600 word essay to be written in 1hr and 45 mins

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Introduction, body , conclusion.

No reference needed.

Learning Outcomes

Understanding the link between strategy, strategic analysis and competitive advantage

Adopt an awareness of external analysis tools and how these can be applied to support competitive advantage

Acknowledge the strategic role of PMD in competitive advantage

Key message?
Context is important!!
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The external environment plays a critical role in shaping individuals, industries, and businesses.
‘To keep the business ahead of the competition, managers must continually adjust their strategies to reflect the environment in which their businesses operate.’ Tan Chee Teik (2013)

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The word ‘Strategy’ was initially introduced and defined in the ancient military dictionaries
It comes from the Greek word ‘strategos’, strictly meaning a general in command of an army; it is formed from ‘stratos’, meaning army and ‘ago’, meaning to lead
Used first time in business literature by William Newman (1951)
Strategy……

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Strategic Analysis
‘… A theoretically informed understanding of the environment in which an organisation is operating, together with an understanding of the organisation’s interaction with its environment in order to improve organisational efficiency and effectiveness by increasing the organisation’s capacity to deploy and redeploy its resources intelligently.’
(Professor Les Worrall, Wolverhampton Business School)
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“A market-oriented strategy that establishes a profitable and sustainable market position for the firm against all forces that determine industry competition by continuously creating and developing a competitive advantage from the potential sources that exist in a firm’s value chain.”
Definition of
Competitive
Strategy

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Achieving
Competitive
Advantage
What makes your firm a better choice over other options in the marketplace?
What is the deciding factor, the thing that really makes the difference?

Examples of
Competitive
Advantage
Economies of Scale
Functionality
Human factor
Accuracy of Information
Innovative Technology
Employer of choice
Class Question:
Think of an example of an Employer of choice:
What makes them an EOC? What gives them competitive advantage?

Value
proposition
development

PESTLE
Analysis
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Macro environment factors: PESTLE Analysis
PESTLE Analysis
Social-cultural
Technological
Legal
Environment/Ethics
Political
Economical
Meso environment factors: Porter’s five forces
Micro environment factors: SWOT/TOWS
Strategy formation
Implementation
Monitoring and Evaluation
The setting between the macro and micro opportunities. It shapes the framework of a business or organisation and can be considered as its infrastructure: policies, standard operating procedures, rules and guidelines

Advantages:
It’s a simple framework.
It facilitates an understanding of the wider business environment. 
It encourages the development of external and strategic thinking. 
It can enable an organisation to anticipate future business threats and take action to avoid or minimise their impact.
It can enable an organisation to spot business opportunities and exploit them fully.
Disadvantages:
Some PESTLE analysis users oversimplify the amount of data used for decisions – it’s easy to use insufficient data.
The risk of capturing too much data may lead to ‘paralysis by analysis’. 
The data used may be based on assumptions that later prove to be unfounded. 
The pace of change makes it increasingly difficult to anticipate developments that may affect an organisation in the future.
To be effective, the process needs to be repeated on a regular basis.
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Introducing PESTEL
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PESTLE Analysis
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Carry out a PESTLE Analysis of the external environment of an organisation of choice.
Select the critical factors that could affect the organisation’s PMD Strategy.
Check the HANDOUT on PESTLE Analysis.

30 minutes

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Michael Porter’s Five Forces
Porters Five Forces is a simple but powerful tool for understanding the competitiveness of your business environment, and for identifying your strategy’s potential profitability.

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Concentration within an industry can be defined as the degree at which a small number of firms make up for the total production in the market. If the concentration is low, it simply means that top ‘n’ firms are not influencing the market production and the industry is considered to be highly competitive.
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Michael Porter’s Five Forces: (1) Competitive rivalry
Number and strength of your competitors.
How many rivals do you have?
Who are they, and how does the quality of their products and services compare with yours?
Where rivalry is intense, companies can attract customers with aggressive price cuts and high-impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and buyers can go elsewhere if they feel that they’re not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then you’ll likely have tremendous strength and healthy profits.
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Michael Porter’s Five Forces: (2) Supplier power
Determined by how easy it is for your suppliers to increase their prices.
How many potential suppliers do you have?
How unique is the product or service that they provide, and how expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper alternative.
But the fewer suppliers there are, and the more you need their help, the stronger their position and their ability to charge you more. That can impact your profit.
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Michael Porter’s Five Forces: (3) Buyer power
Ask yourself how easy it is for buyers to drive your prices down. 
How many buyers are there, and how big are their orders? 
How much would it cost them to switch from your products and services to those of a rival? 
Are your buyers strong enough to dictate terms to you?
When you deal with only a few savvy customers, they have more power, but your power increases if you have many customers.
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Michael Porter’s Five Forces: (4) Threat of substitution
Refers to the likelihood of your customers finding a different way of doing what you do.
For example, if you supply a unique software product that automates an important process, people may substitute it by doing the process manually or by outsourcing it.
A substitution that is easy and cheap to make can weaken your position and threaten your profitability.
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Michael Porter’s Five Forces: (5) Threat of new entry
Your position can be affected by people’s ability to enter your market.
How easily could this be done?
How easy is it to get a foothold in your industry or market?
How much would it cost, and how tightly is your sector regulated?
If it takes little money and effort to enter your market and compete effectively, or if you have little protection for your key technologies, then rivals can quickly enter your market and weaken your position.
If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.
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PMD role in CAV
What is the role of PMD in competitive advantage?
How can PMD support?

Michael Porter’s Five Forces
Case Study:
Martin Johnson is deciding whether to switch his career from being a mechanic to being a farmer – he’s always loved the countryside, and he wants a job where he can be his own boss. He creates the following Five Forces analysis to help him decide:
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Michael Porter’s Five Forces
You are the PMD Director for Talent Management and Development at Media Rotana Hotel in Dubai. You have been assigned to conduct a Porter’s Five Forces Analysis before putting together an Attraction and Retention Strategy for PMD. With Expo 2020 around the corner and the risks from Covid, many hotels are attempting to poach staff from well-known hotels like your own, mainly to avoid cost. Big brand names are entering the race to excellence and you want to proactively prevent the use of expensive resources.
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Redraw on a flipchart

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Learning outcomes

Understand the key models supporting the strategic role of the HR function

Reflect on the skills, knowledge and experiences necessary to drive innovative and adaptive behaviours within professional contexts.

Critically discuss real world issues and their impact of people management and development strategies and practices.

Demonstrate competence in managing and leading the professional practice development of self and others.

Three approaches
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What is Strategic HRM/PMD?
Developing and Implementing HR Strategies:
Alignment between the HR strategy, business strategy and culture achieves vertical and horizontal integration.
Three Resource-based HRM practices/strategies have emerged to support the integration:
Contingency (Best fit)
Universalistic (Best practice)
Configurational (Bundles of HRM practices)
Research these in your teams and explain to the class

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Rees, G. and Smith, P. (2018) Strategic Human Resource Management. SAGE: London.

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What is Strategic HRM/PMD?
(1) Best Practice Approach/Universalist:
“… is based on the assumption that there is a set of HRM best practices and that adopting them will inevitably lead to superior organisational performance.”

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Armstrong, M. (2006) Human Resource Management Practice.

One set of HRM best practices
These inevitable lead to increased organisational performance
Equally applicable to each organisation regardless of the nature of the org
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Best Practice 1: HRM ‘stakeholder’ Model
(Harvard Model, Beer et al, 1985)
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Situational Factors
Workforce characteristics Business Strategy and conditions Management philosophy Labour Market
Trade Unions Task technology Laws and societal values
Stakeholder Interests Shareholders Management Employee groups Government Community Unions
HRM Policy Choices
Employee influence
Human resource flow
Reward systems
Work systems
HRM outcomes
Commitment Competence Congruence Cost effectiveness
Long-term consequences
Individual well-being Organisational effectiveness Societal well-being

Positivist: clear directional flow and round
Beer M, Sector B, Lawrence, P, Quinn M.D., and Walton R, (1985) Human Resource Management: A General Manager’s perspective. Free Press: New York.

Called the stakeholder model because HRM strategy is shaped by stakeholders and the external situation they face
Employee influence – delegated levels of authority, responsibility, power
Human resource flow: recruitment, selection, placement, promotion, appraisal and assessment, promotion, termination,
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Best Practice 1: HRM ‘stakeholder’ Model
(Harvard Model, Beer et al, 1985)
Situational Factors
Work force characteristics Business Strategy and conditions Management philosophy Labour Market Unions Task technology Laws and societal values
Stakeholder Interests Shareholders Management Employee groups Government Community Unions
HRM Policy Choices
Employee influence
Human resource flow
Reward systems
Work systems
HRM outcomes
Commitment Competence Congruence Cost effectiveness
Long-term consequences
Individual well-being Organisational effectiveness Societal well-being

Implicit HR Policies
Flexibility
Selection Process
Appraisal
L&D
Reward
Employee Involvement
AMO:
Enhance ability
Motivate
Provide opportunities
Beer M, Sector B, Lawrence, P, Quinn M.D., and Walton R, (1985) Human Resource Management: A General Manager’s perspective. Free Press: New York.

Called the stakeholder model because HRM strategy is shaped by stakeholders and the external situation the face
Employee influence – delegated levels of authority, responsibility, power
Human resource flow: recruitment, selection, placement, promotion, appraisal and assessment, promotion, termination,
HR practices should be linked to organization goals and key stakeholders involved in decisions
Links to competitive advantage
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Best Practice 2: The Human Equation
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Pfeffer, J. (1994) Competitive Advantage through People Unleashing the Power of the Workforce. Harvard Business School Press: Boston.
Rees, G. and Smith, P. (2018) Strategic Human Resource Management. SAGE: London. (pp. 83 – 84).
High Performance Management Practices
Employment security
Selective hiring and sophisticated selection
Training and L&D – extensive
Employee involvement
Self Managed teams
High compensation (dependent on performance)
Reduction of status differentials
Difficulty of imitation
Performance Results
Innovation
Flexibility
Customer Service
Productivity
Cost reduction
Sustained profitability

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What is Strategic HRM?
Best Practice Approach/Universalist
Criticisms/critique (arguments against):
What works well in one organisation may not work well in others because it may not fit the other company’s strategy, culture, style, technology and working practices.
Organisational systems are highly idiosyncratic (unique) and must be tailored carefully to each firm’s individual situation to achieve optimum results.
Critical perspective …?
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What is Strategic HRM?
Best Practice Approach/Universalist
On the other hand (counter arguments):
Knowledge of best practice can inform decisions on what practices are most likely to fit the needs of the organisation as long as it is understood why it is best practice.
Best practice might be more appropriate for identifying the principles underlying the choice of practices, as opposed to the practices themselves.
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It just depends…
What is Strategic HRM?
(2) Best Fit Approach/Contingency
“Emphasises the importance of ensuring that HR strategies are appropriate to the circumstances of the organisation, including its culture, operational processes and external environments. There can be no universal prescriptions for HRM policies and processes.”

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Armstrong, M. (2006) Human Resource Management Practice. Kogan Page: London.

HR practices should be in line with the context and circumstance of the organisation- culture, operations, external environment
No one size fits all approach
3 models: life cycle, competitive strategy and strategic configuartion (Armsrtong)
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Systems theory and analysis
What is Strategic HRM?
Best Fit Approach/Contingency
Criticisms/critique (arguments against):
Organisations should be less concerned with best fit or best practice and be more sensitive to (1) modelling all the contingency variables, (2) the difficultly in showing their interconnection, and (3) the way in which changes in one variable have an impact on others (Purcell, 1999).
The best practice perspective does not consider for whom the practice may be considered ‘best’ (Boxall and Purcell, 2008).
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What is Strategic HRM?
Best Fit Approach/Contingency
On the other hand (counter arguments):
The approach is flexible within the organisational context: culture, structure, technology and processes.
The approach can pick and mix ‘best practice’ ingredients, developing an approach aligned to the business needs.
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What is Strategic HRM?
(3) Resource-based view (configurational)
RBV based on the ideas of Penrose (1959) is “an administrative organisation and a collection of productive resources”.
Developed by Hamel and Prahalad (1989): competitive advantage is obtained if a firm can obtain and develop human resources that enable it learn faster and apply its learning more effectively than its rivals.
Purcell (2003): the values and HR policies of an organisation constitute an important non-imitable resource.
The aim of RBV is to improve resource capability:
achieving strategic fit between resources and opportunities, and
obtaining added value from the effective deployment of resources.
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The Resource-based view of SHRM
Changed the thinking from an ‘outside in’ approach to an ‘inside out’ approach. Focusing on the firm rather than the environment
Sustained competitive advantage stems from the acquisition and effective use of ‘bundles’ of distinctive resources that competitors cannot imitate.
This is achieved by developing HR strategies and policies which increase the resource capability of the organization by:
Ensuring that it has higher quality people than its competitors;
The unique intellectual capital possessed by the business is developed and nurtured;
Organisational learning is encouraged and
Organisation-specific values and a culture exist which (Purcell et al) “bind the organization together (and) gives it focus”
https://www.youtube.com/watch?v=-KN81_oYl1s
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Farnham, D. (2010) Human Resource Management in context. CIPD: London. (p. 215).

Resource-based view of the firm
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Adapted from: Barney, J.B. (1991) Firm Resources and Sustainable Competitive Advantage. Journal of Management. 17: 99 – 120.
THE FIRM
Unique Resource
Immobile resource
Internal Resources
Valuable
Rare
Non imitable
Not substitutable
Outcome
Sustained competitive advantage

What is Strategic HRM?
Bundling RBV approach:
“Implicit in the notion of ‘bundle’ is the idea that practices within bundles are interrelated and internally consistent, and that ‘more is better’ with respect to the impact on performance, because of the overlapping and mutually reinforcing effect of multiple practices.”
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MacDuffie, J.P. (1995) Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry. ILR Review. Available at: https://doi.org/10.1177/001979399504800201

It ‘s all in the arrangement …

Competitive advantage comes from effectve use of bundles of resources which competitiors cannot imitate
HR practices which together complement and reinforce each other
Example: total reward
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What is Strategic HRM?
Bundling approach/Configurational:
The aim of bundling is to achieve coherence.
Coherence exists when a set of mutually reinforcing HR policies and practices have been developed that jointly contribute to the attainment of the organisation’s strategies for matching resources to organisational needs, improving performance and quality and, in commercial enterprises, achieving competitive advantages.
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MacDuffie, J.P. (1995) Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry. ILR Review. Available at: https://doi.org/10.1177/001979399504800201

Synergy… ‘the whole is greater than the sum of the parts i.e. 1 + 1 + 1 = 5!!!!

What is Strategic HRM?
Bundling approach/Configurational:
Criticisms:
It is difficult to decide which is the best way to relate different practices together.
No evidence that one bundle is generally better than another.
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What is Strategic HRM?
Bundling approach/Configurational:
On the other hand (counter arguments):
The approach can stimulate managers to adopt a unified, coherent manner rather than a disjointed approach based on some combination of best practice, accident and ad hoc response to outside pressures (Beer et al. 1984).
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We started with the question …
What is strategic HRM? How does it contribute to organisational strategy and performance?
And now…?
If you now look back, how has SHRM contributed to people management and development?

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So, strategy and HR strategy – is it formulated …?
Outside in … using
Porter’s positioning strategy for organisational level
Best fit/contingency type of SHRM
Or, inside out …?
Organisational approach to strategy: Resource-based view (RBV) of the Firm and its strategy (Penrose, 1959).
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Penrose, E. T. (1959) The Theory of the Growth of the Firm. John Wiley: New York.
RBV
A basis for the competitive advantage of a firm lies primarily in the application of a bundle of valuable tangible or intangible resources at the firm’s disposal.
Four empirical indicators (VRIN) of the potential of firm resources to generate sustained competitive advantage:
V = Valuable
R = Rare
I = Imperfectly imitable
N = (non) substitutability

If you now reflect on what you have learned, what do you know now?
What does your organisation want to achieve?
High commitment, high performance or high involvement (3 approaches)
How do we as HRM people want to achieve this?
3 different types of strategy (Best Practice, Best Fit, RBV)
What must we remember?
Integration

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Strategic Role of the HR Function
Let’s consider some of the ‘typologies’ of HR functional roles

Storey’s (1992) strategic/tactical model
Ulrich’s (1997) ‘HR Champion’ model
Caldwell’s (2001) change matrix
Ulrich and Brockbank (2005) updated typology of HR roles
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Slide 23
CIPD: http://www.cipd.co.uk/cipd-hr-profession/profession-map/professional-areas/default.aspx (Accessed on 23.09.2013)

Research models
In your groups, research each of these models and present with a summary of each
How could we use these practically within HR?
How do these models help us to work more strategically?

Strategic Role of the HR Function

Strategic
Tactical
Non-Interventionary
Interventionary
Storey’s (1992) HR functional roles.

Examined 15 organisations
HR roles plotted on 2 axis
4 possible roles
Advisor: internal consultancy, advice to LM’s, not interventionary
Handmaiden: reactive to LM requests
Regulator: involved in development of employment rules and policy
Changemakers: strategic and interventionary, SHRM, management of change
Caldwell: advisor role most common: 80%
Changemaker 2nd most common role
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Changemakers

Advisors

Regulators

Handmaidens

Strategic Role of the HR Function
Professor David Ulrich
 
Keynote address Human Asset 2011 summit.

Who is Professor David Ulrich?
A university professor at Ross School of Business, University of Michigan.
Author, speaker, management coach, and management consultant.
Founding partner in the RBL Group, a global consulting organisation.
Ranked the #1 Management Educator & Guru by BusinessWeek, selected by Fast Company as one of the 10 most innovative and creative leaders, and named the most influential person in HR by HR Magazine for over three years.
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Strategic Role of the HR Function

Future/Strategic Focus
Day-to-day Operational Focus
People
Processes
Ulrich’s (1997) typology of HR functional roles.

To make a real contribution to the organisation, all four roles need to be fulfilled- not necessarily by HR
Strategic partner: supports strategic direction of the organisation, design and development, improves productivity, facilitates mergers etc.
Admin expert: efficiency, meets needs of LM’s, demonstrates HR value
Employee champion: wellbeing, awareness of strategic issues
Change agent: manages change
Caldwell criticism: conflict between roles, less than 30% organisations have adopted this model according to CIPD
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Strategic Partner

Change Agent

Admin Expert

Employee Champion

Strategic Role of the HR Function

HR Vision
HR Expertise
Incremental Change
Transformative Change
Caldwell (2001) HR functional roles.

Focus on HR role in managing change
Researched in-depth on the Change Agent role-Ulrich
Champion: high-level executive, leads transformational change
Synergist: senior internal or external HR professional- strategically coordinates and integrates large-scale change projects
Adapter: mid-level HR generalist- builds support for change
Consultant: specialists, internal or external- implements discrete change projects
Problems with synergist and consultant roles- HR expertise is becoming more fragmented
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Champion

Adapter

Synergist

Consultant

Strategic Role of the HR Function

Ulrich and Brockbank’s (2005) typology of HR functional roles updated model.

5 core HR roles rather than 4
Combined strategic partner and change agent into one
Added 2 new: Human Capital Developer and HR Leader
Strategic partner: partners with Line managers to add value, manages change (previously strategic partner and change agent)
Functional expert: HR Professional knowledge (previously admin expert)
Employee advocate: employee relations focus, care for employees (previously employee champion)
Human capital developer: manages development of workforce for the future (new)
HR Leader: leads and values the HR function, best practice initiatives, role model, corporate governance (new)
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HR leader

Human capital developer

Strategic partner

Functional expert

Employee advocate

Strategic HRM
KEY MESSAGES

CIPD Profession Map provides a framework for activities, knowledge and behaviours for the profession.
HR’s role in the contemporary organisation has developed piecemeal over time (Truss et, a., 2012).
Several models have emerged, most differentiate between the strategic and tactical role of HR.
Critical reflection: Which of the 4 models of HR roles, do you find most useful and why?

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Slide 30

Evolution of HRIS: from…to…
Administration (e.g. personnel details)
and transactional (e.g. payroll)
Recruitment & selection
Flexible reward systems
E-learning
Shared services
Self service
….and more
Impact:
Demand for evermore strategic HR Information
Devolution of HR activity to the line

HR supporting business strategy
Business says…..
This is where we are we going.
HR says….
This is who you will need and we know where & how to get them
How will we achieve performance? How will we ensure costs don’t become too great?
Our HRIS can support both

Exam practice
“With reference to contemporary examples critically evaluate the concept of strategic HRM.”
Instructions:
with reference to …”contemporary”…?
Critically evaluate …
What knowledge can you include?
What understanding can you demonstrate?
How can you show your ability to apply these?
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Slide 33