Strategic Human Resource Management and the HR Scorecard

Strategic Human Resource Management and the HR Scorecard

After studying this chapter, you should be able to:

§         Outline the steps in the strategic management process.

§         Explain and give examples of each type of company wide and competitive strategy.

§         Explain what a strategy-oriented human resource management system is and why it is important.

§         Illustrate and explain each of the seven steps in the HR Scorecard approach to creating human resource management systems.

The Strategic Management Process

•      Strategic Management

Ø  The process of identifying and executing the organization’s mission by matching its capabilities with the demands of its environment.

•      Strategy

Ø  A chosen course of action.

•      Strategic Plan

Ø  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

Ø  A general statement of an organization’s intended direction that evokes emotional feelings in organization members.

•      Mission

Ø  Spells out who the company is, what it does, and where it’s headed.

FIGURE 3–1 The Strategic Management Process


FIGURE 3–3 Strategies in a Nutshell

FIGURE 3–4 Relationships Among Strategies in Multiple-Business Firms

Types of Strategies

Types of Strategies (cont’d)

The Southwest Airlines’ Activity System

Achieving Strategic Fit

•      The “Fit” Point of View  (Porter)

Ø  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)

Ø  “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.

Strategic Human Resource Management

•      Strategic Human Resource Management

Ø  The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility.

v  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.

FIGURE 3–6 Linking Company-Wide and HR Strategies

Strategic Human Resource Challenges

Human Resource Management’s Strategic Roles

FIGURE 3–7 Percent of Successful Mergers in Which HR Manager Was Involved

Creating the Strategic Human Resource
Management System

FIGURE 3–8 Three Main Strategic Human Resource System Components

Basic Model of How to Align HR Strategy and Actions with Business Strategy

K E Y  T E R M S

strategic plan

strategic management



SWOT analysis


strategic control

competitive advantage


strategic human resource management

HR Scorecard


value chain analysis

FIGURE 3–A1   The Basic HR Scorecard Relationships

FIGURE 3–A2   The Seven Steps in the HR Scorecard Approach to Formulating HR Policies, Activities, and Strategies

Creating an HR Scorecard

FIGURE 3–A3  Simple Value Chain for “The Hotel Paris”

Map for Southwest Airlines

HR Scorecard Process for Hotel Paris International Corporation*