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Human Resource Management

Gaining a Competitive Advantage

Chapter 2
Strategic Human Resource
Management

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, All Rights Reserved. 1-1
Learning Objectives
After reading this chapter, you should be able to:
• Describe the differences between strategy formulation
and strategy implementation.
• List the components of the strategic management
process.
• Discuss the role of the HRM function in strategy
formulation.
• Describe the linkages between HRM and strategy
formulation.
• Discuss the more popular typologies of generic strategies
and the various HRM practices associated with each.
• Describe the different HR issues and practices associated
with various directional strategies.

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Introduction

• Goal of strategic management – To


deploy and allocate resources in a way
that gives organization a competitive
advantage.
• HRM function must be integrally involved
in the company’s strategic management
process.

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What is Strategic Management?

• Strategic Management is a
process, an approach to addressing
the competitive challenges an
organization faces.
• Strategic human resource
management is the pattern of
planned human resource
deployments and activities intended
to enable an organization to achieve
its goals.

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Components of the Strategic
Management Process

• Strategy Formulation

• Strategy Implementation

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Model of the Strategic
Management Process
Forecasts of Strategy Formulation Strategy Implementation
Labor Demand HR Practices
External Recruiting,
Analysis Training,
Opportunities Performance management,
Labor relations,
Threats Employee relations, Firm
Job analysis Performance
Job design, Productivity,
Human Selection,
Resource Development, Quality,
Strategic Needs Pay structure, Profitability
Mission Goals Skills Incentives,
Choice Benefits
Behavior
Culture
Human Human
Internal Resource Resource
Analysis Capability
Skills, Actions
Strengths Behaviors,
Weaknesses Abilities,
Knowledge Results

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The Role of HRM in
Strategy Formulation

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Strategy Formulation
External
analysis
Opportunities
Threats

Strategic
Mission Goals
Choice

Internal
analysis
Strengths
Weaknesses

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Strategy Formulation

• Five components of the strategic management


process:
– A mission is a statement of the organization's
reasons for being.
– Goals are what the organization hopes to
achieve in the medium-to long-term future
– External analysis consists of examining the
organization's operating environment to identify
strategic opportunities and threats.
– Internal analysis attempts to identify the
organization's strengths and weaknesses.
– Strategic choice is the organization's strategy,
which describes the ways the organization will
attempt to fulfill its mission and achieve its long
term goals.

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Strategy Implementation

Organizational
structure

Types of
Task Design
Information

Product
market Performance
strategy
Selection,
Reward training, and
systems development
of people

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HRM Practices
• Job Analysis - the process of • Job design - making decisions
getting detailed information about about what tasks should be
jobs. grouped into a particular job.
• Recruitment - the process • Selection - identifying the
through which the organization applicants with the appropriate
seeks applicants. knowledge, skills, and ability.
• Training - a planned effort to • Development - the acquisition of
facilitate learning of job-related knowledge, skills, and behavior
knowledge, skills, and behavior. that improves employees' ability
to meet the challenges of future
jobs.
• Performance management - helps ensure that employees’ activities
and outcomes are congruent with the organization’s objectives.
• Pay structure, incentives, and benefits.
• Labor and employee relations.

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Strategic Types

• Porter's Generic Strategies


– overall cost leadership, or
– differentiation.

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HRM Needs in Strategic Types

• Different strategies require different


types of employees.
• Role Behaviors:
– Cost strategy firms seek efficiency and
therefore carefully define the skills they need
in employees and use worker participation to
seek cost-saving ideas.
– Differentiation firms need creative risk takers.

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Directional Strategies

External Growth Concentration


Strategy Strategy

Internal Growth
Downsizing
Strategy

Mergers and
Acquisitions

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The Role of HR in Providing
a Competitive Advantage

• Emergent Strategies - Those that


evolve from the grass roots of the
organization.
• Enhancing Firm Competitiveness

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