Snell bohlander-human resource management chapter 2

© 2007 Thomson/South-Western.© 2007 Thomson/South-Western.All rights reserved.All rights reserved.

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Managing Human ResourcesManaging Human ResourcesBohlander Bohlander •• SnellSnell 1414thth edition edition

Strategy and HumanStrategy and HumanResources PlanningResources Planning

Human Resource Human Resource ManagementManagementSnell Snell • Bohlander• Bohlander

© 2007 Thomson/South-Western. All rights reserved. 2–2

ObjectivesAfter studying this chapter, you should be able to:

1. Identify the advantages of integrating human resources planning and strategic planning.

2. Understand how an organization’s competitive environment influences strategic planning.

3. Recognize the importance of internal resource analysis.

4. Describe the basic tools for human resources forecasting.

5. Explain the linkages between competitive strategies and HR.


Objectives (cont’d)After studying this chapter, you should be able to:

6. Understand the requirements of strategy implementation.

7. Recognize the methods for assessing and measuring the effectiveness of strategy.


Strategic Planning and Human Resources• Strategic Planning

Procedures for making decisions about the organization’s long-term goals and strategies

• Human Resources Planning (HRP)Process of anticipating and making provision for the

movement (flow) of people into, within, and out of an organization.


Strategic Planning and HR Planning

• Strategic Human Resources Management (SHRM)

The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals Strategy formulation—providing input as to what is

possible given the types and numbers of people available.

Strategy implementation—making primary resource allocation decisions about structure, processes, and human resources.


HRP and Strategic Planning

• Strategic Analysis What human resources are needed and what are

available?

• Strategic FormulationWhat is required and necessary in support of human

resources?

• Strategic ImplementationHow will the human resources be allocated?

Human Resources Human Resources PlanningPlanning

Human Resources Human Resources PlanningPlanning

StrategicStrategicPlanningPlanning

StrategicStrategicPlanningPlanning


Figure 2Figure 2–1 –1 Linking Strategic Planning and Human ResourcesLinking Strategic Planning and Human Resources


Step One: Mission, Vision, and Values

• MissionThe basic purpose of the organization as well as its

scope of operations

• Strategic VisionA statement about where the company is going and

what it can become in the future; clarifies the long-term direction of the company and its strategic intent

• Core ValuesThe strong and enduring beliefs and principles that

the company uses as a foundation for its decisions


Step Two: Environmental Scanning

• Environmental Scanning The systematic monitoring of the major external

forces influencing the organization.

1. Economic factors: general and regional conditions

2. Competitive trends: new processes, services, and innovations

3. Technological changes: robotics and office automation

4. Political and legislative issues: laws and administrative rulings

5. Social concerns: child care and educational priorities

6. Demographic trends: age, composition,and literacy


Figure 2Figure 2–2 –2 Five Forces FrameworkFive Forces Framework


Step Three: Internal Analysis

CompositionComposition

CultureCulture CompetenciesCompetencies

Internal Internal AnalysisAnalysis


Scanning the Internal Environment

• Cultural AuditsAudits of the culture and quality of work life in an

organization.

How do employees spend their time?

How do they interact with each other?

Are employees empowered?

What is the predominant leadership style of managers?

How do employees advance within the organization?


Competitive Advantage through People• Core Competencies

Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers.

• Sustained competitive advantage through people is achieved if these human resources:1. Are valuable.

2. Are rare and unavailable to competitors.

3. Are difficult to imitate.

4. Are organized for synergy.


Composition: The Human Capital Architecture• Core knowledge workers

Employees who have firm-specific skills that are directly linked to the company’s strategy. Example: Senior software programmer

• Traditional job-based employees

Employees with skills to perform a predefined job that are quite valuable to a company, but not unique. Example: Security guard


Composition: The Human Capital Architecture (cont’d)• Contract labor

Employees whose skills are of less strategic value and generally available to all firms. Example: General electrician

• Alliance/partners

Individuals and groups with unique skills, but those skills are not directly related to a company’s core strategy. Example: Independent product label designer


Forecasting: A Critical Element of Planning• Forecasting involves:

a. forecasting the demand for labor

b. forecasting the supply of labor

c. balancing supply and demand considerations.


Internal Demand Forecasting Tools

• Skill InventoriesFiles of personnel education, experience, interests,

skills, etc., that allow managers to quickly match job openings with employee backgrounds.

• Replacement ChartsListings of current jobholders and persons who are

potential replacements if an opening occurs.

• Succession PlanningThe process of identifying, developing, and tracking

key individuals for executive positions.


Step Four: Formulating Strategy

• Strategy FormulationMoving from simple analysis to devising a coherent

course of action.

• SWOT analysis A comparison of strengths, weaknesses,

opportunities, and threats for strategy formulation purposes.

Use the strengths of the organization to capitalize on opportunities, counteract threats, and alleviate internal weaknesses.


Corporate Strategy

Strategic Alliances Strategic Alliances and Joint Venturesand Joint Ventures

Growth and Growth and DiversificationDiversification

Mergers and Mergers and AcquisitionsAcquisitions

Corporate Corporate StrategyStrategy


Business Strategy

• Value CreationWhat the firm adds to a product or service by virtue of

making it; the amount of benefits provided by the product or service once the costs of making it are subtracted.

Low-cost strategy: competing on productivity and efficiency Keeping costs low to offer an attractive price to

customers (relative to competitors).

Differentiation strategy: compete on added value Involves providing something unique and distinctive to

customers that they value.


Functional Strategy: Ensuring Alignment• External Fit (or External Alignment)

Focuses on the connection between the business objectives and the major initiatives in HR.

• Internal Fit (or Internal Alignment)Aligning HR practices with one another to establish a

configuration that is mutually reinforcing.


Step Five: Strategy Implementation

• Taking Action: Reconciling Supply and DemandBalancing demand and supply considerations

Forecasting business activities (trends)Locating applicants

Organizational downsizingReducing “headcount”

Making layoff decisionsSeniority or performance?Labor agreements


Step Six: Evaluation and Assessment

• Evaluation and Assessment IssuesBenchmarking: The process of comparing the

organization’s processes and practices with those of other companies

Human capital metrics Assess aspects of the workforce

HR metrics Assess the performance of the HR function itself


Highlights in HRM 5

The Top Ten Measures Of Human Capital

1. Your most important issues

2. Human capital value added

3. Human capital ROI

4. Separation cost

5. Voluntary separation rate

6. Total labor-cost/revenue percentage

7. Total compensation/revenue percentage

8. Training investment factor

9. Time to start

10. Revenue factorSource: “The Top 10 Measures of Human Capital Management,” HRFocus 78, no. 5 (May 2001): 8. Copyright © 2001. Reprinted by permission of the publisher via Copyright Clearance Center.


Measuring Strategic Alignment

• Strategy Mapping and the Balanced ScorecardBalanced Scorecard (BSC)

A measurement framework that helps managers translate strategic goals into operational objectives

– financial– customer– processes– learning


Figure 2Figure 2–9 –9 Balanced ScorecardBalanced Scorecard


Figure 2Figure 2–10 –10 Assessing Internal FitAssessing Internal Fit


Ensuring Strategic Flexibility for the Future• Organizational Capability

Capacity of the organization to act and change in pursuit of sustainable competitive advantage.

Coordination flexibility The ability to rapidly reallocate resources to new or

changing needs.

Resource flexibility Having human resources who can do many different

things in different ways.

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