Unit Three SeminarUnit Three SeminarHR485: Strategic HR HR485: Strategic HR

ManagementManagement

Unit Three SeminarUnit Three SeminarHR485: Strategic HR HR485: Strategic HR

ManagementManagement

Louis Lopez, Jr., Ph.D.Instructor

School of Business and Management

Unit 3 To-do ListUnit 3 To-do List

• Read the Unit 3 Announcement• Complete all Required Reading AssignmentsIncluding textbook, and web reading • Respond to the Discussion Board 40 Points • Complete the Unit 3 Project 50 Points • Visit Extra! Extra!

Objectives

• Describe the elements necessary for developing an HR-business strategy • Determine the impact of not having an HR- business strategy • Demonstrate an understanding of HR maturity level and its influence on an organization

Elements necessary for developing an HR-business strategy

Elements necessary for developing an HR-business strategy

What business strategy is all about - what distinguishes it from all other kinds of business planning - is, in a word, competitive advantage. Without competitors there would be no need for a strategy... Corporate strategy thus implies an attempt to alter a company’s strength relative to that of its competitors in the most efficient way.”

• Kenichi Ohmae, “The Mind of the Strategist” • McGraw-Hill 1982.

What is HR Strategy? – No. 1

A business strategy should give you a competitive advantage.

An HR strategy turns the way you manage your people into a competitive advantage.

An HR strategy is a business strategy.

What is HR Strategy? – No. 2

strategy n. 1. The art of war 2a. The management of an army in a campaign

2b. moving troops into favourable positions (Oxford dictionary)

So what are the key elements of an HR strategy? -

Strategic HR thinking has to be represented at a strategiclevel

HR must focus on the same measures as the business

The HR and business strategies must be completely entwined

There must be a business strategy

HR strategy is much more than a collection of personnel policies.

It is a complete philosophy and a holistic approach to organisational management.

One way to get a better understanding is to consider the negative of HR strategy – what it isn’t and what happens when there is no HR strategy. Some indicators would include –

• Poor employee relations – union confrontation

• High staff turnover

• An inability to change when necessary

• Poor customer service through poorly trained or disengaged staff

What is HR Strategy? – No. 3

Sound principles are the foundation of HR Strategy

Sound principles are the foundation of HR Strategy

principle n. a fundamental truth or law, a personal code of conduct (Oxford dictionary )

Principles should be simple to understand and easily expressed

So what are the key principles on which HR Strategy should be based? -

Honesty?Everyone is a unique individual?All HR solutions must be aligned with business objectives?All activities should add value?Evidence based approach to management?Measurement precedes management?Ethical????

Linking HR & Business Strategy

R&D Business plan:How much?

When?

Operating plan:How?

Sales/Marketing plan

Production plan

Financial/Commercial plan

Logistics plan HR plan?

Strategy:Why?What?Which

market?

Introducing a new product -

the chocolate company's

move into ice cream

Toyota: Make sure you copy the key ingredientsToyota: Make sure you copy the key ingredients

“Sustainable advantage comes from systems of activities that are complementary. Companies with sustainable competitive

advantage integrate lots of activities within the business: their marketing, service, designs, customer support. All those things

are consistent, interconnected and mutually reinforcing.

As a result, competitors don't have to match just one thing; they have to match the whole system. And until rivals achieve

the whole system, they don't get very many of the benefits.”

Michael Porter -“Competitive strategy. Techniques for analysing industries and competitors” (1980)

Toyota leads the world in HCMToyota leads the world in HCM

• “Little by little over the last 30 years, Japanese carmakers

have been conquering the US market and now account

for 28 percent of the roughly 17 million cars

sold each year in the world's biggest market,

which is now the key to their fortunes.

• “The fact is the Japanese are making record high profits out of this 28 percent of the market share and the

Big Three are making absolutely no profits from their

60 percent market share," Endo added, referring to US

auto giants General Motors (GM), Ford and DaimlerChrysler.”

• Koji Endo -Auto Analyst CSFB• Quoted by Agence France Presse from Tokyo Motor Show October 2003

While their competitors stick to the wrong paradigmWhile their competitors stick to the wrong paradigm

“.....the unit cost of production for an American car averages

about $3,500 more than for a Japanese one.”

http://quickstart.clari.net/qs_se/webnews/wed/df/Qjapan-auto-us-show.RoEy_DOJ.html

Toyota now has a market capitalisation biggerthan the total for GM, Ford and Daimler

Chrysler combined.

The ‘People’ Chapter opensThe ‘People’ Chapter opens

“In any decision, the people at the top are just the flag- wavers. It won’t do to wave your flag and have no one to follow you. Waving that flag in a way that makes people fall into line behind you is what makes a decision a good one. Kiichiro was determined to use a new production system … but it was all in his head. Unless he got everyone to close ranks and march in step behind him, he didn’t have the slightest hope for success.”

• Eiji Toyoda, “Toyota - 50 Years in motion” • Harper & Row 1987.

Toyota Employee RelationsToyota Employee Relations

“Mutual trust is the basis of labour relations. Labour relations at Toyota were initially marked by doubts and disbelief, but with time

differences were ironed out. The labour-management declaration we signed was simply a written statement of this rapprochement. The

purpose of this document was to uphold and sustain the trust that had been built up… and to prevent backsliding by either side from this

position. It also was intended as a reminder to those who came after to guard the fruits won through the sacrifices made by both sides. …it took about 10 years for that relationship of mutual trust to take hold.

The spirit of this declaration still lives on at Toyota.”

Eiji Toyoda, “Toyota - 50 Years in motion” Harper & Row 1987.

HR maturity level and its influence HR maturity level and its influence

• Learning Maturity Scale: a continuum of the stages of development and evolution for a learning organization.

• Need to attach a value to all training before it is implemented.

Consummate Professional Serieswww.paulkearnshr.co.uk

Valuing the human contribution

Personnel administration

(REACTIVE)

Stage 2Good ProfessionalPractice

Stage 3Effective HR Management

Stage 4HRM becomes integral to business operations

Stage 5Transition - from operational HR to strategic focus

Stage 1PersonnelAdministration

HCM

(STRATEGIC)

Personnel Management

Basic administrationPayroll

Nos. employedPersonnel costs

Human Capital Barrier:Executive fails to realise

true value of human capital

HRM

Stage 6Organisation becomes a whole system

Recruitment and selection systems

Rudimentary performance review

process

Knowledge sharing culture

Intellectual capital managed

Individually centred but learning

enabled

HRM expertise valued by line

Systems start to have teeth

HR business partners in place who understand

the businessLine managers accept

HRM intervention in their management role

Business measurement systems start to look at

people measures

Organisation starts to become

focused on maximum value

from people through

processes

Stage 0No ConsciousPersonnelManagement

HR Maturity Scale - how mature is your organization?LOW

VALUE

HIGH VALUE

What are your questions or concerns?

What are your questions or concerns?

Have a great week Have a great week learning!learning!

Have a great week Have a great week learning!learning!