CONCLUSION & REVIEW
In today’s lecture, we will be having overview of the entire
course we have covered in previous modules and
will consider the reasons of importance of HRM.
A. Human Resource
Management
A managerial function tries to match an organization’s needs to
the skills and abilities of its employees.
Attracting developing, motivating and retaining required talent
and people in organization carries out this
function. Workforce of the organization is also being utilized
as a source of competitive advantage by
acquiring financial or economic capabilities, product
capabilities, technological or process capability,
organizational capability.
B. Strategies for Gaining Competitive Advantage
Competitive advantage
refers to a company’s ability to maintain market share and profitability. Any
competitive advantage enjoyed by an organization tends to be
short-lived because other companies are
likely to imitate it. This is as true for HR advantages as for
technological and marketing advantages. For
example, many high-tech firms have "borrowed" reward programs
for key scientists and engineers from
other successful high-tech firms. The challenge from an HR
perspective is to develop strategies that offer
the firm a sustained competitive advantage. For instance, a
company may develop programs that maximize
present employees' potential through carefully developed career
ladders while at the same time rewarding
them generously with company stock with strings attached (for
example, a provision that they will forfeit
the stock if they quit before a certain date).
a. Cost leadership
A cost leadership strategy is a
competitive strategy in which a company
aims to become the low-cost leader in the industry by
emphasizing the attainment of
absolute cost advantages from any and all sources. Requires a
balance between low costs
and acceptable quality.
b. Differentiation
A differentiation strategy is a
competitive strategy in which a company
seeks to be unique in its industry in a way that is valued by
the customers. HR strategies
that fit a differentiation strategy emphasize innovation,
flexibility, and renewal of the work
force by attracting new talent from other firms, opportunities
for mavericks, and
reinforcement (rather than discouragement) of creative flair.
The specific HR strategies
that are likely to benefit differentiators include the use of
broad job classes, loose work
planning, external recruitment at all levels, team-based
learning, emphasis on what the
individual can do (rather than on the job title held) as a basis
for pay, and reliance on
performance appraisal as a developmental (rather than a control)
device.
c. Focus Strategy:
A focus
strategy is a competitive
strategy in which a
company selects a market
segment and serves the
customers in that
particular market niche
better or cheaper than its
competitors. The
focus
strategy relies on
both a
low-cost position and
differentiation, with the
objective of serving a
narrow target market
better than other firms.
The firm seeks to achieve
differentiation either from better meeting the needs of the
particular target, or from
lowering costs in serving this target, or both. The HR
strategies likely to fit the focus
strategy best would be somewhere in the middle of those
described for low-cost producers
and differentiators.
C. The Strategic Management Process
Strategic planning is the process of identifying the business of
the firm today and the business of the firm
for the future, and then identifying the course of action it
should pursue. Strategic planning includes the
first five strategic management tasks: evaluating the situation,
defining the business, developing the mission,
translating the mission into goals, and then crafting a course
of action. Strategic management includes the
implementation phase. The strategic management process is the
continuous process of identifying and
pursuing the organization’s mission by aligning internal
capabilities with the external demands of the
environment.
Step 1: Define the Business and Its Mission:
The strategic management process begins with
answering
the question, in what business should we be? Defining a
company’s business involves identifying several
things: product scope, vertical integration, geographic scope,
how they compete. A vision is a general
statement of the organizations desired direction that evokes
emotional feelings in its members. A mission
statement outlines the organization’s future path and it
communicates its purpose. Managers base their
strategic plans on methodical analyses of their internal and
external situations.
IV. Step 2: Translate the mission into strategic goals:
Top management’s vision and mission are
translated into operational strategic goals.
V. Step 3: Formulate a strategy to achieve the strategic goals:
A strategy is a course of action that
explains how the organization will move to achieve its strategic
goals given its internal strengths
and weaknesses and its external opportunities and threats.
Implementation of the strategy means
translating the plan strategy into actions and results, which
requires drawing on the planning,
organizing, leading, and controlling functions of management.
Top companies craft strategies
whose basic principles are easy to communicate.
VI. Step 4: Structure:
Some HR strategies fit very well with highly
formalized organizations that are
divided into functional areas (for example, marketing, finance,
production, and so on) and that
concentrate decision making at the top. The HR strategies
appropriate for this type of firm include
a control emphasis, centralized pay decisions, explicit job
descriptions, and job-based pay.
VII. Step 5: People:
People in organization mean to have workforce in organization to perform
different functions. Different set of HR strategies, include
informal hiring and socializing of new
employees, decentralized pay decisions, broad job classes, and
individual-based pay.
Managers must be alert to opportunities and threats that might
require modifying or totally redoing their
strategies. Strategic control is the assessing of progress
towards strategic goals and taking corrective action
as needed and keeping the strategy up-to-date.
D. Strategic Management Role:
Strategic management role is used to link the firm’s HR policies
and practices to the broader,
longer-term needs of the firm and its stakeholders. Main
responsibilities include Setting the direction
Crafting corporate- and business-level plans developing and
implementing functional plans measuring,
evaluating, revising and refocusing, the fit between HR &
business strategy
a. Enabler and Consultant Role:
This role is used to enabling line managers to make things happen
main responsibilities include, Training, assisting with problem
diagnosis developing solutions with
managers being accessible and attuned to employee needs and
concerns
c. Monitoring and
Maintaining Role: Continuous
monitoring is required to have compliance with
legal regulations and effectiveness of HR activities and this is
ensured by the monitoring role by HR
department. Main activities performed in this role include
monitoring morale, providing support
during change and uncertain times
d. Innovator Role:
Improving productivity and quality of work life it includes: Adapting to an
environment of uncertainty, energy conservation, and
international competition, justifying the
benefits and costs of programs
Change and Knowledge Facilitator Role:
This role is played in order to facilitate
organizational change
and to maintain the organizational flexibility. It includes
focusing on the future, guiding the flow of
knowledge, information and learning throughout the organization.
E. High-performance Work System (HPWS)
A specific combination of HR practices, work structures, and
processes that maximizes employee
knowledge, skill, commitment, and flexibility is called high
performance work systems. This system is
composed of many interrelated parts that complement one another
to reach the goals of an organization,
large or small. This system is based upon the principles of
shared information, knowledge development, performance
reward linkage and social equality.
High performance
work system can bring many advantages to
organization they mainly include:
• Employee
Benefits: High performance
work systems are beneficent for employee in
absence that they are provided with
opportunity of more involvement in
organization, experience growth and
satisfaction specifically through organizational
training and developmental policies and can
become more contributors towards
achievement of goals and mission of the
organization.
• Organizational
Benefits: Organization can improve and
increase the productivity; it can
ensure quality, flexibility in system in order to have more
satisfied customers.
F. Selecting HR Strategies to Increase Firm Performance
No HR Strategy is “good” or “bad” in and of itself. The success
of HR strategies depends on the situation
or context in which they are used. In other words, an HR
strategy’s effect on firm performance is always
dependent on how well it fits with some of the factors.
Fit
refers to the consistency or compatibility
between HR strategies and other important aspects of the
organization
a. Fit with Organizational Strategies
Organizational strategies may be examined at two levels:
corporate and business.
Corporate strategy
refers to the mix of businesses a corporation decides to hold and the flow of
resources
among those businesses. This involves decisions pertaining to
acquisition, divestment, diversification, and
growth. At one end of the spectrum is the evolutionary business
strategy; at the other end is the steadystate
strategy. Business
unit strategies refer to those
established by firms or autonomous units of the
corporation. Well-known business strategies were formulated by
Porter (overall cost leadership strategy,
differentiation business strategy, and focus strategy) and Miles
and Snow (defender strategy and prospector
strategy).
b. Fit with the
Environment
HR strategies should help the organization better exploit
environmental opportunities or cope with the
unique environmental forces that affect it. The environment can
be examined on four dimensions,
including (1) degree of uncertainty, (2) volatility, (3)
magnitude, and (4) complexity.
c. Fit with Organizational Characteristics
To be effective, HR strategies must be tailored to the
organization’s personality. The features of an
organization’s personality are its (1) production process for
converting inputs into output, (2) market
posture, (3) overall managerial philosophy, (4) organizational
structure, and (5) organizational culture.
d. Fit with Organizational Capabilities
An organization’s capabilities are its distinct competencies. HR
strategies make a greater contribution to a
firm’s performance (1) when they help to exploit the firm’s
specific advantages or strengths while avoiding
its weaknesses, and (2) when they assist in better using its own
unique blend of human resource skills and
assets.
e. Choosing Consistent and Appropriate HR Tactics to Implement
HR Strategies
Even the best-laid strategic HR plans may fail when specific HR
programs are poorly chosen or
implemented. A firm’s HR strategies must be mutually consistent.
That is, HR strategies are more likely to
be effective if they reinforce one another rather than work at
cross-purposes.
G. Expectations for HR Professionals
Today’s dynamic environment places some expectations upon the HR
professional to meet the changing
environment and contingencies these expectations are enlisted as
following:
• Understand problems
assigned
• Stay competent and
professional through study and research
• Maintain high standards
of personal honesty and integrity
• Consider the personal
interests, welfare, and dignity of all employees affected by recommendations
and actions
• Ensure organizations
maintain high regard for public interest and personal interests and dignity of
employees
H. Current HRM Challenges
a. Managing Teams
Team building—activities aimed at improving the internal work
and relationship processes of teams—
requires attention to both task and interpersonal relationships.
In team building, organizations apply the
principles of group dynamics to select complementary members,
support more cohesion, manage stages of
group development, and establish constructive norms that foster
high performance. Membership in teams is
based on expertise in areas that are necessary for task
accomplishment. Trust is the key to team members'
commitment to a common goal, mutual accountability, and
collaboration. Trust is built on six
interdependent factors: the integrity of the members; open
communication; mutual respect and support;
fairness and equity; competence and hard work; and reward for
cooperation. In addition, clear goals are a
requirement for effective teamwork. Members of effective teams
play eight different roles, all of which are
necessary for a complete team and for synergy
b. Managing
Diversity
A diverse workforce refers to two or more groups, each of whose
members are identifiable and
distinguishable based on demographic or other characteristics
like gender age group, education etc. Several
barriers in dealing with diversity include stereotyping,
prejudice, ethnocentrism, discrimination, tokenism,
and gender-role. Managing diversity means planning and
implementing organizational systems and practices
to manage people so that the potential advantages of diversity
are maximized while its potential
disadvantages are minimized. Managers are striving for racial,
ethnic, and sexual workplace balance as a
matter of economic self-interest. A study found that cultural
diversity contributes to improved productivity,
return on equity, and market performance.
c. Managing
Globalization
One of the most dramatic challenges facing as they enter the
twenty-first century is how to compete against
foreign firms, both domestically and abroad. Many companies are
already being compelled to think globally,
something that doesn't come easily to firms long accustomed to
doing business in a large and expanding
domestic market with minimal foreign competition.
Weak response to international competition may be resulting in
upwards layoffs in every year. Human
resources can play a critical role in a business's ability to
compete head-to-head with foreign producers. The
implications of a global economy on human resource management
are many. Some firms try to develop a
global company identity to smooth over cultural differences
between domestic employees and those in
international operations. Minimizing these differences increases
cooperation and can have a strong impact
on the bottom line. Some firms actively engage in international
alliances with foreign firms or acquire
companies overseas to take advantage of global markets. Making
such alliances work requires a highly
trained and devoted staff. These illustrations show how firms
can use HR strategies to gain a worldwide
competitive advantage.
d. Managing Change
Many organizations face a volatile environment in which change
is nearly constant. If they are to survive
and prosper, they need to adapt to change quickly and
effectively. Human resources are almost always at the
heart of an effective response system. Here are a few examples
of how HR policies can help or hinder a
firm grappling with external change:
I. Code of Ethics for HR Professionals:
Ethics related problems are faced by the organizations whenever
there is a practice of using favoritism
rather than ability or job performance for managerial decisions
regarding employment, promotion, pay and
discipline. These problems can be reduced and eliminated by
maintaining the highest standards of
professional and personal conduct, encouraging employers to make
fair and equitable treatment of all
employees a primary concern, maintaining loyalty to employers
and pursue company objectives in ways
consistent with the public interest, upholding all laws and
regulations relating to employer activities, and
maintaining the confidentiality of privileged information.
People’s expectations that their employers will
behave ethically are increasing, so much that many firms and
professional organizations have created codes
of ethics outlining principles and standards of personal conduct
for their members. These negative
perceptions have worsened over the years. The widespread
perceptions of unethical behavior may be
attributed to the fact that managerial decisions are rarely
clear-cut. Except in a few blatant cases (such as
willful misrepresentation), what is ethical or unethical is open
to debate. Even the most detailed codes of
ethics are still general enough to allow much room for
managerial discretion. In other words, many specific
decisions related to the management of human resources are
subject to judgment calls. Workplace
Flexibility: collaborative work in a virtual office
J. How Can You Gain Support for “Best HR Practices?”
Managers can gain support for best HR practices by linking the
use of HR practices to the solution of real
business problems, and to achieving tangible business goals.
This achievement of goals requires selection of
well defined and specific, measurable and realistic goals and
communicating the expected standard of
performance to workers. Managers should demonstrate how the
benefits outweigh the costs of using “best
HR practices.” Speak the language of business people, i.e.,
money, not correlation coefficients! Etc.
K. Future HR Trends:
• Workplace
Flexibility: collaborative work in a
virtual office as well as flexible work hours is
one of future HR trends.
• Global
Business: borderless business requires
a global workforce to perform the function at
international business level.
• Work & Society:
working to live, not living to work
• Workforce
Development: constant learning in a
just-in-time format, learning organization &
high skill utilization
• Definition of
Jobs: jobs get bigger & broader
• Strategic Role
of HR: becoming leaders, not just
partners
• The Value of
Predicting: having a vision & a way to
achieve it.
Key issues of the organization are to achieve efficiency,
effectiveness and competitiveness and this can be
done by using not ignoring the Knowledge and experience are
available. Because most of the time Best HR
Practices are not used because of Resistance to change,
Ignorance on the part of decision makers and
Political considerations. By overcoming these three factors we
can have more effectively managed
organizations by using HR practices.
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