STRATEGIC

HUMAN RESOURCE MANAGEMENT

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 The Importance Of Strategic Management
What Is Strategic Management?
– A set of managerial decisions and actions that
determines the long-run performance of an
organization
Purposes of Strategic Management
– involved in many decisions that managers make
– companies with formal strategic management
systems have higher financial returns than
companies with no such system
– important in profit and not-for-profit
organizations
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The Strategic Management Process

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 Components of Strategic Management

• Strategic Management has two distinct yet

interdependent phases:

 Strategy Formulation

 Strategy Implementation
 Strategy Formulation

• Deciding on strategic direction by:

 Defining the company’s mission and goals
 Its external opportunities and threats
 Its internal strengths and weaknesses
• Generating various alternatives and
comparing their abilities to achieve
company’s mission and goals
 Strategy Implementation consists of

• Structuring the Organization

• Allocating Resources
• Ensuring placement of skilled employees in
place
• Developing reward systems that align
employee behavior with the organization’s
strategic goals
 Linkages of Strategic Planning and HRM
Administrative One-Way Two-Way Integrative
Linkage Linkage Linkage Linkage

Strategic Strategic Strategic

Planning Planning Planning Strategic
Planning

HR
HR HR HR Function
Function Function Function
 Administrative Linkage
• Lowest Level of Integration
• HR focus on day-to-day activities
• HR Executives has no time or opportunities to take a
strategic outlook towards HR issues
• Strategic planning function exists without any input from HR
Department
• HR Department completely divorced from strategic
management process both in strategy formulation as well as
strategy implementation process
• HR simply engages in administrative work unrelated to core
business needs
 One-Way Linkage
• Strategic Planning Function develops strategic Plan and
informs HR function of the plan
• Role of the HR function is to design systems and or programs
that implement the strategic plan
• In this level of integration company recognizes the
importance of HR in implementing the strategic plan but it
precludes the company from considering the HR issues while
formulating the strategic plan
• This level of integration often leads to strategic plans that can
not be successfully implemented
 Two-Way Linkage
• This level of integration allows considering the HR issues
during strategy formulation process
• This integration occurs in three sequential steps:
– Strategy planning team informs HR function of various strategies the
company is considering
– HR executive analyze the HR implications of various strategies,
presenting the result of this analysis to the strategic planning team
– After the strategic decision has been made, the strategic plan is passed
to HR department to develop programs for implementation
• Strategic Planning and HR functions are interdependent in
this level of integration
 Integrative Linkage

• Dynamic and multifaceted level of integration based

on continuing rather than sequential interaction
• HR Executive is an integral member of senior
management team
• Rather than an interactive process of information
exchange, HR function is built right into the strategy
formulation and implementation processes
Levels of Organizational Strategy

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