Strategic Human Resource

Management
 Strategic Human Resource
Management
• SHRM is part of strategic planning
• Strategic Plan : The Company’s plan for how it
will match its internal strengths and
weaknesses with its external opportunities
and threats to maintain a competitive
advantage
• Essence is to ask “ Where are we now as a
business, where we want to be, and how
should we get there”
• Then formulates specific strategies (Human
resources and other) to take the company
from where it is now to where he or she wants
it to be
• Strategy : The company’s long term plan for
how it will balance its internal strengths and
weaknesses with its external opportunities
and threats to maintain a competitive
advantage
• SHRM means formulating and executing
human resource policies and practices that
produce the employee competencies and
behaviors the company needs to achieve its
strategic aims
• E.g. Ford
 Traditional View
Personnel Research & Finance
Development
•Staffing
•Pay Production Marketing
•Training
Need and Importance
• Changing demand from customers or the
market place
• New technology and increasing pressure from
competitors (Philip Mirvis)
• Changes in the basic business environment
(Randall Schuler)
• High levels of uncertainty about basic business
conditions
• Rising costs
• Rapid technological change
• Changing demographics
• More limited supplies of highly trained labor
• Rapidly changing government legislation and
regulations
• Increased globalization of industries
 Strategic Management Process
• Strategy : The company’s long term plan for how
it will balance 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
• Essence of strategic planning - “ Where are
we now as a business, where we want to be,
and how should we get there”

• Steps in Strategic Management

• SM entails both strategic planning and
implementation

• The process of identifying and executing the

organization’s strategic plan, by matching the
company’s capabilities with the demands of
its environment
• SM process consist of 7 steps
• 1-5, strategic planning
• 6-7, implementation
• Step1 - define the current Business
• Choose the terrain on which it will compete –
what product it will sell, where it will sell
them, how to differentiate products from its
competitors
• E.g Rolex and Seiko
• Managers use statements like
• Vision – A general statement of its intended
direction that evokes emotional feelings in
organization members
• Broad terms – “what we want to become”
• Gives the direction
• What the business should be
• Mission – What our main task are now
• Spells out who the company is, what it does,
and where it’s headed
• Step 2 – Perform external and internal audits
• Analyzing external and internal situations
• SWOTs
• SWOT analysis
• SWOT chart

• Strengths Weakness
*Strong R&D *Aging Machinery

• Opportunities Threats
*Expanding Market * Merger of
Competitors
• Step 3 : Formulate new Business and mission
statements
• Based on situation analysis
• What should our business be
• What products
• Where it will sell
• How to differentiate from competitors
• New vision and mission
• Step 4 : Translate the mission into strategic
goals
• Operationalizing the mission for managers –
strategic goals
• For each department
• Step 5 : Formulate strategies to achieve the
strategic goals
• Strategies, Course of action – how to move
from the current business to what it wants to
• Strategies act as bridge between these two
• Step 6 : Implement the strategies
• Translating strategies into action
• Hiring, firing people, building plants, adding
products, product lines
• This include managerial functions like
Planning, organizing, staffing, leading, and
controlling
• Step 7 : Evaluate performance
• Management Monitors the extend to which
the firm meeting its strategic goals
• Strategic Control – keep strategy up to date
• According to the environmental changes
• Competitors action
 Types of Strategies
Three types of strategic planning
A)Corporate strategy
• Company wide level (corporate level)
• Pepsico runs pepsi, fritto lay, and pizza hut, so
needs a corporate level strategy
• Diversification- expand by adding new product
lines
• Vertical integration – expands by producing its
own raw material
Relationships among strategies in multiple business Firms

Corporate
Strategy

Business 1 Business 2 Business 3

Competitive Strategy Competitive Strategy Competitive Strategy

Functional Functional Functional

Strategies Strategies Strategies
• Consolidation – reducing the company’s size
• Geographic expansion – taking business
abroad
B)Competitive Strategy (Business level )
E.g., Pizza hut
• Next level down, each of the business need
• How to build and strengthen the business’s
long term competitive position in the market
place
• How pizza hut will compete with Papa John’s
• Strategies like
• Cost leadership, low cost leader, dell by direct
selling
• Differentiation, Firm seeks to be unique,
Toyota by quality, woodland/timberland by
adventure shoes
• Focusers, Carve out a market niche, like
ferrari, by providing products and services
customers can get in no other way
• Functional strategy
• Business composed of departments –
manufacturing, selling, finance, HRM
• This identify the basic courses of action that
each department will pursue in order to help
the business attain its competitive goals