HUMAN RESOURCE HUMAN RESOURCE MANAGEMENTMANAGEMENT

CHAPTER 3CHAPTER 3

HRM Strategy and Analysis

GARY DESSLERGARY DESSLER

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After studying this chapter, you should be able to:After studying this chapter, you should be able to:

1.1. Outline the steps in the strategic management Outline the steps in the strategic management process.process.

2.2. Explain and give examples of each type of Explain and give examples of each type of companywide and competitive strategy.companywide and competitive strategy.

3.3. Explain what a strategy-oriented human Explain what a strategy-oriented human resource management system is and why it is resource management system is and why it is important.important.

4.4. Illustrate and explain each of the seven steps Illustrate and explain each of the seven steps in the HR Scorecard approach to creating in the HR Scorecard approach to creating human resource management systems.human resource management systems.

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The Strategic Management ProcessThe Strategic Management Process

• Strategic ManagementStrategic Management The process of identifying and executing the The process of identifying and executing the

organization’s mission by matching its capabilities organization’s mission by matching its capabilities with the demands of its environment.with the demands of its environment.

• StrategyStrategy A chosen course of action.A chosen course of action.

• Strategic PlanStrategic Plan How an organization How an organization intends to balance its internal intends to balance its internal

strengths and weaknesses with its external strengths and weaknesses with its external opportunities and threats to maintain a competitive opportunities and threats to maintain a competitive advantage over the long-term.advantage over the long-term.

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Business Vision and MissionBusiness Vision and Mission

• VisionVision A general statement of an organization’s A general statement of an organization’s intended intended

directiondirection that evokes emotional feelings in that evokes emotional feelings in organization members.organization members.

• MissionMission Spells out who the company is, what it does, and Spells out who the company is, what it does, and

where it’s headed.where it’s headed.

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Types of StrategiesTypes of Strategies

Diversification Strategy

Geographic Expansion Strategy

Vertical Integration Strategy

Corporate-Level Strategies

ConsolidationStrategy

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Types of Strategies (cont’d)Types of Strategies (cont’d)

Cost Leadership Focus/Niche

Business-Level/Competitive Strategies

Differentiation

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Achieving Strategic FitAchieving Strategic Fit

• The “Fit” Point of View (Porter)The “Fit” Point of View (Porter) All of the firm’s activities must be tailored All of the firm’s activities must be tailored to or fit to or fit

the chosen strategy the chosen strategy such that the firm’s functional such that the firm’s functional strategies support its corporate and competitive strategies support its corporate and competitive strategies.strategies.

• Leveraging (Hamel and Prahalad) Leveraging (Hamel and Prahalad) ““Stretch” in Stretch” in leveraging resourcesleveraging resources—supplementing —supplementing

what you have and doing more with what you have—what you have and doing more with what you have—can be more important than just fitting the strategic can be more important than just fitting the strategic plan to current resources.plan to current resources.

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Strategic Human Resource ManagementStrategic Human Resource Management

• Strategic Human Resource ManagementStrategic Human Resource Management The linking of HRM with strategic goals and The linking of HRM with strategic goals and

objectives in order to improve objectives in order to improve business performance business performance and develop and develop organizational cultures organizational cultures that foster that foster innovation and flexibility.innovation and flexibility.

Involves Involves formulating and executing HR systemsformulating and executing HR systems——HR policies and activities—that produce the HR policies and activities—that produce the employee employee competenciescompetencies and behaviors and behaviors that the that the company needs to achieve its strategic aims.company needs to achieve its strategic aims.

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Strategic Human Resource ChallengesStrategic Human Resource Challenges

Corporate productivity and

performance improvement

efforts

Increased HR team involvement

in design of strategic plans

Basic Strategic Challenges

Expanded role of employees in the

organization’s performance

efforts

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Human Resource Management’s Human Resource Management’s Strategic RolesStrategic Roles

Strategy Execution

Role

Strategic Planning

Roles

Strategy Formulation

Role

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Creating the Strategic Human ResourceCreating the Strategic Human ResourceManagement SystemManagement System

Human Resource Professionals

Employee Behaviors and Competencies

Components of a Strategic HRM System

Human Resource Policies and

Practices

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K E Y T E R M SK E Y T E R M S

strategic planstrategic plan

strategic managementstrategic management

visionvision

missionmission

SWOT analysisSWOT analysis

strategystrategy

strategic controlstrategic control

competitive advantagecompetitive advantage

leveragingleveraging

strategic human resource managementstrategic human resource management

HR ScorecardHR Scorecard

metricsmetrics

value chain analysisvalue chain analysis

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Creating an HR ScorecardCreating an HR Scorecard

1

2

3

4

5

Outline value chain activities

Define the business strategy

Outline a strategy map

Identify strategically required outcomes

Identify required workforce competencies and behaviors

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7

8

9

10

Create HR Scorecard

Identify required HR policies and activities

Choose HR Scorecard measures

Summarize Scorecard measures on digital dashboard

Monitor, predict, evaluate

The 10-Step HR Scorecard Process