SHRM context

1. STRATEGIC HUMAN
RESOURCE MANAGEMENT
Chapter
2
University of Hail
College of Business Administration
Executive Master of Business Administration
Dr.
Abdulrab
Strategic Humane Resource Management
and context.

2. 4-2
Strategic Management
• Strategic management is a continuous process of
strategic analysis, strategy creation, implementation
and monitoring, used by organizations with the purpose
to achieve and maintain a competitive advantage

3. 4-3
What is the importance of strategic
management?

4. 4-4
Models of Strategy
• Industrial Organization (I/O) Model
• External environment is primary determinant of
organizational strategy rather than internal decisions
of managers
• Environment presents threats & opportunities
• All competing organizations control or have equal
access to resources
• Resources are highly mobile between firms
• Organizational success is achieved by
• Offering goods & services at lower costs than
competitors
• Differentiating products to bring premium prices

5. 4-5
Models of Strategy
• Resource-Based View (RBV)
•An organization’s resources & capabilities, not
external environmental conditions, should be basis
for strategic decisions
•Competitive advantage is gained through acquisition
& value of organizational resources
•Organizations can identify, locate & acquire key
valuable resources
•Resources are not highly mobile across organizations
& once acquired are retained
•Valuable resources are costly to imitate & non-
substitutable

6. 4-6
Contrasting the Two Approaches
• Research provides support for both
positions
• What drives strategy?
• I/O: External considerations
• RBV: Internal considerations
• I/O: Strategy drives resource acquisition
• RBV: Strategy determined by resources

7. 4-7
The Process of Strategic
Management
• Mission statement
• Environmental analysis
• Organizational self-assessment
• Establishing goals & objectives
• Setting Strategy
• Identify Assumptions

8. 4-8

9. 4-9
Mission Statement
• Explains purpose & reason for existence
• Usually very broad
• No more than a couple of sentences
• Serves as foundation for everything
organization does

10. 4-10
What is the difference between
vision and mission?

11. 4-11
Analysis of Environment
• Critical components of external
environment
• Competition
• Industry structure
• Government regulations
• Technology
• Market trends
• Economic tends

12. 4-12
Organization Self-Assessment
• Identify primary strengths & weaknesses
• Find ways to capitalize on strengths
• Find ways to improve or minimize
weaknesses
• Examine resources
• Physical
• Human
• Technological
• Capital

13. 4-13
Organization Self-Assessment
• Examine internal management
systems
• Culture
• Organization structure
• Power dynamics & policy
• Decision-making processes
• Past strategy & performance
• Work systems

14. 4-14
Establishing Goals & Objectives
• Goals should be:
• Specific
• Measurable
• Flexible

15. 4-15
Corporate Strategies: Growth
• Benefits
• Gaining economies of scale in
operations & functions
• Enhancing competitive
position vis-à-vis industry
competitors
• Providing opportunities for
employee professional
development & advancement
• HR Issues
• Planning for new hiring
• Alerting current employees
• Ensuring quality &
performance standards are
maintained
• Internal Methods
• Penetration of existing
markets
• Developing new markets
• Developing new products or
services for existing or new
markets
• External Methods
• Acquiring other organizations
• Vertical integration
• HR Issues in M&A
• Merging organizations
• Dismissing redundant
employees

16. 4-16
Corporate Strategies: Stability
• Maintaining status quo due to limited
environmental opportunities for gaining
competitive advantage
• Few employees will have opportunities
for advancement
• Critical that management identify key
employees & develop specific HR
retention strategies to keep them

17. 4-17
Corporate Strategies:
Turnaround
• Downsizing or restructuring organization
in cost-cutting attempt to adjust to
competitive environment
• Few opportunities & many environmental
threats
• Important to develop HR practices to
manage “survivors”

18. 4-18
Business Unit Strategies: Cost
Leadership
• Assumes price elasticity in demand for
products or services is high
• Assumes that customers are more price
sensitive than brand loyal
• HR strategy focuses on short-term
performance measures of results & promoting
efficiency through job specialization & cross-
training

19. 4-19
Business Unit Strategies:
Differentiation
• In order to demand a premium price from
consumers
• Attempting to distinguish organizational products
or services from other competitors or
• Creating of difference
• Organization offers employees incentives &
compensation for creativity
• HR strategy focuses on external hiring of
unique individuals & on retaining creative
employees

20. 4-20
Business Unit Strategies: Focus
• Business attempts to satisfy needs of only a
particular group or narrow market segment
• Strategic intent is to gain consumer loyalty of
neglected groups of consumers
• Strategic HR issue is ensuring employee
awareness of uniqueness of market segment
• Thorough employee training & focus on customer
satisfaction are critical factors
• Hiring members of target segment who are
empathetic to customer in target segment

21. 4-21
What is Strategic HRM?
21

22. 4-22
22
Strategic human resource management can be defined as the linking of human
resources with strategic goals and objectives in order to improve business
performance and develop organizational culture that foster innovation, flexibility
and competitive advantage.
In an organisation SHRM means accepting and involving the HR function as a
strategic partner in the formulation and implementation of the company's
strategies through HR activities such as recruiting, selecting, training and
rewarding personnel.
Definition of SHRM

23. 4-23
Objectives of SHRM
23
• To ensure the availability of a skilled,
committed, & highly motivated workforce
in the organization to achieve sustained
competitive advantage.
• To provide direction to the organization so
that both the business needs of the
organization & the individual & collective
needs of its workforce are met.

24. 4-24
Difference b/w SHRM & Traditional
HRM
24
Traditional HRM SHRM
Focus of activity Employee relations Partnership with internal &
external groups
Role of HR Reactive & transactional Proactive & transformational,
change leader
Initiative for change Slow & not integrated
with larger issues
Fast, flexible & systematic
Time Horizon Short-term Consider various time frames
Control Bureaucratic control Organic control
Job design Focused job design Broad job design
Important
investment
Capital, products,
technology & finance
People & their knowledge
skills & abilities

25. 4-25
Steps to strategic human resource
management
1. Studying and determining the requirements of the organization's mission
2. Studying and analyzing the environment
3. Developing the strategy of human resources management
4. Developing strategies, functions and practices of human resource
management
5. Completion of the human resources management strategy
6. Evaluation of the effectiveness of implementing the strategy of human
resources management
25

26. 4-26
Steps to strategic human resource
management
The human resource manager studies the requirements for achieving the
organization’s mission, as do other managers
26
1. Studying and determining the requirements of the organization's mission

27. 4-27
Steps to strategic human resource
management
Analyzing the internal and external environment at the level of:
• Externally: the job or work market
• Internally: the skills of individuals and groups
27
2. Studying and analyzing the environment

28. 4-28
Steps to strategic human resource
management
Growth
Stability
Turnaround or Retrenchment
Cost Leadership
Differentiation
Focus
28
3. Developing the strategy of human resources management

29. 4-29
Steps to strategic human resource
management
Planning , recruiting, Selecting
Training and Development
Compensation
29
4. Developing strategies, functions and practices of human resource management

30. 4-30
Steps to strategic human resource
management
Completion requires designing programs and developing systems, policies, and rules
for human resources department.
With regard to the regulations, the following systems are required:
• Performance appraisal system
• Disciplinary system
• Communication system
With regard to the programs required to design the following programs:
• Job benefits
• Learning, training and development
• Reducing work stress
• Reducing organizational conflict
• Safety and health in the workplace
30
5. Completion of the human resources management strategy

31. 4-31
Steps to strategic human resource
management
The criterion for evaluating the success of the implementation of the human
resources management strategy:
Employees satisfaction
Employees engagement
Competency and performance
Organization’s sustainability in the market
31
6. Evaluation of the effectiveness of implementing the strategy of human resources
management

32. 4-32
Basics Of Strategic HRM
• HR Programs to enhance overall organizational
performance
• Pro-actively participate in big picture decision making
• Redesign organizations and the work processes
• Measure financial results of all HR activities
32

33. 4-33
Case study - Costco
Strategic Management at Costco