Strategic Human Resource Management Management Principles Strategic Human Resource Management Craig W. Fontaine, Ph.D.

History of HRM’s Organizational Role Formerly (HRM): Administration Employee relations Benefits Now: Business Partner Gaining Strategic Advantage

Models of Strategy Industrial Organization (O/I) Model External environment is primary determinant of organizational strategy Environment presents threats & opportunities All competing organizations control or have equal access to resources Resources are highly mobile between firms Organizational success is achieved by Offering goods & services at lower costs than competitors Differentiating products to bring premium prices

Models of Strategy Resource-Based View An organization’s resources & capabilities, create competitive advantage Organizations can identify, locate & acquire key valuable resources Resources are not highly mobile across organizations & once acquired are retained Valuable resources are costly to imitate & non-substitutable

Both are Right…! Research provides support for both positions Acquire resources to support strategy Determine strategy based on resources Strategy Human Resource Management addressed both approaches

Strategic HR Management Strategic Human Resource Management Aligning initiatives and practices involving how people are managed so that they support the organizational mission and business strategy

Core competencies should drive business strategy…. A Core Competency is a deep proficiency that enables a company to deliver unique value to customers. It embodies an organization’s collective knowledge. Its creates sustainable competitive advantage for a company and helps it branch into a wide variety of related markets. It’s hard for competitors to copy or procure. Understanding Core Competencies allows companies to invest in the strengths that differentiate them and set strategies that unify their entire organization.

Example of Core Competencies Walt Disney World Parks and Resorts Animatronics and Show Design Story Creation and Themed Attractions Efficient operation of theme parks

Strategic HRM Approach Facilitates development of high-quality workforce through focus on types of people & skills needed Facilitates cost-effective utilization of labor, particularly in service industries where labor is generally greatest cost Facilitates planning & assessment of environmental uncertainty & adaptation of organization to external forces

Distinctive Human Resources How can HRM practices specific to an organization create a competitive advantage?

Examples of HRM Practices HRM practices can allow and motivate individuals to support an organization’s strategic objectives Hiring Practices Who do we hire Where do we look for workers Performance Management Practices On what criteria are workers assessed Compensation and Reward Practices What behaviors/actions are rewarded

HRM Practices - Exercise Two Watch Companies Hiring Practices Who do we hire Where do we look for workers Performance Management Practices On what criteria are workers assessed Compensation and Reward Practices What behaviors/actions are rewarded Rolex Very expensive Hand Made Timex Inexpensive Mass Produced

Simple Concepts… People are the essential capital of all organizations Humans create organizational innovations and accomplishments Organizational success depends upon careful attention to human capital But harder than you think…

Challenges: Economic Global Trade Challenge Jobs and prosperity depend upon international trade Job migration to South East Asia and China Challenge of Productivity Improvement Productivity = outputs/inputs ratios Essential for long-term success Requires strategic thinking and creative responses Understanding motivation

Challenges: Technological Computerization Impacts virtually all aspects of work and life Provide large amounts of data at great speed to managers Flexibility e.g. telecommuting Automation Potential benefits include speed, better customer service, predictability and production quality Use robots for hazardous or boring jobs

Challenges: Cultural Work related attitudes Ethnic diversity Changing attitudes toward work and leisure Demand for ethical conduct of business Ethnic diversity Cultural mosaic Attitudes toward governments: Divided population

Challenges: Demographic Trends Increasing number of women in the workforce Shift toward knowledge workers Educational attainment of workers (Bi-modal) Employment of older workers More part-time, contract and contingent workers http://www.stats.gov.nl.ca/Statistics/ http://www.economics.gov.nf.ca/

Objectives of SHRM: Organizational Contribute to organizational effectiveness Means of helping the organization to achieve its primary objectives Provide level of service appropriate to the organization

Objectives of SHCM: Employee Assist employees in achieving their personal goals Employee performance may decline or employees may leave the organization if personal objectives are not considered

Objectives of HRM: Societal Respond to the needs and challenges of society Minimize negative impacts on the organization Reflect society’s concerns e.g. ecological

Goals of Strategic HCM Attract, retain, and motivate employees Direct employee efforts toward goals of organization Assist in the development of the strategic direction of the organization Provide the organization a source of competitive advantage Example: Watch Industry

Review & Evaluation of HCM Strategies Steps in Strategic HRM Environmental Analysis Organizational Mission & Goals Analysis Analysis of Organizational Strengths & Culture Analysis of Organizational Strategies Choice & Implementation Of HCM Strategies Review & Evaluation of HCM Strategies

Activities in Human Resource Management HC strategy formulation Recruitment and selection (staffing) Performance appraisal Training and development Compensation and benefits Employee rights Labor/management relations (if union)

Today’s Workforce Realities: Decade of boom & bust leaves working families with: Stagnant, declining incomes Increased inequality Longer working hours Less retirement savings; fewer health care benefits Broader job insecurity Loss of worker voice in society Current government policies producing: Further cuts in services & jobs Tax policies that further increase inequality Deep divisions over war policies Direct attacks on workers, unions, and core values

Job Satisfaction – Declining! The U.S. has seen a trend of increasingly high job dissatisfaction. Only 45 percent of Americans were satisfied with their jobs. A decrease from a 61 percent satisfaction rate in 1987 Job dissatisfaction is highly correlated with a negative impact on organizational effectiveness Management must respond