Chapter 3

Human Resource Management
1
TWELFTH EDITION
GARY DESSLER BIJU VARKKEY

Part 1 | Introduction
Chapter 3
Copyright 2011 Dorling Kindersley (India) Pvt. Ltd Authorized adaptation from the United States edition of Human Resource Management, 12/e
The Managers Role in Strategic Human Resource Management
After reading this chapter, you should be able to: After reading this chapter, you should be able to:
1. Outline the steps in the strategic management process. 2. Explain and give examples of each type of companywide and competitive strategy. 3. Explain what a strategy-oriented human resource management system is and why it is important. 4. Illustrate and explain each of the eight steps in the HR Scorecard approach to creating human resource management systems.
32
The Strategic Management Process

Strategic Management
The process of identifying and executing the
organizations mission by matching its capabilities with the demands of its environment.
Strategy
A chosen course of action.
Strategic Plan
How an organization intends to balance its internal
strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage over the long-term.
33
Business Vision and Mission

Vision
A general statement of an organizations intended
direction that evokes emotional feelings in organization members.
Mission
Spells out who the company is, what it does, and
where its headed.
34
FIGURE 35
The Strategic Management Process
35
FIGURE 37
A SWOT Chart
Strengths
Example: Market leadership
Weaknesses
Example: Large inventories
Opportunities
Example: New overseas markets
Threats
Example: Market saturation
36
FIGURE 38
Relationships Among Strategies in Multiple-Business Firms
37
Types of Strategies
Corporate-Level Strategies
Diversification Strategy
Vertical Integration Strategy
Consolidation Strategy
Geographic Expansion Strategy
38
Types of Strategies (continued)

Business-Level/ Competitive Strategies
Cost Leadership
Differentiation
Focus/Niche
39
Achieving Strategic Fit
The Fit Point of View (Porter) consists of the idea that each departments strategy needs to fit the parent businesss competitive aims.
310
Strategic Human Resource Management

Strategic Human Resource Management
The linking of HRM with strategic goals and objectives
in order to improve business performance and develop organizational cultures that foster innovation and flexibility.
Involves formulating and executing HR systemsHR policies and activitiesthat produce the employee competencies and behaviors that the company needs to achieve its strategic aims.
311
FIGURE 36
Linking Company-Wide and HR Strategies
312
Creating the Strategic Human Resource Management System

Components of a Strategic HRM System
Human Resource Professionals
Human Resource Policies and Practices
Employee Behaviors and Competencies
313
FIGURE 310 Strategy Map for Southwest Airlines
Source: Adapted from Creating a Strategy Map, Ravi Tangri, Team@TeamCHRYSALIS.com. 314
FIGURE 312 Three Important Strategic HR Tools
Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People, Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12. 315
Measuring HRs Contribution

The HR Scorecard
Shows the quantitative standards, or
metrics the firm uses to measure HR activities.

Measures the employee behaviors
resulting from these activities.

Measures the strategically relevant
organizational outcomes of those employee behaviors.
316
Creating an HR Scorecard
The 10-Step HR Scorecard Process
1 2 3 4 5 Define the business strategy Outline value chain activities Outline a strategy map Identify strategically required outcomes Identify required workforce competencies and behaviors 6 7 8 Identify required HR policies and activities Choose HR Scorecard measures Summarize Scorecard measures on digital dashboard and monitor, predict, and evaluate
317
FIGURE 314
Simple Value Chain for The Hotel Paris
318
HR Metric* Absence rate
Five Sample HR Metrics How to Calculate It # of days absent in month Average # of employees during month # of workdays 100
Cost per hire
Advertising + agency fees + employee referrals + travel cost of applicants and staff + relocation costs + recruiter pay and benefits Number of hires
HR expense factor
HR expense Total operating expense
Time to fill
Total days elapsed to fill job requisitions Number hired

Sources: Robert Grossman, Measuring Up, HR Magazine, January 2000, pp. 29 35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, Improving the Return on Human Capital: New Metrics, Compensation and Benefits Review, January/February 2000, pp. 1320; Thomas E. Murphy and Sourushe Zandvakili, Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics, Human Resource Management 39, no. 1 (Spring 2000), pp. 93105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/BNA 2000 Cost Per Hire and Staffing Metrics Survey; www.shrm.org. See also, SHRM Research 2006 Strategic HR 319 Management Survey Report, Society for Human Resource Management..
Turnover rate
Number of separations during month
100
KEY TERMS
strategic plan strategic management vision mission SWOT analysis strategy strategic control competitive advantage strategic human resource management HR Scorecard metrics value chain analysis
320

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Human Resource Management

GARY DESSLER BIJU VARKKEY

The Managers Role in Strategic Human Resource Management

The Strategic Management Process

Business Vision and Mission

direction that evokes emotional feelings in organization members.

where its headed.

The Strategic Management Process

Relationships Among Strategies in Multiple-Business Firms

Vertical Integration Strategy

Geographic Expansion Strategy

Types of Strategies (continued)

Achieving Strategic Fit

Strategic Human Resource Management

Linking Company-Wide and HR Strategies

Creating the Strategic Human Resource Management System

Human Resource Professionals

Human Resource Policies and Practices

Employee Behaviors and Competencies

FIGURE 310 Strategy Map for Southwest Airlines

FIGURE 312 Three Important Strategic HR Tools

Measuring HRs Contribution

metrics the firm uses to measure HR activities.

resulting from these activities.

organizational outcomes of those employee behaviors.

Simple Value Chain for The Hotel Paris

HR Metric* Absence rate

Cost per hire

HR expense Total operating expense

Total days elapsed to fill job requisitions Number hired

Number of separations during month

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