STRATEGIC HRM

Dr B.K. Majola
Chapter 16
 LEARNING OBJECTIVES
• Explain the concept Strategic HRM (SHRM).

• Define strategy and identify the elements in the strategic planning process.

• Explain the various roles of an effective HR practitioner.

• Demonstrate understanding of the integration of HR management strategy

with the overall organisational strategy.

• Explain the relationship between organisational strategy and SHRM

• Explain the characteristics of a strategic approach to HRM.

 INTRODUCTION

• All Organisations should have a strategy and sub-strategies.

• The HR sub-strategy is important as people are the only sustainable competitive

advantage of the organisation.

• HR practitioners must meet the expectations of top management.

• These imply that the HR’s strategy should be in line with the organisation’s
strategy.
 CONCEPTS LINKED TO HR STRATEGY
FORMULATION

• Strategy:
o the long-term plans of top management.

• Vision:
o goal or reason for organisation’s existence.

• Mission:
o how to achieve business objectives.

• Values:
o how to handle customers, workers, suppliers.

• Strategic Objectives:
o the tasks the organisation wishes to carry out.

• A tactical business plan:

o short-term plans used to implement the activities and objectives contained in the strategy.

• People:
o employees of an organisation.
 STRATEGIC PLANNING AND HRM

• HR should assist the organisation to achieve its objectives.

• HRM must be a strategic partner in the organisation.

• The strategic partner role focuses on aligning HR strategies, programmes,

policies and procedures with the business strategies to achieve both
immediate and long-term goals.

• HR practitioners must be innovative and creative in ensuring that the

organisational culture and climate assist in accomplishing the strategic goals
of the organisation.
 STRATEGIC VS TRADITIONAL HRM

Dimensions Strategic HRM Traditional HRM

• Planning and Is involved in making strategic decisions Makes operational decisions
strategy only
formulation

• Authority Is fully integrated with other organisational Has moderate to small

functions e.g. marketing, finance, integration with other
production organisational functions

• Scope Coordinates all HRM activities Does not coordinate all HR

functions
 STRATEGIC VS TRADITIONAL HRM
(CONTINUED)
Dimensions Strategic HRM Traditional HRM
• Decision making Participates in formulating overall Is involved in operational planning
organisational strategic plan and only
aligning HR functions with company
strategy

• Integration Has high status and authority for top HR

officer (e.g. vice president for HR) Has medium status and authority
(e.g. HR director)

Is concerned with all managers and

• Coordination employees Is concerned primarily with hourly,
operational and clerical
employees
 CHRA031 STRATEGIC PLANNING AND HRM
ORGANISATIONAL LEVEL HR LEVEL

Mission - Identify purpose & scope - Capture underlying bus. philosophy

Vision - Clarify long-term direction - Establish cultural foundation
Values - Establish belief & principles - Guide ethical code of conduct
External - Assess OT - Examine demographic trends
analysis - Conduct environ. Scan - Examine external labour supply
- Analyse industry & competitors - Benchmark competitors’ HR metrics

Internal - Analyse SW - Analyse workforce culture, competencies &

analysis - Analyse competencies composition
- Analyse resources - Forecast labour demand & supply
Strategy - Develop org. strategy - Establish productivity goals
formulation - Develop bus. strategy - Establish quality and innovation goals for employees
- Align functional strategies
Strategy impl- - Design structure & systems - Reconcile labour demand & supply
ementation - Allocate resources - Motivate employees to achieve goals

Evaluation - Evaluate benchmarks - Maintain human capital metrics

- Ensure alignment - Utilise balance score
- Encourage employee agility & flexibility
7
 A MODEL OF STRATEGIC HRM
External environment
Competition,
government regulation,
technology, market Staffing
trends, economic Employee Laws regulating
employment
separation
Training
HR strategy
Corporate Business unit
strategy strategy HR planning, design of Performance
jobs & work systems, management
what workers do, what
workers need, how jobs
Culture, structure, interface with others
politics, employee skills, HRIS Compensation
past strategy

Labour relations
Internal environment
 ADVANTAGES OF INTEGRATING STRATEGIC
PLANNING AND HRM

• Improved understanding of the implications of strategic HR

planning and employees to be retrenched can be phased out
gradually.

• Result in proactive recruitment and selection.

• Improved HR development activities.

• Improved analysis and control of HR costs.

 CHRA031

STEPS IN STRATEGIC PLANNING

• Determining organisational mission:

goals, strategy, values & behaviour standards
• Assessing organisation & its environment:
SWOT analysis

• Setting of specific objectives:

gap analysis
• Determining strategies to accomplish objectives.
 STRATEGIC MANAGEMENT
DEFINITION

-refers to set of decisions and actions used to formulate and

implement strategies that will provide a competitively superior fit
between the organisation & its environment in order to achieve its
goals.
 STRATEGIC HRM

• Strategic HRM are those long-term, top-level management decisions and actions regarding
employment relationships.

• When HR considerations are involved in the formulation of overall strategy, HRM

contributes to the achievement of a strategic advantage for the organisation.

• Strategic HRM cannot be separated from the formulation and implementation of business
and corporate strategy.
 CHARACTERISTICS OF STRATEGIC HRM

• Explicitly recognises the impact of the external environment.

• Recognises impact of competition and the dynamics of the labour market.
• Sets employment standards and policies.
• Focuses on the long-term.
• Manages employer-employee relationships.
• Focuses on the issues of choice and decision-making.
• Considers all personnel.
• Is integrated with overall corporate and functional strategies.
 FORMULATING HRM STRATEGY

• HRM strategy involves decisions and actions relevant to managing HR within the internal & external
environments.

• There must be a fit between the organisation and its environment.

• The focus should include:

• Environmental scan
• Consideration of the mission of the organisation
• Deciding on an appropriate HRM strategy
• Establishing a HRM business plan.

• The HRM strategy and business plan must fit into the strategy of the organisation.
 HR PRACTITIONER’S STRATEGIC ROLE

• Credible activist:
• trustworthiness and dependability.

• Capacity builder:
• assists with organisation’s growth.

• Change champion:
• ensures availability of resources to deal with change.

• HR innovator and integrator:

• aligns HR activities with Organisation’s goals.

• Technology proponent:
• utilises HRIS to ensure efficiency.

• Strategic positioner:
• knows the business and assist in strategic planning.
 IMPLEMENTING HRM STRATEGY

• The role of the HR function becomes one of ensuring that the organisation has the proper
amount of employees with the right Knowledge, Skills and Abilities required by the
strategic plan.

• These include developing and implementing effective programmes relating to

recruitment, selection, training and development, etc.
 CHRA031
EVALUATING THE EFFECTIVENESS OF THE
ORGANISATION

• These can be done through the use of the Balanced Scorecard

measurement tool.

• The tool focuses on four areas of success:

• Internal business processes: how to do our business.
• Learning and growth: what we need to learn.
• Customer satisfaction: how to handle our customers.
• Financial success: cost effectiveness and productivity.
 EVALUATING EFFECTIVENESS OF HRM

• These can be done through the use of the HR Scorecard measurement tool.

• The tool focuses on five key elements:

• Workforce success: measure employees’ contributions towards
organisational goals
• Alignment of HR with organisational strategy: measure the extent to which
HR strategies align with business strategy
• Right HR practices: measure performance of various HR functions
• HR Professionals: assess the HR professionals’ skills and competencies
• Costs: measure how much org spend on employees
 CONCLUSION

• It is clear that an interdependent relationship exists between an organisation’s grand

strategy and its approach to strategic HRM.

• If either are poorly formulated or executed, the chances of an organisation being

successful decreases rapidly.

• The synergy between HRM and organisational effectiveness should therefore never be
under-estimated.

• It is a fact that HR, particularly if managed strategically, remains the greatest asset any
organisation
QUESTIONS/COMMENTS

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