Human Resource Strategy

1. Human Resource Strategy

2. The Idea of Strategic HRM • No definitive, robust theory. • No agreement on meaning, factors, outcomes. • how is SHRM linked with organisational performance? difficult to establish firm relationships given intervening factors: structure, culture & wider environment • various typologies of business and associated HR strategies • Empirical studies tend to use • large-scale questionnaire surveys (Storey) • case-studies on SHRM. • Theoretical &empirical gaps between rhetoric and real experience - downsizing and redundancies etc.

3. Stages in a Corporate Strategy Process Organisation Mission and Goals (Define the business) Strategic Analysis (current situation, programmes and performance) Rational, logical versus interpreted & political Strategic Choice (bounded rationality, shaping the environment) Strategy Implementation (programmes, resources & responsibilities)

4. Planning Levels CEO Corporate Level Corporate HQ Business Level Aviation Heating Trucks Plastics Consultancy Functional Level Accounting Manufacturing Marketing R & D

5. Strategy Formulation • Managers analyse the situation & develop strategies to achieve the mission. • SWOT analysis: planning to identify Organizational • Strengths: manufacturing ability, marketing skills • Weaknesses: high labor turnover, weak financials. Environmental • Opportunities: new markets • Threats: economic recession, competitors • Long-term - 5+ yrs • Intermediate-term 1- 5 yrs. • Corporate & business plans • Short-term - less than 1 yr. • Functional plans? • Rolling cycle - amend plans constantly?

6. Standard Corporate Planning Picture SWOT + STEEPLE Internal & external analysis Corporate strategy develop a plan of policies, allocations, programmes to maximise long-run value • Concentrate • Diversify • Globalize • Vertically Integrate • Down-size • Flexible firm • Grow • Stabilize • Retrench • React/Panic

7. Manifestation of Strategy and Policy • Maintenance • Standing plans (programmed decisions) • policies, rules, and standard operating procedures (SOP). • general and specific guides to action. • Programme arrangements and allocations. • Innovations • New initiatives, programmes and projects What are these for HRM?

8. Schools of Strategy • Prescriptive • Design School • Strategy (formation as a process of conception) • Planning (formal process) • Positioning (analytical process and techniques) • Descriptive Schools (metaphors) • Enterpreneurial (visionary) • Cognitive (mental) • Learning (emergent, adaptation, incremental) • Power (a process of negotiation between interests) • Cultural (collective values, beliefs and behaviours) • Environmental (reactive, contingent) • Configuration (process of transformation from one state to another - management of change) Source: Mintzberg, Ahlstrand, Lampel, 1998, Strategy Safari, Prentice Hall

9. Michael Porter -- Value-Added Chain Analysis Technology development Support Activities Procurement Primary Activities Inbound logistics Operations Outbound logistics Marketing and sales After sales service Employee management Support Activities Firm’s infrastructure

10. Mintzberg on Strategy • Plan (intended) • direction, guide, a course of action. • Pattern (realised) • consistency in behaviour over time e.g. high end, low risk, patterns evolved out of the past. What plan have we actually pursued over the last 5 years? • Position • Locating our HRM in a position, unique and valuable, involving a set of activities, X marks the spot. • Perspective • look inwards and upwards to a grand vision of the enterprise. The “theory” (mind-set) of the business. Less easy to change than position e.g. from bureaucracy to innovation. • Ploy (specific manoeuvres)

11. Deliberate and emergent strategies Intended Strategy Deliberate Strategy Unrealised Strategy Realised Strategy Emergent Source: Mintzberg, Ahlstrand, Lampel, 1998, Strategy Safari, Prentice Hall

12. Form and Formation • Set direction • but unknown waters, move quickly or slowly? • Focuses effort • unity vs group-think & peripheral vision • Defines the organisation • a shorthand but slogans may override complexity & distort reality • Provides consistency • Provide order, a cognitive structure to simplify, explain & facilitate action but creativity thrives on “loose” order • Strategies have a form and they are formulated • So what is the form of HRM strategy of organisation X? • Steerage and Umbrellas • Deliberate broad outlines with details emerging en-route

13. CEO and HR Director as strategists Interpersonal • figurehead • leader Information Processing • liaison • monitor • disseminator • Spokesperson Decision-making • initiator/changer • resource allocator • disturbance handler • negotiator (after H Mintzberg) • Conceive the big idea? • Let everyone else get on with the details? • But the job is not like this • Mintzberg on managerial roles

14. Corporate-Level Strategies • Stick to the knitting - focus on core business • Diversification • Related : similar areas - build upon existing divisions • synergy & core competencies • Unrelated - portfolio business in new areas • No declared strategy? • Corporate failure? Implicit strategy? • Avoid resource-consuming activity • Disdain for formal planning but reliance on consistency of behaviour at all levels. • No frills, non-bureaucratic organisation • No recipe to decrease flexibility, block learning & adaptation • Tension between control and discretionary freedom.

15. International HRM Strategy • Global: HRM diversity for different conditions • single, standard scheme across all countries? • adaptation &acceptance of national differences? • values, ethics in decision-making • Domestic: • Common national schemes? • public sector institutions? • Common professions/occupations • personnel system discretion for semi-autonomous divisions to take advantage of local circumstances?

16. HRM Services and the Product Life Cycle Maturity Growth Profit £/volume Develop or decline Start-up • Implications for • Recruitment? • Rewards? • Training & Development? • Employee Relations? • Organisational development? Loss Time

17. Analysis of HR Services • Deliverables: capacity and capability • Can we deliver? What do we deliver and how well? • Efficiency • How well is the process offered, managed and controlled? • What are the transformation indicators and service quality ratios? • cost/unit, cost/recruit, performance/employee, cost/HR intervention? • Adaptability • short + long term responses to pressure and change • Benchmarking • efficiencies, processes & outputs • investment - £, technical and human • quality, systems, research and intelligence

18. Common-sense propositions on quality • No focus on quality - lose market share and reputation. • Good reputation is easier to lose than regain. • People trust and become accustomed to favourites • They remember the bad. "I'll never go there again". • New loyalties with substitute suppliers. • Complacency breeds neglect. • It takes a major operational and psychological effort to • maintain quality vigilance (entropy). • regain a lost reputation. • Common-sense either forgotten or only realised post hoc

19. What is Quality? ....... a perception of class, excellence, a type of "referential" standard or (in definition) reflecting needs and expectations of customer. Guru definitions : • product or service, nature or features reflecting capacity to satisfy express or implied statements of need (Deming) • conformance to requirements (Crosby) • fitness for purpose or use (Juran) • product/service characteristics as offered by design, marketing, manufacture, maintenance and service that meet customer expectations (Feigenbaum) • Oakland (1995) - perceivable, measurable move from mere satisfaction to "delight and reputation for excellence". • Reliability. “Next door swears by her 8-year old Zanussi!”

20. Elements of a Quality Policy • organisation structure for quality: roles, responsibilities • how client/customer needs and perceptions will be identified • technical/economic resource allocation • QMS scheme & operation • how suppliers & supplies will be required to meet standards • prevention & zero defects/CQI approach vs. "inspect-out" • communication, knowledge, information & staff development • audit of QMS in operation • Partnership with staff, customers and suppliers. • Physical manifestation not just conceptual

21. TQM - a Strategy and Discourse • an approach to improving the competitiveness, effectiveness and flexibility of a whole organisation..... a way of planning, organising and understanding each activity and it depends on each individual at each level. TQM is a way of ...... bringing everyone into the processes of improvement • Oakland 1995 • a TQM programme requires re-evaluation of how organisational members address the quality of their work and the service processes.

22. TQM underpinned by policy commitment • A culture and practice change strategy • Organisational renewal • Injection of energy • Staff encouraged in positive, initiative taking behaviours • Adopt a prevention and CQI ethic • Quality improvement teams/circles • Use of a variety of methods and techniques (tools)

23. Kaizen: Continuous Quality Improvement (CQI) • critical view of organisational performance standards • continuously challenge & incrementally upgrade performance levels • contribution and role of HR team • attitude (ownership), involvement and team effort as the key to improvement • HR team - line manager relationships

24. Classical functional, problem analysis cycle • Situation analysis • Problem definition • Objectives and resourcing • Solution development - options and best fit from DO NOTHING to DO EVERYTHING. Min/Max, optimistic/pessimistic, high/low budget etc.). Test models against objectives and constraints • Implementation analysis • detailed planning for operational implementation. • analysis for potential problems • scheduling, work allocation, capacity management, communicating, monitoring systems & overall coordination.

25. Questions for Quality Strategy • Who are our direct and indirect clients • Define characteristics, needs, requirements? • Design features of services? • How do clients perceive these? • Bench-mark comparisons • Which features do not compete? • How can we delight beyond the basic specification? • Design improvement projects? • Who, by when & at what cost? • Operational ability to bridge the gaps? • Information & monitoring systems? • Supply chain analysis - performance & communication?

26. Specifying HR Quality • Essential contract for supply • ensuring delivered quality in a contract of service. • Implications of failure to draw up a clear specification? • Design quality dimensions include: • Features, performance, delivery, cost, reliability, durability, serviceability, response, aesthetics, reputation. • Conformance measurement: Degree to which service design specification is met

27. ISO 9000 Certification for HR Services? • The parties & organisational level? • Detailed specification • what best practice will be (product & process definition) • contract volume, milestones, stage deliverables? • CSFs/CQFs for inputs, processes, outputs? • work done to plan, in the defined ways? • QA/QC methods? inspection, testing and monitoring • staged prices and conditions? variation orders vs. extras • penalties? • audit trail • client liaison

28. 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 Management Quality Plans Contracts Controlling design - not ISO 9002 Controls using documents and data Purchasing and supply Customer-supplied equipment Product identification and tracing Process controls Inspection/testing Measuring and test equipment Identify status of inspected goods Control over non-conforming products Corrective and preventative action Handling, storage, packaging, preserving and delivery Records for quality Internal audits Training Servicing Using Statistics Clauses of ISO 9000 Costs of initiating and maintaining the system?

29. USA Baldrige National Quality Award (1999) • Leadership (weighting 125 points) • Strategic Planning (85) • Customer & Market Focus (85) • Information and Analysis (85) • Human Resource Focus (85) • Process Management (85) • Business Results (450) Criteria for Performance Excellence

30. References • Gratton L, Hope-Hailey V, Stiles P. and Truss C, (1999) Strategic HRM: Corporate Rhetoric and Human Reality, OUP. • Huselid M, (1995) The Impact of Human Resource Management Practices on Turnover, Productivity and Corporate Financial Performance . Academy of Management Journal, Vol. 38, No. 3, pp. 635-672. • Kamoche K. (1994) A Critique and a Proposed Reformulation of Strategic HRM . HRM Journal, Vol. 4, No. 4, pp.29-43. • Miles R and Snow C. (1984) Designing Strategic Human Resources Systems, Organizational Dynamics, Summer: 36-52. • Swiercz P. (1995) Strategic HRM, Human Resource Planning, 18,3, p.53-. • Truss C. (2001 — forthcoming) Complexities and Controversies in Linking HRM with Organisational Outcomes . Journal of Management Studies. • Truss C. and Gratton L. (1994) Strategic HRM: A Conceptual Approach . International Journal of HRM, 5,3, pp.663-686. • Truss C, Gratton L, Hope-Hailey V, McGovern P, & Stiles P. (1997) Soft & Hard Models of HRM: A Reappraisal . Journal of Management Studies, 34,1, pp.53-73. • Wright, P. and McMahan, G. (1992) Theoretical Perspectives for Strategic HRM , Journal of Management, Vol. 18, No. 2, pp. 295-320.