Chapter 1 (Strategic HRM) (1)

8/18/2019 Chapter 1 (Strategic HRM) (1)

1/47

Human Resource Management by Shah M Saad Husain

Human Resource Management

Shah M Saad HusainB Engg, MS Engg, PE, MBA, FICS, FIMM


2/47

Shah M Saad HusainBEngg, MS Engg, MBA, FICS, FIMM, PE

35 years management experience withmultinational, private sector and governmentcompanies in engineering, petroleum, energyand mineral sectors.

in General Management, Marketing, HR, Project

Management, Engineering Operations,Business Development, External Affairs,Corporate Planning, CSR and Customer Relations.

with PIDC, Habib Group, British Petroleum, BHPBilliton, Toyota Indus Motor, Pak-Arab Refinery.

26 years teaching experience at IBA, CBM,PIQC, PIM, NIPA, LUMS. Subjects: IndustrialMarketing, Customer Ascendancy, B to BMarketing, Marketing Management, StrategicManagement, HRM, Performance &Compensation Management, ProjectManagement, Japanese Management, CSR.


3/47



The Strategic Role of HRM

Job Analysis and Job Design

Staffing

Employee Development

Compensation

Employee Relations

Course Contents


4/47


Course Objectives

Knowledge of HRM Theory Concepts Processes and

Practices

Identifying Sources of Information and using them

Class Interaction learning from the Marketplace

Practical Application of course developing HRM

Strategies for Organizations

Performance Assessment: Students Teacher



5/47


Course Requirements

Readings from selected texts, journals

Theory, Concepts discussed in Class

Student Projects and Reports

Guest Speakers, Real Life Cases

Examinations

Presentations and Class Evaluations

Class Participation, Quizzes, Home Assignments



6/47


Bring Course File to each class

Read reading materials before class

Write notes as slides are explained and discussed

Keep track of Course Calendar, Class Timings,

Grades, etc., on E-group and with CR

Maintain contact with CR and SSH

Meet Attendance and Punctuality requirements

Discipline is key. Adhere to Class Rules.

Instructions for Students

Strategic Human Resource Management


7/47


Human Resource Management - Grading

Midterms ( 2 x 20 ) = 40

Final = 30

Project Report, Presentation = 20

Home Assignments, Quizzes = 10

All Quizzes are open book

For an overall A grade in the course: A in Final

A in Project Report

Active Class Participation


8/47


I. Luis R. Gomez – Mejia, David B. Balkin,

Robert L. Cardy (2008) : Prentice Hall

“Managing Human Resources”

II. Lloyd L. Byars, Leslie W. Rue (1997) : Irwin

McGraw-Hill

“Human Resource Management”

III. Wayne F. Cascio (2005), Tata McGraw-Hill

“Managing Human Resources”

Human Resource Management - Readings


9/47

Performance & Compensation Management by Shah M Saad Husain 9

Introduction to HRM

Human Resources Strategy in a firm is a

firm’s deliberate and planned use of human

resources to help it gain a competitive

advantage.

The HRM strategy of a firm is its grand plan

to ensure that it effectively uses its people toaccomplish its mission.


10/47


JOB

(Scope & Depth)

EMPLOYER

Growth in• Goods & Services

• Customer Satisfaction

• Revenue Generation

• Profits

• Return on Equity (ROE)

• Expansion of Business

• Corporate Reputation

Employer Objectives

Growth in• Family & Self

• Profession

• Career

• Security

• Social Status

Employee Objectives

ServicesWork

Employee – Employer

Relationship

• Employer/Organizational Objectives

• Organizational Structure

• Job Identification, Analysis & Design

• Job Specification (Before Joining)•

• Job Description (After Joining)

• Tasks, Activities, Responsibilities, Accountabilities

• Power (Financial/Administrative)•

• Reporting Structure

• Manpower Planning, Recruitment, Induction

• Training & Development

EMPLOYEE

Performance

ManagementCompensation &

Rewards

• Salary

• Benefits

• Facilities and Perks

• Allowances

• Professional, Career, Societal

Recognition

• Internal + External (Mkt) Equity

• Performance Evaluation

• Increments

• Bonus

• Incentives

• Career Development

• Ultimate Potential

HUMAN RESOURCE MANAGEMENT


11/47



12/47



13/47



14/47



15/47


HRM and the 21st Century

Due to Internet technologies, organizations are undergoing a completetransformation. The 21st century organization must adapt itself to managementvia the web.

Intellectual capital will be critical to success. Advantage of bringing newtechnologies to the market will be shorter. Technologies will let competitorsmatch them almost immediately.

In such times, it will be critical to attract and retain the best thinkers.

Retaining and attracting the top talent will require more than just paychecks. Itwill require a culture of empowering people, and a reward system that rewardsthe best as if they were the owners of the company.

Intellectual capital will be called on from around the globe. A global corporationmight be based in the US but does its software programming in Sri Lanka,engineering in Germany, its manufacturing in China, and is linked via theInternet to allow employees to interact and work in real time.


16/47


HRM and the 21st Century Corporation

20th Century Corporation 21st Century Corporation

Predicated itself on stability Predicated itself on constant change

Organized around rigid hierarchies Organized around networks and teams

Built on self-sufficiency Built on shifting partnerships and

alliances

Organizational chart defined as a

shrinking pyramid leading to the CEO

Organizational chart more likely to be a

flat web, intricately woven that links

partners, employees, external

contractors, suppliers, and customers

in various collaborations

Constructed on bricks and mortar Constructed on knowledge andtechnological advantages.


17/47



18/47



19/47


HRM practices make an important practical

difference in three key organizational

outcomes.

1. Productivity

2. Quality of Work Life

3. Profit : Total Revenue minus the Total Cost

4. Role of HR Professionals Today

Outcomes of HRM Practices


20/47


A measure of the output of goods and

services relative to the input of labor, capital,

and equipment.Higher productivity

Leads to higher wages without boosting inflation.

Is not working harder, it is working smarter.

Is about doing more with fewer people, less money, lesstime and space, and fewer resources.

Outcomes of HRM Practices:

1. Productivity


21/47


MORE PRODUCTIVE ORGANIZATIONS GET MORE GOODS AND

SERVICES FROM A GIVEN AMOUNT OF LABOR, CAPITAL, EQUIPMENT.


22/47


Rebuild employee loyalty.

Establish a clear link between rewards andproduction.

Say no to ‘Quick Fix’ approach.

Emphasize on Continuous Improvement.


1. Productivity Improvement


23/47


Two ways of looking at Quality of Work Life

(QWL)

• Organizational Conditions and Practices such aspromotion from within, democratic supervision, participative

management, employee involvement, safe working

conditions, mutual trust, team work.

• Employees’ Perceptions that they are respected, relativelywell satisfied, and able to grow and develop as human beings

and professionals.


2. Quality of Work Life


24/47



25/47


Management Systems that produce prof i ts through p eople share thefollowing dimensions:

1. Employment Security.

2. Selective Hiring.

3. Self-managed teams and decentralization.

4. High Compensation contingent on organizational performance.

5. Extensive Training, Development and Professional grooming.

6. Reduced differences in status. Respect for competence and

performance.

7. Sharing of information, effective communication systems.

8. Employee Care and Satisfaction.

9. Trust.


3. Profit


26/47


27/47


HRM and Corporate Strategic Goals

Human Resource Management is essential toadvance a firm’s strategic goals.

HR

PRACTICES

HR

STRATEGY

HR

TACTICS

HR

PLANS HR

POLICIES,SYSTEMS,

SOPs

CORPORATE

STRATEGY

CORPORATE

STRATEGIC

GOALS

Linking Corporate Strategic Goals

with

HRM


28/47


The Benefits of HR Planning

1. Encouragement of proactive rather than reactive behavior

2. Explicit communication of Company Goals

3. Stimulation of critical thinking and ongoing examination ofassumptions

4. Identification of gaps between Current Situation and FutureVision

5. Encouragement of Line Manager’s Participation

6. Identification of HR constraints and opportunities

7. Teamwork and creation of common bonds


29/47


HR’s Strategic Role

Successful firms align their HR strategiesand tactics with:

1. Environmental Opportunities and Threats.

2. Business Strategies.

3. Organizational Unique Characteristics.

4. Organization’s Competence.


30/47


Selecting HR Strategies to Increase Firm’s Performances

HR Strategy’s effect on a firm’s performance

depends on how well it ‘fits’ with other factors

Fit refers to the consistency and compatibility

between HR strategies and other important

aspects of the organization


31/47


Fit with Organization Strategies

Corporate Strategy is referred to as the mix

of businesses a corporation decides to hold

and the flow of resources among those

businesses. e.g., PARCO

Business Unit Strategies are those that are

formulated and implemented by a firm that isrelatively autonomous, even if it is part of a

larger corporation. eg. PAPCO


32/47


Effective HR Strategy Formulation and Implementation


33/47



34/47


Selected HR Strategies That Fit Miles and Snow’s Two Major Types of

Business Strategies


35/47


36/47


Selected HR Strategies for Firms Low and High on Different

Environmental Characteristics


37/47


Fit with Organizational Characteristics

1. The production process for converting inputs into

outputs

Routine production process benefits from HR strategies thatemphasize control

example: Specific job description and job specific trainings

Firms with non-routine production processes such asadvertising firms, custom printers, and biotechnologycompanies, benefit from flexible HR strategies that supportorganizational adaptability, quick response to change andcreative decision making

example: Broad job classes, loose work planning, and generic training


38/47



2. The Firm’s Market Posture

Firms that experience high sales growth and engage in product

innovation for a wide market segment benefit from HR

Strategies that support growth and entrepreneurial activities

example: External recruitment or buying skills, decentralized pay

decisions, customized appraisal

Firms with low rates of sales growth and limited product

innovation for a narrow market segment benefit from HR

strategies that emphasize efficiency, control, and firm specific

knowledge

example: Internal recruitment or ‘making skills’. On-the-job training,

and high dependence on superiors


39/47



3. The firm’s overall managerial philosophy

Companies whose top executives are risk-averse and operate

with an autocratic leadership style, and are inwardly focused

use HR strategies that match this outlook

example: Seniority based pay, formal hiring and socializing of new employees,

selection decisions made by the HR department and use of top-downcommunication channels.

Management characterized by high risk taking, participation,

egalitarianism, and external, proactive environmental orientation

use HR strategies that fits this outlookexample: include variable pay, giving supervisors a major role in hiring

decisions, up-and-down communication channels, and multiple inputs for

performance appraisals


40/47



4. The firm’s organizational structure

Highly formal organizations that are divided into functional

areas like marketing, finance, production, etc, and

concentrate decision making on top: HR strategies for

such organizations include a control emphasis,centralized pay decisions, explicit job descriptions, and

job-based pay.

Firms whose structures are less regimented benefit from

HR strategies that include informal hiring and socializingof new employees, decentralized pay decisions, broad job

classes and individual-based pay.


41/47



5. The firm’s organizational culture

Companies that foster an entrepreneurial climate have loose workplanning, informal hiring and socializing of new employees andvariable pay.

Firms that discourage entrepreneurship generally prefer a control

emphasis, detailed work planning, formal hiring and socializing of new employees, and fixed pay.

Firms with emphasis on moral commitment- the extent to which afirm tries to foster a long-term emotional attachment between thefirm and the employees have emphasis on preventive vs. remedial

disciplinary action to handle employee mistakes, and explicit ethicalcodes to monitor and guide behavior.

Firms that are low on moral commitment rely on authoritarianrelationship between employee and company.


42/47


Fit with Organizational Capabilities

Distinctive competencies of a firm are its

capabilities such as technology,management systems, reputation, etc, thatgive it a Competitive Edge

HR strategies should enhance a firm’sperformance by:

1. helping the company exploit its specific advantages or strengths

while avoiding weaknesses

2. assisting the firm in better utilizing its unique blend of humanresource skills and assets


43/47


Choosing consistent and appropriate HR tactics to implement

HR strategies

The best-laid HR strategies may fail when specific HR programs arepoorly chosen or implemented

In addition to fitting with each of the four organizationalcharacteristics; organizational strategy, environment, organizationalcapabilities and characteristics, a firm’s HR strategies should be

mutually consistent

HR strategies are likely to be successful if they reinforce oneanother rather than work at cross-purposes.

example: Working in teams, but traditional individual basedperformance appraisals


44/47


Choosing Consistent and Appropriate HR Tactics to Implement

HR Strategies


45/47


Competencies Required of HR Department to Become a Full Strategic Partner


46/47

PARCO`s Growth and HR Strategy

• Projects


47/47

• Projects• Engineering

PARCO s Growth and HR Strategy

Personnel

Payroll

Benefits

Leave

Recruitment

Industrial Relations

1981 2008 2012 2014

Single Product Multi Product Multi Business

• Projects

• Engineering

• Operations

• Managerial

• Marketing

• Business Diversification

• Projects• Engineering

• Operations

• Managerial

• Marketing

Talent

Management

Sourcing & Recruitment

Performance

Management

Learning & Development

Succession Planning

Leadership Development

Compensation

Work Life Balance

HR Management• Linking HR & Corporate Goals

• Performance Management

• Training and Development

• Job Evaluation

• Rightsizing

• Salary Restructuring

• Employee Surveys

• HR Processes

• SAP & HR Data Management

• Talent Inventory

Chapter 1 (Strategic HRM) (1)

Documents