Human Resource Strategy by George Dreher and Thomas W Dougherty - Assignment Example

Name of writer appears here] [Course name appears here] [Professor’s name appears here] [Date appears here] Human Resource Strategy Human Resource Strategy is a book by George Dreher and Thomas W. Dougherty. The two authors of the book are extremely talented and potential writers of the century. They have discussed various aspects of Human Resource Management and the strategies that can lead to successful outcomes. This book is a new kind of human resource management text because it is written with the general manager in mind. The text provides a base of key organizational behavior material on why employees behave as they do and how to promote behavior required implementing a focused business strategy using staffing, development and reward systems. Organized around the concept of creating integrated HRM systems, students first learn about the processes that explain work behaviors. Students are then acquainted with key issues such as linking HRM systems to a firm's business strategy. That knowledge is then used to design an integrated set of HRM practices promoting the behaviors needed for a particular organization. The text provides detailed and practical examples of the entire process of assessing an organization and designing integrated staffing, development and reward practices. As a result, students become better informed "consumers" of the specialized services provided by in-house human resource professionals and outside consultants and gain insight into how to translate theory into practice. http://www.amazon.com/Human-Resource-Strategy-George-Dreher/dp/0071181113 This is a book about the reality of people management in large, complex companies. Some of the companies in the research project on which this book is based are considered to be world class in their management of people, others are not. All are commercially successful, generally one of the top five performers within their business sector. In their diversity, they represent the type of large companies found throughout the Western world and face the challenges which are discussed in executive boardrooms from London to Stockholm to Cincinnati. The many hundreds of thousands of people these companies employ voice concerns and aspirations you can hear in the local bar or on the evening news (Becker, B. E., Huselid, M. A., and Ulrich, D., 2001). This book represents the culmination of a collaboration between academics and senior managers to study, analyse, reflect, and discuss the challenges they face in people management. It also represents an attempt to reflect the experience, concern, and aspirations of people at all levels in these companies. The authors of the book have discussed various aspect surrounding Human Resource. First, that strategic human resource management is undoubtedly a concept of fundamental interest to both practitioners and academics alike, but research carried out to date had been very inconclusive. At that time there were few empirical studies and as a consequence the commentary was highly prescriptive and presented an idealized view of how people should be managed. Secondly, they identified several questions which arose from the existing literature which they believed needed to be answered if they were to improve their knowledge of how human resource strategy works within organizations, and how to assess best practice. These included the following questions: what are the features of the external and internal contexts which impact on the human resource strategy process? What is the link between intended business strategy, intended human resource strategy, and the realized interventions? What is the impact of human resource strategies at an individual and an organizational level? And finally, how does human resource strategy influence everyday managerial behaviour? To answer these questions they began to map the HRS process which was aimed to test empirically. The authors were aware that there are a number of influences on HRS formulation and implementation, which include the external environment, the strategy pursued by the organization, and what they termed leverage factors such as structure and culture. They concluded early in their investigation that the methodology they pursued would be central to the success of the endeavor (BNA, 2001). During the course of the research Dreher and Dougherty examined the distribution of responsibility for human resource policies and practices. In general, line managers were directly involved in the selection, appraisal, and development of their subordinates in all of the case study organizations. Such areas were clearly viewed as being the responsibility of the line. The general view, from both line managers and human resource specialists, was that line managers should 'own' these activities because it was they who worked directly with their staff on a daily basis and also because it was they who were ultimately responsible for the performance of their departments or areas. In these cases, the human resource function acted in an advisory capacity whilst monitoring recruitment and appraisal procedures, and the like. In sum, the dominant model was of line managers being directly involved in HR activities supported by a specialist human resource function. Two key findings emerged during our research on human resource policies. First, the involvement of the line does not necessarily mean that policies are implemented consistently by all line managers within the organization. Second, even where they are carried out, the quality of practice is frequently not of the kind which we might assume from the spirit of the prescriptive models reviewed. In short, the results indicate significant variation both across and within organizations. Each of the organizations involved in this research claimed to have formal performance appraisals for all categories of employee, with one exception. In W. H. Smith News, the trade unions which represented the shop-floor workers had resisted management's attempts to introduce this policy. Officially, according to company handbooks, all of the organizations had annual performance appraisals or evaluations, some of which included quarterly updates. However, the results of our survey present a different picture which suggests a discrepancy between rhetoric and reality. The use of HR service teams is significantly related to the organizational performance and competency and knowledge management initiatives. One likely reason for this is that HR service teams can bring together the multiple functions required to focus on performance improvement. At the same time, a team approach can improve competency and knowledge management in HR and in the rest of the organization. Decentralization in HR is strongly related to restructuring. One possible reason for this is clear. When organizations restructure into multiple business units and complex business partnerships and networks, decentralization of HR is a way to establish a business partner relationship. It places the HR function close to its customers. Resource-efficiency is significantly related to all three change initiatives. This suggests that whenever an organization considers change, a major issue is how to improve the efficiency of the HR organization. This is hardly surprising given the history of organizations being concerned about the cost of HR as a function and its administrative efficiency. Rotation into and out of the HR function is significantly related to all three change initiatives. Focusing on major change initiatives may make it obvious to organizations that they can gain a considerable amount from having broader knowledge of HR in the organization and having individuals in HR who have a better understanding of the business. Rotation is one way to add to the knowledge and skills of HR professionals. Overall, the results show relatively little change in the application of various organizational approaches from 1995 to 2001. Dreher and Dougherty expected to see more adoption of practices such as joint line-HR development of HR systems, rotation, outsourcing, and centralized processing. These are all approaches that we believe can facilitate HR becoming more of a strategic partner, yet their use is not significantly increasing. The results do strongly suggest that strategic change has significant and important effects on the HR organization. HR is likely to be significantly affected by change efforts that focus on issues like restructuring, organizational performance, and competency and knowledge management. In many respects, this is hardly surprising because HR is an important cost center in an organization and can add considerable value if it can become a strategic partner that supports these change initiatives. Given HR's history of not being a strategic partner, it is hardly surprising that efforts at restructuring often lead to changes in the HR function that appear to be targeted toward making HR more of a strategic partner. The strongest relationships with HR effectiveness clearly occur when the strategy is knowledge and information based. HR is rated as much more effective when this is a key strategy focus. Even shared services effectiveness is related to the knowledge- and information-based strategy focus. What most likely brings about this strong relationship is the important role that HR can play when a company implements a knowledge- and information-based strategy. Human capital is obviously a critical element in any knowledge- and information-based strategy, and as a result organizations that have this strategy invest more in building an effective HR organization. The results with respect to change initiatives very much support the point that when an organization focuses on knowledge and information, HR tends to be more effective. The competency and knowledge management change initiative correlates very strongly with the rated effectiveness of the HR organization. Clearly, when intellectual capital is important to organizations, they seem to have much more effective HR functions. Dreher and Dogherty, though, could not provide a definitive answer to why HR is more effective when organizations are focused on information and knowledge. But they think it is because organizations that are focused on information and knowledge are more concerned with their human capital. This in turn leads to them developing first-rate HR organizations. It also provides the HR organization with a chance to make a major contribution to organizational effectiveness. Overall, the data on effectiveness present a mixed picture of the HR function. Of particular concern are the relatively low scores in effectiveness areas that are related to performing as a business partner. Also on the negative side is the lack of any general increase in the effectiveness of the HR organization from 1995 to 2001. Granted, the number of areas where HR needs to be effective has increased, as have the standards for evaluation. Nevertheless, the absolute scores make clear that respondents view HR as much less effective as it can be. On the positive side are the relationships of companies' strategies and change initiatives with HR effectiveness. These data strongly suggest that when organizations particularly focus on knowledge and competency activities, the HR function is more effective. This argues well for the long-term future of the HR function because organizations are increasingly likely to be in knowledge-based work and therefore place a major strategic focus on knowledge and competency development. In essence, what these data suggest is that the door may be opening for HR to be more effective if it can deliver the kinds of services that the knowledge economy needs. The strongest relationship with effectiveness concerns the use of corporate centers of excellence, centralized processing, rotation of people within HR, and self-service. Also significantly associated with effectiveness are the outsourcing of transactional (but not expert) services, development of HR systems through joint line-HR task forces, activities being done by line managers, and self-funding for HR services. A major surprise in the findings concerns decentralization. Dreher and Dougherty expected that having HR generalists support business units would be strongly related to effectiveness, but the results do not support this. Although it is in the expected direction, even the item in the decentralization group on having a very small corporate staff is not significantly related to effectiveness. One possible explanation is that the ratings of effectiveness are coming from senior corporate HR executives, and they may not be particularly comfortable with having resources in business units. As a result, they may see their HR organization as less effective than it would be if everybody were in a centralized corporate unit. Nevertheless, organizations do not appear to be abandoning this practice, and it seems difficult to imagine the HR function being a business partner without achieving partnerships in each business unit. Overall, the results concerning the organization of HR very much support their view of what HR must do to be effective in today's business environment. Specifically, HR must handle the transaction work efficiently, while at the same time supporting the business units with excellent HR knowledge and well-trained HR employees. The results also support the view that HR systems are best developed with input from the line organization. If members of the line organization are going to engage in self-service, then it makes particular sense to get them involved in the development of the systems so that they will be committed to their effective operation. The result with respect to business strategy is not surprising; the data simply confirm that HR is most effective in developing strategy when it is a full partner. More interesting are the results concerning managing change, developing capabilities, and tailoring HR practices. They suggest that making HR a full strategic partner enables the HR staff to better support more strategy implementation. This interpretation of the results makes sense. HR executives who understand the business strategy most likely can do a better job of supporting the strategy. In addition, they may even influence it so that it is more realistic in terms of the organization's and HR's ability to execute it. However, we must point out that this is simply a relationship and that the causal direction between effectiveness and being a strategic partner may operate in the reverse direction. That is, HR effectiveness may be something an HR organization has to achieve in order to be regarded as a full strategic partner. A negative relationship exists between time spent on records and overall effectiveness; however, a strong positive relationship exists between the degree to which an HR organization spends its time as a strategic business partner and its perceived effectiveness on many dimensions. Note that there is no relationship between outsourcing effectiveness and time spent as a business partner, nor is there one between shared services effectiveness and time spent as a business partner. Earlier, the authors argued in this book that effectiveness in these areas is largely a matter of operational, not strategic, excellence. Thus, it is not surprising that they are not related to time spent as a strategic partner. The availability of information through a portal is strongly related to the effectiveness of the HR function. The availability of knowledge and market information and of general information are highly correlated with HR effectiveness. Interestingly, the highest single correlation is with a manager's tool kit. The more managerial tools are available, the more effective the HR function is perceived to be. Of course, these are correlational data and do not establish causality (Jackson, S., Hitt, M., and DeNisi, A., 2003). Nevertheless, the authors believe that it is reasonable to assume that when HR plays a role in providing tools and information that help employees do their jobs and manage their careers, it leads to HR being more effective. In addition, HR systems themselves may very well work much more effectively when good information about the systems and the organization is provided to employees. For example, performance management processes and incentive systems may operate better in an environment where employees are well informed about company strategy and operating results. The more skilled the employees in the HR function are in working with others, being team members, coaching, consulting, and leading, the more effective the HR function is. In other words, HR effectiveness relates to the ability of HR professionals to influence the effectiveness of others. Further, the more the HR organization staff understands the business and participates in strategic design and change management, the more effective the HR organization. This finding is very consistent with many of our earlier findings. It shows once again that if HR wants to be effective, it needs to be a player in the business. This means having the skills to contribute to its success and helping the organization perform more effectively. Overall, the organizations headed by people with HR backgrounds get slightly higher ratings. Those organizations headed by individuals with HR backgrounds score higher on providing change management services, developing organizational skills and capabilities, and helping to develop business strategy. As has already been found, these are key performance areas with respect to HR becoming a strategic business partner. Thus, it appears that an HR organization headed by an individual with an HR background may be better positioned to be a strategic partner and contribute to the effectiveness of the company. The only area where leaders without HR backgrounds appear to do better is managing shared services units, an area relying to a great extent on operational management skills. Why are HR organizations that are headed by individuals with an HR management background more effective? One explanation is that an organization may appoint an individual from outside HR to head the HR function when it is in trouble and performing poorly. Thus, the background of the head of the HR organization may reflect more on the organization's past performance than on the effectiveness of its current leadership. Another explanation is that individuals with an HR background simply have the deep and broad HR knowledge and skills required to lead the development and implementation of sound HR strategies, as well as to lead an organization composed of HR professionals. Particularly if they have an understanding of the business, they would seem to be in a much better position to combine management of the HR function with being a strategic partner. Conclusion In conclusion, I feel the book is highly informative and influential. The authors of this book provide many persuading arguments on various controversial issues related to Human Resource. The authors were easily able to convey their ideas. Overall, this book showed relatively strong relationships between how the HR organization operates and its effectiveness. Focusing on strategy, organization design and development, employee competency development, and organizational change has high payoffs for the HR organization. Outsourcing transactional work and creating shared services units appears to lead to a more effective HR organization. The authors found consistently strong relationships between using IT for HR tasks and HR effectiveness. Finally, HR functions that are strategic business partners are more effective than those that are not. Reference: Becker, B. E., Huselid, M. A., and Ulrich, D. The HR Scorecard: Linking People, Strategy, and Performance. Boston: Harvard Business School, 2001. BNA. Human Resource Activities, Budgets, and Staffs. Washington, D.C.: BNA, 2001. George Dreher, Thomas W. Dougherty, 2001.Human Resource Strategy. McGraw-Hill Publishing Co. http://www.amazon.com/Human-Resource-Strategy-George-Dreher/dp/0071181113 Jackson, S., Hitt, M., and DeNisi, A. (eds.). Managing Knowledge for Sustained Competitive Advantage: Designing Strategies for Effective Human Resource Management. San Francisco: Jossey-Bass, 2003. Read More