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Managers Role in Strategic HRM
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The Strategic Management Process
Strategic Management
The process of identifying and executing theorganizations mission by matching its capabilities
with the demands of its environment.
Strategy A chosen course of action.
Strategic Plan
How an organization intends to balance its internal
strengths and weaknesses with its externalopportunities and threats to maintain a competitiveadvantage over the long-term.
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Business Vision and Mission
Vision
A general statement of an organizations intended
direction that evokes emotional feelings inorganization members.
Mission Spells out who the company is, what it does, and
where its headed.
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FIGURE 35 The Strategic Management Process
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FIGURE 37 A SWOT Chart
Strengths
Example: Market leadership
Weaknesses
Example: Large inventories
Opportunities
Example: New overseas markets
Threats
Example: Market saturation
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FIGURE 38 Relationships Among Strategies in Multiple-Business Firms
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Types of Strategies
DiversificationStrategy
GeographicExpansionStrategy
VerticalIntegration
Strategy
Corporate-LevelStrategies
ConsolidationStrategy
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Types of Strategies (continued)
Cost Leadership Focus/Niche
Business-Level/CompetitiveStrategies
Differentiation
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Achieving Strategic Fit
The Fit Point of View (Porter) consists of the
idea that each departments strategy needs to fit
the parent businesss competitive aims.
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Strategic Human Resource Management
Strategic Human Resource Management
The linking of HRM with strategic goals andobjectives in order to improve business performanceand develop organizational cultures that fosterinnovation and flexibility.
Involves formulating and executing HR systemsHRpolicies and activitiesthat produce the employeecompetencies and behaviors that the company needsto achieve its strategic aims.
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FIGURE 36 Linking Company-Wide and HR Strategies
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Creating the Strategic Human ResourceManagement System
Human ResourceProfessionals
EmployeeBehaviors andCompetencies
Components of aStrategic HRM System
Human ResourcePolicies and
Practices
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FIGURE 310StrategyMap forSouthwest
Airlines
Source:Adapted from Creating a Strategy Map,Ravi Tangri, [email protected].
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FIGURE 312 Three Important Strategic HR Tools
Source:Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Strategy, and Performance(Boston: Harvard Business School Press, 2001), p. 12.
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Measuring HRs Contribution
The HR Scorecard
Shows the quantitative standards,or metrics the firm uses to
measure HR activities.
Measures the employee behaviorsresulting from these activities.
Measures the strategically relevantorganizational outcomes of those
employee behaviors.
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Creating an HR Scorecard
1
2
3
4
5
Outline value chain activities
Define the business strategy
Outline a strategy map
Identify strategically required
outcomes
Identify required workforcecompetencies and behaviors
6
7
8
Choose HR Scorecardmeasures
Identify required HR policiesand activities
Summarize Scorecardmeasures on digital dashboardand monitor, predict, andevaluate
The 10-Step HR Scorecard Process
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FIGURE 314 Simple Value Chain for The Hotel Paris
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Five Sample HR MetricsHR Metric* How to Calculate It
Absence rate # of days absent in month 100
Average # of employees during month # of workdays
Cost per hire Advertising + agency fees + employee referrals + travel cost ofapplicants and staff + relocation costs + recruiter pay and benefits
Number of hires
HR expensefactor
HR expense
Total operating expense
Time to fill Total days elapsed to fill job requisitions
Number hired
Turnover rate Number of separations during month 100
Average number of employees during monthSources:Robert Grossman, Measuring Up, HR Magazine, January 2000, pp. 2935; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, Improving the Return on
Human Capital: New Metrics, Compensation and Benefits Review,January/February 2000, pp. 1320; Thomas E. Murphy and Sourushe Zandvakili,
Data and Metrics-Driven Approach to Human Resource Practices: Using
Customers, Employees, and Financial Metrics, Human Resource Management39, no. 1 (Spring 2000), pp. 93105; [HR Planning, Commerce Clearing House
Incorporated, July 17, 1996;] SHRM/BNA 2000 Cost Per Hire and Staffing MetricsSurvey; www.shrm.org. See also, SHRM Research 2006 Strategic HRManagement Survey Report Society for Human Resource Management
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