strategic planning & shrm

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Food for ThoughtFood for Thought

Strategy is very important. But no one knowsStrategy is very important. But no one knows

what it means. Every professor in thewhat it means. Every professor in the worldworld

has different version of what strategy means.has different version of what strategy means.This keeps them in business but does not helpThis keeps them in business but does not help

management. In answer to themanagement. In answer to the academicacademic

question,question, µWhat is strategyµWhat is strategy?¶,?¶, there is only onethere is only one

universally accurate answer: µIt means exactlyuniversally accurate answer: µIt means exactly

what you want it to mean to make your ownwhat you want it to mean to make your own

point.¶ (Owen, point.¶ (Owen, 20022002, p., p. 199199))1111/ /2525/ /2010 102010 10::1212::5454 PMPM



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Sc

ope of this PresentationSc

ope of this Presentation

PartPart--11:: The Concept of StrategyThe Concept of Strategy

PartPart--22:: Strategic ManagementStrategic ManagementPartPart--33:: Human Resource ManagementHuman Resource Management

PartPart--44:: Strategic Human ResourceStrategic Human Resource

ManagementManagement

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The Origin of StrategyThe Origin of Strategy

The root of strategy can be tracedThe root of strategy can be traced

back to the golden era of the back to the golden era of thedevelopment of classical Chinesedevelopment of classical Chinese

military strategy back inmilitary strategy back in 772772--221221

BC.BC.

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The Sun Tzu BingThe Sun Tzu Bing--FaFa: The Art of War : The Art of War

The Sun Tzu BingThe Sun Tzu Bing--FaFa, allegedly written by the, allegedly written by the

master Sun Tzu in the fourth century BC, is themaster Sun Tzu in the fourth century BC, is the

most complete and reputable book of militarymost complete and reputable book of military

strategy that has survived tostrategy that has survived to date.date.

The Origin of StrategyThe Origin of Strategy(con(con¶¶t)t)

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The Most Famous QuotationThe Most Famous Quotation

from Sun Tzufrom Sun Tzu³K now your enemy, know yourself, and you³K now your enemy, know yourself, and youcan fight a hundred battles with no danger of can fight a hundred battles with no danger of

defeat. When you are ignorant of the enemydefeat. When you are ignorant of the enemy but know yourself, your chances of winning but know yourself, your chances of winningand losing are equal. If you don¶t know bothand losing are equal. If you don¶t know bothyour enemy and yourself, you are bound toyour enemy and yourself, you are bound to

perish in all battles«know the terrain, know perish in all battles«know the terrain, knowthe weather, and your victory will bethe weather, and your victory will becomplete.´ (Chen,complete.´ (Chen, 19951995, p., p. 4242))

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The Essence of Sun Tzu¶sThe Essence of Sun Tzu¶s

Art of WarArt of War The major principles of strategies;The major principles of strategies;

The importance of moral influences;The importance of moral influences;

The quality a good general should and should notThe quality a good general should and should not possess; possess;

The role of climate and terrain in determining theThe role of climate and terrain in determining thesituation of the battle;situation of the battle;

The strategy of enlarging one¶s comparative strengths;The strategy of enlarging one¶s comparative strengths; The importance of organization and trainingThe importance of organization and training; and; and

The proper usage of discipline which combinesThe proper usage of discipline which combinesseverity andseverity and benevolence. benevolence.

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The Principles of StrategiesThe Principles of Strategies

³With careful and detailed planning, one can³With careful and detailed planning, one can

win, with careless and less detailed planning,win, with careless and less detailed planning,

one cannot win. How much less chance of one cannot win. How much less chance of victory has one who does not plan at all!victory has one who does not plan at all!

From the way planning is done beforehand,From the way planning is done beforehand,

one can predict victory or defeat.´ (Chen,one can predict victory or defeat.´ (Chen,

19951995))

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Some Critical View Points onSome Critical View Points on

S

trategyS

trategy³Strategy comes from the Greek word strategos,³Strategy comes from the Greek word strategos,

which has its roots in military language. It referswhich has its roots in military language. It refers

to a general¶s grand design behind a war or ato a general¶s grand design behind a war or a battle.´ (Noe, Hollenbeck, Gerhart and Wright, battle.´ (Noe, Hollenbeck, Gerhart and Wright,

20002000, p., p. 4242))

³Business is like a war in one respect, if its grand³Business is like a war in one respect, if its grandstrategy is correct, any number of tactical errorsstrategy is correct, any number of tactical errors

can be made and yet the enterprises provescan be made and yet the enterprises proves

successful.´ (Wood, cited in Steiner,successful.´ (Wood, cited in Steiner, 19971997, p., p. 55))1111/ /2525/ /2010 102010 10::1212::5454 PMPM



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³Strategy is grounded in the array of ³Strategy is grounded in the array of

competitive moves and business approachescompetitive moves and business approaches

management depends on to produce successfulmanagement depends on to produce successful

performance (Thompson & Strickland, performance (Thompson & Strickland, 19951995,,

p. p. 22))


Strategy

Strategy (con(con¶¶t)t)

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Strategy

Strategy

³When you cut away all the jargon, this is what³When you cut away all the jargon, this is whatstrategy is all about: how you are going to do better strategy is all about: how you are going to do better by being different.´ (Magretta, by being different.´ (Magretta, 20022002, p., p. 7272))

³Indeed, the essence of good strategy³Indeed, the essence of good strategy--making is tomaking is to build a market position strong enough and an build a market position strong enough and anorganization capable enough to produce successfulorganization capable enough to produce successful performance despite unforeseeable events, potent performance despite unforeseeable events, potentcompetition, and internal problems.´ (Thompson &competition, and internal problems.´ (Thompson &Strickland,Strickland, 19951995, p., p. 33))

³The essence of strategy is choosing what not to do.´³The essence of strategy is choosing what not to do.´(Porter, cited in Magretta,(Porter, cited in Magretta, 20022002, p., p. 7171))

(con(con¶¶t)t)

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The Definition of StrategyThe Definition of Strategy

³Of all the concepts in management, strategy is³Of all the concepts in management, strategy is

the one that attracts the most attention andthe one that attracts the most attention and

generates the most controversy. Almostgenerates the most controversy. Almosteveryone agrees that it is important. Almost noeveryone agrees that it is important. Almost no

one agrees on what it is.´ (Magretta,one agrees on what it is.´ (Magretta, 20022002, p., p.

7171))

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Some Definitions of StrategySome Definitions of Strategy

³Strategy is a deliberate search for a plan of ³Strategy is a deliberate search for a plan of

action that will develop a business¶saction that will develop a business¶s

competitive advantage and compound it.´competitive advantage and compound it.´(Henderson,(Henderson, 19911991, p., p. 55))

³A strategy is an integrated set of choices which

identify the positioning and the competitiveadvantages that beat competition on a

sustainable basis in meeting consumer needs.´

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³A strategy is a commitment to undertake one

set of actions rather than another.´ (Oster,cited in Thompson & Strickland, 1995, p. 2)

Some Definitions of StrategySome Definitions of Strategy (con(con¶¶t)t)

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S

ome Definitions of S

trategyS

ome Definitions of S

trategy³«Strategy, in effect, is management¶s game³«Strategy, in effect, is management¶s game

plan for strengthening the organization¶s position, plan for strengthening the organization¶s position,

pleasing customers, and achieving performance pleasing customers, and achieving performancetargets.´ (Thompson & Strickland,targets.´ (Thompson & Strickland, 19951995, p., p. 22))

³Strategy has been defined«as µthe pattern of ³Strategy has been defined«as µthe pattern of

decisions a firm makes.¶´ (Hax, cited in K reitner,decisions a firm makes.¶´ (Hax, cited in K reitner,19981998, p., p. 196196))

(con(con¶¶t)t)

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³Corporate strategy reconciles what a company³Corporate strategy reconciles what a company

might do in terms of opportunity, what it can domight do in terms of opportunity, what it can doin terms of its strength, what its managementin terms of its strength, what its management

wants it to do, and what it thinks is ethical, legal,wants it to do, and what it thinks is ethical, legal,

and moral.´ (Andrews,and moral.´ (Andrews, 19911991, p., p. 450450))

Some Definitions of

Strategy

Some Definitions of

Strategy (con(con¶¶t)t)

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The pioneering work on which many modernThe pioneering work on which many modern

strategy ideas rest took place at the Harvardstrategy ideas rest took place at the Harvard

Business School in the earlyBusiness School in the early 19601960s lead bys lead by

K enneth R. Andrews and C. RolandK enneth R. Andrews and C. Roland

Christensen (Christensen (Montgomery & Porter,Montgomery & Porter, 19911991))

The Concept of Strategic The Concept of Strategic

Management Application to BusinessManagement Application to Business

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2020

The term strategy was applied to businessThe term strategy was applied to business

enterprises in the lateenterprises in the late 19701970s (Magretta,s (Magretta, 20022002).).

It became a full fledged management disciplineIt became a full fledged management discipline

in thein the 19801980s (Montgomery & Porter,s (Montgomery & Porter, 19911991))

The Concept of Strategic The Concept of Strategic

Management Application to BusinessManagement Application to Business (con(con¶¶t)t)

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SomeSome DefinitionsDefinitions of Strategic of Strategic


³Strategic management is³Strategic management is art and science of art and science of

formulating, implementing, and evaluatingformulating, implementing, and evaluatingcrosscross--functional decisions that enable anfunctional decisions that enable an

organization to achieve its objectives.´organization to achieve its objectives.´

³In the corporate world the term µstrategic³In the corporate world the term µstrategic

planning¶ is more often used.´ (David, planning¶ is more often used.´ (David, 20092009,,

p p.. 3636))

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2222



³Strategic management is that set of managerial³Strategic management is that set of managerial

decisions and actions that determines the longdecisions and actions that determines the long--run performance of a corporation. It includesrun performance of a corporation. It includes

strategy formulation, strategy implementation,strategy formulation, strategy implementation,

and evaluation and control.´ (Wheelen &and evaluation and control.´ (Wheelen &

Hunger,Hunger, 19901990, p., p. 77))

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(con(con¶¶t)t)



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³Strategic Management is an ongoing process of ³Strategic Management is an ongoing process of

ensuring a competitively superior fit between anensuring a competitively superior fit between anorganization and its changing environment.´organization and its changing environment.´

((TeeceTeece,, 19841984, cited in, cited in K reitner K reitner,, 19981998))

³Strategic management = Strategic Planning +³Strategic management = Strategic Planning +Implementation + Control.´ (Implementation + Control.´ (K reitner K reitner,, 19981998, p., p.

196196))


ManagementManagement (con(con¶¶t)t)

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Strategic Management ProcessStrategic Management Process

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Stage 1. Strategy Formulation

Stage 2. Strategy Implementation

Stage 3. Strategy Evaluation

(David, 2009, p. 37)



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Strategic ManagementStrategic Management ProcessProcess

((S

tageS

tage 11.S

trategy Formulation).S

trategy Formulation) ((con¶tcon¶t))

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Includes developing a vision and mission,

identifying an organization¶s external opportunities

and threats, determining internal strengths and

weaknesses, establishing long-term objectives,

generating alternative strategies, and choosing

particular strategies to pursue. Strategy formulation

include what new business to enter, what business to

abandon, how to allocate resources, whether to

expand operations or diversify, whether to enter

international market, etc.



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Strategic ManagementStrategic Management ProcessProcess(Stage(Stage 22. Strategy Implementation). Strategy Implementation) ((con¶tcon¶t))

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Requires a firm to establish annual objectives, devise policies,

motivate employees, and allocate resources so that the

formulated strategies can be executed.

Strategy implementation often is called the ³action stage´ of

strategic management. It is considered to be the most difficult

stage in strategic management. Successful strategy

implementation hinges upon managers¶ ability to motivate

employees, which is more often an art than a science.Strategies formulated but not implemented serve no useful

purpose.



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Strategic ManagementStrategic Management ProcessProcess(Stage(Stage 33. Strategy Evaluation). Strategy Evaluation) ((con¶tcon¶t))

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It is the final stage in strategic management. Managers

desperately need to know when particular strategies are not

working well; strategy evaluation is the primary means for

obtaining this information. All strategies are subject to futuremodification because external and internal factors are

constantly changing. Three fundamental strategy-evaluation

activities are:

1. Reviewing external and internal factors that are the bases

of current strategies,2. Measuring performance, and

3. Taking corrective actions.



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Strategic ManagementStrategic Management ProcessProcess(Stage(Stage 33. Strategy Evaluation/SWOT CHART). Strategy Evaluation/SWOT CHART) ((con¶tcon¶t))

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SWOT AnalysisThe use of a SWOT chart to

compile and organize the

process of identifying

company

Strengths,

Weaknesses,

Opportunities, and

Threats.



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Types: Strategic PlanningTypes: Strategic Planning

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CorporateCorporate--level strategylevel strategy

± ± Identifies the portfolio of businesses that, in total,Identifies the portfolio of businesses that, in total,

comprise the company and the ways in which thesecomprise the company and the ways in which these

businesses relate to each other. businesses relate to each other.

Diversification strategyDiversification strategy implies that the firm willimplies that the firm will

expand by adding new product lines.expand by adding new product lines.

Vertical integration strategyVertical integration strategy means the firm expandsmeans the firm expands

by, perhaps, producing its own raw materials, or selling by, perhaps, producing its own raw materials, or selling

its products direct.its products direct.

Consolidation strategyConsolidation strategy reduces the company¶s sizereduces the company¶s size

Geographic expansion strategyGeographic expansion strategy takes the companytakes the company

abroad.abroad.



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Types: Strategic PlanningTypes: Strategic Planning(con(con¶¶t)t)

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BusinessBusiness--level/competitive strategylevel/competitive strategy

± ± Identifies how to build and strengthen the business¶s longIdentifies how to build and strengthen the business¶s long--

term competitive position in the marketplace.term competitive position in the marketplace.

Cost leadership:Cost leadership: the enterprise aims to become the lowthe enterprise aims to become the low--

cost leader in an industry.cost leader in an industry.

Differentiation:Differentiation: a firm seeks to be unique in its industrya firm seeks to be unique in its industry

along dimensions that are widely valued by buyers.along dimensions that are widely valued by buyers.

Focus:Focus: a firm seeks toa firm seeks to carve out a market niche, andcarve out a market niche, and

compete by providing a product or service customers cancompete by providing a product or service customers can

get in no other way.get in no other way.



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Types Strategic PlanningTypes Strategic Planning(con(con¶¶t)t)

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Functional strategiesFunctional strategies

± ± Identify the basic courses of action thatIdentify the basic courses of action that

each department will pursue in order toeach department will pursue in order to

help the business attain its competitivehelp the business attain its competitive

goals.goals.



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Overview of Strategic ManagementOverview of Strategic Management



3333

The Five Tasks of Strategic ManagementThe Five Tasks of Strategic Management

(Thompson & Strickland, 1995, p. 4)

Developing aDeveloping a

Strategic VisionStrategic Vision

and Businessand Business

MissionMission

EvaluatingEvaluating

Performance,Performance,

Reviewing NewReviewing New

Developments,Developments,

and Initiatingand Initiating

CorrectiveCorrective

AdjustmentAdjustment

ImplementingImplementing

and Executingand Executing

the Strategythe Strategy

Crafting aCrafting a

Strategy toStrategy to

Achieve theAchieve the

ObjectivesObjectives

SettingSetting

ObjectivesObjectives

Improve/ChangeImprove/Change

as Neededas Needed

ReviewsReviews

as Neededas Needed

ReviewsReviews

as Neededas NeededImprove/ChangeImprove/Change

as Neededas Needed

Recycle toRecycle to

TasksTasks 11,, 22,, 33 or or

44 as Neededas Needed

TaskTask

11

TaskTask

22

TaskTask

33

TaskTask

55

TaskTask

44

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P&G StrategyP&G Strategy

DeploymentS

ystemDeploymentS

ystem

Strategy Deployment is intended to be used

by Categories to drive dramatic BusinessResults. Strategy Deployment forces choice,

it forces measurement of strategy. It is

intended for Breakthrough.

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The Seven Steps of StrategyThe Seven Steps of Strategy

DeploymentS

ystemDeploymentS

ystem Long Term VisionLong Term Vision

Develop StrategyDevelop Strategy

Deploy StrategyDeploy Strategy

CapabilityCapability

Do the PlansDo the Plans

Review and AuditReview and Audit--MonthlyMonthly

Review and AuditReview and Audit--QuarterlyQuarterly

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Long Term Vision:Long Term Vision:

Define why we exist, where we areDefine why we exist, where we areheaded asheaded as a business.a business.

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Develop Strategy:Develop Strategy:

Develops strategy; defines theDevelops strategy; defines theobjectives, goals, strategies,objectives, goals, strategies, measuresmeasures

(OGSM).(OGSM).

OGSM¶sOGSM¶s are the building blocks of are the building blocks of thethe system.system.

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Deploy Strategy:Deploy Strategy:-- Defines the groups responsible for deliveringDefines the groups responsible for delivering

the strategies/measures, and then translates tothe strategies/measures, and then translates toactions/measures/accountability for execution.actions/measures/accountability for execution.

-- Deployment links strategies throughout theDeployment links strategies throughout theorganization and translates to what ³I/we canorganization and translates to what ³I/we cango do.´go do.´

-- The emphasis is on what it will take to achieveThe emphasis is on what it will take to achievethe strategy, not negotiate to a lower need.the strategy, not negotiate to a lower need.

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Capability:Capability:

Checks sufficiency of the plans andChecks sufficiency of the plans andcapability of the organization tocapability of the organization to

deliver thedeliver the plans. plans.

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Do the Plans:Do the Plans:

Execute andExecute and track.track.

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Review and AuditReview and Audit--Monthly:Monthly:-- AcAction Planners ask, ³Did we do what wetion Planners ask, ³Did we do what we

said;´ they check actual vs. target, analyzesaid;´ they check actual vs. target, analyze

gaps, and determine adjustments.gaps, and determine adjustments.

-- Reviews are the ³heart´ of the system,Reviews are the ³heart´ of the system,

where strategy becomes action,where strategy becomes action,

accountability is established, and learningaccountability is established, and learning

occurs.occurs.

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Review and AuditReview and Audit--Quarterly:Quarterly:-- Management and Action Planners ask ³Is itManagement and Action Planners ask ³Is it

working, what is needed, what is learned, howworking, what is needed, what is learned, how

to maintain the improvement.´to maintain the improvement.´-- Quarterly Reviews are the ³test´ for leadership¶sQuarterly Reviews are the ³test´ for leadership¶s

behaviour that creates focus, commitment, and a behaviour that creates focus, commitment, and a

learning environment or lack of focus andlearning environment or lack of focus andcompliance, or a fear environment.compliance, or a fear environment.

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Strategy Deployment Flow ChartStrategy Deployment Flow Chart

REVIEW & ADJUST MONTHLYREVIEW & ADJUST MONTHLY

DO THE PLANSDO THE PLANS

yesyes

REVIEW & ADJUST QUARTER LY/ANNUALLYREVIEW & ADJUST QUARTER LY/ANNUALLY

CAPABLE?CAPABLE?nono

LinkagesLinkagesAction PlansAction PlansFunction OGSMFunction OGSM

DEPLOY STRATEGYDEPLOY STRATEGY

Category OGSMCategory OGSMGather DataGather Data

DEVELOP STRATEGY DEVELOP STRATEGY

Corp. OGSMCorp. OGSMPurpose & Vision & ValuesPurpose & Vision & Values

LONG TERM VISIONLONG TERM VISION³Defines Winning´

³What Are We

Going For?´

³How Will We Get IT?´

³How Are We Going

to Organize´

³Can We Do the Plan?´

³Just Do It´

³Did We Do What

We Said We¶d Do?´

³Is It Working´1111/ /2525/ /2010 102010 10::1212::5555 PMPM



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What is Human ResourceWhat is Human Resource

Management?Management?Human Resource Management is a distinctiveHuman Resource Management is a distinctive

approach to employment management whichapproach to employment management which

seeks to achieve competitive advantageseeks to achieve competitive advantagethrough the strategic deployment of a highlythrough the strategic deployment of a highly

committed and capable workforce, using ancommitted and capable workforce, using an

integrated array of cultural, structural andintegrated array of cultural, structural and personnel techniques (Storey, personnel techniques (Storey, 19951995, p., p. 55))

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The Major Component of The Major Component of

HRMHRM--Beliefs and AssumptionsBeliefs and Assumptions

-- That it is the human resource which givesThat it is the human resource which gives

competitivecompetitive advantage.advantage.

-- That the aim should be not more complianceThat the aim should be not more compliance

with rules, but employeewith rules, but employee commitment.commitment.

-- ThatThat employeesemployees should be very carefullyshould be very carefullyselected andselected and developed.developed.

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The Major Component of The Major Component of

HRMHRM--Strategic QualitiesStrategic Qualities

-- Because of theBecause of the foregoingforegoing factors, HR factors, HR

decisions are of strategicdecisions are of strategic importance.importance.

-- Top management involvement isTop management involvement is necessary.necessary.

-- HR HR policies should be integrated into the policies should be integrated into the

business strategy business strategy--stemming from it andstemming from it andeven contributing toeven contributing to it.it.

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The Major Component of HRMThe Major Component of HRM--

Critical Role of ManagersCritical Role of Managers

-- BecauseBecause HR practice is critical to core activitiesHR practice is critical to core activities

of the business, it is too important to be left toof the business, it is too important to be left to

personnel specialists personnel specialists alone.alone.

-- LineLine managers need to be closely involved bothmanagers need to be closely involved both

asas deliverers and drivers of the HR deliverers and drivers of the HR policies. policies.

-- MuchMuch greater attention is paid to thegreater attention is paid to the

management of managersmanagement of managers themselves.themselves.1111/ /2525/ /2010 102010 10::1212::5555 PMPM



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The MajorThe Major ComponentsComponents of of

HRMHRM--KeyKey FactorsFactors-- Managing culture is more important thanManaging culture is more important than

managing procedures and systemsmanaging procedures and systems

³Just Do³Just Do It.´It.´

-- Integrated action on selection, communication,Integrated action on selection, communication,training, reward and developmenttraining, reward and development

-- Restructuring and job design to allow devolvedRestructuring and job design to allow devolvedresponsibility and empowerment (Storey,responsibility and empowerment (Storey, 19951995,, p. p.66).).

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An Organization with aAn Organization with a

Strong Commitment to HRMStrong Commitment to HRM

-- The firm competes on the basis of product qualityThe firm competes on the basis of product qualityand differentiation as well asand differentiation as well as price. price.

-- Human resource considerations weigh heavily inHuman resource considerations weigh heavily incorporate strategic decision making and governancecorporate strategic decision making and governance

processes. Employee interests are represented processes. Employee interests are representedthrough the voice of the human resource staff through the voice of the human resource staff

professionals and/or employee representatives professionals and/or employee representativesconsult and participate with senior executives inconsult and participate with senior executives indecision that affect human resource policies anddecision that affect human resource policies andemployee interests. In either case, employees areemployee interests. In either case, employees aretreated as legitimate stakeholders in thetreated as legitimate stakeholders in the corporation.corporation.

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An Organization with aAn Organization with a

Strong Commitment to HRMStrong Commitment to HRM

-- Investments in new hardware or physical technology areInvestments in new hardware or physical technology are

combined with the investments in human resources andcombined with the investments in human resources and

changes in organizational practices required to realise thechanges in organizational practices required to realise the

full potential benefits of thesefull potential benefits of these investments.investments.

-- The firm sustains a high level of investment in training,The firm sustains a high level of investment in training,

skill development and education, and personnel practicesskill development and education, and personnel practices

are designed to capture and utilise these skillsare designed to capture and utilise these skills fully.fully.

-- Compensation and reward systems are internally equitable,Compensation and reward systems are internally equitable,

competitive and linked to the longcompetitive and linked to the long--term performance of term performance of

thethe firm.firm.

(con(con¶¶t)t)

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An Organization with a StrongAn Organization with a Strong

Commitment to HRMCommitment to HRM

-- Employment continuity and security is an importantEmployment continuity and security is an important priority and value to be considered in all corporate priority and value to be considered in all corporatedecisions anddecisions and policies. policies.

-- Workplace relations encourage flexibility in theWorkplace relations encourage flexibility in theorganization of work, empowerment of employees toorganization of work, empowerment of employees tosolve problems, and high levels of trust amongsolve problems, and high levels of trust amongworkers, supervisors andworkers, supervisors and managers.managers.

-- Worker rights to representation are acknowledged andWorker rights to representation are acknowledged andrespected. Union or other employee representativesrespected. Union or other employee representativesare treated as joint partners in designing andare treated as joint partners in designing andoverseeing innovations in labour and human resourceoverseeing innovations in labour and human resource practices (Beaumont, practices (Beaumont, 19951995, p., p.4040).).

(con(con¶¶t)t)

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5353

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HR and Competitive AdvantageHR and Competitive Advantage


Competitive AdvantageCompetitive Advantage

Any factor that allow an organization toAny factor that allow an organization to

differentiate its product or service from those of itsdifferentiate its product or service from those of its

competitors to increase market share.competitors to increase market share.

Superior human resources are an important sourceSuperior human resources are an important source

of competitive advantageof competitive advantage

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Strategic Human ResourceStrategic Human Resource

Management (SHRM):Management (SHRM):

The linking of HRM with strategic goals andThe linking of HRM with strategic goals and

objectives in order to improve business performanceobjectives in order to improve business performance

and develop organizational cultures that foster and develop organizational cultures that foster innovation and flexibility.innovation and flexibility.

Formulating and executing HR systemsFormulating and executing HR systems² ²HR HR

policies and activities policies and activities² ²that produce the employeethat produce the employee

competencies and behaviors the company needs tocompetencies and behaviors the company needs toachieve its strategic aims (achieve its strategic aims (Gessler Gessler,, 20052005).).

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Strategic HumanStrategic Human ResourceResource

Management (SHRM)Management (SHRM) ((con¶tcon¶t))

The process of linking HR practices to businessThe process of linking HR practices to businessstrategy. Strategic HR is owned, directed, and usedstrategy. Strategic HR is owned, directed, and used by line managers to make HR strategies happen. Line by line managers to make HR strategies happen. Linemanagers invest in the HR function through strategicmanagers invest in the HR function through strategicHR. Strategic HR creates a process for moving fromHR. Strategic HR creates a process for moving from business strategy to organizational capability to HR business strategy to organizational capability to HR practice. HR planning often describes the processes practice. HR planning often describes the processes

whereby business strategies results in HR actions.whereby business strategies results in HR actions.Strategic HR serves stakeholders of the businessStrategic HR serves stakeholders of the business(investors, customers, and employees) who want the(investors, customers, and employees) who want the business deliver results (Ulrich, business deliver results (Ulrich, 19971997, pp., pp.189189--190190))

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Objectives: Strategic Objectives: Strategic HumanHuman

Resource Management (SHRM)Resource Management (SHRM)

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AssessAssess how well human resources management is linked tohow well human resources management is linked to

agency missionagency mission accomplishment.accomplishment.

Explore the role played by the HR staff in agency strategicExplore the role played by the HR staff in agency strategic planning. planning.

Determine how the HR service providers work with lineDetermine how the HR service providers work with line

managers to carry out agency strategicmanagers to carry out agency strategic goals.goals.

Identify best practices aligning HRM with the agency strategicIdentify best practices aligning HRM with the agency strategic plan and goals plan and goals..



5858

The Process of Strategic The Process of Strategic

Human Resource ManagementHuman Resource Management

(Noe, Hollenbeck, Gerhart & Wright, 2001, p.22)

Strategy Formulation Strategy Implementation

External Analysis

Opportunities Threat

Mission Goals Strategic

Choice

Human

Resource

Needs

Skills

Behaviors

Culture

Internal

Analysis

Strengths

Weaknesses

Human Resources Practices

Recruitment Job Analysis

Training Job Design

Performance Selection

Management Development

Labor Pay StructureRelations Incentives

Employee Benefits

Relations

Human

Resource

CapabilitySkills

Abilities

K nowledge

Human

Resource

ActionsBehaviors

Results

(Productivity,

Absenteeism,

Turnover)

Company¶s

Performance

Productivity

Quality

Profitability

EmergentEmergent

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Human Resource StrategyHuman Resource Strategy

FormulationFormulation

The process of deciding on a strategicThe process of deciding on a strategic

direction by defining a company¶s missiondirection by defining a company¶s mission

and goals, its external opportunities andand goals, its external opportunities and

threats, and its internal strengths andthreats, and its internal strengths and

weaknesses (weaknesses (Noe Noe, Hollenbeck,, Hollenbeck, GerhartGerhart &&

Wright,Wright, 20012001, p., p.611611).).

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Human Resource Strategy:Human Resource Strategy:

--HR strategy refers to building an agenda for HR strategy refers to building an agenda for the HR function.the HR function.

--HR strategy creates a purpose and focus for HR strategy creates a purpose and focus for the HR function.the HR function.

--HR strategy serves HR professionals whoHR strategy serves HR professionals whowant to add value to their business, and itwant to add value to their business, and itdefines the mission, vision, and prioritiesdefines the mission, vision, and prioritiesof the HR function (Ulrich,of the HR function (Ulrich, 19971997, p., p. 190190))

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The Process of Human ResourceThe Process of Human Resource

Strategy FormulationStrategy Formulation

External

Analysis

Opportunities

Threats

Mission Goals Strategic

Choice

InternalAnalysis

Strengths

Weaknesses


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Motorola Human ResourceMotorola Human Resource

Strategic Formulation ProcessStrategic Formulation Process

-- Identify the organizational unit and organize theIdentify the organizational unit and organize theworkshop.workshop.

-- Prioritize the trends in the businessPrioritize the trends in the business environment.environment.

-- Specify the sources of competitive advantage and theSpecify the sources of competitive advantage and themeasurements for each source of competitivemeasurements for each source of competitive advantage.advantage.

-- Define the desired cultural capabilities together with theDefine the desired cultural capabilities together with the behavioural expressions of these cultural behavioural expressions of these cultural capabilities.capabilities.

-- Identify the HR practices that will have greatest influenceIdentify the HR practices that will have greatest influenceon creating and sustaining the desiredon creating and sustaining the desired culture.culture.

-- Develop an overall implementationDevelop an overall implementation plan. plan.

Ulrich & Brockbank (2005, pp.152-153)

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ImplementationImplementation

The process of devising structure andThe process of devising structure and

allocating resources to enact theallocating resources to enact thestrategy a company hasstrategy a company has chosen.chosen.

(Noe, Hollenbeck,Gerhart & Wright, 2001, p.611)

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Human Resource OrganizationHuman Resource Organization

--It is the process of diagnosing and improving anIt is the process of diagnosing and improving an

HR function to deliver HR services.HR function to deliver HR services.

--It creates a process that ensures HR strategiesIt creates a process that ensures HR strategieshappen and, like HR strategy, it serves HR happen and, like HR strategy, it serves HR

professionals in adding values to their business. professionals in adding values to their business.

--HR organizations are investments by HR HR organizations are investments by HR

executives in HR professionalsexecutives in HR professionals

Ulrich (1997, p.190)

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Implementation Process:Implementation Process:


Human

Resource

Needs

Skills

Behaviors

Culture

HR Practices

Recruitment Job Analysis

Training Job Design

Performance Selection

Management Development

Labor Pay Structure

Relations Incentives

Employee Benefits

RelationStrategic

Choice

Human

Resource

Capability

Skills

Abilities

K nowledge

Human

Resource

Actions

Behaviors

Results

(Productivity,

Absenteeism,

Turnover)

Firm

Performance

Productivity

Quality

Profitability

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The Case of Amoco CorporationThe Case of Amoco Corporation

Ulrich (1997, p.225)

External andExternal and

InternalInternal

EnvironmentEnvironment

New competitors (foreign national oils, well New competitors (foreign national oils, well--heeled independents)heeled independents)

Weakened demand Weakened demand

Loss of oligopolistic control Loss of oligopolistic control

Fewer ³good opportunities´ Fewer ³good opportunities´

Decisions need to be faster and closer to the material Decisions need to be faster and closer to the material

Poor recent financial performance Poor recent financial performance

Limited funds for reinvestment Limited funds for reinvestment

Declining productivity Declining productivity

Domestically focused businesses Domestically focused businesses

Centralized decision making Centralized decision making

Strong technical skills Strong technical skills

OperatingOperatingStrategyStrategy

Build better customer relationships Build better customer relationships Better manage response to supply/demand cycles Better manage response to supply/demand cycles

Manage costs through cost reduction and reengineering Manage costs through cost reduction and reengineering

Increase investment outside North America Increase investment outside North America

Use joint ventures to increase assets with limited investment Use joint ventures to increase assets with limited investment

Acquire and divest assets to improve operating efficiency Acquire and divest assets to improve operating efficiency

Revised People Strategies Driven by Amoco Strategic Framework and

Organizational Capabilities Required to Execute Business Strategies

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The Case of Amoco CorporationThe Case of Amoco Corporation

Ulrich (1997, p.225)

OrganizationalOrganizationalCapabilitiesCapabilities Rapid consensus Rapid consensus--building and decision building and decision--makingmaking Effective negotiation and deal Effective negotiation and deal--makingmaking

Investment/divestment opportunities identification Investment/divestment opportunities identification

Rapid deployment of resources Rapid deployment of resources

Rapid development of appropriate products and services Rapid development of appropriate products and services

Relentless focus on costs Relentless focus on costs

Understand cost/value relationships Understand cost/value relationships

Create/sustain relationships Integrate/manage cultural diversity Create/sustain relationships Integrate/manage cultural diversity

Understand/anticipate customer requirements Understand/anticipate customer requirements

People StrategiesPeople Strategies StrategyStrategy 11:: Improve Amoco¶s organizational capability to actImprove Amoco¶s organizational capability to act

quickly and decisively (speed and agility).quickly and decisively (speed and agility).

StrategyStrategy 22:: Build and deploy critical people competenciesBuild and deploy critical people competencies(competence).(competence).

StrategyStrategy 33:: Increase the return on investment in people (costIncrease the return on investment in people (cost

effectiveness).effectiveness).

(con(con¶¶t)t)

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Evaluation and ControlEvaluation and Control-- The last part of the strategic management model isThe last part of the strategic management model is

the evaluation of performance and the control of the evaluation of performance and the control of work work activities.activities.

-- Control follows planning. It ensures that corporationControl follows planning. It ensures that corporationis achieving what it set out tois achieving what it set out to accomplish.accomplish.

-- Just as planning involves the setting of objectivesJust as planning involves the setting of objectivesalong with the strategies and programmes necessaryalong with the strategies and programmes necessary

to accomplish them, the control process comparesto accomplish them, the control process compares performance with desired results and provides the performance with desired results and provides thefeedback necessary for the management to evaluatefeedback necessary for the management to evaluateresults and take corrective action, asresults and take corrective action, as needed.needed.

Wheelen & Hunger (1990, p. 280)

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P&G D d R iP&G D d R i



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P&G Do and ReviewP&G Do and Review

Monthly Model:Monthly Model:

³Do what we said we would do´³Do what we said we would do´

³Did we do it, is it working?´³Did we do it, is it working?´

StepStep 11:: Are we doing what we said we would do; if notAre we doing what we said we would do; if notwhy? If yes, look at targets vs. actual resultswhy? If yes, look at targets vs. actual results

StepStep 22:: Do analysis to determine major cause for Do analysis to determine major cause for performance gap performance gap vs. targetvs. target

StepStep 33:: Make adjustments, if neededMake adjustments, if neededStepStep 44:: Make requests on decisions/resources neededMake requests on decisions/resources needed

StepStep 55:: Summarize learningSummarize learning

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P&G Review and AdjustP&G Review and Adjust

Quarterly Model:Quarterly Model:Is it working?Is it working?

Step 1:Step 1: Review OGSMReview OGSM

Step 2:Step 2: Overview Action Plan andOverview Action Plan and

RationaleRationale

Step 3:Step 3: Review Plan vs. ResultsReview Plan vs. Results

Step 4:Step 4: Review Summary of Causes andReview Summary of Causes and

AdjustmentAdjustment

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HR P fHR P f



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HR PerformanceHR Performance

Driver Measures (Sample)Driver Measures (Sample)

Becker, Huselid and Ulrich, 2001, p. 71

Access to business information to

facilitate decision making

Adherence by the workforce to core

values, such as cost consciousness

Average change in performance-

appraisal rating over time

Change in employee mind-set

Climate surveys

Consistency and clarity of messages

from top management and from HR

Customer complaints/praiseCustomer satisfaction with hiring

process

Degree of financial literacy among

employee

Extent to which HR is helping to

develop necessary leadership

competencies

Extent to which HR does a thorough

job of pre-acquisition soft-asset

due diligence

Extent to which HR leadership is

involved early in selection of

potential acquisition candidates

Extent to which HR measurement

systems are seen as credibleExtent to which information is

communicated effectively to

employees

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strategic planning & shrm

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