Human Resource

Management
TWELFTH EDITION
1
GARY DESSLER
BIJU VARKKEY

Part 1 | Introduction

Chapter 3

The Manager’s Role in Strategic Human Resource

Management
Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
 After reading this chapter, you should be able to:

1. Outline the steps in the strategic management process.

2. Explain and give examples of each type of
companywide and competitive strategy.
3. Explain what a strategy-oriented human resource
management system is and why it is important.
4. Illustrate and explain each of the eight steps in the HR
Scorecard approach to creating human resource
management systems.

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–2
 The Strategic Management Process
• Strategic Management
 The process of identifying and executing the
organization’s mission by matching its capabilities
with the demands of its environment.
• Strategy
 A chosen course of action.
• Strategic Plan
 How an organization intends to balance its internal
strengths and weaknesses with its external
opportunities and threats to maintain a competitive
advantage over the long-term.
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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–3
 Business Vision and Mission
• Vision
 A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
• Mission
 Spells out who the company is, what it does, and
where it’s headed.

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–4
 FIGURE 3–5 The Strategic Management Process

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Resource Management, 12/e
3–5
 FIGURE 3–7 A SWOT Chart

Strengths Weaknesses

Example: Market leadership Example: Large inventories

Opportunities Threats

Example: New overseas markets Example: Market saturation

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–6
 FIGURE 3–8 Relationships Among Strategies in Multiple-Business Firms

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Resource Management, 12/e
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 Types of Strategies

Corporate-Level
Strategies

Vertical Geographic
Diversification Consolidation
Integration Expansion
Strategy Strategy
Strategy Strategy

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Resource Management, 12/e
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 Types of Strategies (continued)

Business-Level/
Competitive
Strategies

Cost Leadership Differentiation Focus/Niche

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
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 Achieving Strategic Fit

The “Fit” Point of View (Porter) consists of the

idea that each department’s strategy needs to fit
the parent business’s competitive aims.

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
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 Strategic Human Resource Management
• Strategic Human Resource Management
 The linking of HRM with strategic goals and
objectives in order to improve business performance
and develop organizational cultures that foster
innovation and flexibility.
 Involves formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–11
 FIGURE 3–6 Linking Company-Wide and HR Strategies

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–12
 Creating the Strategic Human Resource
Management System

Components of a
Strategic HRM System

Human Resource Employee

Human Resource
Policies and Behaviors and
Professionals
Practices Competencies

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
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 FIGURE 3–10
Strategy
Map for
Southwest
Airlines

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd Source: Adapted from “Creating a Strategy Map,”
Authorized adaptation from the United States edition of Human Ravi Tangri, Team@TeamCHRYSALIS.com.
Resource Management, 12/e
3–14
 FIGURE 3–12 Three Important Strategic HR Tools

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Authorized adaptation from the United States edition of Human
Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.
Resource Management, 12/e
3–15
 Measuring HR’s Contribution
• The HR Scorecard
 Shows the quantitative standards, or
“metrics” the firm uses to measure
HR activities.
 Measures the employee behaviors
resulting from these activities.
 Measures the strategically relevant
organizational outcomes of those
employee behaviors.

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
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 Creating an HR Scorecard

The 10-Step HR Scorecard Process

Identify required HR policies

1 Define the business strategy 6
and activities

Choose HR Scorecard
2 Outline value chain activities 7
measures
Summarize Scorecard
3 Outline a strategy map 8 measures on digital dashboard
and monitor, predict, and
Identify strategically required evaluate
4
outcomes
Identify required workforce
5
competencies and behaviors

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
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 FIGURE 3–14 Simple Value Chain for “The Hotel Paris”

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–18
 Five Sample HR Metrics
HR Metric* How to Calculate It
Absence rate # of days absent in month
× 100
Average # of employees during month × # of workdays

Cost per hire Advertising + agency fees + employee referrals + travel cost of
applicants and staff + relocation costs + recruiter pay and benefits
Number of hires

HR expense HR expense
factor Total operating expense

Time to fill Total days elapsed to fill job requisitions

Number hired

Turnover rate Number of separations during month

Average number of employees during month
Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd
Authorized adaptation from the United States edition of Human
Resource Management, 12/e
× 100
Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–
35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on
Human Capital: New Metrics,” Compensation and Benefits Review,
January/February 2000, pp. 13–20; Thomas E. Murphy and Sourushe Zandvakili,
“Data and Metrics-Driven Approach to Human Resource Practices: Using
Customers, Employees, and Financial Metrics,” Human Resource Management 39,
no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House
Incorporated, July 17, 1996;] SHRM/BNA 2000 Cost Per Hire and Staffing Metrics
Survey; www.shrm.org. See also, SHRM Research “2006 Strategic HR 3–19
Management Survey Report,” Society for Human Resource Management..
 KEY TERMS

strategic plan
strategic management
vision
mission
SWOT analysis
strategy
strategic control
competitive advantage
strategic human resource management
HR Scorecard
metrics
value chain analysis

Copyright © 2011 Dorling Kindersley (India) Pvt. Ltd

Authorized adaptation from the United States edition of Human
Resource Management, 12/e
3–20