MGI Chapter 2 Strategic HRM

Two Phases of Strategic Management Strategic implementation requires that

"An organization has a variety of structural forms and organizational processes to choose from when implementing a given strategy" • Five variables • organizational structure • HRM tasks •task design •selection, training, and development of people •reward systems • types of information and information systems

Linkage Between HRM and the Strategic Management Process

- Strategic choice • Where to compete? • How to compete? • With what will we compete?

Strategic Planning and HRM Linkages

1. Administrative Linkage (4) - 0 value on HR - Makes decisions and tells everyone at the same time 2. One-Way Linkage (3) - low value on HR - Makes strategies and tells HR before telling everyone else 3. Two-Way Linkage (2) - medium value on HR ▪ Asks HR for issues and input and they take it into consideration at the meeting 1. Integrative Linkage (1) - High value on HR - HR is at the meeting with all other executives - More conversation and discussions - HR is at the same level with everyone else at meeting - Higher value of HR - Usually has chief HR Manager -> meaning they value employees input

Components for Strategic Formulation (1st phase)

1. Mission and Goals 2. Swat Analysis

There are 5 variables that determine success in strategy implementation,

1. Organizational Structure 2. Task Design 3. Selection, Training, and Development of People; 4. Reward Systems 5. Types of Information and Information Systems HRM has primary responsibilities of 3 out of the 5 variables, Task Design, Selection, Training, and Development of People, and Reward Systems

Two Phases of Strategic Management

1. Strategy Formulation - strategic planning groups decide on a strategic direction by defining the company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses 2. Strategy Implementation - Organization follows through on the strategy, devising the structure and allocating the resourcess

2nd phase Strategic Integration (or implementation)

1. Task Design 2. Resource Allocation 3. Rewards

Job Design

A addresses what tasks should be grouped into a particular job

Strategy Implementation Internal Growth Strategies

Companies must constantly hire, transfer and promote individuals. • Compensation weighted towards achievement • Joint ventures require conflict resolution

Strategy Implementation Directional Strategies

Concentration Internal Growth Mergers and Acquisitions Downsizings

The Role of Human Resources in Providing Strategic Competitive Advantage Emergent Strategies Intended Strategies

ES: • Consist of the strategies that evolve from the grassroots of the organization • Can be thought of as what organizations actually do, as opposed to what they intend to do • Usually identified by those lower in the organizational hierarchy IS: The result of the rational decision-making process used by top managers as they develop a strategic plan

Strategy Implementation Labor and Employee Relations

Employees - asset or expense? • How much should employees participate in decision making? • What rights do employees have? • What is the company's responsibility to employees? • The approach a company takes in making these decisions can result in successfully achieving its short and long-term goals or ceasing to exist.

❖ Jack Welch's main point:

HR department important because they know where to best place workers to get the most out of them!

Business Model

How the firm will create value for customers profitably

SWOT Analysis Internal External why do companies use SWAT analysis?

Internal - Strengths and Weaknesses External - Opportunities and Threats they're trying to set strategies to figure out what their limit is, what their weaknesses are and work off of that.

Strategy Implementation Mergers and Acquisitions

M&A on the increase HR needs to be involved • People issues can cause problems • Different organizational cultures • Conflict resolution

Strategy Formulation

Mission Goals External Analysis Internal Analysis Strategic Choice

Job Analysis:

Process of getting detailed information about jobs

Strategy Implementation HRM Needs in Strategic Types Role behaviors • Cost strategies • Differentiation strategies

RB: Behaviors required of an individual in his or her role as a job holder in a social work environment CS: companies define the skills they require and invest in training employees in these skill areas. DS: Employees are expected to exhibit role behaviors that include cooperating with others, developing new ideas, and taking a balanced approach to process and results.

HRM Function must be integrally involved in the company's strategic management process

So that HR can identify and solve problems

Internal Growth Strategy

Strategies focusing on market development, product development, innovation, or joint ventures make up IGS

Strategic HRM

The pattern of planned HR activities and deployments intended to enable an organization to achieve its goals

External Growth Strategy

Those attempting to integrate vertically or horizontally or to diversify are exhibiting an EGScon

Strategy Implementation Downsizing

Trend has slowed since 2008 • Tends to fall short of meeting companies' financial and organizational objectives, and has negative effects on employee morale and productivity • The HRM function must "surgically" reduce the workforce by cutting only the workers who are less valuable in their performance • Early retirement programs usually result in rehiring • Survivor morale issues

companies with a highly developed learning capabilities have a...

competitive advantage

the 2 phases of strategic management plan are

distinct yet interchangeable

the process of determining what tasks should be grouped into a particular job is known as

job design

generic strategies

similarities in the ways companies attempt to compete in a single industry

Goal of Strategic Management is

to deploy and allocate resources in a way that gives an organization competitive advantage

6 menus of HR practice

when companies choose their implementation a strategy

Strategic Management

• A process • An approach to addressing the competitive challenges an organization faces • Managing the "pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole." • Developing strategies for achieving the company's goals in light of its current environment is a process to address the organization's competitive challenges by integrating goals, policies and action sequences into a cohesive whole.

The Role of Human Resources in Providing Strategic Competitive Advantage Enhancing Firm Competitiveness

• Develop a human capital pool that gives the company the unique ability to adapt to an ever-changing environment. • Learning organization

Strategy Implementation Vertical Alignment

• HR practices and processes address the strategic needs of the business. • The link between strategy and HR practices is primarily through people. - Job analysis and design - Recruitment - Selection systems - Training and development programs - Performance management systems - Reward systems - Labor relations programs

Strategy Implementation Pay Structure, Incentives, and Benefits

• High pay and/or benefits relative to competitors can help company attract and retain high-quality employees, but might have a negative impact on overall labor costs. • Tying pay to performance can elicit specific activities and levels of performance from employees

Strategy Implementation Concentration Strategies

• Require that the company maintain the current skills that exist in the organization • Need for skill-based training and fair compensation

Strategic Types Porter's Cost and Differentiation

• Value can be created by reducing costs. • Value can be created by differentiating a product or service so the company can charge a premium price relative to its competitors