Strategic Management.docx - Models of Strategy 1 The...

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Models of Strategy 1. The Standard Causal Model of HRM The best-known HR model is the Standard Causal Model of HRM. The model is derived from many similar models published throughout the 90’s and early 2000’s. The model shows a causal chain that starts with the business strategy and ends, through the HR processes, with (improved) financial performance. The model thus shows how HR activities that are aligned with organizational strategy lead to business performance. According to this model, HR will only be effective if its strategy is aligned with business strategy (in line with the best-fit theory). HR strategy is thus derived from the overall strategy. The HR practices follow the HR strategy. Examples include hiring, training, appraisal, and compensation. These HR practices lead to certain outcomes. Examples include commitment, quality output, and engagement. These HRM outcomes lead in turn to improved internal performance. Examples include productivity, innovation, and quality. These outcomes lead to financial performance (e.g. profits, financial turnover, better margins, and ROI). Two interesting relationships are the unmediated HRM effect, which shows that some HR practices can directly lead to improved internal performance. For example, a good training can directly result in better performance, without necessarily influencing HR outcomes. The reversed causality in the model shows that sometimes a stronger financial performance leads to more investments in HR practices and better HR outcomes. When performance is strong, employees are often more engaged (an HR outcome). This shows that the relationships in the model are not always unidirectional. In general, however, this Human Resources model shows how HR strategy is formulated and what the impact is of HR on internal processes and financial outcomes of the business.
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2. The 8-box model by Paul Boselie A different HR model that’s often used to model what we do in HR, is the 8-box model by Paul Boselie. The 8-box model shows different external and internal factors that influence the effectiveness of what we do in HR. First of all, you see the external general market context, the external population market context, the external general institutional context, and the external population institutional context. These are external forces that influence how we do HR. For example, if there is a shortage of certain skills in the market, this influences how we do our sourcing, recruiting, and hiring, compared to when there’s an abundance of qualified workers. The institutional context also changes: legislation impacts the way we work in HR (e.g. the day-to-day impact of HR) while trade unions and work councils limit what we can do. The core process in the middle starts with the configuration. The company’s history, culture and the technology used are all factors that influence how we communicate in HR, what we want to achieve, and how effective we are in our HR policies.
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