Strategic Management

& HR
Vidhya Srinivas
Conducting a Strategic Analysis
(Strategic HRM)
Understanding of the company mission and
values.It is impossible to plan for HRM if one does not
know the values and missions of the organization. It is
imperative for the HR manager to align department
objectives with organizational objectives. It is
worthwhile to sit down with company executives,
management, and supervisors to make sure you have a
good understanding of the company mission and
values.
HRs Strategic Challenges
Strategic plan
A companys plan for how it will match its internal strengths
and weaknesses with external opportunities and threats in
order to maintain a competitive advantage.
Three basic challenges
The need to support corporate productivity and performance
improvement efforts.
That employees play an expanded role in employers
performance improvement efforts.
HR must be more involved in designingnot just executing
the companys strategic plan.
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 strategy is a course of action.
The companys long-tem plan for how it will balance its
internal strengths and weaknesses with its external
opportunities and threats to maintain a competitive
advantage.
Business Mission and Its Vision
Vision
A general statement of its intended direction that evokes
emotional feelings in organization members.
Mission
Spells out who the company is, what it does, and where its
headed.
Types of Strategic Planning
Corporate-level strategy
Identifies the portfolio of businesses that, in total, comprise
the company and the ways in which these businesses relate to
each other.
Diversification strategy implies that the firm will expand by adding
new product lines.
Vertical integration strategy means the firm expands by, perhaps,
producing its own raw materials, or selling its products direct.
Consolidation strategy reduces the companys size
Geographic expansion strategy takes the company abroad.
Types of Strategic Planning (contd)
Business-level/competitive strategy
Identifies how to build and strengthen the businesss
long-term competitive position in the marketplace.
Cost leadership: the enterprise aims to become the low-
cost leader in an industry.
Differentiation: a firm seeks to be unique in its industry
along dimensions that are widely valued by buyers.
Focus: a firm seeks to carve out a market niche, and
compete by providing a product or service customers can get
in no other way.
Types of Strategic Planning (contd)
Functional strategies
Identify the basic courses of action that each department will
pursue in order to help the business attain its competitive
goals.
Relationships Among Strategies
in Multiple- Business Firms
 Understanding of the HRM
department mission and values
HRM departments must develop their own departmental mission
and values. These guiding principles for the department will change
as the companys overall mission and values change. Often the
mission statement is a list of what the department does, which is
less of a strategic approach. Brainstorming about HR goals, values,
and priorities is a good way to start. The mission statement should
express how an organizations human resources help that
organization meet the business goals. A poor mission statement
might read as follows: The human resource department at Techno,
Inc. provides resources to hiring managers and develops
compensation plans and other services to assist the employees of
our company.
Strategic Management Process
(contd)
Strategic management tasks
Step 1: Define the Business and Its Mission
Step 2: Perform External and Internal Audits
Step 3: Translate the Mission into Strategic Goals
Step 4: Formulate a Strategy to Achieve the
Strategic Goals
Step 5: Implement the Strategy
Step 6: Evaluate Performance
Overview of Strategic Management
Internal Scan
Changes in legislation, collective agreements, etc.
Anticipated changes in funding or budgets
Changes in leadership and priorities
Health and safety
Corporate culture
Employee engagement
Organizational restructuring
Management practices
Leadership styles
Internal policies (ex. immigration, diversity, etc.)
that could affect the workforce
External Scan
Workforce trends
Demand and supply of employees in certain
occupations
Candidate pools
Current and projected economic conditions
Technological advancements which could create new
employment or negatively impact certain occupations
or positions
Migration patterns
In-take for occupational groups at post-secondary
institutions
 Assessment
In this step, the HRM professionals will analyse the challenges
addressed in the first step. For example, the department may
see that it is not strategically aligned with the companys
mission and values and opt to make changes to its
departmental mission and values as a result of this information.
Many organizations and departments will use a strategic
planning tool that identifies strengths, weaknesses,
opportunities, and threats (SWOT analysis) to determine some
of the issues they are facing. Once this analysis is performed for
the business, HR can align itself with the needs of the business
by understanding the business strategy
 A SWOT Chart

SWOT Analysis
The use of a SWOT chart
to compile and organize
the process of identifying
company

Strengths,
Weaknesses,
Opportunities, and
Threats.
 SWOT
Once the alignment of the company SWOT is completed,
HR can develop its own SWOT analysis to determine the
gaps between HRs strategic plan and the companys
strategic plan. For example, if the HR manager finds that
a departments strength is its numerous training
programs, this is something the organization should
continue doing. If a weakness is the organizations lack of
consistent compensation throughout all job titles, then
the opportunity to review and revise the compensation
policies presents itself. In other words, the companys
SWOT analysis provides a basis to address some of the
 Hiring talented people
Company growth
Strengths
Technology implementation for business processes
Excellent relationship between HRM and management/executives
No strategic plan for HRM
No planning for up/down cycles
Weaknesses No formal training processes
Lacking of software needed to manage business processes, including go-to-market
staffing strategies
Development of HRM staffing plan to meet industry growth
HRM software purchase to manage training, staffing, assessment needs for an
unpredictable business cycle
Opportunities Continue development of HRM and executive relationship by attendance and participation
in key meetings and decision-making processes
Develop training programs and outside development opportunities to continue
development of in-house marketing expertise
Economy
Threats
Changing technology
 Strategies in Brief
Company Strategic Principle

Dell Be direct
eBay Focus on trading communities
General Electric Be number one or number two in
every
industry in which we compete, or get
out
Southwest Airlines Meet customers short-haul travel
needs
at fares competitive with the cost of
automobile travel
Vanguard Unmatchable value for the investor-
owner
Wal-Mart Low prices, every day
Source: Arit Gadiesh and James Gilbert, Frontline Action, Harvard Business Review, May 2001, p. 74.
Gap Analysis
Current and future HR requirements need to be projected based on an analysis of
departmental goals and priorities, and environmental scanning. Questions that
are helpful in determining HR needs, identifying gaps, and projecting future HR
requirements include the following:
Do you foresee a skill shortage in a specific occupational group?

Will changes in program delivery require the acquisition of new skills?

Do you have succession plans for critical positions?

Have you conducted a risk analysis of the elements of the scan critical to the
success of your organization?
Business HR GAP- Does Outcomes of Potential soln/strategies to fill
Objective requiremen the dept the gaps not gap
s ts to deliver have what assessed
to the it needs to
Business achieve the
Objectives Business
Objectives
Implement Engineers NO Plan not Explore bursary, internships etc. to
the energy with implemented encourage engineers to work in
plan specialization department
& training High negative
from the impact on the Build relationship with MUN and
petroleum company other organizations Improve the
industry work environment

Re-organize and/or redesign
organizational structures, business
processes and position descriptions

Implement Integrated Talent
Management Program

Create entry-level positions
Achieving Strategic Fit
Michael Porter
Emphasizes the fit point of view that all of the firms
activities must be tailored to or fit its strategy, by ensuring
that the firms functional strategies support its corporate and
competitive strategies.
Gary Hamel and C. K. Prahalad
Argue for stretch in leveraging resourcessupplementing
what you have and doing more with what you havecan be
more important than just fitting the strategic plan to current
resources.
The Southwest
Airlines Activity
System

Source: Reprinted by permission of Harvard Business Review. From What is Strategy? by Michael E. Porter,
NovemberDecember 1996. Copyright 1996 by the President and Fellows of Harvard College, all rights reserved.
HR and Competitive Advantage
Competitive advantage
Any factors that allow an organization to differentiate its
product or service from those of its competitors to increase
market share.
Superior human resources are an important source of
competitive advantage
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.
Formulating and executing HR systemsHR policies and
activitiesthat produce the employee competencies and
behaviors the company needs to achieve its strategic aims.
 Linking Corporate and HR Strategies

Source: 2003, Gary Dessler, Ph.D.

HRS Strategic Roles
HR professionals should be part of the firms strategic
planning executive team.
Identify the human issues that are vital to business strategy.
Help establish and execute strategy.
Provide alternative insights.
Are centrally involved in creating responsive and market-
driven organizations.
Conceptualize and execute organizational change.
 HR Involvement in Mergers

Source: Jeffrey Schmidt, The Correct Spelling of M & A Begins with HR, HR Magazine, June 2001, p. 105.
HRs Strategy Execution Role
The HR departments strategies, policies, and activities
must make sense in terms of the companys corporate
and competitive strategies, and they must support
those strategies.
HRs Strategy Formulation Role
HR helps top management formulate strategy in a
variety of ways by.
Supplying competitive intelligence that may be useful in the
strategic planning process.
Supplying information regarding the companys internal
human strengths and weaknesses.
Build a persuasive case that shows howin specific and
measurable termsthe firms HR activities can and do
contribute to creating value for the company.
Creating a Strategy-oriented HR
System
Components of the HR process
HR professionals who have strategic and other skills
HR policies and activities that comprise the HR system itself
Employee behaviors and competencies that the companys
strategy requires.
 The Basic Architecture of HR

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.
The High-Performance Work System
High-performance work system (HPWS) practices.
High-involvement employee practices (such as job enrichment
and team-based organizations),
High commitment work practices (such as improved employee
development, communications, and disciplinary practices)
Flexible work assignments.
Other practices include those that foster skilled workforces
and expanded opportunities to use those skills.
 Translating
Strategy
into HR
Policy and
Practice

Basic Model of
How to Align
HR Strategy
and Actions
with Business
Strategy

Source: Adapted from Garrett Walker and J. Randal MacDonald,

Designing and Implementing an HR Scorecard, Human
Resources Management 40, no. 4 (2001), p. 370.
HR Departmental Goals
SAMPLE STRATEGIES

Developing a talent pool

Work environment improvements
Organizational development
Competency / Skills development
Employee engagement
Workplace well-being
Recruitment / staffing
Retention
The HR Scorecard Approach
HR scorecard
Measures the HR functions effectiveness and efficiency in
producing employee behaviors needed to achieve the
companys strategic goals.
Creating an HR scorecard
Must know what the companys strategy is.
Must understand the causal links between HR activities,
employee behaviors, organizational outcomes, and the
organizations performance.
Must have metrics to measure all the activities and results
involved.
 Strategic HR Relationships

Strategically
Emergent Achieve
HR Relevant Organizational
Employee Strategic
Activities Organizational Performance
Behaviors Goals
Outcomes
The HR Scorecard
Approach
to Formulating HR Policies,
Activities, and Strategies
Organizational Life-Cycle Stages and HR
Activities
LIFE- TRAINING LABOR /
CYCLE STAFFING COMPENSATION AND EMPLOYEE
STAGE DEVELOPME RELATIONS
NT
Introductio Attract best Meet or exceed Define future Set basic
n technical and labor market skill employee-
professional rates to attract requirements relations
talent. needed talent. and begin philosophy
establishing of
career ladders. organization
.
Growth Recruit Meet external Mold effective Maintain
adequate market but management labor peace,
numbers and consider internal team through employee
mix of qualifies equity effects. management motivation,
workers. Plan Establish formal development and morale.
management compensation and
succession. structures. organizational
Mange rapid development.
internal labor
market
Organizational Life-Cycle Stages and
HR Activities (contd)
LIFE- TRAINING AND LABOR /
CYCLE STAFFING COMPENSATIO DEVELOPMENT EMPLOYEE
STAGE N RELATIONS
Maturity Encourage Control Maintain Control labor
sufficient compensation flexibility and costs and
turnover to costs. skills of an aging maintain labor
minimize layoffs workforce. peace. Improve
and provide new productivity.
openings.
Encourage
mobility as
reorganizations
shift jobs around.
Decline Plan and Implement Implement Improve
implement tighter cost retraining and productivity and
workforce control. career consulting achieve
reductions and services. flexibility in
reallocations, work rules.
downsizing and Negotiate job
outplacement security and
may occur during employment-
 Prioritise and Action Plan
Based on the data gathered in the last step, the HRM manager
should prioritize the goals and then put action plans together to
deal with these challenges. For example, if an organization
identifies that they lack a comprehensive training program, plans
should be developed that address this need. An important aspect of
this step is the involvement of the management and executives in
the organization. Once you have a list of issues you will address,
discuss them with the management and executives, as they may
see other issues or other priorities differently than you. Remember,
to be effective, HRM must work with the organization and assist the
organization in meeting goals. This should be considered in every
aspect of HRM planning.
 Draw an HR Plan
Sometimes companies have great strategic plans, but when the
development of the details occurs, it can be difficult to align the
strategic plan with the more detailed plans. An HRM manager should
always refer to the overall strategic plan before developing the HRM
strategic plan and HR plans.
Even if a company does not have an HR department, HRM strategic
plans and HR plans should still be developed by management. By
developing and monitoring these plans, the organization can ensure the
right processes are implemented to meet the ever-changing needs of
the organization. The strategic plan looks at the organization as a whole,
the HRM strategic plan looks at the department as a whole, and the HR
plan addresses specific issues in the human resource department.
 Exercise
What is the difference between HR plans and HRM
strategic plans? How are they the same? How are they
different?
Of the areas of focus in HRM, which one do you think is
the most important? Rank them and discuss the reasons
for your rankings.
 Case study

As the HR manager, you have access to sensitive data, such as pay

information. As you are looking at pay for each employee in the
marketing department, you notice that two employees with the same
job title and performing the same job are earning different amounts of
money. As you dig deeper, you notice the employee who has been with
the company for the least amount of time is actually getting paid more
than the person with longer tenure. A brief look at the performance
evaluations shows they are both star performers. You determine that
two different managers hired the employees, and one manager is no
longer with the organization. How would you handle this?
How Would You Handle This?
Thanks!