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SHRMStrategic human resource management is the process of linking the human resource function with the

strategic objectives of the organization in order to improve performance.

The importance of strategic human resource management in an organization cannot be
overemphasized due to the fact that human beings are the driving force behind any organization. In
this respect, organizations must be able to implement well-planned and well-thought out strategic
human resource ideas that will be implemented to coordinate and channel the human capital into
increased productivity. A solid human resource strategy will allow an organization to have a good
relationship with its workers and to coexist peacefully and in a mutually beneficial manner with its
host community.
One of the ways that strategic human resources management is beneficial to an organization is the manner in
which a properly implemented strategic human resources plan will help a company attain its goals. When a
company sets goals or targets that it hopes to achieve, it is the employees who will perform the necessary
duties geared toward the attainment of that goal. This is where the importance of strategic human resources in
an organization can be seen, since the human resources department will identify the key areas in the company
that require manpower. This department will also carry out the necessary steps toward the recruitment of the
ideal candidates who cannot only fill the vacancies, but can also help the company achieve its vision and other
long-term or short-term goals.

Strategic human resources also mean developing strategies that will help motivate employees to
greater productivity and even more output. One way in which human resources can do this is through
the development of several types of incentives, such as bonuses and promotions. These often serve as
motivation for employees to work harder in order to attain the promised incentives. Some human
resources departments also use awards to motivate employees. During stated periods, which might be
anywhere from each month to each year, the company could single out one or more employees and
reward them with gifts in the form of money or other prizes, encouraging other employees to work
hard in the process.
Contributions (Importance) of SHRM to Organizational Performance
Modern developed economies are increasingly relying on human capital to gain their competitive
advantage. In such a knowledge economy, it is the skills and knowledge of employees rather than
just the abilities inherent in technology and machinery that are crucial. The capacity of an
organization to manage its talent is what will set it apart from other competitors. In Honk Kong, the
HKSAR government asserts that human resources are the key for successful economic development.
Indeed, Tung Chee Hwa made the following statement in his policy address. Our people are our
most valuable resources and the key to the development of a knowledge-based economy. Only by
developing our own local human resources and providing opportunities for continuing education for
people of all walks of life can we prepare ourselves for the changes in the marketplace. This is of
utmost importance to the well-being of our people and the long-term development of Honk Kong.
However, talented people are scarce, as a result companies must pay closer attention to the issue of
talent management, in terms of attracting, recruiting, and developing talent in an economy that is
increasingly knowledge-based, (Anna, Tsui & Lai, 2009).
The importance of human resource management function to an organizations strategy is underscored
by reviewing the overall functions of strategic planning. These include periodic forward scanning,
analysis based on longer time frame, communication about goals and resource allocation, framework
for short-term plan evaluation and integration, institutionalizing longer term time horizons necessary
for investments, and decisional criteria for short-term decision making. It is impossible to address
these critical issues without bringing in the human resources factor at each element of the process.
In the early development of strategic management, there was little concern about the human
resources function until the actual implementation began. Rarely was the human resource brought
into the planning process. Now this is changing. Strategy and human resource planning are integrated

early in the process. There are several benefits of integrating human resource planning with strategic
planning, making it imperative for this integration to be regularly pursued. Some experts have
suggested that the human resource manager be labeled Director of People Strategy.
Because of the importance of strategy in the success of firms and the critical ingredient of human
resources in the strategic plan, human resource managers are finding themselves heavily involved in
the strategic planning process. Because strategy is related to the organizational goals, the ultimate
opportunity to show the contribution of human resources begins in the strategic planning arena,
(Jack, 1996).
The strategic importance of human resources has been widely recognized. As a result, strategic
human resource management (SHRM) has been argued to be positively related to organization
performance. More especially, HRM has been linked to increased productivity, good customer
service, improved efficiency, increased firm value, greater profitability or financial returns and
overall organizational survival.
Snell, Youndt, and Wright (1996) characterized the strategic role of HRM as organizational systems
designed to achieve competitive advantage through people. In turn, competitive advantage may be
defined as a set of capabilities or resources giving an organization an advantage that leads to superior
performance relative to that of competitors. In this respect, the main focus of SHRM is on integrated
combinations of HRM practices, through which organizations should create competitive advantage
rather than simply adapting to the existing context. A review of the literature reveals five interrelated
approaches to the link between the competitive position of an organization and the creation of
superior human assets.
First, the resource-based approach of competitive advantage focuses on the relationships between a
firms internal resources, its profitability and the ability to stay competitive through its strategy
formulation. According to this approach, a resource is considered as an internal strength only if it
meets the five criteria for sustainable competitive advantage. Specifically, a resource must (1) be
immobile; (2) be difficult to replicate; (3) have no close substitutes; (4) be rare: and (5) create value.
The central idea of the resource-based theory is that a firms systems, among its other attributes,
enable the organization to achieve success relative to competitors.
Another approach focuses on the way human resource systems support competitive advantage and
organizational learning through people. This perspective implies that human resource management
should focus on how the integration of organizational resources, practices and capabilities can lead to
sustainable competitive advantage. To understand this integration researchers have used notions of
internal or horizontal fit and external or vertical fit. Management must have a clear understanding of
internal fit and the way such fit facilitates organizational learning and adaptation. Furthermore,
practices with external fit create capabilities that maintain the organizations overall strategy and
support multiple strategic dimensions in order to lead to sustainable competitive advantage,
(Rudiger, 2005).
It is obvious from the literature review and researches that in todays global and knowledge-based
business environment, the role or importance of Strategic Human Resources Management (SHRM)
in every business organizations cannot be underscored or undermined in helping the organization
realized its business objects (gaining a competitive advantage, profitability, increasing shareholders
wealth, etc.). Therefore, for every organization to achieve its goals, it must place a premium to its
strategic human resource management.
The importance of strategic human resource management in a business organization must be
projected. Why, Most of the organizations when was recently introduce the role of strategic HRM to
the long-term growth and survival of the business organization. Most who are the these most of them
managers of the managers have realized that specific defining the mission of their organization are
better and able to give direction and focus activities.

According to Ansoff (1979), who strongly recommended that, the success or failure of strategic
planning is determined by a number of components which include the environment, organization
structure and strategic decision making. When these three components are properly matched, the
performance of any organization is optimized.
Furthermore Lorange (1979) has describe that the importance of strategic planning is to accomplish
a sufficient process of innovation to support and enhance the planning process and effective strategic
planning does not have to be complicated but must be logical and focused on strategic decisions to
be undertaken.
Based on Alli (1992) who has presented characteristics of an effective strategic management as
1. Clear direction and purpose.

Objectives, goals, and strategic consistency.

Continuous monitoring of internal and external environment.
Integration of operating budget and profit plans with strategic plan.
Continuous monitoring of progress with revision of plan and programs as appropriate.
Creation of strategic atmosphere that foresters a team spirit
Commitment of necessary resources and the development of system to provide necessary
management information.

SHRM has increased its importance since the 1980 and day by day it improved the role dramatically
in business organizations. Because of,

Government regulation
Stronger knowledge or research base.
Changing role for labor unions.
Challenge of matching worker expectations with competitive demands.

It is also important to ensure that staff management, human resource management work with the
interests of the organization. Many organizations change and increase their view to HRM is a
strategic rather than operational issue, and means that SHMR functions tackled and solved by the
particular line manager. It is also requires attention to establishing, maintaining and developing the
organizational management style and culture and involving management development programs.
Therefore, it realized that, the SHRM is highly required in an organization. Without any proper plan
business organization cannot achieve their goals. At the end, it realizes the need of strategic human
resource management cannot be over-emphasized in a business organization.
Purpose of SHRM activities in an organization
Strategic Human recourse management plays an important role of the growth of the business
organization .All the organization activities managed whose are fully incorporated into general
management practice and supported by the specialist corporate HR functions. There is a correlation
between the ways and methods in which each and every aspect is addressed, approached and
organizational success, effectiveness and profitability.
The key activities of SHRM are as follows with discussion with the impact on Tesco.
Equal Opportunity/ diversity: Diversity describes peoples differences, in a business context; it
often focuses on a particular set of characteristics which are: gender, ethnicity, religion, disability,
age, sexual orientation, location, marital status. Tescos diversity programme is essential to keeping
position as a leading employer. The programme helps Tesco maintain first-class reputation and the
opportunity to maximize market share. Tesco feels that diversity is important because of employing
and managing diverse people makes them well-rounded and balanced.

Sexual orientation: The research discovered that lesbian, gay and bisexual (LGB) staff can
sometimes feel lonely. Tesco committed to making sure that employees who are LGB can be
comfortable being open about their sexual orientation at work.
Staff planning: It is the process of analysis an organizations future needs in terms of number, skills
and locations. It allows the organization to plan for the future employees and a vital for Tesco to plan
for the future work force. The key elements involved are as follows:
Work analysis: Work analysis is interesting, rewarding and fulfilling to the individual and profitable
for Tesco. Tesco uses a workforce planning to establish the demand for new staff. The planning runs
each year from the last week in February. There are quarterly reviews in May, August and November,
so Tesco can adjust enrollment levels and recruit where necessary. It allows Tesco sufficient time and
elasticity to meet demands for staff and allows the company to meet its strategic objectives.
Fitting the work to people; fitting the people to work:The process is abbreviated to FWP-FPW balance provides a sound basis on which to address to each
of the following:Job and work descriptions: parceling up task into occupations and patterns of work.
Meanwhile- the behavior, attitude, skills, knowledge, expertise and technological proficiency
required and asked for in jobs holder.
Job description and person specification shows how a job-holder fits into the Tesco business. It helps
Tesco to recruit the right people and provide a benchmark for each job in terms of responsibilities
and skills.
Recruitment: Attracting the right standard of applicants to apply for vacancies. Tesco first looks at
internal Talent Plan to fill a vacancy. For external recruitment, Tesco advertises vacancies via the
Tesco website www.tesco-careers.com or through vacancy boards in stores. People interested in
store-based jobs with Tesco can approach stores with their CV or register though Job centre Plus.
The store prepares a waiting list of people applying in this way and calls them in as jobs become
Selection: identifying the critical behavior, attitudes, skills, knowledge, expertise and technological
proficiency aspect are to be tested in individuals for capability and willingness; identifying the best
to test, observe and understand the particular qualities.
At the first stages of screening, Tesco selectors look carefully at each applicants summarizes
education and job history. A candidate who passes screening attends an assessment centre. Applicants
are given various exercises, including team-working activities or problem solving exercises. These
involve examples of problems might have to deal with at work approved by the internal assessment
Induction: It identifies those qualities required as a condition of employment and ensures that people
learn quickly and effectively to applied. In Tesco, the new employee joint to work through an
induction and learn how to do their works.
Employee and organization development: It identifies those areas where expertise and capability are
not present or need to be improved. Tesco employees assess their own skills to give them a focus for
their development. Tescos Options programme provides a long term route for development like
leadership workshops.
Work patterns: Reflecting the demands for maximizing and optimizing returns on investment in
technology and expertise and ensure that product and service are available to customers and clients.
Tescos purpose is to serve its customers. Their work pattern has the customer at the top. Tesco needs
people with the right skills at each level of these patterns. There are six work levels at Tesco. This
gives a clear structure for managing and controlling the organization. Each level requires particular
skills and behaviors.

Pay and rewards: Balancing the demands with offer and recognizing the actual and potential
problems of retention for those who are coming into work. Its a most important activity of Tesco.
The elements activities for effective staff pay and rewards scheme as follows.
Expectations: all systems must meet of the jobs holder extent to be attracted and retained staff. Tesco
lists current employees looking for a move, either at the same level or on promotion. They do Talent
Plan or developing on the internal management Development programme to retain their current
Motivation: within the constraints illustrated above, all payments and reward motivates to an extent;
the rewards offered to carry implications for nature, complexity and commitment to the work is
required on their part.
Tesco motivates its staff in many ways financially and non-financially. Tesco apply Maslows
hierarchy of needs, Herzbergs two sets of factors to motivation, theorist Elton Mayos motivation
came from a number of factors and Taylors motivational theory to motivate their employee. Good
pay and conditions satisfy basic needs. Reviews and Personal Development Plans ensure that their
staffs are able to make progress and achieve higher goals. This benefit staff and Tesco.
There are some other pay and rewards activity of elements to be done by the organizations includes
Mixes of pay with other aspects, Occupational aspects, International, organizational and local
variations, Respect and value and the nature of the work and working environment.
Contribution of SHRM to the achievement of an organization :
Frank Mueller describe as the human resources are scarce, valuable, firm specific and difficult to
imitate resources that can contribute significantly to the achievement of competitive advantage and
should be regarded as strategic assets.
The approaches of an organization to career planning, performance appraisals, reward management
and employee development must be re-appraised according to vision, characteristics and mission
outcomes as reflected in the SHRM plans, policies, and practices. Development responses aim to
increase business skills, the application of business skills and the behavioral elements -whose
contribute to effective performance to achieve its goal. Investment initiatives for individual, team and
organization are toward to achieve high levels of organizational goal. Reward strategies aim to align
the performance of the organization with the way it rewards its people, providing the necessary
incentives and motivation to staff.
Beardwell I 2004: Tesco has strategically integrated SHR plans. Managers have been to realize
aspects of SHR in their decision making, has shown high commitment, attempting to gain acceptance
from all employees, and offering to all employees basic and extended training. Tescos strategic
direction is discussed with all employees to help individual to understand their role and importance.
A human-resource-leading business strategy has helped Tesco to take the lead over its rivals in the
fiercely-competitive UK supermarket sector. It has introduced a high commitment model which
offers training and development to employees. It operates in a very competitive market; the
consumer has a choice where to shop for their necessities. Their slogan every little helps used to
show their commitment to customers, reduce prices and to increase the level of customer service
which used in staff training to increase the knowledge of the work force.
Tesco is widely reported in news papers to the success of the business. They are rapidly expanding
has taken a great deal of their resources in the planning and implementing stage of expansion. The
human-resource strategy at Tescos revolves work simplification, challenging unwritten rules, rolling
out core skills to employees and performance management linked to achieving targets. Tesco ensures
that each and every employee has the opportunity to understand individual role in contributing to
purpose and values. The training provide by Tesco through the history, purpose, values, business

goals, financial aims, operations and marketing strategy and commitment to customers. Tesco intends
to increase the skills of its workforce to make learning into a truly integrated part of culture, as an
important way of developing organizational flexibility and remaining ahead of its rivals. Future
concentrates provides that all employees are responsible, accountable, consulted and informed.
(Anonymous 2003).

Strategic Human Resource Management is very important in order to gain competitive performance by
utilizing human resource of an organization effectively.


SHRM encourages managers to be proactive which means to think ahead.

Attainment of organization objectives through human capital.
It enhances individual performance by development of commitment at all levels.
It enables development of need based personnel policy/HR policy as a prerequisite for
optimum use of human resources.
Integration of HRM policy with business goals or objectives.
Developing supportive work culture in order to encourage creativity, team work, TQM as
well as innovation and a sense of belonging.
Creation of flexible environment because in flexible environment employees can easily adapt
to changing competitive environment.
Creation of flexible working hours/ function.
Integration of people related issues with business issues.

Theoretical Models of HRM These are Weberian-type ideal models. They illustrate something of the uniqueness of the
varying HR perspectives and show something of the difference from the personnel
management policies that preceded them and they have important intellectual functions for
those studying the links between HRM and OB.

In summary, these models: Provide an analytical framework for studying HR, legitimatize
certain OB theories that underpin HRM practices, provide a characterization of HRM that
establish variables and relationships between dependent and independent variables to be
researched, and to serve as a heuristic device for explaining the nature and significance of key
HR practices.

The Fombrun, Tichy and Devanna model of HRM was developed in 1984 and emphasizes
the interrelatedness and the coherence of HRM activities. The HRM cycle in their model
consists of four key constituent components: selection, appraisal, development and rewards
(Figure 17.1 on slide 11).

The analytical framework of the Harvard model offered by Beer et al. .consists of six
complex components:
o Situational factors which influence managements choice of HR strategy.
o Stakeholder interests recognize the importance of trade-offs between the interests of
owners and those of employees and their organizations - the unions.

o HRM policy choices emphasize that managements decisions and actions in HR

management can be appreciated fully only if it is recognized that they result from an
interaction between constraints and choices.
o HR outcomes are high employee commitment to organizational goals and high individual
performance leading to cost-effective products or services.
o Long-term consequences distinguish between three levels: individual, organizational
and societal.
o The Feedback Loop through which the outputs flow directly into the organization and to
the stakeholders.
This model serves as a useful heuristic device for explaining the significance of HR practices. It
incorporates an analytical base (situational factors/stakeholders and strategic choice levels) but
also a prescriptive element (commitment/competence etc). It was initially used at MBA level in
the early 1980s (Noon, 1982).

The Warwick model extends the Harvard framework by drawing on its analytical aspects. It was
devised by Hendry and Pettigrew. The five elements of the model are: outer context, inner
context, business strategy content, HRM context and HRM content

The model is especially useful as it shows interplay between environmental contingencies

or factors and those specific to HR. Correlations with contemporary models by Porter in the
area of Industrial Economics, are possible.
The Matching Model

A further area of debate is related to the fit of HR strategy and business strategy. The concept
of integration has three aspects: The linking of HR policies and practices with the strategic
management process of the organization, the internalization of the importance of HR on the part
of line managers, and the integration of the workforce into the organization to foster commitment
or an identity of interest with the strategic goals. This approach to SHRM has been referred to
as the matching model. The Devanna et al. (1984) model, HRM strategy-structure follow
and feed upon one another and are influenced by environmental forces

The Resource-Based Model

A second approach to studying strategic HRM is grounded in the degree to which managers
view their subordinates as an asset as opposed to a variable cost. The perspectives on what is
called the resource-based HRM model raise questions about the inextricable connection
between work-related learning, the mobilization of employee consent through learning
strategies, and competitive advantage.

The resource-based HRM model is influenced by the work of Selznick and the view that
organizations exploit a distinctive competence and also Penrose who conceptualized the firm
as a mixture of heterogeneous resources

Also, the resource-based view is premised on the work of Barney (1991) who argued that
sustained competitive advantage is not achieved through an analysis of a firms external market
position but through a careful analysis of the skills and capabilities possessed by people in the
organization - characteristics which competitors find themselves unable to imitate. He argues that
three characteristics are important in sustaining competitive advantage: rarity, inimitability and

Strategic management-The word strategy, deriving from the Greek noun strategus, meaning
commander in chief, was first used in the English language in 1656. The development and usage of
the word suggests that it is composed of stratos (army) and agein (to lead). In a management context,
the word strategy has now replaced the more traditional term long-term planning to denote a
specific pattern of decisions and actions undertaken by the upper echelon of the organization in order
to accomplish performance goals.
Wheelen and Hunger (1995, p. 3) define strategic management as that set of managerial decisions
and actions that determines the long-run performance of a corporation. Hill and Jones (2001, p. 4)
take a similar view when they define strategy as an action a company takes to attain superior
performance. Strategic management is considered to be a continuous activity that requires a constant
adjustment of three major interdependent poles: the values of senior management, the environment,
and the resources available

Model of strategic management-In the descriptive and prescriptive management texts, strategic
management appears as a cycle in which several activities follow and feed upon one another. The
strategic management process is typically broken down into five steps:
Figure 2.2 illustrates how the five steps interact. At the corporate level, the strategic management
process includes activities that range from appraising the organizations current mission and goals to
strategic evaluation. The first step in the strategic management model begins with senior managers
evaluating their position in relation to the organizations current mission and goals. The mission
describes the organizations values and aspirations; it is the organizations raison dtre and indicates
the direction in which senior management is going. Goals are the desired ends sought through the
actual operating procedures of the organization
and typically describe short-term measurable outcomes (Daft, 2001). Environmental analysis looks at
the internal organizational strengths and weak-nesses and the external environment for opportunities
and threats. The factors that
are most important to the organizations future are referred to as strategic factors and
can be summarized by the acronym SWOT Strengths, Weaknesses, Opportunities
and Threats.

Strategic formulation involves senior managers evaluating the interaction between

strategic factors and making strategic choices that guide managers to meet the organizations
goals. Some strategies are formulated at the corporate, business and specific
functional levels. The term strategic choice raises the question of who makes decisions
and why they are made (McLoughlin & Clark, 1988). The notion of strategic
choice also draws attention to strategic management as a political process whereby
decisions and actions on issues are taken by a power-dominant group of managers
within the organization. Child (1972, quoted in McLoughlin & Clark, 1988, p. 41)
affirms this interpretation of the decision-making process when he writes:
When incorporating strategic choice in a theory of organizations, one is recognizing the
operation of an essentially political process, in which constraints and opportunities are
functions of the power exercised by decision-makers in the light of ideological values.
In a political model of strategic management, it is necessary to consider the distribution
of power within the organization. According to Purcell and Ahlstrand 1994 we must consider where
power lies, how it comes to be there, and how the outcome of competing power plays and coalitions
within senior management are linked to employee relations. The strategic choice perspective on

organizational decision-making makes the discourse on strategy more concrete and provides
important insights into how the employment relationship is managed. Strategy implementation is an
area of activity that focuses on the techniques used by managers to implement their strategies. In
particular, it refers to activities that deal with leadership style, the structure of the organization, the
information and control systems, and the management of human resources (see Figure 1.2 above).
Influential management consultants and academics (for example Champy, 1996; Kotter, 1996)
emphasize that leadership is the most important and difficult part of the strategic implementation
process. Strategy evaluation is an activity that determines to what extent the actual change and
performance match the desired change and performance. The strategic management model depicts
the five major activities as forming a rational and linear process. It is, however, important to note that
it is a normative model, that is, it shows how strategic management should be done rather than
describing what is actually done by senior managers (Wheelen & Hunger, 1995). As we have already
noted, the notion that strategic decision-making is a political process implies a potential gap between
the theoretical model and reality.
Hierarchy of strategy Another aspect of strategic management in the multidivisional business
organization concerns the level to which strategic issues apply. Conventional wisdom identifies
different levels of strategy a hierarchy of strategy (Figure 2.3):
1. corporate
2. business
3. functional.

An organizations HRM policies and practices must fit with its strategy in its competitive
environment and with the immediate business conditions that it faces (Beer et al., 1984,)The concept
of integration has three aspects:

the linking of HR policies and practices with the strategic management process
of them organization
the internalization of the importance of HR on the part of line managers
the integration of the workforce into the organization to foster commitment or an
identity of interest with the strategic goals.

Not surprisingly, this approach to SHRM has been referred to as the matching model.


This chapter has examined different levels of strategic management, defining

strategic management as a pattern of decisions and actions undertaken by the
upper echelon of the company.
Strategic decisions are concerned with change and the achievement of superior
performance, and involve strategic choices. In multidivisional companies,
strategy formulation takes place at three levels corporate, business and
functional to form a hierarchy of strategic decision-making. Corporate and
business-level strategies, as well as environmental pressures, dictate the choice
of HR policies and practices.

When reading the descriptive and prescriptive strategic management texts,

there is a great temptation to be smitten by what appears to be the linear and
absolute rationality of the strategic management process. We draw attention to
the more critical literature that recognizes that HR strategic options are, at any
given time, partially constrained by the outcomes of corporate and business
decisions, the current distribution of power within the organization and the
ideological values of the key decision-makers.
A core assumption underlying much of the SHRM research and literature is that
each of the main types of generic competitive strategy used by organizations
(for example cost leadership or differentiation strategy) is associated with a
different approach to
managing people, that is, with a different HR strategy.
We critiqued here the matching model of SHRM on both conceptual and empirical
grounds. It was noted that, in the globalized economy with market turbulence,
the fit metaphor might not be appropriate when flexibility and the need for
organizations to learn faster than their competitors seem to be the key to
sustainable competitiveness.We also emphasized how the goal of aligning a
Porterian low-cost business strategy with an HRM strategy can contradict the
core goal of employee commitment.
The resource-based SHRM model, which places an emphasis on a companys
human resource endowments as a strategy for sustained competitive advantage,
was outlined. In spite of the interest in workplace learning, there seems,
however, little empirical evidence to suggest that many firms have adopted this
soft HR strategic model.
The final section examined the distinctions between international HRM and
comparative HRM. This portrayed international HRM as an area of research and
practice related to issues associated with the cross-national transfer of people,
for example how to select and manage expatriate managers in international job
Comparative HRM was portrayed as a field of inquiry largely concerned with the
issue of how well an HR strategy that works effectively in one country and
culture can be transplanted to another work site overseas.
We indicated that international HRM and comparative HRM as fields of inquiry
have expanded over the past decade, but more research is needed to test the
links between international business strategy and international HRM. Studies
need to examine the barriers facing women who seek overseas appointments
Furthermore; research is needed to investigate HR practices in developing
countries. The mantra of high-commitment HR practices is hollow and
unconvincing when applied to organizational life in the export-processing zones
the next chapter examines some of the environmental factors that underlie
managerial decision-making processes in SHRM and international HRM.
Strategic management
Definition: strategic management refers to a pattern of managerial decisions and
actions that determines the long-run performance of the organization.

Model of strategic management

The prescriptive management literature describes many different strategic
planning models. Most however replicate what we have done, they reduce the
basic idea to the SWOT model.
Hierarchy of strategy
The prescriptive model depicts different levels of strategy: corporate, business,
and functional. Strategies must be integrated.
Business-level strategy and HRM
At functional level, HR strategy is formulated and implemented to facilitate the
business strategy goals.
Business-HRM links are classified in terms of low-cost, differentiation and focus.
Four simple business-level strategies are discussed with relevant examples: lowcost leadership strategy (e.g. Wal-Mart), Differentiation strategy (e.g. Tommy
Hilfiger), Focused low-cost leadership strategy (e.g. Rent-a- Wreck car hire) and
Focused differentiation (e.g. Mountain Equipment Co-operative).
Miles and Snows (1984) strategic models are examined: Defenders, Prospectors,
Analyzers and Reactors. Proactive - HR specialist helps formulate strategy.
Reactive - HR function is fully subservient.
Some models emphasize the importance of the environment as a determinant of
HR policies and practices.
Strategic HRM
SHRM literature is rooted in manpower [sic] planning.
Strategic HRM is described as the process by which managers seek to link
human assets to the strategic needs of the organization.
HR strategy is discussed in terms of an outcome the pattern of decisions
relating to HR policies and practices.
The Four-task model of HRM provides the rationale that guides the strategic
choice of HR policies and practices.
The environment as a determinant of HR strategy is examined as is the notion of
upstream or first-order strategic decisions. HR approaches are third-order
strategic decisions.
The matching model
In Devannas et al model, HRM strategy and structure are linked to and
influenced by environmental forces, figure 2.6.

This model proposes that SHRM should be concerned with matching the five ps
which reinforce employee role behaviour for each generic Porterian competitive
The notion of fit is also a central tenet of Beers et al model (refer you back to
chapter 1 and figure 1.3)
Limitations of the matching model.
Conceptual - predicted upon the rational view of strategic decision-making.
Empirical - limited empirical support for the model
Human resource strategy models
This section of the chapter examines the link between business strategy and HR
strategy. HR strategies are the pattern of decisions regarding HR policies and
practices used by management to design work, select, train and develop,
appraise, motivate and control employees.
Three models to differentiate ideal types of HR strategies:

Controlled-based model
Resource-based model
Integrated model

Controlled-based model discusses management structures and HR strategy as

instruments to control all aspects of the labour process in order to secure higher
efficiency and profitability. Individual, bureaucratic and technical controls are

Process-based control adopted when mean-ends relation are certain

Outcome-based controls adopted when means-ends are less certain

Resource-based model emphasizes the strategic value of human assets and

continuous workplace learning. Whereas the matching SHRM model focuses on
external Opportunities and Threats (from SWOT), the resources-based SHRM
model focuses on the strategic significance of internal Strengths.
Organizations can identify which resources are potentially strategic by using
Barneys (1991) criteria: a) valuability b) rarity c)inimitability d) substitutability.
The organizations resources and capabilities shape strategy (see figure 2.7).

Limitations of resource-based model

conceptual: conceptual vagueness, imbalance giving too much attention
to internal resources at the expense of external competition.
Empirical: little evidence that many firms have adopted the learning
organization or soft SHRM model.

Integrative Model characterizes two dimensions of HR strategy:


Acquisition and development focuses on internal human capital

Locus of control focuses on monitoring employees compliance

Two dimensions (a and b) yield four ideal types of dominant HR strategies:

commitment, collaborative, paternalistic and traditional.
Evaluating SHRM and HR Strategy
Critical organizational theorists have questioned the linear and rational choice
model because lack of information, time and cognitive capacity.
SHRM and HR strategy thesis focuses too much on the link between external
marketing strategies the HR function and pays insufficient attention to internal
operating strategies.
The notion that a commitment HR strategy follows from a real or perceived
added value competitive strategy is plausible in theory but problematic in
practice. Managerial behaviour is influenced also by the indeterminacy of the
employment contract.
Achieving the goal of close fit of business and HR strategy may contract the
goal of employee commitment and cooperation. The foregoing analysis suggests
that there is no one best way of managing contradictions.
Dimensions of Strategic HRM
This part of the chapter examines five important themes associated with SHRM.
With the exception of leadership, they provide an introduction to the following
chapters in the text.
Organizational performance - examines the HRM-firm performance link
and introduces you to some of the methodological challenges of measuring the
impact of HRM that are examined in more detail in Chapter 14.
Organizational architecture - it is claimed that the process leads to flatter
organizational structures, reengineering, redesigned work teams, use of IT,
senior management commitment.
Leadership - considered important in the soft HRM model in order to
develop a high level of employee commitment and cooperation.
Workplace learning - posited to be a central building block in the resourcebased SHRM model and in the learning organization. See also Chapter 9.
Trade unions - draws attention to the contradictions between the
normative HRM model and trade unions and introduces the debate on
partnership between management and unions
The importance of strategic human resource management in an organization
cannot be overemphasized due to the fact that human beings are the driving force
behind any organization. In this respect, organizations must be able to implement wellplanned and well-thought out strategic human resource ideas that will be implemented to
coordinate and channel the human capital into increased productivity. A solid human


resource strategy will allow an organization to have a good relationship with its workers
and to coexist peacefully and in a mutually beneficial manner with its host community.
One of the ways that strategic human resources management is beneficial to an
organization is the manner in which a properly implemented strategic human resources
plan will help a company attain its goals. When a company sets goals or targets that it
hopes to achieve, it is the employees who will perform the necessary duties geared
toward the attainment of that goal. This is where the importance of strategic human
resources in an organization can be seen, since the human resources department will
identify the key areas in the company that require manpower. This department will also
carry out the necessary steps toward the recruitment of the ideal candidates who cannot
only fill the vacancies, but can also help the company achieve its vision and other longterm or short-term goals
Strategic Human Resource Management is very important in order to gain competitive
performance by utilizing human resource of an organization effectively.
SHRM encourages managers to be proactive which means to think ahead.
Attainment of organization objectives through human capital.
It enhances individual performance by development of commitment at all levels.
It enables development of need based personnel policy/HR policy as a prerequisite for
optimum use of human resources.
Integration of HRM policy with business goals or objectives.
Developing supportive work culture in order to encourage creativity, team work, TQM as
well as innovation and a sense of belonging.
Creation of flexible environment because in flexible environment employees can easily
adapt to changing competitive environment.
Creation of flexible working hours/ function.
Integration of people related issues with business issues
2)integrating hr strategies with business strategies
Its time that HR became part of the overall business strategy. In 2009 an Aberdeen study
found that 60% of executives believed that the current state of the economy would
increase the importance their organizations placed on Human Capital Management. In a
time when business results are of utmost importance, and companies are increasingly
seeking efficiencies, human resources can be the difference between success and failure.
Many companies are willing to admit that their most important resource is their people,
but few are willing to put this belief in practice and fully integrate their Human Resources
strategy with their business strategy. Aberdeen found that 54% of Best-in-Class
organizations had aligned employee goals and development activities with business
priorities in 2008. This amounts to only a small percentage of all companies; however it
displays that aligning the human element with business goals results in overall success.
The good news is that this is changing. The 2009 Aberdeen HR Executives agenda report
found that 75% of executives surveyed indicated that HR had become more or
significantly more strategic over a two year period.
By the same study, Aberdeen found that that economic instability and uncertainty posed
by the economic downturn were their biggest pressures for best in class HR executives.
In order to overcome these pressures, HR executives need to align their Human capital
management priorities with the overall business goals. The study found that Best-in-Class
organizations implemented programs that aligned the workforce with organizational
objectives. In order to do this, they must collaborate with business managers to
understand business success criteria.
HR needs to integrate with business managers in order to determine the best HR
strategy in order to have the necessary resources for strong business results. This
includes full time hires, and contract and temporary workers. Contract and temporary
workers are often highly skilled and can be useful to an organization when specific skills
are needed for a particular project, but these skills will not be needed in the long term.

During difficult economic times, this is one of the most effective ways for an organization
to gain the necessary skills without compromising costs.
HR is one of the most important departments in the organization, because HR provides
the human capital that the business rests upon. HR needs to be integrated into the
overall business strategy so that businesses can acquire the full time and contract staff
that they need

Why policies are important

Policies serve several important functions:
Communicate values and expectations for how things are done at your organization
Keep the organization in compliance with legislation and provide protection against
employment claims
Document and implement best practices appropriate to the organization
Support consistent treatment of staff, fairness and transparency
Help management to make decisions that are consistent, uniform and predictable
Protect individuals and the organization from the pressures of expediency
Defining policy and procedureA policy is a formal statement of a principle or rule that members of an organization
must follow. Each policy addresses an issue important to the organization's mission or
A procedure tells members of the organization how to carry out or implement a policy.
Policy is the "what" and the procedure is the "how to".
Policies are written as statements or rules. Procedures are written as instructions, in
logical steps.
Steps in Policy Development
Your workplace is unique and therefore you may need to develop policies very specific to
your organization and type of work, for which there are no templates or benchmarks.
Typically, policy development will follow the following steps:

Step 1: Establish need for a policy

Step 2: Develop policy content

Step 3: Draft the policy

Step 4: Write the procedure

Step 5: Review of the policy by key parties

Step 6: Approve the policy

Step 7: Implement the policy

Step 8: Policy review and update

Step 9: Communication of changes to the policy

Demographic change will have an impact on organisations in two ways in the future.
First, they will find fewer young workers that can be employed and the average age of
the workforce will increase. Additionally the mandatory retirement age has been
increased in the past years - for example in Germany from 65 to 67 years - and it will
continue to rise as the current public debates show. This demographic shift yet is only
beginning to be addressed by many companies as a strategic HRM challenge. Especially
the questions on one hand how to guarantee a smooth transition into retirement for
those workers who are not able or not willing to work until the maximum retirement age,
and on the other hand how to retain key employees and their knowledge longer in the
company, have to be addressed. One possible instrument is the implementation of worklife balance accounts. Especially in Germany this instrument has received much attention
as the government has put into force new regulations on the design and handling of
work-life balance accounts through the so called Flexi II rules. Employees are putting
parts of their remuneration into these accounts and have the possibility of using the

saved money later on in their working life for either a long-term vacation (sabbatical) or
for an early retirement.

International HRM-

A central concern is the transferability of HR models on a global basis. This has accompanied the
intensification of global competition and the creation of virtual organizations.

Organizations seek to leverage human resources to compete in global terms. This affects
national patterns of employment relations. Features include HR practices relative to global and
local recruitment and selection, international training, international reward management and
performance appraisal (of expatriates). These features need to be sensitive to their particular
cultural contexts of application (cross-national).

Connections with MNCs mean that the employment relationship is affected by diverse national
regulatory frameworks and cultural/legislative contexts. These issues affect the ideal of a unitary
model for HR. Global influences are various or divergent on this issue and show the importance
of a distinction between differing institutional contexts when considering the HR practices and
models adopted in particular countries.

A debate has occurred relative to a distinction between International HRM and international
SHRM. The former has been indicated to be pro-western in ethos and orientation; whereas
SIHRM is described as connecting IHRM with the business strategy of a global corporation

SIHRM literature contains a tension between global competitiveness strategies (issues of

rationalization and integration) and the issue of local responsiveness. The cultural
connectedness of strategies when deployed in an international theatre is of significance.
Relative to these issues, the TNC (Trans-National Corporation) also known as the MNC
(Multi-National Corporation) has to achieve a dynamic balance between the issues of local
responsiveness and pressures for centralized control or direction of policies. The
international HRM cycle shows these aspects as features of cultural diversity and specific
employment regimes.

Tensions between head and sub-office are felt in the TNC at the level of international
recruitment and selection. These features express tensions between local cultural aspects
and expatriate staff at a centralized level.

Managers responsible for TNC HR practice need to have recognition of the contextual issues
specific to particular countries which relate to the issue of the apportionment of international
rewards. Relative to issues connected to international training and development, managers in
TNC must be able to transfer distinctive competencies from head office to local level. Integrated
performance appraisal is also best performed in the host country.
A question arising from the SIHRM issue is whether globalization augments a convergence of
HR practices and whether this reflects the dominance of US capitalism. This is known as the
convergence-divergence debate. Key features of this debate include:

A clear challenge exists to the idea of a dominant western ethos of HR practices. These
stem from local cultures/rationalities. This relates to the notion of varieties of capitalism.

However, it is argued also that the idea of an Anglo-Saxon HR linked to individualism,

which is universalist in nature cannot be easily located at the level of a particular
geographical locale like Asia or Europe. Within these geographical areas a lot of
diversity exists and there are particular national conceptions which can vary. For
example, in Europe the EU is a flexible affair which changes in time.

The idea of an Asian HR is deemed problematic. A great deal of diversity exists, just as
in the case of a European HRM.

Therefore at best a relative degree of convergence is argued as likely to be the result of

globalization with countervailing forces causing diversity in the way HR is adopted. The
TNC or MNC might potentially be a force which does contribute to the more homogenous
extension of a certain (pro-western) HR brand.

Temporary Contract Labour:

Temporary employees are hired to assist employers to meet business demands, allowing the
employer to avoid the cost of hiring a regular employee. Sometimes, it is the expectation of the
employer that if the temporary employee is successful, the temporary employee will be hired.

A temporary employee who demonstrates a good work ethic, fits the company culture, learns
quickly, regularly lends a helping hand, and doesn't need to be told what to do next, may receive
an offer of employment.

Most frequently, though, hiring temporary employees serves a business purpose for the company
and the objective is to hire temps rather than taking on the cost of a regular employee.

Business purposes include: seasonal customer demand, temporary surges in manufacturing

orders, an employee on sick or maternity leave, and short-term, clearly defined work such as a
census worker.

Temporary employees allow employers to maintain a cushion of some job security in employment
for regular workers. The temporary employees can be let go first in a business or economic

Temporary employees work part or full-time. They rarely receive benefits or the job security
afforded regular staff. A temporary assignment can end at any time depending on the employers
needs. In other ways, temporary employees are often treated like regular employees and attend
company meetings and events.

Employers will experience increased difficulty when scheduling temporary employees due to the
rules of the Affordable Care Act (ACA). Here's a summary of how it affects how you schedule
temporary employees and how many days they can work before they are eligible for health care
through the temporary employer.

Temporary employees are hired directly by the company or they are obtained from a temporary
staffing agency. If an agency provides the temporary employee, the employer pays a fee over and
above the compensation collected by the employee.

Temporary employees, who work through an agency, may have paid benefits such as health care
insurance. These employees remain the employee of the agency, though, not the employee of the
company where they are placed.

Online recruitment -uses the power of the internet to match people to jobs. Fundamentally, it is about advertising
vacancies on either job sites or corporate websites. At this very basic level it is particularly effective at getting a high
level of response. While it may generate hundreds more applications than traditional print advertising, simply attracting
more candidates is only part of the job. The current view is that truly effective online recruitment could be as low as 10%
of the top blue-chip corporate companies. The real strength and power of online recruitment, when done properly, lie in
harnessing internet technology to not just attract candidates but to deal with them too. In this sense it is also about
streamlining the recruitment process -so busy HR departments can give a better recruitment service to their colleagues in
finance, marketing, sales and manufacturing. Plus it frees up more of their time for more value-added tasks. A specialist
software provider, such as HR Portal, can develop bespoke application programmes for recruiters that will save time,
effort and money. They can automate the pre-selection process by setting 'killer questions' (that only the top candidates
will answer correctly), profiling and scoring, psychometric tests and automatic CV scans to look for key words such as
qualifications and experience.
What are the benefits of online recruitment over traditional recruitment?
There are many benefits to be had by recruiting online:.
1) Wide geographical reach-Advertising online opens up a much wider candidate pool than advertising in print. This
gives you a much better chance of finding the right candidate for the job. Note, however, this is only a benefit if sifting,
sorting and grading tools are applied to the applications coming in. Otherwise you'll have hundreds to go through
manually which becomes a liability. As we said, the advertising is only part of the effective online recruitment.
2) Speed-Jobs posted online go live in literally minutes and candidates can - and do - respond immediately. HR Portal has
a great statistic from one of its clients HFC Bank: from the vacancy appearing online to the candidate appearing in the
interview room took just three hours. While this was an exception, it proves it can be done. For companies needing to
recruit staff quickly to handle extra work, cover sickness, leave or other staff shortages, the option to advertise, select and
appoint people within (typically) 48 hours is a huge bonus.
3) Lower Cost-This may surprise you but technology in online recruitment is not expensive. By saving on time, design
and print costs and targeting precisely the best sites for the best candidates, online recruitment is a very cost-effective
option. Not only that, but the hours saved through automating the pre-selection process represent a considerable cost cut
in terms of HR time needed to get candidates to the interview stage. Suddenly, HR staff have time to do more productive
4) Automating the Process-The pre-selection process can be tailored to individual companies' needs. This way, you can
sift and sort candidates who meet your exact needs. Not only does this save time (and cost) it also results in a better
quality of candidate reaching the interview stage having already established they meet certain key criteria. Automating
the application process also gives a level playing field to all candidates - whether they come directly to your company's
site, via a recruitment consultant or in response to a print advertisement. For many larger organisations, achieving
consistency of handling candidates across many branches or regional offices can be a problem: online recruitment solves
5) Interaction with candidates-Working online via websites and email is the way of the future. It's not just the youngsters
who are logging on to find jobs either. Recent results from NORAS shows 35% of all users are over 35. It's quick,
personal and direct. Questions are answered in seconds and information is immediately accessible. What better way to
establish whether the candidate is right for you (and indeed that you are right for them)? Another benefit is that candidate
information can be held on file (your own searchable CV database). So if someone is not quite right for the job for which
they're applying, you can see if their skills and profile match another job better. Working online opens up communication
channels and enables you to go directly to the candidate either immediately or at a later date when an opportunity arises.

Employee referral -is an internal recruitment method employed by organizations to identify potential candidates
from their existing employees' social networks. An employee referral scheme encourages a company's existing
employees to select and recruit the suitable candidates from their social networks. As a reward, the employer typically
pays the referring employee a referral bonus. Recruiting candidates using employee referral is widely acknowledged as
being the most cost effective and efficient recruitment method to recruit candidates and as such, employers of all sizes,

across all industries are trying to increase the volume of recruits through this channel.Proponents of employee referral
schemes claim the benefits to be an improved candidate quality, fit, and retention levels, while at the same time
delivering a significant reduction in recruitment expenditure.However, there are a number of potential drawbacks. One of
the greatest concerns tends to be that relying too heavily on employee referrals could limit diversity in the workplace,
with new staff recruited in the likeness of existing employees. But, provided that there is already a diverse workforce in
place this ceases to be such an issue.

Improved candidate quality, fit, and retention-The one-to-one direct relationship between the candidate and the
referring employee and the exchange of knowledge that takes place allows the candidate to develop a strong
understanding of the company, its business and the application and recruitment process. With this information
the candidate is ideally placed to assess their own suitability and likelihood of success at the company and make
an informed decision, with the support of the referring employee as to whether to apply. This is the start of the
companys recruitment process where, at no cost to the employer, candidates and employees remove unsuitable
and poor quality candidates, from the recruitment process ensuring a consistently high quality of
applications.Candidates who are interviewed are thoroughly prepared resulting in superior interview to job offer
conversion rates. In addition, successful candidates get up to speed faster compared to other recruitment
methods. Candidate fit to the companys culture, departments and teams is improved as the expectations of
candidate and employer match. This significantly increases the level of staff retention and builds a loyal and
committed workforce - ultimately reducing the companys future recruitment requirements
Reduction in Recruitment Expenditure-Employee referral schemes allows existing employees to screen, select
and refer only the best candidates to the recruitment process. This eliminates the often considerable cost of third
parties service providers who would have previously conducted the screening and selection process.The costs of
operating an employee referral scheme extends to the cash bonus paid to employees and internal promotion and
administration, the total of which is considerably lower than the expense of recruiting using traditional
recruitment consultants, headhunters and online recruitment methodsAs candidate quality improves and
interview to job offer conversion rates increase, the amount of time spent interviewing decreases, which means
the companys Human Resources headcount can be streamlined and be used more efficiently. Marketing and
advertising expenditures decrease as existing employees source potential candidates from the existing personal
networks of friends, family, acquaintances and associates.The opportunity to improve candidate quality, fit,
and retention levels, while at the same time significantly reduce recruitment expenditure, has seen a dramatic
increase in the emphasis employers place on increasing the volume of recruits by employer referral. Through
referrals, employers can access employees' networks, through social media or personal networks, to find
qualified talents to fill the open positions, However, there are number of obstacles to achieving the desired

An employees social network is limited only a small proportion of the network may be suitable for referral

Recruiting from an employees limited social network may compromise the diversity of the workforce

Actively referring candidates increases an employees workload and may be detrimental to their main

The best and most relevant candidates may not be acquainted with an existing employee of the company and
therefore cannot be recruited via the referral scheme

The complexity of today's technology does not allow for easy employee referral management, states Founder
Kristy Schoenberg of Riferral.com[2]

An employee referral scheme is only as good as the volume and quality of candidates applying through the channel

Recruitment Process OutsourcingOutsourcing is the management and/or day-to-day execution of a business function by a third party service provider.
Outsourcing can be provided on or off premises, in the same country or in a separate country.Recruitment Process

Outsourcing (RPO)In most organizations, the recruitment function is either assigned to various people in HR or is
comprised of a dedicated group within HR. It is a critical function, which includes sourcing, assessment, interviewing,
and sometimes new-hire administration and orientation. An effective RPO arrangement involves standardized recruiting
processes and platforms for workforce planning, applicant tracking, and workflow. By specializing, an RPO firm can
invest in the most efficient technology and processes. They also reap significant scale advantages in relationships with
vendors in staffing search, online recruiting, recruitment marketing, background check and profiling, to name a few.

HEADHUNTINGUsed when there is a very defined background from which the recruiting company is looking for. Its ideal for when
someone wants a person who is from a competitor or where that particular expertise is employed in similar, but not
competitive organisations. It is not generally used for generic type positions which are generally advertised instead.
Headhunting is a direct and personalised approach that is made to the individual with a high degree of discretion where
particular expertise is sought. It is not large campaign management, database mining or social networking as you would
see for example on LinkedIn connections. A typical headhunt would involve commissioning an executive search firm
to help define and advise on the role to be recruited, pull together a target list of companies (anything from 20 - 50,
usually competitors) to headhunt into, identifying people in posts through research, seeking recommendations and
tracking high performance individuals. The search organisation will then contact these individuals. This could involve
contacting potentially hundreds of people. The list of individuals is usually supplemented by the headhunter's own
network of contacts often developed over years of relationship building. Harvey Nash's Executive Search & Leadership
Services division provides headhunting, assessment and a broad range of HR services and skills development for
clients.A more detailed explanation of the process can be found here.Headhunting is more than a process though its
also a protocol. Very few companies would recruit a senior exec without using an external headhunter.Headhunting is
nothing but a tendency of Organisations to attract/take Employees from other similar organisations....Specially
Rivals/Competitors.Generally, by offering them Huge Salary + Good Position...Consultancy offers Headhunting
services..and charge percentage on Selcted candidate's CTC

Quality of Work Life- is becoming an increasingly popular concept in recent times. It basically talks about the
methods in which an organisation can ensure the holistic well-being of an employee instead of just focusing on workrelated aspects.It is a fact that an individuals life cant be compartmentalised and any disturbance on the personal front
will affect his/her professional life and vice-versa. Therefore, organisations have started to focus on the overall
development and happiness of the employee and reducing his/her stress levels without jeopardising the economic health
of the company Each organisation has its own way of achieving this. But the most common elements adopted are

Work-life balance -is a concept that supports the efforts of employees to split their time and energy between work
and the other important aspects of their lives. Work-life balance is a daily effort to make time for family, friends,
community participation, spirituality, personal growth, self care, and other personal activities, in addition to the demands
of the workplace. Work-life balance is assisted by employers who institute policies, procedures, actions, and expectations
that enable employees to easily pursue more balanced lives.The pursuit of work-life balance reduces the stress employees
experience. When they spend the majority of their days on work-related activities and feel as if they are neglecting the

other important components of their lives, stress and unhappiness result. Work-life balance enables employees to feel as
if they are paying attention to all the important aspects of their lives.Because many employees experience a personal,
professional, and monetary need to achieve, work-life balance is challenging. Employers can assist employees to
experience work-life balance by offering such opportunities as flexible work schedules, paid time off (PTO) policies,
responsible time and communication expectations, and company-sponsored family events and activities.Managers are
important to employees seeking work-life balance. Managers who pursue work-life balance in their own lives model
appropriate behavior and support employees in their pursuit of work-life balance. They create a work environment in
which work-life balance is expected, enabled, and supported. They retain outstanding employees to whom work-life
balance is important.

Executive EducationExecutive Education programs offer a wide spectrum of courses that show you how to apply your skills and experience to
be an effective and productive leader. Companies BECOMES partnereS with renowned colleges and educational
institutions nationwide to deliver timely topics that enhance your leadership skills and strategic outlook. On top of the
enhanced learning, you can increase your recertification credits

Employee empowermentEmpowerment is the process of enabling or authorizing an individual to think, behave, take action, and control work and
decision making in autonomous ways. It is the state of feeling self-empowered to take control of one's own destiny.When
thinking about empowerment in human relations terms, try to avoid thinking of it as something that one individual does
for another. This is one of the problems organizations have experienced with the concept of empowerment. People think
that someone, usually the manager, has to bestow empowerment on the people who report to him.Consequently, the
reporting staff members wait for the bestowing of empowerment, and the manager asks why people won't act in
empowered ways. This led to a general unhappiness, mostly undeserved, with the concept of empowerment in many
organizations.Think of empowerment, instead, as the process of an individual enabling himself to take action and control
work and decision making in autonomous ways. Empowerment comes from the individual.The organization has the
responsibility to create a work environment which helps foster the ability and desire of employees to act in empowered
ways. The work organization has the responsibility to remove barriers that limit the ability of staff to act in empowered
Empowerment Is Also Known As:
Employee involvement and participative management are often used to mean empowerment. They are not really
Examples of Empowerment
These are examples of empowerment in action.

The manager of the Human Resources department added weeks to the process of hiring new employees by
requiring his supposedly empowered staff members to obtain his signature on every document related to the
hiring of a new employee. When the time problem was brought to his attention, he fostered empowerment by
telling employees they no longer needed his signature unless the hire involved extraordinary circumstances.

John empowered himself to discuss the career objectives he wished to pursue with his supervisor. He told his
supervisor, frankly, that if the opportunities were not available in his current company, he would move on to
another company.

Mary took charge of her career by fueling her sense of empowerment when she developed a career path plan,
met with her manager to ask for her assistance to achieve it, and set goals for its accomplishment in her
performance development plan.

The company's management style involved sharing the goals, sharing each employee's expectations and
framework with the employee, and then, getting out of the way while employees were empowered to set goals,
accomplish their objectives, and determine how to do their jobs.
Empowerment is a desirable management and organizational style that enables employees to practice autonomy,
control their own jobs, and use their skills and abilities to benefit both their organization and themselves.


Advantages of Multiskilling
Employees overcome feelings of having a dead-end job.
Jobs remain interesting and challenging.
Tedious tasks can be spread around, decreasing turnover.
Boredom in the workplace is reduced.
Cohesiveness is enhanced.
Multi-skilled workers have training and skills in more than one area of a business. For example, in a
manufacturing environment, multi-skilled workers may receive training in all aspects of building product, as
well as the ability to perform quality inspections. Such accommodations allows a firm to move workers
where they're needed from one moment to another. Companies cross-train employees to increase
productivity and reduce labor costs.

Flexibility-A company with multi-skilled employees has a flexible workforce, which provides the
employer with the ability to schedule and arrange workers to best suit the needs of the business.
Workers are able to fill in for absent employees and work in any area of the business that requires
increased manpower at any time, and for any duration. This allows the business owner to maintain
production levels under many circumstance that would otherwise leave workers idled or profits left
on the table.

Decreased Labor Costs-A business with a multi-skilled labor force can operate with a
reduced number of employees necessary to conduct business. Workers who are skilled in only one
area of the business may sit idle while waiting for work to become available. A multi-skilled
workforce moves with the workload instead of waiting for the work to come to them. This results in
fewer idle work hours, which reduces the cost to the business owner.

Efficiency in Planning-Planning and scheduling workers can make changes to the production
schedule to meet customer demand without a loss of productivity. For example, when a customer
requests a faster delivery, planners can adjust the production schedule to meet the new date
without disruption to production because all workers can focus on the new customer demand. In a
business with a flexible workforce, planning and scheduling activities can always focus on the
needs of the customer and not the capabilities of the staff.

Employee Satisfaction-Multi-skilled workers are not threatened by obsolescence when new

technology changes the method of production, as workers used to learning new skills consistently
can adapt to changes in production. Employee satisfaction improves morale in a business, which
leads to increases in productivity and employee retention rates.

Succession Planning
Succession Planning is an integral part of the strategic planning process and ties
to the institutions long-term goals and objectives. Effective Succession Planning
strategies mitigate risk associated with turnover and cultivate existing talent,
matching promising employees aspirations to the future needs of the institution.
Succession Planning ties to a wide-range of human resource management
functions, including the process of Recruiting employees, and developing their
skills and abilities through Performance Management, Training Programs and
Mentoring Programs. These programs help employees excel in current positions
and prepare them for advancement, increase retention and ensure a return on the
institutions investment.
The main objectives (and advantages) of succession planning are:
- Improved job filling for key positions through broader candidate search, and
faster decision-making
- Active development of longer-term successors through ensuring their careers
progress, and by making sure they get the range of work experiences they need
for the future

- Encouraging a culture of "progression" through developing employees who are

seen as a business resource and who share key skills, experiences and values
seen as important to the future of the business
Of the above objectives, it is the active development of a strong talent pool for
the future which is often viewed as the most important. Increasingly, this is also
seen as vital to the attraction and retention of the best people (particularly in
service businesses like the accountancy and legal professions).
How are succession and development plans produced?
Succession plans normally cover both short- and longer-term successors for key
jobs, and development plans for these successors.
Where a number of jobs are of similar type and need similar skills, it is
preferable to identify a pool of successors for this collection of posts.
Typical activities covered by succession planning include:
- Identifying possible successors
- Challenging and reviewing succession plans through discussion of people and
- Agreeing job (or job group) successors and development plans for individuals
- Analysis of the gaps or surpluses revealed by the planning process
- Review, ie checking the actual pattern of job filling and whether planned
individual development has taken place.
Succession Planning ProcessSuccession planning is a systematic approach to:
Building a leadership pipeline/talent pool to ensure leadership continuity
Developing potential successors in ways that best fit their strengths
Identifying the best candidates for categories of positions
Concentrating resources on the talent development process yielding a
greater return on investment.

Succession planning recognizes that some jobs are the lifeblood of the
organization and too critical to be left vacant or filled by any but the best
qualified persons. Effectively done, succession planning is critical to mission
success and creates an effective process for recognizing, developing, and retaining
top leadership talent.
There are several factors typically found in successful succession planning
initiatives. For example:
Senior leaders are personally involved.
Senior leaders hold themselves accountable for growing leaders.
Employees are committed to their own self-development.
Success is based on a business case for long-term needs.
Succession is linked to strategic planning and investment in the future.
Workforce data and analysis inform the process.
Leadership competencies are identified and used for selection and
A pool of talent is identified and developed early for long-term needs.

Development is based on challenging and varied job-based experiences.

Senior leaders form a partnership with human resources.

Succession planning addresses challenges such as diversity, recruitment, and retention.

EFFECTIVE SUCCESSION PLANNING The following information includes:
A graphic representation of a six-step process for effective succession planning
A table with descriptions of each step in this process.

What is Cross Cultural Training?

The term "cross cultural training" refers to a variety of different training
courses. Each in essence aims to develop awareness between people where a
In general, cross cultural training has two parallel approaches:
General Cross Cultural Awareness Training, and
Culture/Country Specific Training.

Cross cultural awareness training deals with the manifestations of culture in

the workplace and has many applications. Its main purpose is to evaluate

and constructively tackle the challenges cross cultural differences can bring
to the workplace.
A few examples of the courses we cover can illustrate the different
applications of cross cultural awareness training:
Cross Cultural Team Building Training will aim to raise team members'
awareness of each other culturally in order to foster mutual trust, respect
and understanding. The result of which will be clearer lines of
Cross Cultural Management Training aims to equip management staff with
the knowledge and skills to effectively supervise a multi-cultural staff. Cross
cultural awareness training results in a more convivial and understanding
work environment.
Cross Cultural Negotiation Training assists negotiators involved with
foreign clients or customers with whom they are discussing possible terms
and conditions.
Cultural Diversity Training offers HR staff support in helping them
understand their responsibilities to ethnic minority staff and/or look at ways
of nurturing harmonious inter-personal relationships at work.
Culture Specific Training is generally aimed at individuals or teams that
regularly visit a foreign country or who frequently interact with overseas
clients or colleagues. Such training usually focuses on areas such as values,
morals, ethics, business practices, etiquette, protocol or negotiation styles
with reference to one country. This better equips participants with the key

skills that will help in building successful business relationships.

For a full overview of cross cultural training courses run by Kwintessential,
please visit our Cross Cultural Courses page
Key Result Areas
Key Result Areas or KRAs refer to general areas of outcomes or outputs for
which the department's role is responsible. A typical role targets three to five
Value of KRAs.
Identifying KRAs helps individuals: Clarify their roles Align their roles to the
organisations business or strategic plan Focus on results rather than activities
Communicate their roles purposes to others Set goals and objectives Prioritize
their activities, and therefore improve their time/work management Make
value-added decisions
Description of KRAs
Key result areas (KRAs) capture about 80% of the department's work role. The
remainder of the role is usually devoted to areas of shared responsibility (e.g.,
helping team members, participating in activities for the good of the


KRAs [ KEY RESULT AREAS are managed by
These are the areas within the HR DEPARTMENT, where an
individual or group, is logically responsible / accountable
for the results.
To manage each KRA/ KPAs, a set of KPI are set .
KRA and hence KPI is attributed to the department which
can have effect on the business results and is
self measured where applicable.
1. Definition of Key Result Areas (KRA)
Key Result Areas or KRAs refer to general areas of outputs or outcomes for
which the departments role is responsible.
Key Result Area in simple Terms may be defined as Primary responsibilities of an
Individual, the core area which each person is accountable.
2. Importance of KRAs.
Set goals and objectives
Prioritize their activities, and therefore improve their time/work management
Make value-added decisions
Clarify roles of department or individual

Focus on results rather than activities

Align their roles to the organizations business or strategic plan
Communicate their roles purposes to others
3. Conditions of KRAs
Key result areas (KRAs) capture about 80% of the departments work role. The
remainders are usually devoted to areas of shared responsibility.
Each KRA should capture at least 5 % of work role
4. Types of KRAs:
Training KRAs
Management KRA
Purchasing KRA
Administration KRA
Finance KRA
Manufacturing KRA
Quality KRA
Marketing KRA
Sales KRA
Key result areas
It is vital to spend some thinking time really appreciating what the individual has to do in their job.
Make no assumptions at this stage; bear in mind that:

You may know the appraisees job, you may have held the job yourself, but with the rate of change
impacting on us all, you cannot make assumptions about what they find easy/hard and the systems
and constraints placed upon them.
ii) Remember - they are not you and when you did their job you did not have you
manager. You need to obtain feedback on your performance, also.

as a

Job Purpose
Start by defining the purpose of the job. This is a concise definition of why the job exists at all. An
example would be for a Management Trainer:
To develop all Middle Managers to competency level 3.
Remember to focus on why the job exists and not on what the person does. We often tell people
what we do (I fix machinery) or what our job title is (Im an Engineer) but we do not state why our
job exists, which is the vital one (I keep the plant operating).
Key Result Areas
Once the job purpose is clear, you can then identify five or six areas in which results must be
achieved if the job purpose is to be fulfilled. These are the broad areas within a job that change little
from year to year. Everyones job can be broken into key result areas.
For the management trainer, key result areas could be:

Design of solutions
Delivery of solutions
Evaluation of solutions
Client satisfaction
The KRA approach has three main advantages:

Areas such as innovation, client response time and staff development are
rather than being overlooked.


It is the first stage of objective setting.


It makes it easier to assess current performance.

The key result areas of a Human Resource Specialist may be:
Employee relations
Employee development
Compensation planning and administration


Policy development
Benefits administration
Career development
Statutory compliance
Human Resource information systems
Here is a list of key result areas which may appear in various jobs from one organisation to another:
General Management or Senior Executive
Internal operations
Market development
Organisational structure
Organisational vision and mission
Asset and liability management
Board of directors relationship
Financial strategy
Business development
Customer satisfaction
Community relations
Regulatory compliance
Finance and Accounting
Credit referencing
Management information
Capital expenditure
Financial analysis
Cost control
Internal audit
Regulatory reporting
Credit control
Financial records
Cashflow forecasting
New business acquisition
Territory management
Customer care
Lead generation
Lead follow up (internal and external)
Account management
Customer retention
Interpersonal skills
Negotiating skills
Product knowledge
Sales forecasting
Stock control
Labour relations

Health and Safety
Quality control
Record keeping
Promotional strategy
Market research
Field support
Marketing materials
Media relations
Sales support
Agency relations
Secretarial, Clerical and Administrative
Records management
Administrative support
Internal customer relations
Equipment maintenance
Forms administration
Supply maintenance and purchasing
Telephone coverage
Project support
Finally, key result areas for everyone in an organisation are:
Personal development
Professional development
Internal and external customer satisfaction
Public relations
Communication - oral and written
Interdepartmental relations
Project management
Once the key result areas have been established, you can then set specific objectives for an
individual within each accountability area.
How Should Goals and Targets be Agreed?
A major part of an appraisal is the agreeing of goals and targets for the following period. The time
spent before and during the review getting these right will ensure a better quality and more objective
assessment process at the next and subsequent reviews. Ineffective or badly worded goals and
targets are a common problem in reviews and can lead to ambiguous expectations, unexpected
results and quite costly inefficiencies within the organisation. The secret is to identify what it is that
needs measuring and to state the measurement in "output" terms rather than in "input" terms. That
means goals and targets should be about results not the processes and the procedures that need to
be followed in order to achieve those results. For instance requiring someone to attend six meetings
during the year or visit twelve potential new customers per month are both specific targets but where
is the benefit to the business in those targets being met? Anyone can attend meetings or visit people
but what about the outcome of those meetings and visits?
The value of objectives lies in making it clear what the staff member is to achieve during the reporting
period. To ensure the objectives are clear, they should be:

within the staff member's control

realistic in terms of skills and experience
important and not simply easy to measure

A method to ensure that goals and targets are of good quality is to use the SMART model:
Specific. Goals and targets should have a clear link to the organisational plan.

Measurable. All goals and targets should contain something to measure them by. The
measurements should be quantitative and qualitative.

Agreed. Both parties need to agree the objective. It should not be imposed.

Realistic. The realism should be in terms of the abilities and potentials of the
individual coupled with the needs of the organisation. The measures should be
attainable within the required time period and with the resources available

Timebound. The objectives should be achievable within an agreed timescale.

Objectives should be measured in output

If you cannot measure an objective for an individual, you must ask the question: Why does the role
exist at all? Here are some ideas about measurables:
Number of units produced/published/sent/received/processed/deadlines
Calls per hour/day/week
New products introduced
Grievances per 100 employees
Staff turnover
Customer complaints and compliments
Error rate or reworks
Returned goods
Sales increased
Profit increased
Increase in market share
Variance against budget
s spent
Overtime incurred
Reduction in number of minutes/hours/days etc.
Deadlines and schedules met
Average call response time
Projects completed per week/month etc.
Number of minutes between customers

Customer satisfaction
Repeat business
Key Result Area = Sales
Objective = Sell
x new product to customers
Measure = Number of units sold per new customer whilst maintaining gross
profit level of 25%

Key Result Area(KRA) and Key Performance Area(KPA)

Key Result Area(KRA) and Key Performance Area(KPA) , though the terms hold different
meaning but are often used interchangeably and more or less assumed to have same
applicability . The purpose of this post is to underline the basic differences between the
concept of KRA and KPA.
In relation to a job role, KRA defines the outcome or end result expected to be delivered
while KPA defines all the activities, not always result oriented, an individual has to perform
being on job.
Key Result Area
Key = crucial/main
Result = outcome/end/consequence
Area = space/range
KEY RESULT AREA = crucial outcome space
Point to note
-KRA is not the result.
-KRA is the area identified as important or crucial where a result will assist in the
achievement of the set objectives or goal.
-KRA defines what a job is expected to accomplish.
-KRAs might fall within the scope of Key Performance Areas (KPA)
Key Performance Area
Key = crucial/main

Performance = Achievement/Attainment
Area = space/range/field of operation
KEY PERFORMANCE AREA = Main achievement space
Point to Note
-KPA is the overall scope of activities that an individual on a job role has to perform.
-KPA is not always result focused.
-KPAs can be inclusive of KRAs
In organizations, each role or job has a Job Description (JD) which consist of all the
responsibilities the person on job has to perform. All the activities listed in JD falls in two
Category A List of functions and activities crucial or critical for the job role. These
activities form the KRA of the job.
Category B List of functions and activities associated with the job role but not truly
critical for the role. These functions are important for overall performance of the team,
department or organization as a whole and form the KPA for the job
Example :
Role Product Manager
Goal Ensuring delivery of quality product within schedule.
Key Result Area
1. Customer Satisfaction.
2. Product Management.
3. Operational Cost Control.
4. Quality Check.
5. . Record keeping.
Key Performance Areas
1. Maintaining good working condition in plant.
2. Optimum Resource Utilization.
3. Process Improvement.

4. Safety and Prevention planning and control.

5. Working within the companys SLA(Service Level Agreement), GRC(Governance,
Risk Management and Compliance) policies
Business Definitions
Key Result Areas refer to general areas of outputs or outcomes for which the departments
role is responsible.
Key Performance Areas are the areas within the business unit, for which an individual or
group is logically responsible

8) The Effects of Merit-Based Prom

otion Vs. Seniority
An organization seeking to promote its workers may choose to do so based
on seniority to take advantage of the employees' experience with the
organization and to reward them for their service. Another option is to
promote based on merit, a measure of the employees' contributions based
on performance. Each method offers potential advantages and
disadvantages for the
No Favoritism
A seniority-based promotion structure can eliminate the perception of
favoritism. Employers typically won't have to worry about a newer worker
coming in and quickly leapfrogging them to obtain a promotion simply
because they are friends with an upper-level supervisor or because of the
way they dress or that they are more effective at playing the game of
corporate politics. Instead, workers have a sense that if they pay their dues,
they will be rewarded at some point in the future.
Workplace Harmony
Promotion based on seniority can also help maintain a more harmonious
workplace. Workers who know they need to put in the necessary time with
the company before advancement opportunities present themselves are less
likely to resent those who attained promotion because they worked for the
organization longer. This can eliminate the backstabbing often associated
with merit-based programs where employees may attempt to present
themselves in the most favorable manner possible, sometimes by
attempting to make coworkers look incompetent.
Motivation Boost

A merit-based program, on the other hand, can provide motivation leading

to increased productivity. Workers who recognize that the best performers
are the ones who get ahead may put forth the extra effort they believe it
takes to receive promotions. For instance, salespeople who realize that a
sales manager position is awarded to the person with the highest sales
numbers may strive to produce the desired results, generating additional
revenue for the company in the process.
Reward for Ability
Workers possess varying levels of skills and abilities, and a merit-based
program rewards those who may have the most to offer the organization in
the long run. While tenured employees offer the benefit of greater
experience, this does not necessarily equate with more ability. A less
experienced worker possessing a greater flair for innovation or creativity
may be more likely to generate ideas that help the company move forward
in the future.
Merit as a Basis of Promotion
Merit is taken to denote an individual employees skill, knowledge,
ability efficiency and aptitude as measured from educational, training and
past employment record. The merits of merit system of promotion are:
1. The resources of higher order of an employee can be better utilized at
higher level. It results in maximum utilization of human resources in an
2. Competent employees are motivated to exert all their resources and
contribute them to the organizational efficiency and effectiveness.
3. It works as golden hand-cuffs regarding employee turnover.
4. Further it continuously encourages the employees to acquire new skill,
knowledge etc., for all-round development.
Despite these advantages the merit system suffers from some demerits.
They are:
a) Measurement or judging of merit is highly difficult.
b) Many people, particularly trade union
managements integrity in judging merit.


c) The techniques of merit measurement are subjective.



d) Merit denotes mostly the past achievement, efficiency but not the future
success. Hence, the purpose of promotion may not be served if merit is
taken as sole criteria for promotion.
Merit should mean future potentiality but not past performance in case of
promotion. Hence, it is suggested that organizations should measure the
future potentiality of the candidate based on the requirements of a job to
which he is going to be promoted and take it as merit rather than the past
performance. However, past performance can be considered in evaluating
and forecasting future success. Some of the demerits of this system can be
avoided if the organization views the merit as future potentiality.
9) Performance related pay
Financial motivation - Performance related pay
Performance-related pay is a financial reward to employees whose work is:
Considered to have reached a required standard, and/or
Is above average
Performance related pay is generally used where employee performance
cannot be appropriately measured in terms of output produced or sales
achieved. Like piece-rates and commission, performance related pay is a
form of incentive pay.
Whilst the detail of performance-related schemes varies from business to
business, there are several common features:
Individual performance is reviewed regularly (usually once per year)
against agreed objectives or performance standards. This is the
performance appraisal.
At the end of the appraisal, employees are categorised into performance
groups which determine what the reward will be (if any)
The method of reward will vary, but traditionally it involves a cash bonus
and/or increase in wage rate or salary.
Performance-related pay has grown widely in recent years particularly in
the public sector. This is part of a movement towards rewarding individual
performance which reflects individual circumstances.

According the Equal Opportunities Commission, a well-designed

performance-related pay scheme would have the following elements:
Objective setting Communication and understanding of objectives
Consideration of performance against objectives Translation of evaluation
into performance rating A link between ratings and the determination of
pay A separate appeals procedure
Disadvantages of Performance Related Pay
There are several problems with performance-related pay:
There may be disputes about how performance is measured and whether
an employee has done enough to be rewarded
Rewarding employees individually does very little to encourage teamwork
It may encourage unhealthy rivalry between managers
There is much doubt about whether performance-related pay actually
does anything to motivate employees. This may be because the performance
element is usually only a small percentage of total pay
A financial reward system for employees where some or all of their
monetary compensation is related to how their performance is assessed
relative to stated criteria. Performance related pay can be used in a
business context for how an individual, a team or the entire company
performs during a given time frame.
The Advantages of Multi-Skilled Labor
Multi-skilled workers have training and skills in more than one area of a
business. For example, in a manufacturing environment, multi-skilled
workers may receive training in all aspects of building product, as well as
the ability to perform quality inspections. Such accommodations allows a
firm to move workers where they're needed from one moment to another.
Companies cross-train
A company with multi-skilled employees has a flexible workforce, which
provides the employer with the ability to schedule and arrange workers to
best suit the needs of the business. Workers are able to fill in for absent
employees and work in any area of the business that requires increased
manpower at any time, and for any duration. This allows the business

owner to maintain production levels under many circumstance that would

otherwise leave workers idled or profits left on the table.
Decreased Labor Costs
A business with a multi-skilled labor force can operate with a reduced
number of employees necessary to conduct business. Workers who are
skilled in only one area of the business may sit idle while waiting for work
to become available. A multi-skilled workforce moves with the workload
instead of waiting for the work to come to them. This results in fewer idle
work hours, which reduces the cost to the business owner.
Efficiency in Planning
Planning and scheduling workers can make changes to the production
schedule to meet customer demand without a loss of productivity. For
example, when a customer requests a faster delivery, planners can adjust
the production schedule to meet the new date without disruption to
production because all workers can focus on the new customer demand. In
a business with a flexible workforce, planning and scheduling activities can
always focus on the needs of the customer and not the capabilities of the
Employee Satisfaction
Multi-skilled workers are not threatened by obsolescence when new
technology changes the method of production, as workers used to learning
new skills consistently can adapt to changes in production. Employee
satisfaction improves morale in a business, which leads to increases in
productivity and employee retention rates.
Multi-skilling can provide solutions to skills shortages
Succession planning is a process for identifying and developing internal
people with the potential to fill key business leadership positions in the
company. Succession planning increases the availability of experienced and
capable employees that are prepared to assume these roles as they become
available. Taken narrowly, "replacement planning" for key roles is the
heart of succession planning. Effective succession or talent-pool
management concerns itself with building a series of feeder groups up and
down the entire leadership pipeline or progression (Charan, Drotter, Noel,
2001). In contrast, replacement planning is focused narrowly on identifying
specific back-up candidates for given senior management positions. For the
most part position-driven replacement planning (often referred to as the
"truck scenario") is a forecast, which research indicates does not have
substantial impact on outcomes.

Fundamental to the succession-management process is an underlying

philosophy that argues that top talent in the corporation must be managed
for the greater good of the enterprise. Merck and other companies argue
that a "talent mindset" must be part of the leadership culture for these
practices to be effective.
Succession planning is not a new phenomenon. Companies have been
wrestling with ways to identify, develop, and retain their talent for decades.
So, why is succession planning suddenly popping up on every companys
radar screen? Todays organizations are facing higher demands in a global
market with the retirement of the Baby Boomers and the widening talent
gap. The home-grown and paper-based succession planning that companies
relied on in the past are no longer meeting the needs of todays workforce.
In order to achieve results, companies need to start with the basics, create a
strong process and then invest in the tools and technology to instill a talent
development mindset in their organization. This report highlights research
findings on succession planning efforts in Best in Class organizations across
multiple industries.
Succession planning is a process whereby an organization ensures that
employees are recruited and developed to fill each key role within the
company. Through your succession planning process, you recruit superior
employees, develop their knowledge, skills, and abilities, and prepare them
for advancement or promotion into ever more challenging roles. Actively
pursuing succession planning ensures that employees are constantly
developed to fill each needed role. As your organization expands, loses key
employees, provides promotional opportunities, and increases sales, your
succession planning guarantees that you have employees on hand ready
and waiting to fill new roles.
According to a 2006 Canadian Federation of Independent Business survey,
slightly more than one third of independent business owners plan to exit
their business within the next 5 years and within the next 10 years twothirds of owners plan to exit their business. The survey also found that
small and medium sized enterprises are not adequately prepared for their
business succession: only 10% of owners have a formal, written succession
plan; 38% have an informal, unwritten plan; and the remaining 52% do
not have any succession plan at all. The results are backed by a 2004 CIBC
survey which suggests that succession planning is increasingly becoming a
critical issue. By 2010, CIBC estimates that $1.2 trillion in business assets
are poised to change hands.

Research indicates many succession-planning initiatives fall short of their

intent (Corporate Leadership Council, 1998). "Bench strength," as it is
commonly called, remains a stubborn problem in many if not most
companies. Studies indicate that companies that report the greatest gains
from succession planning feature high ownership by the CEO and high
degrees of engagement among the larger leadership team[1]
Companies that are well known for their succession planning and executive
talent development practices include: GE, Honeywell, IBM, Marriott,
Microsoft, Pepsi and Procter & Gamble.
Research indicates that clear objectives are critical to establishing effective
succession planning.These objectives tend to be core to many or most
companies that have well-established practices:
Identify those with the potential to assume greater responsibility in
the organization
Provide critical development experiences to those that can move into
key roles
Engage the leadership in supporting the development of highpotential leaders
Build a data base that can be used to make better staffing decisions
for key jobs
In other companies these additional objectives may be embedded in the
succession process:
Improve employee commitment and retention
Meet the career development expectations of existing employees
Counter the increasing difficulty and costs of recruiting employees
Succession Planning - A 5 Step Process
Step 1: Identify critical positions
Critical positions are the focus of succession planning efforts. Without
these roles, the department or agency would be unable to effectively meet
its business objectives. Workforce projection data or demographic analysis
is essential in identifying risk areas. A risk assessment may also be

conducted and compared to current and future vacancies to identify critical

positions within your organization.
Step 2: Identify competencies
A clear understanding of capabilities needed for successful performance in
key areas and critical positions is essential for guiding learning and
development plans, setting clear performance expectations, and for
assessing performance. By completing the process of competency or
position profiling within your organization, current and future employees
gain an understanding of the key responsibilities of the position including
the qualifications and behavioural and technical competencies required to
perform them successfully.
Step 3: Identify succession management strategies
Now that critical positions have been identified and have been profiled for
competencies, the next step is to choose from a menu of several human
resource strategies, including developing internal talent pools, onboarding
and recruitment to address succession planning.
Step 4: Document and implement succession plans
Once strategies have been identified, the next step is to document the
strategies in an action plan. The Succession Planning: Action Plan provides
a mechanism for clearly defining timelines and roles and responsibilities.
Step 5: Evaluate Effectiveness
To ensure that the department or agencys succession planning efforts are
successful, it is important to systematically monitor workforce data,
evaluate activities and make necessary adjustments.

What is Competency?

Any underlying characteristic required for performing a given task, activity,

or role successfully can be considered as competency

Competency may take the following forms: knowledge, attitude, skill, other
characteristics of an individual including: motives, values, etc.

Competency can be defined as the process of identifying key attributes and skills for each
position and process with in the company.

What is Competency Mapping?

Competency mapping is the process of identification of the competencies

required to perform successfully a given job or role or a set of tasks at a
given point of time

It consists of breaking a given role or job into its constituent tasks or activities
and identifying the competencies (technical, managerial, behavioral,
conceptual knowledge, attitudes, skills, etc.) needed to perform the same

Competency mapping involves the process by which we determine:

The nature and scope of a specific job role, the skills required, the level of knowledge
required, and the behavioral capacities required to apply those skills and knowledge in
that role.

Competency Mapping plays a vital role in selecting, recruiting and retaining the right
people. When the competency required for a particular position is mapped, an accurate
job profile is created.

Problem with competency mapping A problem with competency mapping, especially when conducted by an organization
is that there may be no room for an individual to work in a field that would best make
use of his or her competencies.
Why? - Macro level

Who does?

Competencies can be identified by one of more of the following category of

people: Experts, HR Specialists, Job analysts, Psychologists, Industrial
Engineers etc. in consultation with: Line Managers, Current & Past Role
holders, Supervising Seniors, Reporting and Reviewing Officers, Internal
Customers, Subordinates of the role holders and Other role set members of
the role (those who have expectations from the role holder and who interact
with him/her)


HR Specialists

Job Analysts


Methods used for Competency Mapping

The various methods used in combination for competency mapping

Group work
Task Forces

Task Analysis workshops

Use of Job descriptions
Performance Appraisal Formats etc.

First: A job analysis is carried out by asking employees to fill in a questionnaire that
asks them to describe what they are doing, and what skills, attitudes and abilities they
need to have to perform it well
Second: Having discovered the similarities in the questionnaires, a competency-based
job description
Third: Having agreed on the job requirements, one starts mapping the capability of the
employees to the benchmarks










Need for Competency based PMS

APT Situations forMIXED MODEL Performance + Competency PMS

Uncertain Environments
Self Managing Teams
Qualitative/Process Service Jobs
Changing Organizational Strategy or Markets



Need for ensuring that competent people are available for performing various critical

Downsizing adds to the consequent need to get a lot of thing done with fewer people
and thus reduce manpower costs and pass on the advantage to the customer.

Recognition that technology, finances, customers and markets, systems and processes
can all be set right or managed effectively if we have the right kind of human

And recognition of the strategic advantage given by employee competencies in

building the core competencies of the organization.

Focus on performing Roles.

For time management

Building the core competition

Broad categories in competency Generic

Competencies which are considered essential for all employees regardless of
their function or level. For example - Communication, initiative, listening
skills etc.

Managerial Competencies
Competencies which are considered essential for managerial or supervisory

Technical / Functional

Specific competencies which are considered essential to perform a specific

role in the organisation within a defined technical or functional area of work.

Competency based recruitment Competency based recruitment processes reduce the chances of a costly hiring
mistake and increase the likelihood of identifying and selecting the right person for
the right job
Competency based Performance Appraisal Competencies enable
establishment of clear high performance standards
Collection and proper analysis of factual data against the set standards.
Conduct of objective feedback meetings
direction with regard to specific areas of improvement
Competency based Training Opportunity to identify/ develop specific training programmes
Focused Training enabling improvement in specific technical and managerial
Competency based Development Competencies
enhances the understanding of development and the individual gets the
necessary tools to take responsibility for their own development
give the managers a tool to empower them to develop people
Competency based Pay Provide an incentive for employees to grow and enhance their capabilities

Advantages of Competency Mapping


Establishes expectations for performance excellence.

Improved job satisfaction and better employee retention.

Increase in the effectiveness of training and professional development programs

because of their link to success criteria.

Provides a common, organization wide standard for career levels that enable
employees to move across business boundaries & help companies raise the bar of
performance expectations.


Identify performance criteria to improve the accuracy and ease of the selection

Provide more objective performance standards.

Easier communication of performance expectations.

Provide a clear foundation for dialogue to occur between the managers and employees
and performance, development and career-oriented issues.


Identify their strengths ,weaknesses & behavioral standards of performance


Provide a more specific and objective assessment of their strengths and the tools
required to enhance their skills.

Enhances clarity on career related issues.

Helps understand where they stand.

Disadvantages of Competency Mapping

Some of these are discussed below:

There may be no room for an individual to work in a field that would best make use
of his or her competencies.

If the company does not respond to competency mapping by reorganizing its

employees, then it can be of little short-term benefit and may actually result in
greater unhappiness on the part of individual employees.

If too much emphasis is placed on 'inputs' at the expense of 'outputs', there is a risk
that it will favor employees who are good in theory but not in practice and will fail to
achieve the results that make a business successful.

Model of Competency Mapping

A competency mapping model is an organizing framework that lists the competencies required
for effective performance in a specific job, job family (e.g., group of related jobs), organization,
function, or process.

Individual competencies are organized into competency models to enable people in an

organization or profession to understand, discuss, and apply the competencies to workforce


Strategize assess business needs, evaluate contextual drivers etc.

Initiate identify methodologies, develop project plans, review existing data etc.

Model analyze and synthesize data, identify competencies etc.

Pilot develop implementation and evaluation plans, develop and initiate competency
applications etc

Link link to all human resources system components and phase in implementation of other
competency' based applications.

Evaluate establish and evaluate measures, and continuously improve the system.


Collection toolsBehavioral Events Interview

Expert Panels
Job Analysis
Role Analysis
Direct Observation

As a conclusion we can say that, it is through the competencies of its employees
executives, managers, and individual contributors that an organization
executes its strategy and achieves results that are crucial to its success.

Upward or vertical movement of employees
Promotion results into more pay, prestige, responsibilities, and position with in
Purpose of Promotion
1) Motivate employees
2) Attract and retain talented people
3) Recognize and reward efforts and efficiency
4) Increase effectiveness and efficiency of employee
5) Fill up higher posts form within the organization
6) Build loyalty and morale
To provide career development path

Principles of Promotions-

HRM must clearly established policy whether to promote from

with in to fill higher vacant position or from recruitment of
external candidate

Basis of promotion (seniority or performance)

Promotions against vacant positions or non vacant positions (time


Frequent promotions are not good practice

Promotions decision must be made based on job analysis and

performance appraisal

Clear promotion policy and communication to employees

Promotion based on competence must be advertised on notice


Objectives of Performance-Based Pay

Use of Performance-Based Pay within an Integrated HRM System

Designing Performance-Based PayTo be effective, performance-based pay must successfully deal with:
Specifying and measuring performance
Specifying the methods for linking pay to performance
Specifying the level of aggregation for reward distribution
Specifying the type of reward
Specifying eligibility for rewards
Gaining employee acceptance

Why Employees Oppose Performance-Based Pay-

Profit Sharing


Current distribution plans: a percentage of profits distributed is

quarterly or annually.
Deferred distribution plans: funds are distributed at retirement,
termination, death, disability

Strategic Objectives:

A criticism of profit sharing:

it is difficult for employees to
see the connection between
their performance and profitability.

Stock Ownership

Employee Stock Ownership Plans (ESOPs)

Stock Options

Grant shares of stock to employees as a means of long-term savings

and retirement.
Not tied to individual performance

Give employees right to buy company stock at later date at price

established when the purchase option was granted.
Executive stock options:

Often exceeds all other compensation

Encourages executives to think like owners?

Types of Base Pay SystemsJob-based

Pay the job (not the person)

Market-based (external equity focus)
Point factor-based (internal equity focus)

Skills / knowledge-based

Pay the person (not the job)

62% of F1000 firms used some type of skill based pay in 1999

When to Use a Job-based Pay Policy

A job-based pay work best in situations where:

Job duties are stable.

Skills are generic.
Employees move up through the ranks over time.
Jobs are fairly standardized within the industry.

Drawbacks of a job-based pay system

Discounts individual ability.

Discourages lateral movement.
Tends to be bureaucratic, mechanistic, and inflexible.
Employees perceptions of equity are more important than market or
point data.

Variable Pay Incentives

Linking performance to pay

Individual Bonuses, piece-rates, stock options

Team Bonuses and awards
Plant / Unit / Business Gainsharing, profit sharing
Corporation ESOPs

Line of sight is the perceived link between individual behavior and the reward.

Factors for Successful Variable Pay Plans-

Conditions for Successful Team Incentives-

Profit Sharing
Profit Sharing

A system to distribute a portion of the profits of the organization to

Primary objectives:
Improve productivity
Recruit or retain employees
Improve product/service quality
Improve employee morale
Disclosure of financial information
Variability of profits from year to year
Profit results not strongly tied to employee efforts

Employee Stock Ownership Plans (ESOPs)

Employee Stock Ownership Plans

ESOP Advantages

A plan whereby employees gain stock ownership in the organization

for which they work.

Favorable tax treatment for ESOP earnings

Employees motivated by ownership in the firm

ESOP Disadvantages

Retirement benefit is tied to the firms performance

Management tool to fend off hostile takeover attempts.

Arguments in the Executive Pay Debate-

Objectives of Performance-Related Pay (PRP)

Motivate all employees, not just the high-flyers.

Increase the commitment of employees by encouraging them to identify with its

mission and values.

Reinforce existing cultures and values to foster high levels of performance,

innovation and teamwork.

Help to change cultures where they need to become more performance- oriented
and results-oriented; or where the adoption of other new and key values should be

Discriminate consistently and be equitable on the distribution of rewards to

employees according to their performance results and contributions.

Deliver a positive message about performance expectations of the company

focuses attention on key performance issues.

Direct attention and endeavour by specifying the organizations performance goals

and standards.

Emphasize individual performance or teamwork as appropriate.

Improve the recruitment and retention of high-quality staff.

PRP costs will be in line with company performance.

Competence and Performance-Related Pay Curve-