Lecture 2: Strategic HRM

Understanding Strategic Management
1. a process, an approach that addresses the competitive challenges an organisation faces
2. Managing the patter nor plan that integrates an organisations major goals, policies and action sequences into a cohesive whole
3. process of developing strategies to achieve a company's goals, in light of the current environment
4. process for analysing a companies competitive situation, developing a companies strategic goals and devising an action plan allocating resources
Model of strategic Management:
1. Mission and Goals
2. Environmental analysis
3. Strategic formulation
4. Strategy Implementation
5. Strategy evaluation
Hierarchy of Strategy
1. Corporate: Organisation's overall direction and general philosophy
2. Business: Make each business unit more competitive in market-place
3. Functional: Major functional operations to maximise resource productivity
Explaining Business:
1. Different Organisations engage in different 'generic' strategies
2. Porters typology of competitive business strategies
3. Cost: achieving the lowest unit costs in the industry
4. Differentiation: based on quality or service
5. Focus based on niche play in cost
6. Miles & Snow typology of competitive business strategies
  1. Defender
  2. Analyser
  3. Prospecter
  4. Reactor
Definitions
1. Strategic HRM is about HOW the employment relationships for all employees can be managed in a way as to contribute optimally to the organisations goal achievement
2. It is also about developing and implementing HR policies and practices that will enable the organisation to achieve its strategic objectives
3. Emphasises the need for HR plans to be formulated within the context of the overall organisational strategies and objectives and to be responsive to the changing nature of the external environment
Two Approaches to Strategic HRM
1. Best Fit
  1. Firms must adapt their HR strategies to other elements of the firms strategy and to fit its wider environment
    1. Variety we see in HRM across hierarchical, occupations and firms implies that managers tailor their HRM to their specific context
    2. Firms must adapt their HR strategies to other elements of the firm's strategy and to fit its wider environment
    3. Harvard model represents best fits
    4. Managers make strategic choices and set their own priorities in HRM based on consideration of situation factors and stakeholder interests
2. best Practice
  1. Firms will be better off if they identify ad adopt best practices in the way they organise work and manage people
    1. All firms will see performance improvements if they don't identify 'leading edge of best practice, publicising commitments to best practices, measuring progress towards them and rewarding lower-level managers for implementing them
    2. best practice are those that enhance shareholder value (also serve employee interests)
    3. Focuses on individual best practices within major categories of micro HRM
  2. 3 models to explain best practice
    1. High commitment management model
    2. High involvement work systems
    3. High performance work Systems
The Matching Model:
1. Integration and external fit of business strategy with HR strategy
  1. 1. Link HR policies with Strategic management
    1. 2. Line Managers internalise importance of HR
      1. 3. Integration of the workforce to foster commitment to strategic goals
2. This approach was implied in many HR theories
External Fit in strategic HRM
1. HR practices should be designed to reinforce the behavioural implications of the various 'generic' competitive strategies as defined by Porter
2. Porters Typology of competitive business strategies
  1. cost: achieving lowest unit costs in the industry
  2. differentiation: based on quality or service
  3. focus based on niche pay in cost or differentiation
3. Performance will improve when the HR practices in a business mutually reinforce competitive strategy
Linking HR to competitive strategy
1. Desried competitive strategy
  1. required employee skills and behaviours
    1. Supportive HR Practices
      1. HR outcomes
Micro HR Practices
1. Employment security
2. selective hiring
3. Self Managed teams or team working
4. High pay contingent on company performance
5. Extensive training
6. reduction of status differences
7. Sharing Information
High Performance Practices
1. Comprehensive selection/ recruitment process
2. Incentive Compensation
3. Extensive employee involvement/ Training
4. improve knowledge skills and abilities of employees
5. increase motivation
6. reduce Shirking
7. Enhance retention of quality employees
High Commitment Practices
1. Sophisticated selection and training
2. Emphasis on values, human relation skills and knowledge skills
3. Behaviour based appraisal
4. Single Status Policy
5. Contingent pay systems
6. Security
7. Above market pay benefits
8. Grievance systems
Criticisms of Best Practice Model
1. Not neccessarily good for all stakeholders
2. Not necessarily equal
3. Best Fit Model is more reliable
Business Strategy
1. Accomodative
2. Interactive
3. Fully intergrated
Criteria for denoting SHRM
1. Proactive system wide interventions
2. an emphasis on fit linking HRM with strategic planning and culture change
3. The view that people are social capital
4. open communication to build commitment and trust
Four Usages:
1. Usage of planning
2. A coherent approach to the design management of personnel systens
3. Matching HRM activities and policies to some explicit business strategy
4. people = strategic resource

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Lecture 2: Strategic HRM

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	Created by Jessica Foley over 9 years ago