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Module 2

STRATEGIC HUMAN
RESOURCE MANAGEMENT

Learning objectives
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
Discuss 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 in order to
become a strategic partner in the company
Identify some of the issues associated with implementing
strategic human resource management

What is strategic management?


Strategic management is a process, an
approach that addresses the competitive
challenges an organisation faces
It can be thought of as managing the pattern or
plan that integrates an organisations major
goals, policies and action sequences into a
cohesive whole (Quinn 1980)

Components of the strategic management process


Strategy formulation:
The process of deciding on a strategic direction by
defining a companys mission and goals, its external
opportunities and threats, and its internal strengths
and weaknesses
Strategy implementation:
- The process of devising structures and allocating
resources to enact the strategy chosen by a company

What is strategic HRM?


Strategic HRM is the pattern of planned HR
deployments and activities intended to enable an
organisation to achieve its goals
It entails assessing the employee skills required to
run systems such as total quality management and
just-in-time and engaging in HR practices such as
selection and training that develop needed skills
Strategic choice is the ways an organisation will
attempt to fulfil its mission and achieve its long-term
goals

Linkage between HR and the strategic


management process
Figure 2.1 A model of the strategic management
process

Role of HR in strategy formulation


Figure 2.2 Linkages of strategic planning and HRM

Components of strategy formulation


Mission: a statement of the organisations reason for
being
Goals: what an organisation hopes to achieve in the
medium- to long-term future
External analysis and internal analysis (SWOT:
strengths, weaknesses, opportunities, threats):
external analysis: examining the organisations
operating environment to identify strategic
opportunities and threats
internal analysis: examining the organisations
strengths and weaknesses

Components of strategy formulation


Strategic choice
HR input for strategic HRM: HR executives involved
in strategy formulation

Figure 2.3 Strategy formulation

Strategy implementation
Important variables determine success in strategy
implementation:
organisational structure
task design
types of information and information systems
the selection, training and development of people
reward systems

Linkage of variables in strategy implementation


Figure 2.4 Variables to be considered in strategy
implementation

Figure 2.5 Strategy implementation

Menu of HR practice options

Job analysis and design


Recruitment and selection
Employee learning and development
Performance management
Pay structure, incentives and benefits
Industrial relations
Also see Table 2.4 on pages 66 and 67 for
additional information and details

Directional strategies

Concentration strategies
Internal growth strategies
External growth strategies
Divestment or downsizing strategies

Strategy execution, evaluation and control


Monitor the effectiveness of the strategy and the
implementation process
Identify problem areas and revisit existing structures
and strategies and/or develop alternative strategies
Recognise the critical nature of human resources in
competitive advantage

The role of HR in providing strategic competitive


advantage
Planned step-by-step procedure (previously discussed)
Emergent strategies
Enhancing firm competitiveness

HR competencies
Strategic positioners: understand evolving business
contexts, stakeholder expectations and business
requirements, and are able to translate them into talent,
culture and leadership actions
Credible activists: build relationships of trust and have a
clear point of view about how to build business
performance
Capacity builders: define, audit and create organisational
capabilities required for sustainable organisational
success
Change champions: initiate and sustain change at the
individual, initiative and institutional levels

HR competencies
HR innovators and integrators: look for new ways to
implement HR practices and integrate those
separate practices to deliver business solutions
Technology proponents: use technology for
efficiency to connect employees and to leverage
new communication channels, such as social media

Summary
SHRM means to proactively provide a competitive
advantage through the companys human resources
The HR function needs to be integral to strategy
formulation
HRM has an impact on strategy implementation
The strategic role of the HR function requires
business, professionaltechnical, change
management and integration competencies