Amity Business School

Management Organizational Strategic Human Resource Behavior Management

Module 3 Formulation of HR Strategy and Integration of Business Strategy with HR Strategy

Copyright 2002 by South-Western

Defenders
Club
Low Cost producer HR Strategy: Retention Entry: early career Development: as generalists, slow paths Exit: Low turnover, retirement

Amity Business School

Prospectors
Baseball Team

Amity Business School

Innovation HR Strategy : Recruitment Entry: recruit at all career stages Development: on-the-job, little formal training Exit: High turnover, cross employer career paths

Analyzers
Academy

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Hybrid Both product innovators and competitors in long-run production roles HR Strategy - Development Development: Extensive training for specific jobs, elaborate career paths / job ladders Exit: Low turnover, retirement, dismissal for poor performance

Reactors
Fortress

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Highly competitive markets and are at the mercy of their environments HR Strategy : Retrenchment Entry : Passive recruitment Development: retention of core talent Exit: frequent layoffs

Type of Business Strategy

Characteristics

Amity Business School Examples

Cost Leadership

The firm increases its efficiency, cuts costs so that products or services may be priced lower than the industry average Assumes that a small change in price will significantly affect customer demand Assumes that customers show greater price sensitivity than brand loyalty- this is because the products/services of each firm are non distinguishable
The firm distinguishes its products/services from its competitors or at least attempts to make consumers perceive that there are differences The firm charges a premium for its products/services because it offers its customers something that is unique, extraordinary or innovative The firm seeks to develop brand loyalty

Retailers such as Big Bazaar

Differentiation

Nike, Sony

Focus

The firm recognizes that different segments of the market have Women different needs and attempts to satisfy one particular group apparel The firm can charge a premium for its services since the 6 market has overlooked these market segments

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Life Cycle Stages

Start-up

HR Practices
Flexible patterns of work Recruitment of highly motivated and committed employees Competitive pay Little formality No unions More sophisticated recruitment and selection Training and development Performance management processes Reward systems Focus on high commitment Developing stable employee relations Attention to the control of labor costs Focus on increasing productivity Strained employee relations Control compensation Emphasis on rationalization of workforce and downsizing Abandoning some longstanding practices to cut costs Trade unions have a marginalized role Retraining and career consulting services

Growth

Maturity

Decline

Schuler and Jacksons HR Strategy Classification Amity Business

Business Strategy HR Strategy

School

Cost Leadership
Suitable for repetitive and predictable behavior Concerned with short-term

Utilization HR Strategy
HR Strategy focused on short-term performance measures, that is, results or outcomes Efficiency is the norm, job assignments are

focus and quantities

Result-oriented

specialized, explicit job descriptions

Hierarchical pay, few incentives Narrow career paths, limited training Limited employment security Cost-cutting may involve incentives for employees to leave the firm Limited participation
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Business Strategy

HR Strategy

Differentiation Long-term focus Creative job behavior Moderate concern for quality and quantity

Facilitation HR Strategy Broad career paths Extensive training Equal and fair pay, many incentives for creativity Long term performance measures External recruitment and hiring of people who bring in new ideas High employee participation Some employment security
Accumulation HR Strategy Equal and fair pay with many incentives Hiring employees belonging to the target market Broad career paths with extensive training High employee participation Some employee security

Focus High concern for quality Moderate concern for quantity Long / medium-term focus

Miles and Snows Classification of Amity Business School Organizational Strategy

Dominant Culture of the Organization (Business Strategy) Defenders Find change threatening Favour strategies which encourage continuity and security HR Strategy Bureaucratic approach Planned and regularly maintained policies to provide for lean HR Build human resources Likely to emphasize training programmes and internal promotion Creative and flexible management style Have high quality human resources Emphasize redeployment and flexibility of HR Little opportunity for long-term HR planning Acquire human resources Likely to emphasize performance based pay Low levels of monitoring and coordination Buy as well as make key human resources Emphasize HR planning

Prospectors Thrive on change Favour strategies of product and / or market development

Analysers Seek to match new ventures with the present business set up Followers the ventures are not

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Golden and Ramanujam (1985)

Amity Business School

Proposed the following four types of linkages between HRM and strategic planning process:

1. Administrative Linkage: HR department adopts the traditional personnel role, provide routine operational support, and handles paperwork. Functional managers see HR function as relatively unimportant 2. One Way Linkage: There is a sequential relationship between strategic planning and the HR function. The HR function reacts to and designs HR programmes to support the strategic objectives of the firm. 3. Two Way Linkage : There is a reciprocal, interdependent relationship between strategic planning and HR function. Business plans affect and are affected by HR activities. HR is seen as important. 4. Integrative Linkage: There is a dynamic interaction, formal as well as informal, between HR function and strategic linkage. The senior HR executive is a strategic business partner with other senior executives of the firm
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Business Strategy and HR Functions

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Amity Business School

Human Resource Planning

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Relationship between Business Amity Business School Strategy and HRP

Relationship between Business Amity Business School Strategy and HRP

Relationship between Business Amity Business School Strategy and Acquisition

Defender Hiring Managerial Talent
Managers have narrow specialized skills Almost always promoted from within

Prospector
Often acquired from outside

Analyser Drawn from internal

promotions, external recruitment, mergers, and acquisitions

Dominant Power Coalition

Consists of financial and production experts

Individuals with backgrounds in marketing or product research and development

Experts in marketing, applied research and production

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Defender Staffing Practices Individuals hired at low level, receive considerable onthe-job training and slow, steady promise in their functional areas

Prospector Employees face relatively frequent changes in job duties and assignments More likely to hire appropriately experienced individuals, since speed is important for moving into new product lines

Analyser Some employees are hired at low levels and moved to positions of higher responsibility within functions Some employee are brought in at higher levels to provide quick, ready-made expertise
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Amity Business School

Defender

Prospector

Analyser

Recruitment Methods
Effective Recruitment Messages

Internal sources
Convey information about centralization of control, emphasis on internal promotion within well-defined functions, importance of meeting cost and production goals

External sources
Indicate dynamism in job and project assignments, decentralized control, risk-taking in work procedures and emphasis on technological and marketing innovations Convey recruiting messages informally, and make use of line managers who are more aware of the changing requirements and characteristics of vacancies

Mixture of sources
Messages similar to defenders in stable areas of the organization and more like prospectors in change oriented sectors Emphasize likelihood of transfers across product or divisional lines

More formal dissemination of information through the use of recruitment brochures, videotapes or standard presentations

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Defender Criteria for Hiring

Less weightage given to past achievements More emphasis on future aptitudes or potential Individuals with high need for security and low tolerance for change and ambiguity more well suited Emphasize relatively narrow range of specialized skills Clearly articulate selection criteria

Prospector
Focus on past achievement in desired knowledge, skills and abilities Seek individuals with high tolerance for ambiguity and a willingness to incur risk Wider and more general range of aptitudes and abilities for adapting to their more rapid production or service shifts Less likely to formalize selection criteria because job requirements change with changes in strategic direction

Analyser
Focus on both, past achievement and future potential Wider and more general range of aptitudes and abilities Clearly articulate selection criteria

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Defender
Selection Methods Use future oriented tests such as aptitude tests and seek to assess potential promotability Involve HR specialists in final hiring decisions Greater corporate control over final hiring

Prospector
Rely on methods that emphasize the applicants work history, such as ability tests, reference checks Greater line influence in hiring decisions Less corporate control over final hiring

Analyser
Use combination of methods

Selection Decision

A mix of the two Fall somewhere in between, with corporate representatives providing guidance but not having the final authority to make a final decision
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Business Strategy and Business Relationship between Business Amity School Compensation Strategy and Compensation