Human Resources Management

Strategic Human Resource Management

2.1: Explain the foundations of strategic

• Having the goal to deploy and allocate resources for competitive advantage.
• Integrally involving the HRM function.
• Using a business model to create value for customers.
What Is Strategic Management?
Strategic Human Resource Management (SHRM):

• A process.
• Approach to addressing competitive challenges organizations face.
• Managing the “pattern or plan that integrates an organization’s major
goals, policies, and action sequences into a cohesive whole.”
• Developing strategies for achieving company’s goals in light of its
current environment.
What Is Strategic Management?
Components of the Strategic Management Process

• Strategy formulation:
• Strategic planning groups decide on strategy.
• Strategy implementation:
• Organization follows through on strategy.
Figure 2.1 A Model of the Strategic Management
Process
What Is Strategic Management?
Linkage Between HRM and the Strategic Management Process

• Strategic choice answers these questions:

• Where to compete?
• How to compete?
• With what will we compete?
What Is Strategic Management?
Role of HRM in Strategy Formulation

• Answers the question “With what will we compete?”

• Four levels of integration between HRM and strategic management

1. Administrative linkage.
2. One-way linkage.
3. Two-way linkage.
4. Integrative linkage.
Figure 2.2 Linkages of Strategic Planning and H RM
The Strategic Management Process:
Formulation & Implementation
Strategy Formulation
Five Major Components:

• Mission.
• Goals.
• External analysis.
• Internal analysis.
• External analysis and internal analysis combined constitute S WOT
analysis.
• Strategic choice.
Strategy Formulation
• Strategy formulation involves converting
the inputs from the strategic analysis into
the business plan
• Michael Porter developed the classic
strategy formulation model (Porter’s
Generic Competitive Strategies)
• The organizational goal is to differentiate
the firm and its products or services
based on one or more attributes that
consumers value that it can uniquely
deliver
• A focus strategy has two variants: cost
and differentiation
• Cost focus strategy seeks to be the lowest
cost producer in the market segment
while differentiation is based on the
specific consumer requirements
Strategic Analysis
• An organization’s mission is its purpose
or reason for existence
• Core values are the formal expression of
the organization’s beliefs and what it
values
• Core values articulate what an
organization stands for and thus inform
a range of business decisions
• If there is a disconnect between lived
culture and stated values, the culture
will undermine efforts to achieve the
mission
• The essential situational analysis tool is
the SWOT analysis (strengths,
weaknesses, opportunities, and threats)
Strategy Implementation
• “An organization has a variety of structural forms and organizational
processes to choose from when implementing a given strategy.”
• Five variables:
• Organizational structure.
• HRM tasks:
• Task design.
• Selection, training, and development of people.
• Reward systems.
• Types of information and information systems.
Figure 2.3 Variables to Be Considered in Strategy
Implementation
Strategy Implementation

• Organizational Culture:
• “…a complex set of values, beliefs, assumptions, and symbols that
define the way in which a firm conducts its business.”
• Helps define relevant stakeholders (employees, customers, suppliers,
and competitors) and how to interact with them.
• Both strategy and culture need to be aligned with the value they
provide to customers.
Figure 2.4 Strategy Implementation
Strategy Implementation
HRM Practices:
• Job analysis:
• Process of getting detailed information about jobs.
• Job design:
• Addresses what tasks should be grouped into a particular job.
• Recruitment:
• Process through which the organization seeks applicants for potential
employment.
• Selection:
• Process by which the organization attempts to identify applicants with the
necessary knowledge, skills, abilities, and other characteristics to help it
achieve its goals.
Strategy Implementation
HRM Practices

• Training:
• Planned effort to facilitate the learning of job-related knowledge, skills,
and behavior.
• Development:
• Acquiring knowledge, skills, and behavior that improve employees’ ability
to meet challenges of existing jobs or jobs that do not yet exist.
• Performance management:
• Ensures employees’ activities and outcomes are congruent with
organization’s objectives.
The Role of Human Resources in Providing Strategic
Competitive Advantage

Enhancing Firm Competitiveness:

• Develop human capital pool that allows the company to adapt to