L3 - Strategy & HRM

• Strategy


  A plan of action designed to achieve a long-term or overall aim
• Learning Outcomes


  • To clearly understand Strategy
  • To examine the different levels of Strategy in an organization
  • Discuss the resource based view theory of an organization and its relevance to SHRM
  • To clearly understand HRM
  • To clearly understand SHRM
  • To examine and appreciate key theories and models behind SHRM practices
  • To discuss and appreciate the linkage between Strategy and HRM
• Henry Mintzberg's 5Ps of Strategy

  • Plan
  • Ploy
  • Pattern
  • Position
  • Perspective

  
• Examples of Mintzberg's 5Ps of Strategy

  • Plan: A restaurant chain plans to expand its business by opening new branches in different locations and offering a variety of cuisines
  • Ploy: A smartphone company launches a new product with innovative features and a lower price than its competitors, attracting more customers and increasing its market share
  • Pattern: A clothing brand follows the latest fashion trends and adapts its products accordingly, creating a loyal customer base and a distinctive image
  • Position: A coffee shop positions itself as a cosy and friendly place where people can relax, work or socialize, differentiating itself from other coffee shops that focus on speed and convenience
  • Perspective: A software company shares a vision of creating user-friendly and accessible products that solve real-world problems, inspiring its employees and customers to support its mission
• Michael E. Porter's Five Forces of Competition

  • Threat of Entry
  • Power of Buyers
  • Power of Suppliers
  • Threat of Substitutes
  • Competitive Rivalry
• Example of Porter's Five Forces in the Airline Industry


  • Threat of Entry is high due to low barriers to entry
  • Power of Buyers is high due to many choices, low switching costs, and high price sensitivity
  • Power of Suppliers is high due to few suppliers of aircraft, fuel, and labor
  • Threat of Substitutes is moderate due to some alternatives like trains, buses, or cars
  • Competitive Rivalry is high due to many airlines competing for market share, price wars, and low profit margins
• Lafley and Martin's Five Step Strategy Model


  • What is our Winning Aspirations
  • Where will we play
  • How will we win
  • What capabilities must we have in place to win
  • What management systems are required to support our choices
• Example of Lafley and Martin's Five Step Strategy Model for Proctor & Gamble's Olay Brand


  • Winning Aspirations: To become a global leader in skin care products for women
  • Where will we Play: Middle-age women with aging skin concerns in developed or emerging markets with premium products sold through mass retailers and online channels
  • How will we Win: Superior product performance based on scientific research and innovation, coupled with strong marketing and customer loyalty programs
  • What capabilities must we have in place to Win: R&D expertise, global supply chain efficiencies, brand management skills and digital marketing capabilities
  • What management systems are required to support our Choices: A matrix organisation structure, a performance based compensation system, a rigorous innovation process, and a data driven decision making culture
• A plan is not a strategy
• The Art of War is the greatest strategy book ever written
• Strategy Statement


  Includes Objective, Scope, and Competitive Advantage
• Levels of Strategy


  • Corporate Strategy
  • Business Unit Strategy
  • Functional Strategy
• Corporate Strategy


  What business are we in?
• Business Level Strategy


  How do we compete?
• Functional Strategy


  How do we support the business-level competitive strategy?
• HRM


  Refers to talents and the ways in which people are managed, including bringing the right people into the organisation, moving them through the organisation, administering their benefits and other 'hygiene' issues, appropriately and moving them out
• HRM Functions/Practices


  • Human Resource Planning
  • Job design / Job Analysis / Recruitment & Selection
  • Performance Management
  • Training and Development
  • Compensation Management
  • Industrial Relations
  • Occupational Health and Safety
  • Leadership
  • Organisational capability / Culture
  • People Analytics
• Resource-Based View (RBV)


  A theory that explains how firms can achieve and sustain competitive advantage by using their internal resources effectively. Resources must be Valuable, Rare, Inimitable, and Organized (VRIO) to provide a lasting source of competitive advantage.
• Example of RBV: Apple's Competitive Advantage


  • Apple has valuable resources such as its brand reputation, loyal customer base, innovative design and technology, and integrated ecosystem of products and services. These resources are rare, inimitable, and organized in ways that create value for customers and differentiate Apple from competitors.
• VRIO


  Valuable, Rare, Inimitable, Organized
• Resource Based View (RBV)


  A theory that explains how firms can achieve and sustain competitive advantage by using their internal resources effectively
• RBV assumes that firms are different from each other because they have different bundles of resources, such as tangible assets, intangible assets, and capabilities</b>
• Resources


  • Valuable
  • Rare
  • Inimitable
  • Organized
• These resources can be valuable, rare, inimitable, and organized (VRIO) in ways that create value for customers and differentiate the firm from its competitors
• RBV also assumes that these resources are not easily transferred or imitated by other firms, which means that they can provide a lasting source of competitive advantage
• Core competencies


  The unique combinations of resources that provide firms with a distinctive edge in the market
• Firms should identify their core competencies and invest in developing and protecting them, and leverage them to create value for customers and stakeholders
• Firms should avoid competing in areas where they do not have a resource advantage, and instead focus on their strengths and core businesses
• Analogies to understand RBV

  • Treasure hunt
  • Recipe
  • Puzzle
  • Garden
• Attributes of RBV


  • Valuable
  • Rare
  • Inimitable
  • Organised
• The important attributes of these views as far as this topic is concerned is that they place organisational resources and in particular, human resource at the centre of strategy making and it has implication for SHRM
• Strategic Human Resource Management (SHRM)

  The process of linking the human resource function with the strategic objectives of the organisation in order to improve performance
• Definitions of SHRM


  • The pattern of planned HR developments and activities intended to enable an organisation to achieve its goals
  • Integrating human resource management strategies and systems to achieve overall mission, strategies, and success of the firm while meeting needs of employees and other stakeholders
  • Linking of all HR activities within the organisation strategic objectives
• Three main elements of Strategic Management

  • Understanding the strategic position of an organisation
  • Management exercising 'strategic choices' about the possible future strategies
  • 'Translating Strategy into action'
• The relationship between an organisation's human resource strategy and its strategic management is of great importance
• The exact nature of this relationship in practice, however, is likely to be difficult to analyse and evaluate, not least because strategic management is far from simple matter
• Principles of SHRM


  • Integration of relevant employment activities
  • High employee commitment
  • High quality staff and internal practices
  • Flexibility in terms of organisational structure, employee functions and job content
• To be strategic, HRM needs to demonstrate a two-way link to strategy


  Either Downward or Upward
• Three theoretical approaches to SHRM

  • Universal Model
  • Matching Model (closed)
  • Matching Model (open)
• Universal Approach


  Assumes that there are 'Best HR practices' which promises success irrespective of organisational circumstances