Human Resource Management Strategy and Analysis 3 Copyright © 2013 Pearson Education Chapter 3-1.

Human Resource Management Strategy and Analysis

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Copyright © 2013 Pearson EducationChapter 3-1

Learning Objectives

1. Explain why strategic planning is important to all managers.

2. Explain with examples each of the seven steps in the strategic planning process.

3. List with examples the main generic types of corporate strategies and competitive strategies.


Learning Objectives

4. Define strategic human resource management and give an example of strategic human resource management in practice.

5. Briefly describe three important strategic human resource management tools.

6. Explain with examples why metrics are essential for managing human resources.


WhyStrategic Planning is WhyStrategic Planning is Important to all ManagersImportant to all Managers


The Human Resource function today continues to play an increasingly visible role in the strategic planning and management process. The HR function requires a new level of skill and competency among HR professionals. HR managers must develop measureable strategies that convincingly showcase the impact of HR on business performance. Successful Human Resource managers have adopted a perspective that focuses on how their departments can play a central role in implementing strategy.

Goal-Setting and the Planning Process

• The hierarchy of goals

• Strategic planning


Strategic planning is important because in a well-run organization the goals come from the top of the organization downward. The process forms a hierarchy of goals. These goals, in turn, should guide everyone in the organization in what they do.

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The Strategic Management ProcessStrategy

• A course of action

Strategic Plan• How an organization intends to match its internal strengths

and weaknesses with its external opportunities and threats to maintain a competitive advantage

Strategic Management• The process of identifying and executing the organization’s

mission by matching its capabilities with the demands of its environment

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Business Vision and MissionVision

• A general statement of an organization’s intended direction that evokes emotional feelings in its members

Mission• Spells out who the company is, what it

does, and where it is headed

The Seven Steps in theThe Seven Steps in the Strategic Planning ProcessStrategic Planning ProcessStrategic Management ProcessStrategic Management Process


Strategic Planning Seven Steps

1. Define current business2. Audits3. New directions4. Strategic goals5. Formulate strategies6. Implement 7. Evaluate


• The logical place to start is by defining one’s current business. What products do we sell and where? How do our products or services differ from our competitors?

1. Perform external and internal audits• The next step is to ask, “Are we heading in the right direction?” 3. Formulate a new direction• The question now is, what should our new business be? Translate the

mission into goals.• Next ,translate the mission into strategic objectives.

2. Formulate strategies to achieve the strategic goal• Next, the manager chooses courses of action that will enable the

company to achieve its strategic goals.3. Implement the strategy

• Strategy execution means translating the strategies into action and trying them out.

4. Evaluate performance• Things don’t always turn out as planned. At this point, the strategies are

tested against reality. If changes are needed, the entire process may be repeated from an earlier step.

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FIGURE 3-1 The Strategic Management Process

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FIGURE 3-2 A SWOT Chart

The Main Generic Types of The Main Generic Types of Corporate Strategies and Corporate Strategies and

Competitive StrategiesCompetitive Strategies


In practice, managers formulate three strategies. There is corporate-wide strategic planning, business unit (or competitive) strategic planning, and functional (or departmental) strategic planning. We’ll look at each.

Types of Strategies

• Corporate strategy

• Competitive strategy

• Functional strategy– Human resources as a competitive advantage

• Strategic fit


Corporate-level strategy identifies the portfolio of businesses that comprise the company and the ways in which these businesses are related to each other.

Managers endeavor to achieve competitive advantages for each of their businesses. Competitive advantages enable a company to differentiate its product or service from those of its competitors. Such differentiation allows a company to increase its market share.

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Types of Strategies

Diversification Strategy

Geographic Expansion Strategy

Vertical Integration

Strategy

Corporate-Level Strategies

ConsolidationStrategy

Concentration Strategy

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Cost Leadership Focus/Niche

Business-Level/Competitive Strategies

Differentiation

Types of Strategies (cont)

Management Roles in Strategic Planning

• Top Managers’ Role in Strategic Planning

• Departmental Managers’ Strategic Planning Roles– Devise– Support– Execution


Devising a strategic plan is top management’s responsibility. Because the consequences of a poor choice can be dire, few top managers delegate total responsibility for strategic planning.

The departmental managers’ strategic planning roles involve:•Helping devise the strategic plan•Formulating supporting, functional/departmental strategies•Executing the plansFew people know as much about the firm’s competitive pressures, vendor capabilities, and concerns than do the company’s department managers.

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Achieving Strategic FitThe ‘Fit’ Point of View (Porter)• All of the firm’s activities must be tailored to, or fit,

the chosen strategy such that the firm’s functional strategies support its corporate and competitive strategies.

Leveraging (Hamel and Prahalad) • ‘Stretch’ in leveraging resources –

supplementing what you have and doing more with what you have – can be more important than just fitting the strategic plan to current resources.

DefiningStrategic Human DefiningStrategic Human Resource ManagementResource Management


We’ve seen that once a company decides how it will compete, it turns to formulating functional departmental strategies to support its competitive aims. One of those departments is human resource management. Its functional strategies are human resource management strategies.

Strategic Human Resource Management

• Defining strategic human resource management

• Human resource strategies and policies


Management formulates a strategic planand measurable strategic goals or aims. The plans imply certain work force requirements required to achieve the firm’s strategic aims. Given these workforce requirements, HR management formulates strategies. These HR policies and practices (strategies) help produce the desired workforce skills, competencies, and behaviors.

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Strategic Human Resource Management

The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility

• Involves formulating and executing HR systems – HR policies and activities – that produce the employee competencies and behaviors that the company needs to achieve its strategic aims

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FIGURE 3-5 Linking Company-Wide and HR Strategies

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Strategic Human Resource Challenges

Corporate productivity and

performance improvement

efforts

Increased HR team involvement

in design of strategic plans

Basic Strategic Challenges

Expanded role of employees in the

organization’s performance

efforts

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Human Resource Management’s Strategic Roles

Strategy Execution

Role

Strategic Planning

Roles

Strategy Formulation

Role

Three Important Strategic Three Important Strategic Human Resource Human Resource

Management ToolsManagement Tools


Once a company decides how it will compete, it turns to formulating functional departmental strategies to support its competitive aims. One of those departments is human resource management. Its functional strategies are human resource management strategies

Strategic Human Resource Management Tools

• Strategy map

• The HR scorecard

• Digital dashboards


The strategy map shows the “big picture” of how each department’s performance contributes to achieving the company’s overall strategic goals. Many employers quantify and computerize the map’s activities. The HR Scorecard helps them to do so.

HR Metrics and Benchmarking

• HR metrics– Types of metrics

• Benchmarking


Being able to measure what you are doing is an integral part of the HR strategy process.

Human Resource Management Strategy and Analysis 3 Copyright © 2013 Pearson Education Chapter 3-1.

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