The Strategic Human Resource Environment

Chapter Outline

•      The Strategic Context of Human Resource Management

•      Corporate, Business, and Functional Strategies

•      Human Resource Strategy Formulation

•      Human Resource Planning and the Workforce

•      Human Resource Strategy Implementation

•      Evaluating the Human Resource Function in Organizations

Chapter Objectives

•      Describe the strategic context of human resource management.

•      Identify three types of strategies and relate each to human resource management.

•      Discuss human resource strategy formulation and relevant organizational factors.

•      Describe the processes of human resource planning.

Chapter Objectives (cont’d)

•      Discuss the processes through which human resource strategy is implemented.

•      Discuss how the human resource function in organizations can be evaluated.

The Strategic Context of
Human Resource Management

•      Human resource management does not occur in a vacuum.

•      HRM occurs in a complex and dynamic milieu of forces within the organizational context.

•      There has been a trend in recent years for HR managers to adopt a strategic perspective on their job and to recognize the critical links between organizational strategy and HR strategy.

Strategic Human Resource Management

Strategic Human Resource Management (in brief)

The Influence of Organizational
Purpose and Mission

•      What is an organization’s purpose?

–  The organization’s basic reason for existence

•      What is an organization’s mission?

–  The organization’s statement of how it intends to fulfill its purpose

•      Both its purpose and its mission affect an organization’s HR practices.

What Is a Top Management Team?

•      The organization’s group of senior executives responsible for the overall strategic operation of the firm

The Roles of Top Management

Corporate, Business, and
Functional Strategies

•      What is a SWOT analysis?

–  Identifying strengths, weaknesses, opportunities, and threats

•      What is corporate strategy?

–  Determining what businesses the corporation will operate

•      What is business strategy?

–  Determining how the firm will compete in each market where it conducts business

Strategies (cont’d)

•      What is functional strategy?

–  Determining how the firm will manage each of its major functions, such as marketing, finance, and human resources

•      What is a grand strategy?

–  A single, overall framework for action that the top management team develops at the corporate level

–  Examples: growth, retrenchment, stability

Strategies (cont’d)

•      What is a diversification strategy?

–  Adding new products, product lines, or businesses to a company’s existing core products, product lines, or business

–  Examples: related, unrelated

Business Strategy: Adaptation Model

•      A business seeks ways to adapt to its environment

–   Defender; Prospector; Analyzer; Reactor

Business Strategy:
Competitive Strategies

•      Differentiation strategy

–   A company attempts to develop an image or reputation for its product or service that sets the company apart from its competitors

•      Cost leadership strategy

–   Focuses on minimizing costs as much as possible

•      Focus strategy

–   An organization targets a specific segment of the marketplace for its products or services

Functional Strategies

•      Human resource functional strategy is closely integrated and coordinated with business strategies.

Human Resource Strategies

The Impact of Organization Design

•      Within an organization, organization design refers to the framework of

–  Jobs

–  Positions

–  Clusters of positions

–  Reporting relationships among positions

Organization Design: Functional Design

•      Also called U-form (unitary)

Organization Design:
Conglomerate Design

•      Also called H-form (holding company)

Organization Design: Divisional Design

•      Also called M-form (multidivisional)

Organization Design: Flat Organization

•      Also called horizontal

What Is Corporate Culture?

•      The set of values that helps the organization’s members understand what the organization stands for, how it accomplishes what it wants to accomplish, and what it considers important

•      Managing corporate culture is important for the success of the organization.

The Impact of Unionization
and Collective Bargaining

•      Labor relations is the process of dealing with employees who are represented by an employee association.

•      Unions can play an important role in formulating and implementing human resource strategy.

Human Resource Planning

•      The process of forecasting the supply and demand for human resources within an organization and developing action plans for aligning the two.

•      Human resource planning can often make the difference between organizational success or failure.

The Human Resource Planning Process

Forecasting the Supply of
Human Resources

•      A human resource information system is an integrated and increasingly automated system for maintaining a database regarding the employees in an organization.

•      Executive succession involves systematically planning for future promotions into top management positions.

•      General trends in the population and workforce

Forecasting the Demand of
Human Resources

•      The organization’s strategic plans

•      Trends in the economy and in certain jobs

Human Resource Strategy Implementation

Human Resource Strategy Implementation (cont’d)

•      Implementing a growth strategy

–  Hire new employees

•      Implementing a stability strategy

–  Plan for attrition

•      Implementing a reduction strategy

–  Attrition, termination, layoffs, early retirement

Individual Processes and
Strategy Implementation

•      Psychological contract

–  The overall set of expectations held by an individual with respect to what he or she will contribute to the organization and what the organization, in turn, will provide to the individual

•      Individual personality traits and attitudes

•      Motivation

•      Stress

Interpersonal Processes and
Strategy Implementation

•      Relationships with coworkers, supervisors, subordinates

•      Leadership

•      Communication

Evaluating the Human Resource Function in Organizations

•      Cost-benefit analysis of human resource management

•      Outsourcing HRM functions

•      HRM as a source of competitive advantage

•      High performance work systems rely on a set of “best practices” to use human resources to gain a meaningful competitive advantage.