Human Resource Management Strategy and Analysis 3 Copyright © 2013 Pearson Education

Human Resources Management 12e Gary Dessler LEARNING OUTCOMES Explain why strategic planning is important to all managers. Explain with examples each of the seven steps in the strategic planning process. List with examples the main generic types of corporate strategies and competitive strategies. Define strategic human resource management and give an example of strategic human resource management in practice. Briefly describe three important strategic human resource management tools. Explain with examples why metrics are essential for managing human resources.   Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Why Strategic Planning is Important to All Managers Human Resources Management 12e Gary Dessler Why Strategic Planning is Important to All Managers The firm’s strategic plan guides much of what is done by all to accomplish organizational goals. Decisions made by managers depend on the goals set at each organizational level in support of higher level goals. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler The Management Planning Process The Hierarchy of Goals Policies and Procedures Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 3–1 Sample Hierarchy of Goals Diagram for a Company Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

The Strategic Management Process Human Resources Management 12e Gary Dessler The Strategic Management Process Strategy A course of action the organization intends to pursue to achieve its strategic aims. Strategic Plan How an organization intends to match its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage over the long term. Strategic Management The process of identifying and executing the organization’s mission by matching its capabilities with the demands of its environment. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Business Vision and Mission Human Resources Management 12e Gary Dessler Business Vision and Mission Vision A general statement of an organization’s intended direction that evokes emotional feelings in organization members. Mission Spells out who the firm is, what it does, and where it’s headed. Serve as filters to separate what is important from what is not Clearly state which markets will be served and how Communicate a sense of intended direction to the entire organization Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler The Strategic Management Process Step 1. Ask, Where Are We Now Step 2. Size Up The Situation: Perform External and Internal Audits Step 3. Create Strategic Options Step 4. Review Strategic Options Step 5. Make a Strategic Choice Step 6. Translate into Goals Step 7. Implement the Strategies Step 8. Evaluate Performance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

The Strategic Management Process Step 1. Ask, Where Are We Now? «Where are we now as a business?» (Here the manager defines the company’s current business and mission.) «What products do we sell, where do we sell them?» «How do our products or services differ from our competitors’?» © 2008 Prentice Hall, Inc. All rights reserved.

The Strategic Management Process Step 2. Size Up The Situation: SWOT analysis is a commonly used tool that identifies the company’s strengths and weaknesses, opportunities and threats. © 2008 Prentice Hall, Inc. All rights reserved.

Human Resources Management 12e Gary Dessler FIGURE 3–3 Worksheet for Environmental Scanning Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 3–4 SWOT Matrix, with Generic Examples Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

The Strategic Management Process Step 3. Create Strategic Options: The situation may require that management consider strategic options for the company. Step 4. Review Strategic Options: . Given the situation, which strategic option should we pursue? Here the manager compares his or her strategic options to see which are most consistent with the firm’s opportunities and threats, and its strengths and weaknesses. © 2008 Prentice Hall, Inc. All rights reserved.

The Strategic Management Process Step 5. Make a Strategic Choice: Here the manager must finalize a strategic choice. © 2008 Prentice Hall, Inc. All rights reserved.

The Strategic Management Process Step 6. Translate into Goals: Management translates the new desired direction into actionable strategic goals. Step 7. Implement the Strategies: Strategy execution means translating the strategies into action. This means actually hiring (or firing) people, building (or closing) plants, and adding (or eliminating) products and product lines. Step 8. Evaluate Performance: Assessing progress toward strategic goals and taking corrective action as needed. © 2008 Prentice Hall, Inc. All rights reserved.

Review Importance of strategic planning Goal setting Steps Copyright © 2013 Pearson Education

Human Resources Management 12e Gary Dessler FIGURE 3–8 Type of Strategy at Each Company Level Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Types of Corporate Strategies Human Resources Management 12e Gary Dessler Types of Corporate Strategies Concentration Vertical integration Diversification Corporate Strategy Possibilities Consolidation Geographic expansion Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Corporate-level strategies Concentration (single business) strategy; the firm offers one product or product line, usually in one market. Vertical integration strategy; the firm expands by, perhaps, producing its own raw materials, or selling its products direct Diversification strategy; the firm will expand by adding new product lines Consolidation strategy; reducing the company’s size Geographic expansion; taking the business abroad © 2008 Prentice Hall, Inc. All rights reserved.

Types of Competitive Strategies Human Resources Management 12e Gary Dessler Types of Competitive Strategies Cost leadership Differentiation Business-Level Competitive Strategies Focus/Niche Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Business-level/competitive strategies Cost leadership means the enterprise aims to become the low-cost leader in an industry. Differentiation is a second example of a competitive strategy. In a differentiation strategy, a firm seek to be unique in its industry along dimensions that are widely valued by buyers. Focusers carve out a market niche (like Ferrari), and compete by providing a product or service customers can get in no other way. © 2008 Prentice Hall, Inc. All rights reserved.

Types of Strategies (cont’d) Functional Strategy Each individual business is composed of departments, such as manufacturing, sales, and human resource management. Functional strategies identify the basic course of action that each department will pursue in order to help the business attain its competitive goals. The firm’s functional strategies should make sense in terms of its business/competitive strategy. © 2008 Prentice Hall, Inc. All rights reserved.

Managers’ Role in Strategic Planning Human Resources Management 12e Gary Dessler Managers’ Role in Strategic Planning Devising a strategic plan is top management’s responsibility. Top management must decide what businesses the company will be in and where, and on what basis it will compete. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Departmental Managers’ Strategic Planning Roles Human Resources Management 12e Gary Dessler Departmental Managers’ Strategic Planning Roles Help devise the strategic plan Formulate supporting, functional/ departmental strategies Department Managers and Strategy Planning Execute the strategic plans Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Strategic Human Resource Management Human Resources Management 12e Gary Dessler Strategic Human Resource Management Strategic Human Resource Management The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility. Involves formulating and executing HR systems—HR policies and activities—that produce the employee competencies and behaviors that the company needs to achieve its strategic aims. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 3–10 Linking Company-Wide and HR Strategies Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 3–11 Basic Model of How to Align HR Strategy and Actions with Business Strategy Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Mergers and Acquisitions Due Diligence Stage • Organizational culture and structure • Compensation and benefits • Labor relations • Pending employee litigation • Human resource policies and procedures • Key employees Integration Stage • Choosing the top management team • Ensuring top management leadership • Communicating changes effectively to employees • Retaining key talent • Aligning cultures Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler Strategic HRM Tools Strategy map HR scorecard Strategic HRM Tools Digital dashboard Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 3–15 Three Important Strategic HR Tools HR Scorecard Strategy Map Digital Dashboard A process for managing employee performance and for aligning all employees with key objectives, by assigning financial and nonfinancial goals, monitoring and assessing performance, and quickly taking corrective action. A graphical tool that summarizes the chain of activities that contribute to a company's success, and so shows employees the "big picture" of how their performance contributes to achieving the company's overall strategic goals. An information technology tool that presents the manager with desktop graphs and charts, so he or she gets a picture of where the company has been and where it's going, in terms of each activity in the strategy map. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

FIGURE 3–8 Strategic Map for Southwest Airlines Profitability Strategic/Financial Results Lower costs Increased revenues Most customers Customer-Based Results Low fares On time fligths Minimize meals Internal Business Processes Fly fewer planes Minimize plane turnaround on ground Organizational and Employee Capabilities Highly engaged ground crews Supportive, high performance HR practices

Building A High-Performance Work System Human Resources Management 12e Gary Dessler Building A High-Performance Work System High-Performance Work System (HPWS) A set of human resource management policies and practices that promote organizational effectiveness. High-Performance Human Resource Policies and Practices Emphasize the use of relevant HR metrics. Set out the things that HR systems must do to become an HPWS. Foster practices that encourage employee self-management. Practice benchmarking to set goals and measure the notable performance differences required of an HPWS. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler TABLE 3–1 Comparison of Selected Human Resource Practices in High-Performance and Low-Performance Companies Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler K E Y T E R M S business plan management by objectives (MBO) strategic plan strategy strategic management vision statement mission statement corporate-level strategy competitive strategy competitive advantage functional strategies offshoring strategic human resource management strategy map HR Scorecard digital dashboard high-performance work system human resource metric value chain HR audit Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall