Strategic HRMThe Context of SHRM

Strategic Managementch 3

Lecture Two

Dr. Maha Dajani

1

Three HR Approaches

Micro HRM MHRM

International HRM IHRM

Strategic HRM SHRM

2

HRM Practices

Job Analysis/DesignRecruitment /Selection

2-3

Benefits of a Strategic Approach to HR

1. Facilitates development of high-qualityworkforce through focus on types ofpeople & skills needed

2. Facilitates cost-effective utilization oflabor, particularly in service industrieswhere labor is generally greatest cost

3. Facilitates planning & assessment ofenvironmental uncertainty & adaptationof organization to external forces

4

What is strategy?

5

A Strategy is a plan of action for the future so as to gain competitive advantage

1) Where

are we

now? 2) Where

are we

going? 3) How will

we get

there?

6

Process of Strategic Management

7

2 Phases of Strategic

Management

Strategy Formulation

Strategy

Implementation

2-8

Strategic Management Process Model

Strategy FormulationStrategy Implementation

HR Practices Recruiting Training

Performance management Labor relations

Employee relations Job analysis Job design Selection

Development Pay structure IncentivesBenefits

FirmPerformance Productivity Quality Profitability

HR ActionsBehaviorsResults

HR CapabilitySkills,AbilitiesKnowledge

HR Needs

SkillsBehavior

Culture

Strategic

ChoiceGoalsMission

External AnalysisOpportunities

Threats

InternalAnalysisStrengthsWeaknesses

2-9

Linkage between HRM and business Strategy

Both strategy formulation and strategyimplementation involve people-relatedissues and therefore necessitate theinvolvement of the HR function.

Four levels of integration exist betweenthe HR function and the strategicmanagement function

10

Four Types of linkages

1- Administrative LinkageThis is thelowest level of integration, in which the HRMfunction's attention is focused onday-to-day activities. No input from theHRM function to the company's strategic planis given.

2.One-Way LinkageThe firm'sstrategic business planning functiondevelops the plan and then informs theHRM function of the plan. HRM thenhelps in the implementation.12

3. Two-Way LinkageThis linkage allowsfor consideration of human resource issuesduring the strategy formulation process. TheHRM function is expected to provide input topotential strategic choices and then helpimplement the chosen option.

4. Integrative LinkageThis is based oncontinuing, rather than sequential, interaction.The HR executive is an integral member of thestrategic planning team.13

Strategy Implementation Variables

ProductMarket

Strategy

RewardSystems

Select

Train

Develop

People

Types

of

Information

Organizational

Structure

Task

Design

Performance

2-14

Corporate Strategies: Growth

BenefitsGaining economies of scale in

operations & functions

Enhancing competitive positionvis--vis industry competitors

Providing opportunities foremployee professionaldevelopment & advancement

HR IssuesPlanning for new hiring

Alerting current employees

Ensuring quality &performance standards aremaintained

Internal MethodsPenetration of existing markets

Developing new markets

Developing new products orservices for existing or newmarkets

External MethodsAcquiring other organizations

Vertical integration

HR Issues in M&AMerging organizations

Dismissing redundant employees

15

Corporate Strategies: Stability

Maintaining status quo due to limitedenvironmental opportunities for gainingcompetitive advantage

Few employees will have opportunitiesfor advancement

Critical that management identify keyemployees & develop specific HRretention strategies to keep them

16

Corporate Strategies:

Turnaround or Retrenchment

Downsizing or streamlining organizationin cost-cutting attempt to adjust tocompetitive environment

Few opportunities & manyenvironmental threats

Important to develop HR practices tomanage survivors

17

Porters Three Types of Competitive Strategies

Cost leadership Differentiation

Business-Level

Competitive Strategies

Focus/Niche

18

Business Unit Strategies: Cost Leadership

Increases in efficiency & cutting of costs, thenpassing savings to consumer

Assumes price elasticity in demand for products orservices is high

Assumes that customers are more price sensitivethan brand loyal

HR strategy focuses on short-termperformance measures of results &promoting efficiency through jobspecialization & cross-training

19

Business Unit Strategies: Differentiation

In order to demand a premium price from consumers

Attempting to distinguish organizational products orservices from other competitors or

Creating difference

Organization offers employees incentives &compensation for creativity

HR strategy focuses on external hiring ofunique individuals & on retainingcreative employees

20

Business Unit Strategies: Focus

Business attempts to satisfy needs of only aparticular group or narrow market segment

Strategic intent is to gain consumer loyalty ofneglected groups of consumers

Strategic HR issue is ensuring employeeawareness of uniqueness of market segment Thorough employee training & focus on

customer satisfaction are critical factors

Hiring members of target segment who areempathetic to customer in target segment

21

Porters Strategy in Relation to HR Strategy

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