1 Strategic Human Resource Management Chapter 3 Management

1 Strategic Human Resource Management Chapter# 3

Management Planning Fundamentals The Planning Process Ø Set objectives Ø Make forecasts Ø Determine your alternatives Ø Evaluate alternatives Ø 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 Ø SMART Ø MBO Using MBO Ø set organizational goals Ø set departmental goals Ø discuss departmental goals Ø set individual goals Ø give feedback

The Strategic Management Process • Strategy Ø A chosen course of action. • Strategic Management Ø Policies and procedures that deal with the long range performance of an organization Ø 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 Ø A general statement of an organization’s intended direction that evokes emotional feelings in organization members. • Mission Ø 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 Corporate. Level 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 Ø 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 Ø “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 Ø The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility. v 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–A 1 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–A 3 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–A 4 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 Ø We need new training programs Ø 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 Ø How to manage such improvements Ø 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.