What is Strategic HRM?What is Strategic HRM?

Strategic human resource management: The pattern of planned human resource deployments and activities intended to enable an organization to achieve its strategic goals.

Strategic HRMStrategic HRM

To be strategic, the HR function shouldHave direct, integral involvement in strategy

formulation and implementation.Know what employee skills, behaviors, and

attitudes are needed to support strategic plan.Develop those skills, behaviors, and attitudes

among employees.

Components of the Strategic Management Process

Components of the Strategic Management Process

1. Strategy Formulation:

Strategic planning group decides on a strategic direction

Defining the company's mission and goals Identify external opportunities and threats Identify internal strengths and

opportunities for growth

Strategy FormulationStrategy Formulation

GoalsMissionStrategicChoice

InternalanalysisStrengths

Weaknesses

Externalanalysis

OpportunitiesThreats

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Components of the Strategic Management Process

Components of the Strategic Management Process

2. Strategy Implementation:

Follow through on the chosen strategy. Includes structuring the organization,

allocating resources, Involves ensuring that the firm has skilled

employees in place Utilizes reward system that align employee

behavior with the strategic goals.

Model of the Strategic Management Process

Model of the Strategic Management Process

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

Mission GoalsStrategicChoice

InternalAnalysisStrengths

Weaknesses

ExternalAnalysis

OpportunitiesThreats

Strategy Formulation Strategy Implementation

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Levels of HRM integration in Strategy Formulation

Levels of HRM integration in Strategy Formulation

Administrative Linkage — Lowest level; HRM focused on day-to-day activities. No input from the HRM function to the company's strategic plan.

One-Way Linkage — The strategic business planning function develops the plan and then informs the HRM function of the plan. HRM helps with implementation.

Two-Way Linkage — HR issues considered during the strategy formulation process. HR function provides input on potential strategic choices and helps implement chosen option.

Integrative Linkage — Continuing, rather than sequential, interaction.

HR is an integral member of the strategic planning team.

Strategy FormulationStrategy Formulation

Five relevant components: Mission: statement of the organization's reasons for being. Goals: 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.

Strategy ImplementationStrategy Implementation

Organizationalstructure

Types ofInformation

Task design

Selection,training, anddevelopment

of people

Rewardsystems

Productmarketstrategy

Performance

Strategic TypesStrategic Types

Porter's Generic Strategies —competitive advantage comes from creating value by:reducing costs orcharging a premium price for

a differentiated product or service (differentiation).

HRM and Strategic TypesHRM and Strategic Types

Different strategies call for different types of employees.

Role behaviors are the behaviors required of an individual in his or her role as a jobholder in a social work environment.

Cost strategy calls for efficiency--carefully define the skills employees need. Seek employees’ cost-saving ideas.

Differentiation firms need creative risk takers.

The Role of HR in Providing a Competitive Advantage

The Role of HR in Providing a Competitive Advantage

Emergent Strategies - Those that evolve from the grass roots of the organization.What actually is done versus what is planned. HR plays an important role in facilitating the

communication of emergent strategies between levels in the hierarchy.

Enhancing Firm CompetitivenessBy developing a rich pool of talent, HR can assure the

company's ability to adapt to a dynamic environment.

Competencies of Strategic Human Resource Consultants

Competencies of Strategic Human Resource Consultants

Four basic competencies:Business Competencies: Understand company's

economic and financial capabilities.Professional/Technical Knowledge: In HR practicesChange Management or Organizational Development

Techniques: Ability to diagnose need for change; develop and implement the appropriate intervention.

Integration Competencies: Holistic perspective with the skills of a specialist in the above three areas.

Human Resource CompetenciesHuman Resource Competencies

HR Professional

IntegrationCompetence

Professional andTechnical

Knowledge

Ability toManage Change

BusinessCompetence