Human Resource Management

Fifteenth Edition

Chapter 3
Human Resource
Management
Strategy and
Analysis

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 Learning Objectives (1 of 2)
3-1. Explain with examples each of the seven steps
in the strategic management process.
3-2. List with examples the main types of
strategies.

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 Learning Objectives (2 of 2)
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. Describe how you would execute a program to
improve employee engagement.

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 I.
Explain with examples each of
the seven steps in the strategic
management process.

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 The Strategic Management Process (1 of 2)

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 The Management Planning Process
• The Hierarchy of Goals
• Policies and Procedures

Figure 3-1 Sample Hierarchy of Goals Diagram for a Company

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 What is Strategic Planning?

A strategic plan is the company’s overall plan

for how it will match its internal strengths and
weaknesses with its external opportunities and
threats in order to maintain a competitive
position. The strategic planner asks, “Where are
we now as a business, and where do we want to
be?” He or she then formulates a strategic plan
to help guide the company to the desired
destination.

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 The Strategic Management Process (2 of 3)

Figure 3-2 The Strategic Management Process

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 The Strategic Management Process (2 of 3)
Its seven steps include:
(1) ask, “Where are we now as a business?”
(2) evaluate the firm’s internal and external
strengths, weaknesses, opportunities, and threats,
(3) formulate a new business direction,
(4) decide on strategic goals, and
(5) choose specific strategies or courses of action.
(6) and (7) are to implement and then evaluate the
strategic plan.
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 II.
List with examples the main
types of strategies.

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 Types of Strategies
1. Corporate Strategy
2. Competitive Strategy
3. Functional Strategy

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 Corporate Strategy
• Identifies the portfolio of businesses that, in total,
comprise the company and how these businesses
relate to each other
• Asks: “What businesses will we be in?”

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 Corporate-level Strategies
1. Concentration (scope is narrow)
2. Diversification (e.g. adding new product lines,
broadening scope)
3. Vertical Integration (produces its own raw
materials or selling its products directly)
4. Consolidation (company reduces its size)
5. Geographic expansion (enters new territorial
markets)

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 Competitive Strategy
• A strategy that identifies how to build and
strengthen the business’s long-term competitive
position in the marketplace, which is also known
as business-level competitive strategy.

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 The Three Standard Competitive
Strategies >>
1. Cost Leadership
2. Differentiation
3. Focus

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 The Three Standard Competitive
Strategies >>
1.Cost leadership – this competitive strategy means
becoming the low-cost leader in an industry. (e.g. Walmart)
2.Differentiation – for this competitive strategy, the firm
seeks to be unique in its industry along the dimensions that
are widely valued by buyers.
(e.g. Volvo stresses the safety of its cars, and Papa John’s
stresses fresh ingredients).
3.Focusers – for this competitive strategy, the company
carves out a market niche.
Bugatti cars is an example. They offer a product or service
that their customers cannot get from generalist competitors,
such as Toyota.
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 Functional Strategy
• A strategy that identifies the broad activities that
each department will pursue in order to help the
business accomplish its competitive goals.

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 Manager’s Role in Strategic Planning

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 III.
Define strategic human resource
management and give an example
of strategic human resource
management in practice.

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 Strategic Human Resource
Management

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 What is Strategic Human Resource
Management?
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.

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 Sustainability and Strategic Human
Resource Management

Today’s emphasis on sustainability has important

consequences for human resource management. Strategic
human resource management means having human resource
policies and practices that produce the employee skills and
behaviors that are necessary to achieve the company’s
strategic goals, and these include sustainability goals.

For example, PepsiCo wants to deliver “Performance with

Purpose.” This means achieving financial performance while
also achieving human sustainability, environmental
sustainability, and talent sustainability.

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 Strategic Human Resource
Management Tools>>
• Strategy map
• The HR scorecard
• Digital dashboards

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 Strategic Human Resource
Management Tools>>
• Strategy map – this shows the “big picture” of how
each department’s performance contributes to
achieving the company’s overall strategic goals. It
also summarizes how each department’s
performance contributes to achieving the
company’s overall strategic goals. It helps the
manager and each employee visualize and
understand the role his or her department plays in
achieving the company’s strategic plan.

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 Strategic Human Resource
Management Tools>>
• The HR Scorecard – is not a scorecard. It does
however refers to a process for assigning financial
and nonfinancial goals or metrics to important
human resource management–related chain of
activities. That chain is required in order to achieve
the company’s strategic aims and for monitoring
results. Many employers quantify and computerize
the strategy map’s activities by utilizing the HR
Scorecard.

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 Strategic Human Resource
Management Tools>>
• Digital Dashboard – presents the manager with
desktop graphics and charts, showing a
computerized picture of how the company is doing
on all the metrics from the HR Scorecard process.

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 IV.
Give at least five examples of
HR metrics.

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 HR Metrics, Benchmarking, and Data
Analytics
Human resource metrics – is the quantitative
gauge of a human resource management activity,
such as employee turnover, hours of training per
employee, or qualified applicants per position.
Benchmarking – means comparing the practices of
high-performing companies results to your own, in
order to understand what they do that makes them
better.
Data Analytics – means using statistical and
mathematical analysis and algorithms to find
relationships and make predictions.
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 Benchmarking
Benchmarking means comparing the practices of
high-performing companies results to your own, in
order to understand what they do that makes them
better.
Just measuring how one is doing (for instance, in
terms of employee productivity) is rarely enough for
deciding what (if anything) to change. Instead, most
managers want to know “How are we doing?” in
relation to something.
For example, are our accident rates rising or falling?
Similarly, the manager may want to benchmark the
results.
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 Metrics for the SHRM® 2011–2012 Customized
Human Capital Benchmarking Report (1 of 4)
Organizational Data Employment Data 
• Revenue • Number of Positions Filled 
• Revenue per FTE • Time-to-Fill 
• Net Income Before Taxes • Cost-Per-Hire 
• Net Income Before Taxes • Employee Tenure 
per FTE • Annual Overall Turnover
• Positions Included Within Rate 
the Organization's • Annual Voluntary Turnover
Succession Plan Rate 
• Annual Involuntary Turnover
Rate

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 Metrics for the SHRM® 2011–2012 Customized
Human Capital Benchmarking Report (2 of 4)
HR Department Data Expectations for Revenue
• Total HR Staff and Organizational Hiring
• HR-to-Employee Ratio • Percentage of Organizations
• Percentage of HR Staff in Expecting Changes in
Supervisory Roles Revenue in 2011 Compared
• Percentage of HR Staff in to 2010 
Professional/Technical Roles • Percentage of Organizations
• Percentage of HR Staff in Expecting Changes in Hiring
in
Administrative Support Roles
•  2011 Compared to 2010
• Reporting Structure for the Head
of HR
• Types of HR Positions
Organizations Expect to Hire in
2011
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 Metrics for the SHRM® 2011–2012 Customized
Human Capital Benchmarking Report (3 of 4)
HR Expense Data Metrics for More Profitable
• HR Expenses Organizations
• HR Expense to Operating Total HR Staff •
Expense Ratio •
HR-to-Employee Ratio
• HR Expense to FTE Ratio HR Expenses •
•
HR Expense to Operating
Compensation Data
Expense Ratio
• Annual Salary Increase
•  HR Expense to FTE Ratio
• Salaries as a Percentage of
•  Annual Salary Increase
Operating Expense
• Target Bonus for Non-Executives • Target Bonus for Non-Executives
• Target Bonus for Executives

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 Metrics for the SHRM® 2011–2012 Customized
Human Capital Benchmarking Report (4 of 4)
Tuition/Education Data Metrics for More Profitable
Organizations
• Maximum Reimbursement
Allowed for Tuition/Education • Target Bonus for Executives
Expenses per Year • Maximum Reimbursement
• Percentage of Employees Allowed for Tuition/Education
Participating in Expenses per year
Tuition/Education • Percentage of Employees
Reimbursement Programs Participating in Tuition/Education
Reimbursement Programs
• Time-to-Fill
• Cost-Per-Hire
• Annual Overall Turnover Rate

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 VI.
Describe how you would
execute a program to improve
employee engagement.

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 Employee Engagement Guide for
Managers: Employee Engagement
and Performance

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 The Employee Engagement
Problem

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 What Can Managers Do to Improve
Employee Engagement? (1 of 2)
1. Provide supportive supervision
2. Ensure employees understand how their
departments contribute.
3. See how their efforts contribute to achieving the
company’s goal.

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 What Can Managers Do to Improve
Employee Engagement? (2 of 2)
4. Ensure employees get a sense of
accomplishment from working at the firm.
5. Ensure employees are highly involved.
6. Employers should hold managers responsible for
employee engagement.

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 Copyright

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