Dessler hrm17 Im 03
Dessler hrm17 Im 03
Introduction
Chapter 3
Human Resource Policy, Strategy, and Performance
Lecture Outline:
Developing Human Resource Management Policy
Developing Human Resource Management Policy
The Management Planning Process
Basics of Strategic Planning
The Strategic Management Process
Strategic Management Example
Types of Strategies
Strategic Human Resource Management
What Is Strategic Human Resource Management?
HR Strategy at The Portman Ritz-Carlton Shanghai Hotel
Strategic Human Resource Management Tools
Assessing HR Performance: Metrics, Benchmarking, and Data analytics
Benchmarking
Strategy-Based Metrics
What Are HR Audits?
Trends Shaping HR: Digital and Social Media
Science in Talent Management
High-Performance Work Systems
Employee Engagement Guide for Managers: Employee Engagement and Performance
Why Is Employee Engagement Important?
The Employee Engagement Challenge
How to Measure Employee Engagement
How Kia Motors (UK) Improved Performance with an HR Strategy Aimed at Boosting
Employee Engagement
Chapter Review
The main purpose of this chapter is to explain how managers formulate human resource
strategies for their companies. We’ll address the strategic management process, types of
strategies, strategic human resources management, HR metrics and benchmarking, high-
performance work systems, and employee engagement.
Learning Objectives:
3-1. Explain how to write an HR policy for a company.
3-2. Describe the basic strategic planning process.
3-3. Define strategic human resource management, and give an example of strategic human
resource management in practice.
3-4. Give at least five examples of HR metrics.
3-5. Give five examples of what employers can do to have high-performance systems.
3-6. Explain how you would design a program to improve employee engagement.
Annotated Outline:
I. Developing Human Resource Management Policies
Policies are broad formal guidelines delineating how employees should act. They provide the
day-to-day guidance employees need to do their jobs in a way consistent with the company’s
way of doing things.
A. Developing Human Resources Policies—employers either write their own policies and
procedures or adapt them from existing sources, (or both). Writing one’s own policies
requires having a standard outline (or template) for each policy, and then actually writing
the policy.
1. The Strategic Context: Netflix’s HR Policies
B. The Management Planning Process—the basic management planning process consists of
five steps: setting objectives, making basic planning forecasts, reviewing alternative
courses of action, evaluating which options are best, and then choosing and implementing
your plan.
VI. Employee Engagement Guide for Managers: Employee Engagement and Performance
A. Why is Employee Engagement Important?—it drives performance and productivity. For
example, based on a Gallup survey, business units with the highest levels of employee
engagement have an 83% chance of performing above the company median; those with
the lowest employee engagement have just a 17% chance.
B. The Employee Engagement Challenge—only about 21–36% of employees nationally are
engaged. Gallup distinguishes among engaged employees “who work with passion and
feel a profound connection to their company,” and not engaged employees who are
essentially “checked out,” and actively disengaged employees.
C. HR Tools for Line Managers and Small Businesses: What Can Managers Do to Improve
Employee Engagement?—managers improve employee engagement by taking concrete
steps to do so, such as: providing supportive supervision, making sure employees
understand how their departments contribute to the company’s success, see how their
efforts contribute to achieving the company’s goals, get a sense of accomplishment from
working at the firm, and are highly involved—as when working in self-managing teams.
D. How to Measure Employee Engagement—firms like Gallup (www.gallup.com) and
Tower Watson (www.towerswatson.com/en-US) offer comprehensive employee
engagement survey services.
E. How Kia Motors (UK) Improved Performance with an HR Strategy Aimed at Boosting
Employee Engagement
1. The Challenges
2. The New Human Resources Management Strategy
Chapter Review
3-2. A strategic plan is the company’s overall plan for how, given its internal strengths and
weaknesses and its external opportunities and threats, it will maintain a successful
competitive position.
3-3. Each function or department in the business needs its own functional strategy, and
strategic human resource management means formulating and executing human
resource policies and practices that produce the employee competencies and behaviors the
company needs to achieve its strategic aims.
3-4. The manager will want to gather and analyze data prior to making decisions. Human
resource metrics are critical in creating high-performance human resource policies and
practices.
3-5. A high-performance work system is a set of human resource management policies and
practices that together produce superior employee performance.
Discussion Questions:
Top management approves a long-term or strategic plan. Then each department, working
with top management, creates its own budgets and other plans to fit and contribute to the
company’s long-term plan.
3-2. What is the difference between a corporate strategy and a competitive strategy? Give
one example of each.
A corporate strategy identifies the portfolio of businesses that, in total, comprise the
company and how these businesses are related to each other. Concentration,
diversification, vertical integration, consolidation, and geographic expansion are all
examples of corporate-level strategies. A competitive strategy identifies how to build and
strengthen the business unit’s long-term competitive position in the marketplace. Examples
of competitive strategies include cost leadership, differentiation, and focusers.
A plan shows the course of action for getting from where you are to the goal, and planning
is always “goal-directed.” So, a strategic plan is the company’s overall plan for how it will
match its internal strengths and weaknesses with external opportunities and threats in order
to maintain a competitive advantage. Strategic management is the process of identifying
and executing the organization’s strategic plan, by matching the company’s capabilities
with the demands of its environment and therefore is important to any manager that intends
to meet his or her goals.
3-4. Explain with examples each of the eight steps in the strategic management process.
Step 1. Ask, Where Are We Now? The logical place to start is by asking, “Where are we
now as a business?” Here the manager defines the company’s current business and
mission. Specifically, “What products do we sell, where do we sell them, and how do our
products or services differ from our competitors’?” The manager will traditionally focus on
four aspects of the current business.
Step 2. Size up the Situation: Perform External and Internal Audits. The next step is to ask,
“Are we heading in the right direction given the challenges that we face?” To answer this,
managers need to study or “audit” the firm’s environment, and its internal strengths and
weaknesses. Managers use a SWOT chart to compile and organize the company’s
strengths, weaknesses, opportunities, and threats.
Step 3. Formulate a New Direction. The situation may require that management consider
strategic options for the company. Several years ago, for instance, Microsoft, facing a
surging product lineup from Apple and competition from Google’s cloud-based office
programs, had to decide whether to change its mission and, if so, how.
Step 4. Translate the Mission into Strategic Goals. Given the situation, which strategic
option should we pursue? Here the manager compares his or her strategic options to see
which are most consistent with the firm’s opportunities and threats, and its strengths and
weaknesses. For P&G, management had to assess whether building up its Oil of Olay
brand was a better option than simply buying (at great expense) a well-known high-tier
cosmetics brand.
Step 6. Formulate Strategies to Achieve the Strategic Goals. Next, management translates
the new desired direction into actionable strategic goals. At P&G, for instance, strategic
goals might have included “generate 20% of corporate revenues from the Oil of Olay brand
within 4 years,” and “capture 18% of the top-tier beauty care market within 3 years.” Ford
breathed life into its “Quality Is Job One” mission by setting goals such as “no more than 1
initial defect per 10,000 cars.”
Step 7. Implement the Strategies. Strategy execution means translating the strategies into
action. This means actually hiring (or firing) people, building (or closing) plants, and
adding (or eliminating) products and product lines. To do this, management uses the firm’s
new top-level strategic goals to formulate a hierarchy of goals, and policies and
procedures. These guide action down the chain of command at lower organizational levels,
and in the firm’s various departments.
Step 8. Evaluate Performance. Things don’t always turn out as planned. P&G soon built its
Oil of Olay line into a world-class brand. However, initially, at least, Microsoft’s new
tablets were off to a slow start. Microsoft soon cut their prices.
3-5. Explain with examples how human resources management can be instrumental in
helping a company create a competitive advantage.
Competitive advantage is any factor that allows an organization to differentiate its product
or service from those of its competitors to increase market share. HR management can be
instrumental in helping a company create a competitive advantage by identifying broad
activities that it will pursue in order to help the business accomplish its competitive goals.
These activities include:
• Formulating and executing human resource policies and practices that produce the
employee competencies and behaviors the company needs to achieve its strategic
aims.
• Implementing new training and communications programs aimed at ensuring all
employees understand the importance of the business strategy, and what is required of
all employees in terms of services, capitalizing on opportunities, and offering high
quality services.
• New job enrichment programs made employees more accountable for their results and
more resilient in terms of moving from job to job.
• New compensation and benefits programs to promote personal growth and encouraged
searching for innovative solutions.
• Improved selection, orientation, and dismissal procedures.
3-7. With three or four other students, form a strategic management group for your
college or university. Your assignment is to develop the outline of a strategic plan for
the college or university. This should include such things as strategic goals and
corporate, competitive, and functional strategies. In preparing your plan, make sure
to show the main strengths, weaknesses, opportunities, and threats the college faces,
and which prompted you to develop your particular strategic plans.
3-8. Using the Internet or library resources, review the annual reports of five companies.
Bring to class examples of how those companies say they are using their HR processes
to help the company achieve its strategic goals.
In class, facilitate a discussion on how effective the HR processes at each company appear
to support strategic goals. Challenge students to come up with additional ideas for other
approaches for using the HR processes and how they would go about implementing them,
noting the specific difficulties of each.
3-9. Interview an HR manager and write a short report on “The Strategic Roles of the HR
Manager at XYZ Company.”
Instruct students to follow the model outlined in this chapter for the steps in the strategic
management process, and HR’s role in strategy execution and strategy formulation.
3-10. Using the Internet or library resources, bring to class and discuss at least two
examples of how companies are using an HR scorecard to help create HR systems
that support the company’s strategic aims. Do all managers seem to mean the same
thing when they refer to HR scorecards? If not, how do they differ?
For each example, ask students to comment on how effective they believe the measures
that were selected by the company are in terms of allowing the company to assess HR’s
performance objectively and quantitatively, as well as serving as a tool for the HR manager
to build a measurable and persuasive business case for how HR is contributing to achieving
the company’s strategic financial goals. Challenge students to critique the scorecard and
how it could be improved to measure strategically relevant organizational outcomes,
workforce competencies and behaviors, and HR system policies and activities.
3-11. In teams of several students, choose a company for which you will develop an outline
of a strategic HR plan. What seem to be this company’s main strategic aims? What is
the firm’s competitive strategy? What would the strategic map for this company look
like? How would you summarize your recommended strategic HR policies for this
company?
3-12. Appendices A and B at the end of this book list the knowledge someone studying for
the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in
each area of human resource management (such as in Strategic Management and
Workforce Planning). In groups of several students, do four things: (1) review
Appendix A and/or B; (2) identify the material in this chapter that relates to the
Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam
questions on this material that you believe would be suitable for inclusion in the
HRCI exam, and/or the SHRM exam; and (4) if time permits have someone from
your team post your team’s questions in front of the class, so that students in all
teams can answer the exam questions created by the other teams.
Material in this chapter that could be covered in the HRCI certification exam include:
Under Strategic Management, the formulation of HR strategies to support the company’s
overall strategic plan; HR’s role in helping companies to build a competitive advantage;
strategic HR management’s role in strategy execution and formulation; high performance
work system concepts and supporting HR systems/practices; the HR Scorecard and all the
steps involved in developing it.
Required Understanding: You should be thoroughly familiar with the material in this chapter.
How to Set up the Exercise/Instructions: Set up groups of three or four students for this
exercise. You are probably already quite familiar with what it’s like to have a cup of coffee or
tea in a Starbucks coffee shop; but, if not, spend some time in one prior to this exercise. Meet in
groups and develop an outline for an HR strategy for Starbucks Corp. Assume for the corporate
strategy, Starbucks will remain primarily an international chain of coffee shops. Your outline
should include four basic elements: a basic business/competitive strategy for Starbucks, the
workforce requirements (in terms of employee competencies and behaviors) this strategy
requires, specific HR policies and the activities necessary to produce these workforce
requirements, and suggestions for metrics to measure the success of the HR strategy.
No, lay-offs, pay scale issues, and attitudes against unionization did not foster an engaged
workforce that could produce a high-quality product—a high-performance car. Strategic
human resource management means formulating and executing human resource policies
and practices that produce the employee competencies and behaviors the company needs to
achieve its strategic aims.
Tesla could use the following HR tools to produce “uncompromising” high- performance
cars: (1) Training and development activities to support continuous learning through a
system of combined classroom and hands-on apprenticeship training to support technical
learning; (2) Continuing education and management development to develop skills
necessary for teamwork; (3) Enhanced internal selection process for career advancement;
(4) Organizational development activities aimed at building openness, transparency,
fairness, and diversity support.
3-14. Given what Kia UK accomplished, should Tesla implement such an engagement
program? Why?
Yes. Tesla should implement an engagement program similar to what Kia UK has
implemented. Employee engagement is important because it drives performance and
productivity. Actually executing Kia UK’s employee engagement HR strategy involved
six steps. These were: set measurable objectives for the program; provide leadership
development, for example, send all managers for training to improve their management
skills; institute new employee recognition programs, for instance, giving “Outstanding
Awards” to selected employees quarterly; institute a new employee development program,
for instance, using the company’s appraisal process to identify employees’ training needs
and to create training plans for each employee; and change the compensation and other
policies to ensure they are aligned with the new cultural values.
3-15. What would you do now if you were Tesla’s Chief People Officer?
Students can share their answers. The Chief People Officer should implement the
employee engagement program outlined above because employee engagement drives
performance and productivity. The company needs to improve its financial situation
immediately. To do so, the Chief People Officer needs to determine what employee
behaviors and attitudes will produce these operational outcomes.
3-16. Based on the case, provide examples for Tesla of at least four strategically required
organizational outcomes, and four required workforce competencies and behaviors.
Student answers will vary but the strategy map should answer the following questions: (1)
What overall goals does Tesla want to achieve?; (2) What must Tesla do operationally to
achieve its goals?; and (3) What employee attitudes and behaviors will produce these
operational outcomes?
3-18. Given this, write two or three more examples of what you believe Zappos could
actually use as HR policies.
Student responses will vary. Policy-setting ideally starts with understanding the company’s
aims and goals. Therefore, policy ideas should evolve around the energy, excitement, and
fun that Zappos wants in employees.
3-19. Not all successful online companies emphasize having employees enjoy work to the
extent that Zappos does. Zappos developed its HR policies to nurture a fun
environment. What alternative to fostering “fun and enjoyment” at work do you
think might have worked for Zappos? What is one example of an HR policy that
would have fit this new goal?
Student responses will vary. One idea may be to accommodate employees’ preferences in
regard to work location and work hours. This may create more content, more satisfied
employees. Another example may be to provide employees with rewards and benefits that
correlate with Zappo’s goals.
3-20. Would you recommend that the Carters expand their quality program? If so,
specifically what form should it take?
Most students will agree that there are opportunities to expand the quality program. The
employee meeting approach is a good start in terms of utilizing high-involvement
organizational practices. There are opportunities to maximize the overall quality of their
human capital. For example, training seems to be an obvious area to improve in terms of
educating and building awareness about basic standards and procedures.
3-21. Assume the Carters want to institute a high-performance work system as a test
program in one of their stores. Write a one-page outline summarizing important HR
practices you think they should focus on.
Students should include some of the following ideas in their outline: The types of HR
practices they would implement to improve quality, productivity, financial performance;
methods for job enrichment; strategies for implementing and leveraging a team-based
organization; ways to implement and facilitate high commitment work practices; employee
development and skill building activities to foster increased competency and capability in
the workforce; a compensation program which provides incentives (for example, profit
sharing, pay for performance) for achieving major goals and financial targets.
3-22. Draw a more simplified and abbreviated strategy map for the Hotel Paris.
Specifically, summarize in your own words an example of the hierarchy of links
among the hotel’s HR practices, necessary workforce competencies and behaviors, and
required organizational outcomes.
The above strategy map for the Hotel Paris succinctly lays out the hierarchy of main
activities required for the Hotel Paris to succeed. For example, the Hotel Paris could
endeavor to improve workforce competencies and behaviors by instituting an improved
recruitment process, and measure the latter in terms of the number of qualified
applicants per position.
3-23. Using Table 3-1 and Figure 3-9, list at least 15 metrics the Hotel Paris could use to
measure its HR practices.
Writing Assignments
3-24. Define and give at least two examples of the cost-leadership competitive strategy and
the differentiation competitive strategy.
3-25. You own a small business, and your friend, over lunch, just mentioned that “it sounds
like you have an employee engagement problem.” What exactly would you do to
improve employee engagement in your company now?
Key Terms:
Strategic Plan—The company’s plan for how it will match its internal strengths and weaknesses
with external opportunities and threats in order to maintain a competitive advantage.
Strategy—A course of action the company pursues to achieve its strategic aims.
Competitive Strategy—A strategy that identifies how to build and strengthen the business’s
long-term competitive position in the marketplace.
Functional Strategy—A strategy that identifies the broad activities that each department will
pursue in order to help the business accomplish its competitive goals.
Strategy Map—A strategic planning tool that shows the “big picture” of how each department’s
performance contributes to achieving the company’s overall strategic goal.
HR Scorecard—A process for assigning financial and nonfinancial goals or metrics to the
human resource management related chain of activities required for achieving the company’s
strategic aims and for monitoring results.
Digital Dashboard—Presents the manager with desktop graphs and charts, and a computerized
picture of where the company stands on all those metrics from the HR Scorecard process.