What is Strategic HRM?. Strategic human resource management : The pattern of planned human resource deployments and activities intended to enable an organization to achieve its strategic goals. Strategic HRM. To be strategic, the HR function should
What is Strategic HRM? • Strategic human resource management: The pattern of planned human resource deployments and activities intended to enable an organization to achieve its strategic goals.
Strategic HRM • To be strategic, the HR function should • Have direct, integral involvement in strategy formulation and implementation. • Know what employee skills, behaviors, and attitudes are needed to support strategic plan. • Develop those skills, behaviors, and attitudes among employees.
Components of the Strategic Management Process • Strategy Formulation: • Strategic planning group decides on a strategic direction • Defining the company's mission and goals • Identify external opportunities and threats • Identify internal strengths and opportunities for growth
Strategy Formulation External analysis Opportunities Threats Goals Strategic Choice Mission Internal analysis Strengths Weaknesses McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Components of the Strategic Management Process 2. Strategy Implementation: • Follow through on the chosen strategy. • Includes structuring the organization, allocating resources, • Involves ensuring that the firm has skilled employees in place • Utilizes reward system that align employee behavior with the strategic goals.
Model of the Strategic Management Process Strategy Implementation Strategy Formulation External Analysis Opportunities Threats HR Practices Recruiting, Training, Performance management, Labor relations, Employee relations, Job analysis Job design, Selection, Development, Pay structure, Incentives, Benefits Firm Performance Productivity, Quality, Profitability Goals Strategic Choice Human Resource Needs Skills Behavior Culture Mission Human Resource Capability Skills, Abilities, Knowledge Human Resource Actions Behaviors, Results Internal Analysis Strengths Weaknesses McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Levels of HRM integration in Strategy Formulation • Administrative Linkage — Lowest level; HRM focused on day-to-day activities. No input from the HRM function to the company's strategic plan. • One-Way Linkage — The strategic business planning function develops the plan and then informs the HRM function of the plan. HRM helps with implementation. • Two-Way Linkage — HR issues considered during the strategy formulation process. HR function provides input on potential strategic choices and helps implement chosen option. • Integrative Linkage — Continuing, rather than sequential, interaction. HR is an integral member of the strategic planning team.
Strategy Formulation • Five relevant components: • Mission: statement of the organization's reasons for being. • Goals: 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.
Strategy Implementation Organizational structure Task design Types of Information Performance Product market strategy Selection, training, and development of people Reward systems
Strategic Types • Porter's Generic Strategies —competitive advantage comes from creating value by: • reducing costs or • charging a premium price for a differentiated product or service (differentiation).
HRM and Strategic Types • Different strategies call for different types of employees. • Role behaviors are thebehaviors required of an individual in his or her role as a jobholderin a social work environment. • Cost strategy calls for efficiency--carefully define the skills employees need. Seek employees’ cost-saving ideas. • Differentiation firms need creative risk takers.
The Role of HR in Providing a Competitive Advantage • Emergent Strategies - Those that evolve from the grass roots of the organization. • What actually is done versus what is planned. • HR plays an important role in facilitating the communication of emergent strategies between levels in the hierarchy. • Enhancing Firm Competitiveness • By developing a rich pool of talent, HR can assure the company's ability to adapt to a dynamic environment.
Competencies of Strategic Human Resource Consultants • Four basic competencies: • Business Competencies: Understand company's economic and financial capabilities. • Professional/Technical Knowledge: In HR practices • Change Management or Organizational Development Techniques: Ability to diagnose need for change; develop and implement the appropriate intervention. • Integration Competencies: Holistic perspective with the skills of a specialist in the above three areas.
Human Resource Competencies Professional and Technical Knowledge Business Competence HR Professional Ability to Manage Change Integration Competence