LA # 2.

What is Strategic Management?

Strategic management is when strategies are being identified in order for managers to
be able to employ them and use them for the improvement of company’s performance
and for the company’s competitive advantage. If the company or organization exceeds
the rest organizations in the industry, then it is known to have a competitive
advantage.It is about decisions and actions that managers usually use in order to know
the outcome and the performance of the firm. In here, to be able to make good
decisions the manager would need to have a complete understanding and analysis of
the overall organizational environment.(Strategic management - Meaning and important
concepts,n.d.)

What are the stages of Strategic Management?

THE STAGES INVOLVED ARE:

GOAL-SETTING
ANALYSIS
STRATEGY FORMATION
STRATEGY IMPLEMENTATION
STRATEGY MONITORING

The purpose of goal-setting is to clarify your company's vision wherein first, you have to
produce your short and long term goals, second, you have to know how to achieve your
goal, and finally be able to personalize the process by assigning every member a task
to be completed. You also need to establish a mission statement which could clearly
define what your main aim is towards the employees and stockholders. Analysis could
help shape the next two stages, here you have to gather as many facts and data as
possible in order to fully realize your own idea. Its emphasis focuses on understanding
the business demands, its strategic direction, and the identification of activities that
could help in the expansion of business.In the formation of a plan, the first step is to
analyze the data gathered after thorough analysis. You need to identify what resources
the company currently has. Identification of places where you would need to hire for
outside help are also included here. Strategic implementation is known to be the
strategic management process's action step. If the strategy or plan does not work
together with the company’s current structure then, at least a new structure should be in
place at the beginning of this stage.Measures of performance, constant assessment of
internal and external trials, and remedial action are examples of strategy monitoring or
evaluation. The first step in any successful strategy is the definition of parameters which
would be measured. The goals established in the first stage must be mirrored in the
parameters. This is where you measure your progress with comparison of the results to
your plan. (The five stages of the strategic management process,n.d.)

What is Competitive Advantage?

What makes a customer choose your company over another is your competitive
advantage. Companies can gain a larger portion of the market by understanding and
promoting such an advantage.The user experience, that is, a better, more inexpensive,
or more joyful product or another tangible or intangible asset, such as intellectual
property or a customer service staff, can provide a competitive advantage.(What is
competitive advantage? Definition, examples & identification,n.d.)

What is the meaning of SWOT? SWOT analysis?

SWOT is an abbreviation for Strengths, Weaknesses, Opportunities, and Threats.

Internal factors over which you have some control are referred to as Strengths (S) and
Weaknesses (W) . Likewise, Opportunities (O) and Threats (T) are external factors over
which you have little control. SWOT Analysis is the most widely used method for
auditing and analyzing a company's overall strategic position and its environment.
(SWOT analysis - Definition, advantages and limitations, n.d.)

What is a strategy? Strategic planning?

A strategy is a set of actions designed to attain a specific goal that is usually large,
broad, and long-term (Higgins and Vincze, 1989). Organizations use strategies to focus
their efforts on achieving the needed changes that will lead to the achievement of their
objectives. Strategic planning is a process by which leaders of organizations decide
their long-term vision as well as their organization's goals and objectives. (Strategic
planning: What is a strategy?,n.d.)

Distinguish mission and vision.

A mission statement explains what the organization does, what its goals are, and how it
plans to achieve them. A vision statement describes the company's desired future
status. (Mission and vision statements,2018)

Describe its role in strategic management.

The mission statement will be used to determine whether the strategic plan is in line
with the agency's ultimate goals. The vision statement serves as motivation for
employees. (The purpose of mission and vision statements in strategic planning,n.d.)

LA#3

Human Resource Management: Evolution and development

In truth, the seeds of HRM were sown in Western Europe and the United States during the
industrial revolution of the 1850s. In the early twentieth century, the wind made its way to India
as well.(Chand,2014) The evolution of HRM can be grouped into the following categories from
that time to the present:

Trade Union Movement Era:

Workers' conditions in the aftermath of the factory system, which emerged as a result of the
industrial revolution, were appalling. Their predicament was made worse by the First World War.
This was the time when the government believed it was necessary to intervene to protect the
interests of workers.(Chand,2014)

Social Responsibility Era:

Some industrial owners/employers began to take a humanistic approach to their employees in

the early twentieth century. Robert Owen, a British industrialist, has a negative attitude about
labor. He believes that workers' physical, mental, and psychological growth is influenced by their
social and economic contexts. As a result, in order to increase productivity, it is required to
improve employee conditions by either removing them from an unfavorable setting or changing
the environment by providing better living and working conditions.(Chand,2014)

Scientific Management Era:

Fredrick Winslow Taylor proposed the notion of scientific management in the United States
early in the twentieth century as an alternative to the existing system of management by
initiative and incentive.(Chand,2014)

Human Relations Era:

By 1920, it was widely recognized that previous approaches to human resource management
were inadequate because they failed to understand workers as human beings with feelings,
attitudes, and needs. Many specialists voiced their views on the human dimensions of
organizational operations between 1925 and 1935.(Chand,2014)

Behavioural Science Era:

As we've seen, the human relations age assumes that a contented employee is a productive
employee. As a result, the behavioural science era views human behavior as a means of
improving performance efficiency. The findings of extensive study conducted by behavioural
scientists from the fields of sociology, social psychology, anthropology, and management
specialists inform the behavioral approach to HRM.(Chand,2014)

Systems Approach Era:

The system is defined as "an organised and complex whole: an assemblage or combination of
items or pieces constituting a complex unitary whole." The subsystems interact with each other
and are susceptible to change. These sub-systems are interconnected and reliant on one
another.(Chand,2014)

Contingency Approach Era:

The term "contingency" refers to a situation that is occurring right now. The contingency method
assumes that there is no one-size-fits-all approach to management that will work in all
scenarios. The ideal strategy to handle, according to this approach, changes depending on the
situation. As a result, this method is also known as the ‘situational approach'.(Chand,2014)

Human resource management: Concept, philosophy, goals, and framework

CONCEPT

Human resource management (HRM) encompasses all aspects of how people are hired and
managed in businesses. Strategic HRM, human capital management, knowledge management,
corporate social responsibility, organization development, resourcing (workforce planning,
recruitment and selection, and talent management), learning and development, performance
and reward management, employee relations, employee well-being, and employee service
provision are all covered. It also has a global aspect to it.(Armstrong,2014)

“The term ‘human resources’ reduces people to the same category of value as materials,
money and technology – all resources, and resources are only valuable to the extent they can
be exploited or leveraged into economic value.’”(Osterby and Coster,1992:31)
PHILOSOPHY

Explanation of HRM Philosophy:

“That human resource policies should be integrated with strategic business planning and used
to reinforce an appropriate (or change an inappropriate) organizational culture, that human
resources are valuable and a source of competitive advantage, that they may be tapped most
effectively by mutually consistent policies that promote commitment and which, as a
consequence, foster a willingness in employees to act flexibly in the interests of the ‘adaptive
organization’s’ pursuit of excellence”(Legge,1989: 25)

HRM beliefs included the notions that human resources provide a competitive advantage, that
the goal should be to increase employee commitment, that HR choices are strategic, and that
HR policies should therefore be integrated into the business plan.(Storey, 2001)

GOALS

HRM's goals are to: first, assist the organization in achieving its goals by developing and
implementing human resource (HR) strategies that are integrated with the business strategy
(strategic HRM); second, contribute to the development of a high-performance culture; ensure
that the organization has the talented, skilled, and engaged people it requires; third, create a
positive employment relationship between management and employees and a climate of mutual
trust; and fourth, encourage the appoint of women to positions of leadership.(Armstrong,2014)

FRAMEWORK

The HR architecture of a business, which includes the HR system, HR practices, and the HR
delivery model used by the HR department, provides the framework for delivering HRM. The HR
function and the HR professionals who are members of the function are responsible for
providing advice and services related to human resource management within that framework.
However, line managers are ultimately responsible for putting HR policy into practice.
(Armstrong, 2014)

HR System and Architecture

HR SYSTEM

The HR system is made up of interconnected and mutually supportive HR activities and

practices that work together to achieve HRM objectives.(Armstrong, 2014)
“The HRM system is first and foremost a vehicle to implement the firm’s strategy.”(Becker &
Huselid, 1998: 95)

Human resource management (HRM) can be defined as "a collection of many separate
processes with no clear or obvious link between them." HRM is viewed as an integrated and
cohesive bundle of mutually reinforcing behaviors under the more strategically minded system
approach.(Boselie et al., 2005: 73)

HR ARCHITECTURE

Human resource systems, processes, and structure, as well as employee behavior, make up
HR architecture. It is a full portrayal of all aspects of HRM, not just the HR function's structure.
(Armstrong,2014)

“We use the term HR architecture to broadly describe the continuum from the HR professionals
within the HR function, to the system of HR related policies and practices, through the
competencies, motivation and associated behaviours of the firm’s employees.” (Becker et al.,
2001: 12)

‘This architecture is seen as a unique combination of the HR function’s structure and delivery
model, the HR practices and system, and the strategic employee behaviours that these
create”(Hird et al., 2010: 25)

“It is the fit between the HR architecture and the strategic capabilities and business processes
that implement strategy that is the basis of HR’s contribution to competitive advantage.”(Becker
& Huselid, 2006: 899)

HR Context: Internal and External Environment Analysis

HRM procedures take place in the context of the organization's internal and external settings.
According to contingency theory, these factors have a significant impact on the choice of HR
practices(Armstrong,2010).

EXTERNAL ENVIRONMENT

Social, political, legal, and economic events, as well as competitive forces, make up the external
environment. Global rivalry in the mature manufacturing and service industries is becoming
more intense. This is aided by technology that is easily transportable and lower international
trade restrictions. Customers are becoming more demanding as new standards are set by
worldwide competition. Organizations are responding to the competition by being more
'customer centered,' reducing response times, emphasizing quality and continuous
improvement, speeding up the adoption of new technologies, working more flexibly, and 'losing
cost.' Businesses have been under pressure to become "lean and mean," downsizing and
eliminating layers of management and supervision. They have reduced permanent staff to a
core of essential workers, increased the use of peripheral workers (subcontractors, temporary
staff), and 'outsourced' work to outside service providers. In an economic crisis like the one that
began in 2008, these pressures can be significant.(Armstrong, 2010)

INTERNAL ENVIRONMENT

HR policy and practice will be influenced by the following aspects of the internal environment:
first, the size of the organization; the age or maturity of the organization; second, the
technology or key activities of the business will determine how work is organized, managed, and
carried out; third,the type of people employed, such as professional staff, knowledge workers,
technicians, administrators, production workers, and sales and customer service staff; and
fourth the financial circumstances. (Armstrong, 2010)

HRM and Organizational Performance: Impact and Ethical Foundations

HR specialists have a specific role in the organization to protect and promote fundamental
values regarding how people should be managed and treated. To achieve fair trading, they must
take action. This entails treating people fairly and consistently in accordance with procedural,
distributive, social, and natural justice principles, as well as ensuring that choices or policies
affecting them are transparent in the sense that they are known, understood, and applied
consistently.(Armstrong,2014, p.102).

Procedural justice involves treating people in ways that are fair, consistent, transparent and
properly consider their views and needs. In organizations, it is concerned with fair process and
the perceptions employees have about the fairness with which company procedures in such
areas as performance appraisal, promotion and discipline are being operated. (Adams, 1965;
Leventhal, 1980)

Distributive justice means ensuring that people are rewarded equitably in comparison with
others in the organization and in accordance with their contribution, and that they receive what
was promised to them (management ‘delivers the deal’)(Adams, 1965; Leventhal, 1980).

“Each person possesses an inviolability founded on justice that even the welfare of society as a
whole cannot override. For this reason justice denies that the loss of freedom for some is made
right by a greater good shared by others.” (Rawls, 1973: 3–4).

In the workplace, social justice refers to treating employees in ways that respect their natural
rights to be treated fairly and respectfully(Armstrong, 2014).
Employees should be aware of the standards they are required to meet and the rules they must
follow, according to natural justice principles. They should be provided a clear indication of
where they are failing or what regulations have been breached, and they should be given an
opportunity to improve before disciplinary action is taken, unless in circumstances of egregious
misbehavior.(Armstrong,2014)

The following are the ethical principles of performance management: First, respect for the
individual, it means people should be treated as 'ends in themselves' rather than merely as
‘means to other purposes.' Second, mutual regard, which means the parties involved in
performance management should respect each other's needs and concerns. Third, procedural
fairness, wherein the procedures used in performance management should be carried out fairly
and in accordance with procedural justice standards. And fourth, transparency which means,
people who are affected by decisions made as a result of performance management systems
should be able to examine the foundations on which those decisions were made. (Winstanley &
Stuart-Smith, 1996)

LA#4

SHRM

● The process of ensuring that major issues of human resource management are
dealt with strategically in order to promote the attainment of organizational goals
is characterized as Strategic Human Resource Management (SHRM).
(Armstrong, 2020)

● “An approach to management which encompasses those HR strategies designed

to improve organizational performance and measures the impact of these
strategies on organizational performance.” (Boxall, 2007: 1)

● “The choice, alignment, and integration of an organization’s HRM system so that

its human capital resources most effectively contribute to strategic business
objectives.” (Kaufman, 2015: 404)

● “All those activities affecting the behaviour of individuals in their efforts to

formulate and implement the strategic needs of the business.” (Schuler, 1992:
30)

Nature or Essence of SHRM

Strategic HRM is a method of defining how the organization's objectives will be met
through people, using HR strategies and policies and procedures.(Armstrong, 2014)

SHRM is, at its core, a notion. It is supported by a number of well-known hypotheses.

However, it also addresses HRM practice by emphasizing the significance of 'strategic
fit.'(Armstrong, 2020)

Strategic HRM encompasses more than just strategic planning and the design of
specific HR strategies. Its key concern is integrating what HR is doing and planning to
do with what the company is doing and planning to accomplish.(Armstrong, 2014)

“The idea of strategic HRM implies that HRM policies are aligned in linear fashion with
and driven by the business strategy; and the HRM strategy in turn translates the people
aspects of that business strategy into a plan for action on the people aspects of the
business and drives the HR activity designed to support that process.”(Brown et al,
2019: 4).

Distinguish SHRM and HRM

SHRM is a comprehensive strategy that outlines how important human resource

management issues can be addressed strategically in order to assist the attainment of
company objectives. SHRM, on the other hand, only comes to life when it results in
strategic actions and reactions, whether in the shape of overall or specialized people
strategies, or strategic behavior on the part of HR professionals working with line
managers. (Armstrong, 2020)

“We should perhaps regard SHRM as an overarching concept that links the
management and development of people within the organization to the business as a
whole and its environment, while HRM could be viewed as an organizing activity that
takes place under this umbrella.”(Truss & Gratton, 1994: 666)

What are the aims of SHRM?

Strategic HRM's main goal is to produce strategic capability by ensuring that the
company has the talented, dedicated, and well-motivated personnel it needs to maintain
a competitive advantage. It also has two additional goals: first, to achieve fit or
integration – aligning HR strategies vertically with business strategies and integrating
HR strategies with one another – and second, to provide a sense of direction in an often
chaotic environment so that the organization's business needs and the individual and
collective needs of its employees can be met by developing and implementing coherent
and practical HR policies and programs.(Armstrong, 2020)
Underpinning theories of SHRM.

The Resource-Based View

At the same time as the first descriptions of SHRM were being written, the resource-
based view (RBV) emerged as an underpinning theory.(Armstrong, 2020)

“The firm is ‘an administrative organization and a collection of productive resources’ and
saw resources as ‘a bundle of potential services’.” (Penrose, 1959: 24–25)

The resource-based view emphasizes that investing in people enhances their worth to
the firm, which is in accordance with human capital theory. It claims that a corporation
can achieve long-term competitive advantage if it has a human resource pool that can't
be replicated or replaced by competitors.(Armstrong, 2020)

Human Capital Theory

The resource-based concept is linked to human capital theory. It claims that the firm's
distinctive human capital resources have the ability to produce long-term competitive
advantage.(Nyberg et al, 2014; Ployhart et al, 2014)

“Sustained competitive advantage is achieved only by the interaction between the

human capital pool and the HR practices”(Wright et al, 1994: 320)

The Behavioural Perspective

Diverse sorts of strategies (cost-cutting, quality-improvement, and innovation)

necessitate different employee role behaviors. (Schuler & Jackson, 1987)

HRM strategies, according to the behavioral perspective, influence firm performance by

fostering needed role behaviors that are compatible with the organization's strategy. It
added a new layer to SHRM's profession, one that was equally concerned with people
as it was with profit.(Lepak & Shaw, 2008)

The AMO Model

The AMO model is tied to a behavioural approach, as well as a focus with the link
between HRM and performance that began in the late 1990s. It states that an
individual's talent, motivation, and opportunity all influence their performance.
Employees must have the ability and drive to perform successfully, and employers must
guarantee that they are given the opportunity to do so.(Boxall & Purcell, 2003)

Stakeholder theory

Shareholders, management, workers, consumers, government, and the general public

are all considered stakeholders in organizations, according to stakeholder theory.
(Freeman, 1984)

Conceptual framework of SHRM

SHRM is a decision-making technique linked to organizational objectives that connects

people rather than employees who are critical to the organization's business strategy
implementation.(Datta, 2007)

SHRM would consider dealing with all people associated with the business for the long
term as part of strategic management, and integrate issues such as organizational
structure, culture, managerial effectiveness, performance, resources, and management
changes that deal with HR actions applied to support the organization's competitive
strategy.(Wright, 1998)

SHRM was created as a means and approach to assist HR management in connecting

with the strategic context of the business, with the goal of equipping employees with the
intelligence to direct any disorderly environment of the organization toward an ordered
and coherent manner through the implementation of effective actions and policies.
(Jakson and Schuler, 1995)

SHRM takes into account those decisions and actions when it comes to managing
personnel at all levels in a way that is oriented in the direction of sustaining a
competitive advantage for the company.(Becker & Huselid, 2006)

LA#5

Strategic role of HRM

HR professionals play a strategic role when they serve as HR directors or heads of the
HR function, leaders of centers of expertise or key HR roles, or strategic business
partners at a transformative (strategic) level.(Armstrong, 2014)

Their function is not particularly strategic at a transactional level (as an HR officer,

consultant, or assistant performing basic HR services such as recruitment or training, or
working in an HR shared service center), but they can contribute to the design and
implementation of HR strategy.(Armstrong, 2014)

Strategic level roles

The roles of HR professionals at a strategic level are:

● To develop and implement forward-looking HR strategies in collaboration with their

management colleagues, based on insights into the organization's needs, linked with
business objectives, and integrated with one another.(Armstrong, 2014)

They accomplish it by taking an 'outside-in' strategy, in which the business is the

beginning point, together with the customer, competitor, and business difficulties it
faces. In order to produce genuine solutions and add real value, the HR strategy is
derived directly from these challenges.(Wright et al, 2004)

● To assist in the creation of corporate strategies. They do it by advising on how the

company may achieve its strategic goals by maximizing its human resources and
highlighting the unique contribution that the company's brilliant employees can make.
(Armstrong, 2014)

● To collaborate with their line management colleagues on a daily basis to assist the
implementation of the organization's, function's, or unit's business or operational plan.
(Armstrong, 2014)

The strategic contribution of HR advisers or assistants

HR advisors or assistants' strategic contribution HR advisers or assistants' primary

responsibility is to provide successful HR services within their function or as a member
of an HR service center. While they will not be in charge of developing HR strategies,
they may be able to contribute to them in their areas of expertise. To ensure that the
services they provide assist the fulfillment of the business goals of the departments or
managers for whom they provide services, they must first understand the business
goals of the departments or managers for which they provide services.(Armstrong,
2014)

The business partner role

HR professionals' ideas have been captured by the concept of HR professionals as

business partners. In essence, HR specialists share responsibility for the enterprise's
performance with their line management colleagues as business partners, and get
involved with them in implementing business strategy and running the firm.(Armstrong,
2014)

HR professionals collaborate extensively with their line management counterparts as

business partners. They are aware of the company's business strategies as well as the
possibilities and dangers it faces. They are capable of analyzing organizational
strengths and shortcomings, as well as identifying business problems and their
consequences for human resources. They are familiar with the company model and the
crucial success criteria that will help them get a competitive advantage. When it comes
to presenting a persuasive business case for innovations, they take a 'value-added'
strategy.(Armstrong, 2014)

The term 'value added' is prominent in the HR business partner idea. The term "added
value" comes from the accounting language, which defines it as the value added to the
cost of raw materials and purchased parts by the manufacturing and distribution
processes.(Armstrong, 2014)

A value added strategy in HR refers to the creation of value through HR efforts that
contribute significantly to corporate success. In strict terms, added value is defined as
the amount by which the value of a contribution outweighs its cost or makes a profit.
However, the phrase is frequently used to refer to the business-oriented approach that
HR professionals are expected to take and how it contributes to the firm's value
development. Adding value is about getting more out of an activity than was put into it
— getting more out of it than was put into it.(Armstrong, 2014)

LA#6
What is HR strategy?

“HR strategies indicate what the organization wants to do about its human resource
management policies and practices and how they should be integrated with the
business strategy and each other. They set out aspirations that are expressed as
intentions, which are then converted into actions”(Armstrong, 2014, pp.25-26).

A business's overall plan for managing its human capital in order to match it with its
commercial activities is known as a human resource strategy. All essential components
of HR, such as hiring, performance review, development, and remuneration, are guided
by the Human Resource strategy.(van Vulpen, 2021)

A human resource strategy, according to the definition, is a blueprint that aligns an

entity's HR activities with its core objectives. The goal of this alignment is to improve the
business's performance and ensure that the pursuit of goals stays on track.
(SoftwareWorld, 2021)

What is the purpose of HR strategy?

HR strategies are intended to express what an organization intends to do with its HRM
policies and practices now and in the future to ensure that they contribute to the
achievement of business goals.(Armstrong, 2014)

Consistently focusing on human resource strategy produces competitive advantage.

This is only achievable when businesses collaborate with human resources to create
systems and procedures. A company's edge over those with a less productive staff is
having the proper people in place. Individuals with high performance levels contribute to
the organization's strategic success.(Colbert, 2019)

What are the main types of HR strategies?

General HR strategies

The total system or bundle of complementary HR practices that the organization

proposes to adopt or implement in order to improve organizational performance is
referred to as a general strategy.(Armstrong, 2014)

Specific HR strategies

HR plans specify what the organization intends to do in areas like(Armstrong, 2014):

● Human capital management – obtaining, analysing and reporting on data that
informs the direction of value-adding, people management, strategic, investment and
operational decisions.

●Knowledge management – creating, acquiring, capturing, sharing and using

knowledge to enhance learning and performance.

● Corporate social responsibility – a commitment to managing the business ethically

in order to make a positive impact on society and the environment.

●Engagement – the development and implementation of policies designed to increase

the level of employees’ engagement with their work and the organization.
●Organization development – the planning and implementation of programmes
designed to enhance the effectiveness with which an organization functions and
responds to change.

●Resourcing – attracting and retaining high-quality people.

●Talent management – how the organization ensures that it has the talented people it
needs to achieve success.

●Learning and development – providing an environment in which employees are

encouraged to learn and develop.

●Reward – defining what the organization wants to do in the longer term to develop
and implement reward policies, practices and processes that will further the
achievement of its business goals and meet the needs of its stakeholders.

●Employee relations – defining the intentions of the organization about what needs to
be done and what needs to be changed in the ways in which the organization manages
its relationships with employees and their trade unions.

● Employee well-being – meeting the needs of employees for a healthy, safe and
supportive work environment.

What is the significance of evaluating the HR strategy?

After the strategies have been developed, a solid feedback and follow-up structure must
be put in place. SHRM emphasizes the importance of strategy evaluation. It
entails(Azmi, 2019):

“For the
success
of
SHRM, it is of utmost significance that HR executives should ensure the deliverables of
HRM are well known. Companies with well-structured and strategically-linked HR
practices have improved organizational performance. It is the responsibility of HR
executives to ensure that the results that are yielded by HRM activities are well known,
so as to provide evidence of the benefits of the strategic role of HRM. Bringing about
the SHRM perspective mandates putting in place a strong architecture for corporate
strategy and HRM integration to take place. Furthermore, the organization structure and
culture of the organization should also be compatible with the proposed
strategies.”(Azmi, 2019, p.23).

LA#7

Factors that affect the process of developing HR strategy

"The choice of practices that an employer pursues is heavily contingent on a number of

factors at the organizational level, including their own business and production
strategies, support of HR policies, and cooperative labour relations."(Cappelli, 1999)

The goals that management sets for their human resources strategy are influenced by a
variety of internal and external factors.(Armstrong, 2008)

The process of human resource development methods entails taking a risky approach
to developing ideas, strategic HRM possibilities and then making strategic decisions
that are appropriate. There is rarely, if ever, a single correct path forward.(Armstrong,
2008)

Choices should be based on, but also anticipate, the company's vital demands. They
should be based on thorough research and analysis rather than wishful thinking, and
they should include the expertise of a group of people,senior management's
assessment of the organization's requirements. Line managers and employees'
requirements are also taken into consideration. The issues of implementation should be
anticipated in the emerging plans. This can happen if line managers aren't dedicated to
the strategy and/or don't have the necessary skills.
the ability to contribute their skills and time, and the methods should be competent of
being transformed into workable programs. (Armstrong, 2008)

Consideration needs to be given

to the impact of the five forces on HR policy choice identified by (Baron & Kreps, 1999):
 ● The external environment (social, political, legal and economic).
● The workforce.
● The organization’s culture.
● The organization’s strategy.
● The technology of production and organization of work.

Approaches to HR strategy development.

HR can take one of two approaches to strategy formulation: 1) the inside-out approach,
which starts with the current HR function (in terms of skills, processes, technologies,
and so on) and then attempts (with varying degrees of success) to identify linkages to
the business (usually through focusing on 'people issues,' making minor adjustments to
HR activities along the way); 2) the outside-in approach, which starts with the business
and the customer, competitor, and so on, making minor adjustments to HR activities
along the way. The HR strategy is thus directly derived from these difficulties in order to
provide actual value. (Wright et al., 2004)

What are the steps in formulating HR strategy?

HR strategies are more likely to emerge from product/market and financial concerns in
corporate plans. However, there is still potential for HR to make an important
contribution at the stage of developing company plans, such as by focusing on resource
concerns. When strategy formation is an emergent or evolutionary process, HR
strategic concerns will be addressed as they occur during the formulation and
implementation of the company strategy.(Wright et al., 2004)

It is vital to emphasize the interactive (not unilinear) relationship between company

strategy and HRM while examining methods to the design of HR strategy.(Hendry &
Pettigrew, 1990).

The mechanism by which plans are achieved is not limited to formal HR policies or
written directions: managers and others can also play a role in the process. Because
acts elicit reactions (acceptance, confrontation, negotiation, and so on), the strategy
process includes these reactions as well.(Tyson, 1997)
The following are the six-step approach to develop HR strategies (Gratton, 2000):

LA#8

Describe a good strategy.

An effective HR strategy is one that works in the sense that it achieves what
it sets out to achieve. In particular, it: (Armstrong, 2008, p.61)

● will satisfy business needs;

● will be founded on detailed analysis and study, not just wishful thinking;

● can be turned into actionable programmes that anticipate implementation

requirements and problems;
 ● is coherent and integrated, being composed of components that fit with and
support each other;

● takes account of the needs of line managers and employees generally as well as
those of the organization and its other stakeholders.

HR strategy should attempt to address the needs of the company's primary stakeholder
groups involved in human resource management.(Boxall & Purcell, 2003)

Identify the problems involved in implementing strategy.

The disconnect between rhetoric and reality in the field of human resource
management, between HRM theory and HRM practice, between what the HR function
says it does and how that practice is perceived by employees, and between what senior
management believes is the role of the HR function and the role it actually plays, is one
major theme that runs throughout the book.(Gratton et al., 1999)

The factors that contribute to creating this gap included (Gratton et al., 1999):

● The tendency of employees in diverse organizations only to accept initiatives

they perceive to be relevant to their own areas.
● The tendency of long-serving employees to cling to the status
quo.
● Complex or ambiguous initiatives may not be understood by employees or will be
perceived differently by them, especially in large, diverse organizations.
● It is more difficult to gain acceptance of non-routine initiatives.
● Employees will be hostile to initiatives if they are believed to be in conflict with
the organization’s identity, e.g. downsizing in a culture of ‘job-for-life’.
● The initiative is seen as a threat, inconsistencies between corporate strategies
and values,
● The extent to which senior management is trusted.
● The perceived fairness of the initiative.
● The extent to which existing processes could help to embed the initiative.
● A bureaucratic culture that leads to inertia.

Other major roadblocks include a lack of understanding of the business's strategic

needs, an inadequate assessment of the environmental and cultural factors that
influence the content of the strategies, and the development of ill-conceived and
irrelevant initiatives, possibly as a result of current fads or an ill-digested analysis of
best practice that does not meet the organization's needs.(Armstrong, 2008)
Discuss how to tackle the problems and describe the approaches for the effective
delivery of HR strategy.

"To overcome these barriers it is necessary to: 1) conduct a rigorous preliminary

analysis of needs and requirements; 2) formulate the strategy; 3) enlist support for the
strategy; 4) assess barriers; 5) prepare action plans; 6) project- manage
implementation; and 7) follow up and evaluate progress so that remedial action can be
taken as necessary. "(Armstrong, 2008, p.71)

THE BEST-PRACTICE APPROACH

This strategy is based on the notion that there is a set of best HRM practices that must
be followed in order to get superior organizational results. They are universal in the
sense that they are appropriate in any circumstance.(Armstrong, 2008)

THE BEST-FIT APPROACH

The best-fit approach highlights the need for HR initiatives to be based on data, the
environment, circumstances, and nature of the organization. 'Best fit' is a term that can
be used in a variety of ways, vertical integration or alignment between the organization's
HR and business strategy There are other models to choose from, including life cycle,
competitive strategy, and strategic configuration are all examples of strategic
configuration.(Armstrong, 2008)

BUNDLING

"A strategy’s success turns

on combining 'vertical' or external fit and 'horizontal'or internal fit." (Richardson &
Thompson, 1999)

They come to the conclusion that a company having a collection of related HR practices
should have a greater level of performance, as long as it's also well-suited to the
environment and its business strategy(Armstrong, 2008)

Bundling refers to the creation and execution of a number of HR practices together in

such a way that they are interconnected and hence complement and
support each other. This is what horizontal integration is all about which is also known
as the application of 'complementarities'(Armstrong, 2008)
Role of Line managers in implementing HR strategy.

Implementing and enacting policies is the task of line managers. (Armstrong, 2020)

"it is front-line managers who ‘bring policies to life’. "(Purcell et al, 2003: x)

"It is necessary first to involve line managers in the development of people

strategy – bearing in mind that things done with line managers are much more likely to
work than things done to line managers. Second, ensure that the people policies they
are expected to put into practice are manageable with the resources they have
available, including their time. Third, provide managers with the training, supporting
processes and on-the-spot guidance they need."(Armstrong, 2020, p.125)

Line managers have a bad habit of compromising, since they were not harmonious,
they sabotaged the implementation of strategies because they were convinced that they
were necessary or had the expertise or motivation to put them into action. The function
of people management could be proposed, but line managers have the final say — line
managers have the power to bring people in. They can bring policies to life, but they
may also kill them.(Trevor, 2011)

Role of HR

HR's strategic function has generally been centered on implementation.(Kammar, 2016)

The functional strategy of a company should complement its competitive strategies.

HRM provides the organization with a capable and willing workforce that is in charge of
putting strategies into action.(Kammar, 2016)

HR also assists with plan implementation in other ways. It can assist the company in
restructuring and downsizing without offending employees, for example, by outpacing
employees, connecting rewards to performance, lowering welfare expenses, and
retraining staff. HR can also make systematic efforts to improve employee skill levels so
that the company can compete on quality.(Kammar, 2016)

If the HR factor is not given enough attention, even a well-designed strategy can fail.
(Kammar, 2016)

LA#9
Organizational Development and Organizational Development Strategy

By establishing, enhancing, and reinforcing strategies, structures, and processes,

organizational development is a critical and science-based process that helps
organizations grow their capacity to change and achieve better effectiveness.(van
Vulpen, 2021)

An objective-based methodology used to induce a change of systems in an entity is

known as organizational development. A modification in communication procedures or
their supporting structure is required for organizational development. Professionals can
investigate and watch the work environment and anticipate change by studying
employee behavior, which can then be used to achieve sound organizational
development.(Corporate Finance Institute, 2020)

“Organization development strategy is founded on the aspiration to improve

organizational capability, which is broadly the capacity of an organization to function
effectively in order to achieve desired results.” (Armstrong, 2014, p.158).

OD strategies are developed as programmes with the following features(Armstrong,

2006,pp.92-93):

OD activities relevant to HR strategy.

Behavioural Techniques
Sensitivity Training

The goal of sensitivity training sessions (also known as T-groups) is to modify people's
behavior through unstructured group interaction. Members (ten to fifteen people) are
brought together in a relaxed and open setting away from their workplaces, where they
can openly discuss themselves with the help of a facilitator. There is no formal agenda
offered.(14 OD Interventions, 2021)

Role Playing

Role playing is a strategy for establishing a real-life situation, frequently including

interpersonal conflict, and then having members of a group act out the parts or roles of
specific personalities. It is largely utilized in industry as a strategy for changing or
adjusting attitudes and interpersonal skills.(14 OD Interventions, 2021)

Management by Objectives

Managing by objectives is a dynamic method that combines the company's desire to

accomplish profit and growth goals with the manager's desire to participate and grow.
(14 OD Interventions, 2021)

Grid Organisation Development

Grid organizational growth is based on Blake and Moution's managerial Grid leadership
concept. Their model highlights two common concerns that can be addressed in any
organization: productivity and people.(14 OD Interventions, 2021)

Some managers are more concerned with productivity than with people, while others
are more concerned with people than with productivity.(14 OD Interventions, 2021)

Non-Behavioural Techniques

Organizational Redesign
By changing the flow of authority, the structure of the organization can be modified to
make it more efficient. Changes in functional responsibility, such as a shift from a
product to a matrix organizational structure, are also occurring.(14 OD Interventions,
2021)

Work design

Work design is a broad term that refers to the process of defining tasks and jobs in
order to achieve both organizational and employee goals. It must therefore consider the
nature of the business (organizational interest), the organizational structure, information
flow and decision-making processes, employee differences, and the reward system.(14
OD Interventions, 2021)

Job enrichment

Job enrichment is a motivating method that emphasizes the importance of doing work
that is both challenging and engaging. It proposes that jobs be redesigned so that doing
the job provides intrinsic satisfaction.(14 OD Interventions, 2021)

Miscellaneous Techniques

Survey feedback

Insofar as it aids in the transformation of participants' attitudes and views, survey

feedback is beneficial. When combined with team building, the survey response has a
considerably more favorable influence.(14 OD Interventions, 2021)

Process consultation

It is defined as a set of activities on the part of a consultant to assist the client in

perceiving, understanding, and acting upon process events that occur in the client's
environment.(14 OD Interventions, 2021)

Team building
Team building is a method of assessing and enhancing the efficiency of a work group,
with a focus on work procedures and interpersonal relationships, particularly the
position of the leader in relation to other members.(14 OD Interventions, 2021)

LA#10

Human Capital Management (HCM)

Human Capital Management (HCM) is defined as a set of practices for human resource
management, with the goal of achieving organizational competency for workforce acquisition,
management and optimization(Ghosh, 2021).

Human capital management, otherwise known as HCM, are all the processes implemented by
HR, both core tasks and strategic initiatives, that help employees in their roles. It is the
collection of processes designed around the topics of recruitment, management, development,
and improvement to add value to a company(Buller, 2021).

HCM connotes an approach to human resource management that views employees as assets
to be invested in and managed to maximize their business value. HCM goes beyond the
traditional and mostly administrative functions of HR to include more strategic disciplines, such
as talent management and employee engagement(Essex & Brunskill, 2021).

Importance of HCM

The role of human capital management in an organization is a very important one because
human capital is knowledge and skills that employees possess that can help the company
further its goals(Pribanic, 2020).

Without human capital management at your organization, it is very difficult to achieve any kind
of success or reach any goals. With a human capital management system in place, your
organization will be able to create and maintain a successful, thriving workforce(Pribanic, 2020).

HCM aligns and measures a company’s two most important assets: people and capital. It is an
important process to keep companies supplied with the right human resources at the right time
to achieve business objectives now and in the future(Holiday, 2020).

From a workforce perspective, human capital management is important because it’s how they
engage with the company to advance their skills and responsibilities and develop their careers.
Surprisingly, more employees will leave a company if they don’t believe there is any opportunity
to grow their careers than because of compensation(Holiday, 2020).
Goals of HCM

The four fundamental objectives of HCM are (Armstrong, 2011,pp.170-171):

The role of HCM strategy to organization's strategic goals.

“Human capital management strategy is defined as ‘a blueprint for securing, managing and
motivating the workforce needed to support the organization’s strategic goals.”(Nalbantian et al.,
,2004:79)

“To be effective, the management practices that influence the workforce should be consistent
with one another and mutually reinforcing’. The whole area of human capital management
presents both an opportunity and a challenge – an opportunity to recognize people as assets
that contribute directly to organizational performance, and a challenge to develop the skills
needed to identify, analyse and communicate that contribution and ensure it is recognized in
business decision making.”(Armstrong, 2020, pp.152-153)
 “By developing strategies to generate better and more accurate information in the form of HR
analytics and communicating this information both internally and externally, organizations will
not only improve their business decision making but also enable stakeholders to make more
accurate assessments about the long-term future performance of the organization.”(Armstrong,
2020, pp.152-153)

HCM and business strategy linkage.

“It is often asserted that HCM and business strategy are closely linked and that a HCM
approach provides guidance on both HR and business strategy”(Armstrong, 2011).

● “By linking good HR practice and strategic management to human capital measurement
firms are able to make a number of better informed decisions that will help to ensure
long-term business success”(Scarborough & Elias, 2002: 17).

● “If HR people can demonstrate they can articulate the worth and contribution of the
organization’s people by linking the human capital strategy to the overall business
strategy, they will not only prove invaluable but play a part in improving management
practices”(Manocha, 2005: 28).

● “The HCM proposition ‘emphasizes the connections and value flows between strategy,
statistical analysis and the key stakeholders – employees, customers and
investors’”(Donkin, 2005: 3).

“One way of being more specific is to use HCM assessments of the impact of HR practices on
performance to justify these practices and improve the likelihood that they will work. The future
of HCM as a strategic management process largely depends on getting this done.”(Armstrong,
2011, p.172).

“A second way of specifying the link is to explore in more detail the implications of business
strategy and, conversely, the business implications of HR strategy. This can be done by
analyzing the elements of the business strategy and the business drivers and deciding on the
HR-supporting activities and HCM data required.”(Armstrong, 2011, p.172).

“A third (and potentially the most productive) way of linking HR and business strategy is
to relate business results to HR practices to determine how they can best contribute to
improving performance.”(Armstrong, 2011, p.172).

Steps in developing an HCM strategy

We should look at human capital management as establishing an environment for
employees to achieve, through many procedures, enabled by an organization. We must
follow several well-known steps in order to develop it.(Buller, 2021):

LA#11

Knowledge Management (KM Strategy)

Knowledge management is the process through which a company collects, organizes,

communicates, and analyzes its data in a form that is easily available to its personnel.
Technical resources, frequently asked questions, training manuals, and people skills are
all part of this expertise(Amsler, 2021).

Knowledge management is the deliberate act of defining, structuring, retaining, and

sharing an organization's employees' knowledge and experience(Valamis, 2021).

“The purpose of knowledge management is to transfer knowledge from those who have
it to those who need it in order to improve organizational effectiveness. It is concerned
with storing and sharing the wisdom and understanding accumulated in an organization
about its processes, techniques and operations.”(Armstrong, 2021, p. 164)

___________________________________________________________________

KM Strategy

A knowledge management strategy is a plan of action that specifies how your firm will
manage and consolidate company data, information, and knowledge in order to
increase productivity and efficiency. Individual departmental and company-wide
objectives are closely connected in the most successful of these programs.(Hill, 2021)

A written plan of action that explains your company's activities to develop a knowledge
management strategy and system is known as a knowledge management strategy. A
strategy will assist you in determining what information you will require to manage and
keep your project on track.(Olmstead, 2021)

“The purpose of knowledge management strategy is to capture an organization’s

collective expertise and distribute it to where it can be best used. It ensures that
knowledge is shared by linking people with people and by linking them to information so
that they learn from experiences”(Armstrong, 2020, p.163)

Approaches to the development of KM strategies.

Two approaches to knowledge management(Hansen et al.,1999):

Identify some strategic KM issues.

The pace of change

How to keep up with the pace of change and define what knowledge needs to be
recorded and communicated is one of the most pressing concerns in knowledge
management.(Armstrong, 2014)

Relating knowledge management strategy to business strategy

“A company’s knowledge management strategy should reflect its competitive strategy:

how it creates value for customers, how that value supports an economic model, and
how the company’s people deliver on the value and the economics.” (Hansen et
al,1999: 109)

Technology and people

When it comes to implementing a codification strategy, technology is crucial. IT, on the
other hand, plays a more supportive role for companies who are adopting a broader and
perhaps more fruitful personalisation approach.(Armstrong, 2020)

“In the codification model, managers need to implement a system that is much like a
traditional library – it must contain a large cache of documents and include search
engines that allow people to find and use the documents they need. In the
personalization model, it’s more important to have a system that allows people to find
other people.” (Hansen et al., 1999: 113).

“Technology should be viewed more as a means of communication and less as a

means of storing knowledge.” (Scarborough et al., 1999: 35)

The significance of process and social capital and culture

A preoccupation with technology may mean that too little attention is paid to the
processes (social, technological and organizational) through which knowledge
combines and interacts in different ways (Blackler, 1995).

The key process is the interactions between people. This is the social capital of an
organization, that is, the ‘network of relationships [that] constitute a valuable resource
for the conduct of social affairs’ (Nahpiet and Ghoshal, 1998).

“Social networks can be particularly important to ensure that knowledge is shared. What
is also required is another aspect of social capital: trust. People will not be willing to
share knowledge with those whom they do not trust. The culture of the company may
inhibit knowledge sharing. The norm may be for people to keep knowledge to
themselves as much as they can because ‘knowledge is power’. An open culture will
encourage people to share their ideas and knowledge.”(Armstrong, 2014, p.167)

Components of KM strategy.

“A knowledge management strategy could be concerned with organizational people

management processes that help to develop an open culture. This will be one in which
the values and norms emphasize the importance of sharing knowledge and facilitate
knowledge sharing through networks. It might aim to encourage the development of
communities of practice” (Armstrong, 2020, p. 167).

“Groups of people informally bound together by shared expertise and a passion for joint
enterprise” (Wenger & Snyder, 2000: 139).
“The strategy could refer to methods of motivating people to share knowledge and
rewarding those who do so. The development of processes of organizational and
individual learning, including the use of seminars and symposia that will generate and
assist in disseminating knowledge, could also be part of the strategy.”(Armstrong, 2020,
p.167).

LA#12Corporate Social Responsibility(CSR)

Corporate social responsibility (CSR) refers to strategies that businesses use as part of
their corporate governance to guarantee that their activities are both ethical and useful
to society(Corporate Finance Institute, 2021).

When a corporation operates in an ethical and sustainable manner and addresses its
environmental and social implications, this is referred to as corporate social
responsibility (CSR). This entails taking into account human rights, the community, the
environment, and the society in which it operates(Collier, 2021).

The term "corporate social responsibility" refers to a company's efforts to guarantee that
its operations have good social and environmental consequences. Businesses that
engage in active CSR initiatives evaluate their global operations to include cultural and
social issues, with the goal of benefiting both in the process. CSR models may boost
company and revenue while also promoting change and growth around the world, which
frequently entails assisting people with limited or no resources(Ohio University, 2020).

“CSR refers to the actions taken by businesses ‘that further some social good beyond
the interests of the firm and that which is required by law’” (McWilliams et al., 2006: 1).

Rationale for CSR

Stakeholder theory suggests that managers must satisfy a variety of constituents (e.g.
workers, customers, suppliers, local community organizations) who can influence firm
outcomes(Freeman, 1984).

“According to this view, it is not sufficient for managers to focus exclusively on the
needs of shareholders or the owners of the business. Stakeholder theory implies that it
can be beneficial for the firm to engage in certain CSR activities that non-financial
stakeholders perceive to be important.”(Armstrong, 2014, p. 108).
CSR is justified on the basis of two propositions. First, there is a moral imperative for
corporations to "do the right thing" regardless of how such actions influence firm
performance (the social issues argument); second, by linking CSR efforts to main
stakeholders, businesses can gain a competitive edge (the stakeholders argument)
(Hillman & Keim, 2001)

“Their research in 500 firms implied that investing in stakeholder management may be
complementary to shareholder value creation and could indeed provide a basis for
competitive advantage as important resources and capabilities are created that
differentiate a firm from its competitors. However, participating in social issues beyond
the direct stakeholders may adversely affect a firm’s ability to create shareholder
wealth. Strong arguments for CSR were made by Porter and Kramer
(2006).”(Armstrong, 2014, p.108).

Arguments in favor of CSR

Arguments supporting CSR(Porter & Kramer,2006):

Strategic CSR

Strategic CSR is determining how active the company should be in social issues and
then developing a corporate social agenda that considers which social issues to focus
on and to what extent.(Armstrong, 2014).

“It is through strategic CSR that the company will make the greatest social impact and
reap the greatest business benefits.”(Porter & Kramer, 2006: 85).

CSR activities

CSR activities include incorporating social characteristics or features into products and
manufacturing processes, implementing progressive HRM practices, improving
environmental performance through recycling and pollution reduction, and supporting
community organization aims.(McWilliams et al., 2006)

Role of HR in implementing CSR

HR also has a role to play in improving the working conditions of employees, which is
an integral part of CSR. Thus, human resources management can contribute to
(Fournier, 2020):

■ Improving the quality of work life:

Human resources, by assisting in the improvement of working circumstances, make the

company a more responsible organization. Ergonomics of premises and equipment,
more attentive management... They can assist in reducing workplace stress, improving
workplace well-being through the use of digital technologies, and so on.

■ Making companies more flexible when possible:

A more responsible HR management also means listening to employees and

sometimes offering them more flexibility. When possible, HR can give them more
flexibility in their schedules to better manage their work/life balance and productivity, or
allow for teleworking.
Basis for developing CSR strategy

The basis for developing a CSR strategy is provided by the following competency
framework which is made up of six characteristics(CSR Academy, 2006):

LA#13

Organizational Performance as a strategy

The analysis of a company's performance in relation to its objectives and goals is known as
organizational performance. In other words, organizational performance is the comparison of
actual results or outputs to expected outcomes. The study focuses on three primary outcomes:
shareholder value performance, financial performance, and market performance.(Nordqvist,
2021).
The degree to which an organization can effectively place itself on the business market using
some informational, financial, and human resources is referred to as organizational
performance. Individual performance can have a favorable or negative impact on the overall
success of the company in the short, medium, and long term.(Conţu,2020).

Running a business - the entire business as a single unit – is what active performance
management is all about. It's a never-ending cycle of planning, executing, measuring results,
and deciding what to do next. That involves constant improvement in the framework of a bigger
strategic endeavor.(Gheorghe & Hack, 2007).

“The management of organizational performance takes place on a number of dimensions. It is a

strategic approach that has to take account of the needs of multiple stakeholders and makes
use of business performance management systems.”(Armstrong, 2009, p.220)

Dimensions of OP management

Managing organizational performance includes five dimensions(Sink & Tuttle, 1990):

Strategic approach to managing OP

“A strategic approach to managing organizational performance means taking a broad and long
term view of where the business is going and managing performance in ways that ensure that
this strategic thrust is maintained. The objective is to provide a sense of direction in an often
turbulent environment so that the business needs of the organization and the individual and
collective needs of its employees can be met by the development and implementation of
integrated systems for managing and developing performance.”(Armstrong, 2009, p.221)

“Organizational performance management systems are strategic in the sense that they are
aligned to the business strategy of the organization and support the achievement of its strategic
goals. They focus on developing work systems and the working environment as well as
developing individuals.”(Armstrong, 2009, p.222)

“Organizational performance strategy is based on the resource-based view that it is the strategic
development of the organization’s rare, hard to imitate and hard to substitute human resources
that produces its unique character and creates competitive advantage.”(Armstrong, 2020,
p.183)

The strategic goal will be to ‘create firms which are more intelligent and flexible than their
competitors’ by developing more talented staff and by extending their skills base.(Boxall, 1996)

Key results areas of strategic OP

The designation of the most significant areas of activity and achievement for the company is the
first step in strategic organizational performance management. These are what might be
referred to as organizational key result areas. They could include all of the following or a subset
of them(Armstrong, 2020):

Organizational capability
“Organizational capability is the capacity of an organization to function effectively. It is about the
ability of an organization to identify its critical success factors, guarantee high levels of
performance for each of these factors, achieve its purpose, deliver results and meet the needs
of its stakeholders.”(Armstrong, 2020, p.184)

Organizational capability is ‘the ability of an organization to perform a coordinated set of tasks,

utilizing organizational resources, for the purpose of achieving a particular end result’. (Helfat &
Peteraf, 2003)

Organizational capabilities are what people, organizations, and technology bring to the table
when they work together to achieve business goals. Collaboration and talent management are
two organizational characteristics that bind all aspects of the business together. The goal of an
organizational capability-based strategy is to plan, design, and supply business capabilities to
the company(MBA Skool Team, 2020).

Process of developing a high performance culture

“Organizations achieve sustained high performance through the systems of work they adopt but
these systems are managed and operated by people. Ultimately, therefore, high-performance
working is about improving performance through people. This can be done through the
development and implementation of a high-performance culture through high-performance work
systems in which performance management plays an important part.”(Armstrong, 2009, p.228).

Creating a high-performance culture:

1. Clarify values and communicate them every day

Adding value to your operations improves a company's profitability and makes it a better place
to work. Your values will guide your actions on a daily basis. The values you establish for your
company have a direct impact on its overall performance.(Kashyap,2019)

2. Reinforce positive behavior

It will offer value to your firm if they can get those negative notions out of their heads.
Encourage your staff to have a positive, can-do attitude. Individuals who exemplify the
organization's principles should be rewarded since it raises their chances of doing a good job
again. Your staff are responsible for the success of your company. To properly reinforce, you
need to urge them to perform more productively, hence enhancing employee self-
esteem(Kashyap, 2019).
3. Encourage open communications

The organizations that encourage open communication in the workplace create a lively
environment. Whatever the topic of discussion is, there should be a continuous line of
communication with an unbiased and open conversation. Ascertain that information flows
smoothly from the executive level to the entry-level employee.(Kashyap, 2019)

4. Employee empowerment

Employees will put their faith in you as a leader to make decisions that will benefit them.
However, people expect to be able to make critical decisions that are directly or indirectly
related to them at times. The most effective leaders strive to help their staff attain their
maximum potential. Here's how you can encourage them to grow(Kashyap, 2019):

● Show them your trust.

● Provide the required training.
● Communicate the vision clearly.
● Don’t avoid small talk.
● Allow freedom within the limit.

5. Collect Feedback

A positive culture requires a culture that is rich in feedback. Give them the opportunity to
contribute feedback while they are at work, rather than waiting until they leave to do so, as
employees do with sites like Glassdoor. Transparent feedback can assist you learn how your
staff feel about company culture and what needs to be improved.(Kashyap, 2019)

How to create a feedback culture(Kashyap, 2019):

● Motivate your employees to give feedback correctly.

● Give the chance to come up whenever they want.
● Take their feedback seriously, do not ignore.

6. Focus on what matters

Do you have a sense of what is important in your culture? Perks and incentives are frequently
confused with culture. Though they are vital as a fantastic compliment to your culture, there are
many other factors to consider, such as(Kashyap, 2019):

● Room for growth in

● Appreciation for a job well done
● High level of transparency
● No favoritism
 ● Sense of purpose
● Supportive leadership

High-performance systems

“A high-performance work system (HPWS) was defined as one ‘that includes a bundle of
innovative HR practices and work processes that are mutually reinforcing, and which correlate
to performance improvements at both the individual employee and organizational
levels’.”(Dundon & Rafferty, 2018: 384)

The components of such a system could consist of strategies for:

● enhancing engagement;

● talent management;

● learning and development, with special consideration being given to leadership

development;

● financial and non-financial rewards;

● the development and use of individual performance management systems

“High-performance work systems provide the means for creating a performance culture. They
embody ways of thinking about performance in organizations and how it can be improved. They
are concerned with developing and implementing bundles of complementary practices that as
an integrated whole will make a much more powerful impact on performance than if they were
dealt with as separate entities.” (Armstrong, 2009, p.230)

LA#14

Explanation and Nature of PMS

A performance management system is a method for formalizing the five actions that are thought
to be necessary for achieving performance improvements(Armstrong, 2020):
“The defining features of an ideal performance management system are that it operates in
accordance with a set of principles and is a continuous process.” (Armstrong, 2020, pp.197-198)

The process of regular feedback and communication between managers and their staff to
ensure the attainment of the organization's strategic objectives is known as performance
management.(Lalwani, 2020)

“Performance management involves a continuing dialogue between managers and the people
they manage. The dialogue is based on goal achievement, performance analysis and
constructive feedback, and leads to performance and personal development plans.”(Armstrong,
2009, p.4)

What are the key principles of a PM?

Identified 10 principles of performance management as stated by practitioners (Armstrong &

Baron, 1998, 2004):
The PM cycle and its steps in the process.

PLANNING

“Performance planning is based on performance agreements. Expectations are defined

generally in role profiles that specify key result areas; the knowledge, skills and abilities (KSAs)
required and the behavioural competencies needed to perform well. What has to be
accomplished in key result areas can be defined in the form of objectives or targets. An
important aspect of performance planning is the process of aligning individual goals with the
strategic goals of the organization”(Armstrong, 2014, p.336).
“What has to be accomplished in key result areas can be defined in the form of objectives or
targets. An important aspect of performance planning is the process of aligning individual goals
with the strategic goals of the organization. The acronym ‘SMART’ is often used to define a
good objective. Traditionally, S stands for specific (sometimes ‘stretching’), M for measurable, A
for agreed, R for realistic and T for time-related.”(Armstrong, 2014, p.336).

The foundation for success is created in the planning stage. Before speaking with the employee,
the management team should convene and determine the organization's annual goals and
objectives.(Valamis, 2021)

This includes not only the company's overarching strategy, but also personal objectives for all
employees and teams, such as career ambitions, particular tasks, targets, actions, and
behaviors.(Valamis, 2021)

MONITORING

“Perhaps one of the most important features of performance management is that it is a

continuous process that reflects normal good management practices of setting direction,
monitoring and measuring performance and taking action accordingly. Performance
management should not be imposed on managers as something ‘special’ they have to do. It
should instead be treated as a natural function that all good managers carry out.”(Armstrong,
2014, p.338).

An employee may also receive training during this stage of the performance management cycle.
Alternatively, they may be subjected to other aspects of the development plan for the time
being.(Specht, 2022)

Monitoring is an important function in the performance management cycle model for attaining
the goals set out in the planning stage.(Valamis, 2021)

However, if the monitoring is only done once or twice a year, it will be ineffective. Management
should meet with staff on a monthly or quarterly basis to check in on progress, offer assistance
if needed, aid in the resolution of any issues that may have occurred, and revise targets as
appropriate.(Valamis, 2021)

REVIEWING

Management and employees meet at the end of the year to assess the past year and see if
goals were reached.(Valamis, 2021)

This is yet another opportunity to work with the employee in a collaborative manner. The more
they are involved in the other stages of the performance management cycle, the more motivated
they will be to continue working hard to meet their own and the organization's objectives.
(Valamis, 2021)

Performance evaluation and comments are an important aspect of a review. Employees may
wish to consider undertaking a 360° feedback process, which includes input from their peers
and management, in addition to a self-assessment.(Specht, 2022)

This group feedback serves as the foundation for a constructive assessment that should be a
two-way conversation. Employees should assess their own performance as well as provide and
receive feedback on the team and boss.(Specht, 2022)

REWARDING

Work that is of high quality should be rewarded. This is the purpose of this step.(Specht, 2022)

It's critical to link rewards to performance directly, ideally inside the performance management
cycle. Because employee motivation is primarily reliant on being compensated, this is the case.
(Specht, 2022)

The reward is the last stage of the performance management cycle plan. This is a vital step that
must not be missed because it is the most important for employee motivation.(Valamis, 2021)

Employees who do not receive a proper incentive after a year of trying for and achieving
corporate goals will lose motivation for the next year. They may lose faith in their organization
and believe that their skills are undervalued, prompting them to look for a new career.(Valamis,
2021)

Limitations of the PM model and its implementation problems.

The emergence in many organizations of a number of distinct but interconnected processes that
are used in various ways depending on the needs of local circumstances and staff levels. Some
organizations reject the model's implication of a bureaucratic, centrally managed, and uniform
system of performance management, and instead acknowledge that diverse approaches may
be suitable in different regions of the business and for different people within an overall policy
framework.(Fletcher, 1998)

“Systems designers may be tempted to cover every aspect of the model in detail and turn what
should be a natural and straightforward management process into a bureaucratic nightmare,
with complex procedures and intricate paper- or computer-based forms. Managers don’t like this
and won’t do it properly, if at all. Employees generally regard it as yet another control
mechanism imposed from above.” (Armstrong, 2020, p.199)

“When developing a performance management system, the watchwords are ‘keep it simple’.
Terms such as role profile, key result areas or key performance indicators make perfect sense
as explanations of how the system works. But to the managers and employees who have to run
the system they can appear to be impenetrable jargon – prime examples of managerese or HR
speak. Such terms should be avoided or at least minimized in communications about the
scheme or during training.”(Armstrong, 2020, p.199)

“Another problem with the model is the suggestion that there is a smooth transition from the
organization’s strategic goals to individual goals. But this is much more difficult than it sounds.
Strategic goals at organizational level may not always translate easily into individual goals
because organizational goals are not defined well enough or are too remote from the work of
individual employees. Many commentators have extolled the virtue of alignment; few have made
practical suggestions about how it can be achieved. It can also be argued that strategic goals
will inevitably be determined by top management without consulting employees, and that simply
‘cascading’ goals downwards contradicts the performance management principle that people
should be involved in agreeing their own objectives.” (Armstrong, 2020, p.199)

“Thereafter, the model indicates a steady progression through the stages of performance
management, each of them linked together. This is both logical and desirable but in reality it
may be difficult to achieve. The natural tendency of managers is to compartmentalize these
activities, if they carry them out at all. They do not always appreciate how they are connected
and what they should do to ensure that the cycle does work smoothly”(Armstrong, 2020, p.200)

LA#15

EMPLOYEE ENGAGEMENT

Employee engagement refers to how enthusiastic and connected employees are with
their company. It's a measure of how dedicated people are to sticking with their
company and how motivated they are to put in extra work for it.(Croswell, 2021)

Employee engagement is:

● ‘the harnessing of organization members’ selves to their work roles; in

engagement, people employ and express themselves physically,
cognitively, and emotionally during role performances’ (Kahn,1990: 894)

● ‘the individual’s involvement and satisfaction with as well as enthusiasm

for work’ (Harter et al.,2002: 269)

● ‘an individual’s purpose and focused energy, evident to others in the

display of personal initiative, adaptability, effort and persistence directed
towards organizational goals’ (Macey et al., 2009: 7)
“The term ‘engagement’ can be used in a specific job-related way to describe what
takes place when people are interested in and positive, even excited, about their jobs,
exercise discretionary behaviour in choosing to do more than is expected of them –
‘going the extra mile’ – and are motivated to achieve high levels of performance. It is
sometimes described as a job or work engagement.” (Armstrong, 2020, p. 211)

Employee engagement is founded on an organization's members' trust, integrity, two-

way commitment, and communication. It's a strategy that helps businesses succeed by
improving organizational and individual performance, productivity, and well-being. It is
quantifiable. It ranges from mediocre to excellent. It can be cultivated and substantially
increased, or it can be squandered and discarded.(Engage for Success, 2020)

IMPORTANCE OF EMPLOYEE ENGAGEMENT

Employee engagement is critical for all businesses because effective solutions help to
improve work culture, minimize employee turnover, increase productivity, improve work
and customer connections, and impact corporate revenues. Nonetheless, it makes
employees happier and converts them into your most ardent supporters.
(EveryoneSocial, 2021)

Companies with an engaged workforce are more successful. Productivity

increases. Employees are satisfied and absorbed in their work so they’re more likely to
stick around. Engaged employees will leverage their networks and refer top talent into
the organization. Customer loyalty increases because of the reciprocal quality and
service that comes from engaged employees. And engaged employees are more likely
to look at the bigger picture because they understand their place and purpose in the
business and how what they do can affect the outcome of the company. All of this
impacts the financial health of your business.(Luther, 2021)

‘The potential for employee engagement to raise levels of corporate performance and
profitability.’(Truss et al., 2014: 1)

Other studies have also indicated that higher levels of engagement produce a range of
organizational benefits, for example(Armstrong, 2020):
ELEMENTS OF EMPLOYEE ENGAGEMENT

Two key elements that have to be present if genuine engagement is to exist

(IDS, 2007):

The first is the rational aspect that relates to an employee’s understanding of their role,
where it fits in the wider organization and how it aligns with business objectives.

The second is the emotional aspect, which has to do with how the person feels about
the organization, whether their work gives them a sense of personal accomplishment
and how they relate to their manager.

The drivers of employee engagement(Crawford et al., 2014: 59–62):

NATURE AND CONTENT OF EMPLOYEE ENGAGEMENT STRATEGY

“Employee engagement strategy is concerned with what needs to be done about

enhancing engagement, bearing in mind the factors affecting levels of engagement.
When developing the strategy the first step is to establish what is happening now and,
in the light of that, determine what should happen in each of those areas. This means
measuring levels of engagement in order to identify trends, successes and failures and
analyse any gaps between what is wanted and what is happening.”(Armstrong, 2020,
p.213)

“This can be done through published surveys such as those operated by Gallup that
enable benchmarking to take place against the levels of engagement achieved in other
organizations. Alternatively, organizations can create their own surveys to suit their
circumstances. These are typically conducted annually, but ‘pulse’ surveys carried out
more frequently enable the organization to keep up to date with trends.”(Armstrong,
2020, p.213)
“The strategy can be developed in the light of this information. It will be concerned with
what needs to be done to provide a better work environment, improve job design, offer
opportunities for personal growth and ensure that performance management is
effective. In each of these areas, strategies, policies and practices can be developed for
the organization by the people management function, but ultimately, the most important
ingredient for enhanced engagement is the leadership provided by line
managers.”(Armstrong, 2020, p.213)

Leadership

“A leadership strategy is required that focuses on how line managers can take the lead
in increasing levels of engagement.”(Armstrong, 2020, p.213)

The work environment

“The work environment impacts on engagement by influencing how people regard their
roles and carry them out. The strategy should aim to create an environment which is
enabling, supportive and inspirational. An enabling environment will establish the
conditions which encourage high performance and effective discretionary behaviour.
“(Armstrong, 2020, pp.213-214)

Job design

“The strategy should be to encourage, guide and as necessary train line managers on
how to increase job engagement by designing or modifying jobs which meet the
requirement to provide, as far as possible, challenge, autonomy and
variety.”(Armstrong, 2020, p.213)

Opportunities for personal growth

“The engagement strategy should consider what steps are required to ensure that
people have the opportunity and are given the encouragement to learn and grow in their
roles and develop their future careers.”(Armstrong, 2020, p.213)

Performance management

“The performance management activities of role definition, performance and personal

development planning, joint involvement in monitoring performance, and feedback can
all enhance engagement.”(Armstrong, 2020, p.213)
LA#16

Rationale for strategic resourcing.

“A rationale for developing a strategic resourcing flows from the suggestion that HRM should
make a significant effort towards: ‘obtaining the right basic material in the form of a workforce
endowed with the appropriate qualities, skills, knowledge and potential for future training. The
selection and recruitment of workers best suited to meeting the needs of the organization ought
to form a core activity upon which most other HRM policies geared towards development and
motivation could be built’”(Keep, 1989: 122)

“The concept that the strategic capability of a firm depends on its resource capability in the
shape of people (the resource-based view) provides the rationale for resourcing strategy. The
aim of this strategy is therefore to ensure that a firm achieves competitive advantage by
employing more capable people than its rivals. These people will have a wider and deeper
range of skills and will behave in ways that will maximize their contribution.”(Armstrong, 2020,
pp.219-220)

SHRM approach to resourcing.

“People management places emphasis on finding people whose attitudes and behaviour are
likely to be congruent with what management believes to be appropriate and conducive to
success.”(Armstrong, 2020, p.220)

“Organizations are concentrating more on ‘the attitudinal and behavioural characteristics of

employees’. This tendency has its dangers. Innovative and adaptive organizations need non-
conformists, even mavericks, who can ‘buck the system’”(Townley, 1989: 92)

“If managers recruit people ‘in their own image’ there is the risk of staffing the organization with
conformist clones and of perpetuating a dysfunctional culture – one that may have been
successful in the past but is no longer appropriate in the face of new challenges, ‘nothing fails
like success’”(Pascale, 1990)

“The people management approach to resourcing therefore emphasizes that matching

resources to organizational requirements does not simply mean maintaining the status quo and
perpetuating a moribund culture. It can mean radical changes in thinking about the skills and
behaviours required in the future to achieve sustainable growth and cultural
change.”(Armstrong, 2020, p.220)

Explain the importance of integrating business and resourcing strategies.

“The philosophy behind the strategic people management approach to resourcing is that it is
people who implement the strategic plan, the process is one of ‘planning with people in mind’.”
(Armstrong, 2020, p. 220)

The integration of business and resourcing strategies is based on a clear understanding of the
organization's direction and the selection of appropriate resources(Quinn Mills, 1985):

“Resourcing strategies exist to provide the people and skills required to support the business
strategy, but they should also contribute to the formulation of that strategy. People directors
have an obligation to point out to their colleagues the opportunities and constraints relating to
people that will affect the achievement of strategic plans. In mergers or acquisitions, for
example, the ability of management within the company to handle the new situation and the
quality of management in the new business will be important considerations.” (Armstrong, 2020,
p.221)

Discuss the components of employee resourcing.

The components of employee resourcing strategy are(Armstrong, 2020):

LA#17

Talent Management

Attracting and maintaining high-quality personnel, expanding their abilities, and

consistently motivating them to enhance their performance are all part of talent
management.(Valamis, 2021)

The main goal of talent management is to develop a motivated staff that will stay with
your firm for a long time. The specifics of how to accomplish this will vary from firm to
company.(Valamis, 2021)
“Talent management is a comprehensive and integrated set of activities which ensure
that the organization attracts, retains, motivates and develops the talented people it
needs now and in the future.”(Armstrong, 2020, p.225)

Talent Management are:

“Those activities and processes that involve the systematic identification of key
positions which differentially contribute to the organization’s sustainable competitive
advantage, the development of a talent pool of high potential and high performing
incumbents to fill these roles, and the development of a differentiated human resource
architecture to facilitate filling these positions with competent incumbents and to ensure
their continued commitment to the organization.” (Collings & Mellahi, 2009: 304)

Strategic Talent Management

“Talent management is a strategic management process because it involves

‘understanding the strategic position of an organization, making strategic choices for the
future, and turning strategy into action’”(Johnson et al., 2005: 6)

“Talent management strategy is a declaration of intent on how the objective of acquiring

and nurturing talent wherever it is and wherever it is needed should be achieved. It is
governed by the views of the organization on what is meant by talent and therefore with
whom the strategy should be concerned. Talent management strategy is expressed in
the form of a ‘bundle’ of interrelated talent management processes that constitute the
talent pipeline.”(Armstrong, 2020, p.225)

Talent

“Talented people could be described broadly as those who have the skills and ability to
do something well. But it is necessary to be more specific about which talented people
will be the concern of talent management. An elitist definition states that talent is a
quality possessed by people with exceptional ability who are going to go
far.”(Armstrong, 2020, p.227)

“Talent consists of those individuals who can make a difference to organizational

performance, either through their immediate contribution or in the longer term by
demonstrating the highest levels of potential.”(CIPD, 2007: 8)
A talented person is someone who can be counted on to finish a task or overcome a
hurdle. Some examples of this talent are the ability to communicate effectively with
other team members and the ability to consistently close agreements. Every person has
their own set of distinct qualities that combine to form their total work competence.
(Ayling, 2021)

Describe and explain the talent management framework.

A talent management framework gives your approach for meeting the organization's
human capital and business needs structure. It assists you in ensuring that you have
everything in place to properly implement your talent management plan and improve the
performance of your employees.(Lucas, 2021)

An excellent framework lays out the various aspects of talent management in your
company. It outlines tasks you can do in each area to make your people management
approach more effective. Finally, you can use it as a checklist when developing or
refining your approach.(Lucas, 2021)

You can improve the efficiency of the organization's talent pool by using a properly
customized talent management system. A practical talent management framework
provides you an edge on human capital management–you know what you need and
how to get it.(Lucas, 2021)
LA#18

Learning

“Learning is the means by which a person acquires and develops new knowledge, skills,
capabilities, behaviours and attitudes.” (Armstrong, 2010, p.217)

‘Learning has happened when people can demonstrate that they know something that
they did not know before (insights, realizations as well as facts) and when they can do
something they could not do before (skills).’(Honey & Mumford,1996)

“Learning is a continuous process which not only enhances existing capabilities but also
leads to the development of the knowledge and skills that prepare people for enlarged
or higher-level responsibilities in the future.”(Armstrong, 2010, p.217)

Strategic learning and development

“A learning and development strategy outlines the approach an organization adopts to

ensure that now and in the future, learning and development activities support the
achievement of its goals by enhancing the skills and capacities of individuals and
teams. It is often called strategic human resource development.”(Armstrong, 2010,
p.219)

“A learning and development strategy should be business-led in the sense that it is

designed to support the achievement of business goals by promoting human capital
advantage. But it should also be people-led, which means taking into account the needs
and aspirations of people to grow and develop. Achieving the latter aim, of course,
supports the attainment of the former. The strategy will aim to develop a learning
culture.”(Armstrong, 2010, p.219)

Goals of SLD

“The aim of strategic learning and development is to produce a coherent and

comprehensive framework for developing people through the creation of a learning
culture and the formulation of organizational and individual learning strategies. It is
about developing the intellectual capital required by the organization, as well as
ensuring that the right quality of people are available to meet present and future needs.
The main thrust of strategic learning and development is to provide an environment in
which people are encouraged to learn and develop. Strategic learning and development
is business-led but it also takes into account individual aspirations and
needs.”(Armstrong, 2020, p.235-236)

One of the primary objectives of HRM is the creation of conditions whereby the latent
potential of employees will be realized and their commitment to the causes of the
organization secured. This latent potential is taken to include, not merely the capacity to
acquire and utilize new skills and knowledge, but also a hitherto untapped wealth of
ideas about how the organization’s operations might be better ordered. (Keep, 1989:
112)

Philosophy of SLD.

The philosophy underpinning strategic learning and development is that (Armstrong,

2020):
Elements of LD
 (Armstrong, 2010)

Organizational learning strategy

“Organizational learning strategy aims to develop a firm’s resource-based capability.

This is in accordance with one of the basic principles of human resource management,
namely that it is necessary to invest in people in order to develop the human capital
required by the organization and to increase its stock of knowledge and
skills.”(Armstrong,2020, p.239)

Five principles of organizational learning(Harrison,1997):

1. The need for a powerful and cohering vision of the organization to be

communicated and maintained across the workforce in order to promote
awareness of the need for strategic thinking at all levels.

2. The need to develop strategy in the context of a vision that is not only
powerful but also open-ended and unambiguous. This will encourage a
search for a wide rather than a narrow range of strategic options, will promote
lateral thinking and will orient the knowledge-creating activities of employees.

3. Within the framework of vision and goals, frequent dialogue, communication

and conversations are major facilitators of organizational learning.

4. It is essential to challenge people continuously to re-examine what they

take for granted.
 5. It is essential to develop a climate that is conducive to learning and
innovation.

Individual learning strategy.

“The individual learning strategy of an organization is driven by its people requirements,

which are expressed in terms of the sort of skills and behaviours that are
required.”(Armstrong,2020, p.240)

An individual learning strategy should take account of these points. It will be based
on(Armstrong,2020):

Process of creating a learning culture.

“A fundamental objective of strategic learning and development is to create a learning

culture. A learning culture is one in which learning is recognized by top management,
line managers and employees generally as an essential organizational process to which
they are committed and in which they engage continuously.”(Armstrong,2020,p.238)

The steps required to create a learning culture are(Reynolds,2004: 12–20):

● Develop and share the vision – belief in a desired and emerging future.

● Empower employees – provide ‘supported autonomy’; freedom for employees

to manage their work within certain boundaries (policies and expected
behaviours) but with support available as required. Adopt a facilitative style of
management in which responsibility for decision making is ceded as far as
possible to employees.

● Provide employees with a supportive learning environment where learning

capabilities can be discovered and applied, e.g. peer networks, supportive
policies and systems, and protected time for learning.

● Use coaching techniques to draw out the talents of others by encouraging

employees to identify options and seek their own solutions to problems.

● Guide employees through their work challenges and provide them with time,
resources and, crucially, feedback.

● Recognize the importance of managers acting as role models.

● Encourage networks – communities of practice.

● Align systems to vision – get rid of bureaucratic systems that produce

problems rather than facilitate work.

LA#19

Reward strategy

“Reward strategy defines what an organization wants to do in the longer term to

address critical reward issues and to develop and implement reward policies,
practices and processes that will further the achievement of its business goals
and meet the needs of its stakeholders. It starts from where the reward practices
of the business are now and goes on to describe what they should
become.”(Armstrong, 2020, pp.242-243)

“Reward strategy provides a sense of purpose and direction, a pathway that links
the needs of the business and its people with the reward policies and practices of
the organization and thereby communicates and explains these
practices.”(Armstrong, 2020, p.243)

Arguments for developing RS

There are four arguments for developing reward strategies (Armstrong, 2020):

Characteristics of RS
“Reward strategy will be characterized by diversity and conditioned both by the
legacy of the past and the realities of the future.”(Armstrong & Murlis, 2004: 33)

“All reward strategies are different, just as all organizations are different. Of
course, similar aspects of reward will be covered in the strategies of different
organizations, but they will be treated differently in accordance with variations
between organizations in their contexts, strategies and cultures.’(Armstrong,
2020, p.244)

“Reward strategists may have a clear idea of what needs to be done, but they
have to take account of the views of top management and be prepared to
persuade them with convincing arguments that action needs to be
taken.”(Armstrong, 2020, p.244)

“They have to take particular account of financial considerations – the concept of

‘affordability’ looms large in the minds of chief executives and financial directors,
who will need to be convinced that an investment in rewards will pay off. They
also have to convince employees and their representatives that the reward
strategy will meet their needs as well as business needs.”(Armstrong, 2020,
p.244)

Basis of RS

“Reward strategy should be based on a detailed analysis of the present

arrangements for reward, which would include a statement of their strengths and
weaknesses. This could take the form of a ‘gap analysis’, which compares what it
is believed should be happening with what is actually happening and indicates
which ‘gaps’ need to be filled.”(Armstrong, 2020, p.244)

Content of RS

“Reward strategy may be a broad-brush affair, simply indicating the general

direction in which it is thought reward management should go. Additionally, or
alternatively, reward strategy may set out a list of specific intentions dealing with
particular aspects of reward management.”(Armstrong, 2020, p.247)
Guiding principles of reward management

Reward guiding principles are concerned with matters such as (Armstrong,

2010):

● operating the reward system justly, fairly, equitably and transparently

in the interests of all stakeholders;

● developing reward policies and practices that support the

achievement of business goals;

● rewarding people according to their contribution;

● recognizing the value of everyone who is making an effective

contribution, not just the exceptional performers;
 ● creating an attractive employee value proposition;

● providing rewards which attract and retain people and enlist their
engagement;

● helping to develop a high-performance culture;

● maintaining competitive rates of pay;

● maintaining equitable rates of pay;

● allowing a reasonable degree of flexibility in the operation of reward

processes and in the choice of benefits by employees;

● devolving more responsibility for reward decisions to line managers.

Model of RS development

There are four key development phases(Armstrong, 2020) :

Model:
 (Armstrong, 2020)

Components and criteria of an effective RS

Effective reward strategies have three components( Brown, 2001: 14–15):

The problems of the concept of RS

Rationalism is limited and pointed out that pay systems tend to be selected
for their legitimacy (best practice as advocated by institutions such as the CIPD
and by management consultants) rather than for purely economic reasons.
(Trevor, 2009)

“‘Irrespective of the strategic desire or the saliency of the design, ineffectual

execution results in ineffectual pay practice which then reacts negatively upon
the pay outcomes experienced as a result… Attempting to use strategic pay
systems such as incentive pay, results often in unintended consequences and
negative outcomes that destroy value rather than create it’” (Trevor, 2009: 34)

“‘Theory is out of step with reality and may represent a largely unattainable ideal
in practice… an alternative approach for the use of pay systems in support of
strategy is required: one that acknowledges the relative limits on the ability of
companies to manage pay strategically’”(p 37)

“Not all intended HR practices are actually implemented and those that are may
often be implemented in ways that differ from the original intention.”(Wright &
Nishii, 2006: 11)

LA#20

Employee relations strategy

“Employment relationships strategy defines the intentions of the organization about

what needs to be done and what needs to be changed in the ways in which the
organization handles relationships with employees and their trade unions, if any. This is
an area of people management where a strategic approach is particularly appropriate.
Organizations need to have a clear idea of the route they want to follow in developing a
cooperative and productive employment relations climate.”(Armstrong, 2020, p.256)

“The employment relationship is ‘The primary vehicle for “marrying” the needs of
individuals and organizations’”(Boxall, 2013: 5)

“The employment relationship can also be described as being a largely informal and
constant process that happens whenever an employer has dealings with an employee,
and vice versa. Underpinning the employment relationship is the psychological contract,
which expresses certain assumptions and expectations about what managers and
employees have to offer and are willing to deliver.”(Armstrong, 2020, p.257)

The dimensions of employment relationship

The dimensions of the employment relationship are (Kessler & Undy, 1996):

Nature of employment relations strategy

‘Like all other aspects of people strategy, employment relations strategy takes account
of the business strategy and aims to support it. Support will exist if employee relations
operate in a spirit of mutual gains and partnership, and if this results in high levels of
trust, cooperation and, ultimately, productivity.”(Armstrong, 2020, p.260)

Key concerns of employment relations strategy

Overall, the goal of an employment relations strategy is to establish secure, cooperative

relationships with employees that reduce conflict. The strategy, in more detail,
addresses issues such as(Armstrong, 2020):
Goal of partnership agreement strategy

“A partnership agreement strategy aims to get management and a trade union to

collaborate to their mutual advantage and to achieve a climate of more cooperative and
therefore less adversarial industrial relations. Management may offer job security linked
to productivity and the union may agree to more flexible working.”(Armstrong, 2020,
pp.261-262)

“The perceived benefits of partnership agreements are that management and unions
will work together in a spirit of cooperation and mutuality, which is clearly preferable to
an adversarial relationship. Provision is made for change to be introduced through
discussion and agreement rather than by coercion or power.”(Armstrong, 2020, pp.261-
262)
Employee voice

“The term ‘employee voice’ refers to the say employees have in matters of concern to
them in their organization. It describes a forum of two-way dialogue that allows
employees to influence events at work and includes the processes of involvement,
participation, upward problem solving and upward communication. An employee voice
strategy will indicate what voice arrangements are to be made, if any.”(Armstrong, 2020,
p.262)

Employee voice is frequently defined as allowing workers to freely share their thoughts,
opinions, and perspectives without fear of social or workplace repercussions. This
means that employees can use their comments to influence workplace decisions.
(Wong, 2020)

Leaders that have influence act in response to employee feedback. Action could be
adopting a new method of doing things, embracing new ideas and work processes,
strengthening the company's culture, or addressing issues.(Wong, 2020)

Union recognition strategy

“An organization may have to decide on a strategy for recognizing or derecognizing a

trade union. An employer fully recognizes a union for the purposes of collective
bargaining when pay and conditions of employment are jointly agreed between
management and trade unions. Unions can be derecognized, although this is happening
less frequently.”(Armstrong, 2020, p.263)

When considering whether or not to recognize or de-recognize a union, an organization

should consider some or all of the following factors:(Armstrong, 2020):