Strategic human resource management

Definition
‡ Strategy: it is a future oriented plan to achieve organizational objectives. Strategic management : process of crafting strategies, implementing them and then evaluating the strategies. Strategic human resource management: it is the process of developing practices, programes , policies that help organizations to achieve its goals.

Shrm continued..
‡ It includes: ‡ Human resource strategy to be aligned with overall organizational strategy. ‡ Human resource policies to cohere both across policy areas and across hierarchies. ‡ It results in above average performance of the firm. ‡ Human resource practices to be adjusted and accepted and used by line managers and employess.

.Roles of an hr manager in strategy making ‡ HR manager needs to define the architecture of the firm. ‡ HR manager should emerge as an strategic partner by identifying ways in which organization can be revamped in areas which require renovation. ‡ HR manager must take account of its own work and set clear priorities. ‡ HR needs to conduct an organizational audit.

medium.proactive . specialization Capital products Cost centre Strategic hrm Line managers Partnerships with internal and external customers Transformational. independence. cross training teams People .integrated Key investments Accountability . fragmented Fast . long Organic-flexible Broad .Traditional HRM vs Strategic HRM Basis Responsibility of HRM Focus Role of hr Initiatives Time horizon Control Job design Traditional hrm Staff Specialists Employee relations Transactional.policies . procedures Division of labour.reactive .flexible. change leader .knowledge Investment centre Slow . change follower . initiator Short. respondent Short term Bureaucratic .

Enhances customer satisfaction Ensures that HR department justifies its existence. Ensures increased employee and organizational productivity. Increases survival rate of the business as an entity.Benefits of SHRM ‡ ‡ ‡ ‡ ‡ Shrm has various benefits: Contributes to enhanced performance. .

‡ Inability of HR to think strategically. ‡ Difficulty in quantifying many HR outcomes. ‡ Lack of appreciation as to what HR can contribute in organizational development. ‡ Failure to understand general manager role as an HR manager. ‡ Perception of human assets as higher risk investments.Barriers to strategic HR ‡ Short term mentality/focus on current performance. .

Model of SHRM Firm strategy Resource based view Of the firm Institutional /political forces Resource dependence institutional HRM Practices Behavioural Approach Cybernetic Agency/transaction cost HR Capital pool Firm Level Outcomes(satisfaction . absenteeism) HR Behaviors .

3. core competencies. Resource based perspective: provides competitive advantage such as allocation of resources . 2. . Cybernetics: it explains the adoption and abandonment of practices resulting from feedback on contribution to strategy.Model of SHRM 1.organizational culture.Behavioural view: explains practices formulated to influence attitudes and behaviors.

. 6. Agency/transactional cost : it explains why firm uses performance evaluation and rewards systems. 5. Institutional /political forces : seeks to explain practices such as the inappropriate performance evaluation systems.Model of SHRM 4. Resource dependence and power variable: explains practices caused by power and political influence.

STRATEGIC MANAGEMENT PROCESS .

Environmental Scanning Environment needs to be scanned in order to determine trends and projections of factors that will affect fortune of the organization. . Scanning helps identifying threats and opportunities prevailing in the environment. What might be a threat to one company could be an opportunity for another.

Strategy formulation Strategy is formulated at three levels: Corporate level Business unit level Functional level .

. Major decisions are taken regarding: What type of business should the company be engaged in. How should resources be allocated to reach these goals. What are the goals and expectations for each business.It is formulated by the top level management.

A business unit is an organizational subsystem that has a market.and a goal distinct from those of other subsystems in the group.BUSINESS UNIT LEVEL Strategy at this level emphasizes on : Prevailing competition in the chosen industry or business. set of competitors . .

. ‡ Each functional department must merge its activities with the activities of the other functional department .manufacturing .Functional level strategy ‡ Each business unit consists of several departments like finance . ‡ Functional level strategy identifies basic course of action that each of the department must perform in order to attain the organizational goals. hr department etc.

FINANCE PRODUCTIONS/OPERATIONS MANAGEMENT HUMAN RESOURCE MANAGEMENT MATERIALS MANAGEMENT MARKETING RESEARCH AND DEVELOPMENT MANAGEMENT INFORMATION SYSTEM .

‡ Third step is to have a SWOT analysis of the firm. ‡ Next step is to identify the trends in the environment .followup.training and development. . ‡ Flow of performance management :measurements.work process design.KEY STEPS IN STRATEGY FORMULATION ‡ Be clear whether the hr strategy is meant for corporate .designing IT infrastructure.unit or functional level strategies. ‡ Flow of information:managing internal communication. ‡ Fourth step is to identify key Hr practices: ‡ Flow of people: hiri ng. ‡ Flow of work : organisation structure.rewards .transfers.promotion.

adding new departments. formulation new employee benefits. closing facilities. changing an organization's pricing strategies. developing financial budgets. transferring managers among divisions. . It requires co-ordination among many persons. and building a better computer information system. It requires special motivation and leadership skills. changing advertising strategies. Strategy implementation is primarily an operational process. hiring new employees. building new facilities.Strategy Implementation Implementing strategies requires such attentions as altering sales territories. establishing cost-control procedures.

Strategy evaluation assumes greater relevance. Analyze deviations from acceptable tolerance limits. Measuring the performance in relation to the targets at a given time. . Some basic objectives are: Establishing performance targets .lasting consequences.Strategy Evaluation Strategic management process leads to decision that can have significant and long. strategies and implementation plans. standards and tolerance limits for the objectives. Strategy evaluation helps determine the event to which the company¶s strategies are successful in attaining its objectives. Execute modifications where necessary and feasible.

CASE STUDY .

AIR NATIONAL INTRODUCTION : Air National¶s (AN) 1998 Annual Report glowed with optimism. the tone had changed. CEO. with a reported pre-tax loss of $93 million.¶ By April 2000. stated in his letter to shareholders. µAs a newly privatized company. we face the future with enthusiasm. however. confident that we can compete in a deregulated industry. . The newly appointed CEO. announced a major change in the company¶s business strategy that would lead to a transformation of business operations and HR practices in Europe¶s largest airline company . Clive Warren. Bradley Smith.

if not always harmonious. and competition was managed via close. civil aviation was a highly regulated market. and market shares were determined not by competition but by the skill of their governments in negotiating bilateral µair service agreements¶. increased by 60 per cent. their competitors and governments. . despite the emergence of new entrants. National flag-carriers dominated the markets.BACKGROUND During the early 1980s. Within these markets. relationships between airlines. AN¶s share of the domestic market in the early 1980s. These agreements established the volume and distribution of air traffic and thereby revenue. for example. AN dominated other carriers.

This potentially reduced the political influence of the old corporation and exposed the new company to competitive forces. Preparation for privatization required a painful restructuring and µdownsizing 'of assets and the workforce. driven largely by the need to make the company attractive to initially sceptical investors. AN¶s external environment was subjected to two sets of significant change. in 1986. . AN was privatized by Britain¶s Conservative government.The competition In the middle of the 1980s. First.

. that gave senior management the degree of stability and security needed to plan and implement new business and HRM strategies. rather than the stimulus of market competition.Privatization also offered significant political leverage. potentially more decisive. It was this context. which AN was able to deploy to secure further stability in its key product markets. The second set of pressures. was generated by prolonged economic recession and the ongoing deregulation of civil aviation in Europe and North America.

µthis strategy requires us to be aggressive in the marketplace and to be diligent in our pursuit of cost reductions and cost minimization in areas like service. Following the appointment of the new CEO. AN changed its competitive strategy and began to develop a differentiation business strategy (Porter. Passenger numbers slumped by 7 percent during the late 1980s. AN attempted to grow out of the recession by adopting a low-cost competitive strategy and joining the industry-wide price war. marketing and advertising¶. contributing to a pre-tax loss. Bradley Smith. The low-cost competitive strategy failed. 1979) or what is also referred to as an µadded-value¶ strategy. when he addressed his senior management team.With these environmental forces. stated. .

and there was a costly battle for market share between AN. .In 2002. The catastrophes caused the loss of more than 100. HopJet Airlines and Tango Airlines. killing almost 3000 people. international air travel bookings fell sharply. early in 2002.000 airline jobs around the world. new discount airlines started operating in Europe. In addition. following the September 11 attacks in New York and Washington in which four commercial planes were hijacked and crashed.

Corporate Management Group 1 North America Group 5 Domestic Group 2 Pacific Group 4 Europe Group 3 India .

commitment and trust .Corporate Level : 1) Differentiation competitive strategy 2)Corporate values recognizing the contribution of Air National employees 3) Effective voice for human resources at the strategy table HUMAN RESOURCES POLICY LEVEL 1 )Priority given to security of employment 2) Investment in workplace learning 3) Competitive and equitable pay policies WORKPLACE LEVEL 1) Broad task design and self-managed teams 2) Emphasis on employee empowerment and self-accountability 3) Climate of cooperation.

a preoccupation with productivity levels.‡ ‡ ‡ Clive Warren and Elizabeth Hoffman undertook to open the books to the unions and established team briefings and regular. and attempts to alter shift patterns sometimes provoked conflict. training and development. and through senior management throwing money at the problem . A profit-related pay system was also launched. usually by the company reminding employees of AN s commitment to Job security. .The requirement to sustain and improve performance in the face of such job losses produced. Parallely cost reduction was also taken up . Job cuts were managed entirely through voluntary severance and redeployment.with the full support of the unions. Disputes were resolved quickly. however. formal consultation meetings with union representatives.

said Warren. AN went into profit in the first quarter of 1998 and then suffered a loss in the last quarter of 2001 and the first quarter of 2002.GoJet competitive and human resources strategy ‡ AN also launched its GoJet product in November 2002 to take advantage of the dramatic shift by European and North American passengers towards discount airlines. said that wages will be competitive with GoJet s competitors in the discount market Reviewing the developments. Deep in debt in the late 1980s. Clive Warren considered that AN had been transformed by re-engineering . GoJet costs will be 20 per cent lower than those of AN s comparable mainline flights partly because GoJet s employees will be paid a lower wage than their counterparts at AN. GoJet planes have more seats because there is less room between the seats and the business-class section has been removed. which allows the planes to carry an additional 20 passengers. ‡ ‡ . The company s aircraft were flying to 164 destinations in 75 countries from 16 UK airports. Clive Warren has. however. If we are to maintain our market share in domestic and international passenger traffic we have to have a business plan that recognizes the realities of airline travel in the 21st century .

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