STRATEGIC HUMAN RESOURCES PLANNING, 4E ©.

Chapter 1 Strategic Management

Learning Objectives After reading this chapter, you should be able to: Discuss why managers need to examine the human resource implications of their organizational strategies Understand the various terms used to define strategy and its processes Describe organizational strategies, including restructuring, growth, and stability

Learning Objectives After reading this chapter, you should be able to: Define business strategy and discuss how it differs from corporate strategy. Discuss the steps used in strategic planning List the benefits of strategic planning

Strategic Human Resources Management Strategic management of people through HR programs and policies helps to ensure positive organizational outcomes such as: profitability, customer satisfaction, employee performance, and organizational survival

Strategy Strategy- the formulation of organizational missions, goals, objectives and action plans for achievement that explicitly recognize the competition and the impact of outside environmental forces

Mintzberg’s Five Ps of Understanding Strategy Plan Purpose Ploy Position Perspective

Mintzberg’s Five Ps of Understanding Strategy Plan: an intended course of action a firm has selected to deal with a situation Purpose: a consistent stream of actions that sometimes are the result of a deliberate plan and sometimes the result of emergent actions based on reaction to environmental changes or shifting of assumptions

Mintzberg’s Five Ps of Understanding Strategy Ploy: a specific manoeuvre at the tactical level with a short time horizon Position: the location of an organization relative to its competitors and other environmental factors Perspective: the gestalt or personality of the organization

Descriptions of Strategy Strategy: A declaration of intent Strategic intent: A tangible corporate goal; a point of view about the competitive positions a company hopes to build over a decade Strategic planning: The systematic determination of goals and the plans to achieve them

Descriptions of Strategy Strategy formulation: The entire process of conceptualizing the mission of an organization, identifying the strategy, and developing long-range performance goals Strategy implementation: Those activities that employees and managers of an organization undertake to enact the strategic plan, to achieve the performance goals

Descriptions of Strategy Objectives: The end, the goals Plans: The product of strategy, the means to the end Strategic plan: A written statement that outlines the future goals of an organization, including long-term performance goals Policies: Broad guidelines to action, which establish the parameters or rules

The Reality of the Strategic Process Intended Strategy- the agreed upon strategy arrived at through the formal planning process Emergent Strategy- created from new ideas and conditions Discarded Strategy – deemed inappropriate due to changing circumstances Realized Strategy- the implemented plan -- what actually happened © 2010 by Nelson Education Ltd.

© 2010 by Nelson Education Ltd. Strategic Types Corporate Strategy- organizational-level decisions that focus on long-term survival Restructuring – includes turnaround, divestiture, liquidation, and bankruptcies Growth – includes incremental, international, and mergers and acquisitions Stability – maintains status quo © 2010 by Nelson Education Ltd.

Restructuring Strategies Turnaround Strategy- an attempt to increase the viability of an organization Divestiture - the sale of a division or part of an organization Liquidation - the termination of a business and the sale of its assets

Restructuring Strategies Bankruptcy- a formal procedure in which an appointed trustee in bankruptcy takes possession of a business’s assets and disposes of them in an orderly fashion

Growth Strategies Incremental growth - can be attained by expanding the client base, increasing products/services, changing the distribution networks, or using technology

Growth Strategies International growth - can be attained by seeking new customers or markets by expanding internationally Acquisition- the purchase of one company by another Merger- two organizations combine resources and become one

Stability Strategies These are maintenance strategies where companies do not wish to see their companies grow and so their strategic HRM practices remain constant These can be called status quo, neutral, or do-nothing strategies

Business verses Corporate Strategies Business strategy- plans to build a competitive focus in one line of business

Business verses Corporate Strategies Corporate strategy – examines questions about which competitive strategy to choose for long-term growth and survival © 2010 by Nelson Education Ltd.

Strategic Plan Re-visited A strategic plan describes the organization’s future direction, performance targets, and approaches to achieve the targets in a formal, written statement Strategic planning can be a long process that has numerous steps including the following:

The Strategic Planning Process Establish the mission, vision and values Develop objectives Analyze the external environment Determine the competitive position Identify the competitive advantage Implement the strategy Evaluate the performance

Purpose of Values Statement Conveys a sense of identity for employees Generates employee commitment to something greater than themselves Adds to the stability of the organization as a social system Serves as a frame of reference for employees to use to make sense of organizational activities and to use as a guide for appropriate behaviour © 2010 by Nelson Education Ltd.

Porter’s Model of Competitive Strategies Michael Porter made a major contribution to the field of strategic management by grouping the ways organizations can compete into five generic competitive strategies: 1. Low-cost provider strategy 2. Broad differentiation strategy 3. Best-cost provider strategy 4. Focused or market niche strategy based on lower cost 5. Focused or market niche strategy based on differentiation © 2010 by Nelson Education Ltd.

What is Competitive Advantage? Competitive advantage – is defined as the characteristics of a firm that enable it to earn higher rates of profits than its competitors by utilizing its resources including: Tangible assets – the organizational assets that have substance and can be consumed Intangible assets – the organizational assets that are not concrete, such as reputation, goodwill Capabilities - the collective skills, abilities and expertise of an organization

Benefits of Strategy Formulation Clarity Coordination Efficiency Incentives Change Career Development

Errors in Strategic Planning Relegating the process to official planners and not involving executives and managers Failing to use the plan as the guide in making decisions and evaluating performance Failing to align incentives and other HR policies to the achievement of strategy

The Strategic HR Planning Model