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Chapter 2 Strategic Human Resource Management
Learning Objectives • Identify the origins of SHRM and how it relates to broader developments in the practice of management • Understand the difference between the concept of personnel management, human resource management and strategic HRM • Understand developments in theories of strategy and how these emphasise the importance of efficient internal processes such as strategic HRM within sport organisations • Describe a model of SHRM and identify key elements of SHRM good practice • Outline key theoretical approaches linking SHRM and sport organisation performance
6 Steps of Strategy 1. 2. 3. 4. 5. 6. Clarification of corporate mission, goals and values Analysis of the organisation’s external competitive environment to identify strengths, weaknesses, opportunities and threats (a SWOT analysis) Analysis of the organisation’s internal operating environment to identify strengths and weaknesses (again using a SWOT analysis) Selection of strategies that build on the organisation’s strengths and correct weaknesses, to take advantage of external opportunities and counter external threats Strategy implementation Strategy evaluation with corrective feedback to the implementation phase
SWOT Internal Factors Company culture Organisation structure Key staff Resource access Experience Operational capacity Operational efficiency Financial resources Patents Customer knowledge and contacts Strengths ■ Strong financial base ■ Growth area for your product ■ Group of skilled volunteers ■ Support from local businesses ■ Support from local politicians ■ Support from local service organisations ■ Well equipped club house ■ Well structured committee ■ Enthusiastic and capable committee. Weaknesses ■ Weak financial base ■ Diminishing need for your product ■ Few volunteers ■ No support from local businesses/ local politicians/local service organisations ■ Out of date ill equipped club house ■ Poor committee structure ■ Overworked and tired committee ■ Fewer new members ■ Lack of interest in your sport. External Factors Customers Competitors Intensity of Competition in Market Suppliers Partnerships and Alliances Change New Technology Economic environment Political issues Opportunities ■ Promotion of sport by government authorities ■ New population of potential users moving into the area, housing estates with children ■ Grants by local authorities for sport ■ Grants by authorities to encourage sport ■ Organisations looking to sponsor local activities ■ Seasonal interest in particular sports, cricket in summer football in winter ■ International or national interests in sports e. g. Commonwealth or Olympic Games ■ Promotion of sport to different age group e. g. lawn bowls to teenagers ■ Promotion of sport to different gender e. g. football – all codes – to girls. Threats Organisations giving up sports to sponsor to concentrate on other areas ■ Seasonal interest which is in direct competition with your own sport ■ Promotion of sport to different gender which competes with your sports interest e. g. netball and soccer for girls ■ Time related issues for example, competition for volunteers time, longer working hours, both parents working – children unable to attend, limited available free time for both children and parents ■ Other organisations with better facilities ■ Lack of knowledge and interest in your product.
PEST analysis • POLITICAL – Government commitment to increasing participation in sport eg current concerns about obesity have led to governments increasing spending on children’s and youth sporting programs in many countries – Government targeting of certain ethnic/age or gender groups for increased participation – Government funding for sport infrastructure eg the Olympic games in Sydney generated many improvements in local sports facilities which greatly assisted many sports federations in their development • ECONOMIC – The potential of sport to create employment – The potential to use sport as an adjunct to promoting tourism eg Golf in Ireland, Surfing in Hawaii • SOCIAL – Aging populations, health issues, diversity agendas, population growth etc. – Urban/rural growth and decline and the need to rebalance sporting infrastructure in changing communities e. g. The decline of small rural towns in many countries which leads to the loss of players for town sporting clubs • TECHNOLOGICAL – Competition from computer games vis a vis children’s sport – Use of the internet to better promote sport e. g. advertise and sell tickets online – Alternative technologies e. g. online sports betting or virtual football
The 5 forces 1. Overall industry rivalry 2. Barriers to entry 3. Buyer power 4. Supplier power 5. Threat of substitutes
Resource based view • an organisation’s competitive advantage lies in its internal resources • resources include any aspect of the sport organisation with value-creating capabilities • HRM has tangible (HR performance, planning, training, selection systems etc. ) and intangible resources (shared mindsets, team synergies etc. ).
Attributes 1. a resource must be valuable – a capability to exploit opportunities and/or neutralise threats in the organisation’s environment 2. It must be rare among the organisation’s current and potential competition 3. there cannot be strategically equivalent substitutes for this resource that are valuable but neither rare nor imperfectly imitable 4. it must be imperfectly imitable
The Strategic Human Resource Management Process • SHRM. . ‘the pattern of planned human resource deployments and activities intended to enable an organisation to achieve its goals’ (Wright and Mc. Mahan, 1992: 298) • emphasises the importance of an organisation’s internal resources and capabilities in helping it achieve its strategic objectives • employees and volunteers are investment assets, who through a series of organisational practices develop a strong commitment to the organisation and ways of working together that deliver superior performance
Figure 2. 2 The Strategic Human Resource Management Process Source: Adapted from De Cieri et al (2003) p. 50 Strategy Implementation Strategy Formulation HR Practices - Work / job design - Recruitment and Selection - Performance management - Employee relations - Training & development - Rewards Management External Analysis -Opportunities -Threats Mission Goals Strategic Direction (Purposive strategy) Internal Analysis -Strengths -Weaknesses Organisational Performance -productivity -service quality -financial results HR Needs -Skills -Behaviour -Culture HR Capability -skills -abilities -knowledge HR Policies and Practices -Behaviours -Results (eg turnover, retention) Strategy evaluation
Issues to be considered when implementing strategy : • allocation of sufficient resources (financial, time, technology and support) • an appropriate organisational hierarchy or some alternative structure (such as cross functional teams) • delegating responsibility of tasks/processes to individuals/groups • managing the process
Linking HRM practices & organisational performance The ‘good practice’ approach • Selective recruitment • Developing a decentralised organisation which supports self managed teams • Providing employment security • Providing high rewards relative to other organisations - but based on performance • Extensive training • Sharing information • Reducing status differentials in the workplace
The ‘contingency’ approach • HR practices should be closely integrated with organisational strategy and different behaviours may be required to enact different competitive strategies • identify behaviours required by staff to achieve the organisation’s goals and ensuring these are consistent with the overall business activities of the sport organisation
Configurational approach • Use of 'bundles' of HR practices which can be mixed and matched • groups of HRM practices can create a synergistic focus for organisation effort • key HR practices are: selective hiring, performance based reward systems and sophisticated training and performance management systems
Summary • SHRM theory is aligned with general strategy literature • There should be a strong link between the goals of the organisation and the need for congruence in the HR system. • There are 3 competing theories explaining the links between SHRM and organisational performance : 1. best practice, 2. contingency and 3. configurational