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Why study HRM? Practicing managers : Familiar with HR processes, but get an explanation Why?

Are we having this process. What? Is it intended to achieve. How? Does it contribute to the achievement of
organization goals.
Ex: medical test prior to joining.

Topics to be covered
Behavioral Sciences
Linkage with HRM

- Certain percepts / lowest common denominator

Difference between strategy and tactics Different levels of strategy Strategy in fast changing world: mechanistic vs complex paradigm

HRM Definition Its relevance Its interface with strategy Major areas

Behavioral Sciences: Involves systematic analysis and investigation of human behavior studied through experimental and observational methods. Organiz ational Behavior:
Ex: Understanding human beings. your project team member, and what makes him tick the set of relationships surrounding you and your team member, including authority relationship small-group dynamics, working together to accomplish well defined tasks Organization as a whole: its culture, processes and ways of doing things that affect you, your member, the relationship and the small project team of which both of you are a part.

The basic motivation process:




Needs: get created when there is a physiological or psychological imbalance. Drives: Or motives are set up to alleviate needs. Action oriented. Incentives: Anything that will alleviate a need and reduce a drive.

Motivation theories Content theories: ways to analyse individuals by identifying needs that motivate their behavior. Maslows (physical and conceptual needs) and ERG (existential, relatedness and growth)

Process theories: seeks to understand the thought processes that take place in the minds of people that act to motivate their behaviour. Equity theory

Motivation: describes the forces within an individual that account for the
level (amount of effort), direction (what he chooses to do when presented with a no. of options), and persistence (how long will he stick to exert effort)

of effort expended at work.

Job Performance? individuals attributes: capacity to perform organizational support: opportunity to perform work effort: willingness to perform

Linkage with HRM: Recruitment and Selection Job design, Right person in Right role, Training, employee/labour relations, safety and health Right Incentives : Performance appraisals, Compensation and benefits, Developmental inputs

Ex: ITES sector: attrition What motivates people to stick around in company X? Organization Development (OD): a planned effort, organization-wide managed from top to increase organization effectiveness and health through interventions in the organizations processes, using behavioral science principles and practices. It is a complex strategy intended to change the beliefs, attitudes, values and structure of organizations so that they can better adapt to new technologies, markets and challenges

Topics to be covered
Behavioral Sciences
Linkage with HRM

Organization - Certain percepts / lowest common denominator Strategy

Difference between strategy and tactics Different levels of strategy Strategy in fast changing world: mechanistic vs complex paradigm

HRM Definition Its relevance Its interface with strategy Major areas

What is an Organisation:
Collective Purpose
Brings together an array of resources and applies their specialisations to a common end-product.

- Open system : they take input from the environment, transform them and discharge outputs in the form of products and services. Organisation and its ecosystem Ex: watch & mobile Second law of thermodynamics, entropy - What distinguishes business organisation?
Ramdev vs Brinda Karat


I. Business organisation: Money in ~ Money out


II. Purpose of a business

Is it solely for profit? Business organisation has to run for profit. But, running business only for profit tends to be corrosive. Profit with values is the right approach.
Refer book Built to Last. Ex: Managing the expectations of variety of stakeholders of the business : shareholders, employees, community, society at large, environment, government. Microsoft: computing power at every desktop Pfizer: medicine for river blindness

II. Purpose of a business

To create a customer.
Ex: tractors (horse that eats less and is always willing to work), tape recorder (Sony). A customer buys a utility, ie, what a product does for him.

To add value to the customer.

Ex: Intel and its faster chips. Good enough computing Can you make an Eskimo your customer?
what our business is, and what it should be? Customer: Who is he? Where is he? What does he buy? What would he like to buy?


Employment is a contract. Entails expectations from each party.
Exercise: Tell me something about your relationship with your employer.


Employment: nature of relationship between individual and firm has components that makes it different from other contractual relationship
Economic: pay-effort bargain. Legal: network of common law and statutory rights and obligations governing both the parties to the contract.
Various employment Acts and Rules of India.

Social relationship: members of social groups. Responding to social norms that influence their actions in place of work.

Psychological relationship: dynamic two-way exchange of perceived promises and obligations between employees and firm.
Model Code of Conduct

Psychological relationship: dynamic two-way exchange of perceived promises and obligations between employees and firm.
These are shaped by the social and economic context, leadership, communication and HR practices.

Challenges for managers: disbalance

Communication through different voices ~ different beliefs about reciprocal promises and obligations. Ensure that anticipated exchange of value is confirmed.
Boss promises, but cannot deliver. Training facilities Cutting edge work

Example: effective communication reduces breach of psychological contract.


IV. Input ~ Output ~ Outcome

Ex: from corporate social responsibility sector


Effective Manager?
performance efficiency: measures how well
resources are being used. focus on efficiency and cost containment. Means ends relationship is certain. So, managers monitor & control performance.

Input ~ output. performance effectiveness: measures whether

important task goals are being attained. Focus on actual result. Means-ends relationship is uncertain. So, managers need to engage workers intellectual capital, commitment and cooperation.

Goal attainment. Outcome


Middle managers:
accountable to higher level for work unit results, and dependent on the efforts of subordinates and other team members to make this happen. link between brains and its hands. depends on them for organizational performance Increasingly, they are taking up leadership roles. Ex: ABB, Microsoft

High performance=effectiveness+efficiency

Effective and efficient: Effective, but not goals achieved Performance efficient: and resources well Effectiveness some used: area of high How well are
resources wasted Goals being attained? productivity

Neither effective nor efficient: goals not achieved;

Area of true managerial success

Efficient but not effective:

No wasted resources, but goals not achieved Good

resources wasted in the process


Performance efficiency
How well are resources being used?

V. WHAT IS MANAGEMENT ? Role of a manager (resource based view)

Finance Infrastructure Machines Manpower Vendors Clients Permits.. Manager Plan Acquire Deploy Monitor Assess Develop Exit

Management as science, politics, control and practice.

Management as science
Successful managers are those who have learned the appropriate body of knowledge, skills and competencies. (PODC)

Management as politics
Successful managers are those who work out and cope with unwritten laws in the organisation.
(knowledgeable agents working in dynamic arena,where resources and outcomes are shaped by actions, networks, alliances)

Management as practice
Successful managers are those who can work out and cope with contradictory demands and purposes. (activities aimed at continual
melioration of diverse, fragmented and contested complex practices) Eg, INTEL

Management as control
Successful managers are those who can exploit and control resources.
(structures and strategies are instrument and techniques to control and raise productivity) Eg, Manufacturing


Topics to be covered
Behavioral Sciences
Linkage with HRM

- Certain percepts / lowest common denominator

Difference between strategy and tactics Different levels of strategy Strategy in fast changing world: mechanistic vs complex paradigm

HRM Definition Its relevance Its interface with strategy Major areas

What is strategy?
Strategy is the creation of a unique and valuable position, involving a different set of activities. Strategy is making trade offs in competing. The essence of strategy is deciding what not to do. Strategy is creating fit among a companys activities. Michael E Porter, What is strategy?, HBR, 1996


1. A process through which - the basic mission and objectives of the organisation are set, and - the organisation uses its resources to achieve its objectives. 2. Concerned with the definition of competitive advantage and the development of activities, resources and capabilities that enable the firm to sustain advantage in a changing world. 3. A bridge between high-order goals (vision/mission) and concrete actions (money out) Tactics = actual means to achieve the end

Strategy: its three levels - corporate values financial goals non financial goals - competitive how a firm competes in a given industry - functional marketing financial research operations HR, and so on.

Strategy development process: Industry analysis today and tomorrow Positioning sources of competitive advantage Competitor analysis past and predicted Current strategy assessment relative position and sustainability Option generation a creative look at new customers and positions Assessment of capabilities positioning for future opportunities Choosing or improving a strategy position, trade offs, fit

Hierarchy of strategy
Business Level: How do we compete.
Porters competitive strategy model (1985): cost leadership, differentiation and focus.
Competitive advantage
Low cost Uniqueness

Competi tive Scope

Broad Target Narrow Target

Low-cost leadership
eg, Wal-Mart (10 feet rule)

eg, Levis

Focused low-cost leadership eg, Air Deccan

Focused differentiation
eg, High priced boutiques

What would be the HRM practices in each of these companies?


Topics to be covered
Behavioral Sciences
Linkage with HRM

- Certain percepts / lowest common denominator

Difference between strategy and tactics Different levels of strategy Strategy in fast changing world: mechanistic vs complex paradigm

HRM Definition Its relevance Its interface with strategy Major areas

Focus people as resources to be utilised like any other resource: management as a control labour is disposable commodity to be bought and controlled. takes a rational approach towards managing employees, that is, views it as a any other economic factor, or takes a marginal cost decision invest in labour or technology. Bureaucratic control, technical control
Henry Ford: production lines

Manpower: peculiarities
Traits that people bring to the work place intelligence, aptitudes, commitment, tacit knowledge and skills, and the ability to learn. But, the contribution of this human resource to the firm is both variable and unpredictable. This, indeterminacy of an employees contribution makes human resources most vexatious of assets to manage.


Management of people - Looks at sophisticated ways of enhancing performance thro forms of control that are based on commitment rather than compliance Management as a politics Commitment strategies to ensure that employee give an organisation its competitive advantage. Needing to be managed ? To be motivated to produce the best.


Focus on people as complex and valuable members or stakeholders of the firm. Management as a practice To be attracted, retained and developed. The sum of peoples knowledge and expertise, and social relationship has the potential to provide non substitutable capabilities that serve as competitive advantage. Characteristic of resource value, rarity, inimitability, non substitutability drive the competitive advantage. Ex: knowledge worker

HRM is..
HRM is the set of philosophies, processes and procedures that a company uses to manage: The entry and exit processes in the firm The growth and development of employees The reward and recognition systems The total organizational climate for how people are treated


HRM is..
The entry and exit processes in the firm:

Earlier: implicit psychological contract ~ life long employment for loyal and productive work. Today: implicit psychological contract ~ create employability Microsoft: Recruitment is every bodys business AT&T: took advertisement offering good people to other companies. Make workers into suppliers.

HRM is..
The growth and development of employees: Training vs Development
Learning is a relatively permanent change in behavior that occurs as a result of experience. Internalising and not acquiring facts.

- Make him able for handling a role, not a job.

Role: how does a successful employee looks in a particular setting. part that an employee is expected to play.

- Fewer managerial positions for promotions up: so move employee into a number of lateral positions. - 360 degree feedback
Ex: Motorola : two weeks of mandatory training. Education is a strategic tool here. As the Co. dominates its core market through expertise and technology. Quick learning needed to enter new markets

HRM is..
The reward and recognition systems: Reward refers to all of the monetary, non-monetary and psychological payments that an organisation provides for its employees in exchange for the work they perform. Pay: an actual income in exchange for labour/effort. Recognition: psychological income, or what makes coming to work really worth while. Psychological contract : perceived incongruence? notion of fairness? tensions?

HRM is..
The total organizational climate for how people are treated: - Alignment with vision, strategy, competitive advantage and function. - HR paradigms


HRM is..
seeking alignment of the employment system of a firm with the strategy, internal context, and nature of the circumstances (external context) that an firm faces. Integration is the key word. The set of employment policies, programmes and practices needs to be coherent and integrated with above three.
Exercise: Give examples of contexts in Intel.

Each HR strategy represent a distinctive HR paradigm, or a set of beliefs, assumptions and values that guide the managers . One example:
Acquisition of employees
Internal Outcomes External

Locus of Workplace control


HR Strategy (sales driven)

HR Strategy (IT)

HR Strategy (Govt dept)

HR Strategy (manufacturing?)

Exercise: Link each strategy with external context.


Changing contexts


Characteristics of present day workers

Knowledge technologists:
Their work is based on substantial amount of theoretical knowledge which can be acquired only through formal education, not through apprenticeship Their job require putting formal knowledge to work, and Continual updation of knowledge throughout their working lives to keep it current for their work. Application of thinking power during production process/service delivery!!!! Ex: from a publication industry. Arvind plant at Chennai. Bajaj plant at Chakhan

Changing expectations
Of workers: Allegiance to his branch of specialised knowledge, so First loyalty is to others of same profession??? Thus, point of reference may lie outside the organisation. Each is an autonomous entity, who come together for project, but can easily disband.

Changing expectations
Of workers: Organisation can therefore be conceptualised as an collective of autonomous units workers. Organisation is defined by interactions, relationships and networks between these autonomous entities, as well as with outside environment that create unexpected outcomes.

Changing expectations
Of workers: The success of organization depends on potential power of its workers, and how they interact to produce something unparallel. That is, there has to be a mutually symbiotic relationship. With mobility, and self confidence, no more adult-child relationship inside the organisation. People practices that tend to be One size fit all will no more suffice.

Changing contexts
External contexts:
Global integration
Fewer tariffs Easy flow of capital, labour, know-how Interdependency

Linkage to capitalist system Maturation of markets in developed economies Technological change Political change
New employment and environment laws

Social change
Aging population in developed countries Young population in developing countries Value system

Changing contexts
Internal context
Educated work force Increased awareness More women Knowledge work Movement of labour across time and space Competition Constant learning


New forms of organisations Virtual corporation: a temporary network or

alliance of otherwise independent companies. Eg, textiles industries of Italy

More of a confederation: Loose network

together by strategy,etc, Eg a syndication, a cooperative

Life span of organisation: Employees outlive

even successful organisations. Manual workers: working life of say 30 years, before they wore out. Knowledge workers : working life of say 50 years.

New forms of organisations

Ideas and partnership needed: Organisations

will build up on the incremental competencies of scores of others to provide their services to customer. Ex: Hollow Corporation

Up-side down pyramid: Perspective that views

managers as helpers, coaches and supporters to serve line managers to deliver to customers. Because, with information, customer has the power. Ex: British Airways


New forms of organisations

Coming together of equals: Knowledge workers need access to an organisationa collective that brings together an array of resources and applies their specialisations to a common end-product. But, for organisation, these are the main factor of production, the primary capital.


New forms of organisations Shamrock (three petal) organisation:

core group of workers with critical jobs, outside consultants performing key jobs, and part-time workers. Orgn dont control them, dont manage them, but have to make them productive.

Virtual workplace:


Newer ways of working in organisations Workforce diversity: elderly, women, student,

global mix, high mobility

New work options: job sharing, multiple careers,

part time

Newer form of collectives: allegiance to their

specialisation, formation of a guild

Non hierarchical: Knowledge is either relevant, or it

is not. So, instead of hierarchy of boss and subordinates, it will be that of seniors and juniors.

New forms of organisations Necessity to learn continually: Job is life: Earlier, mostly job is an means to an end,
now job mostly is an end in itself

Social responsibility: Quality of work life:


HR Strategy

Environmental/internal influences

Business strategy


The Harvard Model (1984)

Stakeholder interests
-Shareholders -Management -Employee groups -Government -Community -Unions

Human resource management policy choices -Employee influence -Human resource flow -Reward systems -Work systems

Human resource outcomes

Internal/external contexts -Workforce characteristics -Business strategy and conditions -Management philosophy -Labour Market -Union strength -Task technology -Law and societal values

-Commitment -Competence -Congruence -Cost effectiveness

Long term consequence s -Individual wellbeing -Organisational effectiveness -Societal wellbeing


What do HRM professionals do? What affects what they do? And, how do HR professionals do what they do?


Three related dimensions of HRM Functions

Planning Staffing Developing Motivating Maintaining Managing relationships Managing change Evaluating Exit

Communication Legal Power Instructional Interpersonal Cognitive Technical

HR strategy Matching Ps
Philosophy Policies Programmes Practices Processes

External context


Internal context


The components of the ideal human organisation

Alignment of HR processes to create ideal culture and mindset to achieve strategy


Culture and mindset

Long term competencies

Core processes

Organisation structure

The performance of the system is not the sum of its parts, but product of their interactions.


The strategic HR planning process

Analysis of Critical success factors Trends
(threats, opportunities)

Which executes the strategy

Strategies set in the criteria for the characteristics of:

Human organisation
The characteristics of the human organisation set the criteria for: Which creates the human organisation

Organisational initiatives

Strategy: Planned vs emergent

Mechanistic models:
Assumes that the future can be known, predicted and to some extent controlled by managers Emphasis is on intention strategic intent, stability and return to equilibrium. Success depends on extensive planning and design, accurate anticipation of resistance to change and overcoming such resistances.
rational, linear, planned process, where risk is measured, evaluated and implemented


Strategy: Planned vs emergent

Complex models:
Assumes that the future cannot be predicted with any degree of certainty; instead it emerges with its own distinctive properties through random or unexpected events. Emphasis is on managing the show with imperfect information, and at various levels with high degree of accountability; nobody has the whole picture. Success depends on tapping the ideas of various groups of people, as they are in touch with customers and changing marketplace. Seemingly adhoc activities are driven by people who have a sense of ownership of ideas being put into practice. advising and modifying the direction and the boundaries within which effective, improvised, self organized solutions can evolve. 61

Competitive advantage
-organisational capability: represents the businesss ability to manage organisational systems and people in order to match customer and strategic needs. Ex: restaurant In complex, dynamic, uncertain and turbulent environment, this capability derives from the flexibility, adaptiveness and responsiveness. In less dynamic environment, the capability derives from maintaining continuity and stability of organisational practices.

Complex paradigm: y
y Keen to espy patterns in the seemingly discrete sets of phenomena. Comfortable with incomplete set of information, and is able to take small, iterative steps rather than wait for the best solution to evolve. Keeps on seamlessly moving between past, present and future through simultaneous attention and linkage. Doesnot believe that there is one best way; instead uses maps as thinks fit in the given situation. Believes that situations and results that are unknown and unstable cannot be analysed using present days tools and frameworks.

y y

Complex paradigm:
       Encourage new ideas Stimulate innovative approach. Is comfortable with improvisations Can take leaps of faith, even with incomplete information. Thrives on constant changes. Uses collaborative and participative approach. Does not control, but content with advise and boundary management.

Strategizing using Complex paradigm:


Enhancing possibility space Self organizing around new opportunities Recognition of new patterns emerging Managing co evolution with other players


Complex paradigm and knowledge worker:

 autonomous entities. Control tendency may backfire, instead advising, guiding and mentoring helps  generally have external points of reference, that is, in contact within the organisation and its ecosystem. Thus, outside-in approach is expectable.  centralised decision making is passe when the world changes fast, distributed decision making at variety of levels is needed.

Complex paradigm:
Leader: Mirroring the future:
Enhancing the possibility space: beacon Self organising around new opportunities: torchbearer Recognising new patterns emerging: seller of dreams Manage coevolution with other players: enablers

Move towards edge of chaos:

Resiliency Tolerance to ambiguity