CHAPTER 2

Strategic Human
Resource
Management

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 Chapter Outline
2.1. Strategic Management
2.2. Strategy Formulation
2.3. Strategy Implementation
2.4. Strategic HRM

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 2.1 Strategic Management
Strategic Management
• A process
• An approach to addressing the competitive challenges
an organization faces
• Managing the “pattern or plan that integrates an
organization’s major goals, policies, and action
sequences into a cohesive whole.”
• Developing strategies for achieving the company’s
goals in light of its current environment

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 2.1 Strategic Management
Strategic Management
• Strategic management is a process to address the
organization’s competitive challenges by integrating
goals, policies and action sequences into a cohesive
whole.
• Strategic management focus on deploy and allocate
resources for a competitive advantage.

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 2.1 Strategic Management
Components of the strategic management
process
• Strategy Formulation
• Strategic planning groups decide on strategy
• Strategy Implementation
• Organization follows through on the strategy

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 2.1 Strategic Management
A model of the strategic management process

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 2.1 Strategic Management
Linkage between HRM and the strategic
management process
• Strategic choice
• Where to compete? In what market?
• How to compete? On what criterion or differentiating
characteristic?
• With what will we compete? What resources to beat our
competitors? How to acquire, develop and deploy
resources?

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 2.1 Strategic Management
Role of HRM in strategy formulation
• With what will we compete?
• Integrally involving the HRM function
• Have input in the strategic plan (HR and ability to
implement)
• Have specific knowledge of strategic goals
• Know the requirement of needed skills, behaviors,
attitudes
• Develop programs to ensure HR have above
requirement

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 2.1 Strategic Management
Role of HRM in strategy formulation
• Four levels of integration between HRM and the
strategic management function
• administrative linkage
• one-way linkage
• two-way linkage
• integrative linkage

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 2.1 Strategic Management
Linkages of strategic planning and HRM

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 2.2 Strategy Formulation

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 2.2 Strategy Formulation

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 2.3 Strategy Implementation

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 2.3 Strategy Implementation
Strategic implementation requires that
• “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
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 2.3 Strategy Implementation
Variables to be considered in strategy
implementation

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 2.3 Strategy Implementation
Vertical Alignment
• HR practices and processes address the strategic
needs of the business.
• The link between strategy and HR practices is
primarily through people.
• Job analysis and design • Recruitment
• Selection systems • Reward systems
• Performance • Training and
management systems development programs
• Labor relations programs

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 2.3 Strategy Implementation

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 2.4 Strategic HRM
Strategic Types
• Porter’s Cost and Differentiation
• Value can be created by reducing costs.
• Value can be created by differentiating a product or service
so the company can charge a premium price relative to its
competitors

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 2.4 Strategic HRM
HRM Needs in Strategic Types
Role behaviors: Behaviors required of an individual in his or
her role as a job holder in a social work environment
• Cost strategies – high concern in quantity, short time -
companies define the skills they require and invest in training
employees in these skill areas
• Differentiation strategies – skills include cooperating with
others, developing new ideas, and taking a balanced
approach to process and results.

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 2.4 Strategic HRM
Directional Strategies
• Concentration
• Internal Growth
• Mergers and Acquisitions
• Downsizings

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 2.4 Strategic HRM
Concentration Strategies
A strategy focusing on increasing market share, reducing
costs, or creating and maintaining a market niche for
products and services
• Require that the company maintain the current skills that
exist in the organization
• Need for skill-based training and fair compensation

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 2.4 Strategic HRM
Internal Growth Strategies
A focus on new market and product development,
innovation, and joint ventures.
• Companies must constantly hire, transfer and promote
individuals.
• Compensation weighted towards achievement
• Joint ventures require conflict resolution

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 2.4 Strategic HRM
Mergers and Acquisitions
An emphasis on acquiring vendors and suppliers or buying
businesses that allow a company to expand into new markets
On the increase
HR needs to be involved
• People issues can cause problems
• Different organizational cultures
• Conflict resolution

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 2.4 Strategic HRM
Downsizing
• The planned elimination of large numbers of personnel,
designed to enhance organizational effectiveness.
• Trend has slowed since 2008 as it falls short of meeting
companies’ financial and organizational objectives, and has
negative effects on employee morale and productivity
• The HRM function must “surgically” reduce the workforce by
cutting only the workers who are less valuable in their
performance
• Survivor morale issues

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 2.4 Strategic HRM
Intended Strategies
• The result of the rational decision-making process
used by top managers as they develop a strategic plan.

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 2.4 Strategic HRM
Emergent Strategies
• Consist of the strategies that evolve from the
grassroots of the organization
• Can be thought of as what organizations actually do,
as opposed to what they intend to do
• Usually identified by those lower in the organizational
hierarchy

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 2.4 Strategic HRM
Enhancing Firm Competitiveness
• Develop a human capital pool that gives the company
the unique ability to adapt to an ever-changing
environment.
• Learning organization

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