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Strategic Human Strategic Human Resource ManagementResource Management

Paul L. Schumann, Ph.D.Paul L. Schumann, Ph.D.

© 2011 by Paul L. Schumann. All rights reserved.© 2011 by Paul L. Schumann. All rights reserved.

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Strategic DecisionsStrategic Decisions

WhereWhere should we compete? should we compete?• What industries, products, locations, …?What industries, products, locations, …?

HowHow should we compete? should we compete?• What criteria: cost, product features, What criteria: cost, product features,

quality, reliability, …?quality, reliability, …? With whatWith what should we compete? should we compete?

• What gives us competitive advantage?What gives us competitive advantage?

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Competitive AdvantageCompetitive Advantage

Unique, sustainable, hard to copy:Unique, sustainable, hard to copy:• Product or serviceProduct or service• Production or inventory methodsProduction or inventory methods• Distribution methodsDistribution methods• Marketing methodsMarketing methods• Financing methodsFinancing methods• Information management methodsInformation management methods• Human resource managementHuman resource management

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Link HRM & StrategyLink HRM & Strategy

Administrative linkageAdministrative linkage One-way linkageOne-way linkage Two-way linkageTwo-way linkage Integrative linkageIntegrative linkage

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Generic Strategies (Porter)Generic Strategies (Porter)

Cost Leadership StrategyCost Leadership Strategy• Control overhead and other costsControl overhead and other costs• Use efficient, large-scale facilitiesUse efficient, large-scale facilities• Exploit the experience curveExploit the experience curve

Differentiation StrategyDifferentiation Strategy• Differentiate through unique technology, Differentiate through unique technology,

features, customer service, brand features, customer service, brand image, etc.image, etc.

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Directional StrategiesDirectional Strategies

External growthExternal growth• Mergers & acquisitions (“M&A”)Mergers & acquisitions (“M&A”)

Horizontal (M&A involving competitors)Horizontal (M&A involving competitors) Vertical (M&A involving the supply chain)Vertical (M&A involving the supply chain)

Internal growthInternal growth• New products, new markets, innovationNew products, new markets, innovation

Concentration (focus, niche)Concentration (focus, niche)• Cut costs, grow market share in nicheCut costs, grow market share in niche

Downsizing / divestingDownsizing / divesting

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Transforming the HRM FunctionTransforming the HRM Function

CustomersCustomers ProductsProducts MethodsMethods

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Measuring HRM EffectivenessMeasuring HRM Effectiveness

Audit approachAudit approach• Measure key indicators & customer Measure key indicators & customer

satisfactionsatisfaction Analytic approachAnalytic approach

• Cost / benefit analysisCost / benefit analysis

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Improving HRM EffectivenessImproving HRM Effectiveness

Restructure HRM:Restructure HRM:• HRM Centers for Expertise (specialists)HRM Centers for Expertise (specialists)• HRM Field Generalists (dual reporting)HRM Field Generalists (dual reporting)• HRM Service Center (specialists)HRM Service Center (specialists)

Outsource HRMOutsource HRM Process redesign/reengineering HRMProcess redesign/reengineering HRM Human Resource Information Human Resource Information

Systems (HRIS)Systems (HRIS)