Nature of Strategy Process 4 What is strategy? –A way of getting things done –Focus on past and future –Focus on environment and internal operations

The Strategic Management Process 4 Strategy Formulation and Implementation –Formulation: What Do We Do? Internal-External SWOT Analysis Alternatives Strategy Selection –Implementation: How Do We Make it Happen Three players in process Where companies often fail Implementers lack authority, resources, business knowledge, understanding of strategy

The Strategic Management Process 4 Stakeholder Analysis –Multiple constituents –Balancing of needs

SWOT: Internal Conditions 4 Financial 4 Business Strategy 4 Production & Information Technology 4 Culture & Philosophy 4 Management Style 4 Organization Design/Structure 4 Employee Characteristics, Attitudes, Behavior.

Strategy Formulation: Identify trends. 4 Project into the future. 4 Predict the consequences for the firm. 4 Prioritize consequences.

SWOT: External Conditions 4 Aging workforce. 4 Immigration. 4 Technological changes. 4 Government influences. 4 Labor & product market conditions. 4 Inflationary pressures. 4 Globalization of markets.

Strategy Formulation: Resource Based 4 Physical, Organizational, or Human Capital based competitive advantages. 4 Heterogeneous 4 Immobile 4 Valuable 4 Rare 4 Imperfect Imitatability 4 Lack of substitutes

Sustained Competitive Advantage 4 Resource-Based View of the Firm –Ownership of Valuable Resource that Enables Company to Perform Better/Cheaper –Criteria for Resources to Provide SCA Must add positive value Must be unique or rate Must be difficult to imitate Must be nonsubsitutable –Best sources are intangible resources

Strategic Human Resource Management  The pattern of planned human resource deployments and activities intended to enable an organization to achieve its strategic plan.  A simultaneous long-term and integrative perspective to planning for and management of an organization’s human resources.

Characteristics of Strategic HR Approach 4 Is integrated with Corporate, business, functional strategies 4 Has a long-range focus (3 levels of operation) 3-5 years 4 Recognizes Impact of External Environment 4 Argues: Effective HRM is source of SCA

Where does SHRM fit in the firm? Corporate Strategy What business should we be in? Business Level Strategy How to compete in the chosen market? Functional Level Strategy How functions ensure and contribute to success of business strategies?

Integration of HR with Business Strategy 4 Accomodation (reactive) –Strategic Business Planning Group ----> HRM function 4 Interactive –Strategic Business Planning Group HRM function 4 Proactive –HRM function ---> Strategic Business Planning Group

Reasons for Integration of HRM & Strategy 4 As environmental instability increases 4 In service industry 4 Where top HR executive holds equal status with other function executives 4 Where line mgt sees that HR planning can help them implement strategy

HRM as a Source of SCA 4 Jobs differ in skill requirements, employees differ in skills possessed: Adds value 4 Due to normal distribution of ability: Human resources with high ability are rare 4 Human resources are not easily imitated 4 Human resources are not substitutable

Linking Competitive Strategies with HRM Practices and Behaviors 4 Growth 4 Retrenchment 4

Linking Competitive Strategies with HRM Practices and Behaviors 4 Change in Competitive Strategy –Needs to be accompanied by change in HR practices –7 – S Model

Strategic Choices: Training & Development 4 Focus on current or future job skills? 4 Firm specific or general skills?

Strategic Choices: Compensation 4 Internal or external focus? 4 Individual or group level? 4 High or low risk? 4 Membership vs. performance?

Strategic Choices: Labor & Employee Relations 4 Collective v. individual relationships. 4 Formality of due process. 4 Employees as expenses v. assets.