1. Human Resource Management Gaining a Competitive Advantage
Strategic Human Resource Management

2. Session Learning Objectives
By end of this session , you should be able to:
List the components of the strategic management process.
Describe the differences between strategy formulation and strategy implementation.
Discuss the role of the HRM function in strategy formulation.
Describe the different HR issues and practices associated with various directional strategies.
Discuss the advantages and disadvantages of various ways of eliminating a labor surplus and avoiding a labor shortage.

3. Introduction
Goal of strategic management – To deploy and allocate resources in a way that gives organization a competitive advantage.
HRM function must be integrally involved in the company’s strategic management process.
The goal of strategic management in an organization is to deploy and allocate resources in a way that gives it a competitive advantage.
Human resource managers should:
have input into the strategic plan,
have specific knowledge of the organization’s strategic goals,
know what types of employee skills, behaviors, and attitudes are needed to support the strategic plan, and
develop programs to ensure that employees have those skills, behaviors, and attitudes.

4. What is Strategic Management?
Strategic Management is a process, an approach to addressing the competitive challenges an organization faces.
Strategic Human Resource Management is the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.
Strategic Management is a process for analyzing a company's competitive situation, developing the company's strategic goals, and devising a plan of action and allocation of resources that will help a company achieve its goals.
HR Managers should be trained to identify the competitive issues faced by the organization.
Strategic human resource management is the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.

5. Porter’s 3 Generic Strategies for Competitive Advantage
Cost Leadership: The strategy is designed to achieve competitive advantage through large scale production and operating as a low cost producer.
Differentiation: The strategy adopts developing high quality products that lead to brand recognition and customer loyalty
Focus: this strategy is deigned to achieve penetration into a particular market using whether differentiation or cost leadership

6. Components of the Strategic Management Process
Strategy Formulation
Reaching a Strategic direction by defining the company’s mission and goals, its external opportunities and threats, and its internal strengths and weaknesses.
Strategy Implementation:
Structuring the organization, allocating resources, ensuring that the firm has skilled employees in place, and developing reward systems that align employee behavior with the strategic goals.
Strategic Management has two distinct yet independent components:
Strategy Formulation: Strategic planning groups
Strategy Implementation: The organization follows through on the strategy that has been chosen. This includes structuring the organization, allocating resources, ensuring that the firm has skilled employees in place, and developing reward systems that align employee behavior with the strategic goals.

7. Model of the Strategic Management Process
Forecasts of
Labor Demand
Strategy Formulation
Strategy Implementation
External
Analysis
Opportunities
Threats
HR Practices
Recruiting,
Training,
Performance management,
Labor relations,
Employee relations,
Job analysis
Job design,
Selection,
Development,
Pay structure,
Incentives,
Benefits
Firm
Performance
Productivity,
Quality,
Profitability
Mission
Goals
Strategic
Choice
Human
Resource
Needs
Skills
Behavior
Culture
This figure presents the strategic management process.
Human
Resource
Capability
Skills,
Abilities,
Knowledge
Human
Resource
Actions
Behaviors,
Results
Internal
Analysis
Strengths
Weaknesses

8. The Role of HRM in Strategy Formulation
Four levels of integration seems to exist between the HRM function and the strategic management function.
Administrative Linkage — Lowest level of integration; HRM function’s attention is focused on day-to-day activities. No input from the HRM function to the company’s strategic plan is given.
One-Way Linkage — The strategic business planning function develops the plan and then informs the HRM function of the plan. HRM then helps in the implementation.
Two-Way Linkage — Allows for consideration of human resource issues during the strategy formulation process. The HRM function is expected to provide input to potential strategic choices and then help implement the chosen option.
Integrative Linkage — Is based on continuing, rather than sequential, interaction. The HR executive is an integral member of the strategic planning team.

9. Strategy Formulation External analysis Opportunities Threats Mission
Goals
Strategic
Choice
Internal
analysis
Strengths
Weaknesses
This figure presents the five major components of the strategic management process are relevant to strategy formulation.

10. Strategy Formulation
Five components of the strategic management process:
A mission is a statement of the organization's reasons for being.
Goals are 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.
Five components of the strategic management process relevant to strategy formulation:
A mission is a statement of the organization's reasons for being.
Goals are 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.

11. Strategy Implementation
Organizational
structure
Types of
Information
Task Design
Product
market
strategy
Performance
This figure presents the variables to be considered in strategy implementation.
Reward
systems
Selection,
training, and
development
of people

12. HRM Practices
Job Analysis - the process of getting detailed information about jobs.
Recruitment - the process through which the organization seeks applicants.
Training - a planned effort to facilitate learning of job-related knowledge, skills, and behavior.
Job design - making decisions about what tasks should be grouped into a particular job.
Selection - identifying the applicants with the appropriate knowledge, skills, and ability.
Development - the acquisition of knowledge, skills, and behavior that improves employees' ability to meet the challenges of future jobs.
HRM function can be thought of as having six menus of HRM practices, from which companies can choose the ones most appropriate for implementing their strategy. Each of these menus refers to a particular functional area of HRM: job analysis/design, recruitment/selection, training and development, performance management, pay structure, incentives, and benefits, and labor-employee relations.
Performance management - helps ensure that employees’ activities and outcomes are congruent with the organization’s objectives.
Pay structure, incentives, and benefits.
Labor and employee relations.

13. HRM Needs in Strategic Types
Different strategies require different types of employees.
Role Behaviors:
Cost strategy firms seek efficiency and therefore carefully define the skills they need in employees and use worker participation to seek cost-saving ideas.
Differentiation firms need creative risk takers.
Different strategies require 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 firms seek efficiency and therefore carefully define the skills they need in employees and use worker participation to seek cost-saving ideas.
Differentiation firms need creative risk takers.

14. Directional Strategies
External Growth
Strategy
Concentration
Strategy
Downsizing
Internal Growth
Strategy
Companies have used five possible categories of directional strategies to meet objectives: external growth, concentration, internal growth, mergers and acquisitions, and downsizing.
Mergers and
Acquisitions