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Pathways Plus

Strategic Management and Leadership

Level 7

Unit 7012V1 Strategic Human Resource Planning

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Pathways Plus

Unit 7012V1: Strategic Human Resource Planning

Copyright © Chartered Management Institute, Management House, Cottingham Road, Corby, Northants NN17 1TT.

First edition 2009

Author: John Lambert Consultant: Leigh Anne Casey Chief consultant: Bob Croson Series consultant: Roger Merritt Associates Project manager: Trevor Weston Editor: Suzanne Pattinson Page layout by: Decent Typesetting

Revised July 2013

British Library Cataloguing-in-Publication Data. A CIP catalogue record for this publication is available from the British Library.

ISBN 0-85946-523-3

All rights reserved, save as set out below. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England WIT 4LP.

Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher. Permissions may be sought directly from the Chartered Management Institute in Corby, UK. Phone Publications on (+44) (0) 1536 207379, or email publications@managers.org.uk.

This publication is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated without the publisher’s prior consent in any form of binding or cover other than that in which it is published and without a similar condition being imposed on the subsequent purchaser.

Approved centres may purchase a licence from the publisher, enabling PDF files of the publication to be printed or otherwise distributed solely within the centre for teacher and student use only according to the terms and conditions of the licence.

Further information is available on the licence from the Chartered Management Institute. Phone (+44) (0) 1536 207379, or email publications@managers.org.uk.

Every effort has been made to trace holders of copyright material reproduced here. In cases where this has been unsuccessful or if any have inadvertently been overlooked, the publishers will be pleased to address this at the first opportunity.

The publishers would like to thank the following for permission to reproduce copyright material:

The Advisory, Conciliation and Arbitration Service (ACAS) for the extract on p. 123, © Acas 2008, Brandon House, 180 Borough High St, London SE1 1LW, United Kingdom, from its website: www.acas.org.uk.

The European Commission for an extract on p. 87 from their Green Paper ‘Modernising labour law to meet the challenges of the 21st century’ — http://ec.europa.eu/employment_social/labour_law/green_paper_en.htm

Penguin Books for the four drawings on pp. 31-2 adapted from Understanding Organisations, 1989, by Charles Handy, reproduced by permission of Penguin Books Ltd.

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is figure from the Flexible Working Survey, 2005; extract from work/life

cks of ton, D., Hall, L., and Taylor, S., Human

; on strategy development, p.81; Fig 1.3a and 1.3b, The cultural web, p.82

Quotation on p.37 from Ghoshal, Sumantra, Sep/Oct 1999 'New thinking from Professor Ghoshal', Vol 8, Issue 6, pp. 367-370. Reproduced with permission of John Wiley & Sons Ltd.

The Chartered Institute of Personnel and Development, London (www.cipd.co.uk) for:

the quote on assessment centres on p.70; Fig 2.1a, Why organisations make use of flexible working practices, p.88; Fig 2.2a, Effect of implementing flexible working practices on the organisation, p89 and comments on this figure and Fig 2.2b, Main constraints in implementing flexible working practices, p90 and comments on thbalance report on p.94.

Fig 4.1a, Model of traditional manpower planning, p.39; Fig 4.1b, Typical statistical method for demand forecasting taking into account different variables, p.40; Figure 4.1c, Retention profile, and Fig 4.1d, Census method, both p.42; Fig 1.1a, Equal opportunities and diversity approaches compared, p.53; Fig 2.1a, Usage of various methods of recruitment, p.61; Fig 2.1b, Advantages and drawbatraditional methods of recruiting, p.62 (all from TorringResource Management, FT Prentice Hall, 2007).

Pearson Education for Fig 2.1a, Business and resourcing strategies, p.23; Fig 2.1b, The HR strategy and business strategy fit, p24; Fig 2.2a, Strategy and people, p.26; Fig 1.1a, Culture in four layers, p.79Fig 1.2a, Culture’s influenceand Some useful questions, p.84 (all from Johnson, G., Scholes, K., and Whittington, R., Exploring Corporate Strategy, 2008).

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Contents

About Pathways Plus ..................................... 9

Introduction ............................................. 13

Section 1 Strategic human resources ............... 15

Topic 1: Strategic capability ...................................... 17

1.1 Resource-based strategy ........................................... 17

1.2 Dynamic capabilities ................................................ 20

1.3 Developing strategic capability ................................... 21

Topic 2: Putting together an HR strategy ....................... 25

2.1 Linking business and HR strategies ............................... 25

2.2 Components of HR strategy ........................................ 27

Topic 3: Organisational design .................................... 33

3.1 Types of organisational design .................................... 33

3.2 Roles of different worker groups .................................. 35

3.3 Purpose, process and people ...................................... 37

Topic 4: The process of HR planning ............................. 40

4.1 Analysing information for HR planning ........................... 40

4.2 Components of the HR plan ........................................ 45

Section summary .................................................... 50

Section 2 Attracting, recruiting and selecting talent ........................................ 53

Topic 1: Attracting talent ......................................... 55

1.1 Broadening the talent pool through diversity ................... 55

1.2 Rewards for all prospective workers ............................. 58

1.3 Recruitment as a marketing exercise ............................ 60

Topic 2: Recruiting talent ......................................... 63

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2.1 The recruitment process ........................................... 63

2.2 The job description and person specification ................... 66

2.3 Reviewing the effectiveness of recruitment .................... 67

Topic 3: Selecting and inducting talent ......................... 70

3.1 Selection methods ................................................... 70

3.2 The selection interview ............................................. 73

3.3 Inducting new employees .......................................... 75

Section summary .................................................... 78

Section 3 Organisational culture and working practices .................................... 79

Topic 1: Culture and its affect on employees .................. 81

1.1 What is culture? ...................................................... 81

1.2 Why is organisational culture important? ........................ 83

1.3 Analysing and changing culture ................................... 85

Topic 2: Changing working practices ............................. 89

2.1 Causes of changes to working practices ......................... 89

2.2 Impact of changes to working practices ......................... 91

Topic 3: The work—life balance .................................. 96

3.1 The importance of the work—life balance ....................... 96

3.2 The business case for a work—life balance ...................... 98

3.3 Setting up work—life balance arrangements ................... 100

Section summary ................................................... 106

Section 4 Legal requirements and external agencies .................................... 107

Topic 1: Legal requirements for HR ............................. 109

1.1 Fairness in recruitment and selection ........................... 109

1.2 Fairness and protection during employment ................... 112

1.3 Leaving the organisation .......................................... 116

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Topic 2: Disciplinary and grievance procedures ............... 119

2.1 The disciplinary procedure ........................................ 119

2.2 The grievance procedure .......................................... 122

Topic 3: The role of external agencies ......................... 126

3.1 The role of ACAS .................................................... 126

3.2 The role of Employment Tribunals ............................... 127

3.3 Other external agencies ........................................... 129

Section summary ................................................... 133

Further reading ........................................ 135

Before you move on ................................... 136

Preparing for assessment ................................................ 136

The Management and Leadership Standards .......................... 136

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About Pathways Plus

Development guides There are 12 development guides in the Pathways Plus series to cover the 14 units of the qualifications at CMI Level 7: Strategic Management and Leadership.

7001V1 Personal leadership development as a strategic manager (ISBN: 0-85946-572-1)

7002V1 Developing performance management strategies (ISBN: 0-85946-577-2)

7003V1 Financial management (ISBN: 0-85946-582-9)

7004V1 Strategic information management (ISBN: 0-85946-587-X)

7005V1 Conducting a strategic management project (ISBN: 0-85946-592-6)

7006V1/ 7011V1

Reviewing organisational strategy plans and performance/Strategic planning (ISBN: 0-85946-597-7)

7007V1 Financial planning (ISBN: 0-85946-503-9)

7008V1 Developing a marketing strategy (ISBN: 0-85946-508-X)

7009V1 Strategic project management (ISBN: 0-85946-513-6)

7010V1 Implementing organisational change strategies (ISBN: 0-85946-518-7)

7012V1 Strategic human resource planning (ISBN: 0-85946-523-3)

7013V1/ 7014V1

Strategic leadership/Strategic leadership practice (ISBN: 0-85946-528-4)

7021V1 Introduction to strategic management and leadership (ISBN: 0-85946-533-0)

7022V1 Developing risk management strategies (ISBN: 0-85946-538-1)

7023V1 Strategic corporate social responsibility (ISBN: 0-85946-543-8)

For further details on the development guides:

Phone: (+44) (0)1536 207379

Fax: (+44) (0)1536 207384

Email: publications@managers.org.uk

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Strategic Human Resource Planning

How to use the development guide The development guides provide a critical commentary to the ideas of writers and thinkers in the management and leadership field. They offer opportunities for you to investigate and apply these ideas within your working environment and job role.

Structure

Each guide is divided into sections that together cover the knowledge and understanding required for the equivalent unit or units of the Chartered Management Institute Level 7 Strategic Management and Leadership qualifications.

Each section starts with a clear set of objectives linked to the learning outcomes of the qualification. You don’t have to complete the sections in the order they appear in the guide (the mind map at the beginning of each guide will help you decide which sections and topics are of particular need or interest) but you should try to cover all sections if you are aiming for a full diploma qualification.

Activities

Throughout the guides there are activities for you to complete. These activities are designed to help you reflect on your own situation and apply your research to your organisation. Space and tables are provided within the activities for you to enter your own thoughts or findings, but in some cases you may choose to copy out the table or make notes in a separate notebook.

Timings

Timings are suggested for each activity to give you a rough idea of how long you should devote to them. They’re not hard and fast, and you must decide whether you will benefit from spending longer on some activities than stated.

SR Supporting resources

The text of the guides is designed to provide you with an introduction to the subject and a commentary on some of the key issues, models and thinkers in the field. The activities are there to help provide a framework for your thinking. A key component of Pathways Plus (Pathways Plus because the development guides work together with the online supporting resources to provide an overall learning journey) is the list of references given throughout the text and at the end of each topic guiding you to the most appropriate supporting resources for you to explore yourself. These are marked with the symbol SR (as shown above).

You have the opportunity to select those resources that are of most interest or relevance to you and to use them as a source of guided research on a particular topic. Many of the supporting resources are immediately available by logging into CMI’s online

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About Pathways Plus

management and leadership portal, ManagementDirect (MDir) (http://mde.managers.org.uk/members), or where you work for an organisation that subscribes to this service use the specific link for your organisation (http://mde.managers.org.uk/(organisation name) . These resources are marked in the reference list at the end of each topic with P+ standing for Pathways Plus. Once logged into ManagementDirect click on More…. on the navigation bar and select Senior Manager Resources, this will take you straight to the list of supporting resources as listed in the Pathways Plus topics. When there, click on the title of your development guide, the section and the topic you’re interested in and then click straight to the article, video, checklist, extract or report that you want to find.

P+

For those resources that are not available through the CMI site, you will be directed to other sources (some also online) to reach what you need.

Preparing for assessment

Further information on assessment is available in the Student Guide produced as part of the Pathways Plus series. If you have any further questions about assessment procedures, it’s important that you resolve these with your tutor or centre coordinator as soon as possible.

Further reading

Suggestions for further reading and links to management information are available via ManagementDirect through the Study Support section of the Institute's website at http://mde.managers.org.uk/members. Alternatively, email ask@managers.org.uk or telephone 01536 207400. You will also find titles for further reading in the Bibliography at the end of this workbook.

The CMI Management Library holds an extensive range of books and pamphlets for loan to members. A postal loan service is offered to members in the UK only. You will only pay your return postal charges. Go to www.managers.org.uk/library to review the collection and to place your requests.

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Strategic Human Resource Planning

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Introduction

Welcome to this development guide on human resource planning. It specifically focuses on the content of the specification for Unit 7012V1 Strategic human resource planning.

The guide will look at four key aspects of HR planning:

strategic human resources — strategic capability, how to put a HR strategy together aligned with the business strategy, the role of organisation design as a strategic issue and the process of HR planning

attracting, recruiting and selecting staff — process, methods, and the role of diversity

getting the best out of people — through having the appropriate culture, making use of flexible working practices, and developing work—life balance arrangements

getting things right — namely, the law: making sure you know the key areas of employment law and key processes backed by law such as disciplinary and grievance procedures, and getting help when you need it from the various agencies that help administer the law such as the Equality and Human Rights Commission.

Development guide mind map

Section 1: Strategic human resources

Human

resource planning

Section 2: Attracting, recruiting and selecting talent

Section 3: Organisational

culture and working practices

Section 4: Legal requirements and external agencies

Assessment If you’re studying for the Level 7 in Strategic Management and Leadership qualifications you will be assessed by your approved

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Strategic Human Resource Planning

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centre on your knowledge and understanding of the following learning outcomes:

Unit 7012V1:

1 Understand how the HR plan supports the strategic objectives

2 Understand the legal and organisational frameworks employment

3 Understand the effect of the organisational culture on staff

4 Understand the grievance, discipline and dismissal process

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Section 1 Strategic human resources

Introduction In this section you’ll consider the strategic aspect of human resource planning. This will involve four key areas:

the notion of HR strategy as part of the resource-based view of the organisation

how to put a HR strategy together by linking it with the business strategy, and what the key components of a HR strategy are

the role of organisational design as part of HR strategy, and which types of structures might be suitable to make the correct strategic ‘fit’

the HR planning (manpower planning) process — supply and demand forecasting and developing a HR plan.

Learning outcomes

This section addresses the following learning outcome:

7012V1.1 Understand how the HR plan supports the strategic objectives

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Strategic Human Resource Planning

Section mind map There are four topics in this section, as shown below. Check the subjects within each one and then continue with the areas you need to explore.

Section 1: Strategic human

resources 1.1 Resource-based

strategy

Topic 2: Putting together an HR

strategy

2.1 Linking business and HR strategies

2.2 Components of

HR strategy

Topic 1: Strategic capability

1.2 Dynamic capabilities

Topic 4: The process of HR

planning

4.2 Components of

1.3 Developing strategic capability

3.1 Types of organisational

design

3.2 Roles of different

worker groups

4.1 Analysing information for

HR planning

the HR plan

Topic 3: Organisational

design 3.3 Purpose, process and

people

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Section 1 Strategic human resources

Topic 1: Strategic capability

Introduction This topic considers human resources strategy from a perspective of strategic capability and the harnessing together of resources and competences to enable the organisation to survive and prosper. You’ll first consider the nature of strategic capability in terms of resource-based strategy and develop this via the notion of ‘dynamic capability’. The topic finishes off by considering how to develop strategic capability in the HR context.

1.1 Resource-based strategy Strategic capability is the organisation’s ability to perform at the level required for success as determined by its resources and competences; and further, as appropriate, its ability to use these resources and competences to gain strategic advantage over its competitors. This distinctiveness in capability is known as ‘resource-based strategy’.

Resources and competences

Resources are key to strategic capability and can be broken down into four areas:

physical — land, buildings, equipment, utilities, raw materials and production capacity

financial — capital, cash, creditors and debtors

intellectual — intangibles (brand, patents, systems and data)

human — employees, contractors and their knowledge and skills.

Competence is a performance concept relating to applied knowledge, techniques, skills and attitudes. It’s about the way a resource is deployed into organisational activities and the processes that link these activities in order to underpin the customer value of a product or service. For example, all the primary and support activities of an organisation from operations through to human resource management — the value chain — form part of an organisation’s competences.

Types of resources and competences

Not all resources and competences have the same value to the organisation. Johnson, Scholes and Whittington differentiate as follows:

Threshold resources — those required to meet customers’ minimum requirements in order for the organisation to survive, such as adequate logistics to get the product to the customer.

SR 1

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Strategic Human Resource Planning

Unique resources — those that underpin competitive advantage and are difficult for competitors to imitate or obtain, such as exceptional product.

Threshold — the skills and abilities required to meet customers’ minimum requirements in order for the organisation to survive, such as technically competent staff.

Core competences — those unique competences that underpin competitive advantage and are difficult for competitors to imitate or obtain, such as exceptionally skilled staff.

Another notion here is of inadequate resources, which do not meet customers’ minimum requirements, and redundant competences, where performance standards are below the level to stay in business. Redundant competences may not be totally useless to the organisation: they may be issues of timing, for example, where the organisation has moved on, say, to satisfy different customer requirements. But it may be that the competences could be used in a different context, for example, in a developing customer segment where the same requirements may be adequate. Reusing competences in different contexts in this way suggests that competences could be flexible (more on this idea later in this section).

Elements of uniqueness

Barney noted four empirical indicators of the potential of a company’s resources to generate sustained competitive advantage (which may be applied to any organisation):

SR 3

value — resources that are valuable, those which enable the organisation to create strategies that improve its efficiency and effectiveness, such as having sufficient financial leverage to buy up competitors and increase market share

rareness — resources that are possessed by few people, such as having a particularly successful CEO or physical asset

imitability — resources that cannot easily be imitated, such as a patented product

substitutability — resources that can’t easily be replaced by something similar, such as a doctor’s skill.

It’s unlikely that any organisation would possess all four, but one or two combined with threshold resources could make all the difference to its success.

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