1-1 Human Resource Management Gaining a Competitive Advantage Chapter 2 Strategic Human Resource Management McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, All Rights Reserved.
1-1
Human Resource ManagementGaining a Competitive Advantage
Chapter 2
Strategic Human Resource Management
McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, All Rights Reserved.
2-2
Learning Objectives
After reading this chapter, you should be able to:• Describe the differences between strategy formulation
and strategy implementation.• List the components of the strategic management
process.• Discuss the role of the HRM function in strategy
formulation.• Describe the linkages between HRM and strategy
formulation.• Discuss the more popular typologies of generic strategies
and the various HRM practices associated with each.• Describe the different HR issues and practices
associated with various directional strategies.
2-3
Introduction
• Goal of strategic management – To deploy and allocate resources in a way that gives organization a competitive advantage.
• HRM function must be integrally involved in the company’s strategic management process.
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What is Strategic Management?
• Strategic Management is a process, an approach to addressing the competitive challenges an organization faces.
• Strategic human resource management is the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.
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Components of the Strategic Management Process
• Strategy Formulation
• Strategy Implementation
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Model of the Strategic Management ProcessStrategy Formulation Strategy Implementation
HR PracticesRecruiting,
Training,Performance management,
Labor relations, Employee relations,
Job analysisJob design, Selection,
Development, Pay structure,
Incentives,Benefits
FirmPerformanceProductivity,
Quality,Profitability
HumanResourceActions
Behaviors,Results
HumanResource
CapabilitySkills,
Abilities,Knowledge
HumanResource
NeedsSkills
BehaviorCulture
StrategicChoice
GoalsMission
ExternalAnalysis
OpportunitiesThreats
InternalAnalysisStrengths
Weaknesses
Forecasts of Labor Demand
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The Role of HRM in Strategy Formulation
2-8
Strategy Formulation
Externalanalysis
OpportunitiesThreats
StrategicChoice
Goals
InternalanalysisStrengths
Weaknesses
Mission
2-9
Strategy Formulation
• Five components of the strategic management process:– A mission is a statement of the organization's
reasons for being.– Goals are 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.
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Strategy Implementation
Productmarketstrategy
Rewardsystems
Selection,training, anddevelopment
of people
Types ofInformation
Organizationalstructure
Task Design
Performance
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HRM Practices
• Job Analysis - the process of getting detailed information about jobs.
• Recruitment - the process through which the organization seeks applicants.
• Training - a planned effort to facilitate learning of job-related knowledge, skills, and behavior.
• Job design - making decisions about what tasks should be grouped into a particular job.
• Selection - identifying the applicants with the appropriate knowledge, skills, and ability.
• Development - the acquisition of knowledge, skills, and behavior that improves employees' ability to meet the challenges of future jobs.
• Performance management - helps ensure that employees’ activities and outcomes are congruent with the organization’s objectives.
• Pay structure, incentives, and benefits.• Labor and employee relations.
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Strategic Types
• Porter's Generic Strategies
– overall cost leadership, or
– differentiation.
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HRM Needs in Strategic Types
• Different strategies require different types of employees.
• Role Behaviors:– Cost strategy firms seek efficiency and
therefore carefully define the skills they need in employees and use worker participation to seek cost-saving ideas.
– Differentiation firms need creative risk takers.
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Directional Strategies
Downsizing
External GrowthStrategy
ConcentrationStrategy
Internal GrowthStrategy
Mergers and Acquisitions
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The Role of HR in Providing a Competitive Advantage
• Emergent Strategies - Those that evolve from the grass roots of the organization.
• Enhancing Firm Competitiveness