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Strategic Planning and Human

Resources
Strategic Planning
Procedures for making decisions about
the organizations long-term goals and
strategies

Human Resources Planning (HRP)


Process of anticipating and making
provision for the movement (flow) of
people into, within, and out of an
organization.
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Strategic Planning and HR


Planning
Strategic Human Resources Management
(SHRM)
The pattern of human resources deployments
and activities that enable an organization to
achieve its strategic goals
Strategy formulationproviding input as to what is
possible given the types and numbers of people
available.
Strategy implementationmaking primary resource
allocation decisions about structure, processes, and
human resources.
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HRP and Strategic Planning


Strategic Analysis
What human resources are needed and
what are available?

Strategic Formulation
What is required and necessary in
support of human resources?

Strategic Implementation
How
will
the human resources
be
Human
Strategic
HumanResources
Resources
Strategic
Planning
Planning
allocated?
Planning
Planning
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Figure 21

Linking Strategic Planning and Human Resources

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Step One: Mission, Vision, and


Values
Mission
The basic purpose of the organization as well as
its scope of operations

Strategic 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 Values
The strong and enduring beliefs and principles
that the company uses as a foundation for its
decisions
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Step Two: Environmental


Scanning
Environmental Scanning
The systematic monitoring of the major external
forces influencing the organization.
1. Economic factors: general and regional conditions
2. Competitive trends: new processes, services, and
innovations
3. Technological changes: robotics and office
automation
4. Political and legislative issues: laws and
administrative rulings
5. Social concerns: child care and educational priorities
6. Demographic trends: age, composition,and literacy
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Figure 22

Five Forces Framework

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Step Three: Internal


Analysis
Culture

Competencies

Internal
Analysis

Composition

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Scanning the Internal


Environment

Cultural 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?
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Competitive Advantage
through People
Core Competencies
Integrated knowledge sets within an organization
that distinguish it from its competitors and
deliver value to customers.

Sustained competitive advantage through


people is achieved if these human resources:
1.Are
2.Are
3.Are
4.Are

valuable.
rare and unavailable to competitors.
difficult to imitate.
organized for synergy.
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Composition: The Human


Capital Architecture
Core knowledge workers
Employees who have firm-specific skills that
are directly linked to the companys strategy.
Example: Senior software programmer

Traditional job-based employees


Employees with skills to perform a
predefined job that are quite valuable to a
company, but not unique.
Example: Security guard
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Composition: The Human


Capital Architecture (contd)
Contract labor
Employees whose skills are of less strategic
value and generally available to all firms.
Example: General electrician

Alliance/partners
Individuals and groups with unique skills, but
those skills are not directly related to a
companys core strategy.
Example: Independent product label designer
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Step Four: Formulating


Strategy
Strategy Formulation
Moving from simple analysis to devising a
coherent course of action.

SWOT 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.
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Corporate Strategy
Growth and
Diversification

Mergers and
Acquisitions

Corporate
Strategy

Strategic Alliances
and Joint Ventures

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Business Strategy
Value 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.
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.
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Functional Strategy: Ensuring


Alignment

External Fit (or External Alignment)

Focuses on the connection between the


business objectives and the major
initiatives in HR.

Internal Fit (or Internal Alignment)


Aligning HR practices with one another
to establish a configuration that is
mutually reinforcing.

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Figure 28

Source: McKinsey & Company

The 7-S Model

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Step Five: Strategy


Implementation
Taking Action: Reconciling Supply and
Demand
Balancing demand and supply considerations
Forecasting business activities (trends)
Locating applicants

Organizational downsizing
Reducing headcount

Making layoff decisions


Seniority or performance?
Labor agreements
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Step Six: Evaluation and


Assessment
Evaluation and Assessment Issues
Benchmarking: The process of comparing
the organizations processes and
practices with those of other companies
Human capital metrics
Assess aspects of the workforce

HR metrics
Assess the performance of the HR function
itself
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Reading 5.3: Reactive and Proactive HR


Operationally Reactive HR
Focuses on implementing the day-to-day demands
for HR.

Operationally Proactive HR
Improves upon the design and deliver of the existing
HR basics before problems set in.

Strategically Reactive HR
Focuses on supporting the successful
implementation of the business strategy.

Strategically Proactive HR
Focuses on creating strategic alternatives.

Reading 5.3: Strategically Reactive HR

HR becomes strategically reactive in


business strategy implementation
through:
Supporting the execution of tactics that
drive the long-term strategies.
Developing the cultural and technical
capabilities necessary for long-term
success.
By providing change management support
for tactical activities.

Reading 5.3: Creating a Strategy-Focused Culture

1. Define the business unit for which the


HR practices are being designed.
2. Specify the key trends in the external
business environment.
3. Identify and prioritize the firms sources
of competitive advantage
4. Define the required culture and
technical knowledge and skill areas
required to support the sources of
competitive advantage.

Reading 5.3: Creating a Strategy-Focused Culture

5. Identify cultural characteristics that the


firm should reduce or eliminate if it is to
optimize competitive advantage.
6. Design HR practices that will have greatest
impact on creating the desired culture.
7. With these decisions made, the firm should
establish action plans for detailed design of
the HR processes.
8. The final step specifies the means by which
effectiveness of the entire process is
measured.

Reading 5.3: Strategically Proactive HR


Becomes proactive by:
learning enough about other functional areas to
allow HR to contribute to the business
expanding/enriching parameters of HR agendas
through which strategic alternatives are define and
created.

Creates a culture of of creativity and innovation.


Is involved in the full breadth of mergers and
acquisition activities.
Creates internal capabilities based on future
external environmental requirements.

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