1. Chapter 2 Strategy and Human Resources Planning

2. Learning Outcomes
Explain how human resources planning and a firm’s mission, vision, and values are integrally linked to its strategy
Understand how an organization’s external environment influences its strategic planning
Understand why it is important for an organization to do an internal resource analysis
Explain the linkages between competitive strategies and HR

3. Learning Outcomes
Understand what is required for a firm to successfully implement a strategy and assess its effectiveness
Describe how firms evaluate their strategies and HR implementation

4. Strategic Planning and Human Resources
Procedures for making decisions about the organization’s long-term goals and strategies
Human resources planning (HRP)
Process of anticipating and providing for the movement of people into, within, and out of an organization

5. Strategic Human Resources Management (SHRM)
Pattern of human resources deployments and activities that enable an organization to achieve its strategic goals
Combines strategic planning and HR planning
Strategy formulation - Provides input as to what is possible given the types and numbers of people available
Strategy implementation - Makes resource allocation decisions to implement the devised strategy

6. Alignment of HRP and Strategic Planning
Two-way process
A firm’s HR strategy follows the business strategy and helps implement it
People, culture, and climate of a company constrain a firm’s ability to achieve strategically

7. 전략적 계획과 인적자원관리와의 관계
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8. Step One: Mission, Vision, and Values
Basic purpose of the organization and its scope of operations
Strategic vision
Clarifies the long-term direction of the company and its strategic intent
Core values
Strong and enduring beliefs and principles that the company uses as a foundation for its decisions

9. Step One: Mission, Vision, and Values
Developing a mission statement
Factors to be considered
Organization’s reason of existence
Need fulfilled by the organization in comparison to the competitors
Knowledge of the need and methods for fulfilling them
Knowledge of market and the customers
Core values of the firm that will be practiced by the employees

10. Step One: Mission, Vision, and Values
HR’s role
Communicates mission, vision, and values frequently informally and formally
Recruit and hire employees whose values are consistent with the organization
Translate mission, vision, and values into:
Specific on-the-job behaviors
Job descriptions
Basis of employee rewards

11. Step Two: External Analysis
Environmental scanning: Systematic monitoring of major external forces influencing the organization
Business environment: Factors that a firm cannot directly control but can affect its strategy
Remote environment: Forces that generally affect specific firms
Economy and ecological, technological, social, demographic, and legal and regulatory changes

12. Step Two: External Analysis
Competitive environment: Consists of a firm’s specific industry
Includes the industry’s customers, rival firms, new entrants, substitutes, and suppliers
HR’s external analysis
Changes in a firm’s remote and competitive environments are monitored and analyzed
Affect hiring plans, recruitment and replacement polices

13. Figure 2.2 - Five Forces Framework

14. Step Three: Internal Analysis
Core capabilities: Integrated knowledge sets within an organization
Distinguish the organization from its competitors and deliver value to customers
Value creation: What the firm adds to a product or service by virtue of making it
Value = benefits – costs

15. Step Three: Internal Analysis
Resources of core capabilities
Processes - Standard routines for how work will be done and results will be accomplished
Systems - Information systems, databases, and proprietary technologies
People - Includes knowledge, skills, and abilities of employees used to create value for customers

16. Step Three: Internal Analysis
Criteria for sustaining competitive advantage
Resources should be:
Valuable
Rare
Difficult to imitate
Organized

17. Step Three: Internal Analysis
Trends of employment relationships and HR practices
Strategic knowledge workers
Hold unique skills directly linked to the company’s strategy
Difficult to replace
Core employees
Skills are transferable
Managers invest less in training and development

18. Step Three: Internal Analysis
Supporting workers
Scope of duties is limited
Employment relationships are transaction-based and focused on rules and procedures
External partners
Hold skills that are unique and specialized
Skills are not related to the company’s core strategy

19. Figure 2.3 - Mapping Human Capital

20. Step Three: Internal Analysis
Cultural audits: Audits of the culture and quality of work life in an organization
Firm surveys its employees on how they feel about a number of issues
Identifies groups with different views about the nature of work and how it should be done
Clan culture - Employees are closely knit and exhibit concern for one another
Values their customers, loyalty, and cohesion

21. Step Three: Internal Analysis
Adhocracy culture - Characterized by risk-taking, innovation, and a spirit of entrepreneurship
Market culture - Encourages competitive, result-oriented behaviors
Hierarchical culture - Characterized by formal structures and procedures
Values efficiency and stability
Value-based hiring: Outlining behaviors that exemplify a firm’s corporate culture and hiring people who are a fit for them

22. Step Three: Internal Analysis
Forecasting - Key elements
Forecasting demand for labor
Forecasting supply of labor
Balancing supply and demand considerations

23. Figure 2.4 - Model of HR Forecasting

24. Step Three: Internal Analysis
Forecasting a firm’s demand for employees
Quantitative approaches
Trend analysis: Forecasts labor demand based on an organizational index such as sales
Modeling or multiple predictive techniques - Combine several factors to predict employment levels
Qualitative approaches
Management forecasts: Opinions of supervisors, department managers, or experts, knowledgeable about the organization’s future employment needs
Delphi technique - Solicits and summarizes judgments of a preselected group of individuals

25. Step Three: Internal Analysis
Forecasting the supply of employees
Staffing tables: Graphic representations of all organizational jobs
Contains numbers of employees currently occupying those jobs and future employment requirements
Markov analysis: Tracks the pattern of employee movements through various jobs
Quality of fill: Metric designed to measure how well new hires are performing on the job

26. Step Three: Internal Analysis
Skill inventories: Files of personnel education, experience, interests, and skills
Allow managers to quickly match job openings with employee backgrounds
Management inventories - Data gathered on managers
Replacement charts: Listings of current jobholders and potential replacements if an opening occurs, used for succession planning
Succession planning: Identifying, developing, and tracking key individuals for executive positions

27. Step Three: Internal Analysis
Human capital readiness: Evaluating the availability of critical talent in a company and comparing it to the firm’s supply
Difference between the quantity and quality of employees required and available represent the gap that needs to be remedied
Provides managers a foundation to establish future strategy and specific requirements for developing talent to implement it

28. Step Four: Formulating Strategy
SWOT analysis: Comparison of strengths, weaknesses, opportunities, and threats for strategy formulation purposes
Strategy formulation builds on SWOT analysis to devise a coherent course of action
Corporate strategy
Growth and diversification
Mergers and Acquisitions
Strategic alliances and joint ventures

29. Step Four: Formulating Strategy
Business strategy
Low-cost strategy
Focuses on efficiency, productivity, and minimizing waste
Linked to HR planning through productivity and outsourcing activities
Differentiation strategy
Based on delivering high-quality products, innovative features, speed to market, or superior service

30. Step Four: Formulating Strategy
Functional Strategy
Vertical fit/alignment
Focuses on the connection between the business objectives and the major initiatives in HR
Horizontal fit/alignment
Aligning HR practices with one another internally to establish a configuration that is mutually reinforcing

31. Step Five: Strategy Implementation
Organizations strive for balance between demand and supply considerations
Demand is based on forecasted trends in business activities
Supply depends on locating required human resource
To meet human resources demands, organizations have staffing options

32. Figure The 7-S Model

33. Step Five: Strategy Implementation
If labor shortage is acute, company develops talent from ground up
Firms restrict hiring, reduce their employees’ work hours, and consider layoffs when forecasts project surplus employees
Organizations have to be prepared to exit and enter new lines of business, restructure, outsource, offshore and downsize
HR managers should ensure no laws are violated while downsizing

34. Step Six: Evaluation
Benchmarking: Looking at an organization’s practices and performances in an area and comparing them with those of other companies
Gathering competitive information
HR metrics
Human capital metrics assess aspects of the workforce
HR metrics assess the performance of the HR function
Managers can gather informal information on competitors through certain legal means

35. Figure 2.11 - Building the Metrics Model

36. Step Six: Evaluation Measuring a firm’s strategic alignment
Balanced scorecard (BSC): Helps managers translate strategic goals into operational objectives
Related cells - Financial, customer, processes and learning
Measuring horizontal fit
Managers identify key workforce objectives they look to achieve
Identify HR practices used to elicit or reinforce the objectives
Evaluate each HR practice

37. Step Six: Evaluation
Successful HRP helps increase organizational capability
Organizational capability: Capacity of the organization to act and change in pursuit of sustainable competitive advantage
Flexibility
Coordination flexibility - Ability to rapidly reallocate resources to new or changing needs
Resource flexibility - Result from having adaptable people and resources that can be used different ways