Mergers Acquisitions and Strategic Human Resource Management Chapter

Mergers, Acquisitions, and Strategic Human Resource Management Chapter 3 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 1

What is strategic HRM? Strategic HRM is developed through three steps: 1. Decide on the strategic goals 2. Identify employee skills and behaviors necessary for success 3. Formulate HR management policies and practices that will produce these required skills Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 2

The Strategic Management Process The process begins by developing a strategic plan that describes how internal strengths and weaknesses will be matched with external opportunities and threats Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 3

Steps in Strategic Management Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 4

Step 1: Define the current business Begin by asking these questions: – What products do we sell? – Where do we sell these products? – How do our products or services differ from our competitors? Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 5

Step 2: Perform External and Internal Situational Audits • The key to success is adaptation • Situational audits require SWOT (strengths, weaknesses, opportunities, and threats) analysis • Insert Figure 3 -2 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 6

Step 3: Formulate a New Business Direction • What should our new business be in terms of product, placement and competitive advantage? • The vision statement describes the following: What do we want to become? • The mission statement explains the following: Where are we now? Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 7

Step 4: Translate the Mission into Strategic Goals • Operationalize the mission for managers • What does the mission mean to each department? • What goals follow implementation? Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 8

Step 5: Formulate Strategies to Achieve the Strategic Goals • What is the game plan? • Decide on a course of action – Best strategies are concise – Easily communicated Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 9

Step 6: Implement the Strategies • Get the game plan going • Do what needs to be done – Hire or fire people – Build or close plants – Adding or eliminating products and product lines Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 10

Step 7: Evaluate Performance • Evaluate, evaluate • Ongoing process vis-à-vis strategic control • Addresses the following questions: – Are resources being utilized as planned? – Are discrepancies explained? – Do changes in our situation suggest change? Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 11

Types of Strategies Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 12

Corporate Strategy • Top-level, company-wide • Identifies the portfolio of existing business segments • Strategic possibilities include the following: – Diversification or vertical integration – Consolidation – Geographic expansion Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 13

Competitive Strategy • Identifies how to build upon and strengthen the business’s long-term marketplace position • Identifies and develops competitive advantage Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 14

Competitive Advantage • Cost leadership indicates that the enterprise intends to become the low-cost leader in the industry • Differentiation strategies seek to be unique in its industry along dimensions valued by buyers • Focusers carve out niche markets and compete by providing a product/service that customers can get through no other means Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 15

Functional Strategies • Identifies basic courses of action that each department will pursue to achieve strategic goals – consider Southwest Airlines Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16

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The Importance of Leverage • Leverage means supplementing what you have and doing more with what you’ve got! • Human resources can be a crucial competitive advantage! Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 18

HRM Creates Competitive Advantage Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 19

Four Important Strategic HR Issues 1. HR must understand that employees play a key role in employers’ performance improvement efforts 2. HR teams should support corporate productivity and performance improvement efforts Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 20

Four Important Strategic HR Issues, cont. 3. HR units must be more involved in designing – not just executing – the strategic plan 4. HR managers must understand how to create value Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 21

How Involved Is HR in Strategic Management? Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 22

What Roles Does HR Play? • Strategy execution • Strategy formulation • SWOT analysis Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 23

Translating Strategy into HR Policy and Practice Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 24

HR’s Role in Mergers and Acquisitions • Early HR involvement creates synergy • HR involvement increases M and A success rates Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 25

Specific HRM M&A Roles • Manage the deal price • Manage the messages • Secure top team and key talent • Prioritize and manage activities • Define and implement an effective HR service delivery strategy Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 26

Specific HRM M&A Roles, cont. • Develop a workable change management plan • Design and implement the right staffing model • Align total rewards • Measure synergies Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 27

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