STRATEGIC HUMAN RESOURCE MANAGEMENT MIB 108

1. STRATEGIC HUMAN RESOURCE MANAGEMENT( MIB 108) By : Prof. V.P.KAKKAR

2. MODULE I

3. SESSION: 1 INTRODUCTION & COURSE REVIEW

4. SESSION - 2 DEFINITION,NEED & IMPORTANCE

5. HRM DEFINED A set of policies, practices and programmes designed to maximize both personal and organizational goals. It is the process of binding people and organization together so that objectives of each are met. It is the planning, organizing, staffing, directing and controlling of Human Resources , focusing at procurement, deployment, development, appraisal, compensation, integration and maintenance of human resources to the end that individual, organizational and societal objectives are met.

6. STRATEGIC VIEWOF HUMAN RESOURCES Employees are human assets that increase in value to the organization and the marketplace when investments of appropriate policies and programs are applied. Effective organizations recognize that their employees do have value, much as same as the organization�s physical and capital assets have value. Employees are a valuable source of sustainable competitive advantage.

9. NEED/IMPORTANCE OF SHRM When adjective STRATEGIC is fixed to HRM, it puts an emphasis on the ways in which HRM contributes to the organization effectiveness in realizing organization�s strategic intents. It provides direction to the organization so that both, the business needs of the organization, individual and collective needs of its workforce are met. This is achieved by developing and implementing HR practices that are strategically aligned with business strategies. SHRM is practiced in only those organizations that have a clearly articulated corporate or business strategies. An integrated approach in the design and implementation of HR systems. Matching HRM policies and activities with the business strategy of organization Viewing people as strategic resource for the achievement of competitive advantage

10. HIERARCHY OF STRATEGY

11. STRATEGY AT DIFFERENT LEVELS

12. SESSION - 3 TRADIONAL HR Vs STRATEGIC HR

13. EVOLUTION OF SHRM

14. TRADITIONAL HR Vs STRATEGIC HR TRADIONAL HR STRATEGIC HR

15. BARRIERS TO STRATEGIC HR SHORT TEM MENTALITY/ FOCUS ON CURRENT PERFORMANCE Reason: No Long term view of investments. More focus on performance evaluation and compensation based on sort term. INABILITY OF HR TO THINK STRATEGICALLY Reason: insufficient management training and segmented understanding of entire business LACK OF APPRECIATION OF WHAT HR CAN CONTRIBUTE FROM STRATEGIC PERSPECTIVE Reason : Seeing HR function as providing unnecessary bureaucracy FUNCTIONAL MANAGERS SEEING THEMSELVES AS HR MANAGERS Reason : Concerned more with technical aspects of their areas than huma aspects. DIFFICULTY IN QUANTIFYING MANY HR OUTCOMES REASON: Tendency towards programs that are quantifiable rather than developmental programs. PERCEPTION OF HR ASSETS AS HIGH RISK INVESTMENTS THAN CAPITAL ASSETS. REASON: HR assets not owned by organizations. More investment in technology & information DISINCENTIVES FOR CHANGE REASON: Strategic approach may call for drastic changes in system. Natural resistance is there to change initiatives. So Risk is involved as these changes might fail MOST OF ABOVE BARRIERS ARE ROOTED IN CULTURE OF AN ORGANISATION ( Organizations history, values and management practices act as act as barriers to change initiatives. Overcoming these barriers is the real challenge of STRATEGIC HRM )

16. SESSION - 4 INTEGRATING HR STRATEGY WITH BUSINESS STRATEGY

17. SEQUENTIAL STRATEGIC HRM MODEL

18. INVESTMENT PERSPECTIVE OF HR(How best to invest in its people ) RESOURCE BASED VIEW ( VRIO FRAMEWORK ) value , rareness , limitability & organization ENHANCING HUMAN CAPITAL collective skills, knowledge & capabilities TRADITIONAL COST VIEW : HR related budget ( salaries, training etc.. ) STATEGIC VIEW : Employees as valuable investments In knowledge economy : Knowledge is important (not goods, services or technology ) for all economic activities. INVESTMENT IN HUMAN RESOURCES IMPORTANT for getting competitive advantage to keep pace with changing technologies & processes COST OF TRG & OTHER INVESTMENTS to be constantly reviewed against benefits. RISKS INVOLVED : Enhanced employability of employees that makes them more desirables to competitors.

19. SESSION - 5 COMPETING APPROACHES & MODELS

20. COMPETING APPROACHES AND MODELS

21. RELATIONSHIP BETWEEN BUSINESSAND HR STRATEGIES THREE TYPES OF BUSINESS STRATEGIES ARE ADOPTED BY ORGANISATIONS: COST LEADERSHIP , DIFFERENTIATION & FOCUS HR STRATEGIES ARE OUTCOME OF GENERAL SHRM APPROACH FOR WINNING A SUSTAINABLE GLOBAL COMPETITIVE ADVANTAGE, A PERFECT STRATEGIC FIT IS REQUIRED TO BE CREATED BETWEEN BUSINESS STRATEGIES AND HR STRATEGIES Following 5 types of strategic fits are generally adopted: BEST FIT APPROACH( STRATEGIC FIT APPROACH): Also called external fit or vertical integration with business strategies. HR strategies should match stages of development of firm ie need for different types of people as well as diverse approaches towards investment in HUMAN CAPITAL. FIT AS CONTIGENCY( BEST FIT APPROACH) : HR approaches to ensure that internal practices of organization respond to external factors : market, skill availability est.'s per contingency of situation FIT AS AN IDEAL SET OF PRACTICES( BEST PRACTICE APPROACH) Identifying any organization as benchmark which has reputation for excellence and copying its practices. FIT AS BUNDLES (BUNDLING APPROACH) : Development and implementation of several HR practices together so that they are interrelated and internally consistent. Each HR practice reinforces and complements the other. Also termed as internal fit oe Horizontal integration.

23. MACKENZIE�S 7S MODEL

24. COMPETING APPROACHES INTEGRATED SYSTEMS MODEL ( RAO & PARREK ) Has development of motivated. Capable, dynamic & committed people at its core HRD systems are designed to work as an integrated system in line with corporate plans ( For Synergistic benefits of an integrated systems ) HRD SYSTEMS : CAREER SYSTEMS : APPRAISAL SYSTEMS: Performance and potential appraisals TRG. SYSTEM S: Separate For all category of employees WORK SYSTEMS: Task analysis, QWL, Stress management, productivity & Quality etc. CULTURAL SYSTEMS : Most neglected , Includes development of octapace culture,Reward systems etc. SELF RENEWAL SYSTEMS; Research. Survey feedback etc.

25. SESSION - 6 STRATEGIC PLANNING IN SBUs, MNCs & TRANSNATIONAL COMPANIES

26. SINGLE COUNTRY, EXPORT & INTERNATIONAL STRATEGY

27. GLOBAL STRATEGY

28. International Imperative Why organizations expand internationally To capture enhanced market opportunities that foreign countries may present To achieve economies of scale in production and administration by expanding scope and volume of operations to international markets Keeping up with industry leaders may require organization to enter foreign markets Acquiring ownership of foreign-based organization or subsidiary

29. How International & Domestic HRM Differ International HRM requires Managing broader range of functional areas Becoming more involved in employees� personal lives Setting up several different HRM systems for different geographic locations Dealing with more complex external constituencies Participating in international assignments that have heightened exposure to personal risk

30. International Expansion Strategies for expanding internationally Exporting locally produced goods to host country Subcontracting or licensing production of certain goods or services to foreign partner Entering into joint venture with foreign partner Setting up operations (making a direct investment) in form of foreign branch or subsidiary

31. Strategic HR Issues in Global Assignments Approaches to sending employees abroad Administrative approach Assisting employee destined for international assignment with paperwork and minor logistics Tactical approach Managing �risk or failure� factor of overseas assignment by providing paperwork assistance and modest amount of training Strategic approach Extensive support and coordination of international assignment, and strategized repatriation program at the end of the assignment

32. Strategic HR Issues in Global Assignments Strategic management of global assignments Establish specific purpose for assignment Select appropriate employee for assignment Organizational and individual purposes for assignment must be identified and matched Assess adaptability to host culture of both employee and any family members who will be accompanying employee Provide appropriate training for employee and family members Simultaneous training should be conducted for headquarters staff

33. Four Approaches to IHRM Make strategic decision as to level of standardization desired across locations Ethnocentric approach Exporting organization�s home country practices and policies to foreign locations Polycentric approach Allowing each location to develop own practices and policies Regiocentric approach Developing standardized practices and policies by geographic region Geocentric approach Developing one set of global practices and policies applied at all locations

34. STRATEGIC PLANNING IN SBU�s Strategic HRM can play an important role at SBU�s level. E.g. SBU�s marketing group may identify an opportunity during its planning process. Marketing planners then develop alternate strategies for exploiting the opportunities. Representatives from other functional areas make inputs on resource requirements, strengths and weaknesses HR depts. would be expected to provide an analysis of staffing implications of each and Inputs from all are submitted to corporate top management for approval and funding. Suitable HR strategies ( Policies & Practices ) in line with business strategies are developed and implemented

35. STRATEGIC PLANNING IN MNCs INTERNATONAL STRATEGY: for companies that operate in countries chosen for their individual profit potential. All activities related to design, production and marketing are then performed in each of these countries. These are called value chain activities. MULTI DOMESTIC STRATEGIES customize the product and its marketing to the unique preferences of each country. Multinational or Multi domestic companies provide power advantage in dealing with unionized workers but do not produce economies of scale of Global companies GLOBAL STRATEGIES: Produce standardized products with different activities such bas design and production being located indifferent countries, depending on labor, cost, skills or other strategic advantages. With Global strategies, economies of scales are obtained by maintaining only few different product models as a result lower cost and higher quality are obtained. Greater coordination is required . It is important to locate each of the value chain activities where there is world class labor in terms of cost or skills. TRANSNATIONAL STRATEGIES: Companies compete in global market place through the use of networks and strategic alliances

36. IHRM Vs DOMESTIC HRM IHRM DOMESTIC HRM Addresses a broad range of HRM activities Addresses to Narrow range of HRM activities HR issues relate to employee belonging Relate to employees belonging to to more than one nationality single nationality Greater involvement of HR managers Limited involvement in the personal life of employee. Greater exposure to risks, in International Limited risk assignments ( Such as wrong selection of manager to be posted abroad . Has to manage several external factors Limited external factors to deal with.

37. SESSION - 7 GLOBALIZATION OF BUSINESS & HR CHALLENGES

38. GLOBALISATION Concerned with degree of standardization of products and practices plus high level of co-ordination and integration of activities in the company�s value chain. Offers extensive opportunities for worldwide development and getting integrated to global economy. For developing countries, it offers prospects of integration with rest of developed economy. In economic terms , It�s the process of integration of world into one huge market. It is a process not an event. It has no beginning or end. It is fast becoming imperative for modern business due to: 1) crumbling trade barriers 2) global flow of capital & technology 3)Information explosion 4) Intensity of global market competition 5) Changing life styles and demand for innovative products etc� It offers free flow of information, goods, capital & people across political and economic boundaries and is a process by which enterprises become interdependent and interlinked globally.

39. GLOBALISATION OF BUSINESS& HR CHALLENGES Major env. Change in last 15 yrs � GLOBALISATION World becoming global village & business becoming Global in character Increased business opportunities in marketing and production. NEW CHALLENGES FOR HR MANAGERS: Domestic firms competing with foreign companies. There is High level of cost consciousness and competitive pressures Multinational companies require employees who can adopt to different cultures, customs, social practices, values, economic and political systems, management approaches and who can work with other employees with different backgrounds. To ensure that employees with requisite knowledge ,skills, abilities and cultural adaptability are available to be successful in global assignments. Focusing increasingly on employee productivity Developing diverse training programmes. Developing HR initiatives directed to workforce diversity. Identifying and training expatriate managers to develop them into Global Managers for overseas assignments. Developing equitable pay plans for individuals working in different countries. Managing a Global workforce, focus on cost, differentiation & quality to enhance competitiveness and ensuring legal compliance while conducting business abroad.

40. CHALLENGES OF LEADING AN ORGANISATION ( STRATEGIC LEADERSHIP ) Influence the behavior of subordinates so that they work willingly & enthusiastically towards attainment of organizational goals. Situational leadership as per contingency of situation. Tasks involved include : Anticipating, Envisioning, Empowering, Direction. Growth & development, in addition to planning, organizing, staffing. directing, coordinating & controlling skills Determining strategic direction : Core ideology & future shape Effectively managing organization resource portfolio ( Financial capital, organization capital, Social capital & Human capital ) Sustaining an effective organization culture ( OCTAPACE CULTURE ) Charisma, vision , Drive, Desire to lead, Honesty & Integrity, Self � confidence, intelligence, Job related knowledge , Energetic, assertive & sociable To lead from front and be a role -model. Sustaining a definite direction, growth, development & competitive advantage for realizing its vision, goals & objectives in a global competitive environment. Encouraging participation, recognition and maintaining high morale of employees at all times. Suitable reward & punishment system for Ethical/Unethical behavior.

41. Managing Global Workforce: Challenges and Strategies Challenges: Deployment in getting right skills to right place in organization, regardless of geographic location Knowledge and innovation dissemination and transfer, where all business units concurrently receive and provide information Talent identification and development of those employees with abilities and skills to function effectively in global organization

42. Managing Global Workforce: Challenges and Strategies Strategies for managing global workforce Develop aspatial careers for employees to provide rich contextual knowledge of environments and cultures. Provide specific awareness building assignments that develop cross-sensitivity in high potential employees in short time Utilize expert SWAT teams deployed on short-term basis for operational problems technical projects Adopt virtual solutions by using electronic communication technologies to connect local employees to distant problems

43. Diagnosing Challenges Deployment challenge Contact time required Extent to which skills can be applied out of cultural context Knowledge and innovation dissemination challenge Choosing among four strategies depends on technical complexity of information to be shared, and extent to which it must be culturally embedded Talent identification and development challenge Organizations should select well, then develop

44. SESSION - 8 SYNDICATE DISCUSSIONS Q1. Why is a competitive advantage based on heavy investment in human resources more sustainable than investment in other type of assets ? Q2. Do pressures on cost containment work against effective management of people? Q3. Discuss strategic role of HRM in today�s competitive environment ?