Human Resource Strategy

1 SHRM Foundation S EFFE ctivE PRacticE GuidElinES SERiESHuman Resource Strategy AdApting to the Age of globAlizAtion by Patrick M. Wright, to the Age of globAlizAtion Human Resource StrategySHRM Foundation S EFFE ctivE PRacticE GuidElinES SERiESThis publication is designed to provide accurate and authoritative information regarding the subject matter covered. Neither the pub-lisher nor the author is engaged in rendering legal or other professional service. If legal advice or other expert assistance is required, the services of a competent, licensed professional should be sought. Any federal and state laws discussed in this book are subject to frequent revision and interpretation by amendments or judicial revisions that may significantly affect employer or employee rights and obligations.

2 Readers are encouraged to seek legal counsel regarding specific policies and practices in their book is published by the SHRM Foundation, an affiliate of the Society for Human Resource Management (SHRM ). The interpretations, conclusions and recommendations in this book are those of the author and do not necessarily represent those of the SHRM Foundation. 2008 SHRM Foundation. All rights reserved. Printed in the United States of publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the SHRM Foundation, 1800 Duke Street, Alexandria, VA SHRM Foundation is the 501(c)3 nonprofit affiliate of the Society for Human Resource Management (SHRM).

3 The SHRM Foundation maximizes the impact of the HR profession on organizational decision-making and performance by promoting innova-tion, education, research and the use of research-based knowledge. The Foundation is governed by a volunteer board of directors, comprising distinguished HR academic and practice leaders. Contributions to the SHRM Foundation are tax deductible. Visit the Foundation online at For more information, contact the SHRM Foundation at (703) 535-6020. Human Resource Strategy 08-0557 contentstable of Human Resource Strategy v Forewordvii Acknowledgmentsix About the Author1 Human Resource Strategy : Adapting to the Age of Globalization3 What Is HR Strategy ?

4 4 Three Versions of a Generic HR Strategy6 How HR Strategies Affect Performance9 Real-World Impact of HR Strategies15 Building Your Own HR Strategy20 Future Challenges21 Conclusion23 Sources and Suggested ReadingsvDear Colleague:As a busy Human Resource practitioner , you probably find it difficult to keep up with the latest academic research in the field. Yet knowing which HR practices have been shown by research to be effective can help you in your role as an HR s why the SHRM Foundation created the Effective Practice Guidelines series. These reports distill the latest research findings and expert opinion into specific advice on how to conduct effective HR practice.

5 Written in a concise, easy-to-read style, these publications provide practical information to help you do your job better. The Effective Practice Guidelines were created in 2004. The SHRM Foundation publishes new reports annually on different HR topics. Past reports, available online at , include Performance Management, Selection Assessment Methods, Employee Engagement and Commitment, Implementing Total Rewards Strategies, Developing Leadership Talent and Retaining Talent. You are now reading the seventh report in the series: Human Resource each report, a subject matter expert is chosen to be the author. After the initial draft is written, the report is reviewed by both academics and practitioners to ensure that the material is research-based, comprehensive and presented in an easy-to-use format.

6 An annotated bibliography, Sources and Suggested Readings section, is included with each report as a convenient reference tool. This process ensures that the advice you receive in these reports is not only useful, but based on solid academic research. Our vision for the SHRM Foundation is to maximize the impact of the HR profession on organizational decision-making and performance, by promoting innovation, education, research and the use of research-based knowledge. In addition, the Foundation is strategically focused on initiatives designed to help organizations maximize leadership talent. We are confident that the Effective Practice Guidelines series takes us one step closer to making that vision a reality.

7 Frederick P. Morgeson, , SHRM Foundation Research Applications CommitteeProfessor and Valade Research Scholar, Michigan State University ForewordviiAcknowledgementsThe SHRM Foundation is grateful for the assistance of the following individuals in producing this report: Content editorFrederick P. Morgeson, Professor and Valade Research Scholar The Eli Broad Graduate School of Management Michigan State UniversityreviewersRajiv Burman, SPHR, CCP, CEBS, CHRP Vice President Human Resources, USA & Canada Griffith LaboratoriesJohn E. Delery, Professor and Raymond F. Orr Chair Department of Management Sam M. Walton College of Business University of ArkansasMark Fogel Corporate Vice President HR and Customer Care Leviton Manufacturing Co.

8 , Henry, Sr. Chief Human Resource Officer Bright Horizons Family SolutionsSumita Raghuram, Associate Professor of Human Resource Management Department of Labor Studies and Employment Relations Pennsylvania State UniversityJames R. Schultz, SPHR, GPHR Vice President-HR, Global Downstream Chevron CorporationProjeCt ManagerBeth M. McFarland, CAE Manager, Special Projects SHRM FoundationMajor funding for the Effective Practice Guidelines series is provided by the HR Certification Institute and the Society for Human Resource Management. ixAbout the Author Patrick M. Wright Dr. Wright is the William J. Conaty GE Professor of Strategic Human Resources in the School of Industrial and Labor Relations at Cornell University.

9 He is also a Senior Research Fellow in the School of Social Sciences at Tilburg University. He holds a BA in psychology from Wheaton College and an MBA and a in organizational behavior/ Human Resource management from Michigan State University. Professor Wright teaches, conducts research and consults in the area of strategic Human Resource management, particularly focusing on how firms rely on people as a source of competitive advantage. He has published more than 60 research articles, 20 chapters in books and edited volumes, co-authored a leading Human Resource management textbook, now in its 6th edition, and co-authored or co-edited six books. He has taught in Executive Development programs at Cornell University, University of Southern California and Texas A&M and has conducted programs and/or consulted for a number of large public and private sector organizations.

10 Dr. Wright served as the Chair of the HR Division of the Academy of Management and on the Board of Directors for the SHRM Foundation, World at Work and Human Resource Planning Society. He was inducted as a Fellow in the National Academy of Human Resources in 2005 and won the 2007 HRM Scholar Award from the Dutch HRM Network. HR strategies need to simultaneously focus on building skills, motivation and behavior for a successful business Resource Strategy : Adapting to the Age of Globalizationhuman Resource StrategyGlobalization of individual companies and capital markets over the past two decades has changed the business landscape. Many firms have expanded operations overseas, and even strictly domestic businesses are facing competition from abroad.