UNIT 4: MANAGING HR FOR

COMPETITIVE ADVANTAGE
 IMPORTANCE OF HR TO
STRATEGY

- Growing realization of the importance of HR as a source of competitive

advantage.
- Increasingly, it is being recognized that competitive advantage can be
obtained with a high-quality workforce, which enables organizations to
compete on the basis of market responsiveness, product and service
quality, differentiated products, and technological innovation, instead of
reliance on low costs.
- Aside from its role in providing competitive advantage through a quality
workforce, the necessity of controlling labor costs also has elevated the
role of human resource management.
- Improved human resource management can play a key role in the
organization’s competitive strategy and in the development of distinctive
competencies.
 IMPORTANCE OF HR TO
STRATEGY

• Turbulence, globalization, technology, dramatically changing

demographics, and differences in workforce values have created almost
unprecedented environmental uncertainty which has led to the integration
of HRM in the strategy formulation and implementation process.
• As human resource management becomes a more important component
of a company’s competitive strategy, general management has an incentive
to ensure alignment and consistency between strategy and human resource
practices and policies.
 HR STRATEGY

• HR strategies are essentially plans and programs to address and solve

fundamental strategic issues related to human resources management.
• Human resource strategy focuses on the alignment of the organization’s
human resource practices, policies, and programs with corporate and
strategic business unit plans.
 CHANGE MANAGEMENT

• Change is the only constant!!!

• Change management is a structured approach to transitioning individuals,
teams and organizations from a current state to a desired state.
• It is the process of developing a planned approach to change in an
organization.
 TYPES OF CHANGE

• Developmental change
• Transitional change
• Transformational change
 DEVELOPMENTAL CHANGE

• Developmental changes are those you make to improve current business

procedures.
• This usually takes place when you realize that a situation does not need to
be completely eradicated, but only requires small improvements.
• For example, an increase in business may necessitate an improvement in
billing procedures to handle the extra work.
 TRANSITIONAL CHANGE

• A transitional change is one in which an organization replaces an existing

process or procedure with a new one.
• It usually involves dismantling an existing system and implementing new
ones.
• For example, a manufacturing business may replace a manual production
procedure with an automated process.
• Businesses implement a transitional change to achieve a goal such as
increasing revenue or eliminating waste.
 TRANSFORMATIONAL CHANGE

• Transformational changes are those you make to completely reshape your

business strategy and processes, often resulting in a shift in work culture.
• These changes may be a response to extreme or unexpected market
changes.
• Transformational change can produce fear, doubt and insecurity in staff,
and needs to be very well managed.
• Examples of transformational change include an overhaul of the
businesses products or services and restructuring the company’s business
strategy.
 THE CHANGE PROCESS

• Kurt Lewin’s Phases of Change Model describes how people react and
adapt to change.
• Kurt Lewin described change as a three-stage process that includes
unfreezing, change, and freezing. Lewin emphasizes that change is not a
series of individual processes but rather one that flows from one process
to the next.
• The first stage (unfreezing) involves overcoming inertia and dismantling
the existing “mind set.” This involves getting over the initial defense
mechanisms that people exhibit to avoid making a change.
 THE CHANGE PROCESS

• In the second stage, the actual change occurs. This is typically a period of
confusion and transition in which people are unsure about the change and
what may happen in the future. People are aware that the old ways are
being challenged, but they do not yet have a clear picture as to what these
ways will be replaced with.
• In the third stage (freezing), the new mindset of the change begins to
become the standard, and people’s comfort levels return to normal.
 THE ROLE OF HR IN CHANGE
MANAGEMENT

• To implement a successful change, managers should focus on

communication, training, monitoring, and counseling for the workforce.
• When change is implemented in an organization, there is often resistance.
This resistance often stems from people’s fear—of change in the work
itself, of change in the process of completing work, or of the possibility
that the change may result in the loss of their job. As a result, managers
and organizational leaders should have a strategic approach to enabling
change that ensures it is maximally effective in the organization.
• At its core, change management is about knowing strategically what to
change and how to manage the human element of this process.
• The central themes of change management revolve around training and
supporting employees. This is a critical managerial responsibility for
enabling change.
 KEY ENABLERS TO CHANGE

• Transparency and Effective Communication

During an organizational change, it is essential for managers to communicate
the reasons for the change as well as the process needed to make the change.
If staff understands why the change is taking place, they will be more likely to
agree with the implementation and see the benefit.
• Effective Education and Training
Education and training is essential for employees to understand and adapt to a
change in the workforce. When a new process is put into place, employees will
likely be unfamiliar with the process and how it will fit into their daily workflow.
Training in this situation is necessary to help employees become familiar with
the change and better adapt to it.
 KEY ENABLERS TO CHANGE

• Personal Counseling
When a major change happens in the workplace, some employees
may feel very uncomfortable about the change—especially the
employees most affected by the change. For these employees it may
be useful to have a program, most likely through human resources,
that will help them adapt to the change.
• Monitoring the Implementation
One of the most important steps in managing a successful change is
to monitor how the change is playing out in the organization. This
can be done by looking at historical data and examining how
employees are performing with the change compared to how they
were performing in the past.
 MULTIPLE STAKEHOLDERS IN
HRM

• Stakeholders refers to the groups who are directly or indirectly affected by

an organization’s actions, policies and objectives.
• Virtually every business and individual to which the company has a
connection, even people in the surrounding community, are stakeholders in
HR projects.
 IMPLICATIONS OF MULTIPLE
STAKEHOLDERS

• In the model stakeholder interests (stakeholders, management, employee

groups, government, community and unions) and situational factors
(workforce characteristics, business strategy and conditions, management
philosophy, labour market, unions, task technology, laws and societal
values) affect the HR policy choices of an organisation in terms of
shaping employee influence, human resource flow, reward systems and
work systems.
 HR AS A STRATEGIC PARTNER

• Fundamentally, HR business partnering is a model which can be used to

organise the way HR functions are carried out.
• At its core is the belief that HR as a function needs to be very closely
aligned with the top and the center of the organisation’s structure: so with
leaders and managers.
• In this way, the functions of HR can therefore truly enhance organisational
objectives and add value. HR business partnering makes HR a part of
organisational strategy rather than a strict personnel function which is
reactive.
 HR AS A STRATEGIC PARTNER

• HR strategies are not simply created reactively, or out of legal necessity.

Instead, HR strategy is determined within the context of the business
strategy – the two go hand in hand.
• The origins of HR Business Partnering can be attributed to Dave Ulrich’s
model of organizing HR, which identifies four roles of HR: strategic
partner, change agent, employee champion, and administrative expert.
 HR BUSINESS PARTNERSHIP IN
PRACTICE

• Proactive Strategic Approach: HR practitioners should always be

working within the concept of, and shaping, the overall business strategy.
It’s about objective setting, responding to challenges, and consistently
adding overall value.
• Being Cost Effective: Cost-effectiveness has always been a bone of
contention for the HR function. However, by taking a strategic approach it
is more possible to demonstrate cost-effectiveness through excellent
solutions and positive contributions. This seeks to enhance HR credibility
as a by-product.
 HR BUSINESS PARTNERSHIP IN
PRACTICE

• Relationship-Based: The most successful HR business partnering is

reliant on the positive and productive relationships formed and the
collaboration which then becomes possible. HR becomes the driver of an
intensely well-networked organisation.
• Initiative and Solution Focused: Rather than simply performing the daily
functions of the old-school HR department, HR business partnerships
work more holistically to translate strategy into action.
 THE HR PARTNERSHIP TRIAD

• Randall and Susan (2005) described HR Triad as the three key partners
involved in a strategic and effective human resource partnership which are
employees, line managers and human resource professionals.
• Each partner plays an important role to ensure that HRM practices are
integrated to achieve strategic objectives.
 THE HR TRIAD

“Human Resources HR has specialized and

are too important to technical knowledge
be left to the HR
department.”

Line managers Employees

have always share
been responsible. responsibility
 EXAMPLE: THE USE OF THE HR
TRIAD IN SELECTION – LINE
MANAGERS

• Identify staffing needs – because they are in charge of all staffs and control all
activities that take place within their line of management, the help to spot open
positions that needs to be filled by new employees based on the productivity level of
their current employees or tasks that are not handled by the current workforce.

• Help HR define performance criteria – this is unarguably true as they understand

the job analysis, specification and descriptions more than the HR department. Thus,
they help the HR department to define the required criterion for an open position
within their line of management.

• Help HR develop selection tools – different job require different selection tool and
line managers help HR department to develop the right selection tool for selecting a
new employee; whether it is interview, reference or experience related.

• Coordinate process with applicants and HR – they also help in coordinating the
selection process between applicants and HR department suggesting the best time to
select a new employee as well as the type of test required.
 HR PROFESSIONALS

• Develop/choose reliable and valid selection tests – this is obviously their main area
of specialization as they have to ensure that they right candidates are chosen to fill open
job positions. Thus, HR professionals are responsible for developing reliable and valid
selection tests.

• Coordinate selection process – HR Professionals are also responsible for

coordinating the selection process to ensure that all selected employees meet set
requirements and specifications.

• Arrange interviews – once the right candidate has been selected, the next step is to
arrange an interview and it is the role of HR Professionals to allocate an interview at a
time that is convenient for both the candidate and the company.

• Train others involved in selection – as discussed earlier, they are other people
involved in selection such as line managers and employees and it is the job of the HR
Professional to equip them with the right selection skills.
 EMPLOYEES

• Apply for transfers and promotions – once an employee notices an open position that he
or she is capable of handling, it is their role to apply for a transfer or promotion to the
position.

• Identify criteria for evaluating performance – sometimes doing something right in the
workforce does not necessary mean doing it the way you are asked to do it. Thus, employees
play the role on identifying the criterion for evaluating performance in their job sections.

• Interview/select new group members – employees want to feel at home with new recruits
and they play an important role in interviewing and selecting new group members to ensure
that they are capable of working with and under the group. This is importance because
incompetent new group member can distort smooth operations within the group.

• Attend training in selection processes – this is also a training process, and employees
attend training in selection process to acquire new skills of how to select and recruit new
staffs.