Strategic Human Resource Management: Words of Wisdom

Strategic Human Resource
Management
Words of wisdom
‘If a global company is to function successfully,
strategies at different levels need to inter-relate.’
‘An organization’s [HRM] policies and practices must fit
with its strategy in its competitive environment and with
the immediate business conditions that it faces.’
‘The [HR-business strategy] alignment cannot
necessarily be characterized in the logical and sequential
way suggested by some writers; rather, the design of an
HR system is a complex and iterative process.’
Web support material to accompany Human Resource Management: Theory and practice, Third edition
© John Bratton and Jeffrey Gold 2003, published by Palgrave Macmillan
Management
Management
A strategic approach to Human Resource

Management:
A managerial process requiring human
resource policies and practices to be
linked with the strategic objectives of the
organization.
Key questions
What determines how HR strategy is

formulated?
Does HR strategy really matter?
How do corporate decisions impact on HRM?
How does HRM impact on the ‘bottom line’?
Strategic Management
Strategy:
A specific pattern of decisions and actions
undertaken by the upper echelon of the
organization in order to accomplish
performance goals.
Strategic Management:
A continuous activity that requires a
constant adjustment of three major
interdependent poles:
the values of senior management,
the environment,
the resources available.
Model of Strategic Management:

Mission & goals
Environmental analysis
Strategic formulation
Strategy implementation
Strategy evaluation
Environmental analysis:
• Internal organizational strengths and
weaknesses
• External environment for opportunities
and threats
Strategic formulation:
Involves senior managers evaluating the
interaction between strategic factors and
making strategic choices that guide
managers to meet the organization’s goals.
Strategy implementation:
Focuses on the techniques used by
managers to implement their strategies
(e.g. leadership style, organizational
structure, control systems, management of
human resources).
Strategy evaluation:
Determines to what extent the actual
change and performance match the
desired change and performance.
Hierarchy of Strategy
Corporate Strategy:
Describes a corporation’s overall direction
in terms of its general philosophy towards
growth and the management of its various
business units.
WHAT BUSINESS ARE WE IN?
Corporate Strategy
• Establishing investment priorities and

steering resources into the most attractive
business units
• Initiating actions to improve combined
performance of business units
• Improving synergy between related
business units to increase performance
• Making decisions re diversification
Business-Level Strategy:
Deals with decisions and actions
pertaining to each business unit in order to
make each unit more competitive in its
market-place.
HOW DO WE COMPETE?
Business-Level Strategy
Business-Level Strategy
Low-cost leadership:
To increase market-share by having the lowest unit-cost
and price compared with competitors.
Differentiation strategy:
Distinguishing products from competitors by providing
distinctive levels of service or quality - the customer is
prepared to pay a premium price.
Functional-Level Strategy:
Pertains to the major functional operations
within the business unit (including
research and development, marketing,
manufacturing, finance and HR) to
maximise resource productivity.
HOW DO WE SUPPORT THE BUSINESS-
LEVEL COMPETITIVE STRATEGY?
Management
Definitions:
OUTCOME: organizational systems designed to
achieve sustainable competitive advantage
(Snell).
PROCESS: of linking HR practices to business
strategy (Ulrich) with HR strategy as the
outcome.
Management
Integration of business strategy and HR
strategy:
• Linking of HR policies and practices with the
strategic management process of the
organization
• Internationalization of the importance of HR on
the part of line managers
• Integration of the workforce into the
organization to foster commitment
HR Strategy models
HR Strategies:
The patterns of decisions regarding HR policies
and practices used by management to design,
work and select, train and develop, appraise,
motivate and control workers.
HR Strategy models
Control-based model:
Management structures and HR strategy are
instruments and techniques to control all
aspects of work - to secure high productivity and
profitability.
The HR strategy will be consistent with the
organization’s competitive strategy.
Creates structural tensions between
management and employees.
HR Strategy models
Resource-based model:
The sum of people’s knowledge and expertise,
and social relationships, has the potential to
create competitive advantage.
Exploits the distinctive competencies of a work
organization (its resources and capabilities).
Leadership capabilities are critical to harnassing
the firm’s human assets.
Resource-based model
HR Strategy models
Integrative model:
Integrates management control model with
reward-effort exchange.
Characterizes two main dimensions of HR
strategy: acquisition & development, locus of
control.
Four dominant types of HR strategy:
commitment, collaborative, paternalistic,
traditional.
Integrative model
Integrative model
Commitment HR strategy focuses on the internal
development of employee’s competencies and outcome
control.
Traditional HR strategy focuses on the external
recruitment of competencies or process-based controls.
Collaborative HR strategy subcontracts work to external
independent experts giving autonomy and evaluating
performance on end results.
Paternalistic HR strategy offers learning opportunities
and internal promotion as trade for compliance with
process-based control mechanisms.
Evaluating SHRM &
HR Strategy Models
Limitations:
• Focus on strategic decision-making
• Absence of internal strategies
• Conceptualization of managerial control
Dimensions of SHRM
Important themes:
• HR practices and performance
• Re-engineering organizations and work
• Leadership
• Workplace learning
• Trade unions
International & Comparative HRM
International HRM:
HRM issues, functions and policies and
practices that result from the strategic activities
of MNCs and that impact the international
concerns and goals of those enterprises
(Scullion).
Emphasizes the subordination of national culture
and national employment practices to corporate
culture and HRM practices (Boxall).
International & Comparative HRM
Comparative HRM:
Systematic method of investigation relating to
two or more countries that has analytical rather
than descriptive implications.
Involves activities that seek to explain the
patterns of HRM institutions and HR practices in
selected countries.
CASE STUDY: Air National
CASE STUDY: Air National

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Strategic Human Resource

A strategic approach to Human Resource

What determines how HR strategy is

Model of Strategic Management:

• Establishing investment priorities and

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