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Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487

2nd International Conference on Leadership, Technology and Innovation Management

Integrative approach in human resources strategy formulation

(Case study: MDN Company)
Dariush Gholamzadeha , Sonya Jalalib, b
a,b
Tehran Azad University Central Branch, Tehran, 1311773591, Iran

Abstract

HR strategy is the pattern of HR-related decisions. That is, the gestalt of negotiated people related policies and practices in use
indeed the formulation and enactment of an HR strategy designed to link HR policies and practices with the strategic goals and
objective of the firm.
The purpose of this research is Human resources Strategy formulation for MDN Company. Integrative Model is used in this
research, which is made from composition of rational and incremental attitude concepts, and according to strategic references points
theory, particularly two main variables: internal labor market and/or external labor market and quality and quantity of control on
work force or product of the work force, it introduces four main strategies, named paternalistic Strategy, commitment Strategy,
free-agent strategy and secondary strategy. This model is a strategic human resources model that practically and really integrates

This research is implemented by survey research pattern. Population universe of the study includes directors of the company, which
measure each determining variables of strategic reference points for every strategic occupations of the company. Data gathering
instruments include questionnaire and interviewing. After processing of the data, strategic coordinates of the occupations were
determined and appropriate strategic pattern of each occupation was identified. The results demonstrate that the appropriate strategy
for the main occupations is the commitment Strategy .and proper strategy for service jobs is secondary strategy Commitment
attitude is a framework fo

Keywords, Strategy formulation, Human resources strategy, Strategic human resource management, Strategic reference points,Integrative approach

2012Published
© 2013 PublishedbybyElsevier Ltd. Selection and/or peer-review under responsibility of 2nd International Conference
ElsevierLtd.
Selection and peer-review under responsibility of The Second International Conference on Leadership, Technology
on Leadership,
and Technology and Innovation Management
Innovation Management

1. Introduction

Human resource management has become more important to general management, largely as a result of its role in
providing competitive advantage, the rush to competitiveness, and an awareness of the demands of the technologically
advanced environment of the future (miles&snow, 1985). Strategist Michael Porter (1985) has found that human
resource management is a key to obtaining competitive advantage. In a growing number of organizations, human
resources are now viewed as a source of competitive advantage. There is greater recognition that distinctive

Corresponding author. Tel. + 98-21-225-54416 fax. + 98-21-225-54416

E-mail address: Sonya_jalali@yahoo.com

1877-0428 © 2013 Published by Elsevier Ltd.

Selection and peer-review under responsibility of The Second International Conference on Leadership, Technology and Innovation
Management
doi:10.1016/j.sbspro.2013.04.052
480 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487

competencies are obtained through highly developed employee skills, distinctive organizational cultures, management
processes, and systems. This is in contrast to traditional emphasis on transferable resources, such as equipment that
can be purchased by competitors. Increasingly, it is being recognized that competitive advantage can be obtained with
a high-quality workforce, which enables organizations to compete on the basis of market responsiveness, product and
service quality, differentiated products, and technological innovation, instead of reliance on low costs (Quinn, James,
Thomas, Doorley, and Penny, 1990) Paquette. The process of human resource management in any organization can
not be a static phenomenon considering dynamism and continuous changes of the environment. Looking upon
organizations as living, dynamic, and learning phenomena necessitates an approach which can be called strategic
approach. It is obvious that in case of developing an appropriate strategy for human resources of the organization,
human resource management sub processes such as recruitment, employment, human resource development,
performance management and reward, promotion, maintenance and personnel relations can all be designed and
developed in a coordinated assortment and with utmost productivity.

The integrative model of human resource strategy formulation is derived from the combination of rational and
progressive approaches, relying on strategic reference points and especially the two main variables: the amount of
attention to internal labor market or external labor market in addition to the quantity and quality of control over labor
process or labor product, defines four major strategies called Paternalistic, Commitment, Secondary and Free-Agent.
This model is a strategic model of human resource that establishes real integration between corporation strategies and
human resource strategy and also among operational systems. (Bamberger and Meshoulam, 2000).

2. Literature Review And Hypotheses

2.1. Human Resource Strategy

Human resource strategy focuses on the alignment of the

programs with corporate and strategic business unit plans. Consistent human resource policies and practices are
important concerns of general management as well as the human resource function (Craft, 1992). Differences in
human resource management policies and practices across industries demonstrate that policies and personnel practices
vary according to the environment in which companies operate. However, industrial categories do not explain all such
differences because variations in company strategies also determine human resource policies and practices.

H
programs to address and solve fundamental strategic issues related to human resources management (Schuler, 1987).
According the other definition Human resource strategy is a pattern of decisions dealing with, and in need of, policies
and procedures related to human resource. Based on this definition, human resource strategy can be regarded as a
result (the result of the existence of organization). The purpose of developing and implementing human resource
strategy is to associate policies and human resource procedures with strategic objectives of human resources and
organization (Bamberger and Meshoulam, 2000).

2.2. Methodologies of Human Resource Strategy Development

The strategy development approach is one of the main discussions in the field of organization strategy. In fact, it
should be noted that there is no standard way to develop human resource strategies in respect to the methodologies of
strategy development. In addition, the process of human resource strategy development is often as important as the
content of strategy (Boxall& Purcell, 2001). There are two main approaches prevalent in this discussion: Rational
Planning Approach (logical-reasoned) and Incremental Approach (step by step). (Bamberger and Meshoulam, 2000)

2.3. Logical Models in Human Resource Strategy Development

The initial researches conducted in the field of human resource strategy development process were basically of
normative or imperative nature.

-logical approach, based on organization strategy. The

unilateral impact of organization strategy on human resource strategies in these models is depicted in Figure 1. The
 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487 481

normative or imperative patterns are deeply rooted in reasoned planning pattern, and therefore it is assumed that there
is a one-sided relationship between the organization strategy and human resource strategy, and human resource
strategy is principally based on organization strategy (Bamberger and Meshoulam ,2000).

Organization Strategy Human Resource Strategy

Fig 1. Logical models in human resource strategy development

2.4. Incremental Approach to Human Resource Strategy Development

From the late -by-step approach are presented, which consider the role
of political and institutional factors both inside and outside the organization in the process of human resource strategy
development to be considerably greater than quantitative and technical calculations and factors. These models also
managed to present strategic patterns of human resources without organization strategy, because decision making
elements include specific factors related to human resource management (i.e., labor market and control procedure).
(Bamberger and Meshoulam, 2000).

Of course in those cases where organization strategy does exist, these models maintain their harmony through the
establishment of a bilateral relationship. This relationship is shown in Figure 2. Based on special factors of human
resource management and in accordance with the main axes of management theories philosophy, natural models are
briefly divided into two types: the models based on personnel control, and those based on the labor market.

Organization Strategy Human resource strategy

Political and institutional factors

Fig 2. Incremental approach to human resource strategy development

2.5. Strategic Reference Points Theory

The scholars have defined the Strategic Reference Points as: outstanding objectives or patterns that organizational
decision makers use to assess their approaches or options so that they can thereby adopt strategic decisions and
provide the main beneficiary groups with the priorities of the whole system (Bamberger & Fiegenbaim, 1996). The
analysts believe that human resource strategy is principally based on setting the goals or reference points which are
considered by decision makers of the system and are selected under the influence of rational, political and institutional
factors (Bamberger and Meshoulam, 2000).

2.6. Integrative Approach in Human Resource Strategy Formulation

Peter Bamberger and Len Meshulam (2000), using the attractive logic of combinative research proposed the
application of strategic reference points (SRPs) to develop human resource strategy.

This proposed model relying on strategic reference points and considering two main variables -the amount of
attention and reliance on internal labor market or external labor market (SRP1), quantity and quality of control over
workforce process or workforce product (SRP2)- defines four major strategies called Paternalistic Strategy,
482 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487

Commitment Strategy, Secondary Strategy and Free-Agent Strategy. In the content of such a framework, the first
dimension ((resource supply)) will deal with ((build or buy)) aspect of human resource strategy. That is the degree or
extent of which human resource strategy considers providing required skills inside which will be different from the
state of providing workforce and such skills or competences through the free market. The second dimension
((Control)) deals with the degree or extent that resource strategy considers the issue of monitoring personnel
behavior. The integrative model of human resource strategy formulation is shown in Figure 3 (Bamberger and
Meshoulam , 2000).

external labor market internal

product
Commitment Strategy Free-Agent Strategy

control
Paternalistic Strategy Secondary Strategy

process
Fig 3. Integrative Model of Human Resource Strategy Formulation (Bamberger and Meshoulam)

As shown in Figure 4, the strategic reference points (SRPs) as an intermediary loop converts tendencies of political
power in organizations with a practical approach to human resource strategy (Bamberger and Meshoulam ,2000).
 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487 483

Selection of strategic reference points of

human resources

Power dependence relationships Human resource Strategy

Current situation of organization toward strategic reference points of

human resources

Fig 4 . The process of human resource strategy formulation in integrative model

2.7. The Features of Four Strategic Patterns in Integrative Model

Secondary Strategy: This strategy is appropriate for simple, recurring and standardizable occupations for which
the required workforce is adequately available in the labor market outside the corporation and there is no need to train
and maintain such employees (Bamberger and Meshoulam, 2000).

Paternalistic Strategy: This strategy also is applied for simple, recurring and standardizable occupations but with
the difference that the corporation management prefers to maintain and upgrade the existing employees and to make
them coordinated with the organizational culture of corporation (Bamberger and Meshoulam, 2000).

Free-Agent Strategy: This strategy is appropriate for those sophisticated and specialized occupations that constant
and formal recruitment of related experts necessitates high costs for the corporation, because the corporation needs
such occupations for short terms and temporarily (Bamberger and Meshoulam ,2000).

Commitment Strategy: This strategy also is used for sophisticated and specialized occupations, but the
corporation constantly needs experts active in such businesses and their replacement is not easily feasible. Therefore,
it is necessary to have an effective approach towards the labor market within the organization (Bamberger and
Meshoulam, 2000).

3. Research Methodology

3.1. Research Questions

What are the appropriate strategies for human resource management in this organization?
What are the appropriate strategies for required manpower supply in this organization?
What are the appropriate strategies for performance evaluation and reward in this organization?
What are the appropriate strategies for relationships with personnel in this organization?

3.2. Research Method

This research is an applied study in terms of objectives criterion and in terms of data gathering criteria is heuristic-
descriptive which is carried out using field study patterns. The research data are extracted through documents analysis,
484 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487

questionnaire and visiting interviews and completing the questionnaire by the subjects. The statistical population
consists of 20 people of senior managers and board of directors of MDN Corporation who are the main decision
makers in taking strategic decisions of the organization and middle managers and experienced experts within the
affect the process of human resource
strategy formulation

3.3. Analyses and Results

Considering that the features of strategic occupations make up the logic of integrative model for human resource
strategy formulation, accordingly in order to develop strategy for human resource there should be distinguished
difference between organizational jobs in terms of strategic reference points of integrative model and developed model
In MDN Corporation four strategic occupation groups are identified:

Managerial Occupations: jobs which undertake the responsibility for planning, organizing, leading and controlling
the affairs of the organization.
Major Occupations (key): jobs which are responsible for the main missions of the organization.
Specialized Occupations: jobs which support the main occupations.
Service Occupations: simple jobs which provide necessary facilities for above occupations .

Sub-strategic reference points are the variables whose average values are used to calculate the value of a main SRP
The sub-strategic reference points which outline the basis of present study questionnaire
are shown in tables 1.

Table 1 Sub-SRPs of Integrative Model

SRP1: Control (efficiency process) SRP2: labor market (internal/external)
Sub-SRPs related to necessity of efficiency control (lack of
Sub-SRPs related to external labor market
process control)
Existence of workforce with suitable quality
Amount of complexity Availability of required suitable workforce
Complexity due to changes in technology Positive impacts of globalization and immigration process on the
Extents of need for creativity labor market
Need for elbow room Insignificance of job stability for job applicants
Need for diversity of skills Absence of demand for commitment and loyalty to the company
need for higher education
need for skills and experience culture
Absence of demand for learning in the company
need for flexibility

After designing the questionnaire and conducting validity and reliability tests the methodology was implemented in
Corporation and 20 experts (influential people of organization) measured the value of every determining variable of
strategic reference points for each strategic jobs of the corporation.
After collecting the data all raw data were inserted in spreadsheet and average and standard deviation of responses
for each question and the number of strategic jobs were calculated at percentage in order to calculate the values of a
main SRP from all related sub-SRPs. If the value of each main SRPs is more than 50 percent the response will be
"yes" otherwise it will be "no". Using the values of main SRPs coordinates which are displayed in Tables 2
appropriate strategy of human resource is determined first in integrative model and then in developed model.
 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487 485

Table 2 Values of Main SRPs Coordinates of Integrative Model

Occupations
Main SRPs of Integrative Model Values
Service Specialized Major Managerial

25 62 70 75 output control necessity SRP1

Average
tendency to external labor
58 43 36 37 SRP2
market
10 11 11 12 output control necessity SRP1
Standard
tendency to external labor deviation
16 18 18 20 SRP2
market

Analysis of SRP1 Results (the Rate of Output Control Necessity):As shown in Table 2in managerial jobs with
an average of 75%, major jobs with an average of 70% and specialized jobs with an average of 62% there is a
tendency to control personnel output. But for service jobs, only the rate of 25% emphasized on output control, in other
words managerial, major and specialized jobs in MDN Corporation are assessed sophisticated and service jobs are
evaluated primitive.

Analysis of SRP2 Results (the Rate of Tendency to External Labor Market):The tendency to external labor
markets is 37% in managerial jobs, 36% in major jobs and 43% in specialized jobs, in other words there is a tendency
in managerial, major and specialized jobs toward internal labor market (building workforce). On the other hand, the
tendency to external labor market in service jobs is assessed 58%, in other words, in service jobs there is more
tendency toward the external labor market (buying workforce). By analyzing the results of SRP1 and SRP2 the
appropriate strategy is determined for strategic jobs in integrative model:

Managerial, major and specialized jobs: output control necessity: Yes, tendency to external labor market: No,

Service jobs: output control necessity: No, tendency to external labor market: Yes

No SRP2 Yes
Yes

Secondary Strategy
Paternalistic Strategy
(Service
Occupations)
SRP1

Commitment
Strategy
Free-Agent Strategy
(managerial, major
and specialized
No

Occupations)

Fig 5 . The Way to Develop Human Resource Strategy in Integrative Model

As shown in Figure 5, in integrative model the appropriate strategy for managerial, major and specialized jobs in
MDN Corporation is commitment strategy and for service jobs is secondary strategy. Considering the fact that in
managerial, major and specialized jobs, the tendency of respondents to commitment strategy was widely revealed,
there is no need to analyze responses to these jobs in the developed model SRPs and only answers to service jobs are
studied.
486 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487

4. Conclusion

Results from analysis of data and information suggest that the appropriate strategy for managerial, major and
specialized jobs in MDN Corporation is commitment strategy and proper strategy for service jobs is secondary
strategy. According to research questions the research achievements are presented in the form of suitable strategies in
following subsystems manpower supply, performance evaluation and reward and relationship with personnel.

4.1. Strategic Axis of Human Resources Supply Subsystem

According to commitment strategy, to recruit personnel in managerial, major and specialized jobs the recruitment
channels should be limited. It means that job competition should be limited more on existing staff, informal ways for
recruitment should be used such as referring to representatives of individuals to recruit in these jobs and potential
capabilities of individuals should be considered to take predetermined job career more than current knowledge and
skills. Complex and innovative ways should be used in selection of individuals.

Regarding staff training and development since the goals of organization in these occupations is ((building human
capitals)) intense investment should be conducted to train and promote personnel. To this end, training programs
should be executed in two dimensions of individual and organizational dynamisms. The promotion of personnel and
managers should take place according to job career and merit.

In service jobs along with secondary strategy the knowledge, skills and abilities which are based on the selected job
must be considered the basis of selection and for recruitment different and more formal methods must be used and the
main selection index should be regarded current merits of individual. There is no high emphasis on training in these
occupations, but training programs design aimed at training skills in desired jobs which have mostly practical and
workshop aspects, it is recommended to perform internal redeployments based on current performance index and
individual competence.

4.2. Strategic Axis of Performance Evaluation and reward Subsystem

According to commitment strategy the payment system should be designed in such a way that procedure stability is
preserved within the organization, for this purpose the works which have the same values should be paid identically,
also in order to observe the principle of external equality the amount of financial payments to personnel of these jobs
must be at least equal to the rate of labor market. In order to encourage risk taking and create motivation among the
personnel mixed salaries should be used that is a percentage of financial payments should be done variably and based
on performance results, the way of rewarding should be in such a way that encourages teamwork and spiritual
rewards (such as works being challenging, career path development and participation in affairs) should be used more
than material rewards and to evaluate the performance of personnel the 360-degree feedback method should be used.

According to secondary strategy the works which have the same values should be paid identically, because the
process of these jobs is; stable, standardizable and on schedule. On the other hand, in order to observe the principle of
external equality and recruitment of more skillful individuals the amount of financial payments to personnel of these
jobs must be at least equal to the rate of labor market. On the other hand to observe the principle of external equality
and recruit more skilled manpower, the amount of material payments to staff of such jobs must be equal to the rate of
the labor market. Also for equality of the staff seniority, skill rate and performance criteria should be considered as the
bases of payment, material rewards should be used more than spiritual rewards and when evaluating performance the

4.3. Strategic Axis of Relationships with Personnel Subsystem

In occupations with commitment strategy, the description must be designed in a flexible manner, the authority of
operation and responsibility of work quality should be assigned to personnel and then their output should be
controlled. The programs to help personnel should be implemented such as assistance to solve personal problems of
staff which barrier their effective performance.
 Dariush Gholamzadeh and Sonya Jalali / Procedia - Social and Behavioral Sciences 75 (2013) 479 – 487 487

In jobs with secondary strategy, duties description must be developed and applied precisely and in a standard and
formal form. And in order to control the process of work performance Taylorism method (indirect control) should be
used. And informal mechanisms based on employee-supervisor relationships should be designed to state personnel
objections and to consider them.

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