Human Resource Management

Function: The Evolution

• Setting up of ‘welfare offices’, , ‘hiring offices’, ‘safety bureaus’, ‘time-office’
during IR 1 and 2

• Helping employers to deal with trade unions in 1930s

• Equal opportunity regulations in 1960’s and competitive advantage with engaged

employees in the globalization in 1970s

• Behavioural science movement; Maslow, Argyris and Herzberg in 1960s

• Organizational Development Movement initiated by Bennis in the 1970

• Human Resource Accounting (HRA) theory developed by Flamholtz (1974)

• Personnel Management, HRM, Strategy-HRM connection

What is the meaning of Strategy Perspective of HRM?

 Possible Roles Assumed by HR
Function
Strategic Focus

Strategic Partner Change Agent

System People

Administrative Expert Employee Champion

Operational Focus
 Transition of HRM Function

• Reactive • Proactive
• Prescriptive • Descriptive
• Administrative • Executive
 Strategic Human Resource
Management: Emergence and Evolution

What is Strategy?
• Originates from the word ‘strategos’, a general,
who organises, leads and directs his forces to the
most advantageous position.

• The main emphasis of strategy is to enable an

organization to achieve competitive advantage
with its unique capabilities by focusing on present
and future direction of the organisation.
 Classical Strategic Management
Process

• Establishing a mission statement and key

objectives for the organization
• Analysing the external environment
• Conducting an internal organizational analysis
• Setting specific goals
• Examining possible strategic choices
• Adoption/implementation of chosen choices
• Regular evaluation of all the above

(Ansoff, 1991; Mello, 2006)

 Strategy in Real Life

• In real life the process is generally not formal

and rational.

• Strategy emerge in response to an evolving

situation.

• Effective strategies combine deliberation and

control with flexibility and organizational
learning.
• A long-term BL strategy must be based on a
core idea about how the firm can best
compete in the marketplace. The popular
term for this core idea is generic strategy.
 Generic Strategies
Generic Management Process and Competencies and
Strategies Systems Resources Required

Cost Leadership • Efficiency driven • Tight cost control

• Generally economies of • Tight management control
scale system
• Process Excellence • Structured organizational
responsibility

Differentiation • Innovation driven • R&D and its strong

• Generally unique coordination with
capabilities driven marketing
• Engineering excellence • Incentives for value
adding innovation
• Flexible and agile
organizational system

Niche or Focus • Combination of above towards a particular segment

 What are the Deliverables of HR
Function?

• Mindset

• Technical Knowledge

• Behavior
The Changing Environment of
Human Resource Management

Globalization Trends

Technological Trends
Changes and Trends in
Human Resource
Management
Trends in the Nature of Work

Workforce Demographic Trends

 HR Deliverables (Mindset, Technical
Knowledge, Behavior)
• Do employees know and understand the firm’s strategy?
• Do employees know and understand the status of the firm’s
success with respect to the pursuit of that strategy?
• Do employees know and understand the firms’s value
proposition and how it is delivered?
• Do employee know and understand what they are to do?
• Do employees believe they have the skills and knowledge
necessary to do their job?
• Are employees provided the managerial support and
support systems to do a the job to the best of their ability?
• What level of competency is necessary in strategic resource
positions now?
• How many truly “A” players are there in “A” positions?
• Are our leaders behaving in ways that elicit “followership”?
 HR Effectiveness Drawn From Business
Performance and Success

• Financial Success

• Customer Success

• Workforce Success

• Business Process Success

 Some Questions Asked More than
Often by All the Managers and
Stakeholders
• Which Screening techniques yield the best
performing recruits?
• What is the ROI of training?
• What target-setting approach will best
motivate performance?
• How to enhance the employee engagement?
• How to promote innovation at workplace?
• How to build positive climate at workplace?
 Does All this Sounds too Academic?

• 30 to 40 percent of market appreciation is due

to non tangible factors. (An Ernst and Young
Study).

• Huselid’s survey of some one thousands firms

indicates that alignment and integration of a
firms’s HR systems plays a critical role and
associated with >$40,000 increase in market
capitalization per employee.
 Result of Poor HR Practices

• Hire the wrong person for the job

• Experience high turnover
• Have your people not doing their best
• Waste time with useless interviews
• Have your company in court because of discriminatory actions
• Have your company cited by labor inspectors for unsafe practices
• Have some employees think their salaries are unfair and
inequitable relative to others in the organization
• Allow a lack of training to undermine your department’s
effectiveness
• Commit any unfair labor practices
 How HR and Strategy are
Harmonized?
Few Examples:

AT&T

• AT&T’s human resources leadership council, comprising

members from the corporate executive, HR, strategic
business units, production, delivery and business support,
who account for a majority of the corporation’s workforce.
The council serves as an interdisciplinary forum for linking
both corporate and business-unit HR activity with
operations, to ensure that HR processes are deployed in a
standard fashion throughout the organization. Also, the
council focuses on more long-term strategic HR issues,
working with the corporation’s strategic planning council.
Mahindra AFS

• Search For Strategist – To bring out the best in every

employee, Mahindra AFS has created an open platform
called Search for Strategist, an opportunity for all the
employees, regardless of their age, function, business,
to work on real-life business challenges and
opportunities. The teams then present these ideas to
the senior management! Through Search for Strategist,
the employees are encouraged to look at problems
from a Business perspective and not from an individual
standpoint, thus, resulting in joint brainstorming
sessions!
SAS

Open-book management is a HR practice followed by the

management in which all the information is spread to all the
levels of employee in the organization. This will keep the
employee informed about the various changes, facilities,
procedures that are incorporated in the company. This
philosophy is used by the management to engage its employees
and make them feel that they are valued and that is why the
management always wants to keep them informed. One more
advantage of this is that it generates an open-line of
communication in contrast to the traditional top-down
communication, which makes the employee organization
friendly. This also gives all the employees an opportunity to raise
or express their concerns.
Marico

They have formalised focus areas under the

themes of Climate Change, Resource
Optimisation and Corporate Citizenship. A
tracking mechanism for sustainability
performance is developed and review system is
being established
 Few More Examples

• The Bon-Ton chain of more than 280

department stores in USA leveraged its data to
identify attributes that made cosmetics sales
reps successful : cognitive ability, situational
judgement, initiative taking (increase of $1400
in sales per representative and 25 percent
lower turnover)
• PNC Financial Services: Picking experienced
outsiders over internal candidates

• Identify the Big questions

(Business-Strategy focused)

Google: Reassessing provisionally rejected

candidates by identifying potential false negatives
• Google: Double-blind review to identify the
key behaviours exhibited by best managers

• ING: Comprehensive dashboard for business

units and HR

• Shell: Data gathering, Analysis, Developing

solutions and Piloting
• What may go wrong due to inefficient HR
management?
 Competence Maturity Model (CMM)
• All CMMs are constructed with five levels of maturity. A
maturity level is an evolutionary plateau at which one or more
domains of the organization’s processes have been
transformed to achieve a new level of organizational
capability.

• A maturity level consists of related practices for a predefined

set of process areas that improve the organization’s overall
performance. Thus, an organization achieves a new level of
maturity when a system of practices has been established or
transformed to provide capabilities and results the
organization did not have at the previous level.
CMM Cont…
• The method of transformation is different at each level,
and requires capabilities established at earlier levels.
Consequently, each maturity level provides a foundation
of practices on which practices at subsequent maturity
levels can be built. In order to be a true CMM, the
maturity framework underlying a model must use the
principles established in the process maturity framework
for transforming the organization at each level.

Maturity level
• A maturity level represents a new level of organizational
capability created by the transformation of one or more
domains of an organization’s processes.
 What is PCMM
• The People CMM applies the principles of the process
maturity framework to the domain of workforce
practices. Each of the People CMM’s five maturity
levels represents a different level of organizational
capability for managing and developing the workforce.

• Each maturity level provides a layer in the foundation

for continuous improvement and equips the
organization with increasingly powerful tools for
developing the capability of its workforce.
 What is PCMM Cont…

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5 Levels of PCMM

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CMM.html
 CMM Level 1
Initial Level typically exhibit four characteristics:

1. Inconsistency in performing practices

2. Displacement of responsibility
3. Ritualistic practices
4. An emotionally detached workforce
 Managed Level: CMM Level 2
Maturity Level 2 focuses on establishing basic practices in
units that address immediate problems and prepare managers
to implement more sophisticated practices at higher levels.
Frequent problems that keep people from performing
effectively in low-maturity organizations include:

• Work overload
• Environmental distractions
• Unclear performance objectives or feedback
• Lack of relevant knowledge or skill
• Poor communication
• Low morale
CMM Level 2 Cont…
• At Maturity Level 2, an organization’s capability
for performing work is best characterized by the
capability of units to meet commitments. This
capability is achieved by ensuring that people
have the skills needed to perform their assigned
work and that performance is regularly discussed
to identify actions that can improve it.
• Measurements of status and performance of
these workforce activities provide management
with a means of monitoring and ensuring
appropriate performance of workforce practices.
At Maturity Level 2, the People CMM addresses
one of the most frequent causes of turnover—
poor relations with the immediate supervisor.
Organizations at the Managed Level find that,
although they are performing basic workforce
practices, there is inconsistency in how these
practices are performed across units and little
synergy across the organization.
 Defined Level: CMM Level 3
Once a foundation of basic workforce practices has been established in the
units, the next step is:

for the organization to develop an organization-wide infrastructure building

on these practices that ties the capability of the workforce to strategic
business objectives.
The primary objective of the Defined Level is to help an organization gain a
competitive advantage by developing the various competencies that must
be combined in its workforce to accomplish its business activities. These
workforce competencies represent the critical pillars that support the
strategic business plan; their absence poses a severe risk to strategic
business objectives. In tying workforce competencies to current and
future business objectives, the improved workforce practices
implemented at Maturity
The Predictable Level: Maturity Level 4
An organization at the Defined Level has established an
organizational framework for developing its workforce.
At the Predictable Level, the organization manages and
exploits the capability created by its framework of
workforce competencies. This framework is sustained
through formal mentoring activities.

The organization is now able to manage its capability and

performance quantitatively. The organization is able to
predict its capability for performing work because it
can quantify the capability of its workforce and of the
competency-based processes they use in performing
their assignments.
There are at least three ways in which the
framework of workforce competencies enables
the organization to more fully use the
capabilities of its workforce.

• First, when competent people perform their

assignments using proven competency-based
processes, management trusts the results they
produce.
• Second, this trust also gives managers the
confidence they need to empower workgroups.

• Third, when members of each workforce

competency community have mastered their
competency- based processes, the organization is
able to integrate different competency-based
processes into a single multidisciplinary process.
 Optimizing Level: CMM Level 5
• At the Optimizing Level, the entire organization is
focused on continual improvement. These
improvements are made to the capability of
individuals and workgroups, to the performance of
competency-based processes, and to workforce
practices and activities. The organization uses the
results of the quantitative management activities
established at Maturity Level 4 to guide
improvements at Maturity Level 5. Maturity Level
5 organizations treat change management as an
ordinary business process to be performed in an
orderly way on a regular basis.
• At Maturity Level 5, individuals are encouraged to
make continuous improvements to their personal work
processes by analyzing their work and making
necessary process enhancements. Similarly,
workgroups are composed of individuals who have
personalized work processes. To improve the capability
of the workgroup, each person’s work processes must
be integrated into an effective operating procedure for
the workgroup. Improvements at the individual level
should be integrated into improvements in the
workgroup’s operating process. Mentors and coaches
can be provided to guide improvements at both the
individual and workgroup levels.
Line Managers’ HRM Responsibilities
• Placing the right person on the right job
• Starting new employees in the organization (orientation)
• Training employees for jobs that are new to them
• Improving the job performance of each person
• Gaining creative cooperation and developing smooth
working relationships
• Interpreting the firm’s policies and procedures
• Controlling labor costs
• Developing the abilities of each person
• Creating and maintaining department morale
• Protecting employees’ health and physical condition
High-Performance Work System Practices

• Talent Management
• Selective hiring
• Extensive training
• Self-managed teams/decentralized decision making
• Reduced status distinctions
• Information sharing
• Contingent (pay-for-performance) rewards
• Transformational leadership
• Measurement of management practices
• Emphasis on high-quality work
 Benefits of a High-Performance
Work System (HPWS)

• Generate more job applicants

• Screen candidates more effectively
• Provide more and better training
• Link pay more explicitly to performance
• Provide a safer work environment
• Produce more qualified applicants per position
• Hiring based on validated selection tests
• Provide more hours of training for new employees
• Conduct more performance appraisals