Management Principles

Strategic Human Resource Management

Craig W. Fontaine, Ph.D.

History of HRM’s Organizational Role
Formerly (HRM):
• Administration
• Employee relations
• Benefits
Now:
 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
 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
 Both are Right…!
• Research provides support for both positions
• Acquire resources to support strategy
• Determine strategy based on resources
 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
 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.
 Example of Core Competencies

• Walt Disney World Parks and Resorts

– Animatronics and Show Design
– Story Creation and Themed Attractions
– Efficient operation of theme parks
 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
 Distinctive Human Resources
• How can HRM practices specific to an
organization create a competitive
advantage?
 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
 HRM Practices - Exercise
– Hiring Practices Two Watch Companies
• Who do we hire
• Where do we look for workers
– Performance Management • Very expensive
Practices • Hand Made
• On what criteria are workers assessed
– Compensation and Reward
Practices • Inexpensive
• What behaviors/actions are rewarded • Mass Produced
 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…

 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
 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
 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
 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
 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
 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
 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
 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
 Steps in Strategic HRM

Environmental
Analysis

Organizational Analysis of Choice &

Analysis of
Mission & Organizational Implementation
Strengths & Organizational Of HCM
Goals
Culture Strategies Strategies
Analysis

Review &
Evaluation of
HCM
Strategies
 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)
 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
Job Satisfaction – Declining!