Human Resource Management and Strategy - Chapter 2

Human Resource Management and Strategy - Chapter 2

• This chapter covers the relationship between company strategy and human resource management.

Learning Agenda

• The links between a firm's mission, vision, values, strategy, and HR planning.
• How an organization's external environment shapes its strategic planning.
• The importance of internal resource analysis for organizations.
• Evaluating HR effectiveness.

Strategic Planning and Human Resources

• Strategic Planning: Procedures for deciding on long-term organizational goals and strategies.
• Human Resources Planning (HRP): Anticipating and addressing the movement of employees into, within, and out of an organization.
• Strategic Human Resources Management (SHRM): The way human resources are deployed and managed to achieve strategic goals.

Linking Strategic Planning and HR Planning

• Organizational Level: Identifying purpose, scope, direction, beliefs, evaluating opportunities and threats. Analyzing strengths, weaknesses, industry and competitors. Developing corporate and business strategies. Allocating resources. Benchmarking and alignment.
• Human Resources Level: Capturing business philosophy, establishing cultural foundation, guiding ethical conduct, analyzing workforce composition, forecasting demand and supply. Creating efficiency, quality and innovation goals. Ensuring a fit between various HR activities (hiring, training, rewards). Metrics like the balanced scorecard.

Step 1: Mission, Vision, and Values

• Mission: The organization's core purpose and scope of operations.
• Strategic Vision: A statement about the organization's future direction and strategic intent.
• Core Values: The strong beliefs and principles guiding organizational decisions.
• Google's example mission: organizing world information and making it universally accessible and useful

Step 2: External Analysis

• Business Environment (Environmental Scanning): Systematically monitoring major external forces impacting the organization.
• Factors include: economic and ecological changes (general, regional, global), technological changes (IT, automation), demographic changes and labour market trends (education, age, composition, literacy, immigration), social changes (priorities toward work, childcare, eldercare), and legal changes (laws and rulings).
• Competitive Environment: Considering the Five Forces Framework (New Entrants, Rivals, Suppliers, Customers, Substitutes). The greater the power of these forces, the less profitable the industry.

Step 3: Internal Analysis

• Core Capabilities (Competencies): Integrated knowledge sets distinguishing an organization from its competitors and delivering value to customers.
• Resources include processes, systems, and people.
• Competitive Advantage: Four criteria – valuable, rare, difficult to imitate, and organized.

Step 4: Formulating Strategy

• Strategy Formulation: Moving from analysis to a coherent course of action.
• SWOT Analysis: Comparing strengths, weaknesses, opportunities, and threats to guide strategy. Applying strengths to opportunities, tackling threats, and mitigating weaknesses.
• Corporate Strategies: Examples include growth and diversification, mergers and acquisitions, and strategic alliances/joint ventures.
• Business Strategies: Two key types are value creation, such as low-cost strategy or differentiation.

Step 5: Strategy Implementation

• Strategies for managing either labor shortages or surpluses in an organization. In a shortage, ways could include overtime, part-time hires, temporary agencies, and new hires. Surpluses might require organizational downsizing, layoffs, attrition strategies, hiring freezes, or terminations.

Step 6: Evaluation and Assessment

• Benchmarking: Comparing organizational processes/practices to those of other companies.
• Human Capital Metrics: Assessing aspects of the workforce, for example, revenue per employee.
• HR Metrics: Assessing HR function performance, like absenteeism and employee turnover.

Ensuring Strategic Flexibility for the Future

• Organizational Capability: The organization's ability to adapt and change in achieving ongoing competitive advantage.
• Coordination Flexibility: Ability to reallocate resources to new or changing needs.
• Resource Flexibility: Having employees and other resources capable of performing diverse tasks.

Explore the intricate relationship between company strategy and human resource management in this chapter. Learn how a firm's mission and external environment influence strategic planning and the significance of internal resource analysis in HR effectiveness.