1 Making Human Resource Management Strategic 2 LEARNING OBJECTIVES After reading this chapter you should be able to: 3 LEARNING OBJECTIVES Describe four human resource strategies that organizations commonly use. Explain how human resource strategies and competitive business strategies are aligned. 4 What is Strategy? Strategy can be viewed as a set of coordinated choices and actions. From a Human resource management perspective, there are actually two types of strategy competitive business strategy, which focuses on choices and actions about how to serve the needs of customers human resource strategy, which focuses on choices and actions concerning the management of people within the organization Research suggests that a major key for long-term profitability is a clear strategy for being better than competitors, along with a highly effective workforce that carries out that strategy. This is a good place to talk about the example of Southwest Airlines, presented in the text. When it comes to human resource management in organizations, there are actually two types of strategy. One is competitive business strategy, which focuses on choices and actions about how to serve the needs of customers. The other is human resource strategy, which focuses on choices and actions concerning the management of people within the organization. Talk about how these strategies are used by Southwest Airlines. 5 Strategy Formulation Process 6 Strategy formation begins with Information gathering? 7 Assessing the External Environment 8 Assessing Internal Capabilities 9 Effective Decision Making 10 BUSINESS STRATEGIES There are two strategies pursued at the business level. Cost leadership strategy Organizations seek to become low-cost producers of goods and services. Their goal is to develop efficient production methods that enable them to sell at a lower price than competitors Using Cost leadership strategy is easy to understand an organization has this strategy when its decisions and actions focus on providing value by reducing cost. The goal of a business pursuing cost leadership is to become highly efficient. Efficiency allows the organization to create value by producing goods and services at lower cost. Talk about Southwest Airlines and Wal Mart 11 BUSINESS STRATEGIES Differentiation strategy 12 HUMAN RESOURCE STRATEGY 13 HUMAN RESOURCE STRATEGY 14 Strategic Human Resource Differences 15 Four Human Resource Strategies 16 Strategic Framework for HR 17 The Loyal Soldier Strategy 18 The Loyal Soldier Strategy 19 Bargain Laborer HR strategy 20 Bargain Laborer HR strategy 21 Committed Expert HR strategy 22 Committed Expert HR strategy 23 Free Agent HR Strategy The main emphasis associated with this strategy is hiring people who have critical skills but who are not necessarily expected to remain with the organization for a long period of time. Work is designed so that employees have extensive responsibility within specific areas and substantial freedom to decide how to go about their work. Long-term commitments are avoided, and no efforts are made to encourage strong attachments between employees and the organization. People are recruited because they already have the skills and experience that they need to perform specific jobs. They are not led to expect long-term careers in the organization. Higher-level positions are frequently given to people from outside the organization. The main emphasis associated with this strategy is hiring people who have critical skills but who are not necessarily expected to remain with the organization for a long period of time. Work is designed so that employees have extensive responsibility within specific areas and substantial freedom to decide how to go about their work. Long-term commitments are avoided, and no efforts are made to encourage strong attachments between employees and the organization. People are recruited because they already have the skills and experience that they need to perform specific jobs. They are not led to expect long-term careers in the organization. Higher-level positions are frequently given to people from outside the organization. 24 Free Agent HR Strategy Emphasis is on hiring people who have critical skills but not expected to remain with the organization. Employees have extensive responsibility within a specific area and substantial freedom to decide how to go about their work. Long-term commitments are avoided and no efforts are made to encourage strong attachment to the organization. Performance Appraisal focuses on outcomes and results. Training is rare. Performance appraisal focuses on outcomes and results. Training is rare. Short-term compensation is usually high, which is necessary if the organization is to obtain people with top skills. Pay is linked specifically to individual performance results. Benefits and long-term compensation packages, which tie employees to the organization, are avoided. Unions are rarely seen in these organizations. Examples: Information Technology career field. 25 Free Agent HR Strategy Short-term compensation is high. 26 ALIGNMENT OF HR AND COMPETITIVE BUSINESS STRATEGIES |