lu 2 strategic human resource management

8/14/2019 LU 2 Strategic Human Resource Management

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LU 2 Strategic Human Resource Management

I. The Strategic Management Process

A. Goal-Setting and the Planning Process - Strategic planning is importantbecause in a well-run organization the goals from the top of theorganization downward should form an unbroken chain, or hierarchy, of

goals. These goals, in turn, should guide everyone in the organization inwhat they do.

B. Strategic Planning - A strategic plan is the companys plan for how it willmatch its internal strengths and weaknesses with external opportunitiesand threats in order to maintain a competitive advantage. Figure 3-2 sums

up the strategic management process in seven steps as follows:

1. Define the current business and mission.

2. Perform external and internal audits.

3. Formulate a new direction.4. Translate the mission into goals.5. Formulate strategies to achieve the strategic goal.6. Implement the strategy.7. Evaluate performance.

C. Improving Productivity through HRIS: Using Computerized BusinessPlanning Software Business planning software packages are available to

assist the manager in writing strategic and business plans.

D. Types of StrategiesManagers develop three types of strategies.

1. Corporate-level strategy Identifies the portfolio of businesses thatcomprise the company and the ways in which these businesses are

related to each other. Concentration, diversification, vertical

integration, consolidation, and geographic expansion are all examplesof corporate-level strategies.

2. 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 ofits competitors to increase market share. Examples of competitive

strategies include cost leadership, differentiation, and focus.


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II. Strategic Human Resource Management

A. Defining Strategic HRM Every company needs its human resourcemanagement policies and activities to make sense in terms of its broad

strategic aims. Strategic human resource management means formulatingand executing human resource policies and practices that produce the

employee competencies and behaviors the company needs to achieve its

strategic aims. Figure 3-7 demonstrates the relationship between humanresource strategy and the companys strategic plans. The following steps

demonstrate linking company-wide and HR strategies:

1. Evaluate Companys Competitive Environment2. Formulate Business Strategy3. Identify Workforce Requirements4. Formulate HR Strategic Policies and Activities5. Develop Detailed HR Scorecard Measures

B. Human Resources Strategies and Policies - Managers call the specifichuman resource management policies and practices they use to support

their strategic aims human resource strategies. The Shanghai Portmans

human resource strategy was to produce the service-oriented employee

behaviors the hotel needed to improve significantly the hotels level ofservice. Its HR policies therefore included installing the Ritz-Carlton

Companys human resource system, having top management personally

interview each candidate, and selecting only employees who cared for andrespected others.

C. Strategic HRM Tools - Managers use several tools to help them translatethe companys broad strategic goals into specific human resource

management policies and activities. Three important tools include the

strategy map, the HR Scorecard, and the digital dashboard.

1. Strategy Map - The strategy map shows the big picture of how eachdepartments performance contributes to achieving the companys

overall strategic goals. It helps the manager understand the role his or

her department plays in helping to execute the companys strategicplan.

2. HR Scorecard - Many employers quantify and computerize the mapsactivities. The HR Scorecard helps them to do so. The HR Scorecard isnot a scorecard. It refers to a process for assigning financial and

nonfinancial goals or metrics to the human resource management

related chain of activities required for achieving thecompanys strategic aims and for monitoring results.


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3. Digital Dashboards - A digital dashboard presents the manager withdesktop graphics and charts.

III. HR Metrics and Benchmarking

A. Types of Metrics Figures 3-11 and 3-12 present examples of broad and morefocused measures organizations can use to measure HR effectiveness.

B. Improving Productivity through HRIS: Tracking Applicant Metrics for ImprovedTalent Management There are a number of metrics that can be used to collectand assess the quality of different recruitment sources. Many companies choose touse an applicant tracking system. There are two basic steps in this process: 1)deciding how to measure performance of new hires and 2) tracking sources thatresult in superior hires.

C. Benchmarking in Action - Benchmarking occurs when an organization comparesthe practices of high performing organizations with their own in order tounderstand what they can do to improve.

D. Strategy and Strategy-Based Metrics Benchmarking is only part of the process.HR must also use strategy-based metrics to determine how HR is helping theorganization reach its goals.

E. Workforce/Talent Analytics and Data Mining Many companies are usingworkforce analytics to analyze and track HR data to help improve performanceand increase job satisfaction. Another technique, data mining, involves statisticalanalysis to find hidden or new relationships among different variables such astracking when and who is more likely to buy a certain product. This can help acompany better manage its marketing money by targeting certain groups of peoplewith advertising.

F. What are HR Audits? These audits are a way for an organization to measure itscurrent policies and practices and identify areas where improvements can be madebased on company goals.

G. Evidence-Based HR and the Scientific Way of Doing Things Evidence-basedHR is the use of data, facts, etc. to support HR proposals, decisions, practices, andconclusions. This requires managers to be more scientific in making organizational

decisions. This approach requires objectivity, experimentation, quantification,explanation, prediction, and replication.

lu 2 strategic human resource management

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