Download presentation
1
Human Resource Management Strategy and Analysis
3 This chapter explains how to design and develop an HR system that supports the company’s strategic goals. We cover the strategic management process and how to develop a strategic plan. We also discuss the HR manager’s role in the process of strategy execution and formulation. Finally, we explain why metrics are essential for identifying and creating high-performance human resource policies and practices. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
2
Learning Objectives Explain why strategic planning is important to all managers. Explain with examples each of the seven steps in the strategic planning process. List with examples the main generic types of corporate strategies and competitive strategies. At the conclusion of this chapter, you will be able to: Explain why strategic planning is important to all managers. Explain with examples each of the seven steps in the strategic planning process. List with examples the main generic types of corporate strategies and competitive strategies. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
3
Learning Objectives Define strategic human resource management and give an example of strategic human resource management in practice. Briefly describe three important strategic human resource management tools. Explain with examples why metrics are essential for managing human resources. In addition, you will be able to: Define strategic human resource management and give an example of strategic human resource management in practice. Briefly describe three important strategic human resource management tools. Explain with examples why metrics are essential for managing human resources. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
4
Why Strategic Planning is Important to all Managers
The Human Resource function today continues to play an increasingly visible role in the strategic planning and management process. The HR function requires a new level of skill and competency among HR professionals. HR managers must develop measureable strategies that convincingly showcase the impact of HR on business performance. Successful Human Resource managers have adopted a perspective that focuses on how their departments can play a central role in implementing strategy. In this chapter we look more closely at how managers formulate and implement such plans, and how they analyze and evaluate their results. We will start with some basic planning-related definitions. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
5
Goal-Setting and the Planning Process
The hierarchy of goals Strategic planning Strategic planning is important because in a well-run organization the goals come from the top of the organization downward. The process forms a hierarchy of goals. These goals, in turn, should guide everyone in the organization in what they do. A strategic plan is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats. A successful strategic plan helps ensure a competitive advantage. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
6
Review In companies, it is traditional to view the goals from the top of the firm down to front-line employees as a chain or hierarchy of goals. A strategic plan is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats. This will allow the organization to maintain a competitive advantage. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7
The Seven Steps in the Strategic Planning Process
The seven steps in the strategic planning process allow you to manage the process in a systematic manner. Let’s discuss them now. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
8
Seven Steps Define current business Audits New directions
Strategic goals Formulate strategies Implement Evaluate Define the current business and mission The logical place to start is by defining one’s current business. What products do we sell and where? How do our products or services differ from our competitors? Perform external and internal audits The next step is to ask, “Are we heading in the right direction?” Formulate a new direction The question now is, what should our new business be? Translate the mission into goals. Next, translate the mission into strategic objectives. Formulate strategies to achieve the strategic goal Next, the manager chooses courses of action that will enable the company to achieve its strategic goals. Implement the strategy Strategy execution means translating the strategies into action and trying them out. Evaluate performance Things don’t always turn out as planned. At this point, the strategies are tested against reality. If changes are needed, the entire process may be repeated from an earlier step. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
9
Review Importance of strategic planning Goal setting Steps
So far, we have discussed the importance of strategic planning and its impact on the organization. Goal setting allows managers to connect the dots between where things are now and where we want them to be. Finally, the seven steps in the planning process provide a rigorous mechanism to manage the process in a systematic manner. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
10
The Main Generic Types of Corporate Strategies and Competitive Strategies
In practice, managers formulate three strategies. There is corporate-wide strategic planning, business unit (or competitive) strategic planning, and functional (or departmental) strategic planning. We’ll look at each. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
11
Types of Strategies Corporate strategy Competitive strategy
Functional strategy Human resources as a competitive advantage Strategic fit Corporate-level strategy identifies the portfolio of businesses that comprise the company and the ways in which these businesses are related to each other. Managers endeavor to achieve competitive advantages for each of their businesses. Competitive advantages enable a company to differentiate its product or service from those of its competitors. Such differentiation allows a company to increase its market share. Functional strategies identify the basic course of action that each department will pursue in order to help the business attain its competitive goals. Human capital is one of the best competitive advantages because it is hard to duplicate a company’s personnel. “Strategic fit” sums up the idea that each department’s functional strategy should fit and support the company’s competitive aims. The “fit” point of view states that all of the firm’s activities must be tailored to or fit its strategy. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
12
Corporate Strategies Concentration Diversification
Vertical integration Consolidation Geographic The corporate strategy question is, “How many and what kind of businesses should we be in?” With a concentration (single business) corporate strategy, the company offers one product or product line, usually in one market. A diversification corporate strategy implies that the firm will expand by adding new product lines. A vertical integration strategy means the firm expands by, perhaps, producing its own raw materials, or selling its products directly to consumers. A consolidation strategy means the company reduces its size. With geographic expansion, the company grows by entering new territorial markets. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
13
Competitive Strategies
Cost leadership Differentiation Focus A competitive strategy identifies how to build and strengthen the business’s long-term competitive position in the marketplace. Cost leadership means becoming the low-cost leader in an industry. In a differentiation strategy, the firm seeks to be unique in its industry along dimensions that are widely valued by buyers. Focusers carve out a market niche (like Porsche). Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
14
Management Roles in Strategic Planning
Top Managers’ Role in Strategic Planning Departmental Managers’ Strategic Planning Roles Devise Support Execution Devising a strategic plan is top management’s responsibility. Because the consequences of a poor choice can be dire, few top managers delegate total responsibility for strategic planning. The departmental managers’ strategic planning roles involve: Helping devise the strategic plan Formulating supporting, functional/departmental strategies Executing the plans Few people know as much about the firm’s competitive pressures, vendor capabilities, and concerns than do the company’s department managers. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
15
Review Types of strategies Managerial roles in strategic planning
Corporate Competitive Functional Strategic fit Managerial roles in strategic planning For this learning objective, we have discussed the types of strategies used by organizations and the important roles of differing levels of managers in strategic planning. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
16
Defining Strategic Human Resource Management with an Example of Strategic Human Resource Management in Practice We’ve seen that once a company decides how it will compete, it turns to formulating functional departmental strategies to support its competitive aims. One of those departments is human resource management. Its functional strategies are human resource management strategies. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
17
Strategic Human Resource Management
Defining strategic human resource management Human resource strategies and policies Management formulates a strategic plan and measurable strategic goals or aims. The plans imply certain workforce requirements required to achieve the firm’s strategic aims. Given these workforce requirements, HR management formulates strategies. These HR policies and practices (strategies) help produce the desired workforce skills, competencies, and behaviors. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
18
Example Shanghai Portman Ritz Carlton Service orientation
Human Resource system The Shanghai Portman’s human resource strategy was to produce the service-oriented employee behaviors needed to improve the hotel’s level of service. Its HR policies therefore included: Installing the Ritz-Carlton Company’s human resource system Having top management personally interview each candidate Selecting only employees who cared for and respected others Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
19
Mergers and Acquisitions
Due Diligence Stage Culture Compensation & benefits Labor relations, etc. Integration Stage Top management and leadership Communication Key talent Mergers and acquisitions are among the most important strategic moves companies make. When mergers and acquisitions fail, it’s often not due to financial or technical issues but to personnel-related ones. Before finalizing a deal, it is usual for the acquirer (or merger partners) to perform “due diligence” reviews. Such reviews ensure they know what they’re getting into. For the human resource teams, due diligence includes reviewing things like: Organizational culture and structure Compensation and benefits Labor relations Pending employee litigation Human resource policies and procedures Key employees There are critical human resource issues during the first few months of a merger or acquisition. These include: Choosing the top management team Ensuring top management leadership Communicating changes effectively to employees Retaining key talent Aligning cultures The two stages are complimentary and demonstrate the advances made in the HR profession in helping to achieve business results. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
20
Review Definition Strategies Policies Service-oriented example
Mergers & acquisitions In this section, we have defined strategic human resource management as formulating and executing human resource policies and practices. Such policies and practices can produce employee competencies and behaviors the company needs to improve its competitive position. Strategies are then developed for the organization that suggest certain workforce requirements. With these workforce requirements, HR management formulates strategies to produce the desired workforce skills, competencies, and behaviors. The Shanghai Portman example speaks to the issue of using effective human resource strategic planning to support the organization. Mergers and acquisitions often fail due to a lack of adequate preparation of the personnel involved. In addition, an M&A may overlook training which fosters self-awareness, cultural sensitivity, and a spirit of cooperation. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
21
Three Important Strategic Human Resource Management Tools
Once a company decides how it will compete, it turns to formulating functional departmental strategies to support its competitive aims. One of those departments is human resource management. Its functional strategies are human resource management strategies. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
22
Strategic Human Resource Management Tools
Strategy map The HR scorecard Digital dashboards The strategy map shows the “big picture” of how each department’s performance contributes to achieving the company’s overall strategic goals. Many employers quantify and computerize the map’s activities. The HR Scorecard helps them to do so. The HR Scorecard is not a scorecard. It refers to a process for assigning financial and nonfinancial goals or metrics to important human resource management–related chain of activities. That chain is required in order to achieve the company’s strategic aims and for monitoring results. A digital dashboard presents the manager with desktop graphics and charts. It is a computerized picture of where the company stands on all those metrics from an HR Scorecard perspective. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
23
HR Metrics and Benchmarking
Types of metrics Benchmarking Being able to measure what you are doing is an integral part of the HR strategy process. First, management translates its strategic plan into workforce requirements. Such requirements are tracked in terms of measurable worker competencies and behaviors (such as outstanding service). Given these workforce requirements, the human resource manager then formulates supportive HR strategies, policies, and practices such as new training programs. Finally, the HR manager picks measures by which to gauge whether his or her new policies and practices are producing the required employee competencies and behaviors. Benchmarking means comparing the practices of high-performing companies to your own, in order to understand what they do that makes them better. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
24
Review Strategy map HR Scorecard Digital dashboards
For this learning objective, we have studied strategy maps, which help align business strategies with HR practices and policies. We also have discussed the use of an HR Scorecard, which is a process, not truly a scorecard. Next, we looked at digital dashboards, which are visual representations of where things stand with respect to organization strategies and results. Finally, we discussed metrics and benchmarking designed to help compare your company’s results against outside standards. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
25
Why Metrics are Essential for Managing Human Resources
Let’s look more deeply into the issue of why metrics are essential for managing human resources. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
26
Strategy and Strategy-Based Metrics
Workforce/talent analytics Data mining HR audits Evidence-based HR The scientific method Why should a manager be scientific? Benchmarking is only part of the process. HR must also use strategy-based metrics to determine how HR is helping the organization reach its goals. Many companies are using workforce analytics to analyze and track HR data to help improve performance and increase job satisfaction. Data mining involves statistical analysis to find hidden or new relationships among different variables. An example is tracking when and who is more likely to buy a certain product. HR audits are a way for an organization to measure current policies and practices. They can then identify areas where improvements can be made based on company goals. Evidence-based HR is the use of data, facts, etc. to support HR proposals, decisions, practices, and conclusions. To do so requires managers to be more scientific in making organizational decisions. The scientific approach requires objectivity, experimentation, quantification, explanation, prediction, and replication. Why should a manager be scientific? For managers, the key point of being “scientific” is to make better decisions. Two things are particularity important. First, in gathering evidence, managers need to be objective. Being scientific also requires experimentation. An experiment is a test the manager sets up in such a way as to ensure that he or she understands the reasons for the results obtained. The question to be answered is, what’s the evidence and what does it suggest? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
27
High-performance Work Systems
High-performance human resource policies and practices A high-performance work system (HPWS) is a set of HR policies and practices that together produce superior employee performance. These policies and practices illustrate the importance of HR metrics and how they help to assess HR performance. They also reveal what HR systems must do to be successful. Such success may include helping workers aspire to manage themselves. HR practices also highlight measureable differences between HR systems in high and low performing companies. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
28
Review Strategy and strategy-based metrics Talent analytics
Data mining Audits Evidence-based HR The scientific method High-performance work systems For this learning objective, we have discussed the relationship between business and HR strategies and the metrics used to measure them. Workforce or talent analytics help you understand and track and improve results. Data mining involves statistical analysis to find hidden or new relationships among different variables. HR audits are a way for an organization to measure current policies and practices. Evidence-based HR is the use of data, facts, etc. to support HR activities. For managers, the key point of being “scientific” is to make better decisions through objective experimentation. A high-performance work system (HPWS) is a set of HR policies and practices that together produce superior employee performance. All of these elements together are designed to help integrate business goals with HR practices and policies while improving results. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
29
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
Similar presentations
© 2024 SlidePlayer.com. Inc.
All rights reserved.