Human Resource Management Chapter 2

Because learning changes everything. ® Chapter 2 Strategic Human Resource Management Human Resource Management Gaining A Competitive Advantage THIR...

Because learning changes everything. ® Chapter 2 Strategic Human Resource Management Human Resource Management Gaining A Competitive Advantage THIRTEENTH EDITION Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright © 2023 McGraw Hill, LLC. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill, LLC.  Learning Objectives 2-1 Describe the differences between strategy formulation and strategy implementation. 2-2 List the components of the strategic management process. 2-3 Discuss the role of the HRM function in strategy formulation. 2-4 Describe the linkages between HRM and strategy formulation. 2-5 Discuss the more popular typologies of generic strategies and the various HRM practices associated with each. 2-6 Describe the different HRM issues and practices associated with various directional strategies. © McGraw Hill, LLC 2  Introduction Strategic Management: Having the goal to deploy and allocate resources for competitive advantage. Integrally involving the HRM function. Using a business model to create value for customers. © McGraw Hill, LLC 3  What Is a Business Model? Business Model: Story of how firm will create value for customers and how it will do so profitably. Accounting concepts: Fixed costs. Variable costs. Margins. Gross margin. © McGraw Hill, LLC 4  What Is Strategic Management? 1 Strategic Human Resource Management (SHRM): A process. Approach to addressing competitive challenges organizations face. Managing the “pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.” Developing strategies for achieving company’s goals in light of its current environment. LO 2-1 © McGraw Hill, LLC 5  What Is Strategic Management? 2 Components of the Strategic Management Process: Strategy formulation: Strategic planning groups decide on strategy. Strategy implementation: Organization follows through on strategy. LO 2-2 © McGraw Hill, LLC 6  Figure 2.2 A Model of the Strategic Management Process Access the text alternative for slide images. © McGraw Hill, LLC 7  What Is Strategic Management? 3 Linkage Between HRM and the Strategic Management Process: Strategic choice answers these questions: Where to compete? How to compete? With what will we compete? © McGraw Hill, LLC 8  What Is Strategic Management? 4 Role of HRM in Strategy Formulation: Answers the question “With what will we compete?” Four levels of integration between HRM and strategic management function: 1. Administrative linkage. 2. One-way linkage. 3. Two-way linkage. 4. Integrative linkage. LO 2-3 & 2-4 © McGraw Hill, LLC 9  Figure 2.4 Linkages of Strategic Planning and HRM SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985), pp. 429–51. Access the text alternative for slide images. © McGraw Hill, LLC 10  Strategy Formulation Five Major Components: Mission. Goals. External analysis. Internal analysis. External analysis and internal analysis combined constitute SWOT analysis. Strategic choice. © McGraw Hill, LLC 11  Figure 2.5 Strategy Formulation Access the text alternative for slide images. © McGraw Hill, LLC 12  Table 2.2 S WOT Analysis for Google, Inc. STRENGTHS WEAKNESSES Expanding liquidity. Issues with Chinese Operational efficiency. government. Broad range of services Dependence on advertising portfolio. segment. Losses at YouTube. OPPORTUNITIES Growing demand for online THREATS video. Weak economic outlook. Growth in Internet advertising Invalid clicks. market. Microsoft–Yahoo! Deal. Inorganic growth. Source: GlobalData © McGraw Hill, LLC 13  Strategy Implementation 1 “An organization has a variety of structural forms and organizational processes to choose from when implementing a given strategy.” Five variables: Organizational structure. HRM tasks: Task design. Selection, training, and development of people. Reward systems. Types of information and information systems. © McGraw Hill, LLC 14  Figure 2.6 Variables to Be Considered in Strategy Implementation Access the text alternative for slide images. © McGraw Hill, LLC 15  Strategy Implementation 2 Organizational Culture: “…a complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business.” Helps define relevant stakeholders (employees, customers, suppliers, and competitors) and how to interact with them. Both strategy and culture need to be aligned with the value they provide to customers. © McGraw Hill, LLC 16  Strategy Implementation 3 Talent: Individuals who can have a disproportionate (positive or negative) impact on the firm. Key groups of employees who are critical to driving value in the value chain that drives value to the customer. © McGraw Hill, LLC 17  Figure 2.7 Supply Chain, Manufacturing, Distribution, and Service Access the text alternative for slide images. © McGraw Hill, LLC 18  Strategy Implementation 4 Talent Vertical alignment occurs when H R practices and processes address strategic needs of the business. Link is primarily through people: Job analysis and design. Recruitment. Selection systems. Training and development programs. Performance management systems. Reward systems. Labor relations programs. © McGraw Hill, LLC 19  Figure 2.9 Strategy Implementation Access the text alternative for slide images. © McGraw Hill, LLC 20  Table 2.3 Menu of HRM Practice Options HRM Practice Options Job Analysis and Design. Recruitment and Selection. Training and Development. Performance Management. Pay Structure, Incentives, and Benefits. Labor and Employee Relations. SOURCES: Adapted from R. S. Schuler and S. F. Jackson, “Linking Competitive Strategies with Human Resource Management Practices,” Academy of Management Executive 1 (1987), pp. 207–19; and C. Fisher, L. Schoenfeldt, and B. Shaw, Human Resource Management, 2nd ed. (Boston: Houghton Mifflin, 1992). © McGraw Hill, LLC 21  Strategy Implementation 5 HRM Practices: Job analysis: Process of getting detailed information about jobs. Job design: Addresses what tasks should be grouped into a particular job. © McGraw Hill, LLC 22  Strategy Implementation 6 HRM Practices Recruitment: Process through which the organization seeks applicants for potential employment. Selection: Process by which the organization attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics to help it achieve its goals. © McGraw Hill, LLC 23  Strategy Implementation 7 HRM Practices Training: Planned effort to facilitate the learning of job-related knowledge, skills, and behavior. Development: Acquiring knowledge, skills, and behavior that improve employees’ ability to meet challenges of existing jobs or jobs that do not yet exist. © McGraw Hill, LLC 24  Strategy Implementation 8 HRM Practices Performance management: Ensures employees’ activities and outcomes are congruent with organization’s objectives. © McGraw Hill, LLC 25  Strategy Implementation 9 HRM Practices Pay structure, incentives, and benefits: High pay and/or benefits relative to competitors can help company attract and retain high-quality employees. Might have negative impact on overall labor costs. Tying pay to performance can elicit specific activities and levels of performance from employees. © McGraw Hill, LLC 26  Strategy Implementation 10 HRM Practices Labor and employee relations: Employees. Assets or expenses? How much should employees participate in decision making? What rights do employees have? What is the company’s responsibility to employees? © McGraw Hill, LLC 27  Strategy Implementation 11 Strategic Types: Porter’s cost and differentiation strategies: Value created by reducing costs. Value created by differentiating a product or service so the company can charge a premium price relative to its competitors. © McGraw Hill, LLC 28  Strategy Implementation 12 HRM Needs in Strategic Types Role behaviors: In cost strategies: companies define the skills they require and invest in training employees in these skill areas. In differentiation strategies: employees exhibit role behaviors such as cooperating with others, developing new ideas, and taking a balanced approach to process and results. © McGraw Hill, LLC 29  Strategy Implementation 13 Directional Strategies: Concentration. Internal growth. Mergers and acquisitions. Downsizings. LO 2-6 © McGraw Hill, LLC 30  Strategy Implementation 14 Concentration Strategies: Company must maintain current skills that exist in organization. Need for skill-based training and fair compensation. Appraisals are more behavioral, and behaviors are established through extensive experience. © McGraw Hill, LLC 31  Strategy Implementation 15 Internal Growth Strategies: Companies must constantly hire, transfer, and promote individuals. Compensation weighted towards achievement. Joint ventures require conflict resolution. © McGraw Hill, LLC 32  Strategy Implementation 16 Mergers and Acquisitions: On the increase. HR needs to be involved. People issues can cause problems. Different organizational cultures—standardization? Conflict resolution. © McGraw Hill, LLC 33  Strategy Implementation 17 Downsizing: Trend has increased significantly during March 2020 due to the lockdown of the economy. Disadvantages: Tends to fall short of meeting companies’ financial and organizational objectives. Has negative effects on employee morale and productivity. Must “surgically” reduce workforce by cutting less valuable workers. Early retirement programs usually result in rehiring. Survivor morale issues. © McGraw Hill, LLC 34  Figure 2.11 Layoffs and Discharges (January 2019 to August 2020) SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, “Layoffs and discharges in small, medium, and large establishments,” Oct. 14, 2020, www.bls.gov/opub/ted/2020/layoffs-and-discharges-in-small-medium-and-large-establishments.htm Access the text alternative for slide images. © McGraw Hill, LLC 35  Strategy Implementation 18 Downsizing: Advantages: Allows company to “get rid of dead wood” and make way for fresh ideas. Opportunity to change organization’s culture. Demonstrate to top-management the value of company’s human resources to its ultimate success. © McGraw Hill, LLC 36  Strategy Implementation 19 Strategy Evaluation and Control: Must constantly monitor effectiveness of both the strategy and implementation process. Helps identify problem areas and either revise existing structures and strategies or devise new ones. © McGraw Hill, LLC 37  The Role of Human Resources in Providing Strategic Competitive Advantage 1 Emergent Strategies: Strategies that evolve from grassroots of the organization. What organizations actually do, not what they intend to do. Usually identified by those lower in organizational hierarchy. Intended strategies are result of rational decision-making process used by top managers to develop strategic plan. © McGraw Hill, LLC 38  The Role of Human Resources in Providing Strategic Competitive Advantage 2 Enhancing Firm Competitiveness: Develop human capital pool that allows the company to adapt to ever-changing environments. Becoming a “learning organization.” Allows people to continually expand capacity to achieve desired results. © McGraw Hill, LLC 39  End of Main Content Because learning changes everything. ® www.mheducation.com © 2023 McGraw Hill, LLC. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill, LLC.