Presentation On Strategic Human Resource Management by Dr. Jamnean Joungtrakul President and CEO, BLCI GROUP and Senior Industry Fellow, Graduate School of Business, Curtin University of Technology, Australia 3300/71, 11th Floor, Tower B,Elephant Tower Paholyothin Road, Chompol, Chatuchack, BKK 10900 Tel 02-937-3773 Fax 02-937-3770 Email: email@example.com Website: www.blcigroup.com
Food for Thought Strategy is very important. But no one knows what it means. Every professor in the worlds has different version of what strategy means. This keeps them in business but does not help management. In answer to the professorial question ‘What is strategy?, there is only one universally accurate answer: ‘It means exactly what you want it to mean to make your own point.’ (Owen, 2002, p. 199)
Scope of this Presentation Part-1: The Concept of Strategy Part-2: Strategic Management Part-3: Human Resource Management Part-4: Strategic Human Resource Management Part-5: Case Study Part-6: Questions and Answers
The Origin of Strategy The root of strategy can be traced back to the golden era of the development of classical Chinese military strategy back in 772-221 BC.
The Origin of Strategy (con’t) The Sun Tzu Bing-Fa: The Art of War The Sun Tzu Bing-Fa, allegedly written by the master Sun Tzu in the fourth century BC, is the most complete and reputable book of military strategy that has survived to date
The Most Famous Quotation from Sun Tzu “Know your enemy, know yourself, and you can fight a hundred battles with no danger of defeat. When you are ignorant of the enemy but know yourself, your chances of winning and losing are equal. If you don’t know both your enemy and yourself, you are bound to perish in all battles…know the terrain, know the weather, and your victory will be complete.” (Chen, 1995, p. 42)
The Essence of Sun Tzu’s Art of War • The major principles of strategies; • The importance of moral influences; • The quality a good general should and should not possess; • The role of climate and terrain in determining the situation of the battle; • The strategy of enlarging one’s comparative strengths; • The importance of organization and training; • The proper usage of discipline which combines severity and benevolence
The Principles of Strategies “With careful and detailed planning, one can win, with careless and less detailed planning, one cannot win. How much less chance of victory has one who does not plan at all! From the way planning is done beforehand, one can predict victory or defeat.” (Chen, 1995)
Some Critical View Points on Strategy “Strategy comes from the Greek word strategos, which has its roots in military language. It refers to a general’s grand design behind a war or a battle.” (Noe, Hollenbeck, Gerhart and Wright, 2000, p. 42) “Business is like a war in one respect, if its grand strategy is correct, any number of tactical errors can be made and yet the enterprises proves successful.” (Wood, cited in Steiner, 1997, p. 5)
Some Critical View Points on Strategy “Strategy is grounded in the array of competitive moves and business approaches management depends on to produce successful performance (Thompson & Strickland, 1995, p. 2) (con’t)
Some Critical View Points on Strategy (con’t) “When you cut away all the jargon, this is what strategy is all about: how you are going to do better by being different.” (Magretta, 2002, p. 72) “Indeed, the essence of good strategy-making is to build a market position strong enough and an organization capable enough to produce successful performance despite unforeseeable events, potent competition, and internal problems.” (Thompson & Strickland, 1995, p. 3) “The essence of strategy is choosing what not to do.” (Porter, cited in Magretta, 2002, p. 71)
The Definition of Strategy “Of all the concepts in management, strategy is the one that attracts the most attention and generates the most controversy. Almost everyone agrees that it is important. Almost no one agrees on what it is.” (Magretta, 2002, p. 71)
Some Definitions of Strategy “Strategy is a deliberate search for a plan of action that will develop a business’s competitive advantage and compound it.” (Henderson, 1991, p. 5) “A strategy is an integrated set of choices which identify the positioning and the competitive advantages that beat competition on a sustainable basis in meeting consumer needs.” (Procter & Gamble)
“A strategy is a commitment to undertake one set of actions rather than another.” (Oster, cited in Thompson & Strickland, 1995, p. 2) Some Definitions of Strategy (con’t)
Some Definitions of Strategy (con’t) “…Strategy, in effect, is management’s game plan for strengthening the organization’s position, pleasing customers, and achieving performance targets.” (Thompson & Strickland, 1995, p. 2) “Strategy has been defined…as ‘the pattern of decisions a firm makes.’” (Hax, cited in Kreitner, 1998, p. 196)
“Corporate strategy reconciles what a company might do in terms of opportunity, what it can do in terms of its strength, what its management wants it to do, and what it thinks is ethical, legal, and moral.” (Andrews, 1991, p. 450) Some Definitions of Strategy (con’t)
The Concept of Strategic Management Application to Business The pioneering work on which many modern strategy ideas rest took place at the Harvard Business School in the early 1960s lead by Kenneth R. Andrews and C. Roland Christensen(Montgomery & Porter, 1991
The term strategy was applied to business enterprises in the late 1970s (Magretta, 2002). It became a full fledged management discipline in the 1980s (Montgomery & Porter, 1991) The Concept of Strategic Management Application to Business (con’t)
Some Definition of Strategic Management “Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes strategy formulation, strategy implementation, and evaluation and control.” (Wheelen & Hunger, 1990, p. 7)
Some Definition of Strategic Management “Strategic Management is an ongoing process of ensuring a competitively superior fit between an organization and its changing environment.” (Teece, 1984, cited in Kreitner, 1998)“Strategic management = Strategic Planning + Implementation + Control.” (Kreitner, 1998, p. 196) (con’t)
Strategic Management Process - Deciding what business will be in and forming a strategic vision of where the organization needs to be headed-in effect, infusing the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be accomplished. - Converting the strategic vision and mission into measurable objectives and performance targets
Strategic Management Process (con’t) - Crafting the strategy to achieve the desired results - Implementing and executing the chosen strategy efficiently and effectively - Evaluating performance, reviewing new developments, and initiating corrective adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing condition, new ideas, and new opportunities (Thompson & Strickland, 1995, p.3)
Task 1 Task 2 Task 3 Task 4 Task 5 The Five Tasks of Strategic Management Developing a Strategic Vision and Business Mission Setting Objectives Crafting a Strategy to Achieve the Objectives Implementing and Executing the Strategy Evaluating Performance, Reviewing New Developments, and Initiating Corrective Adjustment (Thompson & Strickland, 1995, p. 4) Reviews as Needed Reviews as Needed Improve/Change as Needed Improve/Change as Needed Recycle to Tasks 1, 2, 3 or 4 as Needed
P&G Strategy Deployment System Strategy Deployment is intended to be used by Categories to drive dramatic Business Results. Strategy Deployment forces choice, it forces measurement of strategy. It is intended for Breakthrough.
The Seven Steps of Strategy Deployment System • Long Term Vision • Develop Strategy • Deploy Strategy • Capability • Do the Plans • Review and Audit-Monthly • Review and Audit-Quarterly
Long Term Vision: Define why we exist, where we are headed as a Business
Develop Strategy: Develops strategy; defines the objectives, goals, strategies, measures. OGSM’s are the building blocks of the system
Objectives: What we are trying to achieve (1 choice) = Words • Goals: Howe we will measure the objective = Numbers • Strategies: How we will achieve the objective/goals (1-3 choices) = Words • Measures: How we will measure the strategies = Numbers
Deploy Strategy: - Defines the groups responsible for delivering the strategies/measures, and then translates to actions/measures/accountability for execution. - Deployment links strategies throughout the organization and translates to what “I/we can go do.” - The emphasis is on what it will take to achieve the strategy, not negotiate to a lower need.
Capability: Checks sufficiency of the plans and capability of the organization to deliver the plans
Do the Plans: Execute and track
Review and Audit-Monthly: - Action Planners ask, “Did we do what we said;” they check actual vs. target, analyze gaps, and determine adjustments. - Reviews are the “heart” of the system, where strategy becomes action, accountability is established, and learning occurs.
Review and Audit-Quarterly: - Management and Action Planners ask “Is it working, what is needed, what is learned, how to maintain the improvement.” - Quarterly Reviews are the “test” for leadership’s behaviour that creates focus, commitment, and a learning environment or lack of focus and compliance, or a fear environment.
Strategy Deployment Flow Chart LONG TERM VISION “Defines Winning” Purpose & Vision & Values Corp. OGSM DEVELOP STRATEGY “What Are We Going For?”“How Will We Get IT?” Gather Data Category OGSM DEPLOY STRATEGY “How Are We Going to Organize” Function OGSM Action Plans Linkages “Can We Do the Plan?” no CAPABLE? yes DO THE PLANS “Just Do It” “Did We Do What We Said We’d Do?” REVIEW & ADJUST MONTHLY REVIEW & ADJUST QUARTERLY/ANNUALLY “Is It Working”
What is Human Resource Management? Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques (Storey, 1995, p. 5)
The Major Component of HRM-Beliefs and Assumptions - That it is the human resource which gives competitive advantage - That the aim should be not more compliance with rules, but employee commitment - That therefore employees should be very carefully selected and developed
The Major Component of HRM-Strategic Qualities - Because of the above factors, HR decisions are of strategic importance - Top management involvement is necessary - HR policies should be integrated into the business strategy-stemming from it and even contributing to it
The Major Component of HRM-Critical Role of Managers - Because HR practice is critical to core activities of the business, it is too important to be left to personnel specialists alone - Line managers need to be closely involved both at deliverers and drivers of the HR policies - Much greater attention is paid to the management of managers themselves
The Major Component of HRM-Key Levers - Managing culture is more important than managing procedures and systems “Just Do It” - Integrated action on selection, communication, training, reward and development - Restructuring and job design to allow devolved responsibility and empowerment (Storey, 1995, p.6)
Human Resource Management vs. Personnel Management-Similarities - Both emphasise the importance of integrating personnel/HRM practice with organizational goals - Both vest personnel/HRM practice firmly in line management - Both, in the main, stress the importance of individuals developing their abilities fully for their own personal satisfaction to make their ‘best contribution’ to organizational success - Both identify placing the ‘right’ people into the ‘right’ jobs as an important means of integrating personnel/HRM practice with organizational goals, including individual development (Legge, 1995)
HRM vs. PM- Differences - HRM focuses on employees as resources which, like other resources, need to be used efficiently - Employees are viewed as a key resource, which employers actively pursuing employee commitment to corporate goals and values. -Only through a systematic sets of policies on recruitment, rewards for performance, staff appraisal, training and development, and effective communication, it is argued, can commitment and excellence be achieved
HRM vs. PM- Differences (con’t) - HRM assumes that personnel management is the responsibility of all line managers rather than of personnel specialists - There is a preference for individual management communication with employees, rather than relying on collective forms of information exchange through trade unions - HRM assumes a neo-unitary model of employee relations, in contrast with the pluralist model underpinning traditional personnel management (Farnham, 1997)
Differences and Similarities between PM and HRM Source: Farnham, 1990
Criticism of HRM - Old wine in new bottles? - Is it a case of the ‘emperor’s new clothes? - HRM equates to ‘Human Resource Manipulator’? - HRM against or avoid trade union?
My Own Professional Opinion - I see it as a development of management - I agree with Legge (1995, p. 75) “[HRM is], in theory, a more central strategic management task than personnel management in that it is experienced by managers, as the most valued company resource to be managed; it concerns them in the achievement of business gaols and it expresses senior management’s preferred organizational values”.
An Organization with a Strong Commitment to HRM - The firm competes on the basis of product quality and differentiation as well as price - Human resource considerations weigh heavily in corporate strategic decision making and governance processes. Employee interests are represented through the voice of the human resource staff professionals and/or employee representatives consult and participate with senior executives in decision that affect human resource policies and employee interests. In either case, employees are treated as legitimate stakeholders in the corporation
An Organization with a Strong Commitment to HRM (con’t) - Investments in new hardware or physical technology are combined with the investments in human resources and changes in organizational practices required to realise the full potential benefits of these investments - The firm sustains a high level of investment in training, skill development and education, and personnel practices are designed to capture and utilise these skills fully - Compensation and reward systems are internally equitable, competitive and linked to the long-term performance of the firm