Strategic Human Resource Management Copyright © Texas Education Agency, All rights reserved.

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HR as a Strategic Partner HR executives must understand complex organizational design Sharp deviation from what has traditionally been an administrative- type role for HR Copyright © Texas Education Agency, All rights reserved. 3

Strategic Activities CEOs want from HR 4  Make workforce strategies integral to company strategies and goals  Leverage HR’s role in major change initiatives  Earn the right to a seat at the corporate table  Understand finance and profits  Help line managers achieve their goals Copyright © Texas Education Agency, All rights reserved.

The Meaning of “Strategy” 5  A critical factor that affects Firm Performance  A factor that contributes to Competitive Advantage in markets  Means having a long-term focus  Incorporates plans that involve the top executives and/or board of directors of the firm  A general framework that provides a perspective for selecting specific policies and procedures Copyright © Texas Education Agency, All rights reserved.

Definition of Strategic Human Resource Management (SHRM) 6  Integrating human resource management strategies and systems to achieve overall mission, strategies, and success of the firm while meeting needs of employees and other stakeholders. Copyright © Texas Education Agency, All rights reserved.

Strategic Plan  The three traditional poles of a strategic Plan (Aktouf, 1996) 7 Senior Management ResourcesEnvironment Copyright © Texas Education Agency, All rights reserved.

Steps in Strategic Management Process 8 Step 1 Step 2 Step 3 Step 4 Step 5 Mission and Goals Management philosophy values Environmental Analysis External scan Internal scan Strategic Formulation Strategic choice Corporate Business Functional Strategy Implementation Leadership Structure Control Systems Human Resources Strategy Evaluation Operating performance Financial Performance Copyright © Texas Education Agency, All rights reserved.

Step 1- Organization’s Direction  An organizational analysis, involving a close look at the organization’s overall mission and goals, is an integral aspect of identifying human resource strategies. Often, even similar organizations pursue different goals; however, some goals such as profitability (or revenue surplus), organizational growth, employee satisfaction, efficiency, adaptation to environmental changes, etc. are common across most organizations. 9 Copyright © Texas Education Agency, All rights reserved.

Step 1- Organization’s Direction (Continued)  How an organization defines its mission also significantly influences human resource strategies.  A mission statement specifies what activities the organization intends to pursue and what course is charted for the future. It is a concise statement of “who we are, what we do, and where we are headed.” It gives an organization its own special identity, character, and path of development. 10 Copyright © Texas Education Agency, All rights reserved.

Step 2- Environmental Analysis  External Analysis- By careful and continuous monitoring of economic, social, and labor market trends and noting changes in governmental policies, legislation, and public policy statements, a human resource manager will be able to identify environmental threats and opportunities that, in turn, help formulate new action guidelines. 11 Copyright © Texas Education Agency, All rights reserved.

Step 2- Environmental Analysis (Continued)  Internal Analysis- Human resource strategies should be formed only after a careful look at the strengths and weaknesses of the organization and its culture. In the same way, organizational strategies that cannot be built on existing human resource capabilities should be avoided (unless it is possible to remove these deficiencies immediately either through training or selection of employees). 12 Copyright © Texas Education Agency, All rights reserved.

Step 3- Strategic Formulation  Strategic formulation involves senior managers evaluating the interaction between strategic factors and making strategic choices that guide managers to meet the organization’s goals. Some strategies are formulated at the corporate, business, and specific functional levels.  The term “strategic choice” raises the questions of who is making decisions and why they are made. 13 Copyright © Texas Education Agency, All rights reserved.

Step 4- Strategic Implementation  Strategy implementation is an area of activity that focuses on the techniques used by managers to implement their strategies. In particular, it refers to activities that deal with leadership style, the structure of the organization, the information and control systems, and the management of human resources. 14 Copyright © Texas Education Agency, All rights reserved.

Step 5- Strategic Evaluation  Human resource strategies, however effective they prove to be, must be examined periodically.  An organization’s contextual factors, such as technology, environments, government policies, and so on, change continuously. Additionally, several of its internal factors, such as membership characteristics, role definitions, and internal procedures also continuously change. All of these changes necessitate periodic strategy evaluation to ensure their continued appropriateness. 15 Copyright © Texas Education Agency, All rights reserved.

Step 5- Strategic Evaluation (Continued)  Strategy evaluation is an activity that determines to what extent the actual change and performance match the desired change and performance.  Results of program evaluation produce valuable feedback, which is information that helps evaluate success or failure. Such information, in turn, helps the firm to fine tune its practices or even abandon some actions that do not seem to have performance potential. 16 Copyright © Texas Education Agency, All rights reserved.

Conclusion  The strategic management model depicts the five major activities as forming a rational and linear process.  It is, however, important to note that it is a normative model, that is, it shows how strategic management should be done rather than describing what is actually done by senior managers. 17 Copyright © Texas Education Agency, All rights reserved.