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Aligning HR with strategy

Presented by
Ishu Priya
 
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j HR field has dramatically changed in the last few

years

j Importance of HR dept. to involve in the strategic

planning. E.g. talent management.

j Competitive advantage

  



˜ 

˜ Changes in market conditions, economic

conditions, labour markets, industrial
structure and international competition
˜ importance HR as a competitive
advantage.

˜ HR strategy is defined as the set of

ideas, policies and practices that
management adopts to achieve a people
management perspective.

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˜ 

˜ chuler (1992) developed a ͚5-P model͛ of HRM that melds five

HR activities (philosophies, policies, programs, practices and
processes) with strategic business needs, and reflects
management͛s overall plan for survival, growth, adaptability
and profitability.
Πm
 º Organization͛s attitude towards its HR & how they
should be treated & the role they should play in the success of the
business. Found in its values/mission statement ˜ culture. e.g
creating value through leadership & excellence@ Pepsi-cola

Πm



guidelines about mgmt. of people NOT HR policy manual,

these polices have an effect on the immediate future success of
business.
 O

   

   

˜ m 
coordinated HR efforts to initiate and sustain strategic
organizational change . These programs help in indentifying the
nature and scope of the strategic changes initiated by the
organization

˜ m 

deal effectively with performance problems, encourage
creativity in workplace, form work teams & involve employees in
decision making.

˜ m
involves identification, formulation and
implementation of HR activities to meet strategic goals of
organization.
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  how to treat and value people
Õ

  how to treat and value people
Õ
 
  guidelines for action on people-
Õ
 
 
related guidelines
business issues for
andaction on people-
HR Programs
related business issues and HR Programs
Õ
   efforts to facilitate change to
Õ
  
address majorefforts
peopletorelated
facilitate changeissues
business to
address major people related business issues
Õ
    needed role behaviors
Õ
    needed role behaviors
Õ
     how these activities are carried out
Õ
     how these activities are carried out

  
  
  

Ô 

 
  
 
pecialize Change according to external needs of
work
Formulate rules & procedures; strict Good communication; flexible rules &
implementation regulations
HR policies interdisciplinary
Transactional; short term objectives Transformational; change agent
People as means to do work People as intellectual assets ʹ competitive
advantage
Changes are slow Proactive & systemic changes

  
 
  
  


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Õ
.

,
select, design and
implement planning & appraisal systems for
employees.
  ,
implement policies and procedures;
improve administrative system;
r 


  
  

j hort-term mentality / focus on current performance

j Lack of technical knowledge
j Inability of HR to think strategically
j Failure to understand general managerOs role as an HR
manager
j ×ifficulty in quantifying many HR outcomes
j Perception of human assets as high-risk investments
j Resistance (of employees) to change

  
  
  

j Two models are important
ü Model of best practice
ü Model of strategic change
˜ Model of best practice
ü Tyson and ×oherty developed a model of best practice that
helps in analyzing best practices according to requirements.
These outcomes are based at three levelsº
trategic level
Operational level
Business process level

  r 
 

j Recruiting and selecting employees with desired

competencies

j Value of the approach ˜ effectiveness and

efficiency

j Effectiveness defines as extent to which the HR

×ept. give importance to org. objectives

j Efficiency defined by the achievement of the

objectives in a cost effective manner.
 
  
j Implement major changes

j Identify programs and policies ˜

integrate with production/
service delivery systems
  
  
j Competencies are created to give
competitive advantage.

j ×evelop sound recruitment and

retention strategies

j Performance assessment and

training
 r  
 

j Employees should be involved in

framing policies

j Policies ˜ fair and unbiased

j Equal weightage to all

stakeholders

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j A flexible model for integrating strategic change

was developed at Harvard university.

j This model was called ͞The Map of HRM

territory͟

j Legitimate interest of shareholders and

stakeholders in organization aligned with HR and
Business strategy

  

 

 


  


† takeholder mgmt.
† Employee groups
† Govt. Community 



 

† Employee 
 R


† Influence † Commitment
† HR † Competence

† flow † Individual well-
† Congruence
† Reward being

 
 
  † Cost
systems † Organiza.
† Effectiveness
† ´orkforce † work systems Effectiveness
characteristics. † ocial well-being
† Business strategy
† Mgmt. philosophy
† Labout market
† Unions
† Technology
† Law & societal values
 
    

j u


has developed a set of
propositions based on the Harvard Modelº
ü trategic integration - HRM issues with strategic
plan

ü High commitment - to org. goals

ü High quality - goods & services

ü Flexibility - ability of org. to adjust to changing

business environment
  
 


j Hendry & Pettigrew͛s integrative approach that

integrates all modes of HRM like staffing,
recruitment & training.

j This model is called ͞


 

 




j This model explores implications of employee

relations on various approaches to strategic
management.
  

Ô Ô
  
 
á

† socioeconomic
† technical
† political

à

† Culture, tructure
† Politics / Leadership
† Task-technology
† Business outputs

r

 
 

† Role
† Objectives
† ×efinition
† Product-market
† Organization
† trategy & tactics
† HR output



† HR flows
† ´ork systems
† Reward systems
† Employee relations
  
 
   


j How org͛s transformed are being from personnel

into HRM
j Classified into four areas
ü Beliefs & assumptions ʹ about tasks to be
completed, nature of human relations
ü trategic concepts ʹ key corporate planning
ü Line mgmt. ʹ mgmt. skills
ü Key levers ʹ selection, job design, pay, training &
development
  
  
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j By developing policies and programs after aligning biz

strategy with HR foll. Objectives will be achievedº
ü Competitive work practices

ü Global practices help the organization to move faster to change

in the international work environment.

ü Effective remuneration & performance policies that can

motivate employees

ü Effective succession planning through recruitment & selection

strategies
 
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 

1. Management values ʹ people as assets

2. Attitude towards risk ʹ training as risk

3. Employee skills ʹ retention strategies

4. Cost benefit analysis ʹ experience &

commonsense

5. Outsourcing ʹ focus on core competency ʹ

competitive advantage
 
     
j American accounting association (1970) defines it as the human
resources identification and measuring process and also its
communication to the interested parties.

j Rensis Likert (1967) first used the term Human asset accounting ʹ
now replaced by Human resource accounting.

j Likert designed a human capital balance sheet ʹ investments in

replacements and development were balanced with losses thro͛
attrition and amortization
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Ô 

j HRA is a management tool which is

designed to assist senior
management in understanding the
long term cost and benefit
implications of their HR decisions so
that better business decisions can be
taken
 ´   
j According to Likert (1971), HRA serves the following
purposes in an organisationº
ü It furnishes cost/value information for making management decisions
about acquiring, allocating, developing, and maintaining human resources
in order to attain cost-effectiveness;

ü to monitor effectively the use of human resources;

ü It provides a sound and effective basis of human asset control - whether

the asset is appreciated, depleted or conserved;

ü helps in the understanding the financial consequences of various HR

practices.
  
   


j An individual's conditional value is the present worth of the

potential services that could be rendered if the individual
stays with the org. for X years.
j Conditional value refers to the combination of
productivity, transferability and promotability.
j Conditional value when multiplied with probability factor
(time a person will stay with the org.) will give the expected
realizable value.
j Realizable value gives a measure of a person͛s value -
increases as the individual͛s learning increases.
 
  
  

j Two major sources º

ü Productivity

ü Added Value

j Productivity is the level of output generated by a

given level of input.

j Added value can be defined as the wealth

created through the efforts of the enterprise and
its people.
 
   

j Measure productivity and compare with industry standards

j increase in productivity leads to increase in sales, profits which

increases the performance of the organization

j Limitations ʹ This method assumes same average costs for all

employees. Also temporary basis employees cannot be accounted
for.

j hould take into account total cost of contributing labor

 
  
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j Tie pay to individual performances.

j Base pay ʹ decided on basis of seniority of
performance - with variable element (determined on
the basis of individual performance) and an incentive
(if the person performs exceptionally well).
j Incentives motivate individuals
j tock options aim to distribute benefits of achieving
capital growth & to align employee rewards with that
of the shareholders.
   
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j Labor turnover is calculated by taking the

ü no. of employees leaving in a time period/ avg.
no. of people leaving over a time period.

j does not indicate the reason for attrition

j Lost time and company spent on recruiting and

training

j Conduct exit interviews


 

j Recommended HR audits for calculating value of

HR

j Four factors
ü Quality of procedures and practices

ü Cost benefit analysis

ü Ability of staff to perform tasks effectively

ü Customer satisfaction
jThank you