STRATEGIC HUMAN RESOURCE

MANAGEMENT
= Course 5 =

Associate professor PhD. Valentina Mihaela GHINEA

 DIFFERENTIATION
= every successful strategy
(even the low-cost leadership)
is about differentiation

CUSTOMER RELATIONSHIP
= customer loyalty
= customers' willingness for
LOW-COST paying more because of the
LEADERSHIP
COMPANY personal connection they
experience while doing business
with these COs

NETWORK EFFECT
= the value of a product increases
as more units are sold

= the WINNER-TAKES-ALL
STRATEGY
 LOW-COST LEADERSHIP strategy

It is generally used when:

-the CO's product/service = the same as the products/services offered by rivals

THE KEY TO SUCCESS

=
to deliver the customer's expected level of value
at a cost that ensures
the company an adequate level of profitability
 LOW-COST LEADERSHIP strategy

 Generally used methods:

a. OPERATIONAL EFFICIENCY = pressuring suppliers for lower prices
“the WALMART model”  Wal-Mart squeezes suppliers in price war

What about?
METRO, CORA, CARREFOUR
ASTRA, OMNIASIG

b. Non – INVESTING IN HUMAN CAPITAL

 LOW-COST LEADERSHIP strategy

Other ways of achieving LCL strategy:

a. Continuous improvement:
• KAIZEN (a Japanese business philosophy of continuous improvement of
working practices, personal efficiency, etc. = Plan → Do → Check → Act)
• REENGINEERING (restructure a company or part of its operations,
especially by exploiting information technology)
b. Exploitation of the EXPERIENCE CURVE (remember the role of the routine!)
c. Unbeatable SUPPLY CHAIN (a network between a company and its suppliers
to produce and distribute a specific product to the final buyer)
d. Product redesign (the process of imagining and creating products that solve
users' problems or address specific needs in an innovative way)
 LOW-COST LEADERSHIP strategy

A) - CONTINUOUS IMPROVEMENT IN OPERATING EFFICIENCY

- KAIZEN = continuous process improvement  reduce WASTE + improve

PRODUCTIVITY  cost advantage
!! encourages everyone to seek out ways to IMPROVE THE CURRENT
PROCEDURES (upward)

What kind of people we need for the top level positions / regular employees?

top level positions regular employees

open-mind people ? Proactive creativity/involved
transactional vs transformational leadership ? with or without experience

-Organizational Culture  focus on power vs. function vs. TASK FULFILMENT vs.
people
-Intrinsic vs. extrinsic motivation
- the Reward system  bonuses for achievements
 LOW-COST LEADERSHIP strategy

A) - CONTINUOUS IMPROVEMENT IN OPERATING EFFICIENCY

- PROCESS REENGINEERING (downward)

What kind of people we need for the top level positions / regular employees?

top level positions regular employees

Responsive creativity vs. Expected creativity flexibility

-Organizational Culture  focus on power vs. FUNCTION vs. task fulfilment vs.
people
-Intrinsic vs. extrinsic motivation
- the Reward system  bonuses for achievements
 LOW-COST LEADERSHIP strategy

B) - EXPLOITATION OF THE EXPERIENCE CURVE

- CO that gets onto the experience curve SOONER (!! time for achieving
routinization) than an imitator can theoretically maintain a cost advantage
= more times a person fulfill a task  faster & fewer errors

What kind of people we need for the top level positions / regular employees?
- looking for and hiring people WITH EXPERIENCE in that field  need of
induction training & higher salary
vs.
- looking for and hiring people with NO EXPERIENCE at all  need of induction
training + specialised training & lower salary (+ high incentives & compensations)

creativity – for middle & lower levels ????

 LOW-COST LEADERSHIP strategy

C) - UNBEATABLE SUPPLY CHAIN

- selling directly to consumers, skipping the middleman
(Oriflame, Avon, Yves-Rocher,... = NETWORK MARKETING ) 
committed & perseverant & clubby, sociable, good communicator

- production demand  no inventory + JIT production

(Dell computers model, restaurants..)  committed & efficient people
+ operation focus

- controlling the supply -chain by means of e-Business and/or vertical

integration
 LOW-COST LEADERSHIP strategy

D) - product redesign
- redesigning the entire family of products &/or the production process

Example:
- MARTplast used, for the very first time in Romania, 20 years ago a resistant
plastic row-material for kitchen & bathroom furniture
- lower prices (the row material and the production process is rather cheap) 
low-cost leadership strategy
- nowadays, they took part to the “Visuri la cheie” TV show  (higher prices )
differentiation strategy

-need for creative people at R&D dept.

(responsive vs contributory vs expected vs proactive creativity)
JOB DESCRIPTION Complex version & explicit vs. Simple version vs. Based on
competence
SELECTION preferred in-house development of talent ("makes" rather than
"buys" talent)
Entry level vs. senior level
TRAINING induction & specialized training vs. Only induction

MOTIVATION -financial = low salary + high incentives, compensations & bonuses

(according to the market level)
vs.
- non – financial = self – fulfillment
PERFORMANCE short-term vs. long term achievements
APPRAISAL SYSTEM & measurable results (monitoring & control) vs. process oriented

COMMUNICATION Individual vs. Team communication

LEADERSHIP Transactional vs. Transformational (in reengineering case)

TEAM BUILDING & forming // storming (cont. improvement & product redesign)//
team work norming // performing
CONFLICT MG. competing/avoiding/compromising/accommodating/collaborating

ORGANIZATIONAL focus on power vs. function vs. task fulfilment vs. people
CULTURE Process/Work hard-play hard/Bet your comp./Tough guy culture
LOW-COST LEADERSHIP - implications for HR
-focus on the short-term
- avoid risks & generate predictable results (monitor & control)
-focus on measurable business results rather than processes
HR perspective = preferred in-house development of talent ("makes" rather than "buys" talent)
- preferred long employment period , high seniority (to gain experience)
- targeted low turnover

- JOB DESCRIPTION – relatively fixed & explicit

- SELECTION - hiring people at entry level
- TRAINING – induction & specialised training
- MOTIVATION – financial = low salary + high incentives, compensations & bonuses
(close monitoring of market pay levels)
- non – financial = self – fulfillment ???
- PERFORMANCE APPRAISAL SYSTEM-short-term achievements & result oriented
- COMMUNICATION – individual
- LEADERSHIP – transactional (in general)
- transformational (especially, in reengineering situation)
-No special need for TEAM BUILDING
- CONFLICT MG.
- ORGANIZATIONAL CULTURE – focus on function/task fulfilment or Process culture
-CAREER MANAGEMENT –promoting from within
- specialized jobs & narrow career paths
 Deal and Kennedy's Culture Types

Tough-Guy, Macho 

= individualists enjoying risk and getting quick feedback on their decisions

= an all-or-nothing culture successful employees work very hard to be stars
- entertainment industry
- sports
- advertising

teamwork = not highly valued

higher turnover

difficult to build a cohesive culture

individualism prevails
 Deal and Kennedy's Culture Types

Work Hard/Play Hard 

= world of sales (among others)

= employees take few risks + the feedback is almost immediate
= employees must maintain high levels of energy and stay upbeat (heroes =
high volume salespeople)
one person alone cannot make the company

teamwork = valued

higher competition among the employees

difficult to build teamwork

 Deal and Kennedy's Culture Types

Bet-Your-Company = decisions are at high risk + slow feedback

Ex: organizations in large, capital-intensive industries

pharmaceutical companies
oil and gas companies
architectural firms
values are long-term focused 

a collective belief in the need to plan, prepare and

perform due diligence at all stages of decision
making
 Deal and Kennedy's Culture Types

Process = slow feedback, low risks

Ex: large retailers

Employees focus on HOW they do things
banks, insurance companies instead of WHAT they do  
government organizations

technical excellence = valued

attention to getting the process

NOT
measuring the actual outcome