Chapter 2

Web support material to accompany Human Resource Management: Theory and practice, Third edition © John Bratton and Jeffrey Gold 2003, published by Palgrave Macmillan

Words of wisdom

‘If a global company is to function successfully, strategies at different levels need to inter-relate.’

‘An organization’s [HRM] policies and practices must fit with its strategy in its competitive environment and with

the immediate business conditions that it faces.’

‘The [HR-business strategy] alignment cannot necessarily be characterized in the logical and sequential way suggested by some writers; rather, the design of an

HR system is a complex and iterative process.’

Strategic Human Resource Management




A strategic approach to Human Resource Management:

A managerial process requiring human resource policies and practices to be

linked with the strategic objectives of the organization.



What determines how HR strategy is formulated?

Does HR strategy really matter?

How do corporate decisions impact on HRM?

How does HRM impact on the ‘bottom line’?

Key questions


Strategy:

A specific pattern of decisions and actions undertaken by the upper echelon of the

organization in order to accomplish performance goals.

Strategic Management


Strategic Management:

A continuous activity that requires a constant adjustment of three major

interdependent poles:the values of senior management,

the environment,the resources available.





Model of Strategic Management:

Mission & goalsEnvironmental analysisStrategic formulation

Strategy implementationStrategy evaluation




Environmental analysis:

• Internal organizational strengths and weaknesses

• External environment for opportunities and threats



Strategic formulation:

Involves senior managers evaluating the interaction between strategic factors and

making strategic choices that guide managers to meet the organization’s goals.



Strategy implementation:

Focuses on the techniques used by managers to implement their strategies

(e.g. leadership style, organizational structure, control systems, management of

human resources).



Strategy evaluation:

Determines to what extent the actual change and performance match the desired change and performance.




Corporate Strategy:

Describes a corporation’s overall direction in terms of its general philosophy towards growth and the management of its various

business units.

WHAT BUSINESS ARE WE IN?

Hierarchy of Strategy


• Establishing investment priorities and steering resources into the most attractive business units

• Initiating actions to improve combined performance of business units

• Improving synergy between related business units to increase performance

• Making decisions re diversification

Corporate Strategy


Business-Level Strategy:

Deals with decisions and actions pertaining to each business unit in order to

make each unit more competitive in its market-place.

HOW DO WE COMPETE?



Business-Level Strategy


Low-cost leadership:

To increase market-share by having the lowest unit-cost and price compared with competitors.

Differentiation strategy:

Distinguishing products from competitors by providing distinctive levels of service or quality - the customer is

prepared to pay a premium price.

Business-Level Strategy


Functional-Level Strategy:

Pertains to the major functional operations within the business unit (including

research and development, marketing, manufacturing, finance and HR) to maximise resource productivity.

HOW DO WE SUPPORT THE BUSINESS-LEVEL COMPETITIVE STRATEGY?



Definitions:

OUTCOME: organizational systems designed to achieve sustainable competitive advantage (Snell).

PROCESS: of linking HR practices to business strategy (Ulrich) with HR strategy as the outcome.




Integration of business strategy and HR strategy:

• Linking of HR policies and practices with the strategic management process of the organization

• Internationalization of the importance of HR on the part of line managers

• Integration of the workforce into the organization to foster commitment




HR Strategies:

The patterns of decisions regarding HR policies and practices used by management to design, work and select, train and develop, appraise,

motivate and control workers.

HR Strategy models


Control-based model:

Management structures and HR strategy are instruments and techniques to control all

aspects of work - to secure high productivity and profitability.

The HR strategy will be consistent with the organization’s competitive strategy.

Creates structural tensions between management and employees.

HR Strategy models


Resource-based model:

The sum of people’s knowledge and expertise, and social relationships, has the potential to

create competitive advantage.

Exploits the distinctive competencies of a work organization (its resources and capabilities).

Leadership capabilities are critical to harnassing the firm’s human assets.

HR Strategy models


Resource-based model


Integrative model:

Integrates management control model with reward-effort exchange.

Characterizes two main dimensions of HR strategy: acquisition & development, locus of

control.

Four dominant types of HR strategy: commitment, collaborative, paternalistic,

traditional.

HR Strategy models


Integrative model


Commitment HR strategy focuses on the internal development of employee’s competencies and outcome

control.

Traditional HR strategy focuses on the external recruitment of competencies or process-based controls.

Collaborative HR strategy subcontracts work to external independent experts giving autonomy and evaluating

performance on end results.

Paternalistic HR strategy offers learning opportunities and internal promotion as trade for compliance with

process-based control mechanisms.

Integrative model


Limitations:

• Focus on strategic decision-making

• Absence of internal strategies

• Conceptualization of managerial control

Evaluating SHRM &HR Strategy Models


Important themes:

• HR practices and performance

• Re-engineering organizations and work

• Leadership

• Workplace learning

• Trade unions

Dimensions of SHRM


International HRM:

HRM issues, functions and policies and practices that result from the strategic activities

of MNCs and that impact the international concerns and goals of those enterprises

(Scullion).

Emphasizes the subordination of national culture and national employment practices to corporate

culture and HRM practices (Boxall).

International & Comparative HRM


Comparative HRM:

Systematic method of investigation relating to two or more countries that has analytical rather

than descriptive implications.

Involves activities that seek to explain the patterns of HRM institutions and HR practices in

selected countries.

International & Comparative HRM




CASE STUDY: Air National


CASE STUDY: Air National

Chapter 2

Documents

management of human

edition john bratton

jeffrey gold

human resource policies

values of senior management

strategic factors

strategic choices

strategic objectives