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Strategic Human Resource

Management A
Competitive Advantage
 Hohnson andScholes define strategy as :

“ The direction and scope of organisations

over the long term within a challenging
environment whereby through the
configuration of resources the needs of the
markets are met and the stakeholders
expectations are fulfilled in order to achieve
an advantage.”
Strategic Human Resource

Strategic HRM - how the management of

people in organizations relates to the ability
of organizations to compete in the
marketplace and, beyond this, to provide a
sustainable competitive advantage .
Competitive Advantage

 A condition or circumstance that puts a

company in a favourable or superior
business position.
 Competitive advantage can be sustained
in two ways(portor 1985)
1. Uniqueness
2. Quick Improvement


Human resource as source of
competitive advantage
 Wright , 1994 has shown that the
human resource can be a source of
competitive advantage because they meet
the criteria for being the source of
sustainable competitive advantage.

 Pfeffer has issued sixteen practices of

competitive advantage through people
which are:
1. Employment security
2. Incentive Pay
3. Participation and Empowerment
4. Symbolic egalitarianism
5. Long term perspective
6. Selectivity in recruiting
7. Employee ownership
8. Teams and Job Design
9. Wage compression
10. Measurement of practices
Practices by Pfeffer
11.Cross utilisation and cross training
12.High wage
13.Information sharing
14.Training and skill development
15.Promotion from within
16.Overarching Philosophy
Reasons for organisations achieving
competitive advantage through SHRM
 SHRM encourages proactive behaviour
rather than reactive behaviour.
 Companies goals are communicated
 Gaps between the current situation and
vision of the future are focussed on.
 Line managers are involved in human
resource planning process.
 Human resource opportunities and
constraints are identified in implementing
strategic plans.
Competitive advantage through

 Job Analysis
 Job description
 Job Evaluation
Through Job Analysis
 Looks at the behavioural needs of a
particular competitive strategy (cost
leadership or differentiation)role peculiar
to culture and organisation of the
 Competitive advantage can occur only if
employees knowledge ,skills and abilities
can add value to firm.
Through Job Description
 Used to identify responsibilities and
objectives associated with each specific
task and reward associated with it.

 To accomplish employment relationship

effectively , work has to be designed,
programmed, costed , organised and
coordinated well.
Through Job Evaluation
 Begins by considering several job factors
such as working conditions , necessary
skills and salaries etc.

 Rating of each job factor should be done

so as to evaluate well.
Strategic Human Resource
 Analysis and design of work
 Employee relations
 Recruiting
 Selection
 Training and development
 Performance management
 Compensation
 Supporting the organisation strategy
Competitive advantage through
generic functions of SHRM
 Aim of strategic Human Resource
Management is seen as the optimum
utilisation of human resource value.
 Researchers suggest three generic
functions of HRM namely SELECTION,
independent variables in cycle of human
resource intervention's of dependent
 To have reliance on competitive success
one must be careful in choosing right
people in right way.
 It is the primary mechanism in enhancing
the organisation capabilities.
 Firm must be able to identify high ability
individuals and must be able to retain
individuals deemed to be of highest ability.
Example of Strategic Selection
Performance Appraisal and
 Measuring performance is one of the
most important tasks for any manager.
 Critical decisions rely on the accurate
assessment of an employee’s behaviour.
 Measured on regular basis in order to be
ahead of others.
Examples of Best Performance Apparisal

 Google’s performance management

philosophy has always been fairly non
 Formal rankings have never been a part of
the company's process. Instead, employee
goal-setting has been a part of Google's
DNA since the beginning.
Example of Performance Review
system of Adobe
 Adobe has already generated the statistics
to prove that regular feedback and check-
ins make sense.

 The company has cut voluntary employee

turnover by some 30% after introducing a
frequent check-in program.
 Reward both financial and otherwise send a
powerful message to employees of
organisation as to what kind of organisation
they are working with.

 It is one of the most effective and influential

tools available to the organisation when to
reinforce behaviour of employees.


Example of Strategic Reward

 Reimbursement of up to $5000 to employees

for legal expenses
 Maternity benefits of a maximum of 18 weeks
off at about 100 percent pay.
 On-site car wash, oil change, bike repair, dry
cleaning, gym, massage therapy and hair stylist
are available at the company’s headquarters in
Mountain View
 Lunch and dinner is available free of charge, In
addition, an assortment of delicious but healthy
meals are available every day, prepared by
gourmet chefs.
Employment relationship
 It engenders bargaining which can either
individual or collective and mobilises the
power in order to protect or advance such
 Treating employees with respect helps in
controlling conflicts and increasing their
involvement in organisation.
 It is needed to control work - behaviour in
the light of economic realities of
competition and profit motive.
Example of good employee relations

 Having manufacturing presence in USA

for more than 40 years.
 Hondas growth and expansion has
significant impact on U.S. economy in
terms of both dollars and no. of
 All because of its respect for individual
Practical criteria of best practices
for competitive advantage
 Goals/objectives:
Detailed statement of a general goals and
their relationship to the company’s
objectives. When goals are not clear it is
difficult to plan efficiently.
 Recruitment:
Criteria for recruitment should be right as to
ensure the hiring of right employees.
 Commitment:
Commitment is defined as a process by
which people become psychologically
bound to their actions in such a way that
feel a personal obligation to follow through
on the implications of those actions.
 Coaching:
Proper coaching system which captures and
processes work performance data
conveniently summarised for reviews and
management actions.
 Measurability:
To assure accurate measurement of
performance data , especially technical
progress against schedule and budget.

 Signing –on:
The process of signing –on employees
during the initial phases of the job or each
task seems to be very important to a proper
understanding of a task.
 Interesting work:
Managers should try to accommodate the
professional interests and desires of
supporting employees when negotiating
their tasks. This leads to increased
commitment ,lower conflict, better
 Communication:
It is responsibility of task leaders to provide
better communication tools and techniques.
 Minimize threats:
Manager must foster such environment that
is low on personal conflicts ,power
struggles and unrealistic demands.

 Design Reward System:

This should be consistent with the
responsibilities of the employee and treating
employees with respect, rewarding them
fairly .
 For achieving a competitive advantage through the
employees the following recommendations can be
1. Firm should use analytical framework.
2. Technology is worthless without the talent and
knowledge of operators using it.
3. Trust on employees.
4. Choosing the right leader.
5. Provide good job descriptions and realistic targets.
6. Design effective reward system.
7. Making communication effective .
8. Progress assessment , career ambitions and
consideration for training.
9. Needed information should be shared with employees.
10. Attractive work environment.
11. Designing of policies keeping in mind recruitment ,
retention of high quality staff too undertake demanding