1. Strategic Human Resource Management
Dr. Adel Zayed

2. Why people are important?
Organizations are social entities.
People are decision makers.
People are the major source of innovation and creativity.
People are Committed to the organization.
People are an integral part of the organizational learning process
People are a Sustainable Competitive Advantage (SCA).
Assets make things possible, people make things happen.

3. What is strategic management?
Strategic management is a process, an approach to addressing the competitive challenges an organization faces.
Strategic management can be though of as managing the pattern or the plan integrates an organizations’ major goals, policies, and action sequences into a cohesive whole.
Strategic management is a process of analyzing a company’s competitive situation, developing the company’s strategic goals, and devising a plan of action and allocation of resources (human, organizational, and physical) that will increase the likelihood of achieving those goals.

4. Strategic HRM
The linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and flexibility

5. Human Resource Strategy…
The intention of the corporation both explicit and covert, towards the management of its employees, expressed through philosophies, policies and practices (Tyson)
HR strategies define what an organisation wants to do in the longer term to address critical HR issues and to develop and implement policies, practices and processes that will further the achievement of its business goals and meet the needs of its stakeholders.

6. Purpose of strategic HRM
To support the achievement of the organisation’s business objectives
To provide a sense of purpose and direction
To develop a way of thinking that can be applied to any HRM issue arising in the organization, to see how value can be created from it.
To ensure that HR practices are integrated and mutually supportive

7. The meaning of strategic HRM
 The use of planning.
A coherent approach to the design and management of
HR systems based on an employment policy and
manpower strategy and often underpinned by a 'philosophy‘.
Matching HRM activities and policies to explicit business
strategy.
Seeing the people of the organisation as a 'strategic resource' for the achievement of 'competitive advantage'.
Professor Andrew Pettigrew, Bath University and
Professor Richard Whipp, Cardiff University

8. Strategic Human Resource Management (SHRM)
To take a strategic approach to HRM, we must first have an understanding of the role of HRM in the strategic management process.

9. Possible Roles Assumed by HR Function-(Ulrich, 1997)

10. Components of a Human Resource Management System
© Copyright McGraw-Hill. All rights reserved.

11. Traditional HR Versus Strategic HR

12. Egypt In Transition 1950’s - 1975 1976 - Now Socialism …… communism
Capitalism ……. Socialism
State ownership & public sector
Business sector …. Private sector
Price and salary control
No price nor salary control
Protected markets
Open markets
Low competition
severe competition
Low quality
High quality
low market and customer care
High market and customer care.
Primitive management
Advanced management systems
Low tech.
Digital & IT tech.
Saving rather than consumption
consumption rather than saving

13. Strategic Management Process
Strategic management tasks
Step 1: Define the Business and Its Mission
Step 2: Perform External and Internal Audits
Step 3: Translate the Mission into Strategic Goals
Step 4: Formulate a Strategy to Achieve the Strategic Goals
Step 5: Implement the Strategy
Step 6: Evaluate Performance

14. Overview of Strategic Management

15. Strategies in Brief Company Strategic Principle Dell Be direct
eBay Focus on trading communities
General Electric Be number one or number two in every industry in which we compete, or get out
Southwest Airlines Meet customers’ short-haul travel needs at fares competitive with the cost of automobile travel
Vanguard Unmatchable value for the investor-owner
Wal-Mart Low prices, every day

16. HR and Competitive Advantage
Any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share.
Superior human resources are an important source of competitive advantage

17. Linking Corporate and HR Strategies
Figure 3–6

18. HR’S Strategic Roles
HR professionals should be part of the firm’s strategic planning executive team.
Identify the human issues that are vital to business strategy.
Help establish and execute strategy.
Provide alternative insights.
Are centrally involved in creating responsive and market-driven organizations.
Conceptualize and execute organizational change.

19. HR Involvement in Mergers

20. HR’s Strategy Execution Role
The HR department’s strategies, policies, and activities must make sense in terms of the company’s corporate and competitive strategies, and they must support those strategies.

21. HR’s Strategy Formulation Role
HR helps top management formulate strategy in a variety of ways by.
Supplying competitive intelligence that may be useful in the strategic planning process.
Supplying information regarding the company’s internal human strengths and weaknesses.
Build a persuasive case that shows how—in specific and measurable terms—the firm’s HR activities can and do contribute to creating value for the company.

22. Creating a Strategy-oriented HR System
Components of the HR process
HR professionals who have strategic and other skills
HR policies and activities that comprise the HR system itself
Employee behaviors and competencies that the company’s strategy requires.

23. The Basic Architecture of HR
Figure 3–8

24. Translating Strategy into HR Policy and Practice
Basic Model of How to Align HR Strategy and Actions with Business Strategy
Figure 3–9

25. The HR Scorecard Approach
Measures the HR function’s effectiveness and efficiency in producing employee behaviors needed to achieve the company’s strategic goals.
Creating an HR scorecard
Must know what the company’s strategy is.
Must understand the causal links between HR activities, employee behaviors, organizational outcomes, and the organization’s performance.
Must have metrics to measure all the activities and results involved.

26. Strategic HR Relationships
HR Activities
Emergent Employee Behaviors
Strategically Relevant Organizational Outcomes
Organizational Performance
Achieve Strategic Goals
Figure 3–10

27. The HR Scorecard Approach to Formulating HR Policies, Activities, and Strategies
Figure 3–11

28. Using the HR Scorecard Approach
Step 1: Define the Business Strategy
Step 2: Outline the Company’s Value Chain
Step 3: Identify the Strategically Required Organizational Outcomes
Step 4: Identify the Required Workforce Competencies and Behaviors
Step 5: Identify the Strategically Relevant HR System Policies and Activities
Step 6: Design the HR Scorecard Measurement System
Step 7: Periodically Evaluate the Measurement System

29. Outlining the Company’s Value Chain
Value chain analysis
A tool for identifying, isolating, visualizing, and analyzing the firm’s most important activities and strategic costs.
Identifying the primary and crucial activities that create value for customers and the related support activities.
Each activity is part of the process of designing, producing, marketing, and delivering the company’s product or service.
Shows the chain of essential activities.
Prompts future questions.

30. Simple Value Chain for “the Hotel Paris”

31. HR Scorecard for the Hotel Paris International Corporation*
Note:*(An abbreviated example showing selected HR practices and outcomes aimed at implementing the competitive strategy, “To use superior guest services to differentiate the Hotel Paris properties and thus increase the length of stays and the return rate of guests, and thus boost revenues and profitability”).

32. Outcomes of Strategic HR

33. Model of Strategic HR Management

34. Barriers to Strategic HR
Short-term mentality/focus on current performance
Inability of HR to think strategically
Lack of appreciation for what HR can contribute
Failure to understand line managers’ role as an HR manager
Difficulty in quantifying many HR outcomes
Perception of human assets as higher-risk investments
“Incentives” for changes that might arise

35. Achieving Strategic Fit
Michael Porter
Emphasizes the “fit” point of view that all of the firm’s activities must be tailored to or fit its strategy, by ensuring that the firm’s functional strategies support its corporate and competitive strategies.
Gary Hamel and C. K. Prahalad
Argue for “stretch” in leveraging resources—supplementing what you have and doing more with what you have—can be more important than just fitting the strategic plan to current resources.

36. Southwest Airlines
Case Discussion

37. Southwest Airlines
“I’ve tried to create a culture of caring for people in the totality of their lives, not just at work. There’s no magic formula. It’s like building a giant mosaic--it takes thousands of little pieces…The intangibles are more important than the tangibles. Someone can go out and buy airplanes from Boeing and ticket counters, but they can’t buy our culture, our esprit de corps.”
Herb Kelleher
CEO Southwest
Wall Street
Journal
8/31/99

38. Southwest Airlines
Only major airline to have earned a profit every year for nearly three decades.
Southwest has won the Triple Crown (best on time performance, fewest complaints, fewest lost bags) for 5 years in a row. No other airline has won this award.
Southwest’s operating costs are 20% below the industry average. Company is 84% unionized.
Now serves over 52 cities with 26,000 employees.
In 1998 they had over 140,000 job applicants.

39. What are your reactions to this approach?
Southwest Airlines
Talking about Southwest’s recruiting.
Kelleher says, “We draft great attitudes.
If you don’t have a good attitude, we
don’t want you, no matter how skilled
you are.”
What are your reactions to this approach?

40. Does this matter at Southwest? Why?
Mission Statement
“The mission of Southwest Airlines is dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.”
Does this matter at Southwest? Why?

41. To Our Employees:
“We are committed to provide ouremployees a stable work environment with equal opportunity for learning andpersonal growth. Creativity and innovationare encouraged for improving the effec-tivenessof Southwest Airlines. Above all,employees will be provided the sameconcern, respect, and caring attitudewithin the organization that they are ex-pectedto share externally with everySouthwest Customer.”

42. “Every company I have ever gonein, they say people are number one,but they’re just not. They don’t liveup to that, and we do.”
Gary Kelly
Chief Financial Officer
Southwest Airline

43. Airline Performance, January 1999
On-time
Percent
Lost bags
per 1000
Complaints
per 100,000
Southwest
Continental
Delta
American West
American
Alaska
United
Northwest
TWA
USAir
76.7% -1
72.0% -2
71.4% -3
68.3% -4
67.1% -5
66.5% -6
66.5% -7
62.7% -8
60.0% -9
58.2% -10

44. The Southwest Airlines’ Activity System

45. Three Questions
1. What does it take to make money in Southwest’s business? What are Southwest’s sources of competitive advantage? Are they sustainable?
2. How serious is the threat of competition? Can other airlines copy the Southwest model? How?
3. What are your concerns? What does Southwest need to do to continue their success?

46. Southwest Takeaways A simple, consistent strategy
Aligned and consistent HR practices
Long-term perspective on employment
Stability
Job design
Training and development
Careers
Compensation
Performance-based
Ownership
Compressed wages
Selection for “attitude” and “fit”
Strong culture --family, performance
Leadership reinforcement
Information sharing
Psychological Ownership