Strategic HRM

HR’s Strategic Challenges

Strategic plan
A company’s plan for how it will match its internal
strengths and weaknesses with external opportunities and
threats in order to maintain a competitive advantage.
Three basic questions in planning
Current business position?
Future business position?
How to reach the future business position?

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 The Strategic Management Process
The process of identifying and executing the
organization’s mission by matching its capabilities with
the demands of its environment.
Strategy
A strategy is a course of action.
The company’s long-tem plan for how it will balance its
internal strengths and weaknesses with its external
opportunities and threats to maintain a competitive
advantage.

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 The Strategic Management Process
Strategic management tasks
 Step 1: Define the Business and Its Mission

 Step 2: Perform External and Internal Audits

 Step 3: Formulate new business and mission statements

 Step 4: Translate the Mission into Strategic Goals

 Step 5: Formulate a Strategy to Achieve the Strategic Goals

 Step 6: Implement the Strategy

 Step 7: Evaluate Performance

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 Overview of Strategic Management

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 Step 1: Define the Current
Business

Decisions on:
Products and services to provide
Where to sell them
Product/Services differences from competitors
Example: Rolex sells high-priced quality watches vs.
Seiko sells inexpensive but innovative watches

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 Step 2: Perform Internal and
External Audits
Analyze external and internal situations
Usage of SWOT (Strengths, Weaknesses,
Opportunities and Threats) analysis through the usage
of a SWOT chart

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 Step 2: Perform Internal and
External Audits

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 Step 3: Formulate a New Business
Mission and Its Vision

Vision
A general statement of its intended direction that evokes
emotional feelings in organization members.
Mission
Spells out who the company is, what it does, and where
it is headed.

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 Step 4: Translate Mission into Strategic
Goals
If the company’s mission is “to make quality
products”, what does this mission mean, for each
department, in terms of how to improve quality?

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 Step 5: Formulate Strategies to Achieve
Strategic Goals
Strategy: A course of action
Shows how company will move from the present
business to the new business
Simple to understand

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 Step 6: Implement the Strategies
Implementation = putting into action
Hiring people
Building plants adding new product lines
Involves management functions:
Plan
Organize
Staff
Lead
Control

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 Step 7: Evaluate Performance
Success of strategies dependent on changes in external
factors
E.g. New trends may reduce demand in one product and
increase the demand for another
Strategic Control necessary
Process of accessing progress towards strategic goals
and taking corrective actions
Managers study new situations and make adjustments

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 Types of Strategic Planning
Three types of strategies:
Corporate strategy

Competitive strategy

Functional strategy

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 Types of Strategic Planning
Corporate strategy
Company-wide

Identifies the portfolio of businesses that, in total, comprise

the company and the ways in which these businesses relate
to each other.

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 Types of Strategic Planning

Business-level/competitive strategy
Identifies how to build and strengthen the
business’s long-term competitive position in the
marketplace.

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 Types of Strategic Planning
Three possible competitive strategies:
Cost leadership: the enterprise aims to become the low-
cost leader in an industry.
Differentiation: a firm seeks to be unique in its industry
along dimensions that are widely valued by buyers.
Focus: a firm seeks to carve out a market niche, and
compete by providing a product or service customers can
get in no other way.

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 Types of Strategic Planning

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 Types of Strategic Planning
Functional strategies
Identify the basic courses of action that each
department will pursue in order to help the
business attain its competitive goals.

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 HR and Competitive
Advantage
Competitive advantage
Any factor that allows an organization to
differentiate its product or service from those of its
competitors to increase market share.
Superior human resources are an important source
of competitive advantage
E.g. Toyota’s self-managed teams

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 Strategic Human Resource Management
Strategic Human Resource Management

Formulating and executing HR systems—HR policies and

activities—that produce the employee competencies and
behaviors the company needs to achieve its strategic aims.

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 HRM’s Strategic Roles
Effective HR managers are able to:
Handle a larger portfolio
Work closely with top management to formulate
and implement company’s strategic plans
Two basic planning roles:
 Strategy Execution
 Strategy Formulation

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 Strategy Formulation Role
HR helps top management formulate strategy
in a variety of ways by:
Supplying competitive intelligence that may be useful in
the strategic planning process.
Supplying information regarding the company’s internal
human strengths and weaknesses.
Build a persuasive case that shows how—in specific and
measurable terms—the firm’s HR activities can and do
contribute to creating value for the company.

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 Creating A Strategic
HR System
Components of the HR process
HR professionals who have strategic and other
skills
HR policies and activities that comprise the HR
system itself (Recruitment, Selection, Training and
Reward)
Employee behaviors and competencies that the
company’s strategy requires.

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 Translating Strategy into HR Policy and
Practice
HR managers to translate:
Company’s strategy into employee competencies
and behaviors
These employee competencies and behaviors into
specific HR policies and practices to achieve
company’s goals.

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