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Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 3-1
Mergers, Acquisitions, and Strategic Human Resource Management
Chapter 3
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What is strategic HRM?
1. Decide on the strategic goals
2. Identify employee skills and behaviors necessary for
success
3. Formulate HR management policies and practices that will produce these required skills
Strategic HRM is developed through three steps:
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The Strategic Management Process
The process begins by developing a strategic plan that describes how internal strengths and weaknesses will be matched with external opportunities and threats
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Steps in Strategic Management
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Step 1: Define the current business
Begin by asking these questions:
– What products do we sell?
– Where do we sell these products?
– How do our products or services differ from our competitors?
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Step 2: Perform External and Internal Situational Audits
• The key to success is adaptation• Situational audits require SWOT (strengths,
weaknesses, opportunities, and threats) analysis
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Step 3: Formulate a New Business Direction
• What should our new business be in terms of product, placement and competitive advantage?
• The vision statement describes the following: What do we want to become?
• The mission statement explains the following: Where are we now?
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Step 4: Translate the Mission into Strategic Goals
• Operationalize the mission for managers
• What does the mission mean to each department?
• What goals follow implementation?
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Step 5: Formulate Strategies to Achieve the Strategic Goals
• What is the game plan?
• Decide on a course of action
– Best strategies are concise
– Easily communicated
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Step 6: Implement the Strategies
• Get the game plan going
• Do what needs to be done
– Hire or fire people
– Build or close plants
– Adding or eliminating products and product lines
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Step 7: Evaluate Performance
• Evaluate, evaluate, evaluate
• Ongoing process vis-à-vis strategic control
• Addresses the following questions:
– Are resources being utilized as planned?
– Are discrepancies explained?
– Do changes in our situation suggest change?
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Types of Strategies
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Corporate Strategy
• Top-level, company-wide
• Identifies the portfolio of existing business segments
• Strategic possibilities include the following:
– Diversification or vertical integration
– Consolidation
– Geographic expansion
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Competitive Strategy
• Identifies how to build upon and strengthen the business’s long-term marketplace position
• Identifies and develops competitive advantage
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Competitive Advantage
• Cost leadership indicates that the enterprise intends to become the low-cost leader in the industry
• Differentiation strategies seek to be unique in its industry along dimensions valued by buyers
• Focusers carve out niche markets and compete by providing a product/service that customers can get through no other means
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Functional Strategies• Identifies basic courses of action that each
department will pursue to achieve strategic goals – consider Southwest Airlines
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The Importance of Leverage
• Leverage means supplementing what you have and doing more with what you’ve got!
• Human resources can be a crucial competitive advantage!
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HRM Creates Competitive Advantage
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Four Important Strategic HR Issues
1. HR must understand that employees play a key role in employers’ performance improvement efforts
2. HR teams should support corporate productivity and performance improvement efforts
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3. HR units must be more involved in designing – not just executing – the strategic plan
4. HR managers must understand how to create value
Four Important Strategic HR Issues, cont.
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How Involved Is HR in Strategic Management?
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What Roles Does HR Play?
• Strategy execution
• Strategy formulation
• SWOT analysis
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Translating Strategy into HR Policy and Practice