Unit 2: Strategic HR systems
Strategic Human Resource Management notes · PTU syllabus (MBA 934-18)
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Unit summary
Strategic HR systems — staffing, appraisal and rewards — translate strategy into daily people decisions. This unit covers strategic staffing, strategic appraisal, strategic reward design, performance management strategies, HR strategies in Indian industries, reward, compensation, retrenchment and downsizing strategies, and workforce diversity and demographic change.
After this unit you can
- Explain strategic staffing and appraisal
- Design strategic reward and performance management systems
- Explain HR strategies in Indian industries and retrenchment and downsizing
- Manage workforce diversity and demographic change
PTU syllabus topics
- Strategic staffing
- strategic appraisal
- strategic reward design
- performance management strategies
- HR strategies in Indian industries
- reward/compensation/retrenchment/downsizing strategies
- workforce diversity and demographic changes
Strategic staffing
Right talent for future strategy
Strategic appraisal
Goals linked to strategy
Strategic rewards
Pay that drives desired behaviour
Downsizing strategy
Rightsizing with fairness
Topic 1
Strategic staffing
- Strategic staffing: having the right number of people with the right skills in the right places at the right time to execute strategy.
- Decisions: make (develop internally) vs buy (hire externally); core vs contingent workforce (contract, gig, outsourced); internal mobility; employer branding; workforce planning linked to strategy.
Cost leadership
Efficient hiring, narrow roles, contingent workers
Low-cost retail, BPO
Differentiation and innovation
Selective hiring for creativity, broad roles, internal growth
R&D firms, design studios
Growth
Rapid hiring, campus pipelines, referral programmes
Expanding IT services firms
Topic 2
Strategic appraisal and performance management strategies
- Strategic appraisal: linking individual goals to organisational objectives (cascaded goals, OKRs, balanced scorecard).
- Performance management strategies: continuous feedback and check-ins, development focus, calibration, 360-degree feedback, removing forced ranking in many firms.
- 1Strategy and objectives
- 2Cascade goals to teams and individuals
- 3Ongoing coaching and feedback
- 4Review and calibration
- 5Link to rewards, development and talent decisions
Topic 3
Strategic reward design
- Total rewards: pay, benefits, recognition, development and work environment.
- Choices: pay level relative to market (lead, match, lag), fixed vs variable mix, individual vs team incentives, short vs long-term incentives (ESOPs), skill- or competency-based pay.
- Alignment: rewards should reinforce strategic behaviours — innovation, customer focus, cost control.
Topic 4
Compensation, retrenchment and downsizing strategies
- Compensation strategies: market-based pay, broadbanding, pay-for-performance, ESOPs and RSUs in start-ups and IT firms.
- Retrenchment strategies: hiring freeze, attrition, redeployment, pay cuts, VRS, layoffs as a last resort.
- Downsizing: planned reduction of workforce to improve efficiency; risks — loss of talent and knowledge, survivor syndrome (low morale of those who remain), damage to employer brand.
- Responsible downsizing: transparent communication, fair selection, severance and outplacement support, legal compliance (IR Code), care for survivors.
Topic 5
HR strategies in Indian industries
| Industry | Distinctive HR strategies |
|---|---|
| IT services | Mass campus hiring, extensive training (Infosys Mysuru campus), certifications, global mobility, retention through ESOPs and career paths |
| Banking and financial services | Branch staffing, digital reskilling, sales incentives, compliance training |
| Manufacturing | Shop-floor productivity, safety, union relations, apprenticeship programmes |
| FMCG and retail | Sales force management, frontline incentives, high attrition management |
| Start-ups | Equity compensation, flat structures, flexible work, rapid scaling |
Topic 6
Workforce diversity and demographic changes
- Diversity dimensions: gender, age, caste and religion, region and language, disability, LGBTQ+, education and socio-economic background.
- Demographic changes in India: young workforce (demographic dividend), Gen Z entering the workforce, rising women's participation targets, urban migration, ageing in some sectors.
- Strategies: inclusive hiring, flexible work, anti-harassment policies (POSH), accessibility (Rights of Persons with Disabilities Act 2016), mentoring and leadership pipelines for under-represented groups, unconscious-bias training.
Key terms
- Strategic staffing
- Aligning workforce supply with strategy
- OKRs
- Objectives and key results
- Total rewards
- All financial and non-financial rewards to employees
- Survivor syndrome
- Low morale among employees remaining after layoffs
- Broadbanding
- Fewer, wider pay grades
Quick revision
- Make vs buy; core and contingent; staffing by strategy.
- Strategic appraisal and performance management; OKRs.
- Total rewards; pay level, mix and incentives.
- Retrenchment options; responsible downsizing; Indian industry strategies.
- Diversity dimensions; demographic change; inclusion strategies.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.What is strategic staffing?
- Q2.Distinguish core and contingent workers.
- Q3.What are total rewards?
- Q4.What is survivor syndrome?
- Q5.Name two HR strategies of Indian IT firms.
- Q6.State three diversity management practices.
Long-answer questions
- Q1.Explain strategic staffing and strategic appraisal.
- Q2.Discuss the design of strategic reward systems.
- Q3.Explain retrenchment and downsizing strategies and how to manage them responsibly.
- Q4.Discuss workforce diversity and demographic changes in Indian organisations.
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