Competitive Advantage Through HRM

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					Competitive Advantage
   Through HRM
     Jason D. Shaw
       What is Strategic HRM?
   Strategic HRM - how the
    management of people in
    organizations relates to the ability of
    organizations to compete in the
    marketplace and, beyond this, to
    provide a sustainable competitive
            Functional HRM
   Functional HRM studies employees
    and employment practices at the
    individual level. Unlike strategic
    HRM, the focus is on the individual
    rather than the organization as a
    How is Strategic HRM Different
     From Other Areas of HRM?
   Perspective is on the business and
    organizational level
   Studies typically involve:
    • Examination of the integration or fit
      among HRM practices
    • HRM practices and other features of the
       Strategic HRM Differences
   Most studies in the realm of strategic
    HRM focus on organizational
    Organizational Performance
   Intermediate dimensions of
    workforce performance such as:
    • Accident rates
    • Voluntary and involuntary turnover
    • Productivity
    • Measures of corporate financial
      HRM and the Environment
   Environmental factors influencing HRM
    • Dramatic increase in white collar vs. blue collar
    • Dramatic shifts in the management of
    • The workforce may grow at a rate that meets
      or exceeds prior levels
    • Dramatic change in the way that decision-
      makers manage the size of their workforces
     Strategic HRM Responses
   Invest in commitment oriented HRM
    practices such as:
    • Internal selection
    • Group incentives
    • Training
    • Team building
       Strategic HRM Responses
   Enhance the efficiency of internal
    communication networks through:
    • Building trust in management
    • Improving the quality of social climates
    • Creating a shared and meaningful
      organizational language
       Strategic HRM Responses
   Organizations can not only minimize,
    but reverse the negative effects of
    layoffs in terms of organizational
    productivity by continuing
    investments in strategic HRM
      What Research Says About
           Strategic HRM
   A system of HRM practices rather
    than an isolated or best-practice
    approach is necessary for sustained
      What Research Says About
       Strategic HRM Continued
   The effects of HRM systems on
    performance are partially indirect
    through their influence on the work
    force and work force outcomes such
    as turnover and productivity
      What Research Says About
       Strategic HRM Continued
   Organizations that invest in
    commitment-oriented HRM practices
    • High positive levels of internal social
    • Exchanged and combined information
      more effectively
    • Outperformed their competitors on
      revenue from new products and one-
      year sales growth
       Examples of Strategic HRM
   Groups of HRM practices related
    positively to financial profitability in a
    sample of banks
   The productivity of U.S. production
    lines equaled that of Japanese lines
    when there was heavy investment in
    strategic HRM practices
   Focus on sets of commitment-
    enhancing practices when work is
    knowledge-based and when internal
    communication processes are critical
    for success
        Guidelines Continued
   Use the functional HRM literature as
    a guide in developing an effective
    system of HRM practices
   Considerable research exists on HRM
    practices that work at the individual
         Guidelines Continued
   Combine practices across domains in
    logically and theoretically consistent
    • More research needs to be done on best
      practices for combinations of HRM
    • One size doesn’t fit all
        Guidelines Continued
   Use HRM investment as a signal of
    future investment and an ambiguity
    reducer when work force size
   Investment includes:
    • Direct and honest communication
    • Continued HRM investments after
         Guidelines Continued
   Focus on flexibility or agility in the
    HRM system and beyond
   Agile enterprises require guiding
    principles that encourage the inflow
    and outflow of talent in ways that
    facilitate and only minimally disrupt
    internal fluidity
   Strategic HRM practices can enhance
    the competitive advantage of
   Results of the practices are reflected
    in real financial gains for the

Description: Strategic HRM - how the management of people in organizations relates to the ability of organizations to compete in the marketplace and, beyond this, to provide a sustainable competitive advantage