Ch 03 Strategic Human Resource

Human Resource Management Strategy and Analysis

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Learning Objectives
Explain why strategic planning is important to all managers. Explain with examples each of the seven steps in the strategic planning process. List with examples the main generic types of corporate strategies and competitive strategies.

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Learning Objectives

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WhyStrategic Planning is Important to all Managers

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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

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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.

* The Strategic Management Process

Strategy
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

* Business Vision and Mission

Vision
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 the Strategic Planning Process Strategic Management Process

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Strategic Planning Seven Steps
Define current business Audits New directions Strategic goals Formulate strategies Implement Evaluate

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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?Perform external and internal auditsThe next step is to ask, “Are we heading in the right direction?” Formulate a new directionThe question now is, what should our new business be? Translate the mission into goals.Next ,translate the mission into strategic objectives. Formulate strategies to achieve the strategic goalNext, the manager chooses courses of action that will enable the company to achieve its strategic goals.Implement the strategyStrategy execution means translating the strategies into action and trying them out.Evaluate performanceThings 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.

* FIGURE 3-1 The Strategic Management Process

* FIGURE 3-2 A SWOT Chart

The Main Generic Types of Corporate Strategies and Competitive Strategies

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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

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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.

* Types of Strategies

Diversification Strategy
Geographic Expansion Strategy
Vertical Integration Strategy
Corporate-Level Strategies
ConsolidationStrategy
Concentration Strategy

* Cost Leadership

Focus/Niche
Business-Level/Competitive Strategies
Differentiation
Types of Strategies (cont)

Management Roles in Strategic Planning

Top Managers’ Role in Strategic PlanningDepartmental Managers’ Strategic Planning RolesDeviseSupportExecution
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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 planFormulating supporting, functional/departmental strategiesExecuting the plansFew people know as much about the firm’s competitive pressures, vendor capabilities, and concerns than do the company’s department managers.

* Achieving Strategic Fit

The ‘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 Resource Management

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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

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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.

* 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

* FIGURE 3-5 Linking Company-Wide and HR Strategies

* 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

* Human Resource Management’s Strategic Roles Strategy ExecutionRole

Strategic Planning Roles
Strategy Formulation Role

Three Important Strategic Human Resource Management Tools

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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

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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

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