Group Leader:
Hafiz Syed Asad BAM 9211

Other members:
Arslan Aslam Arslan Khalid BAM 9234 BAM 9222

Linking between Human Resource Management (HRM) and Business Strategy HRM Business Strategy

Human Resource Management (HRM)
Human Resource Management (HRM) is the function within an organization that focuses on recruitment , management and providing direction for the people who work in the organization.

The role of HRM in organizations

Change agent and problem solver Adviser/ innovator Employee advocate Service provider




What is Business Strategy?
³Business strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives´.

Levels of Strategy
There are three levels of strategy;
y Corporate level Strategy y Business/Competitive level Strategy y Operational level Strategy

Corporate Strategy:
y addresses the entire strategic scope of the


y This is the "big picture" view of the organization

and includes deciding how the resource allocation process how cash, staffing, equipment and other resources are distributed is typically established at the corporate level

Corporate Level Strategy
y Diversification Strategy; Penetrating into new product line. y Vertical Integration Strategy; Producing its own raw materials or selling its products direct. y Consolidation Strategy; Combining of two or more firms and reduces company size. y Geographic Expansion Strategy; Expands the company s business.

Business level Strategy:
y Concerned with how a business competes successfully

in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining competitive advantage over competitors, creating new opportunities .

Business Level Strategy
y Cost Leadership strategy; Reducing economic costs below competitors. y Differentiation; Positioning a brand in such a way as
to differentiate it from the competition and establish an image that is unique

y Focus; The selection of a segment in the industry to
serve the exclusion of others.

Operational Strategy :
y It is concerned with how operational departments like

marketing, finance, R & D, involve in business.
y It is input for corporate and business level strategy.

Operational strategy therefore focuses on issues of resources, processes, people etc.

Strategic Managers for All Levels

HRM In Strategic Types
y Different strategies require different types of


y Role Behavior; are the behaviors required of an individual in his or her role as job holder in a social work environment.

Integration In HRM
y Integration is the heart of HRM having two forms;

y Vertical Integration y Horizontal Integration

Vertical Integration
y Vertical integration is about Effectiveness of HR.

HR is effective when it contributes to the mission and objectives of the organization.
y 'do the right things'
Overall objectives & strategy of business

HR Practices

Horizontal Integration
y Horizontal integration is that all HR activities feed

into each other and support each other.

y Do the things in right way
T&D HR Practices Motivation


HR Strategic Fit
Cor orate trate y B si ess trate y R trate y

Vertical Fit
Trai i Rewards

R ystem ( erf. Mgmt) Horizontal Fit

Strategic Management:
y A process for analyzing a company s competitive

situation, developing the company s strategic goals, and devising a plan of action and allocation of resources that will help a company achieve its goals.
There are two components of Strategic Management Process; Strategy Formulation 2. Strategy Implementation


Strategy Formulation External
- opportunities - threats

- reason for being

- what it hopes to achieve

Strategic Choice
- ways to fulfill goals and mission

Internal Analysis
- strengths - weaknesses

HR Input


The Role of HR in Strategy Formulation
Administrative Linkage One-Way Linkage Two-Way Linkage Integrative Linkage

Strategic Planning

Strategic Planning

Strategic Planning

Strategic Planning

HR Function HR Function HR Function HR Function

Strategy Implementation
Organizational structure

Types of information Product market strategy

Task design

Reward system

Selection, T&D of people

Strategic Human Resource Management

All those activities affecting the behavior of individuals in their efforts to formulate and implement the strategic needs of the business and achieve organizational goals. (SHRM)

Strategic HR Management
HR Practices
- recruitment - training - performance management - labor relations - HR planning - job analysis - job design - selection - development - pay structure - incentives - benefits

Strategic Choice

HR Needs
- skills - behaviors - culture

HR Capability
- skills - abilities - knowledge

HR Actions
- behaviors - results

Firm Performance - productivity - quality - profitability

Emergent Strategies

Strategic HRM Objectives and Plans
Cost containment

Social Responsibility

Link of HR Plan/ Strategy with Org Obj

Customer service
Org Effectiveness

Strategic Formulation of HRM
Analyze the problems in business Diagnose factors influencing the

Conclusion and recommendations
(alternative strategies)

Action planning ; how overcome the

Resource planning; what resources
we need, how we allocate

Benefits; how satisfy business needs

Strategic Implementation of HRM
y Strategic Staffing y Strategic Human Resource Implementation y Strategic Performance Management y Strategic Compensation Management

HRM Scorecard
y Report card of effectiveness of specific


Basic Model of How to Align HRM with Business Strategy

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