Chapter-3 Hrm and Organisational Strategies

8/2/2019 Chapter-3 Hrm and Organisational Strategies

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HRM AND ORGANISATIONALSTRATEGIES


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HR And Corporate Strategy

HR strategy relates to selection, developmentand motivation of the right candidates for the

job.

According to Michael Porter, corporate strategyis the overall plan for diversified business.

There are 3 different types of corporatestrategies. They are:

Growth

Stability

Retrenchment


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Growth

Growth strategy helps employees todevelop skills and contribute to the overallperformance of the organization.

Growth can be achieved by developingnew products and by training &developingits employees.

Effective planning is utmost important forthe success of growth strategy.


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Stability

Stability is another corporate strategywhere an organization adopts a status quoand sees very few opportunities forgrowth.

Such organizations lack upward mobilityand there are limited opportunities for

growth and may leave the organization.


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Retrenchment

Retrenchment is used when the organizationrealizes that it is unable to compete in the globalmarket.

In retrenchment organization goes in for costcutting and downsizing takes place.

Retrenchment is mainly adopted to stream lineoperations and strengthen organizations

competency. Retrenchment should not affect the morale of

the employees.


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HR And Business Strategy

Corporate strategy is the overall strategyrelated to business interests

Business Strategy is designed to serve theinterests of a particular business unit.

Business unit strategies are of 3 types:

Cost leadership Differentiation

Focus


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Cost Leadership

Organizations focusing on cost leadership arecustomer-oriented & keep manufacturing costslow to gain a competitive advantage.

In this strategy, customers are perceived to beprice sensitive and not brand loyal.

As efficiency is taken into account jobassignments are more specialized.

Employees are also cross trained to buildcustomer loyalty.


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Differentiation

In this strategy organizations differentiate theirproducts from that of the competitors by addingextra features or benefits.

These organizations require creative andinnovative people to contribute to new productdevelopment.

Employees should be empowered andmotivated.

Company should follow a recruitment procedure.


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Focus

An organization concentrates on onemarket and maximizes its profit from thatsegment.

Employees should be aware of the of theparticular market and frame strategiesaccordingly.


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Dyer And Holder Typology For Strategies

An important business strategy was developedby Dyer&Holder in 1998.

It identifies three separate strategies

Inducement Involvement

Investment strategy

The typology is based on the assumption thatHRMs role is to develop policies &practices thatwill have direct employee development &support to achieve organizational goals.


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An investment strategy is used by thoseorganizations that focus on changing market ,

encourage creativity and also show concern forcompensation packages.

Inducement strategy aim at retaining theemployees by encouraging loyalty&

commitment. Involvement strategy is used by organizations

that give importance to both innovation andcost-cutting.


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Human Resource Strategy Frame work

The human resource strategy frameworkshows the interaction between a firm andits environment.

Steps in the strategy framework are:

External Environmental Scan

Internal Capital assessment


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External Environmental Scan

External environmental scan is theanalysis of the external environmentalforces that have an impact on the

organizations functioning. Steps in external environmental scan:

Competitor/industry analysis

Stakeholder analysis PEST analysis

Environmental situational factors


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Competitor/Industry Analysis

It is the analysis of the firms operations and thecompetitive pressures it is facing

Michael Porter has proposed 5 factors that

shape the business strategy1. Intensity of rivalry

2. Threat of new entrants/barriers to entry

3. Threat of substitutes4. Bargaining power of suppliers

5.Bargaining power of buyers


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Stake Holder Analysis

A stake holder analysis identifies &assesses theimportance of key people, groups of people fororganizations success.

This includes different expectations thestakeholders from a company in terms ofperformance and effectiveness.

It is important for the manager to frame a HRstrategy that includes expectations of all thestake holders.


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PEST ANALYSIS

Pest analysis is important for analyzing the fit

between HR and organizational strategy It is concerned with the analysis of political, social,

economic and technological factors that influenceorganizational strategies.

Technological advancements have changed the work

performance &revolutionized the work place. HR practices &policies that guide employees have to

be framed keeping in view technological changes.

Political &legal environment have an impact on theframing of strategies.

Economic and demographic patterns affect anorganization.

PEST analysis helps an organization to assessexternal factors that have an impact on the framingof organizational strategies.


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Environmental Situational Factors

The changing environment is also bringinga change in the human environment.

2 major challenges that the humanresources field has to face are:

Managing Diversity

Demographic Trends


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Management Of Diversity

Diversity enhances work performance andinnovation.

Ex:Lucent Technologies reward employees whenthey achieve diversity objectives.

Reasons for the evolution of the diverseworkforce:

Shift from manufacturing to service economy Globalization of markets Changing business strategy Mergers and acquisitions Changing labor market


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Managing Diverse Paradigms

Managing diverse employees is a strategicissue that has an impact on anorganizational productivity and success.

According to David A. Thomas &Robinthere are 3 paradigms which guideinitiatives in an organization:

Discrimination & Fairness ParadigmAccess and legitimacy paradigm

Learning and effectiveness paradigm


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Diversity Processes

Diversity processes are developed byorganizations to manage diversity.

Organizations can use any of the diversityprocesses or a combination of all:

Cultural audit surveys

Awareness training Skill building training

Diversity enlargement hiring strategies


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Most present day organizations have beensuccessful in managing diversity programs.

They have done this by redesigning the humanresources policies and practices which include:

Creating diversity awareness Involving top management in the diversity

initiative program Developing a plan of action for diversity

programs Identifying the changes required in the human

resource functions


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Management Of Work Teams

Important aspect of diversity is the evolution of workteams and virtual teams.

Unlike traditional project teams new teams have newvalues, beliefs of an organization.

Modern organizations use many work teams such as taskforces, networking groups, project teams, self-managedteams, quality teams &cross functional teams.

Unlike composition of teams in the past, modernorganizations were having teams that were diverse interms of demographics.

Most of the organizations use cross-functional and self-managed teams.


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The reason for growing importance of workteams is the emphasis on customer satisfaction.

The increased emphasis on customersatisfaction enables companies for teaming uptheir marketing experts, &manufacturers withcustomers.

There is no guide for managing a diverse workteam.

Criteria on which a team is evaluated includesboth organizational and individual outcomes.


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Characteristics Of Effective Work TeamsIn The Organizational Context

Team members should have appropriateknowledge, skills, abilities to perform the task.

Team should have clearly defined missionobjectives which are specific.

Teams should have clearly definedresponsibilities for all team members.

Team should have an efficient leader to guide &coach.

Teams should provide employees withautonomy, support, feedback &rewards towardsthe effective performance.


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Characteristics Of Effective WorkTeams In The Team Context

A systematic well-defined plan that can enablemembers to use effective communication skills&reduce distortions.

Individual team member is accountable&responsible for his work &should activelyparticipate in discussions & decision-making.

Each member of the team should be receptive toeach others ideas &should be committed towork.


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Management Of Virtual Teams

Virtual teams can be described as a group ofgeographically or organizationally dispersed employeesto address a specific task, project or ongoing function inthe organization.

Planning and design are the key to the success of virtualteams.

The important elements for the successfulimplementation of virtual teams are organizationaldesign, job design, team design and coordination ofwork of employees with the aid of technology.

Virtual teams create a distance between employees&their organizations.

The demerit of virtual teams is it is difficult tocommunicate with people who have never met eachother. But have to share information constantly.

Ex: Deloitte &Touch


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Impact Of Demographic Trends On HR StrategyFormulation

Demographic changes create a number of

challenges for the HR management. As one moves up in the management hierarchy ,

there are fewer positions available. Incentive programs have to be developed so that

baby boomers (1946-1964) retire and

opportunities may be created for baby busters. Generation X (born in 1970s&early 1980s)

individuals bring in advanced technologies intothe work atmosphere.

Employees of this generation like to be

empowered and require autonomy. Project teams have come forward to motivate

&manage &retain such teams. HR strategy formulation should also take into

consideration the diverse demographics of

employees.


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Internal Capital Assessment International capital assessment helps analyze a

firms strengths &weaknesses in financial,technological and human resources.

Technological revolution brings change inemployee skills and training &also leads tocollaborative work &downsizing.

Technology has created flexible, dynamicorganization structures that facilitate change&acceptance to change.

Human resource assessment includes the

analysis of workforce, organizational culture,&the changes to be implemented in culture&technology to be used for effectiveperformance of employees.

Financial assessment included the balance sheet,analysis of cash flows.


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Strategy Formulation After successful identification of internal & external

capabilities, weaknesses organization has to have amission &vision for the successful implementation of HRstrategy.

Vision presents core ideology and envisioned future forthe organization.

Mission corresponds basic philosophy or visionunderlying business.

Mission describes the companys business activities, andpositions it plans to achieve in its field.

The next step is to develop future projections &strategy

through which it plans to achieve these projections. The next plan is to integrate the HR plans with

organizational plans . The final step is to allocate organizational resources

developing processes &systems to support the HR roles.

Chapter-3 Hrm and Organisational Strategies

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