Meeting Present and Emerging Strategic Human Resource Challenges

Challenges facing HR How can HR influence firm performance? How can HR cope with workplace changes and trends? What are HR strategies that help a firm achieve competitive advantage?

Key HR Challenges for Today’s Managers: Environmental Rapid change Workforce diversity Globalization Internet revolution Legislation Evolving work and family roles Skill Shortages Rise of the service sector Environmental challenges are the forces external to the firm. They influence organizational performance but are largely beyond management’s control. Managers need to monitor the external environment constantly for opportunities and threats. This slide demonstrates how a variety of environmental factors impact the organization.

Key HR Challenges for Today’s Managers: Organizational Competitive Position: Cost, Quality, distinctive capabilities Decentralization Downsizing Organizational restructuring Self-managed work teams Small business growth Technology Outsourcing

Key HR Challenges for Today’s Managers: Cultural Basic assumptions and beliefs shared by members of an organization… rules, norms behaviors philosophy dominant values feeling or climate The term organizational culture refers to the basic assumptions and beliefs shared by members of an organization. These beliefs operate unconsciously, are taken for granted, and are typically very apparent to someone outside the organization. This slide illustrates the key elements of organizational culture, and the ways in which these elements differ between two organizations.

Individual Challenges Key HR Challenges for Today’s Managers: Individual Matching People and Organization Matching people and organizations Ethical dilemmas Social responsibility Productivity Empowerment Brain drain Job insecurity

Strategic HR Choices – Options Available in Designing an HR System Work Flows Staffing Employee Separations Performance Appraisal Training and Career Development Compensation Employee Relations Employee Rights International Management

HR Strategy Leads to Improved Organizational Performance Organizational Strategies Organizational Capabilities HR Strategies The success of HR strategies depends on the situation or context in which they are used. An HR strategy’s effect on firm performance is always dependent on how well it fits with other factors. This slide depicts the key factors that firms should consider in determining which HR strategies will have positive impact on firm performance: organizational strategies, environment, organizational characteristics, and organizational capabilities. Organizational Characteristics Environments

Porter’s Differentiation Strategy HR Strategies: Emphasis on innovation and flexibility Broad job classes Loose work planning External recruiting Team based training Emphasis on individual-based pay Use performance appraisal as a developmental tool A differentiation business strategy attempts to achieve a competitive advantage by creating a product or service that is perceived as unique. Approaches to differentiation can take may forms, among them: design or brand image; technology; features; customer service; and dealer networks.

Porter’s Low-cost Leadership Strategy HR Strategies: Efficient production Explicit job descriptions Detailed work planning Emphasis on qualifications and skills Emphasis on job-specific training Emphasis on job-based pay Use of performance appraisal as a control device The overall cost leadership strategy is aimed at gaining a competitive advantage through lower costs. Cost leadership requires aggressive construction of efficient plant facilities, intense supervision of labor, vigorous pursuit of cost reductions, and tight control of distribution costs and overhead.

Porter’s Focus Strategy Low cost Differentiation A focus strategy relies on both a low-cost position and differentiation, with the objective of serving a narrow target market better than other firms. The HR strategies likely to fit the focus strategy best would be somewhere in the middle of those described for low-cost producers and differentiators.

Miles and Snow Defender – conservative business units that prefer to maintain a secure position in a relatively stable product or service area Prospector – emphasize growth and innovation, development of new products

Miles and Snow Defender Strategy -- RECRUITING Internal recruitment HR makes selection decision Emphasis on qualifications and skills Formal hiring and socialization process

Miles and Snow Prospector Strategy -- RECRUITING External recruitment Supervisor makes selection decision Emphasis on applicant fit with culture Informal hiring and socialization process of new employees

Miles and Snow Defender Strategy -- Compensation Fixed pay Job-based pay Seniority-based pay Centralized pay decisions

Miles and Snow Prospector Strategy --Compensation Variable pay Individual-based pay Performance-based pay Decentralized pay decisions

HR Best Practices Employment security Selectivity in recruiting High wages Incentive pay Employee ownership Information sharing Participation and empowerment Self managed teams Training and skill development Cross-utilization and cross training Promotion from within

HR Department and Managers “The role of a company’s HR department is to support, not supplant managers’ HR responsibility” “Every manager is an HR manager”

KNOWLEDGE OF BUSINESS How HR can be a Strategic Partner HR must understand… internal / external customers key business disciplines business structure, vision, values, goals, strategies, finances competitors, products, technology and sources of competitive advantage

STRATEGIC THINKING How HR can be a Strategic Partner Understand strategic business planning Apply a systematic HR planning process Integrate HR systems to build capability and competitive advantage for the firm Develop and integrate department strategies within corporate framework

PROCESS SKILLS How HR can be a Strategic Partner Know management processes Know process skills: consulting, problem solving, evaluation and communication Understand organizational development Facilitate and manage change Manage under uncertainty and instability

TECHNOLOGY How HR can be a Strategic Partner Maintain HR documentation using knowledge management and technology Build firm’s capability using info systems Provide training in use of technology

Case XYZ has a 1 billion budget and staff of 7,000. To speed growth, XYZ announced a series of performance objectives for individual business chiefs who before enjoyed much free rein. In addition, XYZ introduced specially trained “black belts” to root out inefficiencies in departments. If you were a “black belt”, what would you look for? Students should identify many of the concepts presented in this chapter, including individual challenges, organizational challenges, cultural challenges, ethical dilemmas and environmental challenges.