Unit I

Syllabus
UNIT I : Human Resource Philosophy - Changing environments of HRM - Strategic
human resource management - Using HRM to attain competitive advantage - Trends in
HRM - Organization of HR departments - Line and staff functions - Role of HR
Managers.
 Human Resources (HR)

The people an organization employs

to carry out various jobs, tasks, and
functions in exchange for wages,
salaries, and other rewards.

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 What Is Human Resource
Management (HRM) ?
The comprehensive set of managerial
activities and tasks concerned with
developing and maintaining a qualified
workforce—human resources—in
ways that contribute to organizational
effectiveness.

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 Fig.Cengage
© 2016 1.1 Basic
LearningFunctions ofrights
India Pvt Ltd. All Human Resource
reserved. Management
Contemporary HRM Perspectives
• Recognizing the importance of people
as a source of competitive advantage
• Hiring, rewarding, and managing
people effectively within the limits of
the law
• Balancing legal and ethical concerns
with the needs of the organization

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 Evolution of the Human
Resource Function
Scientific Management, The Human Relations Era
Was concerned with how to Emphasized keeping workers
structure jobs to maximize happy, since “happy workers
efficiency and productivity. were productive workers.”

HR Specialists Personnel Management.

The 1964 Civil Rights Act and Organizations grew and
other legal regulations made created personnel
hiring and promoting departments to work with
employees more complex. employees.

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 HRM in the Electronic Age
Electronic technology has not drastically
affected how human resources are
managed, but certainly is now affecting
how HRM systems are delivered.

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 e-HRM
• e-HRM (electronic HRM) uses web
application technology to provide an on-
line real-time solution.
• Two features are combined together in e-
HRM: use of electronic media and
participation of users.

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 HR Analytics
• HR Analytics is going to have a big impact on
organizations in years to come.

• Through application of statistical techniques (e.g.,

regression analysis, cluster analysis, factor analysis
etc.) and synthesis of multiple sources of data HR
Analytics works as a decision support system and
provides much needed business insights to HR
professionals.

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 Emerging HR Challenges
Financial crises
Stress in employees’ lives
Managing knowledge workers

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Beyond the Book: HR Managers
Advocate “No Lay-Off”
Reasons for a “No Lay-Off” Policy
 Severance and re-hiring costs.
 Accrued vacation and sick day payouts.
 Pension and benefit payoffs.
 Potential lawsuits.
 Loss of institutional memory.
 Lack of staffers when economy rebounds.
 Survivors often suffer from stress.
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Fig. 1.2 Goals of Human Resource
Management
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Promoting Individual Growth and
Development

Education
Skills training
Career development

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 Psychological Contract

The overall set of expectations held by the

employee with regard to what he or she
will contribute to the organization and that
are held by the organization with regard to
what it will provide to the individual in
return.

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 HR Management as a
Staff Versus Line Function
• Line managers
• Are directly responsible for creating
goods and services.
• Staff managers
• Are responsible for supporting line management’s efforts
to achieve organizational roles and objectives.
• Organizations have blurred this distinction.

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 HRM in Smaller Organizations
• Small organizations use operating managers to
handle basic HR functions.
• Small independent businesses generally operate in
the same way as small organizations.
• Very small organizations are exempt from many
legal regulations.

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 HRM in Larger Organizations
• As an organization grows, a separate HR unit
becomes a necessity.
• At 200 to 250 employees, it establishes

a self-contained HR department.
• As growth continues, the HR
department develops into specialized
departments.

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Fig 1.3 The Human Resource
Management Function at Shell Oil

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 Human Resource Management
System
An integrated and interrelated approach to
managing human resources that fully
recognizes the interdependence among the
various tasks and functions that must be
performed.

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 A Systems-Based Perspective
• The HRM subsystem both affects and
is affected by other organizational subsystems.
• Utility Analysis
• Attempts to measure, in objective
terms, the impact and effectiveness of
HRM practices in terms of metrics such
as a firm’s financial performance.

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Fig 1.4 A Systems View of Human Resource Management
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 Beyond the Book: Managing
Change in Organizations
Key elements in successfully engineering change:
 Link the change through the business strategy
 Create quantifiable benefits
 Engage key employees and suppliers early
 Integrate required behavior changes
 Lead clearly and consistently
 Invest to implement a sustained change
 Communicate continually
 Sell commitment to the change

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Fig 1.5 Human Resource Management
as a Center for Expertise
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Role of Human Resource Professionals

• First, HR can play the vital role of strategic execution

and thereby take a strategic partner’s role.
• Second, it can bring forth the much needed
administrative efficiency in the workplace.
• Third, it can take employee championing role by
helping employees to voice their concerns
• Finally, HR can become a change agent.

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 HR Compass

• With the support of XLRI Jamshedpur, a leading business school in

the field of HR in India, Confederation of Indian Industry (CII), and
National Human Resource Development Network (NHRD) have
developed a HR competency Model, called HR Compass.
• Classifying competencies under Technical vs. Behavioral and
Functional vs Generic the 2×2 matrix identified 4 competency
typologies

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 HR Compass
Behavioral Generic

Generic Behavioral Functional Behavioral

   
 Strategic Thinking &  Service Orientation
Functional Alignment  Personal Credibility
 Change Orientation  Execution Excellence
 Networking Management

Generic Technical Functional Technical

   
 Business Knowledge  Recruitment & Selection
 Financial Perspective  Performance Management
   Talent Management
   Compensation and Benefit
Technical
   Managing Culture, Design &
  Change
 ER and Labour Laws
 

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 HR Compass

• Functional Technical competencies refer to HR specific functional

knowledge and skills which are required for a HR professional for
delivering the HR tasks.
• Functional Behavioral competencies refer to those behavioral
competencies which are more critical for HR professionals than other
professionals (e.g., service orientation, execution excellence etc.).

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 HR Compass

• Generic Technical Competencies refer to the competencies required

for HR to play strategic partner’s role.
• Generic Behavioral competencies refer to those critical behavioral
competencies which are required for all functions (e.g., strategic
thinking, change orientation, networking management etc.).

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 The Competitive Environment
for Human Resource Management
 HRM occurs not in a vacuum, but in a
complex and dynamic milieu of forces
within the organizational context.
 HR managers now have a strategic
perspective that recognizes the critical
links between organizational strategy
and HR strategy.

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Fig 2.1 Strategic
Human Resource
Management

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 Beyond the Book: Considering
Fundamental HRM Practices
 If we examine fundamental HRM
practices, it seems reasonable to suggest
two points:
 Formal performance appraisals
are better than none.
 Using systematic selection techniques
is better than hiring based on intuition.

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 A Strategic Perspective
• What is meant when we refer to strategy and a
strategic perspective:
• All firms exist in a competitive
environment, with competitors trying to
attract the same customers.
• Therefore, a firm implements a strategy that
its competitors are unable to implement.

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 Human Resources and
Competitive Advantage
If a firm can
1. hire the right people
2. train them to be effective
3. place them in the right jobs
4. motivate them to work hard, and
5. retain them
then it can gain a sustained competitive
advantage.

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 The Influence of Organizational
Purpose and Mission
• What is an organization’s purpose?
• It is the organization’s basic reason for
existence.
• What is an organization’s mission?
• It is the organization’s statement of
how it intends to fulfill its purpose.
• Both purpose and mission affect an
organization’s HR practices.

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 Fig 2.2 Starbucks Corporate Mission Statement
Our Starbucks Mission Statement
Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
Here are the principles of how we live that every day:
Our Coffee
It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives
of people who grow them. We care deeply about all of this; our work is never done.
Our Partners
We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each
other with respect and dignity. And we hold each other to that standard.
Our Customers
When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly
made beverage, but our work goes far beyond that. It’s really about human connection.
Our Stores
When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It’s about enjoyment
at the speed of life – sometimes slow and savored, sometimes faster. Always full of humanity.
Our Neighborhood
Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for
positive action – bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility – and our potential for good – is
even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.
Our Shareholders
We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so
that Starbucks – and everyone it touches – can endure and thrive.

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What Is a Top Management Team?

The organization’s group of senior executives

responsible for the overall strategic operation
of the firm.

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Beyond the Book: Organizational
Culture and HRM Success
Understanding
Understanding
the
the Cultural
Cultural Environment
Environment

Plays
Playsaamajor
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Haveaavision
vision
Sets
Setsthe
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Haveaavision
vision
role
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ofhow
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firm
for
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wherefirmfirm should
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organization isisgoing
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its
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there

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 Corporate Strategy and HRM

• Corporate Strategy
• Deals with determining what businesses the corporation will
operate.
• Business strategy
• Deals with how the firm will compete in each market where it
conducts business.
• Functional strategy
• Deals with how the firm will manage each of its major
functions (such as marketing, finance, and human resources).

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 Corporate
Strategy

Competitive Competitive Competitive

Strategy Strategy Strategy

Functional Functional Functional

Strategies Strategies Strategies

Fig 2.3 Linkage of Corporate Strategy, Competitive Strategy and Functional Strategy

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Corporate
•
Strategy and HRM (cont’d)
Growth Strategy
• Focuses on growing and expanding the
business, which can be pursued through
joint ventures or acquisitions.
• Retrenchment Strategy
• Occurs when an organization’s operations
are not effective and changes are required.
• Stability Strategy
• Maintains the status quo.

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 Diversification Strategies
• Diversification Strategy
• Occurs when an organization adds new
products and services.
• Related Diversification
• Occurs when a firm achieves synergy
among the various businesses it owns.
• Unrelated Diversification
• Is used when a firm operated several unique
businesses in different unrelated markets.

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 Business Strategies (cont’d)
• The Adaptation Model
• Is an approach to business strategy where a
firm seeks ways to adapt to its environment.
• Basic Strategy Alternatives:
• Defender strategy
• Prospector strategy
• Analyzer strategy
• Reactor strategy

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Business Strategy Alternatives

Defender Strategy Prospector Strategy

Works best in an environment Works best in dynamic and
with little uncertainty and risk growing environments with much
and a high degree of stability uncertainty and risk

Analyzer Strategy Reactor Strategy

Works best in stable conditions Represents the strategic failure
with a moderate degree of of a firm to respond properly to
uncertainty and risk its competitive environment

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 Comparison between Defender and Prospector Strategy and
related HRM StrategyDefender
Business Strategy& Prospector

HRM Strategy
Product-market strategy  Limited, stable product line  Broad, changing product line

 Predictable markets  Changing markets

 Growth through market  Growth through product

penetration development and market
development
 Building human resources  Acquiring human resources
Basic Strategy

Recruitment & Emphasis: "making” of human  Emphasis: “buying” of human

Selection resources resources

 Little recruiting above entry level  Sophisticated recruitment at all

levels

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 Comparison between Defender and Prospector Strategy and
related HRM Strategy

Business Strategy& Defender Prospector

HRM Strategy
Training & Formal, extensive skill building  Informal, limited

Development  Extensive training programs  Skill identification and acquisition

 Limited training programs

Performance  Process-oriented procedure  Results-oriented procedure

Management  Time-series comparisons (for example,  Evaluations based on cross-sectional

previous years' performance will be taken comparisons (for example, what others

into account while judging the current have done during the same period)

year’s performance)

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 Comparison between Defender and Prospector Strategy and
related HRM Strategy

Business Strategy& Defender Prospector

HRM Strategy
Compensation  Oriented towards position in organization  Oriented towards performance

Management hierarchy [Seniority will be valued while  Focused on External competitiveness

deciding compensation]  Total compensation heavily oriented

 Focused on Internal consistency towards incentives and driven by

 Total compensation heavily oriented recruitment needs

towards cash and driven by superior-

subordinate differentials

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 Other
Other Competitive
Competitive
Strategies
Strategies

Differentiation
Differentiation Cost
Cost leadership
leadership Focus
Focus
strategy
strategy strategy
strategy strategy
strategy

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 Three approaches of Strategic
Human Resource Management

• Universalistic Approach
• Contingency Approach
• Configurational Approach

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Universalistic Approach

• It is based on the premise that there are certain "best practices" which
are equally applicable to all the contexts.
• For example some authors argue that employee empowerment,
participative management, pay for performance, employment security
etc. are universally beneficial for any organization and hence all
organizations should adopt these practices.

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Contingency Approach

• Contingency Theory does not believe that there is one best single way
of doing things.
• According to this perspective most appropriate HR practice would be
dependent on the context.
• Both contexts and HR practices would interact to determine the
overall effectiveness of a policy or practice.

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Configurational Approach

• Configurational Approach is the most complex amongst the three

approaches.
• Configurational Approach is based on equifinality.
• Equifinality means two or more configurations can be equally
effective in achieving performance goal.

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Fig 2.4 Human Resource Strategies

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 What Is Organizational Design?
The framework of jobs, positions, clusters of positions,
and reporting relationships among positions that are
used to construct an organization.

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The Impact of Organization Design

Organization
Organization Design
Design Forms
Forms

U-form
U-form H-form
H-form M-form
M-form
(unitary/functional)
(unitary/functional) (holding
(holdingcompany)
company) (multidivisional)
(multidivisional)

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 Corporate Culture

The set of values that helps an organization’s members

understand what it stands for, how it accomplishes
what it wants to accomplish, and what it considers
important.

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 The Impact of Corporate Culture
Strong Corporate Culture
• Defines to its employees what the firm
stands for, its values, and acceptable
employee behaviors.
• Is shaped by its founder and leaders.
• Can impede or facilitate the firm’s success.
• Has a critical effect on the success of
mergers and acquisitions.

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 Interpersonal Processes and
Strategy Implementation
• Psychological Contract
• The overall set of expectations held by the
individual that they can contribute to the
organization.
• Personality
• The stable set of psychological attributes or
traits that distinguish one person from
another.

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 HR Strategy Implementation
(cont’d)
Communication
• The exchange of information and shared
meaning
• HR managers are responsible for
coordinating communication among
employees.

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Motivation is:
 The set of forces that causes people to
behave in certain ways.
 A major determinant of individual
performance.
 What causes an employee to choose to
expend effort to support an
organizational activity.

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 Understanding Stress
• Stress
• A person’s adaptive response to a stimulus
that places excessive psychological or
physical demands on that person.
• Managing stress requires understanding:
• The causes of stress
• How stress affects individuals
• How organizations and individuals
can better cope with stress

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Table 2.2 Human Resource Management Practices
That May Lead to Improved Firm Performance

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