1. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Strategy and Human Resources Planning 1–1 The Challenges of Human Resources Management

2. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 of 36 Chapter Objectives Chapter Objectives After studying this chapter, you should be able to Identify the advantages of integrating human resources planning and strategic planning. Understand how an organization’s competitive environment influences its strategic planning. Understand why it is important for an organization to do an internal resource analysis. Describe the basic tools used for human resources forecasting. Explain the linkages between competitive strategies and HR. Understand what is required for a firm to successfully implement a strategy. Recognize the methods for assessing and measuring the effectiveness of a firm’s strategy. LEARNING OUTCOME 1 LEARNING OUTCOME 2 LEARNING OUTCOME 3 LEARNING OUTCOME 4 LEARNING OUTCOME 5 LEARNING OUTCOME 6 LEARNING OUTCOME 7

3. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3 of 36 Strategic Planning and Human Resources Strategic PlanningStrategic Planning  Procedures for making decisions about the organization’s long-term goals and strategies.  Strategic plans focus on how the organization will position itself relative to its competitors in order to survive, creat value and grow. Human Resources Planning (HRP)Human Resources Planning (HRP)  Process of anticipating and making provision for the movement (flow) of people into, within, and out of an organization.  Its purpose is to help managers deploy their human resources as effectively as possible.

4. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 4 of 36 Strategic Planning and HR Planning Strategic Human Resources Management (SHRM)Strategic Human Resources Management (SHRM)  The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals – Strategy formulation —providing input as to what is possible given the types and numbers of people available. – Strategy implementation —making primary resource allocation decisions about structure, processes, and human resources. 1–4

5. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 5 of 36 Linking Strategic Planning and HRP Strategic AnalysisStrategic Analysis  What human resources are needed and what are available? Strategic FormulationStrategic Formulation  What is required and necessary in support of human resources? Strategic ImplementationStrategic Implementation  How will the human resources be allocated? 1–5 Human Resources Planning Strategic Planning

6. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 6 of 36 1–6

7. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7 of 36 Step One: Mission, Vision, and Values MissionMission  The basic purpose(organization reason for existing) of the organization as well as its scope of operations Strategic VisionStrategic Vision  A statement about where the company is going and what it can become in the future; clarifies the long- term direction of the company and its strategic intent Core ValuesCore Values  The strong and enduring beliefs and principles that the company uses as a foundation for its decisions 1–7

8. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8 of 36 Step Two: Environmental Analysis Environmental ScanningEnvironmental Scanning  The systematic monitoring of the major external forces influencing the organization. – Economic factors: general, regional, and global conditions – Industry and competitive trends: new processes, services, and innovations – Technological changes: robotics and office automation – Government and legislative issues: laws and administrative rulings – Social concerns: child care and educational priorities – Demographic and labor market trends: age, composition, literacy, and immigration 1–8

9. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 9 of 36 Competitive Environment While many factors in the general environment may influence strategic decisions, analysis of the firm’s competitive environment is central to strategic planning.While many factors in the general environment may influence strategic decisions, analysis of the firm’s competitive environment is central to strategic planning. The competitive environment includes the specific organizations with which the firm interacts:The competitive environment includes the specific organizations with which the firm interacts:  Customers  Rival firms  New entrants  Substitutes  Suppliers

10. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 10 of 36 Step Two: Environmental Analysis (Cont.) 1–10

11. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11 of 36 The Competitive Environment By monitoring the external environment, organizations can identify those trends that may affect the organization and its HR programs. Customers –One of the most important environmental assessments a firm can make is identifying the needs of its customers, which often differ from one another. Organizations ultimately, need to know how they are going to provide value to these people. This is the foundation for strategy, and it influences the kind of skills and behavior that will be needed from employees. Rival Firms –Examining the nature of one’s competitors seems obvious, but often it is not. For example, Toys ‘R’ Us believed for many years its main competitors were FAO Schwartz or KB Toys. But it later found out that big box retailers like Wal-Mart and Target were successfully capturing some of its market share. These rival firms altered Toys ‘R’ Us’s strategy. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–11

12. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12 of 36 New Entrants –Sometimes new entrants can compete with established firms and sometimes they can’t, especially if the incumbent firms create entry barriers. Sometimes, however, new entrants do capture market share when they have a better business model or change the “rules” of the competitive game. Substitutes –Sometimes the biggest threat to an industry is not direct competition, but substitutes for their products. The effect VOIP is having on the telephone industry and the Internet on travel agents are two examples of substitutes. Suppliers –Organizations rarely create everything on their own but instead have suppliers that provide them with inputs, including money, information and people. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–12

13. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 of 36 Step Three: Internal Analysis: The Three C’s 1–13 Culture Composition Capabilities Internal Analysis

14. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 14 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–14 Capabilities: People as a Strategic Resource Core Capabilities –Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers. –People are a key resource that underlies a firm’s core capabilities. Sustained competitive advantage through people is achieved if these human resources: 1.Are valuable; improve the efficiency and effectiveness of a company 2.Are rare and unavailable to competitors. 3.Are difficult to imitate. 4.Are organized for teamwork and cooperation. (talent can be combined to work on new assignments at a moment’s notice).

15. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 15 of 36 Step Two: Environmental Analysis (Cont.) 1–15

16. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 16 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–16 Composition: The Human Capital Architecture Strategic Knowledge Workers –Employees who have unique skills that are directly linked to the company’s strategy. Example: R&D scientists Core Employees –Employees with skills to perform a predefined job that are quite valuable to a company, but not particularly unique or difficult to replace. Example: salespeople

17. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 17 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–17 Composition: The Human Capital Architecture (cont’d) Supporting Labor –Employees whose skills are of less strategic value and generally available in the labor market. Example: clerical workers Alliance Partners –Individuals and groups with unique skills, but those skills are not directly related to a company’s core strategy. Example: consultants

18. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 18 of 36 Corporate Culture: Values, Assumptions, Beliefs, and Expectations (VABEs) Cultural AuditsCultural Audits  Audits of the culture and quality of work life in an organization. – How do employees spend their time? – How do they interact with each other? – Are employees empowered? – What is the predominant leadership style of managers? – How do employees advance within the organization? 1–18

19. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 19 of 36 Forecasting: A Critical Element of Planning Forecasting involves:Forecasting involves:  forecasting the demand for labor  forecasting the supply of labor  balancing supply and demand considerations. 1–19

20. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 20 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–20 FIGURE 2.4 Model of HR Forecasting

21. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 21 of 36 Forecasting Demand for Employees 1–21 Quantitative Methods Qualitative Methods Forecasting Demand

22. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 of 36 Quantitative Approach: Trend Analysis Forecasting labor demand based on an organizational index such as sales:Forecasting labor demand based on an organizational index such as sales:  Select a business factor that best predicts human resources needs.  Plot the business factor in relation to the number of employees to determine the labor productivity ratio.  Compute the productivity ratio for the past five years.  Calculate human resources demand by multiplying the business factor by the productivity ratio.  Project human resources demand out to the target year(s). 1–22

23. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 23 of 36 Forecasting Demand for Employees 1–23

24. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 24 of 36 Forecasting the Supply of Employees: Internal Labor Supply Staffing TablesStaffing Tables Markov AnalysisMarkov Analysis Skill InventoriesSkill Inventories Replacement ChartsReplacement Charts Succession PlanningSuccession Planning 1–24

25. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–25 Forecasting Internal Labor Supply Staffing Tables –Graphic representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements. Markov Analysis –A method for tracking the pattern of employee movements through various jobs.

26. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 of 36 Forecasting the Supply of Employees: Internal Labor Supply 1–26

27. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 of 36 Internal Demand Forecasting Tools Skill InventoriesSkill Inventories  Files of personnel education, experience, interests, skills, etc., that allow managers to quickly match job openings with employee backgrounds. Replacement ChartsReplacement Charts  Listings of current jobholders and persons who are potential replacements if an opening occurs. Succession PlanningSuccession Planning  The process of identifying, developing, and tracking key individuals for executive positions. 1–27

28. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 28 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 28 of 36 1–28

29. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 29 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 29 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–29 2 Succession-Planning Checklist RATE THE SUCCESS OF YOUR SUCCESSION PLANNING For each characteristic of a best-practice succession- planning and management program appearing in the left column below, enter a number to the right to indicate how well you believe your organization manages that characteristic. Ask other decision makers in your organization to complete this form individually, compile the scores, and compare notes.

30. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 30 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 30 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–30 FIGURE 2.8 Assessing a Firm’s Human Capital

31. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 31 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 31 of 36 Step Four: Formulating Strategy Strategy FormulationStrategy Formulation  Moving from simple analysis to devising a coherent course of action. SWOT analysisSWOT analysis  A comparison of strengths, weaknesses, opportunities, and threats for strategy formulation purposes.  Use the strengths of the organization to capitalize on opportunities, counteract threats, and alleviate internal weaknesses. 1–31

32. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 32 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 32 of 36 Step Four: Formulating Strategy 1–32

33. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 33 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 33 of 36 Corporate Strategy The overall organizational strategy that addresses the question “What business or businesses are we in or should be in?” © 2007 Thomson/South-Western. All rights reserved. 2–33

34. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 34 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 34 of 36 Step Four: Formulating Strategy 1–34 Strategic Alliances and Joint Ventures Growth and Diversification Mergers and Acquisitions Corporate Strategy

35. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 35 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 35 of 36 Corporate Strategy Growth and Diversification –Growth hinges on three related elements: (a) increased productivity, (b) a greater number of employees, (c) developing or acquiring new skills. What role would HR play in a growth and/or diversification strategy? Mergers and Acquisitions –How successful are M&A’s in terms of achieving their objectives as measured by return on investments, shareholder value, etc.? Key HR activities associated with M&A’s © 2007 Thomson/South-Western. All rights reserved. 2–35

36. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 36 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 36 of 36 Corporate Strategy Strategic Alliances and Joint Ventures –The paramount issue for HR is question of the compatibility of corporate cultures, selecting key executives and developing teamwork across the respective workforces. © 2007 Thomson/South-Western. All rights reserved. 2–36

37. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 37 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 37 of 36 Business Strategy Value CreationValue Creation  What the firm adds to a product or service by virtue of making it; the amount of benefits provided by the product or service once the costs of making it are subtracted (value = benefits - costs).  Low-cost strategy: competing on productivity and efficiency – Keeping costs low to offer an attractive price to customers (relative to competitors).  Differentiation strategy: compete on added value – Involves providing something unique and distinctive to customers that they value. 1–37

38. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 38 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 38 of 36 Business Strategy (cont’d) Functional Strategy: Ensuring AlignmentFunctional Strategy: Ensuring Alignment  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 to establish a configuration that is mutually reinforcing. 1–38

39. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 39 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 39 of 36 Step Five: Strategy Implementation Taking Action: Reconciling Supply and DemandTaking Action: Reconciling Supply and Demand  Balancing demand and supply considerations – Forecasting business activities (trends) – Locating applicants  Organizational downsizing, outsourcing, offshoring – Reducing “headcount”  Making layoff decisions – Seniority or performance? – Labor agreements 1–39

40. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 40 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 40 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–40 Step Five: Strategy Implementation Taking Action: Reconciling Supply and Demand –Balancing demand and supply considerations Forecasting business activities (trends) Locating applicants –Organizational downsizing, outsourcing, offshoring Reducing “headcount” –Making layoff decisions Seniority or performance? Labor agreements

41. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 41 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 41 of 36 Step Five: Strategy Implementation (Cont.) 1–41

42. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 42 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 42 of 36 Step Five: Strategy Implementation Formulating strategy is only half the job. The real challenge for managers is implementing strategy. –The classic 7-S model reveals that HR is instrumental on almost every aspect of strategy implementation. Strategy lays out the route that the organization will take in the future. Structure is the framework in which activities of the organization members are coordinated. Systems include the formal and informal procedures that govern everyday activity. Shared values are the guiding parameter of strategic planning. Skills and staff relate directly to the concern of HR management and point to the critical role that HR plays in strategy implementation. Style refers not only to the leadership approach of top managers, but also the way in which employees present themselves to the outside world. © 2007 Thomson/South-Western. All rights reserved. 2–42

43. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 43 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 43 of 36 © 2007 Thomson/South-Western. All rights reserved. 2–43 Step Six: Evaluation and Assessment Evaluation and Assessment Issues –In order to evaluate their performance, firms need to establish a set of parameters that focus on the “desired outcomes” of strategic planning, as well as the metrics they will use to monitor how well the firm delivers against those outcomes. Benchmarking: The process of comparing the organization’s processes and practices with those of other companies –In the context of HR strategy, metrics fall into two basic categories: Human capital metrics –Assess aspects of the workforce(Ten measures of Human Capital) HR metrics –Assess the performance of the HR function itself –Human Capital Benchmarking Report

44. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 44 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 44 of 36 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–44 4 Ten Measures of Human Capital 1.Your most important issues-These are the targets of all lower-level measures 2.Human capital value added-Primary measure of an individual’s contribution to profitability. 3.Human capital ROI-Ratio of dollars spent on pay and benefits to an adjusted profit figure. 4.Separation cost 5.Voluntary separation rate 6.Total labor-cost/revenue percentage-The total benefits and compensation cost as a % of revenue. 7.Total compensation/revenue percentage-Direct labor costs as a % of revenue. 8.Training investment factor-Basic skills training 9.Time to start-Time it takes to get a person on the job. 10.Revenue factor-Total revenue generated.

45. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 45 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 45 of 36 Step Six: Evaluation and Assessment 1–45

46. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 46 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 46 of 36 Measuring a Firm’s Strategic Alignment Strategy Mapping and the Balanced ScorecardStrategy Mapping and the Balanced Scorecard  Balanced Scorecard (BSC) – A measurement framework that helps managers translate strategic goals into operational objectives financial customer processes learning 1–46

47. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 47 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 47 of 36 Measuring a Firm’s Strategic Alignment 1–47

48. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 48 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 48 of 36 Ensuring Strategic Flexibility for the Future Organizational CapabilityOrganizational Capability  Capacity of the organization to act and change in pursuit of sustainable competitive advantage.  Coordination flexibility – The ability to rapidly reallocate resources to new or changing needs.  Resource flexibility – Having human resources who can do many different things in different ways. 1–48

49. © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 49 of 36 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 49 of 36 Measuring a Firm’s Strategic Alignment 1–49