hrm and its importance

1. Strategic HRMStrategic HRM

2. What is strategy?What is strategy?
 What is strategy?
– Is it a plan?
– Does it refer to how we will obtain the ends we
seek? Is it a position taken?
– Just as military forces might take the high ground
prior to engaging the enemy,
– might a business take the position of low-cost
provider?
– does strategy refer to perspective, to the view one
takes of matters, and to the purposes, directions,
decisions and actions stemming from this view?
– Does strategy refer to a pattern in our decisions and
actions?
– does repeatedly copying a competitor’s new product
offerings signal a "me too" strategy?

3. Strategy isStrategy is
 Strategy is all these—
 it is perspective, position, plan, and pattern.
 Strategy is the bridge between policy or high-order goals on
the one hand and tactics or concrete actions on the other.
 Strategy and tactics together straddle the gap between ends
and means.
 strategy is a term that refers to a complex web of thoughts,
ideas, insights, experiences, goals, expertise, memories,
perceptions, and expectations that provides general guidance
for specific actions in pursuit of particular ends.
 Strategy is at once the course we chart, the journey we
imagine and, at the same time, it is the course we steer, the
trip we actually make. Even when we are embarking on a
voyage of discovery, with no particular destination in mind,
the voyage has a purpose, an outcome, an end to be kept in
view.

4. MeaningMeaning
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

5. definitions in usedefinitions 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?

6. What is strategicWhat is strategic
management?management?
 A continuous, iterative process aimed at
keeping an organization as a whole
appropriately matched to its environment
(Samuel C. Certo and J. Paul Peter, Strategic Management)
 Keeping the business in tune with
management and marketing forces both
outside and inside the firm

7. Competitive strategyCompetitive strategy
Competitive strategy leads to competitive
advantage
– Generates supernormal ROI
– Offers services of value
– Uses cost effective technology
– Avoids erosion of competitive advantage by
exploiting and developing a technological base

8. Stages in Strategic managementStages in Strategic management
Strategic analysis
– Environmental analysis
– Establish organizational direction
Strategy formulation
Strategy implementation
Strategic control

9. Strategy & HRM ?Strategy & HRM ?– NEED FOR STRATEGIC HRM– NEED FOR STRATEGIC HRM
 Physical assets are viewed as investments
 Can
– superior technology
– Superior facility
– Superior product
 Bring about and more importantly sustain competitive
advantage?
 Physical facilities can be duplicated, cloned or
reverse engineered and they no longer provide
competitive advantage

10. Strategy & HRM ?Strategy & HRM ?– NEED FOR STRATEGIC HRM– NEED FOR STRATEGIC HRM
 Cost of employees as variable cost of production.
– No formal recognition of human resource as a key
resource
– No recognition of firms contribution to training
– Cost of recruitment, training and replacement
– ROI for investments in human resources
“maintainable advantage usually from outstanding
depth in selected human skills, logistics
capabilities, knowledge bases

11. strategic HRMstrategic HRM
HRM is a strategic tool only if it contributes
to the bottom line. The question is; Does it?
– Forecasts of shifts in skill needs from manual
to cerebral
– Human Resources needs to looked at from an
Investment perspective.

12. Strategic analysis HRMStrategic analysis HRM
“To be competitive, organizations in many
industries must have highly skilled.
Knowledgeable workers. They must also have a
relatively stable labour force since employee
turnover works directly against obtaining the kind
of coordination and organizational learning that
leads to fast response and high-quality products
and services”
- Edward Lawler

13. Human resourcesHuman resources
Investment considerationsInvestment considerations
Management values
Risk return on investments
Economic rationale for investment in
training
Utility theory
– Outsourcing as an alternative to investment in
Human resources

14. Stages in Strategic managementStages in Strategic management
 Strategic analysis
– Environmental analysis
 human resource environment
 human resource legal environment
– 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

15. Strategy formulationStrategy formulation
 What are the purpose(s) and objective(s) of
the organization?
 Where is the organization presently going?
 What critical environmental factors does the
organization currently face?
 What can be done to achieve organizational
objectives more effectively in the future?

16. Strategy formulation processStrategy formulation process
 Development of organizational philosophy and
mission statement
 Environmental scanning
 Analysis of SWOT
 Formulation of strategic objectives
 Generation of alterative strategy
 Evaluation and selection of strategies
 Informal / incremental strategic planning
– Managed/logical incremental planning
A strategy is the pattern or plan that integrates an organisation’s major goals, policies,
and action sequences into a cohesive whole

17. Competitive strategy in BusinessCompetitive strategy in Business
UnitsUnits
 Periodic forward scanning
 Analysis based on longer time frame
 Communication about goals and resource
allocation
 Framework for short-term plan evaluation and
integration
 Decisional criteria framework for short term
decision making
 PLANNING IN SBU’S
– Base strategy will be integrated with functional specializations to
exploit the opportunity seen by the strategy and achieve the goals.
– Low cost leadership, differentiation, niche

18. HR strategy ?HR strategy ?
'a human resource system that is tailored to the
demands of the business strategy'
-Miles and Snow 1984
'the pattern of planned human resource activities
intended to enable an organization to achieve its
goals'
- Wright and McMahan 1992
“the pattern planned human resource deployments
and activities intended to enable an organisation to
achieve its goals”

19. SHRM concernSHRM 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

20. Strategic HRMStrategic HRM(IMPORTANCE)(IMPORTANCE)
 Needs investment –ROI
 Cost of investment
 Reduction in total Labour cost
 Efficiency in operation
 Optimal use of human resources
 A source of competitive advantage
 Technical skills (pace of technological change)
 Knowledge and capabilities
 Management of critical and Difficult HR areas
 Management of change (Resistance to change)
 Lack of trust
 Antagonistic labour
 Motivational problems
 Management relations
 Economic turbulence
 Within the country (turbulence)
 Globalisation
 Dramatically changing demographics
 Differences in workforce values
Strategic human resource management and ∟ HRP are considered important
to manage uncertainties; HR is integrated with strategy; Integrating and
aligning HR function with strategy

21. Benefits of SHRMBenefits of SHRM
1. Identifying and analysing external opportunities and
threats that may be crucial to the company's success.
2. Provides a clear business strategy and vision for the
future.
3. To supply competitive intelligence that may be useful
in the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are
addressed systematically.
7. To supply information regarding the company's
internal strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough competency

22. 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
Theoretical frame work of SHRM

23. Theoretical frame work of SHRM
 Strategy driven
– Resource based view
 Competitive advantage based on unique allocation of resources {selection
/Compensation package} (TCS)
– 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

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

25. Human resource contributionsHuman resource contributions
to strategyto strategy
Environmental scanning and competitive
advantage
Implementation of resource reallocation
decisions
Lead time for dealing with labour shortages.
..

26. Benefits of integrating HRP with StrategicBenefits of integrating HRP with Strategic
planningplanning
 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.

27. Strategic components of HRMStrategic components of HRM
relevant to internal fitrelevant to internal fit
Management awareness
Management of the function
Portfolio of programs
Personnel skills
Information technology
Awareness of the environment

28. Requirements for SHR-ManagersRequirements for SHR-Managers
Information management skills
Planning skills
Management skills
Integration skills
Change management skills

29. Thank youThank you