In the last video we looked at influences on HR strategy and
managerial styles that reside outside the organization.
Let's continue that discussion by now looking inside the organization and
focusing on organizational strategy.
I say organizational strategy intentionally and not business strategy
because this applies to all organizations, not just private sector businesses.
So while we're on the topic of strategy, first let's ask,
what does it mean for HR to be strategic?
Well this requires at least two things.
First it requires that HR in an organization be focused on organizational
needs, not just the administration of HR policies.
Second, it also requires a shift and
a pushing out of HR tasks from being the responsibility solely of HR
to being a line manager's responsibility with help from an HR partner, of course.
But things like hiring, performance appraisal, determining pay for
performance, those should be a line manager's responsibility.
In fact, those are exactly the classes that follow in this specialization, okay.
So now let's look at relationship between organizational strategy and
HR policies, first starting with business strategy.
I’m going to use a very popular simple two-dimensional approach
to business strategies, Porter's generic 2 business strategies.
First strategy is cost leadership.
Second is called product differentiation.
As the name suggests, in cost leadership, low cost is key,
whereas in product differentiation, differentiation of course is key.
Trying to develop unique features, such as quality, or other types of things
that can give an organization some pricing power or some other thing that will
create a bond between the customers and the organization.
So again, contrast between emphasizing cost and product features.
What does this imply now for HR strategy?
Well, in a cost leadership strategy, you would naturally expect
that HR strategy is also going to emphasize labor costs.
Keep labor costs low and really drive workers in an aggressive way.
How about in a product differentiation strategy?
Well this we would expect to result in a different type of HR strategy,
more that revolves around developing and rewarding employees, engaging employees,
maybe even in some organizations empowering employees.