1) Strategic Human Resource Management

Flashcard maker : Lily Taylor
Business plan to create value in a particular market
Value Creation
Produce a product or provide a service such that the revenue generated exceeds costs
Strategy Formulation
Developing the business strategy given market and other conditions
Outlines specifically how the firm will create value in a particular market
Strategy Implementation
Implementing the business practices to execute the desired strategy. This involves all business practices
competitive advantage
According to Michael Porter, _____ ____ results from creating value
Low-cost strategy, Differentiation strategy
2 ways to create value
Low-cost strategy
create value by reducing costs.
Differentiation strategy
create value by convincing the market that your product/service is different from all the others.
The Resource-based View (RBV) of Competitive Strategy
-Firms gain a competitive advantage through firm-controlled resources
-Not all resources serve as a source of competitive advantage
-Human resources and the organizational practices that develop and support those resources are possibly one of the most difficult sources of competitive advantage to replicate
valuable, rare, inimitable, organizational processes
Resources Characteristics for Competitive Advantage (VRIO)
core capabilities/competencies
Today there is greater acceptance that __________ or “strategic capabilities” serve as the dominant sources of competitive advantage
Core Capabilities
Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers
Porter’s strategy typology
According to Michael Porter, competitive advantage results from creating value
strategic value
Different parts of a firm’s workforce have different ___ ____ to the firm in that they differ in their influence on core competencies
Firm-specific skills vs. general skills
Teams vs. individuals
The entire system of human resource management practices vs. individual practices
Identify the criteria for a core capability (or resource) to become a source of sustained competitive advantage for an organization.

(Greater source of competitive advantage from what three things?)

Human Capital, HRM practices
_____ and _____ can be sources of competitive advantage. One may bring about the other
Strategic Human Resource Management
The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals
Human Capital
Strategic Human Resource Management involves Identifying the _____ ____ throughout the firm that is necessary to implement the business strategy
Includes identifying the specific knowledge, skills, and abilities required of different job families
HRM practices
Strategic Human Resource Management involves identifying and implementing ______ to ensure the necessary human capital is in the correct position within the firm
The effectiveness of an individual HRM practice depends on the others in the system
Consequences of a Systems Perspective
Shift focus from one “best” practice to identifying complementary practices
Consequences of a Systems Perspective
Highlights need for firm to coordinate HRM efforts
Practices shouldn’t be considered in isolation
Need coordination of efforts across HR divisions
control work system
Is a specific combination of HR practices, work structures, and processes that minimizes employee knowledge and skill requirements, and seeks to limit the variability of performance across people
Focus on developing a workforce that identifies with the firm. Enhances attachment
High Performance Work System (HWPS)
Is a specific combination of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment, and flexibility

Is composed of many interrelated parts that complement one another to reach the goals of an organization, large or small

Value Matrix Approach
Focus is on tailoring HR strategies to specific job families/groups within the firm

Firms distinguish jobs in terms of value to firm & uniqueness in labor mkt

Control-vs-Commitment-Oriented Work System
High Performance Work System (HWPS)
Value Matrix Approach
Generic HR Strategies/Systems
High Performance Work System
A system of management practices that together foster the development of a highly

-Knowledgeable, skilled, and able workforce
-Motivated workforce
-A workforce that has Opportunity to use its ability and motivation to achieve objectives

____ creates a High Performance Workforce
they combine to enhance all three factors (e.g., AMO)
The individual HRM practices may vary somewhat under different circumstances (e.g., industries, job families, etc.)

The key issue is that…?
This necessitates a “systems” perspective for HRM professionals

kind of work environments that eliminate status and power differences and, in the process, increase collaboration and teamwork
Egalitarianism and Engagement

Egalitarian work environments eliminate status and power differences and, in the process, increase collaboration and teamwork
When this happens, productivity can improve if people who once worked in isolation from (or opposition to) one another begin to work together

Shared Information

A shift away from the mentality of command and control toward one more focused on employee commitment

Creating a culture of information sharing where employees are more willing (and able) to work toward the goals for the organization

Knowledge Development

Employees in high-performance work systems need to learn in “real time,” on the job, using innovative new approaches to solve novel problems

The number of jobs requiring little knowledge and skill is declining while the number of jobs requiring greater knowledge and skill is growing rapidly

Performance-Reward Linkage

It is important to align employee and organizational goals. When rewards are connected to performance, employees will naturally pursue outcomes that are mutually beneficial to themselves and the organization

Egalitarianism and Engagement, Shared Information
Knowledge Development, Performance-Reward Linkage
4 Principles of a work system
Control-Oriented Work System
Egalitarianism and Engagement

Very little employee influence over “management” decisions

No formal employee complaint/ grievance mechanisms
Intense supervision/control

Control-Oriented Work System
Shared Information

Little communication/socialization efforts
Very little performance information shared
Very little strategic information shared

Control-Oriented Work System
Knowledge Development

Low skill requirements
Limited training efforts
Job tasks narrowly defined/standardized

Control-Oriented Work System
Performance-Reward Linkage

Limited benefits
Relatively low wages
May have Incentive-based Individual Rewards

Have more involvement in the organization
Experience growth and satisfaction, and become more valuable as contributors
Employee Benefits of HPWS
Higher productivity
Lower costs
Better responsiveness to customers/customer satisfaction
Greater flexibility
Higher profitability
Organizational Outcomes and Competitive Advantages of a HPWS
The HC/HR Architecture
Job families contribute differentially to competitive advantage in relation to job requirements and relation to core competencies
Value of Human Capital
(“Potential to contribute to … competitive advantage”)

Uniqueness of Human Capital
(Are the skills and knowledge needed to perform firm-specific or general?)

Two Dimensions of the HC/HR Architecture
Value Matrix Approach
The HC/HR Architecture
Human Capital Architecture
Human Capital Architecture
complimentary, strategic, support, core
4 components of Human Capital Architecture
Strategic Knowledge Workers
The Human Capital Architecture:

Employees who have unique skills that are directly linked to the company’s strategy.
Example: top management

Core Employees
The Human Capital Architecture:

Employees with skills to perform a predefined job that are quite valuable to a company, but not particularly unique or difficult to replace.

Supporting Labor
The Human Capital Architecture:

Employees whose skills are of less strategic value and generally available in the labor market.
Example: clerical workers

Complementary/Alliance Partners
The Human Capital Architecture:

Individuals and groups with unique skills, but those skills are not directly related to a company’s core strategy.
Example: consultants

Some human resources can be a source of competitive advantage, while others cannot
(Knowledge Workers can be a greater source of competitive advantage than traditional employees)

Different groups of employees have different value to the execution of business strategy and for competitive advantage
(Different groups of employees should be managed differently
One work system is not sufficient throughout the organization)

Implications of the HC Architecture (2)
Implications of the HC Architecture
Firms must decide if the performance (productivity) of a job family can influence strategic capabilities

If the answer is yes, firms must develop HRM and other work practices to maximize performance (productivity)

If the answer is no, firms must develop HRM and other work practices to minimize variance in performance (productivity)

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