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CHAPTER 3: STRATEGIC PLANNING Copyright © 2005 South-Western. All rights reserved.

SHRM N ch03

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CHAPTER 3:

STRATEGIC PLANNING

Copyright © 2005 South-Western. All rights reserved.

Copyright © 2005 South-Western. All rights reserved. 1–2

Strategic ManagementStrategic ManagementStrategic ManagementStrategic Management

• Strategic Human Resource ManagementStrategic Human Resource Management– Involves aligning initiatives involving how people are Involves aligning initiatives involving how people are

managed with organizational mission & objectivesmanaged with organizational mission & objectives

• Strategic Management ProcessStrategic Management Process– Determining what needs to be done to achieve corporate Determining what needs to be done to achieve corporate

objectives over 3 - 5 yearsobjectives over 3 - 5 years– Examining organization & competitive environmentExamining organization & competitive environment– Establishing optimal fit between organization & its Establishing optimal fit between organization & its

environment environment – Reviewing & revising strategic plan Reviewing & revising strategic plan

• Strategic Human Resource ManagementStrategic Human Resource Management– Involves aligning initiatives involving how people are Involves aligning initiatives involving how people are

managed with organizational mission & objectivesmanaged with organizational mission & objectives

• Strategic Management ProcessStrategic Management Process– Determining what needs to be done to achieve corporate Determining what needs to be done to achieve corporate

objectives over 3 - 5 yearsobjectives over 3 - 5 years– Examining organization & competitive environmentExamining organization & competitive environment– Establishing optimal fit between organization & its Establishing optimal fit between organization & its

environment environment – Reviewing & revising strategic plan Reviewing & revising strategic plan

Copyright © 2005 South-Western. All rights reserved. 1–3

Models of StrategyModels of StrategyModels of StrategyModels of Strategy

• Industrial Organization (O/I) ModelIndustrial Organization (O/I) Model– External environment is primary determinant of External environment is primary determinant of

organizational strategy rather than internal decisions of organizational strategy rather than internal decisions of managersmanagers

– Environment presents threats & opportunitiesEnvironment presents threats & opportunities– All competing organizations control or have equal access to All competing organizations control or have equal access to

resourcesresources– Resources are highly mobile between firmsResources are highly mobile between firms– Organizational success is achieved by Organizational success is achieved by

• Offering goods & services at lower costs than competitors Offering goods & services at lower costs than competitors

• Differentiating products to bring premium pricesDifferentiating products to bring premium prices

• Industrial Organization (O/I) ModelIndustrial Organization (O/I) Model– External environment is primary determinant of External environment is primary determinant of

organizational strategy rather than internal decisions of organizational strategy rather than internal decisions of managersmanagers

– Environment presents threats & opportunitiesEnvironment presents threats & opportunities– All competing organizations control or have equal access to All competing organizations control or have equal access to

resourcesresources– Resources are highly mobile between firmsResources are highly mobile between firms– Organizational success is achieved by Organizational success is achieved by

• Offering goods & services at lower costs than competitors Offering goods & services at lower costs than competitors

• Differentiating products to bring premium pricesDifferentiating products to bring premium prices

Copyright © 2005 South-Western. All rights reserved. 1–4

Models of StrategyModels of StrategyModels of StrategyModels of Strategy

• Resource-Based View (RBV)Resource-Based View (RBV)–An organization’s resources & capabilities, not external An organization’s resources & capabilities, not external environmental conditions, should be basis for strategic environmental conditions, should be basis for strategic decisionsdecisions

–Competitive advantage is gained through acquisition & value Competitive advantage is gained through acquisition & value of organizational resourcesof organizational resources

–Organizations can identify, locate & acquire key valuable Organizations can identify, locate & acquire key valuable resourcesresources

–Resources are not highly mobile across organizations & once Resources are not highly mobile across organizations & once acquired are retainedacquired are retained

–Valuable resources are costly to imitate & non-substitutableValuable resources are costly to imitate & non-substitutable

• Resource-Based View (RBV)Resource-Based View (RBV)–An organization’s resources & capabilities, not external An organization’s resources & capabilities, not external environmental conditions, should be basis for strategic environmental conditions, should be basis for strategic decisionsdecisions

–Competitive advantage is gained through acquisition & value Competitive advantage is gained through acquisition & value of organizational resourcesof organizational resources

–Organizations can identify, locate & acquire key valuable Organizations can identify, locate & acquire key valuable resourcesresources

–Resources are not highly mobile across organizations & once Resources are not highly mobile across organizations & once acquired are retainedacquired are retained

–Valuable resources are costly to imitate & non-substitutableValuable resources are costly to imitate & non-substitutable

Copyright © 2005 South-Western. All rights reserved. 1–5

Contrasting the Two ApproachesContrasting the Two ApproachesContrasting the Two ApproachesContrasting the Two Approaches

• Research provides support for both Research provides support for both positionspositions

• What drives strategy?What drives strategy?– I/O: External considerationsI/O: External considerations– RBV: Internal considerationsRBV: Internal considerations

• I/O: Strategy drives resource acquisitionI/O: Strategy drives resource acquisition

• RBV: Strategy determined by resourcesRBV: Strategy determined by resources

• Research provides support for both Research provides support for both positionspositions

• What drives strategy?What drives strategy?– I/O: External considerationsI/O: External considerations– RBV: Internal considerationsRBV: Internal considerations

• I/O: Strategy drives resource acquisitionI/O: Strategy drives resource acquisition

• RBV: Strategy determined by resourcesRBV: Strategy determined by resources

Copyright © 2005 South-Western. All rights reserved. 1–6

The Process of Strategic The Process of Strategic ManagementManagement

The Process of Strategic The Process of Strategic ManagementManagement

• Mission statementMission statement• Environmental analysisEnvironmental analysis• Organizational self-assessmentOrganizational self-assessment• Establishing goals & objectivesEstablishing goals & objectives

• Mission statementMission statement• Environmental analysisEnvironmental analysis• Organizational self-assessmentOrganizational self-assessment• Establishing goals & objectivesEstablishing goals & objectives

Copyright © 2005 South-Western. All rights reserved. 1–7

Exhibit 3-1Exhibit 3-1

Process of Strategic ManagementProcess of Strategic ManagementExhibit 3-1Exhibit 3-1

Process of Strategic ManagementProcess of Strategic Management

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Mission StatementMission StatementMission StatementMission Statement

• Explains purpose & reason for existenceExplains purpose & reason for existence

• Usually very broadUsually very broad

• No more than a couple of sentencesNo more than a couple of sentences

• Serves as foundation for everything Serves as foundation for everything organization doesorganization does

• Explains purpose & reason for existenceExplains purpose & reason for existence

• Usually very broadUsually very broad

• No more than a couple of sentencesNo more than a couple of sentences

• Serves as foundation for everything Serves as foundation for everything organization doesorganization does

Copyright © 2005 South-Western. All rights reserved. 1–9

Solectron Mission StatementSolectron Mission StatementSolectron Mission StatementSolectron Mission Statement

““Our mission is to provide worldwide Our mission is to provide worldwide responsiveness to our customers by offering the responsiveness to our customers by offering the highest quality, lowest total cost, customized, highest quality, lowest total cost, customized,

integrated, design, supply-chain and integrated, design, supply-chain and manufacturing solutions through long-term manufacturing solutions through long-term partnerships based on integrity and ethical partnerships based on integrity and ethical

business practices.”business practices.”

““Our mission is to provide worldwide Our mission is to provide worldwide responsiveness to our customers by offering the responsiveness to our customers by offering the highest quality, lowest total cost, customized, highest quality, lowest total cost, customized,

integrated, design, supply-chain and integrated, design, supply-chain and manufacturing solutions through long-term manufacturing solutions through long-term partnerships based on integrity and ethical partnerships based on integrity and ethical

business practices.”business practices.”

Copyright © 2005 South-Western. All rights reserved. 1–10

Analysis of EnvironmentAnalysis of EnvironmentAnalysis of EnvironmentAnalysis of Environment

• Critical components of external Critical components of external environmentenvironment– CompetitionCompetition– Industry structureIndustry structure– Government regulationsGovernment regulations– TechnologyTechnology– Market trendsMarket trends– Economic tendsEconomic tends

• Critical components of external Critical components of external environmentenvironment– CompetitionCompetition– Industry structureIndustry structure– Government regulationsGovernment regulations– TechnologyTechnology– Market trendsMarket trends– Economic tendsEconomic tends

Copyright © 2005 South-Western. All rights reserved. 1–11

Organization Self-AssessmentOrganization Self-AssessmentOrganization Self-AssessmentOrganization Self-Assessment

• Identify primary strengths & weaknessesIdentify primary strengths & weaknesses

• Find ways to capitalize on strengthsFind ways to capitalize on strengths

• Find ways to improve or minimize Find ways to improve or minimize weaknessesweaknesses

• Examine resourcesExamine resources– PhysicalPhysical– HumanHuman– TechnologicalTechnological– CapitalCapital

• Identify primary strengths & weaknessesIdentify primary strengths & weaknesses

• Find ways to capitalize on strengthsFind ways to capitalize on strengths

• Find ways to improve or minimize Find ways to improve or minimize weaknessesweaknesses

• Examine resourcesExamine resources– PhysicalPhysical– HumanHuman– TechnologicalTechnological– CapitalCapital

Copyright © 2005 South-Western. All rights reserved. 1–12

Organization Self-AssessmentOrganization Self-AssessmentOrganization Self-AssessmentOrganization Self-Assessment

• Examine internal management systemsExamine internal management systems– CultureCulture– Organization structureOrganization structure– Power dynamics & policyPower dynamics & policy– Decision-making processesDecision-making processes– Past strategy & performancePast strategy & performance– Work systemsWork systems

• Examine internal management systemsExamine internal management systems– CultureCulture– Organization structureOrganization structure– Power dynamics & policyPower dynamics & policy– Decision-making processesDecision-making processes– Past strategy & performancePast strategy & performance– Work systemsWork systems

Copyright © 2005 South-Western. All rights reserved. 1–13

Establishing Goals & ObjectivesEstablishing Goals & ObjectivesEstablishing Goals & ObjectivesEstablishing Goals & Objectives

• Goals should be:Goals should be:– SpecificSpecific– MeasurableMeasurable– FlexibleFlexible

• Goals should be:Goals should be:– SpecificSpecific– MeasurableMeasurable– FlexibleFlexible

Copyright © 2005 South-Western. All rights reserved. 1–14

Corporate Strategies: GrowthCorporate Strategies: GrowthCorporate Strategies: GrowthCorporate Strategies: Growth

• BenefitsBenefits– Gaining economies of scale in Gaining economies of scale in

operations & functionsoperations & functions– Enhancing competitive position Enhancing competitive position

vis-à-vis industry competitorsvis-à-vis industry competitors– Providing opportunities for Providing opportunities for

employee professional employee professional development & advancementdevelopment & advancement

• HR IssuesHR Issues– Planning for new hiringPlanning for new hiring– Alerting current employeesAlerting current employees– Ensuring quality & performance Ensuring quality & performance

standards are maintainedstandards are maintained

• BenefitsBenefits– Gaining economies of scale in Gaining economies of scale in

operations & functionsoperations & functions– Enhancing competitive position Enhancing competitive position

vis-à-vis industry competitorsvis-à-vis industry competitors– Providing opportunities for Providing opportunities for

employee professional employee professional development & advancementdevelopment & advancement

• HR IssuesHR Issues– Planning for new hiringPlanning for new hiring– Alerting current employeesAlerting current employees– Ensuring quality & performance Ensuring quality & performance

standards are maintainedstandards are maintained

• Internal MethodsInternal Methods– Penetration of existing marketsPenetration of existing markets– Developing new marketsDeveloping new markets– Developing new products or Developing new products or

services for existing or new services for existing or new marketsmarkets

• External MethodsExternal Methods– Acquiring other organizationsAcquiring other organizations– Vertical integrationVertical integration

• HR IssuesHR Issues– Merging organizationsMerging organizations– Dismissing redundant employeesDismissing redundant employees

• Internal MethodsInternal Methods– Penetration of existing marketsPenetration of existing markets– Developing new marketsDeveloping new markets– Developing new products or Developing new products or

services for existing or new services for existing or new marketsmarkets

• External MethodsExternal Methods– Acquiring other organizationsAcquiring other organizations– Vertical integrationVertical integration

• HR IssuesHR Issues– Merging organizationsMerging organizations– Dismissing redundant employeesDismissing redundant employees

Copyright © 2005 South-Western. All rights reserved. 1–15

Corporate Strategies: StabilityCorporate Strategies: StabilityCorporate Strategies: StabilityCorporate Strategies: Stability

• Maintaining status quo due to limited Maintaining status quo due to limited environmental opportunities for gaining environmental opportunities for gaining competitive advantagecompetitive advantage

• Few employees will have opportunities for Few employees will have opportunities for advancementadvancement

• Critical that management identify key Critical that management identify key employees & develop specific HR retention employees & develop specific HR retention strategies to keep themstrategies to keep them

• Maintaining status quo due to limited Maintaining status quo due to limited environmental opportunities for gaining environmental opportunities for gaining competitive advantagecompetitive advantage

• Few employees will have opportunities for Few employees will have opportunities for advancementadvancement

• Critical that management identify key Critical that management identify key employees & develop specific HR retention employees & develop specific HR retention strategies to keep themstrategies to keep them

Copyright © 2005 South-Western. All rights reserved. 1–16

Corporate Strategies:Corporate Strategies:Turnaround or RetrenchmentTurnaround or Retrenchment

Corporate Strategies:Corporate Strategies:Turnaround or RetrenchmentTurnaround or Retrenchment

• Downsizing or streamlining organization in Downsizing or streamlining organization in cost-cutting attempt to adjust to competitive cost-cutting attempt to adjust to competitive environmentenvironment

• Few opportunities & many environmental Few opportunities & many environmental threatsthreats

• Important to develop HR practices to Important to develop HR practices to manage “survivors”manage “survivors”

• Downsizing or streamlining organization in Downsizing or streamlining organization in cost-cutting attempt to adjust to competitive cost-cutting attempt to adjust to competitive environmentenvironment

• Few opportunities & many environmental Few opportunities & many environmental threatsthreats

• Important to develop HR practices to Important to develop HR practices to manage “survivors”manage “survivors”

Copyright © 2005 South-Western. All rights reserved. 1–17

Business Unit Strategies: Cost Business Unit Strategies: Cost LeadershipLeadership

Business Unit Strategies: Cost Business Unit Strategies: Cost LeadershipLeadership

• Increases in efficiency & cutting of costs, then Increases in efficiency & cutting of costs, then passing savings to consumerpassing savings to consumer

• Assumes price elasticity in demand for products Assumes price elasticity in demand for products or services is highor services is high

• Assumes that customers are more price sensitive Assumes that customers are more price sensitive than brand loyalthan brand loyal

• HR strategy focuses on short-term performance HR strategy focuses on short-term performance measures of results & promoting efficiency measures of results & promoting efficiency through job specialization & cross-trainingthrough job specialization & cross-training

• Increases in efficiency & cutting of costs, then Increases in efficiency & cutting of costs, then passing savings to consumerpassing savings to consumer

• Assumes price elasticity in demand for products Assumes price elasticity in demand for products or services is highor services is high

• Assumes that customers are more price sensitive Assumes that customers are more price sensitive than brand loyalthan brand loyal

• HR strategy focuses on short-term performance HR strategy focuses on short-term performance measures of results & promoting efficiency measures of results & promoting efficiency through job specialization & cross-trainingthrough job specialization & cross-training

Copyright © 2005 South-Western. All rights reserved. 1–18

Business Unit Strategies: Business Unit Strategies: DifferentiationDifferentiation

Business Unit Strategies: Business Unit Strategies: DifferentiationDifferentiation

• In order to demand a premium price from In order to demand a premium price from consumers consumers

– Attempting to distinguish organizational products or services Attempting to distinguish organizational products or services from other competitors or from other competitors or

– Creating Creating perception perception of differenceof difference

• Organization offers employees incentives & Organization offers employees incentives & compensation for creativitycompensation for creativity

• HR strategy focuses on external hiring of unique HR strategy focuses on external hiring of unique individuals & on retaining creative employeesindividuals & on retaining creative employees

• In order to demand a premium price from In order to demand a premium price from consumers consumers

– Attempting to distinguish organizational products or services Attempting to distinguish organizational products or services from other competitors or from other competitors or

– Creating Creating perception perception of differenceof difference

• Organization offers employees incentives & Organization offers employees incentives & compensation for creativitycompensation for creativity

• HR strategy focuses on external hiring of unique HR strategy focuses on external hiring of unique individuals & on retaining creative employeesindividuals & on retaining creative employees

Copyright © 2005 South-Western. All rights reserved. 1–19

Business Unit Strategies: FocusBusiness Unit Strategies: FocusBusiness Unit Strategies: FocusBusiness Unit Strategies: Focus

• Business attempts to satisfy needs of only a Business attempts to satisfy needs of only a particular group or narrow market segment particular group or narrow market segment

• Strategic intent is to gain consumer loyalty of Strategic intent is to gain consumer loyalty of neglected groups of consumersneglected groups of consumers

• Strategic HR issue is ensuring employee Strategic HR issue is ensuring employee awareness of uniqueness of market segmentawareness of uniqueness of market segment

– Thorough employee training & focus on customer Thorough employee training & focus on customer satisfaction are critical factorssatisfaction are critical factors

– Hiring members of target segment who are empathetic to Hiring members of target segment who are empathetic to customer in target segmentcustomer in target segment

• Business attempts to satisfy needs of only a Business attempts to satisfy needs of only a particular group or narrow market segment particular group or narrow market segment

• Strategic intent is to gain consumer loyalty of Strategic intent is to gain consumer loyalty of neglected groups of consumersneglected groups of consumers

• Strategic HR issue is ensuring employee Strategic HR issue is ensuring employee awareness of uniqueness of market segmentawareness of uniqueness of market segment

– Thorough employee training & focus on customer Thorough employee training & focus on customer satisfaction are critical factorssatisfaction are critical factors

– Hiring members of target segment who are empathetic to Hiring members of target segment who are empathetic to customer in target segmentcustomer in target segment

Copyright © 2005 South-Western. All rights reserved. 1–20

Exhibit 3-3 (page 1) Exhibit 3-3 (page 1)

Dyer & Holder’s Typology of Dyer & Holder’s Typology of StrategiesStrategies

Exhibit 3-3 (page 1) Exhibit 3-3 (page 1)

Dyer & Holder’s Typology of Dyer & Holder’s Typology of StrategiesStrategies

Copyright © 2005 South-Western. All rights reserved. 1–21

Exhibit 3-3 (page 2) Exhibit 3-3 (page 2)

Dyer & Holder’s Typology of Dyer & Holder’s Typology of StrategiesStrategies

Exhibit 3-3 (page 2) Exhibit 3-3 (page 2)

Dyer & Holder’s Typology of Dyer & Holder’s Typology of StrategiesStrategies

Copyright © 2005 South-Western. All rights reserved. 1–22

Benefits of a Strategic Approach to Benefits of a Strategic Approach to HRHR

Benefits of a Strategic Approach to Benefits of a Strategic Approach to HRHR

• Facilitates development of high-quality Facilitates development of high-quality workforce through focus on types of people workforce through focus on types of people & skills needed& skills needed

• Facilitates cost-effective utilization of Facilitates cost-effective utilization of labor, particularly in service industries labor, particularly in service industries where labor is generally greatest costwhere labor is generally greatest cost

• Facilitates planning & assessment of Facilitates planning & assessment of environmental uncertainty & adaptation of environmental uncertainty & adaptation of organization to external forcesorganization to external forces

• Facilitates development of high-quality Facilitates development of high-quality workforce through focus on types of people workforce through focus on types of people & skills needed& skills needed

• Facilitates cost-effective utilization of Facilitates cost-effective utilization of labor, particularly in service industries labor, particularly in service industries where labor is generally greatest costwhere labor is generally greatest cost

• Facilitates planning & assessment of Facilitates planning & assessment of environmental uncertainty & adaptation of environmental uncertainty & adaptation of organization to external forcesorganization to external forces

Copyright © 2005 South-Western. All rights reserved. 1–23

Reading 3.1Reading 3.1 Human Resources & Resource Based Human Resources & Resource Based

ViewView

Reading 3.1Reading 3.1 Human Resources & Resource Based Human Resources & Resource Based

ViewView

• People management systems constructPeople management systems construct– Not all competitive advantage begins with Not all competitive advantage begins with

people management systemspeople management systems– These systems create value to extent that These systems create value to extent that

they impact stock, flow, & change of they impact stock, flow, & change of intellectual capital/knowledgeintellectual capital/knowledge

– Basis of core competenciesBasis of core competencies

• People management systems constructPeople management systems construct– Not all competitive advantage begins with Not all competitive advantage begins with

people management systemspeople management systems– These systems create value to extent that These systems create value to extent that

they impact stock, flow, & change of they impact stock, flow, & change of intellectual capital/knowledgeintellectual capital/knowledge

– Basis of core competenciesBasis of core competencies

Copyright © 2005 South-Western. All rights reserved. 1–24

Reading 3.1Reading 3.1

Human Resources & Resource Based Human Resources & Resource Based ViewView

Reading 3.1Reading 3.1

Human Resources & Resource Based Human Resources & Resource Based ViewView

• ““Skill” concept expanded to consider stock of Skill” concept expanded to consider stock of intellectual capital in firmintellectual capital in firm

• ““Behavior” concept reconceptualized as flow of Behavior” concept reconceptualized as flow of knowledge within firm through its creation, knowledge within firm through its creation, transfer, & integrationtransfer, & integration

• Core competence arises from combination of Core competence arises from combination of firm’s stock of knowledge & flow of knowledge firm’s stock of knowledge & flow of knowledge through creation, transfer, & integration in a way through creation, transfer, & integration in a way that is valuable, rare, inimitable, & organizedthat is valuable, rare, inimitable, & organized

• ““Skill” concept expanded to consider stock of Skill” concept expanded to consider stock of intellectual capital in firmintellectual capital in firm

• ““Behavior” concept reconceptualized as flow of Behavior” concept reconceptualized as flow of knowledge within firm through its creation, knowledge within firm through its creation, transfer, & integrationtransfer, & integration

• Core competence arises from combination of Core competence arises from combination of firm’s stock of knowledge & flow of knowledge firm’s stock of knowledge & flow of knowledge through creation, transfer, & integration in a way through creation, transfer, & integration in a way that is valuable, rare, inimitable, & organizedthat is valuable, rare, inimitable, & organized

Copyright © 2005 South-Western. All rights reserved. 1–25

Reading 3.1Reading 3.1 Human Resources & Resource Based Human Resources & Resource Based

ViewView

Reading 3.1Reading 3.1 Human Resources & Resource Based Human Resources & Resource Based

ViewView

• Dynamic capability construct illustrates Dynamic capability construct illustrates interdependent interplay between interdependent interplay between workforce & core competence as it changes workforce & core competence as it changes over timeover time

• Dynamic capability construct illustrates Dynamic capability construct illustrates interdependent interplay between interdependent interplay between workforce & core competence as it changes workforce & core competence as it changes over timeover time

Copyright © 2005 South-Western. All rights reserved. 1–26

Reading 3.2Reading 3.2 Distinctive Human ResourcesDistinctive Human Resources

Reading 3.2Reading 3.2 Distinctive Human ResourcesDistinctive Human Resources

• ““Flexibility” dimension associated with Flexibility” dimension associated with “prospectors”“prospectors”

• ““Established markets” category linked to Established markets” category linked to classifications like “defenders” classifications like “defenders”

• Employment practices are difficult to Employment practices are difficult to change & transferchange & transfer

• Core competencies should drive business Core competencies should drive business strategy & not vice versastrategy & not vice versa

• ““Flexibility” dimension associated with Flexibility” dimension associated with “prospectors”“prospectors”

• ““Established markets” category linked to Established markets” category linked to classifications like “defenders” classifications like “defenders”

• Employment practices are difficult to Employment practices are difficult to change & transferchange & transfer

• Core competencies should drive business Core competencies should drive business strategy & not vice versastrategy & not vice versa

Copyright © 2005 South-Western. All rights reserved. 1–27

Reading 3.2Reading 3.2 Distinctive Human ResourcesDistinctive Human Resources

Reading 3.2Reading 3.2 Distinctive Human ResourcesDistinctive Human Resources

• If competencies are available to everyone If competencies are available to everyone on open market, how can they generate a on open market, how can they generate a unique competency & competitive unique competency & competitive advantage for any one firm?advantage for any one firm?

• If competencies are available to everyone If competencies are available to everyone on open market, how can they generate a on open market, how can they generate a unique competency & competitive unique competency & competitive advantage for any one firm?advantage for any one firm?

Copyright © 2005 South-Western. All rights reserved. 1–28

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

• PhilosophyPhilosophy– Statements of how organization values & treats employees; Statements of how organization values & treats employees;

essentially culture of the organizationessentially culture of the organization

• PoliciesPolicies– Expressions of shared values & guidelines for action on Expressions of shared values & guidelines for action on

employee-related business issuesemployee-related business issues

• ProgramsPrograms– Coordinated & strategized approaches to initiate, Coordinated & strategized approaches to initiate,

disseminate, & sustain strategic organizational change disseminate, & sustain strategic organizational change efforts necessitated by strategic business needsefforts necessitated by strategic business needs

• PhilosophyPhilosophy– Statements of how organization values & treats employees; Statements of how organization values & treats employees;

essentially culture of the organizationessentially culture of the organization

• PoliciesPolicies– Expressions of shared values & guidelines for action on Expressions of shared values & guidelines for action on

employee-related business issuesemployee-related business issues

• ProgramsPrograms– Coordinated & strategized approaches to initiate, Coordinated & strategized approaches to initiate,

disseminate, & sustain strategic organizational change disseminate, & sustain strategic organizational change efforts necessitated by strategic business needsefforts necessitated by strategic business needs

Copyright © 2005 South-Western. All rights reserved. 1–29

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

• PracticesPractices– HR practices motivate behaviors that allow HR practices motivate behaviors that allow

individuals to assume roles consistent with individuals to assume roles consistent with organization’s strategic objectivesorganization’s strategic objectives

– Three categories of roles:Three categories of roles:• LeadershipLeadership• ManagerialManagerial• OperationalOperational

• PracticesPractices– HR practices motivate behaviors that allow HR practices motivate behaviors that allow

individuals to assume roles consistent with individuals to assume roles consistent with organization’s strategic objectivesorganization’s strategic objectives

– Three categories of roles:Three categories of roles:• LeadershipLeadership• ManagerialManagerial• OperationalOperational

Copyright © 2005 South-Western. All rights reserved. 1–30

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

• ProcessesProcesses– Continuum of participation by all employees Continuum of participation by all employees

in specific activities to facilitate formulation & in specific activities to facilitate formulation & implementation of other activitiesimplementation of other activities

• ProcessesProcesses– Continuum of participation by all employees Continuum of participation by all employees

in specific activities to facilitate formulation & in specific activities to facilitate formulation & implementation of other activitiesimplementation of other activities

Copyright © 2005 South-Western. All rights reserved. 1–31

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

Reading 3.3Reading 3.3 The Five P’s Model of SHRMThe Five P’s Model of SHRM

• Successful SHRM efforts begin with Successful SHRM efforts begin with identification of strategic needsidentification of strategic needs

• Employee participation is critical to linking Employee participation is critical to linking strategy & HR practicesstrategy & HR practices

• Strategic HR depends on systematic & analytical Strategic HR depends on systematic & analytical mindsetmindset

• Corporate HR departments can have impact on Corporate HR departments can have impact on organization’s efforts to launch strategic organization’s efforts to launch strategic initiativesinitiatives

• Successful SHRM efforts begin with Successful SHRM efforts begin with identification of strategic needsidentification of strategic needs

• Employee participation is critical to linking Employee participation is critical to linking strategy & HR practicesstrategy & HR practices

• Strategic HR depends on systematic & analytical Strategic HR depends on systematic & analytical mindsetmindset

• Corporate HR departments can have impact on Corporate HR departments can have impact on organization’s efforts to launch strategic organization’s efforts to launch strategic initiativesinitiatives