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Impact of HRM on Organizational performance & making the impact work

Terrence Perera FCPM , MBA

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Human resource management (HRM) is defined

as the policies, practices, and systems that influence employees behavior, attitudes, and performance. Important HRM practices include:

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Impact of Human Resource Management

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Why care about HRM?

Impact on you as employees Impact on you as managers Potential future roles as HR professionals Impact of HRM on organizations
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HR Strategy and Performance

What Employees Have Skills, Abilities, Competencies

HR Strategy Recruitment Selection Training Development Performance Management Rewards Communication

What Employees Feel Motivation Commitment Engagement

What Employees Do Task, Discretionary, Counterproductive Behavior, Attendance, Turnover

Customer Outcomes Satisfaction Retention

Operational Outcomes Productivity Quality Shrinkage Accidents

Financial Outcomes Expenses Revenues Profits

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The Harvard Model of Human Resource Management

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The Context of HRM

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HRM has increased in importance since the 1980s. Why?

Government regulation

Stronger knowledge/research base

Changing role for labor unions

Challenge of matching worker expectations with

competitive demands
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How HRM impacts on Org. performance?

People are the Organizations key resources and Organizational performance largely depends on them. All other resources could be acquired easily. If an appropriate rage of HR policies and processes are developed and implemented effectively, HR will make substantial impact on firms performance

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Strategic Importance of HRM

Can establish an organizations sustainable competitive advantage Requires fundamental change in how managers think about employees Need to consider outsourcing certain HR transactions Government influenced HRM through laws and regulations Employers must ensure that managers understand their obligations and comply
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Who is responsible for developing & implementing HRM practices?

Most firms have an HRM department. However , this department does not have sole responsibility for a forms HRM practices. This responsibility lies with both HR professionals anf line managers.

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Skills of HRM Professionals

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HR Professionals role
Establish HRM Procedures Develop / choose HRM methods Monitor / eveluate HRM practices Advise / assist managers on HRM related matters

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Competitive Advantage & HRM

The HRM practices of an organization can be an important source of competitive advantage. Effective HRM practices can enhance a firms competitive advantage by creating both cost leadership and produt differentiation.
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The role of HR in creating intergration

Shaun Tyson (1995) suggests that the HR department itself will be an intergrating device since, its remit usually operates across organizationa boundries and often carries responsibility for corporate communications. The internalization of corporate values , through major communication programmes and the organizational culture as a whole , are other major sources of intergration.
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High performance work practices

Suggestion schemes , Quality circles , problem- solving groups or other forms of employee participation in idea generation Employee participation in decision making Freedom of expression Extensive teamwork , including self managing teams

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How can HR help to implement high performance work practices?

By creating a culture which is supportive of high performance By influencing attitudes By designing and implementing HR processes which support the business startergy

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Performance Management
HR can help managers to understand how to define roles in the light of business drives and how to identify the capabilities required to do the job.

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Job fit and Job design What role can HR play?

HR can develop assessment processes to ensure that the right people are selected for roles. It can also help employees to see for themselves if they have the capabilities for new roles.

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Dealing with poor performance

HR needs to be able to support managers in understanding how hey can achive high standards with slim resources. HR can provide valuable training and othe resources to ensure that managers have the skills to coach anf develop other people , as well as appraise performance.
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Helping managers to make difference

HR can help by using attitude surveys to find out the facts.. These can identify what the problems are , where they are and how deep they are

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The role of HR in facilitating career development

The HRM role in facilitating career development is increasingly becoming more strategic , focusing on the longer term HR need of the firm In practice, the more recent career management support systems have been introduces through a partnership apparoach between HRM & individuals in the firm.
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Support for career development

There are several support mechanism in place to help individuals manage their careers. Some of these operate at a corporate wide level and some are more specific to a particular business area , unit or department.

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What do HR professionals see as priorities for the future?

Training & development Communication Performance management Aligning HR and business strategies Reward and recognition

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Role of HR in supporting cultural change

Layers of Organizational Culture
Cultural Symbols
Shared Behaviors Cultural Values Shared Assumptions

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Slide 15.6 How Cultures Emerge

Top Management
Agrees on shared assumptions of human behavior Develops a shared vision of cultural values

Employees behave in ways that are consistent with shared values and assumptions

Financial performance Market share Employee commitment

Strong culture emerges Traditions are maintained Socialization practices for new employees

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Slide 15.7 Methods of Maintaining Organizational Culture

Methods of Maintaining Organizational Culture What managers and teams pay attention to Reactions to organizational crises Managerial role modeling Criteria for rewards Criteria for selection and promotion Organizational rites, ceremonies, stories

Recruitment of employees who fit the culture

Organizational Culture

Removal of employees who deviate from the culture


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Framework of Types of Cultures

Formal Control Orientation

Clan Culture

Entrepreneurial Culture

Bureaucratic Culture Stable Internal

Market Culture External

Forms of Attention
Source: Adapted from Hooijberg, R., and Petrock, F. On cultural change: Using the competing values framework to help leaders execute a transformational strategy. Human Resource Management, 1993, 32, 29-50; Quinn, R. E. Beyond Rational Management: Mastering the Paradoxes and Competing Demands of High Performance . San Francisco: Jossey-Bass, 1988. Terrence Perera 28

Attributes of a Bureaucratic Culture

Long-term concerns are predictability, efficiency, and stability Members value standardized goods and services Managers view their roles as being good coordinators, organizers, and enforcers of written rules and standards Tasks, responsibilities, authority, rules, and processes are clearly defined

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Attributes of a Clan Culture

Peer pressure to adhere to important norms is strong Success is assumed to depend substantially on sensitivity to customers and concern for people Teamwork, participation, and consensus decision making are believed to lead to success

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Attributes of an Entrepreneurial Culture There is a commitment to experimentation, innovation, and being on the leading edge This culture does not just quickly react to changes in the environmentit creates change Effectiveness depends on providing new and unique products and rapid growth Individual initiative, flexibility, and freedom foster growth and are encouraged and well rewarded

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Attributes of a Market Culture

Contractual relationship between individual and organization

Independence and individuality are valued and members are encouraged to pursue their own financial goals Does not exert much social pressure on an organizations members, but when it does, members are expected to conform
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Attributes of a Market Culture

Superiors interactions with subordinates largely consist of negotiating performancereward agreements and/or evaluating requests for resource allocations Has a weak socialization process Few economic incentives are tied directly to cooperating with peers Often tied to monthly, quarterly, and annual performance goals based on profits

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Organizational Uses of Culture Organizational culture has the potential to enhance organizational performance, individual satisfaction, and a variety of expectations, attitudes, and behaviors in organizations If an organizations culture is not aligned with the changing expectations of internal and/or external stakeholders, the organizations effectiveness can decline

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Organizational Uses of Culture Organizational culture and performance are related, although the evidence regarding the exact nature of this relationship is mixed Organizational culture affects employee behavior and performance Assessing which attributes of an organizations culture need to be preserved and which ones need to be modified is a constant organization need

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Relationship Between Culture and Performance Organizational culture can have a significant impact on a firms long-term economic performance Organizational culture will probably be an even more

important factor in determining success or failure of

firms during the next decade

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Relationship Between Culture and Performance Organizational cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are filled with reasonable and intelligent people

Although tough to change, organizational cultures can be made more performance enhancing if managers understand what sustains a culture

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Effects of Organizational Culture on Employee Behavior and Performance

Allows employees to understand the firms history and current methods of operation Fosters commitment to corporate philosophy and values

Serves as a control mechanism for employee behaviors

Certain cultural types may produce greater effectiveness and productivity

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Effects of Organizational Culture on Ethical Behavior A culture emphasizing ethical norms provides support for ethical behavior Top managers play a key role in fostering ethical

behavior by exhibiting correct behavior

The presence or absence of ethical behavior in managerial actions both influences and reflects the culture
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Just Culture
100 80 60

Openness to Change
40 20

Constructive Conf lict

Core Beliefs 0 and Values



Management Philosophy
Your Organization All Other Organizations

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Financial evaluation of the HR strategy The basic approach is to calculate the cost of a HR intervention,
such as training or an employee participation arrangement, and to determine the benefit in monetary terms or results such as improved productivity or a reduction in absenteeism, accidents and grievances. To calculate the ROI of an HR intervention programme, the manager calculates the total costs and benefits of the programme using the following formula: ROI = Net benefits Intervention costs

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Theorizing the HRM-Performance Link

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HRM auditing

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How The IBM HR Strategy Supports and Enables the Business Strategy
Performance-Based Opportunities IBM Differentiators: The Employee Experience
Innovation Business Value


Diverse, Talented People



Values-based Climate

Focus on Enterprises that Value Innovation

Global Integration On Demand Infrastructure

Anticipate and Build Skills

An inspiring climate in which employees flourish by creating value for our clients and the world

Human Resources Focus Areas

Lead the Transformation

Grow IBM

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