STRATEGIC HUMAN RESOURCES MANAGEMENT

Alexandra Ion

Work in progress!

About…

What is strategy?

Challenges

HR strategy toolsAnalysis methods

HR rolesIntegrating HR strategyM.V.V.

What is Strategy?

Overall definition: "Strategy is the direction and

scope of an organisation over the long-term: which

achieves advantage for the organisation through its

configuration of resources within a challenging

environment, to meet the needs of markets and to

fulfil stakeholder expectations".

Johnson and Scholes (Exploring Corporate Strategy)

What is Strategy?

HR Definition: A "big picture" approach to HR, which means planning and operating HR

programmes to make a direct contribution toward meeting major corporate long-term

objectives; solving "business" problems through the effective use of people management

programmes.

Analysis methods

• Porter’s five forces• S.W.O.T.• B.C.G.• Ansoff• Action priority matrix• Value chain

Porter’s five forces(competitive analysis)

The big ideaFive fundamental competitive forces that determine the relative attractiveness of an industry:

1. New entrants2. Bargaining power of buyers3. Bargaining power of suppliers4. Substitute products and services5. Rivalry among existing competitors

When to use itFor each of the five forces, consider how well your company can compete

Porter’s five forcesmodel

Porter’s five forcesmodel

+ Most widely used and recognized model for strategic analysis

-The organization’s intrinsic strengths and ability to develop its competencies INDIPENDANTLY of the external forces is a largely untouched aspect (the model is rather REACTIVE than PRO-ACTIVE)

The model is best used in combination with an inside-out approach.

S.W.O.T.

Any company undertaking strategic planning will, at some point assess its strengths and weaknesses

When combined with an inventory of opportunities and threats in (or even beyond) the company’s external environment, the company is effectively making what is called a SWOT analysis.

SWOT establishes its current position in the light of its strengths, weaknesses, opportunities and threats.

S.W.O.T; factors to consider

S.W.O.T. analysis

S.W.O.T.

+ The value of SWOT analysis: it constitutes a self assessment for management

-•Far more complex than at first sight•It offers no assistance to translate the elements into strategic alternatives•Inherent risk of making incorrect assumptions

B.C.G.

Boston Consulting Group matrix

Based on Product Life Cycle theory and can be used to determine what priorities should be given in the product portofolio of a business unit.

2 dimentions: market share and market growth

B.C.G.

B.C.G.

+ Help understand a frequently made strategy mistake: having a one size fits all approach

-• High market share is not the only success factor• Market growth is not the only market attractiveness indicator• Sometimes Dogs can earn even more cash than Cash cows

Ansoff’s grid

4 generic growth strategies:

• Market penetration

• Market development

• Product development

• Diversification

2 dimensions determine the scope of

options (growth of vectors), namely

PRODUCTS and MARKETS

5 components of corporate business

strategy•Product/market scope

•Growth vector

•Competitive advantage

•Synergy

•Make or buy

Ansoff’s grid

Ansoff’s grid

+ • Model still valid, used by marketing strategists• Serves as a means to describe product-marketing opportunities and strategic options• Excellent framework for exploration, description and strategic dialogue

-Used in isolation, the model can do little to determine the best strategy

Core competencies

A core competency is a specific factor that a business sees as being central to the way it, or its employees, works.

It fulfills two key criteria:•It is not easy for competitors to imitate •It can be leveraged widely to many products and markets

It may also include product development or culture, such as employee dedication!!!

Competences analysis

Do you picture it?

Value chain

A value chain is a chain of activities for a firm operating in a specific industry.

Products pass through all activities of the chain in order, and at each activity the product gains some value.

It is important not to mix the concept of the value chain with the costs occurring throughout the activities!!!

The chain of activities gives the products more added value than the sum of added values of all activities.

Value chain

Value chain

+ •The concept of value added, in the form of the value chain, can be utilised to develop an organisation’s sustainable competitive advantage

-•It describes an industrial organization which essentially buys raw materials and transforms these into physical products •The ‘value’ for the final customer is the value only in its theoretical context and not practical terms

WARNING!

Models and theories offer not solutions to

organizational problems, but rather ways to

reduce the complexities and uncertainties

involved – nothing more, but definitely

nothing less.

WARNING!

In the world of management and organization, it

is fortunately still ideas that really matter, and not

models.

Q & A

Q & A

M.V.V.

Mission

What do we do?

While your mission should refer more specifically to the type of business you do or products you sell, it can also encompass what you feel your organization's contribution will be to your industry, community, or to the world.

Your mission statement may change if your company outlives the industry it started in, but it should still tie back to your core values and vision.

Dell Computers - "With the power of direct and Dell's team of talented people, we are able to provide customers with superb value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use".

Values

Who are we?

Core values identify 3-5 terms that describe the forces that drove you to form and grow your organization.

They encompass your ethics, principles, and beliefs about your organization and its relationship to the world. Core values are immutable, values that remain the same for the life of your organization.

"integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect" - Microsoft

Vision

Why are we here?

Vision is the reason your company exists.

The world changes, technology changes, so your vision statement need not refer to your product. It conveys why you are in this business (and not another).

It ties directly back to your core values. If the market changed dramatically, your vision should remain intact because it speaks to what your company represents, not just what it does.

NASA: "Man on the moon by the end of the decade “SIEMENS: “Where technology touches lives”HYUNDAI: “Building a better world through innovative technology” NOKIA: “Connecting people”XEROX: “The document company” DU PONT: “Better things for better living through Chemistry”

M.V.V. and HR

Integrating HR strategy with corporate and functional strategy

HR Roles

•Recruitment/selection/staffing•Planning, organization and job design•Career development•Organization development•Training and development•Research and information•Labor relations•Employee assistance and support•Compensation and benefits administration

(as defined by ASTD-American Society for Training and Development)

M.V.V. Strategy &Objectives HR

MarketingMargin

ProductivityInnovationFinancial ResourcesPhysical ResourcesCSR

HR Policies & Procedures /Action Plans

Budgeting

N

HR Results

Organizational Results

ObjectivesAccomplished

Performance evaluation

Compensation&

Reward

RightCompetencies

Continuous LearningImprovement

Competencies Development(long term)

ExternalCompetencies

Develop internalCompetencies

N

Y

Set priorities

Recruitment

Training

HRResults

Y

…revise Objectives (SMART)…see other Internal Factors…see other External Factors…manage Change…?

Y

N

HR Cycle

HR Strategy

• Explicitly recognizes the impact of the outside environment

• Explicitly recognizes the impact of competition and the dynamics of the labor market

• Has a long-range focus (3-5 years)• Focuses on the issue of choice and decision making• Considers all personnel, not just hourly or operational

employees• Is integrated with overall corporate strategy and

functional strategies

The Challenges

•Rapid change•Work force diversity•Globalization•Legislation•Work/Life•Skill shortages

The Environment

The Challenges

•Competitive position: Cost, Quality, Distinctive capabilities•Decentralization•Downsizing•Organizational restructuring•Self-Managed work teams•Organizational culture•Technology•Outsourcing

The Organization

The Challenges

•Matching People and Organization•Productivity•Empowerment•Brain Drain•Job Insecurity•Ethical Issues and Social responsibility

The Individual

WARNING!

All managers are HR Managers!

Shared responsibilities between HRM-Line Managers

WARNING!

Staff people: service representatives

(advising, helping, providing expert guidance

and support for decisions); must understand

the business (ideally coming from business)

Line managers: internal clients (must

become knowledgeable about HR issues)

Tools

• G.A.P.S. map• Helicopter thinking• Influence diagram• Financial business case

G.A.P.S. map

Go for SHOULD

Analyze the IS

Pin the CAUSES

Select the right SOLUTION

G.A.P.S. map

Go for SHOULD

Analyze the IS

Pin the CAUSES

Select the right SOLUTION

Business SHOULD Performance SHOULD

Business IS

Business NEED…..

Performance IS

Employee NEED…

Factors external to the Organization

Factors internal to the Organization

(work environment needs)

Factors external to the Individuals

(capability needs)

Identifying strategic opportunities

G.A.P.S. TrendsLINK

Strategicopportunities

LINK LINK

Company knowledge

Industry knowledge

LINK

LINK

Helicopter thinking

5 Whys and 5 Hows

One of the many useful concepts originating from the TQM (total quality management)

The five whys are used for drilling down into a problem and the five hows are used to develop the details of a solution to a problem.

Both are designed to bring clarity and refinement to a problem statement or a potential solution and get to the root cause or root solution.

How to Use It

Draw a box at the top of a piece of flip chart paper and clearly write down the problem or solution to be explored.

Below the statement box draw five lines in descending order.

Ask the “Why” or “How” question five times and write the answers on the lines drawn from number one to five.

It may take less or more than five times to reach the root cause or solution.

5 Whys and 5 Hows

5 Whys

Influence diagram

Graphical aid to decision making under uncertainty

It depicts what is known or unknown at the time of making a choice and the degree of dependence or independence (influence) of each variable on other variables and choices.

It represents the cause-and-effect (causal) relationships of a phenomenon or situation in a non-ambiguous manner, and helps in a shared understanding of the key issues.

Influence diagram

Financial business case

Q & A