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What is Strategic HRM?

Strategic

human resource management: The pattern of planned human resource deployments and activities intended to enable an organization to achieve its strategic goals.

Strategic HRM
To

be strategic, the HR function should Have direct, integral involvement in strategy formulation and implementation. Know what employee skills, behaviors, and attitudes are needed to support strategic plan. Develop those skills, behaviors, and attitudes among employees.

Components of the Strategic Management Process


1.

Strategy Formulation:

Strategic planning group decides on a strategic direction Defining the company's mission and goals Identify external opportunities and threats Identify internal strengths and opportunities for growth

Strategy Formulation
External analysis Opportunities Threats
Strategic Choice Internal analysis Strengths Weaknesses
McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Mission

Goals

Components of the Strategic Management Process


2. Strategy Implementation:

Follow through on the chosen strategy. Includes structuring the organization, allocating resources, Involves ensuring that the firm has skilled employees in place Utilizes reward system that align employee behavior with the strategic goals.

Model of the Strategic Management Process


Strategy Formulation External Analysis
Opportunities Threats

Strategy Implementation HR Practices


Recruiting, Training, Performance management, Labor relations, Employee relations, Job analysis Job design, Selection, Development, Pay structure, Incentives, Benefits

Mission

Goals

Strategic Choice

Human Resource Needs


Skills Behavior Culture

Firm Performance Productivity, Quality, Profitability

Internal Analysis
Strengths Weaknesses
McGraw-Hill/Irwin

Human Resource Capability


Skills, Abilities, Knowledge

Human Resource Actions


Behaviors, Results

2006 The McGraw-Hill Companies, Inc. All rights reserved.

Levels of HRM integration in Strategy Formulation


Administrative Linkage Lowest level; HRM focused on day-to-day activities. No input from the HRM function to the company's strategic plan. One-Way Linkage The strategic business planning function develops the plan and then informs the HRM function of the plan. HRM helps with implementation. Two-Way Linkage HR issues considered during the strategy formulation process. HR function provides input on potential strategic choices and helps implement chosen option. Integrative Linkage Continuing, rather than sequential, interaction. HR is an integral member of the strategic planning team.

Strategy Formulation
Five

relevant components:

Mission:

statement of the organization's reasons for being. Goals: 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.

Strategy Implementation
Organizational structure

Types of Information Product market strategy Reward systems

Task design

Performance
Selection, training, and development of people

Strategic Types
Porter's

Generic Strategies competitive advantage comes from creating value by:


reducing

costs or charging a premium price for a differentiated product or service (differentiation).

HRM and Strategic Types


Different

strategies call for different types of employees. behaviors are the behaviors required of an individual in his or her role as a jobholder in a social work environment.
Cost

Role

strategy calls for efficiency--carefully define the skills employees need. Seek employees cost-saving ideas. Differentiation firms need creative risk takers.

The Role of HR in Providing a Competitive Advantage


Emergent
What

Strategies - Those that evolve from the grass roots of the organization.
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
By

Firm Competitiveness

developing a rich pool of talent, HR can assure the company's ability to adapt to a dynamic environment.

Competencies of Strategic Human Resource Consultants


Four

basic competencies:

Business

Competencies: Understand company's economic and financial capabilities. Professional/Technical Knowledge: In HR practices Change Management or Organizational Development Techniques: Ability to diagnose need for change; develop and implement the appropriate intervention. Integration Competencies: Holistic perspective with the skills of a specialist in the above three areas.

Human Resource Competencies


Professional and Technical Knowledge

Business Competence

HR Professional

Integration Competence

Ability to Manage Change