Human Resource Management

Gaining a Competitive Advantage

Strategic Human Resource

Management

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, All Rights Reserved. 1-1
Learning Objectives
After reading this chapter, you should be able to:
• Describe the differences between strategy formulation
and strategy implementation.
• List the components of the strategic management
process.
• Discuss the role of the HRM function in strategy
formulation.
• Describe the linkages between HRM and strategy
formulation.
• Discuss the more popular typologies of generic strategies
and the various HRM practices associated with each.
• Describe the different HR issues and practices
associated with various directional strategies.

2-2
Introduction

• Goal of strategic management – To

deploy and allocate resources in a way
that gives organization a competitive
advantage.
• HRM function must be integrally involved
in the company’s strategic management
process.

2-3
What is Strategic Management?

• Strategic Management is a
process, an approach to addressing
the competitive challenges an
organization faces.
• Strategic human resource
management is the pattern of
planned human resource
deployments and activities intended
to enable an organization to achieve
its goals.

2-4
Components of
the Strategic
Management
Process

• Strategy Formulation

• Strategy Implementation

2-5
 Model of the Strategic
Management Process
Forecasts of
Labor Strategy Strategy Implementation
Demand Formulation
External HR Practices
Analysis Recruiting,
Opportunit Training, Firm
Performance Performance
ies management,
Threats Labor relations,
Productivity,
Employee relations, Quality,
Human Job analysis Profitability
Resourc Job design,
Strateg e Selection,
Missio Development,
Goals ic Needs Pay structure,
n Skills
Choice HumanIncentives,
Behavior Benefits
Culture Resource
Capability
Internal Skills, Human
Analysis Abilities, Resourc
Knowledge e
Strengths
Weaknesse Actions
s Behaviors
,
Results

2-6
The Role of HRM in
Strategy Formulation

2-7
Strategy Formulation
External
analysis
Opportuniti
es
Threats

Strategic
Mission Goals
Choice

Internal
analysis
Strengths
Weaknesse
s

2-8
Strategy Formulation

• Five components of the strategic management

process:
– A mission is a statement of the organization's
reasons for being.
– Goals are what the organization hopes to
achieve in the medium-to long-term future
– External analysis consists of examining the
organization's operating environment to identify
strategic opportunities and threats.
– Internal analysis attempts to identify the
organization's strengths and weaknesses.
– Strategic choice is the organization's strategy,
which describes the ways the organization will
attempt to fulfill its mission and achieve its long
term goals.

2-9
 Strategy Implementation

Organizat
ional
structure
Types of
Task
Informat
Design
ion

Product
Perfor
market
strategy mance

Reward
systems Selection,
training, and
development
of peopleof

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 HRM Practices
• Job Analysis - the process of • Job design - making decisions
getting detailed information about about what tasks should be
jobs. grouped into a particular job.
• Recruitment - the process • Selection - identifying the
through which the organization applicants with the appropriate
seeks applicants. knowledge, skills, and ability.
• Training - a planned effort to • Development - the acquisition of
facilitate learning of job-related knowledge, skills, and behavior
knowledge, skills, and behavior. that improves employees' ability
to meet the challenges of future
jobs.
• Performance management - helps ensure that employees’ activities
and outcomes are congruent with the organization’s objectives.
• Pay structure, incentives, and benefits.
• Labor and employee relations.

2-11
Strategic Types

• Porter's Generic Strategies

– overall cost leadership, or
– differentiation.

2-12
HRM Needs in Strategic Types

• Different strategies require different

types of employees.
• Role Behaviors:
– Cost strategy firms seek efficiency and
therefore carefully define the skills they need
in employees and use worker participation to
seek cost-saving ideas.
– Differentiation firms need creative risk takers.

2-13
Directional Strategies

External
Concentration
Growth Strategy
Strategy

Internal
Downsizing Growth
Strategy

Mergers and
Acquisitions

2-14
The Role of HR in Providing
a Competitive Advantage

• Emergent Strategies - Those that

evolve from the grass roots of the
organization.
• Enhancing Firm Competitiveness

2-15