1. CHAPTER NO. 8 STRATEGIC HUMAN RESOURCE MANAGEMENT HUMAN RESOURCE

2. AFTER STUDYING THIS CHAPTER YOU SHOULD BE ABLE TO:
Describe the level of strategy and types of integration.
Explain the role of HRM in strategy formulation.
The process and components of strategic management
Describe HR strategic formulation and implementation
Differentiate between traditional and strategic HRM
Link of HR Plan and Strategy with Organizational objectives and goals.
Illustrate and explain each of the seven steps in the HR Scorecard approach to creating HR systems.

3. STRATEGY
STRATEGY
The direction and scope of an organization over the long term, which achieves competitive advantage for the organization through its configuration of resources within a changing environment and to fulfill stakeholder expectations.

4. LEVELS OF STRATEGY 1. CORPORATE LEVEL STRATEGY
Relates to the overall scope of the organization, its structures and financing, and the distribution of resources between its different constituent parts.
2. BUSINESS/COMPETITIVE LEVEL STRATEGY
Refers how the organization competes in a given market, its approaches to product development and to customers .
3. OPERATIONAL LEVEL STRATEGY
It is concerned with how the various subunits-marketing, finance, manufacturing and so on – contribute to the higher level strategies.

5. THREE LEVELS OF STRATEGY IN ORGANIZATIONS
1. Corporate-Level Strategy
What business are we in?
CORPORATION
2. Business-Level Strategy
How do we compete?
Textiles Unit
Chemicals Unit
Auto Parts Unit
3. Functional-Level Strategy
How do we support the business-level strategy?
Finance
R&D
Manufacturing
Marketing

6. LEVELS OF STRATEGY 1. CORPORATE LEVEL STRATEGY
a. DIVERSIFICATION STRATEGY
Implies that the firm will expand by adding new product lines. b.
VERTICAL INTEGRATION STRATEGY
Means the firm expands by, perhaps, producing its own raw materials, or selling its products direct.
c. CONSOLIDATION STRATEGY
Reduces the company’s size d.
GEOGRAPHIC EXPANSION STRATEGY
Takes the company abroad.

7. LEVELS OF STRATEGY Cont . . .
2. BUSINESS LEVEL/
COMPETITIVE STRATEGY a.
COST LEADERSHIP
The enterprise aims to become the low-cost leader in an industry. b.
DIFFERENTIATION c.
FOCUS
A firm seeks to be unique in its industry along dimensions that are widely valued by buyers.
A firm seeks to carve out a market niche, and compete by providing a product or service customers can get in no other way.

8. LEVELS OF STRATEGY Cont . . .
3. FUNCTIONAL
LEVEL STRATEGY
Identify the basic courses of action that each department will pursue in order to help the business attain its competitive goals.

9. Horizontal Integration
It is the heart of HRM. It takes two forms:
Vertical Integration
Horizontal Integration

10. VERTICAL INTEGRATION VERTICAL INTEGRATION Overall Objectives
This is a general qualitative estimate of the extent to which HR’s activities and objectives are aligned with the overall objectives & strategy of the enterprise as a whole.
VERTICAL INTEGRATION
Overall Objectives
& Strategy of
Business
HR Practices

11. HORIZONTAL INTEGRATION HORIZONTAL INTEGRATION
The extent to which the component activities of an HR function are integrated and relate to each other.
Resourcing
T & D HR
PRACTICES
Motivation
Maintenance

12. HR STRATEGY: STRATEGIC FIT
Training Rewards
Horizontal Fit
Vertical Fit
Corporate Strategy
Business Strategy
HR Strategy
HR System
(Performance Management)

13. ADMINISTRATIVE LINKAGE
THE ROLE OF HRM IN
STRATEGY FORMULATION
ADMINISTRATIVE LINKAGE
Lowest level of integration; HRM function's attention is focused on day-to-day activities. No input from the HRM function to the company's strategic plan is given.
ONE-WAY LINKAGE
The strategic business planning function develops the plan and then informs the HRM function of the plan. HRM then helps in the implementation.
TWO-WAY LINKAGE
Allows for consideration of human resource issues during the strategy formulation process. The HRM function is expected to provide input to potential strategic choices and then help implement the chosen option.
INTEGRATIVE LINKAGE
Is based on continuing, rather than sequential, interaction. The HR executive is an integral member of the strategic planning team.

14. STRATEGY FORMULATION Cont . . .
THE ROLE OF HRM IN
STRATEGY FORMULATION Cont . . .
Administrative
Linkage HR
Function
Strategic
Planning
One-way
Linkage HR
Function
Strategic
Planning
Two-way
Linkage HR
Function
Strategic
Planning
Integrative
Linkage HR
Function
Strategic
Planning

15. STRATEGIC MANAGEMENT
Strategic Management is a process for analyzing a company's competitive situation, developing the company's strategic goals, and devising a plan of action and allocation of resources that will help a company achieve its goals.

16. COMPONENTS OF THE STRATEGIC STRATEGY IMPLEMENTATION
MANAGEMENT PROCESS
STRATEGY FORMULATION
Strategic planning groups decide on a strategic direction by defining the company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses.
STRATEGY IMPLEMENTATION
The organization follows through on the strategy that has been chosen. This includes structuring the organization, allocating resources, ensuring that the firm has skilled employees in place, and developing reward systems that align employee behavior with the strategic goals.

17. MODEL OF THE STRATEGIC MANAGEMENT PROCESS
Strategy Formulation
Strategy
Implementation
EXTERNAL
ANALYSIS
(Opportunities &
Threats)
HR PRACTICES
Recruiting
Training
Performance
Management
Labor relations
Employee
Job analysis
Job design
Selection
Development
Pay structure
Incentives
Benefits
Mission
Goals
Strategic
Choice
HUMAN
RESOURCE
NEEDS
Skills
Behavior
Culture
Firm
Performance
Productivity,
Quality,
Profitability
INTERNAL
ANALYSIS
(Strengths &
Weaknesses)
Human
Resource
Capability
Skills,
Abilities,
Knowledge
Human
Resource
Actions
Behaviors,
Results

18. STRATEGY FORMULATION EXTERNAL ANALYSIS (Opportunities & Threats) GOALS
MISSION
GOALS
STRATEGIC
CHOICE
INTERNAL
ANALYSIS
(Strengths &
Weaknesses

19. STRATEGY FORMULATION Cont . . .
Five Components of the Strategic Management Process: 1
A mission is a statement of the organization's reasons for being. 2
Goals are what the organization hopes to achieve in the medium-to long-term future. 3
External analysis consists of examining the organization's operating environment to identify strategic opportunities and threats. 4
Internal analysis attempts to identify the organization's strengths and weaknesses. 5
Strategic choice is the organization's strategy, which describes the ways the organization will attempt to fulfill its mission and achieve its long term goals.

20. HRM NEEDS IN STRATEGIC TYPES
Different strategies require different types of employees.
Role behaviors are the behaviors required of an individual in his or her role as a jobholder in a social work environment.
Cost strategy firms seek efficiency and therefore carefully define the skills they need in employees and use worker participation to seek cost-saving ideas.
Differentiation firms need creative risk takers.

21. STRATEGY IMPLEMENTATION
Organizational
Structure
Types of
Information
Task Design
Selection,
Training, and
Development
of people
Reward
systems
Product
Market
Strategy
Performance

22. Human Resource Managers Should:
STRATEGIC HRM
Strategic human resource management is the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.
Have input into the strategic plan.
Have specific knowledge of the
organization’s strategic goals.
Know what types of employee skills,
behaviors, and attitudes are needed to
support the strategic plan, and
Develop programs to ensure that employees have
those skills, behaviors, and attitudes.
Human Resource Managers Should:

23. SEQUENCE OF HR STRATEGIC FORMULATION Conclusion & Recommendations:
Analyze:
What are the Issues/problem/business needs
Diagnose:
Why issues occur/Causes
What factors are influencing the situation
Conclusion & Recommendations:
What alternative strategies are available
Action Planning:
What problems may occur and how we will overcome
Resource Planning:
What resource will we need
How will we obtain these resource
Benefits:
How do they satisfy the business needs
How do they benefit individual employees

24. STRATEGIC IMPLEMENTATION OF HRM
Staffing
Strategic
Strategic Human Resource Development
Strategic Performance Management
Strategic Compensation Management

25. TRADITIONAL Vs. STRATEGIC HRM
DIMENSION
TRADITIONAL HR
STRATEGIC HR
Accountability
HR Specialists.
Line Managers & HR Specialists.
Importance
Managing people to facilitate
the activities.
HR strategy formulation & implementation in alignment with organizational strategy.
Role of HR
Custodian of HR policy implementation & compliance.
Strategic Business Partners.
Approach Orientation
Ritualistic, Reactive Activities.
Proactive, Business-oriented Results.
Major Function
People Development.
People and Organization’s Development in line with the Business Objectives.

26. THE HR SCORECARD APPROACH CREATING AN HR SCORECARD
Measures the HR function’s effectiveness and efficiency in producing employee behaviors needed to achieve the company’s strategic goals.
HR SCORECARD
Must know what the company’s strategy is.
Must understand the causal links between HR
activities, employee behaviors, organizational
outcomes, and the organization’s performance.
Must have metrics to measure all the activities
and results involved.
CREATING AN HR SCORECARD

27. STRATEGIC HR RELATIONSHIPS
HR Activities
Emergent Employee Behaviors
Strategically Relevant Organizational Outcomes
Organizational Performance
Achieve Strategic Goals

28. THE HR SCORECARD APPROACH TO
FORMULATING HR POLICIES, ACTIVITIES, AND STRATEGIES

29. USING THE HR SCORECARD APPROACH1
Define the Business Strategy. 2
Outline the Company’s Value Chain. 3
Identify the Strategically Required Organizational
Outcomes. 4
Identify the Required Workforce Competencies
and Behaviors. 5
Identify the Strategically Relevant HR System
Policies and Activities. 6
Design the HR Scorecard Measurement System. 7
Periodically Evaluate the Measurement System.

30. CHAPTER : 10 Management Quality Circle
Levels Of
Strategy
Corporate Level Strategy
Business/Competitive Level Strategy
Operational Level Strategy
Diversification Strategy
Cost Leadership Strategy
Vertical Integration Strategy
Differentiation Strategy
CHAPTER : 10
Consolidation Strategy
Focus
Strategy
Geographic Expansion Strategy
Management Quality Circle
Integration
Vertical
Integration
Horizontal Integration
Role of HRM in
Strategy Formulation
Administrative Linkage
One-Way
Linkage
Two-Way
Linkage
Integrative
Linkage
STRATEGIC HUMAN
RESOURCE MANAGEMENT
Components of the Strategic
Management Process
Strategy
Formulation
Strategy Implementation
1. Analyze
2. Diagnose
3. Conclusion & Recommendation
Sequence Of HR Strategic Formulation
4. Action
Planning
5. Resource
Planning
6. Benefits
Strategic Implementation Of HRM
Strategic
Staffing
Strategic Human Resource Development
Strategic Performance Management
Strategic Compensation Management
Traditional Vs. Strategic HRM
Accountability
Importance
Role of HR
Approach Orientation
Major Function
HR Activities
Emergent Employee Behaviors
Strategically Relevant Organizational Outcomes
Organizational Performance
Achieve Strategic Goals
Strategic HR Relationships

31. Professor, Roger Collins.
THOUGHT OF THE DAY
“If an HR person is trying to choose people for an organization, knowing their values is very important-if they are not consistent with the organization’s values they are not likely to stay very long.”
Professor, Roger Collins.