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Chapter 2 Instructor’s Manual- Strategic Human Resource Management

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Chapter 2 Summary for Instructors

This chapter provides an introduction of the strategic management of HRM

practices (i.e. strategic human resource management) and its role within a
company’s competiveness and competitive advantage. The chapter also juxtaposes
how human resources (i.e. employees) are the most important asset to competitive
advantage, but also the most costly and controllable asset, leading to a disconnect
between personnel decisions and strategy. Within this chapter then is a discussion
of how HRM practices contribute to competitive advantage and how to make such
decisions. A chapter summary may be found on page 94.

This chapter provides instructors opportunity to illustrate how HRM contributes to

strategy, and how to make strategic decisions within HRM. First, however, it is
important to ensure students are aware of strategic management (LO 2-1) and the
general approaches to strategic management (LO 2-2). Here, instructors may be able
to have students review previous material covered in a Principles of
Management/Introduction to Business course and review different generic
strategies such as low cost or differentiation. It may be helpful for instructors to
emphasize internal and external analysis (p. 73, figure 2.2) as important steps to
strategy formulation. As within Chapter 1, this can be integrated into a discussion of
general business acumen for any manager or leader, not just those concerned with
HRM.

Instructors may emphasize that strategic decisions and components of the process
are all people-related (LO 2-3; p. 74) and thus may require further integration of
HRM and strategy formulation (LO 2-4). Discussion could include the difficulty HR
has had over the years with being seen as secondary within strategy. Reviewing
Figure 2.5 on page 77 can help emphasize how input from HR within all aspects of
the strategic management process is important and thus a strategic necessity. Page
77 also includes examples of HR-related concerns that would need to be considered
in the internal and external analysis to ensure viable strategy. It is important here to
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education.
Chapter 2 Instructor’s Manual- Strategic Human Resource Management

not just simply state that employees are important to consider, but to illustrate how
these decisions may be informed through HRM as well as improved and enhanced
for better strategy.

LO 2-5 and LO 2-6 provides examples of how HRM practices would be chosen to
align behind different organizational strategies. Throughout the discussion,
different HRM practices and processes are defined and how they may contribute is
defined.

Society for Human Resource Management Body of Competency & Knowledge:

This chapter contains content, which may be identified within the following content
areas:
Structure of the HR Function
Organizational Effectiveness & Design
Workforce Management
Talent Acquisition & Retention
Learning & Development
Total Rewards
Business & HR Strategy
Employee Relations

Human Resource Certification Institute’s A Guide to the HR Body of

Knowledge:
This chapter contains content which may be identified within the following content
areas:
Business Management & Strategy
Workforce Planning and Employment
Human Resource Development
Compensation and Benefits
Employee and Labor Relations

Other Classroom Materials: CONNECT and PowerPoint Slides

Instructors should review both the available PowerPoint slides and CONNECT
materials. The available PowerPoint slides may assist instructors by providing
additional insight into the chapter materials, while expediting any classroom
preparation. They may also provide visual reinforcement for students during
classroom discussion.

There are CONNECT exercises available through McGraw-Hill, which can greatly
assist student preparation for class and understanding of chapter concepts.
Instructors may wish to structure the class, where students must complete the
CONNECT exercises prior to class, thus, further reinforcing material and allowing
instructors to expand and challenge student understanding during class time.
CONNECT exercises may be set-up to be time-based, requiring students to practice
chapter materials for a specific timeframe. It is the instructors’ discretion how they

Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or

distribution without the prior written consent of McGraw-Hill Education.
Chapter 2 Instructor’s Manual- Strategic Human Resource Management

desire to include this into the course grade, but a low-stakes grading system based
on completion is suggested to help encourage student usage, while minimizing
penalties for mistakes during completion.

To assist in course review, instructors may also require students to periodically

complete CONNECT chapters for previously read chapters. This may be beneficial to
support students in preparation for exams, projects, or where new chapter material
expands upon a previous chapter.

Further support for instructors in setting-up the CONNECT materials may be

obtained by contacting McGraw-Hill.

Suggested Additional Exercise

How was HR where you worked?
Exercise #1
Faculty may lead a discussion asking students to consider previous work experience
and how HR was managed there. This can help students in understanding the
information for this chapter. Both the Self-Assessment exercise and Discuss
Question # 3 can help assist in this assignment.

-If students do not possess (or do not remember) the experience, the instructor may
ask that they ask a friend/family member.

Chapter 2 – List of Cases

Enter the World of Business
Southwest Airlines Hits Middle Age (p 67)
Suggested Discussion Questions
What do you think of when you hear, “strategic human resource management?”

This could serve as an opening question to introduce students to the chapter.

Responses should demonstrate a basic understanding of strategic management
(internal/external analysis, SWOT analysis) and the need to allocate resources
behind a chosen strategy. Students may then be engaged in conversation concerning
how HRM practices, when aligned behind organizational goals, constitutes strategic
human resource management. Within the example, the lower cost structure of labor
coupled with strong labor relations (i.e. family culture) may be seen as aligning
behind Southwest’s strategy offer lower costs to consumers.

Instructors should note that at the end of Chapter 2 on page 94 there is a “Look Back”
section, which revisits the Southwest Airlines case and asks 3 questions. Suggested
guidance for each is as follows:

1) Students may focus on how the lower wage structure and strong labor relations
helped to keep Southwest’s prices for consumer tickets lower. In addition, students

Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or

distribution without the prior written consent of McGraw-Hill Education.
Chapter 2 Instructor’s Manual- Strategic Human Resource Management

may also wish to discuss Southwest’s different business model, and how these HRM
practices helped to support its success.
2) Some challenges would include changing relations with labor unions, increased
competition and pricing pressure from other airlines, potential changes of the
company culture. Students may benefit from the instructor dividing this discussion
into external challenges (threats) and internal challenges (weakness) and discussing
this from a strategic management approach.
3) Answers may vary greatly, but students should be able to connect the general
strategy of Southwest with the different approaches to HRM.

Competing through Globalization:

Facebook’s European Privacy Policy Problems (p. 71)
Question Guidance
Instructors may wish to guide the discussion towards the assessment that
organizations need to determine whether standardization or localization is the best
approach to HR practices. This can be recognized within countries and locales,
geographic regions as well as economic blocks (European Union). It may also be
beneficial to reflect on how the legal environment is a component of external
analysis, and this assessment may be an area HR could contribute to strategy
formulation.

Competing through Technology:

The Rise of the Robot in China (p. 75)
Question Guidance
Instructors may wish to facilitate the conversation around labor and economic costs
for both the country as well as the organization.

Integrity in Action:
3M Named One of World’s Most Ethical Companies (p. 79)
Question Guidance
Student responses should focus on ethics as both a component of operations as well
as a component of culture. Both ethical operations (i.e. actions/behaviors) and an
ethical culture helps attract, retain and motivate the workforce as they work daily
towards organizational goals.

Competing through Sustainability:

Starbucks Employees Go to School (p. 90)
Question Guidance
Traits may include attractive compensation and benefits packages, career
development, training and skill development, education and certification
attainment, reputation and brand recognition, work-life balance and company-
specific perquisites such as recreational rooms. These all, however, must also be a
component of larger strategy to have satisfied and engaged employees and cannot
make-up for issues within those areas. Larger discussion can emphasize how an
employer of choice initiative helps companies attract and retain employees, which
are important to organizational strategy.

Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or

distribution without the prior written consent of McGraw-Hill Education.
Chapter 2 Instructor’s Manual- Strategic Human Resource Management

Answers and Guidance to End of Chapter Sections:

Discussion Questions (page 95), suggested guidance
1) Answers may vary widely, and so the instructor may wish to ensure rationale
follows from strategy to human capital. For example, if a defensive strategy is
identified, then human capital should be positioned to focus on defense. Instructors
should also look to seek rationale behind strengths and weaknesses, and not the
specific correct or incorrect identification.

2) Instructors may look to play devil’s advocate depending on the students’

response. Larger organizations may have issues with bureaucracy, but have the
resources to support large HR initiatives. Smaller organizations, on the other hand,
may be flexible and more open to change, but not necessarily have the resources.

3) Students should be able to present rationale that aligns the consistent HR

practices with the strategy, while identifying how the inconsistent practices didn’t
align and may have hurt the organization. Some examples might be policy on
importance of employees, but poor (or lack of) training and low wages. This may be
integrated with the Self-Assessment Exercise.

4) Student’s may identify that a) strategic management within the HRM department
leads to leadership recognition of such decisions and thus a role in company
strategic management process, and b) strategic management within HRM
department provides the foundation for the department to contribute

5) Students should be able to recall the Competencies of HR Professionals from

Chapter 1 and identify some of these skill sets. Some areas would be college,
certification programs, and experience within companies.

6) Any number of variables may be identified, some previously discussed in Chapter

1. Students should be able to rationalize those changes in their impact on HRM
functions. For example, the aging workforce, changes healthcare and minimum wage
laws may impact compensation and benefits practices. Focus should be on their
ability to identify trends in the external environment and apply them to HRM
practices.

Exercising Strategy:
Strategy and HRM at Delta Airlines (p. 95)
Question Guidance
1) The CEO’s strategy, while focused on financial performance, did not consider the
impact on employees, those who would be responsibility for operational
performance. For instance, it is difficult to excel in operational performance
(strategy implementation) when the employees who are working for the company
have very low morale, and the other competencies important to performance are
outsourced. Strict adherence to financial performance led to inadequate
consideration of other issues that existed, or could arise due to the strategy.

Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or

distribution without the prior written consent of McGraw-Hill Education.
Chapter 2 Instructor’s Manual- Strategic Human Resource Management

2) Students may identify employee morale, but should also consider employee
morale as an important driver of union activity. Thus, initiatives to manage
employee morale, as well as other internal HRM activities to improve employee
performance and morale could be considered.

Managing People:
Is Dell too Big for Michael Dell? (pp. 96-97)
Question Guidance
1) The instructor may wish to draw attention to Dell’s strategy of a direct-sales
model, which needed to emphasize both customer service and quality in both
consumer and business sales. It would seem that Dell’s position has been eroded
due to competitive pressure and weakness of customer service and computer
quality. Further, leadership has been stumbling with no apparent leadership bench
other than Dell now. Thus, lower price competition drove prices lower, causing
issues with computer quality and customer service. Further as an example of “with
what to compete,” Dell does not seem to have much, as even with investments in R &
D the margins would be hurt.
2) Leadership, customer service, R & D and manufacturing capabilities
3) HR could help by initially assessing where internal workforce capabilities reside
in the identified areas of leadership, customer service, R & D and manufacturing. HR
could then provide an employer of choice branding strategy to help attract and
retain talent who may be more interested in working for competitors.

HR in Small Business:
Radio Flyer Rolls Forward (pp. 97-98)
Question Guidance
1) Instructors may ask students to explore motivation and engagement issues
within the company, and whether an HR manager would be able to further identify
areas to engage and motivate the workforce in the U.S. Instructors may also ask
students how the motivation and engagement activities could then be used to brand
the employer as a good place to work. Responses should focus on those areas.
2) Instructors may wish to point out that large or small, people have relationships
within companies and outsourcing and the subsequent lay-offs are difficult because
they a) sever relationships, and b) cause employees to wonder if they are next.
Outsourcing may further hurt the employer’s brand if manufacturing is tied to the
location. HRM could help smooth the transition by preparing employees for the
changes, identifying the appropriate employees/capabilities, and advising on the
process. Student responses should reflect the above.
3) Students may emphasize the other engagement activities (reduction of carbon
footprint) as another example of how Radio Flyer can leverage its learning and
innovation value without it being directly tied to the outsourced manufacturing
capability. Students should then discuss how HR can help put those out for
employees to see and celebrate to increase the employer of choice brand and
morale.

Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or

distribution without the prior written consent of McGraw-Hill Education.
Chapter 2 Instructor’s Manual- Strategic Human Resource Management

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distribution without the prior written consent of McGraw-Hill Education.
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