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2_strategic_HRM (1) strategic management detailprese
- 1. © 2005 Prentice Hall Inc.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
t e n t h e d i t i o n
Gary Dessler
Part 1 Introduction
Chapter 3
Strategic Human Resource
Management and the HR Scorecard
- 2. After studying this chapter,
you should be able to:
1. Outline the steps in the strategic management
process.
2. Explain and give examples of each type of
companywide and competitive strategy.
3. Explain what a high performance work system is
and why it is important.
4. Illustrate and explain each of the seven steps in
the HR Scorecard approach to creating HR
systems.
© 2005 Prentice Hall Inc. All rights reserved. 3â2
- 3. © 2005 Prentice Hall Inc. All rights reserved. 3â3
HRâs Strategic Challenges
ï Strategic plan
â A companyâs plan for how it will match its internal
strengths and weaknesses with external
opportunities and threats in order to maintain a
competitive advantage.
ï Three basic challenges
â The need to support corporate productivity and
performance improvement efforts.
â That employees play an expanded role in
employersâ performance improvement efforts.
â HR must be more involved in designingânot just
executingâthe companyâs strategic plan.
- 4. © 2005 Prentice Hall Inc. All rights reserved. 3â4
The Strategic Management Process
ï Strategic management
â The process of identifying and executing the
organizationâs mission by matching its capabilities
with the demands of its environment.
ï Strategy
â A strategy is a course of action.
â The companyâs long-tem plan for how it will
balance its internal strengths and weaknesses with
its external opportunities and threats to maintain a
competitive advantage.
- 5. © 2005 Prentice Hall Inc. All rights reserved. 3â5
Business Mission and Its Vision
ï Vision
â A general statement of its intended direction that
evokes emotional feelings in organization
members.
ï Mission
â Spells out who the company is, what it does, and
where itâs headed.
- 6. © 2005 Prentice Hall Inc. All rights reserved. 3â6
Strategic Management Process (contâd)
ï Strategic management tasks
â Step 1: Define the Business and Its Mission
â Step 2: Perform External and Internal Audits
â Step 3: Translate the Mission into Strategic Goals
â Step 4: Formulate a Strategy to Achieve the
Strategic Goals
â Step 5: Implement the Strategy
â Step 6: Evaluate Performance
- 7. © 2005 Prentice Hall Inc. All rights reserved. 3â7
Overview of Strategic Management
Figure 3â1
- 8. © 2005 Prentice Hall Inc. All rights reserved. 3â8
A SWOT Chart
Figure 3â2
SWOT Analysis
The use of a SWOT chart
to compile and organize
the process of identifying
company
Strengths,
Weaknesses,
Opportunities, and
Threats.
- 9. © 2005 Prentice Hall Inc. All rights reserved. 3â9
Strategies in Brief
Figure 3â3
Company Strategic Principle
Dell Be direct
eBay Focus on trading communities
General Electric Be number one or number two in every
industry in which we compete, or get out
Southwest Airlines Meet customersâ short-haul travel needs
at fares competitive with the cost of
automobile travel
Vanguard Unmatchable value for the investor-owner
Wal-Mart Low prices, every day
Source: Arit Gadiesh and James Gilbert, âFrontline Action,â Harvard Business Review, May 2001, p. 74.
- 10. © 2005 Prentice Hall Inc. All rights reserved. 3â10
Types of Strategic Planning
ï Corporate-level strategy
â Identifies the portfolio of businesses that, in total,
comprise the company and the ways in which
these businesses relate to each other.
âą Diversification strategy implies that the firm will expand
by adding new product lines.
âą Vertical integration strategy means the firm expands
by, perhaps, producing its own raw materials, or selling
its products direct.
âą Consolidation strategy reduces the companyâs size
âą Geographic expansion strategy takes the company
abroad.
- 11. © 2005 Prentice Hall Inc. All rights reserved. 3â11
Types of Strategic Planning (contâd)
ï Business-level/competitive strategy
â Identifies how to build and strengthen the
businessâs long-term competitive position in the
marketplace.
âą Cost leadership: the enterprise aims to become the
low-cost leader in an industry.
âą Differentiation: a firm seeks to be unique in its industry
along dimensions that are widely valued by buyers.
âą Focus: a firm seeks to carve out a market niche, and
compete by providing a product or service customers
can get in no other way.
- 12. © 2005 Prentice Hall Inc. All rights reserved. 3â12
Types of Strategic Planning (contâd)
ï Functional strategies
â Identify the basic courses of action that each
department will pursue in order to help the
business attain its competitive goals.
- 13. © 2005 Prentice Hall Inc. All rights reserved. 3â13
Relationships Among Strategies
in Multiple- Business Firms
Figure 3â4
- 14. © 2005 Prentice Hall Inc. All rights reserved. 3â14
Achieving Strategic Fit
ï Michael Porter
â Emphasizes the âfitâ point of view that all of the
firmâs activities must be tailored to or fit its
strategy, by ensuring that the firmâs functional
strategies support its corporate and competitive
strategies.
ï Gary Hamel and C. K. Prahalad
â Argue for âstretchâ in leveraging resourcesâ
supplementing what you have and doing more
with what you haveâcan be more important than
just fitting the strategic plan to current resources.
- 15. © 2005 Prentice Hall Inc. All rights reserved. 3â15
The Southwest
Airlinesâ Activity
System
Figure 3â5
Source: Reprinted by permission of Harvard Business Review. From âWhat is Strategy?â by Michael E. Porter,
NovemberâDecember 1996. Copyright © 1996 by the President and Fellows of Harvard College, all rights reserved.
- 16. © 2005 Prentice Hall Inc. All rights reserved. 3â16
HR and Competitive Advantage
ï Competitive advantage
â Any factors that allow an organization to
differentiate its product or service from those of
its competitors to increase market share.
â Superior human resources are an important
source of competitive advantage
- 17. © 2005 Prentice Hall Inc. All rights reserved. 3â17
Strategic Human Resource Management
ï Strategic Human Resource Management
â The linking of HRM with strategic goals and
objectives in order to improve business
performance and develop organizational cultures
that foster innovation and flexibility.
â Formulating and executing HR systemsâHR
policies and activitiesâthat produce the employee
competencies and behaviors the company needs
to achieve its strategic aims.
- 18. © 2005 Prentice Hall Inc. All rights reserved. 3â18
Linking Corporate and HR Strategies
Figure 3â6
Source: © 2003, Gary Dessler, Ph.D.
- 19. © 2005 Prentice Hall Inc. All rights reserved. 3â19
HRâS Strategic Roles
ï HR professionals should be part of the firmâs
strategic planning executive team.
â Identify the human issues that are vital to
business strategy.
â Help establish and execute strategy.
â Provide alternative insights.
â Are centrally involved in creating responsive and
market-driven organizations.
â Conceptualize and execute organizational change.
- 20. © 2005 Prentice Hall Inc. All rights reserved. 3â20
HR Involvement in Mergers
Figure 3â7
Source: Jeffrey Schmidt, âThe Correct Spelling of M & A Begins with HR,â HR Magazine, June 2001, p. 105.
- 21. © 2005 Prentice Hall Inc. All rights reserved. 3â21
HRâs Strategy Execution Role
ï The HR departmentâs strategies, policies, and
activities must make sense in terms of the
companyâs corporate and competitive
strategies, and they must support those
strategies.
- 22. © 2005 Prentice Hall Inc. All rights reserved. 3â22
HRâs Strategy Formulation Role
ï HR helps top management formulate strategy
in a variety of ways by.
â Supplying competitive intelligence that may be
useful in the strategic planning process.
â Supplying information regarding the companyâs
internal human strengths and weaknesses.
â Build a persuasive case that shows howâin
specific and measurable termsâthe firmâs HR
activities can and do contribute to creating value
for the company.
- 23. © 2005 Prentice Hall Inc. All rights reserved. 3â23
Creating a Strategy-oriented HR System
ï Components of the HR process
â HR professionals who have strategic and other
skills
â HR policies and activities that comprise the HR
system itself
â Employee behaviors and competencies that the
companyâs strategy requires.
- 24. © 2005 Prentice Hall Inc. All rights reserved. 3â24
The Basic Architecture of HR
Figure 3â8
Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.
- 25. © 2005 Prentice Hall Inc. All rights reserved. 3â25
The High-Performance Work System
ï High-performance work system (HPWS)
practices.
â High-involvement employee practices (such as job
enrichment and team-based organizations),
â High commitment work practices (such as
improved employee development,
communications, and disciplinary practices)
â Flexible work assignments.
â Other practices include those that foster skilled
workforces and expanded opportunities to use
those skills.
- 26. © 2005 Prentice Hall Inc. All rights reserved. 3â26
Basic Model of
How to Align
HR Strategy
and Actions
with Business
Strategy
Figure 3â9
Source: Adapted from Garrett Walker and J. Randal MacDonald,
âDesigning and Implementing an HR Scorecard,â Human
Resources Management 40, no. 4 (2001), p. 370.
Translating
Strategy into
HR Policy
and Practice
- 27. © 2005 Prentice Hall Inc. All rights reserved. 3â27
The HR Scorecard Approach
ï HR scorecard
â Measures the HR functionâs effectiveness and
efficiency in producing employee behaviors
needed to achieve the companyâs strategic goals.
ï Creating an HR scorecard
â Must know what the companyâs strategy is.
â Must understand the causal links between HR
activities, employee behaviors, organizational
outcomes, and the organizationâs performance.
â Must have metrics to measure all the activities and
results involved.
- 28. © 2005 Prentice Hall Inc. All rights reserved. 3â28
Strategic HR Relationships
Figure 3â10
HR
Activities
Emergent
Employee
Behaviors
Strategically
Relevant
Organizational
Outcomes
Organizational
Performance
Achieve
Strategic
Goals
- 29. © 2005 Prentice Hall Inc. All rights reserved. 3â29
The HR
Scorecard
Approach
to
Formulating
HR Policies,
Activities,
and
Strategies
Figure 3â11
Source: Copyright © Gary Dessler, Ph.D.
- 30. © 2005 Prentice Hall Inc. All rights reserved. 3â30
Using the HR Scorecard Approach
ï Step 1: Define the Business Strategy
ï Step 2: Outline the Companyâs Value Chain
ï Step 3: Identify the Strategically Required
Organizational Outcomes
ï Step 4: Identify the Required Workforce
Competencies and Behaviors
ï Step 5: Identify the Strategically Relevant HR
System Policies and Activities
ï Step 6: Design the HR Scorecard Measurement
System
ï Step 7: Periodically Evaluate the Measurement
System
- 31. © 2005 Prentice Hall Inc. All rights reserved. 3â31
Outlining the Companyâs Value Chain
ï Value chain analysis
â A tool for identifying, isolating, visualizing, and
analyzing the firmâs most important activities and
strategic costs.
â Identifying the primary and crucial activities that
create value for customers and the related support
activities.
âą Each activity is part of the process of designing,
producing, marketing, and delivering the companyâs
product or service.
â Shows the chain of essential activities.
â Prompts future questions.
- 32. © 2005 Prentice Hall Inc. All rights reserved. 3â32
Figure 3â12
Source: Copyright © Gary Dessler, Ph.D.
Simple
Value
Chain for
âthe Hotel
Parisâ
- 33. © 2005 Prentice Hall Inc. All rights reserved. 3â33
HR Scorecard for
the Hotel Paris
International
Corporation*
Figure 3â13
Note:*(An abbreviated example showing
selected HR practices and outcomes aimed at
implementing the competitive strategy, âTo use
superior guest services to differentiate the
Hotel Paris properties and thus increase the
length of stays and the return rate of guests,
and thus boost revenues and profitabilityâ).
- 34. © 2005 Prentice Hall Inc. All rights reserved. 3â34
Key Terms
competitive advantage
HR Scorecard
leveraging
metrics
mission strategic control
strategic human resource
manager
strategic management
strategic plan
strategy
SWOT analysis
value chain analysis
vision