Description
This is a presentation describes about the Strategic Human Resource Management.
STRATEGIC HUMAN RESOURCE MANAGEMENT
Aligning HR with strategy
Presented by Ishu Priya
HR’ S EMERGING ROLE –
FORMULATION
&
IMPLEMENTATION
OF STRATEGY
?
HR field has dramatically changed in the last few years Importance of HR dept. to involve in the strategic planning. E.g. talent management. Competitive advantage
?
?
T RANSITION FROM HRM ? SHRM
?
Changes in market conditions, economic conditions, labour markets, industrial structure and international competition ? importance HR as a competitive advantage.
?
HR strategy is defined as the set of ideas, policies and practices that management adopts to achieve a people management perspective.
T RANSITION FROM HRM ? SHRM
?
Schuler (1992) developed a ‘5-P model’ of SHRM that melds five HR activities (philosophies, policies, programs, practices and processes) with strategic business needs, and reflects management’s overall plan for survival, growth, adaptability and profitability.
?
Philosophy: Organization’s attitude towards its HR & how they should be treated & the role they should play in the success of the business. Found in its values/mission statement ? culture. e.g creating value through leadership & excellence@ Pepsi-cola Policies: guidelines about mgmt. of people NOT HR policy manual, these polices have an effect on the immediate future success of business.
?
‘5-P MODEL’ OF SHRM CONTD .
?
Programs: coordinated HR efforts to initiate and sustain strategic organizational change . These programs help in indentifying the nature and scope of the strategic changes initiated by the organization Practices: deal effectively with performance problems, encourage creativity in workplace, form work teams & involve employees in decision making.
?
?
Processes: involves identification, formulation and implementation of HR activities to meet strategic goals of organization.
T HE 5-P M ODEL
ORGANIZATIONAL STRATEGY INTERNAL CHARACTERISTICS STRATEGIC BUSINESS NEEDS EXTERNAL CHARACTERISTICS
STRATEGIC HRM ACTIVITIES
HR Philosophy HR Philosophy HR Policies HR Policies HR Programs HR Programs HR Practices HR Practices HR Process HR Process
Express how to treat and value people Express how to treat and value people Establishes guidelines for action on peopleEstablishes guidelines and HR Programs related business issues for action on peoplerelated business issues and HR Programs Coordinates efforts to facilitate change to Coordinates efforts to facilitate change to address major people related business issues address major people related business issues Motivates needed role behaviors Motivates needed role behaviors Defines how these activities are carried out Defines how these activities are carried out
T RADITIONAL HR V S STRATEGIC HR
Traditional HR
Specialize Formulate rules & procedures; strict implementation HR policies Transactional; short term objectives People as means to do work Changes are slow
Strategic HR
Change according to external needs of work Good communication; flexible rules & regulations interdisciplinary Transformational; change agent People as intellectual assets – competitive advantage Proactive & systemic changes
T RADITIONAL HR V ERSUS S TRATEGIC HR
R OLES
OF
SHRM
1. Strategic role : formulating business decisions, translating corporate strategy into HR strategy & training employees to focus on customer needs. 2. Information & decision-making role: HR dept informs and advices about best practices life efficiency in customer service or new product development or taking decisions on employee problems. 3. Strategic HR functional role : select, design and implement planning & appraisal systems for employees. 4. Administrative: implement policies and procedures; improve administrative system;
B ARRIERS
? ? ? ?
TO
S TRATEGIC HR
Short-term mentality / focus on current performance Lack of technical knowledge Inability of HR to think strategically Failure to understand general manager’s role as an HR manager Difficulty in quantifying many HR outcomes
?
?
?
Perception of human assets as high-risk investments
Resistance (of employees) to change
M ODELS INTEGRATING S TRATEGY & HR
?
Two models are important
?
?
Model of best practice
?
Model of strategic change Model of best practice
?
Tyson and Doherty developed a model of best practice that helps in analyzing best practices according to requirements. These outcomes are based at three levels:
? ? ?
Strategic level Operational level Business process level
M ODEL OF BEST PRACTICE
?
Recruiting and selecting employees with desired competencies Value of the approach ? effectiveness and efficiency Effectiveness defines as extent to which the HR Dept. give importance to org. objectives
?
?
?
Efficiency defined by the achievement of the objectives in a cost effective manner.
S TRATEGIC LEVEL
?
Implement major changes
?
Identify programs and policies ? integrate with production/ service delivery systems
O PERATIONAL LEVEL
?
Competencies are created to give competitive advantage. Develop sound recruitment and retention strategies Performance assessment and training
?
?
B USINESS
?
PROCESS LEVEL
Employees should be involved in framing policies Policies ? fair and unbiased Equal weightage to all stakeholders
? ?
M ODELS OF STRATEGIC CHANGE
?
A flexible model for integrating strategic change was developed at Harvard university. This model was called “The Map of HRM territory” Legitimate interest of shareholders and stakeholders in organization aligned with HR and Business strategy
?
?
M AP
Stakeholder interests • Stakeholder mgmt.
• Employee groups • Govt. Community
OF
HRM
TERRITORY
HRM policy choices
• Employee • Influence • HR • flow • Reward systems • work systems
HR outcomes
• Commitment • Competence • Congruence • Cost • Effectiveness
Long term consequence
• Individual wellbeing • Organiza. Effectiveness • Social well-being
Situational factors • Workforce
characteristics. • Business strategy • Mgmt. philosophy • Labout market • Unions • Technology • Law & societal values
P ROPOSITIONS
?
OF
G UEST
Guest, HR expert, has developed a set of propositions based on the Harvard Model:
?
Strategic integration - HRM issues with strategic plan High commitment - to org. goals High quality - goods & services
? ?
?
Flexibility - ability of org. to adjust to changing business environment
I NTEGRATIVE
?
MODEL
Hendry & Pettigrew’s integrative approach that integrates all modes of HRM like staffing, recruitment & training.
?
This model is called “Model of strategic change and HRM”
This model explores implications of employee relations on various approaches to strategic management.
?
M ODEL
OF STRATEGIC CHANGE AND
Outer context • socioeconomic
• technical • political
HRM
Inner context
• • • • Culture, Structure Politics / Leadership Task-technology Business outputs
Business strategy content • Objectives
• Product-market • Strategy & tactics
HRM context
• • • • Role Definition Organization HR output
HRM content • HR flows
• Work systems • Reward systems • Employee relations
S TOREY ’ S M ODEL – I DEAL
TYPE
?
How org’s transformed are being from personnel into HRM Classified into four areas
?
?
Beliefs & assumptions – about tasks to be completed, nature of human relations
Strategic concepts – key corporate planning Line mgmt. – mgmt. skills Key levers – selection, job design, pay, training & development
? ? ?
E CONOMIC INDICATORS OF HRM
?
By developing policies and programs after aligning biz strategy with HR foll. Objectives will be achieved:
?
Competitive work practices
?
Global practices help the organization to move faster to change in the international work environment.
Effective remuneration & performance policies that can motivate employees Effective succession planning through recruitment & selection strategies
?
?
FACTOR
AFFECTING INVESTMENT -
ORIENTED ORGANIZATIONS
1. 2. 3. 4.
Management values – people as assets Attitude towards risk – training as risk Employee skills – retention strategies Cost benefit analysis – experience & commonsense Outsourcing – focus on core competency – competitive advantage
5.
H UMAN CAPITAL ACCOUNTING
?
American accounting association (1970) defines it as the human resources identification and measuring process and also its communication to the interested parties. Rensis Likert (1967) first used the term Human asset accounting – now replaced by Human resource accounting.
?
?
Likert designed a human capital balance sheet – investments in replacements and development were balanced with losses thro’ attrition and amortization
W HAT IS H UMAN RESOURCE ACCOUNTING ?
?
HRA is a management tool which is designed to assist senior management in understanding the long term cost and benefit implications of their HR decisions so that better business decisions can be taken
WHY HRA ?
?
According to Likert (1971), HRA serves the following purposes in an organisation:
?
It furnishes cost/value information for making management decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness; to monitor effectively the use of human resources; It provides a sound and effective basis of human asset control - whether the asset is appreciated, depleted or conserved; helps in the understanding the financial consequences of various HR practices.
? ?
?
F LAMHOLTZ ’ S
?
APPROACH
An individual's conditional value is the present worth of the potential services that could be rendered if the individual stays with the org. for X years. Conditional value refers to the combination of productivity, transferability and promotability. Conditional value when multiplied with probability factor (time a person will stay with the org.) will give the expected realizable value.
? ?
?
Realizable value gives a measure of a person’s value increases as the individual’s learning increases.
S OURCES
?
OF EMPLOYEE VALUE
Two major sources :
? ?
Productivity Added Value
?
Productivity is the level of output generated by a given level of input. Added value can be defined as the wealth created through the efforts of the enterprise and its people.
?
P RODUCTIVITY
?
Measure productivity and compare with industry standards
?
increase in productivity leads to increase in sales, profits which increases the performance of the organization
Limitations – This method assumes same average costs for all employees. Also temporary basis employees cannot be accounted for. Should take into account total cost of contributing labor
?
?
A DDED
VALUE THROUGH REWARDS AND BENEFITS
? ?
Tie pay to individual performances. Base pay – decided on basis of seniority of performance - with variable element (determined on the basis of individual performance) and an incentive (if the person performs exceptionally well). Incentives motivate individuals Stock options aim to distribute benefits of achieving capital growth & to align employee rewards with that of the shareholders.
? ?
A DDING
VALUE THRO ’ ATTRITION
&
RECRUITMENT
?
Labor turnover is calculated by taking the
?
no. of employees leaving in a time period/ avg. no. of people leaving over a time period.
?
?
does not indicate the reason for attrition
Lost time and company spent on recruiting and training
?
Conduct exit interviews
M ATTHEWEN
?
Recommended HR audits for calculating value of HR Four factors
?
? ? ?
?
Quality of procedures and practices
Cost benefit analysis Ability of staff to perform tasks effectively Customer satisfaction
?Thank you
doc_309945112.ppt
This is a presentation describes about the Strategic Human Resource Management.
STRATEGIC HUMAN RESOURCE MANAGEMENT
Aligning HR with strategy
Presented by Ishu Priya
HR’ S EMERGING ROLE –
FORMULATION
&
IMPLEMENTATION
OF STRATEGY
?
HR field has dramatically changed in the last few years Importance of HR dept. to involve in the strategic planning. E.g. talent management. Competitive advantage
?
?
T RANSITION FROM HRM ? SHRM
?
Changes in market conditions, economic conditions, labour markets, industrial structure and international competition ? importance HR as a competitive advantage.
?
HR strategy is defined as the set of ideas, policies and practices that management adopts to achieve a people management perspective.
T RANSITION FROM HRM ? SHRM
?
Schuler (1992) developed a ‘5-P model’ of SHRM that melds five HR activities (philosophies, policies, programs, practices and processes) with strategic business needs, and reflects management’s overall plan for survival, growth, adaptability and profitability.
?
Philosophy: Organization’s attitude towards its HR & how they should be treated & the role they should play in the success of the business. Found in its values/mission statement ? culture. e.g creating value through leadership & excellence@ Pepsi-cola Policies: guidelines about mgmt. of people NOT HR policy manual, these polices have an effect on the immediate future success of business.
?
‘5-P MODEL’ OF SHRM CONTD .
?
Programs: coordinated HR efforts to initiate and sustain strategic organizational change . These programs help in indentifying the nature and scope of the strategic changes initiated by the organization Practices: deal effectively with performance problems, encourage creativity in workplace, form work teams & involve employees in decision making.
?
?
Processes: involves identification, formulation and implementation of HR activities to meet strategic goals of organization.
T HE 5-P M ODEL
ORGANIZATIONAL STRATEGY INTERNAL CHARACTERISTICS STRATEGIC BUSINESS NEEDS EXTERNAL CHARACTERISTICS
STRATEGIC HRM ACTIVITIES
HR Philosophy HR Philosophy HR Policies HR Policies HR Programs HR Programs HR Practices HR Practices HR Process HR Process
Express how to treat and value people Express how to treat and value people Establishes guidelines for action on peopleEstablishes guidelines and HR Programs related business issues for action on peoplerelated business issues and HR Programs Coordinates efforts to facilitate change to Coordinates efforts to facilitate change to address major people related business issues address major people related business issues Motivates needed role behaviors Motivates needed role behaviors Defines how these activities are carried out Defines how these activities are carried out
T RADITIONAL HR V S STRATEGIC HR
Traditional HR
Specialize Formulate rules & procedures; strict implementation HR policies Transactional; short term objectives People as means to do work Changes are slow
Strategic HR
Change according to external needs of work Good communication; flexible rules & regulations interdisciplinary Transformational; change agent People as intellectual assets – competitive advantage Proactive & systemic changes
T RADITIONAL HR V ERSUS S TRATEGIC HR
R OLES
OF
SHRM
1. Strategic role : formulating business decisions, translating corporate strategy into HR strategy & training employees to focus on customer needs. 2. Information & decision-making role: HR dept informs and advices about best practices life efficiency in customer service or new product development or taking decisions on employee problems. 3. Strategic HR functional role : select, design and implement planning & appraisal systems for employees. 4. Administrative: implement policies and procedures; improve administrative system;
B ARRIERS
? ? ? ?
TO
S TRATEGIC HR
Short-term mentality / focus on current performance Lack of technical knowledge Inability of HR to think strategically Failure to understand general manager’s role as an HR manager Difficulty in quantifying many HR outcomes
?
?
?
Perception of human assets as high-risk investments
Resistance (of employees) to change
M ODELS INTEGRATING S TRATEGY & HR
?
Two models are important
?
?
Model of best practice
?
Model of strategic change Model of best practice
?
Tyson and Doherty developed a model of best practice that helps in analyzing best practices according to requirements. These outcomes are based at three levels:
? ? ?
Strategic level Operational level Business process level
M ODEL OF BEST PRACTICE
?
Recruiting and selecting employees with desired competencies Value of the approach ? effectiveness and efficiency Effectiveness defines as extent to which the HR Dept. give importance to org. objectives
?
?
?
Efficiency defined by the achievement of the objectives in a cost effective manner.
S TRATEGIC LEVEL
?
Implement major changes
?
Identify programs and policies ? integrate with production/ service delivery systems
O PERATIONAL LEVEL
?
Competencies are created to give competitive advantage. Develop sound recruitment and retention strategies Performance assessment and training
?
?
B USINESS
?
PROCESS LEVEL
Employees should be involved in framing policies Policies ? fair and unbiased Equal weightage to all stakeholders
? ?
M ODELS OF STRATEGIC CHANGE
?
A flexible model for integrating strategic change was developed at Harvard university. This model was called “The Map of HRM territory” Legitimate interest of shareholders and stakeholders in organization aligned with HR and Business strategy
?
?
M AP
Stakeholder interests • Stakeholder mgmt.
• Employee groups • Govt. Community
OF
HRM
TERRITORY
HRM policy choices
• Employee • Influence • HR • flow • Reward systems • work systems
HR outcomes
• Commitment • Competence • Congruence • Cost • Effectiveness
Long term consequence
• Individual wellbeing • Organiza. Effectiveness • Social well-being
Situational factors • Workforce
characteristics. • Business strategy • Mgmt. philosophy • Labout market • Unions • Technology • Law & societal values
P ROPOSITIONS
?
OF
G UEST
Guest, HR expert, has developed a set of propositions based on the Harvard Model:
?
Strategic integration - HRM issues with strategic plan High commitment - to org. goals High quality - goods & services
? ?
?
Flexibility - ability of org. to adjust to changing business environment
I NTEGRATIVE
?
MODEL
Hendry & Pettigrew’s integrative approach that integrates all modes of HRM like staffing, recruitment & training.
?
This model is called “Model of strategic change and HRM”
This model explores implications of employee relations on various approaches to strategic management.
?
M ODEL
OF STRATEGIC CHANGE AND
Outer context • socioeconomic
• technical • political
HRM
Inner context
• • • • Culture, Structure Politics / Leadership Task-technology Business outputs
Business strategy content • Objectives
• Product-market • Strategy & tactics
HRM context
• • • • Role Definition Organization HR output
HRM content • HR flows
• Work systems • Reward systems • Employee relations
S TOREY ’ S M ODEL – I DEAL
TYPE
?
How org’s transformed are being from personnel into HRM Classified into four areas
?
?
Beliefs & assumptions – about tasks to be completed, nature of human relations
Strategic concepts – key corporate planning Line mgmt. – mgmt. skills Key levers – selection, job design, pay, training & development
? ? ?
E CONOMIC INDICATORS OF HRM
?
By developing policies and programs after aligning biz strategy with HR foll. Objectives will be achieved:
?
Competitive work practices
?
Global practices help the organization to move faster to change in the international work environment.
Effective remuneration & performance policies that can motivate employees Effective succession planning through recruitment & selection strategies
?
?
FACTOR
AFFECTING INVESTMENT -
ORIENTED ORGANIZATIONS
1. 2. 3. 4.
Management values – people as assets Attitude towards risk – training as risk Employee skills – retention strategies Cost benefit analysis – experience & commonsense Outsourcing – focus on core competency – competitive advantage
5.
H UMAN CAPITAL ACCOUNTING
?
American accounting association (1970) defines it as the human resources identification and measuring process and also its communication to the interested parties. Rensis Likert (1967) first used the term Human asset accounting – now replaced by Human resource accounting.
?
?
Likert designed a human capital balance sheet – investments in replacements and development were balanced with losses thro’ attrition and amortization
W HAT IS H UMAN RESOURCE ACCOUNTING ?
?
HRA is a management tool which is designed to assist senior management in understanding the long term cost and benefit implications of their HR decisions so that better business decisions can be taken
WHY HRA ?
?
According to Likert (1971), HRA serves the following purposes in an organisation:
?
It furnishes cost/value information for making management decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness; to monitor effectively the use of human resources; It provides a sound and effective basis of human asset control - whether the asset is appreciated, depleted or conserved; helps in the understanding the financial consequences of various HR practices.
? ?
?
F LAMHOLTZ ’ S
?
APPROACH
An individual's conditional value is the present worth of the potential services that could be rendered if the individual stays with the org. for X years. Conditional value refers to the combination of productivity, transferability and promotability. Conditional value when multiplied with probability factor (time a person will stay with the org.) will give the expected realizable value.
? ?
?
Realizable value gives a measure of a person’s value increases as the individual’s learning increases.
S OURCES
?
OF EMPLOYEE VALUE
Two major sources :
? ?
Productivity Added Value
?
Productivity is the level of output generated by a given level of input. Added value can be defined as the wealth created through the efforts of the enterprise and its people.
?
P RODUCTIVITY
?
Measure productivity and compare with industry standards
?
increase in productivity leads to increase in sales, profits which increases the performance of the organization
Limitations – This method assumes same average costs for all employees. Also temporary basis employees cannot be accounted for. Should take into account total cost of contributing labor
?
?
A DDED
VALUE THROUGH REWARDS AND BENEFITS
? ?
Tie pay to individual performances. Base pay – decided on basis of seniority of performance - with variable element (determined on the basis of individual performance) and an incentive (if the person performs exceptionally well). Incentives motivate individuals Stock options aim to distribute benefits of achieving capital growth & to align employee rewards with that of the shareholders.
? ?
A DDING
VALUE THRO ’ ATTRITION
&
RECRUITMENT
?
Labor turnover is calculated by taking the
?
no. of employees leaving in a time period/ avg. no. of people leaving over a time period.
?
?
does not indicate the reason for attrition
Lost time and company spent on recruiting and training
?
Conduct exit interviews
M ATTHEWEN
?
Recommended HR audits for calculating value of HR Four factors
?
? ? ?
?
Quality of procedures and practices
Cost benefit analysis Ability of staff to perform tasks effectively Customer satisfaction
?Thank you
doc_309945112.ppt