GREAT ZIMBABWE UNIVERSITY

DEPARTMENT OF HUMAN RESOURCE

MANAGEMENT

MODULE OUTLINE: HRMH 421-STRATEGIC HUMAN RESOURCE MANAGEMENT

LECTURER: P. MABIKA

The module aims to help students understand the significance of Human

Resource Management in the development and implementation of
corporate strategies for competitive advantage. The module also provides
a platform for the theoretical understanding of HR and Business Strategy
formulation and implementation

Overview of Strategic Management

 Strategic Management Defined

 Strategic Management process
 Competitive Advantage
 Tools for Strategic Analysis: SWOT, BCG Growth-Share Matrix, GE
Matrix Market Attractiveness Business Strength, Porter’s Five
Forces for Industry Analysis, Value Chain Analysis(VCA), McKinsey’s
7s Framework, Resource Based View(RBV), PESTEL, SWOT, SAP
 Conceptualising Strategy (Porter’s Generic Business Strategies,
Miles and Snow’s & Whittington’s Typology).
  Critique of Strategic Management Process (Planned vs. Emergent
Strategy- Mintzberg).

Strategic Human Resource Management (SHRM)

 Definition of Strategic Human Resource Management

 Aims of SHRM
 Strategic integration/fit
 HR Devolvement
 Theoretical foundations of SHRM: Best Fit (Contingent approach),
Best Practice (Universalist) HR Bundling (Configurational Approach)
and The Resource Based View.
 High Performance Work Organisations/Systems (HPWS)
 Ulrich’s Multiple role Model of HR
 HR as Strategic and Business Partner
 Competencies for HR professionals

Reward Management

 Aims of Reward Management

 Key considerations in Reward Management
 Rewards as a key lever in strategy implementation
 Total Reward Model
 Total Cost to Company Model
 Performance Related Pay

Performance Management

 Aims of Performance Management

 Designing and implementing performance management systems
 Approaches to performance management (Balanced Scorecard)
 Developing the HR Scorecard
 Pay, Motivation, Job Design and Performance
 Developing and implementing High Performance Work Culture
 Managing poor performance

Evaluating the HR Effort/Contribution

  The need for measurement in HR
 Challenges in the evaluation of the HR outcomes
 Benchmarking
 HR Auditing
 HR Metrics

Contemporary Issues in HRM

 Ethics and HRM

 HRM in Downsizing and Restructuring
 HRM and Quality
 Managing Diversity (of Mindsets)
 International HRM: The Influence of National Cultures

SUGGESTED READING LIST

Armstrong M (2008) Strategic Human Resource Management 4 thEd

Kogan Page London.

Armstrong m (2006) A Handbook of Human Resource Management 10 th

Ed Kogan Page London

Beardwell I et.al (2004) Human Resource Management. A Contemporary

Approach. Pearson Education

Bratton, J. & Gold, J. (2007) Human Resource Management: Theory

and Practice, 4th Edition, Basingstoke: Palgrave

Ehlers T & Lazenby K (2004) Eds Strategic Management. Southern

African Concepts and Cases. Van Schaik Publishers, Pretoria
Holbeche L (2009) Aligning Human Resources and Business Strategy
2nd Ed. Elsevier Oxford

Huselid M, Becker B & Ulrich D. (2001) The HR Scorecard. Linking

People, Strategy, and Performance. Harvard Business School Press.
Boston
Legge K (1995) Human Resource Management: Rhetorics and Realities.
Macmillan London.

Pettigrew A et.al. Eds (2009) Handbook of Strategy & Management. Sage

Publications

Pfeffer, J (1998) ‘The Human Equation’ Harvard Business School Press,

Boston.

Price A (2004) Human Resource Management in a Business Context 2 nd

Ed. Thomson Learning

Mabey C., Salaman G. and Storey J. (1998) Human Resource

Management: A Strategic Introduction Blackwell, Oxford

Mathis R et.al (2003) Human Resource Management 10th Ed

Pinnington A et.al Eds (2007) Human Resource Management-Ethics and

Employment. Oxford University Press. Oxford

Torington D & Hall L (2001) Human Resource Management 6th Ed

Prentice Hall

The following journal articles are also very helpful

Becker B, Huselid M & Ulrich D (2001) Making HR a Strategic Asset

Boxall P & Purcell J (2000) Strategic Human Resource Management:
Where have we come from and where should we be going? International
Journal of Management Review. Vol. 2 Issue 2 pp183-203
Chandler A (1962) Strategy and Structure: Chapters in the History of
the Industrial Enterprise. The MITP Press Cambridge.
Huselid M & Becker B (1997.) The impact of High Work Systems,
Implementation Effectiveness and Alignment with Strategy on
Shareholder Wealth. Annual Meetings Academy of Management Journal
Huselid.M (1995) The impact of HRM Practices on Turnover, Productivity
and Corporate Financial Performance. Academy of Management Journal
1995 Vol. 38 No. 3 Pg 635-672
Kaplan R (2009) Conceptual Foundations of the Balanced Scorecard.
Harvard Business Review. Boston.
Kaplan R & Norton D (1996) Using the Balanced Scorecard as a Strategic
Management System. Harvard Business Review January-February 1996

Lepak D & Snell S (2002) Examining the Human Resources

Architecture: The Relationships among Human Capital, Employment and
Human Resource Configurations. Journal of Management. Sage
Publications Vol. 28 Issue No.4

Mintzberg H (1990) Strategy Formation. Schools of Strategy. In

Fredrickison(Ed) Perspectives on Strategic Management. Pp 105-235. New
York, Harper Business

Mintzberg H (1994a) The Fall and Rise of Strategic Planning. Harvard

Business Review. Vol. 72 Issue No. 1

Mintzberg H (1994b) The Rise and Fall of Strategic Planning. New York,
The Free Press

Ulrich D & Brockbank W (2005) HR's New Mandate: Be a Strategic

Player. Harvard Business School Press. Boston.

Sabramony. M (2009) A Meta-Analytic Investigation of Relation Between

HRM Bundles and Firm Performance. Wiley Periodicals
Wright P. & McMahan G. (1992). Theoretical Perspectives for Strategic
Human Resource Management. Journal of Management. Vol. 18 Issue No.2
pp 295−320.

HRMH 421 TUTORIALS

1. “The Balanced Scorecard is a tool for translating strategy into

action through performance measures that tell the story of your
strategy.” (Niven, 2006). With the aid of examples explain how
 you would use the Balanced Scorecard to translate business
strategy into action and measure both individual and
organisational performance in an organisation of your choice.
2. With reference to case examples critically evaluate the role and
function of HR departments within organizations and discuss
ways that they can improve their strategic value to the
organization and its customers.
3. Evaluate the usefulness of the McKinsey’s 7S framework in the
formulation and implantation of HR strategies.

4. With reference to any organisation of your choice

a) Evaluate the relevance of its business/competitive strategy in
light of the prevailing economic environment
b) Assess the relevance of HR practices and activities that have
been put in place to support this strategy.
5. Most people agree that differences in rates of pay according to
value or effort are justified, but some differences are obscene.
What criteria would you suggest for setting pay differential in an
organisation of your choice that are seen as fair and are
effective in attracting and retaining talented personnel
6. a). Critically evaluate the proposition that organisations must
recruit for attitude and aptitude, and train for skills
b). Discuss how organisations can take a more strategic approach to
staff selection.
7. Discuss the applicability of the concepts of Strategic Fit and HR
Devolvement within the Zimbabwean context
8. Explain fully the concept of competitive advantage. With
reference to an industry you are familiar with demonstrate how
HR managers have contributed to the building of a sustainable
source of competitive advantage.
9. Discuss how Senge’s (1995) laws of systems thinking can used
in the practice of Strategic Human Resource Management
 10. What key issues would you take into consideration in drawing
up flexible benefits packages aimed at New Graduates,
Employees in Their Thirties and those Aged over Fifty
11. a). Explain the role of HR as both a ‘Strategic’ and ‘Business’
Partner
b). Outline the critical steps in developing a Human Resources
Strategy in a typical organisation.

12. What strategies would recommend to an organisation that

wishes to portray itself as an employer of choice (take into
account the current business constraints). What criticism can be
levelled against arguments for employee retention?
13. (a) To what extent is it possible to identify Best Practice in
reward management. What elements would you consider to
make up such a reward package.
(b) What major organisational problems are associated with a move
from a narrow to a broadbanded payment structure. Suggest
possible solutions to identified problems
15 (a) Assess the usefulness of “benchmarking” in formulation and
evaluation of HR strategies in light of increasing competition and
change.
(b) Identifying Best Practices is a critical issue in HRM
benchmarking. If you were involved in an HRM benchmarking
exercise, how would you define or identify what constitutes best or
better practices

16 Compare and contrast any two frameworks for strategy

implementation you are familiar with and assess the conditions
underlying the effective implementation in each framework
 OVERVIEW OF STRATEGIC MANAGEMENT

Strategic Management the process whereby all the organisational functions and resources are
integrated and coordinated to implement formulated strategies which are aligned with the
environment in order to achieve the long term objectives of the organisation and gain
Competitive Advantage through adding value for the stakeholders ( Ehlers and Lazenby
2007;2)
Strategic Management is the process and approach of specifying an organisation’s objectives
and developing policies and plans to achieve and attain these objectives and allocating
resources so as to implement the policies and plans.

Strategic management is the process by which an organisation establishes its objectives,

formulates actions designed to achieve these objectives in the desired time scale implements
the actions and assesses progress and results. Chapman and hall.

Strategic management is a process of strategy making and strategy formulation and if the firm
survives reforming its strategy over time.

The field of Strategic Management has evolved from Financial Planning (1950s) which
focused on budget for one or two years. Data and variables were all financial measures
Lorange (1991) labelled this budgeting. Long Range Planning (1960) it took a functional
view of the firm and focuses essentially on the arrangement of each of the functions i.e. HR,
Finance, Production, Marketing. Evaluation of Strategic Planning (1970s) often called the
forecast based planning focused on external factors like market competitors and internal
functional factors, customers and competitors were the main forms. corporate planning was
criticised as organisations found themselves in turbulent change and long range plans were of
little use.

CONCEPT OF STRATEGY

The origin of this concept can be traced in its military orientation, going back to the Greek
word ‘strategos’, for a general who organises, leads and directs his forces to the most
advantageous position (Bracker, 1980; Legge, 1995; Lundy and Cowling, 1996). In the world
of business it mainly denotes how top management is leading the organisation in a particular
direction in order to achieve its specific goals, objectives, vision and overall purpose in the
society in a given context / environment. The main emphasis of strategy is thus to enable an
organisation to achieve competitive advantage with its unique capabilities by focusing on
present and future direction of the organisation (also see Miller, 1991; Kay 1993). a strategy
is establishment of clear direction for the organisation and a means of getting there which
requires the creation of strong competitive positions. (chapman and hall). Grant (2008, p.4),
one of the leading US texts, makes it clear that strategy is about winning . . . [It] is not a
detailed plan or programme of instructions; it is a unifying theme that gives coherence and
direction to the actions and decisions of an individual or an organisation. The best-known
British text on the subject (Johnson et al, 2005, p.9) defines strategy as:
The direction and scope of an organisation over the long term, which achieves advantage in
a changing environment through its configuration of resources and competences with the aim
of fulfilling stakeholder expectations.

Strategy is traditionally seen as an effort or deliberate action that an organisation implements

to outperform its rivals. Earlier concept were mechanistic and can be described in terms of fit
i.e. strategy as integrating organisational functions (Chandler and Barnard) as a strategy as fit
between organisation and environment (Andrews 1971) or strategy as a planning perspective
in terms of ends and means. a strategy recognises that the organisational capability(capacity
to function effectively depends on its resource capability(quality and quantity of resources)
an their potential to deliver results( RBV).

According to Mintzberg (1994) strategy is a word that we define differently than we practice.
The field of strategic management cannot rely on a single definition of strategy. Explicit
recognition of the multiple definitions can help practitioners understand this field.
Accordingly Mintzberg presents 5 definitions of strategy as plan, ploy, pattern position and
perspective

Strategy as Plan

Means some sort of consciously intended course of action, a guideline (or set of guidelines)
to deal with a situation. By this definition strategy has two essential characteristics

 They are made in advance of the action to which they apply

 They are developed consciously and purposefully

To Drucker strategy is “purpose for action”. To Moore strategy is design for action thus in
essence conception preceding action.

Strategy as Ploy

A specific manoeuvre intended to outwit an opponent or competitor. A corporation

threatening to expand plant capacity to discourage a competitor from building a new plant.
Here the real strategy (as plan , i.e real intention ) is the threat not the expansion itself and as
such a ploy.
Porter (1980) also makes reference to market signals (discussion of the effects of
announcements of moves, threats of anti-trusts suits, competitive move including actions to
pre-empt competitive response.

Strategy as Pattern.

If strategies can be intended they can also be realised, defining strategy as plan is not enough,
we need a definition that encompasses the resulting behaviour.

Strategy as pattern entails a stream of action e.g. Ford Motor Company offering of Model T.
Strategy becomes consistent behaviour whether intended or not intended. Gradually the
successful approaches merge into a pattern of action that becomes our strategy.

Strategy as Position

A means of locating the organisation in what organisation theorists like to call an

environment. By this definition strategy becomes a mediating force or match between
organisation and the environment i.e. internal and external contexts.

In ecological terms a strategy becomes a niche (apposition occupied to avoid competition), in

economic terms a place that generates “rent” i.e. returns to (being) in a unique place, in
management terms formally a product market “domain” the place in the environment where
resources are concentrated.

Strategy as Perspective

An ingrained way of perceiving the world. Some organisation for example are aggressive
pace setters creating new technologies exploiting new markets ; others perceive the world as
set and stable and so sit in lowly established markets.

Some organisations favour marketing and build a whole ideology around that (IBM), Some
focus on sheer productive efficiency (MacDonald).

From this, strategy is like the personality of the organisation. Philip Selznick makes
reference to character of the organisation i.e. distinct and integrated commitments to ways of
activity and responding that are built right into it.
A variety of concepts from other discipline can be used to capture this; sociologists talk of
ideology, anthropologists make reference to culture and military theorists talk of grand
strategies.

LEVELS OF STRATEGY

Corporate Strategy occurs at top management to oversee the interests and operations of the
organisation. Corporate level strategy addresses the actions of the total organisation is taking
or should take, and attempts to determine the roles each business activity is playing and
should play in the organisation. Questions to ask: what new techniques should we use/take?
What business should we go into/pull out.

Business-Unit Strategy concerns the managing the interests and operations of a particular
business unit. It attempts to determine what approach the business should take to its market
and how the business should conduct itself given its resources and conduct the market. The
strategy is suitable for that particular operating unit. Questions to ask: what products should it
offer? Which customers to serve?

Functional Level Strategy provides a framework for management functions e.g HR, Finance,
marketing so that they conform to the business market strategy. these strategies at functional
level are made in line with how they can maximise resource productivity and support the
business strategy that is HR policies and practices support the business strategy. Questions to
ask: What makes one company better than others? Why do some company marketing perform
their rivals with fewer resources? These three levels of strategy should integrate though.

Strategic Management Process

Over the past three decades or so a lot has been written under the field of strategic
management about the nature, process, content and formation of organisational strategy (see
e.g. Mintzberg, 1987; 1994; Quinn et al., 1988; Ansoff, 1991 Whittington, 1993; 2001). A
‘classical’ strategic management process consists of a series of steps, starting from
establishing a mission statement and key objectives for the organisation; analysing the
external environment (to identify possible opportunities and threats); conducting an internal
organisational analysis (to examine its strengths and weaknesses and the nature of current
management systems, competencies and capabilities); setting specific goals; examining
possible strategic choices/alternatives to achieve organisational objectives and goals;
adoption/implementation of chosen choices; and regular evaluation of all the above (see e.g.
Mello, 2006). The abovementioned first five steps form part of strategic planning and the last
two steps deal with the implementation of an ideal strategic management process. They also
deal with both the ‘content’ (revealed by the objectives and goals) and ‘process’ (for
example, planning, structure and control) of an organisational strategy (Chakravarthy and
Doz, 1992; Lundy and Cowling, 1996).

Strategy process attempts to address question of how strategies are formed, implemented and
changed. Strategic Management Process assumes that managers aspire firms to realise
something called strategy and what constitutes an effective strategy is addressed in the body
of strategy content.

Vision

What do we want to become, this serves as a road map of the organisation, a dream that
focuses on a future desirable state of affairs an enduring process. It should be achievable in
the long term otherwise it may lose its motivating value

For example Coca-Cola’s vision is “a coke is an arm’s reach”. While this seems far-fetched
it is almost coming to fruition as the Coke sign is common even in remote isolated areas of
Africa.

Strategic Intent: (Hamel and Prahalad) envisions a desired leadership position and establishes
a criterion the organisation will use to chat its pRogress. It is an overarching ambitious goal.

Mission – what is our business?

An enduring statement of purpose it has four focus areas

 Purpose Identifies the organisation’s strategy

 Behaviour standards (values moral beliefs)

 Source of its current assets

A study of mission statements in the United States argued that every organization should
have one to motivate its employees. It claimed that firms with clear motivating mission
statements were likely to perform better than those without. Classic mission statements cited
include the Peter Drucker example of the men on the cathedral building site, President
Kennedy’s ‘Put a man on the moon,’ Canon’s ‘Beat Xerox’ and Komatsu’s ‘Encircle
Caterpillar.’ The trouble is that most mission statements tend to provoke cynicism and
confusion rather than clarity and commitment by trying to combine statements of objectives
with statements of values.
Source: Adapted from Financial Times, 3 April 1989.

There are four approaches to setting a mission (Collins and Porras, 1991):
1. Targeting. Setting a clear, definable target for the organization to aim at, such as the
moon (the NASA moon mission statement!), financial/growth targets or standards of
excellence in product markets.
2. Focusing on a common enemy. Defeat of the common enemy guides strategic choice,
e.g. Pepsi’s ‘Beat Coke’, Honda’s ‘Crush, squash, slaughter’ Yamaha, Nike’s attack
on Adidas. Honda was so successful in its mission that Yamaha actually made a
public apology for its claim that it would defeat Honda.
3. Role modelling. Sometimes used by smaller companies that model themselves on
dominant players in their industry. In the computer industry IBM and Apple have
provided – at least, until recently – very different kinds of models.
4. Internal transformation. Used by older organizations faced with the need for radical
change. This kind of mission has as its starting point the admission that its current
mission is out of tune with the new realities it is facing.
STRATEGIC MANAGEMENT PROCESS
Strategic management can be seen as a combination of strategy formulation, implementation
and evaluation.

Strategy Process: Political Perspective

 Political behaviour includes all behaviours associated with the use of power or
influence, consciously self-serving behaviours included, withholding or distorting of
information, agenda control coalition building often influence strategy choice are seen
as dysfunctional.

 Politics is a deviation from techno-economic rationality.

 Organisations are composed of constantly set of actors each seeking to have their
interests defined as part of the organisation’s purpose, thus propose actions that are in
tune with their interests.

Strategy Process: Emergent/Evolutionary Perspectives

 “Organisation action results from a process akin to organised anarchy where decision
making occurs in a stochastic meeting of choices looking for problems, problems
looking for choices, solutions looking for problems to answer, and decision makers
looking for something to decide”(Eisenhardt and Z’baracki 1992:27)

 Strategy is not rational and non-teleological

Competitive Advantage

Business strategy is all about competitive advantage. Without competition there would be no
need for a strategy the sole purpose for strategic management is to enable the company to
gain a sustainable edge over its competitor so as to get a competitive strength relative to that
of its competitors in the most efficient way. A firm achieves competitive advantage in a
market whenever it outperforms its competitors,that are doing things better than one’s
competitors. It may result from low cost of production, ability to satisfy a group of customers
with higher perceived benefits (Porter). organisations seek to create and then sustain a clear
competitive advantage. Competitive advantage is about the edge that a company has that
other companies do not have could be achieved through differentiation, low cost, forms.
Essentially competitive advantage is gained through
  innovation that is new markets and new products.
 identifying the key success factors in an industry.
 attempt to change the key success factors.
 exploit areas where the company enjoys relative superiority.

The important question is what makes one firm better than another? Why do some companies
outperform their rivals with fewer resources, capital and even specialist employees? The
answer lies in competitive advantage i.e. the edge that an organisation has over others. This
could be achieved through strategies such as lower costs, wider range of products,
differentiation or focus strategies. The CA should elevate the organisation from its
competition. The CA should fulfil certain criteria i.e. it must

1. Relate to an attribute with value and relevance to the targeted customer segment

2. Be perceived by the customer as a competitive advantage

3. Be sustainable and not easily imitated by competitors

Consequently CA should be based on an organisation’s resources, strengths or distinctive

competencies relative to competition and must be perceived as such by customers. the
environment in which the organisation will be operating in also determines the key success
factors for organisations to gain competitive advantage.

Resource Based View of Strategy emphasises on firm specific resources as fundamental

determinants of competitive advantage. Resources are all assets, capabilities, competencies,
information knowledge and reputations that are owned or controlled by the firm and that
enable the firm to conceive and implement strategies that improve its efficiency and
effectiveness. The resource based view (RBV) of the firm maintains that firms are
heterogeneous with respect to bundles of resources they control. Resource heterogeneity
persists because resources like reputation or other information based cannot be traded on
factor markets.

Privileged Market Position

This is competitive advantage that follows from industry structure rather than from strategic
resources. Sometimes competitive advantage may be sustainable not because rival firms
cannot replicate underlying resource position but because they do not have the incentive to do
so. In such cases the source of competitive advantage is a privileged market position
Sources of privileged market position

1. Absolute cost advantages which stem from large investments

2. Network Externalities which are present when the benefit a consumer derives from the
use of the product increases with the number of other consumers purchasing
compatible items with the installed base of the selected technology e.g. Microsoft

3. Proliferation of product varieties; by cornering the right niches a market leader may
leave smaller rival with few opportunities for establishing a significant market
presence.

4. Exclusivity, legal restrictions such as patents, copyrights, trademarks or licenses to

operate in a given market given some firms a privileged position, e.g Edgars have the
exclusive right to sell particular brands giving them the advantage over other firms.

Organisational Capabilities

Some companies can perpetuate their strategies successfully overtime while others find it
difficult. Overtime strategy of an organisation is like a person i.e. it can become stronger or
weaker. Strategy health is determined by areas of excellence that a company deliberately
cultivates overtime. These areas of excellence are desirable skills, competencies or
capabilities that a company cultivates to a level of proficiency greater than anything else it
does and more importantly than competitors

Capabilities imply sets of highly routinesid things the organisation is capable of doing
confidently. Behind this notion is the idea that a firm can be seen as a hierarchy of practiced
organisational routines. Routines are intrinsically social and collective phenomena created
and developed overtime inside the firm. They are essentially patterns of behaviour that reside
inside the group.

Organisational capabilities are therefore complex networks of processes and skills that
determine how efficiently and effectively the inputs in the organisation will be transformed
into outputs. Strategic capabilities these are processes which enable the company to be an
effective competitor Core competencies are distinctive skills which yield competitive
advantage and prove difficult for competitors to imitate. Core competencies must however be
flexible and responsive to changing customer demands and expectations.
Below are examples of capabilities that some companies have mastered overtime

CONCEPTUALISING STRATEGY

Whittington’s Typology

Whittington (1993) presents four generic approaches to strategy formation along the two
dimensions of ‘processes’ and ‘outcomes of strategy’. The ‘x’ axis deals with the extent to
which strategy is formed in a rational, formal, planned and deliberate manner , is a result of
bounded rational approach or is emergent in nature. The ‘y’ axis relates to continua of
outcomes, i.e. the extent to which organisational strategy focuses on profit-maximising
outcomes. The top left-hand quadrant represents a mix of maximum profit-maximisation and
a formal planned and deliberate approach to strategy formation. Whittington denotes this
combination as ‘classical’. The combination in the top right-hand is that of profit-
maximisation and an emergent kind of strategy formation called the ‘evolutionary’ approach.
The other two combinations – the emergent approach to strategy formation and pluralistic
types of outcome and deliberate process and pluralistic outcomes–are denoted as ‘processual’
and ‘systemic’ approaches respectively.
 OUTCOMES
Profit-Maximising

Classical Evolutionary

PROCESSES
Deliberate Emergent

Systemic Processual

Pluralistic

Whittington’s (1993) generic perspective on strategy

Organisations adopting the Classical Approach- profit maximisation and deliberate (like the
army) follow a clear, rational, planned and deliberate process of strategy formation and aim
for maximisation of profits. This approach is most likely to be successful when the
organisation’s objectives and goals are clear, the external environment is relatively stable, the
information about both the external and internal environment is reliable and the decision-
makers are able to analyse it thoroughly and make highly calculated decisions in order to
adopt the best possible choice. Strategy formulation is left to top managers and the
implementation is carried out by operational managers of different departments. This scenario
demonstrates the difference between ‘first-order’ strategy or decisions and ‘second-order’
strategy or decisions, where the former represents the strategy formation by top managers and
the latter is an implementation of the same by lower-level managers (for details see Miller,
1993; Purcell 1989; Legge, 1995). It also represents the classic top-down approach of
Chandler (1962) where organisation structure follows the strategy. It is characterised as non-
political, the product of honest endeavour by managers who have nothing but the
organisation’s interests at heart, and who are able to remain above the day-to-day skirmishes
that typify life at lower levels in the hierarchy. The image conveyed is that senior managers
are independent professionals who make decisions in the interests of all stakeholders. The
classical view of strategy leaves little room for choice when devising HR plans because these
are operational matters, which assume there is ‘one best way’ to manage people.

The Evolutionary Approach (Profit-Maximising, Emergent)) represents the other side of the
strategy formation continua where owing to a number of reasons (such as unpredictability of
the dynamic business environment) it is not possible to adopt a rational, planned and
deliberate process, although profit-maximisation is still the focus. In such competitive and
uncertain conditions where managers do not feel they are in command, only the best can
survive (survival of the fittest or being at the correct place at right time). The key to success
thus largely lies with a good fit between organisational strategy and business environment
(also see Lundy and Cowling, 1996). From this angle, strategy is seen as a product of market
forces, in which the most efficient and productive organisations succeed. Drawing on notions
of population ecology, ‘the most appropriate strategies within a given market emerge as
competitive processes allow the relatively better performers to survive while the weaker
performers are squeezed out and go to the wall’ (Legge, 2005, p.136). For evolutionists
‘strategy can be a dangerous delusion’ (Whittington, 1993, p.20). Taken to its extreme, it
could be argued there is little point in planning a deliberate strategy since winners and losers
will be ‘picked’ by a process of natural selection that is beyond the influence of senior
managers. They might, however, see some advantage in keeping their options open and
learning how to adapt to changing customer demands, a process that Lovas and Ghoshal
(2000) refer to as ‘guided evolution’.

The Procession Approach (pluralistic, emergent) is different on the profit-maximisation

perspective where managers are not clear about what the ‘optimum’ level of output is or
should be. A high degree of confusion and complexity exists both within the organisations
and in the markets; the strategy emerges in small steps (increments) and often at irregular
intervals from a practical process of learning, negotiating and compromising instead of clear
series of steps. This is related to the inability of senior managers to comprehend huge banks
of information, a variety of simultaneously occurring factors and a lack of desire to optimise
and rationalise decisions. The outcome is then perhaps a set of ‘satisfying’ behaviours,
acceptable to the ‘dominant coalitions’, which is the reality of strategy-making (Legge, 1995:
100). This view stems from an assumption that people are ‘too limited in their understanding,
wandering in their attention, and careless in their actions to unite around and then carry
through a perfectly calculated plan’ (Whittington, 1993, p.4). There are at least two essential
features to this perspective. First, as Mintzberg (1978) argues, strategies tend to evolve
through a process of discussion and disagreement that involves managers at different levels in
an organisation, and in some cases it is impossible to specify a precise strategy until after the
event. Indeed, actions may only come to be defined as strategies with the benefit of hindsight,
by a process of post hoc rationalisation in which events appear carefully planned in
retrospect. Quinn’s (1980) notion of ‘logical incrementalism’, the idea that strategy emerges
in a fragmented and largely intuitive manner, evolving from a combination of internal
decisions and external events, fits well with this perspective. Second, the processual view
takes a micropolitical perspective, acknowledging that organisations are beset with tensions
and contradictions, with rivalries and conflicting goals, and with behaviours that seek to
achieve

As the name suggests, the Systemic Approach (pluralistic, deliberate) emphasises the
significance of larger social systems, characterised by factors such as national culture,
national business systems, demographic composition of a given society and the dominant
institutions of the society within which a firm is operating. The strategy formation is strongly
influenced by such factors, and faced by these pressures the strategist may intentionally
deviate from rational planning and profit-maximisation. It will not be sensible to suggest that
organisations adopt only one of the four particular approaches to strategy formation, but
certainly it has to be a mixture of possible combinations along the two dimensions of
processes and profit- maximisation. From this perspective, strategic choices are governed not
so much by the cognitive limitations of the actors involved but by the cultural and
institutional interests of a broader society. For example, institutional forces in countries such
as France and Germany shaped HRM rather differently from the way they did in Anglo-
Saxon countries such as Britain and the USA.

Porter’s Generic Strategies

Organisations embark on specific strategies complementing their competencies in order to

achieve their long term goals. Organisations must select specific generic strategies
complementing their competitive advantage. It is these generic strategies which give direction
and focus organisational activities. According to Porter (1980) an organisation can strive to
supply a product in three distinct ways, by pursuing one of the following generic strategies
  By being more cost effective than its competitors i.e. cost leadership

 By adding value to the product or service through differentiation and command higher
prices i.e. differentiation

 By narrowing its focus to a special product market segment which it can monopolise
i.e. focus

Combining the cost and differentiation advantage, adds another generic competitive strategy
namely

 By offering lowest (best) prices compared to rivals offering comparable attributes, i.e.
best cost strategy

Cost Leadership Strategy

This generic strategy calls for being the low cost producer in an industry for a given level of
quality. The firm sells its products either at average industry prices to earn a profit higher
than that of rivals, or below the average industry prices to gain market share. In the event of a
price war, the firm can maintain some profitability while the competition suffers losses. Even
without a price war, as the industry matures and prices decline, the firms that can produce
more cheaply will remain profitable for a longer period of time. The cost leadership strategy
usually targets a broad market. Some of the ways that firms acquire cost advantages are by
improving process efficiencies through value chain analysis, gaining unique access to a large
source of lower cost materials, making optimal outsourcing and vertical integration decisions,
or avoiding some costs altogether. If competing firms are unable to lower their costs by a
similar amount, the firm may be able to sustain a competitive advantage based on cost
leadership. Firms that succeed in cost leadership often have the following internal strengths:
 Access to the capital required to make a significant investment in production assets;
this investment represents a barrier to entry that many firms may not overcome.
 Skill in designing products for efficient manufacturing, for example, having a small
component count to shorten the assembly process.
 High level of expertise in manufacturing process engineering.
 Efficient distribution channels.
Cost leadership can also be driven by economies of scale, experience and learning curve
effects i.e. costs normally decline as employees experience increases as they are able to
devise ways of improving process, apply technology better learning foster increased
understanding of responsibilities and leads to mastering of skills to achieve organisational
objectives more effectively and efficiently, the percentage of capacity utilisation i.e. fixed
costs are spread over a larger unit volume which lowers fixed costs per unit, technological
advances i.e. investment in cost saving technology
Each generic strategy has its risks, including the low-cost strategy. For example, other firms
may be able to lower their costs as well. As technology improves, the competition may be
able to leapfrog the production capabilities, thus eliminating the competitive advantage.
Additionally, several firms following a focus strategy and targeting various narrow markets
may be able to achieve an even lower cost within their segments and as a group gain
significant market share.

Differentiation Strategy
A differentiation strategy calls for the development of a product or service that offers unique
attributes that are valued by customers and that customers perceive to be better than or
different from the products of the competition. The value added by the uniqueness of the
product may allow the firm to charge a premium price for it. The firm hopes that the higher
price will more than cover the extra costs incurred in offering the unique product. Because of
the product's unique attributes, if suppliers increase their prices the firm may be able to pass
along the costs to its customers who cannot find substitute products easily.
Firms that succeed in a differentiation strategy often have the following internal strengths:
 Access to leading scientific research.
 Highly skilled and creative product development team.
 Strong sales team with the ability to successfully communicate the perceived
strengths of the product.
 Corporate reputation for quality and innovation.
The risks associated with a differentiation strategy include imitation by competitors and
changes in customer tastes. Additionally, various firms pursuing focus strategies may be able
to achieve even greater differentiation in their market segments.

Focus Strategy
The focus strategy concentrates on a narrow segment and within that segment attempts to
achieve either a cost advantage or differentiation. The premise is that the needs of the group
can be better serviced by focusing entirely on it. A firm using a focus strategy often enjoys a
high degree of customer loyalty, and this entrenched loyalty discourages other firms from
competing directly. Because of their narrow market focus, firms pursuing a focus strategy
have lower volumes and therefore less bargaining power with their suppliers. However, firms
pursuing a differentiation-focused strategy may be able to pass higher costs on to customers
since close substitute products do not exist. Firms that succeed in a focus strategy are able to
tailor a broad range of product development strengths to a relatively narrow market segment
that they know very well. Some risks of focus strategies include imitation and changes in the
target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its
product in order to compete directly. Finally, other focusers may be able to carve out sub-
segments that they can serve even better.

A Combination of Generic Strategies - Stuck in the Middle?

These generic strategies are not necessarily compatible with one another. If a firm attempts to
achieve an advantage on all fronts, in this attempt it may achieve no advantage at all. For
example, if a firm differentiates itself by supplying very high quality products, it risks
undermining that quality if it seeks to become a cost leader. Even if the quality did not suffer,
the firm would risk projecting a confusing image. For this reason, Michael Porter argued that
to be successful over the long-term, a firm must select only one of these three generic
strategies. Otherwise, with more than one single generic strategy the firm will be "stuck in the
middle" and will not achieve a competitive advantage. Porter argued that firms that are able
to succeed at multiple strategies often do so by creating separate business units for each
strategy. By separating the strategies into different units having different policies and even
different cultures, a corporation is less likely to become "stuck in the middle."

However, there exists a viewpoint that a single generic strategy is not always best because
within the same product customers often seek multidimensional satisfactions such as a
combination of quality, style, convenience, and price. There have been cases in which high
quality producers faithfully followed a single strategy and then suffered greatly when another
firm entered the market with a lower-quality product that better met the overall needs of the
customers.

Generic Strategies and Industry Forces

These generic strategies each have attributes that can serve to defend against competitive
forces. The following table compares some characteristics of the generic strategies in the
context of the Porter's Five Forces.
Generic Strategies and Industry Forces

INDUSTRY GENERIC STRATEGIES

FORCE
Cost Leadership Differentiation Focus

Entry Barriers Ability to cut price in Customer loyalty can Focusing develops
retaliation deters discourage potential core competencies that
potential entrants. entrants. can act as an entry
barrier

Buyer Power Ability to offer lower Large buyers have Large buyers have less
price to powerful less power to power to negotiate
buyers. negotiate because of because of few
few close alternatives.
alternatives.

Supply Power Better insulated from Better able to pass on Suppliers have power
powerful suppliers. supplier price because of low
increases to volumes, but a
customers. differentiation focused
firm is better able to
pass on supplier price
increases.

Threat of Can use low price to Customer's become Specialized products &

Substitutes defend against attached to core competency

substitutes. differentiating protect against
attributes, reducing substitutes
threat of substitutes.

Rivalry Better able to compete Brand loyalty to keep Rivals cannot meet
on price. customers from rivals differentiation-focused
customer needs

Typology of Business Strategies and HRM (Miles and Snow 1984)

Miles and Snow (1978; 1984) classify organisations as ‘prospectors’ (who are doing well and
are regularly looking for more products and market opportunities), ‘defenders’ (who have a
limited and stable product domain), ‘analyzers’ (who have some degree of stability but are on
the lookout for possible opportunities) and ‘reactors’ (who mainly respond to market
conditions). These generic strategies dictate organisations’ HRM policies and practices. For
example, defenders are less concerned about recruiting new employees externally and are
more concerned about developing current employees. In contrast, prospectors are growing, so
they are concerned about recruiting and using performance appraisal results for evaluation
rather than for longer-term development (for details see Jackson and Schuler 1995;
MacDuffie 1995).

Typology Characteristics Basic Strategy Set HR Characteristics &

Behaviours
Defenders Narrow product- Aggressively maintain Single core technology
market domains prominence within Stable and functional structures
chosen market segments Planning is intensive but not
Top managers are Penetrate deeper into extensive
experts in their current markets Promote from within
organisation’s Ignore developments Extensive division of labour
limited area of outside their domains and high degree of
operation Growth is cautious and formalisation
incremental Central control (because
Do not search managers are experts)
outside their
narrow domains
for new
opportunities

Prospector Continuously Growth from new Key executives as likely to

s search for new products and new come from outside as inside.
markets markets
Executive tenure is shorter than
Creators of change Continuous development
defender’s
to which their and improvement
competitors must
 respond
Planning is broad, not intensive

Product based structure

Less division of labor, low

formalization

Control is results-oriented

Managerial appraisal versus

similar organizations

Changing structure and

technology

Frequent prototype production,

multiple technologies

Technologies in people not

machines

Reactors Mangers Management fails to

frequently perceive articulate a viable
change and organizational strategy
uncertainty
Management articulates
occurring in their
an appropriate strategy,
organizational
but technology,
environments but
structure, and process are
are unable to
not linked to strategy
respond
appropriately
effectively.

Management adheres to
a particular strategy-
structure relationship
 that is not relevant to the
environment

Analyzers Which operate in A mixture of products Dual technology core,

two types of and markets, some moderate efficiency
product-market stable, others changing
Dominant coalition is
domains, one
Successful imitation marketing, applied research,
relatively stable,
through extensive and production
the other changing.
marketing surveillance
Planning is both intensive and
In their stable
Avid follower of change comprehensive
areas, these
organizations
Growth normally occurs Structure is matrix, functional
operate routinely
through market and product
and efficiently
penetration
through use of Control difficult; must be able
formalized Growth may also occur to trade off efficiency and
structures and through product and effectiveness
processes. market development
Coordination is both simple
and complex

Managerial is dual efficiency

versus past, effectiveness
versus similar organizations

TOOLS FOR STRATEGIC ANALYSIS

These are frameworks to enhance policy dialogue about appropriate strategies. These tools
help in identifying the relevant variables and questions which managers must answer in
strategy formulation and implementation

SWOT Analysis

Suggests that firms obtain competitive advantage by implementing strategies that exploit
their internal strengths, through responding to the environmental opportunities while
neutralising external threats and avoiding internal weaknesses (ansoff 1965). A strength is a
resource or capability that the organisation has which is an advantage relative to what rivals
have e.g. skilled employees, financial muscle corporate reputation. A weakness implies a lack
of or deficiency in a resource that gives or represents a relative advantage to an organisation
in comparison to what competitors have. They prevent the organisation from occupying a
competitive position in the industry. An opportunity is a favourable condition in the
organisation’s external environment e.g. fall in interest rate for an organisation with a loan
obligation, closing down of a major competitor. A threat is an unfavourable situation in the
external environment e.g. rise in interest rate. Often these are plotted on a simple 2 X 2
matrix.
STRENGTHS WEAKNESSES

 What does your organisation do better  What political, economic, social-

than others? cultural, or technology (PEST)
 What are your unique selling points? changes are taking place that could be
 What do you competitors and favourable to you?
customers in your market perceive as  Where are there currently gaps in the
your strengths? market or unfulfilled demand?
 What is your organisations
competitive edge?  What new innovation could your
organisation bring to the market

OPPORTUNITIES THREATS

 What do other organisations do better  What political, economic, social-

than you? cultural, or technology (PEST)
  What elements of your business add changes are taking place that could be
little or no value? unfavourable to you?
 What do competitors and customers  What restraints to you face?
in your market perceive as your  What is your competition doing that
weakness? could affect you negatively

BCG Growth-Share Matrix

Based on a close relationship between market share and cash generation (it answers the
question does a product or SBU absorb or produce cash). Unlike the PIMS it focuses on the
specific role of each product or SBU in the overall strategy of the organisation. Based on its
cashflow characteristics and relative market share each product or SBU can be positioned in
Portifolio matrix. Two important concepts underlay the BCG i.e. the product life cycle and
the experience curve concept (Hambrick et al 1982)

Resource Based View

Organisational resources have an impact on the management capabilities of the organisation,
which are the sources of core competencies that ultimately lead to competitive advantage.
The RBV holds that an organisation’s resources are more important than the industry
structure in an attempt to gain CA. Thus the firm’s ability to achieve above average
performance is based on valuable and inimitable resources offers an appealing rationale for
RBV. Organisations are perceived as being different in terms of their collections of assets and
organisational capabilities- no two organisations are the same because they have different
experiences, different assets and capabilities and different cultures. From an RBV point of
view if management wants to manage strategically, as a starting point for internal analysis it
is important to understand what exactly resources are and what characteristics will make
them unique.

Three central concepts underpin the RBV

1. Tangible resources these are the easiest to identify as they relate to location, buildings
and equipment. The value of these can be obtained by looking at financial statements
especially the balance sheet

2. Intangible resources these are assets that one cannot touch but are often the critical
assets that create CA. For example the reputation and brand name of coca cola is the
reason why it has CA over Pepsi. Intangible assets are less visible, difficult for
competitors to understand, imitate or replace. Intangible resources thus offer a more
superior and potent source of core competencies

3. Capabilities are the glue that emerges overtime and binds the organisation together

A resource becomes valuable if it is

1. Valuable i.e. if it helps the organisation to exploit the external opportunities or it be

used to neutralise threats

2. Superior i.e. if it is superior to what competitors have and fulfils customer needs
better than competition

3. Scarcity i.e. if the resource is in short supply and other organisation do not posses it.

4. Inimitability i.e. if the resource is hard to imitate

Value Chain Analysis

Every organisation has a chain of activities through which the inputs are transformed into
outputs. VCA is aimed at looking at a chain of activities to determine where value is really
added to the product or service. VCA views the organisation as a sequential process that
includes all the value creating activities in the organisation. The activities in VCA can be
grouped into 2 categories i.e. primary and support activities

Porter’s Five Forces

Porter's five forces of competitive position analysis was developed in 1979 by Michael E.
Porter of Harvard Business School as a simple framework for assessing and evaluating the
competitive strength and position of a business organisation. This theory is based on the
concept that there are five forces which determine the competitive intensity and attractiveness
of a market. Porter’s five forces helps to identify where power lies in a business situation.
This is useful both in understanding the strength of an organisation’s current competitive
position, and the strength of a position that an organisation may look to move into.

Strategic analysts often use Porter’s five forces to understand whether new products or
services are potentially profitable. By understanding where power lies, the theory can also be
used to identify areas of strength, to improve weaknesses and to avoid mistakes. The five
forces are:

Supplier Power. An assessment of how easy it is for suppliers to drive up prices. This is
driven by:

 The number of suppliers of each essential input

 The uniqueness of their product or service

 The relative size and strength of the supplier

 The cost of switching from one supplier to another.

Buyer Power. An assessment of how easy it is for buyers to drive prices down. This is driven
by: the number of buyers in the market, the importance of each individual buyer to the
organisation, the cost to the buyer of switching from one supplier to another. If a business has
just a few powerful buyers, they are often able to dictate terms.

Competitive Rivalry. The key driver is the number and capability of competitors in the
market. Many competitors, offering undifferentiated products and services, will reduce
market attractiveness.
Threat of Substitution. Where close substitute products exist in a market, it increases the
likelihood of customers switching to alternatives in response to price increases. This reduces
both the power of suppliers and the attractiveness of the market.

Threat of New Entry. Profitable markets attract new entrants, which erodes profitability.
Unless incumbents have strong and durable barriers to entry, for example, patents, economies
of scale, capital requirements or government policies, then profitability will decline to a
competitive rate.

Porter’s Generic Business Strategies and HRM

Michael Porter (1980; 1985) identified three possible generic strategies for competitive
advantage in business:

Cost leadership: aim is to secure a cost advantage over their rivals price competitively and
relative to how their product is perceived by customers and achieve a high profit margin.
costs are served by targeting a certain group of people and meeting their needs specifically
and avoiding unnecessary costs. (when the organisation cuts its prices by producing a product
or service at less expense than its competitors); innovation (when the organisation is able to
be a unique producer); and quality (when the organisation is delivering high-quality goods
and services to customers). Considering the emphasis on ‘external-fit’ (i.e. organisational
strategy leading individual HR practices that interact with organisational strategy in order to
improve organisational performance), a number of HRM combinations can be adopted by
firms to support Porter’s model of business strategies. In this regard, Schuler (1989) proposes
corresponding HRM philosophies of ‘accumulation’ (careful selection of good candidates
based on personality rather technical fit), ‘utilization’ (selection of individuals on the basis of
technical fit), and ‘facilitation’ (the ability of employees to work together in collaborative
situations). Thus, firms following a quality strategy will require a combination of
accumulation and facilitation HRM philosophies in order to acquire, maintain and retain core
competencies; firms pursuing a cost-reduction strategy will require a utilisation HRM
philosophy and will emphasise short-run relationships, minimise training and development
and highlight external pay comparability; and firms following an innovation strategy will
require a facilitation HRM philosophy so as to bring out the best out of existing staff (also see
Schuler and Jackson, 1987). In summary, according to the ‘external-fit’ philosophy, the
effectiveness of individual HR practices is contingent on firm strategy. The performance of
an organisation that adopts HR practices appropriate for its strategy will then be higher.

Business Life Cycles and HRM

There is now an established literature in the field of HRM that highlights how possible
contingent variables determine the HRM systems of an organisation (for a detailed review see
Budhwar and Debrah, 2001; Budhwar and Sparrow, 2002). One among the long list of such
variables is the ‘life cycle stage’ of an organisation: introduction (start-up); growth
(development); maturity; decline; and turnaround. Research findings reveal a clear
association between a given life cycle stage and specific HRM policies and practices. For
example, it is logical for firms in their introductory and growth life cycle stages to emphasise
a rationalised approach to recruitment in order to acquired best-fit human resources,
compensate employees at the going market rate, and actively pursue employee development
strategies. Similarly, organisations in the maturity stage are known to recruit enough people
to allow for labour turnover/ lay-offs and to create new opportunities in order to remain
creative to maintain their market position. Such organisations emphasise flexibility via their
training and development programmes and pay employees as per the market leaders in a
controlled way. Accordingly firms in the decline stage will be likely to minimise costs by
reducing overheads and aspire to maintain harmonious employee relations (for more details
see Kochan and Barocci, 1985; Baird and Meshoulam 1988; Hendry and Pettigrew 1992;
Jackson and Schuler 1995; Boxall and Purcell, 2003).

STRATEGIC HUMAN RESOURCES MANAGEMENT

DEFINITION:

It is an approach to the development and implementation of HR strategies that are intergrated

with business strategies and support their achievement.

this means business objectives are accomplished when hr practices, procedures and systems
are developed and implemented based on organisational needs that is when strategic
perspective to HRM is adopted(Baird and Meshonlan 1988:116). In general SHRM is about
integration and fit between hr strategies and business strategies, ensuring that HR activities
support the achievement of business strategies on a continuous basis and add value.

SHRM is an approach that defines how the organisation’s goals will be achieved through
people by means of hr strategies and integrated HR policies and practices.

HR STRATEGY

These are patterns of decisions regarding hr policies and practices that are used by
management to design work and select, train and develop, appraise and motivate and control
workers.

AIMS OF SHRM

Its purpose is to generate organisational capability by ensuring that the organisation has the
skilled engaged and committed and well motivated employees it needs to achieve sustained
competitive advantage through managing the employment relationship.

Its major aims are

  Integration- vertical alignment of hr strategies with business strategies and horizontal
integration of hr strategies.
 Sense of direction in a turbulent environment so that business needs of employees can
be met by the development and implementation of coherent and practical hr policies
and programs.
 Contribute to the formulation of business strategy by drawing attention to ways in
which the business can capitalise on the advantages provided.

Challenges of implementing SHRM levels

 diversity of strategic processes and levels

 The complexity of the strategy formulation process.
 the evolutionary nature of the business strategy
 the absence of articulated business strategies
 The qualitative nature of hr issues.
 External pressures such as legislation that might affect the intergration of ht strategy
and business strategy.

Strategic integration or fit

This is the need to develop/achieve congruence between hr strategies, business strategies

within the context of the internal and external environment. a fit between HRM and the
demands of the competitive environment.

Vertical fit- hr strategy with business strategy

Horizontal fit- hr policies cohere across policy areas and hierarchies.

HR devolvement

HR practices are adjusted accepted and used by line managers and employees as part of
their everyday.

The resource based view of SHRM

Hr is viewed as an asset and not a variable cost. The argument is that the sum of peoples
knowledge, expertise and social relationships has the potential to provide non substitutable
capabilities that serve as a source of competitive advantage. The RBV is based on Penrose
(1959) who said the firm is an administrative organisation and a collection of productive
resources. Competitive advantage comes from implementing a value creating strategy not
simultaneously being implemented by any current or potential competitors and that which the
other firms can not duplicate through rare imitable valuable and non substitutable. Therefore
competitive advantage is through a firm’s analysis of its skills and capabilities, characteristics
that cannot be imitated. RBV focuses on distinctive competencies that are resources and
capabilities. Resources are the tangible and intangible and capabilities being the collective
skills possesses by the organisation to coordinate the resources effectively. Bratton and gold

According to Armstrong 2012 resource based HRM produces HR advantage which assists in
developing strategic capability that is strategic fit between resources and opportunities for
obtaining added value from effective deployment of resources and developing managers who
can think and plan strategically in the sense that they understand the key strategic issues. The
idea is that investing in people increases their value to the firm. This is because knowledge
has become the competitive advantage for companies selling ideas and relationships therefore
capability to find, assimilate compensate and retain the talented individuals they need has
become necessary.

BEST FIT (contingent approach)

In line with the contingency theory that is hr strategies should be contingent with the context
and the circumstances of the organisation. best fit in terms of vertical integration. HR
effectiveness depends on its fit with the organisations stage of development. As the
organisation grows and develops HRM programmes and practices must change to meet its
needs that is HRM develops through stages as the organisation becomes more complex. For
competitive advantage to be achieved the role of people should be matched with the preferred
strategy. that is cost leadership, quality or innovation e.t.c

The best fit approach emphasises the importance of ensuring that human resource
strategies(reward) are appropriate to the circumstances of the organisation including its
culture, operational processes and external environment arguing that they become more
efficient when linked/tailored to the surrounding context or environment of the business.
Armstrong (2009). There is the external fit that is fit linked to the competitive strategy of the
organisation and internal fit where human resources policies and practices must be coherent.

Though it is true that what is best depends there is a danger though of claiming that the
context determines strategy
Best practice (Universalist approach)

This is a universalistic perspective that some hr practices are better than others and all
organisations should adopt these best practices. They are said to be universal in every
situation and that adopting them leads to superior organisational performance. some of the
best practices by Pfeiffer 1998 are employment security, selective hiring and competitive
rewards. The best practice/universalist approach is based on the assumption that there is a set
of best human resource management practices and that adopting them will inevitably lead to
superior organisational performance. Armstrong(2009).

the best practice approach clash with the resource based view that unique resources are
inimitable. best practice assists in identifying the principles underlying the choice of practices
as opposed to the practices themselves.

Bundling configuration approach

This is the development and implementation of several HR practices together so that they are
interrelated and therefore complement and reinforce each other that are horizontal
intergration. The rationality behind bundling is that bundles of hr practices would have higher
levels of performance and fit better with the company strategy than when they are individual
practices.

Bundling is thus intergrated combinations of HRM practices, through which organisations

should create competitive advantage rather than simply adapting to the existing context.
Ichniowski (1997) explain that when HRM practices are combined in different forms the
effects on organisational performance are much greater than when practices are explored
individually. Macduffie 1995 explains that a bundle creates the multiple, reinforcing
conditions that support employee motivation, given that employees have the necessary
knowledge and skills to perform their jobs effectively. Employee behaviours that are
embedded in routine, complex interactive patterns and specific organisational synergies can
create organisational capabilities that create value, a difficult to imitate, rare and immobile
resources

examples of bundles
  training bundle

High Performance Work Practices/Systems (HPWS)

Armstrong 2012 states that these are bundles of hr practices that facilitate employee
involvement, skill enhancement and motivation. HPWS by becker and haselid(98) was
defined as an internally consistent and coherent hrm system that is focused on solving
operational problems and implementing bundles of complementary practices which as a
whole make a more powerful impact on performance. There are three aspects to this concept
performance, work practices and systemic effects.

system being the combination of practices into a bundle rather than individual practices
which shapes the pattern of interations between and among managers and employees that is a
system of complementary practices.

kallebery 2000 states HPWS as workplace practices that incorporate work involvement in
front line decisions and range from participation in production and quality management teams
to employee incentive and reward schemes. These are practices that encourage workers to
involuntarily increase their discretionary effort to improve performance. Most organisations
are now relying on employee contributions to gain competitive advantage.

the use of HPWS improve the knowledge, skills and abilities of a firm’s current and potential
employees, increase their motivation, reduce shirking and enhance retention of quality
employees while encouraging non performers to leave the firm. HPWS serve as inimitable
resources supporting the effective implementation of corporate strategy and the attainment of
operational goals. HPWS as an intergrated system of hr practices that are internally consistent
alignment among hr practices and externally consistent alignment with organisational
strategy that include staffing, self managed teams decentralised decision making and
extensive training flexibility.

features of an HPWS shish(2005)

 job infrastructure
  Training programs to enhance employee skills.
 information sharing and worker involvement mechanisms
 Reward and promotion opportunities that provide motivation.

HPWS therefore embody the notion of best practice since it has a list of desirable features.

Ulrich’s multiple role model of HR

the framework presents the four key roles of the HR professionals that they must fulfil in
order to add the greatest value to the organisation therefore competitive advantage. both the
strategic and long term aspects and operational day to day aspects from managing processes
to managing people.

strategic partner(process, longterm,future)

 design hr strategies to aling with business objectives.

 consultation in the development of organisational values, mission and business
planning
 member of management team contributing to business decisions
 workforce planning, skills assessment succession planning
 foster systems thinking
 translate business strategy into action
 building new organisational capabilities.

change agent(people, longterm)

 hr managers partner with line managers to lead and facilitate change

 facilitates change
 consulting for increased organisational effectiveness
 organisational redesign
 system dressing
 competency analysis
 lead transformation by doing it first within the HR function
 catalysts, facilitators and designers of change.
administrative expert

 hr provides more service, better quality and greater accessibility resulting in lower
costs and increased customer satisfaction.
 wages review
 requisition tracking
 employee resourcing
 human resource information system
 training to improve processes
 provision of quality services.

employee champion

 HR facilitates, measure and improves the quality of management and teamwork

 champion organisational values
 facilitates employee surveys
 promote inclusive environment through open door policies
 promote work life balance
 listens and responds to employees and find the right balance between demands and
employees and resources available to employees.
 they promote employee contribution and protect them during processes of change.

HR AS A STRATEGIC AND BUSINESS PARTNER

strategic partner

 to formulate and implement hr strategies that are aligned to business strategies

 to contribute to the development of business strategies
 to proffer support to line managers.
 advisory role

business partner

hr specialists share responsibility with line management and colleagues for the success of the
business and are involved in implementing business strategy and running the business. they
are able to do a SWOT analysis on the business and the hr implications they are aware of the
critical success factors of the organisation that will create competitive advantage. emphasis is
on value addition. hr business partner should be able to translate hr issues into business
language that is costs profits opportunities and threats.

however it should be noted that HR as strategic and business partner does not mean much if
the HR function does not deliver the essential transactional services their internal clients
require that is their administrative role.

EMPLOYEE RESOURCING

people resourcing is that part of HRM which focuses on the recruitment and selection, release
of individuals from organisations as well as the management of their performance and
potential while employed by the organisation. The business strategy is the key to employee
resourcing. HRM can ensure all resources (people) are deployed and managed in relation to
their importance to strategic success and this allows an organisation to sustain competitive
advantage. Strategic resourcing aims to ensure that the organisation has the people it needs to
achieve its business goals. This is based on the concept that the strategic capability of a firm
depends on its resource capability in the shape of people (RBV). The objective is to ensure
that an organisation achieves competitive advantage through recruiting and retaining and
developing more capable people than competitors. people resourcing is that part of HRM
which focuses on the recruitment and selection, release of individuals from organisations as
well as the management of their performance and potential while employed by the
organisation.
The rationale behind strategic resourcing is that it is people who implement the plans after
all. Therefore the integration of resourcing strategies is based on an understanding of the
direction the organisation takes. This means the number of people, skills and behaviour are
influenced by organisational restructuring due to rationalisation, decentralisation,
acquisitions, mergers, and plans for changing the culture (ability to deliver performance
standards). E.g. Miles and Snows typology informs the calibre of people required in the
organisation. Emphasis is on those people who will fit what management believes to be
appropriate and conducive to success. In other words resourcing strategies that emerge from
the process of strategic resourcing exist to provide the people and skills required to support
business strategy and contribute to its formulation.

Resourcing strategies and activities can be bundled together. E.R is more than R&S it’s about
using all the means necessary to meet the firms need for certain skills and behaviours that is
talent management strategy. R&S, L&D and PM are bundled to enhance abilities, skills and
modify behaviour to motivate people to make use of their abilities and identifying need for
development.

S.E.R aims at developing the organisations employee value proposition and its employer
brand.

Relationship of HR to business strategy

HR strategy is the set of priorities a firm uses to align its resources, policies and programs
with its strategic business plan. What are the implications of the proposed business strategies.
The aim is to make the business and hr strategy interdependent.

Job designs

Job analysis- describes the process obtaining information about jobs

Job design- focuses on the processes and outcomes of how work is structured, organised
experienced and enacted. If the job changes then it is job redesign.

Job design should link closely to business strategy because the strategy might require new
and different tasks e.g. new technology therefore different ways of performing the task.
Taylor and his scientific management believed in one best way which was the dominant
approach for job design. It aimed on maximising efficiency and reducing costs though this
caused feelings of alienation. To counteract these job rotations, job enlargement and job
enrichment was introduced.

Job design today

Job design aims to motivate, satisfaction, learning, improved performance e.t.c understanding
has broadened on the relationship between job characteristics to individuals and
organisational outcomes. therefore conventional job design has approached the challenge of
reconciling employer and employee needs by considering both required job characteristics
and psychological drivers at employee performance. job design today is concerned with the
impact on employees focusing on task, social and physical characteristics. organisations
toady are introducing competency models. after having realised the behavioural requirements
of jobs the organisation can then identify the number of employees and skills required to do
those jobs. job design should be more flexible looking into account the changing nature of
physical work environment especially the growth of flexible working so that organisations
can maximise the use of space. jobs can be designed making use of technological
advancements such as social networks to make knowledge workers more mobile and flexible

Strategic workforce plans/ human resource planning

CIPD (2010) defined it as a core process of HRM that is shaped by the organisations strategy
and ensures the right number of people with the right skills, in the right time, at the right
place at the right cost to deliver short and long term objectives or goals. This the formal
processes that connect business strategy to HR strategy and practices. These plans run
parallel to business planning. HRP aims to deal with the implications of business plans on
HR, focusing on internal and external constraints. Internal- projected retirements of a large
number of older workers. External- shortfall in the supply of labour relative to demand and
supply. rothwell (1995) stated that hard HRP serves as an indicator of the likely match or
mismatch of the supply and demand for the right number of people with appropriate skills.
the soft HRP he said is to alert the organisation to the implications of business strategy for
people development, culture and attitudes as well as number and skills. Strategic workforce
plans must be consistent with the broader hr strategy of an organisation which in turn should
be consistent with the business strategy. Business plans identify the core competencies the
organisation needs to achieve its goals therefore its skills and behavioural requirements. hr
plans then interpret these plans in terms of people requirements. These plans should not just
be driven by business strategy but it also becomes an input to business strategy so as to
provide data, analytics and insights which inform and sometimes challenge executive
decision making. They should also incorporate the environment organisations are surviving
in. This is characterised by globalisation outsourcing, employee leasing, new technology,
organisational restructuring and diversity in the workforce and these cause uncertainty.

workforce planning process.

issue analysis- business needs, external factors, internal supply analysis and management
implications.

forecasting requirements- staffing levels, staffing mix(qualitative), organisational and job

design, available projected resources net requirements.

action plans- staffing authorisations, recruitment, promotions and transfer, organisation

design, training and development and reward and labour relations.

environmental changes lead to issues, issues drive actions and actions encompass programs
processes used to design and implement them. Environmental change includes change in
technology, legislation, demographic changes and increase in MNC competition. Realistically
HR concerns become business concerns only when they affect the line managers’ ability to
function effectively. people issues such as workforce diversity, changing requirements for
managerial skills retraining needs and OHS relate directly to the competitiveness of an
organisation and threaten its ability to survive. In other words progressive organisations
realise that HR issues have an impact on their strategic business.

Rationale for HRP

very important because it allows managers to link business strategy to HR plans. it also
allows for control of costs, numbers employed and enables employees to make informed
decisions knowing the skills mix in their organisations. it assists in optimising resources,
understanding the present to benefit the future. and coordinating and integrating
organisational decision making.

Human Resource Forecasts

Purpose is to estimate labour requirements for the future. There are two types of forecasts
external and internal supply and internal and external demand.
supply forecasting the number of people likely to be available within the organisation having
allowed wastages/attrition. existing number of those employed, potential losses likely to be
incurred and sources of supply.

Forecasting internal HR supply

This relates to conditions within the organisations- age, terminations, retirements, new hires
and this depends on business factors (sales, expansion of business and growth) to which HR
needs can be related.

Considering internal supply is risk management and the simplest form of internal supply is
sucession planning. Which is like an insurance plan it should be there when needed.
succession planning involves assessing the current performance, readiness for promotion,
identifying replacements candidates for key positions, identifying career developments and
intergrating the career goals of individuals with company goals. The objective is to ensure the
availability of competent executive talent in the future or in some case immediately.

Forecasting external workforce supply

Making projections of external labour market conditions and estimates of the supply of
labour to be available in general categories. This prevents surpluses or deficits of employees.

Demand forecasts are subject to many uncertainties that is economic conditions, technology
and consumer behaviour, local, national and international economies and number of contracts
lost, government regulations that might open new markets or close others.

Forecasting workforce demand

this is estimating the future number of people required and the likely skills and competencies
they will need making use of business plans, work plans and production.These are highly
subjective. To forecast demand information is required for those dealing with strategy and
implementation so as to know the mix of numbers and skills needed. linking these with
business objectives, goals and strategies. accuracy of demand forecasting is heavily reliant on
the firms and industry type. however quality of data on which forecasts are based is also
crucial and the integration of HRP with strategic business planning all affect accuracy.
methods for forecasting demand- managerial judgement, ratio trend analysis, work study
techniques and forecasting skill and competence requirements.

Integrating supply and demand forecasts.

Net workforce change with net workforce supply of that period. this kind of information is
what senior management require to make informed decisions regarding the future direction of
HR initiatives.

after forecasting organisations then have to decide whether to make or buy the people with
the skills required. organisations have to select workers who are already have developed the
necessary skills to perform competitively or to select workers who do not have the skills
immediately but who can be trained to perform competently. To avoid mismatched costs
organisations should balance the make or buy. Buying however reduces competitive
advantage because there is no unique skills and unique culture.

If forecasts are not accurate, scale for development is not available and there is no job ladder
to pull talent through, if the talent is not needed for long and culture wants to be changed then
organisations should do buying than making. When forecasting demand is better to
underestimate the numbers because overestimating is now very expensive for organisations.

managing shortage

(1) Recruiting New Permanent Employees. The pro of this strategy is the creativity and
prior experience new employees bring along with them that if channeled properly can aid the
business strategy. The con is the amount of time and resource necessary to assimilate, train
and bring them up to speed with company operations.

(2) Offering Incentives to Postpone Retirement. This strategy has the pro of keeping
around those veteran and highly experienced workers who are familiar with the organization
and know their jobs inside and out. Such employees would better be able to handle any
additional workloads caused by shortages than their newer, younger counterparts. The con
would be if the incentives did not work and many of the veteran employees retired anyway,
thus leaving the organization in the predicament of finding another strategy to elicit skilled
and experienced workers to aid the organization through its dilemma.
(3) Rehiring Retirees Part-Time. The pro is that this shortage management strategy enables
you to keep around your talent and use it more efficiently to aid the organization in critical
areas of need. The con would be possible strife cause between the older and younger
employees based on ego and perceived power (policies and procedures) or simply having to
work together.

(4) Attempts to Reduce Turnover. The pro consists of building loyal and committed
employees as a direct result of the organization’s efforts to value employees. Such attempts
to reduce turnover may consist of offering increased benefits, training, and/or job enrichment
techniques. The con would be the added expense of these attempts that stems from the time
and resources necessary to incorporate them.

(5) Work the Current Staff Overtime. To manage shortages this particular way, the pro of
this strategy would be the immediately available workers to render any tasks complete. The
additional benefit would be directed to the employees in the form of overtime pay. The con
would be the burden employees would have to endure, specifically an increased workload,
longer workdays, and coping with the stress and related ailments that go along with it.

(6) Subcontracting Work. The pro embodies getting short-term professional third parties to
fill any void and complete any projects at possible lower costs than performing them in-
house. The con would be the organization possibly being caught up in being a dual employer
and associated ramifications, as well as relying on a third party to meet organizational needs.

(7) Hiring Temporary Employees. Implementing this strategy to deal with shortages has a
pro of maintaining staffing flexibility, evaluating workers without commitment, and saving
time and money. An example is seasonal employees who are hired for the holidays and let go
thereafter. The con is meeting possible training needs, and dealing with any morale and
safety issues that may come about as a result of temporary and permanent employees working
together.

(8) Redesigning Job Processes. This strategy attempts to limit the number of employees that
are needed. The pro is that it obtains and maintains an efficient workforce while meeting
productivity goals. The con would the time and effort necessary to conduct such job
redesigning and the resulting inflexible workforce to tackle any future change.
Again, as stated in the post “Strategies for Managing Surpluses,” it is essential that you
vigilantly analyze your organizational needs before implementing any of the above strategies
to assist you in shortage management. It is always best to have your long-term goals and
objectives set first, because then your short-term goals and strategies can have a degree of
flexibility in aiding you to meet both current and foreseeable conditions.

managing surplus

The subsequent list are strategies you can implement within your organization for managing
surpluses. Moreover, the pros and cons for each surplus management strategy is offered to
better aid you in determining which strategy would be best at any particular time given your
organizational needs.

(1) Hiring Freezes. The pro for hiring freezes is that it compels managers to align its
workforce more efficiently, whereas the con for hiring freezes is that it dumps additional
work on employees who already feel overburdened.

(2) Not Replacing Those Employees Who Leave. The pro would be that the organization is
cutting labor costs. The con for this strategy is similar to that for hiring freezes, but
magnified. The employees who stay would then have no choice but to be tasked with more
work due to the reduction in the workforce.

(3) Early Retirements. This surplus management strategy has a pro of cutting the
organization’s high labor costs by reducing its aging workforce in order to have one that is
more youthful and it can pay its employees less (e.g. wage workers). The con is that the
organization would lose its veteran workers who have a plethora of valuable experience.

(4) Reducing Work Hours. It has a pro of saving labor costs and a con of a loss of
productivity as a direct result.

(5) Voluntary Severance and Leaves of Absence. These surplus management strategies
have the pro of aiding the curtailment of the organization in a win/win manner between
employer and employee despite the circumstances. The employer cuts costs and is able to
receive a manageable workforce while the exiting employees have a sense of empowerment
with their choice to take the severance or leave of absence. The con would be the short-term
expense of severance and the added workload to remaining employees.
(6) Across-The-Board Pay Cuts. The obvious pro is short-term labor cost savings. The con
is a decreased sense of loyalty to the organization and lowered morale, which can negatively
impact worker productivity. That is why I believe an organization should do everything in its
power to not overextend this strategy.

(7) Reducing Outsourced Work. The pro for this surplus management strategy is cost
savings and the rebuilding of organizational self-reliance, but the apparent con is the added
responsibility derived from the work the third party was performing for the organization.

(8) Employee Training. When used as a surplus management strategy, it would have the pro
of continuing the development of the necessary skills employees need to be productive
workers. The con with this strategy is the added short-term expense to the organization to
include the time allotted to train each applicable employee.

(9) Variable Pay Plan. Switching to a variable pay plan would have a pro of attracting,
retaining, and rewarding employees who help the organization reach its goals. An example
of a variable pay plan is profit sharing. The con would be that it can make employees
complacent along with creating a possible discord among employees who perform and those
who do not regarding issues of partiality while measuring performance.

(10) Expanding Operations. This surplus strategy has the primary pro of gaining economies
of scale. The organization would reduce unit costs as the size of the facility increases. The
con would be over-expansion, which would result in diseconomies of scale or increased per-
unit costs.

(11) Layoffs. Layoffs are the last resort and the last strategy I will mention when it comes to
managing surpluses. Loosing skilled employees can put a business at a competitive
disadvantage once the company rebounds. Further, the morale of the surviving employees is
usually severely impacted when layoffs occur, because they now realize the job security they
thought they had has eroded. Conversely, the pro is that it’s a quick way to cut payroll costs.
FLEXIBLE RESOURCING

Strategic flexibility is the ability of the firm to respond and adapt to changes in its
competitive environment. Armstrong (2005), (chameleon approach). A firm can use its
strategic flexibility to proactively re-define market uncertainities and make it the cornerstone
of its ability to compete. Strategic flexibility implies that the entity has the ability to change
according to its needs that is adapt in a reversible manner. Strategic flexibility is very crucial
in strategy formulation because organizations today are operating in highly turbulent and
unpredictable environments. Wright and Snell (1998) indicated that in an unstable
environment a strategy that is flexible enhances the ability of an organization to stay
operational in changing conditions.

Managers when formulating strategies should then leave room for altering that strategy to
meet the changes that would be occurring in the environment. If rigid strategies are formed
then an organization will not be able to seize opportunities and sustain its competitive
advantage. Through environmental scanning when formulating strategies organizations are
able to have an educated prediction of the future, this allows them to have alternative
strategies in place to cater for different situations thus being strategically flexible. E.g
bonding of nurses.

flexible firm model (atikson and meagre 1985:2)

this model identifies for types of flexibility

1. functional- a firms ability to adjust and deploy the skills of employees to match the
tasks required by the changing workload, production.
2. numerical- a firms ability to adjust the level of labour inputs to meet fluctuations in
output.
3. distancing- replacement of internal workers with external workers/ subcontracts.
4. financial- support flexibility through rewards.
This kind of flexibility is achieved through dividing the workforce into core work force and
peripheral workforce. The core is for those with functional flexibility and has specific
skills.peripheral these are employed for low jobs and consists of temporary/casuals,
consultants and trainees. an organisation chooses the type of flexibility it wants.

offshoring

moving call centres to countries with low wages but similar or higher skills e.g india. that is
flexible labour markets so that there is gain from globalisation by both workers and
organisations. This has been made easy by developments in ICT. off shoring is a means of
outsourcing.

outsourcing

outsourcing is when an organisation seeks to source aspects of its production/services by

setting up a contractual relationship with an external provider to reduce costs.gianni zappala
states that outsourcing is a situation where an external vendor provides, on a recurring basis a
service that would normally be performed within the organisation. it can be said to be a legal
partnership between two or more organisations where one contracts out the ownership,
management and staff of particular function to a specialist firm. Therefore with outsourcing
organisations concentrates on aspects of their business which give them a competitive
advantage(core business) and contract out the more peripheral or noncore aspects of the firm.
outsourcing is used interchangeable with subcontracting and contracting out.

for HR:

 employment agencies can do R&S,

 engage in leasing of employees,
 make use of freelancers,
 convert their employees into some else’s employees e.g canteen, security. that is the
organisation contracted out retains the workers

if this is not done carefully it can lead to demotivation and low morale. the nature of
outsourcing is changing the type of functions that are being outsourced are also changing. e.g
outsourcing of customer services(call centres) and outsourcing of the hr
function(consultancy).

rationale for outsourcing

  Capacity outsourcing- flexibility to supplement existing capacity in response to
changes in demand
 Specialisation subcontracting- where the product or process requires the use of
specialised skills that are otherwise not always needed by the organisation.
Specialisation also involves focusing on those activities in which the organisation has
established a distinctive capability and the rest it outsources
 cost reduction- some organisations can complete processes cheaply that in house
production. reducing labour costs, taxes e.t.c
 market discipline- the product market might lead the organisation to focus on outputs
rather than inputs and the competition between suppliers gives them better bargains.
 to achieve better access to skills due to challenges of attaching the right skills
 improved quality- they are specialists in that field and the organisation is specialist in
another

disadvantages of outsourcing

 loss of control
 coordination costs
 quality and service issues
 costs of transacting
 costs of monitoring
 outsourced labour might lack commitment
 disparity of pay between outsources and internal employees.
 does not build the internal resource with unique skills(RBV)
 outsourcers lack of experience and vendors lack of experience.
 opportunistic behaviour by the vendor.
 vendors financial instability.

EMPLOYER BRANDING

As companies seek to attract the best talent and to win the retention battle, they are coming to
the conclusion that it pays higher dividends to influence candidates’ psyche before the job
advert is placed. Employer branding gives hope that many of HR challenges revolving around
attraction can be solved before they arise.

Employer branding involves developing and communicating the culture of an organisation as

an employer, it assumes that all employees are consumers who must be recruited and be
retained. Essentially employer branding is a series of messages and images that the company
puts out to the employment market to communicate the culture and value-from an employee’s
point of view- in working for the company. An employer brand:

 is a set of attributes and qualities - often intangible - that makes an

organization distinctive, promises a particular kind of employment experience,
and appeals to those people who will thrive and perform to their best in its
culture”

The goal is to create an Employee Value Proposition (EVP) that your offerings leap off the
shelf.

An employer brand is reflected through the behaviours and actions of employees and, if the
behaviours do not reflect employer brand image, no amount of employer marketing will save
the organisation, as authenticity is the key to building an employer brand of which
competitors will be envious.

Emergence of Employer Branding

Strong employer brands have Employee Value Propositions (EVPs) which evoke both
emotive benefits – “I feel good about working here, my friends want to work here, this
company has a great reputation,” – and tangible benefits. “Employees in such organisation
know that their career development is key, are paid well and have a clearly defined career
path,” – for current and prospective employees.

Employer branding becomes even more important when Research has found out that:

 Attraction and retention talent has ranked 3 rd as an important managerial

strategic objective up from 5 in 2003

 Ability to attract and retain talent is becoming harder.

  War for talent is intensifying and becoming global due a to a number of
reasons

 You people are your primary source of competitive advantage – sets

organizations apart

 Improves employee engagement

It is also important to consider the market values of new economy companies. They are
largely determined by intangibles, and managing them is critical because of their impact on
shareholder value. Such things as leadership, governance, R&D, innovation, reputation, brand
strength, tacit knowledge, plant flexibility, speed and quality of service, customer and
employee loyalty, and informal processes and trusted networks are essential factors when it
comes to the future growth expectations of investors.

Primarily the CIPD attributes the rise of employer brands to four reasons as follows:

1. Brand Power- the rise of brand power as a central concept in organisations and social
life. Branding underpins a growing and profitable reputation management. Strategic
management literature has given prominence to the significance of brands in
corporate success.
2. HR’s search for Credibility – HR professionals continue to search for credibility and
strategic influence hence embracing the language and conceptual tools of brand power
seems an obvious choice.
3. Labour Market Conditions – skills shortage make the market a tight trading
environment. Employers are thus forced to compete fiercely with one another to
attract and retain talented people. The branded employment product simplifies choice,
reassures prospective employees about quality and reduces risk.
4. Employee Engagement – from a branding point of view the recruitment and selection
forms the basis for workplace satisfaction and identification with organisation goals
and values. Interest in questions of identity, workplace roles and management of
human emotions and behaviour take centre stage particularly in service and retail
sectors where employees interface with customers and live the brand through
emotional labour or aesthetic labour. Under such an approach, HR policy and practice
can influence who is employed, how they look, behave, speak, think and feel –
particularly important in the realm of lifestyle brands.
Problems of Employer Branding

The success of employer branding is based on its ability to provide what it promises. Its not
all rosy as Employer branding poses the following problems:

1. Overcoming Management and or Employee Resistance – there are ethical questions

raised by the notion of expecting employees to live the brand. Is it ethical? Is it
desirable? Is it ‘kitsch’ (by which we mean a process that has capacity to ‘prettify’ the
problematic and so mask genuine difficulties and problems of human communities
and life, including the workplace)? Thus employer branding may be accused of being
an activity that glosses over the gaps, contradictions, frustrations and disappointment
inherent in the real.

2. Over-Branding- the creation of unrealistic expectations of organisational life. This is a

well-established problem in graduate recruitment and employment.

3. How to Express one Employer Brand when operating with complex organisational
forms. Sustaining a brand may prove difficult in diverse workforce settings, with
strategic partnerships, joint operations or with interims and outsourcing.

4. Colonisation of the HR domain by people from corporate communications and

marketing functions.

Factors Employees Consider (that Create Strong Employer Brands)

1. The Company – potential employees consider the company’s history, reputation and
stability. Equally important is the products offered by the company, are they of
quality and positive value to society. Employees maybe sensitive to being part of
process that produces products that have harmful effects on societies they live in.

2. The Culture – today’s employees are not interested in status barriers but want a
culture of inclusion and a sense of community. Traditions and rituals are important as
threads that weave the community together.
3. Enlightened Leadership – i.e. leadership that creates meaning, enlist employees in
organisational cause. What is critical is creation of leadership rather than individual
leaders. Great leaders do not just enhance their reputations but build the
organisation’s leadership credibility.

4. Care for People – successful employer brands run wellness programmes that enhance
employees quality of life, have work life balance. They acknowledge employees have
a life outside the workplace.

5. Growth Opportunities - Provide opportunities for learning and self development,

integrated with career planning and mentoring. Provide information and support for
the individuals’ own efforts at development.

6. Meaningful Work – companies must not provide “just a job” but create meaningful
jobs i.e. jobs that make a difference, this call for involvement in the design of their
jobs. Task significance becomes a critical issue in job designs
7. Compensation and Benefits – competitive rewards, diverse insurance cover
8. Making a Difference in Society – this involves engaging in activities that help build
society.
9. Fulfilment of the Psychological Contract
 REWARDS
Fairness of rewards
Competitive rewards
Ownership Potential
LEARNING & GROWTH
Recognition Awards Learning & Development
QUALITY OF WORK
Beyond Current Job
Freedom & Autonomy Career Advancement Opp
Workload Performance Improvement
Feedback
Work Relationships
Challenges/Interest

BRANDED
EMPLOYER
VALUES & LEADERSHIP
THE COMPANY Quality of Leadership
Culture Company Values &
Societal Participation behaviours
Quality Products Corporate Reputation
ENABLING WORK
ENVIRONMENT Communition
Reduced Status
Barriers
Tools & Equipment
Physical Environment

THE PUBLIC SECTOR SCENARIO

There are several reasons cited for the recruitment problems in the public sector:
Demographics – Due to demographics, a large portion of employees will be eligible to retire
soon. In most countries, more than a quarter of the national government employees are over
50 years old. Exacerbating this problem is the fact that the generation entering the labour
force tends to be smaller than the generation retiring. This will increase the competition
among employers for a smaller pool of available workers.

Compensation – Wages are low leading to a loss of government competitiveness. While

salary is not the only factor for attracting high performers to government, it is important when
competing for new graduates. Wages have proven to be a crucial retention factor especially
after two to four years of service.

Declining Image of the Public Sector – With few exceptions, young people tend not to rate
public employment highly. There is a belief that the public sector is bureaucratic, old
fashioned and the prestige of the civil service is low in many countries. The trust that citizens
have in government has decreased and this has a negative impact on the image of
government.
Human Resource Management – Old-fashioned human resources management deters high-
quality staff. In many countries seniority is more important than merit and promotions are not
clearly linked to performance. Career paths can be unclear and little emphasis is placed on
staff development.

There is a need to emphasize the advantages of public service over private employment. Key
points identified by the OECD are:
 working for the common good,
 interesting tasks,
 use of advanced information and communication technologies, and
 clear promotion and training opportunities.

Creating better working conditions is necessary if government is to be seen as an Employer

of Choice. Government must develop new compensation policies and create additional
performance-based pay systems and other incentives. Previously, public service was
attractive due to workplace safety, generous pensions, and less daily work stress. As a trade-
off, employees accepted lower salaries. However, recently the pressure of work has
increased, conditions of service have deteriorated, thus making low salaries no longer
acceptable, especially to younger staff.

There is a need for governments to identify incentives other than salary if they want to be
able to recruit and retain high quality employees. Already some developed countries e.g.
Germany have since implemented flexible working hours, flat hierarchies and the use of the
latest technical equipment. Other non-monetary incentives that can be employed include;
 co-operative leadership,
 open communication;
 sufficient freedom to display initiative and make decisions;
 good working conditions;
 good opportunities for training and personal development;
 family-friendly personnel policies;
 job rotation;
 assignments in private sector companies, other public services or international
organizations; and
  opportunities for educational leave or leave for other personal reasons.

Discussion Questions

1. With reference to Zimbabwean examples discuss the adequacy of Corporate Social

Responsibility programmes as an employer branding technique.
2. Discuss the major problems the public service faces in attracting talented employees.
What might be done to alleviate such problems?
3. Discuss the major reasons why Econet Wireless is among the most preferred
employment destinations by graduates.
REWARD MANAGEMENT

Rewards are there to help organisations to achieve their objectives/strategies. That is the right
people at the right time, right place and right cost. Strategic reward involves the development
of policies and practices that are designed to make a specific impact on organisational
performance by helping to attract and retain talented people and provide for their motivation
and engagement.

Strategic reward develops and implements reward strategies that ensure that they are
integrated with and support business strategy and other HR strategies and that the different
rewards cohere. Strategic rewards take into account individual and business needs.

Strategic rewards enhance company performance and securing competitive advantage

through alignment of reward strategies, systems and processes to the organisational strategy.

Rewards are no longer a cost but a means of aligning a company’s unique and inimitable
asset that is employees to the strategic direction of organisation.

strategic fit between the reward strategy and organisational goals at the same time satisfying
individual needs.

strategic management is about identifying the organisational direction and the resource base
required to succeed so in this case strategic reward is the important because it is concerned
with the most important resource(HR).

Horizontal fit- rewards should complement the other HR processes like performance
management. Rewards are centred on best practice that there are universal ways of doing the
right thing but now they are focusing on “best fit” with organisation context. It aims at
influencing employee behaviour to facilitate realisation of organisational objectives in line
with culture and needs.

Reward strategy

Reward strategy is a declaration of intent that defines what the organisation wants to do in the
future to develop and implement reward, policies, practices and processes that will further the
achievement of its business goals and meet the needs of its stakeholders.

the aim is to understand the needs of the organisation and its employees and how they can
best be satisfied. RS will be characterised by diversity and conditioned both by the legacy of
the past and the realities of the future. Reward strategies differ by the organisation to suit
their contexts, business strategies and cultures. It can be both proactive and reactive.

Strategic reward should be a balancing factor for example reconcile competing claims of
being externally competitive and internally equitable therefore in line with the context. use of
flexible rewards varying the reward package for different jobs due to labour market
conditions, occupations or people to reflect particular knowledge and skills and types and
levels of contribution they make.

reward management

it is about deciding how people should be rewarded and ensuring that reward policies and
practices are implemented. R.M is concerned with the strategies, policies and processes
required to ensure that value of people and the contribution they make to achieving
organisational, departmental and team goals is recognised and rewarded.

it is about satisfying the needs of both the organisation and its stakeholders and to operate
fairly, equitably and consistently. reward management is about managing returns on human
capital investment, taking into account the perspectives of both the employer and the
employees consisting of extrinsic and intrinsic elements.

reward management is about both the financial and non financial rewards. non financial being
recognition, learning and development and increased job responsibility.

AIMS

 to add value to people

 To support the achievement of business goals ( through attracting and retaining
engaged people )
 promote high performance work culture( by ensuring R.M recognises and encourages
it)
 support and develops organisational culture(through rewarding the right behaviour)
 Reward people according to the value they create.
 align rewards to employee needs.

key considerations or factors influencing rewards

  organisational values and corporate culture
 fairness
 equity
 consistency
 transparency
 industry
 technology
 the calibre of workers
 business strategy
 organisations capabilities

External considerations

 competition
 globalisation
 changing demographic trends
 employment legislation

total reward model

this is an approach to R.M that emphasizes the need to consider all aspects of work
experience of value to employees not just pay and benefits.(total remuneration).

it focuses on both the financial and non financial rewards. it recognises the necessity of
financial rewards but appreciates the importance of providing people with rewarding
experiences that arise from the work environment.(the job they do and how they are managed
and the opportunities for development in their skills and careers.

This gives a holistic view of rewards and focus on the entire reward system to determine
those elements to be integrated than dealing with rewards in isolation. The whole is greater
than the sum of its parts. There is inclusion of intangible rewards that is flexible working and
work life balance. The argument is financial rewards are no longer efficient to reinforce
desired behaviour there is need for them to be combined with non financial rewards.

With total reward there is need to integrate the intangible and tangible, direct and indirect,
intrinsic and extrinsic rewards.
Transactional rewards- those that arise from the transactions between the employer and
employee concerning pay and benefits.

Relational rewards- intangible rewards concerned with learning and development and work
experience.

the aim is to maximise the effect/impact of the combined reward approaches on motivation,
engagement e.t.c. total rewards embrace everything that employees value in an employment
relationship. the conceptual basis for total rewards is bundling so that different reward
processes are interrelated, complementary and mutually reinforcing. Total rewards is
verticaaly aligned to business strategy and horizontally aligned for consistency.

Components of the total reward are

Transactional rewards- base pay, contingent pay, employee benefits that are total
remuneration. Pay in terms of cash, shares,profit sharing or it could be benefits such as
holidays, pensions health care and flexibility.

Relational rewards - job design, work experience, non-financial recognition, achievement and
growth that are non financial and intrinsic rewards. these include learning and development,
performance management, career development, succession planning, work environment,
worklife balance and culture.

Financial rewards/transactional/ extrinsic

theses are the rewards that have a monetary value and add up to total remuneration. these are
the core element in total rewards. Financial rewards assist in generating more engagement
and effort and attracting better quality employees. However the issue is to what extent it will
provide an incentive. Financial rewards are job based, person based which provide rewards
that recognise the individuals performance, contribution and competence or skill. incentive is
meant to encourage people to work harder and achieve more. basis for financial rewards is
that those who contribute more should be paid more. therefore in line with distributive justice
that rewards should be provided equitably and should only be equal if value of employees is
equal. financial rewards can be used to reinforce behaviour.
Performance management

Performance management has grown considerably in coverage and has become well known
among specialists in the area. The major reasons for this growth are:

 Increased competitive pressures which put emphasis on performance improvements to

achieve a clearer correlation between between organisational goals and individual
targets
 Restructuring and devolution which have put a primacy on delegating tasks and
responsibilities to down organisational hierarchies
 The shift from collectivism to individualism during the last decade which has allowed
for more rigourous specification of individual performance standards and measures

Like many other well known terms in management, however, performance management has a
variety of meanings and has been used to describe just about any hrm initiative. For most
writers it is a system which translate the goals of strategic management into individual
performance and enables the achievement of optimum results through the effective
organisation of work (fowler 1990 walter 1995). Mabey and salaman (1995) see the essence
of performance management as establishing a framework in which performance by individual
can be directed, monitored, motivated and refined.

Both in theory and practice pms are seen to have a number of characteristics (bevan and
Thomson 1991, walters 1995) these include:

 Mission statements which are communicated to all staff not only during induction but
also at later stages in order to reinforce corporate messages or to cascade down
information about changes in formal organisational culture
 Regular communication about business plans and progress in achieving objectives
 Intergration with other organisation-wide inintiatives like tqm
 A clear focus on the performanvce of senior managers and links between this and
reward packages
 Performance expectations expressed in terms of SMART ( specific, measurable,
appropriate, relevant and timed) targets which are reviewed regularly and wherever
possible agreed with staff
  Systematic performance appraisal processes which form a key part of the review
process
 The adoption of performance related pay systems
 The use of on going and formal reviews of performance to identify training needs
which enable the achievement of individual performance requirements and
organisational goals

Performance management is typically characterised as a system (storey, sisson 1993, a

systematic model (mabey and salaman 1995) or a cycle (Torrington and Hall 1995). The
elements of each of these frameworks is broadly similar, in that they each link together
planning, doing and supporting, and reviewing progress some being explicit about
intergration with broader business and departmental goals. The principal components of the
pms are illustrated below

DETERMINING
PERFORMANCE
EXPECTATIONS

MANAGING
SUPPORTING
PERFORMANCE
PERFORMANCE
STANDARDS

REVIEWING AND
SUPPORTING
PERFORMANCE

Source: Marchington and Wilkinson (2000)

Determing performance expectations : employees are made aware of the performance

standards that are expected of them. Typically this would be expressed in mission statements
and organisational goals mediated through departmental purpose analyses. Key issues at this
stage are corporate communication, job descriptions and key accountabilities. Employee
induction is also key in so far as getting employee commitmet to the system
Supporting performance: day to day interaction between managers and their staff, provision
of resources and systems which facilitate achievement of individual targets and accessibility.
Supporting can come from line managers, peers and or hr specialists taking the form
mentoring, coaching, welfare provision and removal of barriers to excellent performance.
Sometimes it is necessary to have formal mechanisms for supporting performance such as
those for female managers

Review and appraisal: often seen as synonymous with performance management. Appraisals
should be seen as only part of the cycle not the end of the process. Usually the performance
criteria focuses on 3 areas i.e. traits – personal characteristics such as loyalty, dependability
or leadership skills; behaviours – how work is performed including persuasion or listening
skills or sensitivity; and outcomes – such as number of products sold, or defects reported

Managing performance standard: where actions are taken to deal with issues raised during the
appraisal and review stage. Appraisal can be the basis for prp or bonus due to the individual,
but can also be developmental i.e. emphasis is on how improved performance can be
facilitated and sustained, training and development basis