Framework of Strategic Human Resource Management

HR Role Framework (Dave Ulrich)

AIMS of HRM• The overall purpose of human resource

management is to ensure that the organization is able to achieve success through people

• As Ulrich and Lake (1990) remark: “HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities.”

Specific concern of HRM: achieve objectives in the following areas:

• Organizational effectiveness• Human capital• Knowledge management• Reward management• Employee relations• Meet diverse needs• Rhetoric and reality

Organizational Effectiveness• HRM strategies aim to support programs for

improving organizational effectiveness by developing policies in such areas as knowledge management, talent management, and generally creating ‘a great place to work’

• More specifically, HRM strategies can be concerned with the development of continuous improvement and customer relations policies.

Human Capital• Human capital represents the human factor in

the organization; the combined intelligence, skills and expertise that gives the organization its distinctive character.

• Regarded as the prime asset of an organization, and businesses need to invest in that asset to ensure their survival and growth.

• HRM aims to ensure that organizations obtains and retains the skilled, committed and well-motivated workforce it needs.

Knowledge Management• Any process or practice of creating, acquiring,

capturing and using knowledge, wherever it resides, to enhance learning and performance in organizations’.

• HRM aims to support the development of firm-specific knowledge and skills that are the result of organizational learning.

Reward ManagementHRM aims to enhance motivation, job enlargement and commitment by introducing policies and processes that ensure that people are valued and rewarded for what they do and achieve and for the level of skills and competence they reach.

Employee RelationsThe aim is to create a climate in which productive and harmonious relationships can be maintained through partnerships between management and employees and their trade unions.

Meet Diverse NeedsHRM aims to develop and implement policies that balance and adapt to the needs of its stakeholders and provide for the management of a diverse workforce, taking into account individual and differences in employment, personal needs, work style and aspirations, and the provision of equal opportunities for all.

Rhetoric and Reality• Managements may start with good intention to

do some or all of these things, but the realization of them – “theory in use’ – is often very difficult.

• Gratton (1999) found that there was generally a wide gap between the sort of rhetoric expressed above and reality.

• Due to other business priorities, short-termism, lack of support from the managers, an inadequate infrastructure of supporting processes, lack of resources, resistance to change and lack of trust.

Internal Assessment• The organization’s performance is assessed vis-à-

vis its given or its adopted mandate.• Gauge the capabilities of the people in the

organization to carry out chosen strategies and objectives.

• See if resources are being put behind the strategies to realize organizational objectives

• Evaluate the systems, processes and procedures instituted by the organization to implement its strategies.

• Assess the different operational functions of the organization. Its different programs, projects, and activities. Are they carried out efficiently and effectively?

• Examine the leadership and teams of people as to their styles, attitudes, value systems, relationships, ethics, team efforts, service orientation and performance.

• Study organization’s facilities and physical set-up to see whether they are responsive to organizational needs and conducive to good performance.

• Scan the organization’s connection, communication, linkages, networks and allies/ collaborator as well as detractors/competitors.

• Assess the over-all consistency or fit among strategies adopted, the structures, systems and resources applied and the people of the organization in relation to the adopted vision, mission and objectives.

• Evaluate the leaders’ ability to elicit support and performance from the staff, the decision-making skills, and their over-all effect in the organization.

Strategy• Large-scale, future-oriented plans for interacting

with competitive environment to achieve organizational objectives.

• Is about deciding where you want to go and how you mean to get there

• Is a declaration of intent: ‘This is what we want to do and this is how we intend to do it ‘.

• A good strategy is one that works, one that guides purposeful action to deliver the required result.

Concept of strategy is based on 3 subsidiary concepts:• Competitive advantage• Distinctive capabilities• Strategic fit

Competitive Advantage• Was formulated by Michael Porter (1985) • Competitive advantage arises out of a firm

creating value for its costumers• To achieve competitive advantage firms select

markets in which they can excel and continually improve their position.

• Porter emphasized the importance of: differentiation, which consists of offering a product or service that is perceived as being unique and focus- seeing a particular buyer group or product market more effectively or efficiently than competitors.

Michael Porter’s Generic Competitive StrategyInnovation – being the unique producerQuality – delivering high-quality goods and services to customersCost leadership – the planned result of policies aimed at ‘managing away expense’

Distinctive Capabilities or Core Competencies• Distinctive capability or competence can be

described as an important feature that confers superiority on the organization.

• Cannot be replicated by competitors, or can only be imitated with great difficulty.

Strategic Fit• The concept of strategic fit states that to

maximize competitive advantage a firm must match its capabilities and resources to the opportunities available in the external environment.

• Matching organizational competencies with the opportunities and risks created by environmental change in ways that will be both effective and efficient.

Strategic ManagementThe set of decisions and actions that result in the formulation and implementation of plans designed to achieve organization’s objectives.

3 Levels of Strategic Planning1. Strategic Planning

- Takes a longer term perspective established by an organization to guide short term decision.

- It is the determination of the most effective means by which an organization can achieve its ends given the resources it can muster and conditions it must operate in.

- It is concerned with the choice of preferred clients, beneficiaries or markets.

- It is concerned with the major securement and deployment of resources.

- It is concerned with the identification of specific key result areas which proceed from the vision and objectives of the company.

2. Tactical or Development Planning- It defines the outcomes required for the

organization to succeed during the relatively short period of time, such as an organization’s one-year budgeting cycle.

- It includes the over-all activities, measurable outcomes, responsible individuals, and targeted completion dates required to succeed during the relatively short period of time.

- The tactical plan must be monitored regularly during the year (monthly or quarterly) to measure progress toward the targeted outcomes, to reassess priorities, to redeploy resources, and to make other necessary adjustments.

- Tactical development planning elaborates the strategic decisions made by top management into programs and projects

3. Project Planning- The detailed activities, responsible

individuals, and timings required to complete a specific project

- Project plans are the most commonly developed plans and are the type of planning most of us have most experience doing. Project plans have tangible and measurable outcomes.

- The duration is generally fixed, with a specific starting date and a targeted completion date.

Action Planning

Strategic Management Models

Strategic Options and Choices

Step 1 Developing and generating strategic options and then making strategic choices.Choices must anticipate the critical needs of the business, incorporating the experienced and collective judgement of top management

Step 2 From a pile of information, the strategists pick out what are critical for evaluation and decision-making. The information and data are screened according to their relevance, magnitude, importance and urgency.Relevance refers to how the information relates to the mission, objectives, purposes and rationale of an issue taken from the point of view of an organization.Magnitude refers to the quantitative extent and scope of influence certain factors have over an issue or problem. Importance refers to the qualitative or significant degree of influence which certain factors exercise over a given situation.Urgency screens data according to time considerations or the response that must be made to a given issue over time.

Step 3After going through either the vision setting or environmental analysis, the organization proceeds to develop strategic options. A juxtaposition of strengths (S) and weaknesses (W) of the organization with the opportunities (O) and threats (T) in the environment can be made to generate options. This is called the SWOT Analysis where four combinations can be made:

Strengths-Opportunities (S-O)How can strengths be employed to take advantage of development and opportunities?Strengths-Threats (S-T)How can strengths be used to counteract threats that tend to hinder achievement of objectives?Weaknesses-Opportunities (W-O) How can we overcome weaknesses to take advantage of development and opportunities?Weaknesses-Threats (W-T). How do we overcome weaknesses to counteract threats that tend to hinder achievement of opportunities?

Step 4The strategic options are then established according to criteria established by the organization or strategists.Factors of Effective Strategies Good strategies must have:

1. Foresight- It must determine the most likely scenario

in order to properly position the organization

- Strategies are fundamentally sound and correct. It must be anchored on realities of the environment. It must recognize major trends and directions in the environment.

- It must take into account what the organization can do and cannot do, what it has and does not have.

2. Focus efforts of a few but critical activities- Effective strategies are rifle shots at a

chosen target, not shotgun blasts that scatter the resources of the organization

3. Have Force behind the Chosen Few Things- They must “put their money where their

mouth is.”4. Have a Fit

- Among the Objectives, Tasks, People and Structure of the Organization.

- Avoid mismatches5. Have a Finite time frame

Strategies must be:1. Feasible

- Strategies must be do-able by the organization.

- Take a Full and Holistic Approach. Compartmentalized approaches lead to partial solutions that often lead to a greater problems

- Organizations must look at the implications of relationships among variables employed in the strategies

- They have to make sure that variables reinforce rather than cancel each other

2. Getting Feedback through Good Monitoring and Evaluating Systems- Every action produces a reaction and this

reaction must be monitored closely and assessed as to whether it is moving towards the desired objectives.

3. Be Felt with Sufficient Impact- Strategies must positively affect the lives of

the people they are serving4. Be Final result oriented

- At the end of the day, the organization must be responsible for its intended results and be accountable to the beneficiaries for such results

5. Be Flexible Depending on Environmental Changes- There may be a need to alter, modify or

overhaul strategies in the face of environmental changes

Tree, Fishbone and Force Field Analysis: Tools to a Strategic Management Plan

Problem Tree / Solution Tree Analysis• Provides an overview of all known causes and

effects to an identified problem• Important in in planning a community

engagement or behavior change project• Establishes the context and help reveal

complexities • A problem tree involves writing causes in

negative form (ex. Lack of knowledge, not enough money etc.)

• Reversing the problem tree, by replacing negative statements with positive ones, create a solution tree

• A solution tree identifies means-end relationships as opposed to cause-effects

Cause and Effects Analysis / Fishbone Analysis• Also known as Cause & Effect Diagrams,

Fishbone Diagrams, Ishikawa Diagrams, Herringbone and Fishikawa Diagrams

• When you have a serious problem, it is important to explore all of the things that could cause it, before you start to think about a solution Cause and Effect Analysis was devised by Prof. Kaoru Ishikawa, a pioneer of quality management in the 1960’s.

• Used as a quality control tool and may also be used to: - Discover the root cause of a problem - Uncover bottlenecks in your processes - Identify where and why the processes isn’t

working

4 steps in using the tool:1. Identify the problem2. Work out the major factors involved (ex.

Site, task, people, equipment & control)3. Identify possible causes4. Analyze your diagram

Force Field Analysis by Kurt Lewin• A powerful strategic tool used to understand

what’s needed for change in both corporate and personal environments

• The concept : Two equal forces , a driving force and a resisting or restraining force, working to keep the equilibrium or status quo

“May the force be with you, or against you”“An issue is held in balance by the interaction of two opposing set of forces – those seeking to promote change (driving forces) and those attempting to maintain the status quo (restraining forces)” – Kurt Lewin

Using the Force Field Analysis1. Define the changes you want to see ( write goal

or vision of a future desired state )2. Brainstorm or Mind Map the Driving Forces

(favorable to change )3. Brainstorm or Mind Mao the Restraining Forces

(unfavorable to change )4. Evaluate the Driving & Restraining Forces (rating

the forces from 1 to 5 / weak to strong, and total on each side)

5. Review the forces – decide which forces have some flexibility for change or which can be influenced

6. Strategize – create a strategy to strengthen the driving forces or weaken the restraining forces, or both.

7. Prioritize action steps – what action steps can you take that will achieve the greatest impact?

Models of Institutional Strategies

Institutional strategies• Vertical integration• Horizontal integration• Diversification• Conglomerate diversification• Stability strategy• Retrenchment • Selling out• Bankruptcy or liquidation

1. Concentration Through Vertical IntegrationBackward integration – manufacture own suppliesForward integration – take-over a function previously performed by distributors

2. Concentration Through Horizontal IntegrationExpand the firm’s activities in other locations or increase range of products or services

3. Concentric Diversification- “niching” – finding a niche- Focus on company distinctive competence

4. Conglomerate Diversification- Growth in diversification out of an industry- Introduce unrelated industry, but still

support own business- Ex. PAL bought Summit

5. Stability Strategy- Pursue or proceed with caution- NO CHANGE strategy

6. Retrenchment7. Selling Out8. Bankruptcy or Liquidation