Week 1

HRM and Strategic HRM

Chapter 1 Learning objectives

• Understand the conceptual foundations of human resource

management
• Discuss the activities and roles of a company’s human resource
function
• Identify the characteristics of the workforce and the human resource
environment
• Discuss the role and linkages between HR functions in strategy
formulation
• Describe the different HR issues and practices associated with various
directional strategies
• Identify some of the issues associated with implementing strategic
human resource management
HRM and Strategic HRM

• Human resource management (HRM) is the policies,

practices and systems that influence employees’
behaviour, attitudes and performance

• Strategic human resource management (SHRM) is the

pattern of planned HR deployments and activities intended
to enable an organisation to achieve its goals (more later)
Talent and Human Capital Management

• Talent management is a long-term and integrated

approach to managing employees—by attracting them into
the organisation, and providing development and
engagement opportunities utilising a sophisticated system
of HR practices

• Human capital management is a management approach

that aims to capture all efforts related to people in an
organisation. While it includes HRM, it focuses on
measuring the effectiveness of HR activities, with an
emphasis on enhancing the fit between those activities and
the organisational strategic goals
Theoretical Perspectives of HRM

• Behavioural view:
• Grounded in role theory, first articulated by Schuler and Jackson.
• Addresses human dimension of work. Behavioural theorists believed that better
understanding of human behaviour at work, such as motivation, conflict, expectations,
and group dynamics, improved productivity.
• Resource-based view:
• Wright and McMahan (1992) presented the RBV a rationale for how a firm’s human
resources could provide a potential source of sustainable competitive advantage
• Political-influence view:
• Issues related to power, influence, and politics in organizations
• Unit
Typical responsibilities of HR professionals
 Composition of the Australian workforce and Trends
Age Ethnic diversity
Gender
Australians aged 65 and over is Australians come from 200
Female employment is projected
projected to more than double countries, 500 K Indigenous &
to increase, by 2054-55, this is
by 2054-55, with 1 in 1,000 Torres Strait Islanders population
projected to increase to around
people projected to be aged over (2.5%), 25% Australians were
70%
100 born overseas

Skill deficiencies Changes in the place of work

Health, education, construction, Trends in Employment contract Flexibility, work life balance
tourism and agriculture sector Permanent Full time VS Casual Hours, patterns, locations of
has tremendous skill shortages Part time work, 12% of telecommuting
for both professionals and trade workforce by 2020

Legislation
Fair Work Act 2009 and 10
National Employment Standard
Examples of how HR practices can help companies
meet the competitive challenges
How HR practices support high-performance work systems as
HR Innovation
 What is strategic management?

• Strategy is a term that comes from the Greek strategia,

meaning "generalship“. In the military, strategy often refers to
manoeuvring troops into position before the enemy is
actually engaged
• Strategic management is a process, an approach that
addresses the competitive challenges an organisation faces
• A continuous, iterative process aimed at keeping an
organization as a whole appropriately matched to its
environment (Samuel C. Certo and J. Paul Peter, Strategic
Management)
Components of the strategic management process

• Strategy formulation:
– The process of deciding on a strategic direction by
defining a company’s mission and goals, its external
opportunities and threats, and its internal strengths
and weaknesses

• Strategy implementation:
- The process of devising structures and allocating
resources to enact the strategy chosen by a company
Linkage between HR and the strategic management
process (a simplified version in next slide)
Figure 2.1 A model of the strategic management
process
 Stages in Strategic Management and HRM

• Strategic analysis
– Environmental analysis
• human resource environment
• human resource legal environment
– Establish organisational direction
• Strategy formulation
– Human resource planning
• Strategy implementation
– Work force utilisation and employment practices
– Reward and development system
• Strategic control
– Performance impact of human resource
practices
– Human resource evaluation
 Role of HR in Strategic Management

• Strategic HRM is an approach, deployment of HR that defines

how the organization’s goals will be achieved through people
by means of HR strategies and integrated HR policies and
practices
• It entails assessing the employee skills required to run systems
such as total quality management and just-in-time and
engaging in HR practices such as selection and training that
develop needed skills
• Strategic choice is the ways an organisation will attempt to fulfil
its mission and achieve its long-term goals
 Strategy formulation process

• Development of organizational philosophy and mission statement

• Environmental scanning
• Analysis of SWOT
• Formulation of strategic objectives
• Generation of alterative strategy
• Evaluation and selection of strategies: Strategic choice
• Informal / incremental strategic planning
– Managed/logical incremental planning

A strategy is the pattern or plan that integrates an organisation’s major goals, policies,
and action sequences into a cohesive whole
Components of strategy formulation
• External analysis and
• Mission: a statement of the
organisation’s reason for
being
• Goals: what an organisation
hopes to achieve in the
medium- to long-term future
• Examples:
– To bring inspiration and
innovation to every athlete in
the world (Nike)
– So together, we save money
for a better everyday life
(Ikea)
internal analysis (SWOT:
strengths, weaknesses,
opportunities, threats):
– external analysis:
examining the
organisation’s operating
environment to identify
strategic opportunities
and threats
– internal analysis:
examining the
organisation’s strengths
and weaknesses
 Strategy implementation

Important variables determine success in strategy

implementation:
– organisational structure
– task design
– types of information and information systems
– the selection, training and development of people
– reward systems
Figure 2.5 Strategy implementation
Menu of HR practice options

• Job analysis and design

• Recruitment and selection
• Employee learning and development
• Performance management
• Pay structure, incentives and benefits
• Industrial relations
• Also see Table 2.4 on pages 66 and 67 for
additional information and details
 Directional strategies

• No single strategy is the best in all situations and at all times:

Align strategic choices to the situation
Strategies:
• Concentration strategies: increasing market share, reducing costs,
creating and maintaining a market share
• Internal growth strategies: new market and product development,
innovation and joint ventures
• External growth strategies: acquiring vendors and suppliers or
buying businesses to expand in new markets
• Divestment or downsizing strategies: planned elimination of large
number of employees designed to enhance organisational
efficiency and effectiveness
Strategy execution, evaluation and control

• Monitor the effectiveness of the strategy and the

implementation process
• Identify problem areas and revisit existing structures
and strategies and/or develop alternative strategies
• Recognise the critical nature of human resources in
competitive advantage
The multiple roles of HR managers in SHRM

Key roles for HR managers

• Strategic Positions/ Partner

• Capacity Builders
• Credible Activists
• Change Agent/ Champions
• HR innovators and
integrators
• Technology proponents
 HR competencies

• Strategic positioners: understand evolving business

contexts, stakeholder expectations and business
requirements, and are able to translate them into talent,
culture and leadership actions
• Credible activists: build relationships of trust and have a
clear point of view about how to build business
performance
• Capacity builders: define, audit and create organisational
capabilities required for sustainable organisational
success
• Change champions: initiate and sustain change at the
individual, initiative and institutional levels
HR competencies

• HR innovators and integrators: look for new ways to

implement HR practices and integrate those
separate practices to deliver business solutions
• Technology proponents: use technology for
efficiency to connect employees and to leverage
new communication channels, such as social media
 Summary

• SHRM means to proactively provide a competitive

advantage through the company’s human resources
• The HR function needs to be integral to strategy
formulation
• HRM has an impact on strategy implementation
• The strategic role of the HR function requires
business, professional–technical, change
management and integration competencies