1. Strategic Management Module
What is Strategic Management?
Is there such a thing as Non-Strategic Management?
More about the Management of Company Competitive Position than People Management
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2. Synonyms for Strategic
Long term
Big Picture
Competitive Positioning
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3. Module 1: Strategic Management 12% PHR (27 questions) 29% SPHR (65 questions)
Any student use of these slides is subject to the same License Agreement that governs the student’s use of the SHRM Learning System materials.
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4. HR Roles
Historical:
Advice
Service
Control
Current:
Strategic
Operational
Administrative
Historical roles are still important, but roles have broadened into today’s more strategic focus.
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5. Changes in the HR Profession
Workforce composition
Globalization
Emphasis on ethics
Flexible organizational boundaries
Require:
Strategic HR perspective
Alignment of human capital and corporate strategy
Technology
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6. (things your predecessors spent less time dealing with…)
Key Trends in HR
(things your predecessors spent less time dealing with…)
Off shoring Mergers and Acquisitions
Project Mgmt Change Mgmt
Outsourcing Technology
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7. Key Trend: Offshoring SPHR only Domestic HR challenges
Displaced workers
Increased HR workload
Decline in employee morale
Shortage of employees in positions vulnerable to offshoring
International HR challenges
Recruiting, managing, and motivating the new workforce
Communication and coordination across time zones
Cultural issues
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8. Key Trend: Mergers, Acquisitions, and Divestiture
SPHR only
1. Identify issues, form and train teams, and prepare for change.
2. Investigate cultural, structural, technological, financial, and legal risks.
3. Develop plans to address key issues.
4. Measure activity of new organization against benchmarks.
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9. Management Functions Forecast Set goals Design Assist Schedule
Planning
Organizing
Directing
Controlling
Forecast
Set goals
Design
Assist
Schedule
Implement
Measure
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10. Project Management Steps
Roles
Interpersonal
Leader
Liaison
Informational
Communicator
Information disseminator
Decisional
Conflict resolver
Resource allocator
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11. Project Planning Tool: Gantt Chart
Also known as horizontal bar chart, milestone chart, or activity chart.
Plots the sequential steps of a project against time.
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12. Project Planning Tool: PERT Chart
An arrow diagram or road map identifying all major events
Shows how much time is needed to complete a project.
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13. Change Management Model
HR challenge: To maintain the level of intensity and consistency of effort throughout the change process
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14. A. Form new work teams based on the gaps created by the layoffs.
A company must immediately downsize its workforce by 15% due to shrinking markets. What important role will HR play during the process?
A. Form new work teams based on the gaps created by the layoffs.
B. Summarize industry trends and communicate them to employees.
C. Ensure that top management regularly communicates with employees.
Launch a new quality initiative to preserve customer satisfaction.
Answer: C
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15. The Outsourcing Process
Analyze needs and define goals.
Define budget.
Create RFP.
Send RFPs to contractors.
Evaluate contractor proposals.
Choose contractor.
Negotiate contract.
Implement and monitor.
Evaluate.
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16. Managing Technology Trends
Business process integration
E-procurement
Electronic record keeping
Electronic signatures
Application service providers (ASPs)
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17. Strategic Planning Process
Defines where the organization is now, where it wants to be, and how it will get there.
Gathers internal and external information.
Develops alternative strategies.
Selects appropriate strategies.
Implements a plan.
Evaluates and revises the plan as needed.
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18. Phase 1: Strategy Formulation
Must understand:
What business the company is in.
When to change the mission and alter strategy.
How and when to communicate the mission.
Strategy Formulation
Develop vision and mission statements.
Define organizational values.
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19. Phase 2: Strategy Development
Conduct a SWOT analysis, including environmental scan.
Establish long-term objectives (three to five years).
Identify corporate, unit, and functional strategies.
S = Internal strengths
W = Internal weaknesses
O = External opportunities
T = External threats
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20. Phase 3: Strategy Implementation
Establish short-term objectives (six months to a year).
Develop action plans.
Allocate resources.
Motivate employees.
Resources needed to
achieve objectives:
Financial
Physical
Human
Technological
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21. Phase 4: Strategy Evaluation
Review strategies at planned intervals.
Measure performance.
Take corrective action.
Assess strategies by noting changes in:
Internal strengths and weaknesses.
External opportunities and threats.
Take corrective action when changes have occurred.
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22. Which of the following activities best prepares HR to participate in the strategic planning process?
A. Evaluating a new HRIS system
B. Restructuring HR’s recruiting system
C. Training line managers on interviewing techniques
Reviewing the company’s key financial data
Answer: D
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23. Understanding the Internal Environment
Understand the perspective of your business partners.
Create communication and collaboration.
Identify internal needs and emerging issues.
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24. Finance and Accounting
Finance helps business units with financial needs.
Pricing products
Creating financial models
Accounting balances the checkbook of the company.
Accounts receivable
Accounts payable
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25. Budgeting Methods
Incremental
Prior budget and newly identified needs are the basis for funding.
Formula
Usually stated as a percentage of increase or decrease to general funding.
Zero-based
All objectives and operations are ranked and funds are allocated according to rank.
Budgets start at zero; all expenses must be justified.
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26. Balance Sheet Summarizes the firm’s financial position.
Basic form of the sheet is:
Assets = Liabilities + Equity.
Every financial transaction is an exchange, and both sides are recorded.
Only records transactions measured in money.
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27. Balance Sheet Assets Liabilities and equity Current assets
Fixed assets
Investments
Total assets
Liabilities and equity
Current liabilities
Equity
Total liabilities and equity
$310,000
$70,000
$20,000
$400,000
$145,000
$255,000
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28. Income Statement
Explains revenues, expenses, and profits over a specified period of time.
Basic form of the statement is:
Revenues – Expenses = Net income.
Some expenses are never cash outflows (depreciation).
Some expenses may be paid partly in one period and partly in another (cost of goods sold).
Owner withdrawals are distributions, not operating expenses.
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29. Income Statement Gross sales $360,000 Less cost of goods sold $240,000
Gross profit $120,000
Less expenses: $50,000
Salaries $20,000
Rent $18,000
Utilities $7,200
Depreciation $1,800
Interest $3,000
Income less expenses $70,000
Income tax expense $28,000
Net income $42,000
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30. Marketing and Sales Marketing:
Promotion
Price
Place
Product
Key
elements
Marketing:
Plan, price, promote, and distribute goods and services.
Sales:
Sell the organization's product to the marketplace.
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31. Operations Goal: To provide goods and services to customers.
Focuses on productivity, quality, cost, delivery, and performance.
Affected by supply chain management.
Control
Inventory
Scheduling
Standards
Capacity
Key
concepts
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32. A company commits to answering all phone calls within 15 seconds
A company commits to answering all phone calls within 15 seconds. Which operational concept deals with observing and documenting actual results?
A. Capacity
B. Inventory
C. Scheduling
D. Control
Answer: D
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33. Information Technology
Enables an organization to use information to support its strategic objectives.
Strategic information systems are designed to achieve competitive superiority.
Airline reservation systems
Operational systems focus on reducing costs or improving productivity.
Remote access systems that allow telecommuting
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34. Employees Engagement Employees’ willingness to “go the extra mile”
How employees describe the organization
Whether employees choose to remain
How employees work
Human Capital
Combined knowledge, skills, and experience of employees
Leads to creativity and competitive advantage.
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35. Evolution of Organizations
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36. Cost Leadership Strategy
Goal: To be the low-cost producer
Requires:
Exploitation of all sources of cost advantage.
Efficiency and productivity.
Sharing of information.
Centralized decision making.
Cross-training and job rotation.
Process improvements.
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37. Differentiation Strategy
Goal: Attempt to set the product apart from its competition by giving it unique characteristics for which customers will pay a premium price
Requires:
Reduced costs in areas not related to differentiation.
Strong research and development and marketing.
Product knowledge and quality training.
Decentralized decision making for quicker speed to market.
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38. Human capital advantage
Other Strategies
Focus
Emphasis on a buyer group, a segment of the product line, or a specific market
Human capital advantage
Investment in people
Customer intimacy
Emphasis on understanding customer needs and helping them get the most out of their products
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39. Specialization and Departmentalization
Specialization: Degree to which processes are divided into tasks and grouped into jobs
Balances need for productivity with employee satisfaction
Departmentalization: The way an organization groups jobs so work can be coordinated
Functional, divisional, or matrix
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40. Functional Structure
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41. Divisional Structure
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42. Matrix Structure
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43. Authority and Reporting Issues
Chain of Command
Line of authority within an organization
Defines the boundaries within which a manager can make decisions
Span of Control
Number of individuals who report to a supervisor
Narrow span (“tall” organization)
Wide span (“flat” organization)
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44. Centralization and Decentralization
Formalization: Degree of discretion individuals have over the way in which they do their jobs.
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45. STOP
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46. Environmental Scanning
Interprets data related to external opportunities and threats.
Prepares HR to participate in strategic planning.
Examines seven key factors:
Demographic – Political
Economic – Social
Employment – Technological
International
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47. Demographic Factors Age Gender Generational differences
Population shifts
Ethnicity
Unskilled labor
Nontraditional labor force
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48. Economic Factors Economic Factors GDP Interest CPI rates Disposable
Inflation
Disposable
income
CPI
GDP
Economic
Factors
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49. Employment Factors Attitude toward careers Immigration
Occupational and industry shifts
Recruitment
Unions
Unemployment
Turnover
Relocation
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50. International Factors
European Union
Wage comparisons
Trade agreements
International labor law
Globalization
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51. Other Factors © SHRM Political Legislation and regulatory guidelines
Social
Changing definition of families
Strain on health-care systems
Technological
Advances
Skills
“Digital divide”
Process changes
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52. ROI Measures the economic return on a project or investment. ROI =
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53. Cost-Benefit Analysis
Determines the financial impact that programs have on company profitability.
Presents data as a ratio.
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54. Break-Even Analysis
Determines the point in time at which total revenue associated with an HR program is equal to the total cost of the program.
* Time = The period of time for which the return is being analyzed.
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55. A. Calculate gross margin. B. Calculate return on investment.
HR is launching a company-wide training initiative. How can HR determine when the anticipated revenue return will exceed the cost of developing the program?
A. Calculate gross margin.
B. Calculate return on investment.
C. Conduct a cost-benefit analysis.
D. Conduct a break-even analysis.
Answer: D
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56. Balanced Scorecard
Finance
Learning
and
growth
Business
processes
Customers
Mission
Vision
Values
Aligns business function measures with organizational strategies.
Measures the effectiveness of a department or the entire company.
Considers perspective of all stakeholders.
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57. For a balanced scorecard system to be implemented effectively, it should
A. be introduced simultaneously to all divisions and departments.
B. start at the bottom of the organization and work its way to the top.
C. focus on specific measures that support business strategies.
D. concentrate on tracking and reporting financial results.
Answer: C
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58. HR Audit Analyzes effectiveness and efficiency of HR programs.
Keeps executives current on HR activities.
Allows HR managers to cut or enhance programs and address noncompliance.
Conducted by HR staff or a third-party contractor.
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59. Other Measurement Methods
Organization’s most important issues (e.g., dollar sales per employee or percentage of workforce that is unionized)
Human capital ROI
Turnover cost
Compensation as a percentage of operating expense
Training investment factor
Time to start
Cost per hire
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60. Inductive and Deductive Reasoning
Inductive (from specific to general)
Looks at a set of observations and designs a rule.
Joe, John, and Mary are top salespeople and have accounting backgrounds. Therefore, for this job accounting background indicates success.
Deductive (from general to specific)
Starts with a general rule and deduces specific instances.
Research shows that units led by controlling managers have decreased morale. John is a controlling manager. His unit will suffer morale problems.
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61. Primary and Secondary Research
(data gathered firsthand)
Secondary
(data gathered by others)
Experimental
Pilot projects
Surveys
Interviews
Focus groups
Direct observation
Testing
Secondhand reports
Historical data
Purchased data
Professional publications
Benchmarking
Best-practices reports
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62. Scientific Method 1 2 3 4 5 Problem analysis Hypothesis formulation
Experimental design 4
Data collection 5
Data analysis
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63. Step 1: Problem Analysis
State the problem as a question.
Identify key factors that contribute to the problem.
“Why are there so many voluntary terminations?”
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64. Step 2: Hypothesis Formulation
Restate problem as a testable prediction.
“Voluntary terminations are high because of low job satisfaction.”
State the relationship between two factors that can be tested.
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65. Step 3: Experimental Design (Classic)
Subjects are randomly assigned to two equal groups.
Experimental group is exposed to the variable; control group is not exposed to the variable.
Experimental group R O X
Control group
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66. Step 3: Experimental Design (Quasi-Experimental)
Subjects are not assigned at random.
Experimental group is exposed to the variable; control group is not exposed to the variable.
Experimental group O X
Control group
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67. Steps 4 and 5: Data Collection and Analysis
Step 4: Data Collection
Data is gathered through primary and secondary research methods.
Step 5: Data Analysis
Data is analyzed and placed into a useful context.
Quantitative analysis: Based on facts and statistics
Qualitative analysis: Based on attitudes, opinions, and feelings
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68. Descriptive Statistics: Measures of Central Tendency
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69. Given the following data, what is the mode?
A. 3
B. 4
C. 5
D. 6
Answer: C
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70. Descriptive Statistics: Measures of Variation
Provide an indicator of variation around central tendency values.
Range: Distance between highest and lowest scores.
Percentile: Specific point that has a given percentage of cases below it.
Standard deviation: How much scores are spread out around a mean.
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71. Descriptive Statistics: Measures of Association—Correlation
Shows the relationship between two variables.
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72. Descriptive Statistics: Measures of Association—Regression
Refers to a statistical method used to predict a variable from one or more predictor variables.
Determines whether a relationship exists between variables and the strength of the relationship.
Causal relationship exists when two variables are related in some way.
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73. Inferential Statistics
Form a conclusion by studying a sample of the population.
Population: Entire group (all employees).
Sample: Part of the population (20 random employees).
Normal distribution: Expected distribution given a random sampling of a large population.
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74. Qualitative Analysis Most useful for: Gathered from:
Depth of information.
Brainstorming and idea generation.
Discovering underlying motivation, feelings, values, attitudes, and perceptions.
Gathered from:
Interviews.
Surveys and questionnaires.
Observation, file studies, testing.
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75. Reliability Ability of an instrument to measure consistently.
Test A scores are more consistent.
This test is considered reliable.
Test A
Test B
Candidate
Form 1
Form 2 1 90 92 87 95 2 89 79 86 3 94 81 93
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76. Validity
Ability of an instrument to measure what it is intended to measure.
Answers the questions:
What does the instrument measure?
How well does it measure it?
A reliable instrument is not always valid.
A valid instrument is always reliable.
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77. Ethics
System of moral principles and values that establish appropriate conduct.
Ethics is not synonymous with legality.
HR assumes a key role in creating an ethical organization by:
Participating in the creation of an ethics policy.
Determining supportive procedures and training.
Creating a culture that values ethics.
Conducting investigations and applying discipline.
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78. Which of the following would NOT be an ethical violation for an HR manager?
A. Recommending a qualified friend for an open position
B. Telling a friend in private that layoffs will occur
Having ownership in an outside firm under contract to the organization
Allowing surveillance of locker room areas
Answer: A
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79. Ethical Issues Board of directors’ training Workplace privacy
Whistleblowing
Conflict of interest
Bribes, payoffs, and kickbacks
Insider trading
Cultural clashes
Copyrights
Corporate responsibility
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80. Legislative and Regulatory Environment
Laws are actions passed by Congress and state legislatures.
Regulations reflect how laws will be implemented and often have the force of law.
Regulatory agencies may issue guidelines that interpret how regulations will be enforced.
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81. Rule-Making Process
Laws are made by legislatures, and rules are made by agencies.
The public may comment via public hearings, conversation, , or letter for a specified time period.
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