Strategic HRM practice exam with verified solutions

Human resource management anything associated with the management of work and employee relationship within an organisation anything associated with the management of work and employment relationships within an organisation firm has to create a human performance to meet the need of the firm through 5 HRM goals 2 broad categories THE ECONOMIC: 1. Cost-effective labour 2. Organisational flexibility 3.Human resource advantage THE SOCIO-POLITIC: 4. social legitimacy 5. manegerial power Brainpower Read More 1. Cost-effective labour - secure economic viability -- generate a return on investment that its shareholders consider acceptable - using cost-effective system = make sure they do everything they can afford to pay to generate effective people Ex. a discount retail sector where standard and low priced good are sold in bulk = they attract less experienced workers (part-time students) ** providing sufficient superior and service standard 2. Organisational flexibility - change is inevitable so an element of flexibility is also an issue for managers - introducing numerical flexibility -- easy to hire and shed labor (Zero-hours contracts) --- Short-run flexibility--- attempt to hire people who are cross-trained or 'multiskilled' (functional flexibility -- lower headcount but cope better with marginal improvements in the production process) ---Long-run agility--- ability to survive in an environment that can change radically (adapt to change as fast as the rivals) EX. Dyson -- shift production to Malaysia (lower units cost than in the UK) ** they need capacity to make quite radical changes in HRM 3.Human resource advantage Beyond resource-based view (valuebale and inimitable): - Human capital advantage: it employs more talented individual than the rivals - Organisational process develops superior ways of combining the talents of individuals in a collective activities ex. high-skill services = invest very carefully in the intitial recruitment process and in individual employee development 4. Social legitimacy 3 pillars of institutions: - regulative different codes of employment law - normative managers come under pressure to conform to prevailing social values and norm around how to treat people on the workplace -cultural cognitive how people behave in the society three pillars of institutions: 1. regulative = different codes of employment law 2. normative = managers come under pressure to conform to prevailing social values and norm around how to treat people in the workplace 3. cultural-cognitive = people customarily think and behave in a society (gov. agency and trade union action) 5. Managerial power - Maximise managerial control over an uncertain environment (threats) - multinational firms tend to favor investment in countries with less demanding labor market regulations - Power-seeking behaviour with agency theory = can use their power to pursue their own interest (personal rewards) - Pay-for-performance schemes = as we live in an era when many CEOs and seniour managers are employed on 'super salaries' -- rising inequility There are key tensions and problems that management faces org. faces a variety opposite of 1. the problem of scarcity (Global war for talent) = managers must compete with others to attract and retain appropriately skilled staff - at the firm level: the labour market tends to be dominated by large organisations which can pay higher salaries and career development 2. the problems of employee motivation - we have to generate equality among employees, fairness! - who are not easily replaced, have greater power - psychological contract 3. change tensions in labour management - the need to establish a stable production system while pursuing some degree of org flexibility - strike a better balance btw the short run and the long run encouraging employee to take leave on reduced pay in order to retain employee goodwill 4. Tension btw management power and social legitimacy - establishing an appropriate social order depends on management accepting some constraints on its power EX. countries such as the UK and the USA, there are strikes and social disruption until union won recognition from employers and improved their life balance. Strategic HRM the way in which the HR is critical to the firm's survival and relative success the way in which HRM is critical to the firm's survival and its relative success (competitive advantages) 2 approaches - Best-practices and Best-fit Best-practices = offers a "recipe" for success (universalistic best practices): Pfeffer's seven practices High-performance work system high-involvement work system high-commitment management ** may work in some context but not all, some practices may be considered as sensible or cost-effective for everyone in a certain micro aspect of HRM (selection, training and appraisal) there might be some 'dumb practices' to be avoided look at the two firm - high performer and average firm, then identify which practices they use Pfeffer's seven practices -- may work in some context but not all 1. employment security = can make better employment commitment and thus they will deliver more (the innovations in work practices may not be sustainable) 2. selective hiring of new employees = if your company is good enough -- generate training and development (spreading of word-of-mouth from your current employees) ex. Google case - invest so much on developing their people 3. Self-managed team and decentralisation = there's delegation -- decision based on employees 4. Comparatively high compensation contingent on organisational performance = best employee but pay them lower than the median wage in that industry 5. Extensive training = develop new skills 6. Reduction of status differences = more collaboration 7. Sharing information = employees acknowledge the goals firms have to adapt HRM practices to different society and industries with "the best-fit school" workforce characetristic business strategy managment philosophy unions societal values the labour market the best-fit school look at the contingency position by considering: 1. workforce characteristics - different needs from different people 2. business strategy 3. management philosophy - Toyota's way (innovation comes from teamwork) 4. the labour market 5. unions (depends on the high and low of trade union; if low-- need job security) 6. societal values (power distance) industry fit firms tend to imitate what is seen to work in their industry ex. Service industry - luxurious hotel may requires professional workers = firm has to provide incentive to invest in people, training to develop them and the process of recruiting firms tend to imitate what is seen to work in their industry - service industry (a hotel) luxurious (need more professional) = incentive to invest in the people, training practices, recruiting ** generate cost-effective labor by customers paying the premium prices that make the firm's high-cost labor sustainable and average (casual workers) = different HR practices organisational fit HR strategies to fit with the particular business -desires competitive strategy - requires employee skills and behaviour - supportive HR practices - HR outcomes HR strategies to fit with features for particular businesses: size and business life-cycle stage the most influential model is to link competitive strategy with HR strategy 1. desired competitive strategy (differentiation, focus or cost leadership) 2. requires employee skills and behaviors 3. supportive HR practices 4. HR outcomes larger org. use more complex staffing and training practices and more developed 'internal labour markets' performance will improve if the HR practices in a business mutually reinforce competitive strategy