HRM 390
Strategic Human Resource
Management
Chapter Two
Concept of Strategy & Strategic HRM
Strategic Human Resource Management
Muhaiminul Islam
HRM 390
Chapter Outlines
▪ Concept of Strategy
▪ Strategy: One time event or Continuous!
▪ Strategic Management Process
▪ How HR is involved in Strategy Formulation
▪ SWOT Analysis: Internal and External Analysis
▪ Different Strategies and HR Implications.
Strategic Human Resource Management
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HRM 390
A strategy is a plan that helps you achieve a goal. It’s about
deciding what actions to take and how to use your resources
to reach your desired outcome.
A strategy is like a roadmap that guides you from where you
Strategy are now to where you want to be, helping you figure out the
best way to get there.
Strategy is a general plans intended to achieve something. In
broad sense strategy is a method or plan chosen to bring
about a desired future such as: achievement of goal or
solution to problem
Strategic Human Resource Management
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HRM 390
What is our
present situation
What Do We Strateg
Mean By y
Strategy ?
Where do we want
to go from here
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HRM 390
Same
Strateg
y Change
d
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HRM 390
Fresh moves of
competitors
Changing market Emerging market
conditions opportunities
Managers modify strategy in
response to
Advancing Shifting buyer
technology needs
New ideas for improving
the strategy
Strategic Human Resource Management
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HRM 390
Changing circumstances and ongoing
management efforts to improve the strategy
cause a company’s strategy to evolve over
time—a condition that makes the task of
Key crafting strategy a work in progress, not a
Takeaway one-time event.
s A company’s strategy is shaped partly by
management analysis and choice and partly
by the necessity of adapting and learning by
doing.
Strategic Human Resource Management
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HRM 390
Strategic Management Process
Strategic Human Resource Management
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HRM 390
The strategic management process is a series of steps that businesses follow to
achieve their long-term goals.
Goal Environment Strategy Strategy Evaluation
Setting al Scanning Formulation Implementati & Control
on
Strategic Human Resource Management
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HRM 390
This is where the company decides what it
wants to achieve. The vision is the big
picture of what the company wants to
become, and the mission explains how it
plans to get there.
Goal Setting
Example: A local coffee shop’s vision
Defining the Vision and might be to become the most popular
Mission coffee chain in the region.
Its mission could be to serve high-quality,
ethically sourced coffee in a welcoming
environment.
Strategic Human Resource Management
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HRM 390
This step involves looking at what’s happening
inside and outside the company. Internally,
companies assess their strengths and
Environmental weaknesses. Externally, they look at opportunities
and threats in the market.
Scanning
Example: The coffee shop analyzes its internal
Analyzing External environment (good customer service, but limited
and Internal seating) and its external environment (more
Environment people working remotely, creating an opportunity
for delivery services).
Strategic Human Resource Management
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HRM 390
Strategy formulation is like making a detailed plan
for how the company will achieve its goals, using
what it knows about itself and the market.
Strategy Based on the review of its current situation, the
Formulation company decides what specific things it wants to
achieve and then picks the best approach to reach
Developing a Plan those goals.
Example: The coffee shop might decide to
expand by offering online ordering and delivery to
meet the demand of remote workers, and to focus
on sustainability as a competitive advantage.
Strategic Human Resource Management
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HRM 390
This is where the company takes the plan and
puts it into practice. This involves organizing
Strategy resources, assigning roles, and making sure
Implementatio everyone is working toward the same goal.
n
Putting the plan into The coffee shop starts offering online ordering,
Action partners with a local delivery service, and trains
its employees on sustainability practices to
support its strategy.
Strategic Human Resource Management
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HRM 390
After the plan is implemented, the company
monitors its progress to see if the strategy is
Evaluation & working. If things aren’t going as planned,
Control adjustments are made.
Monitoring progress After a few months, the coffee shop checks its
sales. If online orders are low, it might decide to
invest in more advertising or offer discounts for
first-time online customers.
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HRM 390
Role of HRM in Strategy Formulation
Strategic Human Resource Management
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HRM 390
Human Resource Management (HRM) plays a crucial role in supporting
these strategies, but the level of HR's involvement can vary.
1 Administrative Hig
Linkage h
2 One Way
Linkage HR
Involvemen
3 Two Way
t
Linkage
No
4 Integrative
Linkage
Strategic Human Resource Management
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HRM 390
In Administrative Linkage, the HR department is
not involved in the company’s big strategic
decisions.
Focus of
Administrative
HR only focuses onHR basic day-to-day tasks, like
Linkage handling payroll, managing benefits, or processing
employee paperwork.
The company’s strategic planning (like deciding new
business goals or growth plans) happens without
any input from HR.
HR is separated from the core business
decisions.
Strategic Human Resource Management
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HRM 390
In one-way linkage, the company’s business
One Way planning team makes the strategic plan first. Then,
Linkage they tell HR what needs to be done, without
involving HR in the actual planning process.
HR’s job is just to implement the plan that was
already made.
Strategic Human Resource Management
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HRM 390
In two-way linkage, HR is involved in the planning
process from the beginning. The business strategy
Two Way team talks to HR about possible strategies.
Linkage
Then, HR provides input, like whether they can hire
the right people or if they need more training for the
existing team. Based on this information, the
strategy is adjusted.
Strategic Human Resource Management
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HRM 390
In integrative linkage, HR and top management work
together constantly, rather than HR waiting for
Integrative instructions or feedback.
Integrative Linkage means that HR is fully involved in
Linkage both planning and implementing a company’s strategies.
Instead of HR being consulted only at the end or in
stages, HR becomes part of the ongoing strategic
decisions from the very start, working closely with top
management.
Strategic Human Resource Management
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HRM 390
p le
am
Ex
Let’s say a technology company is planning to launch a new product that
requires advanced AI skills. In an integrative linkage setup:
▪ HR is involved right from the start of the planning phase.
▪ HR informs the management about the current skill levels of the
employees and whether the company has enough staff with AI
expertise.
▪ If the current workforce lacks the necessary skills, HR works with
management to either hire new talent or train existing employees
so the strategy can be implemented effectively.
▪ As the strategy is finalized, HR continues to align its practices (like
recruitment, training, or rewards) to support the product launch.
Strategic Human Resource Management
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HRM 390
Administrative One Way
Linkage Linkage
HR is disconnected from The company’s strategic plan is
strategic planning and developed first, and HR is informed
focuses solely on day-to-day afterward to implement the necessary
tasks after decisions are workforce changes.
made.
HR is fully integrated into both strategy
HR is involved during strategy
formulation and implementation,
development, providing input on
working closely with senior
human resource capabilities and
management to align human resource
analyzing the impact of strategic
practices with business goals from the
choices. Two Way Integrative
start.
Linkage Linkage
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HRM 390
SWOT Analysis
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SWOT Analysis is a method used to help a company
understand its position in the market.
SWOT Analysis is a simple tool to understand a
company’s situation. It helps a business figure out
SWOT what it does well, what it can improve, and what it
Analysis faces in the market.
Internal External
Analysis Analysis
Inside the Outside the
Company Company
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Streng
ths
These are things the company does well
or has that give it an advantage. For What we’re good at
example, a strong brand, skilled workers,
or efficient production processes.
Internal Analysis
These are areas where the company
What we need to struggles or lacks something important.
improve These could slow the business down or
hurt its growth. Weakn
ess
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HRM 390
Opportunit
ies
These are positive things happening
outside the company that it could take Good chances we can
advantage of to grow or succeed. take
External Analysis
These are challenges or risks outside the
Risks we face company that could harm it or slow its
progress. Threats
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HRM 390
A restructuring strategy is when a
company makes big changes to fix
Turnaround Strategy
problems or improve its performance.
This could mean reorganizing how the Divestiture Strategy
company works, selling off parts of the
business, or even closing down parts that Liquidation Strategy
aren't doing well. The goal is to make the
company healthier
Restructuring andhitting
is like more successful.
the "reset" Types of Restructuring
button to get the company back on track. Strategy
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HRM 390
Possible HR
Turnaround Strategy Implications
Training and development: Employees
When a company is struggling, the may need new skills or better training
turnaround strategy aims to fix problems to adapt to changes.
and get back on track. This strategy
focuses on stopping losses and making Hiring skilled managers: New
the company profitable again. Instead of leadership might be brought in to steer
giving up, management might invest more the company in a better direction.
money or resources to fix the issues. Motivating staff: Employees may feel
uncertain, so HR must ensure morale
stays high and support them through
the changes.
Strategic Human Resource Management
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HRM 390
Possible HR
Divestiture Strategy Implications
Relocation or reassignment:
In a divestiture strategy, a company Employees from the unit may be
decides to sell or close a business unit transferred to other parts of the
that, while making profits now, doesn’t company.
have a bright future. The company wants
to focus on better opportunities Support for departing employees: For
elsewhere. employees who are let go, HR might
help with job placement or offer
severance packages.
Communicating with staff: HR needs to
manage communication so that other
employees feel secure and understand
the reasons for the decision.
Strategic Human Resource Management
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HRM 390
Possible HR
Liquidation Strategy Implications
Layoffs: HR will have to handle the
When the situation is very bad, and process of letting employees go in a
there’s no hope of recovery, a company respectful and fair way.
might choose liquidation. This means
closing the business, selling off assets, Severance packages: Providing
and letting go of employees. financial support to employees losing
their jobs.
Employee counseling: Offering
counseling or career transition services
to help employees move forward after
job loss.
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HRM 390
Possible HR
Hiring More Implications
Employees
If a company is opening new stores, it needs to hire
more sales staff, managers, and other support staff.
A growth strategy is when a company Training and
wants to expand, either by increasing Development
If the company is expanding into international
its market share, launching new markets, employees might need language training or
products, entering new markets, or cultural awareness.
even acquiring other companies. The Promoting Internal
goal is to make the company bigger Talent
An existing manager may be promoted to lead a new
and more successful. division or branch.
Adapting Compensation and
Offering better Benefits
bonuses or stock options as an
incentive for employees to stay during rapid
expansion.
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HRM 390
Cost leadership strategy also known as “low-cost provider
strategy” or simply “low-cost strategy”.
A company’s strategy of selling its product at a lower than the
competitors is known as low-cost strategy.
The emphasis is Production of a standardized
placed on product at a low per unit cost.
Cost
Leadership
For price
Strategy Operating Charging of lower price is sensitive
business in possible when the company can customer
a highly ensure cost reduction s
cost
effective
manner
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HRM 390
Cross-Training
Employees
Train employees to Control Compensation
Performance-Based handle multiple roles so Costs
Rewards the company can operate Keep salaries, benefits,
Offer bonuses for with fewer people and and bonuses competitive
employees who meet avoid hiring extra staff. but not excessive,
productivity targets or ensuring labor costs are
help reduce costs. kept low.
HR Actions for Cost Leadership
Strategy
Lean Workforce
Flexible Work Implement part-time or Outsourcing Non-Core
Arrangements contract work to cover Activities
Encourage fluctuating demands Hire a third-party provider
telecommuting or flexible without maintaining a for payroll or tech support
schedules to reduce large full-time staff. instead of maintaining an
overhead costs such as
in-house team.
office space, utilities, and
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supplies. HRM 390
A differentiation strategy is when a company tries to make
its products or services stand out from competitors.
Instead of competing on price, the company focuses on
offering something unique that attracts customers. This
uniqueness can come from quality, features, brand
image, or customer service.
Goal Offering unique product to the
Differentiati
customer
on
And command premium prices
Strategy
Higher profits
Competitive
advantage
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Employee Training &
Development Attractive Compensation
Provide continuous Package
Employee Empowerment Offer competitive salaries
training to ensure Give employees more
employees have the skills and benefits that attract
autonomy and top talent who can drive
and knowledge to responsibility in their
maintain high standards differentiation.
roles
and develop new ideas. HR Actions for Differentiation
Strategy
Collaborative Workspace
Cross-Functional Designing open office Recognition Program
Collaboration layouts with comfortable Creating an "Innovator of
Encourage collaboration meeting areas for team the Month" award to
between different discussions and idea celebrate employees who
departments (e.g., R&D, sharing. come up with outstanding
marketing, and customer new ideas or improvements.
service) to ensure that Human
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aspects of differentiation HRM 390