Presentation on theme: "CHAPTER NO. 8 STRATEGIC HUMAN RESOURCE MANAGEMENT HUMAN RESOURCE"— Presentation transcript:
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 managementDescribe HR strategic formulation and implementationDifferentiate between traditional and strategic HRMLink 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 STRATEGYSTRATEGYThe 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 STRATEGYRefers how the organization competes in a given market, its approaches to product development and to customers .3. OPERATIONAL LEVEL STRATEGYIt 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 StrategyWhat business are we in?CORPORATION2. Business-Level StrategyHow do we compete?Textiles UnitChemicals UnitAuto Parts Unit3. Functional-Level StrategyHow do we support the business-level strategy?FinanceR&DManufacturingMarketing
6 LEVELS OF STRATEGY 1. CORPORATE LEVEL STRATEGY a. DIVERSIFICATION STRATEGYImplies that the firm will expand by adding new product lines.b.VERTICAL INTEGRATION STRATEGYMeans the firm expands by, perhaps, producing its own raw materials, or selling its products direct.c. CONSOLIDATION STRATEGYReduces the company’s sized.GEOGRAPHIC EXPANSION STRATEGYTakes the company abroad.
7 LEVELS OF STRATEGY Cont . . . 2. BUSINESS LEVEL/COMPETITIVE STRATEGYa.COST LEADERSHIPThe enterprise aims to become the low-cost leader in an industry.b.DIFFERENTIATIONc.FOCUSA 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. FUNCTIONALLEVEL STRATEGYIdentify 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 IntegrationHorizontal 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 INTEGRATIONOverall Objectives& Strategy ofBusinessHR Practices
11 HORIZONTAL INTEGRATION HORIZONTAL INTEGRATION The extent to which the component activities of an HR function are integrated and relate to each other.ResourcingT & DHRPRACTICESMotivationMaintenance
12 HR STRATEGY: STRATEGIC FIT Training RewardsHorizontal FitVertical FitCorporate StrategyBusiness StrategyHR StrategyHR System(Performance Management)
13 ADMINISTRATIVE LINKAGE THE ROLE OF HRM INSTRATEGY FORMULATIONADMINISTRATIVE LINKAGELowest 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 LINKAGEThe strategic business planning function develops the plan and then informs the HRM function of the plan. HRM then helps in the implementation.TWO-WAY LINKAGEAllows 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 LINKAGEIs 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 INSTRATEGY FORMULATION Cont . . .AdministrativeLinkageHRFunctionStrategicPlanningOne-wayLinkageHRFunctionStrategicPlanningTwo-wayLinkageHRFunctionStrategicPlanningIntegrativeLinkageHRFunctionStrategicPlanning
15 STRATEGIC MANAGEMENTStrategic 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 PROCESSSTRATEGY FORMULATIONStrategic 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 IMPLEMENTATIONThe 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 FormulationStrategyImplementationEXTERNALANALYSIS(Opportunities &Threats)HR PRACTICESRecruitingTrainingPerformanceManagementLabor relationsEmployeeJob analysisJob designSelectionDevelopmentPay structureIncentivesBenefitsMissionGoalsStrategicChoiceHUMANRESOURCENEEDSSkillsBehaviorCultureFirmPerformanceProductivity,Quality,ProfitabilityINTERNALANALYSIS(Strengths &Weaknesses)HumanResourceCapabilitySkills,Abilities,KnowledgeHumanResourceActionsBehaviors,Results
19 STRATEGY FORMULATION Cont . . . Five Components of the Strategic Management Process:1A mission is a statement of the organization's reasons for being.2Goals are what the organization hopes to achieve in the medium-to long-term future.3External analysis consists of examining the organization's operating environment to identify strategic opportunities and threats.4Internal analysis attempts to identify the organization's strengths and weaknesses.5Strategic 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.
22 Human Resource Managers Should: STRATEGIC HRMStrategic 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 theorganization’s strategic goals.Know what types of employee skills,behaviors, and attitudes are needed tosupport the strategic plan, andDevelop programs to ensure that employees havethose skills, behaviors, and attitudes.Human Resource Managers Should:
23 SEQUENCE OF HR STRATEGIC FORMULATION Conclusion & Recommendations: Analyze:What are the Issues/problem/business needsDiagnose:Why issues occur/CausesWhat factors are influencing the situationConclusion & Recommendations:What alternative strategies are availableAction Planning:What problems may occur and how we will overcomeResource Planning:What resource will we needHow will we obtain these resourceBenefits:How do they satisfy the business needsHow do they benefit individual employees
24 STRATEGIC IMPLEMENTATION OF HRM StaffingStrategicStrategic Human Resource DevelopmentStrategic Performance ManagementStrategic Compensation Management
25 TRADITIONAL Vs. STRATEGIC HRM DIMENSIONTRADITIONAL HRSTRATEGIC HRAccountabilityHR Specialists.Line Managers & HR Specialists.ImportanceManaging people to facilitatethe activities.HR strategy formulation & implementation in alignment with organizational strategy.Role of HRCustodian of HR policy implementation & compliance.Strategic Business Partners.Approach OrientationRitualistic, Reactive Activities.Proactive, Business-oriented Results.Major FunctionPeople 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 SCORECARDMust know what the company’s strategy is.Must understand the causal links between HRactivities, employee behaviors, organizationaloutcomes, and the organization’s performance.Must have metrics to measure all the activitiesand results involved.CREATING AN HR SCORECARD
28 THE HR SCORECARD APPROACH TO FORMULATING HR POLICIES, ACTIVITIES, AND STRATEGIES
29 USING THE HR SCORECARD APPROACH 1Define the Business Strategy.2Outline the Company’s Value Chain.3Identify the Strategically Required OrganizationalOutcomes.4Identify the Required Workforce Competenciesand Behaviors.5Identify the Strategically Relevant HR SystemPolicies and Activities.6Design the HR Scorecard Measurement System.7Periodically Evaluate the Measurement System.
30 CHAPTER : 10 Management Quality Circle Levels OfStrategyCorporate Level StrategyBusiness/Competitive Level StrategyOperational Level StrategyDiversification StrategyCost Leadership StrategyVertical Integration StrategyDifferentiation StrategyCHAPTER : 10Consolidation StrategyFocusStrategyGeographic Expansion StrategyManagement Quality CircleIntegrationVerticalIntegrationHorizontal IntegrationRole of HRM inStrategy FormulationAdministrative LinkageOne-WayLinkageTwo-WayLinkageIntegrativeLinkageSTRATEGIC HUMANRESOURCE MANAGEMENTComponents of the StrategicManagement ProcessStrategyFormulationStrategy Implementation1. Analyze2. Diagnose3. Conclusion & RecommendationSequence Of HR Strategic Formulation4. ActionPlanning5. ResourcePlanning6. BenefitsStrategic Implementation Of HRMStrategicStaffingStrategic Human Resource DevelopmentStrategic Performance ManagementStrategic Compensation ManagementTraditional Vs. Strategic HRMAccountabilityImportanceRole of HRApproach OrientationMajor FunctionHR ActivitiesEmergent Employee BehaviorsStrategically Relevant Organizational OutcomesOrganizational PerformanceAchieve Strategic GoalsStrategic 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.