CH 3-Strategic-Hrm

Chapter 3
STRATEGIC HUMAN RESOURCE

MANAGEMENT
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THE CLOUDY NATURE OF STRATEGY
Strategy consists of
illusions in the
Strategy is board room.
problem solving in There is a gap
between the John Purcell
unstructured
situations. rhetoric and the
reality of SHRM.
Lester Dignam
Lynda Grattan
Strategy is often
Strategy is Strategy is a fragmentary,
emergent and pattern in a evolutionary and
flexible. stream of largely intuitive.
Sean Tyson activities.
James Quinn
Henry Mintzberg
SO WHAT IS STRATEGIC HUMAN RESOURCE
MANAGEMENT?
Is it about long-range strategic planning?
Is it about day-to-day strategic management?
Or is it about both?
STRATEGIC HRM DEFINED
Strategic HRM is the process of

defining how the organization’s goals
will be achieved through people by
means of HR strategies and
integrated HR policies and practices.
MODEL OF STRATEGIC HRM
Strategic HRM
Strategic management – HR strategies –

strategic role of HR overall/specific
Strategic choice
Strategic analysis
SO WHAT IS THE STRATEGIC
ROLE OF HR SPECIALISTS?
SEVEN STEPS TO BEING STRATEGIC
Practice
Make evidence-
convincing based
business management
case
Act as for
change innovation
agent
See the big
picture
Appreciate
how HR
can add
value
Understand
the
business
Aware of
business
context
SO WHAT ABOUT HR STRATEGY?
HR STRATEGY AREAS
Overall: Specific:
• performance; • organization
• engagement; development;
• ‘the big idea’; • corporate social
• human capital responsibility;
advantage; • resourcing;
• HRM process • talent management;
advantage • learning and
development;
• employee reward;
• employee relations;
• employee well-being.
EXAMPLES OF OVERALL HR STRATEGIES
Stimulate changes on a
broad front aimed at
The only HR strategy achieving competitive
you really need is the We want GSK to be a advantage through
tangible expression of place where the best people.
values and the people do their best
Pilkington Optronics
implementation of work.
values. GlaxoSmithKline
West Water
Staff who are enjoying

A strong focus on the themselves, are being
overall effectiveness of the supported and
Maintain competitive
organization, its direction developed, and who
advantage by continuing
and how it's performing. feel fulfilled and
to attract very high
There is commitment to, respected at work, will
calibre people.
belief in, and respect for provide the best
Boots individuals. service to customers.
New Forest Council Lands’ End
BALANCED SCORECARD IN AN INTERNATIONAL CHARITY
Organizational effectiveness
perspective:
• programme development
• programme delivery
• process development and
management
• cost-effectiveness
Stakeholder perspective:
Financial perspective:
• impact on clients
• income growth
• relationships with key funding
• enlistment and retention of
agencies and supporters
supporters
• development of brand
• cost–income ratio
• influence
People perspective:
• leadership behaviour
• talent management
• learning and development
• employee satisfaction –
a ‘great place to work’
HIGH-PERFORMANCE STRATEGY:
CORPORATION OF LONDON
• Clear line of sight between strategic aims of the Corporation and its
staff.
• Management sets goals for success and monitors performance.
• Leadership from the top and at all levels of management.
• Focus on promoting engagement and commitment.
• Performance management processes aligned to Corporation
objectives.
• Capacities of people enhanced by comprehensive learning and
development programmes.
• People valued and rewarded according to their contribution.
DECLARATION OF STRATEGIC INTENT:
CARE DELIVERY CHARITY
• Achieve strategic integration – match HR policies and practices

to the business strategy.
• Plan coherent approaches to the development of HR processes
so that they are interrelated and mutually supporting.
• Focus on the needs to achieve flexibility, responsiveness,
quality and cost-effectiveness in the delivery of HR services.
CRITERIA FOR HR STRATEGIES
• Aligned to corporate goals.

• Set out clear aims.
• Supported by business case.
• Take account of individual as well as business
needs.
• Contain realistic and achievable plans for
implementation.
STRATEGIC HRM TOOLKIT
CONDUCTING A STRATEGIC REVIEW
1. Analysis
2. Diagnosis
Involve senior Involve employees
management and and their
line managers 3. Conclusions and representatives
recommendations
4. Action planning
HR STRATEGY GOALS: HOW DO THEY RATE?
Possible HR strategic objectives Importance* Effectiveness*
Support the achievement of organizational goals
Meet the needs of employees
Develop a high-performance culture
Ensure that the organization is seen as ‘a great place to work’
Increase engagement and commitment
Recruit and retain talented people
Develop talented people
Reward people according to their contribution
Provide employees with a voice
Provide a good working environment
Other (specify)
* Scale: 10 = high, 0 = low
STRATEGIC HRM GAP ANALYSIS
What are the current and desired SHRM characteristics in your organization?
1 2 3 4 5 6 7
Effective high performance work No attempt made to encourage

system in place high performance
Integrated talent
Talent management is haphazard
management programmes are
or ineffective
operating effectively
A traditional approach is adopted

Sophisticated techniques are
with regard to sourcing recruits and
used to recruit employees
selecting applicants
Focus on using blended learning Reliance on the delivery of

and development processes traditional training courses
A total reward approach is used Reward programmes limited to

effectively financial rewards
Only lip service is paid to

Employees given a voice on all
employee participation and
matters that concern them
involvement
High quality HR practices

Poor quality HR practices
Mark on the scale: X for current, O for desired eg
O X
18
HR IMPLICATIONS OF CORPORATE STRATEGIES
Corporate strategy Implications for HR strategy
1.
2.
3.
4.
5.
6.
ANALYSIS OF RESOURCING GOALS
Possible resourcing goals Importance* Effectiveness*
Match people resources to business requirements
Avoid unexpected deficits or surpluses of staff
Attract and recruit high-quality candidates
Minimize recruitment costs
Maximize ‘recruitment intensity’, ie high numbers of applicants

per vacancy
Increase ‘predictive validity’, ie the extent to which predictions of
suitability at the point of recruitment are achieved
Increase retention rates
Reduce cost of labour turnover
ANALYSIS OF TALENT MANAGEMENT GOALS
Talent management goals Importance* Effectiveness*
Define what is meant by talent in terms of competencies

and potential
Ensure that talent is treated as a key corporate resource
Develop a pool of talent that will provide a guaranteed

supply of highly qualified people
Provide for management succession
Rely primarily on growth from within while recognizing

the need to bring in fresh blood from time to time
Identify those with talent and potential
Institute programmes to develop talent
Create a compelling employee value proposition
Develop the organization as an employer of choice
ANALYSIS OF LEARNING AND DEVELOPMENT GOALS
Learning and development goals Importance* Effectiveness*
Create human capital advantage by ensuring that the
organization has more skilled and competent people
than its competitors
Extend the skills base of the organization
Improve individual, team and organizational

performance
Attract and retain high-quality people by offering them
learning and development opportunities
Improve organizational flexibility by multiskilling
Provide additional non-financial reward to people in

the form of growth and career opportunities
Reduce the length of learning curves to minimize
learning costs
Ensure that talented people are developed to achieve
their maximum potential
Provide line managers with the skills required to lead
and develop their people
ANALYSIS OF REWARD MANAGEMENT GOALS
Reward management goals Importance* Effectiveness*
Reinforce the achievement of organizational goals
Improve individual, team and organizational

performance
Recruit and retain high-calibre staff
Facilitate staff mobility
Achieve strong relationship between pay and

performance
Reinforce organizational values
Motivate and engage employees
Cost-effective
Well-communicated and understood by employees
Managed effectively by line managers
ANALYSIS OF EMPLOYEE RELATIONS GOALS
Employee relations goals Importance* Effectiveness*
Build stable and cooperative relationships with employees

and, where present, their trade unions
Operate on a partnership basis with trade unions
Achieve engagement through employee involvement an

communication processes
Minimize conflict with employees and their unions
Adopt a high-commitment approach to develop mutuality
Maintain bargaining structures and negotiating

procedures that enable agreements to be reached
smoothly
PRIORITIZATION OF HR STRATEGIES
Summary of HR Business case Timing Responsibility for

strategy
1.
2.
3.
4.
5.
6.
STRATEGIC HRM GUIDELINES
• Be clear on what has to be achieved
and why.
• Ensure that what you do fits the
business strategy, culture and
circumstances of the organization.
• Aim for continuous improvement –
evolution not revolution.
• Don’t follow fashion – do your own
thing.
• Keep it simple – over-complexity is a
common reason for failure.
• Don’t rush – it takes longer than you
think.
• Assess resource requirements and
costs.
• Manage change – involve,
communicate and train.
4–27
4–28
READING 4.1: HR AND ORGANIZATIONAL
EXCELLENCE
HR can help deliver organizational excellence by:

 Becoming a partner with senior and line managers in
strategy execution.
 Becoming expert in the way work is organized,
delivering administrative efficiency to ensure that costs
are reduced while quality is maintained.
 Becoming a champion for employees, representing their
concerns to senior management and working to increase
employee contributions.
 Becoming an agent of continuous transformation by
shaping processes and organizational culture.
4–29
READING 4.1: FIVE CRITICAL BUSINESS
CHALLENGES
Globalization
Profitability through Growth
Technology
Intellectual Capital
Change, Change, and More Change
4–30
READING 4.1: HR AS STRATEGY
EXECUTION PARTNER
HR is responsible for defining an organizational structure as the

model for the company’s way of doing business.
HR must be accountable for conducting an organizational audit.
HR is to identify methods to renovate part of the organizational
architecture.
HR must take stock of its own work and set clear priorities.
4–31
READING 4.1: HR AND ORGANIZATIONAL
CULTURE
HR can help bring about a cultural change by:
 Defining and clarifying the concept of cultural change.
 Articulating why cultural change is central to business success.
 Defining a process for assessing the current culture and the desired new culture, as well as
measuring the gap between the two.
 Identifying alternative approaches to creating culture change.
4–32
READING 4.1: FOUR CHANGES FOR THE
LINE
How senior operating management can create an environment in which HR
becomes focused on outcomes instead of activities:
 Communicate to the organization that the “soft stuff” matters.
 Explicitly define the deliverables from HR, and hold HR accountable for results.
 Invest in innovative HR practices.
 Upgrade HR professionals.
4–33
READING 4.2: HUMAN CAPITAL
MANAGEMENT
To become effective human capital managers, HR mangers must

develop competencies in:
 Knowledge of the business.
 Human resource functional expertise.
 The management of change.
4–34
READING 4.2: NEW FUNCTIONAL ROLE
FOR HR
HR must focus on business level outcomes rather than HR level

inputs.
HR must become a strategic core competency rather than a market
follower.
Strategic competencies are more important than functional
competencies.
The most important missing element in the HR function expertise is a
systems perspective.
4–35
READING 4.3: ORGANIZATION CULTURE
QUESTIONNAIRE
Topics to be included in the questionnaire:
 How is performance defined, measured and rewarded in the organization?
 How are information and resources allocated and managed in the organization?
 What is the operational philosophy of the organization with regard to risk-taking, leadership,
and concern for overall results?
 Does the organization regard its human resources as costs or assets?
4–36
READING 4.3: ANALYZING
DYSFUNCTIONAL CULTURES
Which components of the culture are misaligned?

What priorities should be assigned each of the gaps
between what the culture is and what people feel that it
should be?
What resources are needed and how should they be used
to change the culture?
How should the change effort be managed and who does
what?
What role should HR strategy play in signaling, making
and reinforcing the necessary changes?
4–37

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Chapter 3

STRATEGIC HUMAN RESOURCE

Is it about long-range strategic planning?

Is it about day-to-day strategic management?

Strategic HRM is the process of

Strategic management – HR strategies –

Staff who are enjoying

• Achieve strategic integration – match HR policies and practices

• Aligned to corporate goals.

Support the achievement of organizational goals

Meet the needs of employees

Develop a high-performance culture

Ensure that the organization is seen as ‘a great place to work’

Increase engagement and commitment

Recruit and retain talented people

Develop talented people

Reward people according to their contribution

Provide employees with a voice

Provide a good working environment

* Scale: 10 = high, 0 = low

Effective high performance work No attempt made to encourage

A traditional approach is adopted

Focus on using blended learning Reliance on the delivery of

A total reward approach is used Reward programmes limited to

Only lip service is paid to

High quality HR practices

Mark on the scale: X for current, O for desired eg

Corporate strategy Implications for HR strategy

Possible resourcing goals Importance* Effectiveness*

Match people resources to business requirements

Avoid unexpected deficits or surpluses of staff

Attract and recruit high-quality candidates

Minimize recruitment costs

Maximize ‘recruitment intensity’, ie high numbers of applicants

Reduce cost of labour turnover

* Scale: 10 = high, 0 = low

Define what is meant by talent in terms of competencies

Develop a pool of talent that will provide a guaranteed

Rely primarily on growth from within while recognizing

Institute programmes to develop talent

Create a compelling employee value proposition

Develop the organization as an employer of choice

* Scale: 10 = high, 0 = low

Improve individual, team and organizational

Provide additional non-financial reward to people in

Reinforce the achievement of organizational goals

Improve individual, team and organizational

Facilitate staff mobility

Achieve strong relationship between pay and

Motivate and engage employees

Well-communicated and understood by employees

Managed effectively by line managers

* Scale: 10 = high, 0 = low

Employee relations goals Importance* Effectiveness*

Build stable and cooperative relationships with employees

Achieve engagement through employee involvement an

Adopt a high-commitment approach to develop mutuality

Maintain bargaining structures and negotiating

* Scale: 10 = high, 0 = low

Summary of HR Business case Timing Responsibility for

HR can help deliver organizational excellence by:

Profitability through Growth

Change, Change, and More Change