Module 2

STRATEGIC HUMAN RESOURCE MANAGEMENT

Learning objectives

• Describe the differences between strategy formulation and strategy implementation

• List the components of the strategic management process• Discuss the role of the HR function in strategy formulation• Describe the linkages between HR and strategy formulation• Discuss typologies of generic strategies and the various HR

practices associated with each• Describe the different HR issues and practices associated with

various directional strategies• List the competencies the HR executive needs in order to

become a strategic partner in the company• Identify some of the issues associated with implementing

strategic human resource management

What is strategic management?

• Strategic management is a process, an approach that addresses the competitive challenges an organisation faces

• It can be thought of as managing the ‘pattern or plan that integrates an organisation’s major goals, policies and action sequences into a cohesive whole’ (Quinn 1980)

Components of the strategic management process

• Strategy formulation:– The process of deciding on a strategic direction by

defining a company’s mission and goals, its external opportunities and threats, and its internal strengths and weaknesses

• Strategy implementation:

- The process of devising structures and allocating resources to enact the strategy chosen by a company

What is strategic HRM?

• Strategic HRM is the pattern of planned HR deployments and activities intended to enable an organisation to achieve its goals

• It entails assessing the employee skills required to run systems such as total quality management and just-in-time and engaging in HR practices such as selection and training that develop needed skills

• Strategic choice is the ways an organisation will attempt to fulfil its mission and achieve its long-term goals

Linkage between HR and the strategic management process

Figure 2.1 A model of the strategic management process

Role of HR in strategy formulation Figure 2.2 Linkages of strategic planning and HRM

Components of strategy formulation

• Mission: a statement of the organisation’s reason for being

• Goals: what an organisation hopes to achieve in the medium- to long-term future

• External analysis and internal analysis (SWOT: strengths, weaknesses, opportunities, threats):– external analysis: examining the organisation’s

operating environment to identify strategic opportunities and threats

– internal analysis: examining the organisation’s strengths and weaknesses

Components of strategy formulation

• Strategic choice• HR input for strategic HRM: HR executives involved

in strategy formulation

Figure 2.3 Strategy formulation

Strategy implementation

Important variables determine success in strategy implementation:

– organisational structure– task design– types of information and information systems– the selection, training and development of people– reward systems

Linkage of variables in strategy implementation

Figure 2.4 Variables to be considered in strategy implementation

Figure 2.5 Strategy implementation

Menu of HR practice options

• Job analysis and design• Recruitment and selection• Employee learning and development• Performance management• Pay structure, incentives and benefits• Industrial relations• Also see Table 2.4 on pages 66 and 67 for

additional information and details

Directional strategies

• Concentration strategies• Internal growth strategies• External growth strategies• Divestment or downsizing strategies

Strategy execution, evaluation and control

• Monitor the effectiveness of the strategy and the implementation process

• Identify problem areas and revisit existing structures and strategies and/or develop alternative strategies

• Recognise the critical nature of human resources in competitive advantage

The role of HR in providing strategic competitive advantage

• Planned step-by-step procedure (previously discussed)• Emergent strategies• Enhancing firm competitiveness

HR competencies

• Strategic positioners: understand evolving business contexts, stakeholder expectations and business requirements, and are able to translate them into talent, culture and leadership actions

• Credible activists: build relationships of trust and have a clear point of view about how to build business performance

• Capacity builders: define, audit and create organisational capabilities required for sustainable organisational success

• Change champions: initiate and sustain change at the individual, initiative and institutional levels

HR competencies

• HR innovators and integrators: look for new ways to implement HR practices and integrate those separate practices to deliver business solutions

• Technology proponents: use technology for efficiency to connect employees and to leverage new communication channels, such as social media

Summary

• SHRM means to proactively provide a competitive advantage through the company’s human resources

• The HR function needs to be integral to strategy formulation

• HRM has an impact on strategy implementation• The strategic role of the HR function requires

business, professional–technical, change management and integration competencies