Strategic HR Management

and Planning - HRM

Part 2 – R. L. Mathis & J. N. Jackson

By – Md Sahil
 Strategy
 The strategy an organization follows is its proposition for how to
compete successfully and thereby survive and grow.
 There are several different approaches to strategy formation.

For example, an organization might have a formal written

strategy encompassing a five-year period with objectives and
goals for each unit.

Alternatively, the strategy may be identified less formally by the

CEO and changed by that person’s decisions alone.
 Regardless of which specific strategies are chosen for promoting
an organization, the HR strategy to have the right people in the
right place at the right time will be necessary to make the overall
strategies work. That is why it is commonly argued that HR
should have input into the organization’s overall strategy. After
all, if a strategy requires individual skills that are currently not
available in the company, a certain amount of time is necessary
to find and hire people with those skills.
NATURE OF STRATEGY AND HR MANAGEMENT
 Strategic HR management refers to the use of employees to
gain or keep a competitive advantage.
 Because business strategies affect HR plans and policies,
consideration of human resource issues should be part of the
strategy formulation process.
 It may be important to identify competitive advantage
opportunities that fit the existing employees or to assess strategic
alternatives given the current capabilities of organizational human
resources.
 HR managers should be scanning the environment to pinpoint
what workforce skills are and are not available.
 HR professionals also should be able to estimate lead times for
adjusting to labor shortages or surpluses.
 In short, HR should be involved in implementing strategies that
affect and are influenced by people.
Factors That Affect Strategic HR Management
Common Areas for HR Strategies
Possible HR Areas for Core Competencies
 HR AS ORGANIZATIONAL CONTRIBUTOR
 Strategic HR management plays a significant role in the following
strategies:
■ Organizational productivity
■ Customer service and quality
■ Financial contributions
 HR AS ORGANIZATIONAL CONTRIBUTOR (1)
 Strategic HR management plays a significant role in the following
strategies:
■ Organizational productivity

Productivity is the measure of the quantity and quality of work

done, considering the cost of the resources used.
Unit labor cost is computed by dividing the average cost of
workers by their
average levels of output.
 Productivity at the organizational level ultimately affects
profitability and competitiveness in a for-profit organization and
total costs in a not-for-profit organization. Perhaps of all the
resources used for productivity in organizations, the most closely
scrutinized is human resources.
 HR AS ORGANIZATIONAL CONTRIBUTOR (1)
(Approaches to Improving Organizational Productivity)
HR AS ORGANIZATIONAL CONTRIBUTOR (2)
 Strategic HR management plays a significant role in the following
strategies:
■ Customer service and quality
 Quality - Delivering high-quality services and/or products can
significantly influence organizational effectiveness.
 Whether producing automobiles, as General Motors and Toyota do,
or providing cellular phone service, as Verizon and Mobicom do, a
firm must consider how well its products and services meet
customer needs. Therefore, many organizations have emphasized
efforts to enhance quality.
 The thrust of all these programs is to get tasks done correctly and
efficiently so that quality services are delivered the first time,
every time.
HR AS ORGANIZATIONAL CONTRIBUTOR (3)
 Strategic HR management plays a significant role in the following strategies:
 ■ Financial contributions

Effectiveness for organizations is defined as the extent to which goals have

been met.

Efficiency is the degree to which operations are done in an economical

manner. Efficiency can also be thought of as a short-term measure that
compares inputs and costs directly against outputs and benefits.

The return on investment (ROI) of all resources and expenditures in

organizations can be calculated, including the ROI of human expenditures.
 There are many different ways of measuring the financial contributions of HR
and many difficulties associated with doing so. For example, if a firm invests
$20,000 for a supervisory training program, what does it gain in lower
worker compensation costs, lower legal costs, higher employee productivity,
and lower employee turnover? Or if it introduces new HR management
system software that costs $800,000, what will it save in reduced staffing,
lowered response times, and other factors? Questions such as these illustrate
that HR must be able to provide financial justification for its activities.
 TASK

Case Study
HRM, Types of Global Organizations & Global Mindset

 Importing and exporting - Buying and selling goods and services

with organizations in other countries.
 Multi-national enterprise (MNE) - Organization that has operating
units located in foreign countries.
 Global organization - Firm that has corporate units in a number of
countries integrated to operate as one organization worldwide.
 Having a global HR mindset means looking at HR issues from a global
perspective, using ideas and resources throughout the world, and
ensuring openness to other cultures and ideas.
 This global mindset requires consideration of a number of factors,
including

legal, political, cultural, and economic forces that significantly affect

the competitiveness of organizations and global HR management.
 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. In HR planning, an organization must consider the availability of
and allocation of people to jobs over long periods of time, not just for the
next month or even the next year.
 This level of planning requires knowledge of expansions or reductions in
operations and any technological changes that may affect the organization.
 Additionally, as part of the analyses, HR plans can be made for shifting
employees within the organization, laying off employees or otherwise cutting
back the number of employees, retraining present employees, or increasing
the number of employees in certain areas.
 Factors to consider include the current employees’ knowledge, skills, and
abilities in the organization and the expected vacancies resulting from
retirements, promotions, transfers, and discharges.
 In summary, doing HR planning right requires significant time and effort by
HR professionals working with executives and managers.
HR Planning Process
 SCANNING THE EXTERNAL ENVIRONMENT
 At the heart of strategic planning is environmental scanning, a
process of studying the environment of the organization to pinpoint
opportunities and threats.
 The external environment affects HR planning in particular because
each organization must draw from the same labor market that
supplies all other organizations, including competitors.
 Indeed, one measure of organizational effectiveness is the ability of
an organization to compete for a sufficient supply of human
resources with the appropriate capabilities.
 All elements of the external environment— government influences,
economic conditions, geographic and competition issues, and
workforce changes — must be part of the scanning process.
 Workforce Composition
 Changes in the composition of the workforce, combined with the use
of different work patterns, have created workplaces and
organizations that are notably different from those of a decade ago.
 Many organizations face major concerns about having sufficient
workers with the necessary capabilities.
 When scanning the workforce, it is important to consider a number of
variables, including these:
■ Aging of the workforce
■ Growing diversity of workers
■ Women workers and work/life balancing concerns
■ Availability of “contingent workers”
■ Outsourcing possibilities
Estimating Internal Labor Supply for a Given
Unit
 WORKFORCE REALIGNMENT
 Managing a Human Resources Surplus
 Workforce Downsizing
 Hiring Freezes
 Layoffs
 Managing a Shortage of Employees
■ Use overtime.
■ Add contingent workers.
■ Bring back recent retirees.
■ Outsource work.
■ Reduce turnover
HR PLANNING IN MERGERS AND ACQUISITIONS
 Key Factors in Cultural Fit Key factors in assessing the culture fit
between two firms include the following:
■ Degree of internal integration. Strong integration is indicative of
cooperative relationships and common objectives. Weak integration is
conducive to strong subcultures and conflicts.
■ Autonomy. This is the extent to which individuals have freedom to
make decisions about their jobs. Weak autonomy leads to poor M&A
performance.
■ Adaptability. An ability to adapt, develop, and survive is helpful.
Adaptability between the two entities should be similar.
■ Employees’ trust. Higher levels of trust may bode well for a successful
merger.
■ Diversity. The more diverse the organization, the more likely it will be
able to cope with even more diversity after the merger.
 HR Audit
 One general means for assessing HR is through an HR audit, which
is similar to a financial audit. An HR audit is a formal research
effort that evaluates the current state of HR management in an
organization. This audit attempts to evaluate how well HR
activities in each of the HR areas (staffing, compensation, health
and safety, etc.) have been performed, so that management can
identify areas for improvement.
 An HR audit often helps smaller organizations without a formal HR
professional identify issues associated with legal compliance,
administrative processes and recordkeeping, employee retention,
etc.
 Regardless of the time and effort placed on HR measurement and
HR metrics, the most important consideration is that HR
effectiveness and efficiency must be measured regularly for HR
staff and other managers to know how HR is contributing to
organizational success.