Strategic human resource management

Strategic Human Resource Management

Strategic Human Resource Management

• SHRM is part of strategic planning• Strategic Plan : The Company’s plan for how it

will match its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage

• Essence is to ask “ Where are we now as a business, where we want to be, and how should we get there”

• Then formulates specific strategies (Human resources and other) to take the company from where it is now to where he or she wants it to be

• Strategy : The company’s long term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage

• SHRM means formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims

• E.g. Ford

Traditional ViewPersonnel

•Staffing•Pay•Training

Research & Development Finance

Production Marketing

Need and Importance

• Changing demand from customers or the market place

• New technology and increasing pressure from competitors (Philip Mirvis)

• Changes in the basic business environment (Randall Schuler)

• High levels of uncertainty about basic business conditions

• Rising costs• Rapid technological change• Changing demographics• More limited supplies of highly trained labor• Rapidly changing government legislation and

regulations• Increased globalization of industries

Strategic Management Process

• Strategy : The company’s long term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage

• Strategic Management : The process of identifying and executing the organization’s mission by matching its capabilities with the demands of its environment

• Essence of strategic planning - “ Where are we now as a business, where we want to be, and how should we get there”

• Steps in Strategic Management • SM entails both strategic planning and

implementation

• The process of identifying and executing the organization’s strategic plan, by matching the company’s capabilities with the demands of its environment

• SM process consist of 7 steps• 1-5, strategic planning• 6-7, implementation• Step1 - define the current Business• Choose the terrain on which it will compete –

what product it will sell, where it will sell them, how to differentiate products from its competitors

• E.g Rolex and Seiko• Managers use statements like• Vision – A general statement of its intended

direction that evokes emotional feelings in organization members

• Broad terms – “what we want to become”• Gives the direction• What the business should be

• Mission – What our main task are now• Spells out who the company is, what it does,

and where it’s headed• Step 2 – Perform external and internal audits• Analyzing external and internal situations• SWOTs• SWOT analysis

• SWOT chart

• Strengths Weakness *Strong R&D *Aging Machinery

• Opportunities Threats *Expanding Market * Merger of Competitors

• Step 3 : Formulate new Business and mission statements

• Based on situation analysis• What should our business be• What products• Where it will sell• How to differentiate from competitors • New vision and mission

• Step 4 : Translate the mission into strategic goals• Operationalizing the mission for managers –

strategic goals• For each department• Step 5 : Formulate strategies to achieve the

strategic goals • Strategies, Course of action – how to move from

the current business to what it wants to

• Strategies act as bridge between these two• Step 6 : Implement the strategies• Translating strategies into action• Hiring, firing people, building plants, adding

products, product lines• This include managerial functions like

Planning, organizing, staffing, leading, and controlling

• Step 7 : Evaluate performance• Management Monitors the extend to which

the firm meeting its strategic goals• Strategic Control – keep strategy up to date• According to the environmental changes• Competitors action

Types of Strategies

Three types of strategic planningA)Corporate strategy• Company wide level (corporate level)• Pepsico runs pepsi, fritto lay, and pizza hut, so

needs a corporate level strategy• Diversification- expand by adding new product

lines• Vertical integration – expands by producing its

own raw material

Relationships among strategies in multiple business Firms

Corporate Strategy

Business 1 Business 2 Business 3 Competitive Strategy Competitive Strategy Competitive Strategy

Functional Functional Functional Strategies Strategies Strategies

• Consolidation – reducing the company’s size• Geographic expansion – taking business

abroad

B)Competitive Strategy (Business level )E.g., Pizza hut• Next level down, each of the business need• How to build and strengthen the business’s

long term competitive position in the market place

• How pizza hut will compete with Papa John’s

• Strategies like• Cost leadership, low cost leader, dell by direct

selling• Differentiation, Firm seeks to be unique, Toyota

by quality, woodland/timberland by adventure shoes

• Focusers, Carve out a market niche, like ferrari, by providing products and services customers can get in no other way

• Functional strategy• Business composed of departments –

manufacturing, selling, finance, HRM• This identify the basic courses of action that

each department will pursue in order to help the business attain its competitive goals