Human resource is a strategic
resource as supported by SHRM. HR subsystems should thus be aligned to strategy
of the firm. There are literatures which have inherent tension between them on
the structure of HR and its subsystems. Several systems like commitment
oriented system, high performance work system etc. have been studied. As this
prevails, there are also firms having externalised systems like independent
contractors, temporary employees etc. There is a tension between
internalisation and externalisation theories. Externalisation theories rely on
the fact that not all people will add to strategic advantage and there are
categories called A players, B players, C players etc. The situations where
innovation is needed, human capital can be strategic resource but where the
focus is on operational efficiencies and standard procedures, best practices,
low cost then the externalisation and outsourcing will be beneficial. Firms
generally retain the core activities and outsource the peripheral activities.
Knowledge itself may not provide the competitive edge but flow of knowledge and
management of knowledge stock can provide so.
HR Architecture
Employee subsystems are formed within
firms by events that trigger HR practices to be followed like labour supply,
technological change etc. Firms may focus on a central core employee group and
have peripheral employee system to support operational efficiencies. Value is
provided by employee skills that help to translate benefit to customer wrt.
Cost. (Value= benefit/cost). Uniqueness is provided by skills that are guided
by tacit knowledge specific to that firm’s environment.
Knowledge Employees:- Core group, high on value creation and uniqueness ,more incentive, ESOPs, engagement programs, innovative
Job Based Employees:- Peripheral group, job related incentive based on efficiency, low on uniqueness, prone to leaving, deliver high value so internalised
Contract Workers:- Paid per hour, interference is only compliance based, cost effective, low on uniqueness and value
Alliance Partners:- Like knowledge partners, don’t create much value but unique, long term relationship and engagement is preferred by firm for such
Globalisation and HR Architecture
Globalisation has caused firms to
look beyond the boundaries of country. Offshoring has become common to reduce
cost. Countries where cheap labour is available, the firms offshore the
peripheral activities or ancillary knowledge. But while offshoring the firms
have to see the strategic advantage of offshoring rather than only cost. If the
firms’ value to customer is being degraded then cost benefit may not be much
useful (offshoring call centres by DELL to India, Philippines etc.). Labour
rates are gradually increasing in these countries and hence first while
entering the firm should look at cost and then after that improving efficiency
in the offshore location. There are also external factors like social, legal
and political (PESTEL) to be looked before such arrangement. In context of HR
systems, firm can go for short term outsourcing or long term offshoring or
alliance partnership with firms that have the skills to do the job at
operational efficient costs. There are several controversies also in this field
where many claim that offshoring is done only to manufacture goods and services
to be brought back to domestic market for sale
Strategy and HR Architecture
Firms’ HR practices tend to fall in
line with their strategy. Firms looking for innovation should have employees
who share, take risks and collaborate to innovate. Commitment based or
collaborative HRM may be common in these firms. Similarly firms focusing on low
cost strategy, should have HR practices that focus on operational efficiency
and incentives related to it. Compliance based or productivity based HR systems
may be common in these firms.
Knowledge Flow and HR Architecture
Knowledge stock is considered to be
one of the most important strategic resource which is rare, inimitable,
valuable and non-substitutable. It is the knowledge embedded in the people
which is tacit. Knowledge flow and management of knowledge in the firm gives
the edge to the firm in long run. Social capital that is relationships and
sharing between the employees also contribute a lot. These add to the strategic
and unique resource pool. Human capital along with the Social capital is
becoming increasingly important. While HR architecture gives a fair bit of idea
of human capital distinction based on internalisation, externalisation and
uniqueness and value creation, it does not provide a framework for knowledge
flow or social capital. Two archetypes are proposed to define the relationship
between the different employee groups. First is cooperative relational archetype which is based on frequent and
dense social network and sharing and integration. Second is entrepreneurial archetype which is
related to relatively weak ties based on trust between few groups. The primary HR activities that support an entrepreneurial
archetype are flexible work structures,
results-based incentives, and trans-specialist development.
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गुड्डू रंगीला
Knowledge Partner
Charcha Kendra
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