Chapter 2

Strategy and
Human
Resources
Planning

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 2.1 Strategic Planning and
Human Resources Planning
 Strategic planning – Procedures for making decisions
about the organization’s long-term goals and strategies
 Human resources planning (HRP) – The process of
anticipating and providing for the movement of people
into, within, and out of an organization
 Strategic human resources management – The
pattern of human resources deployments and activities
that enable an organization to achieve its strategic goals

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 Figure 2.1: Linking Strategic
Planning and Human Resources

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 2.2 Step One:
Mission, Vision, and Values
 Mission – The basic purpose of the organization
as well as its scope of operations
 Strategic vision – A statement about where the
company is going and what it can become in the
future
 Core values – The strong and enduring beliefs
and principles that guide a firm’s decisions and
are the foundation of its corporate culture

Copyright ©2019 Cengage. All Rights Reserved.

 Video Highlight #1
Two of the most important and yet confusing
strategic decisions a business has to make are,
"What is our mission?" and "What is our vision?"
This video provides an explanation of how radically
different the two are from each other.

“What’s the Difference Between Mission and

Vision?”

Copyright ©2019 Cengage. All Rights Reserved.

2.2 Developing a Mission Statement
 To begin crafting a business’s mission statement, one
should answer the following questions:
 What is my organization’s reason for being? What need does the
organization need to fulfill that isn’t already being met by another
firm or could be better met?
 For whom will the firm fulfill the need? Who are its customers?
 Where is the firm’s market and customers? Will the firm operate
locally, geographically, or globally?
 What core values do the people in the firm share as part of the
organization’s mission?
 How do these values differentiate the organization from other
companies?

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 2.3 Step Two: External Analysis
 SWOT analysis – A comparison of one’s strengths,
weaknesses, opportunities, and threats for strategy
formulation purposes
 Summarizes the major facts and forecasts derived from external
and internal analyses
 Environmental scanning – Systematic monitoring of
the major external forces influencing the organization
 Includes forces in the business environment (also called the
remote environment) and the competitive environment
 Business environment – Factors in the external environment that a
firm cannot directly control but that can affect its strategy and
performance

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 2.4 Step Three: Internal Analysis
 In addition to an external analysis, organizations
must also analyze their own strengths and
weaknesses.

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 2.4a Core Capabilities
 Core capabilities – Integrated knowledge sets within an
organization that distinguish it from its competitors and deliver value
to customers
 Value creation – What a firm adds to a product or service by virtue of
making it; the amount of benefits provided by the product or service
once the costs of making it are subtracted
 Core capabilities can consist of a combination of three resources:
1. Processes – “Recipes” or standard routines for how work will be done
and results will be accomplished
2. Systems (technologies) – Include information systems, databases,
proprietary technologies, and the like
3. People – Include the knowledge, skills, and abilities of employees most
critical for executing the firm’s plan to create the most value for
customers and whose skills are difficult to replicate or replace

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 2.4b Sustaining a Competitive
Advantage Through People
 Organizations can achieve a sustained
competitive advantage if they have resources—
particularly people—that meet the following
criteria:
 The resources must be valuable.
 The resources must be rare.
 The resources must be difficult to imitate.
 The resources must be organized.

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2.5 Step Four: Formulating a Strategy
 Strategy formulation builds on a SWOT analysis.
 A SWOT analysis can help a company move from
formulating a strategy, to devising a plan, to
capitalizing on opportunities, to counteracting on
threats, to alleviating internal weaknesses.

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 Figure 2.11: An Example of a
SWOT Analysis for Liz Claiborne

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 2.6 Step Five:
Executing a Firm’s Strategy
 Execution is the process of combining the
elements of human capital (alignment and
ability) and organizational capital (agility and
architecture).

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 2.7 Step Six: Evaluation
 To evaluate their performance, firms need to
establish a set of “desired” objectives as well as
the metrics they will use to monitor how well
their organizations delivered against those
objectives.
 The objectives can include achieving a certain level of
production, revenue, profit, market share, market
penetration, customer satisfaction, and so forth.

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 2.7a Evaluating a Firm’s
Strategic Alignment
 HR policies and practices need to achieve two types of
fit:
1. Vertical fit/alignment – Focuses on the connection between the
business’s objectives and the major initiatives undertaken by HR
2. Horizontal fit/alignment – Focuses on ensuring that the
business’s HR practices are all aligned with one another
internally to establish a configuration that is mutually reinforcing
 Balanced scorecard (BSC) – A measurement
framework that helps managers translate strategic goals
into operational objectives

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