Unit-1 MBA-3 Sem Strategic Human Resource Management

UNIT-1 (STRATEGIC HUMAN RESOURCE MANAGEMENT)-MBA-3 SEM

LECTURE 1

UNDERSTANDING STRATEGIC HRM

INTRODUCTION

HRM is concerned with the people and it helps in acquiring, developing, stimulating and
retaining the outstanding employees and it also brings effectiveness and efficiency to the
working of the organization therefore HRM is started being used strategically and termed as
Strategic Human Resource Management.1

Important terms to understand SHRM

1. Core competency- a unique capability of organization which differentiate it from

its competitors and also create high value for organization
2. Mission – It defines the business, the needs of covering their products and services,
the market in which it is developed and the public image of the company.
The mission of the company is the answer of the question: why does the
organization exists?3
Example- Mission of Ford- we are a global, diverse family with a proud inheritance,
providing exceptional products and services.
3. Vision: Defines and describes the future situation that a company wishes to have,
the intention of the vision is to guide, to control and to encourage the organization
as a whole to reach the desirable state of the organization.
 The vision of the company is the response to the question of: What do we
want our organization to be?
 Vision of Ford - become the main company of the world in products and
services of the car. A vision statement looks into the future at least five years
and defines a desired future state of the company.
 A mission statement defines what a company currently does, and how it
plans to achieve its vision.
4. Strategy- The company’s plan to how it will balance its internal strength and
weaknesses with external opportunities and threats in order to sustain a competitive
advantage or It is unified (integrated) , comprehensive (complete) and integrated

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Unit-1 MBA-3 Sem Strategic Human Resource Management

plan that relates the strategic advantage of the firm to the challenges of the
environment. It is designed to ensure that the basic objective of the enterprise are
achieved through proper execution by the organization.

COMPANIES FORMS 3 TYPES OF STRATEGIES3

1. Corporate strategy –
It indentifies the mix of businesses the firm will engage in and the ways in which this
business will relate to each other.

2. Business strategy-
It indentify how each of the firms businesses will compete in the market place

3. Functional strategy-
It indentify how manufacturing, marketing, and other functions will contribute to the
business strategy

DEFINITION SHRM –
Strategic HRM has been defined as the integrated set of practices, policies and strategies
through which organizations manage their human capital; that influences or being
influenced by the business strategy and the organizational context and socio- economic
context.

Strategic HRM can also be defined as the linking of HRM with the strategic goals and
objectives in order to improve business performance

Jeffrey A Mello defined SHRM as the development of a consistent, aligned collection of

practices, programs and policies to facilitate the achievement of the organizations strategic
objectives.

Strategic management is that set of managerial decisions and actions that determine the
long term performance of a corporation. It includes environmental scanning, strategy
formulation, strategy implementation, evaluation and control –Harvey

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Unit-1 MBA-3 Sem Strategic Human Resource Management

Strategic human resource management is to ensure that human resource management is

fully integrated into strategic planning, that HRM policies cohere both across policy areas
and across hierarchies and that HRM policies are accepted and used by line managers as
part of their every day work, opines Guest.

According to Donald F. Harvey “Strategic management is that set of managerial decisions

and actions that determine the long-term performance of a corporation. It includes
environmental scanning, strategy formulation, strategy implementation and evaluation and
control. The study of strategic management, therefore, emphasizes monitoring and
evaluating environmental opportunities and threats in the light of a corporation’s strengths
and weaknesses”.

The success of an organization depends on the people therein. This means how they are ac-
quired, developed, motivated and retained in the organization play an important role in the
organizational success. Then this presupposes an integral approach toward human resource
functions and overall business functions of an organization. Thus, strategic HRM means a
strategic look at HR functions in line with the business functions of an organization.

BENEFITS OF STRATEGIC MANAGEMENT: 2

Fred R. David’ has listed the following benefits that strategic management
brings for an organization:
1. Allows identification, prioritization and exploitation of opportunities.
2. Provides an objective view of management problems.
3. Represents a framework for improved co-ordination and control of activities.
4. Minimizes the effects of adverse conditions and changes.
5. Allows major decisions to better support established objectives.
6. Allows more effective allocation of time and resources to identified opportunities.
7. Allows fewer resources and lesser time to be devoted to correcting erroneous or
adhoc decisions.
8. Creates a framework for internal communication among personnel.
9. Helps to integrate the behaviors of individuals into a total effort.
10. Provides a basis for the clarification of individual responsibilities.
11. Gives encouragement to forward thinking.
12. Provides a co-operative, integrated and enthusiastic approach to tackling problems
and opportunities.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

13. Encourages a favorable attitude towards change.

14. Gives a degree of discipline and formality to the management of a business.

References:-

1. http://www.sasurieengg.com/ecoursematerial/EEE/IVYear%20Sem%207/
MG2351%20Principles%20of%20Management.pdf
2. https://www.coursehero.com/file/pvhuin/Acompanymaywishtoenterane
wproductlineprimarilyforpurposesof/
3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

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Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE 2

ROLE OF HRM IN STRATEGIC MANAGEMENT:

Types of Strategy
1. Corporate strategy
2. Business strategy
3. Functional strategy

1.Corporate strategy 1

1. The corporate level of management consists of the chief executive officer (CEO),
other senior executives, the board of directors, and corporate staff.

2. The role of corporate-level managers is to oversee the development of strategies for

the whole organization.

3. This role includes

a. defining the mission and goals of the organization,

b. allocating resources among the different businesses,

C. Formulating and implementing strategies that span individual businesses, and

providing leadership for the organization

2
2. Business Strategy

 Business-level general managers are concerned with strategies that are specific to a
particular business.
 The strategic role of these managers is to translate the general statements of
direction and intent that come from the corporate level into concrete strategies for
individual businesses.

3.Functional Strategy3

 Functional-level managers are responsible for the specific business functions or

operations (human resources, purchasing, product development, customer service,
and so on) that constitute a company or one of its divisions.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

 Thus, a functional manager's sphere of responsibility is generally confined to one

organizational activity.

ROLE OF HRM IN STRATEGIC MANAGEMENT:

Strategic business plan is formulated to achieve competitive advantage. From this specific
strategy for each functional area viz., marketing, finance, production operations and human
resources need to be drawn in alignment with strategic business plan to carry out the
organizational plan. In other words, the formulation of organizational strategy is integrative
with the formulation of functional strategies. Here, human resource strategy assumes more
importance because it provides human resources for other functional areas also. This
suggests that we must recognize that human resources integrally affect the overall strategy
of an organization. With this in mind, we are now discussing the integrative role played by
human resources in the strategic management of an organization.

Basically any strategic process can be broken down into two phases:
1. Strategy Formulation
2. Strategy Implementation
Let us examine the role of HR in these two phases separately.

Strategy formulation Strategy implementation

1. Strategy formulation is positioning forces Strategy implementation is managing forces

before the action. (A) during the action.
2. Strategy formulation focuses on Strategy implementation focuses on
effectiveness. (E) efficiency.
3. Strategy formulation is primarily an Strategy implementation is primarily an
intellectual process. (I) operational process.
4. Strategy formulation requires good Strategy implementation requires special
intuitive and analytical skills. (U) motivation and leadership skills
5. Strategy formulation requires Strategy implementation requires
coordination among a few individuals (O) combination among many individuals.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

The organization implemented the following HR strategies:

1. Right Sizing Human Resources: Manpower audit based on competence mapping

in turn making the organization right sized.

2. Developing a Learning Culture through Continuous Learning: People were

exposed to latest technology and management technique through workshops,
discussions and technical session in each department.

3. Web based customer relationship management: The organization linked its

manufacturing unit with each vital customer through net.

4. Introduction of open house: The new techniques like ‘Open House’ system for
employees to ventilate their problems in a forum wherein present were superiors
including the directors were introduced.

5. Organization of executive leadership camp to develop corporate pride

among the employees: The young executives in an organization were taken into a
hill station wherein they were exposed to yoga, meditation and latest management
techniques of team working etc., for ten days.

6. Introduction of Willy Korf Innovation Award Scheme: This scheme was to

encourage the employees to generate new ideas in improving the workplace
productivity. In this process, employees were lending a contributory hand towards
management.

7. Regular training with a target of seven Mondays per employee: It was made
compulsory for each employee to undergo training at least for 7 days in a year on
different topics identified through training needs analysis.

8. Training programmes on areas of concern: The major areas of concern were

identified through—interaction with technical heads of department and the training
is imparted.

9. Special Programme: Four-point programme to enhance shareholders’ value

through capacity enhancement, contribution enhancement, reduction in financial
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Unit-1 MBA-3 Sem Strategic Human Resource Management

cost, enhancing the value of intangibles were adopted as strategic steps toward
achieving business performance.

References:-

1. https://www.coursehero.com/file/66463479/WEEK12SHRMdoc/
2. https://navclasses.blogspot.com/2017/05/benefitsbarriersofshrm.html
3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

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Notes By: - Rajesh Kumar (Ass. Prof.)
Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-3

PROCESS OF STRATEGIC HRM

PROCESS OF STRATEGIC HRM1

The Strategic Human Resource Management is concerned with the development of
HR strategies intended to direct the employees’ efforts towards the business goals.

1. Scanning the Environment:

The process begins with the scanning of the environment, i.e. both the external and
internal factors of the organization. The external environment encompasses the
political, legal, technological, economic, social and cultural forces that have a great
impact on the functioning of the business. The internal factors include the
organizational culture, hierarchy, business processes, SWOT analysis, industrial
relations, etc. that play a crucial role in performing the business operations.

The role of the HR department is to collect all the information about the immediate
competitors – their strategies, vision, mission, strengths, and weaknesses. This can
be done through the resumes being sent by the candidates working with the other

Notes By: - Rajesh Kumar (Ass. Prof.)

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Unit-1 MBA-3 Sem Strategic Human Resource Management

rivalry firm. Through these, HR professionals can identify the workforce, work
culture, skills of the staff, compensation levels, reasons for exit and other relevant
information about the competing firm.

2. Identify Sources of Competitive Advantage:

The next step in the strategic human resource management process is to identify the
parameters of competitive advantage that could stem from diverse sources as
product quality, price, customer service, brand positioning, delivery, etc.
The HR department can help in gaining the competitive advantage by conducting the
efficient training programmes designed to enrich the skills of the staff.

3. Identify HRM Strategies:

There are major four strategies undertaken by an organization to enrich the
employees capabilities:

a) Learning as Socialization:
This strategy includes the techniques as training courses, coaching sessions,
education programmes to ensure that the employees abide by the rules, value and
beliefs of an organization and are able to meet the performance targets.

b) Devolved Informal Learning:

This strategy helps in making the employees aware of the learning opportunities and
the career development.

c) Engineering:
This strategy focuses on creating and developing communities of practice and social
networks within and outside the organization.

d) Empowered Informal Learning:

Through this strategy, the HR department focuses on developing the learning
environment such as knowledge about the new processes, designing of new work
areas and the provision of shared spaces.

Notes By: - Rajesh Kumar (Ass. Prof.)

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Unit-1 MBA-3 Sem Strategic Human Resource Management

4. Implementing HR Strategies:
Once the strategy has been decided the next step is to put it into the action. The HR
strategy can be implemented by considering the HR policies, plans, actions and
practices.

5. Monitor and Evaluation:

The final step in the strategic human resource management process is to compare
the performance of the HR strategy against the pre-established standards. At this
stage, certain activities are performed to evaluate the outcomes of the strategic
decision: establishing the performance targets and tolerance levels, analyzing the
deviations, executing the modifications. Thus, to have an effective HR strategy the
firm follows these steps systematically and ensures that the purpose for which it is
designed is fulfilled.

The 5 Ps model of strategic human resource management (SHRM) is a new model in

the area of study. This model is proposed by Randal. Schuler this model melds five
human resource activities with strategic highlight just how significant, the strategy
activity link can be. The proposed model incorporates the 5 Ps of strategic human
resource management which stands2

 Philosophy of Human resources

 Policies human resources
 Program of human resources
 Practices of human resources
 Processes of human resources

Notes By: - Rajesh Kumar (Ass. Prof.)

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Unit-1 MBA-3 Sem Strategic Human Resource Management

5 Ps model of strategic human resource management

In addition to these 5- Ps Sender’s model scans some other components, as

a) Organization Strategy

b) Internal Characteristics

c) External Characteristics

d) Strategic Business woods.

The 5-P Model in Strategic Human Resource Management 3

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Unit-1 MBA-3 Sem Strategic Human Resource Management

1. Organizational strategy: Instantiates the process of identifying strategic business

needs and provides specific qualities to them.
2. Internal characteristic: Some internal characteristics such as culture, the business
may affect the activities of an organization.
3. External characteristics: These include the condition of the economy; critical
success factor in the industry etc business needs may be affected by these external
factors.
4. Strategic business needs (SBN): These needs may be expressed in mission
statements or vision statements and translated into strategic business objectives.

References:-

1. https://www.coursehero.com/file/66463479/WEEK12SHRMdoc/
2. http://bankofinfo.com/5psofstrategichumanresourcemanagement/
3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

Notes By: - Rajesh Kumar (Ass. Prof.)

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Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-4

HRM V/S STRATEGIC HRM

HRM is Human Resources Management which is a strategic approach to the management
of employees. HRM involves the process of employing people, developing their
skills/capacities, and utilizing their services. But today, HRM has come across many changes,
and the latest one is the Strategic HRM which is the most powerful idea currently. Strategic
HRM can be termed as a branch of HRM.

In HRM, traditional methods are followed. Traditional methods mean the selection or
recruitment process and imparting training. This HRM process did not have any specific
rules for different areas like recruitment, training, and utilizing the services. This is what
makes the Strategic HRM different from HRM. In Strategic HRM, there are specific rules
specified for specialized fields.

In HRM, there are no separate people for different areas whereas in Strategic HRM there
are different people who are skilled in specific areas. It is not that the same persons will
handle recruitment, training, and employee appraisal.

As the term itself denotes, Strategic HRM deals with strategic aspects of HRM.
Unlike HRM, Strategic HRM mainly focuses on the programs with long-term
objectives. Though HRM and Strategic HRM focus on increasing employee
productivity, Strategic HRM uses many strategic methods.1

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Unit-1 MBA-3 Sem Strategic Human Resource Management

Strategic Planning Model

TRADITIONAL VERSUS STRATEGIC HR As business environment is changing with a

faster rate due to globalization, liberalization, and technological development it has
become necessary to involve HRM in strategic decision making process to improve quality,
productivity, customer satisfaction and cost reduction. Taking into consideration the
changed role of HRM, human resource strategy are been integrated with strategic needs of
the organization.

DIFFERENCE BETWEEN TRADITIONAL AND STRATEGIC HR2

1- Traditional HR activities were more administrative and directorial in nature while
strategic HR activities are concerned with the empowerment of employees keeping in view
human resources as a valuable asset for an organization.

2- In traditional HR job design allows employees to develop and specialize in a particular

area while in strategic HR job design allows to change as per the requirement of external
work environment and emphasis is given on changing according to the conditions.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

3- Another point which differentiate Traditional and strategic HR is HR policies and

functions. In Traditional HR policies are such designed that have very limited scope and they
were rigid whereas in strategic HR policies and function have wide scope and is framed
considering needs of organization and are flexible and can be easily adapted to meet
changes

4- In traditional HR the role of HR manager was restricted only to formulate policies and
procedures. While a strategic HR manager perform various roles other than formulating
policies and procedures like communicator, motivator.

5- Traditional HR is more of transactional in nature and focuses on carrying daily routine

work and on the other hand SHRM is transformational in nature which acts as change agent
to achieve strategic organizational goals

6- Traditional HR focuses on short term objectives whereas strategic HRM focuses on long
term objectives

7- In traditional HR people are not consider as competitive advantage for an organization.

They believe capital and products are the key investments while at the same time in SHRM
people and knowledge is considers as the major investments for an organization they
regards people as intellectual assets and consider people as a competitive advantage

8- Changes which are brought by traditional HR are slow, fragmented and reactive in
nature while in SHRM changes are fast , system and proactive in nature .

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Unit-1 MBA-3 Sem Strategic Human Resource Management

Differences between Traditional HRM and Strategic HRM3

Basis of Differences Traditional HRM Strategic HRM

1. Responsibility of HR Staff personnel in the HR Line mangers, all mangers

Department responsible for people are
HR managers.
2. Focus of activities Employee relations Partnerships with internal
customers
3. Role of HR Transactional ,change Initiator and
follower and respondent transformational ,change
leader
4. Initiative for change Slow, reactive, fragmented Fast, proactive, integrated
5. Time Horizon Short-term Short, medium, long term(as
necessary)
6. Control Bureaucratic control through Organic control through
rules, procedures and flexibility, as few restrictions
policies on employee
behavior as possible
7. Job design Tight division of labor, Broad, flexible, cross training
independence, teams
8. Key investments Capital, products People, knowledge
9. Accountability Cost center Investment center

References:-

1. https://www.coursehero.com/file/66463479/WEEK12SHRMdoc/
2. http://www.differencebetween.net/business/differencebetweenhrmand
strategichrm/
3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

Notes By: - Rajesh Kumar (Ass. Prof.) 17

Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-5

BEST FIT AND BEST PRACTICE APPROACH

There are two perspectives that dominate the strategic pay literature. The ‘best fit’
perspective claims that a firm’s reward system should be aligned to support the
organizations business strategy in order to achieve competitive advantage. ‘Best practice’
advocates claim that there is a bundle of HR policies including the reward system that leads
to highly motivated and committed employees who are the key to an organization’s
competitive advantage.1

The terms ‘best fit’ and ‘best practice’ are used in SHRM literature and are applied to the
specific policy area of reward systems. Each approach attempts to explain the way that HR
policies in general and reward policies in particular can lead to greater organizational
effectiveness

Although both approaches, believe that HR practices should be complimentary. The

fundamental principle of ‘best fit’ is that a close alignment between organizational strategy
and other systems, including reward can improve organizational effectiveness while on the
other hand fundamental principle of ‘best practice, approach is that organizations adopting
a set of best practices attracts super human resources, talent and competencies.

Best fit approach advocates the importance of external competitiveness for attracting and
retaining employees. A reward system must design in a way that rewards leads the
organization’s most valuable employees to feel satisfied when they compare their rewards
with those individuals who are performing similar jobs in similar organizations. While Best
practice approach advocates the need to attract and retain those employees who can help
an organization to gain and sustain competitive advantage

The 'best-practice' theory is based on the assumption that HR practices observed in high
performing firms can be transformed to other companies with the same results. Pfeffer's
list of seven HR practices for competitive advantage through people is one of
the best known set of best-practices1

1- Employment security

2- Selective hiring

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Unit-1 MBA-3 Sem Strategic Human Resource Management

3- Self-managed teams or team working

4- High pay contingent on company performance

5-Extensive training

6-Reduction of status differences

7-Sharing information

In essence, recruiting and retaining talented, team-oriented, highly motivated people is

seen to lay a basis for superior business performance or competitive advantage. But this
theory, like several other universal models, has been criticized for a variety of reasons: -

Disconnection from company's goals and context –

Disregard of national differences such as management practices and culture

Although best-practices are too general, some researchers have found empirical evidence
showing a correlation between the application of best-practice theories and company's
performance. The reason can be seen in the validity of the underpinning "AMO" (ability,
motivation, opportunity) framework.

Best-fit theory 2

The contingency or "best-fit" approach questions the universality assumption of the best-
practice perspective. Instead it emphasizes the fit between HR activities and the
organization’s stage of development ("external-fit"). According to the "best-fit" theory, a
firm that follows a cost-leadership strategy designs narrow jobs and provides little job-
security, whereas a company pursuing a differentiation strategy emphasizes training and
development. This approach is a counterpart to the "one strategy fits all" seen in Pfeiffer’s
seven best practices. The 'best-fit' school, therefore, argues that all SHRM activities must be
consistent with each other (horizontal fit) and linked to the strategic needs of the business
(vertical fit). However, 'best-fit' approach has been criticized for the following reasons:

 Lack of alignment with employee interests, compliance with prevailing social Norms
and legal requirement
 Too simplistic view of business strategy (the reality is more complex than only
innovation, cost-reduction and quality-enhancement strategy in the Schuler and
Jackson model)

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Unit-1 MBA-3 Sem Strategic Human Resource Management

 Too much focus on existing competitive strategy (reactive) rather than ongoing
environmental changes (proactive)

The Best Fit Approach/Contingency Model emphasizes on the importance of

ensuring HR strategies which are appropriate to the circumstances of the
organization, including its culture, operational processes, and external environment.
HR strategies should bridge both organizational needs and its people. Vertical fit
occurs where HR strategies are congruent with business strategies; match the firm’s
stage of development, take care of organizational dynamics, and are in the line with
the characteristics of the organization.

1. Congruence with business strategies –

The whole concept of strategic HRM is predicted on the belief that HR strategies
should be integrated with corporate or business strategies. Miller believes that for
this state of affairs to exist, it is necessary to ensure that management initiatives in
the field of HRM are consistent- consistent with those decisions taken in other
functional areas of the business, and consistent with an analysis of the product-
market situation. The key is to make operational the concept of „fit‟- the fit of
human resource management with the strategic thrust of the organization. The
development of operational links is an important characteristic of strategic HRM.
Tyson and Witcher consider that human resources strategies can only be studied in
the context of corporate and business strategies. Congruence with business
strategies may mean aligning HR strategies to the strategic orientation of the firm.
Different orientations establish the need for different types of people and require
changes in approaches to investing in the firm‟s human capital.

2. Matching firm‟s development stages –

Matching the stage of the firm‟s development means aligning HR strategy to the
business strategies appropriate at each stage of the life cycle of the business-
introduction, growth, maturity, and decline.

3. Dynamics –
The dynamics of organizational change exert a market influence on HR strategies. A
transformational program in any part of the life cycle will indicate what specific
organizational development and culture management strategies the organization
should adopt. Managing the transition between the present state and a future state
will mean the development of change strategies and , possibly, new strategic
approaches to the employment relationship.HR strategies may have to be developed
to support business initiatives in such areas as total quality, customer care,

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Unit-1 MBA-3 Sem Strategic Human Resource Management

organizational re-structuring, process re-engineering, product/market development,

and require the introduction of new technology or production systems, e.g.,
computer- integrated manufacturing or just- in-time production.

4. Organizational Characteristics –
An alternative way of determining HR strategy requirements is to relate them to the
overall characteristics of the organization. The most familiar classification is that
produces by Miles and Snow who distinguishes between defenders, who seek
stability and believe in strict control, prospectors ,who seek new opportunities, focus
on continuous development and believe in flexibility, analyzers ,who seek to
incorporate the benefits of both defenders and prospectors.

Problems in practicing Best fit/contingency mode 3

Vertical integration (strategic fit between business and HR strategies may be desirable but
for a number of reasons it is not easy to achieve. Such reasons include:

 The diversity of strategic processes, levels and styles.

 The complexity of the strategy formulation process.
 The evolutionary nature of the business strategy.
 The absence of articulated business strategies.
 The qualitative nature of HR issues.
 Differing definitions of what there is to integrate with.

The Best-Practice Approach is base on the belief that there is a set of best HRM practices
and that adopting them will lead to superior organizational performance. It is often
associated with the high-performance model. Perhaps the best known set is Pfeffer‟s list of
seven HR practice of successful organizations

1. Employment security

2. Selective Hiring

3. Self- managed Teams

4. High Compensation Contingent on Performance

5. Training

6. Reduction of status differentials

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Unit-1 MBA-3 Sem Strategic Human Resource Management

7. Sharing information

Problems in practicing Best Practice Approach

1. Few Best Practice

2. Ambiguity on Goals

3. Lack of Adaptation

References:-

1. https://studymoose.com/thebestfitandthebestpracticescompensationmo
delessay

2. http://www.differencebetween.net/business/differencebetweenhrmand
strategichrm/

3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

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Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-6

HR STRATEGY AND THE ROLE OF NATIONAL CONTEXT, SECTORAL

CONTEXT, AND ORGANIZATIONAL CONTEXT ON HR STRATEGY AND
PRACTICES

The development of human resources within an organization is linked to the national

context within which the organization operates. National, sectoral and organizational
contextual factors determine various management practices like how different countries
manage their people, how they are balancing the needs of workers and employers in order
to compete in dynamic, global market.

The forces which shape HR strategy widely vary from nation to nation. HR strategy was
congruent with external environment in which they evolved.

Although organizations are adopted similar pattern to conduct their business, behavior of
people within different culture founds to be unique. Therefore HRM activities and
strategies can be designed best at the local level. Mostly MNC’s try to find a balance
between imposing international corporate culture and respecting local cultures but it is not
most difficult part of articulating international strategy. Although a national culture
encourages a sense of collectiveness as employees are started to identified not on the basis
of their occupational expertise rather they identified as a part of family/organization.

Example of Japan

In order to compete with a limitation of scarce natural resources the country started to
focus on developing a competent workforce. Investment in developing human resource has
now become the competitive advantage for the country. Japanese organizations invest in
their people to greater extent and they spend most on workers than managers. They pay
initial emphasis on building a team work and problem solving which in long term results in a
workforce which loyal , flexible and adaptable to rapidly changing technology.

Example of Western Europe

Western Europe is an area with great diversity among national cultures. We found three
dominating cultures there- i.e. the British, French; German which are different from each
other.
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Unit-1 MBA-3 Sem Strategic Human Resource Management

Example of France

Like Japan, France is classified as a high context culture. People and relationships are always
more important than meeting schedules. In France labor, management, and the
government are an integral part of the business environment. Employee training and
development is a high priority among the social partners with the government providing
financial and technical assistance for the unemployment In France recruitment, selection
and laws are not very different from those of US. For ex- certain protected groups are given
employment preferences. Dismissal of a worker in a public sector is much more difficult
than the private sector. Downsizing and restructuring is becoming more prevalent.

Example of Germany-

Germany has the largest population of any country in the European Union. There is lot of
diversity in this large country; therefore generalizations about Germans are not always true.
For ex- German, German workers have a reputation for hard work, but the truth is that the
worker is not at work often. Labor cost in German is very high. Business decisions do take
longer time when compared to the United States, as they examine every possibility.
Germany has low context culture we can found strict punctuality and seriousness in this
culture. Labor, management, and government put great emphasis on training, especially
vocational training they also have special apprenticeship program for qualified youths.
Promotion from within the organization is a common method for developing manager. In
Germany managers and professional technicians are required to be university graduates.
Performance appraisal is an accepted HR practice. Citizens of the United Kingdom include
the English, Scots, welsh and the Northern Irish, but the group as a whole is called British,
the British operates in low context communication.

Example of China –

The most populous and oldest country in the world and it is changing with a very rapid rate.
One of the most serious obstacles in doing business in china is corruption. Bribery and
payoffs are a part of doing business. Staffing and motivating worker is another challenge

Notes By: - Rajesh Kumar (Ass. Prof.) 24

Unit-1 MBA-3 Sem Strategic Human Resource Management

Example of Mexico-

The Mexican economy had resembles more an Asian model than a western one, it is also a
centrally planned economy in which a president and a single political party has immense
control Staffing strategies and Reward system appear similar to North America. Wages are
comparatively low than that of United States.

Role of Sectorial Context on HR strategy and Practices HR strategy plays an

important role in different sectors like service industry, manufacturing industry and other
sectors

HR Strategy in service sector: Service sector is a people based sector. Three main
process influence service sector

1- Development of competencies:

It is the process by which the appropriate number of each category, equipped with
knowledge, skills, and attitude required to produce the kind of performance needed to
achieve the objectives

2- Deployment of workforce:

It refers to the process of allocating the workforce among types and level of services

3- Management of workforce:

It is the process of creating a satisfactory organizational environment and to ensure that the
employees perform satisfactorily and effectively

Strategies adopted in the service sector for the efficiency and effectiveness are
as follows:

Notes By: - Rajesh Kumar (Ass. Prof.) 25

Unit-1 MBA-3 Sem Strategic Human Resource Management

1- Proper human resource planning

2- Recruitment of right person at right time and right place

3- The person employed should be given induction program to familiarize with their job
function, rules and regulations and other relevant issues pertaining to the job

4- Employees good performance should be recognized and rewarded

5- Proper guidance should be provided to employees and they should not be avoided

HR strategy in Government and Public Sector

The environmental and situational factors under which the government operates have an
important bearing on the HR strategy. The public sector is conservative and slow in
managing and implementing HR strategies. Government institutions are very large and
complex systems. The sheer size, spread diversity and complexity of the administrative
machinery make the implementation of HR strategy in public and government sector a
highly complex one

HR strategy in Private Sector

Strategies adopted in private sector for the efficiency and effectiveness according to the
changing situation are as follows:

1- Creating a high trust culture

2- Building a knowledge bridge

3- Igniting and sustaining systematic change

4- Training role in creating, innovation, and people driven organizations

5- Strategic need analysis

6- Adopting all kind of implementation to cope and manage change

7- Team building is a major concern area

Notes By: - Rajesh Kumar (Ass. Prof.) 26

Unit-1 MBA-3 Sem Strategic Human Resource Management

References:-

1. https://www.coursehero.com/file/66463479/WEEK12SHRMdoc/
2. https://www.coursehero.com/file/51262089/StrategicHumanResourceM
anagementEBookpdf/
3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

Notes By: - Rajesh Kumar (Ass. Prof.) 27

Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-7

ALINGING HR SYSTEMS WITH BUSINESS STRATEGY

Human Resources (HR) systems are the electronic tools used to access HR-related
information and perform HR-related functions. The systems also enable HR staff to execute
various HR-related activities.

Five Components of a Human Resource Management System1

On a basic level, human resource management is about recruiting, hiring and managing
employees. However, an effective human resource system entails many more aspects of
the organization, including organizational culture and ensuring health and safety. With an
understanding of these components of an HR management system, business owners and
managers can effectively structure their business processes.

1- Organizational Culture
Organizational culture is the collection of values, working norms, company vision, habits
and beliefs that the business espouses. The HR management system plays a large part in
shaping the organizational culture. Setting policies, procedures and company standards
dictates to employees the behaviors that are acceptable in the workplace. For example, a
policy may state that time management is important to the business, which fosters
timeliness among employees, or HR may adapt a looser time management policy that
values employees' freedom to manage their own schedules. In essence, the organizational
culture affects the way people do their work and interact with one another and with
customers.

2- Planning for Change

The business world changes rapidly. New technology is introduced, employees come and
go, and the finances of the company fluctuate. HR's role in helping to stabilize the company
for change cannot be understated. Planning for change means helping employees
understand their roles in the larger picture of the company. It's about building bridges
between departments and managers and getting people to talk about "what-if" situations.
HR takes this information and develops a management plan for disasters, for changes in
workflow and for reassuring employees in times of crises or frightening change.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

3- Training and Development

Almost all employees, even ones that are highly educated or skilled, require some level of
training because each organization runs things in a different way. Policies and procedures
need to be firmly communicated to employees as part of their on-boarding process. The HR
management system is also responsible for ongoing employee development. This
continuing education keeps employees' skills fresh so they bring new and innovative ideas
to the workplace.

4- Health and Safety

The HR management system plays a key role in ensuring health and safety in the workplace.
This can be achieved through policies and procedures, but the HR function may go a step
further to make sure employees understand the risks of certain activities. For example, if
there is heavy machinery in the office, HR can post warning signs and posters listing the
steps to take in case of an emergency. This minimizes the possibility that an accident will
occur and helps to eliminate any subsequent legal action that might be taken against the
company.

5- Recruitment and Retention

While recruitment and retention may seem like a given for HR management systems, it is
the anchor of all HR's policies and systems. Finding qualified workers, keeping them
engaged with the company, training them to effectively do their jobs and providing
incentives for further education, benefits and compensation are all drivers to organizational
success and should be constantly on the minds of HR managers.

• Employees are human assets that increase in value to the organization and the
marketplace when investments of appropriate policies and programs are applied.

• Effective organizations recognize that their employees do have value, much as same as
the organization’s physical and capital assets have value.

• Employees are a valuable source of sustainable competitive advantage.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

ALIGNMENT 2

Human resource management alignment means the integration of decisions related to

human resource with those decision which an organization make in order to fulfill its vision,
mission, and objectives. These alignment become result oriented and successful only when
there is an integration of HRM and planning process, by emphasizing those HR activities
which are goal oriented, and by building strong human resource and management relation
Human resource alignment is the vital contributor to mission accomplishment in the
Hierarchy of Accountability while effective legal compliance, effective HR processes,
effective HRM program are other contributors of mission accomplishment Now a day a
sudden emphasis is given to align HRM activities with the overall growth of an organization
as organizations have realized that companies competitive edge not only lies in financial,
technological, and other physical resources but human resource plays an very vital role in
achieving organizational goals. An organization cannot achieve success until it has
competent human resource so it is very necessary for an organization to recruit, select right
employee with competent skills, knowledge and ability and also top place them at right job.
After deployment another important task is to train and develop employee to achieve the
desire target and the retention of those competitive workforce is yet so important for an
organization

Hierarchy of Accountability 3

The hierarchy of accountability towards the accomplishment of mission. It shows that legal
compliance is the base having lowest accountability while Effective HR processes and
effective HRM program also contribute much in the target achievement process but the
most crucial contribution in this accountability is made by alignment of HRM activities with
company’s mission.

Notes By: - Rajesh Kumar (Ass. Prof.) 29

Unit-1 MBA-3 Sem Strategic Human Resource Management

References:-

1. https://www.coursehero.com/file/66463479/WEEK12SHRMdoc/
2. https://www.coursehero.com/file/30361719/totedocx/
3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill, 2009

Notes By: - Rajesh Kumar (Ass. Prof.) 30

Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-8

SUSTAINED COMPETITIVE ADVANTAGE

Core Competencies
Meaning
 Core competencies are capabilities that serve as a source of competitive advantage for
a firm over its rivals.
 An organisation’s combination of technological and managerial know-how, wisdom
and experience are a complex set of capabilities and resources that can lead to a
competitive advantage compared to a competitor.
 Core competencies distinguish a company competitively and reflect its personality.
 These competencies emerge over time through an organisational process of
accumulating and learning how to deploy different resources and capabilities
 According to C.K. Prahalad and Gary Hamel, major core competencies are identified in
three areas - competitor differentiation, customer value, and application to other
markets.

Three Areas
Competitor differentiation
 The company can consider having a core competence if the competence is unique and it
is difficult for competitors to imitate.
 This can provide a company an edge compared to competitors.
 It allows the company to provide better products or services to market with no fear that
competitors can copy it.
Competence does not necessarily have to exist within one company in order to define as core
competence. Although all companies operating in the same market would have the equal skills
and resources, if one company can perform this significantly better; the company has obtained
a core competence.

Customer Value
(disproportionate contribution to customer value)
● The second condition to be met is customer value.
● When purchasing a product or service it has to deliver a fundamental benefit for the
end customer in order to be a core competence.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

● It will include all the skills needed to provide fundamental benefits.

● The service or the product has to have real impact on the customer as the reason to
choose to purchase them

Application of competencies
● Unique set of skills and expertise,
● which will be used throughout the organisation
● to open up potential markets to be exploited.
● Must be applicable to a range of products.

If the three above-mentioned conditions are met, then the company can regard it competence
as core competency.

How To Build Core Competencies

Four specific criteria of sustainable competitive advantage that firms can use to determine
those capabilities that are core competencies.
1. Valuable
2. Rare
3. Costly to imitate
4. Non-Substitutable

Value / Valuable
● It should create value for customers.
● Allow the firm to exploit opportunities or avert the threats in its external environment.
● For example human capital is important in creating value for customers.

Rare
● Core competencies are very rare capabilities and very few of the competitors possess
this.
● Capabilities possessed by many rivals are unlikely to be sources of competitive
advantage for any one of them.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

● Competitive advantage results only when firms develop and exploit valuable capabilities
that differ from those shared with competitors.

Costly to imitate
● Costly to imitate means such capabilities that competing firms are unable to develop easily.
● For example: Intel has enjoyed a first-mover advantage more than once because of its rare
fast R&D cycle time capability that brought SRAM and DRAM integrated circuit technology,
and brought microprocessors to market well ahead of the competitor.
● The product could be imitated in due course of time, but it was much more difficult to imitate
the R&D cycle time capability.

Non-substitutable
● Capabilities that do not have strategic equivalents are called non-substitutable capabilities.

Sustainability of competitive advantage

The sustainability of competitive advantage and a firm’s ability to earn profits from its
competitive advantage depends upon four major characteristics of resources and capabilities

1. Durability
2. Transferability
3. Imitability
4. Appropriability
Durability
(For Understanding - More durable the resources and capabilities, more the sustainable
competitive
advantage)
- The period over which a competitive advantage is sustained depends in part on the rate
at which a firm’s resources and capabilities deteriorate.
- In industries where the rate of product innovation is fast, product patents are quite
likely to become obsolete.
- Similarly, capabilities which are the result of the management expertise of the CEO are

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Unit-1 MBA-3 Sem Strategic Human Resource Management

also vulnerable to his or her retirement or departure.

- On the other hand, many consumer brand names have a highly durable appeal.

Transferability
- Even if the resources and capabilities on which a competitive advantage is based are
durable, it is likely to be eroded by competition from rivals.
- The ability of rivals to attack a position of competitive advantage relies on their gaining
access to the necessary resources and capabilities.
- The easier it is to transfer resources and capabilities between companies, the less
sustainable will be the competitive advantage which is based on them.
(If a company’s cost advantage is based on its investment in state-of-the-art automated
equipment, so long as the equipment is supplied by a third party, other companies can acquire
the same advantage).

Imitability
- If resources and capabilities cannot be purchased by a would-be imitator, then they
must be built from scratch.
- How easily and quickly can the competitors build the resources and capabilities on
which a firm’s competitive advantage is based?
- This is the true test of imitability.
- For Example: In financial services, innovations lack legal protection and are easily copied.
Here again the complexity of many organisational capabilities can provide a degree of
competitive defence.
- Where capabilities require networks of organisational routines, whose effectiveness
depends on the corporate culture, imitation is difficult.

Appropriability
- Appropriability refers to the ability of the firm’s owners to appropriate the returns on
its resource base.
- Even where resources and capabilities are capable of offering sustainable advantage,
there is an issue as to who receives the returns on these resources.

Notes By: - Rajesh Kumar (Ass. Prof.) 34

Unit-1 MBA-3 Sem Strategic Human Resource Management

Competitive Advantage
In the resource-based view of the firm, these resources are the sources of competitive
advantage. Barney describes a competitive advantage as occurring "when a firm is
implementing a value creating strategy not simultaneously being implemented
by any current or potential competitors". According to the resource-based view of the
firm, competitive advantage can only occur in situations of firm resource heterogeneity and
firm resource immobility, and these assumptions serve to differentiate the resource-based
model from the traditional strategic management model. Firm resource heterogeneity
refers to the fact that resources vary across firms. In contrast, in the environmentally
focused strategy model, firm resources are viewed as homogeneous across firms in an
industry (Rumelt, 1991). Firm resource immobility refers to the inability of competing firms
to obtain resources from other firms or resource markets.

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Unit-1 MBA-3 Sem Strategic Human Resource Management

Sustained Competitive Advantage

Sustained competitive advantage is distinct from the concept of competitive advantage.
Within the resource-based view, a sustained competitive advantage exists only when other
firms are incapable of duplicating the benefits of a competitive advantage (Lippman &
Rumelt, 1982). Thus, a competitive advantage is not considered sustained until all efforts by
competitors to duplicate the advantage have ceased. Therefore, four criteria must be
attributable to the resource in order for it to provide a sustained competitive advantage: l)
the resource must add positive value to the firm, 2) the resource must be unique or rare
among current and potential competitors, 3) the resource must be imperfectly imitable,
and 4) the resource cannot be substituted with another resource by competing firms
(Barney, 1991).

Notes By: - Rajesh Kumar (Ass. Prof.) 36

Unit-1 MBA-3 Sem Strategic Human Resource Management

A firm has Competitive advantage when it is implementing a strategy which is

not simultaneously being implemented by any current or potential competitor.
Organizations resources can be classified into three categories:

 Physical Resource: Technology, equipment, plant, geographic location, access to raw

material.
 Human capital: training, experience, judgment, intelligence, relationship.
 Organizational capital: formal structure, formal and informal planning, coordination
system, informal relationships.
Now the question arises which resource can acts as sustained competitive advantage Firms
cannot obtain Sustained Competitive advantage when strategic resources are evenly
distributed across all competing firms and highly mobile. For a resource to be a source of
Sustained Competitive advantage it must has four attributes:

1) Valuable

2) Rare

3) Inimitable

4) substitability

Valuable
A resource is valuable when it enables a firm to conceive and implement strategies that
improves its effectiveness and efficiency Traditional models suggest that firms are able to
improve their performance when their strategies exploit opportunities Valuable resources
possessed by all organization cannot be a source of Competitive advantage that’s because
each one of them will exploit the resource in the same way, thereby implementing a
common strategy that gives no one Competitive advantage

Rare
Second, a resource must be rare if it is to be a source of sustained competitive advantage.
One could easily argue that human resources are not rare, due to the fact that where
unemployment exists, there is obviously an excess of workers. Related to the issue of the
homogeneity of labor supply discussed above, to the extent that all current and potential
employees have the same skill levels, human capital resources could not be considered
rare. In fact, much of the scientific management literature (e.g., Taylor, 1911) is focused on
designing jobs in a way that makes human skills irrelevant to performing a job. Campion
(1988) noted that the scientific management literature calls for designing simplified jobs

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Unit-1 MBA-3 Sem Strategic Human Resource Management

which require no (or few) specific skills. To the extent that jobs are designed in this way,
skills become relatively irrelevant, thus, human resources can be characterized as a
commodity rather than a rare resource. However, to the extent that jobs require skills
which allow for variance in individual contributions (i.e., when job-relevant skills are no
longer a commodity), these skills should be normally distributed in the population. Thus,
under these conditions, high quality human resources are rare.

Inimitable
Third, in order for a resource to be a source of a sustained competitive advantage, the
resource must be inimitable. If the competitive advantage gained from having high quality
human resources is easily imitated, then it is not possible for human resources to constitute
a source of sustained competitive advantage. What is necessary for a resource to be
imitated? First, competitors must be able to identify exactly the source of competitive
advantage (i.e., the exact components of the human capital resource pool which are
providing the advantage). Second, the competitor must be able to exactly duplicate both
the relevant components of the human capital resource pool and the circumstances under
which these resources function.
A resource cannot be the source of a sustainable competitive advantage, unless it is difficult
to imitate. Acc. To Barney those resources are more difficult to imitate in which causal
ambiguity and social complexity is found Causal ambiguity exists when the link between a
firm’s resources and its competitive advantage is imperfectly understood

Non – Substitutable
A resource can be a competitive advantage if no good substitute of that resource is
available To create a competitive advantage is another thing but to sustain it over a
prolonged period of time. Many of the strategies used to gain competitive advantage are
difficult to sustain like superior production capacity, excellent marketing research,
inventory control, quality manufacturing process and so on can no longer offer because
they can be Simply imitated.

References:-

1. https://docplayer.biz.tr/106664965Kulturevreniuniverseofculturevselenn
ayakulturybaharspringbecha2011yilyeargod3sayinumberchislo10.html

Notes By: - Rajesh Kumar (Ass. Prof.) 38

Unit-1 MBA-3 Sem Strategic Human Resource Management

2. https://www.academia.edu/23245591/SHRM_helps_organization_to_ach
ieve_sustainable_competitive_advantage

3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill,

2009

Notes By: - Rajesh Kumar (Ass. Prof.) 39

Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-9

HOW HR ADDS VALUE TO THE FIRM – HR AS SCARCE RESOURCE –

NON-SUBSTITUTABLE RESOURCE

According to Lawler, “These investments will become increasingly important

due to forecasts of shifts in skill needs from manual to cerebral.”

Developing an effective strategy to manage an organization’s human assets requires

considering employees as investments. Such an approach helps to ensure that HR practices
and principles are clearly in sync with the organization‟s overall strategy, forces the
organization to invest in its best opportunities, and ensures that performance standards are
met. Instead of having a conflict as to how profits should be allocated (bonuses to
employees or reinvested in the business), both can be achieved simultaneously. This in turn,
has the goal of gaining more commitment from employees and encouraging them to adopt
a long-term focus toward the organization; this is after a shortcoming/deficiency of
American organizations that are concerned with short-run indicators of performance.
Employees, who now intend to stay with the organization longer, given their vested
ownership rights, provide organizations with an incentive to incur the short-term costs
involved with investing in human assts for the long-term financial gains that can result from
such investments.

An investment perspective of HR is often not adopted because it involves making a longer

term commitment to employees. Because employees can”walk” and because

American organizations are so infused with short-term measures of performance,

investments in human assets, which tent to be longer –term investments, are often
ignored. Organizations performing well financially may feel no need to change their
investment strategies. Those not doing well usually need a quick fix to turn thing around
and therefore ignore longer-term investments in people.

However, while investments in HR are longer term, once an organization gains a

competitive advantage through its employees, the outcomes associated with the strategy
are likely to be enduring and difficult to duplicate by competitors as such programs and
values become more firmly entrenched in the organization’s culture. The commitment that
an organization makes to its employees through its investments in them often rewarded
with the return of employees making a long-term commitment to the organization.
Although investments in human assets may be risky and the return may take a long time to
materialize, investment in people continues to be the main source of sustainable
competitive advantage for organizations.

Notes By: - Rajesh Kumar (Ass. Prof.) 33

Unit-1 MBA-3 Sem Strategic Human Resource Management

Not all organizations view human assets from an investment perspective. Mello indentified
five major factors that affect how investment –oriented a company is in its management of
human resource

INVESTMENT ORIENTATION

Organizational Characteristics

 Sees people as central to its mission/strategy.

 Has a mission statement and strategic objectives that espouse the value of human
assets in achieving goals.
 Has a management philosophy that encourages the development and retention of
human assets and does not treat or regard human assets in the same ways as
physical assets.

Senior Management Values and Actions

 An organization’s willingness to invest in its human resources is determined by the “investment
orientation” of its managers.

Notes By: - Rajesh Kumar (Ass. Prof.) 34

Unit-1 MBA-3 Sem Strategic Human Resource Management

Attitude toward Risk

 Investment in human resources is inherently riskier due to lack of absolute

“ownership” of the asset.

Nature of Skills Needed by Employees

 The more likely that skills developed by employees are marketable outside the firm,
the more risky the firm’s investment in the development of those skills.

Utilitarian (“Bottom Line”) Mentality

 An attempt is made to quantify employee worth to the organization through a cost-

benefit analysis.
 The “soft” benefits of HR programs and policies are difficult to objectively quantify
because they affect many different organizational areas and have differential effects
on individual employees.

Availability of Outsourcing

 If cost-effective outsourcing is available, investments will be made only in HR

activities producing the highest returns and largest sustainable competitive
advantage

Notes By: - Rajesh Kumar (Ass. Prof.) 35

Unit-1 MBA-3 Sem Strategic Human Resource Management

ASSESING AND REDUCING COST

To assess and to become cost effective it is very important for an organization to make use
of all practices of human resource management strategically.

HRM Pre- Selection Practices

1. Human resource planning

i. HR Planning is the process of examining an organizations’ future human resource

need.

ii. It involves:

 Identifying and acquiring the right number of people with the proper skills

 Motivating them to achieve high performance

Creating interactive links between business objectives and resource planning

activities An effective HR plan also provides mechanisms to eliminate any gaps that
may exist between supply and demand. Thus, HR planning determines the members
and types of employees to be recruited into the organization or phased out of it.

2. Job Analysis
Job analysis is a systematic procedure for gathering, analyzing, and documentation
of information about particular jobs. The analysis specifies what each worker does,
the work conditions, and the worker qualification necessary to perform the job
successfully.

Notes By: - Rajesh Kumar (Ass. Prof.) 36

Unit-1 MBA-3 Sem Strategic Human Resource Management

HRM SELECTION PRACTICES HRM selection practices, means policies and

procedure used by organization to staff their positions. These practices are:
 Recruitment- Organizations use recruitment to locate and attract job
applicants for particular positions. They may recruit internally and externally
 Selection- It involves assessing and choosing right candidate as per the
requirement of the organization

HRM POST- SELECTION PRACTICES

Organizations implement post selection practices to maintain and improve the performance
level of their workers

Training and development

Training is the process of increasing the knowledge and skills for doing a particular job. It is
an organized procedure by which people learn knowledge and skills for a definite purpose.
The purpose of training is basically to bridge the gap between job requirements and present
competence of an employee. Training aimed at improving the behavior and performance of
a person. It is never ending and continuous process. Employee training is distinct from
management development. Training is a short-term process utilizing a systematic and
organized procedure by which non managerial personnel learn technical knowledge and
skills for a definite purpose. It is designed primarily for non managers. It is for a short
duration and for a specific job- related purpose. On the other hand , development is a long-
term education process utilizing a systematic and organized procedure by which managerial
personnel learn conceptual and theoretical knowledge for general purpose. It involves
broader education and its purpose is long term development. Training involves helping an
individual learn how to perform his present job satisfactorily. Development involves
preparing the individual for a future job and growth of the individual in all respect. Training
is a reactive process to meet current need while Development is proactive process to meet
future needs.

Notes By: - Rajesh Kumar (Ass. Prof.) 37

Unit-1 MBA-3 Sem Strategic Human Resource Management

Performance appraisal

Compensation
Employee compensation is a vital part of human recourse management. Wages, salaries,
and other forms of employee compensation constitute very large components of operating
costs. No organization can expect to attract or retain qualified and motivated employees
unless it pays them fair compensation. Employ compensation therefore influences vitally
the growth and profitability of the company. Remuneration is directly or indirectly one of
the mainsprings of motivation in our society. Wages and salaries have significant influence
on distribution of income, consumption, savings employment and prices. Thus employee
compensation is a very significant issue from the view-point of employers, employees and
the nation as a whole.

Notes By: - Rajesh Kumar (Ass. Prof.) 38

Unit-1 MBA-3 Sem Strategic Human Resource Management

References:-

1. http://web.nchu.edu.tw/~nienyu/ch01.pp

2. https://www.academia.edu/23245591/SHRM_helps_organization_to_ach
ieve_sustainable_competitive_advantage

3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill,

2009

Notes By: - Rajesh Kumar (Ass. Prof.) 39

Unit-1 MBA-3 Sem Strategic Human Resource Management

LECTURE NO:-10

LINKING HRM PRACTICES TO ORGANIZATIONAL OUTCOMES

EMPLOYEE CENTER OUTCOMES REFERS TO –

A. COMPETENCE – The extent to which employees possess the knowledge skills and
abilities that their job requires

B. MOTIVATION- The extent to which employees are willing to exert the necessary effort
to perform their jobs well.

C. WORK RELATED ATTITUDES

D. JOB SATISFACTION

ORGANIZATIONAL OUTCOMES REFERS

ORGANIZATIONAL COMMITMENT- The psychological attachment to, identification

with and involvement in the organization

ORGANIZATIONAL CITIZENSHIP - It refers to the willingness of employees to engage in

behavior that help the organization achieve its goals. Such behavior includes:

 Conscientiousness: performing tasks well beyond the minimum required levels

 Altruism: Giving help to others

Notes By: - Rajesh Kumar (Ass. Prof.) 40

Unit-1 MBA-3 Sem Strategic Human Resource Management

 Civic Virtue: Participating in the political life of the organization

 Sportsmanship: Doing things with the positive attitude, not complaining
 Courtesy: Treating others with Respect

HOW DOES HR ADDS VALUE TO THE FIRM

For companies that consider employees their most valuable assets, human resources has
extreme value. In the most general sense, HR serves to motivate employees to top
performance and maintain an organizational culture of high morale. In the early 21st
century, strategic HR has emerged as a prominent view of the role this functional area plays
in building and developing a strong organization.

People and Performance

The long-term success and financial performance of a company is usually directly correlated
to the talents, motivation and accomplishments of its people. People make and sell
products, work with customers and collaborate on decisions. A primary way HR adds value
to a company is by promoting this link and persuading company leaders to train and
develop employees and reward strong performance.

Talent Acquisition and Retention

Hiring and retaining top talent is a foundation of high-performing companies. HR is largely
responsible for building and managing the systems that recruit, attract, hire, train, motivate
and retain a company's best employees. This includes establishing strong job designs and
hiring the right employees to match. It also involves building strong interviewing and
screening processes, planning orientation and training, developing successful employee
evaluation tools and constructing motivating compensation programs.

Legal Protection

One of the less-heralded ways HR adds value to a business is through legal protection from
discrimination and wrongful termination lawsuits. HR professionals must be continually up
to speed on employee laws and educate company executives and managers. They must also
design hiring and promotional systems that promote fairness and equality. Interview
questions that align specifically to a job, for instance, minimize risks of a discrimination

Notes By: - Rajesh Kumar (Ass. Prof.) 41

Unit-1 MBA-3 Sem Strategic Human Resource Management

claim. This element of HR becomes increasingly valuable as workplaces become more

diverse.

Planning
As proactive HR strategies have overtaken reactive responses to employment conditions,
HR professionals play a stronger role in planning. HR directors commonly serve on company
management teams and participate in strategic planning. This includes assessments of
company strengths and weaknesses and projections of opportunities and threats. HR
participants contribute the current view and future expectations of people and resource
needs, discussion of compensation and training changes and research on emerging
opportunities and threats.

References:-

1. https://smallbusiness.chron.com/hraddvalueorganization50980.html

2. https://www.academia.edu/23245591/SHRM_helps_organization_to_ach
ieve_sustainable_competitive_advantage

3. SHRM: MS. TULSI GOSWAMI &MS. KAJAL SITLANI,Tata Mc Graw Hill,

2009

Notes By: - Rajesh Kumar (Ass. Prof.) 42