Chapter 2

Strategic Human
Resource Management

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Learning Objectives
1. Describe differences between strategy

formulation and strategy implementation.

2. List strategic management process

components.

3. Discuss HRM functions role in strategy

formulation.

4. Describe linkages between HRM and strategy

formulation.

5. Discuss typologies of strategies and

associated HRM practices.

6. Describe HR issues and practices associated

with directional strategies.

Introduction
Goal of strategic management is to
deploy and allocate resources in a way
that gives an organization competitive
advantage.
HRM function must be integrally
involved in the companys strategic
management process.
A business model is how the firm will
create value for customers profitably.

fixed and variable costs

contributing and gross margins

2-3

Business Model Accounting

Concepts
Fixed Costs

Variable Costs

Margins

Gross Margin

2-4

What is Strategic
Management?

2-5

2-6

Strategic Management Process

Model
Strategy
Formulation

Strategy
HR Practices
Implementation
Recruiting

External Analysis
Opportunities
Threats

Mission

Goals

Strategic
Choice

Internal
Analysis

Strengths
Weaknesses

HR
Needs

Skills
Behavior
Culture

Training
Performance management
Labor relations
Employee relations
Job analysis
Job design
Selection
Development
Pay structure
Incentives
Benefits

HR
Capability

Skills,
Abilities
Knowledge

Firm
Performance
Productivity
Quality
Profitability

HR Actions
Behaviors
Results

2-7

Strategy - Decisions about

Competition

2-8

Strategic Planning and HRM Linkages

2-9

Strategy Formulation
External
Analysis
Opportunities
Threats

Internal
Analysis
Strengths
Weaknesses

2-10

SHRM-Strategy Formulation
Mission
Mission
Goals
Goals

Strategic
Strategic Choice
Choice
Internal
Internal Analysis
Analysis
2-11

2-12

Strategy Implementation
Variables
Organizational
Structure
Types
of
Information
Product
Market
Strategy

Task
Design
Performance

Reward
Systems

Select
Train
Develop
People
2-13

HRMs 3 Implementation
Variables:

2-14

HR Practices

Recruiting
Training
Performance management
Labor relations
Employee relations
Job analysis
Job design
Selection
Development
Pay structure
Incentives
Benefits

Strategic Implementation
Human
Resource
Needs
Skills
Behavior
Culture

Human
Resource
Capability
Skills,
Abilities
Knowledge

Human
Resource
Actions
Behaviors
Results
-productivity
-absenteeism
-turnover
2-15

HRM Practices

2-16

Porters Strategies

2-17

5 Categories of Directional
Strategies
Concentration
Concentration
Internal
Internal Growth
Growth
External
External Growth
Growth

Mergers
Mergers &
&
Acquisitions
Acquisitions
2-18

HRs Role - Strategic Competitive

Advantage

2-19

Summary
HR are most important asset and single
largest most controllable cost within the
business model.
HR professionals must develop
business, professional-technical,
change management and integration
competencies.
HRM has a profound impact on the
strategic plan implementation by
developing and aligning HRM practices
that ensure the company has motivated
employees with necessary skills.
2-20