Gary Dessler

tenth edition

Chapter 3 Part 1 Introduction

Strategic Human Resource

Management and the HR Scorecard
© 2015 Prentice Hall Inc. PowerPoint Presentation by Charlie Cook
All rights reserved. The University of West Alabama
 HR’s Strategic Challenges
 Strategic plan
– A company’s plan for how it will match its internal
strengths and weaknesses with external
opportunities and threats in order to maintain a
competitive advantage.
 Three basic challenges
– The need to support corporate productivity and
performance improvement efforts.
– That employees play an expanded role in
employers’ performance improvement efforts.
– HR must be more involved in designing—not just
executing—the company’s strategic plan.
© 2015 Prentice Hall Inc. All rights reserved. 3–2
 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 strategy is a course of action.
– The company’s long-tem plan for how it will
balance its internal strengths and weaknesses
with its external opportunities and threats to
maintain a competitive advantage.

© 2015 Prentice Hall Inc. All rights reserved. 3–3

 Business Mission and Its Vision
 Vision
A general statement of the firm’s intended direction;
it shows, in broad terms, “what we want to
become.”
 Mission

Summarizes the answer to the question, “What

business are we in?”

© 2015 Prentice Hall Inc. All rights reserved. 3–4

 Strategic Management Process (cont’d)
 Strategic management tasks
– Step 1: Define the Business and Its Mission
– Step 2: Perform External and Internal Audits
– Step 3: Translate the Mission into Strategic Goals
– Step 4: Formulate a Strategy to Achieve the
Strategic Goals
– Step 5: Implement the Strategy
– Step 6: Evaluate Performance

© 2015 Prentice Hall Inc. All rights reserved. 3–5

 Overview of Strategic Management

Figure 3–1
© 2015 Prentice Hall Inc. All rights reserved. 3–6
 A SWOT Chart

SWOT Analysis
The use of a SWOT chart
to compile and organize
the process of identifying
company

Strengths,
Weaknesses,
Opportunities, and
Threats.

Figure 3–2
© 2015 Prentice Hall Inc. All rights reserved. 3–7
© 2015 Prentice Hall Inc. All rights reserved. 3–8
Types of Strategic Planning
3 levels of strategic planning (Types of Strategies)
1. Corporate-level strategy
– Identifies the portfolio of businesses that, in total, comprise the
company and the ways in which these businesses relate to each
other.
• Concentration (single business) corporate strategy, the company offers
one product or product line, usually in one market.
• Diversification strategy implies that the firm will expand by adding new
product lines.
• Vertical integration strategy means the firm expands by, perhaps,
producing its own raw materials, or selling its products direct.
• Consolidation strategy reduces the company’s size
• Geographic expansion strategy takes the company abroad.

© 2015 Prentice Hall Inc. All rights reserved. 3–9

 Types of Strategies

Corporate-Level
Strategies

Vertical Geographic
Diversification Consolidation
Integration Expansion
Strategy Strategy
Strategy Strategy

Figure 3–4
3–10
Types of Strategic Planning
3 levels of strategic planning (Types of Strategies) Cont.
2. Business-level/competitive strategy
– Managers endeavor to achieve competitive advantages for each of their
businesses. Competitive advantages enable a company to differentiate its
product or service from those of its competitors. Such differentiation allows a
company to increase its market share.
– A competitive strategy identifies how to build and strengthen the business’s
long-term competitive position in the marketplace.
Forms of competitive strategies
 The three forms of competitive strategies are cost leadership,
differentiation, and focus
• Cost leadership: the enterprise aims to become the low-cost leader in an industry.
• Differentiation: a firm seeks to be unique in its industry along dimensions that are
widely valued by buyers.
• Focus: a firm seeks to carve out a market niche, and compete by providing a
product or service customers can get in no other way.

© 2015 Prentice Hall Inc. All rights reserved. 3–11

Types of Strategic Planning
3 levels of strategic planning (Types of Strategies) Cont.

3. Functional strategies
– Identify the basic courses of action that each department
will pursue in order to help the business attain its
competitive goals.
– Human capital is one of the best competitive advantage
because it is hard to duplicate a company’s personnel.

© 2015 Prentice Hall Inc. All rights reserved. 3–12

 HR and Competitive Advantage
 Competitive advantage
– Any factors that allow an organization to
differentiate its product or service from those of
its competitors to increase market share.
– Superior human resources are an important
source of competitive advantage
– For an effective competitive strategy, the
company must have one or more competitive
advantages, which could take many forms—such
as, quality of products and services, proprietary
software, or level of customer service and
facilities.

© 2015 Prentice Hall Inc. All rights reserved. 3–13

 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.
– Formulating and executing HR systems—HR policies and
activities (Practices)—that produce the employee
competencies and behaviors the company needs to
achieve its strategic aims.
– Strategic human resource plans enable a company to
hire the employees who will exhibit the behaviors the
company needs to accomplish its goals.

© 2015 Prentice Hall Inc. All rights reserved. 3–14

Strategic Human Resource Management Cont’d

– Every company needs its human resource management

policies and activities to make sense in terms of its broad
strategic aims. Strategic human resource management
means formulating and executing human resource
policies and practices that produce the employee
competencies and behaviors the company needs to
achieve its strategic aims. The basic idea behind strategic
human resource management is simple: In formulating
human resource management policies and activities, the
manager's aim must be to produce the employee skills
and behaviors that the company needs to achieve its
strategic aims.

© 2015 Prentice Hall Inc. All rights reserved. 3–15

Strategic Human Resource Management Cont’d

 Management formulates a strategic plan. That strategic

plan implies certain workforce requirements. Given
these workforce requirements, human resource
management formulates HR strategies (policies and
practices) to produce the desired workforce skills,
competencies, and behaviors.

 Finally, the human resource manager identifies the

measures he or she can use to gauge the extent to
which its new policies and practices are actually
producing the required employee skills and behaviors.

© 2015 Prentice Hall Inc. All rights reserved. 3–16

Strategic Human Resource Management Cont’d

 And hence, the Strategic Human Resource

Management would be:
– Linking of HRM with strategic goals and objectives in
order to improve business performance and develop
organizational cultures that foster innovation and
flexibility
– This 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

© 2015 Prentice Hall Inc. All rights reserved. 3–17

Strategic Human Resource Management Cont’d

• The basic idea behind strategic human resource management is

simple: In formulating human resource management policies and
activities, the manager's aim must be to produce the employee
skills and behaviors that the company needs to achieve its
strategic aims.
• Management formulates a strategic plan. That strategic plan implies
certain workforce requirements. Given these workforce requirements,
human resource management formulates HR strategies (policies and
practices) to produce the desired workforce skills, competencies, and
behaviors. Finally, the human resource manager identifies the
measures he or she can use to gauge the extent to which its new
policies and practices are actually producing the required employee
skills and behaviors.

© 2015 Prentice Hall Inc. All rights reserved. 3–18