HR Strategy Integration

7/23/2019 HR Strategy Integration

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Amity Business School

Strategic HRM in Action

HR Strategy defined, purpose,

types of HR strategies, Content of

HR strategies, Formulating HR

strategy, criteria for an Effective

HR strategy, integrating the

business and HR strategies.




HR strategy“HR strategies set out what the organiation intends to

do about its human resource management policies and

practices, and how they should be integrated with the

business strategy and each other.!

" #yer and Reeves $%&&'( as )internally consistent bundles

of human resource practices*," +eter o-all $%&&( they provide )a framewor/ of critical

ends and means*.




#istinction between SHR0 and HR Strategy

" Strategic HR0 can be regarded as a general

approach to the strategic management of human

resources in accordance with the intentions of

the organiation on the future direction it wants

to ta/e.

" HR strategies will focus on the specific intentions

of the organiation on what needs to be doneand what needs to be changed.




TYPES OF HR STRATEGIES" Overarching HR strategies - describe

the general intentions of the organiation

" Specific HR strategies- Specific HRstrategies set out what the organiation

intends to do in specific areas




CRITERIA FOR A EFFECTI!E HR STRATEGY

" will satisfy business needs1

" be founded on detailed analysis and study, not 2ust wishful thin/ing1

" can be turned into actionable programmes that anticipate

implementation re3uirements and problems1" is coherent and integrated, being composed of components that fit

with and support each other1

" ta/es account of the needs of line managers and employees

generally as well as those of the organiation and its other

sta/eholders.




Formulating and implementing HR

strategies




F"#AMETA$ PROCESS COSI#ERATIOS

" 4nteractive $not unilinear( relationship between business strategy

and HR0

" HR strategies are not necessarily developed formally and

systematically but may instead evolve and emerge

" Strategy formulation is about )preferences, choices, and matches*

rather than an e-ercise )in applied logic*. 4t is intentions shared

amongst the top team




5 linear strategic HR0 model




CHARACTERISTICS OF THE PROCESS

" Propositions

" Schools of strategy development

" Levels of strategic decision making

" Strategic options and choices




Strategy formulation propositions

" 6here are many HR strategies in a firm

" usiness strategy is one of the factors that influence

strategy formulation

" Historical compromises and trade7offs from sta/eholders

" 8ot all managements respond from shift from historical

pattern of strategy formulations

" 8o one set of constructs available




Schools of strategy development

+urcell, 9::%" 6he design school 7The design school is deliberate and

is ‘based on the assumption of economic rationality*. 4t uses

3uantitative rather than 3ualitative tools of analysis and Formulating

and implementing HR strategies focuses on mar/et opportunitiesand threats. ;hat happens inside the company is )mere

administration or operations*.




" 6he process school7 adopts a variety of approaches and is concerned with how

strategies are made and what influences strategy formulation.

7 )4t is much more a study of what actually happens with e-planationscoming from e-perience rather than deductive theory.*

7 downplays the role of systematic analysis and Emphasies the role

of intuition and vision, fails to provide a clear basis for reasoned

choices $0intberg(




" 6he configuration school < 5ssumptions

" strategies vary according to the life cycle of the =rganiation

" Strategies will be contingent to the sector of the organiation and," they will be about change and transformation.

“ 6he focus is on 4mplementation strategies, which is where +urcell thin/s

HR can play a ma2or role!




Levels of strategic decision making

- Do strategy flow from business strategy

7 s strategy parallel to businessdecisions




5 methodology for formulating HR strategies was developed by #yer

and Holder $%&>>( as follows?

1.Assess feasibility – number, time and cost

2.Determine desirability – examine the implications of strategy in terms

of sacrosanct HR policies $eg a strategy of rapid retrenchment would

have to be called into 3uestion by a company with a full employment

policy(.

@. Determine goals – these indicate the main issues to be wored on

and they derive primarily from the content of the business strategy.

A. Decide means of achie!ing goals – the general rule is that the

closer the e-ternal and internal fit.




5pproaches to strategy development

7 est fit approach

7 6he best practice approach

7 6he configuration approach




5pproaches to development of HR strategies

" 6he classical se3uential approach

" 6he empirical need based approach




Concepts in strategy formulation

" Resource capability < firms tries to de!elop

strategies concerned more on ac"uisition, de!elopment

and retention of human capital for gaining competiti!e

ad!antage through the human

" 5lignment to business strategy

" 5chieving horiontal fit




4ssues in strategy formulation" usiness issues7 intentions , proposals on increasing

competitive advantage, perceived need to develop performance and

customer oriented culture and any other philosophy li/e

engagement, commitment etc.,

" Conte-tual factors < globaliation, profitability through

growth, technology, importance of intellectual capital and non7stop

change




SETTIG O"T THE STRATEGY1. #asis $business needs 1 environmental factors and analysis1 cultural factors

9. %ontent – details of the proposed &' strategy

@. 'ationale – the business case for the strategy

A. (mplementation plan $ action programme1 responsibility for each stage1

resources re3uired1 proposed arrangements for communication,consultation, involvement and training1

'. %osts and benefits analysis – an assessment of the resource implications of

" the plan $costs, people and facilities( and the benefits that will accrue,

" for the organiation as a whole, for line managers and for individual

" employees $so far as possible these benefits should be 3uantified in" terms of value added(.

ut there is no standard model1 it all depends on the circumstances of the

=rganiation.




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Strategy




4ntegrating the usiness

Strategy and HR Strategy




" Each of the business strategy needs differentapproaches or types of HR strategy to managepeople and the investment towards HumanCapital.

" 6herefore, Bin/ing between HR Strategy andusiness Strategy is important




+orter*s classification of usiness Strategy

" 6hree types of strategies $ porter, %&>'(

adopted by an organiation to gain

superior performance and advantage areCost leadership

#ifferentiation

Focus




Cost leadership" 4ncreases in efficiency cutting of costs, then passing savings to

consumer

" 5ssumes price elasticity in demand for products or services is high

" 5ssumes that customers are more price sensitive than brand loyal

HR Strategy" HR strategy focuses on short7term performance

measures of results promoting efficiency through 2ob

specialiation cross7training

Bin/ing between HR Strategy and usiness Strategy




#ifferentiation" 4n order to demand a premium price from consumers

< 5ttempting to distinguish organiational products or

services from other competitors or

< Creating perception of difference

HR Strategy

" =rganiation offers employees incentives

compensation for creativity

" HR strategy focuses on e-ternal hiring of uni3ue

individuals on retaining creative employees




Amity Business SchoolFocus" usiness attempts to satisfy needs of only a particular

group or narrow mar/et segment" Strategic intent is to gain consumer loyalty of neglected

groups of consumers

" High concern for 3uality product

HR Strategy

" Strategic HR issue is ensuring employee awareness ofuni3ueness of mar/et segment

< 6horough employee training focus on customersatisfaction are critical factors

< Hiring members belonging to the target segment whoare empathetic to customer in that target segment





eaumont*s classification of HR strategies

" 8oted @ bases for classifying HR Strategies and

its relationship to usiness Strategies

7 #ifferent types of business strategies < that

different business strategies will lead to different

HR strategies $ similar approaches of +orter and

Schuler and Dac/son(

7 Stages in business or product life cycle7 6ypes and number of products





HR +ractices corresponding to the stages of organiation*s Bife Cycle

Life cycle stages HR Practices

Start up Flexible pattern of work

Recruitment of highly motivated and committedemployees

Competitive payLess formal systems

o unions

!rowth "ore planned recruitment and selection

#raining and development focus

Performance management processes

Focus on high commitment

$eveloping stable employee relations




HR +ractices corresponding to the stages of organiation*s Bife Cycle

"aturity %ttention to the control of labour costs

Focus on increasing productivity

Strained employee relations

Control compensation

$ecline &mphasising on down si'ing mechanisms

%bandoning some long withstanding practices to cut oncosts

Career consulting services

Retraining

#rade unions marginalised




6ypes and number of products" Fombrun et al $%&>A( suggested that the

strategy aimed at achieving variations in product

focus results in structural modifications andinfluences in HR Strategy.

" Eg., organiations with single product*s HR

Strategy will be different from organiations thatfollows strategy of growth by ac3uisitions.





Schuler and Dac/son*s strategic driven role behaviours and

practices " 6hey focused on +orter*s @ generic approaches but

argued that HR +ractices should be designed toreinforce the behavioral implications of these genericstrategies

" 6he role behaviours needed of employees throughout anorganiation provide a rationale for lin/age betweencompetitive strategies and HR +ractices

" Competitive strategies can be used to e-plain how

different employee behaviours are re3uired forsuccessful implementation of different strategies

" 6hese behaviours are roles that go beyond s/ills,/nowledge, and abilities





Business Strategy

%ost )eadership" Suitable for repetitive and

predictable behaviour " Concerned with short7term focus

and 3uantities $volumes(" Result7oriented" Ris/ averse" Comfortable wor/ing themselves

HR Strategy

*tili+ation &' trategy " Focused on short7term performance

measures, i.e., results or outcomes

" Efficiency is the norm" Dob assignments are specialied" Hierarchical pay, few incentives" 8arrow career paths, limited training" Bimited employment security" Cost7cutting may involve incentives for

employees to leave the firm" +rocedures for continuous trac/ing of

wage rates in the labour mar/et" Bimited participation




Differentiation

" Bong term focus

" Creative 2ob behaviour

" 0oderate concern for 3ualityand 3uantity

" $eg. H+,DD etc.,(

-acilitation &' trategy

" road career paths

" E-tensive training

" E3ual and fair pay, manyincentives for creativity

" Bong term performancemeasures

" E-ternal recruitment and hiring

of people who bring in newideas

" High employee participation

" Some employment security

" Stoc/ ownership options




-ocus

" High concern for 3uality

" 0oderate concern for3uantity

" Bongmedium term focus

" $eg., toyota(

Accumulation &' trategy

" E3ual and fair pay with

many incentives" Hiring employeesbelonging to the targetmar/et

" road career path with

e-tensive training" High employee

participation in decisionma/ing

" Some employee security




0ile*s and Snow*s Classification of HR

strategy

" Suggested that HR0 +ractices must be tailored to the demands of the businessstrategy

6hey identified types of organiational strategies on the basis of the dominant culture

of the organiation7

" #efenders7 who see/ , stability and believe in strict control <low cost providers

" +rospectors7 who see/ new opportunities, focus on continuous development andbelieve in fle-ibility < product differentiators and innovators(

" 5nalyers7 who see/ to incorporate the benefits of both defenders and prospectorsuses focused personnel strategy.Eg., manufacturers of electronics , pharma,automobiles

" Reactors < companies with dysfunctional strategies < companies in this category arehighly competitive mar/ets and are at the mercy of their environments

eg., publishing, retail, hotels7 they have few systematic strategic implications




#ominant Culture o( the

Organi1ation 2Business

Strategy3Defenders

" Find change threatening

" Favour strategies which

encourage continuity andsecurity

HR Strategy

" ureaucratic approach" +lanned and regularly

maintained policies to

provide for lean HR

" uild human resources" Bi/ely to emphasie

training programmes and

internal promotion




rospectors

" 6hrive on change

" Favour strategies of product

andor mar/et development

" Creative and fle-iblemanagement style

" Have high 3uality humanresources

" Emphasie redeployment andfle-ibility of HR

" Bittle opportunity for long term

HR planning" 5c3uire human resources

" Bi/ely to emphasierecruitment, selection andperformance7basedcompensation




Analysers

" See/ to match new

ventures with the presentbusiness set7up

" 6hese firms are followers

< the ventures are not

new to the mar/et, onlynew to the firm

" Bow levels of monitoring

and coordination" )uy* as well as )ma/e*

/ey human resources

" Emphasie HR planning7

e-tensive career pathswithin companies




Schuler*s$%&&9( 7 6he Five +*s 0odel of

SHR0

+roposed the Five + model that lin/s the

strategic business needs with strategic HR0

activities. 6he Five +*s are

$HR( +hilosophy

$HR( +olicies

$HR( +rogrammes$HR( +ractices

$HR( +rocesses




Schuler*s$%&&9( 7 6he Five +*s 0odel of

SHR0 $contd.(" +hilosophy

< Statements of how organiation values treatsemployees1 essentially culture of the organiation

" +olicies < E-pressions of shared values guidelines for action

on employee7related business issues

" +rograms

< Coordinated strategied approaches to initiate,disseminate, sustain strategic organiationalchange efforts necessitated by strategic businessneeds




Five +*s 0odel of SHR0" +ractices

< HR practices motivate behaviors that allow individuals

to assume roles consistent with organiation*s

strategic ob2ectives < 6hree categories of roles?

" Beadership

" 0anagerial

" =perational




Five +*s 0odel of SHR0" +rocesses

<Continuum of participation by all

employees in specific activities tofacilitate formulation

implementation of other activities




Five +*s 0odel of SHR0" Successful SHR0 efforts begin with

identification of strategic needs

" Employee participation is critical to lin/ingstrategy HR practices

" Strategic HR depends on systematic

analytical mindset" Corporate HR departments can have

impact on organiation*s efforts to launch

strategic initiatives




Bin/age between HR0 and Strategic planning

process" +roposed by Golden and Ramanu2am $%&>'(

" A types of lin/ages

%.5dministrative Bin/age< traditional role

9.=ne ;ay Bin/age < HR strategy reactive

@.6wo ;ay Bin/age < reciprocal andinterdependent relationship

A.4ntegrative Bin/age < dynamic interactionbetween HR function and strategic lin/age , HRe-ecutive is a strategic business partner withother senior e-ecutives of the firm




Relationshi) &et.een Business Strategy an' HRP



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HR Strategy Integration

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