Human Resource Planning

HRM-411,

Chapter 2
HUMAN RESOURCE POLICIES AND
STRATEGIES

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 strategy

• A set of related actions that managers take to increase

their company’s performance

• HR strategy designed to give concrete guidance and

help to identify specific practices that are adaptable
for org

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 Strategy
Strategy is primarily concerned with-

• The scope of an organisation’s activities

• Matching the activities of an organisation to that environment in
which it operates
• Resource implication
• Operational decisions
• The values and expectations of stakeholders
• Long-term direction
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 IBM’s HR Strategy
1) innovation, 2) business value, 3) global integration, and 4)
on-demand infrastructure. Behind this overall strategy are all
of the employees who make it work.
• IBM motivates its employees through:
• • Performance-based opportunities.
• • Leadership.
• • Hiring diverse and talented people.
• • Flexibility.
• • A values-based climate.

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 Role of HR Strategy in Strategic
Management
• 1. Behavioral role theory
• Employee behavior is the key factor for implementing
strategy
• Aligning HR policies and practices
• Sustainable competitive advantage
• Economic value
• Cost minimization
• Agency theory 5
 Role of HR Strategy in Strategic
Management
• Institutional theory
Strategic linkage and acceptance from stakeholders (1. investors,
2. customers and 3. employess)

• Dependency theory
HR can influence the performance of the organization.

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 Levels/types of strategy

1.Corporate level strategy (Merger, Acuisition and

diversification)
(necessary for large organization or group of company)
- Overall scope of the organization
- How to run in structural and financial terms
- How resources will be allocated to different operations.

2.Competitive or Business level strategy (SBU)

-Differentiation (Uniqueness) and cost leadership (Low cost)
- How to compete in a market
- Which products or services should be developed and offered to which
markets
- To what extent it meets customers needs
- Does it achieve the objective of the organization, viz., long term
profitability, market growth and efficiency.

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 3.Operational strategies/ Functional Level
strategy:
HR strategy, marketing strategy, Finance strategy, management
strategy, research & development strategy, Production
strtaegy

Adopted at the functional level and the success at the

functional or operational level ultimately enable an
organization to achieve the corporate level and
competitive strategies.

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 What is Policy (guidelines)

• A policy is a predetermined established guideline

towards the attainment of accepted goals and
objectives.
• A comprehensive coverage of policies embrace
any action or decisions, taken by either
employees or management in relation to the
working environment, the rights and
responsibilities of employees and management
and action of both parties.
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HR Policies and Procedures (step by
step methods)
A comprehensive coverage of policies embrace any action
or decision, taken by either employees or management in
relation to the working environment, the rights and
responsibilities of employees and management, and the
action of both parties.

Procedures prescribe the details for carrying out policies.

They spell out the specific rules and regulations, the steps,
time, place and personnel responsible for implementing
policies.

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 HR Program
HR Program is a stable plan of action that continues over an extensive
period of time.
•Some universal elements in HR Program are-
1.Employment- Selection and job change
2.Training and development
3.Communication
4.Grievances and discipline
5.Wages and salary
6.Health and safety
7.Benefits and Services
8.Labor relations
9.Research 11
 Considerations in Developing (making) HR
policies
1. Policy statement constitutes criteria for making
decisions.
2. Policies provide a clear idea of what management and
employees can expect.
3. Policies may originate from anywhere inside an
organization or from external sources-community,
state, legislation, economy change, international
forces.
4. Approval of new or changed HR policies ultimately
comes from top management.
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Considerations in Developing HR policies

5.Formulating policies the first

consideration is the objective and
purpose.
6. It is required to anticipate circumstances
that may arise in administration, as well
as knowledge of operating problems.
7. Unions have had a tremendous impact on
policy formulation.

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 Linking HR Processes to Strategy

• Aligning HR Stategy with business strategy can be done in

one of these ways-

1. Start with organizational strategy and then create HR stategy

2. Start with HR competencies and then craft corporate strategies based
on these competencies
3. Do a combination of both in a form of reciprocal relationship
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 1.Corporate strategy leads to HR
strategy

• Corporate strategy drives HR strategy. In other words,

personnel needs are based on corporate plans. If a firm
decides to compete on the basis of offering low cost
products, HR policies and practices must align and be
based on low labor costs.

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 2.HR Competencies lead to business
strategy

• This “skills determine strategy” outlook relies too

heavily on employee capabilities and not enough on
environmental analysis. Nor is consideration given to
changing HR practices in training or compensation to
facilitate this change in startegy.

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 3. HR strategy and Corporate
strategy

• HR strategy generates the business strategy and business

strategy determines the HR strategy. This concept of
reciprocal interdependence is widely accepted in the HR
strategy literature.

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 4. HR becomes a business partner

• The key concept is the “concurrent strategy

formulation”. Strategy development, based on
environmental analysis, is conducted at the same time
that HRM issues are considered. HR issues do not solely
determine strategy, nor does strategy unilaterally
determine HR practices. Hr managers must understand
the numbers language of business or the outcome
expectations of nonprofit organizations.
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 5. Strategic partnering

• Organizations realize the impact that HRM strategy can

have on organizational effectiveness and as HR managers
develop the internal relationships to ensure that the
strategy is effective.

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