HUMAN RESOURCE STRATEGY

Goals Understand how HR contributes to bottom line of organization Understand that organizations could have same policies with very different results based upon its culture

HR MODELS CLERICAL LEGAL FINANCIAL HUMANISTIC BEHAVIORAL SCIENCE STRATEGIC

Strategic Model (SHRM) Historically, HR focused on employee SHRM focuses on organizational effectiveness How can HR can help company become more profitable? System approach HR is part of the production process that can increase value of good or service

Strategy plan of what business to we want to compete in developing goals what are we best at what can’t we do

ALTERNATIVE STRATEGIC APPROACHES BEST PRACTICES-there are practices that are just good for everyone RESOURCE BASED VIEW focuses on how employees can add value to the firm for sustained competitive advantage resources that are difficult to copy resources that add value CONTIGENCY THEORY Contends that best HR practices will depend upon firm strategy Argues for multiple ways to achieve goals Do HR practices fit with firm’s strategy

Resource Based View How are we different from competitors Sustained Competitive Advantage Perceived customer value technology specialization economies of scale financing Employees How are we different from competitors Provides economic benefits Cannot be duplicated management is particularly difficult to duplicate

Contingency Perspective Firms that match business strategy and HR practices will have the highest performance

Strategic Objectives Cost Quality Innovation Growth Focus

HR Needs in Strategy Formulation HR Role Innovation Cost Leadership Focus of firm Employee role Training Staffing Compensation Performance management - creative, risk-taking - broader tasks creative risk-takers - broad career paths - recruit more from outside - external pay equity long-run results-oriented Allows for mistakes - efficiency - specific & repetitive - specific/short-term skills - promote internally - internal pay equity - behavior-oriented IRWIN a Times Mirror Higher Education Group, Inc., company, 1997

HR & Strategy Formulation Administrative Linkage Strategic Planning HR Function SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

HR & Strategy Formulation Administrative Linkage One-Way Linkage Strategic Planning Strategic Planning HR Function HR Function SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

HR & Strategy Formulation Administrative Linkage One-Way Linkage Two-Way Linkage Strategic Planning Strategic Planning Strategic Planning HR Function HR Function HR Function SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

How is HR Strategy Formulated? Administrative Linkage One-Way Linkage Two-Way Linkage Integrative Linkage Strategic Planning Strategic Planning Strategic Planning Strategic Planning HR Function HR Function HR Function HR Function SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985): 429-451.

Role of Culture Having HR policies not enough, need to know whether these policies are interpreted, understood, and believed by employees Strong climates – “the organization means it”

Factors that contribute to a strong culture Visibility – do people know what the policies and expectations are? Understandability JetBlue Legitimacy of authority – does management mean it? Relevance – what difference does it make? Do I care? Consistency- helps reinforce the above Consensus – do we have buy in across employees? Are the policies fair? Strong cultures lend meaning to the policies

Strategy Summary HR strategy is about managing employees effectively to improve organizational performance Best practice view good practices that will benefit all difficult to copy & add value Strategic HRM contingency view - good practices depend on business strategy Resource based view HR policies and practices can lend strategic advantage