Chapter 2: Human resources strategy
The management of HR philosophies, policies, and practices to allow the achievement of
the organizational strategy.
These HR philosophies and policies form a system which attracts, develops, motivates,
and trains employees who ensure the survival and effective functioning of the
organization and its members
The second area would function like a decision science, concerned with the effective
utilization of human capital, much like finance
Theories of the strategic management of human resources:
HRM making strategic contributions:
HR management, formally called ―personnel management‖ started as an administrative
function and had traditionally been associated with costs in organizations.
Resource based view:
Looking at the south-west airlines as a source which provided a sustained competitive
advantage since its cultural is valuable, rare, and very hard to imitate and substitute.
The less a resource can be imitated, the more durable the source of competitive
First, employees who have superior performance cause of their skills, commitment, or
flexibility are valuable – they help the company beat out competitors by offering better
service and unique products
Second, HR can be hard for competitors to imitate.
The competition can’t just ―buy‖ these employees, because their effectiveness is
embedded in the HR systems of training, compensation, performance appraisal, and
culture that allow them to work productively.
Third, the best human resources are rare. Talent war describes the fierce competition
among firms, especially in the high technology industry for the best talent.
Finally, the value of human resources can be hard to substitute
Dynamic capabilities are critical for today’s business continuously lead to competition.
Dynamic capabilities allow business to be the first to discover new opportunites,to act
faster than others to seize opportunities and to quickly create internal process needed to
realize these opportunities. Organizations human resources are more valuable for sustained competitive
advantage than technological and physical resources, particularly in today’s
competitive and fast changing environment because human resources are less
visible, more complex, and can imitate change.
Human capital theory:
Classical economists describe three types of resources or inputs used in the production of
goods and services: land, capital, and labour.
Labour or Human capital refers to the collective sum of attributes, experience,
knowledge, and commitment that employees choose to visit to invest in their work.
This intangible asset comprises the knowledge, education, vocational qualifications,
professional certifications, work-related experience, and competence of an
From the perspective of human capital employees are viewed as a capital resource that
Cost incurred in training, motivating, compensating, and monitoring employees can
be viewed as investment in capital of the firm.
Human capital return on investment also varied by industry, with finance, insurance, and
real estate having the highest median return
Advantage of an organization with effective Hr practices may come not only from
having better resources, but also from making better use of these resources by
achieving higher productivity per worker and matching the capabilities of
employees with the strategy.
Without the right HR systems, the employees are less effective
An effective HR system first accurately identifies the behaviours needed to
implement a strategy.
Providing expert opinion on human behaviour might be where the HR profession adds
the most unique value.
HR’s role is to tactfully challenge and refocus ideas of human behaviour.
Behavioural perspective suggests that these HR practices should be further catered
to a particular behavioural objective.
The behavioural perspective is important as the HR department is asked to define
and develop the behaviours necessary achieve organizational capabilities of
innovation, speed, and accountability. Strategic HR planning:
A more traditional perspective of the HR planning concept implied that the organization
was concerned only with possible problems of labour surpluses and shortages. Goal was
to determine the knowledge, skills, and abilities (KSA’S).
The importance of strategic planning:
The focus of HR must be on scoring points, not just coaching, training, or counting the
number of players.
The value of HR will be seen in its ability to deliver the behaviours needed to allow the
There are at least two reasons strategic HR planning is so important :
a) Employees help an organization achieve its success cause they are strategic
b) The planning process itself results in improved goal attainment.
The value of employees as a resource must be placed within a strategic framework. In other
words, a strategy itself can become obsolete, making current employee skills obsolete.
HR managers might not look for replacements for current skills but rather consider what
skills will allow the organization to implement its strategy a few years from now.
HR planning ensures that human assets are managed and matched to the organizational
Improved goal attainment:
Goals of these HRM strategies are to shape employee behaviours so that it is
consistent with the direction to the organization identifies in its strategic plans.
Organization with clear strategies provide direction and meaning to employees and
mitigate the need for control by substituting a consistency of purpose- in other words—
Important to have the HR strategies since its important to the attainment of the
organizational goals in order to align HR strategies and to focus employees on
important mission and goals of organizations.
THE RISKS OR THE DOWNSIDE TO STRATEGIC HR PLANNING: Strategic management of human resources seems beneficial, but some researchers point
out that there are costs.
As anyone who has gone through strategy formulation and implementation process
understands, the strategy formulation phase is relatively easy; motivating employees to
commit to the strategy and implement it is far more difficult.
Below are some of the downsid