1. intro_strategic
What is Strategic HRM?
HRM- the bundle of org. practices and policies, including: recruitment, selection, orientation, compensation, training, evaluation, career planning & job design, aimed at efficiently utilizing the human resources of an org.
Has largely been seen as an administrative function and as a cost center
SHRM- Attracting, developing, retaining, deploying, evaluating, and motivating human resources to:
Further the accomplishment of org. strategy
Generate and sustain competitive advantages
Seen as an investment and as a value-added activity

2. Central Themes of SHRM Expanded Role of HR
Administrative Expert
Employee Champion
Strategic Partner
Change Agent
Emphasis on HR and general management competencies
Focus on customers, the value chain & deliverables; not on HR practices
HR seen as a source of strategic advantage; is increasingly important
People are an investment
HR can have a HUGE effect on the bottom line
HR practices can and must be costed and evaluated

3. A Model of the HR-Shareholder Value Relationship
Employee
Skills
Design of Productivity
Business Human Employee Improved Profits Market
and Strategic Resource Motivation Creativity Operating and Value
Initiatives Management Performance Growth
System Job Design Discretionary & Work Effort
Structures

4. SHRM Challenges
The need to be flexible in response to changing business environments
Increasing int’l competition and the expanding global economy
Increased litigation related to HRM
Rapid technological developments
Mergers & Acquisitions
Changing characteristics of the workforce
Older & more diverse
Generational values
Projected Labor Shortfall
Changing Expectations b/t employers & employees

5. High-Performance Work Practices
Large Investment in Training
Performance-Based Pay and Bonuses
Internal Promotions
Value and Attitude Fit as part of Selection
Long-Term Commitment to Employees
Generous Benefits

6. The Benefits of Putting People First
A One Standard Deviation Increase (from 50%ile to 84%ile) in these Practices is Associated with:
7% decrease in turnover
$27,000 more in sales per employee
$18,000 more in market value per employee
$4,000 more in profits per employee
$41,000 more in shareholder wealth per employee
10% greater chance of 5 year IPO survival

7. Overarching Themes Ability Effort Opportunity to Perform
The Performance Equation
The job of managers is to enhance the performance of their people. HR must support managers in this endeavor
Performance is a function of:
Ability
Effort
Opportunity to Perform
Appropriate technology, tools, systems, resources, political cover
80% of variance in performance is system-based (Deming)
How can HR affect these three levers?

8. SHRM & Alignment
Slate of HR Practices should be aligned with Org. Strategy, in particular, these 5 Forces:
Environment
Social, legal, economic & competitive forces
Org. Strategy
How does org hope to achieve competitive advantage? Distinct competencies
Org. Culture
Norms, values and assumptions that govern org behavior
Technology/Type of Job
How inputs are converted to outputs; Formal org structure, decision latitude, specialization, cooperation, layout, workgroup interdependence
Workforce Characteristics
Demography, labor market, skills

9. A Quick Review of Strategy
Strategic Management is aimed at identifying (formulation) and executing (implementation) activities designed to generate a sustainable competitive advantage
Porter’s Generic Strategies:
Cost vs. Differentiation
Focused vs. Broad
Miles & Snow Typology:
Prospectors, Defenders, Analyzers & Reactors
SWOT Analysis-
Scan the org and its environment to identify Strengths, Weaknesses, Opportunities & Threats
Development of Core Competencies
Development of rare, inimitable, non-substitutable and valuable resources

10. Internal Alignment
Slate of HR Practices should be aligned with and complement each other
If not, fail to reap full benefit
E.g., Development & low turnover
Reinforces management’s message
Do we really value empowerment?
Employees (and prospective employees) know the lay of the land
ASA model; alignment of efforts
Increases Internal Equity
Alignment w/in employee, across employees, across time
Is too much alignment a bad thing?
Wage compression, external equity
Do we want “class distinctions”?

11. The Roles of SHRM Must manage both people and processes
Must have both day-to-day/operational focus and a strategic/future focus
Strategic Focus
Operational Focus
Processes
People
Strategic Partner
Align HR and
business strategy
Change Agent
Ensure change capacity
and lead change
Admin. Expert
Build efficient
infrastructure
Employee Champion
Listen & respond,
increase commitment
Traditional HR Perceptions

12. The Role of Strategic Partners
Create and manage processes to meet strategic goals and business requirements
HR follows from Strategy, but also shapes it over time
Three approaches to Strategy & HRM:
“Add-on” approach- Mgt makes business decisions, using market, product & technology input. Give plan to HR to help implement
“Isolated” approach- HR works on a plan, presents to mgt for approval, and then implements
“Integrated” approach- Mgt and HR work together to develop plans to highlight HR activities that help the business achieve goals
Only the 3rd approach ensures Alignment & Partnership

13. Challenges for SP’s Following Through on Strategy Execution
Failing to Measure Deliverables
A “Balanced Scorecard” approach:
Economic value-added (EVA)
Customer value-added (CVA)
People (emp.) value added (PVA)
Relying on Quick Fixes-
the “benchmarking trap” & Fads
Overcome these through:
Proving worthy of and demanding participation in business DM process
Learning about the whole business
Management by Walking Around
Thorough diagnosis and follow-through
Publicize accomplishments: Becoming recognized for deliverables
Encouraging “org. learning”, shaping culture

14. Org. Diagnosis
Strategic Alignment is accomplished by conducting and continually updating an “organizational audit”
A systematic assessment and alignment of org. practices to business goals
4 Steps:
Define an “org. architecture”
Specify the major systems that compose the org.
Work with mgt. to set priorities & goals
Create an assessment process
Goals, gaps, types of data to be used, accountability
Provide leadership in improvement practices (lead by example)