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Strategic Role Of HRM
(Chapter 3)
Compiled By:
Nirav Vyas
Asst Professor
JVIMS-Jamnagar
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Objectives of the Chapter
Meaning Of Strategy, Strategic Plan and
Strategic Management
Steps in Strategic Management Levels Of Strategies
HRMs Strategic Roles
Creating SHRM
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Meaning
Strategy
The organizational long term view for how itwill balance its internal strength and
weakness with its external opportunities andthreats to maintain a competitive advantage
Strategic Plan
The organizational Plan for using its strengthsand opportunities to overcome its weaknessand threats and to achieve the achievetowards the competitive advantage
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Meaning
Strategic Management
The process of identifying and executing the
organizational mission by matching its
capabilities with the demands of its
environment
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Meaning of Vision and Mission
To understand the meaning of strategicmanagement, we should first understandthe meaning of Vision and Mission
Vision
It is a companys general statement of itsintended direction that shows in a broad term
A vision statement sums up in just a fewwords, the promoters image of where thebusiness should move.
What we want to become
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Meaning of Vision and Mission
Mission
Mission lays outs in broad terms what main
tasks are needed to move in the direction of
vision
It is more concrete and quantifiable
Spells out who the company is, what it does
and where is headed Most important phrase is How can we
become
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Examples
Vision "To bring inspiration and innovation to every athlete*
in the world" If you have a body, you are an athlete.
Nike
Mission Statement of Nike To Provide for the best athletic accessories to the
inspiring athletes
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Examples
Vision "The become leader in the Indian automobile
industry, creating customer delight and
shareholder's wealth; a pride for India.
Maruti Udyog
Mission Statement of Maruti Udyog To create customer obsession through innovation,
creativity, networking, partnership, openness and
learning.
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Steps in Strategic Management
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Strategic Management Process
Define Current Business
Perform External and Internal Audits
Formulate New Business and Mission Statements
Translate Mission into strategic goals Formulate Strategies to achieve goals
Implement the Strategies
Evaluate Performance
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Strategic Management Process
Define the Current Business This does not mean mentioning the core business about what we are
doing. It means identifying the segment to which our products are most
appealing to
The organization must also define the area of its operation
A clear Vision statement should be there accompanied with a mission
statement
Perform External and Internal Audits
This is done to check the strengths, weakness, opportunities and threatsfaced by the organization
Decision of strategies and tactics will be based on this mix
SWOT analysis is to be used for this
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Example of SWOT of Amul
Strengths
High and
regular demand
Easy availability
of raw material
Weaknesses
Perishability
Logistics
Problem
Opportunities
Export Potential
Threats
UnorganizedSector
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Strategic Management Process
Formulate new business and mission
statements Based on the situation analysis, what should our new business be, in
terms of what products it will sell, where it will sell them and how itsproducts or services will differ from its competitors
Translate Mission Statements in goals
Segment the overall mission statement into goals of different
department
E.g. Saying We want to make best quality goods is one thing and
operationalizing the statement into goal of achieving 6 sigma for
production department is other
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Strategic Management Process
Formulate Strategies to achieve the
strategic goals It shows how the organization will move from the business it is in now
to the business it wants to be in.
It takes into consideration the results of SWOT analysis
Eg. Strategy of Wal-Mart is Low Prices Everyday. What would be
the implementation of strategy
Low Cost everyday
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Strategic Management Process
Implement the strategies It means translating the strategies into actions and results.
Actual hiring (or firing) people, entering in to new markets, opening or
closing plants, adopting technologies etc. Evaluate Performance
An basic evaluation model has to be thought of for evaluating what we
were expecting after the implementation of strategies and what actually
has happened
This is basically called strategic control
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Levels of Strategies
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Common elements of any strategy
Low Costs
Customer Focus
Incremental Profits
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Corporate Strategy
Business
Strategies
SBU 1 SBU
2
SBU 3
Different
Depts
Different
Depts
Different
Depts
Different
Depts
Functional Strategies
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Levels of Strategy
Corporate level An organizations corporate level strategy identifies
the portfolio of business that, in total, comprise theorganization and the ways these businesses relate to
each other. Business level (Competitive)
It identifies how to build and strengthen thebusinesss long term competitive position in themarketplace
Functional Level (Departmental) It identify the basic courses of action that each
department will pursue in order to help the businessattain its competitive goals
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Example
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Corporate Level Strategy
An organizations corporate level strategy
identifies the portfolio of business that, in total,
comprise the organization and the ways these
businesses relate to each other Basically there are five recognized corporate
strategies which are Diversification
Vertical Integration Horizontal Integration
Consolidation
Geographic Expansion
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Corporate Level Strategy
Diversification Expansion by adding new product lines.
E.g. Mobile service providers have started new product lines by
providing internet surfing devices
Vertical Integration Forward:- Purchasing the retailers, dealers etc.
E.g. Factory outlets of various fashion clothing companies
Backward:- Purchasing the suppliers of raw materials.
Horizontal Integration
Mergers and Acquisition (If you wanttoreducecompetitors,purchasethem)
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Corporate Level Strategy
Consolidation Reducing the organizations size
Geographic Expansion
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Business Level (Competitive)
Strategies
It identifies how to build and strengthen the
businesss long term competitive position in the
marketplace
Types Cost Leadership:-
It means the organization aims to become the low cost
leader in any industry and acquire a market share.
E.g Micromax Mobiles
Differentiation:- It means an organization seeks to be unique in its industry
along dimensions that are widely valued by buyers
E.g Rolex is knows for style while Casio for durability
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Business Level (Competitive)
Strategies
Focus strategy It basically means identifying a niche into the target
segment and producing customized products in order to
cater to that particular niche.
E.g. Ferrari
One thing to note that the organizations different
business strategies should make sense in terms of
its corporate strategy.
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Functional Strategies
It identify the basic courses of action that each
department will pursue in order to help the business
attain its competitive goals
Each business is composed of departments such assales, marketing, production, HRM. The strategies
adopted by them are called functional strategies
The organizations functional strategies should make
sense in terms of its business strategy
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HRM Strategic Roles
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HRM Strategic Roles
Formulating and executing any strategy needs anHR intervention. HR help the strategy team toidentify the human issues that are vital towards thestrategy.
HR helps in conceptualizing and executing the sortsof organizational changes that organizationincreasingly need to execute their strategic plans
Basically there are two roles that HR department
takes Strategy Execution Role
Strategy Formulation Role
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HRM Strategic Roles
Strategic Execution Roles
Top management formulates the organizational strategies
and then the HR manager designs policies and practices
that make sense in terms of the overall strategy
HRM supports the strategy execution by admistrating
firms diversification, consolidation or downsizing by out
placing employees, instituting pay for performance plans,
reducing health care costs, helping employees to work in
abroad, giving training etc
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HRM Strategic Roles
Strategic Formulation Roles
The HRM manager helps in assessing the SWOT of the
organization before it takes decision on any of its strategy
It helps in assessing the need of development needed inthe existing employees to make them aligned with the
intended strategies
They judge on the basis of how many new employees and
of what type should be taken in for creating a particular
strategy etc.
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Creating SHRM
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Creating SHRM
Creating a Strategic Human Resource Management
requires simple but concrete steps.
It involves basically the following process
Creating High performance work system Measuring HRs effectiveness
Translating strategy into HR policies and practices
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Creating SHRM
Creating High Performance Work System
Every company tends to create a HR system thats
uniquely appropriate to its needs.
HPWS is basically advocating a system which focuses onlearning and performance recognition.
Several characteristics of HPWS are multi skilled workers,
empowered front line workers, continuous training,
emphasis on better labor relations, commitment to quality
etc.
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Creating SHRM
Measuring HRs effectiveness Employers today expect their HR manager to build a persuasive
case that shows how the firms HR activities contribute tocreating value for the firm.
It is measured in two terms either low costs or high profits
Some examples are revenue earned per full time employee. Thisis used to measure the productivity of the employee.
For creating a SHRM, it is very important to create a cost tobenefit ratio of all HR activities to the overall costs or profits ofthe organization.
This cost to benefit ratio should be such which can be expressed
in mathematical terms.
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Creating SHRM
Translating Strategy into HR policies and
practices
SHRM in simple terms means formulating and executing
HR polices that produce the desired employeescompetencies which are helpful to achieve the overall
strategy of the business
Hence it is very necessary first to translate the business
strategy into HR policies which will produce the desired
employee behavior and competencies Let us see a basic model of how to align Business strategy
with the HR practices
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Model for translating strategy into HR
practices
Analyze the business strategy
Identify the desired workforce
competencies needed
Formulate HR practices that will
help to achieve those desired
competencies
Develop a system for evaluating
the practices and making them
quantifiable. HR Scorecards
Differentiation
Learning aptitude, Less
resistance to change, ready toaccept challenges
Develop interactive training
methods, recognition on
innovation, increments on new
invention etc
Cost to innovation ratio, time
devoted to study etc.
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Creating SHRM
Meaning of HR Scorecard and how to use HR Scorecards
IT is a measurement system, often summarized on a
computer screen which shows the quantitative standards
or metrics the firm uses to measure HR efforts
Basically it is a system which measures the HR functions
efficiency and effectiveness in a quantifiable terminology.
Three basic information is required to create a HR
scorecard
Knowledge of the business strategy Casual links between a particular HR practice and the
outcome in terms of employee behavior
Metrics which the HR manager can use to quantify
and measure the effectiveness of the HR practices
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Creating SHRM
HR scorecard process Define Business strategy
Outline the organizational value chain
Outline a strategy map
Identify strategically required organizational outcomes
Identify the required workforce competencies
Identify the required HR system and policies
Create HR scorecard
Choose HR scorecard measures Summarize HR scorecard and digitalize
Evaluate
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Creating SHRM
Outline the organizational value chain
Any manager who wants to understand whatemployee behaviors are vital for his firms successmust first understand what the firms required
activities are. E.g High end premium segment hotels value chain
would be Easy guest reservation
Inbound guest services
Faster and polite room service
Luxurious amenities
Outbound guest services etc.
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Creating SHRM
Outline a strategy map
A strategy map is a diagram that summarizes the chain of
major interrelated activities that contribute to a companys
success.
It basically outlines how each department and each
employee needs to contribute in order to achieve the
overall business strategy.
Identify Strategically require organizational
outcomes The strategy map helps the manager recognize the core
outcomes which are needed and relevant for the strategy.
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Creating SHRM
Identify required competencies and behavior of
employees
Listing down what does each employee should achieve in
his own specialized area in order that he can contribute tothe overall strategy of the business
Identify HR system policies and practices required
Create HR Scorecard
By expanding the value chain and strategy map, themanager creates a HR score card which lists down all the
desired competencies of every employee with some
method of measuring it.
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Creating SHRM
Choose HR scorecard measures
Basically it means identifying a ground on which the
competencies, HR practices and outcomes can be
measured
E.g Improve the disciplinary system-How to measure
Perhaps by judging number of employee and manager
grievances in period of time.
Summarize the scorecard measures in a digital
dashboard
Evaluate