HUMAN RESOURCES MANAGEMENT TRAINING

MODULE 1

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 HUMAN RESOURCES MANAGEMENT AND
ORGANIZATIONAL STRATEGY

Objectives
 Explore the relationship between HRM and an organization’s strategy and
performance
 List key HRM elements
 Develop an action plan for improving HRM and developing an organization’s HR
strategy

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 1.Defining Human Resources Management
Too often, Human Resources Management (HRM) is thought of merely as personnel
management, i.e., basically policies and payroll. While personnel management is a key
element of HRM, effective HRM intersects with and contributes to the broader issues of an
organization’s strategy, management and performance.

“…the effective management of an organization’s human resources is a major source of

competitive advantage and may even be the single most important determinant of an
organization’s performance over the long term.”
(Sims, Ronald. 2002. Organizational Success through Effective Human Resources
Management).
HRM is the philosophy, strategic approach, principals, policies, procedures and practices
related to the management of an organization’s employees.

HRM systems and functions operate within the environment of an organization. That
environment is influenced by a number of factors including:–The organization’s culture,
norms and values–The legal environment–The society and community in which the
organization operates.

The challenge for HR managers is to influence their resources so that they are
continuously aligned to–The organization and its strategy–The community in which it
functions. It is important to remember that HR is about managing people and positively
influencing behavior

Key Elements of HRM

HR planning,
job design; job descriptions
Recruitment; retention
Salaries and benefits
HR policies and how they conform to labor laws
Time management
Performance management
Training and competency

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 Motivation and commitment
HRM Approaches
Align employee’s personal values to the values of the organization
Create an environment that contributes to a sense of belongingness
Contribute and influence employee goals by developing a culture of growth
and development

2.HRM and Strategic Planning

The concept of strategy -Strategic Planning
Strategic planning positions an organization for the future. It includes analyses like
SWOT (strengths, weaknesses opportunities and threats) and the clear definition of an
organization’s mission, goals and objectives for a specified time in the future.

Effective strategic planning includes people or departments responsible for human

resources management. Effective HR plans address HR goals and expectations for the
coming period as they relate to the organization’s broader goals and objectives.

Strategy is the approach selected to achieve defined goals in the future. The
determination of the long term goals and objectives of an enterprise, and the adoption
of courses of action and the allocation of resources necessary for carrying out those
goals. Strategy has three fundamental characteristics.

First, it is forward looking. It is about deciding where you want to go and how you
mean to get to it. It is concerned with both ends and means. In this sense a strategy is
a declaration of intent. Strategies define longer-term goals but they also cover how
those goals will be attained. They guide purposeful action to deliver the required
result. Strategy should be understood as a framework of critical ends and means.

The second characteristic of strategy is that the organizational capability depends on

its resource capability (the quality and quantity of its resources and their potential to
deliver results). This is the resource-based view of strategy.

The third characteristic of strategy is strategic fit – the need when developing HR
strategies to achieve congruence between them and the organization’s business
strategies within the context of its external and internal environment. The focus is
upon the organization and the world around it. ·

The formulation of strategy: the formulation of corporate strategy is best described

as a process for developing a sense of direction, making the best use of resources and
ensuring strategic fit. It has often been described as a logical, step-by-step affair, the
outcome of which is a formal written statement that provides a definitive guide to the
organization´s intentions.

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Aims of strategic HRM: The fundamental aim of strategy HRM is to generate
organizational capability by ensuring that the organization has the skilled, engaged,
committed and well-motivated employees it needs to reach result. It has two main
objectives: first to achieve integration between HR strategies with business strategies.
The second objective is to provide a sense of direction so that the business needs of
the organization and the individual and collective needs of its employees can be met
by the development and implementation of coherent and practical HR policies and
programs.

The resource-based view of strategic HRM

To a very large extent, the philosophy and approaches to strategic HRM are
underpinned by the resource-based view. This states that it is the range of resources in
an organization, including its human resources, that produces its unique character and
creates competitive advantages.

The best practice approach:

This approach is based on the assumption that there is a set of best HRM practices that
are universal in the sense that they are best in any situation, and that adopting them
will lead to superior organizational performance. A number of lists of “best practices”
have been produced; the best known was produced by Pfeffer (1998) namely:
1. Employment security
2. Selective hiring
3. Self-managed teams
4. High compensation contingent on performance
5. Training to provide a skilled and motivated workforce
6. Reduction of status differentials
7. Sharing information

The best fit approach:

The best fit approach is in line with contingency theory. It emphasizes that HR
strategies should be congruent with the context and circumstances of the organization.
“Best fit” can be perceived in terms of vertical integration or alignment between the
organization´s business and HR strategies. Human resource management´s
effectiveness depends on its fit with the organization´s stage of development. As the
organization grows and develops, human resource management programs, practices
and procedures must change to meet its needs. Consistent with growth and
development models it can be suggested that human resource management develops
through a series of stages as the organization becomes more complex.

The reality of strategic HRM:

Strategic HRM is not just about planning. It is also concerned with the implementation
of strategy and the strategic behavior of HR-specialists working with their line
management colleagues on an everyday basis to ensure that the business goals of the

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organizations are achieved and its values are put into practice. It is the basis for
developing and implementing approaches to people management that take into
account the changing context in which the organization operates and its longer-term
requirements. It should also be borne in mind that strategic HRM is a mindset that only
becomes real when it produces actions and reactions that can be regarded as
strategic, either in the form of overall or specific HR strategies or strategic behavior on
the part of HR professionals working alongside line managers.

Practical implications of strategic HRM theory:

The theory addresses major people issues which affect or are affected by the strategic
plans of the organization. It provides an agreed and understood basis for developing
and implementing approaches to people management that take into account the
changing context in which the organization operates and its longer-term requirements.
It ensures that business and HR strategy and functional HR strategies are aligned with
another, and is the rationale for HR practitioners acting as strategic partner.

3.HR Strategies
What are HR strategies?
HR strategies set out what the organization intends to do about its human resource
management policies and practices and how they should be integrated with the
organization strategy and each other. The purpose of HR strategies is to articulate
what an organization intends to do about its human resource practices now and in the
longer term. Because all organizations are different, all HR strategies are different.
Some strategies are simply very general declarations of intent. Others go into much
more detail. But two basic types of HR strategies can be defined; these are 1) general
strategies such as high-performance working and 2) specific strategies relating to the
different aspects of human resource management such as learning and development
and reward.

General HR strategies
General strategies describe the overall system or bundle of complementary HR
practices that the organization proposes to adopt or puts into effect in order to
improve organizational performance. The three main approaches are summarized
below.
 High-performance management: high-performance management or high-
performance working aims to make an impact on the performance of the
organization in such areas as productivity, quality, levels of customer service,
growth and profits. High-performance management practices include rigorous
recruitment and selection procedures, extensive and relevant training and
management development activities, incentive pay systems and performance
management processes.

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  High-commitment management: One of the defining characteristics of HRM is
its emphasis on the importance of enhancing mutual commitment. High-
commitment management can be described as “a form of management which is
aimed at eliciting a commitment so that behavior is primarily self-regulated
rather than controlled by sanctions and pressures external to the individual, and
relations within the organization are based on high levels of trust.”
 High-involvement management: High-involvement work practices are a
specific set of human resource practices that focus on employee decision
making, power, access to information, training and incentives. It is a
management system based on commitment and involvement, 4 as opposed to
the old bureaucratic model based on control. The underlying hypothesis is that
employees will increase their work involvement if they are given the opportunity
to control and understand their work. High-involvement practices work well
because they act as a synergy and had a multiplicative effect. This approach
involves treating employees as partners in the organization whose interests are
respected and who have a voice on matters that concern them. It is concerned
with communication and involvement. The aim is to create a climate in which a
continuing dialogue between managers and the members of their teams takes
place in order to define expectations and share information on the organizations´
mission, values and objectives. This establishes mutual understanding of what is
to be achieved and a framework for managing and developing people to ensure
that it will be achieved.

Criteria for an effective HR strategy

An effective HR strategy is one that works in the sense that it achieves what it sets out
to achieve. Its particular requirement is set out below:
1. It will satisfy the organization needs.
2. It is founded on detailed analysis and study, not just wishful thinking.
3. It can be turned into actionable programs that anticipate implementation
requirements and problems.
4. It is coherent and integrated, being composed of components that fit with and
support each other.
5. It takes account of the needs of line managers and employees generally as well
as those of the organization and its other stakeholders.

How should HR strategies be formulated?

Two approaches can be adopted by HR in strategy formulation; “The inside-out approach”
and “the outside-in” approach. Some observations about the HR-strategy linkage: At the
extreme, the “inside-out” approach begins with the status quo HR function (in terms of
skills, processes, technologies, etc) and the attempts (with varying degrees of success) to
identify linkages to the business (usually through focusing on “people issues”) making
minor adjustments to HR activities along the way. On the other hand, a few organizations
have shifted to build their HR strategies from the starting point of the organization.

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Within these “outside-in” HR functions, the starting point is the business, including the
customer, competitor and business issues they face. The HR strategy then drives directly
from these challenges to create real solutions and add real value.

Issues in developing HR strategies

Five fundamental questions that need to be asked in developing HR strategies have been
posed:
1. What is the organization´s strategic objective?
2. How are these translated into unit objectives?
3. What do unit managers consider are the “performance drivers” of those
objectives?
4. How do the skills, motivation and structure of the organization´s workforce
influence these performance drivers?
5. How does the HR system influence the skills, motivation and structure of the
workforce?
But many different routes may be followed when formulating HR strategies. There is no
one right way. In developing HR strategies, process may be as important as content.

Implementing HR strategies
An implementation program needs to be based on:
1. A rigorous preliminary analysis of the strategic needs of the business and how the
strategy will help to meet them.
2. A communication program that spells out what the strategy is, what it is expected
to achieve and how it is to be introduced.
3. The involvement of those who will be concerned with the strategy, i.e. line
managers, in identifying implementation problems and how they should be dealt
with.
4. The preparation of action plans that indicate who does what and when.
5. Project managing the implementation in a way that ensures that the action plans
are achieved.

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Section Subsection
Governance Vision/Mission
Organizational Structure
Board Composition and
Responsibility
Legal Status
Succession Planning
Administration Operational Policies, Procedures
and Systems
Travel Policies and Procedures
Procurement
Fixed Assets Control
Human Resources Job Descriptions
Management Recruitment and Retention
Staffing Levels
Personnel Policies
Staff Time Management
Staff Professional and Salary
History Documentation
Staff Salaries and Benefits Policy
Staff Performance Management
Financial Management Financial Systems
Financial Controls
Financial Documentation
Audits
Financial Reporting
Organizational Strategic Planning
Management Work plan Development
Change Management
Knowledge Management
Stakeholder Involvement
New Opportunity Development
Communication
Decision Making
Performance Management Progress (Implementation Status)
Standards
Supervision
Monitoring and Evaluation
Quality Assurance
Organizational Capacity Assessment (OCA) Outline

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1.1 HR Strategy Scenarios

a) What HR questions might you ask in the following 3

scenarios if this were part of your organization’s strategic plan?

b) What strategies could you develop to help the organization

attain its goal?

Scenario 1: The New World PLC runs a hotel in Addis Ababa. As

part of its strategic plan, NW wants to expand its business to
include tour operation covering all regions of Ethiopia.

Scenario 2: The organization NW has an average staff retention

rate of one year. The organization knows the turnover rate is
high, but it isn’t exactly sure why it is so high. As part of its
strategic plan for 2015 - 2018, it wants to improve the average
time staff work for NW to three years.

Scenario 3: A large automotive company has a strategic

objective to ensure annual sales of 1,000 vehicles by 2018, the
end of its strategic planning cycle.

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 1.2 Sample HRM Action Plan
Current Desired Proposed Change Action Steps Communi Team Monitoring Performa Timeline
Status Status Change Leader for cation Involveme Strategy nce
(goal) Implementin Strategy nt Indicator
g Change

No A Establis HR % of 1/31/10
formal perform ha Manag 1. Map out 1. Meet 1.Put 1. Do staff
perform ance perform er the with together monthly who
ance appraisa ance supervisory staff to a PA review of have
appraisa l policy appraisa structure present team to achievem complet
l system and l policy 2. Develop the review ent of ed PA
tools and the objectiv policy, activities (to be
that is tools performanc e of the tools and against assesse
impleme e appraisal process PA plan. d the
nted on tools and process 2. Collect month
an 3. Train present informatio followin
annual staff to set ideas for n on g the PA
basis performanc moving numbers period)
e goals and forward of staff
use the 2. At who have
tools monthly PA
4. Train staff meeting
supervisors meeting set up
to conduct s report with
performanc on supervisor
e appraisal develop 2 weeks
meetings ment of prior to PA
5. process review
Communica and period
te tools 3. At end
performanc of PA
e appraisal review
events to period
prepare review
staff to set informatio
goals, set n on % of
up staff who
meetings had a
and Performan
conduct PA ce
Assessme
nt
4. Team
review of
sample
performan
ce
objectives
1 per year
to monitor

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 the quality
of
objectives
and
decide on
future
training
needs

1.3 HRM Action Plan Template

Current Desired Proposed Change Action Steps Communi Team Monitorin Performanc Timeline
Status Status Change Leader for cation Involveme g e Indicator
(goal) Implementin Strategy nt Strategy
g Change

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