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Chapter 3 Strategic Management

This document discusses strategic human resource management and the linkages between business strategy and HRM. It covers three approaches to HRM: micro, international, and strategic. Strategic HRM facilitates developing a high-quality workforce aligned with business needs. The strategic management process involves both strategy formulation and implementation, with HRM practices playing an important role in implementation. There are four levels of integration between HRM and business strategy. The document also discusses various corporate and business unit strategies and their implications for HRM strategies in areas like staffing, training, and performance management.

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Toushkar Aowni
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212 views22 pages

Chapter 3 Strategic Management

This document discusses strategic human resource management and the linkages between business strategy and HRM. It covers three approaches to HRM: micro, international, and strategic. Strategic HRM facilitates developing a high-quality workforce aligned with business needs. The strategic management process involves both strategy formulation and implementation, with HRM practices playing an important role in implementation. There are four levels of integration between HRM and business strategy. The document also discusses various corporate and business unit strategies and their implications for HRM strategies in areas like staffing, training, and performance management.

Uploaded by

Toushkar Aowni
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 22

Strategic HRM

The Context of SHRM


Strategic Management
ch 3
Lecture Two
Dr. Maha Dajani
1

Three HR Approaches
Micro HRM MHRM
International HRM IHRM
Strategic HRM SHRM
2

HRM Practices
Job Analysis/Design

Recruitment
/Selection

2-3

Benefits of a Strategic Approach to


HR
1. Facilitates development of high-quality
workforce through focus on types of
people & skills needed
2. Facilitates cost-effective utilization of
labor, particularly in service industries
where labor is generally greatest cost
3. Facilitates planning & assessment of
environmental uncertainty & adaptation
of organization to external forces
4

What is strategy?

A Strategy is a plan of action for the future so


as to gain competitive advantage
1) Where
are we
now?

2) Where
are we
going?

3) How will
we get
there?

Process of Strategic Management

Strategy

Strategy
Formulation

Implementation

2 Phases of
Strategic

Management
2-8

Strategic Management Process Model


Strategy Formulation

Strategy Implementation
HR Practices

External Analysis
Opportunities
Threats

Mission

Goals

Strategic
Choice

Internal
Analysis

Strengths
Weaknesses

HR
Needs

Skills
Behavior
Culture

Recruiting
Training
Performance management
Labor relations
Employee relations
Job analysis
Firm
Job design
Performance
Selection
Productivity
Development
Quality
Pay structure
Profitability
Incentives
Benefits

HR
Capability

Skills,
Abilities
Knowledge

HR Actions
Behaviors
Results

2-9

Linkage between HRM and


business Strategy
Both strategy formulation and strategy
implementation involve people-related
issues and therefore necessitate the
involvement of the HR function.
Four levels of integration exist between
the HR function and the strategic
management function
10

Four Types of linkages

1- Administrative LinkageThis is the


lowest level of integration, in which the HRM

function's attention is focused on


day-to-day activities. No input from the
HRM function to the company's strategic plan
is given.

2.One-Way

LinkageThe

firm's
strategic business planning function
develops the plan and then informs the
HRM function of the plan. HRM then
helps in the implementation.

12

3. Two-Way LinkageThis linkage allows


for consideration of human resource issues
during the strategy formulation process. The
HRM function is expected to provide input to
potential strategic choices and then help
implement the chosen option.

4. Integrative LinkageThis is based on


continuing, rather than sequential, interaction.
The HR executive is an integral member of the
strategic planning team.
13

Strategy Implementation
Variables
Organizational
Structure
Types
of
Information

Product
Market
Strategy

Task
Design

Performance
Reward
Systems

Select
Train
Develop
People

2-14

Corporate Strategies: Growth


Benefits
Gaining economies of scale in
operations & functions
Enhancing competitive position
vis--vis industry competitors
Providing
opportunities
for
employee
professional
development & advancement

HR Issues
Planning for new hiring
Alerting current employees
Ensuring
quality
&
performance standards are
maintained
15

Internal Methods
Penetration of existing markets
Developing new markets
Developing new products or
services for existing or new
markets

External Methods
Acquiring other organizations
Vertical integration

HR Issues in M&A
Merging organizations
Dismissing redundant
employees

Corporate Strategies: Stability


Maintaining status quo due to limited
environmental opportunities for gaining
competitive advantage
Few employees will have opportunities
for advancement
Critical that management identify key
employees & develop specific HR
retention strategies to keep them
16

Corporate Strategies:

Turnaround or Retrenchment
Downsizing or streamlining organization
in cost-cutting attempt to adjust to
competitive environment
Few
opportunities
&
many
environmental threats
Important to develop HR practices to
manage survivors
17

Porters Three Types of


Competitive Strategies
Business-Level
Competitive Strategies

Cost leadership

18

Differentiation

Focus/Niche

Business Unit Strategies: Cost


Leadership
Increases in efficiency & cutting of costs, then
passing savings to consumer
Assumes price elasticity in demand for products or
services is high
Assumes that customers are more price sensitive
than brand loyal

HR strategy focuses on short-term


performance measures of results &
promoting efficiency through job
specialization & cross-training
19

Business Unit Strategies:


Differentiation
In order to demand a premium price from consumers
Attempting to distinguish organizational products or
services from other competitors or
Creating difference

Organization offers employees


compensation for creativity

incentives

&

HR strategy focuses on external hiring of


unique individuals & on retaining
creative employees
20

Business Unit Strategies: Focus


Business attempts to satisfy needs of only a
particular group or narrow market segment
Strategic intent is to gain consumer loyalty of
neglected groups of consumers
Strategic HR issue is ensuring employee
awareness of uniqueness of market segment
Thorough employee training & focus on
customer satisfaction are critical factors
Hiring members of target segment who are
empathetic to customer in target segment
21

Porters Strategy in Relation to HR


Strategy

22

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