Aligning HR with Strategy Flashcards
What is Strategic HRM?
The management of interrelated HR philosophies, policies, and practices that facilitate the attainment of organisational strategy
Resource-based view- Theories for Strategic HRM
A true resource is:
Scarce
Hard to imitate
Gives sustained competitive advantage
Hard to substitute
Human Resources can fit the resources that can aid a company achieve its strategic goals.
The contingency perspective
The nature of one’s HR strategy differs based on Business strategy being used
The cost-effectiveness of HR’s strategy depends on the business strategy being used.
Human Capital
The sum of employees’
knowledge, skills,
experience, and commitment invested in the
organization.
Human Capital Theory
The characteristics needed to make a business successful is found in its human capital
Human Capital Value
Total revenue- (operating expenses-total compensation costs)
all divided by total compensation costs
Behavioural Theory
Different HR strategies require different employee behaviours
Creating Behaviours
- The company must decide on the behaviours it needs
-Implement practices that produce those behaviours
Sample activities that prompt behaviours
Involvement in decision-making, incentives to prompt behaviour,
Traditional view of HRM planning
only with possible problems of labour surpluses and shortages.
The goal was to determine the knowledge, skills, and abilities (KSAs) required within
broad organizational outcomes such as growth or decline. Much emphasis was put on
the statistical techniques for analyzing resource supply and demand forecasting while
ignoring managerial realities and support for the process.
Hr continuum
AD HOC- No workforce planning/hire as needed
Headcount Planning- Headcount analysis and basic labour costing
Workforce forecasting analytics- Historical/lagging performance indicators/ descriptive workforce analytics
Strategic Workforce Planning- Workforce segmentation/ workforce planning to support projected business needs
Human Capital Planning- Enterprise-level workforce planning/ workforce risk management and mitigation planning.
Importance of Strategic HR planning
- employees help an organization achieve
success because they are strategic resources - the planning process itself results
in improved goal attainment
Practical Barriers to Workforce Planning
- Leaders lack planning and business acumen
- Moving targets- business goals are not clear
- Not enough time, too busy, competing priorities, “daily
bombs,” and “fighting fires”
PERCEPTION AND ATTITUDE BARRIERS
- Seen as important, but not urgent
- Resistance to change: “We always got by in the past”
- Seen as too daunting to change
- Lack of a holistic approach
LINKING HR PROCESSES TO STRATEGY
Can be one of the following:
1. Start with an organizational strategy and then create an HR strategy.
2. Start with HR competencies and then craft corporate strategies based on
these competencies.
3. Do a combination of both in the form of a reciprocal relationship.
CORPORATE STRATEGY LEADS TO HR STRATEGY
look to corporate strategy an then build strategy for hr. Strategy would cover recruitment and selection, training and development, compensation, performance evaluation, labour relations
Eg. of corporate to hr strategy
Corp: low cost
HR Planning: entry level-minimal succession planning, ensuring labor supply for entry-level. Use of fringe workers part of strategy.
exec level-succession management
assumes the same importance as in other organizations.
R&S: save costs with word-of-mouth applications, on site applications, inward promotions.
Compensation: price lag strategy, outsource to lower wage paying places, offer fringe benefits, make use of part time with no fringe benefits - students, contract,
Training: Minimized to those things that increase efficiency- quick and fast
Performance Evaluation: Short-term results, with explicit and standardized criteria,
are used to evaluate an employee’s performance.
Labour relations: try to prevent labour unions from forming.
HR COMPETENCIES LEAD TO BUSINESS STRATEGY
A competing view states that an organization cannot implement a strategy if it does
not have the human resources necessary.
The owners of very small
businesses are nimble and quickly recognize that if an employee has a certain capability,
it can be exploited to develop new products or services
This view involves identofying the skills of workers and ignores the enviornment which is not realistic
RECIPROCAL INTERDEPENDENCY BETWEEN HR STRATEGY
AND BUSINESS STRATEGY
An emerging perspective sees HR strategy as contributing to business-level strategy and
vice versa. Increasingly, in large firms, senior HR vice-presidents are asked not only to
review business plans to ensure consistency with HR strategy but also to provide input
to this strategy based on HR strengths and weaknesses.
Simply phrased, an organization develops its
employees and then capitalizes on their skills; the employees then learn new skills, and
so it continues.
HR BECOMES A BUSINESS PARTNER
Strategy development is conducted at the same time that H RM issues are considered. The HR senior
management team moves from outsider status to insider status.
They must be able to understand
analyses presented by marketing, financial, and operational managers
BECOMING MORE STRATEGIC
- moving from just being a functional unit to enhancing performance of business units and supporting business moves.
HR STRATEGY DIFFERENTIATION- multiple corporate strategies and hr strategies
The challenge is to treat employees across
divisions in an equitable fashion while motivating different behaviours that align with
the divisions’ strategies or functions.
look at HR PLANNING TODAY 2.2
CHARACTERISTICS OF AN EFFECTIVE HRM STRATEGY
external and internal fit, and a focus on results.
Fit
EXTERNAL FIT- Strategy compatibility with advancing business strategy and other functional strategies. HR senior management must
be included in strategy discussions to be sure this happens. This is sometimes called
the “best fit” approach to strategic HR, where HR strategies match organizational
strategies.
INTERNAL FIT- a fit with other functional areas, such as marketing,
and a fit among all HR programs-This working together is commonly referred to as “bundling” HR practices.
Focus on Results
FOCUS ON RESULTS- HR program ~ employee human capital and behaviours
~ organizational strategy ~ organizational outcome
So, if the overall corporate outcome for a retailer is “growth in sales,” and the
strategy to do this is through customer service (a differentiation strategy), then what
employee human capital and behaviours are required? If, for example, product
knowledge and sales skills are needed, then HR programs could be designed to select
and/ or develop these skills.
Are you a strategic partner?
Do you understand the business?
What financial indicators are important to the company?
Who are your customers, and what is your competitive advantage?
What major technological changes will affect your work?
Do you know what the corporate plan is?
Can you quickly list the major initiatives of your organization?
Do you align HR programs, policies, and practices with organizational strategies and goals?
How can HR position the organization to succeed?
Are the people management
processes focused and measured on deliverables and not functions?
Does HR report on effectiveness (the impact
that the training program had on employee behaviour)
or just efficiencies (such as the number of people being
trained)?
Are major organizational decisions made with your input? Are you on the executive team? Are you part of the strategic planning process?
