1
Strategic Human Resource Management
Chapter# 3
Management Planning Fundamentals
The Planning Process
 Set objectives
 Make forecasts
 Determine your alternatives
 Evaluate alternatives
 Implement and evaluate plan
Business Plan
Comprehensive view of the firms situation today and
company wide and departmental plan for the next 3
to 5 years.
Marketing Plan, Financial Plan, HR Plan, Production Operation
Plan
Management Planning Fundamentals cont.
Setting objectives
 SMART
 MBO
Using MBO
 set organizational goals
 set departmental goals
 discuss departmental goals
 set individual goals
 give feedback
The Strategic Management Process
• Strategy
 A chosen course of action.
• Strategic Management
 Policies and procedures that deal with the long
range performance of an organization
 The process of identifying and executing the
organization’s mission by matching its capabilities
with the demands of its environment.
FIGURE 3–1
The Strategic Management Process
Strategic Management
• Vision
 A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
• Mission
 Spells out who the company is, what it does, and
where it’s headed.
FIGURE 3–2
A SWOT Chart
FIGURE 3–3
Strategies in a Nutshell
FIGURE 3–4
Relationships Among Strategies in Multiple-Business Firms
Types of Strategies
CorporateLevel
Strategies
Concentratio
n
Strategy
Vertical
Integration
Strategy
Diversificatio
n Strategy
Geographic
Expansion
Strategy
Consolidatio
n
Strategy
Types of Strategies (cont’d)
Business-Level/
Competitive
Strategies
Cost Leadership
Differentiation
Focus/Niche
FIGURE 3–5
The Southwest
Airlines’ Activity
System
Note: Companies like Southwest tailor all of their activities so that they fit and contribute to making their strategies a reality.
Achieving Strategic Fit
The “Fit” Point of View
 All of the firm’s activities must be tailored to or fit
the chosen strategy such that the firm’s functional
strategies support its corporate and competitive
strategies.
Leveraging
 “Stretch” in leveraging resources—supplementing
what you have and doing more with what you have—
can be more important than just fitting the strategic
plan to current resources.
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.

Involves formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.
Three Main Strategic Human Resource System Components
Characteristics of HPWS
• multi-skilled work teams
• empowered front-line
workers
• extensive training
• labor-management
cooperation
• commitment to quality
• customer satisfaction
Linking Company-Wide and HR Strategies
Basic Model of How to
Align HR Strategy and
Actions with Business
Strategy
“
Strategic HR in Action improving Mergers and
Acquisitions
Due Diligence Stage(before finalizing the deal)
Reviewing organizational culture, employee
compensation, labor relations, pending employee
litigations, HR policies and procedures
Integration Stage(first few months)
Choosing top management, communicating
changes, aliening cultures, ensuring top
management leadership
Using HR consultants
Percent of Successful Mergers in Which HR Manager Was Involved
FIGURE 3–A1
The Basic HR Scorecard Relationships
HR
Activities
Emergent
Employee
Behaviors
Strategically
Relevant
Organizational
Outcomes
Organizational
Performance
Achieve
Strategic
Goals
Creating an HR Scorecard
The 10-Step HR Scorecard Process
1
Define the business strategy
6
Identify required HR policies
and activities
2
Outline value chain activities
7
Create HR Scorecard
3
Outline a strategy map
8
Choose HR Scorecard
measures
4
Identify strategically required
outcomes
9
Summarize Scorecard
measures on digital dashboard
5
Identify required workforce
competencies and behaviors
10
Monitor, predict, evaluate
Step 1: Define the business strategy
• Medical company: have a strategy of becoming
a comprehensive healthcare network.
• By the end of this step, management translates
its broad strategic plans into specific,
actionable strategic goals.
Step 2: Outline the company’s value chain
• Value chain: identifies the primary activities that
create value for customers and related support
activities.
• It is a tool for identifying, isolating, visualizing
and analyzing the firm’s most important
activities and strategic costs.
• Outlining and analyzing the company’s value
chain help the HR manager formulate the
policies and practices that make sense in terms
of firm’s strategy.
FIGURE 3–A3
Simple Value Chain for “The Hotel Paris”
Step 3: Outline a strategy map
• It is a diagram that summarizes the chain of
major interrelated activities that contribute to a
company’s success.
• It shows a “big picture” of how each
department/team performance contributes to
achieving the company’s overall strategic goal.
FIGURE 3–A4
Strategy
Map for
Southwest
Airlines
Step 4: Identify strategically required
organizational outcomes
• Dell: receiving quick, competent and courteous
technical advice by phone is one such
outcome.
• This step identifies and specifies firm’s
strategically relevant outcomes.
Step 5: Identify the required workforce
competencies and behaviors
• Medical company: employees have to take
personal accountability for the results, willing to
work proactively (be “generative”) to find new
and novel solutions.
Step 6: Identify the required HR system,
policies and activities
• Medical company: new training and pay plans
• In this step one should be specific
 We need new training programs
 Exactly what sort of new training programs do we
need
Step 7: Choose HR scorecard measures
• How to measure HR policies and activities.
• Improve company's disciplinary system
 How to manage such improvements
 Solution: Number of grievances
• HR score card contains a balance of financial and non
financial, short and long-term, external and internal
goals.
• Example:
Southwest might measure turnaround time in terms of “
improve turnaround time from an average of 30-mins
per plane to 26-mins per plane and then measure
customer satisfaction with periodic year.
Step 8: Summarize the scorecard measure
in a digital dashboard
• “A picture is worth thousand words”
• It presents HRM function, core measures from
HR scorecard Via a PC desktop screen.
• Example: A manager’s dashboard for
Southwest Airline might display daily trends for
activities such as fast turnaround, attracting
and keeping customers, on time flights and
employee morale.
• Gives manager time to take corrective actions.