Chapter 2 - BD Flashcards
Importance of HR planning and alignment, and associated risks of not doing strategic planning* See week 2 slides 18 to 20. Resource-based view - An organization’s human resources as a sustained competitive advantage – VRIO Risks of doing strategic human resources management AKA Downside to actually doing strategic planning – See Week 2 slide 21
Human Resources Management: (HRM) is …
an umbrella term that encompasses:
• Overarching HR philosophies
• Formal HR policies
• Specific HR practices… to enable an organization to achieve it’s strategy
What is the Resource-Based View of HRM?
- Suggests that the management of resources and capabilities will lead to competitive advantage, resulting in superior performance and value creation
- A firm’s human resources can create sustained competitive advantage
What are the criteria of Resource-Based View of HRM?
V – Valuable employees due to superior performance
R – Rare, in terms of talent
I – Difficult for competitors to imitate
O – Organized - Hard to substitute
Typical resources might include:
a) Human resources
b) Proprietary knowledge
c) Reputation
Typical capabilities might include:
a) Adaptability
b) Flexibility
c) Speed of bringing new products to market
Theories of HR: Contingency Perspective
(a) human capital and (b) behavioural theories: Claims that there is no one size fit all, and that HR strategies must be modified based on business and organizational strategies
Human Capital Theory:
Classical economists view the firm as having control over three types of resources in the production of goods and services:
- Land
- Labour (or human capital)
- Capital
Define the Human Capital
The collective sum of employees’ attributes, experience, knowledge, and commitment invested in the organization
Human capital also includes:
- Knowledge
- Education
- Vocational qualifications
- Professional certifications
- Work-related experience
- Competence of an organization’s employees
The Behavioural Theory suggests that…
different HR strategies are required to influence the diverse behaviours of employees (e.g. frontline at McDonald’s vs their corporate office).
HR’s role is to reinforce certain behaviours using HR practices such as recruitment, selection, training, compensation, and performance
What is Strategic HR Planning?
Human resource planning is a process that identifies current and future human resources needs for an organization to achieve its goals. It links human resources management with the overall strategic plan of an organization.
Different Levels of HR Planning
AD HOC Head Count Planning Workforce Forecasting Analytics Strategic Workforce Planning Human Capital Planning
AD HOC HR Planning:
No workforce planning/hire as needed
Head Count Planning:
Head count analysis and basic labour costing
Workforce Forecasting Analytics:
Historical or 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
Why is Strategic HR Planning Important?
related to mid-term short answer
- Employees help an organization achieve success because they are its strategic resources
- The planning process itself results in improved goal attainment
Employees as Strategic Resources: Organizations need to plan for employees as a strategic resource. Why?
related to mid-term short answer
Because:
- Human resources can deteriorate if skills and knowledge become obsolete
- Investment in employees’ skills increases the value of the organization’s human capital
- Human assets offer organizations a competitive advantage: An organization that manages its human resources strategically is more likely to survive and profit
What are the three HR’s Responsibility?
- Human assets must be managed and matched to the organizational strategy
- Determine what skills need to be planned for in the future or when there is a vacancy, and
- Capture the “value” of this human capital within the strategic HR plan
Strategic HR Planning improves Goal Attainment. How?
- Strategy formulation is important to the attainment of organizational goals
- Aligns all HR functional strategies with overall strategy
- Focuses employees on important missions and goals of the organization
What is HR’s responsibility?
Developing HR practices that support the strategy lead to improved strategy implementation
Is there a downside to strategic HR planning? List 7 risks.
- Time and energy in making decisions
- Information overload potential
- Impossible to get employees to commit
- Too much concern with employee reactions
- Potential job losses
- Myopia (short-sightedness) developed from commitment to one strategy
- Inability to see and adapt to changes developing in environment
Aligning HR strategy with business strategy can be done in one of three ways:
- Start with organizational strategy and then create HR strategy
- Start with HR competencies and then craft corporate strategies based on these competencies
- Do a combination of both in a form of reciprocal relationship
Corporate Strategy Leads to HR Strategy:
- A traditional view that supports the notion that HRM programs flow from corporate strategy
- The HR needs are derived subsequent to the inception of the corporate plan
- For example, a low-cost strategy needs to be aligned with low-cost labour, like McDonald’s or Walmart
HR Competencies Lead to Business Strategy:
- A “skills determine strategy” outlook
- A more current view assumes that an organization cannot implement a strategy if it does not have the necessary human capital
- Small businesses are more in tune with this approach because the impact of human capital has a greater effect
HR Competencies Lead to Business Strategy:
Drawbacks include over-reliance on employee capabilities and not enough environmental analysis or changing HR practices
Reciprocal Interdependency:
A reciprocal interdependency exists between HR strategy and business strategy
- Both strategies influence each other
- Changes to one type of strategy will require changes to the other type
- HR should build its strategy by acknowledging the main issues facing the business
Concurrent strategy formulation of HRM becoming a Business partner:
- HR professionals to play a more strategic role, moving from outsider to insider status
- HR managers to apply their financial, forecasting, and entrepreneurial skills to assist in developing the strategy
- HR manager to be a partner and problem solver
Although most HR professionals recognize the need to be involved in strategic issues, most non-HR managers do not see the importance of HR professionals as a strategic partner. Why?
- Management is not satisfied with HR services in general
- People issues belong to HR and they’re not strategic issues; therefore execution is HR’s problem
- These attitudes are changing
Strategy Differentiation definition is…
Organizations with more than one business strategy will have more than one HR strategy
What are the two characteristics of an Effective HRM Strategy?
External fit
Internal fit
External fit:
Fit between HR and organizational strategies
2 examples:
- Low cost strategy - HR policies and practices reinforce low cost strategy by reinforcing efficient labour
- Org competes through innovation and new product development – HR policies aligned with creating flexibility and creativity
Internal fit:
Link HR programs to other functional areas of the business.
All HR practices are aligned with one another to establish a system that is mutually reinforcing.
E.g. Job design, L&D, performance management, compensation, rewards.
Focus on results: Results must be measured and tracked
