Strategic Human Resource Management

1. Management Principles Strategic Human Resource Management Craig W. Fontaine, Ph.D.

2. History of HRM’s Organizational Role Formerly (HRM): • Administration • Employee relations • Benefits Now: • Business Partner • Gaining Strategic Advantage

3. Models of Strategy • Industrial Organization (O/I) Model • External environment is primary determinant of organizational strategy • Environment presents threats & opportunities • All competing organizations control or have equal access to resources • Resources are highly mobile between firms • Organizational success is achieved by • Offering goods & services at lower costs than competitors • Differentiating products to bring premium prices

4. Models of Strategy • Resource-Based View • An organization’s resources & capabilities, create competitive advantage • Organizations can identify, locate & acquire key valuable resources • Resources are not highly mobile across organizations & once acquired are retained • Valuable resources are costly to imitate & non-substitutable

5. Both are Right…! • Research provides support for both positions • Acquire resources to support strategy • Determine strategy based on resources Strategy Human Resource Management addressed both approaches

6. Strategic HR Management • Strategic Human Resource Management • Aligning initiatives and practices involving how people are managed so that they support the organizational mission and business strategy

7. Core competencies should drive business strategy…. A Core Competency is a deep proficiency that enables a company to deliver unique value to customers. • It embodies an organization’s collective knowledge. • Its creates sustainable competitive advantage for a company and helps it branch into a wide variety of related markets. • It’s hard for competitors to copy or procure. • Understanding Core Competencies allows companies to invest in the strengths that differentiate them and set strategies that unify their entire organization.

8. Example of Core Competencies • Walt Disney World Parks and Resorts • Animatronics and Show Design • Story Creation and Themed Attractions • Efficient operation of theme parks

9. Strategic HRM Approach • Facilitates development of high-quality workforce through focus on types of people & skills needed • Facilitates cost-effective utilization of labor, particularly in service industries where labor is generally greatest cost • Facilitates planning & assessment of environmental uncertainty & adaptation of organization to external forces

10. Distinctive Human Resources • How can HRM practices specific to an organization create a competitive advantage?

11. Examples of HRM Practices HRM practices can allow and motivate individuals to support an organization’s strategic objectives • Hiring Practices • Who do we hire • Where do we look for workers • Performance Management Practices • On what criteria are workers assessed • Compensation and Reward Practices • What behaviors/actions are rewarded

12. HRM Practices - Exercise Two Watch Companies • Hiring Practices • Who do we hire • Where do we look for workers • Performance Management Practices • On what criteria are workers assessed • Compensation and Reward Practices • What behaviors/actions are rewarded Rolex • Very expensive • Hand Made Timex • Inexpensive • Mass Produced

13. Simple Concepts… • People are the essential capital of all organizations • Humans create organizational innovations and accomplishments • Organizational success depends upon careful attention to human capital But harder than you think…

14. Challenges: Economic • Global Trade Challenge • Jobs and prosperity depend upon international trade • Job migration to South East Asia and China • Challenge of Productivity Improvement • Productivity = outputs/inputs ratios • Essential for long-term success • Requires strategic thinking and creative responses • Understanding motivation

15. Challenges: Technological • Computerization • Impacts virtually all aspects of work and life • Provide large amounts of data at great speed to managers • Flexibility e.g. telecommuting • Automation • Potential benefits include speed, better customer service, predictability and production quality • Use robots for hazardous or boring jobs

16. Challenges: Cultural • Work related attitudes • Changing attitudes toward work and leisure • Demand for ethical conduct of business • Ethnic diversity • Cultural mosaic • Attitudes toward governments: • Divided population

17. Challenges: Demographic Trends • Increasing number of women in the workforce • Shift toward knowledge workers • Educational attainment of workers (Bi-modal) • Employment of older workers • More part-time, contract and contingent workers

18. Objectives of SHRM: Organizational • Contribute to organizational effectiveness • Means of helping the organization to achieve its primary objectives • Provide level of service appropriate to the organization

19. Objectives of SHCM: Employee • Assist employees in achieving their personal goals • Employee performance may decline or employees may leave the organization if personal objectives are not considered

20. Objectives of HRM: Societal • Respond to the needs and challenges of society • Minimize negative impacts on the organization • Reflect society’s concerns e.g. ecological

21. Goals of Strategic HCM • Attract, retain, and motivate employees • Direct employee efforts toward goals of organization • Assist in the development of the strategic direction of the organization • Provide the organization a source of competitive advantage • Example: Watch Industry

22. Organizational Mission & Goals Analysis Analysis of Organizational Strengths & Culture Choice & Implementation Of HCM Strategies Analysis of Organizational Strategies Review & Evaluation of HCM Strategies Steps in Strategic HRM Environmental Analysis

23. Activities in Human Resource Management • HC strategy formulation • Recruitment and selection (staffing) • Performance appraisal • Training and development • Compensation and benefits • Employee rights • Labor/management relations (if union)

24. Today’s Workforce Realities: • Decade of boom & bust leaves working families with: • Stagnant, declining incomes • Increased inequality • Longer working hours • Less retirement savings; fewer health care benefits • Broader job insecurity • Loss of worker voice in society • Current government policies producing: • Further cuts in services & jobs • Tax policies that further increase inequality • Deep divisions over war policies • Direct attacks on workers, unions, and core values

25. The U.S. has seen a trend of increasingly high job dissatisfaction. • Only 45 percent of Americans were satisfied with their jobs. • A decrease from a 61 percent satisfaction rate in 1987 • Job dissatisfaction is highly correlated with a negative impact on organizational effectiveness • Management must respond Job Satisfaction – Declining!