Ch2 Human Resource Policies and Strategies
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Human resource strategies and policies play an important role in organizational success. An effective HR strategy has three key elements: strategic objectives, a plan of action to meet those objectives, and alignment between HR strategies and the overall business strategy. Developing strong HR policies provides guidelines for employee management and ensures consistency. Regular strategic planning allows an organization to assess its mission, vision, external environment, and goals to develop effective strategies and policies over the long term.
Ch2 Human Resource Policies and Strategies
- 1. CHAPTER 2 HUMAN RESOURCE POLICIES AND STRATEGIES PRESENTED BY: MANJALIKA KOMAL
- 2. INTRODUCTION STRATEGY K Ashwathappa defines strategy as: • It is a future oriented plan for interacting with the competitive environment to achieve organizational goals. • Strategy is a framework for managerial decisions According to Chandler (1962) : ‘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.’
- 3. STRATEGY HAS THREE FUNDAMENTAL CHARACTERISTICS: 1.FORWARD LOOKING: It is concerned with both ends and means. Strategies define longer-term goals but they also cover how those goals will be attained. Boxall (1996) explained: ‘Strategy should be understood as a framework of critical ends and means.’ 2. ORGANIZATIONAL CAPABILITY OF A FIRM (ITS CAPACITY TO FUNCTION EFFECTIVELY) DEPENDS ON ITS RESOURCE CAPABILITY. This is the resource-based view, based on the ideas of Penrose (1959) : The firm is ‘an administrative organization and a collection of productive resources’. It was expanded by Wernerfelt (1984) who explained that Strategy ‘is a balance between the exploitation of existing resources and the development of new ones’.
- 4. 3. 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. HR STRATEGY Richardson and Thompson (1999) suggest that: A strategy, whether it is an HR strategy or any other kind of management strategy must have two key elements: there must be strategic objectives (i.e. things the strategy is supposed to achieve), and there must be a plan of action (i.e. the means by which it is proposed that the objectives will be met). Dyer and Reeves (1995) as ‘internally consistent bundles of human resource practices’. According to Deepak kumar Bhattacharya “HR strategy is a pattern of decisions concerning policies and practices concerning with the HR system”.
- 5. STRATEGIC HUMAN RESOURCE MANAGEMENT (SHRM) (OTHER SOURCES…) It is a competency based approach for management of HR. It focuses on developing HR for sustainable competitive advantage It is an approach that defines how the organization’s goals will be achieved through people by means of HR strategies and integrated HR policies and practices- MICHAEL ARMSTRONG
- 6. ROLE OF HR STRATEGY IN STRATEGIC MANAGEMENT There are number of theories which define the role of HR strategy 1. Behavioural role theory ( Katz and Kahn (1978), Jackson & Schuler (1995)) : It considers employee behaviours as key to successful strategy implementation. By aligning hr policies & practices with organisation wide strategy , employees can fulfil their role expectations within the organisation 2. Resource based theory (Barney (1991) , Prahalad & Hamel (1990)) : It suggests that HR has the sustainable competitive advantage for the organisation. This is because HR is inimitable and non-substitutable source for achieving competitive advantage. 3. Human capital theory (Becker (1964)) : It suggests the strategic importance to HR like other economic assets as knowledge., skills and abilities of the people also have economic value. 4. Transaction cost theory (Williamson(1981)): It suggests that strategic HR approach can ensure cost minimisation as this will enhance periodic monitoring and governance
- 7. ROLE OF HR STRATEGY IN STRATEGIC MANAGEMENT contd… 5. Agency theory (Eisenhardt (1989)): Strategic approach to HR aligns agents ( employees) and principals (employers) interests and thereby ensures streamlining of employment relations and systems within the organisation. All these theories are grouped under RATIONAL CHOICE THEORIES OF HR. Institutional and dependency theories on HR strategy focus on constituency based interest . This is because the strategic approach is not empirically proved as contributor to organisational performance. There are external factor that act as potential influencers in strategy. STRATEGY is the direction and scope of an organisation over long term , matching its resources to its changing environment and in particular its markets, customers so as to meet stakeholders interests.
- 8. Strategy is mainly concerned with: 1. The scope of an organisation’s activities 2. Matching the activities of an organisation to that environment in which it operates 3. Resource implications 4. Operational decisions 5. The value and expectations of stakeholders 6. Long term direction
- 9. CRITERIA FOR AN EFFECTIVE HR STRATEGY (OTHER SOURCES..) • It will satisfy business needs. • It is founded on detailed analysis and study, not just wishful thinking. • It can be turned into actionable programmes that anticipate implementation requirements and problems. • It is coherent and integrated, being composed of components that fit with and support each other. • It takes account of the needs of line managers and employees generally as well as those of the organization and its other stakeholders.
- 10. LEVELS OF STRATEGY CORPORATE LEVEL: This strategy is influenced by the mission of the organisation It addresses the issues : Overall scope of an organisation How to run in structural and financial terms How resources are allocated to different operations COMPETITIVE OR BUSINESS STRATEGY: This strategy is adopted by an organisation in order to have strong market position. It explains: How to compete in the market. Which products or services should be developed and offered to which markets To what extent it meets customers need Does it achieve the objectives of the organisations like long term profitability etc. OPERATIONAL STRATEGIES: These are adopted at the functional level or the operational level.
- 11. POLICY A policy is a pre determined established guidelines towards the attainment of accepted goals and objectives. Such guidelines facilitates properly designed efforts to accomplish the strategic intent. Policy is not a strategy or a tactic ACCORDING TO MICHAEL ARMSTRONG: HR policies provide guidelines on how key aspects of people management should be handled. The aim is to ensure that any HR issues are dealt with consistently in accordance with the values of the organization in line with certain defined principles. All organizations have HR policies.
- 12. FROM OTHER SOURCES… (TEXTBOOK OF HRM BY R.S DWIVEDI) DIFFERENTIATING POLICY FROM STRATEGY PROPOSED COURSE OF ACTION POLICY STRATEGY Policy relates to general character or nature which an enterprise intend to adapt Strategy is means to be used in bringing about such intended features. Policy decisions reflects the personal beliefs of owners or directors about kind of enterprise they intend to run and how it should run It reflects the logical and rational analysis by senior executives intended to implement such policy decisions TIME FRAMEWORK Policy decisions have broader perspective than strategic decisions It has been asserted that Policy decisions prevail over a decade or more Strategic decisions are valid for several years but less than 10 years.
- 13. POLICY Policy is different from objectives: Objectives are specific goals or aims , in quantitative terms and can be considered as something which an individual or group seeks to accomplish. Objective is something to accomplish whereas a policy is a guide to accomplish it. Policy is different from procedure: Procedure defines the manner or way of accomplishing something i.e. it is a process and method. While policy forms part of a framework of general principles. Policy is different from programmes: Programmes are developed on the basis of policies with a view to implement them and accordingly programmes involve one additional step beyond policy to simplify the decisions. The execution of programmes lead to specific actions including practices and procedures
- 14. HR POLICIES AND PROCEDURES A comprehensive coverage of policies embrace any action or decision, taken by management or employees in relation to the working environment. It includes the rights, responsibilities and actions. Policy may be statement of : Standards for employee attendance Management obligations in grievance administration Conditions under which loans will be granted Conditions under which an employee is suspended or terminated PROCEDURES Procedures prescribe the details for carrying out the policies. It tells about the specific rules and regulations, the steps, time, place and personnel responsible for implementing policies. It also clarifies what is to be done in particular circumstances.
- 15. HR PROGRAMME HR Programme consists of the entire broad course of action governing employees at all levels(including management) in a firm. It can be thought of as a stable plan of action that continues over an extensive period of time. It is the end product of philosophy, values, concepts, principles, policies and procedures. Some universal elements in a HR programme are: 1. Employment – Selection and job change, 2. Training and development, 3. Communication, 4. Grievances and discipline, 5. Wages and salary, 6. Health and safety, 7. Benefits and services, 8. Labour relations, 9. Research.
- 16. HR PLANNING HRP is defined as the process of forecasting an organisation’s future demand for, supply of the right type of people in right number. All activities of HRM- planning, hiring , training , remunerating and maintaining must be merged with strategic management. HR planning is part of strategic planning. In most successful companies, there is virtually no difference between HR planning and strategic planning
- 17. HR PLANNING PROCESS ENVIRONMENT ORG. OBJECTIVES AND POLICIES HR NEEDS FORECAST HR SUPPLY FORECAST HR PROGRAMMING HRP IMPLEMENTATION CONTROL AND EVALUATION OF PROGRAMME SURPLUS SHORTAGE
- 18. CONSIDERATIONS IN DEVELOPING HR POLICIES • Statements of policy constitute criteria for making decisions. • They render decision making easier and more routine. • They facilitate saving of precious time. • Policies provide a clear idea of what management and employees can expect. Therefore, policies promote consistency and fairness of action and eliminate any bias in employee related decisions. • This way policies help to avoid confusion and misunderstanding. • Policies may originate from anywhere inside an organisation or from external sources . • The approval of new or changed HR policies ultimately come from top management.
- 19. CONSIDERATIONS IN DEVELOPING HR POLICIES CONTD.. • An effective HR department recommends policies and policy changes that it has to assist in communicating policies to those who should know about them. • In formulating policies, the first consideration is the objective or purpose. • Operationally, it is also necessary to contemplate economics(costs) and benefits in relation to size and complexity of the organisation. • Thus comes to need for determining the policies acceptability to management and to employees, and this depends to a great extent on their administrative feasibility and fairness to employees. • Unions have had a tremendous impact on policy formulation.
- 20. GUIDELINES FOR POLICY FORMULATION A number of guidelines for policy writing have been well established and are worth enumerating: 1. Purpose: A statement of purpose or rationale helps to understand the policy and ensure acceptance of it. 2. Semantics: choice of words should be understandable. Wording should avoid irritating expressions that denote inferiority e.g., ‘You are forbidden.’ 3. Tone: A warm, understanding tone will help to show the interest and concern of management. This means avoidance of legalistic language as much as possible. 4. Form: An outline form may be useful for management references and application. But outlines are difficult for employees to follow. Relatively short paragraphs, some use of underlining , and adequate spacing(double rather than single) encourage reading. 5. Clarity: Short sentences are better than long ones and simple sentences are easier to read and comprehend than complex or compound sentences.
- 21. COMMUNICATING THE POLICIES Management has a definite responsibility to see that employees become familiar with all policies that affect them. WAYS OF COMMUNICATION WRITTEN MEDIA - employee handbooks, bulletin boards, company periodicals, etc. In orientation sessions for new and old employees: ORAL EXPLANATION - can be accompanied by visual aids such as film strips, placards and funnel boards.
- 22. ADMINISTERING POLICIES • Uniformity in administration is desirable when circumstances are similar among the various individuals and groups concerned. Customs amongst various groups and parties that have been in operation for sometime and needs of different groups of employees, etc., influences decisions in regard to degree and extent of uniformity. • Questions of rigidity of administration and consistency or flexibility of interpretation must also be faced. In weighing special consideration to an employee or penalty for a violation, many factors must be taken into account: work record; demonstrated capability; history of relationships ; impact on other and on further situations; knowledge at the individual’s disposal; reasons; obligations to the organisation; respective values etc.
- 23. PART II
- 24. Learning Objectives Framing strategy Strategic control Operational control systems Functional & grand strategies Example of strategy & action plan for HRM
- 25. FRAMING STRATEGY Strategic plan is the process of thinking through the current mission of the organization with due cognizance to current environmental conditions—both internal & external Such plans, thus, set guidelines for future decisions & results.
- 27. VISION MISSION FRAMING STRATEGY A vision is a depiction of what you would like your organization and HR department to be like in the future. A vision statement is a brief explanation (one or two sentences) with some explicit commentary about why the vision is desirable. For eg.- Attitude towards quality and customers’ complaints Effective mission statements include the following elements: The concept of your organization. The nature of your business. The reason your organization exists. The people you serve. The principles and values under which you intend to operate.
- 28. CHARACTERISTICS OF A VISION STATEMENT Imaginable: Conveys a picture of what the future will look like. Desirable: Appeals to your long-term interests and the interests of other stakeholders. Feasible: Has realistic, attainable goals. Focused: Is clear enough to help guide decision-making. Flexible: Is general enough to allow for individual initiative and alternative responses in light of changing conditions. Comprehensible: Is easy to communicate; can be successfully explained within five minutes.
- 29. SAMPLE MISSION STATEMENTS XYZ is committed to delivering exemplary, compassionate and professionally rewarding internal medicine care to patients with complex multi-system diseases. XYZ’s HR department is committed to providing professional, progressive and strategic human resource leadership to all stakeholders. XYZ’s HR department provides the organization with people, policies, processes and practices that best support a flow of talent capable of meeting businesses’ needs.
- 30. VISION MISSION Category of intentions that are broad, all inclusive & forward thinking A vision in tangible form is a mission statement Describes aspirations for the future Mission statements verbalise the vision Does not specify the means that are used to achieve the desired ends Key elements of mission statement Must be inspirational Often unwritten Must be communicated In 2 ways :- (i) In form of mission statement, OR (ii) Through personal selling (eg.behaviour of the visionary)
- 31. KEY ELEMENTS OF MISSION STATEMENT VIEW OF THE FUTURE COMPETITIVE ARENAS SOURCES OF COMPETITVE ADVANTAGE BENEFITS GOALS OBJECTIVES POLICY STRATEGY
- 32. GOALS OBJECTIVES Goals make a mission statement more concrete Operational definitions of goals Address both financial and non-financial issues Describe what the organisation hopes to accomplish They facilitate reasoned trade-off They can be measured Can be reached with a stretch They indicate time dimension Cut across functional areas Reduce conflicts & misunderstandings
- 33. policy strategy General statements or understandings It is the direction Policies guide manager’s thinking in decision- making Concerned with deployment of human and material resources Ensure that decisions fall within certain boundaries Increases the chance of achieving selected objectives
- 34. STRATEGIC CONTROL Allow time between initial implementation and achievement of intended results Steer the organization through different actions- environmental situation & firm’s internal situation Correct the actions and directions of the firm as required by making certain changes & deployments in external env. & internal situation
- 35. Types of strategic control
- 37. OPERATIONAL CONTROL SYSTEMS TOP MANAGEMENT- monitor and steer the basic strategic direction of the company OPERATING MANAGERS- control methods appropriate to their level of strategy implementation PRIMARY CONCERN AT THE OPERATING LEVEL- allocation and use of company resources Operational systems guide, monitor and evaluate progress in meeting annual objectives
- 38. Steps include :
- 39. TYPES OF OPERATIONAL CONTROL SYSTEMS : BUDGETS SCHEDULES KEY SUCCESS FACTORS
- 40. FUNCTIONAL & GRAND STRATEGIES FUNCTIONAL STRATEGIES GRAND STRATEGIES Functional strategies give specific guidance to managers for accomplishing annual objectives They translate grand strategies at the business level into action plans for the org. Grand strategies are framed with a long-term perspective at the corporate level.
- 43. Operations strategy factors Number, type, location and size of operations facilities Type of equipment to be utilised Make or buy decision Organisation structure Workforce selection, employment scrutiny, compensation methods, & management style Information system Production planning, scheduling n control, system and inventory policy Quality control and improvement methods Productivity improvement methods- machine/manpower
- 44. HR Strategy factors Recruitment and selection Career development Performance appraisal Training & development Compensation Designing HRP
- 46. EXAMPLE OF STRATEGY & ACTION PLAN FOR HRM VISION (i) We are committed to provide an enjoyable work environment to our employees to promote teamwork, quality improvement and excellence. (ii) Our employees are our valued customers and most important stakeholders. MISSION To achieve excellence in HRM, fostering growth and creativity
- 47. GOALS (i) to promote teamwork (ii) to ensure quality improvement (iii) to foster growth and creativity OBJECTIVES Goal 1- Achieve group cohesiveness by inculcating participative management Reduce dissonance in managerial decisions Zero man days loss and increased productivity
- 48. STRATEGIES 1. Improve participative management 2. Initiate organization wide quality improvement 3. Develop culture to promote growth and creativity STRATEGY AND ACTION PLAN STRATEGY 1 – Establish small group forums, quality circles (QC), self managed teams (SMTs), TQM clubs Shift focus from statutory participation to total participation Empower employees by involving them in decision making process
- 49. REFERENCES BOOKS Human Resource planning - Dipak Kumar Bhattacharyya Strategic Human Resource Development - Jim Grieves Strategic Human Resource Technologies - Ashok Chanda WEBSITES http://smallbusiness.chron.com/four-types-strategic- control-14720.html