STRATEGIC HR MANAGEMENT Lecture # 2

AND PLANNING
 CHAPTER OBJECTIVES
After you have read this chapter, you should be able to:
Summarize the strategic planning process and how it drives the
organizational activities.
Outline how strategic HR management is linked
to the organizational strategies.
Discuss how internal and external environmental factors affect HR
strategies.
List HR strategic challenges faced by modern organizations.
Explain how technology is affecting HR management practices and
employees.
Identify how organizations can measure and assess
the effectiveness of HR management practices.
STRATEGY AND STRATEGIC
PLANNING Strategy Strategic Planning

The proposition an organization follows The process of defining organizational

for how to compete successfully and strategy and allocating resources toward
thereby survive and grow. its achievement.
STRATEGY FORMULATION
Organizational Mission Strategic HR Management

The guiding force and core reason for The use of employees to gain or keep a
the existence of the organization and competitive advantage, resulting in
what makes it unique. greater organizational effectiveness.
 FIGURE 2–1
Strategic Planning Process
OPERATIONALIZING HR MANAGEMENT STRATEGIES

Thinking
Strategically

Understand Focus on key business Know what Prepare for the

the business goals to measure future
 FIGURE 2–3
Strategic Human Resource
Management
HR AS ORGANIZATIONAL
CONTRIBUTOR
HR Contributions to Organization
Effectiveness

Organization Customer service and

Financial contributions
productivity quality
HR EFFECTIVENESS AND
FINANCIAL PERFORMANCE
Effectiveness
The extent to which goals have been met.
Efficiency
The degree to which operations are done in an
economical manner.
GLOBAL COMPETITIVENESS
& STRATEGIC HR
 TYPES OF GLOBAL ORGANIZATIONS
1. Importing & Exporting
2. Multi-national Enterprise (MNE)
3. Global Organization
 Global Legal & Political Factors
 Global Cultural Factors
 Global Economic Factors
HUMAN RESOURCE
PLANNING
Human resource This level of planning requires knowledge of
planning expansions or reductions in operations and any
technological changes that may affect the
Process of analyzing organization. To illustrate, Walgreens, the large
and retail drugstore chain, has had an aggressive
expansion plan.
Additionally, as part of the analyses, HR plans can
identifying the need be made for shifting employees within the
for organization, laying off employees or otherwise
and availability of cutting back the number of employees, retraining
present employees, or increasing the number of
human employees in certain areas.
resources so that the
organization can
meet its
HUMAN RESOURCE
PLANNING
HR Planning
Responsibilities
HUMAN RESOURCE
PLANNING
Small Businesses and HR Planning
Particular difficulties arise when a growing business is passed from one
generation to another, resulting in a mix of family and non-family
employees.
HUMAN RESOURCE
PLANNING
HR
Planning
Process
HUMAN RESOURCE
PLANNING
1. Government Influences
2. Economic Conditions
SCANNING THE The general business cycle of economic recessions and economic
EXTERNAL booms also
ENVIRONMENT affects HR planning.
There is a considerable difference between finding qualified
applicants in a 3% unemployment market and in a 7%
unemployment market. As the unemployment rate rises,
the number of qualified people looking for work increases, making
it easier to fill jobs.
3. Geographic and Competition Concerns
4. Workforce Composition
Aging of the workforce
■ Growing diversity of workers
■ Women workers and work/life balancing concerns
■ Availability of “contingent workers”
HUMAN RESOURCE
PLANNING
1. Jobs and Skills Audit
The starting point for evaluating internal strengths and
ASSESSING weaknesses is an audit
THE INTERNAL of the jobs being done in the organization.
WORKFORCE The following questions are addressed during the internal
assessment:
■ What jobs exist now?
■ How many individuals are performing each job?

2. Organizational Capabilities Inventory

As HR planners gain an understanding of the current and future
jobs that will be
necessary to carry out organizational plans, they can conduct a
detailed audit of
current employees and their capabilities.
The basic source of data on employees is the HR records in the
HUMAN RESOURCE
PLANNING
3. Using a Skills Database
An inventory of organizational skills and capabilities may consider
ASSESSING a number
THE INTERNAL of elements. The following ones are important:
WORKFORCE ■ Individual employee demographics (age, length of service in th
organization,
time in present job)
■ Individual career progression (jobs held, time in each job,
promotions or
other job changes, pay rates)
■ Individual performance data (work accomplishment, growth in
skills)
HUMAN RESOURCE
PLANNING
FORECASTING
Forecasting Methods and Periods
HR SUPPLY Methods for forecasting human resources range from a manager’s best guess
Rigorous and complex computer simulation.
AND DEMANDHR forecasting should be done over three planning periods: short range,
intermediate range, and long range.
Forecasting
Forecasting the Demand for Human Resources
Using information
Demand for human resources can be forecast by considering specific openings
from the past and
that are likely to occur.
the present to The openings (or demands) are created when new jobs are being created or cu
identify expected
jobs are being reduced. Additionally, forecasts must consider when employees
future conditions.
positions because of promotions, transfers, turnovers, and terminations.

Forecasting the Supply of Human Resources

• External Supply
• Internal Supply
 HUMAN RESOURCE
PLANNING
Succession  One common flaw in succession planning is
planning that too often it is limited to key executives.
Process of
identifying a long-  It may be just as critical to replace several
term plan for the experienced mechanical engineers or
orderly specialized nurses as to plan for replacing the
replacement of key CEO.
employees.
WORKFORCE
REALIGNMENT
 Managing a Human Resources Surplus
1. Workforce Reductions and the WARN Act
2. Workforce Downsizing
3. Attrition and Hiring Freezes
4. Voluntary Separation Programs
5. Layoffs
 Outplacement Services
 Managing a Shortage of Employees