Core competency = A unique capability in the organization that creates high value and that differentiates the organization from its competition.
Certainly, many organizations have voiced the idea that their human resources differentiate them from their competitors.
HR management effectiveness positively affected organizational productivity, financial performance, and stock market value.
Some ways that human resources become a core competency are through attracting and retaining employees with unique professional and technical capabilities, investing in training and development of those employees, and compensating them in ways that keep them competitive with their counterparts in other organizations.
Certainly, many organizations have voiced the idea that their human resources differentiate them from their competitors.
HR management effectiveness positively affected organizational productivity, financial performance, and stock market value.
Some ways that human resources become a core competency are through attracting and retaining employees with unique professional and technical capabilities, investing in training and development of those employees, and compensating them in ways that keep them competitive with their counterparts in other organizations.
2. RESOURCE-BASED ORGANIZATIONAL STRATEGIES
There has been growing recognition that human resources contribute to sustaining a competitive advantage for organizations.
There are four factors that are important to organizational strategic accomplishments.
Those factors are related to human resources as follows:
- Value: Human resources that can create value are those that can respond to external threats and opportunities. Having this ability means that employees can make decisions and be innovative when faced with environmental changes.
- Rareness: The special capabilities of people in the organization provide it significant advantages. Especially important is that the human resources in an organization be provided training and development to enhance their capabilities, so that they are continually seen as “the best” by customers and industry colleagues. This rareness also helps in attracting and retaining employees with scarce and unique knowledge, skills, and abilities. Reducing employee turnover is certainly important in preserving the rareness of human resources.
- Imitability: Human resources have a special strategic value when they cannot be easily imitated by others.
- Organization: The human resources must be organized in order for an entity to take advantage of the competitive advantages just noted. This means that the human resources must be able to work effectively together, and have HR policies and programs managed in ways that support the people working in the organization.
Organizational culture is a pattern of shared values and beliefs giving members of an organization meaning and providing them with rules for behavior.
These values are inherent in the ways organizations and their members view themselves, define opportunities, and plan strategies. Much as personality shapes an individual, organizational culture shapes its members’ responses and defines what an organization can or is willing to do.
The culture of an organization is seen in the norms of expected behaviors, values, philosophies, rituals, and symbols used by its employees. Culture evolves over a period of time. Only if an organization has a history in which people have shared experiences for years does a culture stabilize. A relatively new firm, such as a business existing for less than two years, probably has not developed a stabilized
culture.
Managers must consider the culture of the organization because otherwise excellent strategies can be negated by a culture that is incompatible with the strategies.
Further, it is the culture of the organization, as viewed by the people in it, that affects the attraction and retention of competent employees. Numerous examplescan be given of key technical, professional, and administrative employees leaving firms because of corporate cultures that seem to devalue people and create barriers to the use of individual capabilities. In contrast, by creating a culture that values people highly, some corporations have been very successful at attracting, training, and retaining former welfare recipients.
The culture of an organization also affects the way external forces are viewed.
In one culture, external events are seen as threatening, whereas another culture views risks and changes as challenges requiring immediate responses. The latter type of culture can be a source of competitive advantage, especially if it is unique and hard to duplicate. This is especially true as an organization evolves through the life cycle in an industry.
4. ORGANIZATION/INDUSTRY LIFE-CYCLE STAGES AND HR STRATEGY
These values are inherent in the ways organizations and their members view themselves, define opportunities, and plan strategies. Much as personality shapes an individual, organizational culture shapes its members’ responses and defines what an organization can or is willing to do.
The culture of an organization is seen in the norms of expected behaviors, values, philosophies, rituals, and symbols used by its employees. Culture evolves over a period of time. Only if an organization has a history in which people have shared experiences for years does a culture stabilize. A relatively new firm, such as a business existing for less than two years, probably has not developed a stabilized
culture.
Managers must consider the culture of the organization because otherwise excellent strategies can be negated by a culture that is incompatible with the strategies.
Further, it is the culture of the organization, as viewed by the people in it, that affects the attraction and retention of competent employees. Numerous examplescan be given of key technical, professional, and administrative employees leaving firms because of corporate cultures that seem to devalue people and create barriers to the use of individual capabilities. In contrast, by creating a culture that values people highly, some corporations have been very successful at attracting, training, and retaining former welfare recipients.
The culture of an organization also affects the way external forces are viewed.
In one culture, external events are seen as threatening, whereas another culture views risks and changes as challenges requiring immediate responses. The latter type of culture can be a source of competitive advantage, especially if it is unique and hard to duplicate. This is especially true as an organization evolves through the life cycle in an industry.
As noted, organizations go through evolutionary life cycles, and the stage in which an organization finds itself in an industry affects the human resource strategies it should use. For example, the HR needs of a small, three-year-old hightechnology software firm will be different from those of Netscape or America Online.
The relationship between the life cycle of an organization and HR management activities is profiled in figure.
The relationship between the life cycle of an organization and HR management activities is profiled in figure.
Industry Life Cycle and HR Management
EMBRYONIC
At the embryonic stage a high-risk, entrepreneurial spirit pervades the organization. Because the founders often operate with limited financial resources, base pay often is modest. When skills are needed, the organization recruits and hires individuals who already have the necessary capabilities. Training and development are done on an as-needed basis.
GROWTH
During the growth stage, the organization needs investments to expand facilities, marketing, and human resources to take advantage of the demand for its products and services. Often, backlog and scheduling problems indicate that the organization has grown faster than its ability to handle the demand. Extensive efforts are made to recruit employees to handle the expanded workload. It is also important to have HR plans, and planning processes, rather than just reacting to immediate pressures. Compensation practices have to become more market-competitive in order to attract sufficient employees with the necessary capabilities. Communicating with those employees about career opportunities affects their retention, so career planning efforts and HR development efforts to support them are expanded.
SHAKEOUTS In the shakeout stage the industry reacts to rapid growth, and not all firms will continue to exist. Some will be bought out by other larger competitors; others will fade from the industry. The explosive growth in Internet businesses and the consolidations of Internet providers by such firms as America Online, Microsoft, and Yahoo illustrate how shakeouts occur. Regarding HR management in a shakeout industry, competition to retain human resources is important, especially while restructuring and reducing the number of jobs to control costs.
Compensation costs must be monitored, but a balance is required in order to retain key employees using short- and longer-term incentives. HR development is focused on high-potential, scarce-skilled employees who are seen as ones who will ensure that the organization is a major player following the shakeout.
MATURITY
In the maturity stage, the organization and its culture are stabilized.
Size and success enable the organization to develop even more formalized plans, policies, and procedures. Often, organizational politics flourish and HR activities expand. Compensation programs become a major focus for HR efforts, and they are expanded to reward executives as well. Extensive HR development occurs, coordinated by an internal training staff.
DECLINE
The organization in the decline stage faces resistance to change.
Manufacturing firms have had to reduce their workforces, close plants, and use their accumulated profits from the past to diversify into other industries. During the decline stage, employers try certain HR practices such as productivityenhancement and cost-reduction programs. Unionized workers resist the decline by demanding no pay cuts and greater job-security provisions in their contracts.
Nevertheless, employers are compelled to reduce their workforces through attrition, early retirement incentives, and major facility closings.
Strategic planning must include planning for human resources to carry out the rest of the plan.
Figure shows the relationship among the variables that ultimately determine the HR plans an organization will develop. Business strategy affects strategies and activities in the HR area.
There are many possible approaches to understanding the strategies that an organization may choose.
To illustrate the relationship between strategy and HR, two basic business strategies can be identified: cost-leadership and differentiation.
Figure compares HR needs under each strategy and suggests the HR approaches that may be most appropriate.
The first strategy may be appropriate in a relatively stable business environment. It approaches competition on the basis of low price and high quality of product or service.
The differential strategy is more appropriate in a more dynamic environment characterized by rapid change (such as the computer software industry). It requires continually finding new products and new markets. The two categories may not be mutually exclusive, because it is possible for an organization to pursue one strategy in one product or service area and a different one with others.
The cost-leadership strategy requires an organization to “build” its own employees to fit its specialized needs. This approach requires a longer HR planning horizon. When specific skills are found to be needed for a new market or product, it may be more difficult to internally develop them quickly.
However, with a differentiation strategy, responsiveness means that HR planning is likely to have a shorter time frame, and greater use of external sources will be used to staff the organization.
The HR Perspective discusses a study that examined the involvement of HR executives when determining organizational strategies and core competencies.
Manufacturing firms have had to reduce their workforces, close plants, and use their accumulated profits from the past to diversify into other industries. During the decline stage, employers try certain HR practices such as productivityenhancement and cost-reduction programs. Unionized workers resist the decline by demanding no pay cuts and greater job-security provisions in their contracts.
Nevertheless, employers are compelled to reduce their workforces through attrition, early retirement incentives, and major facility closings.
5. LINKING ORGANIZATIONAL STRATEGIES AND HR PLANS
Strategic planning must include planning for human resources to carry out the rest of the plan.
Figure shows the relationship among the variables that ultimately determine the HR plans an organization will develop. Business strategy affects strategies and activities in the HR area.
Factors That Determine HR Plans 
There are many possible approaches to understanding the strategies that an organization may choose.
To illustrate the relationship between strategy and HR, two basic business strategies can be identified: cost-leadership and differentiation.
Figure compares HR needs under each strategy and suggests the HR approaches that may be most appropriate.
Linkage of Organizational and HR Strategies 
The first strategy may be appropriate in a relatively stable business environment. It approaches competition on the basis of low price and high quality of product or service.
The differential strategy is more appropriate in a more dynamic environment characterized by rapid change (such as the computer software industry). It requires continually finding new products and new markets. The two categories may not be mutually exclusive, because it is possible for an organization to pursue one strategy in one product or service area and a different one with others.
The cost-leadership strategy requires an organization to “build” its own employees to fit its specialized needs. This approach requires a longer HR planning horizon. When specific skills are found to be needed for a new market or product, it may be more difficult to internally develop them quickly.
However, with a differentiation strategy, responsiveness means that HR planning is likely to have a shorter time frame, and greater use of external sources will be used to staff the organization.
The HR Perspective discusses a study that examined the involvement of HR executives when determining organizational strategies and core competencies.
No comments:
Post a Comment