Transcript Slide 1

Human Resource
Management
T 2 Business Strategy and HRM
D. Borisova
Personnel Administration
vs.
Human Resources
Management
Find the differences
Origins of “HRM”
• Technological developments
• Changes to labour and product market
– Early stages of “globalisation”
• Neo-liberal politics; “M. Thatcher/R. Reagan”
– Consumer driven capitalism and extension of
individual share ownership
– privatisations of the 80’s
– Collapse of communism in Europe
• “New Managerialism” in UK
– The need for organisational flexibility
– People as a source of competitive advantage
– Employer/employee “branding”
Key Concepts
HRM as a “Business Partner” - importance of line managers to HR
practice; business alignment and integration
Long term and strategic planning
Commitment as a form of employee control
Organic/flexible structures and systems
• Quality (TQM)
• Flexibility
• Commitment
of the workforce
Management of organizational culture
“Stake holding”
Unitarist approach to Employee Relations
•High trust
•Individualised relationship
What is HRM about?
Finding
– The right number of people
– In the right place
– With the right skills
– At the right price
AND
– Persuading them to work for you
– When you need them
The right number of people
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Labour Market Analysis
Work and Job Design
Forecasting labour demand
Matching to labour supply
Recruitment
Selection
The right place
• Where in the world?
• Bringing workers to jobs….
….. Or jobs to workers?
– Increase from
– Home working, tele-working,
virtual working
UK….
• 1997 <1m teleworkers (4%)
• 2005 2.37m
(8%)
With the right skills
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Training and development
Appraisal
Performance management
Promotion
Career progression
Succession planning
At the right price
• Salaries and wages
– Piecework
– Day rates
– Salaries
• Pay for performance
• Bonuses and benefits
• The “effort-reward bargain”
Persuading them to work for
you
• Management and Motivation
– Intrinsic, i.e. driven from within
– Extrinsic, i.e. provoked from outside
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Working Conditions
Communication
Employment Relations
Trade Unions
When you need them
Direct employment
• Terms, conditions and the law
• Hours and overtime
• Downsizing & Redundancy
Or indirect employment
• Sub-contracting and outsourcing
• “Off-shoring”
The “Business Partnership”
• Find out what the
management/owners/stakeholders want
– Understand the strategy
• Give it to them
– Develop the “best fit” for HR strategy
• Be seen to give it to them
– Make sure HR is represented in the Business Plan
Strategy
• A plan of action for the future, answering
the questions of:
– What to do?
– How to do it?
• Levels:
– Corporate (growth, stability, retrenchment)
– Business (cost leadership, differentiation,
focus, and innovation)
– Functional/Operational
HRM a Business Partner
• Failure here often a critique of Personnel
• So how to do it better?
• “Best fit” approach?
– Use a business strategy model, eg.
• Stages of growth models (Boston Box)
• Strategic orientation (Porter)
– Design HR strategy to fit
HRM
MARKETING
PRODUCT/SERVICE
LOGISTICS
FINANCE
BOSTON BOX
MARKET
GROWTH
STARTUP
GROWTH
HIGH
LOW
DECLINE
MATURITY
LOW
HIGH
MARKET SHARE
BOSTON BOX
MARKET
GROWTH
HIGH
STARTUP
PURE
Digital (DAB)
radio sets
Motorola
GROWTH
Mobile phones
Pioneer
Bosch
Turntables
Washing
Machines
LOW
DECLINE
MATURITY
LOW
HIGH
MARKET SHARE
BOSTON BOX & HR FIT
GROWTH
HIGH
LOW
•ATTRACT TALENT
•EXCEED LABOUR MARKET RATES
•DEFINE FUTURE SKILL NEEDS
•ESTABLISH CAREER LADDERS
•DEVELOP Emp RL PHILOSOPHY
•REDUCE/REALLOCATE STAFF
•CONTROL WAGE COSTS
•RETRAINING
•MAINTAIN Emp RL PEACE
•MANAGE REDUNDANCY
LOW
•RECRUIT QUALIFIED STAFF
•SUCCESSION PLANNING
•MANAGEMENT DEVELOPMENT
•FORMAL COMPENSATION
STRUCTURES
•MOTIVATION AND MORALE
•CAREER AND MANPOWER
PLANNING
•CONTROL REWARD SYSTEMS
•MAINTAIN FLEXIBILITY AND
SKILLS
•IMPROVE PRODUCTIVITY
HIGH MARKET SHARE
The Value Chain (Porter)
Firm infrastructure (Finance, administration)
Support
activities
Human resource management
IT/ Technological development
Procurement
Inbound
logistics
Operations
Outbound Marketing
Service
logistics & Sales
Primary activities
Chocolate value added chain
COMPANY FOUNDERS & MANAGERS
GROWING COCOA
PROCESSING RAW COCOA
MANUFACTURING CHOCOLATE
PRODUCT BRANDING & MARKETING
TRANSPORT & LOGISTICS
SALES
Porter generic strategies
Strategic scope:
a demand-side
dimension
Strategic strength: a supply-side dimension
that looks at the strength or core competency of the firm
Porter’s model of Strategic
Orientation
LOW COST LEADER
• Economies of scale; cost reduction
DIFFERENTIATOR
• Enhanced Quality; “something special"
FOCUSSED/SEGMENTATION
• Innovation; concentrates on small scale /
niches
Cost Leadership Strategy
To be successful, this strategy usually requires a
considerable market share advantage or preferential
access to raw materials, components, labour, or some
other important input. Without one or more of these
advantages, the strategy can easily be mimicked by
competitors. Successful implementation also benefits from:
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process engineering skills
products designed for ease of manufacture
sustained access to inexpensive capital
close supervision of labour
tight cost control
incentives based on quantitative targets.
Differentiation Strategy
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The company creates a product that is perceived as unique and thus its
features provide superior value for the customer. The price elasticity of
demand is reduced and customers are more brand loyal. There are
usually additional costs associated with the differentiating product
features and this could require a premium pricing strategy. To maintain
this strategy the firm should have:
strong research and development skills
strong product engineering skills
strong creativity skills
good cooperation with distribution channels
strong marketing skills
incentives based on subjective measures
be able to communicate the importance of the differentiating product
characteristics
stress continuous improvement and innovation
attract highly skilled, creative people
Segmentation Strategy
• The firm concentrates on a select few target markets. It
is also called a focus strategy or niche strategy.
• The firm typically looks to gain a competitive advantage
through effectiveness rather than efficiency.
• It is most suitable for relatively small firms but can be
used by any company.
• Focus on specific skills of the personnel, retention of key
people; corporate culture that distinguishes the company
from the rest
COST LEADER:
DIFFERENTIATOR:
FOCUSSED:
Head of Personnel / HR Department has a
place on the main Board of Directors or the
equivalent (%)
100
90
91 88
85
79 76 76
80
70
58
60
44
50
40
40
41
35 34
32
25
30
20
10
Turkish
Cypriot
Israel
USA
Bulgaria
Turkey
EU Avg.
Greece
Cyprus
Hungary
Italy
Spain
Belgium
Sweden
France
0
Stage at which HR is involved in development
of business strategy (%)
From the outset
France
73
Finland
70
Italy
69
Hungary
58
Germany
50
Greece
42
Estonia
39
Slovakia
35
EU Avg.
55
Turkey
46
Bulgaria
30
Turkish Cypriot Community
27
USA
53
Nepal
27
Through subsequent On
consultation
implementation Not consulted
13
12
2
15
8
7
26
4
1
7
13
22
21
10
19
22
27
10
30
20
11
37
15
13
22
14
9
10
35
10
20
39
12
6
30
38
27
8
12
22
43
8
Business Strategy (% of organisations)
Yes, written Yes, unwritten
Slovenia
91
6
Sweden
91
5
Czech Republic
89
10
Denmark
84
9
Greece
58
35
Spain
53
37
Italy
42
30
Cyprus
37
24
EU Avg.
70
19
Turkey
62
32
Bulgaria
70
26
Turkish Cypriot Community
29
59
USA
73
17
Israel
48
37
No
3
4
1
6
5
7
27
20
8
4
2
8
9
14
HR Strategy (% of organisations)
90
Yes, written
Yes, unwritten
No
79
80
73
68
70
60
67
52
56,3
53
51
44
50
61
44,2
37
40
25
30
18,3
20
10
Tunisia
USA
Turkish
Cypriot
Bulgaria
Turkey
Norway
EU Avg.
Cyprus
Spain
Greece
Italy
Denmark
Czech
Republic
Sweden
0
Sustainability through people
PRESERVES
Competitive
Shareholder &
Stakeholder Value
PROJECTS IN
Effective
Leadership
HR Work
Superior
Talent & High
Innovation
PROMOTES
High
Commitment &
Engagement
POWERS
“BEST FIT” SEMINAR
In the seminar for week three we will be
considering the Personnel/HRM
implications for a business which adopts
different strategic orientations. This
involves considering how each of the
personnel/HR functions would need to
differ depending on the business strategy
to achieve “best fit”.