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Defining Strategy, Strategic
Management, and Strategic Plan
 The word strategy means “general” in Greek and, in
a military sense, is linked to the planning of battles
and military campaigns.
 Most authors would probably agree that it has to
do with long-term, large-scale plans for future-
oriented, competitive success.
 Involves allocation of organizational resources.
 Its ultimate objective is to achieve a company’s
competitive advantage.
Defining Strategy, Strategic
Management, and Strategic Plan…
 A strategy, whether it is an HR strategy or any other
kind of management strategy, must have two key
 there must be strategic objectives (i.e. things the
strategy is supposed to achieve), and
 there must be a plan of action (i.e. the means by which it
is proposed that the objectives will be met).
Defining Strategy, Strategic
Management, and Strategic Plan…
 Strategic management can be defined as the art and
science of formulating, implementing, and evaluating
cross-functional decisions that enable an organization
to achieve its objectives.
 Strategic management focuses on integrating
management including marketing, finance/accounting,
production/operations, research and development,
information systems, and other units of an organization
to achieve organizational success.
Defining Strategy, Strategic
Management, and Strategic Plan…
 Strategic planning is the process of defining an
organizational strategy, or direction, and making
decisions on allocating the resources of the organization
(capital and people) to pursue this strategy.

 Strategic leadership is about how to most effectively

lead a company’s strategy making process to create
competitive advantage.
 The strategy-making process is the process by which
managers select and then implement a set of strategies that
aim to achieve a competitive advantage.
Strategic HRM and Human Resource
 HR planning goes hand in hand with an organization’s
strategic planning.
 Once the organizational strategy is set, the HRM
function must do its part to ensure the strategy’s
success, thereby helping the organization to achieve its
 The acknowledgement that HR policies and practices
have critical linkages with an organization’s overall
strategy is generally termed strategic human
resource management (SHRM).
Organizational Strategy
 Organizations before 1980 tended to operate in
relatively stable external environments.
 Most of them offered a single service or product line to
a clear-cut group of customers in a geographically
limited sphere of operations.
 Planning for changes in the external environment was less
important than coordinating such internal functions as
finance, marketing, operations/production and personnel.
 Managers, therefore, devoted most of their time to
policymaking, an activity intended to ensure coordination
inside an organization.
Organizational Strategy…
 Long-range planning based on an assumption of
environmental stability proved inadequate for dealing
with an increasingly dynamic external environment
where the uncertain future was often nothing like the
present or past.
 At this point, strategic management and strategic
planning emerged as a way of coping with increasing
environmental and organizational complexity.
 Top managers discarded older notions of planning and
policy-making in favor of a strategic view.
Strategic HRM and Human Resource
 Strategic HRM refers to the use of human resource
management (HRM) practices to gain or keep a
competitive advantage.
 Talent acquisition, talent deployment, talent
development, and rewarding talent are all strategic
HRM approaches that can impact the organizational
ability to achieve its strategic objectives.
 Thefocus of HR initiatives is evolving from a traditional
emphasis to a strategic emphasis.
Strategic HRM and Human Resource
 Strategic HR deals with the contributions that HR
strategies make to achieving organizational
effectiveness and competitive advantage and how
these HR contributions are accomplished.
 An important element of strategic HRM is to
develop processes in the organization that help
align individual employee performance with the
organizational strategic objectives.
Strategic HRM and Human Resource
 Regardless of which specific strategies are adopted
for guiding an organization, having the right people in
the right place at the right time will be critical to make
the overall strategies work.
 Strategic HR management entails providing input into
organizational strategic planning and developing
specific HR initiatives to help achieve the
organizational goals.
Defining and Explaining Strategic
Human Resource Planning
 Human resource planning is the process of
analyzing and identifying the need for and
availability of human resources so that the
organization can meet its objectives.
 The focus of HR planning is to ensure the organization
has the right number of human resources, with the right
capabilities, at the right times, and in the right places.
 An effective HR plan provides mechanisms to eliminate
any gaps that may exist between supply and demand.
Defining and Explaining Strategic
Human Resource Planning…
 This process becomes strategic when some attempt is made
to anticipate long-term HR “supplies and demands”
relative to changing conditions facing the organization.
 The basic premise is that every HR policy and practice
must directly support the organization's strategy and
 This does not happen as frequently as it should.
 In the worst-case scenario, HR plans are developed as an
afterthought and separately from organizational strategy.
 They are not relevant to the business and are seen as
important only by the HR people.
Aligning Human Resource Strategy
with Business Strategy
 Strategic HRM is a set of distinct but interrelated
practices, policies, and philosophies whose goal is to
enable the achievement of the organizational strategy.
 Ideally, these practices, policies, and philosophies form
a system that attracts, develops, and motivates
employees who ensure the effective functioning and
survival of the organization.
Aligning Human Resource Strategy
with Business Strategy…
 Human capital issues are at the top of the CEO
agenda, with more than half of the top priorities
(attraction, retention, innovation) needing HR input.
 The term human capital refers to the collective sum of
the attributes, experience, knowledge, and commitment
that employees choose to invest in their work.
Aligning Human Resource Strategy
with Business Strategy…
 More traditional perspective of the HR planning
concept implied that the organization was
concerned only with possible problems of labor
surpluses and shortages.
 The goal was to determine the knowledge, skills, and
abilities (KSAs) required within broad organizational
 This is now regarded as a narrow, linear approach to
HR planning.
Aligning Human Resource Strategy
with Business Strategy…
 The modern approach to HR strategy calls for
tailoring human resource policies and practices to
the organizational needs of the future.
 Achieving organizational excellence must be the work
of HR.
The Importance of Strategic HR
 Executives are demanding that the HR department move
from articulating perceived value ("training builds employee
skills") to demonstrating real value (an external client can
see the economic value).
 The value of HR will be seen in its ability to deliver the
behaviors needed to enable the organization’s strategy.
 There are at least two reasons why strategic HR planning is
so important:
 (1) Employees help an organization achieve success because
they are strategic resources and
 (2) the planning process itself results in improved goal
The Importance of Strategic HR
 Every HR policy and practice must directly support
the organization's strategy and objectives.
 Aligning HR strategy with business strategy can be
done in one of these ways:
 Start with organizational strategy and then create HR
 Start with HR competencies and then craft corporate
strategies based on these competencies.
 Do a combination of both in a form of reciprocal
Evaluating HRM

 Measurement of the HR function is critical for

improving both the credibility and the effectiveness of
 What gets measured gets managed and improved.
 Very few organizations measure the impact of HRM.
 Interest in measuring HR is growing slowly, fuelled by
 businessimprovement efforts across organizations,
 attempts to position HR as a strategic partner, and

 the need for objective indicators of success to accompany

the analysis of HR activities.
The 5C Model of HRM Impact

 Executives, investors, customers, and HR professionals

themselves make judgments in many ways about the
effectiveness of the HR function.
 The numerous areas that are judged can be grouped
into five clusters—the 5 Cs of evaluating HRM:
compliance, client satisfaction, culture management, cost
control, and contribution.
The 5C Model of HRM Impact…
 Compliance
 Senior management depends on HR expertise to ensure
that organizational practices comply with the law.
 HR can make a difference by ensuring that managers
and employees comply with the law, thus saving the
company legal costs, fines, and damaging publicity.
The 5C Model of HRM Impact…
 Client Satisfaction
 Organizations may track their success by measuring
customer satisfaction or soliciting input on client
complaints and attitudes.
 This means that if employee morale drops, management
can expect to see customer satisfaction levels drop in
about six months.
The 5C Model of HRM Impact…
 Culture Management
 Highly effective organizations seek to influence
employee attitudes through the development of an
appropriate culture that will support optimum
 Executives carefully monitor cultural programs (such as
that of empowerment) through attitude surveys of
 The results of these surveys can then be linked to the
objective results of the department.
The 5C Model of HRM Impact…
 Cost Control
 HR practices can reduce labor costs by reducing the
workforce while attempting to get the same volume of
work done with fewer employees.
 HR departments can reduce expenses associated with
employees in at least two other ways.
 The first is to increase the efficiencies of those working (i.e.,
achieve the same results at lower costs or faster speeds), and
 the second is to reduce the costs associated with behaviors
such as absences or accidents that are, to some extent, under
the control of the employee.
The 5C Model of HRM Impact…

 Contribution
 Unless HR can demonstrate its impact on the bottom
line, it will continue to be seen as "overhead," as a
department that grabs resources while contributing
 Sophisticated and integrated HRM practices have a
positive effect on employee performance: they
increase knowledge, skills, and abilities; improve
motivation; and increase retention of competent