Ms HUMAN RESOURCE PLANNING, INTRODUCTION | . concerning licies and practices associated li all functional area HR strategy is the pattern of decisions with the HR system. Each organizational system encor agen of an ceqarication and thereby helps in formulation of organization wide strategies. Strategic Human Resource Management (SHRN) isa competency based approach for management of HR. It focuses on devel loping competitive advantage. . IN STRATEGIC MANAGEMENT ies which defi , Behavioural “There are a number of theories which define the role of HR stratr6Y 0 rple theory, pioneered by Katz & Khan (1978), Jackson & Schuler (199% 95), considers msiders employee behaviours as key to successful strategy implementation. By aligning ization wide strategy, employees can fulfill | HR policies and practices with orga | their role expectations within the organization. Resource based theory of Barney | (1991) and Prahalad & Hamel (1990) suggests Hit Fas the susta} able competitive ~_ advantage for the organization. This is because HR is characteristically rare, inimitable and non-substitutable source for achieving competitive advantage. \ Other resources do nat have such characteristic features. The human capital 7” theory of Becker (1964) suggests strategic importance to HR like other economic ssstvas knowledge, skills and abilities ofthe people also have economic values. / This concept later developed the human resource accounting by Flamhdlté (1981) and others Transaction cst theory of Williamson (1981) suggests that strategic | HR approach ean ensure cost minimization as this will enhance periodic | monitoring and governance. Agency theory of Eisenhardt 1989) suggests, strategic approach to HR aligns agents (employees) and principals (employers) interests and thereby, ensures streamlining of employment rélations and systems within ROLE OF HR STRATEGY ! 2 organization. Il the above theories [Link] of HR with organization wi ganization wide stral | i aad therefor, they ae grouped under Rational Choice theories of HR. Institution! |. (Meyer & Rowen, 1977, Powell & DiMaggio, 1991) and Dependency (Pfeffer | Salancik, 197) theories on HR strategy, however, focus On oe ea | oe This is because the strategic approach to HR is not empirically proved as a contributor to organizational performance. While Institutional theory argues satepc linkage and acceptance from stakeholders, Dependency theory as || this will unduly enhancé the level of influence over the organizati from : and thereby will defeat, the purpose. ey | Prima face, environmental, organizati | een al, organizational, institutional and i ate potential infh vencers in strategy. The relative importance of etn one ‘epend on organizational characteristics. However, for Rr ar a , We need to Scanned with CamScannera i ' 4 puan RESOURCE POUCIES AND STeATEGiES ° a ¥ Fee ee yanizateal t t0 OF else this wll not be a strategic decision for sustaining organi Srowth and profitability. Any redundancy decisi without considering the possible i i fine, or 50 as to meet stakeholders’ expectations. tegy is primarily concerned with: { ‘e The scope ‘of an organization's activities. ©. Matching the activities of an organization to that entironment in which it operates. ’ ' @ Resource implication. © Operational decisions. © The values and expectations of stakeholders. © Long-term direction., of Strategy : , Corporate Level: Corporate level strategy addresses the following issues: ~ Overall scope of an organization : - How to run in structural and financial terms ~ How resources are allocated to different operations. te level strategy is influenced by the mission of the organization. Competitive or Business Strategy: These strategies are adopted in order to strengthen the position of the organization in the market. It explains: ~ How to compete in.a market ~ Which products or services should be developed and offered to which _ Markets Scanned with CamScanner© > To what extent it meets customers needs Does it achieve the objective of the organizations, viz., long-term 7 Profitability, market growth and efficiency. Operational Strategies: Operational strategies are adopted at the functiona, an organization to achieve the corporate level and competitive strategies, | Strategy therefore, is either the plans made or the actions taken to help an \ organization to fulfill its intended purposes. Strategic plans for the future are HUMAN RESOURCE PLAN, : level and the success at the functional or operational level ultimately enables | called intended strategy and strategic actions are known as realized strategy | Strategic means are plans and policies while strategic ends may be either = (vision and mission) or focussed ([Link] objectives). WHAT Is POLICY? oT to accomplish the strategic intent. Policy is not a strategy or tactic. Strategy is a Proposed course of action to exert a far reaching impact on the ability of the | y enterprise to attain its goals. Strategy relates to means. decisions and structured thought processes. Objectives are specific goals or aims, individual or group seeks to accomplish. Hence, an objective is something to accomplish, while a policy is a guide to accomplish it ‘Again policy is different from procedure, as procedure defines the manner ot way of accomplishing something, ic, itis the process and method. While policy forms part of a framework of general principles, a procedure necessarily indicates how to do something and direct employees towards the accomplishment of goals. Policies are also differentiated from programmes. Programmes are developed ot the basis of policies with a view to implementing them and accordingly programmes involve one additional step beyond. Policies to simplify the decisions The execution of programmes leads to specific actions including’ practices and procedures. Scanned with CamScanner Policy can be differentiated from objective, programmes and procedures. Policy relates to the fundamental framework of principles and rules which are used as. | reference information for decision making and provide a constant pattem of | preferably in quantitative terms and can be considered as something which an | A policy is a pre determined established guideline towards the attainment of | accepted goals and objectives. Such guidelines facilitate properly designed efforts |RESOURCE POLICIES AND STRATEGIES a R POLICIES AND PROCEDURES policies in the management of HR cover a wide variety of subjects. A comprehensive coverage of policies embrace any action or decision, taken by ‘either employees or management in relation to the working environment, the rights and responsibilities of employees and management, and the action of both patties. Thus. one policy may bea statement of standards for employee attendance and another a statement of management obligations in grievance administration. One policy may explain conditions under which loans will be. granted whereas another may indicate conditions under which an employee is subjected to discharge. : . procedures prescribe the details for carrying out policies. They spell out the specific rules and regulations, the steps, time, place, and personnel responsible for implementing policies. Procedures also clarify what is to be done in particular circumstances. : - HR PROGRAMME HR programme consists of the entire broad course of action governing employees at all levels (including management) in a firm. Like any other programme of management, it can be thought of as a "stable plan of action that continues over an extensive period of time." It is the end product of philosophy, values, concepts, principles, policies and procedures. Some universal elements in a HR programme are: 1. Employment - Selection and job change, 2. Training and development, 3. Communication, : 4. Grievances and discipline, 5. Wages and salary, 6 Health and safety, 7. . Benefits and services, Z 8. Labour relations 5 9. Research Scanned with CamScanner4 HUMAN RESOURCE PANG CONSIDERATIONS IN DEVELOPING HR POLICIES Statements of policy constitute criteria for making decisions. They render decision making easier, more routine. They permit decisions on problems without detaileg analysis and thus facilitate saving of precious time. { Policiés provide a clear idea of what management and employees can expec, fore, policies promote consistency and fairness of action under conditions that are similar in character and eliminate any bias in employee related decisions, ‘This way, policies help to avoid confusion and misunderstanding. Policies may originate from anywhere inside an organization or from external Sources - the community, state and national legislation, changes in the economy, and even international forces, such as war time or defence conditions. Internally, Policies have their inception in employees’ suggestions or complaints, in collective bargaining, and at any level of management - staff or line. j The approval of sew or chahged HR-policies ultimately come from top management. However, the responsibility for administration rests with the line, | An effective HR department recommends. policies and ‘policy changes that it considers appropriate for the benefit of the organization. The HR department also has to assist in communicating policies to those who should know about them. There are many ways of communicating the policies, like; standing orders, house journals, circulars or through a documented policy manuals. HR department interprets policies, exercises control over policy administration and Periodically reviews the same in order.o ensure fairness and uniformity. careful thought, it is necessary-to anticipate circumstances that may igination is required here, as well as prea of operating problems. Supervisors are in a good pect i Sees ane ti ; Projecting exigencies that can arise under a Particular Policy. . SS Scanned with CamScanner‘HE RISKS .-— 2 “here a downside to strategic HR planning? The strategic managen 3 human resources Se ‘ems beneficial, but some researchers point out that ue So ieearch ghows that these include the Increased time and ¢ wr mn ial natn rg Se ave commitments to employees, and an overconcern with employee reaggn sat may be Incompatible with industry conditions. AS anyone who has gon, through the strategy formulation and implementation process understands hase is relatively easy; motivating employees to commis strategy formulation pl the strategy and implement It is far more difficult. A further problem is that _ HR plan forthe future may create employees’ expectations that they have en for life and will be trained for those jobs, whereas the reality Is that condition, change, and the plan may change, resulting in job losses. ‘Another problem, some would argue, is that organizations that commit ty one strategy become blind to changes in the environment and lose their flextbity However, incremental adjustments [Link] environmental, scanning are part | strategy implementation. The risk of not having a strategy seems greater. ‘There are risks to not developing a strategy. Organizations that do not acti scan the environment face the danger of being out of touch with reality, Todays operating decisions may be based on yesterday's conditions. Comfortable wi past success, the managets in these organizations focus on resolving internal problems, much like those who concentrated on mak'ng better horse carriages when automobiles were on the horizon. (One example of a company not in touch with reality was Consumers Distributing. It did not develop a strategy to match or surpass the changing ds} tribution networks and customer-service levels of its competitors. The company now bankrupt, continued to require customers to come to the stores and stand in line, often for out-of-stock items. Meanwhile, their competitors were offering elec tronic purchasing or were providing greeters at the door of the store who helped the customers find anything they wanted, all for a competitive price. MacMillan argues that firms that develop strategies gain an advantage and control their own! destinies# An apt cliché is “an organization that fails to plan, plans to fail” LINKING HR PROCESSES TO STRATEGY ____— Strategic HRM has to facilitate the formulation and implementation of corpora and business-level strategies. Senior managers naust focus on issues such What are the HR implications of adopting a strategy? What are the internal até external constraints and opportunities? Exactly what policies, practices, and phi} ldsophies contribute to the successful implementation of the strategy? The basic premise is that every HR policy and practice must directly suppor the organization's strategy and objectives.? This does not happen as frequently asi should. Aligning HR strategy with business strategy can be done in one | of these wal} 1. Start with organizational strategy and then create HR strategy. 2. Start with HR competencies and then craft corporate strategies based 0" these competencies, 3, Do a combination of both in a form of reciprocal relationship. Let us examine each approach. A Scanned with CamScannercorporate Strategy Leads to HR Strategy wraiwonal perepecive of HR planning views HRM porte srategy: I other words, personnel need | ctor irm decides to compete on the basis of offe good ist cient Gee Programs as flowing from s are based on corporate ra ring low-cost pati sand practices must align and be bi Products, HR alicies and PI ign and be based on low labour cost 7 ‘example. To illustrate the alignment of HR ope a th bestooss Steg HR Planning Today 2.3 focuses on two strategies under Porter's madel: recog HRM hel practices jow-cost-provider strategy and the differentiation strategy. Alth uelow et tne importance of HRM, and even concedes tine in cove tenn ids the key to competitive advantage, he dia not delineate any specific that can be aligned with business strategy. HR Planning Today 2.3 provides one of the few “recipes” for using HR strategies to support a business strategy: Me dnu ec eee Terie UROL te he arrecet eeeeeaene Strategy 1: Low-Cost-Provider Strategy ‘Afirm competing on cost leadership attempts to be the low-cost provider of a product or service within a mar-. katplace. The product or service must be pérceived by the consumer to be comparable to that offered by the competition and fo have a price advantage. McDonalds uses this approach, as do Zellers and Timex. Buyers are price sensitive, and businesses appeal to this price consciousness by providing products or services at prices lower than those of competitors. Surival is the ultimate goal, but organizations price low to gain market share (by underpricing competitors) or [Link] a higher profit margin by selling at the'going ‘market rate. This strategy requires the:company to bal- ‘ance the delivery of a product that still appeals to cus- ‘tomers with not spending too much on gaining market share, McDonald's could deliver @ cheaper hamburger, ‘ut would it have any taste? McDonald's could under- Price its competitors, but it may risk its survival by going ‘00 low. The key is to manage costs every year. te : ‘Adoption of a low-cost-provider strategy by a ae at inmecate implications for HR strategy Costs important element of this strategy, $0, labour ee carefully controlled. Efficiency and controlling ate paramount. The implications of a low-cost- me provider strategy for six key components of HR ar@ dis- cussed below, but first we start with the job description ‘of a typical employee working in a company that competes as a low-cost provider. The Employee ‘To keep wages low, jobs have to be of limited scope so that the company can hire people with minimal skills at low wages. The job requires highly repetitive and pre- dictable behaviours. There is litle heed for cooperative or interdependent behaviours among employees, The company ditgets its efforts at doing the same or more with less and capitalizing on'economies of scale. Doing more with fewer employees is the goal of most organi- zations with a low-cost-provider strategy’ Risk taking on the part of the employee is not needed, but comfort with repetitive, unskilled work necessary. Customers like those frequenting McDonald's are “trained” not to make idiosyncratic requests (such as a “medium-rare hemburger” or. “hot mustard"), and 0 no unique response system is required. Employees are not expected to contribute ideas. "Another way to cut costs isto eliminate as many of the support or managerial layers as possible. The impact of cutting costs in this way is that employees may have to do more with ess, make more decisions, and so on, which would require a more skilled employee. Alternatively, the Scanned with CamScannerVEE er ee Rae ke $20 oF mriore an hour, to jobs could be so tightly designed that tte supervision is|_workera mace § ; non aia, ie eee Substtuing technology for _sinaller sites, where workers ate paid Ssh mone labour is another way to save coats, 7 m wage. “ ‘We now. Took as HR functions that will facilitate... sorte uae eons can site chien provider organization. thio uise-of part-time wotkrs, the personnel work at» lowe provide orge picgeropsaatinpies ‘ = Mi * 30 .[Link] Fringe Benefits, #0. the saving gang, HR Planning ; in fing | AAt the entry level, succestion planning ‘is minimal, 3 pe oe — ‘ensuring only the feeder line to the next lavel. Outside ae chiges sry a an 3 ‘ ost exclus labour markats are monitored to ensure that entry-level - @/miost e a ‘itebil » Pay for performance, such as incentive. People are in adequate supply. The availability and na “ Me omen that ti linked. of fri rkere—those who are retired, temripo- tat sh wheyhed aime oc comer Group, rewards are basedt-on:explict, resus oer * planning stateay, particulary if the employmerit market ard the mesh ofahbcrterng 's offering better opportunities to the normal [Link]. 2 a vative. compensation: schéme that cannot be dini Selection “ys ated by tals may provide & cor votive advange Recruitment is primary at the entry, or lowest: level 0" 2™Ple, in an-arrangement’ .etween the Srext and is from the surrounding exterfal labour macket. : [Link] by word of mouth, and application forms, O04: ehelis a are available on-site, thus saving the et of recruiting : -22 Percent pay-cut in exchange for cash bonuses. * 2 in Dewspapers. Mest other prstions are staffed inter: » OTS employees ould keep lat sur costs 10 pueet rally trough promotions. Thus, career paths ara natios.< Ct Sales By J. MOre « .. ently oF generating . con [90 stor’ tafe, they wauld .» ive & ath bonis of ‘Compensation. runiricad les. This arrangement resited in an ; “ A stiatogy includes iat nd 92. in oderdting profits, However, He opposed! 6 the spread “this practice, and fvals In: the. [Link] business wet foes nasa Poin Ith local abou market’ These, able reuce ther abou cst inthe sre way A tes; Job, de spec jon. Such such as New Mexico. In Canada, wages aré vary a Paatation fox the ae ee 3 Vary similar. training no for ths 6 + 807088 provinoés, so firms analyze ‘Wage rates in coat ere Seed enemy: Mi sae tres such as india, which pay employees substantial Thebes coe eet oF cashier within cnn doth less for similar Productivity. Outsourcing has also meant ‘pment of the en . et ican of sls oye, nor in ‘moving the work from highly unionized plants, here for jobs sth@r than the current one. Scanned with CamScannerve The training staff ts lean, ajng on outside suppliers for Is limited trajning is. Howaver, most tairiog takes place on the job Mine form f rect instruction from or coaching by the pris, The jobs 3f@ $0 Naow in Scope, so repel fre a nature, that fitte need for taining exists. Performance Evaluation. short-term results, with explicit and standardized cr- tora, avo used to [Link] employee's performance, The feedback is immediate and specific. Individuals are held accountable only for their own behaviour or fess, not for that of the team or the company. Only « the sopervisor provides, input for the performance ‘enluation. Forms are kept to.a minimum, and rating is done against check mprs. Feedback; if based on a ce review, tends to be one-way, with little for the employee to debate the results or receive developmental feedback. Results are used: for consideration for promotion. Labour Relations Low-cost providers ty to prevent the formation of @ union because they believe that unions drive up wages. Unions find low-cost providers, such as McDonald's, dificult to unionize, (Employees working part-time hours have little interest in unionization because they believe that this is & part-time job that they will leave in the near future, and they are unlikely to benefit from ‘belonging to a union, to which they have to pay fees. Its also difficult to organize those working night shits) Furthermore, employees quit often, and many low-cost Providers absorb tumover rates of 300 percent annux aly a a cost of doing business, High turnover has the Primary advantage of keeping compensation levels low. Now that we have an idea ‘of how HR programs align with a low-cost provider strategy, let us examine what these programs would be like under a differentia- tion strategy. e Strategy 2: The Differentiation Strategy ‘mn most matkets, buyer preferences are too diverse 10 be satisfied by one undifferentiated product. Firms segment are said to compete on a differentiation strategy. A firm competing on the basis of a differen tiation strategy will offer something unique and valu able to its customers. BMW, Polo Ralph Lauren, Rolex, and Hewlett-Packard scientific instruments divisions are firms that compete successfully by charging price premium for uniqueness. The primary focus is on the néw and different. Observation, experience, and market research will establish what buyers consider important. what has value, and what buyers will pay for these fee- tures. Then the firm can offer @ product or service that commands a prertium price, increase unit sales within this niche, and gain buyer loyalty among those who value these features. The extra price ‘outweighs the ‘extra costs of providing these festures. ‘A firm can. differentiate itself from its competitors ‘many ways: « Having quality products, ‘= Offering superior customer service, «+ Having a more convenient location,- * Using proprietary technology, Offering valuable features, * Demonstrating unique styling, and + Having a brand-name reputation. “These different features can be anythingeCommon ‘examples show some firms competing on seivice (Four Seasons Hotels), engineering design (BMW), image (Polo Ralph Lauren), reliability (Bell); 2 full-range of products or sefvices (Procter & Gamble), technofogical leadership (RIM), and quality (Honda). Most-of the time, these competitive, advantages are combined, such as by linking quality products. with proprietary technology and superior customer - service, thus providing the buyer with more value for the money. The key In-this strategy is to provide the differentiation that is perceived to be of value to customers while keeping costs dow. For example, a slice of lemon in a glass of ice water delivered to the table is an obvious way to differentiate the restaurant, but at low cost. After-dinner mints are less expensive . than valet parking, but may be equally appreciated by : Scanned with CamScanner{ j A differentiation strategy calls for innovation ‘and creativity among employees. HRM is affected in fundamentally different ways in organizations that want to use employees’ brains rather than their limited (mainly manual) skills in the low-cost-provider strategy. The starting point for aligning HR programming with a differentiation strategy is the employee. The Employee ‘Organizations competing on 8 differentiation strategy require from their employees creative behaviour, @ long-term focus, interdependent activity, and some risk taking, as well as an ability to work in an ambiguous and unpredictable environment. Their employees! sills need! to be broad, and employees must be highly involved with the. firm. Organizations encourage employees to make suggestions, through both informal and formal suggestion systems, for new and. improved ways. of doing their job. Employees at Coming Canada Inc., for ‘example; submit their suggestions to their supervisors, ‘who review them formally and give feedback directly to the employee. Contrast this with the traditional sugges- tion bok, which many employees view a8 a recycling bin because of the lack of timely feedback. ©. “HR Planning Ina company that has a differentiation strategy andthat. © recognizes people are the key [Link] advan tage, HR planning is taken very seriously. Far example, ‘at Sumitomo Metals in Japan, the business planning, ‘group reports to HR because the company understands {that identifying what needs to be done is ess difficult than planning how to do it. Succession management is critical as employees have to possess many attributes to move ahead in the ‘organization. Thus, a strong emphasis on-developing skills for the future is part of the promotion policy, Investments in career moves, training, and develop: mental experiences are substantial. Long-term job security and reciprocal loyalty are the norm. Selection ‘Companies with a differentiation strategy need employees who have a broad range of skils and the abilty to leam PUM aed ek a Pe hn from others. An innovative atmosphere requires vio are self-motivated and do not require grat day, of supervision. Employees are selected for their abies to think creatively to be flexible in work atts angy, be able to work in teoms. However, selection fr hes characteratics is rhore-difcult and usually imohes tayy interviews and behaviourally based evidence ofimnoatn performance. Employees are normally recited thou, reputation (word of mouth) or through craduate schoo, Some testing for creative ability may be used, Compensation Compensation plans affect employee behaviour¥nan directly than most HR practices. For example, Drucker describes a compensation scheme he implemented at General Electric (GE) in which pay for performance wes based only on the previous year’s results. As such, for ten years, GE lost its capacity for innovation because investing in innovation ‘affects expenses and decreases Profits, s0 everyone’ postponed spending on innovation, However, compensation is carefully designed in firms that have a differentiation strategy. Pay rates may be slightly below average market rates but there are Subttantial opportunities to inereate:those base lees ‘through inceritive ‘pay. ‘Pay for performance is a large art of the’ comipensation package: and will be deper- dent cn’individual, gréup, and corporate results. These results: ére a combination of process and financial ci- terig and are set inv advance, usually on a yearly basis ‘Theie is 4 more varied mix of types of compensation, individuals may receive salary, Bonus, or stock opion incentives. intemal: equity is of greater concem than ‘equity with the extemal market. Egalitarian pay stuc- tures are associated with greater product quality. Now ‘monetary rewards also play a larger role in HR atetegy ‘these types of firms. ‘At Honda, the team that designs @ Lunigu® transportation vehicle is awarded a trip to Japan. Training Companies with a differentiation strategy have 2 870°9 taining team. The focus of training is on both stilt and attitudes: Process skills, such as decision making: the ability to work in teams, and creative thinking. emphasized ds much as skills needed for the curert Scanned with CamScannerso Train tans nen a n oportinity to ge Fran ean aod procedures. Indeed, customers and teams might be included in the training aren Dewan xparence re encouraged waive of working in ancther division or another Mrnmy is recognized and encouraged. Employees receive ‘or other job opportunities based, Foraly, on the wilingness to undertake taining and fhe track recordin learning, performance Evaluation in companies with a differentiation strategy, perfor- ‘nance appraisal is based not on short-term resuks ‘but instead on the long-term implications of behav- ‘our Processes that are deemed to lead tn better results in the long term are rewarded. Thus, companies encourage and appraise attitudes such as empower iment, diversity sensitivity, and teamwork in an effort to build ture bottor”-line outcomes. Working »eyond the jpb is encouraged, not punished. Failure is tolerated, akhough management [Link] distinguish bet veen bed luck and bad judgment or stupidity. Evaluation tends to be based on a mixture of indi vidual and group (and sometimes corporate) criteria, ‘Thus, an individual might be evaluated on his or her ability to achieve resuits and to work as a member of the team, the group's performance might be measured against established quotas, and the company in terms of its overall financial performance. ‘Appraisals that include input from employees, func- tional experts, peers, and so on—360" evaluations— are the norm. Organizations in the service sector are more likely to include customers as sources of input for performance appraisal Labour Relations ‘Any structure or process that reduces the capacity to be innovative and flexible is difficult to tolerate. Traditional unions, with rigid collective agreements, ae encouraged to work collectively toward a new union-management relationship. This relationship is characterized by shared information such as open books, shared decision inaking about best approaches, and shared responsi- bility for solving problems as they arise. Seucu: Adapted tm RS. Shuler and SE. Jackson, “inking Competitive Strategies with Human Resource Manauerent Ferre Resdemy of Management Execztive, vl 1, . 3(1987), pp. 207-219 Ukich, “Using Human Resources (ot Circ acbertage” rR. Kiman and .Kman, eds. Making Orgenizations Compottive, San Frances, losseyion, 1971, PF. Drucker, “They're Not Employees, They're People,” The Harvard Business Review, vol. 80, no.2 (2002). pp. 70-77; Fearn ne ey, “Grong tom the irside Out Human Resources Practice fr Growth Strategies.” Proceedings oF» the Administrative Sciences Association of Canada, 1999. But another pérspective reverses this view, suggesting that employee com- ’ Petencies determirie the business strategy. HR Competencies Lead to Business Strategy ‘Acompeting view states that an organization cannot i implement a strategy if it does not have the human resources necessary. Early into the 21st century, com- Panies are scrambling to find qualified workers in many flelds. Small businesses seem to be better at this second approach, The owners of very small businesses are riimble and quickly recognize that if an’employee Wis certain capably, it can be exploited to develop new produrts or services. versity management efforts are currently building on this! theme. For example, if ‘he number of employees who speak Mandarin reachesa sufficient number within 2n organization, the observant executive will start torexplore Asian markets. ne Scanned with CamScannerqutlook relies too heavily on employes «, MA ontal anal not Is consideration pensation to facilitate ths chang © ‘This “skills determine stra .d not enough on envi angie HO practices in training or com) = extremes on a continuum between o yresent two va Ines perspec paces, The realy 5 closer tthe concept 2 - rocal interdependencies.4° iprocal Interdependency between AR Stra egy and Business Strategy — An emerging perspective sees HR strategy as contributing to business. trategy and vice versa. increasingly, n large firms, senior HR vice-presidents ay asked not only to review business plans to ensure consistency with HR stra but also to provide input to this strategy based ori HR strengths and Weaknessas In this context, an organization chooses a business strategy, such as be a leader in innovative products, based on its in-house, highly educated, trained ‘employees who have been socialized to value creativity. Simply phrased, an orga. * nization develops its employees and then capitalizes on thelr skills; the employees then learn new skills, and so it continues. In many ways, HR strategy gener. ates the' business strategy, and business strategy determines HR strategy. This concept of reciprocal interdependence is widely accepted in. the HR strategy literature.*? : ‘An emerging view is that HR should bud its strategies by starting with the ‘Issues facing the business. All HR programs should be created to solve real business Problems and add value, thus becoming indistinguishable from the business.!2 me ry implications are not trivial; HR managers must under u I stand the numbers language ctes or the outcome expectations of non-profit organizations, ‘They must manages Case San ales bresénted by marketing financial and operstona acd isheon at ‘assessmeénts of options within the HR‘omain will haveto pare md a eneurial instincts will have to be sharpened, as anagers expected to oe in scanning HR capabilities for business proach to strategic HR planning, An example of this occu ts : eee ee mene bee my n organization was experiencing a rapid downward spiral it iene aca respanse ‘would have been to prepare for downsizing ree. Instead the HR manager created zs aonerntt2 Support two major contract,«3. Nt 10bby-suecestfally—the ages to rete the cst of tum. The HR oan itor, __ but a partner and problem solver. Linkages ee ae ‘managers, both formal and informal, ensure that this, Partnership roe is enacted ‘ . : e Scanned with CamScannerte you undéfstand the business? What financial indicators are important to the company? Who are your customers, and what is your competitive advan- tage? What major technological changes wil affect your work? ‘and measured on deliverables and not functions? Does HR report on effectiveness (the impact that the training program had on employee behaviour) ‘or just efficiencies (such as:the number of people being trained)? Do you know what the corporate plan's? Can you quickly list the major initiatives of your organization? ‘Do you align HR programs, policies, and practices with orgenizational strategies and goals? How can HR position the organization to succeed? ‘Ave the people management processes focused your input? to be one. STRATEGIC PARTNERING Human resources professionals recognize the need to play a more strategic role within the organization, Although only 23 percent HR managers are playing that role now, executive teams expect most of them to be more strategic and to dem- onstrate added value, over the next five years.“ Why do executives ignore HR's ‘contribution to strategy? Some argue that it is because management is not satis fied with HR services in general; that “people” issues belong only to HR, and HR can take care of any problems in executing the strategy. ‘These attitudes are changing, as organizations realize the impact that HRM ‘strategy can have on organizational effectiveness and as HR managers develop the internal relationships to ensure that the strategy Is effective. However, you cannot just ask to be on the executive team. It is like being in high school and» asking to be on the basketball team. You have to prove yourself. HR Planning Notebook 2.1 pases the question, “Are you a strategic partner?” BECOMING MORE STRATEGIC —________ HR departments are restructuring in order to be able to do the basics right (Pay- "ol safety training, and so on) while enhancing the performance-of business ‘its and supporting strategic moves. Traditionally, IR has been organized into functional units (training, compensation, and so on). However, there are some "ore innovative practices, where the unit is organized according to the services Provided, as outlined in HR Planning Notebook 2.2.- Itseems feasible to design HR policies to match strategy, but what happens en an organization has mére than one business strategy and more than one HR strategy? We attempt to answer that question in the next section. . ~ f ‘Are major organizational decisions made with Count the number of times you answered yes. The higher the number, the greater the likelihood that you are a strategic partner or Have the ability Scanned with CamScanner