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Chapter 3
Human Resource
Management Strategy
and Analysis
Learning outcomes
Explain what human resource management is and how it relates to the management
process.
Show with examples why human resource management is important to all managers.
Illustrate the human resources responsibilities of line and staff (HR) managers.
Briefly discuss and illustrate each of the important trends influencing human resource
management.
List and briefly describe important trends in human resource management.
Define and give an example of evidence-based human resource management.
Outline the plan of this book.
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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 systems—HR policies and activities—that produce
the employee competencies and behaviors the company needs to achieve its
strategic aims.
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The Strategic Management Process
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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 ( a vertical integration consists of companies that
acquire a company that operates either before or after the acquiring company in the
production process).
Consolidation strategy reduces the company’s size
Geographic expansion strategy takes the company abroad.
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Types of Strategic Planning (cont’d)
Business-level/competitive strategy
Identifies how to build and strengthen the business’s 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.
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Types of Strategic Planning (cont’d)
Functional strategies
Identify the basic courses of action that each department will pursue in order to
help the business attain its competitive goals.
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Linking Corporate and HR Strategies
Figure 3–6 8
HR’S Strategic Roles
HR professionals should be part of the firm’s 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.
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HR’s Strategy Execution Role
The HR department’s strategies, policies, and activities must make sense in
terms of the company’s corporate and competitive strategies, and they must
support those strategies.
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HR’s 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 company’s internal human strengths and
weaknesses.
Build a persuasive case that shows how—in specific and measurable terms—the
firm’s HR activities can and do contribute to creating value for the company.
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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 company’s strategy requires.
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The Basic Architecture of HR
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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.
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Translating Strategy into HR Policy and Practice
Basic Model of How to Align
HR Strategy
and Actions
with Business Strategy
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The HR Scorecard Approach
HR scorecard
Measures the HR function’s effectiveness and efficiency in producing employee
behaviors needed to achieve the company’s strategic goals.
Creating an HR scorecard
Must know what the company’s strategy is.
Must understand the causal links between HR activities, employee behaviors,
organizational outcomes, and the organization’s performance.
Must have metrics to measure all the activities and results involved.
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Strategic HR Relationships
Strategically Achieve
Emergent
HR Relevant Organizational
Employee Strategic
Activities Organizational Performance
Behaviors Goals
Outcomes
Figure 3–10 17
The HR
Scorecard
Approach
to
Formulating
HR Policies,
Activities,
and
Strategies
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HR Audit
HR audit is an analysis by which an organization measures where it currently
stands and determines what it has to accomplish to improve its HR function.
It is a process of examining policies, procedures, documentation, systems,
and practices with respect to an organization s HR functions.
HR audit generally involves:
(1) reviewing the functioning of most aspects of the company s human
resource function (recruiting, testing, training, and so on), usually using a
checklist,
(2) ensuring that the employer is adhering to government regulations and
company policies.
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