Presentation on theme: "intro_strategic What is Strategic HRM?"— Presentation transcript:
1 intro_strategicWhat is Strategic HRM?HRM- the bundle of org. practices and policies, including: recruitment, selection, orientation, compensation, training, evaluation, career planning & job design, aimed at efficiently utilizing the human resources of an org.Has largely been seen as an administrative function and as a cost centerSHRM- Attracting, developing, retaining, deploying, evaluating, and motivating human resources to:Further the accomplishment of org. strategyGenerate and sustain competitive advantagesSeen as an investment and as a value-added activity
2 Central Themes of SHRM Expanded Role of HR Administrative ExpertEmployee ChampionStrategic PartnerChange AgentEmphasis on HR and general management competenciesFocus on customers, the value chain & deliverables; not on HR practicesHR seen as a source of strategic advantage; is increasingly importantPeople are an investmentHR can have a HUGE effect on the bottom lineHR practices can and must be costed and evaluated
3 A Model of the HR-Shareholder Value Relationship EmployeeSkillsDesign of ProductivityBusiness Human Employee Improved Profits Marketand Strategic Resource Motivation Creativity Operating and ValueInitiatives Management Performance GrowthSystem Job Design Discretionary & Work EffortStructures
4 SHRM ChallengesThe need to be flexible in response to changing business environmentsIncreasing int’l competition and the expanding global economyIncreased litigation related to HRMRapid technological developmentsMergers & AcquisitionsChanging characteristics of the workforceOlder & more diverseGenerational valuesProjected Labor ShortfallChanging Expectations b/t employers & employees
5 High-Performance Work Practices Large Investment in TrainingPerformance-Based Pay and BonusesInternal PromotionsValue and Attitude Fit as part of SelectionLong-Term Commitment to EmployeesGenerous Benefits
6 The Benefits of Putting People First A One Standard Deviation Increase (from 50%ile to 84%ile) in these Practices is Associated with:7% decrease in turnover$27,000 more in sales per employee$18,000 more in market value per employee$4,000 more in profits per employee$41,000 more in shareholder wealth per employee10% greater chance of 5 year IPO survival
7 Overarching Themes Ability Effort Opportunity to Perform The Performance EquationThe job of managers is to enhance the performance of their people. HR must support managers in this endeavorPerformance is a function of:AbilityEffortOpportunity to PerformAppropriate technology, tools, systems, resources, political cover80% of variance in performance is system-based (Deming)How can HR affect these three levers?
8 SHRM & AlignmentSlate of HR Practices should be aligned with Org. Strategy, in particular, these 5 Forces:EnvironmentSocial, legal, economic & competitive forcesOrg. StrategyHow does org hope to achieve competitive advantage? Distinct competenciesOrg. CultureNorms, values and assumptions that govern org behaviorTechnology/Type of JobHow inputs are converted to outputs; Formal org structure, decision latitude, specialization, cooperation, layout, workgroup interdependenceWorkforce CharacteristicsDemography, labor market, skills
9 A Quick Review of Strategy Strategic Management is aimed at identifying (formulation) and executing (implementation) activities designed to generate a sustainable competitive advantagePorter’s Generic Strategies:Cost vs. DifferentiationFocused vs. BroadMiles & Snow Typology:Prospectors, Defenders, Analyzers & ReactorsSWOT Analysis-Scan the org and its environment to identify Strengths, Weaknesses, Opportunities & ThreatsDevelopment of Core CompetenciesDevelopment of rare, inimitable, non-substitutable and valuable resources
10 Internal AlignmentSlate of HR Practices should be aligned with and complement each otherIf not, fail to reap full benefitE.g., Development & low turnoverReinforces management’s messageDo we really value empowerment?Employees (and prospective employees) know the lay of the landASA model; alignment of effortsIncreases Internal EquityAlignment w/in employee, across employees, across timeIs too much alignment a bad thing?Wage compression, external equityDo we want “class distinctions”?
11 The Roles of SHRM Must manage both people and processes Must have both day-to-day/operational focus and a strategic/future focusStrategic FocusOperational FocusProcessesPeopleStrategic PartnerAlign HR andbusiness strategyChange AgentEnsure change capacityand lead changeAdmin. ExpertBuild efficientinfrastructureEmployee ChampionListen & respond,increase commitmentTraditional HR Perceptions
12 The Role of Strategic Partners Create and manage processes to meet strategic goals and business requirementsHR follows from Strategy, but also shapes it over timeThree approaches to Strategy & HRM:“Add-on” approach- Mgt makes business decisions, using market, product & technology input. Give plan to HR to help implement“Isolated” approach- HR works on a plan, presents to mgt for approval, and then implements“Integrated” approach- Mgt and HR work together to develop plans to highlight HR activities that help the business achieve goalsOnly the 3rd approach ensures Alignment & Partnership
13 Challenges for SP’s Following Through on Strategy Execution Failing to Measure DeliverablesA “Balanced Scorecard” approach:Economic value-added (EVA)Customer value-added (CVA)People (emp.) value added (PVA)Relying on Quick Fixes-the “benchmarking trap” & FadsOvercome these through:Proving worthy of and demanding participation in business DM processLearning about the whole businessManagement by Walking AroundThorough diagnosis and follow-throughPublicize accomplishments: Becoming recognized for deliverablesEncouraging “org. learning”, shaping culture
14 Org. DiagnosisStrategic Alignment is accomplished by conducting and continually updating an “organizational audit”A systematic assessment and alignment of org. practices to business goals4 Steps:Define an “org. architecture”Specify the major systems that compose the org.Work with mgt. to set priorities & goalsCreate an assessment processGoals, gaps, types of data to be used, accountabilityProvide leadership in improvement practices (lead by example)