Organizational Behavior

Organizational Behavior Lecture 27 Dr. Amna Yousaf PhD (HRM) University of Twente, the Netherlands

Strategic HRM Lecture 27

Recap Lecture26 The selection process typically consists of eight steps: • initial screening interview • completion of the application form • employment tests • comprehensive interview • background investigation • conditional job offer • medical/physical exam • permanent job offer Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Training & Development • Firm Size • Training Need Analysis • Outcomes Compensation and Rewards High Performance work Systems Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Defining… HRM is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business Lecture 2/MS (HRM) class

HR: Who is Managed? • Covering all workforce groups • All employee cadres including managers thesmsevles • Difference in way of treatment “ high trust” manner! • All kinds of employment relations (e.g mananement-worker relations, management-union relations) Lecture 2/MS (HRM) class

Who is Involved? • Specialist managers • Designing selection process • Formation of policies and laws such as EEO • Training needs analyses • Formulation of performance incentive plans • Line managers • Stay in the loop Lecture 2/MS (HRM) class

Management Styles • Variety depending on nature of contract • Permanent or contractual • Part time or full time • With in and between firm differences • Ultimate goal is competitive advantage • Overall aim • Design of work systems around firm’s strategy • Deployment of workers around technogoloies and production processes • Other aspects of employee’s life cycle Lecture 2/MS (HRM) class

Critical HR Goals (1/3) • Labor productivity/cost effectiveness • Investment in HR resources • Formal feedback/appraisal systems • Training and selective selection programs • Firm size/economies of scale Lecture 2/MS (HRM) class

Critical HR Goals (2/3) • Organizational felxibility • Managing change – capability to change • Short Run agiligy (adjusting the price of exisiting labour) • Functional flexibility • Numerical flexibility • Long Run agility (meeting long term targets such as change in technology or market demands) • Tension between the two – contractuals v/s permanent staff e.g. Lecture 2/MS (HRM) class

Critical HR Goals (3/3) • Social legitimacy • Government regulations • Protection of natural environment • Occupational safety and health • EEO • Tripple bottom line ( financial, environmental and social) • Incentives as best comapnies to work for • Social Accountability 8000 – certified auditors or accredited audit agency • Consult employees and unions for complaints and non compliance of HR practices Lecture 2/MS (HRM) class

Goals: At a Close (1/5) • Getting the Best Employees • Staffing – Workforce Planning • Staffing – Specifying Jobs & Roles • Staffing – Recruiting • Staffing – Outsourcing (having services and functions performed by non-employees) • Staffing – Screening Applicants • Staffing – Selecting (Hiring) New Employees Lecture 2/MS (HRM) class

Goals: At a Close (2/5) • Employee’s due Benefits & Compensation • Training Employees • Career Development • Employee Orientation • Leadership development • Management Development • Personal Development • Supervisional Development Lecture 2/MS (HRM) class

Goals: At a Close (3/5) • Ensuring Compliance to Regulations • Personnel Policies & Records • Employee Laws, Topics & Issues • Ethics – Practical Toolkit • To comply all Statutory Requirements under Labour Laws Lecture 2/MS (HRM) class

Goals: At a Close (4/5) • Ensuring Safe Work Environments • Diversity Management • Dealing with Drugs at the Work Place • Employee Assistance Programs • Ergonomics : Safe facilities at the Work Place • Personal Wellness • Preventing Violence at the Work Place • Ensuring Safety at the Work Place • Supporting Spirituality at the Work Place Lecture 2/MS (HRM) class

Goals: At a Close (5/5) • Sustaining High-Performing Employees • Employee Performance Management • Group Performance Management • Interpersonal Skills • Personal Productivity • Retaining Employees Lecture 2/MS (HRM) class

Strategic Tensions in HR (1/3) • Labor scarcity (Health Care and IT) • Elimination of forced labor • Globalization • Mobility of labor • Survival of well resourced organizations • Small firms under pressures Lecture 2/MS (HRM) class

Strategic Tensions in HR (2/3) • Labor Motivation • Employment relationship not completely defined. • Conflicts can arise • Unitarist approach – improve cooperation • Plurist approach - improve intrinsic and extrinsic incentives • Conflicts can be detrimental to worker motivation and trust Lecture 1/SHRM

Strategic Tensions in HR (3/3) • Labour management • Dependanle and disposable workers! • Flexibility pressures • Emregence of core/periphery models • Clever balance between short term and long term demands required Lecture 2/MS (HRM) class

Strategic HRM: the Best-Fit School In strategic HRM, there is a fundamental debate over how HRM is, and should, be linked to wider business strategy. To many scholars, it seems obvious that strategic HRM rests on a contingency position: firms fit their HRM to their particular strategies and environment and are wise to do so (the best-fit school). Boxall and Purcell chapter three

Strategic HRM: the Best-Fit School ... • HR stratgy should be context specific and argued that situational factors inevitably affected choices in HRM, including • Environment • Industry • Government policies • Work Systems evolve accordingly • Small business (SME’s): limited HR function • Large companies (corporates): HR departments at sopisticated level Boxall and Purcell chapter three

Major Factors Affecting management choices in HR strategy Management Choices in HR strategy

Linking HR Practices to Competitive Strategy • Internal fit • Between HR practices • External fit • Matching HR strategy to competitive strategy of business unit

Selected HRM implications of Miles & Snow’s competitive types

Examples • A study of 200 Spanish firms: Innovative firms follow employee participation, training and development opportunities, better wages, hiring of creative, innovative people, given greater powers and discretion to employees, reduced controls, extensive trainings, providing more resources for experimentation.

Internal Fit • Complementry fit (single employee fit) • Use of expensive selection processes should be accompanied by training programs and retention programs • Consistecy (across employees) fit • such as standarized employment and work conditions for same occupational group such as clerks. • Temporal consistecy • employee A should be treated the same way today as yesterday by the employer. Reversal of employer behavior can be demotivating

Internal Fit • Avoid costly dupilcation of practices (structured interviewing or assesment center taking 5-6 tests or over designed selection systems where extra ‘ hurdles’ add no value) • Avoid deadly combinations (heavy training on teamwork but individualistic rewards)

Critique External Fit: • Multiple fits needed – Plural HR objectives • Fit between HR strategy and competitive goals BUT • What about employee needs? – if ignored, motivational problems can arise • Legitimacy needs, social needs and rights of employees ( max work hrs, minimum wages, safety laws etc). • A specific HR strategy can not be applied to ‘all rounder’ firms

Internal Fit - Critique • Such kinds of fits not practical: high commitment work systems but at same time organizational flexibility pressures force organziations for layoffs -job insecurity which erode commitment

Configurational thinking in HR strategy: two different scenarios

Internal Fit - Critique • So both firms have same competetive stragty but different nature of busines and production process wich drives different HR stratgy for both. Best fit theory is too thin and overly simple! • It is difficult to attain consistency keeping in view the uncertaity a firm faces – both temporal and among employees

Linking HR practices to competitive strategy (Schuler and Jackson 1987) Desired competitive strategy Required employee skills and behaviours Supportive HR practices HR outcomes

Strategic HRM: the Best-Practice School There are HR practices which are best for firms regardless of context ( the best-practice or universalist school). Some practices to be considered sensible or cost-effective for everyone in certain micro aspects of HRM (e.g. in employee selection and appraisal) Boxall and Purcell chapter three

Best Practice School • Enhance employee abilities through AMO • Structured interviews (carefully designed around job aspects) better over unstructured • Performance appraisal tied to objective results (profits ROI) better over Input based performance apprasial (such as measures of timekeeping) • High pay but lesser pay inequity to encourage teamworking • Promotion from within, high wages, participation and empowerment, teams, job redesign etc

Critique Best Practice • Difference in opinion as to what constitutes best practice ( 4-5 or a dozen) • Beyond a certain amount of uniformity, managers start thinking about diversity in HRP • What if a practice is good for corporate goals but not for employees such as layoffs – can we still call it a best practice?

Critique Best Practice • Labor (government) laws, cultural practices vary from country to country – union powers vary? Can best practiecs be universalistic? • Sectoral context: e.g. innovative firms make use of more job rotation, team working, TQM compared to low tech firms. • Organziational structure: Firm size; introductrion of new technology etc plays major role – such firms use more best practices.

Critique Best Practice • Best practices more relevant for sectors which emphasize quality, high tech where firms need motivated and skilled employees and pay them higher in return. Even in high tech sectors low skilled workers dont benefit as they are paid less and best practices not for them ( labor market very loose for them). • Employers will only invest in employees when they wil be sure of returns –to stay cost effective

Organizational Behavior