hr strategies for organizations competing in the millennium
DESCRIPTION
HR Strategies for Organizations Competing in the Millennium. Have you ever worked for a learning organization? Do you think business process re-engineering is a good idea? Do most companies leverage their core competencies?. What is sound organizational architecture? - PowerPoint PPT PresentationTRANSCRIPT
Copyright 2000 - South-Western College Publishing
Module 2 - 1
HR Strategies for Organizations Competing in the Millennium
Copyright 2000 - South-Western College Publishing
Module 2 - 2
Management Quiz/Future Trends
• Have you ever worked for a learning organization?
• Do you think business process re-engineering is a good idea?
• Do most companies leverage their core competencies?
• What is sound organizational architecture?
• Do you believe in time-based competition?
Copyright 2000 - South-Western College Publishing
Module 2 - 3
HR Strategy: Core Concepts
• Strategic HRM• HR activities must be designed to
support strategic & business objectives (vertical fit)
• HR congruence• HR systems must have congruence
between other HR subsystems & other org. systems (Horizontal fit)
• Strategies for Gaining Competitive Advantage
• Core Competencies, Resources & Activity Streams
• Alternative Strategic HR perspectives
• HR Strategy Framework
• Reflection on workplace of the future
Copyright 2000 - South-Western College Publishing
Module 2 - 4
Definition: Strategic HRM• An organization’s fundamental approach to the
employment relationship; the pattern of HR decisions made by managers that reflect business strategies & relate to firm & environmental conditions
• The approaches to the separate HR activities (e.g., selection, compensation, performance appraisal) are integrated to provide a unified pattern to the employment relationship
Copyright 2000 - South-Western College Publishing
Module 2 - 5
Basic Question: How do HR Practices add Strategic Value?
• What is the relative contribution of different HR practices? (Black Box problem)
• HR Practices -> employee attitudes and Behaviors -> firm performance?
• How do bundles of HR practices filter down to people? (How do people experience policies and how do they operate to influence strategy?
Copyright 2000 - South-Western College Publishing
Module 2 - 6
Why do HR Strategies Matter?
• HR strategies are important because they are malleable and affect human capital
• Key to differentiate between management of HR function vs. HR management
• While orgs. cannot easily change firm assets, they can change how they manage people.
• HR practices can operate in 2 ways:
• increase value • lower human capital
investments
Copyright 2000 - South-Western College Publishing
Module 2 - 7
Some General Strategic HR Congruence Issues
• Upward Bias: firms that have more policies and are good at HR seem to do it better and better over time
• Downward Bias: firms that are below average and have fewer policies seem to do it worse and worse
• Complementary aspects of HR (Synergy) 1 +1 =5
• Internal alignment: fit with bundles of practices
• External alignment: fit with current external environment
Copyright 2000 - South-Western College Publishing
Module 2 - 8
5
ENVIRONMENTAL CONTEXT
ORGANIZATIONAL BUSINESS
Managerial Discretion
(More Less)
Unilateral
Decisions
Negotiated
Decisions
Imposed
Decisions
Transaction
Translation
HR S
trateg
y
HR Roles
Transition
STRA
TEG
Y
Transformation
MODEL FOR UNDERSTANDINGMODEL FOR UNDERSTANDINGHUMAN RESOURCE STRATEGY:HUMAN RESOURCE STRATEGY:
CONTEXT, ROLES, AND CONSTRAINTSCONTEXT, ROLES, AND CONSTRAINTS
Copyright 2000 - South-Western College Publishing
Module 2 - 9
Key Forces Shaping Business Strategy
• External environment (Social, political, legal, economic)
• Workforce (demographics and occupational mix)
• Org. culture• Org. Strategy (plan for achieving competitive
business advantage)• Technology of Production & Layout of Work
Copyright 2000 - South-Western College Publishing
Module 2 - 10
Strategic HRM Perspectives
• Strategic Contingency Behavioral Perspective of HR strategy
• Different firms follow different strategies which require unique behaviors and competencies (e.g. innovation, cost, customer focus)
• HR adds value by alignment
• Resource Based View• Any asset adds economic
value particularly if they enable my org. to be further down the dependent path (First mover advantage); If I’m further down the path on HR, I have competitive advantage
Copyright 2000 - South-Western College Publishing
Module 2 - 11
Strategies for Gaining Competitive Advantage
• Cost leadership:Compete by lower costs – Core workforce mindset: cost reduction & effectiveness
• Product Differentiation/Innovation– Core mindset: innovation & flexibility
• Focus: Best customer service or quality– Core mindset: reward teamwork and quality successes that
surpass customer needs
• Speed to Market– Core mindset: Work faster than competitors
Copyright 2000 - South-Western College Publishing
Module 2 - 12
HR Bundles Characterizing High Performance Work Systems
(Resource View/ Universal Best Practice Example)
• Extensive Recruitment and Selection Procedures
• Needs-based training• Performance contingent
incentive compensation & performance management systems
• Procedures that allow for voice
• Optimal levels of job involvement
• What others can you think of?
Copyright 2000 - South-Western College Publishing
Module 2 - 13
Strategic Analysis: Core Competencies, Resources,
Activity Streams• Firm must identify its core competencies
(identify and organize around what they do best that gives the firm access to many markets and is difficult to imitate.)
• Firms should also identify its most valuable resources and how workflow activity streams add to customer value
Copyright 2000 - South-Western College Publishing
Module 2 - 14
New Forms of Corporate Architecture
• Value Chain Perspective
• Organizations should only expend financial & managerial resources on activities that add a lot of value to the final value of its products goods or services
• Should outsource activities that add only a fraction to final value
• Example: Modular Companies
Copyright 2000 - South-Western College Publishing
Module 2 - 15
Modular Companies: Outsource Non-Vital Functions
• Nike & Reebok– Focus on designing
fashionable footwear; outsource manufacturing
• Core competencies:– design & marketing,
not manufacturing
• Sun Microsystems• Buys ready-made parts
from employers & performs only the final assembly
• Core competencies: design & assembly
Copyright 2000 - South-Western College Publishing
Module 2 - 16
Modular Companies
• Pros– Focus managerial &
technical talent on most critical activities
– Obtains best in the business for each value chain activity
– Centralizes decision-making for core competencies; all else outsourced
– Focus on customers & markets
– Quickens response to environmental shifts
• Cons– May keep you from
investing in core competencies or ability to bring back value added activities
– Too much outsourcing can lead to hollow companies & loss of competitive advantage
– Inhibits common vision
– Decreases operational control
Copyright 2000 - South-Western College Publishing
Module 2 - 17
Virtual Companies
• Continually evolving network of independent companies, customers, suppliers, even competitors that link together to share costs, skills & access to one anothers’ markets
• Term virtual comes from computer industry; A computer’s ability to appear to have more storage than it really has
• By assembling resources from a variety of entities, an org. has more capability that it possesses on its own
• Not permanent
• Participating firms give up some control & accept interdependent destinies
Copyright 2000 - South-Western College Publishing
Module 2 - 18
Virtual Companies• The ultimate joint
venture• Example: Paramount &
Hughes conversion of movies & texts into digital formats; Apple & Sony’s Powerbooks
• Pros: good for getting products to the market quickly
Pros:• Enables sharing of costs &
skills• Enhances access to global
markets• increases market
responsiveness– Creates “Best of
Everything” since each partner brings core competencies to alliance
Copyright 2000 - South-Western College Publishing
Module 2 - 19
Virtual Companies
Cons:• In order to be successful,
a strategic plan must determine effectiveness of combining core competencies
• Need to develop common vision, trust, & manage control issues
• Boundary Management• Leads to potential loss
of operational control• Results in loss of
strategic control over emerging technology
• Tough to manage; a new org. form
Copyright 2000 - South-Western College Publishing
Module 2 - 20
Barrier-Free
• Bridging differences in culture, function & goals to find common ground; eliminating multiple organizational boundaries (internal & external) fluid ambiguous roles
• Interdivisional task forces at GE; Chrysler’s development of Neon
• Pros– Leverages talent of
all types
– enables quick market response through single goal focus
– Enhances cooperation
Copyright 2000 - South-Western College Publishing
Module 2 - 21
Barrier-Free
• Cons– difficult to overcome
political & authority boundaries
– coordination problems can come from lack of strong leadership & common vision
– Time-consuming
• Problems in managing politics & trust
• often managers trained in rigid hierarchies have difficulties making the transition to more democratic participative style
Copyright 2000 - South-Western College Publishing
Module 2 - 22
Re-Engineering
• Examining entire work process and redesigning functions to organize around customer needs (e.g. increase quality, service, flexibility, and lower costs) rather than functions
• Simplify flow of work• Starts with
benchmarking: identifying how exceptional companies achieve their results (Best practices)
Copyright 2000 - South-Western College Publishing
Module 2 - 23
Re-Engineering• Several jobs combined
into one(reduces errors, delays & miscommunications via hand-offs)
• Employees empowered to make decisions
• Use of teams/ High performance work systems
• Work is performed where it makes the most sense (e.g. team hiring)
• Controls are used only where they add value(e.g. Walmart has given suppliers control over inventory management)
Copyright 2000 - South-Western College Publishing
Module 2 - 24
Organizational Adaptation& Performance Outcomes
FirmStrategic Analysis &Formulation1. ExternalEnvironmentScan/Forecast *Competitor/Industry*Stakeholder Analysis *EnvironmentalSituational Factors(e.g., Social, Political,Technological, Legal),2.Internal CapitalAssessment-Financial-Physical & Technological-Human
*Workforce Skills,Abilities,Competencies,CultureManagementStyle Values
3.IdentifyCompetencies &Sources of
CompetitiveAdvantage
4.OrganizationalStrategy Fomulation- Mission & Vision- Strategic Thrusts:- Operating- Financial- Human Capital
Human ResourceStrategy Development& Execution5.Management Choices& Constraints regardingthe HR and PeopleDeployment6.HR Planning &Organization Design ofPolicy Clusters- HR Strategy &
Work Organization- Talent ID &
Deployment- HumanCapital
Development- Reward
Management- Employee Relations
& Voice7.Allocate resources &develop processes &systems for HR roledelivery- Transactions- Translation- Transition- Transformation
-OrganizationCulturalResponse
Employee &Work UnitAttitudes.Behaviors&Performance
OrganizationalPerformance,Stakeholder &Societal Outcomes
HR Strategy Framework
Copyright 2000 - South-Western College Publishing
Module 2 - 25
Current HR Trends: Workplace of the Future
• TRADITIONAL HR– Jobs designed for
individual work
– HR systems designed based on based on assumption of workforce homogeneity
– Standardized work sites & schedules set by company
• FUTURE TRENDS– Jobs designed for
teamwork
– HR systems designed based on assumption of heterogeneity (sex, age, ethnicity, country)
– Flexiplace (work may be done at home, at the customer & employees have greater control over when & where it is done)
Copyright 2000 - South-Western College Publishing
Module 2 - 26
Current HR Trends: Workplace of the Future
• TRADITIONAL HR– U.S. culturally driven
HR policies
– Segmented work/life boundaries
– Strive for compliance with EEO & AA
• FUTURE TRENDS– Global best practices
of HR policies
– Integrated/blurring work/life boundaries
– Manage diversity & EEO/AA compliance
Copyright 2000 - South-Western College Publishing
Module 2 - 27
Current HR Trends: Workplace of the Future
• TRADITIONAL HR– Technology
controlled by experts
– Limited training investments
– Explicit HR systems & Management Determined Policies
• (Most work rules are clearly written down and administered by the HR department and controlled by mgmt.)
• FUTURE TRENDS– Employees control
technology – -Learning organization &
high skill utilization – Implicit Systems &
Negotiated HR Policies• (A lot of critical HR work is
culturally driven. and constantly being renegotiated between employees & managers, employees & customers and teams.)
Copyright 2000 - South-Western College Publishing
Module 2 - 28
Application
• HR Vignettes: Discuss each case in small groups and come to consensus on the guide questions to the exercise. Your group should be prepared to report out on your thinking and rationale for the case(s) you are assigned.