CHAPTER 2

HUMAN RESOURCE POLICIES AND

STRATEGIES

PRESENTED BY:
MANJALIKA
KOMAL
 INTRODUCTION
STRATEGY
K Ashwathappa defines strategy as:
• It is a future oriented plan for interacting with the competitive
environment to achieve organizational goals.
• Strategy is a framework for managerial decisions

According to Chandler (1962) :

‘The determination of the long-term goals and objectives of an
enterprise, and the adoption of courses of action and the allocation
of resources necessary for carrying out those goals.’
STRATEGY HAS THREE FUNDAMENTAL CHARACTERISTICS:

1.FORWARD LOOKING:
It is concerned with both ends and means.
Strategies define longer-term goals but they also cover how those goals will be attained.

Boxall (1996) explained: ‘Strategy should be understood as a framework of critical ends

and means.’

2. ORGANIZATIONAL CAPABILITY OF A FIRM (ITS CAPACITY TO FUNCTION EFFECTIVELY)

DEPENDS ON ITS RESOURCE CAPABILITY.

This is the resource-based view, based on the ideas of Penrose (1959) :

The firm is ‘an administrative organization and a collection of productive resources’.

It was expanded by Wernerfelt (1984) who explained that

Strategy ‘is a balance between the exploitation of existing resources and the
development of new ones’.
3. STRATEGIC FIT –
The need when developing HR strategies to achieve congruence between them and the
organization’s business strategies within the context of its external and internal
environment.

HR STRATEGY
Richardson and Thompson (1999) suggest that:
A strategy, whether it is an HR strategy or any other kind of management
strategy must have two key elements: there must be strategic objectives (i.e.
things the strategy is supposed to achieve), and there must be a plan of action
(i.e. the means by which it is proposed that the objectives will be met).

Dyer and Reeves (1995) as ‘internally consistent bundles of human resource

practices’.
According to Deepak kumar Bhattacharya
“HR strategy is a pattern of decisions concerning policies and practices
concerning with the HR system”.
 STRATEGIC HUMAN RESOURCE
MANAGEMENT (SHRM) (OTHER SOURCES…)

It is a competency based approach for management

of HR.
It focuses on developing HR for sustainable
competitive advantage

It is an approach that defines how the organization’s

goals will be achieved through people by means of HR
strategies and integrated HR policies and practices-
MICHAEL ARMSTRONG
 ROLE OF HR STRATEGY IN STRATEGIC
MANAGEMENT
There are number of theories which define the role of HR strategy

1. Behavioural role theory ( Katz and Kahn (1978), Jackson & Schuler (1995)) :
It considers employee behaviours as key to successful strategy implementation. By aligning
hr policies & practices with organisation wide strategy , employees can fulfil their role
expectations within the organisation

2. Resource based theory (Barney (1991) , Prahalad & Hamel (1990)) :

It suggests that HR has the sustainable competitive advantage for the organisation.
This is because HR is inimitable and non-substitutable source for achieving competitive
advantage.

3. Human capital theory (Becker (1964)) :

It suggests the strategic importance to HR like other economic assets as knowledge., skills
and abilities of the people also have economic value.

4. Transaction cost theory (Williamson(1981)):

It suggests that strategic HR approach can ensure cost minimisation as this will enhance
periodic monitoring and governance
 ROLE OF HR STRATEGY IN STRATEGIC
MANAGEMENT contd…
5. Agency theory (Eisenhardt (1989)):
Strategic approach to HR aligns agents ( employees) and principals (employers) interests
and thereby ensures streamlining of employment relations and systems within the
organisation.

All these theories are grouped under RATIONAL CHOICE THEORIES OF HR.
Institutional and dependency theories on HR strategy focus on constituency based interest
. This is because the strategic approach is not empirically proved as contributor to
organisational performance.

There are external factor that act as potential influencers in strategy.

STRATEGY is the direction and scope of an organisation over long term

, matching its resources to its changing environment and in particular its
markets, customers so as to meet stakeholders interests.
Strategy is mainly concerned with:

1. The scope of an organisation’s activities

2. Matching the activities of an organisation to that environment

in which it operates

3. Resource implications

4. Operational decisions

5. The value and expectations of stakeholders

6. Long term direction

 CRITERIA FOR AN EFFECTIVE HR
STRATEGY (OTHER SOURCES..)

• It will satisfy business needs.

• It is founded on detailed analysis and study, not just wishful

thinking.

• It can be turned into actionable programmes that anticipate

implementation requirements and problems.

• It is coherent and integrated, being composed of components that

fit with and support each other.

• It takes account of the needs of line managers and employees

generally as well as those of the organization and its other
stakeholders.
 LEVELS OF STRATEGY
CORPORATE LEVEL: This strategy is influenced by the mission of the organisation
It addresses the issues :
 Overall scope of an organisation
 How to run in structural and financial terms
 How resources are allocated to different operations

COMPETITIVE OR BUSINESS STRATEGY:

This strategy is adopted by an organisation in order to have strong market position.
It explains:
 How to compete in the market.
 Which products or services should be developed and offered to which markets
 To what extent it meets customers need
 Does it achieve the objectives of the organisations like long term profitability etc.

OPERATIONAL STRATEGIES:
These are adopted at the functional level or the operational level.
 POLICY
 A policy is a pre determined established guidelines towards the attainment
of accepted goals and objectives.
 Such guidelines facilitates properly designed efforts to accomplish the
strategic intent.
 Policy is not a strategy or a tactic

ACCORDING TO MICHAEL ARMSTRONG:

HR policies provide guidelines on how key aspects of people management

should be handled.
The aim is to ensure that any HR issues are dealt with consistently in
accordance with the values of the organization in line with certain defined
principles.
All organizations have HR policies.
 FROM OTHER SOURCES…
(TEXTBOOK OF HRM BY R.S DWIVEDI)

DIFFERENTIATING POLICY FROM STRATEGY

PROPOSED COURSE OF ACTION
POLICY STRATEGY
Policy relates to general character or Strategy is means to be used in bringing
nature which an enterprise intend to about such intended features.
adapt
Policy decisions reflects the personal It reflects the logical and rational analysis
beliefs of owners or directors about kind by senior executives intended to
of enterprise they intend to run and how implement such policy decisions
it should run
TIME FRAMEWORK
Policy decisions have broader perspective than strategic decisions
It has been asserted that Policy decisions Strategic decisions are valid for several
prevail over a decade or more years but less than 10 years.
 POLICY
Policy is different from objectives:

Objectives are specific goals or aims , in quantitative terms and can be considered as
something which an individual or group seeks to accomplish.
Objective is something to accomplish whereas a policy is a guide to accomplish it.

Policy is different from procedure:

Procedure defines the manner or way of accomplishing something i.e. it is a process and
method. While policy forms part of a framework of general principles.

Policy is different from programmes:

Programmes are developed on the basis of policies with a view to implement them and
accordingly programmes involve one additional step beyond policy to simplify the decisions.
The execution of programmes lead to specific actions including practices and procedures
 HR POLICIES AND PROCEDURES
A comprehensive coverage of policies embrace any action or decision, taken by
management or employees in relation to the working environment.

It includes the rights, responsibilities and actions.

Policy may be statement of :

 Standards for employee attendance
 Management obligations in grievance administration
 Conditions under which loans will be granted
 Conditions under which an employee is suspended or terminated

PROCEDURES
Procedures prescribe the details for carrying out the policies.
It tells about the specific rules and regulations, the steps, time, place and
personnel responsible for implementing policies.
It also clarifies what is to be done in particular circumstances.
 HR PROGRAMME
 HR Programme consists of the entire broad course of action governing employees at
all levels(including management) in a firm.

 It can be thought of as a stable plan of action that continues over an extensive period
of time.

 It is the end product of philosophy, values, concepts, principles, policies and

procedures.

Some universal elements in a HR programme are:

1. Employment – Selection and job change,

2. Training and development,
3. Communication,
4. Grievances and discipline,
5. Wages and salary,
6. Health and safety,
7. Benefits and services,
8. Labour relations,
9. Research.
 HR PLANNING

HRP is defined as the process of forecasting an organisation’s

future demand for, supply of the right type of people in right
number.

All activities of HRM- planning, hiring , training , remunerating

and maintaining must be merged with strategic management.

HR planning is part of strategic planning.

In most successful companies, there is virtually no difference

between HR planning and strategic planning
 HR PLANNING PROCESS
ENVIRONMENT

ORG. OBJECTIVES AND

POLICIES

HR NEEDS FORECAST HR SUPPLY FORECAST

HR PROGRAMMING

HRP IMPLEMENTATION

CONTROL AND EVALUATION OF

PROGRAMME

SURPLUS SHORTAGE
 CONSIDERATIONS IN DEVELOPING HR
POLICIES
• Statements of policy constitute criteria for making decisions.

• They render decision making easier and more routine.

• They facilitate saving of precious time.

• Policies provide a clear idea of what management and employees can expect.
Therefore, policies promote consistency and fairness of action and eliminate any bias in
employee related decisions.

• This way policies help to avoid confusion and misunderstanding.

• Policies may originate from anywhere inside an organisation or from external sources .

• The approval of new or changed HR policies ultimately come from top management.
 CONSIDERATIONS IN DEVELOPING HR
POLICIES CONTD..

• An effective HR department recommends policies and policy changes that

it has to assist in communicating policies to those who should know about
them.

• In formulating policies, the first consideration is the objective or purpose.

• Operationally, it is also necessary to contemplate economics(costs) and

benefits in relation to size and complexity of the organisation.

• Thus comes to need for determining the policies acceptability to

management and to employees, and this depends to a great extent on
their administrative feasibility and fairness to employees.

• Unions have had a tremendous impact on policy formulation.

GUIDELINES FOR POLICY FORMULATION
A number of guidelines for policy writing have been well established and are worth
enumerating:

1. Purpose: A statement of purpose or rationale helps to understand the policy and

ensure acceptance of it.

2. Semantics: choice of words should be understandable. Wording should avoid irritating

expressions that denote inferiority e.g., ‘You are forbidden.’

3. Tone: A warm, understanding tone will help to show the interest and concern of
management. This means avoidance of legalistic language as much as possible.

4. Form: An outline form may be useful for management references and application. But
outlines are difficult for employees to follow. Relatively short paragraphs, some use of
underlining , and adequate spacing(double rather than single) encourage reading.

5. Clarity: Short sentences are better than long ones and simple sentences are easier to
read and comprehend than complex or compound sentences.
 COMMUNICATING THE POLICIES

Management has a definite responsibility to see that employees

become familiar with all policies that affect them.

WAYS OF COMMUNICATION

WRITTEN MEDIA - employee handbooks, bulletin boards, company

periodicals, etc.
In orientation sessions for new and old employees:
ORAL EXPLANATION - can be accompanied by visual aids such as
film strips, placards and funnel boards.
 ADMINISTERING POLICIES
• Uniformity in administration is desirable when circumstances are similar
among the various individuals and groups concerned. Customs amongst
various groups and parties that have been in operation for sometime and
needs of different groups of employees, etc., influences decisions in regard to
degree and extent of uniformity.

• Questions of rigidity of administration and consistency or flexibility of

interpretation must also be faced. In weighing special consideration to an
employee or penalty for a violation, many factors must be taken into account:
work record; demonstrated capability; history of relationships ; impact on
other and on further situations; knowledge at the individual’s disposal;
reasons; obligations to the organisation; respective values etc.
PART II
Learning Objectives

 Framing strategy
 Strategic control
 Operational control systems
 Functional & grand strategies
 Example of strategy & action plan for
HRM
FRAMING STRATEGY

 Strategic plan is the

process of thinking through
the current mission of the
organization with due
cognizance to current
environmental conditions—both internal & external
 Such plans, thus, set guidelines for future
decisions & results.
STRATEGIC PLANNING CYCLE
 FRAMING STRATEGY
VISION
 A vision is a depiction of what
you would like your organization
and HR department to be like in
the future.
 A vision statement is a brief
explanation (one or two
sentences) with some explicit
commentary about why the
vision is desirable.
 For eg.- Attitude towards quality
and customers’ complaints
MISSION
Effective mission statements
include the following
elements:
 The concept of your
organization.
 The nature of your business.
 The reason your organization
exists.
 The people you serve.
 The principles and values
under which you intend to
operate.
CHARACTERISTICS OF A VISION
STATEMENT
Imaginable: Conveys a picture of what the future will
look like.
Desirable: Appeals to your long-term interests and the
interests of other stakeholders.
Feasible: Has realistic, attainable goals.
Focused: Is clear enough to help guide decision-making.
Flexible: Is general enough to allow for individual
initiative and alternative responses in light of changing
conditions.
Comprehensible: Is easy to communicate; can be
successfully explained within five minutes.
SAMPLE MISSION STATEMENTS

XYZ is committed to delivering

exemplary, compassionate and professionally
rewarding internal medicine care to patients with
complex multi-system diseases.
XYZ’s HR department is committed to providing
professional, progressive and strategic human
resource leadership to all stakeholders.
XYZ’s HR department provides the organization with
people, policies, processes and practices that best
support a flow of talent capable of meeting
businesses’ needs.
VISION MISSION
Category of intentions that A vision in tangible form is a
are broad, all inclusive & mission statement
forward thinking
Describes aspirations for the Mission statements verbalise
future the vision
Does not specify the means Key elements of mission
that are used to achieve the statement
desired ends
Must be inspirational
Often unwritten
Must be communicated
In 2 ways :-
(i) In form of mission
statement, OR
(ii) Through personal selling
(eg.behaviour of the
visionary)
KEY ELEMENTS OF MISSION STATEMENT
VIEW OF THE FUTURE
COMPETITIVE ARENAS
SOURCES OF COMPETITVE ADVANTAGE

BENEFITS
GOALS

OBJECTIVES
POLICY

STRATEGY
GOALS
Goals make a mission
statement more concrete
Address both financial and
non-financial issues
They facilitate reasoned
trade-off
Can be reached with a
stretch
Cut across functional areas
OBJECTIVES
Operational definitions of
goals
Describe what the
organisation hopes to
accomplish
They can be measured
They indicate time
dimension
Reduce conflicts &
misunderstandings
policy strategy

General statements or It is the direction

understandings
Policies guide manager’s Concerned with
thinking in decision- deployment of human
making and material resources
Ensure that decisions fall Increases the chance of
within certain boundaries achieving selected
objectives
STRATEGIC CONTROL
 Allow time between initial implementation
and achievement of intended results
 Steer the organization through different
actions- environmental situation & firm’s
internal situation
 Correct the actions and directions of the firm
as required by making certain changes &
deployments in external env. & internal
situation
Types of strategic control
OPERATIONAL CONTROL SYSTEMS
 TOP MANAGEMENT- monitor and steer the
basic strategic direction of the company

 OPERATING MANAGERS- control methods

appropriate to their level of strategy
implementation

 PRIMARY CONCERN AT THE OPERATING LEVEL-

allocation and use of company resources

 Operational systems guide, monitor and evaluate

progress in meeting annual objectives
 Steps include :
TYPES OF OPERATIONAL CONTROL SYSTEMS :

 BUDGETS
 SCHEDULES
 KEY SUCCESS FACTORS
FUNCTIONAL & GRAND STRATEGIES

FUNCTIONAL STRATEGIES GRAND STRATEGIES

Functional strategies give Grand strategies are framed

specific guidance to with a long-term perspective
managers for at the corporate level.
accomplishing annual
objectives

They translate grand

strategies at the business
level into action plans for
the org.
Operations strategy factors
 Number, type, location and size of operations
facilities
 Type of equipment to be utilised
 Make or buy decision
 Organisation structure
 Workforce selection, employment
scrutiny, compensation methods, & management
style
 Information system
 Production planning, scheduling n control, system
and inventory policy
 Quality control and improvement methods
 Productivity improvement methods-
machine/manpower
HR Strategy factors
 Recruitment and selection
 Career development
 Performance appraisal
 Training & development
 Compensation Designing
 HRP
EXAMPLE OF STRATEGY & ACTION PLAN
 VISION
FOR HRM
(i) We are committed to provide an enjoyable
work environment to our employees to promote
teamwork, quality improvement and
excellence.
(ii) Our employees are our valued customers and
most important stakeholders.

 MISSION
To achieve excellence in HRM, fostering growth
and creativity
 GOALS
(i) to promote teamwork
(ii) to ensure quality improvement
(iii) to foster growth and creativity

 OBJECTIVES

Goal 1-
 Achieve group cohesiveness by inculcating
participative management
 Reduce dissonance in managerial decisions
 Zero man days loss and increased
productivity
 STRATEGIES
1. Improve participative management
2. Initiate organization wide quality improvement
3. Develop culture to promote growth and
creativity

 STRATEGY AND ACTION PLAN

 STRATEGY 1 –
 Establish small group forums, quality circles
(QC), self managed teams (SMTs), TQM clubs
 Shift focus from statutory participation to total
participation
 Empower employees by involving them in decision
making process
REFERENCES

 BOOKS
Human Resource planning
- Dipak Kumar Bhattacharyya
Strategic Human Resource Development
- Jim Grieves
Strategic Human Resource Technologies
- Ashok Chanda
 WEBSITES
http://smallbusiness.chron.com/four-types-strategic-
control-14720.html