HRD- A Strategic Perspective

In the absence of HR Strategy clearly In the absence of HR Strategy clearly linked with business strategy, HRM linked with business strategy, HRM programs may easily lack direction, programs may easily lack direction, clarity, coherence and critical marks clarity, coherence and critical marks

to add value.to add value.(Tony Grundy)(Tony Grundy)

HRD- A Strategic Perspective

Brief Introduction of Roots and Models of HRM/HRD

Significance of HRD

Human Resource for Competitive Advantage

Business Strategy and HRD

HRD and Business Policy Linkages

HRD and Life Cycle of Organization

HRD and Organizational Performance

TOPICS COVERED IN THIS CHAPTERTOPICS COVERED IN THIS CHAPTER

Roots of HRM Go as far back as 1950s when Drucker and

McGregor stressed the need for visionary goal directed leadership and management of integration.

Then in 1960 Behavioral Science Moment headed by Maslow, Argyris and Herzberg.

The origin of HRM as defined school of thought in back 1970 with the development of Human Resource Accounting Theory (Flamholtz, 1974)

Models of HRM/HRD Three models

1. Hard Variant of HRM Has a harder, less humanistic edge, holding

that employees are resources in the same way as any other business resource. People have to be managed in a similar manner to equipment and raw materials. They must be obtained as cheaply as possible, used sparingly, and developed and exploited as much as possible.

Also called matching model developed by Michigan and New York schools

Models of HRM/HRD

2. Soft Variant of HRM (Beer et al. (1984)

The Harvard interpretation sees employees as resources. However, they are viewed as being fundamentally different from other resources - they cannot be managed in the same way.

The stress has been given on people as Human Resource.

Employees are significant stakeholders in an organization. They have their own needs and concerns along with other groups such as shareholders and customers.‘

Employer employees relationship

Commitment better Eco performance

Models of HRM/HRD1. 5p model of strategic HRM

• (HR Philosophy, Policies, Programmes, Practices and Processes)

• As per this model HR is the integral part of business strategy (Schuler and Jackson 1987)

Significance of HRD Changes in Business Environment have

created a sudden shift in focus of HR function. These changes include: Raising Cost, Increasing competition Rapid Technological Changes, increase in

demand for new skills through resourcing and re-training.

Changing demographics Increasing multinational collaboration,

multilateral relationship

HR for Competitive Advantage Resource Based View

Suggests that the HR system can contribute to sustained competitive advantage through facilitating the development of competencies that are firm specific and generate implicit

organizational knowledge. The firm is viewed as an excess of resources and

capabilities which are not freely bought and sold in the spot market.

Porter (1985)-Human Resource Management can help a firm attain competitive advantage by lowering the cost, by increasing sources of product and service differentiation or by both. All these activities should be managed from strategic perspective.

HR for Competitive Advantage Dunlop (1989) economic growth and

improvement in productivity depend on the investment in human resource development.

Behavioral Psychology Perspective Schuler and Jackson (1987) HRM practices can contribute

to competitive advantage insofar as they bring and reinforce the set of role behaviors that result in lowering costs or enhancing product differentiation or both.

MacDuffie and Kochan (1991), Snell and Dean (1992) contended that investment in firm specific human capital can generate competitive advantage.

HR for Competitive Advantage Greer and Ireland (1992) A firm which is able to

accumulate HR during periods of economic slump for use in future is likely to achieve competitive advantage over the competitors who indulge in hire and fire practice.

Wright and Snell (1991) proper staffing practices could result in firm to build and sustain competitive advantage.

Sparrow et al., (1994) . Five major groupings of HRM policies and practices that are connected to competitive advantage are Culture, Organization Structure, Performance Management, Resourcing, Communications and Corporate Responsibility.

Pfeffer, (1984) how we think about workforce and employment relationship. Seeing the workforce as a source of strategic advantage, not just as a cost to be minimized or avoided.

Business Strategy and HRDThree models to link Business Strategy and HRM. Reactive Model of HRM

Strategy derives HRM policy.

Proactive ModelIn which HR planning is involved in the strategy formulation stage itself.

Match ModelSimultaneous action for design and implementation of business strategy and HR strategy.

Table 3.1

HR and Business Policy Linkages Golden and Ramaujam(1985) proposed four level model in the

context of linkages between human resources and business policy

Dynamic, frequent, formal and informal interaction

HR is involved strategic decisions.

Info flows both to business and HR planners.

Exist but not highly integrated

HR as a resource but not as a strategic business partner

Little or not

Integrative Linkage

Two Way Linkage

One Way Linkage

Administrative Linkage

Macro-environmental analysis

Macro-resource analysis

Key business assumptions

Business implications

Critical business issue

Strategy developmentAnd evaluation

HR environmental analysis

HR resource analysis

HR assumptions

HR implications

Critical HR issue

HR strategy And evaluation for inclusion in strategic business plan

Human Resource Planning Steps

Business Planning Steps

Starting Point Mission statement Statement of business thrust

Linking HRD with Strategic Business Planning

HRD and Life Cycle of Organization

Schien (1985) argues that successful orgnisations are those that are able to match orgnizational needs with individual needs, thus achieving organizational growth along with individual development, commitment creativity etc.

HRD and Life Cycle of Organization Baird and Mesholaum (1992) argues that

organizations undergo five stages of development with different HRM needs in each stage and one programme or approach does not work everywhere.

Grundy (1997) argues that SHRD and planning involves linking business strategy with organization strategy to the current and emerging pool of management skills, thus identifying key shifts and gaps and areas for intervention.

Strategic HR Planning and Development

Competitive Strategy

FutureOrganizational

Plans

CurrentOrganizational

Policies

Environment

Strategic human resource planning and development, organisation and strategy.

Table 3.2

HRD and Organizational Performance The organizational HR policies if properly

configured, provide a direct and economically significant contribution to a firm’s performance.

Schuler and MacMillan (1984) argues that effectively managing HR gives many benefits, including greater profitability.

According to Huselid (1995) the way a firm manages its people affects the profitability and stock price of an organisation.

A study of more than one hundred German companies found a strong link between investing in employees and stock market performance.

Table 3.4

Thanks