Strategic HRM: Pulak Das 1

Strategic HR Planning
Lectures slides for Chapter 7
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Objectives
Objectives of this lecture is to understand
meaning of strategic HR plan, its
difference from conventional HR plan and
what managerial actions required for
executing such plans in an organization.
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What is HR planning?
Conventional meaning:
Estimation of demand for manpower in
various departments or divisions and
assessment of manpower available in both
internal and external markets.
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Strategic HR Planning and its
goals
Strategic planning of human resources tries to
estimate demand for and availability of
competencies to create and maintain companys
long run competitive advantage.
Since sources of competitive advantage are
different for companies operating in different
industries, so the goals and actions for Strategic
HR planning are expected to be different for
organizations operating in different industries.
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Classifications of Organization
Based on the goals of Strategic HR plans
are pursued, the industrial organizations
can be classified into four groups:
Regulatory compliance,
Strategy Implementation,
Strategy moderation
Strategy Integration
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Strategic plan to achieve
regulatory compliance
In these industries, there is no occupational
entry barrier against employees moving from
one area to another. Naturally market supply is
plenty. In these industries HR are mainly to
ensure regulatory compliance e.g. minimum
wage law, equal remuneration acts, employment
reservation etc.
Example:
Agricultural employment, Govt. employment for low
level jobs.
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Strategic plan to Implement
Market Driven Business Strategy
Source of competitive advantage :
Owner ship of tangible asset.
Business and HR plans are pursued comes for getting
maximum returns from investment in tangible assets.
These are physical assets driven businesses. Manpower
acquisition and deployment are more for making use of
these assets. Large scale manufacturing business e.g.
Motor cars, Tractors.
Example:
A tractor company having plants in South and North India. The
market for these two areas may be growing at different rates
which may require advance plan for manpower transfer from one
plant to another. Identifying employees who are willing to move
from their existing location is important part of the planning
activities.
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Strategic HR Plan for Moderation
of Business Strategy
Industries where source of competitive advantage is still
ownership of tangible assets but importance of support
service areas is growing and the company needs lot
more employees in support areas who worked in primary
areas. Source of competitive advantage is fast moving
away from tangible assets to intangible assets areas of
employee skill and competencies.
Example:
Most big plant based manufacturing companies come under this
group. Due to product standardization, more jobs are emerging
in support service areas.
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Strategic HR plan for Integration
Source of competitive advantage:
Employee skill and organizational competencies.
Investment in tangible assets are made to
enhance returns from the use of intangible
assets particularly the employee competencies
and commitments.
Example:
Highly skill driven service business e.g. Health care,
banking, insurance. Non-standard products.
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What is an Integrated Strategic HR Plan?
It means deciding on the hr functional
requirements of recruitment and selection, off
the job and on the job training and
development, performance management,
compensation and reward system to ensure
availability of manpower both in terms of
number as well competency to maintain
company competitive advantage over its
competitors.
What does it imply in terms of skill and
expertise of an hr planner?
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HR Plan and HR system: A
simple system
Business
Strategy
HR
Planning
Acquisition
T & D
Performance
evaluation
Selection
Incentive
Promotion
T & D
Union
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Factors Affecting Integration
Environmental instability;
Structural Change in Industry due to
Diversification in forward or backward sides of
the industry;
Skill Shortage;
Changing Composition of Internal Work Force;
Merger & Acquisition;
Compensation;
Status of top HR managers.
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Activities for HR planning
Understanding company business;
Understanding core and support functions;
Understanding company strategy;
Understanding current stock of competencies at
functional level;
Understanding employee career expectations;
Estimating the requirements of competencies at
functional levels;
Estimating the internal flow of competencies at different
levels;
Relating the internal flow with the company HR policies
and practices;
Understanding external availability of competencies and
their flow.
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What does it mean in terms of
Managerial action?
It means getting
An estimate of manpower requirements both number
and competency in different departments at different
times in future years;
An estimate of availability of manpower in terms of
number and competency from internal market of the
company;
Suggest remedial action both in terms of internal
developmental and external acquisition activities for
closing the demand supply gap.
Suggest remedial actions in the areas of HR policies
to reduce demand supply gaps in future.
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Estimating Demand for
Manpower at different times
Knowing the company manpower utilization in different departments
and divisions in recent past;
Knowing the skill set required for meeting the service demands of
different departments and divisions in recent past;
Knowing the company core and support functions for doing the
business;
Knowing company business strategy;
Knowing company Human resource strategy;
Converting business strategy and human resource strategy into
requirements of positions and skill set. As a first approximation you
may use company past practice as a starting point and then adjust
one variable at a time for the required change in business strategy
and human resource strategy.
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Estimating Internal Availability of
manpower and competency
Internal demography: Education, work
experience and age distribution in different
departments;
Movement in internal hierarchy: eligibility
conditions and promotion rates;
Horizontal transfer policy across departments
and divisions;
External loss by way of turnover from different
departments and divisions;
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Closing demand supply gap
Estimate demand supply gap at different critical
functions, departments and ranks;
Consider remedial steps by way of internal development
through ranks and through external developmental
activities;
Identify ranks with large demand-supply gaps and look
for cause in areas e.g. poor recruitment and selection
and placement system,lack of developmental
opportunity, poorly designed career management
system, poorly administered performance management
system, poorly designed reward system
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Factors affecting external flow
Company Hr policies and practices;
Company image as an employer;
Popularity of local area as a place to live
and work for families;
External supply of human capital
development institutes.
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Key Learning
An integrated strategic hr plan is used to
support maintenance of company
competitive advantage. It not only
estimates manpower and competency
demands and their internal availabilities
but also evaluates other hr functions that
affect the availability of manpower and
competencies at different times.