2. Strategic Management
• Strategic Human Resource Management
– Involves aligning initiatives involving how people are
managed with organizational mission & objectives
• Strategic Management Process
– Determining what needs to be done to achieve corporate
objectives over 3 - 5 years
– Examining organization & competitive environment
– Establishing optimal fit between organization & its
environment
– Reviewing & revising strategic plan
3. Models of Strategy
• Industrial Organization (O/I) 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
4. 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
5. 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
6. The Process of Strategic Management
• Mission statement
• Environmental analysis
• Organizational self-assessment
• Establishing goals & objectives
• Setting Strategy
Identify Assumptions
7.
8. Mission Statement
• Explains purpose & reason for existence
• Usually very broad
• No more than a couple of sentences
• Serves as foundation for everything
organization does
11. Analysis of Environment
• Critical components of external
environment
– Competition
– Industry structure
– Government regulations
– Technology
– Market trends
– Economic tends
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. Organization Self-Assessment
• Examine internal management systems
– Culture
– Organization structure
– Power dynamics & policy
– Decision-making processes
– Past strategy & performance
– Work systems
14. Establishing Goals & Objectives
• Goals should be:
– Specific
– Measurable
– Flexible
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. 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. Corporate Strategies:
Turnaround or Retrenchment
• Downsizing or streamlining organization in
cost-cutting attempt to adjust to competitive
environment
• Few opportunities & many environmental
threats
• Important to develop HR practices to
manage “survivors”
18. Business Unit Strategies: Cost Leadership
• Increases in efficiency & cutting of costs, then
passing savings to consumer
• 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. 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 perception of difference
• Organization offers employees incentives &
compensation for creativity
• HR strategy focuses on external hiring of unique
individuals & on retaining creative employees
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.
22. Benefits of a Strategic Approach to HR
• Facilitates development of high-quality
workforce through focus on types of people
& skills needed
• Facilitates cost-effective utilization of
labor, particularly in service industries
where labor is generally greatest cost
• Facilitates planning & assessment of
environmental uncertainty & adaptation of
organization to external forces
23. Reading 3.1
Are You Sure You Have a Strategy?
Strategy has five components, which provide
answers to five specific questions:
1) where will we be active? (arenas)
2) how will we get there? (vehicles)
3) how will we win in the marketplace?
(differentiators)
4) what will be our speed and sequence of moves?
(staging)
5) how will be obtain our returns? (economic logic)
27. Reading 3.2
Bringing Human Resources Back into Strategic Planning
HR can play critical role during each stage of the planning process
Stage 1 - Understand the Planning Legacy- the planning process needs to be informed by what’s been
done before; What was the result of any previous work?; Where were the successes and failures?; How
have employees been affected?; and What is the organizational attitude, at all levels, toward the strategic
planning process and the resulting plans?
HR can conduct this type of research at all levels of the organization. Without this knowledge, strategic
planning teams will often repeat the same mistakes of their predecessors.
Step 2 - Create a Diverse Planning Team - the formation of an intelligent strategic-planning team
which includes both diversity of thought and diversity of skills.
HR is the repository of all employee data related to knowledge, functional expertise, skills and
experiences and is in the best position to compile an optimal team.
Step 3 - Align Planning with Leadership Goals – ensuring that planning efforts are being conducted in
tandem with the organization’s mission and vision of senior executives
HR should communicate this knowledge as well as provide access to senior leaders and help facilitate
effective and well-structured interviewing sessions that will aid communication.
28. Reading 3.2
Bringing Human Resources Back into Strategic Planning
Step 4 - Analyze Current Realities – examine the organization’s history with its current
position and identify both the factors that can be leveraged to move the organization
forward as well as those may serve as obstacles and challenges to moving forward.
HR can facilitate the selection of subject matter experts as well as provide technical
expertise regarding laws and regulations which affect existing and potential employees
Step 5 - Develop Alternative Performance Options – ensuring that the strategic plan has
some flexibility in the form of alternative scenarios and courses of action
HR can determine, with a great degree of accuracy, what resources (people, time, tools,
and money) realistically exist in the current organization, which ones can be acquired from
outside the organization, and which ones can be redistributed around the organization to
achieve any alternative options.
Step 6 -Measure Progress – ensuring that actual performance is in line with that expected
HR ensures that all associated performance measures are clearly understood throughout the
organization and ensures that the performance management system rewards appropriate
performance.
29. Reading 3.2
Bringing Human Resources Back into Strategic Planning
Step 7 - Deploy the Strategic Plan – developing appropriate and effective communication
to create enthusiasm and commitment to the components of the plan.
HR develops plans and programs to ensure and monitor employee engagement and
commitment.
Step 8 - Develop Contingency Plans – given the fact that assumptions made during the
planning process about the future may not materialize as anticipated, plans need to be
flexible to address the realities which develop for the organization.
HR assists the organization with any kind of change initiatives which must be
implemented as part of this process.
