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Strategic human resource managementMandy Waber & Ana Grethe

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Agenda Problem statement Modes of theorizing in SHRM Strategic human capital management in SMEs HR and the resource based view of the firm Case Conclusion

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Problem statement

How can HRM be a contribution to the strategic management of operations?

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Modes of theorizing in strategic human resource managementTests of universalistic, contingency, and configurational performance predictions Which are the 3 modes of theorizing in SHRM? Universalistic perspective Contingency perspective Configurational perspective

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Universalistic perspective Best practices approach, some HR practices are always better than others It requires 2 steps: -Important strategic HR practices must be identified -Arguments that relate individual practices to organizational performance

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What are the 7 strategic HR practices? Internal career opportunities Formal training systems Appraisal measures Profit sharing Employment security Voice mechanisms Job definition

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Contingency perspective Organisations HR policies must be consistent with other aspects of the organization (vertical fit). The HR practices must interact with the firms strategy to result in organizational performance. The relationship between the use of a specific employment practice and organizational performance is contingent on organizations strategy.

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What are the 3 ideal strategic profiles? Prospectors: highly innovative, experimentation and not efficient. Analyzers: Moderately innovative, not initiative of change, but followers. Defenders: Rarely innovative, narrow and stable product domain, efficient production and little R&D.

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Configurational perspective Based on holistic principle of inquiry. Assumption of equifinality. Equifinality: multiple unique configurations of relevant factors that can result in maximum performance. How is a pattern of multiple independent variables related to a dependent variable? The combination of HR practices has a bigger effect than the sum of individual practices

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Configurational perspective In order to be effective, companies need both horizontal and vertical fit. Vertical fit: Congruence of the HR system with other organizational characterstics (strategy) Horizontal fit: Internal consistency of the organizations HR policies and practices.

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Characteristics of employment systemsMarket-type system Internal system

Can a company also use a hybrid structure, as combination of the systems just mentioned?www.company.com

Characteristics of employment systemsMarket-type system -Hiring outside organization -No formal training -Little socialization -Results-oriented measures -Use of profit sharing -Little employment security -Little voice for employees -No clear job definitions Internal system -Hiring inside organization -Formal training provided - Great amount of socialization -Behavior-oriented results - Little use of profit sharing - much employment security -Employees participate in decision making -Jobs very tightly defined

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Market-type system vs. internal system, which one is better?

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Advantages market-type system -You can look for talented people outside your organization. -People from outside organization can bring new ideas -Results-oriented measures leads to good results -The use of profit sharing reduces the agency problem

Advantages internal system -Employees feel secure -Employees feel that they have a say in the company -Employees know that they can get promotions, which leads to more motivation -Behavior-oriented results leaves room for failure, and therefore also innovation

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Human resources and the resource based view of the firmThe resource based view is another way for HRM to justify its position in an organization.

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Value proposition of HRM

Value?

Heterogeneous?

Immobile?

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Valueable? HRM is definitely valuable. Human capital advantage refers to talented and motivated employees, which are valuable, and human resource practices support that. People are becoming more and more important in organizations, especially because of the knowledge and expertise people have.

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Heterogeneous?

Off course every company has human resources, so in that way HRM is not heterogenously divided. However, the different HR practices companies use are heterogeneously divided.

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Immobile? Human resource management on its own is not immobile. However a good system of human resource practices, which is well aligned with the human capital pool and the whole organization, is often difficult to copy, which may be based on 3 things: - The role of history - Causal ambiguity - Social complexity

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Can good human resource practices create a sustainable competitive advantage?

Valueable? Yes!

Heterogeneous? Yes!

Immobile? Yes!

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Areas in HRM that can create a sustainable competitive advantage

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Empirical SHRM research HR practices can have a profound impact on accounting and market-based measures of performance (Huselid, 1995). HR practices are related to labor productivity (Koch and McGrath (1996). The value and uniqueness of skills are associated with different types of HR systems within the same organization (Lepak and Snell 1999) Most emperical research applying the RBV has failed to test its fundamental hypotheses, it only assesses 2 variables: HR practices and performance

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The convergence of RBV and SHRMPotential bridges between HR and strategy: Core competencies Dynamic capabilities Knowledge-based views of the firm Potential bridges between HR and strategy:

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Core competencies as a bridge between HR and strategy Core competences and skills are inseperable of the employees who comprise the competences. The behavioral aspects of employees and the supportive nature of people management systems to development/maintenance of the competency.

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Dynamic capabilities as a bridge between HR and strategy Dynamic capabilities are resources that can match and create market change. Dynamic capabilities require that organizations establish processes that enable them to chnage their routines, services, products and even markets. Human resource practice can create flexibility and adaptability to the market.

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Knowledge-based theories as a bridge between HR and strategy The generation, transferring, integrating and protecting of knowledge is becoming more important in every firm. Many firms start recognizing that the key to successful knowledge management requires attending to the social and cultural systems of the organization.

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Movie: Is HRM strategic? http://www.youtube.com/watch?v=AzNL0gEZcL U

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