HRM –

Strategy and Analysis

The Strategic Management Process
• Strategic Management
– The process of identifying and executing the organization’s
mission by matching its capabilities with the demands of
its environment.
• Strategy
– A chosen course of action.
• Strategic Plan
– How an organization intends to balance its internal
strengths and weaknesses with its external opportunities
and threats to maintain a competitive advantage over the
long-term.
 Business Vision and Mission
• Vision
– A general statement of an organization’s intended direction that evokes
emotional feelings in organization members.
• Mission
– Spells out who the company is, what it does, and where it’s headed.
 LG’s Vision statement
• LG Electronics continues to pursue its 21st century vision of becoming a
worldwide leader in digital—ensuring customer satisfaction through
innovative products and superior service while aiming to rank among the
world’s top three electronics, information, and telecommunications firms.

• On our way, we hold tight to a philosophy of “Great Company, Great

People,” underscoring our belief that only great people can create a great
company.

• LG strives for greatness in what we’ve identified as our three core

capabilities: Product Leadership, Market Leadership, and People
Leadership—each strength a key part of realizing our growth strategies for
“fast innovation” and “fast growth”.
 Strategic Planning
• A Strategic plan is the company’s overall plan
for how it will match its internal strengths and
weaknesses with external opportunities and
threats in order to maintain a competitive
advantage.

VISION

STRATEGY
STRATEGIC
PLAN
 LG’s Vision statement
• LG Electronics continues to pursue its 21st century vision of becoming a
worldwide leader in digital—ensuring customer satisfaction through
innovative products and superior service while aiming to rank among the
world’s top three electronics, information, and telecommunications firms
by 2010.

• On our way, we hold tight to a philosophy of “Great Company, Great

People,” underscoring our belief that only great people can create a great
company.

• LG strives for greatness in what we’ve identified as our three core

capabilities: Product Leadership, Market Leadership, and People
Leadership—each strength a key part of realizing our growth strategies for
“fast innovation” and “fast growth”.
 LG’s Vision statement
• LG Electronics continues to pursue its 21st century vision of becoming a
worldwide leader in digital—ensuring customer satisfaction through
innovative products and superior service while aiming to rank among the
world’s top three electronics, information, and telecommunications firms
by 2010.

• On our way, we hold tight to a philosophy of “Great Company, Great

People,” underscoring our belief that only great people can create a great
company.

• LG strives for greatness in what we’ve identified as our three core

capabilities: Product Leadership, Market Leadership, and People
Leadership—each strength a key part of realizing our growth strategies for
“fast innovation” and “fast growth”.
 Types of Strategies
Corporate-Level
Strategies

Vertical Geographic
Diversification Consolidation
Integration Expansion
Strategy Strategy
Strategy Strategy

© 2008 Prentice Hall, Inc. All

rights reserved.
Diversification strategy
Vertical & Horizontal Integration
strategy
Geographic
expansion
strategy
 Types of Strategies (cont’d)
Business-Level/
Competitive Strategies

Cost Leadership Differentiation Focus/Niche

© 2008 Prentice Hall, Inc. All

rights reserved.
 Achieving Strategic Fit
• The “Fit” Point of View (Porter)
– All of the firm’s activities must be tailored to or fit
the chosen strategy such that the firm’s functional
strategies support its corporate and competitive
strategies.
• Leveraging (Hamel and Prahalad)
– “Stretch” in leveraging resources—supplementing
what you have and doing more with what you
have—can be more important than just fitting the
strategic plan to current resources.
 Basic Management Planning Process
• The Hierarchy of goals
• Policies and Procedures:
– Policies – set broad guidelines delineating how employees should
proceed.
– Procedures – spell out what to do if a specific situation arises.
 Strategic Human Resource
Management
• Strategic Human Resource Management
– The linking of HRM with strategic goals and objectives in
order to improve business performance and develop
organizational cultures that foster innovation and
flexibility.
• Involves formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.
HRM – Sub functions
Human Resource Management’s
Strategic Roles

Strategic
Planning
Roles

Strategy
Strategy
Execution
Formulation Role
Role
Creating the Strategic Human Resource
Management System

Components of a Strategic
HRM System

Human Resource
Human Resource Employee Behaviors
Policies and
Professionals and Competencies
Practices
The Practices-Behaviours-Strategy
Pyramid

What are
our strategic
goals or
aims

What employee
behaviours and skills do
we need to achieve our
strategic aims?

What HR policies and practices

will enable us to produce the
necessary employee behaviours
and skills?
Translating strategy into HR Policies & Practices
at Albert Einstein Healthcare Network

New
Strategy –
Initiate,
Adapt and
Deliver

New competencies &

Behaviours-
Dedicated, Accountable,
Generative and Resilient.

New HR Policies & Practices –

New Training & Communications programmes, Job
enrichment programmes, Compensation & Benefits
programmes, Improved selection, orientation and
dismissal procedures
 Strategic Management Tools
• Strategy Map
• HR Scorecard
• Digital dashboard
Strategy Map
for
Southwest
Airlines
HR Strategy Map
 HRD Score Card
• The HRD score card draws heavily from the following
assumption:
• Competent and motivated employees are needed
to provide quality products and services at
competitive rates and in ways that enhance
customer satisfaction

COMPETENT INCOMPETENT
EMPLOYEE EMPLOYEE
 HRD Score Card

Name of the Organisation ABC

HRD HRD HRD Business Overall

System Competence Culture Linkage HRD
Maturity Score Grade Grade Maturity
Grade rating

B* C B* B B*CB*B

• These four indices consist of the four pillars of HRD effectiveness. All the four
dimensions are assessed using following ten point rating system.
A* Highest Score and Highest Maturity Level
A Very High Maturity level
B* High Maturity Level
B Moderately High Maturity Level
C* Moderate Maturity Level
C Moderately low Maturity level
D* Low Maturity Level
D Very low Maturity level
F Not at all present
U Ungraded
Digital dashboards
 HR METRICS
• A Metric is a parameter for Quantitatively expressing
characteristics of an object, person, process or
institutions.

• E.g. Ritz Carlton Portman Shanghai’s goal of “Better

customer service” – Can this be measured?
– Pax size
– Occupancy rate
– Complaints volume
– Members v/s guest ratio
– Customer satisfaction data
 HR Metrics
• Organization data:
– Revenue
– Revenue per FTE
– Net income before taxes
per FTE
• HR Department data
– Total HR staff
– HR to employee ratio
– % of HR staff in supervisory
roles
– Types of HR Positions
organizations expect to
hire in next year.
• Employment data:
– Number of positions filled
– Time to fill
– Cost per hire
– Employee tenure
– Annual overall turnover
rate
– Annual voluntary turnover
rate
– Annual involuntary
turnover rate
 HR Metrics
• HR Expense data: • Tuition/ Education data:
– HR expenses
– HR expenses to
Operating expense ratio
– HR expense to FTE ratio
• Compensation data:
– Annual salary increase
– Salaries as a percentage
of Operating expense
– Target bonus for
executives
– Maximum
reimbursement allowed
for Tuition/ Education
expenses per year
– Percentage of
employees participating
in Tution/ Education
reimbursement
programs
 Benchmarking and Metrics
• “How we are doing?” in relation to something.
• E.g. Accident rates are rising or falling?

• Benchmarking is “the process of identifying,

understanding, and adapting outstanding
practices and processes from organizations
anywhere in the world to help your
organization improve its performance.”
 Benchmarking and Metrics
• Areas of comparison:
– Financial comparison
– Customer service delivery systems
– Productivity measures
– Use of technology
– Human Resource Management
– Financial control systems
• Examples:
– Mariott hotels improved guest check in service process by
500% by benchmarking with patient admission process in
hospital emergency rooms.
– Attrition rate comparisons
– Employee engagement rate comparisons
 HR Audits
• HR Audit is an analysis by which an
organization measures where it currently
stands and determines what it has to
accomplish to improve its HR function.”
 High Performance Work Systems
• A HPWS is a set of HRM policies and practices
that together produce superior employee
performance.
– Recruiting, screening and hiring more effective
– Providing more and better training
– Paying higher wages
– Providing safer work environment
– Linking pay to performance
– Coaching and mentoring