control
• Performance impact of human resource practices
• Human resource evaluation

HR strategy ?
“the pattern of planned human resource activities
intended to enable an organization to achieve its
goals”
- Wright and McMahan 1992
“the overall plan that leads the implementation of
specific HRM functional areas. HRM strategies
guide personnel decisions that ensure the best fit
for the organization. All functional areas of HRM
strategies need to match the overall business
strategy”

HR Strategy
HR Strategy is concerned with two key elements:
i. Determining the strategic objective
ii. Developing a plan of action

Strategic Human Resource Management
Strategic Human Resource Management is
is the practice of attracting, developing,
rewarding, and retaining employees for the
benefit of both the employees as individuals
and the organization as a whole.

Objectives of SHRM
i. To ensure the availability of a skilled,commited, & highly
motivated workforce in the organization to achieve
sustained competitive advantage.
ii. To provide direction to the organization so that both the
business needs of the organization & the individual &
collective needs of its workforce are met.

Difference btn SHRM & Traditional HRM
Traditional HRM SHRM
Focus of activity Employee relations Partnership with internal &
external groups
Role of HR Reactive & transactional Proactive & transformational,
change leader
Initiative for
change
Slow & not integrated with
larger issues
Fast,flexible & systematic
Time Horizon Short-term Consider various time frames
Control Bureaucratic control Organic control
Job design Focused job design Broad job design
Important
investment
Capital,products,technology
& finance
People & their knowledge
skills & abilities
Accountability Cost centre Investment centre

Difference btn SHRM & HR Strategy
SHRM HR Strategies
• A general approach to strategic
management to HR
• Aligned with the organizational
intention with future directions
• Focus on long term people issue
• Defines the areas in which specific
HR strategies need to be developed
• Focus on macro concern such as
structure & culture
• Strategic HRM decisions are built into
strategic business plans
• Outcome of the general SHRM
approach.
• Focus on specific organizational
intentions about what needs to be
done.
• Focus on specific issues that facilitate
the achievement of corporate strategy.
• Human resource strategy derived
from SHRM

SHRM concern
SHRM concern is to ensure
• HR management is fully integrated with the strategy and strategic
needs of the firm
• HR policies cohere across policy areas and areas of hierarchy
• HR practices are adjusted and used by line manages and
employees as part of their everyday work

Benefits of SHRM
i. Identifying and analysing external opportunities and threats
that may be crucial to the company's success.
ii. Provides a clear business strategy and vision for the future.
iii. To supply competitive intelligence that may be useful in the
strategic planning process.
iv. To recruit, retain and motivate people.
v. To develop and retain of highly competent people.
vi. To ensure that people development issues are addressed
systematically.
vii. To supply information regarding the company's internal
strengths and weaknesses.
viii. To meet the expectations of the customers effectively.
ix. To ensure high productivity.
x. To ensure business surplus thorough competency

HRM Practices
Firm strategy Institutional /
Political forces
HR Capital pool
(Skills, abilities)
HR behaviors
Firm level outcomes
(performance,
satisfaction,
absenteeism etc)
Resource
based view
of the firm
Cybernetics
Agency/transaction costs
Resource dependence
institutional
Behavioral
approach
Theoreticalframe work of SHRM

Theoretical frame work of SHRM
• Strategy driven
• Resource based view
• Competitive advantage based on unique allocation of resources {selection
/Compensation package}
• Behavioral view
• Control and influence the behaviors of individuals (Infosys)
• Cybernetics systems
• Adoption or abandonment of practices based on feedback on contributions
to strategy (Bosch – MICO)
• Agency/transactions cost view
• Use of control systems, performance evaluation and reward systems etc
• (In the absence of performance evaluation strategy may not be pursued)
• Non-Strategy driven
• Resource dependence and power theories
• Power and politics= legislation, unionization, control of resources, expectations of
social responsibility.
• Institutional theory
• In appropriate performance evaluation dimensions (inertia / rational decision making
appraisal

Four Components of SHRM
SHRM
Human
Resource
Activities
Pattern &
Plans
Purposeful

The VRIO Framework
• VRIO framework a resource based view of an
organization determines the value of human resources for
the organization on the basis of four criteria- value,
rareness, imitability & organization.
VRIO
Rarene
ss
Imitabili
ty
Organiz
ation
Value

Linking Business Strategy & HR Strategy
Business Strategy HR Strategy
Cost Leadership Utilization HR Strategy
Differentiation Facilitation HR Strategy
Focus Accumulation HR strategy

Theoretical Perspectives of SHRM
SHRM
Fit
Perspective
Functional
perspective
Economic
Perspective
Typological
perspective

Theoretical Perspectives of SHRM
• Fit Perspective-match its internal resources & skills with
opportunities available in the external environment.
• Functional Perspective-An organization performs best
when each departmental unit maximizes its contributions
limited to its unique area of expertise.
• Economic perspective- Human resources are a unique
& distinguishable source of competitive advantage.
• Typological Perspective-Three distinct ‘types’ of HR
strategies
Inducement
Investment
Involvement

The human resource environment
• Global changes
• Boarders and barriers
• E-commerce
• Emerging markets, new markets.
• Technology
• Demography
• Culture
• Etc….
• The imperative >>‘HR focus’

-General environment
• Technology and organisational structure
• Worker values and attitudinal trends
• Management trends
• Demographic trends
• Trends in utilisation of human resources
• International developments

• Influence of technology
• HRIS
• Redeployment of HR staff to
operating units
• New organisational structures
(Short / accountability)
• Unbounded corporations
• Virtual corporations / networked
organisations
• Cellular organisations/guilds
• Respondent organisations/
supply niche components
• Stimulus for entrepreneurial
business
 Technology and
organisational structure
 Worker values and
attitudinal trends
 Management trends
 Demographic trends
 Trends in utilisation of
human resources
 International
developments

• Ethical/moral issues
• (older generation blaming
younger generation)
• Time spent on work/ leisure
• Work enjoyment / satisfaction
/appeals
• Loyalty of employees
• Location near / far
• Age
• Younger no loyalty and expect
none
• New employee Perception before
joining and after joining the job
(extrinsic to intrinsic)
• (image, induction and orientation,
socialization process)
• Emphasis on core values, cultures,
family, social service)
 Technology and
attitudinal trends
human resources
 International
developments

• Management of diversity
• Work teams
• Virtual teams
• Human resource outsourcing
• Open book management
• TQM
• Integrated manufacturing
• Reengineering
• Management of professionals
• Managing of aftermath of Mrg &
Aqui
 Technology and
attitudinal trends
human resources
 International
developments

• Aging work force (HMT)
• Baby boom-US, China
• Labour Shortages
• Racial diversity
• Occupational
distribution for women
• Dual career couples
 Technology and
attitudinal trends
human resources
 International
developments

• Telecommuting /
working from home
• Relocation from work
• Growing use of
temporary and
contingent workers
• Employee leasing
 Technology and
attitudinal trends
human resources
 International
developments

• COMESA
• EU
• SADC
• WTO
• EAC
 Technology and
attitudinal trends
human resources
 International
developments

International strategy
• Multinational, global and transnational strategies
• Strategic alliances
• Sustainable global competitive advantage
• Globally competent managers
• Location of production facilities

HUMAN RESOURCE ACTIVITY TYPOLOGY
Staffing planning
Benefits of planning
Retirement planning
Compliance
Performance enhancement
Consulting
Employee relations
Labour negotiations
Executive compensation
Employee development
Management development
Recruitment interviewing
< IMPORTANT TO EXECUTIVES >
Payroll
Benefits administration
Retirement administration
Employee records
Relocation administration
Recruitment information processing
< IMPORTANT TO EMPLOYEES >
Recruitment information processing
Employee assistance programs
Strategic value of
activity
Low
High
RelationshipTransactional Type of HR activity

Benefits of integrating HRP with Strategic
planning
• Generates more solutions to complex organizational
problems
• Ensures consideration of human resources in
organizational goal setting process
• Ensures consideration of human resources in
assessment of organizational abilities to accomplish
goals and implement strategies
• Reciprocal integration prevents strategy formulation
based on personal rigidities/preferences
• Facilitates concurrent consideration of strategic plans
and managerial succession.

Strategic components of HRM relevant to
internal fit
• Management awareness
• Management of the function
• Portfolio of programs
• Personnel skills
• Information technology
• Awareness of the environment

HR Practitioners Role
• The HR managers have keen role in the effective planning and implementation of
the policies and decisions that in tune with the business changes.
1. They should act as strategic partners and be proactive in their role than mere
reactive, passive spectators.
2. The HR managers should understand how far their decisions contribute to
business surplus incorporating human competency and performance to the
organisation.
3. Strategic HR managers need a change in their outlook from seeing themselves as
relationship managers to strategic resource managers.
i. Kossek (1987, 1989) argues that 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.
ii. Legge (1978) commenting on the actions of the personnel practitioner in the innovation process
suggests that adoption of an innovation by an organization depends largely on HR practitioners'
credibility with information and resource providers.
4. HR Department and HR managers in these innovative organizations play a strategic
role (Ulrich, 1997) linking the HR strategy with the business strategy of the
organization.
5. A crucial aspect concerning SHRM is the concepts of fit and flexibility. The degree of
fit determines the human resource system's integration with organization strategy. It is
the role of HR Managers to ensure this fit in between Human Resource System with the
Organization Strategy.

Human Resource Evaluation
• Overview of evaluation
• Approaches to evaluation
• Prevalence of evaluation
• Evaluating strategic contributions of traditional areas
• Evaluating strategic contributions in emerging areas

• Evaluating strategic
contributions of traditional
areas
contributions in emerging
areas
• Scope of evaluation
• Strategic impact
• Level of analysis
• Criteria
• Level of constituents
• Ethical dimensions

areas
areas
• Audit approaches
• Analytical approaches
• Quantitative and
qualitative measures
• Balance scorecard
perspective
• Benchmarking
• Industry influences

areas
areas
• Little
• Results not revealed

areas
areas
• HRP
• Staffing
• Training
• Performance evaluation
systems
• Compensation systems
• Utility analysis
• labour and employee
relations

areas
areas
• Equal employment
opportunity and
management of diversity
• Quality readiness

Q & A

Lesson 1 introduction to shrm

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