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Strategic Human Resource Management

After reading this chapter, you should be able to:Describe the differences between strategy formulation and strategy implementation.List the components of the strategic management process.Discuss the role of the HR function in strategy formulation.Describe the linkages between HR and strategy formulation.

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Strategic Human Resource Management

Discuss the more popular typologies of generic strategies and the various HR practices associated with each.Describe the different HR issues and practices associated with various directional strategies.List the competencies the HR executive needs to become a strategic partner in the company.

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The goal of strategic management in an organization is to deploy and allocate resources in a way that gives it a competitive advantage.

Human resource managers should:have input into the strategic plan,have specific knowledge of the organization’s strategic goals,know what types of employee skills, behaviors, and attitudes

are needed to support the strategic plan, anddevelop programs to ensure that employees have those skills,

behaviors, and attitudes.

Introduction

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What is Strategic Management?Strategic Management is a process for

analyzing a company's competitive situation, developing the company's strategic goals, and devising a plan of action and allocation of resources that will help a company achieve its goals.

Strategic human resource management is the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.

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Components of the Strategic Management Process

Strategy Formulation: Strategic planning groups decide on a strategic direction by defining the company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses.

Strategy Implementation: The organization follows through on the strategy that has been chosen. This includes structuring the organization, allocating resources, ensuring that the firm has skilled employees in place, and developing reward systems that align employee behavior with the strategic goals.

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Model of the Strategic Management Process

HR PracticesRecruiting,

Training,Performance management,

Labor relations, Employee relations,

Job analysisJob design, Selection,

Development, Pay structure,

Incentives,Benefits

FirmPerformanceProductivity,

Quality,Profitability

HumanResourceActions

Behaviors,Results

HumanResource

CapabilitySkills,

Abilities,Knowledge

HumanResource

NeedsSkills

BehaviorCulture

Mission Goals StrategicChoice

InternalAnalysisStrengths

Weaknesses

ExternalAnalysis

OpportunitiesThreats

Strategy Formulation Strategy Implementation

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The Role of HRM in Strategy Formulation

Administrative Linkage — Lowest level of integration; HRM function's attention is focused on day-to-day activities. No input from the HRM function to the company's strategic plan is given.

One-Way Linkage — The strategic business planning function develops the plan and then informs the HRM function of the plan. HRM then helps in the implementation.

Two-Way Linkage — Allows for consideration of human resource issues during the strategy formulation process. The HRM function is expected to provide input to potential strategic choices and then help implement the chosen option.

Integrative Linkage — Is based on continuing, rather than sequential, interaction. The HR executive is an integral member of the strategic planning team.

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Strategy Formulation

GoalsMissionStrategicChoice

InternalanalysisStrengths

Weaknesses

Externalanalysis

OpportunitiesThreats

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Strategy FormulationFive components of the strategic management process:

A mission is a statement of the organization's reasons for being. Goals are what the organization hopes to achieve in the medium-to

long-term future External analysis consists of examining the organization's

operating environment to identify strategic opportunities and threats.

Internal analysis attempts to identify the organization's strengths and weaknesses.

Strategic choice is the organization's strategy, which describes the ways the organization will attempt to fulfill its mission and achieve its long term goals.

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Strategy Implementation

Organizationalstructure

Types ofInformation

Task design

Selection,training, anddevelopment

of people

Rewardsystems

Productmarketstrategy

Performance

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HRM Practices Job Analysis - the process of getting

detailed information about jobs. Recruitment - the process through

which the organization seeks applicants.

Training - a planned effort to facilitate learning of job-related knowledge, skills, and behavior.

Job design - making decisions about what tasks should be grouped into a particular job.

Selection - identifying the applicants with the appropriate knowledge, skills, and ability.

Development - the acquisition of knowledge, skills, and behavior that improves employees' ability to meet the challenges of future jobs.

Performance management - helps ensure that employees’ activities and • outcomes are congruent with the organization’s objectives. Pay structure, incentives, and benefits. Labor and employee relations.

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Strategic TypesPorter's Generic Strategies —

Michael Porter has hypothesized that competitive advantage comes from creating value by:reducing costs (overall cost

leadership), orcharging a premium price for a

differentiated product or service (differentiation).

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HRM Needs in Strategic TypesDifferent strategies require different types of

employees.

Role behaviors are the behaviors required of an individual in his or her role as a jobholder in a social work environment.Cost strategy firms seek efficiency and therefore

carefully define the skills they need in employees and use worker participation to seek cost-saving ideas.

Differentiation firms need creative risk takers.

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Directional Strategies

External GrowthStrategy

ConcentrationStrategy

Internal GrowthStrategy

Downsizing

Acquisitions Mergers

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The Role of HR in Providing a Competitive Advantage

Emergent Strategies - Those that evolve from the grass roots of the organization.What actually is done versus what is planned. HR plays an important role in facilitating the

communication of emergent strategies between levels in the hierarchy.

Enhancing Firm CompetitivenessBy developing a rich pool of talent, HR can assure the

company's ability to adapt to a dynamic environment.

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Strategic Human Resource Executives

Four basic competencies:Business Competencies - Understanding the company's

economic and financial capabilities.Professional/Technical Knowledge - In HR practices such

as selection techniques and compensation systems.Change Processes or Organizational Development

Techniques - The ability to diagnose the need for change and develop and implement the appropriate intervention.

Integration Competencies - A generalist perspective with the skills of a specialist in the above three areas.

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Human Resource Competencies

HR Professional

IntegrationCompetence

Professional andTechnical

Knowledge

Ability toManage Change

BusinessCompetence

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