Chapter 3

Human Resource Management Strategy

and Analysis
Reference: Dessler, G. (2017) Human Resource Management, 15 edition, Pearson education.

Week 2

3–1
 LEARNING OUTCOMES

1. Outline the basic steps in the management planning

process.
2. Explain and give examples each of companywide and
competitive strategy.
3. Explain what a strategy-oriented human resource
management system is and why it is important.
 Unit 2.1: The Strategic Management Process
•Strategy
 A course of action the organization intends to pursue to
achieve its strategic aims.
•Strategic Plan
 How an organization intends to match its internal strengths
and weaknesses with its external opportunities and threats
to maintain a competitive advantage over the long term.
•Strategic Management
 The process of identifying and executing the organization’s
mission by matching its capabilities with the demands of its
environment.
 Business Vision and Mission
•Leveraging
 Capitalizing on a firm’s unique competitive strength
while underplaying its weaknesses.
•Vision
 A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
•Mission
 Spells out who the firm is, what it does, and where
it’s headed.
The Strategic Management Process
 The Strategic Management Process
Step 1: Define the Current Business
 Every company must choose the terrain on which it
will compete –in particular, what products it will sell,
where it will sell them, and how its products and
services will differ from its competitors.
 Managers sometimes use vision and mission
statements.
 Whereas visions usually lay out in very broad
terms what the business should be, the mission
lays out in broad terms what our main tasks are
now.
The Strategic Management Process
•Step 2: Perform External and Internal Audits
 Ideally, managers begin their strategic planning by
methodologically analyzing their external and
internal situations.
 To facilitate this strategic external/internal audit,
many managers use SWOT analysis.
 This involves a SWOT chart to compile and
organize the process of identifying company
Strengths, Weaknesses, Opportunities and
Threats.
SWOT Matrix, with Generic Examples
• Step 3: Formulate New Business and Mission Statements
 Based on the situation analysis, what should our new
business be?
 What is our new mission and vision?
• Step 4: Translate the Mission into Strategic Goals
 Saying the mission is “to make quality job one thing;
operationalizing that mission for your managers is another.
• Step 5: Formulate Strategies to Achieve the Strategic Goals
 The strategies bridge where the company is now, with where
it wants to be tomorrow.
 The best strategies are concise enough for the manager to
express in an easily communicated phrase that resonates
with employees.
• Step 6: Implement Strategies
Strategy implementation means translating
strategies into actions and results –by
actually hiring (or firing) people, building (or
closing) plants, and adding (or eliminating)
products and product lines.
• Step 7: Evaluate Performance
 Strategies do not always succeed.
 Managing strategy is an ongoing process.
 Strategic evaluation addresses several important
questions:
 For example: Are all the resources of our firm
contributing as planned to achieving our
strategic goals?
 What is reason for any discrepancies?
 Do changes in our situation suggest that we
should revise our strategic plan?
Types of Corporate Strategies

Corporate Strategy Possibilities

Concentration Diversification Consolidation

Vertical Geographic
integration expansion
 Types of Corporate Strategies
• A company’s 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)
 The firm offers one product or product line, usually
in one market.
• Diversification
 The firm will expand by adding new product lines.
 Related and unrelated (conglomerate)
Types of Corporate Strategies
• Vertical Integration
The firm expands by, perhaps, producing its
own raw materials, or selling its products
direct.
• Consolidation
Reducing a firm’s size.
• Geographic Expansion
Taking business abroad
Types of Competitive Strategies

Business-Level
Competitive Strategies

Cost leadership Differentiation Focus/Niche

Types of Competitive Strategies
• A competitive strategy identifies how to build and strengthen the
business’s long term competitive position in the marketplace.
• Cost leadership
 A firm is seeking to become the overall low-cost leader in an
industry.
 Dell
• Differentiation
 The firm seeks to be unique in their industry along competitive
dimensions that are widely valued by buyers.
 Volvo (safety), Mercedes- Benz (reliability and quality)
• Focus
 The firms that attempt to compete in a narrow market segment
(niche) through the provision of a product or service that specify
customers can get in no other way. (Ferrari)
Functional Strategy
• A functional strategies identify the
basic courses of action that each
department will pursue in order to
help the business attain its
competitive goals.
Dell’s human resource
strategies
 HRM’s Role in Creating Competitive
Advantage
Competitive advantages are “factors that
allow an organization to differentiate its
product or service”.
To have an effective competitive strategy,
the company must have one or more
competitive advantages.
The competitive advantage can take many forms.
 For a pharmaceuticals company, it may be the
quality of its research team, and its patents.
 Ford and Toyota (same technology)
 Toyota’s HR strategies:

– A full week of employee screening testing

– Three weeks per year of training
– Team-based rewards
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’s Strategic Roles
• HR Managers can play two basic strategic planning
roles, in strategy execution and in strategy
formulation.
• The Strategy Execution Role
 Strategy execution is traditionally the heart of the
Hr managers’ strategic job.
 Top management formulates the company’s
corporate and competitive strategies.
 Then, hr manager designs strategies, policies, and
practices that make sense in terms of company’s
corporate and competitive strategies.
• The Strategy Formulation Role
 HRM’s traditional role in executing strategy has expanded
to include working with top management to formulate the
company’s strategic plans.
 This expanded strategy formulation role reflects the reality
employers face today.
 Globalization means more competition, more
competition means more performance and most
employers are pursuing improved performance
 By boosting the competence and commitment levels of
their employees.
 ‘How can we boost employee productivity?’ is crucial to the
strategy formulation process.
 Building A High-Performance Work System
 A set of human resource management policies and practices
that promote organizational effectiveness.
• High-Performance Human Resource Policies
and Practices
 Emphasize the use of relevant HR metrics.
 Set out the things that HR systems must do to become an
HPWS.
 Foster practices that encourage employee self-management.
 Practice benchmarking to set goals and measure the notable
performance differences required of an HPWS.
KEY TERMS

strategic plan Off shoring

strategy strategic human resource
strategic management management
vision statement strategy map
mission statement high-performance work system
corporate-level strategy human resource metric
competitive strategy value chain
competitive advantage HR audit
functional strategies