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1 Human Resource Strategy

2 The Idea of Strategic HRMNo definitive, robust theory. No agreement on meaning, factors, outcomes. how is SHRM linked with organisational performance? difficult to establish firm relationships given intervening factors: structure, culture & wider environment various typologies of business and associated HR strategies Empirical studies tend to use large-scale questionnaire surveys (Storey) case-studies on SHRM. Theoretical &empirical gaps between rhetoric and real experience - downsizing and redundancies etc.

3 Stages in a Corporate Strategy ProcessOrganisation Mission and Goals (Define the business) Strategic Analysis (current situation, programmes and performance) Rational, logical versus interpreted & political Strategic Choice (bounded rationality, shaping the environment) Strategy Implementation (programmes, resources & responsibilities)

4 CEO Corporate Level Business Level Functional LevelPlanning Levels CEO Corporate Level Corporate HQ Business Level Aviation Heating Trucks Plastics Consultancy Functional Level Accounting Manufacturing Marketing R & D

5 SWOT analysis: planning to identify Organizational Strategy Formulation Managers analyse the situation & develop strategies to achieve the mission. SWOT analysis: planning to identify Organizational Strengths: manufacturing ability, marketing skills Weaknesses: high labor turnover, weak financials. Environmental Opportunities: new markets Threats: economic recession, competitors Long-term yrs Intermediate-term yrs. Corporate & business plans Short-term - less than 1 yr. Functional plans? Rolling cycle - amend plans constantly?

6 Standard Corporate Planning PictureSWOT + STEEPLE Internal & external analysis Corporate strategy develop a plan of policies, allocations, programmes to maximise long-run value Concentrate Diversify Globalize Vertically Integrate Down-size Flexible firm Grow Stabilize Retrench React/Panic

7 Manifestation of Strategy and PolicyMaintenance Standing plans (programmed decisions) policies, rules, and standard operating procedures (SOP). general and specific guides to action. Programme arrangements and allocations. Innovations New initiatives, programmes and projects What are these for HRM?

8 Descriptive Schools (metaphors)Schools of Strategy Prescriptive Design School Strategy (formation as a process of conception) Planning (formal process) Positioning (analytical process and techniques) Descriptive Schools (metaphors) Enterpreneurial (visionary) Cognitive (mental) Learning (emergent, adaptation, incremental) Power (a process of negotiation between interests) Cultural (collective values, beliefs and behaviours) Environmental (reactive, contingent) Configuration (process of transformation from one state to another - management of change) Source: Mintzberg, Ahlstrand, Lampel, 1998, Strategy Safari, Prentice Hall

9 Michael Porter -- Value-Added Chain AnalysisTechnology development Support Activities Procurement Primary Activities Inbound logistics Operations Outbound logistics Marketing and sales After sales service Employee management Support Activities Firm’s infrastructure

10 Ploy (specific manoeuvres)Mintzberg on Strategy Plan (intended) direction, guide, a course of action. Pattern (realised) consistency in behaviour over time e.g. high end, low risk, patterns evolved out of the past. What plan have we actually pursued over the last 5 years? Position Locating our HRM in a position, unique and valuable, involving a set of activities, X marks the spot. Perspective look inwards and upwards to a grand vision of the enterprise. The “theory” (mind-set) of the business. Less easy to change than position e.g. from bureaucracy to innovation. Ploy (specific manoeuvres)

11 Deliberate and emergent strategiesIntended Strategy Deliberate Strategy Unrealised Strategy Realised Strategy Emergent Source: Mintzberg, Ahlstrand, Lampel, 1998, Strategy Safari, Prentice Hall

12 but unknown waters, move quickly or slowly? Focuses effort Form and Formation Set direction but unknown waters, move quickly or slowly? Focuses effort unity vs group-think & peripheral vision Defines the organisation a shorthand but slogans may override complexity & distort reality Provides consistency Provide order, a cognitive structure to simplify, explain & facilitate action but creativity thrives on “loose” order Strategies have a form and they are formulated So what is the form of HRM strategy of organisation X? Steerage and Umbrellas Deliberate broad outlines with details emerging en-route

13 CEO and HR Director as strategistsInterpersonal figurehead leader Information Processing liaison monitor disseminator Spokesperson Decision-making initiator/changer resource allocator disturbance handler negotiator (after H Mintzberg) Conceive the big idea? Let everyone else get on with the details? But the job is not like this Mintzberg on managerial roles

14 Corporate-Level StrategiesStick to the knitting - focus on core business Diversification Related : similar areas - build upon existing divisions synergy & core competencies Unrelated - portfolio business in new areas No declared strategy? Corporate failure? Implicit strategy? Avoid resource-consuming activity Disdain for formal planning but reliance on consistency of behaviour at all levels. No frills, non-bureaucratic organisation No recipe to decrease flexibility, block learning & adaptation Tension between control and discretionary freedom.

15 International HRM StrategyGlobal: HRM diversity for different conditions single, standard scheme across all countries? adaptation &acceptance of national differences? values, ethics in decision-making Domestic: Common national schemes? public sector institutions? Common professions/occupations personnel system discretion for semi-autonomous divisions to take advantage of local circumstances?

16 HRM Services and the Product Life CycleMaturity Growth Profit £/volume Develop or decline Start-up Loss Implications for Recruitment? Rewards? Training & Development? Employee Relations? Organisational development? Time

17 Analysis of HR ServicesDeliverables: capacity and capability Can we deliver? What do we deliver and how well? Efficiency How well is the process offered, managed and controlled? What are the transformation indicators and service quality ratios? cost/unit, cost/recruit, performance/employee, cost/HR intervention? Adaptability short + long term responses to pressure and change Benchmarking efficiencies, processes & outputs investment - £, technical and human quality, systems, research and intelligence

18 Common-sense propositions on qualityNo focus on quality - lose market share and reputation. Good reputation is easier to lose than regain. People trust and become accustomed to favourites They remember the bad. "I'll never go there again". New loyalties with substitute suppliers. Complacency breeds neglect. It takes a major operational and psychological effort to maintain quality vigilance (entropy). regain a lost reputation. Common-sense either forgotten or only realised post hoc

19 What is Quality? a perception of class, excellence, a type of "referential" standard or (in definition) reflecting needs and expectations of customer. Guru definitions : product or service, nature or features reflecting capacity to satisfy express or implied statements of need (Deming) conformance to requirements (Crosby) fitness for purpose or use (Juran) product/service characteristics as offered by design, marketing, manufacture, maintenance and service that meet customer expectations (Feigenbaum) Oakland (1995) - perceivable, measurable move from mere satisfaction to "delight and reputation for excellence". Reliability. “Next door swears by her 8-year old Zanussi!”

20 Elements of a Quality Policyorganisation structure for quality: roles, responsibilities how client/customer needs and perceptions will be identified technical/economic resource allocation QMS scheme & operation how suppliers & supplies will be required to meet standards prevention & zero defects/CQI approach vs. "inspect-out" communication, knowledge, information & staff development audit of QMS in operation Partnership with staff, customers and suppliers. Physical manifestation not just conceptual

21 TQM - a Strategy and Discoursean approach to improving the competitiveness, effectiveness and flexibility of a whole organisation..... a way of planning, organising and understanding each activity and it depends on each individual at each level. TQM is a way of bringing everyone into the processes of improvement Oakland 1995 a TQM programme requires re-evaluation of how organisational members address the quality of their work and the service processes.

22 TQM underpinned by policy commitmentA culture and practice change strategy Organisational renewal Injection of energy Staff encouraged in positive, initiative taking behaviours Adopt a prevention and CQI ethic Quality improvement teams/circles Use of a variety of methods and techniques (tools)

23 Kaizen: Continuous Quality Improvement (CQI)critical view of organisational performance standards continuously challenge & incrementally upgrade performance levels contribution and role of HR team attitude (ownership), involvement and team effort as the key to improvement HR team - line manager relationships 10

24 Classical functional, problem analysis cycleSituation analysis Problem definition Objectives and resourcing Solution development - options and best fit from DO NOTHING to DO EVERYTHING. Min/Max, optimistic/pessimistic, high/low budget etc.). Test models against objectives and constraints Implementation analysis detailed planning for operational implementation. analysis for potential problems scheduling, work allocation, capacity management, communicating, monitoring systems & overall coordination.

25 Questions for Quality StrategyWho are our direct and indirect clients Define characteristics, needs, requirements? Design features of services? How do clients perceive these? Bench-mark comparisons Which features do not compete? How can we delight beyond the basic specification? Design improvement projects? Who, by when & at what cost? Operational ability to bridge the gaps? Information & monitoring systems? Supply chain analysis - performance & communication?

26 Essential contract for supplySpecifying HR Quality Essential contract for supply ensuring delivered quality in a contract of service. Implications of failure to draw up a clear specification? Design quality dimensions include: Features, performance, delivery, cost, reliability, durability, serviceability, response, aesthetics, reputation. Conformance measurement: Degree to which service design specification is met 7

27 ISO 9000 Certification for HR Services?The parties & organisational level? Detailed specification what best practice will be (product & process definition) contract volume, milestones, stage deliverables? CSFs/CQFs for inputs, processes, outputs? work done to plan, in the defined ways? QA/QC methods? inspection, testing and monitoring staged prices and conditions? variation orders vs. extras penalties? audit trail client liaison

28 Costs of initiating and maintaining the system?Clauses of ISO 9000 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 Management Quality Plans Contracts Controlling design - not ISO 9002 Controls using documents and data Purchasing and supply Customer-supplied equipment Product identification and tracing Process controls Inspection/testing Measuring and test equipment Identify status of inspected goods Control over non-conforming products Corrective and preventative action Handling, storage, packaging, preserving and delivery Records for quality Internal audits Training Servicing Using Statistics Costs of initiating and maintaining the system?

29 USA Baldrige National Quality Award (1999)Leadership (weighting 125 points) Strategic Planning (85) Customer & Market Focus (85) Information and Analysis (85) Human Resource Focus (85) Process Management (85) Business Results (450) Criteria for Performance Excellence 4

30 References Gratton L, Hope-Hailey V, Stiles P. and Truss C, (1999) Strategic HRM: Corporate Rhetoric and Human Reality, OUP. Huselid M, (1995) The Impact of Human Resource Management Practices on Turnover, Productivity and Corporate Financial Performance . Academy of Management Journal, Vol. 38, No. 3, pp Kamoche K. (1994) A Critique and a Proposed Reformulation of Strategic HRM . HRM Journal, Vol. 4, No. 4, pp Miles R and Snow C. (1984) Designing Strategic Human Resources Systems, Organizational Dynamics, Summer: Swiercz P. (1995) Strategic HRM, Human Resource Planning, 18,3, p.53-. Truss C. (2001 — forthcoming) Complexities and Controversies in Linking HRM with Organisational Outcomes . Journal of Management Studies. Truss C. and Gratton L. (1994) Strategic HRM: A Conceptual Approach . International Journal of HRM, 5,3, pp Truss C, Gratton L, Hope-Hailey V, McGovern P, & Stiles P. (1997) Soft & Hard Models of HRM: A Reappraisal . Journal of Management Studies, 34,1, pp Wright, P. and McMahan, G. (1992) Theoretical Perspectives for Strategic HRM , Journal of Management, Vol. 18, No. 2, pp