Gmb 6070 session 2 - may 16th (fil eminimizer)

ROLE OF STRATEGIC HUMAN RESOURCES MANAGEMENT (HRM) IN BUSINESS STRATEGY

GMB 6070 - Session 2

16th May ‘11

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6PRESENTATION PLAN

1. Discussion - Strategy formulation process2. Discussion - Role of environment in

strategy development3. Role of Strategic Human Resources in the

contribution to overall strategy 4. Group discussion - Situational approach

to strategy

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6STRATEGY FORMULATION PROCESS

Involves planning and taking decisions that lead to the establishment and achievement of the organization’s goals of a specific plan.

The process comprises three phases:1. Diagnosis2. Formulation3. Implementation

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…STRATEGY FORMULATION PROCESS1

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Diagnosis: 1. Analyzes internal environment

of the organization - this is also called performing a situation analysis.

2. It involves evaluation of current mission, strategic objectives, strategies, and results, plus major strengths and weaknesses

3. Analyzes external environment to review major opportunities and threats

4. Identifies major critical issues – usually a set of two to five major problems, threats, weaknesses, and/or opportunities that require priority attention by management

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Formulation stage: Development of a clear set of

recommendations with supporting justification, that revise as necessary the mission and objectives of the organization, and supply the strategies for accomplishing them.

Looks for "sustainable" competitive advantages – (despite steady erosion by the efforts of competition).

In order to align "fits" between resources plus competencies with opportunities, and also fits between risks and expectations the SHRM will help to focus on the following:

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1. Review the current key objectives and strategies of the organization, identified and evaluated as part of the diagnosis

2. Identify a rich range of strategic alternatives to address the three levels of strategy formulation

3. Balance evaluation of advantages and disadvantages of the alternatives relative to their feasibility plus expected effects on the issues and contributions to the success of the organization

4. Decide on the alternatives that should be implemented or recommended.

ROLE OF ENVIRONMENT ON STRATEGY FORMULATION

GMB 6070 - Session 2 – May 16th

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ENVIRONMENTAL SCANNING

• If an organization understands the environment in which it operates, half the problems would be sorted.

• This requires an analysis of what is happening outside the organization and an evaluation of current resources (strength and weaknesses) and an assessment of opportunities and threats present in the environment.

• Environment could be classified as external and internal.

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6…ENVIRONMENTAL SCANNING

• External:• The external environment consists

of variables that are outside the organization and not typically within the short-run control of top management.

• They may be general forces and trends within the overall set-up which consist of political, economic, socio-cultural, technological, legal and environment, – (PESTLE).

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• Internal:• The internal environment of a corporation

consists of variables (strengths and weaknesses) that are within the organization and are not usually within the short run control of top management.

• These include the corporate culture, structure, resources and competencies.

• One of the widely used methods for internal analysis of the firms is Value Chain Analysis which assesses the strengths and areas of improvement that divide a business into a number of linked activities, each of which may produce value to the customers.

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…ENVIRONMENTAL SCANNING

• HR Partnership• Parenting – the

manner in which the management coordinates activities and deploys resources and cultivates capabilities among product lines and business units.

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Corporate StrategyBusiness StrategyFunctional Strategy

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6HR CHALLENGES

• Business acumen• Influencing performance• Measuring performance• Determining competencies• Creating an enabling environment • Creating passion for quality and

competitiveness.• ..\HR BA.pptx

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ROLE OF STRATEGIC HUMAN RESOURCES IN STRATEGY IMPLEMENTATION

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6ROLE OF STRATEGIC HUMAN RESOURCES IN STRATEGY IMPLEMENTATION

• Understanding the Corporate Mission:• An organization’s mission is the purpose or the

reason for the organization’s existence. • HR should articulate the fundamental,

uniqueness and focus that sets a company apart from other firms of its type and identifies the scope of the company's operation in terms of the products offered and markets.

• HR should formulate policies to communicate the corporate mission to all employees.

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6…ROLE OF STRATEGIC HUMAN RESOURCES IN STRATEGY IMPLEMENTATION

• Some of the key policies to drive the HR agenda include:• On-boarding - (Orientation) policy, • Induction policy, • Remuneration Policy, • Motivation Policy, • Performance Management Policy, • Training and Development Policy, • Employee Satisfaction Index Policy • Employee Exit and Separation Policy

• Such policies should help HR demonstrate value creation by monitoring implementation of corporate strategy and business competitiveness.

• ..\Climate 1 - Slide.pptx

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6…ROLE OF HUMAN RESOURCES IN STRATEGY IMPLEMENTATION

HR professionals are often defensive about their comparative worth, but they do not need to apologize for not being subject matter experts; all they need is to demonstrate strategy implementation competitiveness.

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6…ROLE OF STRATEGIC HUMAN RESOURCES IN STRATEGY IMPLEMENTATION

Alignment with strategic goals of the organization

Effective HRM Programs

Effective HR systems and Processes

Legal Compliance

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HOW STRATEGIC HUMAN RESOURCES CONTRIBUTE TO OVERALL STRATEGY In his book “Workplace Excellence” Dan

Robkins wrote:

“It’s (HR) not just a place to go when troubles arise; Human Resources is a vital department within companies, but too often they are misunderstood and underutilized.”

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6…HOW STRATEGIC HUMAN RESOURCES CONTRIBUTE TO OVERALL STRATEGY

• Thirty (30years ago) - 80s- the business environment talked about the “personnel department” which took care of everything relating to people in the workplace.

• Twenty (20) years ago – 90s- we realized the need for a new department handling talent and other people issues “Human Resources,”.

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…HOW STRATEGIC HUMAN RESOURCES CONTRIBUTE TO OVERALL STRATEGY

• Human Resource Management addresses two functions – HRM and HRD.

• According to Richard Chang, author of The Passion Plan at Work, HRM focuses mainly on • HR Research and Information Systems • Labour Relations • Employee Assistance • Employee Compensation/Benefits.

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• Human Resource Development focuses on: • Career Development (helping individuals align

their career planning) • Organizational Development (helping groups

initiate and manage change) • Training and Development (design / execute) • Delivering training to ensure people are enabled

to perform their jobs competently

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• HRM and HRD tend to overlap in:• Selection and Staffing • Organizational/Job Design • Human Resource Planning • Performance Management

System

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• Despite the importance of HRM and HRD, HR is generally too often omitted from participation in key strategic decisions.

• Reasons why HR should be part of the strategic planning process team include:

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1. Selection and Staffing: • HRD is more equipped to

make accurate selection of talent for each position to develop a competitive workforce

• HRD will help line managers to develop SMART performance objectives for employees

• HR professionals are best placed to detect potential conflicts between what a company wants and what is truly realistic in HR terms; thus helping to ensure business plans are workable right from the start.

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2. Organizational Development: • Strategic planning often encompasses

change in workplace systems or processes.

• Although individual departments are aware of the status of their own departments, HR folks are often aware of group initiatives and changes that has occurred company-wide.

• Accordingly, they will be able to speak about OD issues with unique insights on how changes may impact the established systems and processes

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3. Training & Development: • Research shows that only 20% of the

workforce has the skills that will be required ten years from now.

• That means training and development are guaranteed to be needed at some point of the strategic growth process.

• HRD team must speak instantly on any issues, and provide input that could help the organization to achieve its goals faster.

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• According to Chandler and Andrews separately, key support of successful development and implementation of strategic management lies in full engagement of Human Resources in the organization’s top management.

• HR should have a huge influence on:• Effectiveness and efficiencies in production • Effective communication • Marketing and sales • Upgrades on subject matter skills• Influence on developing soft skills for SME • Enhancement in cost reduction and overall

equipment efficiency (OEE).

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• According to Zikria of Preston University, Karachi Pakistan organizations which include HR in their strategic planning process gain value in effectiveness and efficiencies in strategy implementation, monitoring and evaluation.

• HR become partners in coordinating recruitment, talent development, performance management and sharpening talent through training.

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…HOW STRATEGIC HUMAN RESOURCES CONTRIBUTE TO OVERALL STRATEGY 1

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• Strategic Human Resources will align and integrate decisions about people with decisions about the results an organization is trying to obtain.

U.S. Office of Merit Systems Oversight and

Effectiveness

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6Group Work

G1 G 2 G3

Critically discuss how the strategic planning process for HR would differ from that of top line executives? Indicate if, in your opinion, the HR team would think strategically differently in consideration of Key HR issues vis a vis corporate issues?

As head of the HR function in your organization, identify HR drivers that will distinguish your department as being a key player in the implementation of corporate business plan.

Distinguish SHR management issues from corporate strategy issues and develop alignments

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READING ASSIGNMENT

Read Course Text – Anthony, Kacmar and Perrewe ( 2006 ) - Ch.2

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END Thank you

Gmb 6070 session 2 - may 16th (fil eminimizer)

Business

usiu gmb

internal environment

throle of environment

major opportunities

formulation stage

organization thisis

strategic objectives

major problems